In early trading today (June 14), Ambuja Cements saw its share price increase by over 3% to reach a 52-week high. This surge followed the announcement of the acquisition of Penna Cement Industries Ltd (PCIL) by the Adani Group firm for an enterprise value of ₹10,422 crore. Subsequently, the company’s shares surged by up to 3.86% to reach a new peak of ₹690 each on the BSE.
Ambuja Cements buys Penna Cement
According to the agreement, Ambuja Cements will purchase all the shares of Penna Cement from its current owners, Pratap Reddy and family. The acquisition will be financed entirely through internal funds, as stated by the cement company in a regulatory filing. Ajay Kapur, CEO & Whole Time Director of Ambuja Cement, commented, “This important acquisition marks a major milestone in Ambuja Cement’s growth strategy. Through this acquisition of PCIL, Ambuja is set to enhance its market reach in southern India and strengthen its position as a nationwide leader in the cement sector.”
What brokerages said on Ambuja Cement stock? Should you buy?
Emkay Global Financial Services reiterated its favor for Ambuja Cements by maintaining a ‘Buy’ recommendation for Ambuja Cements stocks with a target price of ₹700 per share for March 2025. Additionally, Antique Stock Broking upheld a ‘Buy’ rating for Ambuja Cements with a target price of ₹700 per share.
Macquarie kept a neutral outlook on Ambuja Cements, setting a target price of ₹608. Jefferies indicated that the growing market dominance of key players such as Ambuja Cements could put pressure on smaller competitors. The acquisition will raise Ambuja Cements’ overall capacity to 91 million tonnes, it highlighted. Citi provided a neutral rating for Ambuja Cements’ stock with a target price of ₹675 per share and commented on the company’s progress in achieving its expansion objectives.
Ambuja Cements Share Price Target 2024 to 2030 Year Wise
Year | Year-End Target |
|---|
2024 | ₹644.69 |
2025 | ₹737.41 |
2026 | ₹797.17 |
2027 | ₹858.92 |
2028 | ₹924.70 |
2029 | ₹993.62 |
2030 | ₹1065.96 |
Category: Stock Market
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Ambuja Cements share price jumps 3% today
Ambuja Cements’ stock price surged by more than 3% to reach a 52-week high in early trading on Friday following the Adani Group’s announcement of acquiring Penna Cement Industries Ltd (PCIL) for an enterprise value of ₹10,422 crore. The share price of Ambuja Cements climbed by 3.86% to hit a new peak of ₹690.00 each on the BSE. The acquisition of 100% of PCIL’s shares from its current promoters, Pratap Reddy and family, will be entirely financed through internal accruals, as stated in a regulatory filing by the Adani Group cement manufacturer on Thursday.
PCIL currently has a cement capacity of 14 MTPA, with 10 MTPA already operational and the rest being constructed in Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA), expected to be finished within 6 to 12 months. Additionally, the surplus clinker at the Jodhpur plant will enable an extra 3 MTPA cement grinding capacity beyond the existing 14 MTPA. Analysts view this expansion positively for PCIL’s growth prospects and anticipate it to enhance Ambuja Cements’ value. Analysts remain optimistic about Ambuja Cements’ stocks.
Penna Acquisition Value Accretive
Dharmesh Shah, a Research Analyst at Emkay Global Financial Services, calculated the deal at $89 per tonne. It might drop to $79 per tonne with an additional 3 mt grinding capacity. The acquisition could boost Ambuja’s market share by 200 bps in India and by 800 bps in the South. Ambuja aims to increase capacity to around 113 mt by FY27 and reach 140 mt by FY28. The brokerage firm prefers Ambuja Cements due to its growth plans, nationwide presence, and strong financial position. They maintain a ‘Buy’ rating for Ambuja Cements with a target price of ₹700 per share by March 2025.
Antique Stock Broking thinks 17 MT clinker-backed capacities are worth $85 per ton, which is beneficial. The brokerage hasn’t included the deal in its estimates yet as they await regulatory approvals.They suggest buying Ambuja Cements at ₹700 with a target price based on 17x FY26 EV/EBITDA. They predict a 12% volume growth and rising EBITDA/ton due to cost efficiencies. Nuvama Institutional Equities mentions potential value increase for Ambuja Cements through a PCIL turnaround like Sanghi’s. PCIL’s increased utilization can boost market competition with additional volumes.
Nuvama Equities likes Ambuja Cements for its good spending plans and efforts to cut costs. It keeps a ‘Buy’ rating on Ambuja Cements with a target price of ₹767 per share. The stock has risen by 13% in a month and over 18% in three months. Year-to-date, it has yielded more than 27% returns. At 9:16 am, shares were up by 2.57% at ₹681.35 each on the BSE.
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