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Reliance Securities
HeidelbergCement (Buy)
CMP: ₹178.3
Target: ₹250
HeidelbergCement India is engaged in manufacturing of Portland cement. The company’s product portfolio includes Portland Pozzolana cement and Portland Slag cement.
HeidelbergCement India stock has been remaining strong recently with bullish undertone as investors continued to show confidence due to persistent traction in its operational performance
Its 9MFY19 performance remained strong (EBITDA grew by about 56 per cent y-o-y) mainly due to steady sales volume, superior realisation and cost saving measures.
While capacity constraint seems to be a key hurdle for Heildelberg as of now to get re-rated, we are hopeful that the company will set right the issue in the medium term.
Looking ahead, we expect visible de-leveraging of balance-sheet and healthy operating efficiencies are expected to result in improvement in return ratios.
Further, recent improvement in average realisation in the region along with higher trade cement sales volume is likely to aid Heidelberg earnings in current quarter.
We maintain our fundamental ‘buy’ recommendation on the stock with a target price of ₹250.
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