Security Analysis &Portfolio Management

ACC Ltd

Nirmi Parikh - 40

Agenda

• Industry Overview• Company Overview• Financial Analysis• Ratio Interpretation• Technical Analysis• Recommendation/Conclusion

Industry Overview

• The cement industry comprises of 125 large cement plants with an installed capacity of 148.28 million tonnes and more than 300 mini cement plants with an estimated capacity of 11.10 million tonnes per annum.

• Presently 93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7 per cent of the capacity is based on old wet and semi-dry process technology.

• The Cement Corporation of India, which is a Central Public Sector Undertaking, has 10 units. There are 10 large cement plants owned by various State Governments

• The total installed capacity in the country as a whole is 159.38 million tones

Top Leading Companies of World.

Sector Wise Allocation

Distribution Cost In Producing Cement

22%

10%

8%

28%

3%

6%

19%

5%

PowerRaw MaterialSelling & AdminisrationTransportOverheadsManpowerFuelConsumables

Distribution Of Cost In Production Of Cement

Market overview

2004 2005 2006 2007 2008 2009

#REF! 144.33 151.68 157.59 165.86 179.29 204.82

25

75

125

175

225

Market Overview

Market Segment

23%

16%

14%14%

33%

Regional share of installed capacity (2009)

NorthWestCentralEastSouth

Key Players

38%

11%

46%

5%Market Share (Produc-tion) of key players (2009)Aditya birla groupIndia cement group Holcim(F) groupJaiprakash group

Market Share (production) of Key Players (2009)

The impact of the Union Budget 2010

• Excise duty has been increased by 2 per cent.

• The Budget has allocated US$ 36.16 billion to India’s infrastructure development. Heightened focus on railways, housing, urban infrastructure and continued easy financing of the projects is expected to give impetus to the construction sector.

• Further, the additional deduction available for investment in long-term infrastructure bonds for individuals is expected to speed up the execution of infrastructure projects.

Company Analysis

• ACC was formed in 1936 when ten existing cement companies came together under one umbrella in a historic merger.

• The use of the plural in ACC's original name, The Associated Cement Companies Limited, itself indicated the company's origins from a merger.

• F. E. Dinshaw – the founder of ACC

• Headquarters in Mumbai, India

• Products-Ordinary Portland Cements, Fly- Ash based Portland Pozzoloana cement,Portland slag cement

Financial Analysis

Dec' 07 Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12

Se-ries1

1438.59 1212.79 1606.7 1587.47 1671.525 1755.58

100.00300.00500.00700.00900.00

1,100.001,300.001,500.001,700.001,900.00

Net sales

sales (in cr)

Dec' 07 Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12

Se-ries1

1438.59 1212.79 1606.7 1587.47 1671.525 1755.58

100.00300.00500.00700.00900.00

1,100.001,300.001,500.001,700.001,900.00

NPAT

NPAT ( in cr)

Ratio Interpretations

Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12

Series1 0.86 0.89 0.67 0.616666666666667

0.426666666666667

0.050.150.250.350.450.550.650.750.850.95

Current Ratio

Axis Title

Dec' 07 Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12

Series1 200 200 230 240 255 270

25

75

125

175

225

275

Dividend %

Technical Analysis

23-Aug-1

0

25-Aug-1

0

27-Aug-1

0

29-Aug-1

0

31-Aug-1

0

2-Sep-10

4-Sep-10

6-Sep-10

8-Sep-10

10-Sep-10

12-Sep-10

14-Sep-10

16-Sep-10

18-Sep-10

20-Sep-10

22-Sep-10

750

800

850

900

950

1000

1050

Close Price

Recommendations• Investors should buy the stock.

• Likely to increase share price to Rs 1500/ share

• Since Government’s continued thrust on infrastructure and its stimulus packages to boost rural and other sectors are likely to accelerate construction activity. It is, therefore, expected that the demand for cement will grow steadily in the next few years.

• Real estate started booming after recession and so the demand of cement will grew up.

 • Even the common wealth approaching India, the demand of cement sector

has gone up due to infrastructure growth in India.