ACC: Q2 Result Much Below Street Expectations---Nr. Term TGT May Be 1349, If Failed To Sustain Over 1540

Technically, ACC (CMP:1486), has immediate support of around 1463-1444 & sustain below that it could fall to 1426-1398 & 1376-1364 zone. In the near term, only consecutive closing below 1364, it may further fall to 1349-1305 and 1290-1277-1261-1232 territory in the worst bear case scenario.

On the upside, sustaining above 1510, ACC might target 1525-1540 and only sustaining above that, it may scale 1560-1590 and 1619-1665-1687 & 1705-1750-1775 zone in the short to long term under bullish market scenario.

In brief, post Q2 result, ACC could be in a broad range of 1349-1540 until Q2FY16.

Bottom Line: Technical Trading Levels (Positional)

	SL</>10	FROM SLR
		ACC	CMP	1486
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	1510		1525-40*	1560-71	1590-1619	1635-65	1687-1705	1750	1775	<1495
Weak <	1495		1478-63	1444*	1426-14	1398-76	1364-49*	1320-05	1290-61	>1510

Q2 result of ACC published yesterday (Saturday), might be much below market expectations as NP fall around 45% (Y-O-Y) against mean street estimate of drop of around 11%.  The poor result is attributed by the company on account of "challenging market conditions & subdued demand", although the consolidated revenue fall marginally my 1.5%.

As par the management, for the past AMJ quarter overall demand situation is weak due to lackluster infra projects & tepid housing activity (except south India), which is leading excess supply in the market and creating demand supply mismatch and erosion of net realisations (bottom line).

Another factor for ACC may be that it uses most of ts coal from Coal India and so there is no benefit of lower international coal prices. Also higher railway freight cost may dent its margin considerably. Unlike, southern India cement companies (where demand is much more for better housing activity & infra spending), ACC lacks pricing power at this juncture of time.

Looking ahead, ACC management is betting on "Smart City" & "Affordable Housing" theme along with RBI rate cut (which may translate into higher home loan demands) and expecting that by H2FY16, demand for cement will revive considerably. The company will focus on cost control and a host of market oriented initiatives (strategies).

Also, going by the dream plan of our respected road minister devoting 24/7 of his time for the construction & development of National High Ways/Express Ways, we might see/heard high ways made of cement (concrete high ways in lieu of traditional coal tar high ways) in the coming days, which will be beneficial for most of the cement companies, including ACC.

As par BG metrics, current median valuation of ACC may be around 1630 and its projected fair valuations might be around 1800-2075-2300 (FY:16-18)

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
ACC	53.13	437.23	33.78	1629.04	1630.18	1629.61	1478.64	1480.72

ACC

65.58

461.25

33.78

1809.87

1811.14

1810.50

1478.64

1480.72

ACC

85.39

486.75

33.78

2065.21

2066.66

2065.94

1478.64

1480.72

ACC

104.65

523.26

33.78

2286.29

2287.89

2287.09

1478.64

1480.72