Sagar Cements to add 2.6 mt cement capacity with acquisition of Andhra Cements.

Sagar Cements is planning to add 2.6 million tonnes (mt) of cement and 1.65 mt of clinker capacities with the acquisition of Andhra Cements for ₹922 crore.

Amravati Bench of the National Company Law Tribunal has recently approved a proposal of Sagar Cements to acquire Andhra Cements.

Sagar currently has a production capacity of 8.25 mt and targets to reach 10 mt capacity by FY25.

Sagar Cements’ board has recently approved an additional capital outlay of ₹470 crore for the enhancement of Andhra Cements capacity by 1.2 mt and clinker production by 0.6 mt by second half of FY25. Accordingly, the total capex stands at ₹1400 crore and the capacity comes at $56 per tonne.

“We expect capacity enhancement to generate an industry-leading volume CAGR of 24 per cent over FY22-25,” said Dharmesh Shah, Research Analyst, Emkay Research.

However, capex funding requirement would keep leverage high, with ‘net debt-to-EBITDA’ in the 3-4 times range for a couple of years, he added.

HBL