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Uneventful CY2014 comes to a close. ACC ended CY2014 with another unimpressive earnings performance as net income growth declined by 2% yoy compared to lofty expectations of 38% yoy growth factored at the start of the year. Even as we leave CY2014 behind and look promisingly at CY2015E with 26% yoy growth in earnings, we remain wary as valuation multiple at 12.6X EV/EBITDA is at a 47% premium to the forward-trading multiple at the start of the year. Maintain SELL rating with revised target price of `1,400 (`1,280 earlier).
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4QCY14 results: EBITDA/ton at decadal low of `304 ACC reported net revenues of `27.6 bn (3% yoy, 1% qoq), EBITDA of `1.8 bn (-32% yoy, -42% qoq) and net income of `1.2 bn (-37% yoy, -38% qoq) against our estimates of `28 bn, `2.6 bn and `1.6 bn respectively. Volumes at 5.7 mn tons (-2% yoy, 2% qoq) were 5% below estimates and not reflective of even the modest growth reported by peers. Cement realizations at `4,497/ton saw a `81/ton sequential decline despite some strength shown in key markets in South. EBITDA/ton at `304 is at a decadal low, and contributed by high raw material cost that was attributable to shutdown of limestone mines at Chaibasa and Bargarh that led to purchase of clinker. Even if one were to adjust the impact of the higher raw material cost, EBITDA/ton remains unimpressive in comparison to that of previous years. Lower effective tax rate at 8% and tax reversal of `2 bn lent some respectability to reported profits. CY2014—earnings downgrade of 38% from the start of the year, looking hopeful ahead ACC ended CY2014 with 2% yoy decline in net income and 9% yoy decline in EBITDA compared to 38% and 46% growth estimated at the start of the year. The poor show was a combination of modest volumes (1% yoy) and unimpressive realizations at `4,475/ton (3% yoy), which together with cost inflation of 7% yoy led to decline in EBITDA/ton by 10% yoy to `516. However, we remain ever optimistic and have factored a volume growth of 7% yoy and improvement in EBITDA/ton to `790 yielding 64% yoy growth in EBITDA and 39% yoy growth in net income for CY2015E. Maintain SELL rating with revised target price of `1,400 At 12.6X EV/EBITDA and 24X P/E, ACC continues to trade rich on expectations of a strong recovery in earnings. Accordingly, we maintain our SELL rating on ACC with a revised target price of `1,400 (`1,280 earlier). The change in our target price reflects rollover to September 2016E. We have marginally revised our earnings for CY2015E and CY2016E to `63/share (`69/share previously) and `85/share (`91/share previously).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
Uneventful CY2014 comes to a close. ACC ended CY2014 with another unimpressive earnings performance as net income growth declined by 2% yoy compared to lofty expectations of 38% yoy growth factored at the start of the year. Even as we leave CY2014 behind and look promisingly at CY2015E with 26% yoy growth in earnings, we remain wary as valuation multiple at 12.6X EV/EBITDA is at a 47% premium to the forward-trading multiple at the start of the year. Maintain SELL rating with revised target price of `1,400 (`1,280 earlier).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
4QCY14 results: EBITDA/ton at decadal low of `304 ACC reported net revenues of `27.6 bn (3% yoy, 1% qoq), EBITDA of `1.8 bn (-32% yoy, -42% qoq) and net income of `1.2 bn (-37% yoy, -38% qoq) against our estimates of `28 bn, `2.6 bn and `1.6 bn respectively. Volumes at 5.7 mn tons (-2% yoy, 2% qoq) were 5% below estimates and not reflective of even the modest growth reported by peers. Cement realizations at `4,497/ton saw a `81/ton sequential decline despite some strength shown in key markets in South. EBITDA/ton at `304 is at a decadal low, and contributed by high raw material cost that was attributable to shutdown of limestone mines at Chaibasa and Bargarh that led to purchase of clinker. Even if one were to adjust the impact of the higher raw material cost, EBITDA/ton remains unimpressive in comparison to that of previous years. Lower effective tax rate at 8% and tax reversal of `2 bn lent some respectability to reported profits. CY2014—earnings downgrade of 38% from the start of the year, looking hopeful ahead ACC ended CY2014 with 2% yoy decline in net income and 9% yoy decline in EBITDA compared to 38% and 46% growth estimated at the start of the year. The poor show was a combination of modest volumes (1% yoy) and unimpressive realizations at `4,475/ton (3% yoy), which together with cost inflation of 7% yoy led to decline in EBITDA/ton by 10% yoy to `516. However, we remain ever optimistic and have factored a volume growth of 7% yoy and improvement in EBITDA/ton to `790 yielding 64% yoy growth in EBITDA and 39% yoy growth in net income for CY2015E. Maintain SELL rating with revised target price of `1,400 At 12.6X EV/EBITDA and 24X P/E, ACC continues to trade rich on expectations of a strong recovery in earnings. Accordingly, we maintain our SELL rating on ACC with a revised target price of `1,400 (`1,280 earlier). The change in our target price reflects rollover to September 2016E. We have marginally revised our earnings for CY2015E and CY2016E to `63/share (`69/share previously) and `85/share (`91/share previously).
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily04022015rq.pdf
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