On Thursday, the Adani Group’s Ambuja cements ltd announced that it would acquire Hyderabad based- Penna Cement Industries (PCIL) at an 100 percent stake for an enterprise value of Rs 10,422 crore. With this acquisition, it will replace the former promoter group, P Pratap Reddy and family.
This is the group’s third acquisition since it entered the cement business less than two years ago in 2022. In 2023, the cement giant acquired Sanghi Industries cement capacity in Gujarat. This year in April, the Adani company agreed to acquire MyHome Industries’ grinding unit in Tamil Nadu.
The acquisition, Ambuja Cements said, would add 14 million tonnes per annum (mtpa) to its capacity, taking the total capacity of Adani group’s cement business (ACC-Ambuja consolidated) to 89 mtpa. It has set a target capacity of 140 mtpa by 2028. The deal is expected to be closed in three to four months.
Ambuja Cements expects to leverage Penna Cement’s location to access the eastern and southern parts of peninsular India, apart from an entry to Sri Lanka, through the sea route, Kapur said. PCIL’s existing dealers will move to the Adani Cement network to bring in formidable synergy, the statement said.
Penna Cement was already undergoing loss after it went public in 2019. India Ratings said that the company had reported an EBITDA (Earnings before Interest, Taxation, Depreciation and Amortisation) loss of 11 crore in the first half of FY24 due to reduced operational efficiencies and lower fixed-cost absorption amid high-cost coal inventory and weak realizations.
Ambuja Cements ranks among ‘India’s Top 50 companies contributing to inclusive growth’ by SKOCH and ‘India’s Top 50 most sustainable companies’ cross-country by BW businessworld.
Also Read: TCS served a $194 million penalty by a US court
Brokerage firms bullish on Ambuja cements
Once the announcement was made, Jefferies, an American brokerage firm issued a ‘buy’ rating for Ambuja Cements with a target price of Rs.735 per share. Morgan Stanley also believes that this deal will enhance Ambuja’s presence in the South Indian Market, giving the Adani Group market dominance across the country. Similarly, Emkay Global Financial Services and Antique Stock Broking also maintained the ‘buy’ recommendation for Ambuja Cements with a target price of Rs.700 per share in March 2025.
