ACC: robust performance

ANALYSTS' CORNER

Angel Research recommends a "hold" on ACC. The company's revenues for the quarter were as per expectations and rose by 14 per cent y-o-y to Rs 1,005 crore, backed by robust performance from the cement and the ready mix concrete divisions.

Profit for the quarter at Rs 203 crore was up 159 per cent y-o-y, mainly on account of an exceptional income of Rs 173 crore, arising on account of profit on sale of the refractory division. PBT (operations) for the quarter at Rs 71 crore was much below expectations as it declined 17 per cent y-o-y.

The cement division, which contributes 85 per cent of total revenues, grew 14 per cent y-o-y, whereas the refractory (six per cent contribution) and RMC (six per cent contribution) divisions grew by two per cent and 35 per cent y-o-y, respectively.

Higher volumes and improved realisation partly mitigated the impact of increase in cost of inputs such as coal and petroleum products. Freight costs too rose substantially due to change in railway freight classification.

Crompton Greaves: banking on buyouts

Motilal Oswal Securities recommends a "buy" on Crompton Greaves. The company is leveraging on global scale and Indian cost economics, while the progress on integration with Pauwels has been encouraging. The report talks about earnings CAGR of 29 per cent over FY05-08.

Crompton is the market leader in power systems, industrial motors and consumer fans in India. The recent acquisition of Pauwels has catapulted it to the world's 7th largest transformer manufacturer, with a market share of 3.3 per cent.

The company now has access to US and European markets. From a loss of euro two million in 2004, the report expects Pauwels to turnaround with a net profit of euro 4.8 million in 2005 and euro 10.1 million in 2006. The progress so far on integration indicates that Crompton has the management bandwidth to manage large acquisitions.

Asian Electronics: eyes US market

Brics Securities recommends a "buy" on Asian Electronics. Government has mandated establishments above 500KW to cut energy bill by 30 per cent over next three years. Companies should buy energy efficient equipment, where payment would be made only from the savings accrued.

The company is the major ESCO who has won majority of orders until date. It is leveraging Westinghouse brand to supply to the US and EU.

The company has received most of the safety certifications for its T5 retrofit product, including CE, Underwriters Lab, Nemko, Germany, VDE in Germany and from the UK and US governments.

The management is focusing on both organic and inorganic growth. It has taken over Raymolds Lighting, enjoying major market share in retail malls in India. The company has introduced T5 retrofit under the Asian E+ brand in the domestic market.

The company is dealing with Ahmedabad Electricity Company, Maharashtra and Rajasthan SEBs and Surat Electricity Company to allow customers to pay back through monthly electricity bills in instalments.