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Result Synopsis

ACC Ltd (ACC) reported in-line revenue of Rs45.4bn (+7% y/y & +14% q/q) largely supported by overall volume growth of +3% y/y and +12% q/q to 8MT, aided by pickup in construction activities. EBITDA/PAT came at Rs3.8/1.9bn, declined by 32/43% y/y respectively. In Q4CY22, ACC charged exceptional items of Rs791mn towards a) one time Information technology transition cost b) towards special incentives. ACC’s total cost/te came 4% below YSECe to Rs5400 (+10% y/y) softened by 7% sequentially resulting in EBITDA/te of Rs492 beat by 37% to YSECe (v/s Rs24/te in Q3CY22).

ACC recently commissioned WHRS at Kymore & Jamul and GU at Tikaria of 1.6 MTPA. While other ongoing expansions of Ametha 2.7MTPA Clinker & 1MTPA Cement capacity and Salai Banwa 2.2MTPA are on track which would take total capacity to ~39MTPA by Q2FY24E. As a result, we believe the recently added & upcoming capacity in the central market will improve the volume growth by +8-10% over FY23-25E. Due to various debottlenecking initiatives, ACC’s AFR consumption volume increased by +33% In Q4CY22. Similarly envisaging on 1) Cost normalization 2) Improving operating efficiency 3) Incremental volumes, we believe ACC’s EBITDA to improve to +Rs900/te by FY25E. By scaling up its green power (WHRS/Solar/ Wind capacity to 75/82/19MW) & alternative fuel share along with debottlenecking of various plants will be margin accretive. ACC is a net cash company with cash & cash equivalent of Rs29bn (as of Dec’22) and would be generating FCF of Rs45.2bn over FY24-25E would aid to fund its expansion aggressively. At CMP stock trades at 10/7x EV/EBITDA on FY24/25E. We rolled our estimate to FY25E and arrived at a BUY rating with revised price target of Rs2488, valuing the stock at 10x EV/EBITDA on FY25E.

Result Highlights

? ACC delivered cement volume growth of +3% y/y and +12% q/q to 7.7MT owing to higher demand aided by pickup in construction activities. Similarly, RMC volume came in-line at 0.79mm3, up by +8% y/y and +5% q/q in this quarter.

? NSR increased by +4% y/y and +1% q/q but remained 2% below YSECe, as a result revenue came at Rs45.4bn (in-line with YSECe) up by +7% y/y and +14% q/q. ? EBITDA came at Rs3.8bn (beat YSECe by 40%) in Q4CY22, whereas declined by 32% y/y but revived from multi-year low of Rs164mn in Q3CY22.

? ACC’s total cost/te came 4% below YSECe to Rs5400 (+10% y/y) while softened by 7% sequentially. As a result, EBITDA/te beat YSECe by 37% to Rs492. ? ACC’s Adj. PAT beat YSECe by 86% to Rs1.9bn, while declined by 32% y/y in Q4CY22 v/s net loss of Rs711mn in Q3CY23

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