ACC suffers Rs 91-crore loss in September quarter: What should you do with the stock?

The company recorded a 7 percent rise in net sales at Rs 3,910 crore as compared to Rs 3,653 crore in the same quarter last year.

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ACC shares fell nearly 2 percent on Tuesday as the company has posted losses in the quarter ended September 2022.

ACC on October 17 reported a standalone loss of Rs 91 crore for the quarter, as against a post-tax profit of Rs 449 crore a year back, while it had posted a net profit of Rs 222 crore in the June quarter this year.

The company recorded a 7 percent rise in net sales at Rs 3,910 crore as compared to Rs 3,653 crore in the same quarter last year.

EBITDA (earnings before interest, tax, depreciation and amortisation) stood at Rs 16 crore against Rs 713 crore last year, impacted largely due to a steep rise in fuel cost.

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Here is what brokerages have to say about the stock and the company after its September quarter earnings:

Morgan Stanley

Morgan Stanley has maintained ‘underweight’ rating on the stock and cut the target price to Rs 1,950 from Rs 2,050 per share.

The company’s EBITDA fell sharply, coming in well below estimate on weaker-than-expected costs.

“We have revises estimates to reflect the miss. We have maintained relative underweight call given lower growth expectations versus peers,” reported CNBC-TV18.

Goldman Sachs

“We have kept a ‘neutral’ call on the stock with a target at Rs 2,375 per share,” it said.

The cost rationalisation benefits are likely at least 3-4 quarters away. Given weak profitability in near-term, pricing aggression is highly unlikely, reported CNBC-TV18.

Jefferies

“We kept the ‘buy’ call on ACC with a target price at Rs 3,000 per share. The company reported a net loss for Q3 as costs weighed hugely,” it said.

The EBITDA declined 98 percent on-year, led by broad-based increase in costs. “We have cut the FY23 EBITDA estimate by 13 percent, while retain FY24 estimates,” reported CNBC-TV18.

Citi

“We have maintained the ‘buy’ rating on the stock with a target at Rs 2,900 per share,” said the brokerage house.

The company should benefit from potential synergies with Adani group. The EV/t at $110 suggests market is pricing in limited growth, reported CNBC-TV18.

Motilal Oswal

ACC is increasing its grinding capacity by 3.2 MTPA in Central India to 39.3 MTPA by FY24. “We believe capacity expansions will benefit the company in terms of better volume growth, although we await clarity from the management over its cost-saving strategies and future growth plans,” it said.

Valuations, at 12.4x/9.9x FY24/FY25 EV/EBITDA and EV/t of $109/ $103, remain the cheapest among its larger peers. “We maintain our ‘neutral’ rating with a target price of Rs 2,430 (from Rs 2,515 earlier), based on 12x Sep’24E EV/EBITDA,” it said.

ACC was quoting at Rs 2,231.35, down Rs 38.35, or 1.69 percent on the BSE.

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