Hold ACC; target of Rs 1585: Arihant capital markets

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26 Aug, 2025 12:21

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Arihant capital markets research report on ACC“ACC’s 3QCY14 operating performance came in line with estimates. Standalone EBITDA margins increased by 250bps on YoY basis and stood at 13.5%. Volumes grew marginally by 1.4% on YoY basis and stood at 5.6mn tonnes. Realisations increased by 7.7% to Rs 4879 per ton. Sharp increase in realizations indicates return of pricing power. We expect cement demand to increase by 6-8% during next one year and realizations by ~10% on back of GOI emphasis on housing and infrastructure development. ACC’s witnessed 7% decrease in its operating cost to Rs 3,836 per ton on YoY basis. Raw material cost per ton was down by 20% on YoY basis on account of lower coal prices and stood at Rs 631 per ton. Power & fuel and freight cost increased by 10.5% and 15.6% respectively. EBITDA per ton thus increased sharply by 30.3% YoY to Rs 674 per ton. Profit after tax increased by 69.6% YoY to Rs 205cr.” “From the current quarter we have started to see pricing power coming back to the manufacturers which makes us optimist on the sector. Our optimism is based on revival in investment climate created by the current government. Going forward, we forecast ACC’s margins to increase to 16%. We have modeled for volume growth of 5% CAGR and realizations to increase by 8% CAGR over the next 2 years. We have valued stock on EV/EBITDA of 10.0(x) its CY15 estimates and have arrived at a fair value of Rs 1,585 per share. At CMP of Rs 1,501 the stock is available at CY15E P/E(x) and EV/EBITDA(x) of 18.0x and 9.3x, respectively at which valuations looks attractive in our view. We recommend HOLD rating on the stock, says Arihant capital markets research report.

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