HeidelbergCement’s Bottomline Drops

HeidelbergCement India, a subsidiary of Cementrum IBV HeidelbergCement, is one of the leading building manufacturers known globally for cement and concrete production. It has recently announced its second quarter result.

The company follows a calendar year as its fiscal year and the revenues of the company have increased by 17.59% to stand at Rs 358.64 crore for Q2CY13 as against Rs 307.44 crore in Q2CY12. On the other hand, the company slipped into losses of Rs 7.95 crore for Q2CY13 against a profit of Rs 19.27 crore posted in Q2CY12.

The total expenditure of the company has risen by 28% on a yearly basis to Rs 352.97 crore in Q2CY13. The EBITDA margins of the company have declined to 8.85% in the quarter under review from 12.13% in Q2CY12.

The company has approved for the sale of its cement grinding facilities at Raigad, Maharashtra to JSW Group as a going slump sale basis. Both parties are negotiating and finalising the terms of business and waiting for stakeholders’ approval.

The cement sector is bleeding due to an increase in the cost of inputs and at the same time, there is a slowdown in the economy which is limiting any substantial pick-up in the demand of the cement. Moreover, the second and third quarter for cement sector in India remains down because of the monsoon and festival season which falls in these two quarters. The stock of the company is trading at an expensive PE of 43x and EV/EBITDA of 21.86x and hence we advise readers to stay away from the scrip as of now.