Deven Choksey’s latest research report suggests BUY Call for cement major ACC Limited, underlining the company’s commanding market position and robust operational momentum. ACC demonstrated impressive top-line growth with cement volumes surging by 16% year-on-year in Q2FY26 alongside margin expansion fueled by operational synergies and cost rationalization under the Ambuja-Adani integration. The firm is strategically expanding capacity, integrating advanced AI-driven business processes, and aggressively transitioning to renewable energy sources, positioning itself to capitalize on India’s infrastructure boom. With a target price of Rs 2,140 offering a 16% upside, the stock is an attractive proposition for investors seeking growth backed by cost leadership and sustainable competitive advantages.

Deven Choksey’s BUY Recommendation and Valuation

The research house reiterates a BUY rating on ACC Ltd with a target price of Rs 2,140, based on a 10.5x multiple on September 2027 EBITDA projections. Trading currently at Rs 1,845, this valuation signals a significant upside of 16%. The valuation is supported by expectations of sustained double-digit revenue growth, margin expansion through efficient cost management, and strategic capacity additions that will unlock scale economies. Given ACC’s debt-free balance sheet and improving profitability metrics, the stock offers both quality and value to investors looking for alpha in the cement sector.

Strong Earnings Momentum: Q2FY26 Performance

ACC delivered stellar Q2FY26 results reflecting operational excellence:

Revenue jumped 28.6% YoY to Rs 59,317 million despite slight sequential softness.

Cement volume increased 16% YoY to 10 million tons, driven by both volume gains and a premium product mix.

EBITDA surged nearly 94% YoY to Rs 8,457 million; margins expanded 480 bps to 14.3% thanks to cost efficiencies.

PAT ballooned 460% YoY to Rs 11,193 million, aided by operational leverage and a tax credit of Rs 3,561 million.
This inflection in profitability underscores ACC’s improved cost structure and pricing power amid robust demand fundamentals.

Cost Optimization and Operational Efficiency

Operational expenditures declined significantly, enhancing margins:

Kiln fuel costs reduced by 6% year-on-year to Rs 1.57 per 000 Kcal.

Power costs decreased 9% YoY to Rs 5.95 per kWh with renewable energy usage rising sharply by 16.2 percentage points to 30.3%.

Logistics expenses dropped 4%, aided by shorter lead distances and higher direct dispatches.
These cost improvements stem from the deeper integration with Ambuja Cement, fuel procurement synergies, and logistic rationalization initiatives. ACC targets further cost reduction to Rs 4,000/ton by FY26, Rs 3,800/ton by FY27, and Rs 3,650/ton by FY28, aiming for sustained competitive advantage.

Robust Cement Demand Backdrop

ACC benefits from a buoyant demand environment:

Cement demand grew approximately 5% YoY in Q2FY26, propelled by government infrastructure initiatives such as PMAY, PMGSY, Bharatmala, and Sagarmala.

Both urban housing recovery and rural sector strengthening (due to favorable monsoons and farm incomes) sustain demand.

Government capex and pre-election project acceleration improve visibility for sustained volume growth (guidance: 7-8% for FY26).
This macroeconomic tailwind supports ACC’s volume and revenue growth trajectory.

Capacity Expansion and Green Energy Integration

ACC is aggressively investing in capacity bolstering and sustainability:

New grinding units at Salai Banwa (2.4 MTPA) and Kalamboli (1.0 MTPA) are being commissioned in Q3FY26, enhancing capacity by 3.4 MTPA.

Brownfield debottlenecking will unlock 5.6 MTPA by FY28 at a cost-efficient capex of USD 48 per ton.

Newer clinker lines target heat consumption reduction to ~680 kcal/kg.

Renewable energy projects aim to increase green power share to 60% by FY28, with renewable capacity rising to 1,122 MW by FY27.

This transition is expected to reduce power costs by Rs 1.5 per unit to Rs 4.5 by FY28.
These moves will fortify margins, reduce carbon footprint, and align ACC with ESG imperatives critical to long-term value creation.

Technology and Strategic Partnerships

ACC’s digital transformation and partnerships accentuate its competitive edge:

Launched CiNOC, an AI-driven Cement Intelligent Network Operations Centre to optimize sales, production, and logistics autonomously.

Institutionalized RESQ workplace management system for enhanced operational safety and quality.

Formed strategic alliance with CONCOR for rail-based bulk cement transport, slashing logistics costs and supporting sustainability.

Strengthened ecosystem engagement via the NirmAAAnotsav program with CREDAI, a flagship real estate developers’ association.
These initiatives drive operational precision, cost efficiency, and strengthen customer and stakeholder relationships.

Key Financial Indicators and Outlook

Projected financial performance outlines a robust growth profile:

The company forecasts sustainably high double-digit revenue growth and EBITDA margins stabilizing near 14%. Return ratios remain strong, with ROE and ROCE above 10%, reflecting efficient capital deployment. ACC’s net debt-free status adds financial prudence and flexibility.

Investment Strategy and Stock Levels

For investors seeking quality growth in the cement sector, ACC is well-positioned with strong fundamental triggers:

Entry Zone: Rs 1,800 to Rs 1,850

Immediate Support: Rs 1,750

Resistance Levels: Rs 1,900 and Rs 2,000

Target Price: Rs 2,140 (16% upside potential)
The risk-reward profile favors accumulation, supported by a robust growth outlook, cost leadership, future-ready capacity, and green transition.

Conclusion: A Strategic Growth Play

ACC Ltd emerges as a best-in-class cement stock with structural growth catalysts, disciplined execution, and sustainability leadership. Backed by strong earnings, margin expansion, and capacity ramp-up combined with digital and green initiatives, it offers an attractive opportunity for investors focused on at-scale industrial beneficiaries poised to capitalize on India’s infrastructure and urbanization trajectory. The stock is a high conviction BUY with strong near- to medium-term upside potential.