Ambuja Cements rises 5% in weak trade; here’s why

Shares of Ambuja Cements rallied over 5% to hit a fresh all-time high in intraday trade on Wednesday, in otherwise weak trading on the domestic exchanges, ahead of its board meeting to consider fund raising. The board of directors of Ambuja Cements is scheduled to meet on September 16 to consider and evaluate proposal for raising of funds. The cement major, however, did not disclose the details about the amount of fundraising.  

“A meeting of the board of directors of Ambuja Cements is scheduled to be held on September 16, 2022 inter-alia, to consider and evaluate the proposal for raising of funds by way of issue of equity shares, convertibles and/or any other eligible securities, on a rights/preferential or any other permissible mode/ and/or combination thereof as may be considered appropriate, subject to all such regulatory/statutory approvals as may be required,” the cement major said in an exchange filing on Tuesday.

At 11:40 AM, Ambuja Cements share price was trading 4% higher at ₹505.75, against the previous closing price of ₹486.40 on the Bombay Stock Exchange (BSE). The stock gained as much as 5.2% to touch a new record high of ₹511.8, driven by strong volume trade. The counter saw a surge in buying activities as 9.2 lakh shares worth ₹46 crore changed hands on the BSE, against the two-week average volume of 7.01 lakh scrips. Ambuja Cements shares have risen 87% in the past six months, from its 52-week low of ₹274 touched on March 8, 2022.  

In sharp contrast, the BSE benchmark Sensex dropped as much as 1,154 points, or 1.9%, to slip below psychological levels of 60K to 59,417 during the trade so far. The fall in Indian equity was in line with global markets after data showed that U.S. consumer prices increased faster than expected in August, prompting bets on more aggressive rate hikes by the Federal Reserve.

The share price of Ambuja Cements has been gaining for the last three trading days and has climbed more than 12% during the same period. In the past one week, the largecap stock has rallied 14%, as compared to 1.95% gain in the Sensex. Besides, the counter has surged 32% in the past one month, while Sensex rose 1.2% during this period. The stock has delivered a return of 18% over one year and 35% in the calendar year 2022.

Earlier this month, billionaire Gautam Adani-led Adani Group launched its ₹31,000 crore open offer to acquire 26% additional stake in Swiss firm Holcim's two Indian listed entities ACC and Ambuja Cements. As per the open offer filed with exchanges, the Adani Group intends to acquire up to 4.89 crore equity shares of ACC from public shareholders for ₹11,259.97  crore and 51.63 crore equity shares of Ambuja Cements for total consideration of ₹19,879.57 crore.

The open offer has been triggered after the Adani family in May this year signed a deal to acquire Holcim’s entire stake in ACC and Ambuja Cements for around $10.5 billion, making this the largest ever acquisition by Adani, and India’s largest ever M&A transaction in the infrastructure and materials space. Holcim, through its subsidiaries, holds 63.19% in Ambuja Cements and 54.53% in ACC - of which 50.05% is held through Ambuja Cements.