Ambuja Cements to buy 47% stake in Orient Cement at Rs 8,100 crore valuation

Ambuja explained that the investment aims to boost the company’s footprint by 8.5 MTPA in the key markets of South and West India.

Adani Group’s Ambuja Cements Ltd announced on Tuesday its plan to acquire 46.8% of Orient Cement Ltd’s shares at an equity value of Rs 8,100 crore, equivalent to Rs 395.40 per share. The transaction will be financed entirely through internal earnings. Orient Cement Ltd brings along 8.5 MTPA of operational cement capacity, complemented by 8.1 MTPA of projects ready for implementation. Noteworthy is the presence of a high-quality limestone mine in Chittorgarh (Rajasthan), which could potentially bolster an additional 6.0 MTPA of cement capacity in North India, as disclosed in a filing to the stock exchange by the Gautam Adani-led conglomerate.

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Adani Cement’s operational capacity will reach 97.4 MTPA with this acquisition, pushing it closer to its goal of surpassing 100 MTPA by March 2025..

Ambuja explained that this investment aims to bolster the company’s footprint by 8.5 MTPA in the key markets of South and West India, consequently enhancing its overall market share in India by 2 percent.

It is anticipated that enhancing capacity utilization will lead to increased profitability, with a projected ramp-up to 85% by the third year. The utilization of Ambuja and ACC brands is set to bolster trade sales, boost realizations, and drive the sale of premium cement.

Karan Adani, the Director of Ambuja Cements, expressed that the recent timed acquisition signifies a major advancement in Ambuja Cements’ rapid expansion path, boosting cement capacity by approximately 30 million metric tonnes per annum within two years of Ambuja’s takeover.

In the fiscal year 2025, Ambuja is on track to achieve a cement capacity of 100 MTPA. Orient Cement boasts exceptionally efficient assets, complete with railway sidings, and is well backed by captive power plants, renewable energy sources, WHRS, and AFR capabilities. With advantageous locations, top-notch limestone reserves, and the necessary regulatory clearances, there exists a prospect to boost cement capacity to 16.6 MTPA in the short run, he emphasized.

Ambuja highlighted that Orient Cement is on the verge of being debt-free, and acquiring it would enhance the robustness of its financial position.

CK Birla, Chairman of the CK Birla Group and Orient Cement, expressed that the CK Birla Group is consistently adjusting its capital allocation to enhance its concentration on consumer-oriented, tech-savvy, and service-centric ventures. He highlighted Orient Cement’s remarkable history of establishing renowned brands and upholding a dominant market position in its operational regions. Birla voiced confidence in the Adani Group, known for its emphasis on cement and infrastructure, as the perfect new proprietor to propel ongoing expansion at Orient Cement for the benefit of employees and stakeholders.

Furthermore, the organization highlighted that the purchase would enhance its general ROCE (Return on capital employed) performance.