- 06 Dec 2023
- ICICI Securities
AMBUJA CEMENTS COMPLETES ACQUISITION OF SANGHI INDUSTRIES
AMBUJACEM - 571 Change: 6.00 (1.06 %)News: Ambuja Cements has completed the acquisition of Sanghi Industries (SIL), at an enterprise value of Rs 5,185 crore (vs earlier expected value of ~Rs 5000 crore). Ambuja has also extended an inter-corporate loan of Rs 1,810 crore to SIL for repayment of existing loans. As part of the deal's completion, Ambuja Cements has acquired 54.51% of SIL from the promoters (14.1 crore shares at Rs 121.9). An additional 2.23% of SIL (57 lakh shares) from the promoters will be acquired separately at the same price, taking the total stake of Ambuja into SIL at 56.74%. The company said the acquisition of shares is fully funded through internal accruals. SIL has a clinker capacity of 6.6 million tonnes (mtpa) and cement grinding capacity of 6.1 mtpa, a dedicated 13 MW captive power plant and 13 MW Waste Heat Recovery System.
Views: Considering the additional clinker capacity of about 2.1 mtpa, acquisition at valuation of $90-100/ton is lower than the current replacement cost of about $130/ton. However, this acquisition will help Ambuja to increase its market share in western markets. Going forward, Ambuja plans to increase clinker capacity by 0.5 mtpa and cement capacity by 1.5 mtpa through debottlenecking. In the longer term, Ambuja aims to increase its cement capacity at the West coast to 15 mtpa on the strength of SIL's low cost clinker.
Impact: Neutral