Accumulate ACC; target of Rs 1548: Angel

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26 Aug, 2025 12:21

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  Angel Broking's report on ACC

For 2QCY2015, ACC’s net revenue declined by 1.6% yoy to Rs 2,961cr. The same was below our expectation of Rs 3,083cr. Volumes declined by 2.4% yoy to 6.2mt. (vs our expectation of 6.29mt) and realization per tonne declined by 1.2% yoy to Rs 4,385, which is below our estimate of Rs 4,526, due to lackluster demand for cement. EBITDA margin, at 11.3%, was also below our expectation of 12.2%, due to lower realizations and higher freight expenses. The net profit saw a decline of 45.5% yoy to Rs 131.5cr, weighed down due to lower other income.

For 2QCY2015, ACC reported an EBITDA of Rs 333.5cr, a decrease of 26% yoy, and below our estimate of Rs 377.7cr. The same was led by higher raw material and freight costs. The total operating cost increased by 5.3% yoy to Rs 2,681.7cr, led by 9.5% and 5.2% yoy increase in freight and net raw material costs, respectively. The EBITDA margin fell by 371bp yoy to 11.3%; the same is below our expectation of 12.2%. The decline in realization and higher operating cost worsened the EBITDA per tonne by 24.2% yoy to Rs 538.

Outlook and valuation: Going ahead, we expect ACC’s bottom-line to grow at a CAGR of 29% over CY2014-16E, considering capacity addition and operational efficiency post commissioning of new capacity in east region. However, we maintain our Accumulate rating on the stock with a revised target price of Rs 1,548 (earlier target price was of Rs 1,650) on 10.5x EV/EBIDTA and EV/tonne of US$120 on CY2016E installed capacity. Rich valuation and volume growth concerns leave limited potential for the stock to rise", says Angel Broking research report.

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