Net profit down 13.4% yoy weighed down by margin pressures
During 1QCY2011 ACC posted a 14.1% yoy growth in its net sales to `2,398 aided by growth in volumes and higher realizations. The company’s dispatches for the quarter stood at 6.16 mn tonnes up 10.4% on yoy basis. The growth in dispatches was aided by a pick-up in the demand across the country during the quarter and also due to increase in the company’s capacity. The realizations too improved by 3.4% yoy to `3,893/tonne resulting in a healthy growth in the top-line. The realizations were higher in the quarter on account of the price hikes carried out by the cement manufacturers across the country to the tune of `30-40 per bag. On a qoq basis, the net sales were higher by a robust 22.5% on account of 11.4% improvement in realizations coupled with a 10% growth in dispatches. However, the company faced margin pressure during the quarter on account of increase in the power and fuel costs, freight costs and raw materials like fly ash and slag. The OPM for the quarter was down by 708bp yoy to 24.2%. The power and fuel costs rose by 21.9% yoy during the quarter on account of sharp increase in the coal costs both in the international and domestic markets. The freight costs too were higher by 25.1% yoy on account of higher diesel costs. On the bottom-line front, the company’s net profit fell by 13.4% yoy to `351cr. The fall in net profit was on account of lower operating profit and higher interest and depreciation costs. We continue to remain neutral on the stock as it is fairly priced.
Exhibit 1: 1QCY2011 Performance (Standalone)
| Y/E Dec (` cr) | 1QCY11 | 4QCY10 | % qoq Chg | 1QCY10 | % yoy Chg | CY10 | CY09 | % Chg |
| Net Sales | 2,398 | 1,958 | 22.5 | 2,102 | 14.1 | 7,717 | 8,027 | (3.9) |
| Other Operating Income | 25 | 131 | (80.7) | 34 | (26.4) | 258 | 164 | 57.9 |
| Total Operating Income | 2,424 | 2,089 | 16.0 | 2,136 | 13.4 | 7,976 | 8,191 | (2.6) |
| Net Raw Material Costs | 412 | 282 | 45.9 | 307 | 34.2 | 1,184 | 956 | 23.9 |
| (% of Sales) | 17.2 | 14.4 | 14.6 | 15.3 | 11.9 | |||
| Power & Fuel | 478 | 451 | 6.0 | 393 | 21.9 | 1,599 | 1,540 | 3.8 |
| (% of Sales) | 20.0 | 23.1 | 18.7 | 20.7 | 19.2 | |||
| Staff Costs | 112 | 149 | (24.4) | 90 | 25.3 | 462 | 368 | 25.6 |
| (% of Sales) | 4.7 | 7.6 | 4.3 | 6.0 | 4.6 | |||
| Freight & Forwarding | 344 | 299 | 14.9 | 275 | 25.1 | 1,070 | 1,054 | 1.5 |
| (% of Sales) | 14.4 | 15.3 | 13.1 | 13.9 | 13.1 | |||
| Other Expenses | 497 | 567 | (12.4) | 415 | 19.7 | 1,848 | 1,629 | 13.4 |
| (% of Sales) | 20.7 | 29.0 | 19.8 | 23.9 | 20.3 | |||
| Total Expenditure | 1,844 | 1,749 | 5.4 | 1,480 | 24.6 | 6,163 | 5,547 | 11.1 |
| Operating Profit | 580 | 340 | 70.4 | 657 | (11.7) | 1,812 | 2,644 | (31.5) |
| OPM | 24.2 | 17.4 | | 31.2 | | 23.5 | 32.9 | |
| Interest | 25 | 14 | 84 | 12.8 | 98.4 | 57 | 84 | (32.6) |
| Depreciation | 113 | 112 | 0.5 | 94 | 20.3 | 393 | 342 | 14.8 |
| Other Income | 42 | 24 | 71.7 | 26 | 57.2 | 98 | 77 | 28.4 |
| PBT | 483 | 239 | 102.6 | 577 | (16.2) | 1,461 | 2,294 | (36.3) |
| Provision for Taxation | 133 | (17) | (867.9) | 172 | (22.7) | 341 | 688 | (50.3) |
| (% of PBT) | 27.5 | (7.2) | 29.8 | 23.4 | 30.0 | |||
| Reported PAT | 351 | 256 | 37.0 | 405 | (13.4) | 1,120 | 1,607 | (30.3) |
| PATM | 14.6 | 13.1 | 19.3 | 14.5 | 20.0 | |||
| EPS (`) | 18.7 | 13.6 | 21.6 | (13.4) | 59.6 | 85.5 |
Source: Company, Angel Research
Exhibit 2: Per tonne analysis
| Particulars ` | 1QCY11 | 4QCY10 | 1QCY10 | yoy chg(%) | qoq chg (%) |
| Realisation/tonne | 3,893 | 3,496 | 3,767 | 3.4 | 11.4 |
| Raw Material Cost/tonne | 668 | 504 | 550 | 21.6 | 32.7 |
| Power & Fuel Cost /tonne | 777 | 806 | 703 | 10.4 | (3.6) |
| Freight & Forwarding Cost/tonne | 559 | 535 | 493 | 13.3 | 4.5 |
| Operating Profit/tonne | 900 | 373 | 1115 | (19.3) | 141.2 |
| Depreciation/tonne | 183 | 200 | 168 | 9.0 | (8.6) |
| Net Profit/tonne | 528 | 223 | 664 | (20.5) | 137.2 |
Source: Company, Angel Research
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