ACC Ltd. share price target

ACC's Q2CY18 results were a beat on all fronts with sales/EBTIDA/PAT higher than our estimates by 18%/27%/26%, respectively. Sales grew by 14% YoY to Rs37,679 mn driven by higher volumes as well as realization. RMC sales volumes were strong at 0.77 mn cbm (+22% YoY). EBTIDA increased 10% YoY (higher than our forecast) to Rs5,435...

ICICI Securities Ltd | Retail Equity Research ACC's Q2CY18 results were above our estimates. The topline beat (on strong realisation growth) led to higher-than-expected profit during the quarter. Revenues increased 13.7% YoY to | 3,767.9 crore (above I-direct estimate of | 3,559.1 crore) led by 7.4% YoY rise in volume to 7.2 MT (vs. I-direct estimate of 7.2 MT), 5.9% YoY increase in realisation to | 5,204/t (above I-direct estimate of | 4,978/t) The EBITDA margin declined 52 bps YoY to 14.5% due to higher...

Revenue growth led by strong volumes & realisation Driven by healthy growth in both volumes and realisation, ACC posted strong growth in revenue in Q1CY18 on standalone basis. While cement sales volume increased by 8% YoY, realisation rose 7% YoY, leading to 15% growth in revenue during the quarter. The growth in cement volumes was supported by improvement in sand availability leading to growth across regions. While growth in premium products volume (18% YoY) supported realisation. Further, its ready-mix concrete business continued to witness strong traction with sales volume increasing strongly by 16% YoY....

ICICI Securities Ltd | Retail Equity Research ACC's Q1CY18 results came in below our estimates. Revenues increased 14.8% YoY to | 3,557.0 crore (below I-direct estimate of | 3,735.8 crore) led by 7.7% YoY increase in volumes to 7.1 MT (vs. Idirect estimate of 7.5 MT) and 6.5% YoY increase in realisation to | 5,003/t (vs. I-direct estimate of | 4,981/t) Despite cost headwinds (led by higher power and freight cost) ACC...

Cost/t at INR4,407(+5% YoY; - 1% QoQ) was largely in line with our expectation of INR4,420. The1% QoQ decline was due to lower raw material cost offset by higher freight and power & fuel cost. Other expenses were flat YoY, despite higher volumes, due to cost saving measures. Blended EBITDA/t was INR691 (v/s our estimate of INR570) (+10% YoY; +17%QoQ); EBITDA grew 24% YoY to INR4.9b (v/s our estimate of INR4b). Depreciation declined 11% YoY to INR1.5b. Tax rate was higher at 34% v/s 19% in 1QCY17. Reported PAT grew 16% YoY to INR2.4b(v/s our estimate of INR2.1b)

Strong Performance on Higher Realisation; Maintain BUY ACC's reported performance exceeded our estimate in 1QCY18 mainly aided by better-thanestimated average cement realisation. Unlike the expectation of QoQ decline, average realisation improved by 1.3% QoQ owing to higher sales of premium products (~14% of total volume) and meaningful contribution from the Eastern markets. Reported EBITDA surged by 24% YoY and 16% QoQ to Rs4.23bn. Cement EBITDA/tonne stood at Rs573 compared to Rs497 and Rs506 in 1QCY17 and 4QCY17, respectively. Sales volume grew by 7.7% YoY and 2.7% QoQ to 7.11mnT mainly due to strong demand environment in Eastern markets and stabilisation of newly commissioned units in Jamul and Sindri. Notably, operating cost per tonne remained broadly...

ACC Ltd. reported a strong set of numbers in its first quarter of CY2018. Net profit for the quarter came in at Rs. 250cr as compared to Rs. 211 cr in the corresponding quarter of previous year registering a growth of 19% YoY. Total income for the quarter came in at Rs. 3,625 cr as compared to Rs. 3,174 cr in the corresponding quarter of CY 17, up 14% YoY and increased 4% sequentially. EBITDA for the company stood at Rs. 492 cr vs. Rs. 417 cr YoY. EBITDA margin stayed almost the same at 13.6% vs 13.4% in the previous corresponding quarter. Cement Business volume came at 7.11 MT higher by 7.7% compared to the...

ICICI Securities Ltd | Retail Equity Research ACC reported a good set of Q4CY17 numbers. The results were better than our expectation mainly due to the topline beat. The topline beat was led by 27.0% YoY increase in volumes to 6.9 MT (vs. I-direct estimate of 6.0 MT) mainly led by commissioning of Jamul plant (10% of overall capacity) and low base last year...

Despite a strong surge in sales volume, ACC has reported a soft performance in 4QCY17, missing our estimate albeit marginally. EBITDA adjusted for reversal of Rs342mn for DMF provision stood at Rs3.3bn vs. our estimate of Rs3.5bn. While cost optimisation measures aided ACC to contain overall operating cost/tonne, higher freight cost (led by change in commercial terms from ex-factory to FOR and higher share of road transportation), higher raw material cost (due to spike in additives prices) and other expenditures impacted operating performance. Sales volume grew strongly by 27% YoY to 6.92mnT mainly due to strong demand environment in Eastern markets and stabilisation of newly commissioned units in Jamul and Sindri. Cement...

Valuation and View: We introduce CY19 numbers. We have penciled 8% CAGR in revenues over for the next two years. With contribution from high value added products and benefit from operating leverage, we think 14% CAGR in EBITDA, over the next two years, should possible. Yet even after valuing the stock at 15x CY19 EV/EBITDA, we fail to see...