Global Brokerage Firms Bullish on Ambuja Cements' Stock after Penna Acquisition

Leading global brokerage firms have gone bullish on the Adani Group’s Ambuja Cements after it announced to acquire of Hyderabad-based Penna Cement for Rs 10,442 crore.

Jefferies has a 'buy' rating on the Ambuja Cements shares, giving it a target price of Rs 735 per share.

The stock of Ambuja Cements went up more than 2 per cent at Rs 679 in the morning trade on Friday.

According to Jefferies, the landmark acquisition of Penna Cement would boost the positioning of the Adani Group’s cement and building material major as a pan-India leader.

Morgan Stanley said the acquisition would support volume growth for Ambuja Cements over the medium term.

Macquarie expects that with the acquisition, the capacity share of Ambuja Cements in South India is likely to improve to 10-11 per cent from the current 4-5 per cent.

According to Macquarie analysts, a key factor to see is whether this acquisition will help Ambuja Cements reach its capacity target of 140 million tonnes by FY28.

Global brokerage Nuvama also retained a 'buy' rating on the company’s stock with a target price of Rs 767 on FY26E EV/EBITDA of 18 times.

The acquisition, to be funded by internal accruals, will improve Adani Cement’s market share pan-India by 2 per cent and by 8 per cent in south India.

PCIL has 14 MTPA cement capacity, of which 10 MTPA is operational, and the remaining is under construction at Krishnapatnam (2 MTPA) and Jodhpur (2 MTPA) and will be completed within 6 to 12 months.

Ambuja Cements reported profit after tax (PAT) at Rs 4,738 crore for FY24 -- up by a record-setting 119 per cent (year-on-year) -- and operating EBITDA at Rs 6,400 crore, up by 73 per cent.