On Monday, JPMorgan (NYSE:JPM) launched coverage on ACC Ltd. (ACC:IN) with an Overweight rating and set a price target of INR 3,020.00. The firm highlights the potential for a rebound in cement prices in the near term as a positive driver for the stock. They also noted that ACC could benefit significantly from an expected surge in central government capital expenditures after the monsoon season.
The Overweight rating is based on a 12.5x rolling four-quarter EBITDA multiple and suggests a forward FY26 P/E ratio of approximately 24x, which is slightly above the long-term averages. The analyst believes that while ACC's growth may be slower compared to its peers, the overall rebound in cement demand and pricing should positively impact revenues, particularly for ACC, which has experienced a sharper pricing contraction recently.
The assessment by JPMorgan also points to low valuations and recent underperformance relative to the sector as factors that could support ACC's stock performance in the near term. The firm expects that the strong increase in central government capital expenditures should have a beneficial impact on most cement company revenues, with ACC likely to see a greater effect in theory due to these anticipated market dynamics.
JPMorgan's initiation of coverage on ACC comes at a time when the cement industry is looking forward to a post-monsoon recovery. The firm's analysis suggests that the expected demand and price rebound in the cement market could provide a favorable environment for ACC Ltd. shares, potentially leading to an improvement in stock performance compared to recent trends.
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