The cement sector is a cornerstone of India’s economy, playing a crucial role in infrastructure development, housing, and construction. With the government’s strong push for infrastructure projects like roads, railways, and housing under schemes such as PMAY (Pradhan Mantri Awaas Yojna), the sector has immense growth potential.
Although the sector witnessed modest growth of 2-3% in Q1FY25 due to the Lok Sabha elections, ICRA estimates a robust 7-8% growth for FY25, driven by rising demand in infrastructure and housing.
Major players like UltraTech, ACC-Ambuja, Shree Cement, and Dalmia Cement are set to add over 42 million tonnes of capacity, increasing their market share from 48% in FY23 to an expected 54% by FY26, ensuring sustained growth and competitiveness.
Share Price
The shares of ACC Ltd. are currently trading at Rs. 2,233 up by 0.17% from its previous close of Rs. 2,229.35 as of December 13, 2024.
Future Capacity Expansion/Plans
ACC Cement is set for strong growth, currently producing 89 million tonnes per annum (MTPA) of cement, with 22 MTPA added in the last two years. Ongoing projects nearing completion are further expected to boost capacity to over 100 MTPA by the end of this financial year.
The company aims to reach a total capacity of 140 MTPA by FY28, with 21 MTPA already under execution and more projects in progress.
Since September 2022, it has successfully reduced costs by 18% through strategic investments in operations and infrastructure, strengthening its position as a cost leader. With well-known brands and a strong market presence, the company is firmly positioned for long-term growth and industry leadership.
Scope of Growth
Housing Growth Potential
The government’s renewed commitment to the “Housing for All” initiative is driving growth in the housing sector. The launch of a new phase under the PMAY scheme aims to construct 3 crore houses in urban and rural areas, ensuring a steady demand for construction materials like cement.
Infrastructure as a Key Driver
Rapid infrastructure development continues to fuel India’s economy with major initiatives like PM Gati Shakti, the National Logistics Policy, and the Smart Cities Mission. With a substantial
budget of ₹11 lakh crore, projects include industrial parks, modernizing railways, and expanding metro networks to 1,700 km across 27 cities by 2025.
Commercial Construction Surge
Rising demand for office spaces and the government’s focus on industrial Capex, supported by the PLI scheme, are enhancing manufacturing capabilities, and boosting commercial and industrial construction growth.
Financial Outlook
Comparing the ACC Standalone results year-over-year (YoY), we can observe the following:
Volume: The volume increased from 9.3 million tonnes in Q3 2023 to 10.2 million tonnes in Q3 2024, marking a 9.7% YoY growth.
Revenue from Operations: The revenue increased from ₹4,608 crore in Q3 2023 to ₹5,156 crore in Q3 2024, representing a 12.0% YoY growth.
EBITDA: The EBITDA (Excl. Other Income) increased from ₹429 crore in Q3 2023 to ₹677 crore in Q3 2024, a significant 57.8% YoY growth, indicating improved operational efficiency.
Net Profit: The PAT (Profit After Tax) increased from ₹234 crore in Q3 2023 to ₹384 crore in Q3 2024, a 64.1% YoY growth, demonstrating a stronger bottom line performance.
Overall, the ACC Standalone results show robust YoY growth across key metrics, including volume, revenue, EBITDA, and net profit, reflecting the company’s ability to capitalize on market opportunities and drive operational excellence.
Geographical Presence
ACC Cement has a strong presence across 31 states and union territories in India, covering approximately 75% of the country’s 625+ districts. The company’s cement capacity stands at 89 MTPA, indicating its ability to efficiently produce cement.
ACC’s presence is particularly dominant in the southern and eastern regions of India. In the south, the company has multiple integrated plants, captive ships, and bulk cement terminals in states like Andhra Pradesh, Telangana, and Tamil Nadu. Similarly, in the east, ACC has a significant foothold in states like Odisha and West Bengal, with integrated plants, grinding units, and a strong distribution network.
This widespread geographical coverage and diverse production capabilities position ACC Cement as a leading player in the Indian cement industry, with the ability to cater to the growing infrastructure and construction demands across the country.
Targets Given By KR Choksey
KR Choksey: Has given a BUY rating on the stock with an upside potential of 24% from the current market price, with a price target of 2790. According to the brokerage ACC Q2FY25 revenue and earnings beat our estimates, however, EBITDA performance was below our expectations. Revenue increased by 4.0 YoY (-10.5% QoQ) to INR 46,135 Mn, driven by higher volume growth of 14.8%, beating our estimates.
Conclusion
The analysis of ACC Limited presents a compelling investment case. The company’s robust financial performance, marked by volume growth, revenue increase, and substantial improvements in EBITDA and net profit, underscores its operational efficiency. ACC’s strong geographical presence, particularly in the southern and eastern regions, positions it well to capitalize on the growing infrastructure and construction demands in India. The brokerage’s positive outlook, with a BUY rating and an upside potential of 24%, further reinforces the company’s value proposition. Overall, ACC appears to be a promising investment option in the cement sector, offering investors an opportunity for long-term growth and value creation.
Written By: Dipangshu Kundu
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