Buy ACC, target price Rs 2380: HDFC Securities

HDFC Securities has buy call on ACC with a target price of Rs 2380. The current market price of ACC Ltd. is Rs 2142.95.
Time period given by analyst is one year when ACC Ltd. price can reach defined target.

ACC Ltd., incorporated in the year 1936, is a Large Cap company (having a market cap of Rs 39858.79 Crore) operating in Cement sector.


ACC Ltd. key Products/Revenue Segments include Cement, Ready Mix Concrete, Other Operating Revenue, Scrap for the year ending 31-Dec-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 4522.28 Crore, up .83 % from last quarter Total Income of Rs 4485.01 Crore and up 15.06 % from last year same quarter Total Income of Rs 3930.49 Crore. Company reported net profit after tax of Rs 223.00 Crore in latest quarter.

Investment Rationale
The brokerage maintains BUY on ACC, with a lower TP of INR 2,380/share (12x its Mar-24E consolidated EBITDA). The upcoming expansions in the central market will boost its volume growth visibility from CY23 onwards. ACC is also increasing its green power mix and alternative fuel usage to mitigate the impact of rising fuel costs. In Q2CY22, while consolidated revenue rose 15% YoY (on a low base), EBITDA/APAT fell 51/61% YoY on sharp energy cost inflation. Working capital stretch led to ACC reporting negative OCF of INR 7.6bn in H1CY22 (vs INR +4.2/ 24.1bn during H1/H2CY21).

Promoter/FII Holdings
Promoters held 54.53 per cent stake in the company as of 30-Jun-2022, while FIIs owned 22.63 per cent, DIIs 10.15 per cent.