Ambuja & Orient Cement Rally Up to 10% on Merger Hopes; ACC Lags — Broker Views

Ambuja–ACC–Orient Cement Merger: Broker Optimism Lifts Ambuja, Orient Shares; ACC Slips

Shares of Ambuja Cements and Orient Cement rallied on December 23 after brokerages turned bullish following board approvals for a merger involving the three Adani Group cement companies. ACC, however, underperformed and traded in the red.

Ambuja Cements rose over 4% to Rs 563.50, hitting a more-than-one-month high, while Orient Cement surged nearly 10% to around Rs 179, also marking a one-month peak. Both stocks extended gains for a third consecutive session.
In contrast, ACC shares slipped nearly 2% to about Rs 1,752 in morning trade.

What the merger means for shareholders

Under the proposed scheme, eligible ACC shareholders will receive 328 shares of Ambuja Cements for every 100 ACC shares, implying a 328:100 share-swap ratio.
Meanwhile, Orient Cement shareholders will receive 33 Ambuja Cements shares for every 100 Orient shares, translating into a 33:100 ratio.
The record date for the merger is yet to be announced.

Morgan Stanley on Ambuja Cements

Morgan Stanley reiterated an ‘Overweight’ rating on Ambuja Cements with a target price of Rs 650, indicating an upside of over 20% from the previous close of Rs 539.95.

The brokerage said the swap ratio is neutral for ACC’s minority shareholders and positive for Orient Cement’s minorities. It expects merger synergies to deliver cost savings of at least Rs 100 per tonne, adding that consolidation removes the overhang of managing multiple listed entities.

CLSA on Ambuja and ACC

CLSA said the amalgamation could result in around 10% value accretion for shareholders. It highlighted ACC’s sharp valuation discount and prolonged underperformance versus Ambuja as supportive of value creation.

The brokerage maintained an ‘Outperform’ rating on Ambuja with a target of Rs 680, implying nearly 26% upside.
For ACC, CLSA retained a ‘Hold’ rating with a target price of Rs 2,035, suggesting over 14% upside from the previous close.

Other brokerage views

Emkay said the transaction is largely neutral, with a slight negative bias for ACC shareholders and mildly positive for Orient Cement.
JPMorgan noted that Ambuja’s pan-India scale post-merger should help optimise costs and improve the mix of higher-margin premium products, adding that both Ambuja and ACC brands will continue to operate after the merger.