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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-
limited risk of earnings downgrade due to demonstrated cost savings and potent volume benefit from fellow subsidiary Sanghi Industries (under MSA);
imminent ordering of 4mtpa clinker line in South India, in the near term, offering growth visibility.
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;
strong balance sheet (net cash being ~10% of market cap) and healthy return on equities (13-15%);
odds of eventual consolidation with parent Ambuja Cement (over the long term, in our view) and
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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