ACC Ltd. share price target

We value ACC at 11x (10x earlier) its CY22E EV/EBITDA to arrive at TP of Rs.2230, an upside of 19% from the current level.

New capacities to help gain lost ground from CY22E onwards Over the past five years, ACC has lost market share to other large players with no major new capacities coming up during this period either through greenfield or M&A; route. While industry capacity grew at 7% CAGR, the company managed to increase its capacity from 30.5 MT to 33 MT i.e. at 2% CAGR. As a result, ACC's production share declined from 14% in FY14 to 11% in FY20. To address this growth concern, the company is increasing its capacity to 39.3 MT with total capex of ~| 3000 crore. This would be mainly...

ACC's Q1CY21 EBITDA is 14% higher than our estimate. Beat in the number is led by volume and lower costs. Volume in the quarter has increased by 22% YoY and opex/t is down Rs350/t QoQ. Though realization was down 1% QoQ but EBITDA/t was up 18% QoQ and was supported by higher volume and lower raw material cost, other expenses. ACC's has re-iterated greenfield expansion of 3.7mtpa Ametha (MP) plant in Q2CY22, this will increase its capacity by 10%. We have factored better volume and lower costs in CY21/22, this has resulted in higher EBITDA by 5%/10% respectively. Accordingly our TP is revised to Rs2143 (earlier Rs1875). Maintain ACCUMULATE rating....

ACC's 1QCY21 result surprised positively on strong cost control. EBITDA grew 47% YoY on 3% YoY decline in total cost/t driving EBITDA/t to INR1,078. ACC's Central India expansion is expected to get commissioned in 2HCY22, which we estimate would drive an 11% CAGR in volumes over CY2023E. We expect costs to remain in check, supported by a master supply agreement (MSA) with Ambuja as well as supply chain efficiencies. We raise CY21/CY22...

We initiate coverage on ACC Limited (ACC) with a BUY recommendation and a Target Price (TP) of Rs. 2100/share which implies an upside of 17% from the current levels.

Despite company's strong financial position, cash flows, increasing infrastructure projects, government spending etc., rising pet coke and oil prices will pose threat to its recovery. Hence, we maintain our HOLD...

ACC's Q4CY20 Adj. EBITDA is 7% lower than our estimate. Volume in the quarter has declined by 1% YoY and adjusted EBITDA/t stood at Rs908 (vs Rs1033/t QoQ). Cash in the books remains strong at Rs58bn (18% of Mkt Cap) and company has announced dividend of Rs14/sh in CY20, which is same as CY19. Due to lack of capacity addition, ACC has lost market share in the last 3-4 years. And company plans to correct this with addition of 5.4mtpa over CY21, CY22. In CY21/22E we factor volume to increase by 19%/3% YoY and EBITDA/t of Rs955/952 respectively. We maintain our estimate and TP...

New capacities to help gain lost ground from CY22E onwards In the past five years, ACC has lost market share to other large players with no major new capacities coming in place in this period either via greenfield or M&A; route. While industry capacity grew at CAGR of 7%, the company managed to increase its capacity from 30.5 MT to 33 MT at 2% CAGR. As a result, ACC's production share declined from 14% in FY14 to 11% in FY20. To address this growth concern, the company is adding 6.2 MT new cement capacities with capex of ~| 3000 crore. This would be mainly funded...

ACC and Ambuja Cement (ACEM) board has approved continuation of existing technology and know-how agreement ('TKH Agreement') at 1% of net sales with Holcim Technology Limited. We understand this will come as relief for both the company, as street feared that TKH fee will see an increase. Both the stocks were down by 8-10% in the last one month relative to its large cap peers like UTCEM, SRCM. We have factored TKH fee at 1% of net sales in CY21E and CY22E and thus on unchanged earnings estimate we re-iterate BUY rating on ACC (TP Rs1,879) and HOLD on Ambuja Cement (TP Rs245). We prefer ACC due to a) simplified structure vs holding company structure...