Recent Price Movement and Market Context
ACC’s stock price has been under pressure for the past two trading sessions, registering a cumulative return of -0.48% during this period. Today’s trading saw the stock fluctuate within a narrow band of Rs.5, reflecting subdued volatility despite the new low. The stock is currently positioned below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained period of price weakness.
In contrast, the broader market has shown resilience. The Sensex opened higher at 84,856.26, gaining 176.40 points or 0.21%, and was trading at 84,819.40 at the time of reporting, a 0.16% increase. The index remains just 1.58% shy of its 52-week high of 86,159.02. Mid-cap stocks are leading the market rally, with the BSE Mid Cap index advancing by 0.21% today.
Performance Comparison Over One Year
Over the past year, ACC’s stock has recorded a return of -19.51%, contrasting with the Sensex’s positive performance of 5.12% during the same period. This underperformance extends beyond the last year, as ACC has consistently lagged behind the BSE500 benchmark across the previous three annual periods. The stock’s 52-week high was Rs.2269, indicating a substantial decline of approximately 22% from that peak.
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Financial Metrics and Operational Highlights
Despite the stock’s subdued price action, ACC’s recent financial results reveal notable growth in key areas. The company’s net sales for the latest six-month period stood at Rs.12,018.90 crore, reflecting a 22.22% increase compared to the previous corresponding period. Profit after tax (PAT) for the same period was Rs.1,494.61 crore, showing a rise of 155.94%. These figures indicate a strong expansion in revenue and profitability over the half-year horizon.
Return on Capital Employed (ROCE) for the half-year reached 17.88%, while Return on Equity (ROE) was recorded at 16.2%. These returns suggest efficient utilisation of capital and equity in generating profits. The company’s Price to Book Value ratio is 1.7, which is considered attractive relative to its peers’ historical valuations.
ACC maintains a low average debt-to-equity ratio of zero, underscoring a conservative capital structure with minimal leverage. Institutional investors hold 27.75% of the company’s shares, indicating a significant stake by entities with substantial analytical resources.
Technical and Valuation Considerations
The stock’s current trading below all major moving averages points to a technical environment where short- and long-term momentum indicators are subdued. This technical positioning aligns with the recent price decline to the 52-week low. The narrow trading range observed today suggests limited immediate volatility, which may reflect a period of consolidation or investor caution.
Valuation metrics show that ACC is trading at a discount compared to the average historical valuations of its sector peers. The company’s PEG ratio stands at 0.1, which is low, indicating that the stock price does not fully reflect the growth in profits reported over the past year, which rose by 75.6%.
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Sector and Industry Context
ACC operates within the Cement & Cement Products industry, a sector that often reflects broader economic cycles and infrastructure activity. While the sector has seen mixed performance, ACC’s recent financial results demonstrate growth in sales and profitability, which contrasts with the stock’s price movement. The divergence between operational performance and market valuation highlights the complex dynamics influencing investor sentiment and stock pricing in this space.
Over the last three years, ACC has consistently underperformed the BSE500 index, indicating challenges in matching broader market returns despite positive earnings trends. This persistent underperformance is a key factor in the stock’s current valuation and price levels.
Summary of Current Situation
In summary, ACC’s stock has reached a new 52-week low of Rs.1768, reflecting a period of price weakness amid a generally buoyant market environment. The stock’s position below all major moving averages and its recent price decline over two sessions illustrate a cautious technical outlook. However, the company’s financial results for the latest six months show robust growth in sales and profits, alongside attractive returns on capital and equity. The low debt-to-equity ratio and significant institutional holdings further characterise the company’s financial profile.
While the stock’s one-year return of -19.51% contrasts with the Sensex’s positive 5.12% return, ACC’s operational metrics suggest a complex interplay between market valuation and company fundamentals. Investors and market participants may continue to monitor these factors as the stock navigates this low price territory.
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