Ambuja Cements - Announced Acqusition Of Penna Cement: Motilal Oswal

Motilal Oswal Report

Ambuja Cements Ltd.'s has announced the acquisition of 100% stake in Penna Cement Ltd. at an enterprise value of Rs 104.2 billion. Penna Cement has 14 mtpa grinding capacity (including 4.0 mtpa under construction).

The acquisition cost (estimated EV includes capex required for under construction capacity) works out to be $90/tonne (on face value capacity). However, the management noted that surplus clinker at the under construction capacity at its Jodhpur plant will support additional 3 mtpa grinding capacity over and above 14 mtpa.

Considering the surplus clinker capacity, the adjusted EV/tonne works out to be $80 (estimated Rs 10 billion for additional 3 mtpa grinding capacity). This acquisition will be funded through internal accruals and is estimated to be completed within three-four months.

Penna Cement has four integrated cement plants and two grinding units operational, with an aggregate clinker/cement capacity of 7.3 mt/10.0 mt. While 3.0 mtpa/4.0 mtpa clinker/cement capacity is under construction, which will be completed within six-12 months. Penna Cement has limestone reserves of ~638 mt, including subsidiary (as per its DRHP filed in May 2021). About 90% of Penna Cement’ capacity has railway siding and some plants are equipped with CPP and waste heat recovery system.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.