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ACC Ltd (Q4 CY09) – MP (Target Price Rs881, Upside 2.8%)

India Infoline Research Team / 17:10 , Feb 05, 2010

  • Revenue declines 1.0% YoY due to lower realisations; marginally higher than our estimates
  • OPM contracts by 150bps to 24.9% on account of surge in other overheads
  • Higher depreciation coupled with increase in interest outflow drags PAT lower; below our estimates
  • Thondebhavi and Kudithini grinding units commence trial run
  • Maintain Market Perform with a price target of Rs881
Result table
(Rs m)
Q4 CY09
Q4 CY08
% yoy
Q3 CY09
% qoq
Net sales
19,839
20,040
(1.0)
20,055
(1.1)
Material costs
(2,148)
(2,858)
(24.8)
(2,083)
3.1
Personnel costs
(917)
(1,469)
(37.6)
(998)
(8.1)
Power and fuel costs
(3,950)
(4,036)
(2.1)
(3,595)
9.9
Freight cost
(2,670)
(2,508)
6.5
(2,548)
4.8
Other overheads
(5,221)
(3,886)
34.4
(3,791)
37.7
Operating profit
4,933
5,283
(6.6)
7,040
(29.9)
OPM (%)
24.9
26.4
(150) bps
35.1
(1024) bps
Depreciation
(1,052)
(768)
37.1
(796)
32.2
Interest
(181)
(120)
50.7
(135)
33.8
Other income
200
(78)
(358.5)
148
35.6
PBT
3,900
4,318
(9.7)
6,257
(37.7)
Tax
(1,092)
(1,315)
(17.0)
(1,900)
(42.6)
Effective tax rate (%)
(28.0)
(30.5)
247 bps
(30.4)
238 bps
Reported PAT
2,809
3,003
(6.5)
4,356
(35.5)
PAT margin (%)
14.2
15.0
(83) bps
21.7
(757) bps
Ann. EPS (Rs)
59.8
63.9
(6)
92.8
(36)
Source: Company, India Infoline Research

Lower realizations hurt revenues
ACC revenues declined by 1.0% yoy to Rs19.8bn, marginally higher than our estimates of Rs19.3bn. Average realization witnessed a decline of 3.0% yoy and 8.2% sequentially, as pricing pressures emerged in southern and western markets, which account for ~35% of ACC sales. The company’s volume grew by 1.2% yoy (7.7% qoq), owing too higher demand in key northern and eastern markets.

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