HDFC Securities' research report on Heidelberg Cement
In the absence of any major planned expansion for the next few years, we expect HEIM to continue to lose market share. In Q1FY24, volume grew 8/1% YoY/QoQ, owing to strong demand and a low base (five-year-CAGR: -1%). Its NSR declined 2.5% QoQ, owing to weak pricing in the central region. Cost reduced on all fronts and opex fell 7/6% QoQ/YoY. On QoQ, unitary input cost/fixed expense/freight cooled off by INR 150/50/110 per MT respectively. Thus, unit EBITDA recovered ~INR 190/MT QoQ to INR 772/MT. Debottlenecking expansion of 0.2/0.2mn MT clinker/grinding is delayed to H2FY25 (vs FY24 expected earlier).
Outlook
We maintain our REDUCE rating on Heidelberg Cement (HEIM), with an unchanged target price of INR 160/share (7x Mar-25E EBITDA).
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