ACC Ltd. - GEPL Capital

Q4CY11 – Strong Y-o-Y performance, driven by increase in realisation

- Net sales for Q4CY11 grew by 22.3% on Y-o-Y basis to Rs.25,552 mn. This was mainly driven by higher volumes and better realisation.

- As a result of higher realisation the EBIDTA margin increased by 101bps Y-o-Y to 17.3% in Q4CY11 from 16.3% in Q4CY10.

- PAT in Q4CY11 stood at Rs.4,704 mn showing a growth of 83.8% Y-o-Y (Tax Expense for Q4CY11 includes an adjustment of credit of Rs.2280 mn (Corresponding previous quarter Rs.820 mn) arising from reversal of tax provision related to earlier assessment years.

- Adjusting for the above said figures the PAT stands at Rs.2, 425 mn showing a sequential growth of 44.7%.

Result Highlights

Strong realisation coupled with better volumes helped ACC report good numbers for Q4CY11

Blended Realisation of cement per bag for Q4CY11 stood at Rs.217/bag showing a growth of 15.9% Y-o-Y, this was mainly on account strong demand in the regions where ACC operates, especially north, west and south, where company gets its major share of revenue. The volumes grew by 5.6% Y-o-Y to 5.89 mn MT in Q4CY11.

Total Expenditure per bag rose by 14.5% on Y-o-Y basis to Rs.179. This was mainly on account of increase in raw material costs, freight costs and power & fuel costs, which rose by 46.3%, 19.1% and 22.5% on Y-o-Y basis respectively. However the staff costs per bag declined by 5.3% Y-o-Y.

Valuation & Viewpoint

Over last two years, EV per MT of ACC in US$ term has been in the range of US$100-198. At current market price the stock is trading at US$198/MT at its two years high and at a 27.5% discount to its all time high of US$253/MT. We expect the cement prices to remain strong over next few months and despatches are also expected to show a strong growth on account of seasonal up tick. Hence we believe this should help the company in further increasing its operating margins going forward. However as a result of sharp run up seen in the recent past, upside is limited for the stock.

Source : Equity Bulls

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