ACC‘s first-quarter results (company follows calendar year) announced on Tuesday were relatively lukewarm, as expected across the industry. ACC’s cement volumes of 7.71 million tonnes in this period were 3 per cent lower than the same quarter last year. In this quarter, despite the fall in cement volumes, the company saw a modest rise of 3 per cent in revenue over Q1CY21 to ₹4,322 crore. This was aided partly by the 4 per cent volume growth in the ready-mix concrete segment, bringing about 7-8 per cent of revenues. All India cement prices during this period rose 6 per cent year-on-year, according to a report by JM Financial. This has also helped topline growth to an extent.

However, the company saw a steep decline in margins, with the EBITDA margin reducing to 14.3 per cent in March 2022 from the 19.9 per cent levels a year ago. The spike in the raw material costs has taken a heavy toll on the industry with ACC being no exception. The cost of goods sold as a percentage of revenue stood at 20.3 per cent in this quarter from 17.4 per cent in Q1CY21.

As per a recent report put out by Nomura, in the March quarter of 2022, the cost of imported coal rose to a multi-year high of about USD 400 per tonne before cooling off now to about $250 levels, and Brent crude crossed $100 per barrel. Diesel prices averaged ₹87 per litre (in Delhi) in March 2022, which was an 11 per cent rise year on year. Domestic pet coke prices saw over a 50 per cent hike in February-April 2022 and were up over ₹20,000 per tonne.

Another area where the company saw a significant rise was in power and fuel cost.  In the March 2022 quarter, it stood at 23 per cent of sales, compared with 18.8 per cent a year ago. The rise in coal and crude oil cost seems to have driven this rise. The per-tonne cost rose 14 per cent in Q1CY22 to ₹4,482.

Despite marginal growth in revenues, net profit for the quarter fell 30 per cent to ₹396 crore due to cost pressures.  The net profit margin was down to 9 per cent from 13 per cent in March 2021.


ACC corrected around 20 per cent from its peak of  ₹2,589 in November last year, thanks to the headwinds from the Russia-Ukraine conflict. . ACC is trading at a trailing P/E of 20.7x, whereas its peers like Ambuja are trading at 25.3x, Ultratech 35.7x and Shree at 39.2x.  ACC looks cheaper as of now than all its peers. However, raw material costs will play a major role in upcoming quarters, with geopolitical uncertainties continuing.

On the demand front, it may pick up with traction in residential real estate. According to ACC’s investor presentation, 450 million sq. ft of projects are expected to be launched between FY22-24 in the top 10 cities. The infrastructure push under Bharatmala and Metro projects is also expected to be positive for the sector. The significant budget outlays by the states and the target to build 25,000 km of highways and roads in FY23 may also help boost demand for the sector.