Why is ACC falling/rising?

Recent Price Performance and Market Context

ACC’s stock price has demonstrated notable resilience over the past week and month, rising by 4.88% and 4.70% respectively, outperforming the Sensex which was largely flat or modestly positive during the same periods. This recent upward momentum contrasts with the stock’s longer-term underperformance, as it has declined by 7.33% over the past year and 21.30% over three years, while the Sensex has delivered gains of 7.31% and 36.34% respectively. Despite this, the stock’s five-year return of 14.15% remains positive, albeit significantly lagging the benchmark’s 90.69% appreciation.

On the day of the price surge, ACC outperformed its sector by 6.71%, reaching an intraday high of ₹1,986.90, marking an 8.59% increase from previous levels. The stock traded within a wide range of ₹181, indicating heightened volatility and active trading interest. Notably, ACC is trading above all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day marks, signalling a strong technical uptrend.

Investor participation has also increased, with delivery volumes rising by 9.21% on 21 Nov compared to the five-day average, reflecting growing confidence among market participants. Liquidity remains adequate, supporting sizeable trade volumes without significant price disruption.

Fundamental Strengths Supporting the Rally

ACC’s recent financial disclosures have been a key catalyst for the stock’s rise. The company reported net sales of ₹12,018.90 crores over the latest six months, reflecting a robust growth rate of 22.22%. This top-line expansion is complemented by strong profitability metrics, with the company achieving its highest Return on Capital Employed (ROCE) at 17.88% for the half-year period. Additionally, the latest quarterly Profit After Tax (PAT) reached ₹1,119.23 crores, marking a significant increase and underscoring operational efficiency.

Return on Equity (ROE) stands at a healthy 16.2%, which, combined with a Price to Book Value ratio of 1.8, suggests that the stock is attractively valued relative to its peers. Despite the stock’s negative total return over the past year, profits have surged by 75.6%, indicating strong underlying business momentum. The company’s PEG ratio of 0.2 further highlights its undervaluation relative to earnings growth potential.

ACC’s balance sheet strength is another positive factor, with an average Debt to Equity ratio of zero, signalling a conservative capital structure and limited financial risk. This low leverage enhances the company’s ability to sustain growth and weather market volatility.

Institutional investors hold a substantial 27.75% stake in ACC, reflecting confidence from sophisticated market participants who typically conduct thorough fundamental analysis. Their involvement often provides stability and can drive demand for the stock during positive earnings cycles.

Technical and Market Sentiment Factors

The stock’s trading above all major moving averages indicates strong technical support, which often attracts momentum traders and short-term investors. The wide intraday price range and increased delivery volumes suggest heightened market interest and liquidity, facilitating smoother price discovery and enabling the stock to absorb larger trades without significant price impact.

While the weighted average price indicates that more volume was traded closer to the lower end of the day’s range, the overall trend remains positive, supported by the stock’s outperformance relative to its sector and benchmark indices. This combination of fundamental strength and technical momentum has likely contributed to the sharp price appreciation observed on 24-Nov.

Outlook and Considerations

Despite the recent rally, ACC’s longer-term returns lag behind the broader market, reflecting challenges faced over the past few years. However, the company’s improving sales, profitability, and conservative financial structure provide a solid foundation for potential future gains. Investors should weigh these positives against the stock’s historical underperformance and broader market conditions.

In summary, ACC’s price rise on 24-Nov can be attributed to strong half-year sales growth, record profitability metrics, attractive valuation relative to peers, and increased investor participation, all of which have combined to boost market confidence in the stock’s near-term prospects.

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