ACC Ltd. share price target

Volume growth lags industry: ACC’s 2QCY16 volumes fell 1.2% YoY to 6.12mt, led by muted demand in some regions. While 2Q cement realizations were up 2.3% QoQ (-3% YoY), spot prices remain higher than the 2Q average, aiding visibility of QoQ uptick. Prices improved in the north and east, but remained stable in the south. Revenues stood at INR28.7b (-3.1% YoY), comprising cement revenues of INR26.1b (-1.6% YoY) and RMC revenues of INR2.6b (-6% YoY, volume up 9% YoY).Motilal Oswal remain Neutral on the stock. ACC is the most sensitive large cap play on price recovery due to its comparatively weak cost structure. Improvement in industry pricing dynamics would be a trigger for rerating. We cut CY16E/CY17E EPS by 6%/7% and volumes by 2.3%/1.4%. We value ACC at INR1,833 (13x CY17E EBITDA, USD146/ton).

Trendlyne has 17 reports on ACC updated in the last year from 7 brokers with an average target of Rs 1580.7. Brokers have a rating for ACC with 1 downgrade,3 price downgrades,2 upgrades,6 price upgrades in past 6 months and 5 price downgrades in past 1 Year.

ACC's reported operating performance exceeded our expectations amid subdued sales volume in 2QCY16 mainly on account of cost benefits. Its operating profit stood at Rs4.09bn (vs. our estimate of Rs3.80bn), while operating cost/tonne declined by ~7% yoy (flat on qoq basis) primarily aided by cost benefits owing to higher usage of petcoke (60% vs. 15% in 2QCY15). Further, freight cost/tonne declined by 10% yoy and 7% qoq mainly owing to proactive measures taken by ACC to reduce its lead distance. EBITDA/tonne stood at Rs655 compared to Rs444 & Rs574 in 2QCY15 & 1QCY16, respectively. We marginally tweak our earnings estimates mainly to factor...

First, led by poor volumes and drop in realization, we suspect ACC's future hinges on plants in eastern clusters. Second, as we have said in the past, the critical factor of operational efficiency is driving the show. The pet coke gains are losing its steam. Post Q2CY16, with higher demand from eastern region, the delta in EBITDA will be stronger, we foresee. Yet even after valuing the stock at...

ACC reported yet another weak quarter, with cement EBITDA/t at Rs 539 (-21.7% YoY, 57.4% QoQ). Volume growth (6.4mT, 9.3% YoY) drove the performance on topline, as realisations slipped (Rs 4,171/t, -8.0% YoY, -3.7% QoQ) across markets. P&F; costs were sharply lower owing to petcoke driven by higher usage and price decline. The RMC division logged a good quarter.

ICICI Securities Ltd | Retail Equity Research ACC's results were broadly below our estimate. While revenues were in line with our estimate, EBITDA, PAT were below our estimates...

Outlook and valuation: We maintain our Sell rating on ACC. Our rating is driven by our concernthatACCstilllacksbroadergrowthtriggers.Withnofurthercapexinthepipeline, longerterm earnings growth is at risk. Though Jamul commissioning will be a nearterm...

New growth avenues and cost saving levers bode well for CY16 Volume boosted by industry demand: ACC's volume growth of 9.3% YoY (6.36mt) for 1QCY16 was its highest in 18 quarters, led by a strong boost from...

ACC's reported operating performance marginally exceeded our expectations amid subdued realizations mainly on account of cost benefits. Its operating profit stood at Rs3.69bn vs. our estimate of Rs3.57bn. Operating cost/tonne declined by ~4% yoy and ~7% qoq mainly aided by cost benefits in terms of higher usage of petcoke (50% v/s 8%), softening of additives prices and decline in advertisement cost (~Rs150mn), maintenance cost (~Rs110mn) and packaging cost (~Rs60mn) during the quarter. EBITDA/tonne stood at Rs574 vis--vis Rs704 and Rs405 reported in 1QCY15 and 4QCY15, respectively. Sales volume grew by robust ~9% yoy to 6.36mnT owing to pickup in construction...

The Union Budget 2016-17 turned out to be positive for cement sectors as there were some positive announcements by finance minister Arun Jaitley. Government has increased its focus on...

ICICI Securities Ltd | Retail Equity Research ACC's revenues increased 3.0% YoY to | 2,846 crore (vs. I-direct estimate of | 2,771 crore) led by 4.2% YoY increase in volumes to 6.0...