Hold ACC; target of Rs 1400: ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on ACCACC’s revenues increased 3.0% YoY to | 2,846 crore (vs. I-direct estimate of | 2,771 crore) led by 4.2% YoY increase in volumes to 6.0 MT (vs. I-direct estimate of 5.8 MT) while realisation declined 1.1% YoY to | 4,744 (vs. I-direct estimate of | 4,755). For CY15, revenues were flat at | 11,432.76 crore EBITDA margins increased 91 bps YoY (down 210 bps QoQ) to 7.5% (vs. I-direct estimate of 7.9%) due to a decline in power expenses (down 7.3% YoY). EBITDA/tonne increased 12.5% YoY to | 356 (vs. Idirect estimate of | 374) The Jamul clinkering project has been delayed by a quarter and is now expected to be commissioned in Q2FY16. Grinding units at Jamul (1.1 MT) and Sindhri (1.4 MT) are also delayed and are expected to commence operations in Q2 2016 The company has recommended a final dividend of | 6 per share Being a pan-India player and having a strong balance sheet, the company is in a better position to withstand the current slowdown. However, adding to the demand slowdown, we expect volume growth to moderate further due to delay in capacity expansion. We expect margin expansion to be limited due to high cost pressure led by higher freight cost, and higher proportion of inefficient plants. Hence, we maintain our HOLD recommendation with a revised target price of | 1,400/share (i.e. valuing the stock at CY17E EV/EBITDA of 14.0x, EV/tonne of $120/tonne on CY17E capacity of 35 MT).

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