IGI Logo

Result Synopsis

ACC Ltd (ACC) reported mixed-bag performance, where revenue grew by 8% y/y aided by strong volume growth of 10% y/y, even though NSR corrected by 2% y/y in Q4FY23. Despite power/te corrected by 18% y/y, the sharp rise in RM cost by 59% y/y kept overall total cost up by 3% y/y in Q4FY23. Therefore, muted NSR & elevated cost had confined EBITDA/te to Rs551 declined by 33% y/y in Q4FY23. EBITDA/PAT came at Rs4.68/ 2.35bn register a de-growth of 26/41% y/y respectively. In Q4FY23, ACC charged exceptional items of Rs664mn of restructuring cost.

Ongoing expansions of Ametha 3.3MTPA Clinker (EC approvals of 2.75MTPA) & 1MTPA cement capacity is expected to be commissioned by Q2FY24, while it looks like Salai Banwa 2.2MTPA has gone on back burner. Hence, we have trimmed our volume estimates by 7/11% for FY24/25E, which moderates EBITDA/PAT by 12/8% in FY24E and 11/9% in FY25E. However, ACC recently added GU at Tikaria of 1.6 MTPA (also commissioned WHRS at Kymore / Jamul), which coupled with ongoing expansion will take total capacity to ~39MTPA by FY25E. As a result, above expansion in the central market will aid production headroom leading to the volume growth of 6% y/y in FY24/25E against 2%CAGR over a decade. Similarly envisaging 1) Cost normalization 2) Improving operating efficiency 3) Incremental volumes, we believe ACC’s EBITDA to improve to +Rs900/te by FY25E. By scaling up its green power (WHRS/Solar/ Wind capacity), alternative fuel share and debottlenecking of various plants is lever for margin accretion. ACC is a net cash company with cash & cash equivalent of Rs57bn (as of Mar’23) would aid to fund its expansion. At CMP stock trades at 12/9x EV/EBITDA on FY24/25E. On FY25E, we arrived at a revised price target of Rs2151 with a BUY rating, valuing the stock at 10x on EV/EBITDA.

Result Highlights

? ACC delivered +10% volume growth on both y/y & q/q to 8.5MT (v/s YSECe 8.3MT) owing to higher demand aided by construction activities.
? NSR corrected by 2% y/y and 4% q/q (5% below YSECe) resulted in revenue missed of 2% came at Rs47.9bn up by +8% y/y and +6% q/q in Q4FY23.
? EBITDA came at Rs4.7bn (beat YSECe by 9%) in Q4FY23, declined by 26% y/y but up by 24% q/q, this translates to EBITDA/te of Rs551 in Q4FY23.
? Total cost/te came 6% below YSECe to Rs5085/te, largely due to power cost correction of 18% y/y and 24% q/q, while sharp rise in RM cost by 59% y/y kept overall total cost higher in Q4FY23.
? Reported PAT of Rs2.4bn (+4% above YSECe), de-grew by 41% y/y (+108% q/q) (Includes Rs664mn of restructuring cost under exceptional items) in Q4FY23.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer