Mihir Jhaveri of Religare Capital Markets in an interview to CNBC-TV18 recommended a hold on ACC with a target of Rs 1,530. "Ambuja Cement and Ultratech Cement is our top picks right now and we continue to prefer those compared to ACC", he added.
Also read: Budget 2013: Sector expectations and likely impact on stocks Below is the edited transcript of his interview to CNBC-TV18 Q: What are your expectations from ACC? A: On ACC, we expect margins of around 14.4. This will be like a sequential drop of more than 400 basis points (bps). We expect a profit after tax (PAT) decline of 12 percent. Given that the prices have declined, we also expect a pretty muted quarter. So, that is largely the assumption in terms of profitability for ACC. Q: Do you have a price target going on ACC though? A: We have a hold recommendation on ACC with a target of Rs 1,530. So, we clearly had a preference towards Ambuja Cement and Ultratech Cement. This is our top picks right now and we continue to prefer those compared to ACC. Q: Morning reports seem to indicate that again prices are on the uptick for cement companies even though several brokerages have sells on some of these cement stocks, what exactly are you seeing in terms of pricing trends because? A: The price uptick has already started. So, post January 14 we had seen some price increase happening across the country. It was like Rs 20-40 increase has happened in pricing. In some of the regions, demand has started to pick up be it the eastern or the central or some part of western market. That is the reason why the prices have started to pick. It always happens during this time of the year which is a busy construction season. Q: What do you expect to see from Ambuja today? A: We expect a margin drop of around 500 bps for Ambuja to 20 percent. On a sequential basis basis we do expect that both the companies should report muted numbers. Having said that, what will happen is probably a rebound in the next quarter. So, both set of numbers should be pretty good.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
