ACC : REDUCE TARGET PRICE: RS.1235 :: Kotak Securities PDF link

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight20042012.pdf

ACC
PRICE: RS.1248 RECOMMENDATION: REDUCE
TARGET  PRICE: RS.1235 CY12E P/E: 19.4X
 Revenues of the company during Q1CY12 grew by 19% YoY primarily
due to improved cement realizations during Q1CY12 as well as higher
sales volume.
 Operating margins witnessed an improvement sequentially led by cement price hikes and stood at 21.5% for Q1CY12 as against 15.56% in
Q4CY11. However due to higher costs, margins remained lower than
Q1CY11.
 Net profit registered a decline of 56% for Q1CY12 due to higher depreciation charge on change in the depreciation policy for captive power
plants.
 At current price of Rs 1248, stock is trading at 19.4x P/E and 8.9x EV/
EBITDA multiples on CY12 estimates. Stock has corrected by nearly 10.5%
since our last recommendation due to steep valuations, continued cost
pressures and fears of CCI imposing fine on cement companies. Based on
high valuations, we continue to maintain REDUCE recommendation on
the company with a revised price target of Rs 1235 (Rs 1246 earlier) and
would look for better entry points to invest in the stock if demand and
pricing scenario remains strong.