Shares of ACC Ltd surged as much as 7.1 percent to Rs 1,423.95 on Tuesday after the company reported its financial results for the June-ended quarter.
The cement maker saw a fall of 40 percent in its consolidated net profit at Rs 270.95 crore for the quarter against Rs 455 crore in the same period last year. Its sales were down by 38 percent to Rs 2,520 crore against Rs 4059.28 crore in June 2019.
Revenue from operations declined by 37 percent year-on-year to Rs 2,602.24 crore.
Brokerage house CLSA has raised its price target on the stock to Rs 1,675 from Rs 1,575 and reiterated its buy rating as it thinks the stock is better positioned in the current environment due to renewed focus on costs and visibility on medium-term growth.
ACC Ltd's other costs declined by Rs 200 crore from the March ended quarter. Its total expenses fell 36 percent to Rs 2,252 crores in the June-ended quarter against Rs 3,533 crore a year ago, mainly due to a decrease in employee cost to the extent of 12 percent, and a drop in raw material cost to the extent of 63 percent year-on-year.
The company had shut plants after the lockdown from April 2020 and have commenced operations in a phased manner.
Brokerages are encouraged by the company's operating cost cut during the quarter despite the challenge in running the business in the three-month period.