ACC Ltd Reports Sharp Decline in Quarterly Profit Amid Revenue Growth

Quarterly Revenue Growth Hits New High

ACC Ltd reported its highest-ever quarterly net sales at ₹6,482.98 crore for Q4 FY2025, underscoring robust demand in the cement and cement products industry. This revenue milestone reflects a strong top-line performance, driven by steady volume growth and price realisations in key markets. The company’s ability to expand sales despite a competitive environment is a positive indicator of its market positioning.

However, this encouraging revenue figure masks underlying operational difficulties. The company’s operating profit to net sales ratio for the quarter contracted to a low of 10.80%, signalling margin pressure. This is a significant decline compared to previous quarters, where operating margins were more resilient. The contraction suggests rising input costs, possibly from raw materials or energy, are eroding profitability.

Profitability Metrics Show Marked Deterioration

ACC’s profit after tax (PAT) for the quarter plunged to ₹375.81 crore, representing a steep fall of 53.4% relative to the average PAT of the preceding four quarters. This sharp decline in bottom-line earnings is a cause for concern, especially given the strong revenue growth. The fall in PAT indicates that cost pressures and possibly higher interest or depreciation expenses are weighing heavily on net profitability.

Further compounding the negative trend, the company’s PBDIT (profit before depreciation, interest and tax) dropped to ₹700 crore, the lowest level recorded in recent quarters. Similarly, profit before tax less other income (PBT less OI) declined to ₹370.18 crore, underscoring the squeeze on core earnings from operational activities.

Operational Efficiency and Working Capital Challenges

ACC’s return on capital employed (ROCE) remains a bright spot, with a half-yearly high of 17.88%, reflecting efficient utilisation of capital assets. Nonetheless, the company’s debtors turnover ratio has deteriorated to 6.57 times, the lowest in recent periods. This indicates slower collection cycles and potential working capital stress, which could impact liquidity and operational flexibility going forward.

The combination of declining profitability and stretched working capital metrics suggests that ACC is facing headwinds from both cost inflation and cash flow management, which may require strategic adjustments to restore financial health.

Stock Performance Versus Market Benchmarks

ACC’s stock price closed at ₹1,685.50 on 29 Jan 2026, marginally down 0.18% from the previous close of ₹1,688.50. The share price remains well below its 52-week high of ₹2,123.30, reflecting investor caution amid the company’s deteriorating financial trend. The 52-week low stands at ₹1,664.70, indicating the stock is trading near its lower range.

When compared to the broader market, ACC’s returns have lagged significantly. Over the past year, the stock has declined by 15.76%, while the Sensex has gained 8.49%. Over three and five years, ACC’s returns of -10.54% and +3.16% respectively pale in comparison to Sensex’s 38.79% and 75.67%. Even over a decade, ACC’s 38.52% return is dwarfed by the Sensex’s 236.52% gain. This underperformance highlights the challenges ACC faces in delivering shareholder value relative to the broader market.

Mojo Score Downgrade Reflects Negative Financial Trend

Reflecting the recent financial deterioration, ACC’s Mojo Score has dropped to 38.0, with a corresponding Mojo Grade downgrade from Hold to Sell as of 1 Oct 2025. This downgrade signals a shift in analyst sentiment, driven by the negative financial performance in the December quarter. The company’s market cap grade remains low at 2, indicating limited market capitalisation strength relative to peers.

The downgrade is consistent with the observed contraction in profitability and operating margins, as well as the weakening working capital metrics. Investors should weigh these factors carefully when considering ACC’s stock for their portfolios.

Industry Context and Outlook

The cement sector continues to face volatility due to fluctuating input costs, regulatory changes, and demand variability linked to infrastructure and real estate cycles. ACC’s mixed results mirror these sector-wide challenges. While revenue growth is encouraging, the margin squeeze and profit decline raise questions about cost control and pricing power.

Going forward, ACC’s ability to improve operational efficiencies, manage working capital effectively, and sustain pricing in a competitive environment will be critical to reversing the negative financial trend. Investors should monitor upcoming quarterly results closely for signs of margin stabilisation or further deterioration.

Conclusion: Cautious Stance Recommended

ACC Ltd’s December 2025 quarter results present a cautionary tale of strong revenue growth overshadowed by significant margin contraction and profit declines. The company’s financial trend has shifted negatively, as reflected in the downgrade of its Mojo Grade to Sell. While operational efficiency remains relatively strong as indicated by ROCE, deteriorating working capital metrics and shrinking profitability pose risks to near-term performance.

Investors should approach ACC with caution, considering the company’s underperformance relative to the Sensex and the broader cement sector challenges. Monitoring upcoming quarters for margin recovery and improved cash flow management will be essential before reassessing the stock’s investment potential.

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