KR Choksey Assigns Buy On Midcap Adani Group Stock, Sees 21% Gains, Board Recommends Dividend

KR Choksey initiates coverage on ACC Ltd. with a "Buy" call for gains up to 21% with a target price of Rs. 2,166/share. ACC is an Adani Group firm having a market capitalisation of Rs. 33,168.86 crore. It is a midcap Cement sector stock.

On April 27, 2023, the Board of Directors of ACC Ltd. recommended a dividend of Rs. 9.25 per equity share of Rs. 10 each for the financial year 2022-23. The Board fixes the record date for the recommended dividend as 07th July 2023.

Recommended Rs. 9.25/Share Dividend

According to an exchange filing by the Board of Directors of the ACC Ltd, "recommended payment of dividend of Rs. 9.25 (Rupees Nine and Twenty Five Paise Only) per Equity Share of Rs. 10/- each (fully paid-up) for the financial year ended March 31, 2023 and the same shall be payable subject to approval of the Shareholders at the ensuing Annual General Meeting ('AGM') of the Company. The dividend, as recommended by the Board of Directors, if approved at the AGM will be paid on or after 25th July 2023."

Furthermore, "The Board also approved the proposal to convene and hold the 87th AGM of the Shareholders of the Company on Thursday, July 20, 2023, at Mumbai through video conferencing / other audio-visual means in accordance with the relevant circulars issued by the Ministry of Corporate Affairs, Government of India. We also wish to inform you that the Board has fixed the record date as 07th July, 2023 for the purpose of determining the entitlement of dividend for the financial year ended March 31, 2023. Accordingly, the dividend, if approved by the Members at the AGM of the Company will be made payable to those Members whose names stand on the Register of Members as on 07 th July, 2023."

Valuation and view

According to the brokerage firm, With the government's focus on infrastructure development and affordable housing, we expect the demand situation to improve going forward. ACC being a pan-India player will be one of the key beneficiaries of this increased demand. Also, now under the new management of Adani Group, which is consolidating its footprint in the cement space, ACC has significant scope for scaling up going forward. With crude prices and other input prices like pet coke and coal coming off from their peak, ACC will see some ease off in the margin pressure in the coming quarters.

ACC has changed its accounting year from December end to March end. Hence, FY23 is a 15-month period for ACC. "We now value the stock at 11x FY25E EV/EBITDA, which yields a target price of INR 2,166 per share (earlier INR 2,342 per share), giving an upside potential of 22.9% from CMP. Accordingly, we have changed our rating to 'BUY' on the shares of ACC," KR Choksey said.

Current Market Price, 52-week Low/High, & Returns

The stock's current market price is Rs. 1,766.30/share on NSE, up 1.30% from its previous close of Rs. 1,743.60/share. Its 52 week high is Rs. 2,785/share and 52 week low is Rs. 1,592.35/share, respectively.

It has delivered a positive return of 0.88% in 1 week, and 3.55% in 1 month, respectively. It has fallen 23.21% in the past 1 year. It gave 56.75% positive return in 3 years and 15.61% in 5 years, respectively.

Disclaimer - The stock has been picked from the brokerage report of KR Choksey. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.