Hold ACC; target of Rs 1630: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services research report on ACC“ACC delivered 3QCY14 EBITDA of Rs3.06 bn (+36% yoy, -23% qoq) which was ~6% higher than our estimate of Rs2.88 bn mainly on account of better than expected realisation which also led to marginally better margins. Revenues at Rs 27.42 bn (+9.3% yoy) was in-line with our estimate of Rs 27.41 bn. Lack of new capacities led to disappointing volume growth of mere 1.4% yoy, lower than our estimate of 4% yoy growth. Blended cement realisation at Rs4879/t increased 7.7% yoy (+3% qoq) was better than our estimate of Rs4759/t. Grey Cement realisation at Rs4517 (+3% qoq). Higher realization led to EBITDA/t of Rs544 (+34% yoy, -14% qoq) better than our estimate of Rs501/t. Led by better than expected operating performance coupled with higher than expected other income (Rs 1.17 bn vs estimate of Rs 910 mn) and lower tax rate (25% vs. 29% in Q2), the company reported APAT of Rs2.05 bn (+70% yoy, -15% qoq) against our estimate of Rs1.62 bn.” “The company has lagged behind its closest peer, UltraTech in volume growth due to lack of new capacities. Post volume decline of 0.7% in CY13, the company has reported muted volume growth of mere 2% in 9MCY14. At the same time, cost pressures (operating cost increased Rs200/tn to Rs3,957/tn in 9MCY14) continue to impact the margins of the company. We expect the company to benefit from cost saving measures only in CY16e post commissioning of new capacities in the East region. Though, we expect earnings to improve going forward led by higher prices, we believe that these positives are largely factored in the stock price. We downgrade our rating on the stock to Hold with a PT of Rs1,630 and would await better entry points, says Emkay Global Financial Services research report. 

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