Emkay Global is bullish on ACC has recommended buy rating on the stock with a target price of Rs 1814 in its research report dated October 17, 2018.
Emkay Global's research report on ACC
ACC reported adjusted EBITDA of Rs4.46bn against our estimate of Rs4.83bn, as lower realization affected margins. Realization was down 1.7% qoq against estimated growth of 1% qoq. EBITDA/tn was at Rs648 against estimated Rs721. Sales volume was up 9.9% yoy (vs. estimate of 7% growth) to 6.55mt. YTD volume growth stands at 8.3% yoy with capacity utilization of 82.9%. Realization was up by mere 0.5% yoy. EBITDA/tn was at Rs648 against Rs658/Rs875 in Q3CY17/Q2CY18. Opex/tn was up by 0.6% yoy led by higher freight cost (due to higher diesel prices) and other expense (higher maintenance and packaging expense). Energy cost increased 7.5% qoq due to higher pet coke/coal price. OPM was down 32bps yoy to 13%.
Outlook
We like the stock due to reasonable valuations (10.4x CY19E EV/EBITDA) and strong balance sheet. We believe that any announcement of organic/inorganic expansion would be a positive trigger for the stock. We maintain BUY with a TP of Rs1,814.
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