YES Securities is bullish on ACC has recommended buy rating on the stock with a target price of Rs 1532 in its research report dated July 20, 2020.
YES Securities' research report on ACC
Led by COVID inflicted lockdown measures with April 2020 being a washout month for the industry, we had expected volumes for Q2CY20 to de-grow by 33.6% y/y to 4.78 MT (official volumes have not been disclosed by the company). However, ACC delivered exceptional operating performance. On the back of strong pricing tailwinds especially for the Southern exposure of ACC and optimization of freight and misc. expenses, company posted an EBITDA of Rs 5.25 bn (-32.9% y/y) – 19%/9% above consensus/YES-Sec est. respectively. We have raised EBITDA estimates by 29.3%/6.1% for CY20E/CY21E respectively due to robust pricing scenario and phenomenal pick-up of demand post relaxation of lockdown measures.
Outlook
Currently ACC is trading at EV/EBITDA of ~8.4x and EV/te of $82 on CY21E. Taking an average of EV/EBITDA and DCF derived values, we have a target of Rs 1,532/share (implied EV/EBITDA multiple of 10x on CY21E). We have a BUY rating for the stock.
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