Shares in Ambuja Cements Ltd slumped 4 per cent after Credit Suisse downgraded the stock to 'neutral' from 'outperform', while maintaining its target price at Rs. 205.
The investment bank said the stock is trading at its peak multiple and is already pricing in margin recovery in 2014 and part of the potential merger synergies with ACC Ltd.
A newspaper reported on July 3 that Holcim Ltd is looking to merge ACC and Ambuja Cements as part of its restructuring of Indian operations, citing sources.
Holcim owns a little more than 50 per cent in both the companies, exchange data shows.
Credit Suisse adds that cement demand growth in the April-June quarter was weak and expects profits for Indian cement majors to decline by 25-35 per cent for the period.
Ambuja Cements will report its April-June earnings on Wednesday, while ACC reports on Thursday.
Copyright: Thomson Reuters 2013
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