ACC’s consolidated net profit grew 15% year on year (YoY) at Rs 2.09 billion against analyst estimate of Rs 2.81 billion in September quarter. The consolidated net sales rose 10% at Rs 33.64 billion, in line, on yoy basis.
The cement company, however, reported lower than expected September quarter operating performance with EBITDA/tonne at Rs 683 versus the estimate of Rs 775 primarily owing to miss in realization while volumes grew by around 10% YoY. EBITDA (adjusted) grew around 8% YoY to Rs 4.5 billion. Realisations were impacted by price pressures in the Eastern and Western markets.
“Management highlighted that benefits from operational efficiencies and productivity, as well as other cost reduction measures, have helped to partly neutralize the effect of increases in fuel and slag prices,” analysts at Antique Stock Broking said in result preview. The brokerage firm, however, maintains 'BUY' rating on the stock, given the relatively attractive valuations of the stock versus other large caps in the sector.
“ACC reported Q3CY18 earnings below our estimates due to unexpected fall in realisations. High base and abnormal increase in Q2 resulted in lower than expected realisations. However, ACC posted strong show on volume growth and cost control,” analysts at Prabhudas Lillahder said in result update note.
“Due to the continuity of intense competition, unabated capacity addition and weakness in high margin trade segment, we expect prices to remain weak for next couple of years. However, the earnings cut remains limited for ACC at 4% each for CY18e/CY19e supported by lower costs and better regional mix. Given the attractive valuations and improved quality of operations, we maintain our BUY with target price of Rs 1,710 (earlier Rs 1,800), EV/EBITDA of 13x CY19e," it added.