ACC Limited - PINC Result Review

Results Inline; Bottom in sight

ACC's Q2CY10 standalone results were inline with our estimates with a 26% decline in net profits to Rs3.6bn. On flat volumes and lower realisations, revenue declined by 2.7% to Rs20.6bn. Margins dipped by 760bps to 28.8% from all time high levels achieved during Q2CY09 due to lower utilisation rate and drop in realisation.

Outlook: We maintain our earnings estimate for ACC at Rs71.9 and Rs83.2 for CY10 and CY11 respectively. We expect the industry to remain under pressure during the ongoing monsoon period. However, post monsoon we expect strong pick up in demand.

VALUATIONS AND RECOMMENDATION

The stock is currently trading at CY11E EV/EBIDTA of 5.4. Considering the recent correction in stock price, we are upgrading the stock to a 'BUY' with a price target of Rs974 discounting CY11E EBITDA 6.5x.

Source : Equity Bulls

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