Buy ACC; target of Rs 1485: Angel Broking

Angel Broking`s research report on ACC

“For 1QCY2014 ACC’s operating profits were in-line with estimates. However, the company’s bottom-line performance was better than estimates due to higher other income.”

“During the quarter, ACC’s standalone top-line rose by 1.9 percent yoy to Rs 2,967cr. While grey cement volume rose by 1.3 percent yoy to 6.48mn tonne, realization remained flat on a yoy basis at Rs 4,304/tonne. Although the company benefitted out of higher prices in northern and central regions, weak pricing scenario in the south resulted in modest performance on the realization front. Net sales of the RMC division rose by 4.6 percent yoy to Rs 178cr. The OPM stood at 14.3 percent, down 259bp on a yoy basis, impacted by higher cost of major inputs such as fly ash and gypsum. Freight cost/tonne too rose by 7.3 percent on a yoy basis. The Adjusted PAT, after factoring in Rs 113cr of tax credit during the quarter, fell by 3.7 percent yoy to Rs 286cr.”

“We expect ACC to register a 12 percent yoy growth in its top-line over CY2013-15. The bottom-line is expected to grow at a CAGR of 21.9 percent over the same period. At current levels, the stock is trading at an EV/tonne of US$94 on CY2015E capacity. We recommend an Accumulate on the stock with a target price of Rs 1,485,” says Angel Broking research report.

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