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ACC Beats Estimates As Volume Growth Hits Six-Year High

ACC reports healthy earnings in the July-September quarter.



A contractor levels a cement slab for a home under construction (Photographer: David Paul Morris/Bloomberg)
A contractor levels a cement slab for a home under construction (Photographer: David Paul Morris/Bloomberg)

Cement maker ACC Ltd.’s quarterly standalone net profit nearly doubled beating analyst estimates as interest costs fell and quarterly volume growth was the highest in six years.

Net profit rose nearly 99 percent to Rs 178 crore in the three months ended September over the year-ago quarter, ACC said in a stock exchange filing today. That surpassed the Bloomberg consensus estimate of Rs 165 crore.

Net sales increased nearly 26 percent to Rs 3,116 crore year-on-year, also beating forecasts. That came on a 17.6 percent rise in volumes to to 5.96 million tonnes, led by the stabilisation of Jamul and Sindri plant capacities and healthy realisations, ACC said in a separate media statement. Restocking after the Goods and Services Tax also pushed volumes, Kotak Securities said in a research note.

Productivity and operating efficiency improved despite rising costs from higher slag prices and fuel costs, the company said in a statement.

Higher usage of improved and auctioned coal, caused by the limited availability of linkage, adversely impacted fuel costs. Improved raw material mix and fuel mix optimisation helped to partially neutralise the adverse cost impact.
ACC Statement

Earnings before interest, tax, interest, depreciation and amortisation jumped 47.4 percent to Rs 414.6 crore from the same quarter last year while operating margin expanded to 13.6 percent from 11.6 percent.

ACC expects the demand for cement and related products to stay favourable in the next quarter, spurred by the government’s increased spending on infrastructure, roads, highways and affordable housing, Sunil Nayak, chief financial officer at ACC, said in the statement.

Shares of the cement maker rose as much as 1.6 percent after the earnings compared to a 0.8 percent gain S&P BSE Real Estate Index.

Kotak Securities Maintains ‘Sell’

Volume expansion of near 18 percent year-on-year, the highest in six years, augurs well for ACC, Kotak Securities said in its research note. There were cost pressures from higher slag prices, increase in freight cost, rise in pet coke costs due to greater use of imported coal.

Kotak Securities maintained its ‘Sell’ rating on the stock.

(Corrects an earlier version which said the volumes are at a six-year high.)