Q4CY2020 Result Update - ACC Ltd - ICICI Direct

ACC reported EBITDA margin of 13.8%, EBITDA/t of Rs. 742/t, lower than our estimate of 16.4%, Rs. 871/t, respectively, although sales volumes (up 18.8% QoQ, flat YoY) broadly remained in line with our estimates. Strong rural demand along with revival of infrastructure projects supported sales volumes. RMC volumes, however, fell 21.5% YoY to 0.73 Mio (up 58.6% QoQ). While operating performance of ACC appear weak mainly due to lower margins, this is due to additional charge of Rs. 129 crore in other expenses (pertaining to incentives receivable from government) that led to sharp contraction in margins. Adjusting for the same, EBITDA margins and EBITDA/t would have been 16.9% and Rs. 909/t. Further, impairment loss of Rs. 176 crore led to 14.6% QoQ dip in profits at PBT level to Rs. 461 crore, which otherwise would have remained on expected lines. The company's expansion plans are on track, which will be mainly funded through internal accruals. Of the total 6.2 MT new proposed capacity additions, the company has commissioned a new 1.4 MT grinding unit at Sindri, Jharkhand during January 2021, which will help strengthen its positioning in the eastern region. The board has recommended final dividend of Rs. 14/share.

Valuation & Outlook

Structural issues with respect to CoP need to be addressed for sustenance of healthy margins in the long run. On the positive side, strong b/s and improved cash flow remain key positives. Further, new capacities would bring the company back on the growth track with expected revenue CAGR of 12.8% during CY20-22E. Hence, we retain BUY with a revised TP of Rs. 2,250/share (valuing at 11.5x CY22E EV/EBITDA implying EV/t of ~$135) (earlier TP Rs. 1950/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ACC_Q4CY20.pdf

Shares of ACC LTD. was last trading in BSE at Rs.1785.3 as compared to the previous close of Rs. 1766.45. The total number of shares traded during the day was 51259 in over 2714 trades.

The stock hit an intraday high of Rs. 1797.95 and intraday low of 1767.35. The net turnover during the day was Rs. 91501424.

Source : Equity Bulls

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