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

Quarterly results (Standalone)

Operating profit 464 688 (32.5) 319 45.5

OPM (%) 19.0 24.8 (578)bp 14.8 415bp

Source: Company, Angel Research

ACCs 3QCY2012 net profit rose by a strong 48.4% yoy to `249cr, beating our

estimate of a 37% yoy growth. The companys strong performance was on

account of a 19.8% yoy growth in its realizations. However, volume degrowth of

5.1% yoy for the quarter is a disappointment. For 9MFY2012 the companys

volume growth has been marginal at 2.2%.

ACCs standalone top-line rose by 13.7% yoy to

`2,445cr, aided by a strong 19.8% yoy growth in realization to `4,431/tonne.

However, dispatches were down 5.1% yoy as the company was affected by a

muted demand scenario in south India. The strong improvement in realization

resulted in a 415bp yoy expansion in OPM despite the increase in operating costs.

The companys per tonne operating cost was higher by 9.7% on a yoy basis. Freightand power & fuel costs were higher by 8.8% and 8.1% yoy respectively.

We expect ACC to register a 13.9% yoy growth in its

top-line over CY2011-13E. The bottom-line is expected to post a CAGR of 8.5%.

At the current levels, the stock is trading at an EV/tonne of US$130 on CY2013E

capacity, which we believe is fair.

Key financials (Standalone)

% chg (3.9) 22.3 15.7 12.2

% chg (30.3) 18.3 12.6 4.6

OPM (%) 23.5 20.3 21.5 21.4

P/E (x) 23.6 20.0 17.7 17.0

P/BV (x) 4.1 3.7 3.4 3.1

RoE (%) 17.9 19.4 20.0 19.2

RoCE (%) 19.9 18.6 21.6 22.8

EV/Sales (x) 3.0 2.5 2.1 1.8EV/tonne (US$)* 178 152 135 130

Installed capacity (mtpa) 27 30 30 30

EV/EBITDA (x) 12.7 12.4 9.8 8.4

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

CMP `1,408

Target Price -

Investment Period -

Stock Info

Sector

(1,997)

Bloomberg Code

Shareholding Pattern (%)

Promoters 50.3

MF / Banks / Indian Fls 10.6

FII / NRIs / OCBs 20.0

Indian Public / Others 19.1

Abs. (%) 3m 1yr 3yr

Sensex 8.1 9.3 7.8

ACC 11.5 25.0 77.5

52 Week High / Low 1515/1083

Cement

Market Cap (` cr) 26,438

Net Debt (` cr)

Beta 0.8

Avg. Daily Volume 45,981

Face Value (`) 10

BSE Sensex 18,682

Nifty 5,684

Reuters Code ACC.BO

ACC@IN

022-39357800 Ext 6831

[email protected]

Performance Highlights

3QCY2012 Result Update | Cement

October 19, 2012

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ACC | 3QCY2012 Result Update

October 19, 2012 2

Exhibit 1:3QCY2012 performance (Standalone)

Other Operating Income 29 38 (21.8) 99 (70.2) 96 169 (43.4)10.0

Net Raw-Material Cost 306 302 1.5 288 6.5 990 852 16.2

(% of Sales) 12.5 10.9 13.4

12.2 12.3

Power & Fuel 567 604 (6.2) 552 2.6 1,847 1,600 15.5

(% of Sales) 23.2 21.7 25.7

22.8 23.1

Staff Costs 141 136 3.6 141 (0.3) 408 376 8.7

(% of Sales) 5.7 4.9 6.6

5.1 5.4

Freight & Forwarding 488 574 (15.1) 472 3.3 1,636 1,408 16.3

(% of Sales) 20.0 20.7 22.0

20.2 20.3

Other Expenses 509 512 (0.6) 477 6.7 1,499 1,392 7.7

(% of Sales) 20.8 18.4 22.2

18.5 20.1

4.1

45.5

OPM (%) 19.0 24.8 (578)bp 14.8 416bp 22.2 21.3 92bp

Interest 26 30 (14) 25 1.5 87 78 12.4

Depreciation 135 136 (0.3) 120 12.7 401 348 15.3

Other Income 55 78 (30.1) 57 (4.8) 199 146 36.0

(40.4) 54.9 25.7

Extr. Income/(Expense) - - -

(335.3) -

Provision for Taxation 109 183 (40.2) 64 71.9 350 344 1.8

(% of PBT) 30.6 30.4 27.5

29.9 28.7

PATM (%) 10.2 15.0 (487)bp 7.8 238bp 10.2 12.3 (215)bp


Exhibit 2:Financial performance

Source: Company, AngelResearch

2,4032,150

2,503

2,860 2,778

2,445

337168

470

155

418249

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

Net Sales Reported PAT OPM (RHS)

(`cr)

(%)

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October 19, 2012 3

Exhibit 3:3QCY2012 Actual vs Angel estimates

Net sales 2,445 2,401 1.8Operating profit 464 463 0.3

OPM (%) 19.0 19.3 (28)bp

Net profit 249 230 8.1


Performance highlights

ACC reported a strong top-line performance during 3QCY2012 primarily on

account of improved realization as volume declined by 5.1% on a yoy basis.During the quarter, ACCs realization rose strongly by 17.3% yoy to `4,431/tonne.

A robust yoy improvement in ACCs realization pushed up its OPM by 416bp on a

yoy basis despite a 9.7% yoy increase in operating costs. Even on a qoq basis the

realsation was down only by 1.4% as delayed monsoon resulted in prices

remaining healthy in this seasonally weak quarter. Cement prices in fact rose in

the month of July before witnessing a decline in the month of August and

September.

During 3QCY2012, ACCs realization/tonne improved by 19.8% yoy to `4,527.

Power & fuel cost/tonne rose by 8.1% yoy to `1,049. Even, on a qoq basis, the

power & fuel cost/tonne rose by 5.1%. The freight cost/tonne increased by 8.8% to

`903. The operating profit/tonne stood at `806, up 107.9% yoy.

Exhibit 4:Operational performanceRealization/tonne 4,527 4,591 3,779 19.8 (1.4)

Net Raw-material cost /tonne 661 638 735 (10.0) 3.6

Power and fuel cost /tonne 1049 998 971 8.1 5.1Freight cost/tonne 903 949 830 8.8 (4.9)

Other expenses/ tonne 942 846 838 12.4 11.4

Operating profit/tonne 806 1076 387 107.9 (25.1)


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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 cement demand or, if it is more, excess can economically be supplied

to nearby supply-deficit states. Hence, all such capacities can rationally achieve

higher capacity utilization. Even 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.

Growth to be driven by capacity addition

Post the expansion of the Wadi plant and the commissioning of the 3mtpa Chanda

plant, ACC's total capacity currently stands at 30mtpa. These capacity additions

are expected to drive its growth going ahead, as was reflected by the 11.5% yoy

increase in the dispatches during CY2011.

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

Going ahead, we expect the 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 13.9% yoy growth in its top-line over CY2011-13E.The bottom-line is expected to post a CAGR of 8.5%. At the current levels, the stock

is trading at an EV/tonne of US$130 on CY2013E capacity, which we believe is

fair.

Exhibit 5:Key assumptions

Installed capacity (mtpa) 30 30 30 30

Realization/tonne (`) 4,400 4,598 4,449 4,649

Power cost/tonne (`) 958 986 994 1,018

EBITDA/tonne (`) 957 995 966 1,001


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Exhibit 6:Change in estimates

Net sales 10,802 10,923 1.1 12,256 12,253 (0.0)Op. expenses 8,631 8,731 1.2 9,782 9,794 0.1

Op. profit 2,332 2,353 0.9 2,635 2,621 (0.5)

Depreciation 529 529 - 543 543 -

Interest 92 92 - 86 86 -

PBT 1,541 1,653 7.2 2,208 2,230 1.0

Tax 432 496 14.9 662 669 1.0

PAT 1,445 1,492 3.3 1,546 1,561 1.0

Source: Angel Research

Exhibit 7:One-year forward EV/tonne

Source: BSE, Company, Angel Research;

Exhibit 8:Recommendation summary

Ambuja Cements* Neutral 206 - - 3.5 16.0 25.7 21.1 184India Cements Neutral 98 - - 0.8 8.0 12.8 10.2 63

JK Lakshmi Neutral 116 - - 0.9 6.5 41.7 14.6 50

Madras Cement Neutral 187 - - 1.6 10.3 6.2 17.0 65

Shree Cements# Neutral 4,206 - - 3.5 16.1 20.0 23.6 138

UltraTech Cements Neutral 2,010 - - 3.2 18.2 11.3 18.7 209

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

0

50,000

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EV(`mn)

EV/tonne $100 $120 $140 $160

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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 astandalone total capacity of 30mtpa, with 16 cement plants spread across thecountry. Similar to UltraTech, the company is also a pan-India player but with asouthern 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).

Profit & loss statement (Standalone)

% chg 3.9 12.5 (2.6) 21.1 14.7 12.0

Total Expenditure 5,550 5,547 6,163 7,740 8,731 9,794

Net Raw Materials 886 956 1,168 1,503 1,450 1,639

Other Mfg costs 1,599 1,540 1,599 2,183 2,422 2,664

Personnel 416 368 462 526 560 616

Other 2,648 2,684 2,935 3,527 4,300 4,875

% chg (9.6) 52.6 (31.5) 6.0 22.5 11.4

(% of Net Sales) 23.8 32.9 23.5 20.3 21.5 21.4

Depreciation& Amortisation 294 342 393 475 529 543

% chg (10.8) 60.0 (38.3) 1.8 26.2 13.9

(% of Net Sales) 19.8 28.7 18.4 15.3 16.7 17.0

Interest & other Charges 40 84 57 97 92 86

Other Income 338 77 98 192 256 238

(% of PBT) 18.9 3.3 6.7 12.5 15.5 10.7

% chg 1.1 32.1 (36.3) 5.4 29.1 12.2

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

Tax 524 688 341 215 496 669

(% of PBT) 29.3 30.0 23.4 14.0 30.0 30.0

% chg (1.0) 32.5 (30.3) 18.3 12.6 4.6(% of Net Sales) 16.7 20.0 14.5 14.0 13.7 12.7

% chg (1.1) 32.4 (30.3) 18.3 12.6 4.6

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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 7,506 8,349

Total Loans 482 567 524 511 486 461

Deferred Tax Liability 336 349 362 518 518 518

Gross Block 5,836 6,826 8,077 9,645 9,901 10,156

Less: Acc. Depreciation 2,366 2,668 2,995 3,438 3,967 4,510

Capital Work-in-Progress 1,603 2,156 1,563 435 855 1,590

Goodwill - - - - - -

Current Assets 2,760 2,256 2,753 3,618 3,317 3,788

Cash 984 708 980 1,653 1,079 1,353

Loans & Advances 651 554 624 590 624 683

Other 1,124 994 1,149 1,375 1,614 1,752

Current liabilities 2,766 3,114 3,746 3,664 3,863 4,063

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

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October 19, 2012 8

Cash flow statement (Standalone)

Profit before tax 1,785 2,294 1,461 1,540 1,653 2,230

Depreciation 294 342 393 475 529 543Interest expense 40 84 57 97 92 86

Change in Working Capital 309 575 407 (142) (74) 3

Less: Other income 338 77 98 192 256 238

Direct taxes paid 564 727 395 215 496 669

(Inc)/ Decl Fixed Assets (1,325) (1,544) (657) (441) (675) (990)

(Inc)/ Dec in Investments 166 (797) (227) 78 (830) (100)

Other income 338 77 98 192 256 238

Issue of Equity 2 - - - - -

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

Dividend Paid (Incl. Tax) 439 505 667 609 655 718

Others 40 84 57 97 92 86

Inc./(Dec.) in Cash 241 (276) 272 672 (573) 274

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Key ratios

P/E (on FDEPS) 21.8 16.5 23.6 20.0 17.7 17.0P/CEPS 17.0 13.6 17.5 14.7 15.7 12.6

P/BV 5.4 4.4 4.1 3.7 3.4 3.1

Dividend yield (%) 1.4 1.6 2.2 2.0 2.1 2.3

EV/Sales 3.3 2.9 3.0 2.5 2.1 1.8

EV/EBITDA 13.9 8.7 12.7 12.4 9.8 8.4

EV / Total Assets 4.2 3.3 3.1 2.9 2.7 2.3

EPS (Basic) 64.6 85.5 59.6 70.5 79.4 83.1

EPS (fully diluted) 64.6 85.5 59.6 70.5 79.4 83.1

Cash EPS 82.8 103.7 80.5 95.8 89.7 112.0

DPS 20.0 23.0 30.5 28.0 30.1 32.9

Book Value 262.3 320.1 344.2 382.7 409.3 454.2

EBIT margin 19.8 28.1 17.8 15.0 16.5 16.7

Tax retention ratio 70.7 70.0 76.6 86.0 70.0 70.0

Asset turnover (x) 2.0 1.8 1.6 1.8 2.0 2.1

ROIC (Post-tax) 27.3 35.1 21.4 23.8 23.2 25.0

ROCE (Pre-tax) 26.9 36.3 19.9 18.6 21.6 22.8

Angel ROIC (Pre-tax) 55.4 90.8 49.8 37.9 41.4 49.9

ROE 26.7 29.4 17.9 19.4 20.0 19.2

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

Inventory / Sales (days) 38 35 39 38 39 39.6

Receivables (days) 15 11 9 8 9 9.4

Payables (days) 159 193 203 175 157 147.7

WC cycle (ex-cash) (days) (40) (57) (81) (69) (55) (47.8)

Net debt to equity (0.2) (0.2) (0.3) (0.3) (0.3) (0.4)

Net debt to EBITDA (0.7) (0.5) (1.0) (1.2) (1.1) (1.1)

Interest Coverage (EBIT / Int.) 36.0 27.3 25.0 14.9 19.8 24.1

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October 19, 2012 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.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or inthe 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 3qcy2012ru

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