Result Review: ACC

Result Review: ACC
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First Published: Fri, Apr 24 2009. 09 15 AM IST

Updated: Fri, Apr 24 2009. 09 15 AM IST
Revenues for the Q1CY09 grew by 16% as compared to Q1CY08 led by 6.1% improvement in dispatches and 9.6% improvement in realizations as against same period last year.
Dispatches for the recently concluded quarter stood at 5.73MT and net realizations witnessed an increase and stood at Rs3,587 per tonne.
Capacity expansion at various locations like Bargarh, Wadi and Chanda is progressing well.
Bargarh facility along with a 30MW captive power plant is expected to get operational by mid-CY09 while expansion at Wadi facility will be commissioned in two phases - first phase getting operational by August, 2009 while second phase by March, 2010. Facility at Chanda is likely to commission in mid-2010.
We revise our realization assumptions upwards to factor in the recent price hikes witnessed across regions.
Our full year realization assumptions also take into account the reduction in cement prices post monsoons due to increased supplies as well as demand moderation.
We maintain our volume assumptions of 22.6MT for CY09 and expect revenues to grow to Rs80.2bn for CY09 as against Rs 75bn estimated earlier.
Valuation
At Rs646, stock is trading at 10x P/E multiples and 5.7x EV/EBITDA multiples on CY09 estimates.
We believe that most of the positives related to near term price hikes have already been factored in the price. We continue to maintain our cautious stance on the sector due to expected increase in supplies as well as moderation in demand growth going forward.
The company has been valued using average of 10x P/E and 5x EV/EBITDA on CY09 estimates. We continue to maintain REDUCE recommendation for the stock with a revised price target of Rs605 on CY09 estimates as against Rs504 earlier.
At our target price, stock would trade at 9.4x its estimated earnings for CY09 and 5.4x its EV/EBITDA multiples. Our best-case assumption of volume growth and better realization also does not leave any upside from the current level.
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First Published: Fri, Apr 24 2009. 09 15 AM IST
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