ACC Q2 Results Review: Volume Expansion Drives Profitability, Analysts Say

The Q2 earnings growth was driven by lower input costs. Power and fuel costs declined 33% year-on-year to Rs 886.6 crore.

<div class="paragraphs"><p>A banner for ACC Cement on a rooftop in India. (Source: Company website)</p></div>
A banner for ACC Cement on a rooftop in India. (Source: Company website)

Analysts are positive on ACC Ltd. capacity expansion in the medium term, with lower costs driving profitability in the second quarter.

The Adani Group-owned cement manufacturer posted a net profit of Rs 387.9 crore in the September quarter, compared to a net loss of Rs 87.3 crore in the same period last year, according to an exchange filing on Thursday. Analysts polled by Bloomberg estimated a net profit of Rs 334.2 crore.

ACC Q2 FY24 Highlights (Consolidated, YoY)

  • Revenue up 11% at Rs 4,434.7 crore (Bloomberg estimate: Rs 4,403.5 crore)

  • Ebitda up 33.53 times at Rs 549.3 crore (Bloomberg estimate: Rs 575.5 crore)

  • Ebitda margin at 12.39% vs 0.41% (Bloomberg estimate: 13.1%)

  • Net profit of Rs 387.9 crore vs net loss of Rs 87.3 crore (Bloomberg estimate: Rs 334.2 crore)

The earnings growth was driven by lower input costs. Power and fuel costs declined 33% year-on-year to Rs 886.6 crore. Revenue growth was supported by volume growth of 17% year-on-year at 8.1 million tonne, partially offset by lower realisations.

The cement business' profit before tax grew to Rs 336.9 crore, compared to a loss of Rs 142.3 crore, while the ready-mix concrete earnings rose 79% to Rs 3.3 crore.

ACC Q2 Results: Profit Beats Estimates

Shares of ACC rose 1.9% during the day to Rs 1,936 apiece. It pared gains to trade 0.28% higher at Rs 1,905.15 apiece compared to a 0.82% advance in the benchmark NSE Nifty 50 as of 11:09 a.m.

It has declined by 22% year-to-date. Total traded volume stood at 1.6 times its 30-day average.

Twenty-nine out of the 42 analysts tracking ACC maintain a 'buy' rating on the stock, seven recommend a 'hold' and six suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 15.9%.

Here's What Brokerages Say About ACC's Q2 Results


  • Maintains a 'buy' with a target price of Rs 2,325, implying a 21.5% upside.

  • Lower freight and other costs, as well as growth from a lower base, were the driving forces behind the Ebitda beat.

  • The company incurred approximately Rs 600 crore in capex during the first half of the fiscal, lower than the brokerage's run-rate capex estimate for the fiscal.

  • Kiln fuel costs were reduced by 42%, driven by fuel mix optimisation and higher alternate fuel consumption.

  • ACC's logistics effort has resulted in a road direct dispatch increase of 58% compared to 52% in the year-ago period.

  • A clinker facility in Ametha, Madhya Pradesh, of 3.3 million tonne capacity was commissioned in the quarter.

ICICI Securities

  • Upgrades ACC to 'buy' with a revised target of Rs 2,451 vs. Rs 2,338 earlier.

  • Valuations remain attractive given improving prices, volume gains from capacity commissioning, and a strong balance sheet.

  • While realisation fell 1.2% QoQ, a price uptick across India drove a 3% upward revision to FY24 and FY25 Ebitda estimates.

  • Cement prices are looking up across regions and are expected to sustain in the near term, based on the brokerage's channel checks.

  • Sequentially low Ebitda primarily on account of seasonality and low operating leverage.

Emkay Global Financial Services

  • Maintains 'buy' and raises target price by 2.8% to Rs 2,365, implying a 23.62% upside.

  • ACC's Ebitda miss is mainly due to a lower-than-expected realisation.

  • Healthy volume growth of 17% YoY was partly led by increased master-supply-agreement transactions with parent Ambuja Cements.

  • Brokerage increases Ebitda estimates by 5% for FY24, citing recent price hikes while maintaining FY25 and FY26 estimates.

  • The share of premium products improved by 150 basis points year-on-year to 32% of sales.

Motilal Oswal Financial Services

  • Maintains 'neutral' with a target price of Rs 2,150, implying a 12.4% upside.

  • Ebitda misses due to a lower blended realisation and a higher variable cost per tonne.

  • Profit-after-tax growth was driven by a sharp increase in other income, which tripled year-on-year.

  • Management indicates robust demand, driven by increased spending on housing and infrastructure projects.

  • The company witnessed a net addition of 534 dealers across various markets during the quarter.

  • Brokerage anticipates expansion to boost volume growth, particularly due to its robust presence in central India.

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