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ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments - Views on News from Equitymaster
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  • Jul 20, 2017 - ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments

ACC: Cementing Growth through Capacity Expansion and Favorable Sectoral Developments
Jul 20, 2017

ACC has announced its financial results for the second quarter of the calendar year 2017. During the quarter ended June 2017, the company's standalone sales increased by 17.9% YoY, while net profit increased by 32.7% YoY. Here is our analysis of the results:

Performance summary
  • On a standalone basis, net sales reported a rise of 17.9% YoY during the quarter.
  • Capacity utilisation during the quarter stood at 84%, up from 81% seen during the previous quarter. Cement sales volume stood at 6.74 million tonnes, higher by 10% YoY. The rise in volumes sales was supported by additional volumes sold from expanded capacity at Jamul and Sindri plants.
  • Operating profit rose 19.7% YoY during the quarter, while operating margins improved marginally from 12.8% in 2QCY16 to 13.0% in 2QCY17.
  • On the expenditure front, higher fuel costs and freight costs led to a 17.6% YoY increase in operating expenses.
  • Depreciation charges and finance costs rose 15% YoY and 8.3% YoY, respectively. However, the rise in these costs was offset by the rise in other income, which increased 127.8% YoY during the quarter and aided the profit before tax.
  • There was a sharp rise in the tax expense during the quarter, which limited the rise in the net profit to 32.7% YoY. Net profit margin increased from 7.5% in 2QCY16 to 8.4% in 2QCY17.

    Standalone Financial Performance Snapshot
    (Rs m) 2QCY16 2QCY17 Change 1HCY16 1HCY17 Change
    Net sales 32,387 38,182 17.9% 64,987 73,749 13.5%
    Expenditure 28,251 33,231 17.6% 57,063 65,381 14.6%
    Operating profit (EBITDA) 4,136 4,951 19.7% 7,924 8,369 5.6%
    EBITDA margin 12.8% 13.0%   12.2% 11.3%  
    Other income 730 1,663 127.8% 1,848 2,764 49.6%
    Depreciation 1,410 1,621 15.0% 2,844 3,271 15.0%
    Finance cost 208 225 8.3% 396 477 20.5%
    Profit before tax & exceptional items 3,248 4,768 46.8% 6,532 7,385 13.1%
    Exceptional gain/ (loss) 0 0   0 0  
    Profit before tax 3,248 4,768 46.8% 6,532 7,385 13.1%
    Tax 824 1,550 88.1% 1,761 2,052 16.5%
    Effective tax rate 25.4% 32.5% 27.0% 27.8%  
    Profit after tax 2,424 3,217 32.7% 4,770 5,333 11.8%
    Net profit margin 7.5% 8.4% 7.3% 7.2%  
    No of shares (m)         187.8  
    Diluted EPS (Rs)*         37.4  
    P/E (times)         45.8

    *trailing twelve month earnings

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