Buy ACC; target of Rs 3272: ICICI Securities

ICICI Securities's research report on ACC

Our earnings forecast for ACC appears largely immune to the current weakness (and uncertain outlook) on cement prices. Sustained cost efficiency (across fixed/variable cost), expected benefit from imminent rise in share of green power (both WHRS and solar power) and scope for a further rise in volume benefits (under Master-Supply-Agreement with parent Ambuja Cement, as well as sister concern Sanghi Ind.) is at the heart of this conviction. Factoring these in, we broadly retain EBITDA for FY25E, but we raise our FY26E EBITDA by ~9%. A strong balance sheet (current cash/share of ~INR 250 seen surging to ~INR 490 in FY26E) and healthy RoE of ~14–15% are compelling investment
arguments.

Outlook

We continue to value ACC at 13x FY26E EV/EBITDA. Retain BUY; TP revised to INR 3,272 (from INR 2,931).