Shares of ACC have remained under pressure this year along with other Adani Group stocks after the Hindenburg report came out. Analysts at Axis Securities and ICICI Securities see the stock making a strong comeback.
The ACC Analysts: The Uttam K Srimal-led analyst team at Axis Securities maintained their “buy” rating but cut the price target to ₹2,460 from ₹2,540. The revised target still reflects an around 31% upside from the stock’s last closing price of ₹1,878.
ICICI Securities’ analysts led by Navin Sahadeo upgraded the stock’s rating from “add” to “buy” raising the price target to ₹2,451 from ₹2,338.
The ACC Thesis: Axis Securities in its latest note said that the company’s revenue and profit for the September quarter beat its estimates. However, the brokerage firm added that the cement major’s EBITDA missed estimates. ICICI Securities also reiterated the point that the company missed estimates on EBITDA.
The domestic brokerage firms attributed the miss to an increase in raw material costs, higher purchase of stock-in-trade, and lower realisation. However, the analysts expect this to change.
As per the brokerage firms, the cement industry is poised for significant volumetric growth, driven by a robust demand environment, particularly due to increased investments in housing and infrastructure projects.
Cement prices are also on an upward trajectory, across various regions, marking a rebound after nearly a year. Preliminary assessments and channel checks by ICICI Securities analysts indicate that this price trend is likely to be sustained in the near term. The analysts said that these factors not only augur well for the company’s growth but will also help improve its margins.
The brokerages also add that the company after the correction this year is trading at an attractive valuation.
Price Action: ACC’s share price was up 0.49% to trade at ₹1,887.15 in the early hours of trading on Monday.
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