Reduce ACC - Q2CY12 Result Update - Kotak

- Revenues of the company during Q2CY12 grew by 16%, marginally lower than our estimates and led by improved cement realizations as well as marginally higher sales volume during Q2CY12.

- Operating margins witnessed an improvement led by cement price hikes and stood at 23.4% for Q2CY12 as against 22.9% in Q2CY11. However, increase in margins was not in line with increase in cement prices since costs continued to remain high due to higher freight and power & fuel cost per tonne.

- Net profit growth was marginally better than our estimates and was led by better than expected operating margins.

- CCI had also imposed a penalty of Rs11.47 bn during Q2CY12 on the company and ACC is planning to appeal to competition appellate tribunal for the same. Hence, it has not provided for this amount in its Q2CY12 financials.

- At current price of Rs 1261, stock is trading at 20.4x and 16x P/E and 9.3x and 8.1x EV/EBITDA on CY12 and CY13 estimates. We tweak our estimates and arrive at a revised price target of Rs1183 on CY12 estimates. (Rs1105 earlier). We continue to maintain REDUCE on ACC due to its rich valuations.

Source : Equity Bulls

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