What Analysts Made Of ACC’s September Quarter Results
Most analysts remained bullish on ACC as a rise in prices and lower costs drove the cement maker’s operating performance higher.
Most analysts remained bullish on ACC Ltd. as a rise in prices and fall in raw materials costs and other expenses drove the cement maker’s operating performance.
Operating profit of the cement maker rose 25.7 percent year-on-year in the quarter ended September to Rs 556 crore. Net profit of ACC, which follows January-December financial year, increased 45.9 percent over the last year to Rs 300 crore, according to an exchange filing. But the company’s volumes dropped 2 percent year-on-year to 6.4 million tonnes.
A robust performance by the pan-India cement maker also turned peers upbeat. Stocks of all cement makers gained in the early trade Wednesday. Shares of ACC rose as much as 1.52 percent compare with the NSE Nifty Index’s 0.19 percent gain. Of the 42 analysts tracking the counter, 25 have a ‘buy’ rating. The Bloomberg consensus potential upside is 12 percent from the current level.
Brokerages on ACC and Ambuja Cement’s quarterly performance:
HSBC
- Upgrades ACC and Ambuja Cements Ltd. to ‘Buy’ from ‘Hold’
- Beat was primarily driven by better-than-expected realisations, lower-than-expected costs
- ACC and Ambuja Cements trade below 16 percent and 11 percent discount to long term enterprise value per tonne average.
- Improving efficiency and attractive valuation make a strong case for an upgrade.
Citi On ACC
- Maintains ‘Buy’ rating but cuts target price to Rs 2,150 from Rs 2,175 a share.
- Would buy into current weakness.
- Expects demand/price improvement post Diwali.
- Petcoke prices should continue to fall in fourth quarter.
Edelweiss On ACC
- Maintains ‘Buy’ rating with a target price of Rs 1,846 apiece.
- Fixed cost was also under control, down 2 percent year-on-year.
- Cement demand muted over the past two quarters; hopeful of recovery ahead.
- Sees limited risk to 2019 and 2020 earnings.
Morgan Stanley On ACC
- Maintains ‘Underweight’ with a target price of Rs 1,425 apiece.
- Valuation cheap but muted earnings CAGR keeps the counter underweight.
- Sees upside risk of 4-6 percent to 2019-21 Ebitda estimates due to weak realisation in the near term.
- Sees slower improvement in realisations compared to peers in view of higher exposure to the southern/eastern regions.
