Broking house, Emkay Research has maintained hold rating on the Associated Cement Companies , ACC with a target of Rs 1188.
Emkay Research report on Associated Cement Companies:
ACC's approval of capacity expansion by 3.0 million tonnes
ACC is the largest cement producer having a pan India presence with a total cement producing capacity of 19.91 million tonnes. Over the last 6 years the company has taken tremendous efforts in reducing its power cost by investments in captive power plants.
For the period Apr- Nov'06, ACC's despatches increased by 5% to 12.05 million tonnes.
The company is looking for expanding cement capacities in the Eastern & Southern regions & aims to increase its capacity to 25.0 million tonnes in the next 2-3 years.
The company has announced projects for Lakheri expansion of capacity (by 0.90 million tonnes) with a 25 MW captive power plant and Bargarh expansion (by 1.18 million tonnes) with a 30 MW captive power plant. ACC will also pump in about Rs 5000 million to establish 50 new ready-mix concrete by 2010.
In keeping up with its expansion plans, ACC approved the capacity expansion by 3.0 million tonnes at New Wadi with a capital expenditure of Rs 14800 million. Currently, New Wadi has a cement manufacturing capacity of 2.60 million tonnes. The new plant is expected after CY08. Further details regarding the same are awaited.
We maintain our earlier estimates and target of Rs 1188 thereby recommending a HOLD.
