- 13 Jun 2024
- ICICI Securities
ADANI GROUP IS EVALUATING MULTIPLE CEMENT COMPANIES
AMBUJACEM - 549 Change: 12.15 (2.26 %)News: As per media sources, Adani Group is evaluating multiple cement companies like Penna Cement, Saurashtra Cement, JP Associates' cement business & Vadraj Cement for acquisition. In terms of capacity, Penna Cement current capacity stands at 10 mtpa while Saurashtra Cement, JP Associates' & Vadraj cement has 5 mtpa, 9.5 mtpa & 6 mtpa respectively. As per the report, Adani Group is ready to offer a valuation of $ 85-120 per ton for these acquisitions (with an estimated total cost at ~$ 3 billion).
Views: Adani Group has been aggressively looking at increasing its cement capacity to strengthen its position and gain market share across regions (20% by FY28 from 14% at present). Ambuja's total consolidated cement capacity stands at 79 mtpa and in process of expanding it to 100 mt by FY26. The group aims to reach a total capacity of 140 mtpa by FY28E, for which it is exploring both organic and inorganic route. With a healthy cash & bank balance position, the group is well positioned for aggressive capacity expansions and further strengthening its position whch would drive volume growth for both the companies (Ambuja and ACC). Valuation of $85-120 per ton is also in the comfort range considering the current capex cost for a greenfield plant.
Impact: Positive