Guj. Ambuja may sell its eastern cement plant - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Guj. Ambuja may sell its eastern cement plant

Mar 6, 2000

It has been reported that Gujarat Ambuja Cements Limited (GACL) may be looking at divesting its 93% stake in Ambuja Eastern Cement Limited, a company that it took over in 1997. The company has denied any such move. 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.

GACL has been on an acquisition spree of late during which it acquired stakes in DLF Cements and Associated Cement Companies (ACC). The company has been able to arrange funding for these deals mostly through borrowings. GACL has also planned a US$ 200 m issue to fund its expansion plans and also pare down its debt in the coming months.

The need for additional funding has arisen due to concerns that Sebi may rule that there has been a change in management at ACC, thus triggering the Takeover code. Under this, the company would have to make an open offer for another 20% stake in ACC at a price of not less that Rs 370 per share (the rate at which they bought out the Tata stake). This could put the company’s existing cash flows under sever constrain (the additional 20% would cost approximately Rs 12 bn).

The unconfirmed reports that the company may be looking at selling its subsidiary are based on this rationale. Although the company has denied such a move, there seems to be some logic to the reports.

After the acquisition of a stake in ACC, GACL has got a nation wide presence, including eastern India (ACC’s eastern presence is via two plants in West Bengal, one in Orissa and 2 in Madhya Pradesh). Therefore, the need to have another unit serve the eastern markets is diluted.

The decision if taken would be a step in the right direction for GACL, which is likely to face a tightening of liquidity in the coming months. However, one must not forget that a sellout may involve the entry of an international giant – Lafarge, Cemex or Holderbank. This could alter the competitive scenario in the East.

Market View:
The fact that GACL is India's most efficient producer of cement has led the analyst to rate the stock as a 'BUY'. The management quality of the company is considered to be another factor in favour of the company.


Equitymaster requests your view! Post a comment on "Guj. Ambuja may sell its eastern cement plant". Click here!

  

More Views on News

AMBUJA CEMENT Announces Quarterly Results (4QFY20); Net Profit Up 7.0% (Quarterly Result Update)

Apr 29, 2020 | Updated on Apr 29, 2020

For the quarter ended March 2020, AMBUJA CEMENT has posted a net profit of Rs 7 bn (up 7.0% YoY). Sales on the other hand came in at Rs 62 bn (down 8.5% YoY). Read on for a complete analysis of AMBUJA CEMENT's quarterly results.

AMBUJA CEMENT Announces Quarterly Results (2QFY20); Net Profit Up 34.6% (Quarterly Result Update)

Oct 23, 2019 | Updated on Oct 23, 2019

For the quarter ended September 2019, AMBUJA CEMENT has posted a net profit of Rs 5 bn (up 34.6% YoY). Sales on the other hand came in at Rs 61 bn (up 1.0% YoY). Read on for a complete analysis of AMBUJA CEMENT's quarterly results.

AMBUJA CEMENT 2017-18 Annual Report Analysis (Annual Result Update)

Apr 8, 2019 | Updated on Apr 8, 2019

Here's an analysis of the annual report of AMBUJA CEMENT for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of AMBUJA CEMENT. Also includes updates on the valuation of AMBUJA CEMENT.

AMBUJA CEMENT 2016-17 Annual Report Analysis (Annual Result Update)

Dec 18, 2018 | Updated on Dec 18, 2018

Here's an analysis of the annual report of AMBUJA CEMENT for 2016-17. It includes a full income statement, balance sheet and cash flow analysis of AMBUJA CEMENT. Also includes updates on the valuation of AMBUJA CEMENT.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

AMBUJA CEMENT SHARE PRICE


Sep 18, 2020 (Close)

TRACK AMBUJA CEMENT

  • Track your investment in AMBUJA CEMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

AMBUJA CEMENT 8-QTR ANALYSIS

COMPARE AMBUJA CEMENT WITH

MARKET STATS