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Hyderabad Industries


Hyderabad Industries is in the business of manufacturing fibre cement sheets and thermal insulation materials.

It owns the prominent ‘Charminar’ brand and is a market leader in its industry with 20%+ market share.

The company has reported good growth in revenues in the last five years as a result of capacity additions but operating margins have taken a hit in the last year due to overcapacity in the industry (see below).  It reported 88cr of operating profits on 725cr of revenues in the last financial year.  The company employed only moderate debt in financing its operations despite the heavy capacity additions in the industry, which is a point in favour of the company’s strong cash flows and management competence.

The business is exposed to the risk of substitutes becoming economically viable such as GI corrugated sheets (steel-based).  The business is dependent on rural spending power and there is little pricing power within the industry to pass on increasing input costs.  It is exposed to the risk of rising costs of cement, asbestos and fly ash, which forms a large proportion of its input cost. The industry is currently blighted by a demand slowdown and overcapacity as a result of large capacity additions in the past in expectation of larger demand growth.  The thermal insulation material business is specifically exposed to the industrial capital investment cycle.
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