ACC Q3 Results Review - Higher Volume And Lower Opex/t Led EBITDA Beat: Motilal Oswal

Motilal Oswal Report

ACC Ltd.'s reported robust performance with Ebitda growing ~139% YoY to Rs 9 billion in Q3 FY24, 34%/27% above our/consensus estimates. Sales volume grew 15% YoY to 8.9mt (11% above our estimates). Ebitda/t doubled YoY to Rs 1,017 (estimate Rs 840). operating profit margins surged 10pp YoY to 18.4% (est. 15%). Adjusted. net profit stood at Rs 5.3 billion (212% YoY; 35% above our estimates).

The management expected the cement demand to grow at 7-8% YoY, mainly led by investment in infrastructure and housing projects. It commissioned 1mtpa grinding capacity at Ametha plant in Madhya Pradesh (earlier commissioned 3.3mtpa clinker in September 2023).

Recently, it acquired a 55% stake in Asian Concretes and Cements, which along with its subsidiary has 2.8 million tonnes per annum grinding capacity in the northern markets. These will aid higher volume growth for the company going forward.

We raised our Ebitdaestimates by 14%/8%/10% for FY24/FY25/FY26, given the outperformance in Q3 and improving outlook. ACC trades at 11 times/9.5 times FY25E/FY26E. We value ACC at 10 times FY26E enterprise value/Ebitda to arrive at our revised target price of Rs 2,550 (earlier 2,300). We reiterate our Neutral rating on the stock.

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