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* ACC Ltd, with its pan India presence, is likely to gain healthy traction ahead led by the sustained demand in key markets and recent recovery in realizations.
* We further believe that ACC’s strong penetration in rural markets (~80% trade segment volume) and consistent focus on premium products are likely to result in healthy margins in ensuing quarters.
* Further, cost optimization measures and solid recovery in realisation in its key markets are likely to offer further boost to margins. Additionally, likely synergies from MSA between ACC and Ambuja Cements are likely to ensure additional savings (in the range of Rs500-800mn in CY19E).
* Concern of capacity constraints is expected to be sorted out in ensuing quarters, which may lead to further re-rating in the stock.
* We maintain our fundamental BUY recommendation on the stock with a Target Price of Rs1,840.
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