ACC: Improving earnings visibility boosts confidence on the Street

Rising cement prices, lower fuel prices expected to add Rs 200-300 per tonne to operating profit of the company

Major cement stocks have gained recently on the back of improving prices of construction material. ACC, however, has outperformed peers, with the stock rising almost 9 per cent in the last five trading sessions versus up to 5 per cent rise in stocks of UltraTech Cement, Ambuja Cements, and Shree Cement.

The confidence of ACC’s management, in terms of improving operating profit, coupled with an attractive stock valuation (10 times its estimated EV/Ebitda, against 15-16 times that of UltraTech and Ambuja), has turned investors more bullish towards ACC. EV/Ebitda denotes enterprise value to earnings before interest, tax, depreciation and amortisation.