ACC has raised Rs300 crore through the issue of non-convertible debentures on a private placement basis. The company has issued 3,000, secured, non-convertible debentures of the face value of Rs10lakh each, aggregating to Rs300 crore.

The non-convertible bond will carry a coupon of 8.45% per annum and would be repaid over a period of five years. After the issuance of these non-convertible debentures, the debt-equity ratio of the company stands to increase from 0.1 to 0.16.

The money raised would be utilized to partly fund its expansion plans. We do not see any significant impact on the EPS on account of this fund raising.

At the CMP of Rs815, ACC is trading at an EV/EBITDA of 5.7x and 6.5x its CY2009E and CY2010E EBITDA, respectively, and at an EV/tonne of $117/tonne and US $105/tonne on its CY2009E and CY2010E capacities, respectively.

We believe that the current valuations for ACC are expensive, considering the concerns of oversupply and a fall in prices, going forward. Hence, we maintain a REDUCE on ACC, with a target price of Rs743.