Research firm Investec said in a note that it is confident in Ambuja Cement's management, which has reaffirmed its growth targets, cost-saving goals, and ongoing efforts to complete the merger with its two units—Sanghi Industries and Penna Cement.
Given the company's growth potential, upcoming lease expirations, and the promoter's financial interest in Ambuja Cement, the research firm said.
The broking report highlighted consolidation, sustainability, and ESG (Environmental, Social, and Governance) as key trends in the sector, with Ambuja Cement well-positioned to benefit from these.
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Investec also said that the approved merger will streamline the company structure, simplify compliance, and remove related party transactions.
The report came after Ambuja Cements Ltd.'s board on Tuesday approved the merger of its recently acquired entities—Sanghi Industries Ltd. and Penna Cement Industries Ltd.—with itself through separate schemes of arrangement.
The Adani Group cement-maker will issue 12 equity shares of face value of Rs 2 each for every 100 equity shares of Sanghi Industries of face value Rs 10. The eligible shareholders of Sanghi Industries will become the shareholders of Ambuja Cements.
In 2023, Ambuja acquired Sanghi Industries for an enterprise value of Rs 5,000 crore. Sanghi has a clinker capacity of 6.6 million tonnes per annum, a cement capacity of 6.1 MTPA, and limestone reserves of one billion tonnes.
In August, Ambuja Cements also acquired Hyderabad-based Penna Cement for an enterprise value of Rs 10,422 crore. Penna operates four integrated plants in Andhra Pradesh and Telangana, as well as a grinding unit in Maharashtra, with an operational capacity of 10 MTPA.
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