PROJECT REPORT ON ANALYSIS OF INDIAN CEMENT INDUSTRY

Under the Guidance of:

MR. KUMAR BIJOY FACULTY:SECURITY ANALYSIS
SUBMITTED BY:

JASLEEN KAUR (196) KHUSHBU RAJ (201) JATIN SHARMA (197) SHIVANI AGGARWAL (223) SONIA GULATI ( 213)

DECLARATION
We hereby declare that the work presented in this Project entitled Project Report on Analysis of Indian Cement Industry submitted to Prof. Kumar Bijoy (visiting Faculty) at New Delhi Institute of Management, New Delhi is an authentic record of our original work.

Signature of Mentor

Signature of Candidates

Date:

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ACKNOWLEDGEMENT
The completion of a project is never a unilateral effort. Through this sentence we wish to make a modest effort to thank and express our gratitude to all those who extended their cooperation and assistance for this project.

This report is the outcome of the sustained effort put in by us under the guidance of our Security Analysis Faculty Mr. K.Bijoy. We would like to extend our gratitude to our esteemed institution, NDIM, for all that we have learnt, and the platform we have got.

Also, I acknowledge the inputs from my colleagues for their ideas & suggestions given in this project.

WITH REGARDS JASLEEN KAUR SHIVANI AGGARWAL KHUSHBU RAJ JATIN SHARMA SONIA GULATI

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PREFACE

As a part of PGDM II, students of NDIM, New Delhi, undertook a project for a period of one month (13 th August-10th September2009) on the project Equity Evaluation of at ACC LIMITED.

The project is being divided into the introduction of fundamental and technical analysis part where the ultimate aim of the project is to do equity evaluation of ACC LIMITED.

We have done it to the best of our ability. And all the information and data in our project are authentic to the best of our knowledge and taken from reliable sources.

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CONTENTS

S.NO. Chapter 1. Chapter 2. Chapter 3.

PARTICULARS Executive Summary of the Project Objective of the Project Analysis of Indian Cement Industry

PAGE NO.

 Fundamental Analysis
a. b. c. d. e. Economy Industry Eco-Industrial Industry-Company Company
- Financial & Non-Financial

 Technical Analysis
a. b. c. d. Share Price Analysis Moving Average Bollinger Band RSI MACD Elliott Wave Theory Dow Theory

e. f. g. Chapter 4 Chapter 5

Conclusion & Recommendations Bibliography Annexure

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EXECUTIVE SUMMARY This project report provides an analysis and evaluation of the performance of ACC LIMITED stocks in the financial market over a period of 5 years and the effect of Sensex movement, global and domestic stock market changes and the performance of global economy as a whole. It also includes the evaluation of the current and prospective profitability, liquidity and financial stability of ACC LTD. The methods used for analysis involves fundamental analyses using EIC approach, the effect of world major crash on Indian stock market and in turn on ACC LTD. share and also the technical analyses using various tools for equity evaluation. The results of the data are analysed, which shows that the company performance is at par with the industry average. The report finds the prospects of the company in future. Its strengths include improved efficiency, brand image and nationwide presence to ensure competitive edge. The major weaknesses include high cost of operations, reducing margins and high interest rates to pay. The recommendations discussed the industry is in growth phase and it is giving good returns to its investors. Therefore it is good for long term investors. The report also investigates the fact that the analysis conducted has limitations. Some of the limitations include are that the forecasting figures are not available and only secondary data was available to us. Finally some suggestions and recommendations have also been incorporated which may prove to be helpful to be helpful for the financial market players.

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OVERVIEW OF CEMENT
Cement is a binder which sets and hardens independently, and can bind other materials together. Cement is an essential component of infrastructure development and most important input of construction industry, particularly in the governments infrastructure and housing programs, which are necessary for the countrys socioeconomic growth and development. Cement ranks second in volume among the industrial products manufactured in the world. And it is the most widely used man-made product and second only to water as worlds most heavily consumed substance. Its properties includey Low cost, high performance
y y y y

Binder with almost any hard material Building block Gain strength progressively with ageing Substitutes with steel, polyester, epoxy-resin, plasticizers

E-I-C APPROACH
ECONOMY ANALYSIS
Global Economy Financial market conditions in the global economy have remained extremely difficult for a longer period than envisaged in November 2008, despite wide-ranging policy measures to provide additional capital and reduce credit risks. Since end-October, in advanced economies, spreads in funding markets have only gradually narrowed despite government guarantees. As economic prospects have deteriorated, equity markets in both advanced and emerging economies have made little or no gains. Indian Economy India has been less affected from recession due to economys strong fundamentals. An ASSOCHAM survey conducted on 11 th June 2009 said Indian economy may grow at 7.2 % this fiscal on the back of improvement in consumer sentiment, policy reforms and projected growth in agriculture and industrial sector. Indian economy registered an average growth of 8.8% during the 5 years ending 2007-08, its growth is slacking today this is because the global economic crisis is getting even deeper than before. The six-core infrastructure industry managed to continue with a positive 2.2% growth, this growth was however much less than the growth number of 7% seen in the previous year.

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GROWTH RATE IN SIX CORE INFRASTRUCTURE INDUSTRIES

10 8 6 4 2 0 -2 -4

APRIL- FEB

2007-08

5.6

7.9

0.5

2008-09

2.4

7.2

-1.7

-I DUS

I P

YSIS

FOLLOWING ARE T E E ONOMIC FACTORS WHICH ARE AFFECTING THE CEMENT INDUSTRY:

) Political Influences Government stimulus measures to spur cement demand

 Aut i i g India Infrastructure Finance C any Li ited (IIFCL) t Rs.10,000 cr. t refinance bank lending for infrastructure projects.  To facilitate access to funds for t e housing sector, the 'development of integrated townships' would be permitted as an eligible end -use of the ECB, under the approval route of RBI  NBFCs, dealing exclusively with infrastructure financing, would be permitted to access ECB from multilateral or bilateral financial institutions, under the approval route of RBI.  Several other measures to support housing including infusion of li uidity and reduction in interest rate by RBI  Removal of ban on export of cements and re -introduction of customs duty on imported cement

B)

acro Economic Indicators

GDP Indian economy has posted the 2nd fastest growth rate in the world after Chinas 8% for 2008-09.

20% 8%

11% 11%
10%

10% 0%

8%

10%

8% 9% 5% 7%

2004-05

2005

2006

2007

FINISH S L

NT

CR P TROL

P TROL R FINER
7.2

COAL
5.6

POWER
6.6

8.7

2.7

GDP Growth Cement Demand

Cement Demand

GDP Growth 2008

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IN
y y y y

STRY ANALYSIS

India is the second largest cement producer in the world Healthy CAGR of ~ 9.3% per annum Amongst the lowest per capita consumption in the world at 145 kg Future Demand Drivers  Expected GDP Growth level of > 6%  Initiatives for growth of Housing  Development of Roads/Other Infrastructure  Gradual process of consolidation continuing The industry is highly energy intensive and the energy bill in some of the plants is as high as 60% of cement manufacturing cost. Some of the various types of cement produced in India are:  Clinker Cement  Ordinary Portland Cement (OPC)  Portland Blast Furnace Slag Cement (PSC)  Portland Pozzolana Cement (PPC)  Rapid Hardening Portland Cement  Oil Well Cement  White Cement  Sulphate Resisting Portland Cement The Indian cement industry has to be viewed in terms of five regions:y North (Punjab, Delhi, Haryana, Himachal Pradesh, Rajasthan, Chandigarh, J&K and Uttaranchal)
y y y y

West (Maharashtra and Gujarat) South (Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Pondicherry, Andaman & Nicobar and Goa) East (Bihar, Orissa, West Bengal, Assam, Meghalaya, Jharkhand and Chhattisgarh) Central (Uttar Pradesh and Madhya Pradesh)

Region-wise production of cement REGION CENTRAL NORTHERN SOUTHERN WESTERN EASTERN INCREASE (%) 13 22 9 2 9 PRODUCTION TONNES 2.31 3.74 4.94 2.51 2.32 IN MN

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Region-wise Cement Consumption REGION CENTRAL NORTHERN SOUTHERN WESTERN EASTERN CONSUMPTION (%) 2.38 3.21 4.58 2.46 3.02 YoY Growth (%) 25 11.7 9.3 14.1 8.3

1) BCG Matrix

CEMENT

REASONS WHY CEMENT INDUSTRY IS A STAR:

1. The business has high market share compared to competitors and it is doing business in high-growth market. This business is a market leader. 2. Stars have to improve their business continuously in order to keep their position in the marketplace. As long as this market is growing new question marks will try to capture new business. 3. Invest for sales growth and market share. Use cash from Cash Cows to support required investments. 4. They re-invest the profits made into the company by augmenting the capacity.

2) INDUSTRIAL LIFE-CYCLE
CEMENT

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1. 2. 3. 4.

The product market has been established There is at least some historical guide to ground demand estimates The industry is growing rapidly at an accelerating rate of sales and earnings growth Companies will still face relatively frequent execution issues.

3) SWOT Analysis
STRENGTHS
y y y y

Second largest in the world in terms of capacity ms of capacity Low cost of production
Increase in demand Capacity utilization over 90%

WEAKNESSES
y y y y
y

Effect of global recession on Real Estate and Infrastructure Increasing Cost of Production High Interest rates
Cement Industry is highly fragmented Industry is also highly regionalized

OPPORTUNITIES
y y y
y

Strong growth of economy in the long run Growing middle class Increase in government spending
Demandsupply gap because Lower per capita consumption as compared to developing countries (=1/3 rd of world average) Technological change is the way to the future. Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level.

THREATS
y y y

Imports from Pakistan affecting markets in Northern India. Excess over capacity can hurt margins as well as prices
High Transportation Cost is affecting the competitiveness of the cement industry. Freight accounts for 17% of the production cost. Road is the preferred mode for transportation for distances less than 250km. However, industry is heavily dependent on roads for longer distances too as the railway infrastructure is not adequate. Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are controlled by the government. There is regional imbalance in the distribution of cement industry. Limestone availability in pockets has led to uneven capacity additions. Coal availability and quality is also affecting the production

y y y

4) FUTURE PROSPECTS
According to a report by the ICRA Industry Monitor, the installed capacity is expected to increase to 241 MTPA by FY 2010-end. India's cement industry is likely to record an annual growth of 10 per cent in the coming years with higher domestic demand resulting in increased capacity utilisation.

REAS

S WHY EMENT IND STRY IS IN

ROWTH STAGE:

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Moreover, according to the Centre for Monitoring Indian Economy (CMIE), cement production is expected to grow by 8.1 per cent and demand for the same is likely to rise by a healthy 7-7.5 per cent in FY 2009-10.

5) Factors Affecting Cement Industry:

LIMESTONE RESERVES
Limestone is the main raw material for manufacture of cement. For manufacture of one tonne of cement, a quantity of 1.5 tonne of limestone is required. India is endowed with large deposits of limestone. The estimated total reserves of cement-grade limestone are 95.623 billion tonnes.

COAL
oal contributes 35-40 of the production cost. The cement industry consumes about 10mn tons of coal annually. Since coalfields like B L supply a poor quality of coal, N L and L the industry has to blend high-grade coal with it.
      

ELECTRICITY
ement industry consumes about 5.5bn units of electricity annually while one ton of cement approximately requires 75-85 units of electricity. ower tariffs vary according to the location of the plant and on the production process .


TRANSPORTATION
ement is mostly packed in D E ( igh Density oly Ethylene) bags. It is then transported either by rail or road. oad transportation beyond 200 kms is not economical therefore about 55 of cement is being moved by the railways. Today, 70 of the cement movement worldwide is by sea compared to 10 in India.
    

TECHNOLOGY
Indian cement industry has been actively pursuing various avenues to improve its productivity and energy efficiency. There has been all-around upgradation of technology in all sections of the plant like mining, process, equipment and machinery, packaging and transportation.

ENERGY CONSERVATION
The cement industry is an energy intensive industry by virtue of high temperature reactions and various physical operations involved in its manufacture. The industry uses both coal and power as energy inputs. The cost of energy accounts for about 45 of the total production cost.

6) REASONS IN STRY

FOR

THE

GROWTH

The domestic cement industry is highly insulated from global cement markets. Exports have been constant at about 6 of total cement demand for past few years. ith the Government of India intervention, making cement duty free, cem ent is being imported from neighboring countries. owever, due to logistics issues and lack of port handling capabilities imports of cement will remain negligible and do not pose a threat to domestic industry.
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OF

CEMENT

Earlier government sector use to consume over50% of the total cement sold in India but in the last decade its share has come down to 35%.

ia Ceme t I
4 %
"

4 %

7) Barriers to E try
Cement being a high bulk and low value commodity, outward freight accounts for close to one fifth of the total manufacturing cost. In addition, for every tonne of cement produced, close to 1.7 tonnes of raw material (including coal) is transported. In this scenario, the location of the cement plant becomes crucial. While deciding on the plant location, there is a trade-off between proximity to raw material sources and proximity to markets. A split-location cement plant can be a good compromise between the two options. The plant also has to address issues of logistics (evacuation of cement by rail, road or waterways), power availability in the region, and the first strategy is to locate manufacturing facilities near the consuming centres. In this case, outward freight is minimised and marketing flexibility enhanced at the cost of higher raw material assembly costs. The second strategy is tolocate the plant close to the mineral deposits, so as to minimise raw material assembly costs. Occasionally, as in areas like Satna, Rewa, and Raipur, the coal pitheads are also quite close by availability of materials (limestone, coal, slag, etc). Although, world trade in cement is limited because of high freight costs, there are countries, which either import a significant share of their total consumption or export a major share of their total production. Countries, which import a significant share of their consumption, appear to be falling in the developing world category, where the public expenditure on infrastructure projects is very high. Countries with high export thrust opt for bulk transportation for exporting cement.At the exfactory level, Indian cement is quite competitive with many global cement producing regions. Outward freight on cement is an important element in the operating cost of a cement plant. It accounts for around one third of the total variable costs. Most of the cement pla in India nts are located in and around the limestone clusters.
!

8) Acquisitions & Mergers

A growing and robust economy was noteworthy in terms of the total number of mergers and acquisitions (M A) in India 2007, with the cement sector contributing to 7 per cent to the total deal value. Holcim strengthened its position in India by increasing its holding in Ambuja Cement from 22 per cent to 56 per cent through various open market transactions with an open
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&

2 %

I frastructure

%$

I
#

ustrial/commercial

"

ustry Dema

Drivers

Housi g

offer for a total investment of US$ 1.8 billion. Moreover, it also increased its stake in ACC Cement with US$ 486 million, being the single largest acquirer in the cement sector. Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management Fund and Emerging Market Fund have together bought around7.5 per cent in India's third-largest cement firm, India Cements (ICL), for US$ 124.91 million. Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim Industries' 53.63 per cent stake in Shree Digvijay Cement. CRH Plc, the world's second biggest maker and distributor of building materials, acquired a 50 per cent stake in My Home Industries Ltd for almost US$ 372.64 million. Vicat SA, a French cement maker acquired a 6.67 per cent stake in Hyderabad -based Sagar Cement for US$ 14.35 million.

COMP

YSIS- CC imited

 Established in 1936, ACC has been a pioneer and trend -setter in cement and concrete technology  ACC's operations are spread throughout the country with 14 modern cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices and several zonal offices  It has a workforce of about 10,000 persons and a countrywide distribution network of over 9,000 dealers  It is the only cement company that figures in the list of Consumer SuperBrands of India

1. BACKGROUND
Company was established in 1936 as a result of a historic merger of ten existing cement companies and named as Associated Cement Companies. Tata group one of the major stakeholder from its formation sold its 14.5% stake in ACC to subsidiaries of Gujrat Ambuja Cements. ACC like Ambuja Cements is also owned by the Holcim group, which is the worlds leader in cement, large supplier of concrete, aggregates and construction related services. ACC is Indias largest and integrated cement manufacturer, which hol s significant d market share in fragmented cement Industry with captive power, strategic location and s large limestone reserves.

2. MANAGEMENT
)@ 93) 81 8(1( 7 1(0) ( ' 6 5 43 2 1(0 ) ('

BOARD OF DIRECTORS Mr. N. S. Sekhsaria C i Mr. Paul Hugentobler t C i Mr. Sumit Banerjee i Di t Mr. S M Palia Mr. Naresh Chandra Mr. Markus Akermann Mr. M L Narula Mr. D K Mehrotra Mr. R A Shah Dr. Nirmal a Kumar

Subsidiaries
 Bulk (BCCI)  ACC Concrete Limited  Lucky Minmat Limited Cement Corporation (India) Ltd. (BCCI) (India) Ltd.

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ACC's

io is C ist ibutio J A A

sp t h 2 8
No th st
ED C

23

24

3. SHAREHOLDING PATTERN
G l u bli , 15.75

t h s , .91 N 's, .44

's, 1 .32

o i p o o to s, .29

4. LISTING ON STOCK EXCHANGES

BSE CODE: 500410 NSE CODE: ACC BLOOMBERG CODE: ACC IN REUTERS: ACC.BO

U Y U X W VU T

V c X aU Xb Xb X T X a

k i . s t. & su , 19. 6

R C S C I QIP G

q ph

t Co po t Bo i s, 4.6

Go t., .21

21

i o oto s, 45.9 2

IE

t l

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GC

c aU V X V

19

13

F G

st

outh

bs UV t

qr q p i hg

eed

5. RATIO ANALYSIS
A) Profit Margin Ratios
YEAR MAR 00 12 mths MAR 01 12 mths MAR 02 12 mths MAR 03 12 mths MAR 04 12 mths MAR 05 12 mths DEC 05 9 mths DEC 06 12 mths
DEC 07 12 mths DEC 08 12 mths

NET PROFIT MARGIN RATIO OPERATIN G PROFIT MARGIN RATIO

2.11 %

1.84%

4.61%

3.64%

6.11%

9.73%

17.22 %

21.55 %

20.92 %

16.23 %

7.09 %

13.45 %

14.60 %

10.42 %

11.53 %

14.75 %

15.72%

26.13 %

24.69 %

21.48 %

y y

The efficiency of ACC has certainly increased over the last years mainly owing to average operating expenses and low indirect taxes. Operating expenses have been increasing over the years until the year 2008.

B) Rate of Return Ratios

YEAR MAR 00 12 mths MAR 01 12 mths MAR 02 12 mths MAR 03 12 mths MAR 04 12 mths MAR 05 12 mths DEC 05 9 mths DEC DEC 07 DEC 08 12 06 12 mths 12 mths mths

Return on Total Assets (1.84) Return on Capital Employed 0.09 Return on Net Worth -0.05

0.96

2.50

1.96

3.61

6.13

7.81

15.40

14.97

10.61

0.14 0.04

0.19 0.13

0.16 0.10

0.20 0.15

0.24 0.24

0.20 0.25

0.45 0.39

0.46 0.35

0.37 0.25

y y y

Effectiveness of Total Assets in ACC has been on a rise marginally. This shows that the investment in assets by the company has been a wise decision. Shareholders equity has been considerably utilised in generating companys profits. Return on Net worth also seems improving and in a favourable situation for the company. Net Worth has been increasing over the years, share capital being constant.

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C) Liquidity Ratios
YEAR MAR ths
Current Ratio

MAR ths
1.37 0.89

MAR ths
0.94 0.63

MAR ths
0.85 0.54

MAR ths
0.82 0.52

MAR ths
0.84 0.47

ths ths
0.81 0.47

ths
0.95 0.66 0.87 0.59

ths
0.89 0.65

1.45 0.98

Quick Ratio y

ACC has short term liabilities greater than the short term assets. It implies that the company would have problems in managing its short term liabilities and liquidity requirements. The company might resort to financing its short term liquidity requiremen by long ts term sources of finance. Liquid Ratio is much lesser than the current ratio which signifies that inventory forms a major part of the Current Assets.

D) Sol ency Ratios YEAR MAR MAR ths ths

MAR ths

MAR ths

MAR ths

MAR ths

ths ths ths ths

Debt Ratio

0.65

0.67

0.71

0.70

0.66

0.64

0.57

0.48

0.42

0.43

DebtEquity Ratio Interest Coverage Ratio

2.83

3.00

3.44

3.33

2.91

2.80

2.33

1.93

1.71

1.75

1.41

2.13

3.24

3.72

5.64

8.15

14.31

37.01

94.37

51.81

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y y y

Interest paid by the company has been decreasing over the years. The linear trend line depicts the efficiency of ACC in paying off its long term debts. Debt Ratio has also been decreasing which means that the company is able to finance its assets effectively. Debt-Equity Ratio shows a decline which means that the company has more equity than long term debt.

E) Efficiency Ratios
YEAR MAR 00 12 mths MAR 01 12 mths MAR 02 12 mths MAR 03 12 mths MAR 04 12 mths MAR 05 12 mths DEC 05 9 mths DEC DEC 07 06 12 12 mths mths
DEC 08 12 mths

Inventory Turnover
8.70 12.28 13.09 16.18 10.90 9.02 7.65 9.04 6.96 7.16

Accounts Receivable Turnover Total Assets Turnover

y y

9.28

10.20

12.11

14.52

18.02

20.91

16.34

27.75

27.40

24.12

0.87

0.52

0.54

0.54

0.59

0.63

0.45

0.71

0.72

0.65

Inventory turnover shows that the company is positively turning its inventory into sales. The ability of the company to collect from its customers or wholesalers is good as its declining from year to year.

F) Investor Ratios
YEAR MAR 00 12 mths MAR 01 12 mths MAR 02 12 mths MAR 03 12 mths MAR 04 12 mths MAR 05 12 mths DEC 05 9 mths DEC DEC 07 12 06 mths 12 mths
DEC 08 12 mths

EPS
-3.45 2.78 7.64 6.08 11.30 21.19 29.49 65.78 76.67 64.62

DPS
0.92 2.00 3.00 2.50 4.00 7.00 8.00 15.00 19.99 Dividend Coverage -3.76 1.39 2.55 2.43 2.83 3.03 3.69 4.39 3.84 Ratio y As EPS is increasing, we can see that the investors have been benefiting from their investment in ACC.
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20.00

3.23

y y

The long term investors have also been gaining from the dividend policy of the company. Dividend coverage ratio of ACC shows that the company is steady in giving good return on its shares to the shareholders.

6. SWOT ANALYSIS
STRENGTHS
 Improved efficiency, brand image and nationwide presence ensure competitive edge/ sustained profitability for ACC  A national presence helps ACC to withstand regional fluctuations in prices and adapt its distribution to market place needs  Installed capacity: ~ 22.63 MTPA  Significant market share in an otherwise fragmented industry  Leader also in blended cements: 83%  Unique R D facility  ACC Brand : Recognized for superior quality and timely delivery  Widest distribution network of any cement company in India with around 250 warehouses and over 9,000 dealers  Downstream and supporting business: RMX, Bulk Cement

WEAKNESSES
 High cost operations to exert pressure  Margins to squeeze  High Interest rates

OPPORTUNITIES
    Strong growth of economy in the long run. Increase in infrastructure Projects Increase in govt spending Rural markets offer unique opportunities

THREATS
 Imports from Pakistan affecting markets in Northern India.  Excess over capacity can hurt margins as well as prices.  Deficit monsoon in near future.

7. FIVE FORCES MODEL

Entry barriers:
v

Economies of scale Capital requirement Average gestation period of 2-3 years Access to distribution channels Bargaining power of suppliers: High y Large and few sellers y No substitutes y Sellers product important input for buyer y High fixed costs y Lack of switching cost y Capacity augmentation in large increments y y y y

T reat of new entrants: Low Bargaining power of buyers: Low/Medium

y y y y y Standard product No substitute Intensity of competition: Medium Equally balanced competitors Average industry growth

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8. COMPARATIVE ANALYSIS
COMPARISION OF THE SHARE PRICE MOVEMENT OF ACC LTD. WITH AMBUJA CEMENTS

INTERPRETATION: The fluctuation in prices of ACC LTD. has always been greater and higher than that of Ambuja Cements. COMPARISION OF THE SHARE PRICE MOVEMENT OF ACC LTD. WITH SHREE CEMENTS

INTERPRETATION: The fluctuation in prices of ACC LTD. and SHREE CEMENTS shows almost opposite trend. COMPARISION OF THE SHARE PRICE MOVEMENT OF ACC LTD. WITH J K LAKSHMI CEMENTS

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INTERPRETATION: The fluctuation in prices of has always been higher than that of J K LAKSHMI CEMENTS

TECHNICAL ANALYSIS
SHARE PRICE MOVEMENT OF ACC LTD. FOR A PERIOD OF 5 YEARS

5 Years Tre
1400 1200 1000

li e of ACC LTD
Bearish Trend

Bullish Trend
800 600 400 200
0 01/06/2004 01/06/2005 01/06/2006 01/06/2007 01/06/2008 01/06/2009

Close

INTERPRETATION: The market was bullish form the month of June2004 till January2007.Then there was a downfall till June2007. Again the price rose till November2007, then again started to fall showing a bearish trend till December2009. Thereafter, the share price of ACC is rising since then. COMPARISION OF ACC LTD WITH SENSEX FOR A PERIOD OF 5 YEARS

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25000 20000 15000 10000 5000 0

1400

1200 1000
800 600 SENSEX ACC LTD

400 200
0

INTERPRETATION: From the year 2004 to the end of 2005 the Sensex movement and ACC LTD. movement shows similar type of trend. Thereafter, fluctuation in prices of ACC LTD. was much greater than that in the movement of Sensex, and then since December 2007 the fall in ACC prices was greater than the fall in Sensex. And then since August2009 similar trend was seen. SHARE PRICE MOVEMENT OF ACC LIMITED DURING THE FINANCIAL YEAR JAN-DEC2008

ACC LTD
1200 1000

Resistance Level

800
600

400
200 0

ACC Cement

Support Level

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IMPACT OF NEWS:
(A ACC Ltd. Plans for expansion : 3rd June2008 (B) Ambuja Cement Ltd. buys a stake in ACC Ltd. Concrete unit : 3rd June2008 (C) Holcim Cement to raise stake in ACC Ltd. : 27th June2008 (D) ACC Ltd. announces ownership interest of Ambuja Cement : 1st July2008 (E) ACC recommends interim dividend : 24th July2008 th (F) ACC Ltd. proposes to delist GDR from London Stock Exchange :16 Sep2008 th (G) ACC Ltd. likely to set up Hydro Power Plants : 6 oct2008 (H) ACC Ltd. buys 40% stake in Alcon : 8th oct2008 (I) ACC Ltd. plans expansion : 9th oct2008 (J) News came the ACC, Reliance petroleum and steel makers may have unusual price changes : 3rd Dec2008 INTERPRETATION: The share price of company started falling much before recession was declared in India, during the month of September. The fall in its share prices was seen from the end of June. Although it showed some recovery in August and September but then again went on a downturn. The major reason for such a trend was FDIs not investing in India when the world over and mainly US was into the meltdown. COMPARISION OF THE SHARE PRICE MOVEMENT OF ACC LTD. WITH SENSEX FOR THE YEAR 2008
25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 1200 1000 800 600 400 200 0

ACC Cement

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Sense

INTERPRETATION: The trend in movement of SENSE and ACC LTD. shows almost similar trend. But the cement industry saw downturn much before Indian economy went into the meltdown. GRAPH SHOWING VOLATILITY OF ACC LTD.
1200 1000
800

600
400

i gh

Low Close

200
0

INTERPRETATION: The share of ACC LTD. is highly volatile with an average fluctuation of Rs. 31.9 and a standard deviation of Rs.144.87. This clearly denotes that the share price of ACCLTD. shows high fluctuation on an intra-day basis. COMPARISION OF THE SHARE PRICE MOVEMENT OF ACC LTD. WITH SENSE FROM JAN-AUGUST2009
18000
16000

14000
12000

1000 900 800 700 600 500 400 300 200 100 0

10000 8000 6000 4000 2000 0

SENSEX

CC

INTERPRETATION: with the start of the year 2009 also SENSE and ACC LTD. shows a similar type of movement and has shown recovery by the mid of April2009.

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x y

SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 5 YEARS USING SIMPLE MOVING AVERAGE

SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 6 MONTHS USING SIMPLE MOVING AVERAGE

Buy Buy Buy Signal Buy Signal Sell Sell Signal Sell Signal

Sell

Interpretation The most popular method of interpreting a moving average is to compare the relationship between a moving average of the security's price with the security's price itself. A buy signal is generated when the security's price rises above its moving average and a sell signalis generated when the security's price falls below its moving average.

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SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 5 YEARS USING BOLLINGER BAND

SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 6 MONTHS USING BOLLINGER BAND

High Volatility High Volatility

Low Volatility Low Volatility Low

Interpretation Bollinger Bands are usually displayed on top of security prices, but they can be displayed on an indicator. As with moving average envelopes, the basic interpretation of Bollinger Bands is that prices tend to stay within the upper- and lower-band. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatil of the prices. ity During periods of extreme price changes (i.e., high volatility), the bands widen to become
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more forgiving. During periods of stagnant pricing (i.e., low volatility), the bands narrow to contain prices. SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 5 YEARS USING RELATIVE STRENGTH INDEX

SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 6 MONTHS USING RELATIVE STRENGTH INDEX

Interpretation The Relative Strength Index is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the Relative Strength Index is to look for a divergence in which the security is making a new high, but the Relative Strength Index s failing to surpass its i previous high. This divergence is an indication of an impending reversal. When the Relative Strength Index then turns down and falls below its most recent trough, it is said to have
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completed a "failure swing." The failure swing is considered a confirmation of the impending reversal. SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 5 YEARS USING MACD

SHARE PRICE PREDICTION OF ACC LTD FOR A PERIOD OF 6 MONTHS USING MACD

Interpretation The MACD proves most effective in wide-swinging trading markets. There are three popular ways to use the MACD: crossovers, overbought/oversold, and divergences. Crossovers: The basic MACD trading rule is to sell when the MACD falls below its signal line. Similarly, a buy signal occurs when the MACD rises above its signal line. It is also popular to buy/sell when the MACD goes above/below zero.
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Overbought/Oversold Conditions: The MACD is also useful as an overbought/oversold indicator. When the shorter moving average pulls away dramatically from the longer moving average (i.e., the MACD rises), it is likely that the security price is overextending and will soon return to more realistic levels. MACD overbought and oversold conditions exist vary from security to security. Divergences: A indication that an end to the current trend may be near occurs when the MACD dive rges from the security. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought/oversold levels .

SHARE PRICE MOVEMENT OF ACC LTD. FROM JAN-AUGUST2009

IMPACT OF NEWS (A) The shipments in August rose 7.1 percent from a year earlier to 1.65 million tonnes for ACC LTD: 2nd Sep2009 (B) ACC LTD looking to raise 3 billion rupees via Bonds and Loans: 31st Aug2009. (C) The shipments in July rose 4.1 percent from a year ago to 1.78 million tonnes: 3rd Aug2009. (D) ACC Q2 profit jumped to INR 485.61 crore: 25th July2009. (E) ACC LTD. posted a better-than-expected 85 percent rise in quarterly profit on strong sales volumes: 23rd July2009.

(F) ACC

Ltd announced that Mr. A Anjeneyan, Company Secretary has resigned from the Company's services with effect from July 25, 2009: 23rd July2009.

(G) ACC allots 5400 shares to its shareholders: 23rd July2009. ACCLTD declared intrim dividend: 23rd July2009. (H) Indian shares fall 2.8 pct on global worries: 8th July2009. (I) Metal and cement stocks trade with moderate movement, ignoring the railway budget, rd which kept the freight rates unchanged for the industry: 23 June2009
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(J) Indian shares fell 1.8 percent dropping for the fifth session in six, as profit-taking picked up momentum on market talk the cash -strapped government may roll back tax rd breaks for some sectors: 18 June2009

ELLIOTT WAVE THEORY:

5 3 1 B A C

INTERPRETATION: Every action is followed by a reaction. Five waves move in the direction of main trend ( 1-3-5) known as impulsive wave, followed by three corrective waves (A-B-C). This trend shows that the main direction of prices while correction moves against the trend.

DOW THEORY:
There are three types of trend in dow theory : Primary trend, Secondary trend and Daily fluctuations.
987.65, 05/05/06

130.2, 02/05/03

857.3

732.9, 16/06/06 254.74

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INTERPRETATION: In a bull market(which is a primary trend) a secondary move is considered as a correction. The above chat illustrates a correction within the confines of a primary bull trend. Based on historical observation the secondary move is retraced about 29.7% of the primary move(254.75/857.35=0.297). Accor ding to Dow Theory(Hamilton) secondary movement retrace 50% of the primary move.

987.65, 05/05/06 732.9, 16/06/06

INTERPRETATION: At the end of secondary move there is usually a dull period before the turnaround. There is a dicline in the volume which is dipected by a red color line on volume. After the downgap there were reversal day and then there was a reaction high which is depicted by a green color line on volume. The reaction high combined with the increase in volume indicate that the secondary move is over and the primary trend has resumed.

New Uptrend Confirmed

Higher Low

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INTERPRETATION: The black line shows downward trajectory of the trend. Since the peak in 2002 is a series of lower lows and lower highers are formed to make a down trend. There was a secondary rally in 2005(shown with black circle) but 2002 high was not surpassed. The down trend continued until high volume washout day. A high volume washout day does not indicate by signal. After this it moved above 600, creating higher low. The change of trend is confirmed after the previous reaction high is surpassed(shown with red line).

mm

S gg

By analyzing the industry on various parameters with help of implementing Fundamental and Technical tools we came to know that this industry have so much potential to grow in future. So recommending to invest in Cement Industry have no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all around the world. The current position of ACC LTD.is on the peak, showing growth phase, the earning per share of the company is showing a positive trend and has grown upto Rs 64.62. We anticipate oversupply and pricing pressure would impinge the valuations in coming years, as utilization levels coming down. Industry is expected to face next downturn over coming 12-18 months. However, with strong financial positions as compared to earlier downturn, ACC Limited seems to be well prepared, which is expected to pass on the current down cycle with less severity.

Cement Industry has been in existence in India for over eight decades. In the present scenario it is showing it is in the growth phase in our country. Real estate boom and governments persistent focus towards infrastructure development had kicked in strong cement demand in India from FY05. Low available capacities and soaring realizations boosted profitability of cement players during FY05-08, which encouraged aggressive capacity expansion plans by cement companies over FY09-11. However, dwindling economic performance and slackening demand after the meltdown in the global markets has reversed the equation for industry players, as earlier planned capacities are getting feet like surpluses. Cement demand grew at buoyed rate of 9.5% during 4QFY09. Sudden growth in cement demand in Northern, Eastern and Central regions, on account of heightened pre-election
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infrastructure activity and individual housing demand from rural and semi urban areas, led cement players to hike prices by Rs 10-15 per bag as their last efforts to allure the sudden demand. We believe, current momentum is unlikely to sustain beyond 1QFY10 as election activities taking halt and start up of Monsoon by June09 would pressurize demand. Cement demand in economy is largely based on development and construction activity. Housing, infrastructure and industrial developments are the prominent factors deriving cement demand. Cement demand growth has reflected a strong co-relation with overall GDP growth at 1.1 or 1.2, over last many years, which indicates its dependency on capital formation and GDP growth.

BIBLIOGRAPHY BOOK 1. Investment Analysis and Portfolio Management: (By Prasanna Chandra)

2. PROWESS
WEBSITES
y y y y y y y y y y y y y y y y y

www.moneycontrol.com www.money.rediff.com www.finance.yahoo.com www.googlefinance.com www.economictimes.indiatimes.com

www.timesofindia.indiatimes.com

www.livemint.com www.bloomberg.com www.scribd.com www.mospi.nic www.bseindia.com www.nseindia.com www.acclimited.com www.rbi.org.in

www.imf.org www.google.com www.incrediblecharts.com

NEWS PAPER 1. Economics Times 2. Financial Express

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