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MOSL:MOrning India (15/July/22): 1. ACC (Downgrade to Neutral); 2. LT Infotech; 3. Life Insurance Corporation; 4. Angel One; 5. Blue Dart Express; 6. Financials; 7. NBFC; 8. EcoScope

Today’s top research idea

ACC: Weak performance as expected; downgrade to Neutral

• ACC reported weak 2Q result as EBITDA declined 51% YoY to INR4.25b (v/s estimated INR4.29b) and OPM contracted 13pp YoY to 9.5% (v/s estimated 9.9%). EBITDA/t dipped 56% YoY to INR563.
• We further cut our EBITDA estimates by 7%/4% and EPS estimates by 9%/4% for CY22/23, respectively considering cost pressures.
• ACC, due to ongoing corporate action (acquisition by Adani group which has to be followed by an open offer), has outperformed BSE Sensex by 6% in CY22; whereas, other companies underperformed the index by 17-38%. We expect ACC's EBITDA and profits to decline at a CAGR of 4% and 6% over CY21-23, respectively.  The stock trades at 12x CY23E EV/EBITDA (in line with its 10-year average one-year forward EV/EBITDA). We value ACC at 12x Mar'24E EV/EBITDA and downgrade it to Neutral with a revised TP of INR2,260 (v/s INR2,465 earlier).

• Piping hot news

  Bank credit grows by 13.29%, deposits by 9.77%

  Bank credit grew by 13.29 per cent to Rs 123.81 lakh crore and deposits by 9.77 per cent to Rs 169.61 lakh crore in the fortnight ended on July 1, RBI data showed. In the fortnight ended June 2, 2021, bank advances stood at Rs 109.28 lakh crore and deposits at Rs 154.51 lakh crore, according to the Scheduled Banks' Statement of Position in India as on July 1, 2022, released on Thursday. In the fortnight ended June 17, 2022, bank credit grew by 8.31 per cent and deposits by 12.05 per cent.