Ambuja Cements hits new high ahead of closure of Adani Group's open offer

The stock has surged 17 per cent in a month ahead of the closure of Adani Group's open offer on Friday, September 9

Shares of Ambuja Cements hit a record high of Rs 446.50, up 2 per cent on the BSE in Wednesday’s intra-day trade in an otherwise weak market ahead of closure of the open offer made by Adani Group on Friday, September 9. The S&P BSE Sensex was down 0.53 per cent at 58,885 at 09:23 am.

The stock of the cement company surpassed its previous high of Rs 443 touched on September 8, 2021. In the past one month, the stock has outperformed the market by surging 17 per cent, as compared to less than 1 per cent gain in the S&P BSE Sensex. Meanwhile, shares of ACC traded nearly 3 per cent higher at Rs 2,398.95 on the BSE. The stock had hit a 52-week high of Rs 2,587.95 on November 15, 2021.

Adani family group's Mauritius-based firm Endeavour Trade and Investment on August 26, 2022 launched its Rs 31,000-crore open offer to acquire 26 per cent additional stake from the public shareholders of Swiss firm Holcim's two Indian listed entities Ambuja Cements and ACC.

As per the revised schedule submitted by ICICI Securities and Deutsche Equities India, managers to the open offer, the tendering of shares opened on August 26 and will end on Friday, September 9, 2022. CLICK HERE FOR DETAILS

In May this year, Holcim had signed a binding agreement for the Adani Group to acquire its business in India, comprising its 63.11 per cent stake in Ambuja Cement, which owns a 50.05 per cent interest in ACC, as well as its 4.48 per cent direct stake in ACC. The Adani Group had made an open offer at Rs 385 per share for Ambuja Cements and Rs 2,300 per share for ACC.

Ambuja Cement and ACC are among the most iconic building material brands in India, with a track record of leadership in sustainability and innovation. Their combined footprint includes 31 cement manufacturing sites and 78 ready-mix concrete plants with 10,700 people across India.

Meanwhile, according to analysts at Emkay Global Financial Services, cement industry volumes are likely to have risen by a low single-digit YoY, while waning by a mid-single-digit MoM in August 2022, given the accelerating monsoons, the harvesting season and restriction on sand-mining in several states, which see heavy rains.

Operating costs should peak in Q2FY23 and are expected to decline in coming quarters, with international petcoke prices down around 40 per cent in the past four months to US$175/ton. Factoring-in the inventory lag (45-90 days), CC ratio of 1.5x and the petcoke usage (around 70 per cent in fuel mix), the dip in fuel prices is expected to provide cost savings of at least Rs 200/ton from Q3, in our view, the brokerage firm said in sector update.