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ACC (ACC IN) SELL
We expect ACC’s sales volume to grow at 6% YoY during CY11 and CY12 on
account of lower overall demand growth. We have also included the flat
realisation in CY11 to reflect the weak demand scenario along with the impact of
30mn mt of capacity addition in India by March 2012. Further, we have assumed
power and fuel cost to firm up from current levels led by an increase in coal prices
in both domestic and import markets. We also expect freight cost to remain high.
We have lowered our CY11 and CY12 net realisation estimates by ~Rs20/mt on
account of the excise duty hike announced in the recent Union Budget 2012.
Subsequently, we expect operating margins to decline 410bps and EPS to decline
31% YoY in CY11. The excise hike has impacted our previous CY11 EBITDA and
net profit estimates downwards by ~2% each. Subsequently, our DCF-based
valuation implies a fair value of Rs938/share (1% lower than our previous estimate
of Rs948/share). The fair value discounts CY11E and CY12E EBITDA 10x and 7.5x
respectively and implies a replacement cost of US$120/mt.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ACC (ACC IN) SELL
We expect ACC’s sales volume to grow at 6% YoY during CY11 and CY12 on
account of lower overall demand growth. We have also included the flat
realisation in CY11 to reflect the weak demand scenario along with the impact of
30mn mt of capacity addition in India by March 2012. Further, we have assumed
power and fuel cost to firm up from current levels led by an increase in coal prices
in both domestic and import markets. We also expect freight cost to remain high.
We have lowered our CY11 and CY12 net realisation estimates by ~Rs20/mt on
account of the excise duty hike announced in the recent Union Budget 2012.
Subsequently, we expect operating margins to decline 410bps and EPS to decline
31% YoY in CY11. The excise hike has impacted our previous CY11 EBITDA and
net profit estimates downwards by ~2% each. Subsequently, our DCF-based
valuation implies a fair value of Rs938/share (1% lower than our previous estimate
of Rs948/share). The fair value discounts CY11E and CY12E EBITDA 10x and 7.5x
respectively and implies a replacement cost of US$120/mt.
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