Fundamental Result Update

ACC Q2CY19 Result Update



Higher annual budget allocation for infrastructure, affordable housing, upgradation of roads and Government's strong focus on improving connectivity across the country will drive cement demand going forward. ACC being a Pan-India player will be a direct beneficiary of this improved demand. Cement prices have seen some correction in last two months due to seasonal factors like slow industrial activity during monsoon. Despite subdued demand, ACC’s operational performance improved substantially this quarter. We continue to maintain our positive view on ACC owing to its deep penetration in rural markets and strong focus on premium products. At CMP of Rs 1544 the stock is available at CY20E EV/EBITDA of 9.6x. After factoring in strong Q2CY19 results, we keep our CY19E/CY20E estimate unchanged, however lower our target EV/EBITDA multiple to 11x from 12x earlier which yields a target price of Rs 1736. Maintain ‘Accumulate’.


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