ACC Q4 EBITDA seen up 94% at Rs 423.8 cr

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By Nigel D'souza, Research Analyst at CNBC-TV18

Cement company ACC is likely to report a profit after tax of Rs 230.4 crore in the October-December quarter of FY12, a growth of 44.6% as compared to Rs 159.3 crore in the previous quarter.

Sales are seen going up by 7% to Rs 2,437.55 crore from Rs 2,283.4 crore quarter-on-quarter.

EBITDA is expected to go up sharply by 94.4% to Rs 423.8 crore from Rs 217.98 crore during the same period.

EBITDA margin is seen improving at 17.4% versus 9.55% quarter-on-quarter.

Volumes:

- Top line will be driven by 3mtpa capacity addition due to stabilizing of the new Wadi and Chanda plants, which has taken ACC's installed capacity currently stands at 30mtpa during CY11

- Q4CY11 versus Q4CY10: Sales Volume stood at 5.89 million tonnes, up 5.6% on a y-o-y basis and up 3.5% on q-o-q

Realizations:

- All India cement prices up 19% (y-o-y) and 9% (q-o-q):

- But push-up in sales by calendar year-ending companies (ACC and Ambuja) has led to a Rs 5-10/bag decline in average prices towards December end

- ACC will gain owing to its PAN India presence:
* North and West India: ACC has relatively large exposure to north & west from where it gets roughly 45% of its revenue
* Prices in north India are up 21% and West India are up 18% on a y-o-y basis
* Prices in these regions have shown an upward movement alongwith demand pick up
* South India: ACC's presence in South India will further boast its top line as price have remained resilient owing to production discipline
* Prices in South India are up 17% on a y-o-y basis

EBITDA margins:

- Margins will be driven by higher realizations despite continuous cost push in form of energy and freight

- Higher power and fuel costs due to dependence on indigenous coal and freight costs will limit the gains on the margins front

- ACC's captive power capacity is meets roughly 75% of its requirement

- Also they import roughly only 10-15% of their coal requirement and hence protected against the depreciating rupee

- Also ACC continues to focus on use of alternative fuels and raw materials (tyres, industrial waste, plastic waste) whose overall usage is still quite small but will help margins

PAT (YoY) impacted by other income and depreciation:

Alert: In Q4CY10, tax expense was stated net off credit of Rs 82 crore pertaining to an earlier year

ACC has healthy cash and cash equivalents of approximately Rs 2200 crore and other income will boost the PAT on a y-o-y basis

However, higher depreciation due to commissioning of new plant will impact negatively impact the PAT