Prabhudas Lilladher is bullish on ACC has recommended buy rating on the stock with a target price of Rs 1710 in its research report dated October 17, 2018.
Prabhudas Lilladher's research report on ACC
ACC reported Q3CY18 earnings below our estimates due to unexpected fall in realisations. High base and abnormal increase in Q2 resulted in lower than expected realisations. However, ACC posted strong show on volume growth and cost control. Strong demand in its key home markets like Central UP, Jharkhand, Odisha and West Bengal helped company to post 10% growth above our estimate of +8%. Led by quantum improvement in energy efficiency, measured increase in freight cost through route optimisation and strict control on fixed overheads and discretionary spends helped company to contain the cost with a nominal increase of 0.6% YoY (PLe:+2%).
Outlook
However, the earnings cut remains limited for ACC at 4% each for CY18e/CY19e supported by lower costs and better regional mix. Given the attractive valuations and improved quality of operations, we maintain our BUY with TP of Rs1,710 (earlier Rs1,800), EV/EBITDA of 13x CY19e.
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