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ACC 3QFY2013 performance highlights and results update

Contributed by Angel Broking

ACC’s 4QCY2012 net profit fell by 3.8% yoy to Rs.239cr, and the same was below our estimate. Realizations for the company, although higher by 2.0% on a yoy basis, fell by 3.8% on a qoq basis.

OPM at 12.8%, down 481bp on a yoy basis: ACC posted a 24% yoy growth in standalone top-line to Rs.3,098cr. Adjusted for sales of the ready mix concrete (RMC) segment, which were included in the standalone sales (w.e.f 4QCY2012), the top-line growth for the quarter remained flat. Volume growth remained flat on a yoy basis. Even for CY2012, ACC posted a modest performance with volumes growing by a modest 1.6%. The overall OPM stood at 12.8%, down 481bp on a yoy basis, impacted by increase in freight costs and also due to low margins for the RMC business (which got included in standalone business during the quarter). Adjusting for the RMC business, we estimate the OPM for the company to be 14.8%. The adjusted profit after tax stood at Rs.239cr, down 1.3% (4QCY2011 had tax reversal of Rs.228cr) on a yoy basis.

Outlook and valuation: We expect ACC to register a 13.4% yoy growth in its top-line over CY2011-13. The bottom-line is expected to post a CAGR of 3% over the same period. At current levels, the stock is trading at an EV/tonne of US$119 on CY2013E capacity, which we believe is fair. Hence, we continue to remain Neutral on the stock.