Cement companies in our coverage universe reported earnings above our expectation. Beat in earnings was led by higher than expected realisations and lower costs due to elimination of local taxes in GST. Sales volume for our coverage universe (60% share in aggregate volumes of the listed cos) grew 9.5% YoY (on a base of -1%), ahead of 5% growth (on a base of +7%) in rest of listed space. Driven by low base and increased spending by Govt on infrastructure development and affordable housing, volumes is expected to grow at 8‐9% in rest of the year despite weakness in real estate sector. We continue to like Heidelberg cement (HIEM) and JK Lakshmi (JKLC) on the back of attractive valuations and strong earnings outlook.
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