In Wednesday’s trading session, the shares of one of the leading adani stock specialised in manufacturing of cements jumped upto 1.5 percent following amalgamation of its subsidiaries Sanghi Industries Ltd and Penna Cement Ltd.
Price action
With a market capitalization of 1,40,632 Crores on Wednesday, the shares of Ambuja cements Ltd jumped upto 1.5 percent after making a high of Rs 579 compared to its previous closing price of Rs 571.10.
What happened
Ambuja Cements Ltd has announced the amalgamation of its subsidiaries, Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL) into the parent company.
As part of the merger, Ambuja Cements will issue 12 equity shares of the face value of Rs. 2 each for every 100 equity shares of Sanghi Industries Ltd of face value Rs. 10.
This merger move by the company is aimed to enhance shareholder value by streamlining the organization, improving operational efficiency, and simplifying governance. Unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, thereby simplifying compliance requirements.
The transaction’s pending necessary approvals are anticipated to be finalized within 9-12 months. SIL has India’s largest single-location cement plant, while Penna Cement has a significant presence in various regions. The merger aims to enhance market competitiveness and foster business growth.
Sanghi Industries Limited (SIL) has a clinker capacity of 6.6 MTPA, cement capacity of 6.1 MTPA, and limestone reserves of ~1 billion tonnes and Penna cements Ltd has four integrated plants in Andhra Pradesh and Telangana along with a grinding unit in Maharashtra and It has an operational capacity of 10 MTPA.
Additionally, two plants, with a capacity of 2 MTPA each, are under construction in Krishnapatnam and Jodhpur, expected to be completed within the next 8-12 months.
About the company
Ambuja Cements Ltd is one of the leading cement stocks specializing in manufacturing of cements and a member of the diversified Adani Group.
It produces a wide range of products, including Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), and Ready Mix Concrete (RMC), catering to diverse construction needs in residential, commercial, and infrastructure projects.
The company with its subsidiaries has a cement capacity of 89 MTPA with 22 integrated cement manufacturing plants and 21 cement grinding units across the country and operates a vast network of plants and distribution channels across India, serving a wide range of industries, including construction, infrastructure, and real estate.
Shareholding Pattern
Ambuja Cements shareholding reflects a strong promoter backing, with promoters holding 67.57 percent of the total shares, Foreign Institutional Investors (FIIs) own 10.61percent, while Domestic Institutional Investors (DIIs) hold 15.19 percent and the remaining 6.64 percent is held by the public indicating a well-balanced distributed shareholding pattern.
Financials
The company’s revenue declined by 0.12 percent from Rs 7,899.99 crore to Rs 7,890.14 crore in Q2FY24-25. Meanwhile, Net profit fell from Rs 792.96 crores to Rs 455.96 crore during the same period.
Key Financial ratios
Ambuja Cements Ltd has an Return on Equity (RoE) of 5.9 percent and a Return on Capital Employed (RoCE) of 10.06 percent. Furthermore, the company’s debt-to-equity ratio is 0.02.
Written by Sridhar J
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