Buy ACC; target of Rs 2923: KR Choksey

KR Choksey's research report on ACC

ACC Q1FY25 earnings fell short of our expectations despite exceeding our projections on revenue. Revenue declined to INR 51,549 Mn, down 0.9% YoY (-4.7% QoQ), beating our estimates primarily driven by jump in sales volume. EBITDA dropped to INR 6,791 Mn, down 11.9% YoY (-18.8% QoQ), missing our projections due to higher raw material expenses; EBITDA margin stood at 13.2% (-165bps YoY/-230bps QoQ). PAT stood at INR 3,614 Mn declining 22.5% YoY (-61.8% QoQ), missing our estimates due to weaker operating performance, leading to PAT margin declining to 7.0% (-195bps YoY /-1,046bps QoQ).

Outlook

We maintain our multiple of 13.0x to FY26E EBITDA and FY26E EBITDA to reflect the benefits of synergies from the parent company and added benefit to ACC Ltd from the acquisition of Penna Cement, and better margin improvement going forward driven by cost reduction initiatives. Accordingly, we arrive at a target price of INR 2,923 per share and retain our “BUY” rating on the shares of ACC Ltd.

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