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* HeidelbergCement India (HEIDELBERG) gained ~3% in last trade on the expectation of further traction in its operational performance.
* We expect HEIDELBERG to register ~28% YoY growth in net profit in 1QFY20 despite subdued sales volume. A healthy realization in the Central markets is likely to aid its performance.
* Going forward, while Central region is likely to see sizeable capacity addition, we continue to believe that sustained demand in the region will result in benign utilization. Hence, prices are likely to remain firm in the region.
* Looking ahead, we expect visible de-leveraging of balancesheet (net debt at mere Rs1.8bn currently) and healthy operating efficiencies to result in the best return ratios vis-à-vis its comparable peers.
* While capacity constraint is a key hurdle for HEIDELBERG as of now to get re-rated, we are hopeful it to get addressed in the medium term.
* We maintain our fundamental BUY recommendation on the stock with a Target Price of Rs245.
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