ACC shares fall after Q4 profit drops 40%

Shares of ACC tanked over 2% in opening trade on Friday as investors reacted to the cement major’s March quarter earnings report which came post-market hours yesterday. The board of the cement maker also declared dividend on equity shares at ₹9.25 per share.

Snapping two sessions gaining streak, ACC shares opened 1.1% lower at ₹1,727 against the previous closing price of ₹1,747.10 on the BSE. In the early trade, the cement heavyweight declined as much as 2.45% to ₹1,704.20, while the market capitalisation slipped to ₹32,258 crore.

ACC share price currently trades 39% lower than its 52-week low of ₹2,784.95 touched on September 14, 2022, while it is up 7% against its 52-week low of ₹1,593.50 hit on March 28, 2023. In the calendar year 2023, the largecap stock has fallen 29%, while it lost nearly 26% in the past six months. In the last one year, the counter has plunged over 27%, while it gained nearly 7% in a month.

ACC, the cement and building material arm of Adani Cement, posted a 40.53% decline in its consolidated net profit at ₹235.66 crore for the quarter ended March 2023 as against ₹396.33 crore in the same quarter a year ago, dented by higher costs. On the quarter-on-quarter (QoQ), the profit more than doubled from ₹113 crore in December quarter of 2022 (Q3FY23), ACC said in a post-market hour BSE filing on Thursday.

The revenue from operations rose 8.23% to ₹4,790.91 crore compared with ₹4,426.54 crore in the corresponding period a year ago. Sequentially, revenue grew 6% from 4,537 crore in Q3FY23.

The total expenses climbed 14.1% to ₹4,514.38 crore as compared to ₹3,956.37 crore in the corresponding quarter last year, despite fall in power and fuel as well as freight expenses.  

The operating profit or EBITDA dropped 15.15% to ₹588 crore versus ₹693 crore in the year ago period. However, it grew 40% sequentially from ₹419 crore in the December quarter of 2022. EBITDA margin stood at 12.3% compared to 15.7% in Q4FY22 and 9.3% in Q3FY23. Sequentially, the EBITDA margin expanded on cost optimisation and leveraging synergies from adjacency businesses of Adani Group.

“While fuel cost is on a declining curve, EBITDA is lower YoY due to higher fuel cost compared to last year. Fuel cost is expected to further reduce in the coming months through synergies with the group,” the company said in its earnings report.

Going ahead, business initiatives are expected to further bring down operating cost, reduce clinker factor, reduce logistics cost, improve sale of blended cement and expand EBITDA margin, ACC said.

During the quarter under review, volume increased by 9% QoQ at 8.5 metric tonne (MT), supported by an increase in blended cement (clinker factor reduced from 56.1% to 54.8%), better route planning and higher operational synergies with parent Ambuja Cements. In the March quarter of 2022, volume was 7.9 MT.

Ajay Kapur, Whole Time Director & CEO, ACC Limited said, “Our transformation journey fuelled by sizeable operational efficiencies, improved synergies and business excellence has led to substantial improvement in our financial performance and overall business indicators. We have a detailed blueprint on each of the cost factors and initiatives to reduce & improve. This along with capex program will position the Company back into growth momentum synonymous with its legacy.”

“We have consistently included sustainability in all our operational and growth planning. We have continued to reduce our carbon footprint by lowering the clinker factor, reducing thermal and electrical energy intensity, implementing Waste Heat Recovery Systems at our plants and increasing our use of and capacity of generating renewable energy."

For the full financial year 2023, the PAT stood at ₹885 crore and net revenue was ₹22,210 crore. The figure for the last fiscal is for fifteen months as the company changed its financial year end from December to March.

In September last year, billionaire Gautam Adani-led Adani family completed acquisition of ACC and Ambuja Cements from its Switzerland-based parent, Holcim, for around $10.5 billion, in the largest ever acquisition by Adani, and India’s largest ever M&A transaction in the infrastructure and materials space. Adani family acquired Holcim’s 63.1% stake in Ambuja Cements and 54.5% holding in ACC.