KR Choksey has given Accumulate recommendation for ACC with a target price of Rs. 2342 in its research report issued on Oct 19, 2022

KR Choksey’s research report on ACC

In Q3CY22, ACC reported consolidated revenue growth of 6.4% YoY/-10.8% QoQ at INR 39,873 mn, which was 6% below our estimate. Cement sales volume saw a growth of 4.3% YoY/-9.4% QoQ to 6.85 MT. Cement realization saw a modest growth of 1.3% YoY/-1.9% QoQ at INR 5,389/ton. EBITDA was down by a whopping 97.7% YoY/96.2% QoQ at INR 164 mn, substantially below (95.6% below) our estimate. EBITDA margin contracted by 1859 bps YoY/913 bps QoQ to 0.4%. The severe contraction in margin can be attributed to steep rise in Power & Fuel costs (67.1% YoY/0.4% QoQ) as well as higher raw material prices. ACC reported loss of INR 873 mn at consolidated PAT level on account of severe fall in EBITDA. PAT margin suffered a contraction of 1420 bps YoY/728 bps QoQ to -2.2% for Q3CY22.


ACC has changed its accounting year from December end to March end from this quarter. Hence, FY23E will be 15-month period for ACC. We now value the stock at 12x FY24E EV/EBITDA, which yields a target price of INR 2,342 per share (earlier INR 2,262 per share), giving an upside potential of 5.6% from CMP. Accordingly, we maintain our ‘ACCUMULATE’ rating on the shares of ACC.

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