Ambuja Cements Shares Rise 7% On Plan To Increase Stake In Sanghi Industries

Shares of Ambuja Cements Ltd. rose to a 10-month high on Tuesday, driven by a rally in Adani Group shares and its plan to acquire additional stake in Sanghi Industries Ltd.

Ambuja Cements will acquire an additional 2.23% stake in Sanghi Industries for Rs 121.90 per equity share, an exchange filing said. The company has already acquired 54.51% stake in Sanghi Industries for Rs 5,185 crore.

The earlier acquisition was funded through internal accruals leading to Ambuja Cements controlling a majority stake in Sanghi Industries. After the acquisition, Ambuja's consolidated capacity has increased to 74.6 MTPA from the earlier 68.5 MTPA.

The company is also looking to increase its coastal footprint to 15 MTPA across the west coast markets, by expanding the existing port at Sanghipuram to accommodate larger vessels. The additional capacity is expected to be commissioned in the next 30 months, the company said.

"Recognising the Adani Group's expertise in marine infrastructure, plans are underway to expand the Sanghipuram port's capacity to handle larger vessels, facilitating cost-effective transportation of clinker and cement via sea routes," said Ajay Kapur, chief executive officer of Adani Group's cement business.

Other Adani Group stocks gained as well, with Adani Enterprises Ltd. and Adani Ports and Special Economic Zone Ltd. hitting upper circuit on Tuesday.

Making changes in the initial agreement, the company has also decided to lend additional funds of Rs 1,810 crore in Sanghi Industries that will be used for repayment of outstanding debt.

Shares of Ambuja Cements rose as much as 7.55%, it traded at this level on Jan. 4. last, before paring gains to trade 5.69% higher at 11:38 a.m. This compares to a 0.29% advance in the NSE Nifty 50.

The stock has fallen 4.45% on a year-to-date basis. Total traded volume so far in the day stood at 11 times its 30-day average. The relative strength index was at 85.

Of the 43 analysts tracking the company, 30 maintain a 'buy' rating, five recommend a 'hold,' and eight suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 11.7%.

Sanghi Industries has been locked in the 5% upper circuit of Rs 12.25 apiece on Tuesday.

It has risen 84.38% on a year-to-date basis. Total traded volume so far in the day stood at 1.1 times its 30-day average. The relative strength index was at 68.98.

Both the analysts tracking the company maintain a 'buy' rating, according to Bloomberg data. The average 12-month consensus price target implies an upside of 78.2%.

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