HDFC Securities' research report on ACC
ACC’s numbers exceeded the low expectations (EBITDA: Rs 296/t, Est: Rs 273, -13.5% YoY, -28.9% QoQ) as its P&F costs unexpectedly declined 7.8% QoQ. (Likely an-year-end adjustment, given sharp hikes in petcoke prices (67% of kiln fuel mix in 3QCY16)).
OutlookGoing by CY16 nos (EBITDA/t: Rs 526/t), ACC completely missed the strongest tailwind the cement industry has seen in recent times; a sharp plunge in energy prices. Those have normalized now. Other than its strong brand, ACC does not have much going for it. Its return ratios do not merit comparison with peers, even if its valuations do (11.8/8.6x EV/EBITDA). We retain our SELL with a reduced TP (Rs 1,300, 8.0x CY18 EV/EBITDA).
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