Global brokerage firm CLSA is bearish on cement maker ACC post its March quarter earnings. It has an 'Underperform' rating for ACC with a target at Rs 2,080 per share.

As per the brokerage, the company's Ebitda of Rs 860 crore for the first quarter of 2021 was 26 percent above the estimates and utilization is at 90 percent. It also noted that the company's volume is up by 21 percent year-on-year, and its average selling price (ASP) saw a decline of one percent quarter-on-quarter which was in line.

CLSA also mentioned that the beat was driven by lower costs (-5 percent quarter-on-quarter/flat year-on-year) driving a 19 percent quarter-on-quarter (+Rs170/t) profitability increase. The company expects to commission the Ametha expansion by the second quarter of 2022.

Also, with capacity utilization at 90 percent, CLSA predicted the company to grow slower than the industry till Ametha's expansion is ramped up. While CLSA expected ACC to react positively on earnings in the current cycle of strong demand growth with strong volume growth company’s outlooks are better placed.

The company plans to increase clinker and cement capacities which will see an integrated green field project of 2.7Mta clinker capacity with 1 Mta grinding unit at Ametha in Kymore, Madhya Pradesh.

The expansion of the existing Tikaria grinding unit with 1.6 Mta cement capacity and a grinding unit in Shonebhadra district, Uttar Pradesh, with 2.2 Mta of capacity is in progress. With this, the company has recently completed and commissioned a new grinding unit at Sindri, Jharkhand. The new facility will add 1.4 Mta of cement capacity to its existing 3 Mta at this site.

ACC has been recognized for its efforts to reduce its CO2 emissions. It has been awarded with the Oriented Award at the Climate Action Programme 2.0° Awards. The company won this award in the Energy, Mining and Heavy Manufacturing sectors category. The award recognizes the Company's continued focus on climate action, building a circular economy, and conserving resources and nature.

(Edited by : Pranati Deva)