ACC 4QCY2013 performance highlights and results update
February 10, 2014, Monday, 07:57 GMT | 03:57 EST | 13:27 IST | 15:57 SGT
For 4QCY2013 ACC’s results were below our expectations on the operating front. The company posted a 16.4% yoy increase in net profit to Rs.279cr aided by tax write back of Rs.76cr.
OPM at 13.4%, up 57bp yoy: ACC’s stand-alone top-line fell by 13.1% yoy to Rs.2,693cr. Net sales of grey cement business remained flat on a yoy basis. While realization remained flat on a yoy basis at Rs.4,307/tonne, volume was down by 1.5% yoy to 5.85mn tonne. However, on a sequential basis, realization rose by 1.7% yoy aided by price hikes in October and November. The company’s operating profit per tonne stood at Rs.617, down 7.9% yoy, impacted by higher freight costs. Freight costs per tonne rose by a steep 14.3% on a sequential basis to Rs.1,049. While the busy season charge imposed by railways pushed up the railway freight fares to some extent, the spurt in freight costs per tonne indicates an increase in lead distance.
Outlook and valuation: We expect ACC to register a 4% yoy growth in its top-line over CY2012-14. The bottom-line is expected to de-grow at a CAGR of 11.8% over the same period due to high cost pressures and poor pricing scenario. At current levels, the stock is trading at an EV/tonne of US$80 on CY2014E capacity. We recommend Buy on the stock with a target price of Rs.1,225.