Neutral ACC; target of Rs 2150 : Motilal Oswal

Motilal Oswal's research report on ACC

ACC reported EBITDA of INR5.5b vs. our estimate of INR6.8b (19% below our estimate) in 2QFY24, due to lower blended realization (~3% miss) and higher variable cost/t (7% above our estimate). EBITDA/t came in at INR677 (vs. estimate INR820). However, adjusted PAT stood at INR3.8b (in line with our estimate), led by a sharp increase in ‘other income’ (up 3x YoY; up 160% vs. our estimate). The management indicated that demand remains robust, driven by increased spending on housing and infrastructure projects. It has initiated commercial production with a 3.3mtpa clinker capacity at its Ametha plant in Madhya Pradesh. Additionally, the share of premium products in trade sales increased 1.5pp YoY to 32%. Furthermore, the company witnessed a net addition of 534 dealers across various markets during the quarter.

Outlook

We broadly maintain our FY24/FY25 estimates. ACC trades at 11x/9x FY24E/ FY25E EV/EBITDA and USD105/USD95 FY24E/FY25E EV/ton. We value ACC at 9.5x Sep’25E EV/EBITDA (earlier FY25E) to arrive at our TP of INR2,150. We reiterate our Neutral rating on the stock.