Ambuja Cements and ACC shares fell sharply amid a broader selloff in Adani group stocks. The cement firms, which were recently acquired by the Gautam Adani-led Adani Group, plunged up to 10 per cent after Hindenburg Research said it held short positions in Adani Group shares. Hindenburg Research accused the Adani group of improper extensive use of entities set up in offshore tax havens, expressing concern over its high debt levels.
The Adani group, however, dismissed the US short-seller's claims, as baseless, saying it was timed to damage its reputation ahead of a large share offering.
Ambuja Cements' shares crashed 10 per cent to Rs 450.75 on Wednesday, before recovering partially. The scrip had ended Tuesday's session at Rs 498.55. The company was commanding a marketcap of less than Rs 92,000 crore.
Ambuja Cements' shares, despite the latest correction, have delivered a return of 31 per cent in the last one year, whereas the stock is down 25 per cent from its 52-week high of Rs 598.15 on December 9, 2022.
Shares of ACC tumbled 7 per cent to Rs 2178.85, before recovering marginally. The scrip had settled at Rs 2336.20 on Tuesday and the company was commanding a marketcap of Rs 41,500 crore.
ACC's shares have turned flat for the last one year, whereas the stock is down in the current month so far. The stock is 22 per cent down from its 52-week high at Rs 2,784.95 in September 2022.
Asia's richest person and world number three Gautam Adani, who is the promoter of Adani Group acquired ACC and Ambuja Cements from LafargeHolcim in September. Adani Group has suspended its operations at its two cement plants, said some media reports, which is denting their operations.
The tussle between truck operators' unions and Adani Cement has intensified in the last few days, reports added, hitting the transportation and production of the cement at their existing plants.
BSE Sensex plunged about 900 points or 1.5 per cent to 60,081.36, whereas its NSE peer Nifty50 index dwindled 272 points or 1.5 per cent to 17,846.15 during the trading session.
ACC's sales volume would improve 10.9 per cent quarter-on-quarter (QoQ) to 7.6 metric tonnes (MT) mainly on account of pick-up in the construction activities post monsoon. Cost of production per tonne to decline by Rs 309 per cent tonne QoQ with moderation in petcoke & fuel prices and other costs. We expect EBITDA/tonne to increase by 35 per cent QoQ to Rs 807/tonne, said ICICIDirect Research.
"We expect sales volume growth of 8.3% QoQ to 7.3 MT. Realizations to also improve by 2 per cent QoQ leading to sequential revenue growth of 10.5 per cent QoQ. EBITDA per tonne is expected to improve sharply QoQ due to low base effect. On a YoY basis, the same is likely to be lower by 14 per cent," it said.
Overall demand is expected to be healthy with Lok Sabha elections on the horizon as the Government would start doling out infrastructure projects, said Nirmal Bang Institutional Equities.
"With ACC and Ambuja Cements’ well-established brand value and experienced management at the helm of these companies, the Adani group will reap the benefits and will scale the business to new heights. Given the diversified nature of the Adani group, synergies are expected to materialize in the form of cost efficiencies aiding the profitability" it said.
Nirmal Bang resumed its coverage on 12 cement companies and Ambuja Cements remains among its top picks.
"With a major consolidation predicted going roward and potential synergies with other businesses, we believe that Ambuja Cements (we expect ACC to merge with Ambuja eventually) will continue to trade at high valuations with a strong increase in EBITDA/tonne and capacity increases on the horizon," it said.
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