February 08, 2017 / 17:37 IST
Edelweiss' research report on ACC ACC’s Q4CY16 EBITDA, akin to all other cement players, sprung a pleasant surprise. Part of it could, probably, be explained by the fact that the company may have pushed cement volumes in December 2016 to meet year-end targets. However, at the same time, EBITDA/t of INR351 is amongst the lowest in our coverage universe. Hereon, a significant improvement in EBITDA/t can only be driven by sector turnaround.
OutlookWe await details, if any, of the possible synergies expected from working with Ambuja. However, a merger with Ambuja entails a risk of brand dilution, resulting in loss of profitability / market share. Overall, at revised valuation of INR 1,648 (earlier INR 1,589), we retain ‘BUY’. Our top picks continue to be Shree Cement and UltraTech in large caps.
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