ACC Q2 Results: Brokerages Up Price Targets; Cement Stocks Rally
Here is what analysts made of ACC’s second-quarter results...
Shares of ACC Ltd. gained the most among peers after brokerages raised target prices for the cement maker, citing a better-than-expected second quarter, improved realisations and cost-saving efforts.
That’s despite a 9.5% sequential fall in revenue of the Lafarge Holcim subsidiary at Rs 3,884.8 crore in the April-June period. That compares with the Rs 3,705.3-crore consensus estimate of analysts tracked by Bloomberg. ACC follows January-December fiscal.
Net profit down 4.2% at Rs 533.8 crore, surpassing the Rs 453-crore consensus estimate.
Ebitda rose 1.8% at Rs 874.7 crore compared with the Rs 726.4-crore estimate.
Margin stood at 22.5% versus 20.02%.
Shares of ACC gained as much as 8.9%, compared with a 1.5-8.4% rise in other cement stocks in afternoon trade on Tuesday. Of the 44 analysts tracking ACC, 35 have a ‘buy’ rating, six recommend a ‘hold’ and three suggest a ‘sell’, according to Bloomberg data. After today's rally, the ACC stock is trading near the Bloomberg consensus 12-month target price of Rs 2,311.
UltraTech Cement Ltd. shares rose as much as 3.2% to Rs 7,544 apiece.
Shree Cements Ltd. stock rose as much as 1.9% to Rs 28,555 apiece.
Ambuja Cements Ltd. shares rallied as much as 5.8% to Rs 408.9 apiece.
JK Lakhshmi Cement Ltd. shares surged as much as 8.4% to Rs 715 apiece.
Here are key brokerage’s takeaways on ACC’s second-quarter results...
UBS
Maintains ‘sell’ rating; raises target price to Rs 1,530 from Rs 1,407 apiece.
Q2 beat on better realisations, continued cost savings.
Ebitda was 20% ahead of consensus driven by raw material cost decline.
Ebitda per tonne was the best quarterly print in last 10 years at least.
Sharp decline in raw material cost is unsustainable.
Bulk of the cost savings driven impact is already through.
Expects company to lose capacity market share.
Credit Suisse
Maintains ‘neutral’; hikes target price to Rs 2,450 from Rs 2,000 apiece.
Strong volume growth in partly impacted quarter, realisations up QoQ.
Ebitda increase QoQ driven by higher realization.
Ametha expansion and associated grinding unit on track.
Near-term weakness may emerge on Covid, commodity pressures.
Jefferies
Maintains ‘buy’; raises target price to Rs 2,870 from Rs 2,300 apiece.
Volume growth over 40% YoY was 5% ahead of estimates.
Blended realisations grew 5-6% YoY and QoQ, and was a bit ahead of estimates, led by south and east markets.
Unit Ebitda was the highest in a decade.
Kotak Securities
Upgrades to ‘add’ from ‘sell’; hikes target price to Rs 2,300 from Rs 1,950 apiece.
Q2 CY21: Ebitda outperformance continues on lower costs.
Cost-saving programmes, fuel-mix rationalisation and lower clinker factor are driving sustainable cost efficiencies.
Continuous focus on cost-saving initiatives yielding results.
Expansion and cost-saving projects provide growth visibility.