ACC - Growth stung by costs - IDBI Capital

Net sales for the quarter was in-line with our estimates. However, we were expecting a turnaround from the company in terms of cost efficiency, which stood as a disappointment. The company's Rail-Road mix is keeping freight costs elevated given recent diesel price hike of ~Rs5/litre (and erstwhile rail freight hike of ~20%). Power and fuel costs per tonne were also firm (up by 6/5% YoY/QoQ despite stable international coal prices and Rupee appreciation).

Our CY12/CY13E Net sales, EBITDA, Adj. PAT numbers stand altered by 2.5%/2.5%, 1.3%/4.7% and (1.6%)/3.8% respectively. We factor resilient cement prices over Q3CY12 and higher than anticipated cost push.

Our EBITDA CAGR over CY11-13E stands changed to 21% (vs. 19% previously) and we maintain our target EV/EBITDA multiple for the company at 9x. We maintain our HOLD rating on the company with a TP of Rs1,445.

Source : Equity Bulls

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