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UBS Investment Research
ACC Limited
Q 111: largely in line with expectations
Q111: above consensus estimates
ACC reported Q111 recurring PAT (consolidated) of Rs3.5bn (down 11% YoY),
7% above UBS’s estimate of Rs3.25bn and ahead of consensus (Rs3bn). EBITDA
declined 10% YoY to Rs5.6bn (UBS estimate: Rs5.3bn) mainly due to higher raw
material and power & fuel costs. In Q111, net sales rose 14% YoY to Rs25.6bn (up
22% QoQ).
EBITDA margin declined 580bps YoY due to increase in costs
Per ton freight costs, raw material costs, and power & fuel costs increased 13%,
15% and 11% YoY, respectively. Hence, EBITDA margin declined 580bps YoY to
21.8% as the company was not able to pass on the increase in input costs to
customers. Realisation was up 3% YoY as against a 12% YoY increase in
operating expenses.
Cement volumes were up 10% QoQ
Cement volumes rose ~10% YoY (up 10% QoQ) in Q1 to 6.2mt, and realisation
improved 15% QoQ to Rs3,884/T (3% YoY). Higher cement realisations have led
to better-than-expected sales of Rs23.9bn (UBS estimate: Rs22.7bn). RMC
revenue rose 18% YoY to Rs1.6bn.
Valuation: maintain Sell rating
We value ACC at a one-year forward EV/EBITDA of 6.5x. We are cautious about
the near-term outlook for the cement sector in India and maintain our Sell rating.
ACC Limited
ACC is primarily engaged in manufacturing cement and ready-mixed concrete.
It is India’s second largest cement manufacturer with 26mt capacity. Most of its
capacity is in south, north and east India. In addition to the core business, the
company has interests in manufacturing refractory material, and providing
research and consultancy services on the cement business. The Holcim group
holds the controlling stake in ACC. Holcim had 48mt capacity in India in 2009
via ACC and Ambuja Cement, in which it has a majority stake.
Statement of Risk
We believe the principal risk to cement companies earning estimates arises from
fall in cement prices and rise in raw material prices.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
ACC Limited
Q 111: largely in line with expectations
Q111: above consensus estimates
ACC reported Q111 recurring PAT (consolidated) of Rs3.5bn (down 11% YoY),
7% above UBS’s estimate of Rs3.25bn and ahead of consensus (Rs3bn). EBITDA
declined 10% YoY to Rs5.6bn (UBS estimate: Rs5.3bn) mainly due to higher raw
material and power & fuel costs. In Q111, net sales rose 14% YoY to Rs25.6bn (up
22% QoQ).
EBITDA margin declined 580bps YoY due to increase in costs
Per ton freight costs, raw material costs, and power & fuel costs increased 13%,
15% and 11% YoY, respectively. Hence, EBITDA margin declined 580bps YoY to
21.8% as the company was not able to pass on the increase in input costs to
customers. Realisation was up 3% YoY as against a 12% YoY increase in
operating expenses.
Cement volumes were up 10% QoQ
Cement volumes rose ~10% YoY (up 10% QoQ) in Q1 to 6.2mt, and realisation
improved 15% QoQ to Rs3,884/T (3% YoY). Higher cement realisations have led
to better-than-expected sales of Rs23.9bn (UBS estimate: Rs22.7bn). RMC
revenue rose 18% YoY to Rs1.6bn.
Valuation: maintain Sell rating
We value ACC at a one-year forward EV/EBITDA of 6.5x. We are cautious about
the near-term outlook for the cement sector in India and maintain our Sell rating.
ACC Limited
ACC is primarily engaged in manufacturing cement and ready-mixed concrete.
It is India’s second largest cement manufacturer with 26mt capacity. Most of its
capacity is in south, north and east India. In addition to the core business, the
company has interests in manufacturing refractory material, and providing
research and consultancy services on the cement business. The Holcim group
holds the controlling stake in ACC. Holcim had 48mt capacity in India in 2009
via ACC and Ambuja Cement, in which it has a majority stake.
Statement of Risk
We believe the principal risk to cement companies earning estimates arises from
fall in cement prices and rise in raw material prices.
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