Factors that will drive ACC's Q1 earnings

Moneycontrol Bureau

ACC's March quarter (Q1CY13) profit is likely to climb more than two fold to Rs 325 crore year-on-year, despite marginal recovery in demand, states a CNBC-TV18 poll. The jump in profit is significant due to the corresponding quarter of last year having an exceptional item of Rs 335 crore.

According to the poll, sales will rise 6.8 percent Y-o-Y to Rs 3055 crore.

However, EBITDA will slide around 16 percent to Rs 520 crore. Along with ACC, its sister concern firm Ambuja Cements and even Heidelberg Cement will announce quarterly numbers on Friday.

Factors that will impact Q1 numbers for Holcim-owned ACC

The firm which consolidates its ready-mix concrete (RMC) arm with itself in the December quarter (Q4CY12) and this will boost overall revenues.

Most analysts are expecting topline to be anything between Rs.2900 crore – Rs.3200 crore but without including income from RMC business

Historically cement prices tend to see a healthy increase during the period under review, but this time Jan-Mar quarter disappointed on account of a lower than expected recovery in the demand environment.

Sluggish demand environment restricted cement companies from hiking price.

ACC has pan India presence and could hike price around 4 percent Y-o-Y to Rs 295/bag of 50 kg.

Average was largely held up by 2 out of 5 regions – east India, and central India

Prices were weak in most other parts of the country

Price in South India witnessed a sharp correction of Rs20/bag which may be a drag on earnings. 

Despatches are estimated to decline 2 percent Y-o-Y to 6.59 metric tonnes

Margins for all cement manufacturers including ACC have come under pressure on account of lower than normal Q1 realizations, hike in railway freight and increase in rates of bulk diesel

Key issues to watch out for

Volume growth recovery and outlook, given the weakness in 1QCY13

Cement pricing outlook, considering unusually weak demand in 1QCY13

Progress in ongoing capex for Jamul expansion of 5MT

 Read This: SP Tulsian positive on Ultratech Cement, ACC