Cement conglomerate ACC Ltd’s
shares rose marginally by 1.1% as results were announced on Thursday.
This is not to say the firm did well in the December quarter. At first
glance, consolidated net profit growth of 16% from the year-ago period
looked impressive, given the dull market. But a closer look shows that
net profit for the quarter included a tax write-back.
At the operating level, poor volumes—down by 1.5% from the year-ago
period—and weak realizations pulled down revenue during the quarter. Net
consolidated sales fell by 13% to Rs.2,693.1
crore. Profitability was further hit as costs during the quarter,
mainly on freight and power, rose compared with the year-ago period and
the September quarter as well. Other expenses, too, were higher.
Operating profit per tonne of cement sold plunged by
nearly 16% from the previous-year period. The weak performance is best
indicated by the 9.8% operating margin at the consolidated level, which
was lower than Bloomberg’s consensus estimates by about 150 basis points (bps). One basis point is 0.01 percentage point.
It could be argued that the December quarter is not quite the best period for the sector, but then ACC’s
management is not upbeat on the near-term outlook either. The policy
logjam and a languishing industry segment continue to daunt the cement
companies, which are presently faced with surplus capacity. Only a jump
in volumes will bail out the sector.
ACC’s shares have underperformed the broader indices like
the S&P BSE 100 significantly over the last one year. One would
have to wait for sustained volume growth and stable cement prices for a
firm upward trend in the company’s stock price.
Source- Livemint.com
Shah Mohammad Abdul Qadir
2nd Semster
IIMT College Of Management
Greater Noida, U.P.
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