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Prabhudas Lilladher Report
Heidelberg Cement India Ltd. reported Q2 FY22 Ebitda in line with our estimates. However, margins were impacted severely due to flattish realisations and 7% YoY increase in costs.
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 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 6.3 million tonne through debottlenecking. However, we believe that contraction in margins would considerably neutralise the volume growth. Hence, we expect Ebitda to grow at a CAGR of 3% over FY20-FY23e.
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