ACC Ltd - Q4 CY20 Result Update - YES Securities

(Rating: REDUCE, TP: Rs 1,845, Upside 4%)

- Q4CY20 of ACC was marked by distinct volume underperformance (-0.6% y/y) vis-à-vis industry growth rate (+5-7% y/y) and our estimates (+6% y/y). However EBITDA/te at Rs 880 was ~8% higher than our estimates translating into EBITDA of Rs 7 bn for the quarter (vs. our estimates of Rs 6.97 bn).

- ACC has commissioned 1.4 MTPA brownfield grinding unit in Jharkhand during Jan 2021. Notwithstanding the fact that company's 4.8 MTPA expansion in Central market along with investments in WHRS system in East and Central plants would drive operating profits, these triggers remain fairly distant in nature as company would enjoy benefits of the same post CY22E.

- In the medium term, we expect volume/EBITDA CAGR of 12.2%/5.5% over CY20-CY22E. Further, balance sheet of ACC will continue to be strong as we expect net cash reserves to remain stable at ~Rs 60 bn despite expected capex of Rs 36 bn over next two years.

- At CMP of Rs 1,776, ACC is trading at EV/EBITDA of 9.9x and EV/te of ~$92 on CY22E. We continue to assign EV/EBITDA multiple of 10x on CY22E and arrive at TP of Rs 1,845/share with potential upside of 4% (previous TP of Rs 1,804). We downgrade ACC from BUY to REDUCE.

Shares of ACC LTD. was last trading in BSE at Rs.1766.45 as compared to the previous close of Rs. 1776.25. The total number of shares traded during the day was 149764 in over 7049 trades.

The stock hit an intraday high of Rs. 1812.35 and intraday low of 1742.4. The net turnover during the day was Rs. 265696355.

Source : Equity Bulls

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