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Indian cement maker ACC reported a smaller-than-expected decline in second-quarter profit on Thursday, as steady volume growth helped mitigate a decline in cement prices and rising costs.

The company's profit after tax dropped 39% to 2.34 billion rupees (about $28 million) in the three months ended Sept. 30, but was above analysts' average estimate of 2.18 billion rupees, per data compiled by LSEG.

Revenue from operations grew 4% to 46.08 billion rupees, while its expenses rose about 8% to 44.44 billion rupees owing to a 17% surge in input costs.

KEY CONTEXT

Cement prices hit five-year low of 336 rupees per bag in the September quarter, according to Ambit Capital, due to an industry-wide ramp-up in production to meet medium-term demand expectations, leading to greater supply.

Earlier this week, ACC's larger rival UltraTech Cement reported a steeper-than-expected decline in profit due to low cement prices.

ACC reported a 15% sales growth, compared to a 9% growth in the preceding quarter.

The company also said it expects demand improvement across the cement industry in the second half of fiscal year 2025, likely due to post-monsoon pickup in construction and housing activity.

PEER COMPARISON

Valuation (next 12 Estimates (next 12 Analysts' sentiment

months) months)

RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div

growth growth rating* analyst price yield

s target** (%)

ACC 18.90 10.30 6.73 10.59 Buy 18 0.80 0.33

Ambuja Cements 29.70 15.40 15.82 27.11 Buy 27 0.83 0.36

UltraTech Cement 35.76 19.93 10.69 20.31 Buy 35 0.92 0.65

Shree Cement 38.95 17.05 7.71 6.59 Hold 16 0.92 0.43

* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT

JULY-SEPTEMBER STOCK PERFORMANCE

-- All data from LSEG

-- $1 = 84.0500 Indian rupees