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Last Updated : Jul 19, 2019 03:01 PM IST | Source: Moneycontrol.com

Buy ACC; target of Rs 2040: Motilal Oswal

Motilal Oswal is bullish on ACC has recommended buy rating on the stock with a target price of Rs 2040 in its research report dated July 18, 2019.

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Motilal Oswal's research report on ACC


Volumes down marginally but realizations improve: Volumes declined 0.6% YoY to 7.2mt in 2QCY19. However, premium product volumes were up 9% YoY. Cement realizations increased 8% YoY (+12% QoQ) to INR5,255, led by healthy price hikes in the quarter. Revenue grew 8% YoY to INR41.5b (our estimate: INR37.1b), led by optimization of both market and product mix. Profitability improves 18% YoY: Blended cost/t increased 6% YoY (+4%QoQ) to INR4,678. However, blended EBITDA/t was up 18% YoY (+53% QoQ) to INR1,086 due to healthy realizations. Consequently, EBITDA increased 17% YoY (+47% QoQ) to INR7.8b (our estimate: INR5.8b). Operating margin came in at 18.8% (+1.5pp YoY, +5.3pp QoQ). Adj. PAT increased 22% YoY to INR4.5b (our estimate: INR3.4b).


Outlook


The stock trades at 7.4x CY20E EV/EBITDA. We value the stock at 10x Jun'21E EV/EBITDA (30% discount to UTCEM) and arrive at a TP of INR2,040 (implied EV/tonne of USD125 on CY20).


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.




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First Published on Jul 19, 2019 03:01 pm
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