October 26, 2016 / 18:30 IST
Centrum's research report on ACC We maintain HOLD on ACC with a revised TP of Rs 1,710. ACC’s Q3CY16 consolidated net sales/EBITDA/PAT dipped 10%/13%/29% YoY (much below our expectations) led by sharp 10%YoY and 17%QoQ volume decline and QoQ increase in energy and freight costs. Cement NSR however recovered 3% QoQ (down 1% YoY) on strong supply discipline across India. While Q3 volume dip would lead to 5th consecutive year of flattish volume growth, we expect ACC’s capacity expansion during H2CY16 should drive 6% volume CAGR during CY17/18.
We introduce ACC’s CY17E financials estimates and roll forward our valuations on CY17E. We increase our TP by 6% toRs1710 as we value ACC at11x it’s CY17E EBITDA. Our TP implies replacement value of USD139 per MT. With limited upside on our TP, we maintain our HOLD recommendation on the stock.
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