Sell ACC, target of Rs 474 :HDFC Securities
HDFC Securities has maintained its sell rating on ACC with a price target of Rs 474 in its February 26, 2009 research report. “ACC has planned to increase its installed capacity by 7 mt in different stages during CY09 and CY10. We do not expect the company to derive much benefit through this expansion as we feel newer capacities will remain under-utilized due to the oversupply. ACC gets 10-15% of its coal requirements through imports. We do not foresee much impact on ACC’s earnings due to the reduction in imported coal prices.”
“‘We have assumed ACC’s realization to decrease by 4% in CY09 and 5% in CY10. We expect the earnings to decline at a CAGR of 11.7% for the period CY08 to CY10E, as the company has minimal avenues for reducing costs. We maintain our Sell rating on the stock with a price target of Rs 474 (downside of 15% from its CMP),” says HDFC Securities’ research report.
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