ACC 1QCY21 Results Review Report - Strong margins! - HDFC Securities

Mr. Rajesh Ravi, Institutional Research Analyst, HDFC Securities & Mr. Saurabh Dugar, Institutional Research Analyst, HDFC Securities

During 1QCY21, ACC reported strong volume growth and all-round opex reduction. ACC's consolidated revenue/EBITDA/APAT grew by 4/23/25% QoQ (+23/47/74% YoY) to INR 42.9/8.6/5.6bn respectively. Unitary EBITDA firmed up 23% QoQ to INR 1,039/MT, led by lower input and employee costs. As ACC moved to the lower tax regime in 4QCY20, APAT grew 25% QoQ (+74% YoY). We maintain our BUY rating on the stock with an unchanged TP of INR 2,185/share (11x Mar'23 consolidated EBITDA).

1QCY21 key highlights: Cement volumes grew 22/3% YoY/QoQ on robust demand. NSR fell 1% QoQ (+4% YoY) on a high base as prices remained firm during 1Q. Utilisation fell slightly from 94% to 93% QoQ (vs 80% YoY) as on strong demand, despite ACC ramping up its Sindri plant. Significant reduction in raw material and employee costs led to unitary opex falling by 6% QoQ despite higher slag and fly ash prices. Strong EBITDA margins and healthy volumes, thus, led to unitary EBITDA firming up 23% QoQ (+25% YoY) to INR 1,039/MT. RMC division's sales volume/revenue/ EBITDA fell 11/8/22% YoY (even on a low base) to 0.83 cbm/ INR 3.6bn/INR 0.3bn respectively on lower demand trend in the infrastructure segment.

Outlook: ACC had accelerated its Capex spends towards its ongoing expansions beginning 4QCY20. It has now guided the commissioning of its greenfield project at Ametha and associated GUs by 2QCY22. The WHRS work at Ametha has been initiated and projects of Jamul and Kymore are also on track. These expansions have boosted ACC's volume growth outlook CY22 onwards. We maintain our earnings estimates and retain our BUY rating on the stock with an unchanged TP of INR 2,185/share (11x Mar'23 consolidated EBITDA).

Shares of ACC LTD. was last trading in BSE at Rs.1824.45 as compared to the previous close of Rs. 1876.85. The total number of shares traded during the day was 219560 in over 13479 trades.

The stock hit an intraday high of Rs. 1982 and intraday low of 1810. The net turnover during the day was Rs. 414358399.

Source : Equity Bulls

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