ACC Q2 Results Review - Profitability To Improve; Attractive Valuation: Dolat Capital

Dolat Capital Report

ACC Ltd. Q2 FY24 reported volume, revenue in line, however realisation, Ebitda, Ebitda/tonne were below estimates, whereas adjusted profit after tax above estimates.

ACC posted +11.2% YoY revenue to Rs 44.3 billion (-14.7% QoQ) led by +17.3% YoY/ -13.9% QoQ in volume to 8.1 million tonne which was partially offset by -3.3% YoY/ -1% QoQ in realisation to Rs 5,096.

ACC's Ebitda +3,253.4% YoY/ -28.7% QoQ to Rs 5.5 billion. Adjusted profit after tax sharply increased YoY to Rs 3.9 billion versus net loss of Rs 711 million YoY led by better operating performance coupled with higher other income.

We expect -0.1%/ +23.1%/ +26.3% revenue/ Ebitda/adjusted profit after tax compound annual growth rate over FY23- FY26E led by -7.4% (+16.2% on like-to-like basis)/ +6.0%/ +5.0% volume growth and -2.3%/ 0.0%/ 0.0% cement realisation growth in FY24E/ FY25E/ FY26E.

We maintain Ebitda estimates for FY24E/ FY25E and introduce FY26E. As we roll over to FY26 coupled with improvement in profitability, we upgrade from 'Accumulate' to 'Buy' with a revised target profit of Rs 2,457 based on 11 times (~35% discount to 5/ 10 year average) consolidated FY26E enterprise value/Ebitda.

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