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Heidelberg Cement
Mu t e d v o l ume , h i g h c o s t s e r o d e b o t t oml i n e…
Heidelberg Cement reported net sales of | 249 crore (up 3% YoY, down
8% QoQ) and net profit of | 13.1 crore (down 49% YoY, 49.5% QoQ) in
Q2CY11, which were ahead of our respective estimates of | 231 crore and
| 4 crore on account of higher-than-expected cement realisation.
Realisation increased ~4% QoQ to | 3424 per tonne (our estimate: | 3203
per tonne). EBITDA per tonne declined sharply ~49% YoY (49.5% QoQ)
to | 318 per tonne (our estimate: | 203 per tonne). The company plans to
increase its capacity to 6 MTPA by setting up 3 MTPA of grinding units.
This is expected to drive sales volume growth at 26% CAGR (CY10-12E).
ƒ Sales volume down ~12% QoQ, realisation up ~4% QoQ
Cement volumes remained flat YoY at 0.73 MT but declined ~12%
QoQ due to sluggish demand during the quarter on account of the
onset of the monsoon season and slowdown in construction
activities. Realisation increased ~3% YoY (~4% QoQ) to | 3424 per
tonne after prices increased sharply in March-April 2011.
ƒ EBITDA per tonne declines significantly on higher costs
The EBITDA per tonne has declined significantly ~42% YoY and
~36% QoQ to | 318 as the total cost has increased ~11% YoY
(~11% QoQ) to | 3106 per tonne. This negated the impact of
increase in realisation. On the cost front, power & fuel cost increased
sharply ~38% YoY (~18% QoQ) as the impact of hike in coal prices
has come into effect in the quarter.
V a l u a t i o n
At the CMP of | 36, the stock is trading at 21.7x and 11.2x its CY11E and
CY12E earnings, respectively. The stock is trading at an EV/EBITDA of
13.7x and 6.5x CY11E and CY12E EBITDA, respectively. On an EV/tonne
basis, the stock is trading at $79 and $44 its CY11E and CY12E capacities,
respectively. We are maintaining our target price of | 51 per share with
BUY rating on the stock. At the target price, the stock is valued at
$55/tonne at CY12E capacity of 6 MTPA (~56% discount to the
replacement cost).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Heidelberg Cement
Mu t e d v o l ume , h i g h c o s t s e r o d e b o t t oml i n e…
Heidelberg Cement reported net sales of | 249 crore (up 3% YoY, down
8% QoQ) and net profit of | 13.1 crore (down 49% YoY, 49.5% QoQ) in
Q2CY11, which were ahead of our respective estimates of | 231 crore and
| 4 crore on account of higher-than-expected cement realisation.
Realisation increased ~4% QoQ to | 3424 per tonne (our estimate: | 3203
per tonne). EBITDA per tonne declined sharply ~49% YoY (49.5% QoQ)
to | 318 per tonne (our estimate: | 203 per tonne). The company plans to
increase its capacity to 6 MTPA by setting up 3 MTPA of grinding units.
This is expected to drive sales volume growth at 26% CAGR (CY10-12E).
ƒ Sales volume down ~12% QoQ, realisation up ~4% QoQ
Cement volumes remained flat YoY at 0.73 MT but declined ~12%
QoQ due to sluggish demand during the quarter on account of the
onset of the monsoon season and slowdown in construction
activities. Realisation increased ~3% YoY (~4% QoQ) to | 3424 per
tonne after prices increased sharply in March-April 2011.
ƒ EBITDA per tonne declines significantly on higher costs
The EBITDA per tonne has declined significantly ~42% YoY and
~36% QoQ to | 318 as the total cost has increased ~11% YoY
(~11% QoQ) to | 3106 per tonne. This negated the impact of
increase in realisation. On the cost front, power & fuel cost increased
sharply ~38% YoY (~18% QoQ) as the impact of hike in coal prices
has come into effect in the quarter.
V a l u a t i o n
At the CMP of | 36, the stock is trading at 21.7x and 11.2x its CY11E and
CY12E earnings, respectively. The stock is trading at an EV/EBITDA of
13.7x and 6.5x CY11E and CY12E EBITDA, respectively. On an EV/tonne
basis, the stock is trading at $79 and $44 its CY11E and CY12E capacities,
respectively. We are maintaining our target price of | 51 per share with
BUY rating on the stock. At the target price, the stock is valued at
$55/tonne at CY12E capacity of 6 MTPA (~56% discount to the
replacement cost).
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