HDFC Securities Institutional Research Desk - Report on ACC - In a shocker, unitary EBITDA falls to near zero! - Maintain BUY

Rajesh Ravi, Institutional Research Analyst, HDFC Securities.

ACC - In a shocker, unitary EBITDA falls to near zero!

We maintain BUY on ACC, with a lower TP of INR 2,685/share (13x its Sep-24E consolidated EBITDA). ACC delivered very poor set of numbers in Q3CY22/Q3FY23: profitability misses ours/consensus numbers by a huge margin. Due to lower realisation and higher costs (input costs spiked by INR 300/MT QoQ), ACC reported almost zero unitary EBITDA (the lowest in past many years). While consolidated revenue rose 6% YoY, EBITDA fell 98% YoY, and APAT turned negative. The upcoming expansion in central market will boost its volume growth visibility from FY24 onwards. ACC is also increasing its green power/fuel mix to mitigate the impact of rising fuel costs.

Q3CY22/Q3FY23 performance: ACC delivered very poor set of numbers: profitability misses ours/consensus numbers by a huge margin, predominantly due to higher P&F fuel. Volume rose a modest 4% YoY, (seasonally down 9% QoQ). NSR fell 2% QoQ due to weak realisation across all regions. Input costs spiked by INR 300/MT QoQ in Q2 even on a high base (similar rise was seen Q1 also) on continued surge in its fuel consumption cost. Cost spike pulled down its unitary EBITDA to near zero (INR 12/MT), its lowest in past many years.

Expansion update and outlook: ACC will commission 2.7/1mnMT clinker/cement IU in Ametha, MP in Mar-23 (delayed by a quarter). Its 2.2mn MT SGU in UP is also delayed (to late FY24E) as the company is changing its configuration. These will expand its cement capacity to 39mn MT. WHRS at Jamul and Kymore are partially commenced in Q3CY22. Post installation of WHRS in Jamul, Kymore and Ametha (combined capacity of 39 MW), green power share will rise to 15%. We expect EBITDA margin to improve Dec-22 quarter onwards, driving up profit. We cut FY23/24/25E EBITDA estimates by 14/6/6% to factor in poor Q3CY22 performance.

Shares of ACC Limited was last trading in BSE at Rs. 2219.70 as compared to the previous close of Rs. 2269.70. The total number of shares traded during the day was 47502 in over 3487 trades.

The stock hit an intraday high of Rs. 2292.25 and intraday low of 2216.05. The net turnover during the day was Rs. 106648431.00.

Source : Equity Bulls

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