Buy Heidelberg Cement; target of Rs 200: ICICI Direct

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26 Aug, 2025 12:21

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Heidelberg Cement India (HCIL) reported a better-than-expected performance, especially on the profitability front. Revenues fell 4.7% YoY to Rs 509.3 crore, led by a 10% dip in volumes. Owing to suspension of operations in the ending days of March, volumes dipped 10% YoY to 1.09 MT. However, realisations stayed elevated, increasing 5.8% YoY to Rs 4,672/t. Higher realisations were on the back of healthy price environment prevailing in the central region. This led to further expansion in EBITDA margins, which improved to 24.8% in the quarter, up 318 bps YoY. EBITDA/t increased 21% YoY to Rs 1,164. On an absolute basis, EBITDA rose 9.2% YoY to Rs 126.9 crore while PAT increased 8.9% YoY to Rs 66.3 crore. The board has proposed a final dividend of Rs 6/share for FY20 that will be paid subject to approval in the AGM.

HCIL is one of the companies that ticks all the right boxes – healthy profitability, strong balance sheet, robust return ratios and strong retail presence. While minor hiccups in the form of de-growth are expected in FY21, the company is expected to rebound strongly in FY22. We maintain our BUY rating and upgrade our target price to Rs 200/share, (9x FY22E EV/EBITDA, implying an EV/t of $105).

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