BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Centrum Broking Report
Heidelberg Cement India reported better than expected Ebitda of Rs 1.17 billion (CentrumE: Rs 1.02 billion), down 11% QoQ/8% YoY. Ebitda/t, at Rs 946, was down 15% QoQ/17% YoY. This was primarily due to higher than expected volume growth and lower dip in realization.
On a QoQ basis, HEIM recorded 4% volume growth in a seasonally weak quarter coupled with marginal drop in realization (lower than 1.5-2% QoQ decline for the industry).
HEIM’s earnings were hit by higher power & fuel cost, which was up 13.5% QoQ. As a result, Ebitda fell 11% QoQ (7.5% YoY) to Rs 1.17 billion and EBITDA/t fell 15% QoQ/17% YoY to Rs 946.
We expect sharp hike in cement prices in Q3FY22, which should more than offset higher power & fuel cost, thereby improving margins. We increase our FY22E/FY23E EBITDA by 17.5%/4.6% to factor in higher cement prices, offsetting cost increases.
We raise our target price to Rs 225 (earlier Rs 212), based on 7x FY23E EV/Ebitda. With limited growth beyond FY23, the stock should trade at a discount to its peers.
Reiterate SELL.
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