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ACC: Healthy volume growth led to profitability improvement

ICICIdirect Research 25 Apr 2025 DISCLAIMER

Volume growth remained healthy at ~14% YoY (+11% QoQ) in Q4FY25, possibly led by increase in share of volumes under MSA (master supply agreement) with Parent company Ambuja Cements and sister concerns (Sanghi & Penna)

Realisation remained down 2.7% YoY but improved 2.7% QoQ, mainly led by increase in share of premium products and improvement in prices during the quarter
Revenue was at Rs 6008.5 crore, up by 11.3% YoY. Sequentially, revenue is up 14.2% (after adjusting Rs 636 crore of excise duty refund in Q3FY25)
Cost structure remained lower (flattish YoY, -2% QoQ), led by lower energy cost, freight cost and positive operating leverage

EBITDA/ton improved by 52% QoQ to Rs 673/ton, led by lower costs and improvement in realisation. However, it remained lower by 16% on YoY basis, mainly due to lower realisations. Subsequently, EBITDA was down 4.4% YoY (+69.4% QoQ) to Rs 800 crore

Going ahead, we believe that company’s operational performance would further improve over FY26E-27E. Volume growth is expected to remain healthy driven by pick-up in demand and capacity expansion of 4 mtpa in FY26E. Also, master supply agreement with group companies would also help in overall sales volume. Improvement in realizations and continuous focus on operational efficiencies in terms of logistics and power & fuel (management guided Rs 500+ reduction in total cost/ton at the group level in the next 3 years)

Overall outlook remains positive on ACC. Currently, we have a Buy rating on ACC with a target price of Rs 3225. However, we will be revisiting our estimates post Ambuja’s earnings call next week.

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