HDFC securities Ankur Kulshrestha released a note on ACC with a Buy rating and a Rs 1,308 price target as against current market price (CMP) of Rs 1,596 in its report.

ACC reported vastly improved profitability for 1QCY15 at ~Rs 700/t. This was despite a 10% YoY decline in volumes and only marginal improvement in realizations. The profitability jump is largely due to a 10% QoQ decline in other operating expenses, attributable to lower variable costs on packing, driven by lower crude. Numbers were positively impacted (Rs 1.39 billion in other income) due to a favourable court verdict on VAT/capital subsidy claims in Jharkhand.

Commenting on the investment rationale, HDFC Sec said, ''ACC continues to be the cheapest amongst the large cement companies and does not enjoy any premium valuation. This is attributable to ACC's legacy operations, lagging profitability and lack of volume triggers. We retain our negative stance on the stock driven by these considerations. Maintain SELL.

Shares of the company gained Rs 19.8, or 1.24%, to trade at Rs 1,614.40. The total volume of shares traded was 127,512 at the BSE (3.47 p.m., Wednesday).

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