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ACC Limited Q2 CY22 results are out. Should you stay invested?

ACC Limited Q2 CY22 results are out. Should you stay invested?

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ACC Limited Q2 CY22 result

ACC Limited Q2 CY22 results declared: check out its key highlights here.

Cement major, ACC Limited, which is a subsidiary of Ambuja Cements and a part of the Adani Group has declared its Q2 CY22 result updates.


ACC Limited Q2 CY22 result highlights

Hits

  • 😊Revenue from operations has grown by 15% YoY and 0.9% QoQ to ₹4,468 crores. The growth in topline YoY was backed by realization and volume growth.
  • 😊Realisation/ ton grew by 2,9% YoY and 2.3% QoQ, up to ₹5,879.
  • 😊Sales volume grew by 11.8% YoY, however, declined by 1.3% QoQ to 7.6 million tonnes in line with our estimate of 7.4 million tonnes.

Misses

  • 🙁 A sharp decline in the bottom line was recorded due to poor operating performance. Reported PAT declined by 60.6% YoY and  43.1%  QoQ to ₹227 crores below our estimate of ₹341 crores.
  • 🙁 Higher input cost impacted operational performance. Project ‘Parvat’ delivered strong internal efficiencies but a significant fuel cost rise during the quarter reduced the margins. Reported EBIDTA declined by 50.9% YoY, and 32.9 QoQ to ₹426 Cr below our estimate of ₹572 crores. EBIDTA/tonne declined by 56.1% YoY and 32% QoQ ton to ₹560.5.

Other important highlights

  • Ametha project is expected to add 5 MTPA capacity and commissioning of the integrated unit is expected in Q4 CY22.
  • Waste heat recovery projects at Jamul and Kymore plants are on track for commissioning in Q3 2022.
  • Orders were placed for the next wave of projects at the Chanda and Wadi plants.
  • Land acquisition and other actions for the grinding unit project at Salai Banwa are progressing well.

Valuation and Outlook

The company delivered a poor performance in Q2FY22 on the operational front mainly due to rising input costs. The moderation in crude oil prices and cost efficiencies from project ‘Parvat’, will partially offset the impact. The waste heat recovery projects in Jamul, Kymore and Ametha plants will further accelerate the cost reduction journey.

Although we expect demand to remain muted in next quarter and slowing down of construction activities due to on-going monsoon. However, from a long-term point of view, we are positive about the company considering factors like the capacity expansion plan of the company. We expect a pick-up of demand in cement led by government focus on infrastructure and the pick-up in real estate.

At a CMP of ₹2,156 stock is trading at an EV/EBIDTA multiple of 10(x) and 8.2(x) to its CY22E and CY23E. We value the stock at an EV/EBIDTA multiple of 9.6(x) to its CY23E EBIDTA of ₹374 crores to arrive at a target price of ₹2,435 and maintain accumulate rating on the stock.

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