🟢 At a Glance:
HeidelbergCement India (MyCem) reported ₹2,149 Cr sales in FY25 (down 9.2% YoY) and net profit of ₹107 Cr (down 36% YoY). EBITDA margins contracted to 11.1%. Management’s playbook includes a 200 kt clinker capacity expansion by June ’25, a ₹300 Cr green bond for waste‐heat recovery and solar rooftops, plus captive‐mine acquisitions to cut limestone costs—yet investors fret over 41× P/E valuation in a tepid market.
1. About the Company 🏭
- Parentage & Brands:
- Indian arm of Germany’s HeidelbergCement Group
- Sells 100% blended cement as MyCem and renewable power as MyCem Power
- Manufacturing Footprint:
- Damoh (Madhya Pradesh) – 1.5 MTPA clinker + power
- Jhansi (Uttar Pradesh) – 1.2 MTPA clinker + power
- Ammasandra (Karnataka) – 1.0 MTPA clinker + power
- Green Credentials:
- Renewable‐power output up 33% in FY23
- Alternate‐fuel (sugarcane bagasse, RDF) usage at 6%
- Why It Matters:
- Integrated model (clinker→cement→power→mines) offers cost control—if only demand would play ball! 😂
2. Title (H1)
HeidelbergCement India: Green Bond or Grey Bondage?
3. Key Managerial Personnel (KMP) 🎩
- Martin Heining – Managing Director & Chairman
- S. Subramanian – Chief Financial Officer
- Pooja Rao – Chief Operating Officer
- Rajesh Patel – Head, Green Energy
- Ankit Sharma – Company Secretary
4. Key Financials (FY24 vs. FY25) 💸
| Metric | FY24 | FY25 | YoY Δ |
|---|---|---|---|
| Sales (₹ Cr) | 2,366 | 2,149 | –9.2% |
| EBITDA (₹ Cr) | 317 | 239 | –24.5% |
| EBITDA Margin | 13.4% | 11.1% | –2.3 pp |
| Net Profit (₹ Cr) | 168 | 107 | –36.3% |
| EPS (₹) | 7.40 | 4.71 | –36.3% |
| ROCE / ROE | 16% / 13% | 11% / 7% | –5 / –6 pp |
| Net Cash (₹ Cr) | 137 | 75 | –45.3% |
Finance Joke: Margins thinner than your ex’s apologies! 🤭
5. Strategic Events & Business Triggers 🚀
- 200 kt Clinker Capacity Expansion (Jun ’25):
- +10% capacity; readies north‐India for post‐monsoon revival
- Estimated ₹150 Cr capex; funded via green bond & internal accruals
- ₹300 Cr Green Bond Issue:
- Coupon: 3.5%, 7-year tenor
- Funds: Waste‐Heat Recovery Units (WHRU) & 10 MW solar rooftops
- Limestone Mine Acquisitions (MP Blocks):
- Secures captive reserves to 2035; reduces limestone cost by 5–7%
- Digitalization Drive:
- IoT‐enabled kilns; 4% energy saving target
- ERP phase-II roll-out across R&D, SCM & sales
- Rising Freight Costs:
- Diesel up 15% YoY; a ₹5 / bag headwind
- Monsoon Variability:
- South-west monsoon at 95% of LPA; uneven demand across regions
6. Fair Value Estimate ⚖️
- Methodology: Sector P/E band (8–10×), FY27E EPS ₹20–₹22
- Fair Value Range: ₹170 – ₹200
- Current Price: ₹193 → trades near upper fair band → limited upside
7. EduInvesting Take 📌
- Green Ambitions: Strong ESG push (green bond + alternate fuel) ticks boxes for sustainable investors. 🌱
- Volume Woes: Domestic cement demand grew just 3% in FY25; capacity expansion may exacerbate oversupply.
- Valuation Risk: At 41× P/E, valuation far exceeds sector average of 10–12×. Paying café prices for concrete? ☕🧱
- Balance Sheet: Net-cash status (₹75 Cr) is comforting; limited leverage gives runway for capex.
8. Risks & Red Flags ⚠️
- Pricing Pressure: UltraTech & Ambuja expansions could trigger regional price wars.
- Fuel/Power Costs: Coal & diesel volatility could erode margins by 100–150 bp.
- Regulatory Hurdles: Stringent environmental norms on mining & emissions may delay expansions.
- Monsoon Dependence: Dry spell reduces rural and infra demand.
9. Final Word 🎯
HeidelbergCement India’s integrated model and green‐bond funding offer a strategic edge—but only if it can fill kilns amid sluggish demand. High valuation (41× P/E) leaves little margin for error. For long‐term investors with a green tilt, a ₹170 – ₹200 fair value range justifies a cautious “hold”—but don’t pour all your capital into grey dust!
Author: Prashant Marathe
Date: 17 Jun 2025
Tags: cement, infrastructure, greenbond, mycem, valuation, monsoon, ESG, eduinvesting
