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Choice Equity Broking's report on ACC

We forecast ACC EBITDA to grow at a CAGR of 35.5% over FY25–28E, supported by our assumptions of volume growth at 12.0%/8.0%/8.0% and realisation growth of 1.5%/0.5%/0.5% in FY26E/FY27E/FY28E, respectively. We remain positive on ACC. We arrive at a 1-year forward TP of INR 2,475/share for ACC. We now value ACC on our EV/CE framework – we assign an EV/CE multiple of 2.4x for FY27E/28E, which we believe is conservative given the increase of ROCE from 5.7% in FY25 to 14.9% in FY28E under reasonable operational assumptions. This valuation framework gives us the flexibility to assign a commensurate valuation multiple based on an objective assessment of the quantifiable forecast financial performance of the company. We do a sanity check of our EV/CE TP using implied EV/EBITDA, P/BV, and P/E multiples. On our TP of INR 2,475, FY28E implied EVEBITDA/PB/PE multiples are 13.3x/2.1x/15.5x. Management has indicated the cement industry is expected to grow by 7-8% in FY26. Slowdown in construction activities due to heatwaves, sudden large spike in petcoke prices as a result of various global dynamics are risks to our BUY rating.

Outlook

We maintain our BUY rating with a TP to INR2,475. We maintain our Volume / EBITDA per ton and EBITDA assumptions (Exhibit 2), We now incorporate a robust EV to CE (Enterprise Value to Capital Employed) based valuation framework (Exhibit 3) which allows us a rational basis to assign a valuation multiple that captures fundamentals in a better way.

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ACC - 30042025 - choice

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