Holcim: Margin-Accretive Investments Can Support Record Profitability; Raising Our Fair Value by 20%

We’re raising narrow-moat Holcim’s fair value estimate by 20% to CHF 72 from CHF 60 after reviewing its annual report, which highlights the impressive operating margin it earned from its products and solutions segment, and provides further clarity about how its role in decarbonizing cement will be margin-accretive. Having achieved margin expansion of 150 basis points during fiscal 2023, we believe Holcim can maintain current levels in the medium term, increasing our average EBIT margin to 18.0% between 2024 and 2027 from 17.4%. Shares remain at a slight premium.