Add ACC Ltd For Target Rs.2,028 - Yes Securities
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Result Highlights
* Volume dispatches for the quarter stood at 7.97 MT translating into 21.5% y/y growth vis‐à‐vis expected growth of 18.7% y/y. RMC volumes continue to recover with normalcy in construction activities across metro cities as volumes came in at 0.83 mcm (down by ~10% y/y and lowest de‐growth over last 4 qtrs).
* Cement NSR/te was Rs 4,876 during the quarter witnessing a healthy improvement of 6.5% y/y (vs. est. of +3.5% y/y). Improvement and outperformance in NSR/te on y/y basis was primarily driven by product mix optimization and higher share of premium products.
* Net sales for the company stood at Rs 42.9 bn – a growth of 22.6% y/y and 0.5% above our estimates.
* ACC delivered extremely strong outperformance on EBITDA level with absolute EBITDA for the quarter at Rs 8.6 bn (+22% above our estimates and +20% above consensus estimates) while EBITDA growth stood at 47% y/y. Per ton profitability on blended basis came in at Rs 1,041 (vs. est. of Rs 870) translating into healthy improvement of 22% y/y and 18.4% q/q. Better pricing and lower clinker cost led to strong operational performance for the company.
* Net profit for the company stood at Rs 5.62 bn which grew by 74.2% y/y.
Our View:
* ACC delivered strong set of numbers for Q1CY21 with marginal outperformance on volumes (+21.5% y/y and +2.2% above estimates) and massive outperformance on EBITDA level (+47% y/y) which was 22% above our estimates and 20% above consensus estimates. Better than expected realizations due to higher share of premium products (cement NSR up 6.5% y/y vs est. of +3.5% y/y) and lower clinker cost led to beat on operating performance.
* Going ahead, on the back of sharp surge in energy prices (spot prices at ~Rs 1.4/kcal on blended basis vs consumption cost of Rs 1.1‐1.2/kcal during the quarter), we expect P&F costs to rise by ~Rs 170/te sequentially from Q2CY21E onwards. However, strong pricing scenario and operating leverage would offset the surge in costs to some extent translating into range‐bound profitability for CY21E vis‐à‐vis CY20.
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