Hold ACC; target of Rs 1394:Emkay

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26 Aug, 2025 12:21

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Emkay research report on ACCACC surprised positively with adj. EBITDA (adjusted for Rs249mn for prior period provision for DMF) against our estimate of Rs2.4bn primarily driven by lower employee cost (Rs1.7bn against Rs1.9bn/Rs2bn in Q3CY14/Q2CY15). Higher sales volume (5.6mt vs. est. 5.4mt) led to Revenue of Rs27.4bn (vs. est. Rs26.7bn). Sales volume was at 5.6mt (-0.2% yoy) and realization was at Rs4,530 (-1% yoy). RMC revenue was up 17.4% yoy to Rs2bn. Decline in Employee cost (down 13.2% yoy) was negated by Increase in freight cost (up 3% yoy) and other expense (up 8% yoy) leading to 0.8% yoy increase in opex/tn to Rs4,370. Lower realization and higher opex led to 5.7% yoy decline in adj. operating profit and OPM contracted 62bps yoy to 10.5%. Adjusted profit was down 31% yoy to Rs1.4bn. Though, operating performance was a tad better than expectations during the quarter, we expect operating cost of the company to remain higher going forward due to continued suspension of limestone mining at Chaibasa (the mining is suspended from July 3, ’15). We expect the company to benefit from cost saving measures only in H2CY16e post commissioning and stabilization of new capacities in the East region. Though, we expect earnings to improve going forward, we believe that these positives are largely factored in the stock price. We maintain Hold rating on the stock with revised PT of Rs1,394.

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