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Informist, Wednesday, Jul 24, 2024

By Sunil Raghu

AHMEDABAD – Like its peers, ACC Ltd is expected to take a hit on its June quarter earnings from a drop in demand due to General Elections in the country and softer cement prices. ACC's consolidated net sales for Apr-Jun are likely to fall 3.2% on year and 6.9% on quarter to 50.35 bln rupees, according to the average of the estimates of 13 brokerage firms. The consolidated net profit is likely to fall 9.83% on year and 55.51% on quarter to 4.2 bln rupees.

Of the 13 analysts polled by Informist, Nuvama Wealth Management Ltd has highest estimate for ACC's net profit at 5.32 bln rupees, while Prabhudas Lilladher has the lowest estimate of 3.07 bln rupees. As for the company's revenue, IDBI Capital Market Services Ltd expects it to be the highest at 55.99 bln rupees, with Prabhudas Lilladher again having the lowest estimate of 46.89 bln rupees.

Brokerages expect ACC's on-year volume growth in Apr-Jun to be in low single digits. Sequentially, too, its volume growth is seen in single digit. In the quarter ended March, ACC's volume growth was 10.4 mln tn, up 23% on year and 17% on quarter.

IDBI Capital expects sees ACC's volumes to rise 12% on year, and realisations to rise 3% on quarter and Ebitda per tn by 213 rupees per tn to 1,018 rupees per tn during Apr-Jun, riding on weakness in fuel costs. It is keenly watching out for sustainability of the margin and capex plans for ACC.

Incred sees ACC's consolidated volumes in Apr-Jun at 9.7 mln tn, up 3% on year from 9.4 mln tn a year ago and 7% lower on quarter, from 10.4 mln tn. It expects consolidated resalisations for ACC at 4,788 rupees per tn, down 7.7% on year and 2.7% on quarter. At the same time, it sees costs in the June quarter fall 9% on year to 4,305 rupees per tn, down 2.1% sequentially. It, however, sees Ebitda per tn down 14% on year at 708 rupees per tn and 12% on quarter.

Prabhudas Lilladher expects cement companies to benefit from lower cost coal inventory and muted petcoke prices, with lower power and fuel costs in Apr-Jun. A recent drop of 5-6% in petcoke prices is expected to benefit cement companies in Jul-Sep.

Prabhudas Lilladher estimates ACC's Apr-Jun sales volume to have gone down up 4% on year to 9.8 mln tn, the highest compared to five other listed cement sector peers. Sequentially, it is seen falling 6%, lower than the brokerage's volume growth estimates for two peers of ACC.

According to Prabhudas Lilladher, ACC's sales realisation per tn in Apr-Jun is likely to have been impacted by weak pricing across regions. It estimates ACC's sales realisation per tn at 4,797 rupees, down 7.7% on year and the sharpest fall compared to the brokerage's estimates for Ultratech Cement Ltd, Ambuja Cements Ltd, Shree Cement Ltd, and Nuvoco Vistas Corp Ltd. Sequentially too, the estimated figure is lower by 2%, which is sharper than Ambuja Cement but lower than all the other peer cement firms.

Meanwhile, the average estimate of 12 analysts pegs ACC's earnings before interest, tax, depreciation and amortisation at 7.46 bln rupees, with the estimates in a range of 6.03-10.68 bln rupees.

Nirmal Bang Equities expects ACC's volume growth to be 4.4% on year but down 5.6% on quarter. It also sees ACC's sales, realisation, Ebita per tn all down on year and sequentially as well.

In its preview report, the brokerage said that due to General Elections, extreme heat, and a labour shortage, demand for the entire cement sector fell 6% in Apr-Jun. "With the onset of monsoon in Jul-Sep, we think that demand in Apr-Sep, 2024-25, will be lacklustre with no material improvement in the pricing mechanism," the brokerage said in a report. "The full-year demand is forecasted to range between 8.5% and 9%, driven by infrastructure led demand and steady demand from the housing and commercial segments in Oct-Mar, 2024-25."

ACC Ltd is set to announce its earnings for the June quarter on Jul 29.

Today, shares of ACC ended 1% lower at 2,619.35 rupees on the National Stock Exchange.

Following are the Apr-Jun consolidated earnings estimates for ACC based on reports compiled by Informist from 13 brokerage houses:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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