ACC completes acquisition of Asian Concretes and Cements; shares fall

ACC shares fell two percent in early trade on January 8. The cement player completed the acquisition of Asian Concretes and Cements Private Limited (ACCPL) for a total consideration of Rs 775 crore.

ACC, the subsidiary of Ambuja Cement, previously held 45 percent in Asian Concretes and Cements. With the current acquisition of the remaining 55 percent stake from its promoter, ACC is now the complete owner of ACCPL. The cost of the remaining stake clocked in at Rs 425.96 crore.

As of 10.15 am, shares of ACC were trading at Rs 2,351 apiece, lower by 1.11 percent on the NSE compared to the closing price of the previous session.

ACCPL has 1.3 MTPA cement capacity in Nalagarh (Himachal Pradesh), while its subsidiary Asian Fine Cements Pvt Limited (AFCPL) has 1.5 MTPA cement capacity in Rajpura (Punjab).

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“The entire acquisition is funded through internal accruals and will help ACC & its parent company Ambuja to further bolster market leadership in the lucrative North India market,” said the company in a filing with the bourses.

The acquisition will bolster ACC’s cement capacity, and help contribute towards the overall target of 140 MTPA capacity of Adani’s Cement Business by 2028. While ACC has an existing tolling arrangement with the Nalagarh unit, Rajpura plant’s additional 1.5 MTPA capacity will cater to a customer base across three states – Himachal Pradesh, Haryana, and Punjab.

Additionally, global brokerage firm CLSA expects demand for cement to slow down in 2024 but it also sees input costs coming down for the manufacturers. Factoring in these expectations, the firm has rolled out a slew of downgrades for major cement players.

ACC and Ambuja Cements, the two Adani Group cement stocks, have been downgraded to “underperform” and “sell”, respectively, even as CLSA raised their price targets to Rs 2,430 and Rs 490. The expansion plans of the two Adani firms would be keenly tracked in 2024, it said.

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