The target price for ACC is set at ₹2,545, while the current market price stands at ₹1,993.80. The company reported weak numbers for Q3FY25, with adjusted EBITDA coming in at ₹470 crore, down 48 per cent year-on-year and 25 per cent below expectations.
The reported numbers were inflated by one-off items including a reversal of tax provision amounting to ₹530 crore and a refund of incentives/exemptions of excise duty totaling ₹637 crore. Adjusted for these items and higher income tax, the PAT stood at ₹230 crore, down 57 per cent year-on-year and 28 per cent below estimates.
Despite a strong 20 per cent year-on-year volume growth (including MSA and Sanghi volume), margins suffered a decline due to lower realizations compared to expectations of an increase. The management anticipates improved profitability as capacity utilization of acquired capacities improves and efficiency measures take effect.
ACC is projected to achieve a 5/12 per cent revenue/EBITDA CAGR over FY24-FY27, driven by volume growth from the MSA agreement with Ambuja and additional volume from Sanghi and Penna assets. The timing and valuation of ACC’s merger with Ambuja remain concerns for the stock.
Maintaining their estimates, analysts continue to value ACC based on 10x FY27E EV/EBITDA to arrive at a target price of ₹2,545.
