This cement stock surges 30% in one month on sell-off buzz

Ambuja Cements had a stellar run at Dalal Street in the recent past, with the stock price rising as much as 30% in the past one month amid reports that the company’s promoter, Holcim, is considering a potential sale of businesses in India. The Switzerland-based cement giant Holcim is in talks with buyers to sell its two listed cement firms in India — ACC and Ambuja Cement.

Driven by sell-off buzz, Ambuja Cements shares rose 29.5% so far this month, from ₹299.2 to over three-month high of ₹387.45 in intraday trade on Tuesday. The largecap cement stock trades 40% higher than its 52-week low of ₹274 touched on March 8, 2021. It hit a 52-week high of ₹442.95 on September 8, 2021.

On Wednesday, Ambuja Cements shares opened marginally higher at ₹386 against previous close price of ₹385.15, but soon pared gains to slip in negative terrain. Snapping two sessions' gaining streak, the stock declined as much as 1.5% to hit an intraday low of ₹379.35 on the BSE. The market capitalisation of the company stood at ₹75,494 crore. In comparision, the S&P BSE Sensex was down 414 points or 0.72% lower at 56,942 levels at 11:20 am.

Technically, the stock is in a “mildly bullish” range, trading higher 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Ambuja Cements shares have risen 1% in a week and 30% in a one-month period. It has delivered negative returns of 1.5% on a year-to-date basis, while it surged 24% over one-year period.

Sell-off buzz boosted stock demand

Ambuja Cements shares have witnessed a trend reversal after falling 22% in the first three months of the calendar year 2022, from ₹387 on January 3, to ₹299.2 on March 31. The stock made a strong rebound and rose 30% in the last one month after a report emerged that Holcim Ltd., the world's biggest cement maker, is mulling to sell its businesses in India, including Ambuja Cements.

The Swiss giant is planning to sell its controlling stake in Ambuja Cements and ACC, but there is no official confirmation regarding the same. Holcim, which entered India in 2005 through acquisition of cement businesses, holds 63.19% stake in Ambuja, which in turn holds 54.5% of ACC.

According to reports, Kumar Mangalam Birla-led Aditya Birla Group, Sajjan Jindal’s JSW group, and Gautam Adani’s Adani Group are in race to buy Holcim's India cement assets. Aditya Birla Group’s flagship UltraTech is the leading cement player in the country and the proposed acquisition can boost its dominance in the Indian cement market.