Cement major ACC Limited emerges as an investment opportunity, according to DevenChoksey Research’s BUY recommendation backed by a target price of Rs 2,128. The company’s recent Q1FY26 results highlight resilient growth, strategic capex, and operational excellence, even as input costs constrain margins. ACC’s robust volume expansion, disciplined pricing, and dynamic cost reduction initiatives position it ahead of peers in a sector riding on India’s infrastructure and housing boom. For investors, ACC offers both short-term volatility and long-term structural upside, capitalizing on sector tailwinds, valuation comfort, and prudent capital stewardship.

Company and Stock Recommendation Overview

DevenChoksey Research is steadfast in its bullish stance on ACC Ltd, underscoring a target of Rs 2,128, which translates to an upside potential of 18.2% from the current market price of Rs 1,802. This confidence is founded on ACC’s unyielding operational momentum, capacity for sector outperformance, and a growth-oriented management outlook. Importantly, the stock is trading at a discounted EV/EBITDA multiple both compared to its peers and its historical average, reinforcing the investment thesis for value-seeking professionals. The company maintains substantial market heft, reflected in its market capitalization of Rs 338,393 million, confirming its major-league stature. The resounding recommendation: BUY at current levels.

Q1FY26 Financial Performance: Resilient Growth

ACC’s first quarter financials for FY26 signal a remarkable year-over-year trajectory. Revenue leapt 17.1% to Rs 60,872 million, well exceeding analyst consensus. This surge can be attributed to robust contractual volumes, specifically leveraging bulk purchases from Ambuja Cement, where total volumes swelled 12.7% year-over-year to 11.5 MT. Despite sector-wide cost pressures, EBITDA advanced 14.6% to Rs 7,780 million, although margin erosion persisted, compressing to 12.8%—28 basis points lower YoY. Notably, ACC’s operational management offset these challenges, validating its pricing discipline with realization per ton climbing 4.4% YoY to Rs 5,275. Adjusted net profit also registered a robust uptick of 4.4% YoY to Rs 3,754 million, reinforcing its earnings resiliency.

Demand Drivers and Sector Tailwinds

India’s cement landscape has entered a growth phase, with overall demand rising 4% YoY, propelled by heightened infrastructure development and fresh housing starts. ACC’s management outlook remains upbeat, revising FY26 volume growth guidance up to 7–8%, underpinned by the government’s capex push and signature initiatives such as PMAY, PMGSY, Bharatmala, and Sagarmala. Urban housing has begun showing green shoots of recovery, while rural demand, sustained by a well-distributed monsoon, is expected to accelerate. The sector’s pre-election infrastructure momentum coupled with robust policy execution point to an even stronger demand environment as the year progresses, offering significant upside to well-positioned players.

Profitability and Margin Analysis

Despite enduring input cost inflation—particularly raw materials and one-off brand investments—ACC’s profitability metrics exhibit resilience. Challenges are compounded by employee separation costs and planned maintenance shutdowns, though management expects these factors to normalize over the fiscal year. On a per-ton basis, EBITDA inched up 1.2% YoY to Rs 672, a testament to disciplined operational controls despite sector-wide volatility. Improved realization metrics offset these headwinds, evidencing ACC’s prudent management and strategic cost balancing.

Capex Strategy and Operational Efficiency

ACC’s future-readiness is supported by its aggressive capex plans, ranging from Rs 22,500 million to Rs 30,000 million, within the group’s larger expansion program targeting up to Rs 1,00,000 million. These investments are fueling regional capacity enhancements and operational efficiencies. Recent commissioning at Sindri and pending launches at Salai Banwa and Wadi underpin the momentum in expansion. ACC is also channeling investments into Waste Heat Recovery Systems (WHRS), solar initiatives, and logistics digitization, cumulatively aiming for a 60% green power mix by FY28 and reduced power costs at Rs 4.5/unit. These strategic measures will lower operating expenses and structurally bolster margin profiles.

Cost Reduction Initiatives Yielding Results

A highlight of ACC’s operational mastery lies in cost containment: power costs per ton dropped 24% YoY to Rs 737, thanks to smart renewables integration, optimized fuel procurement, and group-wide synergies. Simultaneously, logistics costs declined 6.3% YoY to Rs 1,007/ton, with freight negotiations sharpening road dispatch rates by 1% YoY. Advances in thermal efficiency and logistics automation signal further incremental gains. The strategic use of higher captive coal and low-cost imported petcoke is keeping the fuel basket optimally balanced.

Financial Highlights and Competitive Benchmarking

For the upcoming years, ACC’s forecasts illuminate its financial robustness:

Peer analysis reveals a compelling value case: ACC is trading at a notably lower EV/EBITDA (9.7x FY26E) compared to UltraTech (22.3x), Ambuja (17.5x), and Shree Cement (19.7x). This valuation gap offers substantial opportunity for investors committed to fundamental-driven allocation.

Key Balance Sheet and Cash Flow Data

ACC’s fiscal fortitude is unmistakable, with projected total equity of Rs 1,98,947 million in FY26E and year-end cash at Rs 4,452 million. The company is preparing for robust free cash flow generation post-FY27 as capex normalizes and recurring EBITDA builds momentum. Recent and forecast figures:

This cycle sets the stage for a strong financial updraft as the company emerges from a heavy investment phase.

Valuation Update and Stock Levels

The valuation matrix is constructive for ACC. Rolling the company’s valuation to June 2027, the EV/EBITDA stands at 10.5x, closely aligned with its seven-year average of 10.6x. At the current juncture, the stock trades at 9.7x FY26E and 8.4x FY27E EBITDA, presenting an attractive entry for long-term investors. Buying ACC at or below Rs 1,802 with a year-ahead target of Rs 2,128 is recommended, with pivotal support at Rs 1,778.

Outlook: High Growth Mosaic Amid Transitional Costs

The growth story at ACC remains compelling. The company continues to chalk up sustained volume and topline expansion, leveraging constructive management and dedicated capex deployment. While short-term profitability may be dampened by planned maintenance and higher MSA-linked volumes, the medium-term outlook is robust, underpinned by urban housing rebound, strong governmental policy momentum, and unwavering pricing discipline in its core markets. Investors should expect some volatility, but the overarching trajectory is optimistic.

Investor Takeaway

For savvy investors, ACC combines compelling valuation, clear sector leadership, and visible capacity expansion—creating an optimal environment for tactical positioning. Strategic entry is advised at or below Rs 1,802, with thoughtful accumulation on pullbacks to Rs 1,778 and a 12-month target of Rs 2,128. Monitoring cost normalization and volume ramp-up, particularly through the latter half of FY26, will be critical for maximizing returns.