Cholamandalam Securities
HeidelbergCement (Buy)
Target: ₹200
CMP: ₹177.30
HeidelbergCement’s revenue for Q1-FY21 fell by 30.2 per cent Y-o-Y to reach ₹410 crore as against ₹580 crore in Q1-FY20, due to fall in volume (nearly 32 per cent); this was in part due to the shutdown in April. PAT dropped by 38.1 per cent Y-o-Y to ₹48.90 crore. During the quarter healthy demand recovery seen in the central region on the back of pre-monsoon work and rural housing demand going up.
On a per tonne basis, gross realization increased by 2.4 per cent whereas total operating cost (incl. freight) increased by 1.8 per cent resulting in EBITDA of ₹1,264 per tonne as compared to ₹1,253 per tonne in Q1-FY20. Concerted efforts to optimise costs supported HCIL; however, decrease in volume negatively impacted the operating leverage. On a per tonne basis, increased fixed cost is partially offset by lower raw materials and power & fuel costs.
HCIL's net cash increased to ₹160 crore as of June 30, 2020, while company continued to operate on negative net working capital.
For FY21 the management expects the outlook to remain uncertain.