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Centrum Broking Report
Heidelberg Cement India Ltd. reported good set of result for Q1 FY24 with Ebitda of Rs 929 million, 14% ahead of our estimate of Rs 817 million. Better volumes and lower than expected costs resulted in Ebitda beat.
While the numbers for Q1 FY24 were tad better, overall story remains unchanged as lack of capacity addition from the company is likely to limit volume growth going forward.
Heidelberg Cement's volume compound annual growth rate over the past five years is flat whereas industry has grown at ~6%. We await long term capital allocation plan from the company which will provide visibility on volume growth as well as profitability for the foreseeable future.
In the absence of the same, we expect the stock to underperform the sector. We have tweaked our assumptions for the company and now bake in 5.5% revenue and 17.5% Ebitda CAGR for the company over FY23-25.
We maintain our 'Reduce' rating on the stock with a revised target price of Rs 173 (Rs 180 earlier) based on seven times FY25 enterprise value/Ebitda (unchanged).
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