BROKER CALL: Angel puts buy on ACC

Angel Broking has recommended a BUY on ACC with a 12-month price target of Rs 1,050.

"ACC's revenues for the quarter were above our expectations and rose 24% QoQ to Rs 1,328 crore backed by robust performance by the cement division. PBT (operations) at Rs 236 crore was also above expectations and rose by 215% QoQ. PAT for the quarter was at Rs 235 crore as against Rs 94 crore (adjusted for extraordinary income) in Q4CY2005.

"The cement industry recorded a consumption growth rate of around 9% during 2005 when compared with 8.3% in the previous year. Growth during Q1CY2006 was 15.1% compared with 7.4% during the corresponding period of last year.

"Following continued emphasis on infrastructure and housing sectors, ACC expects demand to remain strong going ahead. With an increase in capacity, focus on core cement business, robust demand growth and better price realisations, ACC is expected to improve its performance going forward." the report said.

At the current market price of Rs 897, ACC is trading at 16.3xCY2007E EPS and 11.6x EV/EBITDA, the report added.