ACC Ltd. share price target

We have left unchanged our CY22E/CY23E earnings estimates. Despite nearterm challenges due to higher coal/petcoke prices, we maintain our positive stance on the sector given the robust demand outlook. ACC's capex plans are progressing as per schedule. We maintain our Buy rating on attractive valuations (CY23E EV/EBITDA of 9.1x and EV/t of USD112)....

ACC is a leading pan-India cement player with installed cement capacity of 36.1mtpa (including 1.6mtpa recently commissioned in central India). In this note, we analyze the CY21 Annual Report (AR) of ACC. Key highlights of our analysis are as follows: a) ACC had accelerated its growth plans (undertook expansions and completed them on time) to leverage the rising cement demand; b) it has been a pioneer in sustainability and innovation (has scaled up green products and solutions); and c) it has improved profitability through cost reduction measures (delivering superior performance)....

Over the last few quarters, the company has experienced pressure from higher fuel costs, despite making reasonable efforts across digitalization and increasing capacity. With a cautious view, we maintain our HOLD rating on the stock with a rolled forward target price of Rs. 2,415 based on 9.5x CY23E EV/EBITDA. Better realised prices support topline growth Q4CY21 revenue climbed up 2.0% YoY to Rs. 4,226cr (+12.7% QoQ), on higher realisations (+4.6% YoY to Rs. 5,524/t) with better product mix, while cement sales...

We value ACC at 10.5x its CY23E EV/EBITDA to arrive at a TP of Rs 2,620/share, implying an upside of 22% from the CMP. We maintain our BUY rating on the stock.

PAT of | 280.9 crore was lower than our estimates, mainly due to exceptional charge of | 54.8 crore pertaining to restructuring What should investors do? ACC's share price has grown by ~1.9x over the past...

ACC missed our estimate primarily due to higher-than-estimated increase in variable costs (up 24% YoY/20% QoQ) in 4QCY21. EBITDA was at INR5.6b v/s estimated INR6.7b, while EBITDA/t stood at INR741 v/s estimated INR966. Adj. Profit declined 26% YoY to INR3.2b v/s estimated INR4.1b....

ACC has delivered 11% EBITDA/te CAGR over CY16-CY21E vs 7% for our coverage universe led by increased cost efficiencies. ACC’s EBITDA/te inched up to Rs1,127/te during 9MCY21E resulting in narrowing of the gap vs peers.

We recommend a BUY rating on the stock with a target price of Rs 2,480/share

ACC’s Q3CY21 EBITDA at Rs7.1bn (up 6% YoY) was broadly in line with consensus estimates. Total cost/te increased 4.6% QoQ (6.8% YoY) primarily led by higher fuel cost, and packing materials and maintenance costs. Blended EBITDA/te (including RMC) grew 7% YoY and declined 15% QoQ to Rs1,060/te (ISec: Rs977/te). While investor concern around sharp cost increases seem valid, industry has demonstrated strong pricing resilience in the past. Our recent channel checks suggest companies have increased prices by Rs15-20/bag across regions.

Cement volumes in line with our expectation: Volumes grew 1.2% YoY to 6.6mnt (PLe:6.6mnt). Capacity utilisation in Q3CY21 improved by 200bps QoQ to 79%. Ready Mix concrete (RMC) volumes grew 48% YoY (+17% QoQ) at...