Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Associated Cement Companies
Visit highlights cautious
optimism
„Moderate drop in cement prices; demand – a key concern
ACC told us that cement prices have eased moderately vs 2Q CY11 levels. Also,
the Co expects EBITDA/ton to stay healthy YoY. Slowing demand is a key worry
even though the Co has grown faster (+11%) than industry (+3%) in 1H CY11.
Cartelisation probe – can it be path-breaking?
ACC said it is co-operating with the government on all aspects of the cartelisation
probe. However, the Co believes that cement inflation in India over the last
decade has been the lowest amongst all major commodities. In our view, the
Competition Commission of India’s (CCI’s) recent imposition of a financial penalty
on DLF indicates that regulatory risks are real and could continue.
Company-specific factors helping ACC to outperform
Market share gains in south India have helped ACC grow its volumes faster than
the industry. On the cost front, recent focus on hub-and-spoke distribution is
helping to cut logistic costs. Looking ahead, ACC does not expect costs to rise
much unless local coal prices are hiked again.
Valuations have eased but we see pain over next 6-months
Among the pure cement majors, ACC’s valuations (~US$110/ton) appear
relatively attractive versus replacement cost. However, our outlook on the
industry’s profit environment is weaker than ACC’s views above; we think pricing
pressure could aggravate due to steep supply overhang and possible continued
demand disappointment over next 2-3 quarters. ACC’s free cash yield looks
extremely attractive pending any major capex announcements; we see this as
temporary
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Associated Cement Companies
Visit highlights cautious
optimism
„Moderate drop in cement prices; demand – a key concern
ACC told us that cement prices have eased moderately vs 2Q CY11 levels. Also,
the Co expects EBITDA/ton to stay healthy YoY. Slowing demand is a key worry
even though the Co has grown faster (+11%) than industry (+3%) in 1H CY11.
Cartelisation probe – can it be path-breaking?
ACC said it is co-operating with the government on all aspects of the cartelisation
probe. However, the Co believes that cement inflation in India over the last
decade has been the lowest amongst all major commodities. In our view, the
Competition Commission of India’s (CCI’s) recent imposition of a financial penalty
on DLF indicates that regulatory risks are real and could continue.
Company-specific factors helping ACC to outperform
Market share gains in south India have helped ACC grow its volumes faster than
the industry. On the cost front, recent focus on hub-and-spoke distribution is
helping to cut logistic costs. Looking ahead, ACC does not expect costs to rise
much unless local coal prices are hiked again.
Valuations have eased but we see pain over next 6-months
Among the pure cement majors, ACC’s valuations (~US$110/ton) appear
relatively attractive versus replacement cost. However, our outlook on the
industry’s profit environment is weaker than ACC’s views above; we think pricing
pressure could aggravate due to steep supply overhang and possible continued
demand disappointment over next 2-3 quarters. ACC’s free cash yield looks
extremely attractive pending any major capex announcements; we see this as
temporary
No comments:
Post a Comment