Ambuja Cements to Acquire 46.8% Stake in Orient Cement for ₹8,100 Cr

Ambuja Cements a part of the Adani Group has announced its plans to acquire a 46.8% stake in Orient Cement for an equity value of ₹8,100 crore. The deal will be executed through the purchase of shares from Orient Cement’s promoters and select public shareholders at ₹395.4 per share as disclosed in a stock exchange filing.

Acquisition in Two Stages

The acquisition will be completed in two phases. Initially Ambuja Cements will acquire 37.9% of Orient Cement’s shares from its promoters. In the second phase Ambuja will buy an additional 8.9% from certain public shareholders.

Once these transactions are finalized Ambuja will launch an open offer to acquire another 26% of Orient Cement’s expanded share capital at the same price of ₹395.4 per share.

Impact on Cement Capacity

This acquisition will boost Ambuja’s cement production capacity by adding 16.6 million tonnes per annum (MTPA) to its portfolio. Out of this 8.5 MTPA is currently operational and an additional 8.1 MTPA is under development.

With this deal Ambuja Cements moves closer to its goal of achieving over 100 MTPA cement capacity by FY25 with a longer term target of 140 MTPA by 2028. Additionally, Orient Cement’s limestone reserves in Rajasthan offer a potential capacity expansion of 6 MTPA in North India.

Following the announcement Ambuja Cement’s stock saw a slight rise of 0.6%, trading at ₹575.15 on NSE. Meanwhile Orient Cement’s share price dropped by nearly 1% to ₹347 after recording a 6% gain the previous day.

According to Karan Adani, Director of Ambuja Cements the acquisition is part of the company’s accelerated growth plan. He stated by acquiring Orient Cement Ambuja is well positioned to reach 100 MTPA cement capacity in FY25.

Orient Cement’s promoter, CK Birla noted that the group’s strategy is to reallocate capital towards consumer centric and technology driven businesses. Amita Birla expressed confidence that the deal would benefit both employees and stakeholders in the long run.

Mangesh Bhadang, Senior Vice President of Centrum Broking commented that the acquisition is a positive development not only for Ambuja Cements but also for the cement industry, particularly in the southern region.

Conclusion

Ambuja Cements will fund the acquisition entirely through internal accruals, maintaining its debt free status. Orient Cement’s plants in Telangana, Karnataka and Maharashtra will complement Ambuja’s existing operations enhancing logistics efficiency and increase its market share by 2% across India.

Ambuja Cements, one of India’s leading cement producers focuses on manufacturing and selling cement and clinker for both domestic and export markets.

In the first quarter of FY25 the company’s consolidated net profit dropped by 28.63% reaching ₹646.31 crore compared to ₹905.61 crore in the same period of FY24. Revenue from operations fell by 4.61% year on year totaling ₹8,311.48 crore for the quarter ending 30 June 2024.