{"id":6244,"date":"2012-01-27T17:17:39","date_gmt":"2012-01-27T11:47:39","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?p=6244"},"modified":"2024-03-11T14:59:09","modified_gmt":"2024-03-11T09:29:09","slug":"acc-company-fundamental-analysis-report","status":"publish","type":"post","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/acc-company-fundamental-analysis-report\/","title":{"rendered":"Company Shastra \u2013 ACC Ltd."},"content":{"rendered":"

ACC Ltd. \u2013 Poised to grow in the long term<\/strong><\/h1>\n

ACC Ltd.: Company Highlights<\/strong><\/p>\n

ACC Ltd. \u2013 Second largest cement company in India<\/strong><\/p>\n

Market View of ACC Ltd. (as of 27\/01\/2012)<\/strong><\/p>\n

Latest Stock Price: <\/strong>Rs. 1190.65<\/p>\n

Latest Market Cap: <\/strong>Rs. 22377.08<\/p>\n

52 Week High Stock Price: <\/strong>Rs. 1233<\/p>\n

52 Week Low Stock Price: <\/strong>Rs. 917<\/p>\n

Latest P\/E: <\/strong>20.15<\/p>\n

Latest P\/BV: <\/strong>3.46<\/p>\n

Tell me more about ACC Ltd.\u2026<\/strong><\/h2>\n

ACC Ltd.<\/span><\/span><\/a> <\/span>is India\u2019s oldest and second largest cement company with a total Capacity of about 30 MMTPA. It commands a market share of 10.3% compared to 18.3% of Ultratech Cements<\/span><\/a> <\/span>and 9.6% of Ambuja Cements<\/span><\/a>.<\/span> It recently commissioned the world\u2019s largest cement kiln with 12500TPD capacity. It was acquired in 2005 by Holcim Ltd \u2013 one of the world\u2019s leading suppliers of cement. Ambuja Cements is also a part of the Holcim group.<\/p>\n

ACC ltd. has a pan India presence. This geographical diversity lends it a unique advantage. Since cement prices vary across regions, this pan India presence augurs well for the company as it de-risks the effect of this price change to a certain extent.<\/p>\n

It is only in the western region that ACC has a low presence in its overall manufacturing pie mainly because of the presence of its sister company viz. Ambuja Cements in the western region. (The regional distribution of ACC\u2019s cement capacity is given in the pie-chart). Also, one of its main advantages is that it is backward integrated as far as its requirement for power is concerned.<\/p>\n

\"ACC<\/p>\n

How has the financial performance of ACC Ltd. been? Here\u2019s the review\u2026<\/h2>\n

Good growth in Sales and EPS: <\/strong>The analysis of the company\u2019s 10 YEAR X-Ray<\/span><\/a> indicates that it has had a cyclical performance. This comes from the very nature of the cement industry. Over a 5 year period the company has grown its Net Sales by 12.4%; this is on account of increasing capacity expansion and higher realisation of prices.\u00a0 Its EPS (earnings per share) have increased at a much faster rate of ~18% CAGR over 10 years.<\/p>\n

Increased profit margins:<\/strong> The large earnings growth has come because of decreasing reliance on electricity provided by SEB (State Electricity Boards) as the company is backward integrated as far as power requirement is concerned. Also, higher cement prices and lower interest costs have augured well for its earnings growth. This fast growth in earnings compared to sales has resulted in higher NPM (Net Profit margin) today over the start of the decade. Its NPM in 2003 was ~5% with capacity utilization at 83% compared to NPM in 2010 at ~14% and with capacity utilization at 77%.<\/strong> Thus, a lower capacity utilization still leads to higher NPM, this has occurred largely due to higher operational efficiency and much better Capital Structure.<\/p>\n

High ROE and ROIC: <\/strong>ACC has enjoyed a high ROE and ROIC over the last decade because of the operational efficiency, more optimal capital structure, and negative non-cash working capital.<\/p>\n