ACC Ltd posted a stellar 103% YoY profit growth in Q3 FY25, but the stock has declined post-earnings. Is this a market overreaction, or is there more to the story? Let’s break it down.
ACC’s Q3 FY25 results: Strong profit but market reaction disappoints
Shares of ACC Ltd, the cement and building materials arm of Adani Group, have been on a declining trend after announcing their Q3 FY25 earnings. On January 28, 2025, the stock fell by 1.3% to ₹1,968, marking a 3% drop from the day’s high of ₹2,028.
At first glance, ACC delivered impressive numbers for Q3, reporting a 103% YoY jump in net profit to ₹1,091 crore, compared to ₹537.63 crore in Q3 FY24. However, the stock’s reaction suggests that investors are focusing on the adjusted earnings after removing one-time gains, which paints a different picture.
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Let’s take a closer look at the numbers.
Breaking down ACC’s financial performance
ACC’s earnings were boosted by ₹640 crore in excise duty refunds (from May 2005 to Feb 2013) and a ₹530 crore reversal of interest provisions. Once these one-time items are removed, the adjusted financials look quite different.
ACC’s key financials for Q3 FY25
| Financial Metric | Q3 FY25 | Q3 FY24 | YoY Growth |
| Net Profit (Reported) | ₹1,091 crore | ₹538 crore | +103% |
| Net Profit (Adjusted) | ₹230 crore | ₹538 crore | -57% |
| Revenue | ₹5,207 crore | ₹4,855 crore | +7.25% |
| EBITDA (Reported) | ₹1,116 crore | ₹905 crore | +23.4% |
| EBITDA (Adjusted) | ₹470 crore | ₹905 crore | -48% |
| EBITDA Margin | 18.8% | 18.4% | +0.4% |
While headline numbers look great, adjusted figures suggest a 57% YoY drop in net profit and a 48% YoY decline in EBITDA, which explains the stock’s negative reaction.
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What’s driving ACC’s performance?
ACC’s revenue hit ₹5,207 crore, marking its highest Q3 revenue in five years, driven by:
- 11% increase in trade sales volume
- Premium product sales making up 32% of trade sales
- Lower fuel and logistics costs, thanks to imported petcoke and group synergies
However, cement sector growth has been moderate at 1.5–2% in H1 FY25, and cost pressures remain a challenge.
Also read: Cyient’s Q3 FY25 Results: Declining Profit and Revenue Trends
Cost optimisations and margin improvements
ACC has implemented several cost-cutting measures, including:
| Cost Component | Q3 FY25 | Q3 FY24 | Change |
| Kiln Fuel Cost | ₹1.68 per ‘000 Kcal | ₹1.86 per ‘000 Kcal | -10% |
| Logistics Cost | ₹939 per ton | – | -9% |
Additionally, ACC’s solar power project at Khavda is expected to reduce power costs in the coming quarters.
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Brokerage views: Mixed opinions on ACC stock
ACC’s Q3 results have led to divided opinions among analysts.
| Brokerage | Rating | Target Price (₹) |
| CLSA | Outperform | 2,580 |
| Investec | Hold | 2,845 |
| Morgan Stanley | Equal Weight | 2,510 |
| Nomura | Reduce | 1,920 |
While CLSA and Investec remain positive, Nomura has downgraded ACC, citing concerns over sustainability of profits without one-off gains.
Sector outlook and what lies ahead for ACC
The cement industry is projected to grow by 4-5% in FY25, boosted by:
- Increased infrastructure and housing projects
- Government spending in Budget 2025
- Potential demand surge in Q4 FY25
ACC’s strong focus on premium cement products, operational efficiency, and sustainability could help maintain its competitive position. However, market sentiment remains cautious due to high valuations and near-term cost pressures.
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Should you buy, sell, or hold ACC stock?
Key reasons to BUY ACC:
Long-term demand growth: Cement demand is expected to rise in Q4 FY25, backed by government spending.
Operational efficiencies improving: Cost reductions in logistics and fuel should boost margins.
Strong balance sheet: Cash reserves of ₹2,526 crore provide financial stability.
Key reasons to SELL ACC:
Stock underperformance post-earnings: The market has reacted negatively, pricing in adjusted earnings rather than headline figures.
Valuation concerns: At ₹1,968, ACC trades at a premium compared to some peers. One-time profit boost: Without excise refunds and interest reversals, adjusted profit actually declined 57% YoY.
Verdict:
If you’re a long-term investor, ACC’s cost-cutting measures and sector growth potential make it a decent hold. However, short-term traders should be cautious, as the stock may remain volatile.
Final thoughts: A short-term dip or a deeper concern?
ACC’s Q3 results show strong revenue growth, but the heavy reliance on one-off gains raises questions about sustainability. The stock’s decline suggests that investors are reassessing the real profitability of the business.
For long-term investors, ACC remains a solid bet on India’s infrastructure growth, but those looking for short-term gains may need to wait for better entry points.
