ACC's Q1CY21 performance was ahead of our estimates led by better sales volumes and higher margins. Sales volume increased 21.5% YoY to 7.97 MT (up 3.4% QoQ) while realisations increased 0.9% YoY (flat QoQ) to Rs. 5,385/t leading to revenue growth of 22.6% YoY to Rs. 4292 crore. Strong demand along with lower base of last year and partial benefit of new capacity (1.4 MT) led to healthy sales volume growth. However, RMC volumes fell 10.7% YoY to 0.83 million cubic metre (up 14.7% QoQ). Reported EBITDA margin came in at 20% (up 330 bps YoY, 625 bps QoQ), higher than our estimate of 16.5% due to volume led operating leverage and lower other costs. Absolute EBITDA increased 46.7% YoY to Rs. 860.3 crore. EBITDA/t was at Rs. 1079/t (I-direct estimate: Rs. 891/t) vs. Rs. 894/t last year, Rs. 742/t last quarter. The company commissioned a new grinding unit (1.4 MT) in January 2021 at Sindri, Jharkhand. Further greenfield expansion in Ametha and associated grinding units are on track.
Valuation & Outlook
While structural issues w.r.t CoP need to be addressed for sustenance of healthy margins, strong b/s and improved cash flow remain key positives. Further, new capacities would bring growth back on track. The Covid induced lockdown may impact sales in the near-term. However, strong underlying demand should help the company recover lost volumes as and when normalcy resumes. Hence, we retain BUY and maintain TP of Rs. 2,250 (valuing at 11.5x CY22E EV/EBITDA implying an EV/t of ~$135).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ACC_Q1CY21.pdf
Shares of ACC LTD. was last trading in BSE at Rs.1824.45 as compared to the previous close of Rs. 1876.85. The total number of shares traded during the day was 219560 in over 13479 trades.
The stock hit an intraday high of Rs. 1982 and intraday low of 1810. The net turnover during the day was Rs. 414358399.