Buy Ambuja Cements stock as merger sets stage for 14% upside, says Axis Securities

Shares of Ambuja Cements climbed in Wednesday’s trade to continue their winning run for the fourth consecutive session. At last check, the stock was trading 0.90 per cent higher at Rs 551.65 on BSE. 

The Adani Group stock has been in focus following a strategic push to consolidate its cement operations, prompting domestic brokerage Axis Securities to maintain a ‘Buy’ rating on the counter, implying a potential upside of over 14 per cent from the current levels.

On Tuesday, the stock had closed 1.25 per cent higher at Rs 546.75. 

The bullish outlook is largely anchored on Ambuja Cements’ ambitious consolidation strategy. The company’s board has given the green light for the amalgamation of its subsidiaries, ACC Ltd and Orient Cement Ltd, into the parent entity. 

According to Axis Securities, this move is set to establish a unified “One Cement Platform,” designed to streamline the group’s corporate structure and bolster its balance sheet.

“The merger is expected to create operational synergies by improving manufacturing and logistics efficiency... and enabling better capital allocation to support growth and reinforce market leadership,” the brokerage said.

For investors holding shares in the subsidiaries, the swap ratios have been clearly defined. ACC shareholders will receive 328 equity shares of Ambuja Cements with a face value of Rs 2 for every 100 ACC shares held. Similarly, for every 100 shares of Orient Cement, shareholders will be issued 33 shares of Ambuja Cement.

The transaction is expected to wrap up within 12 months, subject to regulatory nods from shareholders, creditors, SEBI, and the NCLT. For ACC, the appointed date is set for January 1, 2026, while for Orient Cement, it is May 1, 2025.

Axis Securities highlighted that the unified structure will optimise the network and branding, potentially leading to a margin improvement of at least Rs 100 per metric tonne.

The current cement capacity stands at 107 MTPA, with a clear roadmap to hit 155 MTPA by FY28. The brokerage believes that post-merger, tax incentives currently availed by ACC in states like Maharashtra, Madhya Pradesh, and Uttar Pradesh will continue to accrue to Ambuja, further sweetening the deal.

The brokerage values Ambuja Cements at 17x its FY27E EV/EBITDA to arrive at the Rs 630 target.

Exchange seeks clarification

In related market developments, the stock exchange sought clarification from Ambuja Cements Ltd on December 24, 2025, regarding significant “movement in volume” observed in the counter. A reply from the company is currently awaited.