HDFC Securities: ACC’s Strong Cost Controls Cushion Earnings
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HDFC Securities Report
ACC Ltd. delivered earnings beat as sharp reduction in fixed opex moderated the impact of Covid-19 led revenue loss. Consolidated revenue/Ebitda/APAT fell 37/33/41% YoY to Rs 26.02/5.25/2.71 billion respectively in Q2 CY20. While cement sales fell 34% YoY, Net Sales Realisation (NSR) remained flattish YoY (over 11% QoQ). A weak Q2, pulled down H1 CY20 consolidated revenue/Ebitda/APAT by 24/15/16% YoY to Rs 61.04/11.12/5.94 billion respectively.
We expect the volume decline to slow down in H2 CY20, leading to 15% volume decline in CY20. Healthy pricing, benign fuel prices, and strong cost controls should aid 4% Ebitda Compound Annual Growth Rate (CAGR) during CY19-22E (despite fall in CY20E).
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