Heidelberg Cement India Ltd. share price target

to capacity constraints and focus on nearby markets. Strong prices in the region has attracted meaningful surge in volumes from other regions. Increased supplies due to inflow from other regions and upcoming new capacities would keep margins under check. We cut our EBITDA estimates for FY23e/FY24e by 10.6%/10.4% on account of lower margins. Given the tepid outlook on earnings growth due to capacity constraints and contraction in...

The stock is currently trading at 9.5x FY22E and 7.7x FY23E EV/EBITDA. We value the company at 8x FY23 EV/EBITDA to arrive at TP of Rs 260 share, implying an upside of 5% from the current level. We maintain our HOLD rating on the stock.

HeidelbergCement India’s (HEIM) Q2FY22 EBITDA at Rs1.2bn (down 8% YoY) was higher than our / consensus estimates led by higher volumes, up 11% YoY and 4% QoQ. Realisation remained flat QoQ and YoY while total cost/te rose 6.8% YoY and 4.1% QoQ resulting in EBITDA/te declining 16.8% YoY and 14.6% QoQ to Rs946/te.

Background: Heidelberg Cements (HCIL), erstwhile Mysore Cements set up by Birla group in 1958 is now a subsidiary of Heidelberg AG, the world's third largest cement manufacturer. The company manufactures portland cement brand through its three plants located at Ammasandra, Karnataka (0.6 MTPA), Damoh, Madhya Pradesh (2.1 MTPA) and Jhansi, Uttar Pradesh (2.7 MTPA). The company also caters to Bangalore, Mumbai and Pune apart from MP and UP. The company has a...

region. EBITDA/t grew at CAGR of 17.8% while volumes grew mere 0.2% due to capacity constraints and focus on nearby markets. Strong prices in the region has attracted meaningful surge in volumes from other regions. Increased supplies due to inflow from other regions and upcoming new capacities would keep margins under check. HEIM expanded capacity by 20% to 6.3mnt through debottlenecking. However, we believe that contraction in margins would considerably neutralize the volume growth. Hence, we expect EBITDA to grow at a CAGR of 3% over FY20-FY23e. Given the tepid outlook...

We arrive at a TP of Rs 265/share, valuing the company at 8x FY23 EV/EBITDA, which implies an upside of 3% from the CMP. Hence, we maintain a HOLD rating on the stock.

The stock is currently trading at 9.8x FY22E and 8x FY23E EV/EBITDA. We value the company at 8x FY23 EV/EBITDA to arrive at TP of Rs 265/share, implying an upside of 2% from the current level and change our rating from BUY to HOLD.

Exploring options on group simplification with Zuari Cement, a fellow subsidiary estimates by 5% due to higher volumes. Contrary to expansion in margins reported by peers, HEIM's margins fell 15% YoY/0.5% QoQ. HEIM's EBITDA/EPS grew at a CAGR of 18%/49% over FY16-FY21, predominantly led by revival in prices post consolidation in the central...

Heidelberg Cement reported revenue growth of 14.1% YoY, mainly on the back of 14.9% YoY jump in volumes to 1.25 MT during Q4FY21. Capacity utilisation was at 80% for the quarter while for the full year it was at 72% despite pandemic vs. 87% last year. EBITDA/tonne, however, fell 8.3% YoY to | 1067/t (vs. | 1164/t last year) mainly on account of a sharp jump in the power & fuel costs (up 17.1% YoY to | 1202/t). Higher dependence on grid power and increase in the petcoke & international coal prices led to increase in fuel cost. PBT of | 130.2 crore were up 29.4% YoY due to higher other...