ACC Ltd Q1CY18 Result Update Rating - ACCUMULATE - Arihant Capital Markets

ACC Ltd. reported a strong set of numbers in its first quarter of CY2018. Net profit for the quarter came in at Rs. 250cr as compared to Rs. 211 cr in the corresponding quarter of previous year registering a growth of 19% YoY. Total income for the quarter came in at Rs. 3,625 cr as compared to Rs. 3,174 cr in the corresponding quarter of CY 17, up 14% YoY and increased 4% sequentially. EBITDA for the company stood at Rs. 492 cr vs. Rs. 417 cr YoY. EBITDA margin stayed almost the same at 13.6% vs 13.4% in the previous corresponding quarter.

Cement Business volume came at 7.11 MT higher by 7.7% compared to the corresponding quarter of the previous year & grew by 2.7% sequentially. The management has indicated that improving sand availability in the impacted states could help improve demand in the ensuing months.

Realization for the quarter improved by 5% YoY. Government's higher outlay for infrastructure and rural economy is expected to boost consumption, production and investments.

Cost pressure remains elevated for the industry, sharp rise in energy and freight costs are due to higher petcoke, coal and diesel prices. There is also a sharp rise in slag prices.

Overall demand seeing visible recovery driven by execution of 'Housing for All' program.

Valuations:

We have valued the stock at 11(x) its EV/EBITDA of CY19 estimate and have arrived at a fair value of Rs 1,778 per share. This is an upside of 13%. At CMP of Rs 1573 the stock is available at CY19E P/E(x) of 22.4 (x) and CY17 EV/EBITDA(x) of 14.1 (x) respectively. We have "ACCUMULATE" rating on the stock.

Shares of ACC LTD. was last trading in BSE at Rs.1565.55 as compared to the previous close of Rs. 1574.25. The total number of shares traded during the day was 16692 in over 888 trades.

The stock hit an intraday high of Rs. 1584.9 and intraday low of 1558. The net turnover during the day was Rs. 26228210.

Source : Equity Bulls

Keywords