Revisiting the Gujarat Ambuja – ACC deal - 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?  

Revisiting the Gujarat Ambuja – ACC deal

May 10, 2000

The deal stuck by Gujarat Ambuja Cements Limited (GACL) with the Tatas to buy the latter’s 14.4 stake in Associated Cement Companies Limited (ACC) was widely appreciated on announcement. The subsequent erosion in market capitalisation of the two companies however reflected a changed in perception of investors.

One of the key factors that adversely affected the share price of GACL was the fear that it would need to raise approximately Rs 10 bn to fund the entire deal. This would have created pressures on margins as servicing costs rose. Moreover, GACL had paid RS 370 per share for the stake as against the ruling price of Rs 270. The ACC stock too took a knock. This was largely due to the apprehension that integrating the operations would be a tougher task. Then came the news that GACL may not have to make an open offer after all. News about Lafarge considering a counter bid too proved unfounded.

  • Read an interview with Mr. T M M Nambiar, Chairman ACC

    There is however much to gain from this deal. The combined entity would have significant clout in domestic markets. This would impart it with more pricing power, which could help in improving realisations. Moreover, synergies in supply chain and procurement could be exploited to minimise costs. For GACL, the deal would enable it to become a significant player with a national presence. ACC on the other hand could leverage on GACL’s efficient processes to improve its own productivity and efficiency levels. In short, there is much to be gained from this deal.

    The markets however seem unsure of the benefits. The recent announcement that GACL has picked up a further 4% stake from the Tata group may probably fail to trigger any movement in stock prices.

    In recent weeks speculation that the monsoon may not be normal has once again cast a shadow on cement stocks. Until the prospects for the sector, which only until a month ago looked very bright, improve it is unlikely that there will be a significant movement in these stocks. The deal notwithstanding.

  • Equitymaster requests your view! Post a comment on "Revisiting the Gujarat Ambuja – ACC deal". Click here!

      

    More Views on News

    What's Behind ACC's Highest-Ever Revenue in March Quarter? (Company Info)

    Apr 20, 2021

    Key takeaways from ACC's March quarter (Q1CY21) results.

    ACC Announces Quarterly Results (2QFY21); Net Profit Up 21.3% (Quarterly Result Update)

    Oct 22, 2020 | Updated on Oct 22, 2020

    For the quarter ended September 2020, ACC has posted a net profit of Rs 4 bn (up 21.3% YoY). Sales on the other hand came in at Rs 35 bn (up 0.3% YoY). Read on for a complete analysis of ACC 's quarterly results.

    ACC 2018-19 Annual Report Analysis (Annual Result Update)

    Oct 20, 2020 | Updated on Oct 20, 2020

    Here's an analysis of the annual report of ACC for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of ACC . Also includes updates on the valuation of ACC .

    Ramco Cements Q4 Profit Up 51.1% on Higher Sales & Better Cost Control (Views On News)

    May 25, 2021

    Here's our view on Ramco Cements latest quarterly results.

    A Close Look at the Stock of JK Lakshmi Cement (Views On News)

    May 21, 2021

    A key highlight of the company's Q4 results was its healthy operating performance.

    More Views on News

    Most Popular

    Hotel Stocks Will Reward Investors (Fast Profits Daily)

    Jun 8, 2021

    This is why I'm bullish on the hotel and hospitality sector.

    Don't Break These 5 Intraday Trading Rules (Fast Profits Daily)

    Jun 1, 2021

    To become a better intraday trader, follow these rules religiously.

    Is the RBI's 'Bubble Talk' Signalling a Market Crash? (Profit Hunter)

    May 31, 2021

    Is the Indian central bank correct in warning you about a market crash?

    Rs 2 Trillion Stimulus Coming to a Stock Market Near You (Profit Hunter)

    Jun 2, 2021

    Get ready to profit from a massive stimulus that you've never seen before.

    More

    India's #1 Trader
    Reveals His Secrets

    Secret To Increasing Your Trading Profits Today
    Get this Special Report,
    The Secret to Increasing Your Trading Profits Today, Now!
    We will never sell or rent your email id.
    Please read our Terms

    ACC SHARE PRICE


    Jun 11, 2021 (Close)

    TRACK ACC

    ACC - MANGALAM CEMENT COMPARISON

    COMPARE ACC WITH

    MARKET STATS