Despite talk of impending overcapacity in the cement sector , Heidelberg deserves attention as perhaps the right time to look at such "FERA " companies is when there is alround pessimism towards a sector .
Market cap of 500 crore ( 836 crore less 337 crore cash ) which can be covered in 3 years PAT .Capacity going up from to 4.7 mtpa .
At 75$ per tonne the replacement cost is 1750 + crore at 4.7 mtpa capacity which means Rs.77 per share .
a) Management pedigree : Top 3 in the world - German Mnc .They hold 69% and I expect they would want to delist . If indeed they wish to delist the earlier they attempt to do so the better for them . This is one trigger.
b) Accounting year is Jan to Dec . For year 2009 expect eps of over 8. whereas Industry pe is above 8 whereas a mid cap mnc cement stock that has just announced intention to double capacity by 100% deserves a higher pe in my view and definitely not sub 5 pe .
c) Expect dividend to be declared for this year - Jan-Dec 2009 period as the company would have wiped off all accumulated debts .If they declare a dividend of Rs.2 per 10 Re Share the yield at current prices would be 5% tax free ! Rerating would also happen .
d) Book value expected to cross Rs.30 by Dec 2009 - Cash per share expected to be near Rs.15 levels .
e) Heidelberg can also be a surprise aggresor in the consolidation of the cement sector .
f) Zero debt company - Clean financials,ROE of 26,Revenues of 953 Crores,EV/Tonne is 46,EV/EBIDTA is 4.2, Great debtor days and also capacity utilisation position.Good markets essentially the lucrative central indian belt . Smart management including ex Ambit`s Ashish Guha and 3 distinguished germans on the board - all career heidelbergers - Dr.Bernd Scheifele,Dr Lorenz Nager and Dr Albert Scheuer.
Globally Richard Perry the reclusive but successful hedge fund manager recently recommended Heidelberg with the brief comment " The price of rock has never gone down " .
My view is to consider buying at these levels for substantial appreciation to the believer . This company offers not just a sector play but also a play on a huge ( and efficiently silent ) turnaround story , an open offer / delisting play and a dividend rerating play . My short term target is 90 levels by budget time 2010 - Over a 2 year period this can be a ten bagger ie 400 levels is my view.Lets see how this one shapes up .
yesterday, analyst sanjay chhabaria strongly recommended heidelberg on cnbc interview with target of 70/- in short term. he was giving factors for the projected target but unfortunately cnbc cut short the interview due to pausity of time.
his view on heidelberg dated 16/10/09 is available on valuenotes site. i personally think this is a multi bagger in 18 to 24 months time frame.
I agree with all of you because i am tracking this from couple of quarters. The result of company is fantabulous compared to peers in the industry. According to my view one can invest in this for 3 years (Dec2011) target of 110+. Also, i m tracking prsim cement and not able to make a decision as to which one to buy as both the counters are good in the industry rather the best one to give fantastic returns in a bull market.
NOTE: All above mentioned comments are based on my understanding and should not be used as a basis for any investment :-) :-).
icici direct has given a value play report dt. 27. 11. 09 on heidelberg as pick of the week. short term target shown is 45/-.
technical report is also showing that the stock supports a bullish scenerio, as per icici.
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