Even as Adani Group prepays $500 million loan, shares of Ambuja Cement tumble

Last updated time: 13 March 2023, 14:48 IST

Why is Ambuja Cement stock down today?

However, shares of Adani Enterprises rose nearly 3 percent to Rs 1,985 in opening trade on Monday; Find out why

Shares of Ambuja Cement traded in the red on March 13 in a weak market, despite the Adani Group prepaying a $500 million loan for the Ambuja deal. However, shares of Adani Enterprises rose nearly 3 percent to 1,985 rupees on the BSE in opening deals on Monday after the group announced $2.15 billion in prepaid share-backed financing. Adani Power, Adani Green Energy, Adani Total Gas and Adani Transmission continued to grow to reach the top 5 percent of the chain.

The group said it completed the prepayment of $2.15 billion in margin-linked equity financing ahead of the March 31, 2023 deadline. Since the release of the Hindenburg Research report on January 24, Adani Group has focused on reducing debt to ease investor concerns.

The Adani group also said Ambuja had pre-paid the $500 million facility taken to finance the acquisition in line with the equity increase commitment. As a result, the promoters injected $2.6 billion for Ambuja and ACC out of the total purchase price of $6.6 billion.

Adani added that the entire prepayment program was completed within six weeks, “testifying to strong liquidity management and access to capital at the sponsor level, which complements the tight capital prudence adopted across all portfolio companies.”

In a $10.5 billion deal, Adani Group acquired Holcim Group’s entire stake in two Indian firms – Ambuja Cements and ACC. This was Adani’s largest acquisition and India’s largest M&A deal in the infrastructure and materials space.

Holcim has sold its 63.19 per cent stake in Ambuja Cement Ltd and 54.53 per cent stake in ACC (of which 50.05 per cent is in Ambuja Cements) to the Adani Group.

Earlier, Moody’s Investors Service had said that India will see high demand for cement in FY23 and FY24. According to a Moody’s report, India’s cement production is projected to grow by around 6-8 percent in fiscal 2023 and 2024, after a 21 percent jump in the fiscal year ended March 2022.

The rating agency believes that India’s infrastructure investments, massive housing projects and broad-based economic growth will keep demand for cement stable.

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