Mumbai: Shares of Ambuja Cements could be in the limelight in coming weeks with the eighteen-month timeline for promoter Adani Group to convert its warrants into shares of the company coming up on April 18.

In October 2022, Ambuja Cements issued warrants totalling ₹20,000 crore to the Adanis on a preferential basis at ₹418.8 per share. The company received ₹5,000 crore, or 25%, of the warrant issue as the mandatory upfront payment.

Now, with the deadline coming up, Adanis must bring in an additional ₹15,000 crore. If the promoters are unable to convert the warrants, it would lead to the forfeiture of the ₹5,000 crore payment by the conglomerate.

An email query sent to the Adani Group did not elicit any response.

Ambuja Cements may Get a Lift as Adani Warrant Conversion Deadline Nears

Currently, the Ambuja Cements stock is trading at ₹555, a 32% premium over the issue price of ₹418.8.”Amidst the ongoing infrastructure surge and the influx of capital for capital expenditures, Ambuja’s stock is poised for strong performance in the short term,” said SP Tulsian, an independent market analyst. “Despite investor awareness regarding warrant conversion, the impending event is anticipated to have a positive impact.”Conversion of the warrants into shares would result in the Adani Group’s stake in Ambuja going up from 63.19% to 70.33%. In 2022, the Adani Group announced it was acquiring Swiss cement major Holcim’s stake in Ambuja Cements and ACC. The stock has rallied 32% in the past three months and 57% in last one year as against the 14% and 24% gains in the Nifty, respectively, during the same periods.Analysts said technical indicators are pointing to further gains. “We expect the stock to accelerate upward momentum and head towards ₹620 in coming weeks,” said Dharmesh Shah, head of technicals at ICICI Securities. “The key point to highlight is that the stock is sustaining well above its short-term moving averages after witnessing a Golden Cross, highlighting positive bias.”

According to rating agency Crisil, the company, at a consolidated level, is likely to incur a large capex of nearly ₹22,000 crore over fiscal years 2024 and 2025 towards capacity addition, captive power plants, plant maintenance, and other infrastructure development. The ₹15,000 crore balance sum pending towards the warrants issued will ensure ‘negligible reliance’ on debt to fund capex, said the rating agency.

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