Cement maker ACC on July 27 posted an all round beat in its earnings for the April to June 2023 quarter. The firm profit jumped 105 percent year-on-year (YoY) to Rs 466.1 crore while its revenue came in at Rs 5,201.1 crore.

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The strong quarterly numbers of ACC, now a part of Adani Cement, came against the backdrop of volume increase, softening of kiln fuel price and improvement in operational efficiency.

Sales volume (cement and clinker) increased by 23.2 percent year-on-year at 9.4 million tonne supported by an increase in blended cement and improvement in efficiency parameters and reduction in kiln fuel cost by 15.5 percent. Besides, energy efficiency, manpower productivity and other operational efficiency improvement measures have helped optimise cost, according to ACC’s statement.

The total expenses in the quarter stood at Rs 4,655.39 crore, up 10.27 percent from the year-ago period. The total income came in at Rs 5,270 crore, up 16.53 percent.

Following the stellar result, brokerage firm Citi has raised its target price on the stock, implying that it sees a 21 percent upside in the stock. It explained that efficiency and business initiatives played out for the firm in the June ended quarter.

CLSA, meanwhile, has an underperform rating on the stock. It said that EBITDA per tonne increased 49 percent QoQ to Rs 820 on lower employee and power and fuel costs despite. The cement maker expects to commission the Ametha (Madhya Pradesh) integrated unit by the second quarter of the fiscal.

Though brokerage firm Macquarie has not revised its neutral rating and sees an upside of only three percent in the stock from July 27 closing price, it put spotlight on the high points that ACC delivered in the first quarter of the fiscal.

It noted that volume growth of 24 percent YoY was a key surprise. Another was a seven percent sequential decline in cost that was offset by lower blended realisation, the brokerage said.

It also said that earnings before interest, taxes, depreciation, and amortisation (EBITDA) per tonne improved to Rs 820, which is up 45 percent YoY and above estimate. It added that net cash increased marginally on a quarter on quarter basis to Rs 3,200 crore.

However, Morgan Stanley has an underweight rating to ACC shares and expects a downside of 14 percent in the stock price. It also noted that EBITDA was higher than estimated led by volume and lower operational expenditure per tonne while realisations were weaker. The brokerage added that ACC’s cash position moved down slightly sequentially.

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