Dolat Capital Market has given Accumulate recommendation for HeidelbergCement India with a target price of Rs. 263 in its research report issued on Feb 11, 2021

Dolat Capital Market’s research report on HeidelbergCement India

HEIM reported revenue, volume and realization in line but EBITDA and EBITDA/tn below estimates. HEIM posted muted numbers with +8.5%/ +0.2%/ -1.5% YoY growth in revenue/ EBITDA/ APAT to Rs6.0 bn/ Rs1.2 bn/ Rs636 mn led by +3.8%/ +4.6% YoY growth in volume/ realization (+1.2% QoQ). We expect 7.0%/ 7.4%/ 7.2% revenue/ EBITDA/ APAT CAGR over FY20-23E led by -3.5%/ 15.0%/ 6.0% volume growth and 1.5%/ 1.3%/ 1.3% realization growth in FY21E/ FY22E/ FY23E. We broadly maintain our estimates for FY21E/ FY22E/ FY23E. HEIM has built a strong retail franchise in the lucrative central region and has also been improving its operating efficiencies. It has prudently refrained from any significant capex to strengthen its balance sheet. All these have helped it to significantly improve its RoE to 21.6% (FY20) and to remain at 20.1% (average over FY22-23E).


Moreover, increased volume growth visibility combined with net cash bodes well for the company. Thus, we maintain Accumulate with a TP of Rs263 (8.5x FY23E EV/EBITDA + 50% FY23E CWIP).