Heidelberg Cement Result Analysis Q1 FY2021

Heidelberg Cement  Result Analysis Q1 FY2021

CMP: 176.40 (As on 23-07-2020)

Total income from operations 407.7 Cr 

582.4 Cr (-30.01%) YoY | 509.2 Cr (-20.02%) QoQ 

Year ending revenue: 2,157 Cr Vs. 2,133 Cr (1.11%) 

Net Profit of 48.9 Cr 

79 Cr (-37.87%) YoY 66.2 Cr (-25.73%) QoQ 

Year ending Net profit: 268 Cr Vs. 221 Cr (-21.21%) 

EPS (in Rs.) 2.16 

3.49 YoY | 2.93 QoQ 

Year ending EPS: 11.83 Vs. 9.74 

View: Result is in line with the expectation. YoY revenue and profit both have declined. As per the Govt strict Guidelines for Covid -19 pandemic company suspended manufacturing operations in its plants in the last week of March 2020. The operations were resumed in a phased manner with effect from April 20, 2020. 

Business Updates & Highlights: 

Q1FY21 EBITDA is around INR 108.3 Cr Vs. 157.7 Cr in Q1FY20 therefore declined by 31.2% in YoY. EBITDA margin in Q1FY21 was 26.7% Vs. 27.1% in Q1FY20 therefore EBITDA margin contracted by 40 bps. EBITDA per tonne is 1,264 Vs. 1,253 which was improved by 0.9% in YoY. 

Sales volume (KT) in Q1FY20 was 857 Vs. 1,258 in Q1FY20 therefore declined by 31.9% in YoY. Volume decreased by c. 32% y/y primarily driven by the suspension of operations in April 2020. The decrease in volume impacted revenue and profitability during the quarter. 

Financial

ROE and ROCE is around 20% and 25% respectively and book value per share is around INR 58 and share is currently trading at 3.1x of its book value. Company is currently trading at annualized PE of around 21 which is good as per Industry benchmark. Promoter holding is around 69.4% in the company which is very strong and stable. FIIs and mutual fund hold around 9.7% and 6.1% in the company. The Company's net cash increased to INR 160 Cr as at June 30, 2020. The good thing is continuously declining finance cost which was around 15.9 Cr in this quarter as compared to INR 19.8 Cr in corresponding previous quarter. 

Position: Share strong support price is INR 156. Mid to long term investor should continue with the company. 

Share View: Share price high 218 (52 week) and now 182. Heidelberg Cement (formally known as Mysore Cement) is a German multinational building materials company headquartered in Heidelberg, Germany. It is a DAX corporation and is one of the largest building materials companies in the world. 

Opportunities: Strong operating cash flow and also follow highly corporate governance model. Further company is continuously reducing their debt and as per earlier planned 2021 the company could be debt free. EBITDA is almost in the same line and per tonne EBITDA also improved in this quarter. Consistent high profit growth in last 5 years which is around more than 45% and also paying good dividend. 

Risk: Covid-19 outbreak and continuously strong in country and part of some states have further extended the lockdown can further impact for Q2 as well. Real estate slower growth especially for commercial space can also impact the topline in upcoming quarters. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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