View Full Version : ACC Ltd (NSE:ACC) (BSE:500410)

07-22-2015, 06:33 AM
ACC Limited is an India-based company engaged in the manufacturing and selling of cement and ready mix concrete. The Company offers various cement products, such as ACC-Gold, ACCF2R, ACC Plus and ACC Coastal+. The Company offers various concrete products, such as Permecrete, Stampcrete and Imprincrete, ready to use mortar, Thermocrete and Hi-densecrete, which have lower environmental footprint. The Company's subsidiaries include ACC Mineral Resources Limited, Bulk Cement Corporation (India) Limited, Lucky Minmat Limited, National Limestone Company Private Limited and Singhania Minerals Private Limited.

Official website: www.acclimited.com

07-22-2015, 06:36 AM
For 2QCY2015, ACC’s net revenue declined by 1.6% yoy to Rs2,961cr. The same was below our expectation of Rs3,083cr. Volumes declined by 2.4% yoy to 6.2mt. (vs our expectation of 6.29mt) and realization per tonne declined by 1.2% yoy to Rs4,385, which is below our estimate of Rs4,526, due to lackluster demand for cement. EBITDA margin, at 11.3%, was also below our expectation of 12.2%, due to lower realizations and higher freight expenses. The net profit saw a decline of 45.5% yoy to Rs131.5cr, weighed down due to lower other income. EBITDA margin dips 371bp yoy to 11.3%: For 2QCY2015, ACC reported an EBITDA of Rs333.5cr, a decrease of 26% yoy, and below our estimate of Rs377.7cr. The same was led by higher raw material and freight costs. The total operating cost increased by 5.3% yoy to Rs2,681.7cr, led by 9.5% and 5.2% yoy increase in freight and net raw material costs, respectively. The EBITDA margin fell by 371bp yoy to 11.3%; the same is below our expectation of 12.2%. The decline in realization and higher operating cost worsened the EBITDA per tonne by 24.2% yoy to Rs538. Outlook and valuation: Going ahead, we expect ACC’s bottom-line to grow at a CAGR of 29% over CY2014-16E, considering capacity addition and operational efficiency post commissioning of new capacity in east region. However, we maintain our Accumulate rating on the stock with a revised target price of Rs1,548 (earlier target price was of Rs1,650) on 10.5x EV/EBIDTA and EV/tonne of US$120 on CY2016E installed capacity. Rich valuation and volume growth concerns leave limited potential for the stock to rise.

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