Go Back   ManagementParadise.com | Management & Business Education Learning Platform Mirror View - Ebooks Links & Miscellenous Reading Material > Articles !!

Deal makes Guj Ambuja most valuable cement co

Discuss Deal makes Guj Ambuja most valuable cement co within the Articles !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; HOLCIM'S acquisition of a controlling stake in Gujarat Ambuja Cements has resulted in the highest-ever valuation for an Indian cement ...

Reply

 

Thread Tools Display Modes
Deal makes Guj Ambuja most valuable cement co
Old
 (1 (permalink))
vengabeats
vengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud ofvengabeats has much to be proud of
 
Financial Analyst at Transparent Value
Management Paradise Guru
 
Status: Offline
Posts: 2,529
Join Date: Jul 2005
Deal makes Guj Ambuja most valuable cement co - February 3rd, 2006

HOLCIM'S acquisition of a controlling stake in Gujarat Ambuja Cements has resulted in the highest-ever valuation for an Indian cement company. In the cement industry, enterprise value per ton is typically used as the valuation metric. The current deal, struck at Rs 90 per share (excluding the non-compete fee of Rs 15 per share paid to the promoters), translates to an enterprise value for Gujarat Ambuja of $198 per ton. This is by far the highest pricing ever received, dwarfing the previous deal, Holcim-ACC, which was at roughly $100 per ton. In the past, most of the local cement deals were in the range of $80-$120 per ton. Says an industry source, "Globally one has heard of $140-$150 per ton but close to $200 per ton is unheard of." What is interesting is that cement players are willing to pay a hefty premium to buy an existing capacity over setting up a greenfield project.
Enterprise value (EV) of a company is measured by adding market capitalisation and debt. EV divided by the existing capacity gives the EV per ton. EV per ton is considered a better measure by analysts than just market capitalisation since it also accounts for the firm's debt that needs to be paid by the buyer while taking over a company.
If one were to look at the major deals in the last decade, the $100-plus deals included Holcim-ACC ('04) deal, Lafarge-Raymond ('00) and Gujarat Ambuja-DLF(1999). Out of the lot, Lafarge-Raymond commanded the highest price of $119 per ton. Even when adjusted for inflation, these deals come nowhere close to the Holcim-Gujarat Ambuja deal in real terms. EV per ton for major players today range anywhere from $ 98-$198. Gujarat Ambuja is quoting at $198, ACC at $38, Madras Cement at $116, India Cements at $105, Grasim's cement business at around $100 and Ultratech at $98. Top listed companies are quoting anywhere from 1 to 2 times the replacement cost. As per industry estimates, it roughly takes $95 to set up an 1 ton cement capacity plant in India.
Gujarat Ambuja has always commanded a premium over the other players in the market. The reason — higher profit margins emanating from greater cost control measures. Its captive power plant, for instance, generates power at a substantially lower cost than the national grid. It also sources cheaper inputs from South Africa and the Middle East.
Profitability margins of the cement companies could be measured from its EBITDA (earnings before interest, tax, depreciation and amortisation) per ton. While Gujarat Ambuja had an EBITDA per ton of $12, it was $11.5 for ACC and $9 for Shree Cement. It was lower for companies such as Ultratech Cement and Madras Cement with respective EBITDA per ton of $5.4 and $7.2.
Gujarat Ambuja Cements has reported a 34% increase in net profit at Rs 122 crore for the second quarter ended December 31, '05 as against Rs 90 crore in the same period last year. Turnover during the quarter increased 9% at Rs 797.6 crore. The company sold 3.42m tonnes of cement in the second quarter as against 3.34m tonnes last year.
Advertisements



It's better to let someone think you are an Idiot than to open your mouth and prove it.



To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.

Friends: (18)
Reply With Quote
Re: Deal makes Guj Ambuja most valuable cement co
Old
 (2 (permalink))
niraj01
niraj01 is an unknown quantity at this point
 
niraj01
 
Status: Offline
Posts: 5
Join Date: Feb 2008
Re: Deal makes Guj Ambuja most valuable cement co - August 12th, 2008

hi
thxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Friends: (0)
Reply With Quote
Re: Deal makes Guj Ambuja most valuable cement co
Old
 (3 (permalink))
ritesh.chandak
ritesh.chandak is an unknown quantity at this point
 
ritesh.chandak
 
Institute: EIILM University
Status: Offline
Posts: 3
Join Date: Aug 2009
Re: Deal makes Guj Ambuja most valuable cement co - August 10th, 2009

want a project on ambuja please help me out to get it the report on ambuja
Friends: (0)
Reply With Quote
Reply

Bookmarks

Tags
ambuja, cement, deal, guj, makes, valuable
Related to Deal makes Guj Ambuja most valuable cement co
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
How cement was branded(Gujarat Ambuja) indrajit_v5 Marketing Management 14 April 19th, 2010 12:21 PM
Analysts' Picks - Gujarat Ambuja Cement, Federal Bank and Dena Bank Vijith Pujari Stock Markets Tips & Gyan !! 2 January 1st, 2009 11:03 PM
Water: a very valuable commodity Praveen Gurwani Articles !! 0 December 16th, 2006 01:32 AM
3 valuable lessons from a CAT aspirant shrijit_s Articles !! 0 November 16th, 2006 08:17 PM
Some valuable words to apply in ur life gaurav200x LaUghTeR AccEleRatED , Just CHILL !! 2 August 4th, 2006 09:05 PM
 


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are Off


ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.



Search Engine Optimization by vBSEO ©2011, Crawlability, Inc.