* Sagar Cements (SAGCEM) gained over ~3% in last trade on the expectation of likely price recovery in its key AP and Telangana markets.
* A sharper-than-expected improvement in average realisation along with steady growth in sales volume had aided SGC to report a strong 116% YoY growth in EBITDA to Rs786mn in 1QFY20. Consolidated EBITDA/tonne improved to Rs959 vs. Rs492 in 1QFY19 and Rs654 in 4QFY19.
* We believe a firm pricing environment, production ramp up from new plants, commissioning of 18 MW CPP and further ramp-up in WHRS capacity and hydel power are likely to aid its performance in subsequent quarters.
* Further, geographical diversification in Central region and higher blended cement bode well for SAGCEM in the long-run.
* We maintain our fundamental BUY rating on the stock with a Target Price of Rs800.
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