Dear All,
Forwarding you the Result Update on ACC for 1QCY2011 with a Neutral recommendation.
For 1QCY2011, ACC posted 14.1% yoy growth in its net sales to `2,398cr, aided by growth in volumes and higher realisations. Realisations were higher during the quarter on account of price hikes of `30–40 per bag carried out by cement manufacturers across the country by adopting production discipline. However, the company faced margin pressure during the quarter due to higher power and fuel costs, freight costs and costs of raw materials such as fly ash and slag. At current levels, we maintain our Neutral view on the stock.
OPM at 24.2%, down 708bp yoy: ACC’s dispatches for the quarter stood at 6.16mn tonnes, up 10.4% yoy, aided by a pick-up in demand across the country during the quarter and due to the increase in the company’s capacity. Realisations also improved by 3.4% yoy to `3,893/tonne, resulting in healthy top-line growth. However, the company faced margin pressure during the quarter on account of higher power and fuel, freight and raw-material costs. Consequently, ACC’s net profit fell by 13.4% yoy to `351cr.
Outlook and valuation: We expect cement prices to correct in the near term due to the onset of monsoons. We expect ACC to register a 14.7% CAGR in its top line over CY2010–12, aided by capacity addition. However, the bottom line is expected to grow at a lower CAGR of 2.2% over the mentioned period due to higher operating costs. At current levels, the stock is trading at EV/EBITDA of 8x and EV/tonne of US$124 based on CY2012 estimates. We maintain our Neutral view on the stock, as we believe it is fairly priced.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6864 / 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6864,6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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