ACC shares hit 5-month high on robust Q1; jump 15% in 6 sessions

Shares of ACC continued gaining streak for the sixth straight session on Monday, with the share price of the cement major rising as much as 4% to hit a 5-month high in intraday trade today. The largecap cement stock has maintained an uptrend for the last six sessions and surged nearly 15% during the same period. Analysts have turned bullish on the stock after the Adani Group company last week reported better than expected earnings for the first quarter ended June 30, 2023.

Extending its gaining momentum, ACC shares surged 4.1% to touch an intraday high of ₹2,030 on the BSE, while the market capitalisation increased to ₹37,980 crore. Early today, the Adani group stock opened lower at ₹1,943 against the previous closing price of ₹1,950.10. At the time of reporting, ACC share price was quoting at ₹2,022.50, up 3.7%, with 0.68 lakh shares changing hands over the counter as compared to a two-week average volume of 0.29 lakh scrips.

At the current price level, ACC shares trade nearly 3% lower than its 52-week high of ₹2,784.95 touched on September 19, 2022. The counter has risen 27% in the last four months from its 52-week low of ₹1,593.50 hit on March 28, 2023.

Over the past year, ACC shares have fallen 9%, while it has tumbled more than 17% in the calendar year 2023. In the past six months, the cement stock has gained 3%, whereas it climbed nearly 12% in a month and 9.5% in a week.

ACC has an average price target of ₹2,120.89, which represents an upside of 8.75% from Friday’s closing price of 1,950.10 on the BSE, as per Trendlyne data, a platform for stock market analysis.

ACC released its first-quarter earnings report on July 27, which saw its consolidated net profit zooming 105% to ₹466.14 crore in Q1FY24, from ₹227.35 crore in the same period last year. Sequentially, the profit grew 97.8% from ₹235.66 crore in the Q4 of FY24. The revenue from operations grew 16.4% to ₹5,201.11 crore as against ₹4,468.42 crore in Q1 of FY23. On quarter-on-quarter, the revenue rose 8.5% from ₹4,790.91 crore in the January to March period of FY23.

On the operational front, EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at ₹848 crore, up 76.6% as against ₹480 crore in the same period last year. The EBITDA margin stood at 16.3% as against 10.7% in Q1 of FY23.

Post Q1 results, Axis Securities maintained a ‘Buy’ rating on the stock with an upgraded price target of ₹2,540 per share from ₹2,300 estimated earlier. “With the rise in construction activities across its markets, the company foresees the continuation of the elevated demand and strong volumes in the upcoming quarters. EBITDA is expected to sustain and improve further led by various efficiency and operational excellence initiatives undertaken by the company,” it says in a report.

The brokerage in its report said that the stock currently trades at 11xFY24E and 8xFY25E enterprise value to earnings before interest, taxes, depreciation, and amortization ratio (EV/EBITDA) and EV/Tonne of $100 and $95, respectively, which is attractive compared to other larger peers in the sector.

Going forward, the brokerage expects the company’s growth to be driven by the addition of a new greenfield integrated unit in Ametha (MP) in a demand-accretive central region by Q2FY24E, higher cement demand backed by increased spending on infrastructure development, particularly roads, railways, affordable housing and other schemes, and better synergies with other group companies. 

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