Buy ACC, target price Rs 2615: ICICI Securities

ICICI Securities has buy call on ACC with a target price of Rs 2615. The current market price of ACC Ltd. is Rs 2111.55.
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 39233.45 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 31-03-2022, the company reported a Consolidated Total Income of Rs 4485.01 Crore, up 4.80 % from last quarter Total Income of Rs 4279.64 Crore and up 3.44 % from last year same quarter Total Income of Rs 4335.94 Crore. Company reported net profit after tax of Rs 392.69 Crore in latest quarter.

Investment Rationale
ACC’s Q1CY22 EBITDA of Rs6.35bn (down 26% YoY) was broadly in-line with consensus estimates. Total cost/te continued its upward trajectory as it rose 1.6% QoQ and 13% YoY primarily due to higher fuel prices, while blended realisations were up 2.7% QoQ and 5.0% YoY, resulting in blended EBITDA/te increasing 12% QoQ but declining 24% YoY to Rs812/te (I-Sec: Rs779/te). Volumes including clinker sales were down 2% YoY and up 2% QoQ at 7.8mnte. Factoring in higher cost escalations, it cuts CY22E-CY23E EBITDA by 16-3% and reduces target price to Rs2,615/sh (earlier: Rs2,710/sh) based on 11x Mar’24E EV/E. It maintains BUY. Key risks: Lower demand/prices and sharp cost escalations.

Promoter/FII Holdings
Promoters held 54.53 per cent stake in the company as of 31-Mar-2022, while FIIs owned 22.44 per cent, DIIs 10.29 per cent.