HeidelbergCement zooms 18% on report Ambuja eyeing to buy co's India ops

Ambuja Cements is in talks to acquire Indian operation of Heidelberg at an estimated cost of Rs 10,000 crore for 14 mtpa, reports said

HeidelbergCement India share price zoomed 18 per cent to Rs 257.85, hitting a multi-year high on the BSE in Monday's intraday trade, amid heavy volume. HeidelbergCement share rose on news report that Ambuja Cements is in talks to acquire the Indian operation of Heidelberg at an estimated cost of Rs 10,000 crore for 14 mtpa.

Heidelberg Cement India has operations in Central India (Madhya Pradesh (MP) and Uttar Pradesh (UP); and in Southern India (Karnataka).

The stock is trading at its highest level since October 2021. It had hit a record high of Rs 300 on March 30, 1992.

At 09:46 AM, HeidelbergCement India share price was trading 14 per cent higher at Rs 249.35 as compared to 0.26 per cent rise in the BSE Sensex. The average trading volume on HeidelbergCement's counter jumped over 20-fold today.

 

A combined 7.16 million equity shares, representing 10.32 per cent of the total free-float equity of the company, changed hands on the NSE and BSE till the time of the writing of this report.

According to a report in The Economic Times, Adani Group has begun talks to acquire the Indian cement operations of Germany-based Heidelberg Materials. The proposed buyout of Heidelberg's India unit will be led by Adani Group company Ambuja Cements, and could be worth around $1.2 billion (Rs 10,000 crore), the newspaper reported.

Heidelberg Materials, parent company of HeidelbergCement India, provides solutions for the construction industry and is a pioneer in the field of decarbonisation. HeidelbergCement India is engaged in the manufacturing and selling of cement at its three locations viz. Ammasandra (Karnataka), Damoh (MP) and Jhansi (UP).

An acquisition cost of $85/tonne has been in-line with earlier acquisitions in the industry, considering the current capex cost of $120/tonne with 2-2.5 years of commissioning time. Ambuja Cement's total capacity stands at 89 mtpa (in process of further expansion of 51.4 mtpa) with an aim to reach a target capacity of 140 mtpa by FY28E. Ambuja Cement has a strong balance sheet with cash and bank balance of Rs 18,300 crore as on June 30, 2024, ICICI Securities said in a note.

 

HeidelbergCement India Annual Report FY24

HeidelbergCement India, in its FY24 annual report, said the company is trying to increase its volumes through several initiatives i.e. increasing its volume with capital expenditure of Rs 70 crore to de-bottleneck capacity in Central India.

Presently, the housing shortage is around 30 million units. This is expected to increase to 90 million units by mid-2030. Owing to an increase in young population, higher education, and nuclear families, the demand for housing is expected to double in the next 10 years.

Plan outlay for railways, ports, and urban infrastructure funds for tier 2 and 3 cities will bode well for cement demand. The projects include Bharatmala (roads and highways), Tunnels & Border Roads, Roads and Expressways, Indian Railways projects, Amrit Bharat Station Scheme (World Class Railway Stations), Industrial corridors and industrial projects, Gati Shakti (Logistics projects) and Nuclear Power Plants.

The company said it foresees a healthy demand in the construction sector resulting from capital spending from businesses. It has done good work in debottlenecking and invested in capital for asset sweating.