ACC’S Q2CY21 EBITDA is 23%/ 21% higher than our/consensus estimate. Beat in the number is led by volume and realization. Volume in the quarter has decreased by 15% QoQ versus estimate of -21% QoQ. Cement Realization increased by 8% QoQ and was supported by sale of premium cement.

"We have factored beat in Q2 result in CY21/22 financials and this has resulted in increase in the EBITDA by 5%/8%. After covid 2 related lockdown, ACC has seen pick up in the volume in June-21 and profitability (EBITDA/t) led by realization has increased sharply. We value the stock at +1STD of its last 10 year mean to factor the positivity and arrive at TP of Rs 2,289.  Our rating is HOLD on the stock," the broking firm IDBI Capital said.

Following are the key highlights and investment rationale:

Q2CY21 Snapshot: ACC Q2CY21 Revenue / EBITDA increased by 49% / 67% YoY. Operationally, volume increased by 43% YoY at 6.8mt. Opex/t was down 4% YoY at Rs 4,057/t. Company witnessed strong delivery on cost efficiency actions under project 'Parvat' across cost levers. This led EBITDA/t to increase to Rs 1,279/t versus Rs 1,074/t QoQ, Rs 1,093/t YoY. ACC reported PAT of Rs 5.3 billion up 99% YoY. In Q2CY21 company incurred a charge of Rs 381 million in respect of impairment in the value of investment in Lucky Minmat.

Realization could go soft in monsoon: Start of monsoon, could lead to softness in realization, we expect Q2CY21 EBITDA/t of Rs 1,279, to taper off in the coming quarter. We are modeling in volume increase of 18%/6% and EBITDA/t of Rs 993/1047 for CY21E/22E.

Capacity addition plans on track: ACC has cement capacity of 34.5mtpa with 17 operating cement plants having capacity utilization of 79% in Q2CY21 versus 57% in Q2CY20. Company's cement capacity expansion project at Ametha in Madhya Pradesh has commenced and is expected to commission by Q2CY22. And its WHRS projects at various sites are progressing well.

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