Arihant Capital has given Accumulate recommendation for ACC with a target price of Rs. 2187 in its research report issued on Apr 20, 2021
Arihant Capital’s research report on ACC
ACC Limited reported robust set of numbers for Q1CY21. Revenue from operations showed a healthy growth YoY basis and grew by 22.6%, however on QoQ basis revenue from operations grew only by 3.5% to INR 4292 cr in line with our estimate of INR 4296 cr. Revenue from Cement grew by 22.6% YoY and 2.7% QoQ to INR 3981 cr. Revenue from ready mix concrete declined by 7.6% YoY, however rose by 15% QoQ to INR 360 cr. Sales Volume grew by 21% YoY and 3.9% Q0Q to 8 million tonne. Realization/ton grew mutedly by 1.1% YoY but declined by 0.3% QoQ to INR 5365. Reported EBIDTA grew by 46.5% YoY and 50.3% QoQ to INR 860 cr above our estimate of INR 679 Cr. Adjusted EBIDTA for Q4CY20 stood at INR 701 cr after adjusting for one off expense of state industrial policy charge of INR 129 cr due to time value of money computed based on expected credit loss method included in other expenses.
At CMP of INR 1877 the stock is trading at a EV/EBIDTA multiple of 11.5x to its CY20 EBIDTA of INR 2355 cr. ,we value the stock at EV/EBIDTA multiple 10.0x to its CY22E EBIDTA of INR 3353 cr to arrive at a target price of INR 2187 and maintain Accumulate rating on the stock.