Ambuja Cements hits new high, up 10% on Adani's Rs 20,000-cr funding plan

The company's new board approved an infusion of Rs 20,000 crore by way of preferential allotment of 477 million convertible warrants at a price of Rs 419 to Harmonia Trade and Investment

Shares of Ambuja Cements rallied 10 per cent to hit a new high of Rs 568 on the BSE in Monday’s intra-day trade following Adani Group's plans to infuse Rs 20,000 crore more in the company. The stock surpassed its previous high of Rs 550.15 touched on Friday.

On September 15, 2022, Ambuja Cement’s new board approved an infusion of Rs 20,000 crore in the company by way of preferential allotment of 477.5 million convertible warrants at a price of Rs 419 to Harmonia Trade and Investment (promoter entity) on a preferential basis. The company said issuance of warrants can be exercised and converted into equity shares in one or more tranches within 18 months.

The new promoters have categorically stated that they want to double the group’s cement capacity in next five years and become largest and most efficient cement company by 2030. The management believes that the group’s exposure into energy and logistics will help them to improve cost dynamics and gain supply chain efficiencies.

"This signals promoters’ intent for growth and commitment for further investments into the cement business. Upon conversion of these warrants, promoters’ shareholding will increase to 70.3 per cent v/s 63.2 per cent at present”, according to Motilal Oswal Financial Services.

The commitment of Promoters for growing cement business has strengthened after their announcement of fund infusion in this business. “We have assumed capacity of Ambuja Cements and ACC to be 88mtpa and 50mtpa, respectively in CY26E. The group has environmental clearance/plans for 25mtpa+ clinker capacities and the fundraising will help to pursue inorganic growth opportunities too,” the brokerage firm said in company update.

Meanwhile, soon after closure of the $6.4 billion transaction to buy Swiss major Holcim’s stake in Ambuja Cements by the Adani group, the boards of Ambuja Cements and its subsidiary, ACC, were reconstituted on Friday.

Gautam Adani took over as chairman of Ambuja Cements’ board, while his elder son Karan was appointed chairman and non-executive director at ACC. Karan will also be a non-executive director at Ambuja Cements. CLICK HERE FOR FULL REPORT

Technical View

Bias: Positive

Support: Rs 552; Rs 510

Resistance: Rs 578; Rs 622

Ambuja Cements has witnessed a runaway rally in the recent past, gaining nearly 29 per cent in the preceding three weeks prior to today. Including today's gain, the stock has soared as much as 38 per cent so far this month.

Further, the stock has constantly managed to hold above the higher end of the Bollinger Band on the weekly chart during the last three weeks, and is seen trading in an unchartered territory. 

Despite the overbought conditions, the bias for the stock is likely to remain positive as long as Ambuja Cements trades above Rs 552-level, i.e. the higher-end of the Bollinger Band on the daily chart.

As per the yearly Fibonacci chart, the stock seems headed towards Rs 578, above which the next target would be Rs 622.

(With inputs from Rex Cano)