Global brokerage firms rally on Ambuja Cements shares after Penny acquisition

Mumbai, June 14 (IANS) Leading global brokerage firms have become optimistic about Adani group’s Ambuja Cements after it announced the acquisition of Hyderabad-based Penna Cement for Rs 10,442 crore.

Jefferies has a ‘buy’ rating on the Ambuja Cements stock with a target price of Rs 735 per share.

Shares of Ambuja Cements rose over 2 percent to Rs 679 in the morning session on Friday.

According to Jefferies, the landmark acquisition of Penna Cement would strengthen cement and construction materials major Adani Group’s position as a pan-India leader.

Morgan Stanley said the acquisition will support Ambuja Cements’ sales volume growth in the medium term.

Macquarie expects that the acquisition will likely increase Ambuja Cements’ share of South India capacity to 10-11 per cent from the current 4-5 per cent.

According to Macquarie analysts, the key factor is whether this acquisition will help Ambuja Cements achieve its capacity target of 140 million tonnes by FY28.

Global brokerage Nuvama also reiterated its ‘buy’ rating on the company’s stock with a target price of Rs 767 at a FY26 EV/EBITDA of 18 times.

The acquisition, to be financed through internal accruals, will increase Adani Cement’s market share across India by 2% and by 8% in South India.

PCIL has a cement production capacity of 14 MTPA, of which 10 MTPA is operational and the remaining part is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed in 6 to 12 months.

Ambuja Cements reported profit after tax (PAT) of Rs 4,738 crore for FY24 – up a record 119 per cent (YoY) – and operating EBITDA of Rs 6,400 crore, up 73 per cent.

—IANS

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