Analyst Corner: ACC- Volumes in line; blended realisations slightly lower sales

Standalone revenue of 42.9bn (+23% y-y, +4% q-q) came in 1-2% below Bloomberg consensus estimate and our forecast, driven by 1% lower blended realisations, while cement volume was in line with our estimate.

EBITDA of Rs 8.6bn (+47% y-y, +23% q-q) was 21%/26% above our/consensus estimates, driven by lower power/fuel and raw material costs (both 10% below us). 1Q standalone reported PAT at Rs 5.6bn (+74% y-y, +20% q-q) was 27%/30% above consensus/our estimates driven by higher EBITDA and lower depreciation.

Volumes in line; blended realizations slightly lower ACC’s cement sales volume at 7.97mt (vs our estimate of 8mt) was up 21% y-y driven by robust demand as well as lower base. Ready Mix Concrete (RMC) volume recovered further 14% q-q to 0.83 mcu. m (vs our estimate of 0.85) but are still down 11% y-y (-22%/-43%/-83% y-y in 4Q/3Q/2QFY20).

Blended realization at Rs 269/bag (flat q-q, +1% y-y) was 1% below our estimate of Rs 273/bag, while cement realization at Rs 244/bag (flat q-q, +7%y-y) was largely in line with our estimate of `245/bag. Lower power/fuel costs, inventory and freight costs boost per ton EBITDA margins Per unit power and fuel costs at `1,009 (+3% q-q, -10% y-y) was 9% below our estimate as higher fuel cost was offset by improvement in energy consumption/mix.

Per unit freight costs at Rs 1,366 (+3% q-q, -5% y-y) was 3% below our estimate as increased direct dispatches, warehouse and network optimization and procurement savings mitigate impact of higher diesel costs. Total raw material costs were ~10% below our estimate driven by lower inventory and lower purchase of traded cement. Overall, per unit variable cost at `3,311 (-3% q-q, +1% y-y) was 7% below our estimate of Rs 3,557.

Staff costs were -17% q-q to Rs 2.1bn (-1% y-y, 7% below our estimate), while other expenses at Rs 5.9bn (in line with our estimate), was +6% y-y.  Per unit fixed cost at `996/t (-6% q-q, -14% y-y) was ~2% below our estimate. Overall per unit opex at Rs 4,307 (-4% q-q, -3% y-y) was ~6% below our estimate of `4,570.

With lower per unit costs offsetting slightly lower blended realization, blended per unit EBITDA at Rs 1,078 (+21 y-y, +19%q-q) was 22% above our estimate of `885/t.