Ambuja Cements Near Adani's Acquisition Price: Is the Stock Worth a Look?
The Indian cement industry is seeing increasing competition as companies expand their production capacity and focus on reducing costs. UltraTech Cement and Ambuja Cements are two major players in this space. While UltraTech leads in terms of capacity, sales and revenue, Ambuja is focusing on expansion, acquisitions and improving efficiency. In this article, we compare both companies based on their financial performance, profitability, debt and cash flows to understand how they are performing against each other.
Interestingly, Ambuja Cements is now trading close to Rs. 385, the same price at which the Adani Group made its open offer in 2nd half of 2022. After rising nearly 82% to reach an all-time high of around Rs. 700, the stock has given up almost all its gains.
Meanwhile, the proposed merger of ACC and Orient Cement could bring major changes to Ambuja's business. With UltraTech maintaining its lead and Ambuja focusing on expansion, let's see how the two cement companies compare and whether Ambuja is catching up with its larger rival.
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In September 2022, the Adani Group, through an offshore special purpose vehicle, announced the acquisition of Holcim's stakes in Ambuja Cements and ACC. Holcim held a 63.19% stake in Ambuja Cements and a 54.53% stake in ACC, including a 50.05% stake held indirectly through Ambuja Cements.
The total deal value, including the open offer consideration, was approximately $10.5 billion, making it the largest acquisition by the Adani Group at the time. However, the open offers received a relatively weak response as both stocks were already trading above the respective offer prices, leaving shareholders with little incentive to tender their shares. The Adani Group's open offer price for Ambuja Cements was Rs. 385 per share.
The daily chart of Ambuja Cements shows that the stock has come back to its September 2022 open offer price of Rs. 385. After rising nearly 82% from that level to reach an all-time high of around Rs. 700, the stock entered a prolonged downtrend and gradually lost all its gains. After nearly 1,640 days, the stock is now trading close to its original open offer price at Rs. 387.80, bringing it back to almost the same level at which Adani made the acquisition offer.
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Business Model of Cement Companies
According to a report from S&P Global, Key expenses for Cement companies are power and fuel (25-30%), raw materials (20-25%) and transportation (10%+). Coal and electricity are required for manufacturing, while limestone, gypsum, fly ash and slag are key raw materials. Transportation costs are high due to the bulky nature of cement. Companies also incur expenses for pollution control and reducing emissions.
Cement companies mainly generate revenue by selling cement, aggregates such as sand and gravel, and ready-mix concrete (RMC). Their total revenue depends on the quantity of products sold and their average selling prices.
Sales volume depends on production capacity and how much of that capacity is being used. Selling prices are influenced by demand, supply, raw material costs, transportation expenses and competition. Revenue growth is also measured through volume growth, price increases, acquisitions and foreign exchange changes to understand how much growth comes from the company's actual business operations.
Ultratech V/s Ambuja
While UltraTech leads in terms of production capacity, sales volume and revenue, Ambuja is backed by a strong balance sheet and its ongoing expansion plans. In this comparison, we analyse both companies across key parameters, including scale and growth, profitability, debt levels and cash flows, based on their Q2 FY27 and H1 FY27 financial performance, to understand how they stack up against each other.
CAPACITY & GROWTH (Q2 FY27)
ULTRATECH
AMBUJA
Cement Capacity
210.1 mtpa
113.5 mtpa
Total Sales Volume
38.22 MnT
16.5 MnT
Volume Growth YoY
12.9%
(1.0%)
Revenue
Rs. 23,024 Cr
Rs. 9,197 Cr
Revenue Growth YoY
18.9%
0.0%
PROFITABILITY (Q2FY27)
ULTRATECH
AMBUJA
OPERATING EBITDA
Rs. 3,721 Cr
Rs. 1,271 Cr
Operating EBITDA Growth YoY
20.3%
(28.0%)
EBITDA Margin
~16%
13.8
EBITDA Per Tonne
Rs. 974
Rs. 770
PAT
Rs. 1,501 Cr
Rs. 236 Cr
PAT Growth YoY
21.3%
(90.0%) Tax Reversal in Q2FY26
BALANCE SHEET (30 SEP 26)
ULTRATECH
AMBUJA
Gross Debt
Rs. 28,411 Cr
Rs. 55 Cr
Cash/Treasury Surplus
Rs. 4,875
Rs. 1,070
Net Debt
Rs. 23,536 Cr
Rs. (1,015) Cr
Shareholders fund (incl. minority interest)
Rs. 77,702 Cr
Rs. 72,238 Cr
Net Debt / Equity
0.30x
(0.01x)
CASH FLOW (H1 FY27)
ULTRATECH
AMBUJA
EBITDA
Rs. 8,978 Cr
Rs. 2,860 Cr
Operating Cash Flow
Rs. 6,181 Cr
Rs. 2,916 Cr
Capex
Rs. 5,882 Cr
Rs. 2,963 Cr
Capex as % of EBITDA
65.5%
103.6%
Finance Expenses incl. Lease Payments
Rs. 965 Cr
Rs. 168 Cr
Free Cash after Interest & Capex
Rs. 388 Cr
Rs. (215)
Merger Details & Benefits
Under the proposed merger, Ambuja Cement will issue 328 equity shares of Rs. 2 face value for every 100 equity shares of ACC. Similarly, Orient Cement shareholders will receive 33 equity shares of Ambuja Cement with a face value of Rs. 2 for every 100 equity shares of Orient Cement.
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Both ACC and Orient Cement shareholders have approved their proposed merger with Ambuja Cement, and the schemes have moved to the final NCLT approval stage. The ACC merger petition is scheduled for an NCLT hearing on November 19, 2026, while the overall merger process is expected to be completed by January 2027.
The company states that the merger is expected to improve operational efficiency by optimising manufacturing and logistics networks, reducing administrative costs and simplifying the corporate structure. It is also expected to improve profit margins by at least Rs. 100 per tonne through lower costs and better resource utilisation.
The combined entity will benefit from a stronger balance sheet, better capital allocation and increased capacity to support future growth. Additionally, it will bring Ambuja, ACC and Orient Cement under one corporate structure, strengthen market presence and support expansion in renewable energy and low-carbon cement production.
Conclusion
UltraTech Cement continues to maintain its leadership over Ambuja Cements in terms of production capacity, sales volume, revenue and profitability. It also reported stronger volume growth and higher operating margins, reflecting its larger scale of operations.
On the other hand, Ambuja has an advantage in terms of its debt-free balance sheet and lower finance costs, giving it room to fund its expansion plans. However, its weak Q2 FY27 performance and higher capital expenditure highlight the challenges it faces in improving profitability and cash flows.
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The proposed merger of ACC and Orient Cement could strengthen Ambuja's market position, improve operational efficiency and generate cost savings of at least Rs. 100 per tonne. While UltraTech remains ahead in the current comparison, the coming quarters will be important in determining whether Ambuja can convert its expansion plans and merger benefits into stronger financial performance and narrow the gap with its larger rival.