Sanghi Ind shares tank 12% post merger announcement; Ambuja Cements trade flat

Shares of Adani group cement companies Ambuja Cements and Sanghi Industries remained in focus today after the conglomerate announced the merger of the two listed entities. In a post market release on Tuesday, Ambuja Cements announced amalgamation of its newly acquired subsidiaries Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL) with itself.

Reacting to the news, Sanghi Industries shares tumbled as much as 12.3% to hit a low of ₹67.42 on the BSE. Early today, the smallcap stock opened lower at ₹70.70, down 8% against the previous closing price of ₹76.92.

On the other hand, Ambuja Cements shares opened 1% higher at ₹577 over the previous closing price of ₹570.95 on the BSE. However, the cement heavyweight lost momentum and slipped 1.8% from the early high of ₹578.15 to hit a low of ₹567.60 in the first two hours of trade so far.

At the time of reporting, shares of Sanghi Industries were trading 10.1% lower at ₹69.15, with a market capitalisation of ₹1,786 crore, while Ambuja Cements shares were down 0.15% at ₹570.10, and the market cap stood at ₹1.4 lakh crore. ACC shares were also under stress, down 1.4% at ₹2,169.05, with a market cap of ₹40,732 crore.

As part of the scheme of arrangement, Ambuja Cements will issue 12 equity shares of the face value of ₹2 each for every 100 equity shares of SIL of the face value of ₹10 each. The company says these transactions will be effected with requisite approvals from stakeholders and authorities, which could take around 9-12 months.

Adani Group believes that the consolidation of the cement business will help to streamline the organisation structure and simplify compliance requirements for effective governance.

Ambuja Cements acquired a 56.74% stake in Gujarat-based Sanghi Industries, from its existing promoter group, Ravi Sanghi and family, at an enterprise value of ₹5,000 crore in August 2024. Before that, in June this year, Ambuja Cements acquired Penna Cement Industries for ₹10,422 crore, a deal which saw the company taking over PCIL entirely from its current owners.

Sanghi Industries has a clinker capacity of 6.6 million tonnes per annum (MTPA), cement capacity of 6.1 MTPA, and limestone reserves of 100 tonnes. SIL’s Sanghipuram plant is India’s largest single-location cement and clinker unit by capacity, with a captive jetty and captive power plant.  

On the other hand, Penna has four integrated plants in Andhra Pradesh and Telangana, along with a grinding unit in Maharashtra. It has an operational capacity of 10 MTPA. Additionally, two plants, with a capacity of 2 MTPA each, are under construction in Krishnapatnam and Jodhpur, expected to be completed within next 8-12 months. It also has five bulk cement terminals at Kolkata, Gopalpur, Karaikal, Kochi, and Colombo (Sri Lanka).

Recently in October this year, Ambuja Cements signed a deal to acquire a 46.8% stake in Orient Cement Ltd (OCL) for an equity value of ₹8,100 crore or ₹395.40 per share. The transaction will trigger an open offer of 26% to acquire shares from public shareholders. Besides in April this year, Ambuja inked a pact to acquire My Home Group's 1.5 MTPA cement grinding unit in Tuticorin, Tamil Nadu. 

As per media report, Adani Group is looking for several acquisitions in the cement sector as part of its strategies to become the largest cement manufacturer in India. This includes Gujarat’s Saurashtra Cement, Vadraj Cement owned by ABG Shipyard, and Jaiprakash Associates’ cement business.

Currently, Adani Cement, including Ambuja and its subsidiaries ACC and Sanghi Industries, is the country’s second-largest cement producer after Aditya Birla Group’s UltraTech Cement, with the group’s cement capacity of 78.9 MTPA and 18 integrated cement manufacturing plants as well as 19 cement grinding units across the country. Ambuja is aiming to take parent Adani Cement's operational capacity to 97.4 MTPA by March 2025. 

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