New Delhi [India], Soon after Ambuja Cements announced the acquisition of Penna Cement, brokerage firm MK Global Financial Services maintained its 'buy' recommendation on the Adani Group-owned cement maker.
“Given the strong growth/capex plans, pan-India presence and strong balance sheet, we maintain our preference for Ambuja,” the brokerage said in a report.
The brokerage has maintained 'Buy' recommendation with a target price of Rs 700 per share by March 2025. At the time of filing this report, Ambuja Cements shares were trading at Rs 676.30, up 1.8 per cent.
“Short-term challenges may persist as players look to gain market share, but long-term consolidation – with larger players expanding organically and through acquisitions – is expected to improve pricing discipline and drive profitability,” MK said. Is.,
“Additionally, small/midcap cement company shares are likely to remain bullish due to ongoing news on M&A (mergers and acquisitions),” the brokerage report said.
On Thursday, Ambuja Cements announced that it has decided to acquire 100 per cent shares of Penna Cement Industries Limited. Penna Cement will now become a wholly owned subsidiary of Ambuja Cements.
The acquisition of Penna Cement will expand Ambuja Cements' presence in India, especially in South India, besides expanding its footprint in neighboring Sri Lanka, the Adani Group cement company said in a presentation explaining the rationale behind the acquisition.
The enterprise value of the transaction is Rs 10,422 crore.The cement maker said the transaction will be funded entirely from internal accruals.
The transaction involved the acquisition of 14.0 million tonnes per annum cement capacity. The 4.0 MTPA cement capacity under construction at Jodhpur IU and Krishnapatnam GU will be fulfilled by the seller.
This acquisition will help Ambuja Cements accelerate its journey to 140 million production by 2028.
With the acquisition of Penna, Adani Cement's operating capacity now stands at 89 MTPA.The remaining 4 parapet manufacturing capacity will be commissioned within 12 months.
PCIL has 14 MTPA cement capacity, of which 10 MTPA (million tonnes per annum) is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months.
According to Adani Cement, the acquisition will also fast-track capacity that was otherwise planned as greenfield expansion. It is expected that South India market share will improve by 8 percent to 15 percent and All India market share will improve by 2 percent.
Penna has surplus land and limestone reserves available in integrated units for setting up additional clinker lines.The cement maker said this leaves scope for Adani Cement to overcome headwinds and further improve efficiencies on marginal investments.
“Given the strong growth/capex plans, pan-India presence and strong balance sheet, we maintain our preference for Ambuja,” the brokerage said in a report.
The brokerage has maintained 'Buy' recommendation with a target price of Rs 700 per share by March 2025. At the time of filing this report, Ambuja Cements shares were trading at Rs 676.30, up 1.8 per cent.
“Short-term challenges may persist as players look to gain market share, but long-term consolidation – with larger players expanding organically and through acquisitions – is expected to improve pricing discipline and drive profitability,” MK said. Is.,
“Additionally, small/midcap cement company shares are likely to remain bullish due to ongoing news on M&A (mergers and acquisitions),” the brokerage report said.
On Thursday, Ambuja Cements announced that it has decided to acquire 100 per cent shares of Penna Cement Industries Limited. Penna Cement will now become a wholly owned subsidiary of Ambuja Cements.
The acquisition of Penna Cement will expand Ambuja Cements' presence in India, especially in South India, besides expanding its footprint in neighboring Sri Lanka, the Adani Group cement company said in a presentation explaining the rationale behind the acquisition.
The enterprise value of the transaction is Rs 10,422 crore.The cement maker said the transaction will be funded entirely from internal accruals.
The transaction involved the acquisition of 14.0 million tonnes per annum cement capacity. The 4.0 MTPA cement capacity under construction at Jodhpur IU and Krishnapatnam GU will be fulfilled by the seller.
This acquisition will help Ambuja Cements accelerate its journey to 140 million production by 2028.
With the acquisition of Penna, Adani Cement's operating capacity now stands at 89 MTPA.The remaining 4 parapet manufacturing capacity will be commissioned within 12 months.
PCIL has 14 MTPA cement capacity, of which 10 MTPA (million tonnes per annum) is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months.
According to Adani Cement, the acquisition will also fast-track capacity that was otherwise planned as greenfield expansion. It is expected that South India market share will improve by 8 percent to 15 percent and All India market share will improve by 2 percent.
Penna has surplus land and limestone reserves available in integrated units for setting up additional clinker lines.The cement maker said this leaves scope for Adani Cement to overcome headwinds and further improve efficiencies on marginal investments.
