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MOSL: Morning India (08/March/19): 1. Bulls & Bears (Markets – borderline show in a ‘striking’ month; FII flows pick up); 2. ACC (Annual Report Update: Profitability improves despite cost pressure); 3. Gujarat

MOrning India (08/March/19): 1. Bulls & Bears (Markets – borderline show in a ‘striking’ month; FII flows pick up); 2. ACC (Annual Report Update: Profitability improves despite cost pressure); 3. Gujarat Gas; 4. Expert Speak (IT)

 

Today’s top research idea

ACC | Annual Report Update: Profitability improves despite cost pressure; Increase in working capital impacts cash flow…

• Higher slag prices dented ACC's raw material cost. Its efforts to improve fly ash absorption enabled the company to reduce the clinker factor by producing a higher share of blended cement that helped mitigate the increase in slag prices. The increase in petcoke and coal prices was mitigated by fuel mix optimization and the use of WHRS. ACC's freight cost was impacted by higher FOR sales and a rise in diesel prices, the effects of which were partly mitigated by route optimization.
• Despite cost increases, the company's EBITDA/t increased by 4% YoY to INR745, led by better realization. ACC focused on the sale of premium products, which increased by 36% YoY. Retail constituted 80% of the company's sales. The stock trades at an attractive valuation of 7x CY 20 EV/EBITDA. We value ACC at 9x CY20E EV/EBITDA to arrive at a target price of INR1,853.

Piping hot news

Bharti Airtel promoters, GIC to subscribe half of ₹32,000 cr rights issue

• Bharti Airtel, which is planning to raise up to Rs 32,000 crore through a mix of rights and perpetual bond issues, intends to use the proceeds to further bolster its capital structure. The promoters will subscribe to their entire rights entitlement of Rs 16,785.7 crore, with promoters subscribing to Rs 11,785.7 crore and GIC subscribing to Rs 5,000 crore by way of renouncement in their favour, the company said in a statement.