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ACC Board will meet on February 3 to consider merging its subsidiaires with ACC. The key
subsidiary- Encore Cements was acquired by ACC in January 2010, and its operates a
0.4mmt cement grinding unit in A.P. We see no material impact on ACC's financials due to
the above
ACC Board to meet on February 3 to merge 3 subsidiaries
ACC Board will consider the merger of its 3 subsidiaries - Encore Cement, Lucky Minmat
Ltd, and National Limestone Co Pvt Ltd with itself. All these subsidiaries are 100% owned
by ACC, hence will not impact the consolidated financials of ACC. Of these, the key
subsidiary of is Encore Cement & Additives Pvt Ltd which ACC acquired in January 2010.
The company had a 0.2mmt grinding unit in Vishkapatnam in Andhra Pradesh. This
acquisition helped ACC further strengthen its presence in Coastal Andhra Pradesh. ACC
has since then raised the capacity of Encore Cement to 0.4mmt.
ACC to report a 9% drop in yoy EBITDA in Q4FY10
We expect ACC to report a 9% drop in EBITDA in Q4 at Rs3.9bn, and report a EBITDA/mt of
Rs700/mt. However there would be a sharp rise in EBITDA/mt on a qoq basis. Cement prices
have improved by 5-7% on a qoq basis, with a sharper rise in South India.
We remain cautious on cement earnings outlook for FY12
The sharp improvement in cement prices from October to December 2010 has been largely
driven by production discipline. The inherent over-supply conditions still persist, with industry
operating assets 77-78%, hence we believe the downside risks to cement prices do exist.
ACC is relatively cheaper than its other cement peers at US$128 EV/mt, and its company we
estimate has a net cash of Rs10.5bn as of FY10E balance sheet.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
ACC Board will meet on February 3 to consider merging its subsidiaires with ACC. The key
subsidiary- Encore Cements was acquired by ACC in January 2010, and its operates a
0.4mmt cement grinding unit in A.P. We see no material impact on ACC's financials due to
the above
ACC Board to meet on February 3 to merge 3 subsidiaries
ACC Board will consider the merger of its 3 subsidiaries - Encore Cement, Lucky Minmat
Ltd, and National Limestone Co Pvt Ltd with itself. All these subsidiaries are 100% owned
by ACC, hence will not impact the consolidated financials of ACC. Of these, the key
subsidiary of is Encore Cement & Additives Pvt Ltd which ACC acquired in January 2010.
The company had a 0.2mmt grinding unit in Vishkapatnam in Andhra Pradesh. This
acquisition helped ACC further strengthen its presence in Coastal Andhra Pradesh. ACC
has since then raised the capacity of Encore Cement to 0.4mmt.
ACC to report a 9% drop in yoy EBITDA in Q4FY10
We expect ACC to report a 9% drop in EBITDA in Q4 at Rs3.9bn, and report a EBITDA/mt of
Rs700/mt. However there would be a sharp rise in EBITDA/mt on a qoq basis. Cement prices
have improved by 5-7% on a qoq basis, with a sharper rise in South India.
We remain cautious on cement earnings outlook for FY12
The sharp improvement in cement prices from October to December 2010 has been largely
driven by production discipline. The inherent over-supply conditions still persist, with industry
operating assets 77-78%, hence we believe the downside risks to cement prices do exist.
ACC is relatively cheaper than its other cement peers at US$128 EV/mt, and its company we
estimate has a net cash of Rs10.5bn as of FY10E balance sheet.
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