Neutral ACC; target of Rs 2040: Motilal Oswal

Motilal Oswal recommended Neutral rating on ACC with a target price of Rs 2040 in its research report dated July 24, 2025.

Broker Research

July 28, 2025 / 12:45 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on ACC

ACC’s 1QFY26 EBITDA missed our estimate due to lower blended realization/t and higher opex/t. EBITDA increased ~14% YoY to INR7.7b (10% miss). EBITDA/t inched up ~2% YoY (flat QoQ) to INR675 (est. INR794). OPM contracted 30bp YoY to ~13% (est. ~15%). Adj. PAT increased ~5% YoY to INR3.8b (24% miss led by higher finance cost and effective tax rate). Management indicated that cement demand grew ~4% YoY in 1QFY26, and the outlook remains positive in 2Q. ACC believes demand will grow ~6-7% YoY in FY26, fueled by affordable housing and increased spending on the infrastructure and commercial segments. In Jul’25, ACC commissioned a 1.5mtpa grinding capacity through brownfield expansion at Sindri, Jharkhand. It is also setting up a greenfield GU at Salai Banwa, Uttar Pradesh, having a capacity of 2.4mtpa. The company also added 12 RMC plants during the quarter, taking the total RMC plant count to 114. The company’s premium product share increased to 41% of trade sales.

Outlook

We downgrade our rating on ACC to Neutral. We value ACC at 8.0x Jun’27E EV/EBITDA to arrive at our revised TP of INR2,040 (vs. INR2,400 valued at 10x FY27E EV/EBITDA).

For all recommendations report, click here