Heidelberg Cement Q3 Results Review - Underwhelming Performance: ICICI Securities

ICICI Securities Report

Heidelberg Cement India Ltd.’s Q3 FY23 Ebitda of Rs 371 million (down 46% YoY) was significantly below our / consensus estimates owing to lower-than-expected volumes and realisations.

Volumes declined 3% YoY (up ~10% QoQ) as the company witnessed volume loss of 10 days during the quarter due to warehousing issues and intense competitive pressures.

Total cost/te increased by 9% YoY (flat QoQ) against 2% YoY rise (down 2% QoQ) in realisations resulting in Ebitda/tonne declining 44%/29% YoY/QoQ to Rs 339/tonne (our estimate: Rs 555/tonne).

Heidelberg Cement may see pressure on near-term volumes / profitability as the key market of Central India is likely to add ~6 million tonnes per annum capacity (~9% compound annual growth rate in supply) between FY22-FY25E against ~7% CAGR in demand.

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