ACC Q3 Review - Improving Margins To Narrow Valuation Gap: ICICI Securities
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ICICI Securities Report
ACC Ltd.’s Q3 CY21 Ebitda at Rs 7.1 billion (up 6% YoY) was broadly in line with consensus estimates.
Total cost/tonne increased 4.6% QoQ (6.8% YoY) primarily led by higher fuel cost, and packing materials and maintenance costs.
Blended Ebitda/tonne (including ready-mix-concrete) grew 7% YoY and declined 15% QoQ to Rs 1,060/tonne (our estimate: Rs 977/tonne).
While investor concern around sharp cost increases seem valid, industry has demonstrated strong pricing resilience in the past.
Our recent channel checks suggest companies have increased prices by Rs 15-20/bag across regions.
We believe ACC with its large pan-India diversified market presence, premium brand positioning and increased focus on cost efficiencies is better placed to sustain / improve margins in the medium term.
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