Buy Heidelberg Cement India; target of Rs 195: Prabhudas Lilladher

February 13
16:41 2018

Prabhudas Lilladher’s research report on Heidelberg Cement India

Heidelberg cement (HEIM) reported strong set of Q3FY18 result with beat across the fronts. Beat was largely on the back of better than expected volume growth and lower costs. Demand would remain firm in its key markets like UP on the back of strong govt spending on low cost housing and infrastructure sector, revival of private spending in rural areas and easing of sand shortage. Contrary to market’s expectation of pressure due to higher supplies from Ultratech, prices in the region improved (firmed up further in January) in quarter with the limited increase in supplies as the acquired capacity was already operating at high utilisation rates.

Our BUY rating on HEIM remains intact given the strong outlook on region and attractive valuations. Reiterate BUY with TP of Rs195, EV/EBITDA of 10x FY20e.

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