ACC’s cement volumes were up 4 per cent in the March quarter after 9-10 per cent fall in volumes in the previous two quarters.

ACC’s March quarter results beat market estimates – by showing decent growth in volumes.

Its consolidated sales were up 8 per cent to ₹3,108 crore y-o-y during the March quarter of 2016-17. During the March quarter, cement volumes were up by 4 per cent to 6.6 million tonnes, while that of concrete were up by 7 per cent to 0.72 million cubic metres.

Sales from its newly expanded capacity at Jamul and Sindri plant in the eastern region – helped prop up overall cement sales.

In the previous two quarters, it had reported volume decline to the tune of 9-10 per cent. ACC sales in the fourth quarter was 13 per cent higher than Bloomberg estimates.

However, its operating margins reduced y-o-y with escalation of power and fuel costs, logistics as well as other expenses.

Operating margins was down to 13.4 per cent during the March quarter of 2016-17 compared to 15.3 per cent in the corresponding quarter of the previous year.

With doubling of petcoke prices in the last one year, power and fuel costs were up by 10 per cent y-o-y during the quarter.

Petcoke is used as an alternative for coal and its usage increased from 48 per cent to 65 per cent in the last one year. Rising diesel prices – which was up 25 per cent y-o-y -- spiked logistics costs, especially that of road freight.

Moreover, other costs such as packaging increased by 5 per cent impacting overall margins.

Higher operating costs along with higher depreciation (from commissioning of new plants) impacted overall profitability. Net profit was down by 9 per cent to ₹211 crore. However, the figures were 27 per cent higher than Bloomberg estimates.

Outlook

While the company is witnessing a boost in volumes – aided by higher infrastructure activity, the forthcoming quarters could see a slowdown in sales with the onset of monsoons. It needs to be seen if the company could continue to keep the volume growth momentum.

Moreover, the investors should keep an eye on petcoke prices, that has the potential to pull down margins and profitability of the company.

The share price was up more than 7 per cent on Monday to ₹1,606 per share – post announcement of the results.

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