ACC Ltd. share price target

Refer to important disclosures at the end of this report Ban on petcoke imports likely: cost competitiveness of petcoke to reduce The Supreme Court of India has allowed the use of petcoke by the cement industry (we understand it is for kilns only) in its judgment of 13 th December, which is in line with our expectations and Union Environment Ministry's (MoEF) earlier guidelines that the use of petcoke by the cement industry is non-polluting. In its judgment, the apex court has mentioned about the affidavit filed by MoEF on 11 th...

We remain cautious and maintain a SELL (Rs 1,542, 10.0x Sep-19 EV/EBITDA, US$120/t). ACCs numbers were below estimates (EBITDA/t: Rs 549, 26.9/(22.0)% YoY/QoQ, v/s Est Rs 636). It reported the strongest volume growth (5.96 mT, 17.6% YoY) since 3QCY11, when it had commissioned Wadi and Chanda in the previous year. ACC delivered realisation gains too (Rs 4,645/t, 7.0/3.0 YoY/QoQ), driven likely by higher shares of dispatches in East, as most of the volume growth is supposed to have accrued from there. P&F; costs surged 6.8/11.2% YoY/QoQ while RM costs were higher 12.1/7.0% YoY/QoQ negating the improvement in realizations and volumes.

Shortfall in linkage coal impacted fuel costs. Yet, with improved raw material mix, the spikes were neutered. The result: EBITDA advanced by three-tenths to Rs592-a-ton. For CY18, we tweaked our Revenue/EBITDA estimates up by 2%/1%. ACC trades at an EV of $147/ton, relatively cheaper among pan-India players. Yet this captures the best-case scenario. Thereby, the implied assumption of growth in operating profit-per-ton needs a big leap of faith. Nonetheless, we raise our TP to Rs1722 (from Rs1666). We continue to maintain HOLD. Key Highlights and Investment Rationale...

ACC reported a good set of Q3CY17 numbers. The results were better than our estimates on all fronts. The beat at topline level was led by 17.6% YoY increase in volumes to 6.0 MT (vs I-direct estimate of 5.3 MT) and 7.0% YoY increase in realisation to | 5,125/t (vs. Idirect estimate of | 4902/t) Revenues increased 25.8% YoY to | 3,054.5 crore (above I-direct estimate of | 2,616.3 crore) led by 17.6% YoY increase in volumes...

ACC has reported a healthy operating performance in 3QCY17 mainly supported by higher volume and higher contribution of premium products. While revenue grew by 26% YoY to Rs30.5bn, EBITDA registered a robust growth of 52% YoY (down 29% QoQ) to Rs3.5bn, surpassing our estimate of Rs3bn. Cement EBITDA/tonne stood at Rs569 in 3QCY17 vis--vis Rs437 and Rs715 in 3QCY16 and 2QCY17, respectively. Reported net profit stood at Rs1.8bn (+111% YoY and -45% QoQ). Going ahead, we expect ACC to continue reporting healthy volume in the next 2-3 quarters more on account of stabilisation of new capacity in Eastern markets and favourable demand in the region. However, given the absence of any capacity addition...

capacity in the east and a favorable base. Cement realization of INR4,645/t (+6% YoY, +3% QoQ) came in higher than our estimate, partly due to a change in commercial terms (INR114/t impact). The residual increase in realization (INR22/t QoQ) was due to better pricing in the underlying markets. Hence, revenue increased 24% YoY to INR30.5b (est. of INR28.6b). Healthy realizations drive EBITDA/t improvement YoY: EBITDA increased 57% YoY to INR3.53b (est. of INR2.86b), led by EBITDA/t of INR592 (+36% YoY; cement EBITDA/t at INR568). Unitary cost rose 2% YoY, led by an increase in...

driven by strong operating income and revenue. OPM expanded by 200 bps to 16.1%. The Company's cement sales volumes increased 10.1% to 6.74 million tonnes due to higher sales from the expanded capacity at Jamul integrated project. Also, the launch of two new brands ACC Suraksha and ACC HPC in the previous quarter "enriched the company's product portfolio,...

Revenue grew by 6.87% to Rs. 3312.52 Cr in Q2CY17 when compared to the previous quarter Revenue grew by 6.87% to Rs. 3312.52 Cr in Q2CY17 when compared to the previous quarter

2QCY17 results are ACC's best since 2QCY12. However, its costs remain one of the highest in the industry, led by legacy operations. With no capacity addition scheduled, volume growth will taper after 1HCY18, as the expansion in the East gets factored in. Valuations at 15.6/12.1x CY17/18E EV/EBITDA remain expensive, especially given low return ratios (~15% RoE/RoCE in CY18E). We remain cautious (TP: Rs 1,459, 10x June 2019 EBITDA, US112/t) ACCs numbers were inline (EBITDA/t at Rs 704/t vs estimated Rs 699/t, 7.7% YoY, 48.0% QoQ). The company witnessed double-digit volume growth (6.74 mT, 10.1% YoY) for the first time since 3QCY11, led by capacity addition in the East (4 mTPA, commissioned by 3QCY16). Strong pricing (Rs 4,509/t, 5.7% YoY, 5.7% QoQ) also aided growth, as overall costs remained flattish QoQ (Rs 3,805/t, 5.3% YoY). Other operating income surprised (Rs 1.4bn, ~2x YoY), driving the earnings beat (Rs 3.2bn, 35.3% YoY, 52.1% QoQ, est Rs 2.85bn)

ICICI Securities Ltd | Retail Equity Research ACC reported a good set of Q2CY17 numbers. The topline beat was led by 10.1% YoY increase in volumes to 6.7 MT (vs. I-direct estimate of 6.5 MT) and 6.2% YoY increase in realisation to | 4,915/t (vs. Idirect estimate of | 4900/t) Revenues increased 16.9% YoY to | 3,312.5 crore (above I-direct estimate of | 3,172.9 crore) led by 10.1% YoY increase in volumes due to commissioning of Jamul plant (10% of overall capacity) and better pricing scenario across regions...