Ambuja Cements Shares Jump on Morgan Stanley Overweight Call and Rs 650 Target

Ambuja Cements shares witnessed a sharp rally on Tuesday, climbing over 3% to reach their highest level in more than a month. The surge comes after Morgan Stanley maintained a bullish ‘overweight’ rating on the stock, highlighting the strategic amalgamation of its subsidiaries ACC Ltd. and Orient Cement. The stock is currently trading with a relative strength index (RSI) of 25, indicating oversold conditions and potential for further upside.

Morgan Stanley views the merger as a strategic move that simplifies the Adani Group’s cement portfolio by consolidating multiple listed entities into one. The brokerage emphasizes that streamlining operations through this amalgamation could unlock substantial shareholder value while reducing the complexities of managing separate companies.

The brokerage’s analysis suggests that the share swap ratios from the merger are balanced, presenting a neutral outcome for ACC’s minority shareholders while benefiting those of Orient Cement. Operational synergies between the companies are expected to generate significant efficiencies, potentially adding around Rs 100 per tonne in cost savings.

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Market analysts believe these synergies could translate into higher profit margins in an otherwise competitive cement market. Morgan Stanley notes that improved operational efficiency should be viewed positively by investors, reinforcing confidence in Ambuja Cements’ growth prospects.

Out of 46 analysts tracking Ambuja Cements, 35 recommend a ‘buy,’ eight suggest ‘hold,’ and only three advise ‘sell,’ according to Bloomberg data. The average 12-month price target stands at Rs 659.21, implying an upside of approximately 17.5% from current levels.

With the merger set to streamline operations, unlock cost efficiencies, and strengthen the company’s market position, Ambuja Cements appears poised for sustained growth, making it an attractive option for long-term investors seeking exposure in the cement sector.

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