Result Update

ACC Ltd Volume Growth Continues

On the back of increase in sales volume, ACC Ltd has reported net sales of Rs.2539 crore as
against Rs.2166.9 crore, up by 17.2% (yoy). However, on account of steep increases in the costs of
coal, diesel, freight and other manufacturing inputs such as flyash and gypsum, the company
witnessed a decline in profitability and as a result, EBITDA margins have declined by 440bps (yoy)
to 22.5%
For HY11, ACC reported 15.6% yoy increase in net sales to Rs5095.2 crore. However, a decline in
profitability is observed which is attributable to increasing input and interest costs.
While market conditions are presently subdued, post monsoon we expect that overall cement
demand will grow and ACC is well placed to benefit from this in the coming months. At CMP of
Rs1012.5, the stock is trading at 17.29x and 14.64x its estimated consensus for CY2012E and
CY2013E. We recommend HOLD on the stock.
High input costs offset the benefits of strong volume growth and improved realizations
During the quarter, sales volume grew by 12.52% YoY to 5.93 MT from 5.27 MT. Net sales is reported at
Rs2539 crore, up by 17.2% (YoY). Also, owing to higher linkage coal prices due to hikes undertaken in
Q1CY11 by domestic coal suppliers and due to higher clinker production, power and fuel costs grew by
45% YoY and 19% QoQ. As a result operating margins contracted by 440 bps YoY. EBITDA at Rs578.4
crore declined 2.4% YoY and was flat at QoQ level.

01-Aug-2011
CMP:
1012.5
Rating:

Nifty: 5516.8

HOLD

Sector:

Cement & Construction

Materials

Equity Cap (Rs Cr):

187.8

Face Value:

10

52 Week High:

1144

52 Week Low:

812

Market Cap (Rs Cr):

18992.3

Price Chart

Increasing Interest Costs, a concern

The company has witnessed an increase in interest cost by 91.5% (YoY) to Rs 27.1 crore from Rs 14.2
crore and 88.6% (HYoY) increase to Rs 52.4 crore. The burden, during the quarter, led to decrease in net
profit by 6.8% YoY to Rs.325.2 as against Rs.348.9 crore.
Valuation and recommendation
While market conditions are presently subdued, post monsoon we expect that overall cement demand will
grow and ACC is well placed to benefit from this in the coming months. At CMP of Rs1012.5, the stock is
trading at 17.29x and 14.64x its estimated consensus for CY2012E and CY2013E. We recommend HOLD
on the stock.

Shareholding Pattern:

Result Update

Result Update
ACC Ltd.

Net Sales
Other operational Income
Total Oper. Income(TOI)
Raw Materials Cons.% to TOI
Stock adj. (-)Inc / (+)Dec% to TOI
Net Raw Mat adj. for stock
% to TOI
Other expenses
% to TOI
Contribution Net_Sales
Personnel
% to TOI
Total expenditure
Operating Profit
% to TOI

Non-Operating Income
Interest
Exceptional Items
Gross Profit
Depreciation
PBT before Extra-ord
% to TOI
Extraordinary Items
PBT
Tax Rate
Prov. for Tax
% to TOI
Profit after Tax
% to TOI

Minority Interest
PAT (adj. For MI)
Face Value
Equity Share capital
EPS (Rs.)
CEPS (Rs.)
Source: ACE Equity

Q2FY11
2539.0

Q2FY10
2166.9

% Chg.
17.2

30.9

42.3

-27.0

2569.9

2209.2

16.3

466.0

374.9

24.3

18.1%

17.0%

-109.9

-48.3

127.8

-4.3%

-2.2%

Q2FY11
2539.0

Q1FY11
2556.2

% Chg.
-0.7

30.9

28.0

10.3

2569.9

2584.2

-0.6

466.0

470.1

-0.9

18.1%

18.2%

-109.9

-5.9

-1769.4

-4.3%

-0.2%

HY201106
5095.2

(Rs. In Cr.)

HY201006
4407.2

% Chg.
15.6

58.9

77.2

-23.7

5154.1

4484.4

14.9

936.1

709.2

32.0

18.2%

15.8%

-115.8

-16.5

604.1

-2.3%

-0.4%

18.4

356.1

326.6

9.0

356.1

464.2

-23.3

820.3

692.8

13.9%

14.8%

13.9%

18.0%

15.9%

15.5%

1505.4

1174.4

28.2

1505.4

1412.1

6.6

2917.5

2330.8

25.2

58.6%

53.2%

58.6%

54.6%

56.6%

52.0%

708.4

708.1

0.0

708.4

707.9

0.1

1416.3

1460.8

-3.0

130.0

114.8

13.2

130.0

121.9

6.7

251.9

213.2

18.1

5.1%

5.2%

5.1%

4.7%

4.9%

4.8%

1991.5

1615.9

23.2

1991.5

1998.1

-0.3

3989.6

3236.8

23.3

578.4

593.3

-2.5

578.4

586.1

-1.3

1164.4

1247.6

-6.7

22.5%

26.9%

22.5%

22.7%

22.6%

27.8%

46.4

18.1

156.5

46.4

41.4

12.2

87.8

44.2

98.9

27.1

14.2

91.5

27.1

25.3

7.1

52.4

27.8

88.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

597.7

597.3

0.1

597.7

602.2

-0.7

1199.9

1263.9

-5.1

124.7

104.7

19.1

124.7

120.9

3.1

245.6

207.8

18.2

473.1

492.6

-4.0

473.1

481.2

-1.7

954.3

1056.2

-9.7

18.4%

22.3%

18.4%

18.6%

18.5%

23.6%

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0
-9.7

473.1

492.6

-4.0

473.1

481.2

-1.7

954.3

1056.2

31.3%

29.2%

31.3%

27.6%

29.4%

29.9%

147.8

143.7

2.9

147.8

132.9

11.2

280.7

315.4

-11.0

5.8%

6.5%

5.8%

5.1%

5.5%

7.0%

325.2

348.9

-6.8

325.2

348.3

-6.6

673.5

740.8

-9.1

12.7%

15.8%

12.7%

13.5%

13.1%

16.5%

0.0

0.0

PL

0.0

0.0

0.0

-0.1

0.0

353.9

328.1

349.5

-6.1

328.1

350.2

-6.3

678.3

742.4

-8.6
0.0

10.0

10.0

0.0

10.0

10.0

10.0

10.0

188.0

187.9

0.0

188.0

188.0

0.0

188.0

187.9

0.0

17.3

18.6

-6.8

17.3

18.5

-6.6

35.8

39.4

-9.1

23.9

24.1

-0.8

23.9

25.0

-4.1

48.9

50.5

-3.1

Result Update
Source: ACE Equity

Source: ACE Equity

Ventura Securities Limited
Corporate Office: Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai 400079
This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or
liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither Ventura
Securities Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole or in part without written permission is
prohibited. This report is for private circulation.