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ACC---------------------------------------------------------------------------Maintain UNDERPERFORM
4Q10: pain continues, results significantly below estimates
● ACC reported 4Q10 pre-exceptional PAT of Rs1.8 bn, which
declined 34% YoY and was 34% below our estimates. Cement
volumes for 4Q10 stood at 5.6 MT, growing 5% YoY in line with
estimates. Net realisation at Rs3,490/t was 4% below estimates
● 4Q10 EBITDA/t at Rs499/t increased sequentially but was 31%
lower than estimates. Power and fuel costs/t went up 9% YoY due
to increase in coal prices and higher power tariffs. Raw material
costs went up 39% YoY due to higher clinker purchase and
increase in slag, fly-ash and gypsum prices.
● ACC’s capacity stands at 30 MT post commissioning of Chanda
3MT capacity in Nov-10, which is expected to ramp up in 1H
2011. Management remains cautious on margins in the near term
due to pressure on prices and rising costs.
● We cut EPS estimates for 2011-12 by 7%/6%, respectively, as we
revise our coal cost and realisations assumptions. Our target price
reduces from Rs815 to Rs811. We maintain our
UNDERPERFORM rating on the stock.
Weak results, recurring PAT 34% below estimates
ACC reported 4Q10 pre-exceptional PAT of Rs1.8 bn, which declined
34% YoY and was 34% below our estimates. EBITDA margin at
14.3% was 555 bp lower than estimates due to higher cost of raw
material and increased employee costs. Employee costs went up 51%
YoY due to increased provisioning for employee retirement benefits.
Post-exceptional PAT stood at Rs2.6 bn due to one-off items of Rs753
mn pertaining to: 1) Rs820 mn tax credit pertaining to previous years,
2) additional other income of Rs645 mn due to write-back of
provisions made in the previous year in relation to Gagal sales tax
subsidy, and 3) provisioning of Rs712 mn due to change in basis of
identifying obsolescence of spare parts based on actual usage pattern.
Cement volumes for 4Q10 stood at 5.6 MT, growing 5% YoY in line
with estimates. Net realisation at Rs3,490/t was 4% below estimates.
4Q10 EBITDA/t at Rs499/t was 31% lower than estimates. Power and
fuel costs/t went up 9% YoY due to increase in coal prices and higher
power tariffs. Raw material costs went up 39% YoY due to higher
clinker purchase and increase in slag, fly-ash and gypsum prices.
ACC’s capacity stands at 30 MT post commissioning of Chanda 3MT
capacity in Nov-10. Two 25 MW captive power plants, each at Wadi
and Chanda were commissioned in 4Q10. Another 25MW unit at Wadi
is expected to be completed in 1Q11. Management remains cautious
on margins in the near term due to pressure on prices and rising costs.
Revise estimates, target price of Rs811
We cut EPS estimates for 2011/2012 by 7%/6%, respectively, as we
revise our coal cost and realisation assumptions. Our target price
reduces from Rs815 to Rs811. We maintain UNDERPERFORM.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ACC---------------------------------------------------------------------------Maintain UNDERPERFORM
4Q10: pain continues, results significantly below estimates
● ACC reported 4Q10 pre-exceptional PAT of Rs1.8 bn, which
declined 34% YoY and was 34% below our estimates. Cement
volumes for 4Q10 stood at 5.6 MT, growing 5% YoY in line with
estimates. Net realisation at Rs3,490/t was 4% below estimates
● 4Q10 EBITDA/t at Rs499/t increased sequentially but was 31%
lower than estimates. Power and fuel costs/t went up 9% YoY due
to increase in coal prices and higher power tariffs. Raw material
costs went up 39% YoY due to higher clinker purchase and
increase in slag, fly-ash and gypsum prices.
● ACC’s capacity stands at 30 MT post commissioning of Chanda
3MT capacity in Nov-10, which is expected to ramp up in 1H
2011. Management remains cautious on margins in the near term
due to pressure on prices and rising costs.
● We cut EPS estimates for 2011-12 by 7%/6%, respectively, as we
revise our coal cost and realisations assumptions. Our target price
reduces from Rs815 to Rs811. We maintain our
UNDERPERFORM rating on the stock.
Weak results, recurring PAT 34% below estimates
ACC reported 4Q10 pre-exceptional PAT of Rs1.8 bn, which declined
34% YoY and was 34% below our estimates. EBITDA margin at
14.3% was 555 bp lower than estimates due to higher cost of raw
material and increased employee costs. Employee costs went up 51%
YoY due to increased provisioning for employee retirement benefits.
Post-exceptional PAT stood at Rs2.6 bn due to one-off items of Rs753
mn pertaining to: 1) Rs820 mn tax credit pertaining to previous years,
2) additional other income of Rs645 mn due to write-back of
provisions made in the previous year in relation to Gagal sales tax
subsidy, and 3) provisioning of Rs712 mn due to change in basis of
identifying obsolescence of spare parts based on actual usage pattern.
Cement volumes for 4Q10 stood at 5.6 MT, growing 5% YoY in line
with estimates. Net realisation at Rs3,490/t was 4% below estimates.
4Q10 EBITDA/t at Rs499/t was 31% lower than estimates. Power and
fuel costs/t went up 9% YoY due to increase in coal prices and higher
power tariffs. Raw material costs went up 39% YoY due to higher
clinker purchase and increase in slag, fly-ash and gypsum prices.
ACC’s capacity stands at 30 MT post commissioning of Chanda 3MT
capacity in Nov-10. Two 25 MW captive power plants, each at Wadi
and Chanda were commissioned in 4Q10. Another 25MW unit at Wadi
is expected to be completed in 1Q11. Management remains cautious
on margins in the near term due to pressure on prices and rising costs.
Revise estimates, target price of Rs811
We cut EPS estimates for 2011/2012 by 7%/6%, respectively, as we
revise our coal cost and realisation assumptions. Our target price
reduces from Rs815 to Rs811. We maintain UNDERPERFORM.
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