ACC is India’s second-largest cement company with an installed capacity of ~33 mtpa. It also has presence in the ready-mix concrete (RMC) business.
Valuation: We expect revenue/PAT to grow at a CAGR of 11%/24% over CY17-19E. Although increasing cost pressure is likely to weigh on margin, improving mix, volumes ramp up and cost savings will drive EBITDA margin expansion of 250bps over CY17-19E. Recommend BUY rating on the stock with a revised target price of Rs. 1,655 based on valuation multiple of 12x CY19E EV/EBITDA.
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