Ambuja Cements Gains As Board To Consider Fundraising Plan
Ambuja Cements will consider a proposal for raising funds by way of issue of equity shares or any other means on Sept. 16.
Shares of Ambuja Cements Ltd. gained after the company said it would consider a fundraising proposal.
“A meeting of the board of directors of Ambuja Cements is scheduled to be held on Sept. 16, 2022 inter-alia, to consider and evaluate proposal for raising of funds by way of issue of equity shares, convertibles and / or any other eligible securities, on a rights/preferential or any other permissible mode/ and/or combination thereof as may be considered appropriate,” the company said in a Sept. 13 exchange filing after market hours.
The Adani family’s open offer to acquire an additional 26% stake in Ambuja and ACC Ltd. had closed on Sept. 9, 2022. The mandatory open offers in cash were made after the Adani family acquired a 63% stake in Ambuja from Swiss cement major Holcim. Ambuja has a 50.05% stake in ACC.
Separately, Nirmal Bang upgraded its view on the cement sector from 'neutral' to 'positive', citing stable competitive intensity, profitability, improved pricing and lower operational costs.
"ACC and Ambuja operate at higher utilisation levels (80-85%) and meaningful incremental supply from both the firms is likely only after two-three years. Hence, profitability of the industry will be maintained in the near term," the brokerage said in a Sept. 14 note.
"Moreover, ACC and Ambuja command a significant brand premium in the industry (along with UltraTech), and they do not need to sacrifice pricing to gain higher market share." A large part of the capacity addition over FY23-25, it said, is being done by industry leaders.
Shares of Ambuja rose nearly 8% Wednesday. The trading volume was nearly five times the 30-day average, when markets closed. The Relative Strength Index of the stock was 88, suggesting it may be overbought.
Of the 47 analysts tracking the company, 18 maintain a 'buy', 17 suggest a 'hold' and 12 recommend a 'sell'. The 12-month consensus price target implies a downside of 27.1%.
Other cement makers such as ACC, Heidelberg Cement, JK Cement also advanced.
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