Heidelberg Cement India Ltd. share price target

Heidelberg Cement's top-line de-grew by ~6.2% Y-o-Y to `5,098mn primarily on the back of decline in sales volume. Sales volume plunged 10% YoY to 1.09mn MT primarily due to nationwide shutdown (led by Covid-19 pandemic) in last week of March 2020. With no clinker sales total 10 days volume lost due to lockdown was around 1-1.25 lakh tons. However, realisations were up marginally by 4% YoY to `4,677/MT on account of higher sales of its premium products& firm cement prices. EBITDA in Q4FY20 stood at `1,273mn up ~2% Y-o-Y on the back of lower operating expense (mainly Power & Fuel cost & Freight forwarding cost which dropped 24% & 17%...

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...

Pandemic poses headwinds; revenues to recover from FY22E Cement companies lost significant business owing to lockdown in April. While volume offtake has shown pace on the back of strong rural demand, it remains lower YoY. While operations have resumed, companies are facing logistics challenges, which is a key challenge. Demand has been healthy in the central region currently led by pre-monsoon works and rural housing. However, we expect HCIL to see its volumes decline 7.5% YoY to 4.4 MT in FY21E. Realisations are also expected to slip as the current pent-up demand...

Lockdown to lead to revenue decline; FY22 to witness pullback Cement companies in recent weeks had to undertake a complete shutdown of their plants in adherence to the national lockdown announcement. Q4 and Q1 are generally the strongest quarters for cement companies. With the lockdown continuing in these quarters, companies are expected to see significant loss of revenues. While the recent lifting of lockdown comes as a respite for cement companies, we may not see an immediate pick-up in cement volumes as normalisation of operations (due to social distancing...

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...

by 10%/13% with miss across the fronts. Volumes dropped sharply by 5.5% YoY. While, higher prices helped it to expand EBITDA/t by 10% YoY. HEIM's EBITDA/EPS grew at a CAGR of 26%/68% over FY16-FY20, predominantly led by strong revival in region's pricing. EBITDA/t grew at CAGR of 23% while volumes grew marginally at a rate of 2.5%. Region is going to see sizeable capacity addition (12-14mnt) over next couple of years coupled with entry of three new players. HEIM is expanding capacity by 15% to 6.3mnt (to become operational by Q4FY20 in phases) through...

increase market reach to maintain brand premium in home market to sustain prices and brand image. The company is covering more ground to expand the geographic reach and keep the brand premium in the home market to sustain prices and brand image. This has lead to an increase in...

HeidelbergCement India (HEIM) continued to deliver steady performance in 2QFY20 despite moderate deterioration in opex. EBITDA grew by 9% YoY to Rs1.2bn vs. our estimate of Rs1.15bn, while EBITA/tonne stood at Rs1,060 vs. Rs980 and Rs1,199 in 2QFY19 and 1QFY20, respectively. While sales volume remained muted at 1.13mnT (+1% YoY), average realisation remained upbeat at Rs4,581 (+7.5% YoY and -1.1% QoQ). Notably, opex/tonne surged to Rs3,522 (+7.3% YoY and +2.7% QoQ) owing to 8% YoY and 13% QoQ rise in other expenditures/tonne, while input cost/ tonne stood at Rs1,900 (+11.5% YoY and +2% QoQ) mainly impacted by increase in grid charge in MP and UP and higher flyash prices. As company continued to follow old taxation regime...

realisations. Unitary EBITDA rose 16% YoY to Rs1,060 (PLe:Rs1,140). Exhaustion of capacity remains Achilles heel for HEIM. To address the same, it is expanding capacity by 0.5mnt through debottlenecking which would support 4-5% YoY growth in volumes for next couple of years. In addition, it is also exploring inorganic route to expand volumes. Despite exhausted capacity, HIEM maintained its strong earnings growth trajectory on the back of steep increase in margins. Led by better outlook on...

HCILs financial metrics has drastically improved over the years due to an increase in...