Result Update

ACC LTD - Q4CY18 Result Update


We continue to maintain our positive view on ACC owing to its deep penetration in rural markets. The regional break-up shows that cement prices in central and eastern India did relatively better. Since ACC has a national presence, it could benefit from this. However, unless cement prices improve across India or cost pressures abate, the stress on profitability will continue. There was some signs of easing of pet coke and diesel prices of late, which if continues, will improve the realization and the company can gain back pricing power if cement prices stabilise. At CMP of Rs 1401 the stock is available at CY20E P/E of 19.3x and CY20E EV/EBITDA of 9.1x respectively. After factoring in Q4CY18 results we have revised our CY19E estimates and introduced CY20E estimates. We have rolled over our target multiple to CY20E and now value the stock at 10x EV/EBITDA of CY20E which yields a fair value of Rs 1,601. We maintain our ‘Accumulate’ rating on the stock

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