Moneycontrol PRO
HomeNewsBusinessMarketsSanghi Industries crashes 10% over profitability concerns in Ambuja Cement deal

Sanghi Industries crashes 10% over profitability concerns in Ambuja Cement deal

Sanghi Industries signed a contract with Ambuja Cements to supply its entire production to Ambuja and ACC at a fixed 10 percent markup over the production cost.

January 18, 2024 / 09:54 IST
Shares of the cement maker had fallen another 10 percent in the previous session as well.

Shares of the cement maker had fallen another 10 percent in the previous session as well.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Shares of Sanghi Industries extended their downfall for the third straight session, plunging another 10 percent in early trade on January 18 amid persisting concerns over limited profitability on its cement supply agreement with parent Ambuja Cements.

At 9.33am, shares of Sanghi Industries were trading at Rs 121.40 on the NSE. Volumes in the counter were also sharply higher as 63 lakh shares changed hands so far, significantly more than the one-month daily traded average of 11 lakh shares.

Shares of the cement maker had fallen another 10 percent in the previous session as well.

Sanghi Industries has entered into a contract with Ambuja Cements to supply its entire production to Ambuja and ACC at a fixed 10 percent markup over the production cost. This decision is viewed as a potential constraint on Sanghi Industries' future profitability, as it means the company won't be able to secure a competitive market price for its cement output.

Follow our market blog to catch all the live action

"We believe that this will cap Sanghi's profitability substantially as entire production will be purchased at just a 10 percent markup to operating costs," said Mangesh Bhadang, equity analyst at Centrum Broking.

Ambuja Cements owns a 54.51 percent stake in Sanghi Industries which was acquired in August last year for a total enterprise value of Rs 5,000 crore.

The Adani Group owned Ambuja Cements also recently launched an open offer to acquire an additional 26 percent stake in Sanghi Industries. The open offer is scheduled to conclude on January 29.

Also Read | Sanghi Industries stock tumbles 10% as Ambuja Cement supply deal seen limiting profitability

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Moneycontrol News
first published: Jan 18, 2024 09:52 am

Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347