Heidelberg Cement Q2 Results Review - Poor Quarter; Near Term Expansion Missing: Dolat Capital

Dolat Capital Report

Heidelberg Cement India Ltd. reported volume, revenue in line, however realization, Ebitda, Ebitda/tonne, automatic process analysis tool below estimates.

Heidelberg Cement posted +11.9% YoY (-4.9% QoQ) growth in revenue to Rs 5.7 billion led by +16.4% YoY (-3.3% QoQ) in volume to 1.2 million tonne, which was partially offset by -3.8% YoY (-1.6% QoQ) in realisation/tn to Rs 4,871. Ebitda/ automatic process analysis tool plus 46%/ 410.7% YoY to Rs 695 million/ Rs 358 million led by better operating performance coupled it lower finance cost.

We expect 5.1%/ 22.9%/ 41.3% revenue/ Ebitda/ adjusted profit after tax compounded annual growth rate over FY23- 26E led by 8.0%/ 5.0%/ 4.5% volume growth and -2.5%/ 0.5%/ 0.0% realisation growth in FY24E/ FY25E/ FY26E.

We decrease Ebitda estimates by 7.1%/ 6.7% for FY24E/ FY25E factoring higher opex and introduce FY26E.

As we roll over to FY26E, we maintain 'Reduce' with a revised target price of Rs 191 (7.5 times FY26E enterprise value /Ebitda plus 50% FY26E capital works-in-progress).

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