Geojit Financial Services has reiterated an ACCUMULATE call for ACC Limited, setting a target price of Rs 2,134 for investors. Their latest research report underlines the company’s vigorous volume growth and cost-optimization measures, reflecting a favorable outlook in a rapidly evolving cement sector. ACC Limited, part of the Adani Group, has demonstrated strong momentum backed by robust volume expansion, lower fuel costs, and strategic operational enhancements. Geojit Financial Services recommends an ACCUMULATE stance, citing the cement producer’s growing synergy with group companies, expected government infrastructure spend, and its ongoing capacity augmentations as catalysts for medium- to long-term growth. With quarterly volumes at an all-time high, and management initiatives to elevate alternative fuel usage and green power consumption, ACC appears positioned to benefit from broad-based demand drivers. The report highlights the company’s aim to achieve a consolidated 140 MTPA within the Adani ecosystem by FY28.

1. Corporate Profile and Strategic Focus

ACC Limited operates nationwide with 20 manufacturing sites and 99 concrete plants, creating a significant footprint in the Indian cement and ready-mix concrete landscape. The company’s affiliation with the Adani Group has amplified its drive toward higher capacity utilization and operational synergy. A key focus includes:

• Nationwide Reach: ACC’s extensive production and distribution network aims to service growing infrastructure and housing demands across India.
• Operational Efficiency: The firm’s optimized fuel basket and supply chain measures underline its strategic emphasis on cost reduction and sustainable growth.

Given the organization’s scale and ongoing investments, ACC is poised to capitalize on a nationwide surge in construction and infrastructure activities.

2. Q3FY25 Performance Highlights

ACC’s consolidated revenue for Q3FY25 grew 20.6% year-on-year to Rs 5,927 crore. Notably, clinker and cement sales volumes rose by 20.2% YoY to approximately 10.7 million tonnes, while premium product sales also registered a healthy 11% growth. Key points include:

• Highest Quarterly Volume: Achieving a record-breaking volume underscores the firm’s robust domestic demand and effective market outreach.
• Optimized Fuel Cost: Fuel cost in kiln operations declined 10% YoY, largely driven by the use of cheaper imported petcoke and inter-company synergies within the Adani Group.
• Rising Green Power Consumption: From 13% in previous quarters, the company has propelled green power usage to nearly 18.7%, showcasing a commitment to more sustainable operations.
• EBITDA Growth: EBITDA rose 23.3% YoY, boosted by volume expansion, supply-chain fine-tuning, and logistics cost controls.

3. Expansion Plans and Capacity Targets

ACC plays a pivotal role in the Adani Group’s ambition to reach a combined output of 140 MTPA by FY28. During Q3FY25, 8 MTPA capacity was commissioned, with an additional 14 grinding units in the pipeline. Clinker expansions at Maratha and Bhatapara underscore the group’s readiness to scale up further. According to management:

• Progressive Commissioning: The near-term goal is to surpass 100 MTPA by Q4FY25, following which the group projects to reach 118 MTPA by the end of FY26.
• Acquisitions: The impending acquisition of Orient Cement should lift the group’s operating capacity to 97 MTPA, buttressing ACC’s role within the conglomerate.
• Sustainability Efforts: ACC aims for 60% green power usage by FY30, signaling a long-term commitment to environmental responsibility and cost optimization.

4. Cost Optimization and Fuel Strategy

ACC’s power and fuel costs declined 7% YoY to Rs 1,262 per tonne in Q3FY25 due to:

• Efficient Fuel Mix: Substitution of traditional fuels with lower-cost petcoke and consistent thermal improvements (a reduction to 732 kcal from 739 kcal).
• Logistics Efficiency: A 9% drop in freight costs (Rs 939/tonne) stems from route optimization, better fleet management, and digital tracking initiatives.

These strategic cost levers strengthen the company’s margin profile and position ACC favorably against competition in an increasingly price-sensitive market.

5. Financial Snapshot and Rating

Geojit Financial Services projects a healthy outlook for ACC over the next few quarters, driven by:

• Consolidated Sales: Expected to grow at a moderate pace, reaching around Rs 21,085 crore in FY25 and Rs 22,959 crore in FY26.
• EBITDA Margin: Although the margin dipped slightly in recent quarters, improved synergy and cost cuts could elevate margins to around 15.8% by FY27.
• Target Price: Reiterating an ACCUMULATE recommendation, Geojit sets a target of Rs 2,134, implying about a 14% upside from current levels.

ACC’s ability to navigate volatile commodity cycles, coupled with strategic expansions, supports the stock’s medium-term potential.

6. Recommended Levels and Investor Strategy

Based on the data provided and Geojit’s analysis:

• Buy/Accumulation Zone: Investors could look to accumulate ACC shares near Rs 1,830–1,870, where the stock appears to have a relatively solid floor.
• Support Levels: Short-term support stands around Rs 1,800, with extended support in the vicinity of Rs 1,750 if broader market weakness persists.
• Resistance and Upside: A break above Rs 1,940 may signal a bullish continuation, with an immediate upside target of Rs 2,000–2,050. Successful consolidation above these levels can drive the stock closer to the Rs 2,134 mark, in line with the research house’s forecast.

Long-term participants aiming for capital appreciation might retain positions even beyond the suggested target, given ACC’s scale and the sector’s favorable outlook.

7. Growth Catalysts for the Cement Industry

ACC stands to benefit significantly from multiple external catalysts:

• Government Expenditure: Infrastructure projects, rural housing, and highway expansions are set to fuel cement demand, particularly in Tier 2 and Tier 3 cities.
• Urban Revitalization: Greater urbanization and ongoing real estate developments across metro regions are positive tailwinds for high-volume players like ACC.
• Sustainability Mandates: The group’s shift to green power and alternative fuels should curb long-term operating costs and align with evolving ESG standards, appealing to global investors.

8. Risks and Considerations

While the trajectory appears positive, investors should account for:

• Volatility in Energy Costs: Fuel prices remain a key determinant of cement margins, and any sudden spike could narrow profitability.
• Execution Delays: Although capacity expansion plans are ambitious, unforeseen operational hurdles may lead to timeline setbacks.
• Macroeconomic Fluctuations: A slowdown in government spending or real estate activity could temper near-term demand, impacting volumes.

Nonetheless, ACC’s track record of operational efficiency, along with synergies from the Adani Group, adds resilience to its long-term growth narrative.

9. Conclusion

ACC Limited’s Q3FY25 performance underscores its robust ability to scale, embrace sustainability, and optimize costs. By blending volume expansion strategies with group-led synergies, the company is poised to accelerate growth amid a favorable infrastructure pipeline. Geojit Financial Services’ rating of ACCUMULATE with a target price of Rs 2,134 signals optimism around ACC’s operational strength, cost management, and consistent progress toward higher capacity. For investors seeking exposure in India’s resilient cement segment, ACC remains a noteworthy candidate, with a balanced near-term approach supported by a longer-term vision of market leadership and strong shareholder returns.