Analysts Expect New Ambuja Cements CEO To Drive Synergies With ACC
Brokerages expect the appointment of ACC Ltd.’s Neeraj Akhoury as chief executive officer of Ambuja Cements Ltd. to drive synergies between the two Indian units of LafargeHolcim Ltd., eventually paving the way for their merger.
Akhoury replaces Bimlendra Jha who resigned as the MD and CEO of Ambuja Cements, according to filings last week. Akhoury, whose term began on Feb. 21, remains on the board of ACC.
Ambuja Cements proposed to buy out Holcim’s stake in ACC in 2013 after the global merger between Lafarge and Holcim. It forecast synergies of Rs 780-900 crore per annum. But in February 2018, the Indian units of LafargeHolcim put the merger on hold citing constraints in implementation. They then agreed to supply clinker and raw materials such as fuel, fly ash, slag and gypsum and spare parts at a discounted rate to each other.
Now, according to Ambit Capital, Akhoury’s appointment paves the way for potential long-pending merger between the two companies. The brokerage cited strong growth at ACC between 2017 and 2019 under Akhoury for its optimism.
Morgan Stanley and JPMorgan expect Akhoury to accelerate master-supply agreement benefits. His appointment would also lead to tighter costs and higher market share for Ambuja Cements, like in case of ACC, JPMorgan said.
UBS is less sanguine, though. It sees a limited scope for additional cost savings from master service agreement.
Shares of Ambuja ended 1.9 percent higher compared with a 2 percent decline in the Nifty 50 Index.