homemarket NewsAmbuja Cements hits an all time high, ACC gains over 6% — why cement stocks are solid
Ambuja Cements hits an all-time high, ACC gains over 6% — why cement stocks are solid
Ambuja Cements’ shares touched an all-time high of Rs 533.60 intraday on BSE after the company informed the exchanges it would consider and evaluate the proposal to raise funds.
Most cement stocks, including Ambuja Cements, ACC, and India Cements, traded higher on Wednesday, shrugging off the overall negative sentiment in the market following worse-than-expected US inflation data that was released last evening.
Ambuja Cements’ shares touched an all-time high of Rs 533.60 intraday on BSE after the company informed the exchanges it would consider and evaluate the proposal to raise funds. The firm’s board will meet on September 16 to discuss the fundraising via an issue of equity shares, convertibles, and other instruments.
In terms of cash, the firm’s standalone entity has around Rs 4,000 crore, and the consolidated entity has more than a billion dollars of cash. The new fundraising will add to this cash balance.
The Street awaits to find out what the firm plans to do with the proceeds. ACC shares, too, finished the session nearly 7 percent higher.
In May, Adani Group announced the acquisition of Holcim's stake in Ambuja (63.19 percent) and stake in ACC (4.48 percent). Ambuja directly owns a 50 percent stake in ACC.
The new promoter will likely show aggression while cost savings measures may play out. There are also chances of a potential merger of Ambuja and ACC, enhancing the synergy benefits.
The Street believes that the cost difference between ACC-Ambuja and some of its peers like Shree Cement and UltraTech Cement, will gradually get narrowed. Currently, the cost difference is close to Rs 200 per tonne.
The remaining cement sector also largely witnessed gains amid the hope that there will be some consolidation and if that happens, pricing power and profitability shall follow.
Earlier on Monday, JPMorgan said the market is behind Adani Enterprises’ open offer to acquire a 26 percent stake each in Ambuja Cements and ACC from public shareholders. According to the brokerage, the focus for the cement sector is back on fundamentals. The key would be structure and expansion details, it added.
Here’s how other cement stocks fared on Wednesday:
| Stock | Closing price Sept 14 |
| Ambuja Cements | 7.85% |
| ACC | 6.62% |
| Ultratech Cement | -0.15% |
| The Ramco Cements | -0.04% |
| Shree cement | 1.27% |
| JK Lakshmi Cement | 11.99% |
| Birla Corporation | -1.10% |
| Mangalam Cement | 2.80% |
| Heidelbergcement India | 2.32% |
| India Cements | 9.19% |
| Dalmia Bharat | 6.28% |
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