Ambuja, ACC stocks drop after Holcim’s rejig | business | Hindustan Times
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Ambuja, ACC stocks drop after Holcim’s rejig

Shares of Ambuja Cements plunged by 10.52% in trading on Thursday on news that Swiss-based building materials company Holcim is revamping its India operations. Shares of the company fell by Rs 20 to close at Rs 171 on the Bombay Stock Exchange (BSE).

business Updated: Jul 26, 2013 03:05 IST
HT Correspondent

Shares of Ambuja Cements plunged by 10.52% in trading on Thursday on news that Swiss-based building materials company Holcim is revamping its India operations. Shares of the company fell by Rs 20 to close at Rs 171 on the Bombay Stock Exchange (BSE).

Ambuja had on late Wednesday evening announced the acquisition of Holcim's 50.3% stake in ACC through cash and allocation of shares to Holcim. Shares of ACC fell by 3% to close at Rs 1,194 or down by Rs 39.90 on BSE. “We believe this acquisition will not benefit Ambuja shareholders in the near term and expect a derating in the company's valuation multiple,” said Sanjeev Singh of Centrum Broking.

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Onne Van Der Weijde, managing director, Ambuja Cements, sadi that the transaction was “a natural and an important step towards further strengthening Holcim Group's India platform to increase profitability and facilitate more flexible use of capital.”

Analysts decry this move. “While the company talked of synergy benefits of Rs 800-900 crore through logistics and fixed-out rationalisation in phased manners in two years, the deal would lead to Rs 3,500 crore cash outflow from the books of Ambuja to the parent company,” said a note from Karvy Broking.