ACC Ltd. share price target

Wait for better entry levels

ACC Ltd. (ACC) Q1CY15 earnings surprised positively driven by better than expected realisationgrowth.ThishasbeenalongawaitedpositivesurpriseforACCaswehaveseen ACC disappointing on operating performance consistently for the past many quarters. The...

ACC reported vastly improved profitability for 1QCY15 at ~Rs 700/t (vs est Rs 436). This was despite a 10% YoY decline in volumes (5.8 mTPA, 5 yr low for 1Q volumes) and only marginal improvement in realizations (Rs 4,535, 5.5% YoY, 2.1% QoQ). The profitability jump is largely due to a 10% QoQ decline in other operating expenses, attributable to lower variable costs on packing, driven by lower crude.

Buy on dips to Rs 1,365 - Rs 1,423 for target of Rs 1,538 in 1 quarter

ACC reported multi-year low profitability for 4QCY14 (EBITDA/t at Rs 300/t vs. estimated Rs 364/t). This was on account of 1) lower volumes (5.8 mT,-1.5% YoY) and 2) higher freight costs ( 9.1% YoY, 8% QoQ).