ACC’s profits declined in the fourth quarter due to rising energy prices. However, after the results, brokerage houses are bullish on the stock.
ACC Stock Price: After the results of the March quarter, today the shares of the cement company ACC are seeing a great rise. Today the stock gained about 5 percent to reach a price of Rs 2154, while on Tuesday it closed at Rs 2057. The company’s quarterly results have been weak. ACC’s profits declined in the fourth quarter due to rising energy prices. However, after the results, brokerage houses are bullish on the stock. He says that the margin of the company has been as per the estimates. Other operating income has also been better. Further, the company will get the benefit of cost control and capacity expansion plan. The brokerage house has expected an upside of 23 percent from the current price in the stock.
The advantage of capacity expansion
Brokerage house Motilal Oswal says that further ACC has plans to expand capacity in Central India, which will benefit. The company has also taken cast control measures. The company expects that due to some initiatives taken by it, there can be a cost saving of up to Rs.100-150/t.
The brokerage house says that the company is not short of cash, the management says that there is a plan to increase the capacity 45-50mtpa in the next 2 to 3 years. The company is in a better position for growth. ACC stock is currently trading at 12.2x/9.1x CY22E/CY23E EV/EBITDA. In such a situation, a price of Rs 2485 can be seen in the stock going forward. The brokerage house has given investment advice in the stock.
Global brokerage also positive
Brokerage house CLSA has given a target of Rs 2530 while advising to buy in the stock. Whereas Jefferies has also advised to buy with a target of Rs 2400. Macquarie has given an outperform rating and has projected the stock to reach Rs 2530. Goldman Sachs, however, has given a neutral rating on the stock and has set a target of Rs 2,300. Different brokerages say that the operating EBITDA of the company in the March quarter has been as per the estimates. However, volumes were under pressure due to weak demand. Profits have been impacted by rising energy prices or other cost increases, and may continue to be visible. But the measures of cast control will give relief. Recovery is expected in EBITDA/Tonne.
Company’s profit decreased
ACC’s profit on a year-on-year basis declined by 29 per cent to Rs 396.3 crore in the March quarter. While the income of ACC increased from Rs 4,292 crore to Rs 4,426.5 crore. ACC’s EBITDA declined from Rs 860 crore to Rs 634.6 crore. At the same time, ACC’s EBITDA margin declined from 20 per cent to 14.34 per cent in Q1 CY22 on a year-on-year basis. Cement sales volume declined from 79.7 Lk Ton to 77.1 Lk Ton on a year-on-year basis.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)