Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

ACC - 2QFY22 Result Update - Performance Beat Despite Elevated Input Costs - Reliance Securities

Posted On: 2021-10-21 09:34:18 (Time Zone: IST)


ACC reported a modest performance beat despite elevated input costs, mainly supported by the resilient realizations and cost efficiency measures. EBITDA (excluding other operating income) grew merely 3% YoY to Rs6.16bn (-23% QoQ) and was slightly higher than our estimate of Rs6bn, while cement EBITDA/tonne stood at Rs914 in the quarter vs. Rs918 in 3QCY20 and Rs1,145 in 2QCY21. Sales volume grew merely by 1.2% YoY to 6.57mnT (-3.9% QoQ) vs. our estimate of 6.75mnT. Further, the average realization/tonne remained steady at Rs5,175 (+1.7% YoY and -1.6% QoQ), which was Rs75/tonne higher than our estimate. Operating cost/tonne hardened by ~4.7% YoY and 5.1% QoQ to Rs4,623, as against an estimate of Rs4,486. Notably, the input cost/tonne (RM+P&F) rose significantly by +7% YoY and +10% QoQ to Rs2,149, mainly led by a sharp increase in fuel and input costs. Surprisingly, freight cost/tonne contracted by 1% YoY and 2.6% QoQ to Rs1,317. Net profit increased by 24% YoY to Rs4.49bn (-20% QoQ), ahead of our estimate of Rs4.2bn, and was mainly aided by the higher other income and lower taxes. While the ongoing expansions (2.7mnT clinker and 1mnT cement in Ametha, MP and 3.8mnT SGU in UP) ensure a sustainable growth visibility in the ensuing fiscals, the company's commitment on green energy by way of setting up WHRS (10MW at Jamul and 14MW at Kymore) are likely to offer more cushion against a sharp rise in fuel prices. We raise the EBITDA estimate by 10%/8%/13% for CY21E/CY22E/CY23E, respectively to factor the superior realizations and operating efficiencies. Keeping the target multiple unchanged for CY23E at 12x, we maintain our BUY rating with a revised 12-month target price of Rs2,685.

Cement Sales Volume Sees Modest Improvement

The heavy rainfall in various parts of its key markets, especially in the Eastern region, and a high base weighed on the sales volume, which led ACC to record a sharp under-performance in volume compared to the industry. The company recorded a mere 1.2% YoY growth in cement sales volume to 6.57mnT. However, a sustained traction in projects segment aided it to record a sharp 46% YoY growth in RMC sales volume to 0.68mn cubic meters.

Resilient Realizations and Savings on Freight Aid Performance

Despite a sharp increase in input cost/tonne (+7% YoY and +10% QoQ) that was mainly led by higher fuel costs, ACC managed to report a better-than-expected operating performance, mainly on account of steady realizations and savings in freight costs. Average realizations/tonne declined modestly by 1.6% QoQ to Rs5,175, against the industry's sequential drop of 3%. Further, the company's continued efforts on network optimization and improvement in lead distance enabled it to post a 2.6% sequential decline in freight cost/tonne, despite the sharp rise in diesel prices.

Outlook and Valuation

The better-than-expected realizations and continued cost efficiencies, despite elevated input costs, aided in the performance beat during the quarter. ACC has been working on improving cost efficiencies through various ways and these have started to pay off. Going forward, the commissioning of new capacities and further improvement in operating efficiencies by way of setting up WHRS at various plants should aid it to witness a sustainable growth. Keeping the target multiple unchanged for CY23E at 12x, we maintain our BUY rating with a revised 12-month target price of Rs2,685. Notably, we have shifted to a 1-year target price, from the earlier 2-year. As we enter 4QCY21, instead of rolling forward the valuation, we maintain it based on CY23E earnings and shift to a 1-year target price of Rs2,685.

Link to the report

Shares of ACC Limited was last trading in BSE at Rs. 2263.20 as compared to the previous close of Rs. 2245.50. The total number of shares traded during the day was 217924 in over 15006 trades.

The stock hit an intraday high of Rs. 2357.95 and intraday low of 2222.00. The net turnover during the day was Rs. 498092122.00.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Expect to see the industrial sector firing on all cylinders in H2FY22 - Acuite Ratings

Q2FY22 GDP Numbers - Suvodeep Rakshit - Kotak Institutional Equities

India Q2FY22 GDP data - JLL

The absolute real GDP value has exceeded the pre-pandemic levels of Q2FY20 by 0.33% - Acuite Ratings & Research

Post Listing view on Go Fashion by Mr. Santosh Meena, Head of Research, Swastika Investmart Ltd

Mutual Fund Review - November, 2021 - ICICI Direct

Maintain SELL on Asian Paints - Demand rebound strong; profitability cut steeper - HDFC Securities

Mphasis - 2QFY22 Result Update - Growth Resiliency Continues; Raise Target Price - Reliance Research

Gateway Distriparks - Rail continues to drive earnings - ICICI Securities

JSW Steel - Start of EBITDA contraction cycle - ICICI Securities

Shoppers Stop - Beneficiary of faster than expected recovery - ICICI Securities

Asian Paints - Q2FY22 Result Update - ICICI Securities

TVS Motor Company - EVs now at the center of its global ambitions - ICICI Securities

Havells India - Strong demand across regions; profitability likely to be muted in H2FY22 - ICICI Securities

Tata Communications - Rising visibility on revenue growth - ICICI Securities

Angel Broking - Business momentum intact for strong earnings growth - ICICI Securities

Q2FY22 Result Update - Rallis India - ICICI Direct

Q2FY22 Result Update - Navin Fluorine - ICICI Direct

Q2FY22 Result Update - Shoppers Stop - ICICI Direct

Company Update - Mastek Ltd - ICICI Direct

Q2FY22 Result Update - JSW Steel - ICICI Direct

Q2FY22 Result Update - VST Industries - ICICI Direct

HDFC Life Insurance - Q2FY22 First Cut - ICICI Direct

Federal Bank - Q2FY22 First Cut - ICICI Direct

Company Update - Taj GVK Hotels - ICICI Direct

Q2FY22 Result Update - Indian Hotels - ICICI Direct

Inox Leisure - Q2FY22 First Cut - ICICI Direct

Supreme Industries - Q2FY22 First Cut - ICICI Direct

Q2FY22 Result Update - Biocon Ltd - ICICI Direct

PVR Ltd - Q2FY22 First Cut - ICICI Direct

Q2FY22 Result Update - Asian Paints - ICICI Direct

Quant Pick - RBL Bank - ICICI Direct

Q2FY22 Result Update - IIFL Securities - ICICI Direct

Q2FY22 Company Update - Bank of Baroda - ICICI Direct

Q2FY22 Result Update - Syngene International - ICICI Direct

Company Update - Sonata Software - ICICI Direct

Q2FY22 Result Update - Gateway Distriparks - ICICI Direct

Q2FY22 Result Update - Tata Communications - ICICI Direct

Q2FY22 Result Update - Havells India - ICICI Direct

Mphasis - 2QFY22 Result Update - Growth Resiliency Continues; Raise Target Price - Reliance Research

Maintain ADD on Havells India - Outperformance continues; miss on margin - HDFC Securities

Indraprastha Gas - Company Update - EV vs CNG; TCO Economics Favour CNG - Reliance Research

FinTech Playbook - Discount Brokers - 'Nudging' the long tail of standalone brokers - HDFC Securities

Tata Communication - Revenue growth remains muted - YES Securities

Havells India Ltd - Q2FY22 Result Update - YES Securities

ICICI Lombard General Insurance - Q2FY22 Result Update - YES Securities

Syngene International Ltd - Lack of near term triggers - YES Securities

Mphasis - Q2FY22 First Cut - YES Securities

IndiaMART InterMESH - Q2FY22 First Cut - YES Securities

Sterlite Technologies - Q2FY22 First Cut - YES Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020