Analysts remained bullish on ACC Ltd. and Ambuja Cements Ltd. as they expect the cement makers’ move to renew their existing royalty pact with Holcim Technology to remove a key overhang from the stock prices.
Under the agreement, the companies will pay a technology and know-how agreement fee at 1% of net sales each year to Holcim, according to their exchange filings. The stocks of both companies had declined earlier this month amid concerns that the TKH fee to Holcim might be raised.
The agreement will range for a period of two years, starting Jan. 1, 2021, the filing said.
Shares of ACC gained as much as 7.3% to Rs 1,694.4 apiece in early trade on Thursday, while Ambuja Cements rose 10% to Rs 261 apiece.