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Buy ACC; target of Rs 1774: Emkay Global Financial

Emkay Global Financial is bullish on ACC has recommended buy rating on the stock with a target price of Rs 1774 in its research report dated October 19, 2020.

October 20, 2020 / 04:53 PM IST
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Emkay Global Financial's report on ACC

ACC’s Q3 results were above our estimates, led by higher-than-estimated realization (up 3.5% yoy vs. estimate of 1.4% growth). EBITDA stood at Rs6.7bn vs. estimated Rs6.3bn and EBITDA/ton came in at Rs1,073 vs. estimated Rs958. Key positives: 1) 10.2% yoy decline in freight costs, despite increase in diesel prices, due to higher inter-company purchases and increase in direct dispatches, in our view; 2) 20% yoy decline in other expense; 3) realization decline restricted at mere 1.1% qoq. Key negative was a 43% yoy decline in RMC volume, leading to a 44.3% yoy fall in revenue. Cement EBITDA/ton stood at Rs1,073 vs. Rs851/Rs1,173 in Q3CY19/Q2CY20. Grinding capacity expansion of 1.1mt in Sindri, Jharkhand, is expected by Mar’21, while capacity expansion of 4.8mt in the Central region is expected by CY22-end.


ACC started a cost reduction initiative “Project Parvat” in CY19 with an aim to reduce operating costs by Rs200/ton till CY21. Valuations are attractive at 8.8x/8.1x CY21/CY22E EV/EBITDA and an EV/ton of US$95. We maintain Buy and OW in sector EAP.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Oct 20, 2020 04:53 pm

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