ACC - Improving Profitability To Narrow Valuation Gap: ICICI Securities
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ICICI Securities Report
ACC Ltd. has delivered 11% Ebitda/tonne compound annual growth rate over CY16-CY21E versus 7% for our coverage universe led by increased cost efficiencies.
ACC’s Ebitda/tonne inched up to Rs 1,127/tonne during nine months-CY21E resulting in narrowing of the gap versus peers. With higher cost efficiencies via project Parvat, master supply agreement with Ambuja Cements Ltd. and better market/product mix, this gap may shrink further, in our view.
Ametha expansion (of five million tonnes) provides volume visibility over CY22E-CY24E. Net cash may further increase up to Rs 88 billion by CY23E from Rs 60 billion in H1 CY21 thereby increasing probability of higher dividend payout.
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