ACC Q3 Results Review- Profitability Picked Up: IDBI Capital

IDBI Capital Report

ACC Ltd's Q3 FY24 Ebitda beat our and consensus estimates by 20% and 27%. Ebitda beat was led by

1. Volume growth at 16% YoY better than our estimate of 10%

2. Lower other expenses at Rs 582/tonne versus Rs 689/tonne QoQ and

3. Lower freight costs at Rs 1082/tonne versus Rs1177/tonne QoQ.

ACC is expected to see its installed capacity increasing by 4%/6% in FY25E/26E. Though the addition is lower than Ambuja Cement but in next round of capex for Adani cement, ACC is expected to get larger share.

On ACC, we retain 'Buy' rating with revised target price of Rs 3,224 (earlier Rs 2148) as we increased valuation multiple to 12 times versus 10 times earlier roll forward target price to FY26E versus FY25E earlier.

ACC profitability (Ebitda/tonne) has seen sharp improvement and we see this sustaining, which will narrow valuation discount (of 50%) with its peers group.

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