Cement consolidation: Ambuja merges ACC and Orient into one platform; what the Adani Group’s scale bet means for investors

Ambuja Cements has moved to consolidate the Adani Group’s cement assets by approving schemes to merge ACC and Orient Cement into itself, creating a single listed platform aimed at sharper operating leverage and cost synergies.The transaction is entirely share-based, with no cash payout. ACC shareholders will receive 328 Ambuja shares of face value Rs 2 each for every 100 ACC shares of face value Rs 10, while Orient Cement shareholders will get 33 Ambuja shares of face value Rs 2 each for every 100 Orient shares of face value Rs 1, according to an ET report.At current prices, the swap values ACC at about Rs 1,772 a share against a market price of around Rs 1,777, making the deal broadly valuation-neutral for ACC investors. Orient Cement is valued at roughly Rs 178 per share versus a CMP of Rs 163, implying a premium of about 9%, according to domestic brokerage Emkay.The schemes have appointed dates of January 1, 2026 for ACC and May 1, 2026 for Orient, and are expected to take effect over the next year, subject to regulatory and shareholder approvals. Following the announcement, Orient Cement shares rose up to 10% to Rs 180, ACC gained about 1.5%, and Ambuja advanced nearly 4%.Ambuja already owns close to 50% of ACC and around 73% of Orient. To acquire the remaining minority stakes, the company will issue roughly 308 million new shares for ACC and about 18–19 million shares for Orient, taking the total new issuance to around 326–327 million shares.This will raise Ambuja’s outstanding equity from about 2.47 billion shares to roughly 2.78–2.80 billion shares, implying dilution of around 12–13% for existing Ambuja shareholders once all ongoing mergers, including Sanghi and Penna, are accounted for. Motilal Oswal estimates promoter holding will decline from 67.65% to about 60.9% post all announced amalgamations, even as public and institutional shareholding increases.For the Adani Group, the merger marks the culmination of a two-year effort to bring Ambuja, ACC, Orient, Sanghi and Penna under a single operating and ownership structure. The company has described the move as a “transformational step” that simplifies the cement business, replaces the Master Supply Agreement model with direct ownership and allows tighter control over manufacturing, logistics and branding.Ambuja expects operational synergies to deliver at least Rs 100 per tonne in cost savings through network optimisation, logistics efficiencies and lower corporate overheads. The merged entity underpins the group’s plan to expand cement capacity from about 107 mtpa to 155 mtpa by FY28, backed by a largely debt-free balance sheet and continued capital expenditure.Brokerage projections factor in rising volumes and improving utilisation over FY26–28. Motilal Oswal estimates EBITDA per tonne could increase from around Rs 1,043 in FY26 to Rs 1,230 by FY28, with margins crossing 21%. Emkay expects consolidated EBITDA to rise to about Rs 118 billion by FY28, with margins above 23%.For Ambuja shareholders, analysts see the deal as earnings-accretive despite dilution, given that ACC trades at a steep discount to Ambuja on EV/EBITDA and EV/tonne metrics. Motilal Oswal’s pro-forma estimates show Ambuja’s EPS rising from about Rs 16.9 to Rs 18.6 for FY25 once ACC is consolidated, and from Rs 10.1 to Rs 10.6 in the first half of FY26, even after accounting for the higher share count.At current valuations of roughly 15–16 times FY27 EV/EBITDA and about $128 per tonne, Ambuja still trades below its five-year average multiples, suggesting scope for rerating if synergies materialise. In the near term, however, the balance sheet may see some pressure, with net cash expected to dip briefly into net debt in FY26–27 before turning positive again by FY28.ACC shareholders now face a valuation-neutral exit but a shift in exposure, as ACC will be delisted into Ambuja. While ACC trades at about 7.1 times FY27 EV/EBITDA and around $71 per tonne, swapping into Ambuja offers exposure to a larger, pan-India platform with higher growth ambitions. State incentives linked to ACC’s operations in Maharashtra, Madhya Pradesh and Uttar Pradesh are expected to continue accruing to Ambuja post-merger.Orient Cement minority shareholders emerge as the clearest beneficiaries, with the swap embedding a near-9% premium and offering an exit from a small-cap regional player into Ambuja’s larger balance sheet and expansion pipeline.Regulatory approvals for multiple amalgamations remain a key risk, alongside execution challenges in integrating plants, systems and people. Until approvals are in place, operations will continue under the existing Master Supply Agreement. Post-merger, Ambuja will be the Adani Group’s sole listed cement vehicle, while brands such as “Adani Ambuja Cements” and “Adani ACC” are expected to continue in their respective markets.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. 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