Ambuja, ACC gain up to 8% on Adani Group's buyout of Holcims's India biz

Shares of Ambuja Cement and ACC rallied up to 8 per cent on the BSE in Monday’s intra-day trade after the Adani Group announced the acquisition of Swiss cement major Holcim's stake in all its Indian operating entities for $10.5 billion (around Rs 81,361 crore), including the open offers.

The Adani family, through an offshore special-purpose vehicle, said that it has entered into definitive agreements for the acquisition of Holcim Ltd’s entire stake in two of India’s leading cement companies -- Ambuja Cements and ACC.

Holcim, through its subsidiaries, holds 63.19 per cent in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements).

Ambuja Cements and ACC currently have a combined installed production capacity of ~70 MTPA. Both Ambuja and ACC will benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani Portfolio companies have vast experience and deep expertise.

This will enable higher margins and return on capital employed for the two companies. The companies will also benefit from Adani’s focus on ESG, Circular Economy and Capital Management Philosophy, Adani Group said. CLICK HERE FOR FULL RELEASE

Among the individual stocks, ACC rallied 8 per cent to Rs 2,288, while Ambuja Cements rose 5 per cent to Rs 377 on the BSE, as compared to 1 per cent rise in the Sensex, at 10:45 am.

Adani group proposed to acquire up to 48.96 million equity shares representing 26 per cent of total equity capital of ACC at a price of Rs 2,300 per share via an open offer. It will buy 516 million shares or 26 per cent stake of Ambuja Cements at a price of Rs 385 per share.

“As the deal closes, and ACC and Ambuja Cements becomes a direct, and most importantly, identifiable individual promoter-controlled entities and Adani emerges as the second largest player in Indian cement industry, this deal will potentially change the fortune of the sector for a betterment!,” said analysts at Philllip Capital.

Adani Group, all of a sudden, has emerged as the second largest cement producer of the country with its master stroke of buying-out Ambuja Cements and ACC from Holcim. However, to us, this is not just about the buy-out, but Adani, in our view, now has the potential to turnaround the fortune for the whole industry and not just theirs. It has now also become a 70 mn tonnes p.a. capacity player, next only to UltraTech Cement, the brokerage said.

_________________________________________________________________________________________________

Technical View
 

Ambuja Cement

Bias: Range-bound

Resistance: Rs 380

Support: Rs 350

Shares of Ambuja Cement are seen consolidating in a range of Rs 350 to Rs 380 for more than a month now, give or take couple of per centage points in either direction. The stock has consistently been finding support around its 100-DMA at Rs 350.80, whereas on the upside has failed to sustain above its 200-DMA placed at Rs 377.30-odd level.

The near term bias indicates that the stock needs to break and trade above Rs 377.30 on a consistent basis for an upward bias to emerge. Further, a close above Rs 390-odd level can trigger a sharp upswing. 

On the flip side, failure to sustain above Rs 350-odd level, can see the stock drop to Rs 340 to Rs 330-odd levels in the near term. 

The key momentum oscillators on the daily charts are mixed, with the DI (Directional Index) and Slow Stochastic in favour of the bulls, while the MACD (Moving Average Convergence and Divergence) is slightly in favour of the bears. 

The weekly chart too indicates resistance around Rs 374-odd level, which is where the 50-WMA (Weekly Moving Average) exists. On the upside, the stock can spurt to Rs 420-odd level.

ACC

Bias: Range-bound

Resistance: Rs 2,266

Support: Rs 2,153

ACC has bounced back strongly in trades today, after having given a downside breakout on Friday. The current up move can extend up to Rs 2,385, provided the stock is able to sustain above 2,266 - its 200-DMA.

On the flip side, in case the stock is unable to sustain above the 200-DMA, the stock can re-test supports at 100-DMA and 50-DMA placed at Rs 2,187 and Rs 2,153, respectively.

Similarly, the weekly chart indicates sustenance above Rs 2,240 as the key for further upside to Rs 2,430-odd level. 

The key momentum oscillators on the daily charts are mixed, with the DI (Directional Index) and Slow Stochastic showing signs of a positive turnaround, whereas the MACD is slightly in favour of the bears.

(With inputs from Rex Cano)