ACC Ltd. Q3CY17 Result Update Rating - NEUTRAL - Arihant Capital Markets

ACC Ltd. reported a healthy rise in its net profit for its third quarter ended June, 2017. Net profit for the quarter came in at Rs. 182 cr compared to Rs.90 cr in the corresponding quarter of previous year registering a growth of 102% YoY. Total income for the quarter came in at Rs.3,116 cr as compared to Rs. 2,476 cr in the corresponding quarter of CY 16, up 26% YoY however decreased 9.8% sequentially. EBITDA for the company stood at Rs.416 cr vs. Rs. 282 cr YoY. EBITDA margin expanded to 13.3% from 11.4% in corresponding quarter of previous year and contracted from 18.4% sequentially.

Cement volumes came in at 5.96 MT higher by 18% compared to the corresponding quarter of previous year & contracted by 13% sequentially led by continued thrust on promotion of company's range of premium products, alongside contributions from volume growth during the quarter from added capacity in East supporting its market share improvement. Further, enhanced participation in Infra projects (ZMorh tunnel - Srinagar Leh Highway), integrated offers for metros, landmark buildings etc aided the volume growth for the company. Premium product volume grew by 18% YoY.RMX Business sales improved by 11%.Realisation for quarter improved by 6% YoY & 1.6% 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 higher usage of alternative fuel. Basic price of slag increased due to spurt in demand. Gypsum & raw mix optimization minimized the cost increase. Rail freight reduced due to lower lead. Road freight maintained at PY level due to restricted freight pass-on.

Valuations:

Increased government spending on infrastructure development should further boost demand for cement and concrete.

We have valued stock on EV/EBITDA of 19.6 (x) to its CY19 estimates and have arrived at a fair value of Rs 1,872 per share. At CMP of Rs 1,781 the stock is available at CY19E P/E(x) of 39.4 (x) and CY17E EV/EBITDA(x) of 21.4 (x) respectively. We have "NEUTRAL" rating on the stock.

Shares of ACC LTD. was last trading in BSE at Rs.1788 as compared to the previous close of Rs. 1783.65. The total number of shares traded during the day was 7104 in over 504 trades.

The stock hit an intraday high of Rs. 1800 and intraday low of 1772.55. The net turnover during the day was Rs. 12685510.

Source : Equity Bulls

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