Hold ACC; target of Rs 1570: JM Financial
JM Financial recommended hold rating on ACC with a target price of Rs 1570 in its research report dated October 17, 2017.
JM Financial's research report on ACC
ACC reported +26% YoY revenues on volume /realisation growth of 18%/7.5% YoY respectively as operations stablised in Jamul/Sindri plants and higher premium product sales. 3QCY17 EBITDA,+47% YoY, beat our estimates primarily on higher realisations. YTD ACC has reported a realisation growth of 5.7% YoY. EBITDA/t for the quarter at INR543/t; improved YoY as cost escalation was offset by strong realisation. Lack of expansion pipeline and high cost structure limits significant earning surprise going forward.
Outlook
We continue to value the company at 10x EVE to arrive at a TP of INR1,570 (Sep’18). Key trigger will be merger with Ambuja and capacity expansion plans. Maintain HOLD.
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