ACC Limited, one of the top players in India's cement industry, recently announced its Q3 FY25 results, causing significant ripples in the stock market.
Market Performance of ACC Shares
The ACC share price fell by 1.3% on January 28, 2025, in the morning session, closing at ₹1,968 per share, marking its second consecutive session of losses. From its day's high of ₹2,028, the stock witnessed a 3% fall, signalling cautious investor sentiment following its Q3 earnings announcement.
Despite this decline, ACC's financial performance reflected notable achievements, although some one-time adjustments played a crucial role in shaping the numbers. Let's break down the results further.
ACC Q3 FY25 Results – What's Driving the Numbers?
Revenue Performance
The company achieved its in last five-years Q3 revenue of ₹5,207 crore, representing a 7.25% year-on-year growth from ₹4,855 crore in Q3 FY24. This impressive rise was driven by:
- Volume growth: Trade sales volumes increased by 11%.
- Premium product sales: These contributed 32% of trade sales.
EBITDA and Margins
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased to ₹1,116 crore, up from ₹905 crore in Q3 FY24. However, the EBITDA declined by 48% YoY to ₹470 crore, with an EBITDA margin of 18.8% , slightly higher than the 18.4% margin reported in the previous year.
Net Profit
ACC posted a consolidated profit of ₹1,091 crore, a 103.06% year-on-year (YoY) growth, compared to ₹537.63 crore in the same period last year. The profit jumped by 446.8% sequentially.
Without one-offs, adjusted profit after tax (PAT) stood at ₹230 crore, reflecting a 57% YoY decline.
Operational Efficiency Initiatives
ACC showcased its commitment to improving efficiency across operations:
Fuel Cost Optimization
- ACC reduced its kiln fuel cost by 10% through better coal linkage and low-cost imported petcoke.
- Thermal energy consumption dropped from 739 kCal to 732 kCal.
Logistics Cost Management
- Logistics costs were reduced by 9% to ₹939 per ton.
- Improvements included reducing secondary lead distances and increasing direct dispatch by 7% points to 51%.
These measures reflect ACC's strategic focus on cost control amidst a challenging market environment.
Sector Overview and Growth Outlook
During H1 FY25, the Cement Sector of India experienced modest growth of 1.5–2%. However, demand is projected to recover in Q4 FY25, driven by:
- Government Infrastructure Spending: Pro-infrastructure initiatives in Budget 2025 are expected to boost demand.
- Housing Sector Growth: Rising construction activity in the housing segment is anticipated to contribute significantly.
ACC estimates cement demand will grow between 4% and 5% in FY25, a promising sign for the sector's recovery.
Company Insights – Breaking Down ACC's Strategy
ACC's synergy with the broader Adani portfolio has been a notable factor in driving efficiency and cost optimization. Its focus on:
- Diversifying the fuel basket.
- Strengthening supply chain logistics.
- Expanding premium product offerings.
These strategies place ACC in a position to capitalize on future demand surges.
Summary
Despite the reported profit surge, ACC's share price decline reflects investor caution over the adjusted earnings figures. While one-off gains buoyed Q3 results, the underlying operational challenges suggest a mixed outlook.
As the cement sector gears up for growth in Q4 FY25, ACC's continued focus on efficiency and premium offerings may help it navigate these challenges effectively. However, whether the company can sustain this momentum remains to be seen.
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