ACC, which was upbeat in morning trades on Friday, seemed enervated after results turned out below expectations of the market. By 14:00 IST, the scrip of the largest Indian cement maker slipped 0.98% to Rs 156. It came off its intra-day high of Rs 160 by then. Over 3.42 lakh ACC shares were traded on BSE thus far.
In afternoon trades, ACC came out with its third quarter ended 31 December 2002 results. For Q3, ACC posted a 19.4% rise in net profit to Rs 20.21 crore compared to Rs 16.93 crore in the corresponding period of the previous year. However, net sales declined by 3.06% to Rs 682.28 crore (Rs 6.82 billion) from Rs 703.86 crore (Rs 7.03 billion) in DQ 2001.
Both net sales as well as net profit fell below analysts' expectations. A capitalmarket.com poll of six cement analysts projected a net profit growth in the range of 20.5-135.2% to Rs 20.5-40 crore. Net sales were projected at between Rs 694 crore (Rs 6.94 billion) and Rs 734 crore (Rs 7.34 billion), a change of negative 1.4% to positive 4.3%.
The company expects the momentum in growth rate to continue during Q4 of the current year on account of the Centre's focus on housing, road construction and other infrastructure development.
Cement analysts say that demand for cement is expected to be on a rise following the infrastructure activities, but till cement production is not curbed to set off hikes in prices, profitability of the company will not improve. Profitability of cement makers is directly dependent on a rise in realisations. As a consequence, firm cement prices are vital for the industry.
The cement supply overhang, meanwhile, is expected to continue. In January 2003, Sanghi Industries was expected to commence production, but it has postponed that till March 2003. If Sanghi Industries commences production, the supply overhang will worsen.
In December 2002, the cement industry registered a 13.9% rise in dispatches to 9.51 million tonnes, from 8.35 million tonnes in the same month a year earlier. Production rose by 17.6% to 96.9 lakh tonnes, from 8.24 million tonnes a year ago.
BSE Code: 500410