Ambuja Cement share price

Ambuja Cement share price rose 3.89 percent, and ACC LTD's share price gained 6.31 percent

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Adani Group's Ambuja ACC buys an Expensive valuation, which means significantly higher profits are required to maintain decent ROE

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Nearly 33% more profits per tonne than greenfield profits and more than 120% compared to brownfield expansion

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With profitability crucial, the brokerage does not see the Adani acquisition getting into a price war with competitors to gain market share

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Becoming the second-largest cement player in the sector hasn't come cheap for the Adani Group

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According to a Jefferies report, Greenfield and brownfield projects need to make an EBITDA/T of Rs 1,500 and Rs 900, respectively, to deliver ROE and ROCE of 10.6%

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The Adani Group entity would need to make an EBITDA/T of Rs 2,000 get similar margins, an ROE of 10.8%, and a ROCE of 10.7%

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According to the report, retaining brand premium will be critical to sustaining profitability

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Ambuja and ACC have a substantial brand premium; in all markets, the brands feature among the top three, according to Jefferies

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The report has helped it cement its position in the trade-sales channel– it has a "very high trade sales component" of 80%

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