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Expect worst to be over- upgrade to ACCUMULATE |
ACCUMULATE
CMP: Rs983 Target Price: Rs1,035
n APAT at Rs0.9bn (-79.3%yoy) sharply below estimates led by lower realizations. Revenue decline of 16.9% yoy - volumes decline 3.6%yoy, realizations down 13.8%
n Costs increases drag EBITDA to Rs 1.69bn by 74.6%yoy. RM cost/t up 16%yoy due to outside clinker purchases & increase in fly ash prices. EBITDA/t at Rs3512 (-73.6%yoy)
n Downgrade our earnings by 8% for CY10 & 5.9% for CY11. With recent cement prices hikes and pick up in volumes, we expect the worst phase of profitability to be over for ACC
n We upgrade our target price to Rs1050 by upgrading our valuation to EV/ton of USD 130 (earlier USD110/ton) and rolling over to CY11 nos. Upgrade to ACCUMULATE
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