The price of the shares of the cement manufacturers ACC Ltd. witnessed a surge of 6 percent on Tuesday. After the jump, the prices traded at Rs 1,422 apiece.
The point to note here is that this hike in the share prices is seen despite giving weak numbers for the April-June quarter. Not only the quarter numbers but also the integrated net profit fell to Rs. 270.95 crore as compared to Rs. 455 crore, during the equivalent quarter last year. Further increasing the despondency, Earnings before interest tax depreciation and amortization also decreased by 33 percent as against the same period last year.
Now, the question arises what led this surge?
As per the analyst’s data, there are 2 key factors for this unexpected hike in the share price. Firstly, the long-term expectations from the ACC’s stock of improving its ratios and margins accelerated the growth. Secondly, the latest quarterly result of the company is quite above then the actual estimations of the analysts, however, the numbers are depressed than the last year.
Keeping the current situation and demand-supply ratio in mind, many brokerage companies are optimistic about ACC. As on the return of favorable conditions the cement supply will increase. The possible recovery in the demand can be mainly seen in the Northern, Central, and Eastern regions of the country but after easing lockdowns.
Moreover, the company is under a cost-saving mode – it has reduced power and fuel costs steadily over the past couple of years on the back of higher energy efficiency and optimization of coal mix, as said by Prabhudas Lilladher in a report.
To save the costs the company has also lowered the raw material prices, power cost, and fuel costs. Thus, decreasing the blended cost of the company to Rs 4,362 per tonne down with 7 percent from the last year. However, analysts expect the costs to increase shortly.