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ACC share price gains 7% despite 40% decline in Q2 profit, here's why

ACC share price gains 7% despite 40% decline in Q2 profit, here's why

ACC share price: Buoyed by the positive Q-o-Q performance, share of the firm gained 6.98% to Rs 1,422 against previous close of Rs 1,330 on BSE.

ACC share trades higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages ACC share trades higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages

Share price of ACC gained 7%  in early trade today after the firm reported a 40.53 per cent decline in consolidated net profit to Rs 270.95 crore for the quarter ending June. However, the cement maker logged a marginal 16% dip in net profit in Q2 against profit of Rs 323 crore in Q1 of current year.  

The company  follows January-December financial year. The performance is better than expectations on a quarter on quarter (QoQ) basis since all construction activities came to a halt during coronavirus lockdown which started from March end and ended in June.

In Q2, net sales fell 25% to Rs 2602 crore against Rs 3,501 crore in the preceding quarter.

Buoyed by the positive Q-o-Q performance, share of the firm gained 6.98% to Rs 1,422 against previous close of Rs 1,330 on BSE.

The large cap share has risen 8.9% in last 4 days. The stock opened with a gain of 2.65% at Rs 1365 today. ACC share trades higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

However, the stock has lost 9.37% in one year and fallen 3.17% since the beginning of this year.  In a month, the share has gained 10.13%.

On a year on year basis, total revenue from operations fell 37.29 per cent to Rs 2,602.24 crore during the quarter under review against Rs 4,149.82 crore in the year-ago period.

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Total expenses in April-June quarter of 2020 stood at Rs 2,252.62 crore, down 36.25 per cent against Rs 3,533.55 crore in the year-ago period.

Revenue from cement fell 33.59 per cent in Q2 to Rs 2,550.99 crore as against Rs 3,841.39 crore of the corresponding quarter of last year. Revenue from ready mix concrete declined 82.87 per cent to Rs 62.63 crore as against Rs 365.82 crore.

Motilal Oswal in a report said EBITDA, PAT will turn positive YoY from current quarter. The firm's positive 2QCY20 result was a welcome surprise, attributed to sharp cost reduction on account of significant curtailment in discretionary costs. Volumes declined 27% QoQ due to COVID-19-led lockdown and EBITDA just 10% QoQ, the brokerage said.

"We raise our CY20 EBITDA and PAT estimates by 12% and 15%, respectively, as we factor lower discretionary costs for the year. We expect EBITDA and PAT to turn positive YoY from the current quarter. We have, however, kept our CY21 estimates largely unchanged as discretionary costs should normalize next year. Maintain Buy," it added.

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Published on: Jul 21, 2020, 10:27 AM IST
Posted by: Aseem Thapliyal, Jul 21, 2020, 10:27 AM IST