Buy ACC, target price Rs 2620: Emkay Global

Emkay Global has buy call on ACC Ltd. with a target price of Rs 2620. The current market price of ACC Ltd. is Rs 2252.1.

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 41971.39 Crore) operating in Cement sector.


ACC Ltd. key Products/Revenue Segments include Cement, Other Operating Revenue, Scrap, Other Services for the year ending 31-Dec-2020.


Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 3812.31 Crore, down -3.01 % from last quarter Total Income of Rs 3930.49 Crore and up 6.41 % from last year same quarter Total Income of Rs 3582.82 Crore. Company reported net profit after tax of Rs 448.17 Crore in latest quarter.

Investment Rationale
Factoring in higher opex/ton, the brokerage marginally cuts CY22-23 EBITDA estimates. However, the brokerage raises TP by 2% to Rs2,620 as we roll over to Dec’22 from Sep’22. The revised TP is backed by a DCF analysis (11.25% WACC, 7.0% FCFF growth post FY26) and implies a 1-year forward EV/EBITDA of 11x (vs 10.4x currently).

Promoter/FII Holdings
Promoters held 54.53 per cent stake in the company as of 30-Sep-2021, while FIIs owned 23.69 per cent, DIIs 9.29 per cent.