Whalesbook
### Earnings Performance Under Pressure
ACC's third-quarter fiscal year 2026 performance revealed a substantial drop in profitability, with net profit declining 63% year-on-year to INR 404 crore. This stark contrast to revenue growth, which climbed approximately 22% year-on-year to INR 6,391 crore, suggests significant cost pressures and margin compression. While EBITDA grew 45% year-on-year to INR 6.9 billion, it landed 8% below Motilal Oswal's projection, primarily due to lower-than-anticipated realisations per tonne [cite: original input]. Earnings before interest, taxes, depreciation, and amortisation per tonne stood at INR 541, a 22% year-on-year increase but short of the INR 626 forecast [cite: original input]. Operating profit margins were reported around 11%, a modest 1.7 percentage point improvement year-on-year [cite: original input]. The company's stock has seen a year-to-date decline of over 15%, underperforming the broader market indices like the Nifty 50, which gained approximately 8.5% over the same period.
### Industry Tailwinds and Strategic Integration
Despite ACC's profit challenges, the broader Indian cement sector is poised for growth. Industry volumes are projected to increase by 6–7% in FY27, supported by sustained government focus on infrastructure development and housing initiatives like Pradhan Mantri Awas Yojana. The Indian economy itself is expected to grow at a robust 7.4% in FY26. In line with this positive sector outlook, ACC is progressing with its strategic merger with ACEM, slated for completion by FY27 [cite: original input]. This integration aims to establish a unified 'One Cement Platform', expected to unlock significant synergies, accelerate efficiency, and drive growth [cite: original input, 8]. Grinding capacity expansions at Salai Banwa (2.4 mtpa) and Kalamboli (1.0 mtpa) are now anticipated to conclude in the fourth quarter of FY26, slightly delayed from the initial third-quarter timeline [cite: original input].
### Valuation and Analyst Outlook
Motilal Oswal reiterates a Neutral rating on ACC, setting a price target of INR 1,900, based on a valuation of 7 times its fiscal year 2028 estimated enterprise value to EBITDA [cite: original input]. The brokerage forecasts a compound annual growth rate of 12% in revenue, 18% in EBITDA, and 25% in PAT between fiscal years 2026 and 2028, projecting a volume CAGR of approximately 10% and EBITDA per tonne reaching INR 727 and INR 753 in FY27 and FY28, respectively [cite: original input]. ACC currently trades at a P/E ratio of approximately 11.94, with a market capitalisation around INR 31,652 crore. This valuation appears considerably lower than key competitors such as UltraTech Cement (P/E of 49.13) and Shree Cement (P/E of 57.68), suggesting ACC is valued at a discount.