ACC Ltd. share price target

We maintain our BUY recommendation on the stock.

We recommend a BUY on the stock for a target price of Rs 2615/ implying an upside of 10% from CMP.

Q2 volumes flat YoY (-15% QoQ) at 6.9mt due to flood impact in key markets

ACC had a decent performance in Q2FY24 with EBITDA/t at INR 677 (4% below estimates), down 17% QoQ mainly due to seasonal low-operating leverage. While realisation disappointed, falling 1.2% QoQ, the underlying price improvement across regions is driving ~3% upwards revision to each of our FY24E and FY25E EBITDA estimates.

Strong Volume Growth: The company's volume increased by 18% YoY to 8.1 mtpa, supported by an increase in blended cement and an improvement in efficiency parameters.

ACC has made a strong comeback under the management of Adani Group. Q1FY24 EBITDA surged 81% YoY / 65% QoQ (65% ahead of our estimate) with outperformance across the board. With industry-superior volume growth (up 24% YoY) as well as cost control (costs down >7% QoQ), ACC’s EBTDA/te gap vs industry leader UltraTech Cement has got narrowed to ~INR 200 from >INR 400-500 in the past.

We maintain our BUY recommendation on the stock and increase our estimates for FY24E and FY25E.