Neutral ACC; Target Price Revised to Rs 1310 by Motilal Oswal

Motilal Oswal Revises ACC's Earnings Outlook Amid Ongoing Market Volatility

Motilal Oswal's latest research report on ACC highlights a decline in the company's 4QFY26 earnings, falling short of the research firm's estimates. ACC's earnings before interest, taxes, depreciation, and amortization (EBITDA) declined by approximately 23% year-over-year (YoY) to INR6.2 billion, representing a 22% miss.

The EBITDA margin, also known as EBITDA/t, fell by 28% YoY to INR518, lower than the estimated INR605. Additionally, the operating profit margin (OPM) contracted by 4.5 percentage points (pp) YoY to approximately 9%, which is a 3pp miss compared to the research firm's estimate. Adjusted profit after tax (PAT) declined by approximately 51% YoY to INR2.5 billion, representing a 42% miss.

Management Outlook

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According to the research report, ACC's management has indicated that demand growth in FY27 is expected to remain soft at 5%, primarily due to a weak monsoon season. This could negatively impact agricultural output and housing demand. However, India's long-term infrastructure growth outlook remains strong. The ongoing West Asia crises have also led to volatile fuel prices, affecting the company's operations.

Outlook and Valuation

Motilal Oswal estimates ACC's EBITDA/t to be at INR617/INR695 in FY27/FY28, higher than the FY26 level of INR614. The company's valuations have seen significant de-rating due to weak profitability. Based on a 6.0x FY28E enterprise value to EBITDA (EV/EBITDA) multiple, Motilal Oswal values the stock at INR1,310 and reiterates a Neutral recommendation.

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