ACC lifts operating margin despite lower revenue, but net profit falls 61%
Lower expenses supported operating profit, while the reported pre-tax profit decline and a lower tax rate shaped the sharp fall in net profit.
Filed 24 Jul 2026, 14:51 IST · ACC Ltd (ACC)
Key takeaways
- ACC's consolidated operating margin narrowed 4.91 percentage points year on year to 7.87% as revenue fell 4.59% while expenses rose 0.79%.
- Net profit declined 60.84% year on year, with a lower 26.5% tax rate partly cushioning the 64.47% fall in profit before tax.
- Other income contributed 15.5% of profit before tax, highlighting a material non-operating contribution to reported earnings.
Price around the results
Imported fuel and packaging costs compressed margins
ACC's consolidated revenue fell 4.59% year on year, but expenses rose 0.79%, reducing operating profit by 41.26% and narrowing operating margin by 4.91 percentage points. Management said higher imported fuel prices and elevated freight and logistics costs linked to West Asia affected the sector, while packaging costs rose 25%-30% during the quarter. Sequentially, revenue fell 18.73% and expenses fell 17.93%, so costs declined less than revenue and operating margin contracted another 0.90 percentage points.
Lower tax softened a sharper pre-tax profit decline
Profit before tax fell 64.47% year on year, while net profit declined 60.84% as the tax rate dropped 6.81 percentage points to 26.5%. Interest expense fell 11.33%, but depreciation rose 2.52%, offering limited relief below operating profit. Other income was 15.5% of profit before tax, making non-operating income a significant part of the reported result.
Margin has declined for three straight quarters
Operating margin has fallen from 14.26% in Q2FY26 to 10.80% in Q3FY26, 8.77% in Q4FY26 and 7.87% in Q1FY27. ACC's margin was 10.85 percentage points below the 18.72% median for 22 reported Commodities peers, placing it third from the bottom. Management said cement demand is expected to remain soft at about 5% in FY27, although it described the long-term demand outlook as intact.
Capacity and logistics initiatives remain the stated priorities
Management said the company targets cement capacity of 119 MTPA in FY27, up from 109 MTPA as of June 30, 2026. The presentation also said ACC is developing an AI-enabled sales and logistics model, plans to induce BCFC rakes and expand rail use, and plans to induct EV trucks. These initiatives were presented alongside the company's response to freight, logistics and fuel-cost pressure.
Initial stock reaction was smaller than its usual result-day move
The stock's initial return was +0.52%, with a -0.37% opening gap and a +0.95% relative move; the next observed session return was +1.81%. Across the last eight results, the stock rose twice and fell six times, with a median absolute move of 1.43%, so the initial reaction was smaller than its typical move and ran against its recent direction.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,808 cr | ₹7,146 cr | -18.73% | -4.59% |
| Other income | ₹31 cr | ₹50 cr | -38.52% | -55.70% |
| Expenses | ₹5,351 cr | ₹6,520 cr | -17.93% | +0.79% |
| Operating profit | ₹457 cr | ₹627 cr | -27.06% | -41.26% |
| Operating margin (%) | 7.87% | 8.77% | — | — |
| Interest | ₹27 cr | ₹27 cr | -0.37% | -11.33% |
| Depreciation | ₹261 cr | ₹279 cr | -6.61% | +2.52% |
| Profit before tax | ₹200 cr | ₹370 cr | -46.00% | -64.47% |
| Tax | ₹53 cr | ₹132 cr | -59.87% | -71.74% |
| Net profit | ₹147 cr | ₹238 cr | -38.31% | -60.84% |
| EPS (₹) | ₹7.83 | ₹12.69 | -38.30% | -60.83% |
Operating margin of 7.87% compares with a Commodities sector median of 18.72% across 22 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.52% | +0.95% |
| Next session | +1.81% | — |
Volume on the results session was 3.20× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- The company reported higher imported fuel prices and elevated freight and logistics costs during Q1 FY27.
- Packaging costs rose 25-30% during Q1 FY27.
Guidance & outlook
- Cement demand is expected to remain soft at about 5% in FY27, although the long-term demand outlook remains intact.
- GDP is projected to grow by 6.6%-6.8% in FY2027.
- The company targets cement capacity of 119 MTPA in FY27.
Expansion
- Cement capacity is planned to increase to 119 MTPA by FY27 from 109 MTPA as of June 30, 2026.
New initiatives
- The company is developing an AI-enabled sales and logistics operating model.
- The company plans to induce BCFC rakes and maximize rail transport mode.
- The company plans to induct EV trucks.
Problems & risks
- The Indian cement sector faced Q1 FY27 cost pressures from higher imported fuel prices and elevated freight and logistics costs linked to West Asia.
- Packaging costs increased by 25-30% during the quarter.
- West Asia conflict may impact the Indian economy.
What to watch
- Whether consolidated operating margin holds above 7.87% after three consecutive quarterly declines.
- Whether packaging-cost pressure remains near the 25%-30% increase reported for Q1FY27.
- Progress toward the 119 MTPA cement-capacity target from 109 MTPA as of June 30, 2026.