Pick of the week: Heidelbergcement India

HDFC Sec | March 25, 2019, 11:28 a.m.

View & Valuation

The company has been reducing its debt and improving its cash per share in absence of major capex for the past few years and the same has been helping it increase its net margins. With strong balance sheet, rational & improving capital structure, good return ratios and improving margins, the company seems to be a strong bet fundamentally. We think investors could buy the shares at the CMP of Rs 176.20 (~7.1x FY21E EV/EBITDA; $104.7 EV/tonne) and add on dips to Rs.158-162 (6.4x FY21E EV/EBITDA; $95 EV/tonne) for sequential targets of Rs 199 (8x FY21E EV/EBITDA; $118 EV/tonne) and Rs 211 (8.5x FY21E EV/EBITDA; $125 EV/tonne) over the next 4-6 quarters.

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