A decision to change with retrospective effect, the method of providing for depreciation on captive power plants, has resulted in virtual halving of the net profit of ACC Ltd in the first quarter of its financial year year (January-March, as its FY is January-December).

While the January-March quarter PAT without the changes would have been slightly higher compared to the corresponding first quarter of 2011, across the board cost increase seems to have eroded the margins in Q1 of 2012.

Emkay Global Financial Services, while maintaining a ‘hold' on the stock, expects the impact of margin squeeze to be felt in the second quarter of current FY.

Standalone figures

According to the standalone audited results, the total operational income was Rs 2,889.09 crore in January-March compared to Rs 2,423.54 crore in the same quarter last year. The profit from ordinary activities before finance costs and exceptional item was higher at Rs 580.35 crore (Rs 508.65 crore).

Emkay's call

ACC share came under some selling pressure after the results, with the stock shedding Rs 49.20 to close at Rs 1,248 on the NSE. In about two months, ACC scrip has lost about 13 per cent. It touched a 52-week high of Rs 1,421.75 on February 10, on the NSE.

Emkay Global, in its note on ACC post-results, said the net sales at Rs 2,860 crore, which was a 19.3 per cent increase y-o-y was ‘in line with estimates'. Volume growth was 9.1 per cent y-o-y at 6.72 million tonnes. But the realisations at Rs 4,256/t, marginally less than the estimate of Rs 4,289/t, was 9.3 per cent higher y-o-y.

Emkay saw a ‘marginal downgrade' in its EPS estimate. It felt that the impact of the recent cost increase such as raliway freight hike of 23 per cent (effected on March 6) and excise duty increase from March 16, would reflect in Q2 CY12 performance. It maintained a ‘hold' on the stock.

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