ACC Ltd's Q1 PAT may decline 40% on higher expense: Poll

ACC Ltd is expected to post around 40 percent year-on-year drop in profit in June quarter on higher depreciation and freight cost, states CNBC-TV18 poll. The cement firm had posted Rs 414 crore profit in corresponding quarter of last year.

Sales could also decline over 4 percent to Rs 2800 crore as demand remained weak in most markets  Analysts also expect EBITDA margins to shrink around 800 bps to Rs 14.5 percent.

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Factors likely to impact ACC’s numbers

-Volumes may be flattish on weak demand

-Despatches growth will almost be flattish and may grow hardly a percent Y-o-Y.

-Average realisations are likely to decline 5-6 percent Y-o-Y

-Feedback from cement dealers suggests that in 1Q FY14, pan-India cement prices were down around 6 percent Y-o-Y 

-Prices were weak in most other parts of the country

-Prices in south market gained (q-o-q) in Q2CY13 but extremely weak demand will hit topline.

-ACC has the highest exposure to east and central India.

-Demand is likely weakest in north India, while east and central India was relatively better.

Incase net profit comes in much lower:
Watch out for any “Provisioning for Competition Commission of India (CCI) penalty”:
COMPAT served an interim order directing cement companies to deposit 10% of the total penalty levied by the CCI
ACC's penalty amount was Rs. 1148 crore and hence 10 percent will be around Rs.114.7crore

Key issues to watch out
-Volume growth recovery and outlook
-Cement pricing outlook, considering volatility in 2QCY13
-Progress in ongoing capex for 5MT Jamul expansion
-Any Commentary with regard to merger of the cement twins