Ambuja Cements: the buyer, not the bought

Ambuja Cements Limited (NSE: AMBUJACEM) is absorbing ACC and Orient Cement into itself, becoming India's second largest cement company. The stock is near ₹384, down 36% from its ₹601 high. What happened Q1 FY27 revenue was ₹9,500 crore, down 7.7% YoY. PAT fell 36.6% to ₹660 crore as West Asia geopolitical costs added ₹110 per tonne to fuel and freight. The positives are sequential. EBITDA per tonne rose 27% to ₹931 from ₹735 in Q4 FY26. Costs fell ₹206 per tonne quarter on quarter. Capacity is 109 MTPA, heading to 119 MTPA by FY27 end. Why it matters ACC shareholders voted on 29 September 2026 to merge into Ambuja. Post merger, Ambuja runs over 100 MTPA of cement, second only to UltraTech. The combined entity targets ₹100 per tonne of synergies from logistics and procurement. My view The YoY fall is misleading because Q1 FY26 had an unusually high tax credit that inflated that base. Strip it out and the operating business is broadly stable, recovering on cost and EBITDA per tonne. The real story is what the merger adds. ACC brings 36 MTPA of capacity and an RMC business. Orient Cement adds 16.6 MTPA with south India exposure. Ambuja gets scale but also merger complexity. At about 23 times trailing earnings and 2.1 times book, the stock is not cheap for a company growing revenue at 5% to 7% per year. The re-rating needs either a cement price recovery or the ₹100 per tonne synergy arriving faster. What I am watching Q2 FY27 results in October, EBITDA per tonne crossing ₹1,000, and the final merger record date. On the chart, ₹380 is the 52-week low and ₹450 is the resistance. My stance: Accumulate near ₹380 to ₹400. A quality cement platform at a reasonable price. Disclosure: I do not hold a position in Ambuja Cements Limited at the time of writing. This is not investment advice.