ACC reported a 54% decline in EBITDA to INR 3.7 billion for the second quarter of fiscal 2027, hurt by a tough pricing environment. While profit beat analyst estimates due to non-operational tax benefits, brokerage firm Motilal Oswal has maintained a neutral rating with a target of INR 1,170, citing ongoing margin pressure.
ACC Limited reported a challenging second quarter for fiscal year 2027, with financial results highlighting the continued pressure on profitability within the Indian cement sector. The company's revenue dropped by 5% year-on-year to INR 56.4 billion, while the operating profit, or EBITDA, saw a significant 54% decline, falling to INR 3.7 billion.
A key metric for cement companies is EBITDA per tonne, which reflects how much money the company makes on every unit of cement sold. For ACC, this metric fell 51% compared to the same period last year, reaching INR 360. Although this figure was slightly better than some analyst estimates of INR 341, the overall operating margin narrowed to 6.6%, a drop of 7.2 percentage points. This indicates that costs remained high or selling prices for cement were lower than expected, putting a squeeze on the company’s ability to generate profits from its core business.
The company’s reported net profit fell by 51% year-on-year to INR 1.6 billion. While this profit figure actually came in higher than initial analyst expectations, the improvement was largely driven by non-operational factors. These included higher other income and a lower effective tax rate, which helped cushion the final profit number. Investors should note that these are one-time benefits and do not necessarily signal a recovery in the company's core cement business operations.
Following these results, brokerage firm Motilal Oswal has maintained a neutral rating on ACC, setting a target price of INR 1,170. The brokerage highlighted that persistent profitability pressures and a de-rating in the company's valuation—meaning the stock market is assigning a lower value to the company's future earnings potential—are primary concerns.
Looking ahead, analysts expect EBITDA per tonne to remain under pressure for the next two fiscal years. The brokerage suggests that without a clear recovery in operating efficiency or a favorable shift in cement pricing power, the outlook remains cautious. Investors will likely be watching for improvements in volume growth, management commentary on cost-saving initiatives, and any signs of stabilization in cement prices across key markets.