Shares of ACC hit a new high of Rs 2,343 as they rallied 9% on the BSE in intra-day trade today after the company reported strong operational performance for the second quarter ended June 2021.
Cement manufacturer ACC's June-quarter earnings results came out much better than expected in the wake of the second wave of Covid-19.
The resilience in cement volumes was due to the continued strength in the housing and the infrastructure segments.
ACC reported 49.3% growth year on year (YoY) in total sales revenues for the June 2021 quarter on consolidated basis at Rs 38.8 bn.
On a sequential basis, the revenues were down 9.5% compared to Rs 42.9 bn in the March 2021 quarter on account of Covid 2.0 impact on output.
For the June quarter, cement volumes 43.7% to 6.8 m tonnes as compared to 4.8 m tonnes in the same period last year. It got big boost from government infrastructure spending.
Among the two key verticals of ACC, the cement division saw 43.9% growth at Rs 36.7 bn while the ready-mix concrete or RMC division saw 4-fold revenue growth at Rs 2.6 bn.
In terms of earnings before interest, taxes, depreciation, and amortisation (EBITDA) contribution, the RMC business turned around from EBITDA losses to EBITDA gains. The cement division saw EBITDA improve YoY by 79% to Rs 7.2 bn.
The cement maker reported an over two-fold jump in consolidated net profit to Rs 5.7 bn for the second quarter ended June 2021, helped by a lower base, increase in sales, and cost-efficiency.
The company, which follows the January-December financial year, had posted a profit of Rs 2.7 bn in the April-June quarter a year ago.
Rs in bn | Jun-21 | Jun-20 | YOY |
---|---|---|---|
Total Income | 38.8 | 26.0 | 49.3% |
Operating Profit | 7.2 | 3.6 | 99.3% |
Net Profit | 5.7 | 2.7 | 110.2% |
Diluted EPS | 30.2 | 14.4 | |
Operating Profit Margin (OPM) | 18.6% | 13.9% | |
Net Margins | 14.7% | 10.4% |
While commenting on the results, the management said that with a strong focus on supply chain efficiencies and cost optimisation, the company has emerged stronger and more resilient.
Waste heat recovery system projects at various sites are progressing well.
The large cement capacity expansion project at Ametha in Madhya Pradesh has commenced.
Also, the management expects strong demand recovery. This would be led by the government's focus on large-scale infra projects and affordable housing, coupled with a revival in industrial capex, driven by the implementation of the production-linked incentive scheme.
We reached out to Brijesh Bhatia, Research Analyst at Equitymaster, and editor of the premium monthly recommendation service Fast Profits Report, for his technical view on the cement sector.
Here's what he has to say...
Shares of ACC opened the day at Rs 2,225 on the BSE and Rs 2,226 on the NSE.
Its share price closed at Rs 2,287.1 (up 6.3%) on the BSE and Rs 2,287.9 (up 6.3%) on the NSE.
At its current price, it is trading at a P/E of 25.8.
The share touched its 52-week high of Rs 2,304 and 52-week low of Rs 895.5 on 20 July 2021 and 7 September 2020, respectively.
Over the last 30 days, the ACC share price is up 13%. Over the last one year, the company's share price is up 157.3%.
ACC is India's oldest cement company.
It's a member of the LafargeHolcim Group and is one of India's leading producers of cement and ready-mix concrete.
The company has 6,300 employees, 17 cement manufacturing sites, 79 concrete plants and a nationwide network of over 50,000 retail outlets to serve its customers.
ACC boasts a large marketing infrastructure, pan-India presence, and strong operational linkages with Ambuja Cements. The two companies together have around 14% capacity share in the Indian cement market.
Their nationwide presence shields operations from regional price volatility and demand-supply imbalances.
ACC and Ambuja Cements are part of the LafargeHolcim group. As on December 31, 2020 LafargeHolcim held 63.27% stake in Ambuja Cements, which held 50.05% stake in ACC; it also holds 4.48% stake in ACC through Holderind Investments.
For more details about the company, you can have a look at ACC's fact sheet and ACC's quarterly results on our website.
You can also compare ACC with its peers on our website.
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