Buy ACC; target of Rs 1760: Dolat Capital

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26 Aug, 2025 12:21

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Revenue was in line however EBITDA, EBITDA/tn and PAT much above estimates.  ACC posted -37.3%/ -32.9%/ -40.6% YoY de-growth in revenue/ EBITDA/ APAT to Rs26 bn/ Rs5.2 bn/ Rs2.7 bn in Q2CY20 due to 33.3% YoY volume de-growth which was partially offset by 0.6% YoY realization growth (+11.5% QoQ).  We expect (-0.6%)/ 7.0%/ 11.5% revenue/ EBITDA/ APAT CAGR over CY19-21E led by -14.6%/ 12.3% volume growth and 3.0%/ 2.0% cement realization growth in CY20E/ CY21E.  We broadly maintain our revenue estimates for CY20E and CY21E. We increase our EBITDA estimates by 25.0%/ 19.3% for CY20E and CY21E to factor H1CY20 results. Accordingly, we increase our APAT estimates by 29.6%/ 22.5% for CY20E and CY21E. Considering ACC's healthy cash flow & RoE, net cash position, and 5.9mtpa (17.7% increase) capacity expansion, current valuation of 9.0x/ 7.5x CY20E/ CY21E EV/EBITDA provides comfort which is 19%/ 39%/ 46%/ 47% discount to 1yr Fwd EV/EBITDA of 1/ 3/ 5/ 10 years.

Thus, we maintain BUY with an upward revised TP of Rs1,760 (10x CY21E EV/EBITDA + 0.5x CY21E CWIP).

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