Motilal Oswal has given Neutral recommendation for ACC with a target price of Rs. 2430 in its research report issued on Oct 17, 2022

Motilal Oswal’s research report on ACC

ACC reported a dismal set of 3QFY23 earnings as higher energy costs impacted operating metrics adversely. EBITDA stood at a mere INR154m (est. INR2b), though revenue was 2% above our estimate. EBITDA/t of INR23 and OPM of 0.4% was at historically low levels. Adjusted loss stood at INR748m v/s our estimate of a profit of INR577m. The decline in coal/petcoke prices and discontinuation of royalty payments to Holcim (1% of sales; ~INR53/t) should aid the margin recovery in 2HFY23. We factor in an EBITDA/t of ~INR620 between Oct’22 and Mar’23. As the company has changed its financial year-end to March from December, we adjust our earnings for the same. On a like-to-like basis, our EBITDA estimate for CY22/CY23 is being downgraded by 17%/10% and EPS estimate is being cut by 23%/13%. We await clarity from the new management on its capex and cost-saving plans to turn constructive on the stock as it has spoken about its ambitious growth plans for the next few years.


We maintain our Neutral rating with a TP of INR2,430 (from INR2,515 earlier), based on 12x Sep’24E EV/EBITDA (from Mar’24E EV/EBITDA earlier).

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