Ambuja Cements, up 10% on Adani's Rs 20,000-cr funding plan
Published On: Monday, September 19, 2022 | By: Team KnowMyStock
Shares of Ambuja Cements rallied 10 percent 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. With that, the stock has breached its previous high seen on 16 September. 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 the issuance of warrants can be exercised and converted into equity shares in one or more tranches within 18 months. Since then, hopes have been running high that the new management would increase its focus on capacity expansions, where both the companies have been lagging competition, which in turn had weighed on their market share.
"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 percent v/s 63.2 percent at present”, according to Motilal Oswal Financial Services. “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.
Jefferies believes it’s time to upgrade it to ‘buy’ as the cement maker is set to seek shareholders’ approval for the appointment of Gautam Adani and others on the board and a Rs 20,000 crore cash infusion in the company through preferential allotment of warrants.
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