Motilal Oswal neutral on ACC

Motilal Oswal has maintained neutral rating on ACC with a target of Rs 1263, in its April 19, 2012 research report.

“ACC's 1QCY12 standalone performance was below expectations with EBITDA at INR6.16b (v/s estimate of INR6.6b) and adjusted PAT at INR3.86b (v/s estimate INR4.32b) driven by lower tax.”

“Volumes grew 9.1% YoY (and 4.6% QoQ) to 6.72m tons (v/s estimate of 6.75m tons). Realizations improved by just 1% QoQ (up 9% YoY) to INR4,256/ton (v/s estimate INR4,406/ton), impacted by market mix changes. Net sales improved 19% YoY (up 14% QoQ) to INR28.6b (v/s estimate of INR29.7b). Adjusted PAT grew 10% YoY (and 99% QoQ) to INR3.86b (v/s estimate of INR4.32b). EBITDA/ton was INR917 (estimate INR977) v/s INR654 in 4QCY11. Costs were lower than estimated, with positive surprises on other expenses which declined by INR140/ton QoQ (v/s estimate of INR100/ton decline). All other cost factors were largely in-line with our estimates. Its RMC business continues to incur losses. The business reported a PBIT loss of INR33m in 1QCY12 (v/s loss of INR84m in 4QCY11). The board has approved the amalgamation of ACC Concrete with ACC. ACC Concrete is a loss-making RMC business, which incurred PBIT loss of INR254m and PAT loss of INR238m in CY11.”

“We are downgrading our EPS estimates for CY12 by 9.5% to INR70.3 and for CY13 by 8.7% to INR86.3 to factor in lower-than-estimated realizations. We estimate 11% volume CAGR (CY11-13) and cement price increase of INR16/bag in CY12E and INR10/bag in CY13E. The stock trades at 18.3x CY12E EPS, 9.8x CY12E EV/ EBITDA and USD127/ton. Maintain Neutral with TP of INR1,263 (~10x CY12E EV/EBITDA),” says Motilal Oswal research report.  

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