Choice Institutional Equities has lowered its target price for ACC from Rs 1,700 to Rs 1,445, citing weak second-quarter results and margin pressure. While the brokerage remains cautious about short-term profitability, it points to the ongoing expansion and synergy with Ambuja Cements as potential long-term value drivers.
Choice Institutional Equities has revised its outlook on ACC, lowering the stock's target price to Rs 1,445 from its previous estimate of Rs 1,700. This downward adjustment follows the company's second-quarter performance in the 2027 fiscal year, which fell short of market expectations.
The brokerage attributed this revision primarily to lower sales volumes and significant pressure on profit margins. High operating costs have been a challenge for the company, making it difficult for earnings to recover quickly. In response to these near-term difficulties, the firm has also lowered the valuation multiple it assigns to the stock, reflecting a more cautious view on how quickly the company can improve its operational profitability.
Despite these immediate hurdles, analysts continue to track several long-term factors that could support the company's future value. A major focus is the ongoing merger-like process with Ambuja Cements, which is expected to be completed in the 2027 fiscal year. This amalgamation is intended to create operational efficiencies, allowing the two companies to work better together and reduce costs.
Another point of interest is the company's recent capacity expansion. ACC has commissioned 3.4 million tonnes per annum (MTPA) of new capacity, which is expected to increase its footprint in key regional markets like Uttar Pradesh and Maharashtra. This expansion is designed to help the company increase sales volumes in the coming quarters. Additionally, the company has started attempts to pass on higher costs to customers by raising prices by Rs 15 to Rs 20 per cement bag. The success of these price hikes will be a crucial factor in whether the company can stabilize its profit margins as input cost pressures eventually ease.
Looking ahead, the brokerage projects an EBITDA growth rate of approximately 7.3 percent between fiscal years 2026 and 2029. While current volatility in the cement sector remains a concern, the revised target suggests a belief that the company’s strategic moves—such as capacity growth and operational synergy—may eventually help it overcome these structural problems. Investors will likely monitor the company’s ability to successfully increase prices, manage its operational costs, and effectively use its newly added production capacity to drive sales growth.