Heidelberg Cement: An Outperformer, With Room To Rally

Heidelberg Cement India Ltd., the best performing cement stock so far this year, has still room left on the upside, according to analysts.

Of the 12 cementmakers, stock prices of only three—Heidelberg Cement, UltraTech Cement Ltd. and Shree Cement—rose in 2018, according to Bloomberg data. Shares of Heidelberg Cement gained over 9 percent this year—higher than large and mid-sized peers.

Eleven of the 12 analysts covering the stock have a ‘Buy’ rating with a potential upside of nearly 18 percent from its market price of Rs 196 apiece. Analysts, however, expect shares of UltraTech Cement and Shree Cement to decline 2 percent and 7 percent, respectively, from their current market price.

Star Cement, JK Cement and JK Lakshmi Cement offer a higher return potential compared to Heidelberg Cement but they have declined more than 20 percent in the year.

Heidelberg Cement has its operations in central India. Improved availability of sand in that area, construction of houses under the Pradhan Mantri Awas Yojana and a faster-than-expected deleveraging are making analysts bullish on the counter.