ACC Q1 results beat estimates; brokerages raise targets
ACC share price rose more than 1% on Friday after the company reported robust Q1 results with net profit doubling during the quarter. ACC shares gained as much as 1.72% to ₹1,972.00 apiece on the BSE.
The Adani group cement manufacturing company ACC Ltd posted a net profit of ₹466.14 crore for the quarter ending June 2023, registering a growth of 105% as compared to ₹227.35 crore in the corresponding period of last year.
The company’s consolidated revenue in Q1FY24 increased 16.4% to ₹5,201.11 crore from ₹4,468.39 crore, YoY. Volume rose by 23.2% to 9.4 MT from 7.60 MT, YoY, supported by increase in blended cement and improvement in efficiency parameters.
Read here: ACC Q1 Results: Net profit soars 105% to ₹466.14 crore; revenue growth at 16.4% YoY
Analysts maintained their bullish view on ACC with most brokerages raising their targets on the stock.
Citi has a ‘Buy’ rating on ACC and raised the target price to ₹2,350 per share from ₹2,150 earlier as ACC Q1 results beat Citi’s estimates.
ACC’s EBITDA was 26% ahead of Citi estimates on stronger volumes and better costs. The brokerage believes efficiency and business initiatives were playing out for the company.
UBS has a ‘Buy’ call on ACC and it raised the target price to ₹2,400 per share saying that the Q1 results were a stellar beat.
ACC’s cement volume grew 23% YoY significantly beating UBS estimates and consensus expectations of 10% growth. Realisation per tonne fell 2% QoQ, inline with peers, while EBITDA beat estimates by 22%.
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ACC Q1 results beat domestic brokerage house Motilal Oswal Financial Services’ estimates on all fronts.
“ACC’s 1QFY24 result surprised us as the company operated at 100%+ capacity utilization level (volumes 17% above estimate) with controlled operating costs,” the brokerage said.
It will monitor the sustainability of cost savings and profitability improvement. Further, there is still a lack of clarity on ACC’s growth plans, it said.
Motilal Oswal believes ACC trades at reasonable valuations of 11.0x/8.2x FY24E/FY25E EV/EBITDA and $100/$95 FY24E/FY25E EV/ton. It maintained its ‘Neutral’ rating on the stock and raised the target price to ₹2,180 per share from ₹2,000 earlier.
Also Read: Ajanta Pharma share price surges 9% to a 52-week high after Q1 results; what should investors do?
Antique Stock Broking said that the 3 mtpa Ametha expansion commissioning in Q2FY24 would allow ACC to take advantage of pre-election demand and ramp up volume faster. Besides, management is targeting ₹500/ton benefit (ex-drop in fuel prices) led by various internal cost efficiencies over the next two years.
Factoring in the Q1 beat, the brokerage raised its FY24–25E EBITDA by 8%–15% and increased target price to ₹2,300 from ₹2,100 earlier based on unchanged 10x FY25E EV/ EBITDA.
It upgraded the stock to ‘Buy’ from ‘Hold’ earlier. Valuations at ~8x FY25E EV/EBITDA likely factors in concerns around lower near-term expansion plans of the company, in the brokerages view.
At 10:55 am, ACC share price was trading 0.80% higher at ₹1,954.15 apiece on the BSE.
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Updated: 28 Jul 2023, 10:56 AM IST
