Cement equities owned by Adani experienced a sharp selloff on Tuesday. Ambuja Cements and ACC stock have both decreased by about 4%. Once the Gautam Adani-backed company unveiled its vision for long-term objectives in the cement industry, Ambuja and ACC found themselves on a precarious ledge. Among its few main objectives were the conglomerate’s plans to double capacity, concentrate on states with rapid economic growth, ramp up demand, increase shares in various industry sectors, and diversify asset footprint.
Ambuja’s stock is currently trading close to its day low. Ambuja Cements were trading at $357 per piece at the time of writing on the BSE, down $12.75 or 3.45%. An intraday low of 354.20 per share was reached earlier in the day, marking at least a 4.2% decline in the stock. The company currently has a market value of around 71,036 crore.
The ACC stock, however, decreased by 73.65 or 4.4% to trade at 1,611.15 per share on the BSE. Earlier in the day, the stock reached a new 52-week low of $1,593.50 per share.
The main holding of Adani in the cement industry is Ambuja Cements. Whereas Ambuja, a subsidiary of Adani, owns the majority of ACC.
The Group owned a 63.15% share in Ambuja Cement as of December 31, 2022, while Ambuja Cement in turn owned 50.05% of ACC Ltd. In ACC, Adani directly owns 6.64% of the company.
Adani stated that the company intends to increase its future cement production capacity from the existing 67.5 MTPA to 140 MTPA in the investors presentation it released on March 27. (Ambuja and ACC). The group has budgeted 7,000 crore for capital expenditures, including further capacity unlocking through debottlenecking, in order to double capacity to 140 MTPA. Adani projects that by FY28, net sales will increase to 70,000 crore from FY23’s current level of 29,700 crore.
Moreover, Adani projects that by FY28, EBITDA per tonne will increase from its present level of 1,000 to 1,470. EBITDA margins are also anticipated to increase in FY28 from 19% to 25%.
The business also intends to have a well-diversified asset base to meet the need for cement across all of India, including a captive coal mine called Gare Palma/Dahegaon Gowari. By utilising the Group’s extensive knowledge and unrivalled adjacencies in all crucial areas including group infrastructure and digital platform, energy cost, and supply chain, Adani further seeks to attain the lowest cost to service.
