Adani Group is ahead in the race to acquire Ambuja Cements Ltd and ACC Ltd, the India arms of Switzerland-based Holcim, with a war chest of USD 13.5 billion for the deal, according to a livemint report quoting sources.
“Adani appears to be ahead of others in the acquisition race for Ambuja and ACC,” according to the report quoting one of the sources.
Recently, Bloomberg also reported that billionaire Gautam Adani’s conglomerate is in advanced talks to acquire Holcim Ltd’s businesses in India. The Adani Group may sign an agreement to acquire a controlling stake in Ambuja Cements from Holcim as soon as in the coming days, it said.
It reported that JSW Group also remains interested in the assets. Holcim controls 63.1 per cent of Ambuja Cements. The former has been considering the sale of its stake in the latter. ACC Ltd is Ambuja’s subsidiary.
Holcim has sold off its non-core assets, divesting its Brazilian unit for USD 1 billion in September and planning the sale of its business in Zimbabwe.
“We are constantly evaluating possibilities to align our portfolio with this vision to open new growth opportunities for our company,” a Holcim spokesman has told Bloomberg.
According to analysts at Nirmal Bang Institutional Securities, “We believe that these assets (Ambuja and ACC) will command a significant premium given the quality of brands, country-wide reach and large capacities. At current valuation, we do not see too much upside for Ambuja, but in case of corporate action taking place, aggressive bidding and possible aggressive growth over the next 10 years will make this company attractive again,” analysts at.”
Ambuja Cements reported better-than-anticipated operating performance in the March 2022 quarter. It reported a 30.26 per cent decline in its consolidated net profit to Rs 856.46 crore for the first quarter ended March 2022 on account of rising fuel prices. Its standalone Ebitda stood at Rs 7,900 crore in the first quarter of the calendar year 2022, fell 19 per cent on a year-on-year (y-o-y) basis but was 16 per cent ahead of consensus estimates.
Ebitda stands for earnings before interest, tax, depreciation and amortisation. The company follows a January to December accounting year.
Ambuja’s volumes increased 3 per cent y-o-y to 7.5 million tonnes, led by ramping up of capacity at its recently commissioned Marwar plant in Rajasthan, and demand recovery in March after witnessing weakness during January-February, note analysts. Realisations, however, were not that impressive.
“The January to March 2022 quarter was impacted by rising fuel prices due to which Ebitda during the quarter was lower by 19 per cent. This was partly mitigated by boosting efficiencies. Supported by the Master Supply Agreement with ACC, we further reduced our logistics costs,” Holcim India MD and Ambuja Cements CEO Neeraj Akhoury said.