India's ACC posts smaller-than-expected Q2 profit drop on steady volumes

ACC

24/10/2024 10:07

Oct 24 (Reuters) - 
    Indian cement maker ACC  ACC.NS  reported a smaller-than-expected decline in second-quarter profit on Thursday, as
steady volume growth helped mitigate a decline in cement prices and rising costs.
  
    The company's profit after tax dropped 39% to 2.34 billion rupees (about $28 million) in the three months ended
Sept. 30, but was above analysts' average estimate of 2.18 billion rupees, per data compiled by LSEG.
    Revenue from operations grew 4% to 46.08 billion rupees, while its expenses rose about 8% to 44.44 billion rupees
owing to a 17% surge in input costs.

    KEY CONTEXT
    Cement prices hit five-year low of 336 rupees per bag in the September quarter, according to Ambit Capital, due to
an industry-wide ramp-up in production to meet medium-term demand expectations, leading to greater supply.
    Earlier this week, ACC's larger rival UltraTech Cement  ULTC.NS  reported a steeper-than-expected decline in profit
due to low cement prices.
    ACC reported a 15% sales growth, compared to a 9% growth in the preceding quarter. 
    The company also said it expects demand improvement across the cement industry in the second half of fiscal year
2025, likely due to post-monsoon pickup in construction and housing activity.
    
    PEER COMPARISON 
    
                                 Valuation (next 12     Estimates (next 12    Analysts' sentiment              
                                 months)                months)                                                
                      RIC        PE     EV/EBITDA       Revenue     Profit    Mean     No. of   Stock to       Div
                                                        growth      growth    rating*  analyst  price          yield
                                                                                       s        target**       (%)
 ACC                   ACC.NS    18.90  10.30           6.73        10.59     Buy      18       0.80           0.33
 Ambuja Cements        ABUJ.NS   29.70  15.40           15.82       27.11     Buy      27       0.83           0.36
 UltraTech Cement      ULTC.NS   35.76  19.93           10.69       20.31     Buy      35       0.92           0.65
 Shree Cement          SHCM.NS   38.95  17.05           7.71        6.59      Hold     16       0.92           0.43
 * The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above
the PT
    
    JULY-SEPTEMBER STOCK PERFORMANCE    

-- All data from LSEG
-- $1 = 84.0500 Indian rupees

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ACC Q2 VS PEERS    https://tmsnrt.rs/3YzM58n
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 (Reporting by Manvi Pant in Bengaluru; Editing by Varun H K)
 ((Manvi.Pant@thomsonreuters.com; +918447554364;))