ACC 130 - Moneycontrol.com

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Annual Report 2020: Accelerating value creation ACC in its CY20 annual report, highlights their core focus on health, cost and cash. ACC helped people and provided relief to covid affected people, saved ~Rs2.5 bn from Parvat efficiency program and witnessed significant improvement in cash. ACC operated under challenging circumstances for the entire CY20 and they believe the worst is behind and the business is gaining momentum. ACC will continue to deliver despite the headwinds.

MDA Overview Cement demand fell by an estimated 10-12% YoY in 2020 owing to the COVID-19 outbreak. Lockdown-led demand disruption was the highest in Q2CY20 on the back of suspension of production, stalled construction activities and mass exodus of labour. However, starting early June, pent-up and pre-monsoon construction requirement cushioned demand de-growth to a large extent.

Financial Snapshot Revenue down 12.0% YoY to Rs137.8 bn in CY20 led by 11.6% YoY de-growth in volume to 25.5 mt which was partially offset by 2.4% growth in realization to Rs5,025/ tn in CY20. EBITDA/tn increased by 27.0% YoY to Rs921 tn in CY20 led by 2.4 YoY growth in realization to Rs5,025/ tn coupled with lower cost by 2.3% YoY to Rs4,478/ tn. APAT grew 6.6% YoY to Rs13.4 bn in CY20.

Strategy ACC’s focus is to innovate more and invest in human capital, technology and operations to develop solutions that take advantage of emerging trends in the industry. The company continues to invest in areas of solutions and products, digital initiatives, technology, sustainability and in people development to build a better future. Importance is given to a diverse workforce and an inclusive environment.

Major Highlights of CY20

ACC commissioned new 1.4 MTPA cement grinding unit at Sindri in Jharkhand, taking total capacity at the plant to 4.4 MTPA. Total cement capacity of ACC stood at 33.05 MTPA.

The company under Project Parvat, undertook several cost-saving projects like renegotiation of warehouse rents, increased direct dispatches of sales, and renegotiated fuel/freight mix

ACC invested in efficiency initiatives such as WHRS plants at Jamul and Kymore.

Ready mix concrete launched value added solutions: ACC Thermofillcrete, ACC Suraksha NX and ECOPact – the Green Concrete

Rolled out a new digital-first campaign for our innovative product – Gold Water Shield, a water-repellent cement

Achieved specific carbon emissions of cementitious materials below 500 kg/tn.

Initiated an AI-powered supply chain management platform ‘Blue Yonder’ to enable better predictability, prevent and resolve disruptions across business.

Margin expansion was driven by product mix optimisation and cost-efficiency initiatives.

CMP Rs 1,835

Target / Upside Rs 2,140 / 17%

BSE Sensex 51,280

NSE Nifty 15,175

Scrip Details

Equity / FV Rs 1,880mn / Rs 10

Market Cap Rs 345bn

US$ 5bn

52-week High/Low Rs 1,894/Rs 895

Avg. Volume (no) 12,61,610

NSE Symbol ACC

Bloomberg Code ACC IN

Shareholding Pattern Dec'20(%)

Promoters 54.5

MF/Banks/FIs 20.7

FIIs 11.6

Public / Others 13.2

Company Relative to Sensex

VP Research: Shravan Shah Tel: +91 22 40969749

E-mail: [email protected]

Associate: Maulik Shah Tel: +91 22 40969775


Associate: Parth Bhavsar Tel: +91 22 40969775


80

90

100

110

120

130

Mar-

20

Apr-

20

May-

20

Jun-2

0

Jul-20

Aug-2

0

Sep-2

0

Oct-20

Nov-

20

Dec-

20

Jan-2

1

Feb

-21

Mar-

21

ACC SENSEX

ACC

Buy

March 12, 2021

March 12, 2021 2 ACC

Key Management

Mr Neeraj Akhoury resigned from MD &CEO of the company w.e.f 20th February, 2020 Mr Balakrishnan was appointed as MD & CEO of the company w.e.f 21st February, 2020 Ms Rajani Kesari demitted office as CFO of the company w.e.f 31st August, 2020. Mr Yatin Malhotra was appointed as the CFO of the company w.e.f 1st September, 2020

Board of Directors No change

Credit Rating CY2019 CY2020

CRISIL CRISIL AAA/Stable (Long term) CRISIL A1+ (Short term)

CRISIL AAA/Stable (Long term) CRISIL A1+ (Short term)

Auditors Deloitte Haskins & Sells LLP, Chartered Accountants. Secretarial Auditor M/s Mehta & Mehta.

Pledged Shares

% of shares pledged:

CY2019 CY2020

- -

Macro-economic Factors

India’s economic growth fell from 6.5% in fiscal 2018-19 to 4.0% in fiscal 2019-20, reflecting an 11-year low. Due to the impact of COVID-19, the Gross Domestic Product (‘GDP’) is expected to contract by 7.7% in fiscal 2020-21, as per the first advance estimates released by the National Statistical Office. While the full impact of the COVID-19 lockdown was felt in the April-June quarter, the worst may have been avoided with a faster than expected recovery of the manufacturing sector in the July-September quarter, and a revival of consumer demand sentiment during the festive season. The outlook for fiscal 2021-22 is firmly positive with an estimated GDP growth of ~11%. The Union Budget 2021 focuses on continued spending to stimulate growth as the economy tries to recover from the impact of COVID-19. The outlay for capital expenditure for Financial Year 2021-22 has been increased by 26% YoY with a specific emphasis on infrastructure which, in turn, will provide a boost to the employment numbers. While this would stretch the fiscal consolidation path in the near to medium term, the fiscal deficit is budgeted to improve to 6.8% of GDP in 2021-22.

Key Holders

Shareholding Pattern Dec’19 Dec’20

A. Promoters 54.53 54.53

B. Public Shareholding

1. Institutions:

a. Mutual Funds 13.20 9.57

b. Banks/FI 6.78 0.96

c. Central Govt. 0.12 0.15

d. State Govt.(s) -

e. Venture Capital Funds -

f. Insurance Companies 1.06 -

g. FII(s) / FPI(s) 8.60 11.55

h. Foreign Venture Capital Funds -

i. Others (Alternate Investment Funds) 0.08 0.17

j. Any Other 0.10 9.98

2. Non-Institutions:

a. Bodies Corp. 1.73 0.70

b. Individuals 10.33 10.21

c. Others 3.47 0.63

C. Shares held by Custodian for GDRs & ADRs - -

Total 100.00 100.00


Remuneration of Key managerial personnel

Name of Director Designation Remuneration (Rs mn)

FY18 FY19 FY20 Mr Neeraj Akhoury (up to Feb’20) MD, CEO and ED 88.9 88.9 61.5 Mr Sridhar Balakrishnan (from Feb’20) MD, CEO and ED - - 33.2 Mr Shailesh Haribhakti Independent Director 4.3 4.3 4.7 Mr Sushil Kumar Roongta Independent Director 4.5 4.5 4.7 Ms Falguni Nayar Independent Director 2.3 2.3 2.6 Mr Sunil Mehta Independent Director - 3.2 4.8 Mr D. Sundaram Independent Director - 4.0 5.7 Mr Vinayak Chatterjee Independent Director - 3.3 4.8 Ms Rajani Kesari (up to Aug’20) CFO NA 15.0 41.0 Mr Yatin Malhotra (from Sept’20) CFO - - 5.6 Mr Rajiv Choubey CS NA 3.8 22.6

Source: DART, Company

Board and Committee Composition

Name of Directors Audit Nomination & Remuneration

Stakeholders Relationship

Risk Management CSR Compliance

Mr N S Sekhsaria •

Mr Jan Jenisch

Mr Martin Kriegner • •

Mr Sridhar Balakrishnan • • • •

Mr Neeraj Akhoury •

Ms Falaguni Nayar •

Mr Vinayak Chatterjee • •

Mr Shailesh Haribhakti • • •

Mr S K Roongta • •

Mr Damodarannair Sundaram •

Mr Sunil Mehta •

Mr M. R. Kumar

Total No. of Members 4 3 3 5 4 5

Source: Company, DART, Chairperson, • Member

Key Takeaways from the MD&A Cement demand fell by an estimated 10-12% YoY in 2020 owing to the COVID-

19 outbreak. Lockdown-led demand disruption was the highest in the second quarter of 2020 on the back of suspension of production, stalled construction activities and mass exodus of labour. However, starting early June, pent-up and pre-monsoon construction requirement cushioned demand de-growth to a large extent.

Rural demand continues to be the silver lining for cement consumption while that from the infrastructure sector was in a slower lane. Infrastructure demand witnessed gradual pickup from September onwards on the back of improving government spending, coupled with gradual normalisation in labour availability.

The outlook for the cement sector in 2021 looks robust, with growth estimated at more than 10% YoY over that in 2020. The country’s demand revival is likely to be led by the North, East and Central regions. The primary drivers of growth will be infrastructure and affordable housing. Highways and roads, metro rail projects and dedicated freight corridors are expected to see increased levels of activity with sharply higher budgetary allocations in the next year.


Sustainable long term strides

Parvat

An efficienct optimisation programme initiated in 2019 to bring radical changes in the cost structure and to improve delivered cost. The plants of the company will meet customer expectation efficiently at reduced cost. This programme will save Rs2.5 bn converting to a specific actual cost savings of Rs110/ tn.

Supply chain automation & optimization

ACC’s logistics strategy is based on four pillars, which include distribution safety, cost efficiency, use of technology and environmental sustainability. The company engages with suppliers, governments, industry bodies, businesses and other partners to collaborate and find new ways to innovate and create positive change. The initiative is aimed at generating monthly demand plan based on forecast from grassroots level, advanced planning to improve utilization, EBITDA maximization by preferring high margin markets, network optimization and boost secondary distribution cost and strategic simulation to facilitate future expansion.

Financial Analysis Capacity Cement capacity was flat YoY and decreased by 1.1% between CY16-CY20 to 33.1 mtpa.

Capacity

Source: Company, DART

33.4 33.4 33.4

33.1 33.1

32.8

32.9

33.0

33.1

33.2

33.3

33.4

33.5

CY16 CY17 CY18 CY19 CY20

Capacity (MT)


Region wise cement plants

Region State Plant Integrated Units Grinding Units

North Rajasthan Lakheri

North HP Gagal 1

North HP Gagal 2

South AP Vizag •

South Karnataka Kudithini •

South Karnataka Thonbebhavi •

South Karnataka Wadi 1

South Karnataka Wadi 2

South TN Maddukarai

East Jharkhand Chaibasa

East Jharkhand Sindri •

East West Bengal Damodar •

East Odisha Bargarh

West Maharashtra Chanda

Central MP Kymore

Central UP Tikaria •

Central Chhattisgarh Jamul

Source: Company, DART, Intergrated, • Grinding

Particulars

No. of dealers 12,000

No. of retailers 56,000


Cement Production Cement production decreased by 14.7% to 23.8 mt in CY20 vs. 27.9 mt in CY19. Volumes were due to covid-19. Capacity utilization decreased to 71.9% in CY20 from 84.3% in CY19.

Production and Capacity utilization


Revenue and revenue Growth Revenue decreased by 12.0% YoY in CY20 to Rs137.8 bn led by 11.6% decrease in volume which was partially offset by increase in realization by 2.4% YoY.

69.4

79.5

84.9 84.3

71.9

65

68

70

73

75

78

80

83

85

88

20

21

22

23

24

25

26

27

28

29


Production (MT) Capacity Utilization - RHS


Revenue grew at 5.8% CAGR between CY16-CY20.


Volume and Realization Volume de-grew by 11.6% YoY to 25.5 mt in CY20 on account of lower demand attributable to demand slump due to COVID-19 led lockdown. Realization increased by 2.4% YoY to Rs5,025/ tn which led to revenue decreasing by 12% YoY.

Volume trend Blended realization trend

Source: Company, DART Source: Company, DART

Expenses Raw materials cost decreased by 7.7% YoY to Rs25.1 bn. Raw material cost per ton increased by 4.5% YoY to Rs984/ tn. The landed slag cost is lower by 21%, fly ash landed cost is lower by 6% and gypsum landed cost is lower by 13% as compared to previous year.

Raw material as a % to revenue Raw material cost/ tn trend


109.9

132.6

148.0

156.6

137.8

(15)

(10)

(5)

0

5

10

15

20

25

100105110115120125130135140145150155160


Revenue (Rs bn) Revenue growth (%) - RHS

23.0

26.2

28.428.9

25.5

(15)

(10)

(5)

0

5

10

15

20

20

22

24

26

28

30


Volume (MT) Volume growth (%) - RHS

4,360

4,628

4,759

4,910

5,025

(6)

(4)

(2)

0

2

4

6

8

4,2004,3004,4004,5004,6004,7004,8004,9005,0005,100


Realization/ tn (Rs) Growth (%) - RHS

14.6 14.8

15.8

17.4

18.2

14

15

16

17

18

19

10

13

15

18

20

23

25

28

30


Total Raw Material (Rs bn) % of Revenue - RHS

699751

823942

984

(15)

(10)

(5)

0

5

10

15

20

600650700750800850900950

1,0001,050


Total Raw Material/ tn (Rs) Growth (%) - RHS


Employee expenses decreased by 2.9% YoY to Rs8.4 bn in CY20 as against Rs8.6 bn in CY19. Employee cost/ tn increased 9.9% YoY to Rs329/ tn as against Rs299/ tn in CY19.

Employee exp as a % to revenue Employee exp/ tn trend


Power and fuel cost decreased by 17.9% YoY to Rs25.7 bn as against Rs31.3 bn in CY19 mainly due to lower production and drop in fuel prices. Power and Fuel cost/ tn too decreased 7.0% YoY to Rs1,008/ tn as against Rs1,084/ tn in CY19. Kiln fuel cost dropped by 6% and CPP fuel by 3% in 2020 vs 2019.

Power & Fuel cost as a % to revenue Power & Fuel cost/ tn trend


Freight charges decreased by 15.3% YoY to Rs34.3 bn as against Rs40.5 bn in CY19. Freight charges/ tn too decreased 4.1% YoY to Rs1,344/ tn as against Rs1,402/ tn in CY19. This was mainly due to drop in sales volume and higher MSA volumes. Although, there was some reduction in benefits due to increase in diesel prices YoY.

Freight cost as a % to revenue Freight cost/ tn trend


6.9

6.26.0

5.5

6.1

5.0

5.3

5.5

5.8

6.0

6.3

6.5

6.8

7.0

7.0

7.3

7.5

7.8

8.0

8.3

8.5

8.8

9.0


Employee expense (Rs bn) % of Revenue - RHS

328

312 311

299

329

(10)

(5)

0

5

10

15

280

290

300

310

320

330

340


Employee expense/ tn (Rs) Growth (%) - RHS

19.6

20.520.3

20.0

18.7

18.0

18.5

19.0

19.5

20.0

20.5

21.0

15

18

20

23

25

28

30

33


Power & Fuel cost (Rs bn) % of Revenue - RHS

938

1,036

1,057 1,084

1,008

(10)

(5)

0

5

10

15

850

900

950

1,000

1,050

1,100


Power & Fuel cost/ tn (Rs) Growth (%) - RHS

24.2

26.0

27.1

25.9

24.9

24

25

25

26

26

27

27

28

20

25

30

35

40

45


Freight cost (Rs bn) % of Revenue - RHS

1,155

1,317

1,414 1,402

1,344

(10)

(5)

0

5

10

15

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450


Freight cost/ tn (Rs) Growth (%) - RHS


Other expenses decreased by 16.3% YoY to Rs20.8bn as against Rs24.8 bn in CY19. Other expenses/ tn too decreased 5.3% YoY to Rs813/ tn as against Rs859/ tn in CY19.

Other expenses as a % to revenue Other expenses/ tn trend


Total expenses decreased by 13.7% YoY to Rs114.3 bn as against Rs132.5 bn in CY19. Total expenses/ tn too decreased 2.3% YoY to Rs4,478/ tn as against Rs4,585/ tn in CY19.

Total expenses as a % to revenue Total expenses/ tn trend


Margins EBITDA margin increased by 154 bps YoY to 17.1% in CY20. EBITDA/ tn too increased by 27.0% YoY to Rs921/ tn as against Rs725/ tn in CY19. This was mainly because of better realizations (Rs5,025/ tn, +2.4% YoY) and lower cost (Rs4,478/ tn, -2.3% YoY) in CY20.

EBITDA Margin Trend EBITDA/ tn Trend


21.3

18.1

17.1

15.8 15.1

14

15

16

17

18

19

20

21

22

20

21

22

23

24

25

26


Other expenses (Rs bn) % of Revenue - RHS

1,019

916 892

859

813

(12)

(10)

(8)

(6)

(4)

(2)

0

800825850875900925950975

1,0001,0251,050


Other expenses/ tn (Rs) Growth (%) - RHS

86.6

85.6 86.2

84.6

82.9

82

83

84

85

86

87

80

90

100

110

120

130

140


Total Cost (Rs bn) % of Revenue - RHS

4,139

4,332 4,497

4,585

4,478

(6)

(4)

(2)

0

2

4

6

4,000

4,100

4,200

4,300

4,400

4,500

4,600

4,700


Total Cost/ tn Growth (%) - RHS

13.4

14.4 13.8

15.4

17.1

12

13

14

15

16

17

18

12

14

16

18

20

22

24

26


EBITDA (Rs bn) EBITDA Margin (%) - RHS

633593

607

725

921

(10)

(5)

0

5

10

15

20

25

30

500550600650700750800850900950


EBITDA/ tn (Rs) Growth (%) - RHS


Depreciation: Depreciation increased by 6.6% YoY to Rs6.4 bn in CY20 as against Rs6.0 bn in CY19 mainly on account of the impact of implementation of new Indian Accounting Standard (IndAS) 116 Leases. Finance Cost: Finance cost decreased by 33.8% YoY to Rs570 mn in CY20 as against Rs862 mn in CY19 due to and the impact of IndAS 116 Leases. Effective Tax Rate: Total effective tax rate for CY20 stood at 16.2% vs. 33.1 in CY19. APAT: Adjusted PAT increased by 9.4% YoY to Rs13.4 bn in CY20 as against Rs12.6 bn in CY19. After adjusting exceptional items, APAT increased by 9.4% YoY to Rs13.4 bn in CY20 as against Rs12.6 bn in CY19. APAT margin increased by 169.3 bps YoY to 9.7% in CY20 as against 8.0% in CY19. Return Ratios: ROCE decreased by 104 bps YoY to 9.0% in CY20 as against 10.1% in CY19 and ROE also decreased by 32 bps YoY to 11.1% from 11.4% in CY19.

PAT margin trend Return Ratios Trend


Balance Sheet Analysis Networth: Networth increased 9.9% YoY to Rs126.6 bn in CY20 as against Rs115.2 bn in CY19. The paid-up equity share capital of ACC stood at Rs1,880 mn comprising of 18,77,87,263 equity shares of Rs10/- each. Net Cash: Net Debt increased 29.8% YoY to Rs58.9 bn in CY20 as against Rs45.4 bn

in CY19.

Gross Block: The company incurred a capex of Rs7.5 bn in CY20 vs. Rs5.4 bn in CY19, a growth of 38.0% YoY. Gross Block stands at Rs98.1 bn in CY20 vs. Rs94.0 bn in CY19, a growth of 4.4% YoY. Fixed Asset turnover decreased to 2.1x in CY20 from 2.2x in CY19. Capex Plan: ACC announced clinker capacity addition of 2.7mtpa and grinding capacity addition of 6.2mtpa during 4QCY18. The expansion plan includes 2.7mtpa clinker capacity and 1mtpa cement capacity as part of greenfield integrated plant at Ametha, District Katni, MP, expansion of the existing GU at Tikaria, UP (capacity of 1.6mtpa) and a third GU in UP (cement capacity 2.2mtpa). These plants are expected to be operational by H1CY22E which will support volume growth. ACC plans to spend to Rs30 bn capex on these capacity additions. ACC is expanding its waste heat recovery capacity by adding 22.5 MW in addition to its current capacity of 7.5 MW. The new capacities will be operational in the year 2022.

6.2

6.9 6.8

8.0

9.7

5

6

7

8

9

10

56789

1011121314


APAT (Rs bn) APAT Margin (%) - RHS

7.8

10.1 10.1

11.411.1

6.8

9.5 9.410.1

9.0

6

7

8

9

10

11

12


ROE (%) ROCE (%)

March 12, 2021 10 ACC

Gross Block, Capex & FA Turnover Trend


Working Capital: Trade receivables decreased to Rs4.5 bn in CY20, a de-growth of 28.1% YoY resulting in reduced debtor days of 12 days vs. 15 days in CY19. Inventories increased to Rs9.0 bn in CY20, a de-growth of 21.1% YoY resulting in decreased inventory days of 24 vs. 27 days. Trade payables decreased to Rs14.2 bn in CY20, a de-growth of 3.7% YoY resulting in increased trade payable days of 38 vs. 34 days.

Debtor, Inventory and Creditor Days


Cash Flow: Cash flow from operations decreased by 1.5% YoY to Rs22.2 bn in CY20 compared to Rs22.5 bn in CY19. Cash flow from investing increased to (Rs5.4 bn) in CY20 vs. (Rs3.3 bn) in CY19 due to increase in capex. Cash flow from financing stood at (Rs3.3 bn) in CY20 vs. (Rs3.7 bn) in CY19.

81.3

84.8 88.8 94.0

98.1

5.2 5.3 5.2 5.4 7.5

1.35

1.56

1.67 1.67

1.41

1.2

1.3

1.4

1.5

1.6

1.7

1.8

0

20

40

60

80

100

120


Gross Block (Rs bn) Capex (Rs bn) FA Turnover (x) - RHS

18 1821

1512

4139

41

2724

42

5047

3438

10

15

20

25

30

35

40

45

50

55


Debtor Days Inventory Days Creditor Days

March 12, 2021 11 ACC

Cash Flows Trend


Dividend: ACC declared a dividend of Rs14 per equity share on face value of Rs10 per share in CY20 vs. Rs14 per equity share in CY19. The cash outflow on account of dividend and dividend distribution tax amounted to Rs2.6 bn in CY20 vs. Rs3.2 bn in CY19.

Subsidiary Financials Subsidiary Financials

Particulars (Rs bn) Standalone Consolidated Difference

Revenue 137.8 137.9 0.0

Expenditure 114.3 114.3 -0.0

EBITDA 23.5 23.6 0.0

Depreciation 6.4 6.4 0.0

PBIT 17.2 17.2 -0.0

Other Income 2.0 2.2 0.1

Interest 0.6 0.6 0.0

PBT 18.6 18.8 0.1

Stamp duty on acquisition of assets 1.8 1.8 - Share in Profit / (Loss) of Associates and Joint Venture (net of tax) - 0.1 0.1

PBT 16.9 17.1 0.2

Normalised Tax Expenses 5.5 5.5 0.0

Reversal of Deferred Tax Liability (2.7) (2.7)

PAT 14.1 14.3 0.2


(8)(6)(3)(1)

257

101215172022


CFO (Rs bn) CFI (Rs bn) CFF (Rs bn) FCFF (Rs bn)

March 12, 2021 12 ACC

Profit and Loss Account

(Rs Mn) CY19A CY20A CY21E CY22E

Revenue 1,56,567 1,37,845 1,62,580 1,79,907

Total Expense 1,32,472 1,14,324 1,32,854 1,46,577

COGS 27,206 25,124 29,711 32,893

Employees Cost 8,640 8,391 9,971 10,876

Other expenses 96,626 80,809 93,172 1,02,809

EBIDTA 24,095 23,522 29,726 33,330

Depreciation 6,030 6,353 6,773 7,926

EBIT 18,065 17,169 22,953 25,403

Interest 862 570 576 582

Other Income 3,112 2,040 1,938 1,938

Exc. / E.O. items 0 1,760 0 0

EBT 20,315 20,398 24,315 26,759

Tax 6,726 2,728 7,294 8,028

RPAT 13,589 17,670 17,020 18,732

Minority Interest 0 0 0 0

Profit/Loss share of associates 0 0 0 0

APAT 13,589 16,480 17,020 18,732

Balance Sheet


Sources of Funds

Equity Capital 1,880 1,880 1,880 1,880

Minority Interest 0 0 0 0

Reserves & Surplus 1,13,333 1,24,735 1,39,123 1,55,223

Net Worth 1,15,213 1,26,614 1,41,003 1,57,103

Total Debt 0 0 0 0

Net Deferred Tax Liability 6,422 3,762 3,762 3,762

Total Capital Employed 1,21,635 1,30,376 1,44,765 1,60,865

Applications of Funds

Net Block 69,914 66,586 65,813 89,887

CWIP 4,353 5,453 16,453 1,453

Investments 2,302 2,206 2,601 2,699

Current Assets, Loans & Advances 94,252 1,07,014 1,12,999 1,25,978

Inventories 11,410 9,005 11,581 12,815

Receivables 6,284 4,515 6,236 6,901

Cash and Bank Balances 45,381 58,911 59,261 68,506

Loans and Advances 314 598 650 720

Other Current Assets 30,863 33,985 35,271 37,036

Less: Current Liabilities & Provisions 49,186 50,883 53,114 59,164

Payables 14,710 14,163 15,275 17,251

Other Current Liabilities 34,476 36,720 37,839 41,913

sub total

Net Current Assets 45,066 56,131 59,885 66,814

Total Assets 1,21,635 1,30,376 1,44,753 1,60,852

E – Estimates

March 12, 2021 13 ACC

Important Ratios

Particulars CY19A CY20A CY21E CY22E

(A) Margins (%)

Gross Profit Margin 82.6 81.8 81.7 81.7

EBIDTA Margin 15.4 17.1 18.3 18.5

EBIT Margin 11.5 12.5 14.1 14.1

Tax rate 33.1 13.4 30.0 30.0

Net Profit Margin 8.7 12.8 10.5 10.4

(B) As Percentage of Net Sales (%)

COGS 17.4 18.2 18.3 18.3

Employee 5.5 6.1 6.1 6.0

Other 61.7 58.6 57.3 57.1

(C) Measure of Financial Status

Gross Debt / Equity 0.0 0.0 0.0 0.0

Interest Coverage 21.0 30.1 39.8 43.7

Inventory days 27 24 26 26

Debtors days 15 12 14 14

Average Cost of Debt

Payable days 34 38 34 35

Working Capital days 105 149 134 136

FA T/O 2.2 2.1 2.5 2.0

(D) Measures of Investment

AEPS (Rs) 72.4 87.8 90.6 99.7

CEPS (Rs) 104.5 121.6 126.7 142.0

DPS (Rs) 15.0 14.0 14.0 14.0

Dividend Payout (%) 20.7 16.0 15.5 14.1

BVPS (Rs) 613.5 674.2 750.9 836.6

RoANW (%) 12.3 13.6 12.7 12.6

RoACE (%) 12.4 13.1 12.8 12.6

RoAIC (%) 22.8 23.2 29.2 28.6

(E) Valuation Ratios

CMP (Rs) 1835 1835 1835 1835

P/E 25.4 20.9 20.2 18.4

Mcap (Rs Mn) 3,44,599 3,44,599 3,44,599 3,44,599

MCap/ Sales 2.2 2.5 2.1 1.9

EV 2,99,218 2,85,688 2,85,338 2,76,093

EV/Sales 1.9 2.1 1.8 1.5

EV/EBITDA 12.4 12.1 9.6 8.3

P/BV 3.0 2.7 2.4 2.2

Dividend Yield (%) 0.8 0.8 0.8 0.8

(F) Growth Rate (%)

Revenue 5.8 (12.0) 17.9 10.7

EBITDA 17.8 (2.4) 26.4 12.1

EBIT 25.0 (5.0) 33.7 10.7

PBT 35.9 0.4 19.2 10.1

APAT 35.1 21.3 3.3 10.1

EPS 35.1 21.3 3.3 10.1

Cash Flow


CFO 11,181 22,484 22,156 21,169

CFI (3,678) (3,283) (5,366) (17,576)

CFF (4,411) (3,742) (3,274) (3,230)

FCFF 6,004 17,079 14,697 4,169

Opening Cash 26,902 30,003 45,381 58,899

Closing Cash 30,003 45,381 58,899 59,261

E – Estimates

DART RATING MATRIX

Total Return Expectation (12 Months)

Buy > 20%

Accumulate 10 to 20%

Reduce 0 to 10%

Sell < 0%

Rating and Target Price History

Month Rating TP (Rs.) Price (Rs.)

Mar-20 Buy 1,387 948

Mar-20 Buy 1,387 934

Jun-20 Accumulate 1,366 1,302

Jul-20 Buy 1,760 1,330

Aug-20 Buy 1,760 1,385

Oct-20 Buy 1,966 1,563

Dec-20 Buy 1,966 1,666

Feb-21 Buy 2,139 1,776

Feb-21 Buy 2,139 1,766

*Price as on recommendation date

DART Team

Purvag Shah Managing Director [email protected] +9122 4096 9747

Amit Khurana, CFA Head of Equities [email protected] +9122 4096 9745

CONTACT DETAILS

Equity Sales Designation E-mail Direct Lines

Dinesh Bajaj VP - Equity Sales [email protected] +9122 4096 9709

Kapil Yadav VP - Equity Sales [email protected] +9122 4096 9735

Yomika Agarwal VP - Equity Sales [email protected] +9122 4096 9772

Jubbin Shah VP - Equity Sales [email protected] +9122 4096 9779

Ashwani Kandoi AVP - Equity Sales [email protected] +9122 4096 9725

Lekha Nahar AVP - Equity Sales [email protected] +9122 4096 9740

Equity Trading Designation E-mail

P. Sridhar SVP and Head of Sales Trading [email protected] +9122 4096 9728

Chandrakant Ware VP - Sales Trading [email protected] +9122 4096 9707

Shirish Thakkar VP - Head Domestic Derivatives Sales Trading [email protected] +9122 4096 9702

Kartik Mehta Asia Head Derivatives [email protected] +9122 4096 9715

Dinesh Mehta Co- Head Asia Derivatives [email protected] +9122 4096 9765

Bhavin Mehta VP - Derivatives Strategist [email protected] +9122 4096 9705

870

1,130

1,390

1,650

1,910

2,170

Mar-

20

Apr-

20

May-2

0

Jun-2

0

Jul-20

Aug-2

0

Sep-2

0

Oct-

20

Nov-2

0

Dec-2

0

Jan-2

1

Fe

b-2

1

Mar-

21

(Rs) ACC Target Price

Dolat Capital Market Private Limited. Sunshine Tower, 28th Floor, Senapati Bapat Marg, Dadar (West), Mumbai 400013

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I. Analyst(s) and Associate (S) holding in the Stock(s): (Nil)

II. Disclaimer: This research report has been prepared by Dolat Capital Market Private Limited. to provide information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies) solely for the purpose of information of the select recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written consent of Dolat Capital Market Private Limited. This report has been prepared independent of the companies covered herein. Dolat Capital Market Private Limited. and its affiliated companies are part of a multi-service, integrated investment banking, brokerage and financing group. Dolat Capital Market Private Limited. and/or its affiliated company(ies) might have provided or may provide services in respect of managing offerings of securities, corporate finance, investment banking, mergers & acquisitions, financing or any other advisory services to the company(ies) covered herein. Dolat Capital Market Private Limited. and/or its affiliated company(ies) might have received or may receive compensation from the company(ies) mentioned in this report for rendering any of the above services. Research analysts and sales persons of Dolat Capital Market Private Limited. may provide important inputs to its affiliated company(ies) associated with it. While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or developments referred to herein, and Dolat Capital Market Private Limited. does not warrant its accuracy or completeness. Dolat Capital Market Private Limited. may not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision. The investment discussed or views expressed herein may not be suitable for all investors. The user assumes the entire risk of any use made of this information. The information contained herein may be changed without notice and Dolat Capital Market Private Limited. reserves the right to make modifications and alterations to this statement as they may deem fit from time to time. Dolat Capital Market Private Limited. and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction. This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Dolat Capital Market Private Limited. and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required to inform themselves of and to observe such restrictions.

For U.S. Entity/ persons only: This research report is a product of Dolat Capital Market Private Limited., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

This report is intended for distribution by Dolat Capital Market Private Limited. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person or entity.

In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Dolat Capital Market Private Limited. has entered into an agreement with a U.S. registered broker-dealer Ltd StoneX Financial Inc.(“StoneX”). Transactions in securities discussed in this research report should be effected through StoneX Financial Inc.(“StoneX”) or another U.S. registered broker dealer/Entity as informed by Dolat Capital Market Private Limited. from time to time.

Dolat Capital Market Private Limited.

Corporate Identity Number: U65990DD1993PTC009797 Member: BSE Limited and National Stock Exchange of India Limited.

SEBI Registration No: BSE – INZ000274132, NSE - INZ000274132, Research: INH000000685 Registered office: Office No. 141, Centre Point, Somnath, Daman – 396 210, Daman & Diu

Board: +9122 40969700 | Fax: +9122 22651278 | Email: [email protected] | www.dolatresearch.com

Documents

ACC 130 - Moneycontrol.com