KR Choksey's research report on ACC
ACC reported revenue growth of 49.3% YoY at INR 38,849 mn, 17.9% above our estimate. Cement volume saw strong growth of 43.7% YoY to 6.8 MT (6.4 MT KRC estimate) from 4.8 MT in Q2CY20, mainly driven by robust demand and low base effect. EBITDA for the quarter was up by 65.5% YoY (1.1% QoQ) to INR 8,693 mn. EBITDA margin expanded by 219 bps YoY/ 233 bps QoQ to 22.4%. Margin expansion was largely due to effective cost control on the company’s part driven by efficiencies under project “Parvat”, geo-mix and network optimization. Reported PAT has more than doubled, a quantum jump of 110.2% YoY to INR 5,694 mn, beating our estimate of INR 4,120 mn by a wide margin. On sequential basis, PAT has seen a growth of 1.2%. NPM stood at 14.7%, an expansion of 425 bps YoY.
Outlook
As a result, we raise our target price for ACC from INR 2,185 per share earlier to INR 2,540 per share, valuing the company at 12.5x CY22E EV/EBITDA (earlier 10.5x CY22E EV/EBITDA), giving an upside potential of 10% over CMP. Accordingly, we reiterate our “ACCUMULATE” rating on the shares of ACC Ltd.
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