Adani group stocks: Ambuja Cements, ACC shares gain as cement makers resume HP operations

Shares of Adani group companies ACC and Ambuja Cements advanced in Tuesday's trade after Adani Cement said the cement makers will resume operations at two plants in Himachal Pradesh (HP) after resolving issues over freight rates. Gagal and Darlaghat units were shut for more two months owing to deadlocked negotiations between Adani Group's cement business and Himachal Pradesh-based truck drivers. The Gagal and Darlaghat units of ACC and Ambuja Cements are one of the largest industrial units in HP.

Following the development, shares of Ambuja Cements gained 0.46 per cent to hit a high of Rs 354.95 on BSE. Shares of ACC were up 0.69 per cent at Rs 1,863.60. The average target price for Ambuja Cements at Rs 457, as per data publicly available with Trendlyne, suggests 29 per cent potential upside for the stock. ACC's average target price of Rs 2,388.70 suggests 28.5 per cent potential upside.

All stakeholders, Adani Cement said, have amicably resolved the issues on freight rates in Himachal Pradesh, adding that ACC and Ambuja will resume operations on Tuesday at the Gagal and Darlaghat plants. Adani Cement said the parties have agreed what equates to a 10-12 per cent cut in overall freight rates from Tuesday.

"The new freight rates from tomorrow for single axle trucks of 12 tons would be Rs 10.30 Per Ton Per Km for Ambuja Cements’ Darlaghat plant and ACC’s Gagal  plant as compared to earlier rates of Rs 11.41 for ACC’s Gagal and Rs 10.58 for Ambuja Cements’ Darlaghat units. The new rates for multi-axle 24 ton trucks would be Rs 9.3 Per Ton Per Km for both units. This will result in overall reduction of 10-12% in the freight rates benefiting the customers of Himachal Pradesh," Adani Cement said.

Adani Group acquired 63.2 per cent stake in Ambuja Cements from the Holcim Group in July 2022. Ambuja Cements also holds a controlling 50.05 per cent stake in ACC.

In its first ever earnings call under Adani Group, Ambuja Cements recently reiterated plans to double capacity in five years. In the case of ACC, the ongoing expansion work for 2.7 million tonne clinker and 1 million tonne cement capacity at Ametha (Madhya Pradesh) is expected to be completed by Q2FY24.

ACC is also focusing on cost-saving initiatives such as higher blending ratio, group synergies on coal procurement, and logistics cost rationalisation, with warehouse infrastructure optimisation, rising direct sales, reduction in lead distance and higher dispatches through rail.