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YES Securities
ACC (Buy)
Target: ₹1,532
CMP: ₹1,382.75
Led by Covid-nflicted lockdown measures with April 2020 being a washout month for the industry, we had expected volumes for Q2-CY20 to degrow by 33.6 per cent y-o-y to 4.78 tonnes (official volumes have not been disclosed by the company).
Net sales for the quarter came in at ₹2,602 crore (37.3 per cent y-o-y. However, ACC delivered exceptional operating performance. On the back of strong pricing tailwinds especially for the Southern exposure of ACC and optimisation of freight and misc. expenses, company posted an EBITDA of ₹525 crore (32.9 per cent y-o-y).
Operating margins stood at 20.2 per cent (+132 bps y-o-y) vs. our estimates of 17.6 per cent.
PAT for the quarter was ₹270 crore, which declined by 40.5 per cent y-o-y.
Outgo towards capex has been muted for ACC – at ₹176 crore for H1-CY20. Accordingly, we have cut our capex estimates for CY20 CY21 period from ₹4,000 crore to ₹2,500 crore and expect expansion of 5.9 MTPA capacity to be commissioned by CY22- 23. Accordingly, we expect net cash of ACC to increase from ₹4,650 crore to ₹5,710 crore CY19-CY21.
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