We maintain our buy rating on ACC with target price of R1,650 at EV/T of $140 CY15e capacity of 34 million tonnes, driven by strong outlook on demand of worst-hit southern and western regions (both combined constitute 45% of ACCs total volumes) and play on improved operations. ACC would be the biggest beneficiary of an increase in all-India cement demand due to its pan-India presence and would have one of the cheapest valuations compared to its peers. The recent modernisation of Wadi and Chanda, and upcoming commissioning of the modernised Jamul plant should see reduction in cost and enhanced efficiencies. Stock trades at EV/T of $127 CY15e capacity, significantly lower compared to $170 of UltraTech and Ambuja Cement.
ACC reported Q3CY14 earnings, in-line-with our expectation. Volumes grew 1.4% year-on-year (y-o-y) to 5.62 million tonnes, below our expectation of 5.71 million tonnes. The companys blended realisations rose 3% q-o-q (+7.7% y-o-y) to R4,879 per tonne, above our expectation of R4,792. Around R34 per tonne of the realisation were driven by better than expected revenues in raw material costs. However, higher-than-expected realisations were partially negated by higher costs.