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Research
ACC Ltd - Q2CY17 Result Update Rating - HOLD - Arihant Capital Markets
Posted On : 2017-07-23 09:30:56( TIMEZONE : IST )
ACC Ltd. reported a healthy rise in its net profit for its second quarter ended June, 2017. Net profit for the quarter came in at Rs. 326 cr compared to Rs.246 cr in the corresponding quarter of previous year registering a growth of 32.6% YoY. Total income for the quarter came in at Rs.3,453 cr as compared to Rs. 2,880 cr in the corresponding quarter of FY 16, up 19.9% YoY however increased 8.8% sequentially. EBITDA for the company stood at Rs.637 cr vs. Rs. 462 cr YoY. EBITDA margin expanded to 18.4% from 16.1% in corresponding quarter of previous year and 13.2% sequentially.
Cement volumes came in at 6.74 MT higher by 10.1% compared to the corresponding quarter of previous year & higher by 11.2% sequentially led by continued thrust on promotion of company's range of premium products, alongside contributions from newly commissioned plants at Jamul & higher demand in eastern region. Premium product volume grew by 9% YoY.RMX Business sales improved by 14%.Realisation for quarter improved by 6.2% YoY & 4.6% QoQ based on higher prices in all regions.
Ongoing efforts to enhance operational efficiency delivered a reduction in energy consumption as a result of optimization of fuel mix and other input materials. Basic price of slag increased due to spurt in demand. Gypsum & raw mix optimization minimized the cost increase. Diesel price increased by 12% which impacted road freight. Despite busy season surcharge wavier of railway not available during the period, freight increase restricted through various logistics improvement initiatives. Packing material cost increased due to increase in price of PP granules.
Valuations:
Increased government spending on infrastructure development should further boost demand for cement and concrete.
We have valued stock on EV/EBITDA of 19.5 (x) its CY19 estimates and have arrived at a fair value of Rs 1,862 per share. At CMP of Rs 1,734 the stock is available at CY19E P/E(x) and EV/EBITDA(x) of 39.4 (x) and 19.5 (x) respectively. We have "HOLD" rating on the stock.
Shares of ACC LTD. was last trading in BSE at Rs.1710.8 as compared to the previous close of Rs. 1715.5. The total number of shares traded during the day was 23519 in over 1489 trades.
The stock hit an intraday high of Rs. 1725.6 and intraday low of 1698.4. The net turnover during the day was Rs. 40264610.
