Reviews

In this edition, we have reviewed Heidelberg Cement India Ltd. and Siemens Ltd. We suggest our reader investors to HOLD Heidelberg Cement India Ltd. and Siemens Ltd. 

We had previously recommended Heidelberg Cement India in Volume No. 34, Issue No. 24, dated October 28 – November 10, 2019, under the ‘Cover Story’ segment. The stock was then trading at Rs189.40 and was recommended based on the company’s sturdy growth momentum across segments, better performance than peers and strong product profile. Heidelberg Cement, with its core products being cement and ready mixed concrete aggregates and related activities, is one of the leading producers of building materials. Looking at the quarterly trends, on a standalone basis, the net sales for Q2FY21 decreased by 1.31 per cent to Rs512.69 crore from Rs519.51 crore reported for Q2FY20. It reported an operating profit of Rs136.08 crore for Q2FY21 thus expanding by 0.6 per cent compared to the operating profit of Rs135.27 crore posted for Q2FY20.

The company gained a net profit of Rs62.40 crore in Q2FY21, which is an expansion by 7.31 per cent compared to the net profit of Rs58.15 crore gained in Q2FY20. Net sales for FY20 increased by 2.28 per cent to Rs2,157.64 crore from Rs2,109.44 crore reported for FY19. The company posted operating profit of Rs580.52 crore for FY20, thus increasing by 12.03 per cent against operating profit of Rs518.16 crore posted for FY19. It gained a net profit of Rs268.06 crore in FY20, which is an expansion by 21.48 per cent compared to the net profit of Rs220.66 crore gained in FY19. The company’s capacity utilisation is higher than the industry average of 67 per cent. It has recorded the highest-ever profitability in FY20. There is also a reduction in the prices of input costs. Hence we recommend HOLD.

We had previously recommended Siemens Limited in Volume No. 34, Issue No. 24, dated October 28 – November 10, 2019, under the ‘Analysis’ segment. The stock was then trading at Rs1,634.70 and was recommended based on good growth prospects and higher profitability. Siemens stands for engineering excellence, innovation and reliability and it focuses on electrification, automation and digitalization. Looking at the quarterly trends, on a consolidated basis, the net sales for Q1FY21 decreased by 59.21 per cent to Rs1,276 crore from Rs3,128.10 crore reported for Q1FY20. It reported an operating profit of Rs76.80 crore for Q1FY21, indicating a contraction by 82.53 per cent compared to the operating profit of Rs439.50 crore posted for Q1FY20.

The company incurred a net loss of Rs1.90 crore in Q1FY21 compared to the net profit of Rs250.10 crore gained in Q1FY20. Net sales for FY20 increased by 8.45 per cent to Rs13,408.20 crore from Rs12,364 crore reported for FY19. Operating profit of Rs1,889.30 crore was recorded for FY20, thus expanding by 17.54 per cent against the operating profit of Rs1,607.40 crore posted for FY19.

It gained a net profit ofRs1,099.40 crore in FY20, which is an expansion by 21.99 per cent compared to the net profit of Rs901.20 crore gained in FY19. Even though the company has shown poor performance in the June quarter, the company is likely to perform well in the coming quarters because of opening up of the economy and confirmed orders in its portfolio. Hence we recommend HOLD

(Closing price as of November 04, 2020)