ACC (Q2 CY12)

India Infoline News Service | Mumbai |

ACC revenues grew 16% yoy to Rs28.2bn, higher than our estimate of Rs27.7bn.

CMP Rs1,298, Target Rs1,170, Downside 9.9 %

  • Improvement in net realisation drive 16% yoy revenue growth
  • OPM up ~60bps yoy and in line with expectations as power & fuel costs declined 193bps yoy   
  • PAT grew 24%yoy, ahead of our estimate largely due to higher other income
  • Maintain Market Performer with 9-mnth price target of Rs1,174 
Result table*
(Rs m) Q2 CY12 Q2 CY11 bps yoy Q1 CY12 bps qoq
Net sales 28,154 24,329 15.7 28,891 (2.6)
Material costs 3,016 2,316 30.2 3,823 (21.1)
Personnel costs 1,356 1,211 12.0 1,322 2.6
Power and fuel costs 6,038 5,687 6.2 6,763 (10.7)
Freight cost 5,743 4,725 21.6 5,744 (0.0)
Other overheads 5,116 4,588 11.5 4,789 6.8
Operating profit 6,885 5,802 18.7 6,450 6.7
OPM (%) 24.5 23.8 61 bps 22.3 213 bps
Depreciation (1,356) (1,158) 17.1 (1,305) 3.9
Interest (301) (271) 10.9 (316) (5.0)
Other income 782 472 65.6 660 18.5
PBT 6,010 4,845 24.0 5,488 9.5
Tax (1,829) (1,479) 23.7 (580) 215.5
Effective tax rate (%) 30.4 30.5 (0.3) 10.6 188.1
Adjusted PAT 4,180 3,366 24.2 4,908 (14.8)
Adj. PAT margin (%) 14.8 13.8 101 bps 17.0 (214) bps
Extra ordinary items - - - 3,354 -
Reported PAT 4,180 3,366 24.2 1,554 168.9
Source: Company, India Infoline Research
* Standalone


Improved realisation drives revenue growth

ACC revenues grew 16% yoy to Rs28.2bn, higher than our estimate of Rs27.7bn. Realization improved higher than expected at 7.3% qoq (and 13.1%yoy) against our expectation of +3.7% qoq. Delay in monsoon and shutdown of few plants for maintenance purpose resulted into better pricing scenario in the current quarter. Volumes grew at a tepid rate of 2.5% yoy.

 

OPM expands by 60bps in line with estimates

As expected hike in railway freight, increase in gypsum price restricted margin expansion during the quarter but lower international coal prices mitigated the impact to an extent. EBITDA margin grew ~60bps to 24.5% and in line with our estimate. OPM is expected to remain under pressures on back of escalating input cost over the next 2 quarters. Moreover, any hike in diesel prices would also lead to higher fuel and freight costs.


Cost Analysis

Q2 CY12 Q2 CY11 bps yoy Q1 CY12 bps qoq
Material costs 10.7 9.5 119 13.2 (252)
Personnel costs 4.8 5.0 (16) 4.6 24
Power and fuel costs 21.4 23.4 (193) 23.4 (196)
Freight cost 20.4 19.4 98 19.9 52
Other overheads 18.2 18.9 (69) 16.6 159
Total costs   75.5 76.2 (61) 77.7 (213)
Source: Company, India Infoline Research

PAT at 4.2bn up 24% yoy, beats estimate

Reported PAT stood at 4.2bn, up 24% yoy against our expectation of 3.9bn. The outperformance was largely on back of unexpected jump in other income (up 65% yoy). Depreciation surged 17% yoy on back of new capacity addition.


Maintain Market Performer with tgt of Rs1,170

Pre-exceptional PAT is expected to increase by 17% CAGR over CY11-13. However, we expect cement demand to take a hit in case of any drought-like situation, although we have not penciled in such a scenario in our estimates. We maintain Market Performer rating with a 9-mnth price target of Rs1,170


Financial summary
Y/e 31 Mar (Rs m) CY10 CY11 CY12E CY13E
Revenues 77,173 96,603 118,533 132,691
Yoy growth (%) (3.9) 25.2 22.7 11.9
Operating profit 15,540 19,207 24,816 30,768
OPM (%) 20.1 19.9
BSE 1,709.30 [25.85] ([1.49]%)
NSE 1,710.25 [22.55] ([1.30]%)

***Note: This is a NSE Chart

 

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