ACC (Q3CY20) - BUY (Target Rs1804, Upside 16%)
Amidst sluggish pace of construction and infrastructure activities in urban areas, ACC delivered a flattish volume growth y/y (volumes at 6.49 MT) during Q3CY20 on the back of strong demand scenario in IHB segment. Realizations of ACC remained resilient as NSR/te declined by 1.6% q/q as compared to decline of cement prices to the tune of 4% q/q in key operating markets of the company. Company delivered a big beat on EBITDA level - 20% above our estimates and 17% above consensus estimates. EBITDA stood at Rs 6.7 bn (+20.5% y/y) while EBITDA/te came in at Rs 1,010 (+21.8% y/y). Operational outperformance was led by 1. higher than expected NSR/te, 2. curtailed freight costs/te (sequential hike of 3.6% vs expectation of 10%) and 3. lower fixed costs. ACC is trading at EV/EBITDA of 8.4x and EV/te of ~$79 on CY22E. We assign an EV/EBITDA multiple of 10x on CY22E and arrive at revised TP of Rs 1,804/share with potential upside of 16% (previous TP of Rs 1,532). We continue to maintain our BUY rating on the stock.
Shares of ACC LTD. was last trading in BSE at Rs.1562.8 as compared to the previous close of Rs. 1561.4. The total number of shares traded during the day was 53073 in over 3247 trades.
The stock hit an intraday high of Rs. 1574 and intraday low of 1539. The net turnover during the day was Rs. 82560138.