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TP : Rs1100
Investment Rationale
§ Cement demand growth likely to bounce back in FY13 after a prolonged 12-15 months of subdued growth.
Growth to be led by 1) Continued improvement in rural housing fuelled by higher MSPs and better monsoons. 2)
Pre-election (General elections in FY14, multiple state election in FY12/13) infra spending
§ Though cement realizations could come under pressure in short term ACC’s solid volume growth (12%+ytd)
would help company protect its profitability. Cost closer to peaking out by Q3FY12 as slower global growth likely
to stabilize runaway coal/petcoke prices
§ Solid balance sheet - Rs23 bn (1/3rd of balance sheet size) worth of Cash & cash equivalents
§ Impressive return ratios - RoCE of 21% (1.5X CoC) & RoIC of ~35% even in relatively subdued cement cycle
clearly reflects company’s superior capital efficiency
Valuations
§ Valuation at PER of 15.1X & EV/ton of USD118 on CY12E though not cheap are still at discount to Ambuja
Cement
For full list click link below:
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TP : Rs1100
Investment Rationale
§ Cement demand growth likely to bounce back in FY13 after a prolonged 12-15 months of subdued growth.
Growth to be led by 1) Continued improvement in rural housing fuelled by higher MSPs and better monsoons. 2)
Pre-election (General elections in FY14, multiple state election in FY12/13) infra spending
§ Though cement realizations could come under pressure in short term ACC’s solid volume growth (12%+ytd)
would help company protect its profitability. Cost closer to peaking out by Q3FY12 as slower global growth likely
to stabilize runaway coal/petcoke prices
§ Solid balance sheet - Rs23 bn (1/3rd of balance sheet size) worth of Cash & cash equivalents
§ Impressive return ratios - RoCE of 21% (1.5X CoC) & RoIC of ~35% even in relatively subdued cement cycle
clearly reflects company’s superior capital efficiency
Valuations
§ Valuation at PER of 15.1X & EV/ton of USD118 on CY12E though not cheap are still at discount to Ambuja
Cement
For full list click link below:
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