ACC Q2 Results Review - Strong Growth With Revival In Cost Efficiencies: Systematix

Systematix Research Report

ACC Ltd. reported healthy Q2 FY24 numbers led by strong domestic demand and a sustained focus on cost reduction. While the results missed street consensus, they aligned with our expectations on the revenue and Ebitda fronts. Revenue grew 11.2% YoY led by higher volumes and partially offset by lower realisations. Volumes grew 18.2% YoY (-13.8% QoQ) to 8.1 million metric tonne.

Blended realisation dipped 1% QoQ at Rs 5,475 (versus Rs 5,821 in Q2 FY23). Further, higher other income (+208% YoY) led to a higher-than-expected profit after tax of Rs 3.8 billion (versus our estimate of Rs 2.8 billion). The company’s various cost initiatives led to a substantial reduction in input costs.

Power and fuel costs stood at Rs 1,096/tonne (-43.1%/-8.5 YoY/QoQ) while freight costs also declined -5.5% QoQ to Rs 1,177 (-18.4% YoY).

However, this was partially offset by the higher cost of raw materials which saw a sharp surge of 52% YoY. Blended Ebitda/tonne stood at Rs 677 (versus Rs 818 QoQ).

ACC company added 534 dealers to its existing network in the quarter. We are keeping our estimates unchanged and maintaining 'Buy' on the stock with an unchanged target price of Rs 2,336 based on enterprise value/Ebitda multiple of 13 times on FY25E.

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