Hold ACC; target of Rs 1475:ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct research report on ACCACC is the second-largest pan-India cement manufacturer with cement production capacity of 30 MT. The company has increased its capacity at 10% CAGR over the past five years. ACC’s market share declined from 13% to 10% over the past five years, as capacity expansions were backended. However, we expect its market share to increase, going forward, with stabilisation of new capacity. ACC’s regional mix is among the most balanced in the country while its key markets are the south and eastern regions, which together account for ~54% of volume sales. We remain positive on the company due to its pan-India presence and strong balance sheet to withstand the current slowdown and its compelling valuations. However, we expect volume growth to be moderate due to lower demand in north and west. 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 target price of | 1,475/share (i.e. valuing the stock at CY16E EV/EBITDA of 13.0x, EV/tonne of $125/tonne on CY16E capacity of 35 MT)

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