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Please refer to important disclosures at the end of this report 1

Quarterly results (Standalone)

Operating profit 398 464 (14.3) 442 (9.9)

OPM (%) 12.8 19.0 (616)bp 17.7 (481)bp

Source: Company, Angel Research

ACCs 4QCY2012 net profit fell by 3.8% yoy to `239cr, and the same was below

our estimate. Realizations for the company, although higher by 2.0% on a yoybasis, fell by 3.8% on a qoq basis.

ACC posted a 24% yoy growth in

standalone top-line to `3,098cr. Adjusted for sales of the ready mix concrete

(RMC) segment, which were included in the standalone sales (w.e.f 4QCY2012),

the top-line growth for the quarter remained flat. Volume growth remained flat on

a yoy basis. Even for CY2012, ACC posted a modest performance with volumes

growing by a modest 1.6%. The overall OPM stood at 12.8%, down 481bp on a

yoy basis, impacted by increase in freight costs and also due to low margins for

the RMC business (which got included in standalone business during the quarter).

Adjusting for the RMC business, we estimate the OPM for the company to be14.8%. The adjusted profit after tax stood at `239cr, down 1.3% (4QCY2011 had

tax reversal of `228cr) on a yoy basis.

We expect ACC to register a 13.4% yoy growth in its

top-line over CY2011-13. The bottom-line is expected to post a CAGR of 3% over

the same period. At current levels, the stock is trading at an EV/tonne of US$119

on CY2013E capacity, which we believe is fair.

Key financials (Standalone)

% chg (3.9) 22.3 17.9 9.1

% chg (30.3) 18.3 6.5 (0.3)

OPM (%) 23.5 20.3 19.9 19.6

59.6 70.5 75.1 74.9

P/E (x) 21.2 17.9 16.8 16.8

P/BV (x) 3.7 3.3 3.2 2.9

RoE (%) 17.9 19.4 19.4 18.1

RoCE (%) 19.9 18.0 19.2 20.3

EV/Sales (x) 2.6 2.3 1.9 1.7EV/tonne (US$)* 155 136 121 119

Installed capacity (mtpa) 27 30 30 30

EV/EBITDA (x) 11.2 11.2 9.4 8.5

Source: Company, Angel Research ;Note: *adjusted for CPP

CMP `1,261

Target Price -

Investment Period -

Stock Info

Sector

(1,804)

Bloomberg Code

Shareholding Pattern (%)

Promoters 50.3

MF / Banks / Indian Fls 10.2

FII / NRIs / OCBs 20.4

Indian Public / Others 19.1

Abs. (%) 3m 1yr 3yr

Sensex 4.4 9.9 20.7

ACC (11.6) (4.5) 46.0

Reuters Code ACC.BO

ACC@IN

BSE Sensex 19,461

Nifty 5,898

Avg. Daily Volume 26,307

Face Value (`) 10

52 Week High / Low 1515/1105

Cement

Market Cap (` cr) 23,674

Net Debt (` cr)

Beta 0.8

022-39357800 Ext 6831

[email protected]

Performance Highlights

4QCY2012 Result Update | Cement

February 11, 2013

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ACC | 4QCY2012 Result Update

February 11, 2013 2

Exhibit 1:4QCY2012 performance (Standalone)

Other Operating Income 81 29 174.6 52 53.8 228 231 (1.4)

Net Raw-Material Cost 794 306 159.5 422 88.2 1,784 1,216 46.8

(% of Sales) 25.6 12.5 16.9 16.0 12.9

Power & Fuel 535 567 (5.5) 584 (8.3) 2,382 2,183 9.1

(% of Sales) 17.3 23.2 23.3 21.4 23.2

Staff Costs 208 141 48.3 155 34.0 617 533 15.7

(% of Sales) 6.7 5.7 6.2 5.5 5.7

Freight & Forwarding 606 488 24.2 376 60.9 2,233 1,894 17.9

(% of Sales) 19.5 20.0 15.0 20.1 20.1

Other Expenses 638 509 25.4 576 10.8 2,146 1,913 12.2

(% of Sales) 20.6 20.8 23.0 19.3 20.3

OPM (%) 12.8 19.0 (616)bp 17.7 (481)bp 19.7 20.4 (64)bp

Interest 27 26 6 19 42.2 115 97 18.3

Depreciation 158 135 16.5 127 24.0 559 475 17.6

Other Income 66 55 21.0 46 44.4 265 192 38.0

16.0

Extr. Income/(Expense) - - - (335.3) -

Provision for Taxation 40 109 (63.5) (129) (131.0) 390 215 81.4

(% of PBT) 14.3 30.6 (37.8) 26.9 14.0

PATM (%) 7.7 10.2 (245)bp 18.8 (1108)bp 9.5 14.1 (452)bp


Exhibit 2:Financial performance

Source: Company, AngelResearch

2,4032,150

2,503

2,860 2,778

2,445

3,099

337168

470

155

418249 239

10

12

14

16

18

20

22

24

26

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2QCY11 3QCY11 4QCY11 1QCY12 2QCY12 3QCY12 4QCY12

Net Sales Reported PAT OPM (RHS)

(`cr)

(%)

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February 11, 2013 3

Exhibit 3:4QCY2012 Actual vs Angel estimatesNet sales 3,099 2,768 12.0

Operating profit 398 490 (18.9)OPM (%) 12.8 17.7 (488)bp

Net profit 239 289 (17.2)


Performance highlights

ACC posted a 24% yoy growth in its standalone top-line to `3,099cr. Adjusted for

the sales of RMC segment, which were included in the standalone sales (w.e.f

4QCY2012) top-line growth for the quarter remained flat. Volumes for the quarterremained flat. Realizations for the company, although higher by 2.0% on a yoy

basis, fell by 3.8% on a qoq basis.

The overall OPM stood at 12.8% down 481bp on yoy basis, impacted by increase

in freight costs and also due to low margins for the RMC business, which got

included in the standalone business during the quarter. Adjusting for the RMC

business, we estimate the OPM for the company to be at 14.8%. The adjusted

profit after tax stood at `239cr down 1.3% on a yoy basis.

During 4QCY2012, ACCs realization/tonne improved by 2.0% yoy to `4,531.

Power & fuel cost/tonne fell by 10.5% yoy to `884. Even, on a q-o-q basis, the

power & fuel cost/tonne fell by 16.3%. The freight cost/tonne increased by 11.2%

yoy to `932. The operating profit/tonne stood at `661, down 10.4% yoy.

Exhibit 4:Operational performanceRealization/tonne 4,531 4,708 4,441 2.0 (3.8)

Net Raw-material cost /tonne 913 688 770 18.6 32.6

Power and fuel cost /tonne 884 1057 988 (10.5) (16.3)Freight cost/tonne 932 919 838 11.2 1.4

Other expenses/ tonne 1,074 942 968 11.0 14.0

Operating profit/tonne 661 863 738 (10.4) (23.4)


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February 11, 2013 4

Investment rationale

Favorable capacity location to augur well for ACC

Around 51% of ACC's total capacity is located in states where either cement supplyis less than demand or, if it is more, the excess can economically be supplied to

nearby supply-deficit states. Hence, all its capacities can rationally achieve higher

utilization. Its entire south India plant capacity is in Karnataka and Tamil Nadu,

where the demand-supply dynamics are far better than that in Andhra Pradesh.

Higher fuel availability for CPPs leading to lower power and fuel costs

Going ahead, we expect power and fuel cost to be lower for the company, as it

currently has 85% self sufficiency in its power requirement with a 361MW captive

power plant (CPP), and access to the highest coal linkage in the industry along with

few captive coal blocks.

Outlook and valuation

We expect ACC to register a 13.4% yoy growth in its top-line over CY2011-13E.

The bottom-line is expected to post a CAGR of 3% for the same period. At current

levels, the stock is trading at an EV/tonne of US$119 on CY2013E capacity, which

we believe is fair.

Exhibit 5:One-year forward EV/tonne

Source: BSE, Company, Angel Research;

0

50,000

100,000

150,000

200,000

250,000

300,000

Jul-01

Jan-0

2

Jul-02

Jan-0

3

Jul-03

Jan-0

4

Jul-04

Jan-0

5

Jul-05

Jan-0

6

Jul-06

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

EV(`mn)

EV/tonne $100 $120 $140 $160

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February 11, 2013 5

Exhibit 6:Recommendation summary

Ambuja Cements* Neutral 189 - - 3.2 15.0 24.3 20.7 163

India Cements Neutral 83 - - 0.7 7.7 5.5 9.0 63

JK Lakshmi Neutral 135 - - 1.0 5.9 37.3 17.7 54

Madras Cement Neutral 236 - - 2.0 12.7 7.3 16.9 89

Shree Cements Neutral 4,411 - - 3.3 13.2 35.9 28.4 150

UltraTech Cements Neutral 1,910 - - 2.9 16.3 14.5 19.5 191

Source: Company, Angel Research; Note: *Y/E December; ^ Computed on TTM basis

In 2005, ACC was acquired by the world's second largest cement company,

Holcim. Currently, the Holcim Group in India (ACC and Ambuja Cements taken

together) has the largest cement capacity in the country (57mtpa). ACC has a

standalone total capacity of 30mtpa, with 16 cement plants spread across the

country. Similar to UltraTech, the company is also a pan-India player but with a

southern inclination (36% of its total capacity is in south as against 22% in north,

22% in east and northeast, 17% in central and 4% in west).

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Profit & loss statement (Standalone)

% chg 3.9 12.5 (2.6) 21.1 17.6 8.9

Total Expenditure 5,550 5,547 6,163 7,740 9,148 9,991

Net Raw Materials 886 956 1,168 1,503 1,784 1,964

Other Mfg costs 1,599 1,540 1,599 2,183 2,382 2,502

Personnel 416 368 462 526 617 654

Other 2,648 2,684 2,935 3,527 4,364 4,871

% chg (9.6) 52.6 (31.5) 6.0 15.1 7.4

(% of Net Sales) 23.8 32.9 23.5 20.3 19.9 19.6

Depreciation& Amortisation 294 342 393 475 559 574

% chg (10.8) 60.0 (38.3) 1.8 14.3 9.0

(% of Net Sales) 19.8 28.7 18.4 15.3 14.8 14.8

Interest & other Charges 40 84 57 97 115 85

Other Income 338 77 98 192 265 295

(% of PBT) 18.9 3.3 6.7 12.5 18.1 14.7

% chg 1.1 32.1 (36.3) 5.4 17.0 11.6

Extraordinary Expense/(Inc.) (49) - - - 335 -

Tax 524 688 341 215 390 603(% of PBT) 29.3 30.0 23.4 14.0 26.6 30.0

% chg (1.0) 32.5 (30.3) 18.3 6.5 (0.3)

(% of Net Sales) 16.7 20.0 14.5 14.0 12.7 11.6

% chg (1.1) 32.4 (30.3) 18.3 6.5 (0.3)

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Balance sheet (Standalone)

Equity Share Capital 188 188 188 188 188 188Reserves & Surplus 4,740 5,828 6,282 7,004 7,195 7,955

Total Loans 482 567 524 1,001 623 598

Deferred Tax Liability 336 349 362 518 517 517

Gross Block 5,836 6,826 8,077 9,576 9,322 9,577

Less: Acc. Depreciation 2,366 2,668 2,995 3,438 3,997 4,571

Capital Work-in-Progress 1,603 2,156 1,563 435 850 1,527

Goodwill - - - - - -

Current Assets 2,760 2,256 2,753 3,791 3,198 3,623

Cash 984 708 980 1,653 678 519

Loans & Advances 651 554 624 836 1,053 1,144

Other 1,124 994 1,149 1,302 1,466 1,960

Current liabilities 2,766 3,114 3,746 3,277 3,403 3,453

Misc. Exp. not written off - - - - - -

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Cash flow statement (Standalone)

Profit before tax 1,785 2,294 1,461 1,540 1,466 2,011

Depreciation 294 342 393 475 559 574Interest expense 40 84 57 97 115 85

Change in Working Capital 309 575 407 (703) (255) (535)

Less: Other income 338 77 98 192 265 295

Direct taxes paid 564 727 395 215 390 603

(Inc)/ Decin Fixed Assets (1,325) (1,544) (657) (371) (161) (932)

(Inc)/ Dec in Investments 166 (797) (227) 78 (929) (1)

Other income 338 77 98 192 265 295

Issue of Equity 2 - - - - -

Inc./(Dec.) in loans 13 85 (43) 478 (378) (25)

Dividend Paid (Incl. Tax) 439 505 667 609 618 647

Others 40 84 57 97 383 85

Inc./(Dec.) in Cash 241 (276) 272 672 (974) (159)

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February 11, 2013 9

Key ratios

P/E (on FDEPS) 19.5 14.7 21.2 17.9 16.8 16.8P/CEPS 15.2 12.2 15.7 13.2 14.5 12.0

P/BV 4.8 3.9 3.7 3.3 3.2 2.9

Dividend yield (%) 1.6 1.8 2.4 2.2 2.3 2.4

EV/Sales 2.9 2.5 2.6 2.3 1.9 1.7

EV/EBITDA 12.3 7.7 11.2 11.2 9.4 8.5

EV / Total Assets 3.7 2.9 2.8 2.5 2.4 2.2

EPS (Basic) 64.6 85.5 59.6 70.5 75.1 74.9

EPS (fully diluted) 64.6 85.5 59.6 70.5 75.1 74.9

Cash EPS 82.8 103.7 80.5 95.8 87.0 105.5

DPS 20.0 23.0 30.5 28.0 28.4 29.7

Book Value 262.3 320.1 344.2 382.7 392.8 433.3

EBIT margin 19.8 28.1 17.8 15.0 14.5 14.6

Tax retention ratio 70.7 70.0 76.6 86.0 73.4 70.0

Asset turnover (x) 2.0 1.8 1.6 1.8 1.9 2.0

ROIC (Post-tax) 27.3 35.1 21.4 22.7 20.7 20.2

ROCE (Pre-tax) 26.9 36.3 19.9 18.0 19.2 20.3

Angel ROIC (Pre-tax) 55.4 90.8 49.8 35.7 35.0 39.6

ROE 26.7 29.4 17.9 19.4 19.4 18.1

Asset Turnover (Gross Block) 1.3 1.3 1.1 1.1 1.2 1.3

Inventory / Sales (days) 38 35 39 38 36 40

Receivables (days) 15 11 9 7 8 9

Payables (days) 159 193 203 166 133 125

WC cycle (ex-cash) (days) (40) (57) (81) (59) (33) (18)

Net debt to equity (0.2) (0.2) (0.3) (0.3) (0.3) (0.2)

Net debt to EBITDA (0.7) (0.5) (1.0) (1.0) (0.9) (0.9)

Interest Coverage (EBIT / Int.) 36.0 27.3 25.0 14.9 14.4 21.3

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February 11, 2013 10

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

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Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking orother advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

Disclosure of Interest Statement ACC

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

acc, 12th february, 2013

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