This Adani-backed cement company fueled optimism on the Dalal Street after Motilal Oswal highlighted its bullishness on this stock. In this article, we will try to understand the rationale behind it.
With a market capitalisation of Rs 34,757.54 crores, the shares of ACC Ltd are currently trading at Rs 1850.90 per share, down by 33 percent from its 52-week high of Rs 2,844 per share. In the last one year, the stock has plummeted by 24 percent.
Motilal Oswal’s Rationale
It reported Q4 FY25 EBITDA of Rs 800 crore with a 15% beat over estimates. Additionally, its adjusted PAT rose 4% YoY to Rs. 510 crore, beating estimates by 26%, and also the sales volumes rose 14% YoY to 11.9 million tons, exceeding expectations.
ACC has acquired land in the Western part of India for strategic capacity additions, including grinding units and potential coal mine acquisitions. Its investments include Rs 750 crore in railway wagons (GCFC), Rs 500 crore in grinding units, and Waste Heat Recovery Systems (WHRS) at Chanda and Wadi-2 line.
Adding to its future, Motilal Oswal said that its FY25- 27 EBITDA CAGR is estimated at 27%, and PAT CAGR at 30%. EBITDA per ton is expected to rise from Rs 565 in FY25 to Rs 760 in FY27, and its volume growth is projected at 10% CAGR over FY25–FY27.
That is why, Motilal Oswal said that the stock trades at 10x FY26E and 8x FY27E EV/EBITDA, which is considered inexpensive, and the valuation is based on 10x FY27E EV/EBITDA, resulting in a target price of Rs 2,400 signalling an upside of 29.66% from its current market price of Rs 1850.90.
Financial Highlights
ACC reported a consolidated revenue of Rs 21,762 crores in FY25, up by 9 percent from its FY24 revenue of Rs 19,959 crores. It increased by 12.17 percent YoY from 5,409 crores in Q4 FY24 to 6,067 crores in Q4 FY25. Additionally, on a QoQ basis, it rose by 2.36 percent from 5,927 crores in Q3 FY25 to 6,067 crores in Q4 FY25.
It posted a net profit of Rs 2,402 crores in FY25, up by 2.78 percent, from its FY24 net profit of Rs 2,337 crores. It declined by 20.37 percent YoY from 943 crores in Q4 FY24 to 751 crores in Q4 FY25. Additionally, on a QoQ basis, it declined by 31.23 percent from 1,092 crores in Q3 FY25 to 751 crores in Q4 FY25.
Written by Satyajeet Mukherjee
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