Accumulate ACC; target of Rs 2134: Geojit Financial Services

Geojit Financial Services research report on ACC

ACC Limited, which is a part of Adani Group, is a leading Indian cement and ready-mix concrete producer with 20 manufacturing sites and 99 concrete plants, serving customers through a nationwide network. In Q3FY25, the company’s consolidated revenue rose 20.6% YoY to Rs. 5,927cr, on the back of increase in sales volume. Sales volume of clinker and cement grew a significant 20.2% YoY to 10.7 million tonne and that of premium products rose a notable 11% YoY, thereby marking the company's highest quarterly volume ever. Also, the company’s Optimised Fuel Basket strategy achieved a 10% YoY reduction in kiln fuel cost to Rs. 1.68 per '000 kcal from Rs. 1.86, owing to the use of lowcost imported petcoke and synergies accrued from group companies. The company has made progress in increasing green power consumption and alternative fuel and raw material (AFR) usage as well, with green power and AFR consumption rising 5.7 pp to 18.7% and 0.4 pp to 9.6%, respectively. EBITDA increased 23.3% YoY to Rs. 1,116cr and EBITDA margin improved 40bps YoY to 18.8%, owing to strong topline growth, cost optimisation measures and logistics cost reduction.

Outlook

The company is also well-positioned to capitalise on growing cement demand, driven by government spending and construction activity. Therefore, we reiterate our ACCUMULATE rating on the stock, with a target price of Rs. 2,134, valuing the company at 9x FY27E enterprise value /EBITDA.

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