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Buy This Cement Stock For Potential Upside Of More Than 21%: Axis Direct
Axis Direct, a leading brokerage firm in India, has given a buy call to a large market cap stock from the cement sector. The brokerage firm is bullish on ACC Ltd and has a target price of Rs. 3050.
As per the chart, the stock has shown a rounded recovery and has broken all the previous highs and major resistance. The price of the stock is on a strong momentum to the upside, and it is trading near its all-time highs currently; however, the Axis direct in the latest report has mentioned the stock has the potential to give more than a 21% of the positive move from the current market price.
Here is a detailed breakdown of the latest report of Axis Direct on ACC Ltd.
Outlook of ACC Ltd.
Incorporated in 1936, ACC Ltd. is a member of LafargeHolcim Group. The company is engaged in selling and manufacturing Ready mix concrete and Cement. With manufacturing factories across India, the company mainly focuses on providing products to the domestic market.
Most of the company's revenue comes from Cement, around 90%, around 7% of the company's revenue comes from Ready Mix Concrete, 1% comes from Clingers, and another 2% comes from other products.
Outlook of ACC stock price
ACC is a large-cap company with over Rs. 49,041 Crores market capitalization. The current market price of ACC is Rs. 2,612, with an all-time high of 2,785 and an all-time low of Rs. 1,900.
The stock has a Return On Capital Employed of 17.3% and a Return On Equity of 13% overtime 5 years. The company also pays a dividend to the shareholders. The dividend yield of ACC is 2.22%, and the dividend payout ratio is about 58.5%.
Buy Call of Axis Direct On ACC Ltd
'The company has a Pan-India presence, and with strong positioning in its key market of East and South India, resilient cement demand aided by capacity expansion, higher realization and impending cost benefit, we expect the company to gain market share forward. The stock is currently trading at 15x CY23E and 12.5x CY24 EV/EBITDA. We roll over our estimate to CY24E and value the company at 14x CY24E EV/EBITDA to arrive at a target price of Rs 3,050.' Says the latest report of Axios Direct.
Key Factors For The Growth Of ACC Ltd
According to the latest report of Axis Direct, 'The company ACC Limited under Holcim regime could not capitalize on the growth momentum offered by the Industry owing to sluggish capacity expansion which resulted in market share loss to the other big players in the Industry. With the change in the ownership, new management is expected to be more aggressive, and a lot can change for the company moving ahead.'
