ACC - Even Keel In Choppy Seas: ICICI Securities

ICICI Securities Report

In current times of cement price weakness (hikes attempted in April 2024 have not only reversed but prices have slipped further in May-24), ACC Ltd. appears a compelling bet given-

1. limited risk of earnings downgrade due to demonstrated cost savings and potent volume benefit from fellow subsidiary Sanghi Industries (under MSA);

2. imminent ordering of 4mtpa clinker line in South India, in the near term, offering growth visibility.

3. Further, in the backdrop of it being a beneficiary of the Rs 530/tonne cost saving guidance given by parent Ambuja Cement Ltd. by FY28;

4. strong balance sheet (net cash being ~10% of market cap) and healthy return on equities (13-15%);

5. odds of eventual consolidation with parent Ambuja Cement (over the long term, in our view) and

6. undemanding current valuation of less than 10 times FY26E enterprise value/Ebitda – ACC appears evenly keeled to tide the choppy sector outlook. Maintain Buy with target price of Rs 3,272.

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