Action Construction Equipment - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 132; MCap: Rs. 1495 crore)

Action reported strong numbers for Q3FY21 led by improved volumes & better realization. Margins across segments improved given increase in utilization levels on a YoY basis.

Q3FY21 Earnings Summary

- Revenue for the quarter came in at Rs. 400.4 crore, up 38.4% YoY. Post lockdown & monsoon season, revival in infra activities coupled with spillover from Q2 aided topline performance

Segmental performance was as follows

Cranes

- Revenue Rs. 257.3 crore (up ~31% YoY)
- EBIT Rs. 33 crore vs (up 54.7% YoY), EBIT margin 12.9%

Construction Equipment

- Revenue Rs. 38.8 crore (up ~53.1% YoY)
- EBIT Rs. 2.7 crore, EBIT margin 7%

Material Handling

- Revenue Rs. 31.3 crore (up, ~66.4% YoY),
- EBIT Rs. 3.98 crore, EBIT margin 12.7%

Agri Equipment

- Revenue Rs. 73 crore (up, ~50%YoY),
- EBIT Rs. 8.6 crore, EBIT margin 11.8%

- Gross margins contracted ~96 bps YoY on account of recent run up in steel prices. Nevertheless, the company took a price hike of about 2-3% in the month of November which limited the overall impact. Further down the line, positive operating leverage and a decline of 8% YoY in employee cost aided operating performance. Consequently, EBIDTA increased 101.7% YoY to Rs. 45.2 crore with an expansion of ~ 354 bps in EBIDTA margins which came in at 11.3%

- Subsequently, ACE reported a net profit of Rs. 30.9 crore, up 145.3% YoY

Overall this was a robust performance from Action and a positive start to H2FY21. Improved margins across all the segments and a positive outlook for infra, agri & CE segments should assist Action in becoming a counter cyclical company in the next two to three years. We would come out with a detailed report post the conference call.

Shares of ACTION CONSTRUCTION EQUIPMENT LTD. was last trading in BSE at Rs.131.6 as compared to the previous close of Rs. 132.55. The total number of shares traded during the day was 19273 in over 593 trades.

The stock hit an intraday high of Rs. 134.8 and intraday low of 130. The net turnover during the day was Rs. 2547654.

Source : Equity Bulls

Keywords