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Guj Ambuja up stake in ACC to 14.4% - Views on News from Equitymaster
 
 
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  • Mar 4, 2000

    Guj Ambuja up stake in ACC to 14.4%

    According to newspaper reports, Gujarat Ambuja has decided to pick up the remainder 7.2% stake held by the Tata group in Associated Cement Companies at a price of Rs 370 per share. The ACC stock is currently trading at Rs 140 per share.

    GACL is the largest manufacturer of cement in Gujarat and Punjab. It is India's most efficient cement manufacturer due to high degree of mechanisation in its products and mining activities. It has controlled freight costs by moving bulk of its production through the sea route.

    The company has also announced plans to restructure the debt of DLF Cements, another company in which it acquired a 42% stake earlier this fiscal year.

    Gujarat Ambuja's acquisition of a strategic stake in ACC would give it a national presence that would go a long way in establishing its dominance in the domestic markets. ACC on the other hand would benefit from GACL's experience in running plants at optimal capacity and efficiency levels. Together the companies would command a capacity of 21 million tonnes, by far the largest in the country.

    This move is likely to further boost speculation that GACL has infact taken over the management and it should, according to the Takeover Code, make an open offer for an additional 20% stake in the company. In case Sebi were to favour this view point, GACL would have to make an open offer at Rs 370 per share, which is substantially higher than the market price of Rs 140 per share. This could also leave the company grappling for funds to meet the requirements of the takeover code.

    Market View:
    The stock has been rated as a 'BUY' mainly on account of its being one of the most cost efficient cement producers in Asia and the improving demand supply position in the domestic cement markets.

     

     

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    More Views on News

    ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments (Quarterly Results Update - Detailed)

    Jul 20, 2017

    Expanded capacity helped ACC strengthen its market presence in eastern region during the quarter ended June 2017.

    ACC: Jan-March Quarter Sales up 9% YoY, Margins Dip (Quarterly Results Update - Detailed)

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    Aug 11, 2017

    While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.

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