Ambuja Cements witnessed a significant surge in its share price, jumping more than 3% to reach a fresh 52-week high following the announcement of its acquisition of (Penna Cement Industries Ltd) PCIL at an enterprise value of ₹10,422 crore. The Adani Group firm disclosed this development in a regulatory filing on Thursday.
The acquisition entails Ambuja Cements acquiring 100% of PCIL shares from its current promoter group, Pratap Reddy and family. The transaction will be financed entirely through internal accruals, reflecting Ambuja’s robust financial position and strategic growth ambitions.
PCIL boasts a cement capacity of 14 million metric tonnes per annum (MTPA), with 10 MTPA currently operational. Additional capacity of 4 MTPA, under construction in Krishnapatnam and Jodhpur, is slated for completion within 6 to 12 months. Moreover, surplus clinker at the Jodhpur plant will support an extra 3 MTPA cement grinding capacity, further enhancing operational efficiencies.
Analysts view the acquisition as strategically beneficial for Ambuja Cements, particularly in strengthening its presence in the southern market. They anticipate the deal to expand Ambuja’s market share by approximately 200 basis points (bps) pan-India and by 800 bps specifically in the South, driving future growth prospects.
Dharmesh Shah, Research Analyst at Emkay Global Financial Services, highlighted the favorable valuation of the deal at $89 per tonne, potentially reducing it to $79 per tonne with the additional grinding capacity. He emphasized Ambuja’s trajectory towards increasing its capacity to around 113 MTPA by FY27 and targeting 140 MTPA by FY28, reinforcing the company’s ambitious growth agenda.
Brokerage firm Antique Stock Broking echoed optimism, citing an implied valuation of $85 per tonne for the clinker-backed capacities, underscoring the value-accretive nature of the transaction. The firm maintained a ‘Buy’ rating for Ambuja Cements with a target price of ₹700 per share, based on a consolidated FY26 EV/EBITDA multiple of 17x.
Investors and analysts alike are closely monitoring regulatory approvals for the acquisition, anticipating further clarity on its impact and integration with Ambuja Cements’ existing operations. The bullish sentiment surrounding Ambuja reflects confidence in its strategic acquisitions and expansion plans amidst a dynamic cement industry landscape.
