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ACC – Results Update

October 19, 2007

ACC’s Q3CY07 results were below expectations due to higher power and fuel costs, and muted realization gains. Net revenues, at INR 16.4 bn, grew by 35.3% Y-o-Y, but slid by 11.2% sequentially, as monsoons suppressed volume growth. Sharp increase in power and fuel costs offset savings in raw material costs and EBITDA margin dipped by 214bps Q-o-Q to 27.4%. ACC’s core profits, at INR 2.9 bn, though up 28.4% Y-o-Y, were down 17.9% Q-o-Q.

FY09 will be a transition year for the cement cycle with incremental supply of ~89 mn tonnes coming on-stream between FY08E and FY10E. Detailed demands upply estimates reflect that while tightness will persist till Q1FY09E, industry utilization levels are likely to correct thereafter taking the all India utilization level to ~93% in FY09E from ~101% in FY08E.

Earnings per share is likely to slow down in the coming quarters. Start booking profits on rise.

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