Acc Ltd share price forecast
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UPDATED FOR 17th JULY 2018
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Maintain sell on ACC by Kotak Institutional Equities
As per latest report published on financial express 28th June 2018, Kotak Institutional Equities recommended to maintain sell call in ACC and they are expecting a ACC target around 1205 due to expensive valuations.
As per report stock trades at 13X CY2019E Ebitda and 24X earnings. In contrast to expectations of strong earnings growth at the start of the each year, ACC’s Ebitda/tonne has improved at CAGR of only 4% between CY2014-2017 to Rs 593/tonne (from Rs 508/tonne in CY2014). We expect Ebitda/ton for CY2018E to be flat as well (at Rs 594/tonne) due to rising cost pressures and weak prices trends.
The company’s 40% of capacity in south, west regions will restrict earnings improvement due to large overcapacity in the region (sub-60%). Moreover, the all-India capacity addition of 75 mtpa over the next three years will restrict industry utilisation rates to close to 70% (from 64% now). The higher profitability earned by cement companies in last up-cycle (2007-2010) was led by industry operating at >80% utilisation rates.cut in EV/Ebitda multiple reflects the rising cost of equity as well as the fact that ACC’s plant utilisation rates will increase to +90% in three years (and which are already built into our earnings estimates and TP).
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JP Associates is in talk with ACC to sell its cements business for Rs 5200 cr
JP Associates is in talk with ACC to sell its cements business for Rs 5200 cr, (as per latest new published on ET on 26thn June 2018) which has an capacity of about 5.5 million tonnes per annual. Jaypee has entered into an exclusivity agreement with ACC till July 31. A spokesperson of ACC declined comment on what he called “market speculation”. Jaiprakash Associates also declined a comment.
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