Well thought out strategy being executed! We maintain our BUY rating and raise the target price to INR 625 for ACEM, considering 1) INR 300/t cost reduction over FY25-28E due to renewable energy and logistics optimization, 2) higher premium product share boosting realizations, and 3) the turnaround of Sanghi, Penna, and Orient Cement assets. We now use an EV/CE valuation framework, forecasting a 27.3% CAGR in EBITDA over FY25-28E, supported by volume growth and moderate realization increases. ACEM’s strong market presence, recent mergers, and ongoing capacity expansion are positive, but the complex corporate structure remains a concern. Risks include rising raw material costs, construction slowdowns, and volatility in petcoke prices. Q4FY25: Revenue inline, while EBITDA & Profitability were a beat ACEM reported Q4FY25 revenue of INR 56,814 Mn (+18.8% YoY, +12.7% QoQ) and EBITDA of INR 10,382 Mn (+30.1% YoY, +72.9% QoQ), surpassing CEBPL estimates of INR 57,848 Mn and INR 8,534 Mn, respectively. Market expectations for Q4 EBITDA were in the range of INR 8,300 – 9,500 Mn, making the reported numbers better than anticipated. Volumes for Q4 were 11.6 Mnt (vs CEBPL est. 11.4 Mnt), up 22.1% YoY and 14.9% QoQ. Realization/t was INR 4,898/t (-2.7% YoY, -1.9% QoQ), lower than CEBPL’s estimate of INR 5,068/t. Total cost/t was INR 4,003/t (-4.5% YoY, -9.0% QoQ). EBITDA/t came in at INR 895/t (vs CEBPL est. INR 748/t), up 6.6% YoY and 50.5% QoQ. Targeting INR300/t cost reduction between FY26 to FY28: ACEM is on track to achieve its target total cost of INR 3,650/t by FY28, having already reduced costs by ~INR 175/t. Power & fuel costs are expected to decrease by ~INR 150/t, supported by the company's goal of achieving 30% WHRS capacity by FY28. Long-term supply agreements are also expected to reduce raw material costs by ~8-10%. With a continued focus on cost optimization, we forecast ACEM’s EBITDA/t to grow at a CAGR of 24.5%, reaching INR 1,157/t by FY28. Focusing on premium push and aggressive capacity expansion to drive volume growth: ACEM’s consolidated cement capacity is expected to grow from 100 Mnt at the end of FY25 to 140 Mnt by FY28, with a near-term target of 118 Mnt by FY26. The company aims to increase its share of premium products to 35% by FY26, up from 29% in FY25. With strong capacity expansion, a focus on premium products, and improving cement realizations, we project ACEM’s revenue to reach INR 221.1 Bn in FY26, INR 242.3 Bn in FY27, and INR 265.4 Bn in FY28.

Continue to maintain our positive stance We maintain our BUY rating on ACC with a target price of INR 2,475/share, based on a revised EV to Capital Employed (EV/CE) valuation framework. We forecast 35.5% EBITDA CAGR over FY25–28E, driven by strong volume growth (12%/8%/8%) and stable realizations. Our valuation uses a conservative EV/CE multiple of 2.4x, reflecting a ROCE improvement from 5.7% in FY25 to 14.9% in FY28E. Implied FY28E valuation multiples are EV/EBITDA: 13.3x, P/BV: 2.1x, and P/E: 15.5x. Risks include a slowdown in construction due to heatwaves and a sharp rise in petcoke prices. Q4FY25 Volume growth impressive, EBITDA/t in line: ACC reported Q4FY25 Revenue of INR 59,486 Mn (up 12.1% YoY, 14.9% QoQ) and EBITDA of INR 7,404 Mn (flat YoY, but up 90.2% QoQ), largely in line with market expectations. Total volume stood at 11.9 Mnt, higher than estimated 11.5 Mnt, marking a solid 14% YoY and 11.2% QoQ growth—one of the key positives in the results. Realization came in at INR 4,999/t (-1.6% YoY, +3.3% QoQ), slightly above CEBPL's estimate of INR 4,934/t. Total cost was INR 4,377/t (+0.2% YoY, -2.2% QoQ). EBITDA/t stood at INR 622/t (vs CEBPL est. INR 614/t), down 12.8% YoY but up 71% QoQ. Focusing on EBITDA/t expansion via cost reduction initiatives: ACC aims to cut costs by INR 500/t by FY28 through its Parvat initiatives. This includes an ~INR 80/t saving in power and fuel costs in FY26, driven by more green power and a 200 MW solar plant at Kavda. Raw material costs are expected to drop by INR 50/t in FY26 due to long-term tie-ups, while logistics optimization will provide further savings. These efforts are expected to boost EBITDA/t by ~INR 150/t in FY26. ACC's EBITDA is forecasted to grow at a CAGR of ~35.5% from FY25 to FY28. Volume to grow at 9.3% CAGR over FY25- 28, driven by capacity expansion; profitability to improve on positive pricing outlook: ACC plans to increase its capacity from 39.9 MTPA to 45 MTPA, with a capex of INR 10,000 Mn in FY26, mainly focusing on the East and Central regions. Cement prices are rising, with a ~INR 15 increase in April and further hikes expected. We anticipate a ~1.5% growth in realizations for FY26. With strong volume growth and better realizations, ACC’s revenue is expected to grow at a CAGR of 10.2% from FY25 to FY28.

Firing on Multiple Cylinders We maintain a BUY rating on Greenply Industries Ltd (MTLM) with a revised target price of INR 423/share, based on strong growth prospects. The company is expected to deliver volume growth of 9.7% over FY25–28E, outpacing the industry average, driven by gains from unorganized players in plywood and a 25% capacity addition in MDF, along with better utilization. Additionally, its new JV with BV Samet is expected to contribute revenue starting FY26. We project EPS to grow at a CAGR of 42% during this period, supported by consistent volume and realization growth. Our valuation is based on a PEG ratio framework (PEG = 1x), aligning with core EPS growth and reflecting a fair multiple. On our target price, the implied FY27 valuations—EV/EBITDA of 14.2x, P/E of 25.8x, and P/BV of 4.6x—appear reasonable. However, potential risks include a slowdown in real estate and home improvement demand, delays in import regulation updates, and higher timber costs. Q4FY25: Margins were ahead of estimates despite weak volumes; Core PAT adjusted for one offs/non core reasons is healthy In Q4FY25, Plywood volumes grew 4.8% YoY and 8.2% QoQ to 19.7 Mn Sqm, while realization rose to INR 254, up 3.7% YoY and 1.5% QoQ. This drove revenue up by 8.7% YoY and 6.6% QoQ to INR 5,000 Mn. Margins improved to 9.2%, beating CEBPL’s estimate of 8.2%. In Q4FY25, MDF volumes declined 6.7% YoY but rose 1% QoQ to 42,688 CBM. Realization increased 10.9% YoY to INR 31,765/CBM, leading to revenue growth of 3.4% YoY and 0.7% QoQ to INR 1,356 Mn. Margins improved to 15%, ahead of CEBPL’s estimate of 13%. MTLM reported Q4FY25 revenue of INR 6,488 Mn (up 8.2% YoY), and EBITDA of INR 681 Mn (up 18.1% YoY), beating EBITDA estimates but slightly missing revenue expectations. Core PBT stood at INR 245 Mn, lower than estimates and down both YoY and QoQ. EPS for the quarter was INR 1.3. Outlook: Targeting double digit growth in Plywood segment: Management is aiming for double-digit volume growth in FY26, up from the 5.5% growth achieved in FY25 (75.8 Mn Sqm). They've also guided for a 10% margin in FY26, compared to 8.5% in FY25. Multiple price hikes in Q3 and Q4 helped realizations rise by 2% YoY to INR 252 per Msm. Targeting 88% Capacity Utilization in MDF segment for FY26: Management is targeting 88% capacity utilization and a 16% margin for FY26, backed by higher sales of value-added products. To support this, they're planning a 25% capacity expansion, increasing daily capacity from 800 CBM to 1,000 CBM during FY26.