Neutral ACC; target of Rs 2180: Motilal Oswal

Motilal Oswal's research report on ACC

ACC’s 1QFY24 result surprised us as the company operated at 100%+ capacity utilization level (volumes 17% above estimate) with controlled operating costs. Absolute employee expense declined 30% YoY/28% QoQ. Other expense/t was down 24% YoY/9.5% QoQ. Management expects EBITDA to sustain with further improvement fueled by various efficiency and operational excellence initiatives. ACC beat our estimates on all fronts and delivered an EBITDA of INR7.7b (vs. estimated INR4.9b) and EBITDA/t of INR818 (vs. estimated INR610). Profit was at INR4.6b vs. estimated INR2.6b. Opex/t was 7% below our estimates. We raise our FY24E/25E EBITDA by 25%/23% given the significant beat in 1QFY24 and management’s guidance of sustaining the current cost structure.

Outlook

ACC trades at 11x/8.2x FY24E/FY25E EV/EBITDA and USD100/ USD95 FY24E/FY25E EV/ton. We maintain our Neutral rating on the stock with a revised TP of INR2,180 (earlier INR2,000).