- Revenue: INR 8,894 crores, a 12% increase year-over-year.
- Operational Cost: INR 4,345 per ton, a 9% decline.
- Energy Costs: 13% decline, with fuel costs reduced by 17% to INR 1.84 per 1,000 kg.
- Transportation Cost: 8% decline to INR 1,280 per ton.
- EBITDA: INR 1,699 crores, a 37% increase.
- EBITDA per Ton: INR 1,026, a 17% increase.
- EBITDA Margin: Expanded by 3.5% to 19.1%.
- Cash and Cash Equivalents: INR 15,999 crores as of March 31, 2024, increasing to INR 24,338 crores with warrant money received in April.
- Full Year Revenue: INR 33,160 crores, a 7% increase year-over-year.
- Full Year EBITDA: INR 6,400 crores, a 73% increase.
- Full Year EBITDA per Ton: INR 1,081, a 60% increase.
- Full Year EBITDA Margin: Expanded by 7.4% to 19.3%.
- Capacity Expansion: Increased by 17% to 78.9 million tonnes, with a target of 140 million tonnes by FY28.
- Promoter Stake: Increased by 3.6% to 70.3%.
- Waste Heat Recovery System (WHRS): Capacity increased to 134 megawatts, targeting 186 megawatts by March 2025.
- Green Power: 60% of power requirement to be met through green power by FY26.
- Coal Mines: Secured 3 mines catering to 50% of current requirement, targeting 80-90% through captive sources within 12 months.
- Freight and Forwarding Costs: Reduced by 8% to INR 1,280 per tonne.
- Limestone Reserves: Total reserves reaching 7.8 billion tonnes.
- Net Worth: Approximately INR 60,000 crores including warrant money.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ACC Ltd (BOM:500410, Financial) reported a revenue increase of 12% year-over-year, reaching INR8,894 crores.
- The company achieved the highest-ever clinker and cement sales for the last 20 quarters in Q4 FY24.
- Operational costs per ton decreased by 9%, driven by a 13% decline in energy costs.
- EBITDA grew by 37% to INR1,699 crores, with EBITDA per ton increasing by 17% to INR1,026.
- The company remains debt-free and has a strong cash position, with consolidated cash and cash equivalents at INR24,338 crores.
Negative Points
- Despite the positive financial performance, the company faces uncertainties related to future developments and market conditions.
- The company is awaiting environmental clearances for new clinker facilities, which could delay capacity expansion plans.
- Sanghi Industries, a recent acquisition, is still undergoing refurbishment and stabilization, which may impact short-term performance.
- The company's clinker factor is relatively high, which could affect cost efficiency in the long run.
- There are concerns about the impact of potential market price fluctuations on the company's profitability, despite cost-saving initiatives.
Q & A Highlights
Q: Can you provide more details on the capacity expansion plan, particularly regarding clinker capacity?
A: We are ready to place orders for three new clinker lines, one in the West, one in the North, and one in the South, pending environmental clearances (EC). This will add 12 million tonnes of clinker capacity, which can produce over 20 million tonnes of cement. Our target is to reach 82 million tonnes of clinker capacity by FY28, with 80% of this being brownfield expansions.
Q: What is the overall game plan for Sanghi Industries, especially after the recent fund-raising announcement?
A: Sanghi has a strategic location and fits well within our ecosystem. We plan to run both existing kilns at full capacity by H2 of this year and add two more kilns of 4 million tonnes each in the future. The recent fund-raising is aimed at improving financial efficiency and supporting these expansion plans.
Q: How should we look at Sanghi's profitability and volume targets for FY25?
A: We are targeting a minimum of 5 million tonnes from Sanghi in FY25. The Master Supply Agreement (MSA) with Sanghi ensures a 9% margin for them, with the rest of the margin retained by Ambuja and ACC.
Q: Given the industry's focus on cost-saving initiatives, will margin expansion be led by cost control rather than price increases?
A: While cost control is a significant focus, we also aim to maintain stable pricing. Our initiatives in waste heat recovery, green energy, and logistics optimization will drive cost reductions. However, we expect cement demand to grow at 8-9%, which should support stable or improving prices.
Q: Can you break down the expected INR500 per tonne cost reduction by FY28?
A: The cost reduction will come from several areas: coal mines and long-term procurement agreements, investments in railway wagons, and green energy initiatives. For example, our power cost is expected to decrease from INR6.75 to around INR4.50 per unit, contributing significantly to the overall cost reduction.
Q: What is the strategy for the South Indian market, especially with the new Tuticorin grinding unit?
A: We are leveraging our existing infrastructure, including ports and bulk terminals, to efficiently transport clinker and cement to the South. The new Tuticorin unit will use clinker from Sanghi, and we are also planning additional grinding stations to serve this market.
Q: How do you plan to achieve the target of 20% market share by FY28?
A: We are confident in our capacity expansion plans to 140 million tonnes. Our strong dealer network, brand strength, and strategic investments in underserved markets will help us achieve this target without significantly impacting market prices.
Q: What is the outlook for smaller cement players in the industry?
A: The industry is moving towards consolidation, with larger players benefiting from scale, efficiency, and strong balance sheets. Smaller players may find it challenging to compete unless they can match these advantages.
Q: Can you provide more details on the coal blocks you have won and their suitability for cement kilns?
A: The coal blocks we have won are suitable for our cement kilns, with good quality coal that meets our requirements. We are leveraging our expertise within the Adani Group to ensure efficient and cost-effective coal procurement.
Q: What is the long-term corporate strategy for Ambuja, ACC, and Sanghi? Will there be any consolidation?
A: While we operate as one management team, any decisions on corporate structure will be made transparently and in compliance with legal requirements. Our focus remains on maximizing shareholder value through efficient operations and strategic growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
