Buy ACC; target of Rs 2900: Emkay Global Financial

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Emkay Global Financial's research report on ACC

ACC’s Q3FY24 EBITDA was a robust beat on our/consensus estimates by 27- 30% mainly owing to lower-than-expected costs. EBITDA more than doubled YoY to Rs9.1bn (up 65% QoQ) with EBITDA/ton crossing the Rs1,000 mark post nine quarters (Emkay est: Rs825). Total cost/ton declined 17% YoY (6% QoQ) to Rs4,505 (vs. our est. of flat cost QoQ) owing to cost savings across line items. Blended realization improved 1% QoQ to Rs5,522/ton. Volume growth surprised positively with 15% YoY growth to 8.9mt, partly led by increased MSA transaction with Ambuja Cement.

Outlook

We increase our EBITDA estimates upwards by 13-15% in FY25-26E, citing consistent cost-saving measures and the recent acquisition of Asian Concretes & Cements. Given the healthy B/S and attractive valuation, we maintain BUY with a revised Dec-24E TP of Rs2,900 (13x EV/E).

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ACC - 2912024 - emkay