(Rating: ADD, TP: Rs2,291, Upside: 6.5%)
- ACC delivered strong set of numbers for Q2CY21 with outperformance on volumes (+43.7% y/y) and massive outperformance on EBITDA level (+65% y/y) which was 23% above our estimates. Better than expected realizations due to higher share of premium products (cement NSR up 2% y/y) and lower clinker cost led to beat on operating performance.
- Volume dispatches for Q2CY21 stood at 6.84MT translating into 43.7% y/y growth while was lower by 9.7% y/y to our estimates. Cement NSR/te was Rs5153 during the quarter witnessing an improvement of 2% y/y (vs. est. of -0.43% y/y). RMC volumes came in at 0.58mcm; witnessed sequential drop of 30.1% as construction activity remained muted due to covid-19 related restriction.
- We have recalibrated our estimates where volumes kept unchanged but rationalized cost structure as we were too aggressive which resulted in absolute EBITDA accretion by 3.8%/3.9% for CY21E/22E respectively; aided EBITDA/te to go up by 8.3%/9.7% for CY21E/22E. At CMP of Rs2,151, ACC is trading at EV/EBITDA of 10.2x on CY22E. We have assigned EV/EBITDA multiple of 10.5x on CY22E and arrive at TP of Rs 2,291/share with potential upside of 6.5% (previous TP of Rs2028). We have an ADD rating on the stock.
Shares of ACC LTD. was last trading in BSE at Rs. 2308.55 as compared to the previous close of Rs. 2150.65. The total number of shares traded during the day was 341721 in over 22148 trades.
The stock hit an intraday high of Rs. 2342.95 and intraday low of 2191.9. The net turnover during the day was Rs. 781269776.