Prabhudas Lilladher has given Buy recommendation for ACC with a target price of Rs. 2460 in its research report issued on Jul 20, 2021

Prabhudas Lilladher’s research report on ACC

ACC reported Q2CY21 EBITDA above our/consensus estimates by 10%/17%. EBITDA grew 65% YoY (+1% QoQ despite 14% fall in volumes) to Rs8.7bn. This is the sixth consecutive quarter of beat on our/consensus estimates. Better than expected realisations and lower costs drove the beat. ACC continued its strong work on cost front through increased coverage of volumes under Master supply agreement (MSA), reduction in energy consumption and optimisation of logistics network with reduction in lead distance.

Outlook

We expect further cost reduction of Rs115-120/t, largely on account of upcoming waste heat recovery/solar plants and upgradation of plants. Driven by improved visibility on operations and attractive valuations, we reiterate our BUY rating with revised TP of Rs2,460 (earlier Rs2,360) based on 12.5x EV/EBITDA of CY22e.

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