Ambuja Cements’ recent acquisition announcement of Penna Cement has sparked varied reactions from leading brokerages. The move, aimed at expanding Ambuja’s regional footprint in South India, has drawn different assessments from analysts.

Macquarie has maintained a neutral stance on Ambuja, setting a target price (TP) of ₹608. They view the expansion positively, noting the deal’s value at $125 per tonne, which aligns with Ambuja’s growth ambitions.

CITI has also adopted a neutral position with a TP of ₹675, seeing the transaction as a positive indicator of Ambuja’s growth trajectory.

However, UBS has taken a contrarian view, advising a sell with a TP of ₹475. They highlight the acquisition’s valuation of assets at $125 per tonne, suggesting a potential cost reduction to US$90 per tonne. This move is expected to raise Ambuja’s production market share to around 9% in Andhra Pradesh and Telangana.

Morgan Stanley (MS) maintains an equal weight (EW) stance with a TP of ₹665, seeing the acquisition as incrementally positive for both the industry and Ambuja.

Jefferies, on the other hand, is bullish, recommending a buy with a TP of ₹735. They believe the acquisition will propel Ambuja to a top-three position in South India, reinforcing its position as a leading pan-India player.

CLSA, however, takes a cautious approach, suggesting a sell with a TP of ₹575. They calculate the deal’s value at $103 per tonne, compared to the replacement cost of $90-110 per tonne, indicating a potential overvaluation.

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