UltraTech Cement (ULTCEM) 2674

Result Update Rating matrix Rating : Buy Target : 36 Target Period : 9-12 months Potential Upside : 35% What s changed? Target Price Unchanged EPS FY16E Changed from 76.6 to 82.2 EPS FY17E Changed from 93.8 to 1.5 Rating Unchanged Quarterly performance Q3FY16 Q3FY15 YoY (%) Q2FY16 QoQ (%) Revenue 5,747.3 5,487.6 4.7 5,62. 2.3 EBITDA 1,43.9 845.7 23.4 927.4 12.6 EBITDA (%) 18.2 15.4 275 bps 16.5 166 bps PAT 58.6 364.4 39.6 393. 29.4 Key financials Crore FY14 FY15 FY16E FY17E Net Sales 277.9 22651.5 24171.5 26376.7 EBITDA 3616. 3915.3 451.1 5198.1 Net Profit 2144.5 214.7 2254.8 2756.7 EPS ( ) 78.2 73.4 82.2 1.5 Valuation summary FY14 FY15 FY16E FY17E PE (x) 34.2 36.4 32.5 26.6 EV to EBITDA (x) 2.5 19.7 17.2 14.8 EV/Tonne(US$) 218 23 191 169 Price to book (x) 4.3 3.9 3.5 3.2 RoNW (%) 12.5 1.6 1.8 11.9 RoCE (%) 11.7 1.9 11.6 12.9 Stock data Particular Amount Mcap 73375 crore Debt (FY15) 7574 crore Cash & Invest (FY15) 2916 crore EV 7833 crore 52 week H/L 3399 / 253 Equity cap 274.2 crore Face value 1 Price performance 1M 3M 6M 12M ACC -1.1-12.1-16.7-21.5 Ambuja Cement -6.3-11. -25.6-24.4 Shree Cement -11.5-24.4-14.8-7.1 UltraTech Cement -7. -1.3-22. -15.5 Research Analyst Rashesh Shah rashes.shah@icicisecurities.com Devang Bhatt devang.bhatt@icicisecurities.com January 21, 216 UltraTech Cement (ULTCEM) 2674 Cost efficiency drives margin expansion Standalone revenues increased 4.7% YoY (up 2.3% QoQ) to 5,747.3 crore (vs. I-direct estimate: 5,665.4 crore) due to 7.1% YoY growth in volumes to 11.6 MT (vs. I-direct estimate of 11.4 MT) led by capacity expansion. Realisation declined 2.2% YoY to 4,955 (vs. I-direct estimate of 4,953) due to pricing pressure across regions EBITDA/tonne increased 15.2% YoY in Q3FY16 to 9/tonne (vs. I- direct estimate: 833/tonne) due to a decline in power & fuel costs as there was an increase in pet coke consumption (from 51% to 74% YoY in fuel mix). RM cost during the quarter increased due to DMF levy The management expects amendment to the MMRD Act to get passed in the upcoming Budget session. It expects consolidation of acquired Madhya Pradesh units of Jaiprakash Associates by Q1FY17 end Largest pan-india player in cement industry UltraTech Cement is the largest player in capacity terms (~64.7 MT) with a market share of over ~18% in India. The company has consistently remained ahead of its peers in terms of capacity expansion with a CAGR of 23% vs. peer s CAGR of 13% in the past five years. In Q2FY16, UltraTech commissioned the 1.6 MT grinding unit at Jhajjar, Haryana and 1.6 MT grinding unit at Dankuni, West Bengal. The management has also indicated that the Bihar and Maharashtra grinding unit (1.6 MT each) is expected to be commissioned by March 216. Further, with ongoing organic, inorganic expansion, total capacity is set to reach ~72.8 MT (consolidated capacity at 75.8 MT) by FY17E while industry capacity is expected to grow at a modest pace in the next three years. This, in turn, is expected to help the company further gain its leadership position, going forward. Green shoots visible in infra spending We expect the company to grow at a higher rate than the industry in coming years led by capacity expansion. Some green shoots of recovery in demand from big-ticket infra projects are visible in North and South. Further, in the East sustained infra spending in Odisha, Bihar and Chhattisgarh are expected to continue to drive volume growth in Q4FY16 and FY17. In south, the company expects demand from Seemandhra and Telangana to pick up in FY17. UltraTech, being the largest pan-india player, would be one of the major beneficiaries of a demand recovery. Operating efficiency to drive margins In Q3FY16 total cost/tonne declined 5.4% YoY led by lower energy cost. Cost/tonne is expected to come down further led by commissioning of grinding units (in Haryana, West Bengal, Maharashtra and Bihar) coupled with power cost savings driven by decline in pet coke prices, higher share of WHRMS and increased use of pet coke (currently 74% that can go up to 8-9%). The full benefit of cost benefit will be reflected in Q4FY16 and FY17. Well positioned to reap benefits of recovery in demand! With the government s focus on infrastructure and a gradual revival in housing demand led by stable housing prices and the Seventh Pay Commission, cement demand is expected to improve, going forward. We assign premium valuations multiple to UltraTech vs. its peer companies due to industry-leading growth (on the back of consistent capacity additions), higher margins and healthy cash flows. Hence, we continue to maintain our positive view on the stock with a BUY recommendation and a target price of 3,6/share (i.e. at 2.x FY17E EV/EBITDA and EV/tonne of $225/tonne). ICICI Securities Ltd Retail Equity Research

Variance analysis Q3FY16 Q3FY16E Q3FY15 YoY (%) Q2FY16 QoQ (%) Comments Net Sales 5,747.3 5,665.4 5,487.6 4.7 5,62. 2.3 The revenue growth was driven by 7% YoY increase in volumes (led by capacity expansion) Other Incomes 131.8 15. 144.5-8.8 15. 25.5 Raw Material Expenses 99.2 912. 876.2 3.8 94.4.5 Increase in RM cost was mainly due to the impact of DMF, which will be 3% of limestone royalty w.e.f. December 1, 215 Employee Expenses 349.2 34.5 35.6 14.3 34.5 2.6 Power and fuel 1,68.2 1,8.6 1,25.8-11.4 1,58.9.9 Energy cost declined due to an increase in pet coke consumption in the fuel mix (74% in Q3FY16 vs 51% in Q3FY15), 18% YoY decline in pet coke cost and increase in share of thermal power plant & WHRMS (57 MW) Freight 1,398. 1,379.4 1,315.3 6.3 1,347.3 3.8 Logistic cost increased due to a hike in rail freight (2.7% hike from April 1 215) Others 978.8 1,. 939.1 4.2 1,41.5-6. EBITDA 1,43.9 952.9 845.7 23.4 927.4 12.6 EBITDA Margin (%) 18.2 16.8 15.4 275 bps 16.5 166 bps The EBITDA margin improved due to lower energy cost The increase in depreciation expenses was due to a change in useful life of ancillary Depreciation 323.8 289.8 278.3 16.4 333.3-2.8 asset Interest 125.7 13.3 154. -18.4 13.3-3.5 PBT 726.2 637.8 557.8 3.2 568.9 27.7 Total Tax 217.7 21.4 193.5 12.5 175.9 23.8 PAT 58.6 436.4 364.4 39.6 393. 29.4 PAT declined mainly on account of a fall in interest expenses Key Metrics Volume (MT) 11.6 11.4 1.83 7.1 11.12 4.3 The volume growth was mainly led by capacity expansion Realisation ( ) 4,955 4,953 5,68-2.2 5,53-1.9 Prices during the quarter declined due to pricing pressure across regions EBITDA per Tonne ( ) 9 833 781 15.2 834 7.9 EBITDA/tonne improved mainly due to lower energy cost Change in estimates FY16E FY17E ( Crore) Old New % Change Old New % Change Comments Revenue 23,892.3 24,171.5 1.2 25,987.2 26,376.7 1.5 EBITDA 4,3.6 4,51.1 4.9 4,937.6 5,198.1 5.3 We expect EBITDA to improve led by a decline in energy and freight cost EBITDA Margin (%) 18. 18.7 66 bps 19. 19.7 71 bps PAT 2,12.5 2,254.8 7.2 2,572.7 2,756.7 7.2 We expect PAT to improve led by lower interest expenses EPS ( ) 76.6 82.2 7.2 93.8 1.5 7.2 Assumptions Current Earlier FY13 FY14 FY15 FY16E FY17E FY15 FY16E FY17E Comments Volume (MT) 41.7 42.6 45.6 48.4 51.7 45.6 48. 51.2 We expect volumes to increase mainly led by capacity expansion Realisation ( ) 4,8 4,713 4,963 4,996 5,15 4,963. 4,978 5,76 We expect realisation to remain healthy mainly due to better realisation in south EBITDA per Tonne ( ) 1,84 849 858 932 1,6 855. 896. 964.3 We expect EBITDA/tonne to remain healthy on acount of improved realisation and lower power cost ICICI Securities Ltd Retail Equity Research Page 2

Company Analysis Largest pan-india player in cement Industry Regional presence South 24% East 15% West 32% North 29% UltraTech Cement is the largest player in capacity terms (~64.7 MT) with a market share of over ~18% in India. The company has consistently remained ahead of its peers in terms of capacity expansion with a CAGR of 23% vs. peer s CAGR of 13% in the past five years. In Q2FY16, UltraTech commissioned 1.6 MT grinding unit at Jhajjar, Haryana and 1.6 MT grinding unit at Dankuni, West Bengal. The management has also indicated that the Bihar and Maharashtra grinding units (1.6 MT each) are expected to be commissioned by March 216. Further, with the ongoing organic, inorganic expansion, total capacity is set to reach ~72.8 MT (consolidated capacity at 75.8 MT) by FY17E while industry capacity is expected to grow at a modest pace in the next three years. This, in turn, is expected to help the company further gain its leadership position, going forward. Demand expected to revive in FY17 UltraTech derives majority of its revenue from northern, western India, at 29%, 32%, respectively. Other than this, 15% of revenue is from eastern India where prices remain strong while 24% of its revenue comes from southern India where prices are improving. On the whole, the sales mix across India is well distributed, indicating lower volatility in blended realisation, going forward. The company has indicated some green shoots of recovery in demand from big-ticket infra projects in north. Further, in the east sustained infra spending in Odisha, Bihar and Chhattisgarh are expected to continue to drive volume growth in Q4FY16 and FY17. In south, the company expects demand from Seemandhra and Telangana to pick up in FY17. Operates at healthy EBITDA/tonne vis-à-vis industry With lower lead distances due to a pan-india presence, captive power plants and higher sales realisations due to a higher trade mix coupled with higher white cement sales realisation, the company generates highest EBITDA/tonne in the industry. It has also been able to reduce its power consumption per tonne gradually through various initiatives. Power requirement of ~8% is met through captive power plants, which helps the company in reducing per tonne cost. Other than this, the company also has increased pet coke consumption, which has helped in reducing power cost. Further, commissioning of various grinding units is expected to reduce freight cost/t. Exhibit 1: Gradual reduction in power requirement Exhibit 2: Higher EBITDA/tonne vis-à-vis peer group 86 84 82 8 78 76 74 85.1 83.1 82. 81.3 81.1 79. FY9 FY1 FY11 FY12 FY13 FY14 EBITDA/tonne ( ) 1,2 1, 8 6 4 2-1,16 837 Q1FY14 74 548 Q2FY14 765 61 Q3FY14 914 787 Q4FY14 843 82 Q1FY15 775 718 Q2FY15 781 63 Q3FY15 1,13 845 Q4FY15 881 73 Q1FY16 834 74 Q2FY16 Kwh/T of cement Ultratech Industry Peer set includes ACC, Ambuja, Shree cement and India cement ICICI Securities Ltd Retail Equity Research Page 3

Expect revenue CAGR of 7.9% during FY15-17E We expect revenues to grow at a CAGR of 7.9% YoY over the next two years led by capacity expansion. The company is well on track on the capacity expansion front and will likely remain ahead of its target of 72.8 MT by FY17E (including the Jaiprakash Associate deal). Considering this, we expect volume CAGR of 6.4% during FY15-17E. We expect the blended realisation to increase at a CAGR of 1.4% during FY15-17E. Exhibit 3: Expect expansion led revenue CAGR of 7.9% during FY15-17E Exhibit 4: Capacity addition plans (standalone) 3, 25, 2, 15, 1, 5, - 1321 18184 221 278 22652 24171 26377 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Clinker Grey Cement Opening FY15 48 6.2 Additions Q1FY16 - - Q2FY16-4.5 Q3FY16 - - Q4FY16 - - Q1FY17-3.2 Q2FY17-4.9* Closing FY17 48 72.8 Sales ( crore) * Board approval for acquisition of Jaiprakash s MP plant with capacity of 4.9 MT Exhibit 5: Volume to grow at CAGR of 6.4% during FY15-17E Exhibit 6: Realisation to pick up led by higher price realisation in south 7. 6. 5. 4. 3. 2. 1.. 41.6 41.7 42.6 45.6 48.4 51.7 FY12 FY13 FY14 FY15 FY16E FY17E 52 5 48 46 44 42 4 515 4963 4996 48 4713 4374 FY12 FY13 FY14 FY15 FY16E FY17E 2. 15. 1. 5.. -5. Sales Volumes Realisation ( /tonne) -LS Growth (%) -RS Exhibit 7: Robust volume growth led by capacity expansion Exhibit 8: Quarterly realisation trend Million Tonne 14 12 1 8 6 4 2 9.4 1. 12.5 12. 1.7 1.8 12.2 12.4 11.1 11.6 ( ) 55 525 5 475 45 425 482 4792 4662 4725 528 568 545 4866 553 4955 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Sales Volume Q1FY16 Q2FY16 Q3FY16 4 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Realisation Q4FY15 Q1FY16 Q2FY16 Q3FY16 ICICI Securities Ltd Retail Equity Research Page 4

Margins to improve led by operating efficiency Exhibit 9: Expect EBITDA/tonne of 16 in FY17E In Q3FY16 total cost/tonne declined 5.4% YoY led by lower energy cost. Going forward, cost/tonne is expected to come down further led by commissioning of various grinding units, WHRS, and increased use of pet coke. The full benefit of the recent decline in pet coke prices will be reflected in Q4FY16 and FY17. This, in turn, would help the company in achieving over 2% margins by FY17E. Exhibit 1: Margins to improve led by improvement in realisations 12 1 8 6 4 2 713 962 184 849 858 932 16 3. 25. 2. 15. 19.2 22. 22.6 18. 17.3 18.7 19.7 1. FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E EBITDA/Tonne EBITDA Margin (%) Exhibit 11: Q3FY16 EBITDA per tonne improves due to lower energy cost Exhibit 12: Pick-up in margins expected, going forward per tonne 12 1 8 6 4 2 74 765 914 843 775 781 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 113 881 834 9 Q4FY15 Q1FY16 Q2FY16 Q3FY16 (%) 25 2 15 1 5 14.7 Q2FY14 19.6 16. Q3FY14 Q4FY14 17.8 Q1FY15 15.4 Q2FY15 15.4 2.1 Q3FY15 Q4FY15 16.5 18.1 Q1FY16 Q2FY16 Q3FY16 18.2 EBITDA Margin Expect net profit CAGR of 17. % during FY15-17E After witnessing a sharp decline in profit in FY15, we expect net margins to improve to 1.5% in FY17E, which is still lower than the average NPM of 13.3% in FY12. Exhibit 13: Profitability trend crore 3 25 2 15 1 5 2655.6 2446.2 1.6 2144.5 13.3 13.5 1.7 144. 214.7 8.9 2756.7 2254.8 1.5 9.3 16. 14. 12. 1. 8. 6. 4. 2.. (%) FY11 FY12 FY13 FY14 FY15 FY16E FY17E Net profit - LS Net profit margin -RS ICICI Securities Ltd Retail Equity Research Page 5

Outlook and valuation The company is well on track on the capacity expansion front and will likely remain ahead of its target of 72.8 MT by FY17E (including the Jaiprakash Associates deal). Considering this, we expect volume growth at 7.9% CAGR in FY15-17E. We expect blended realisations to increase moderately at 1.4% CAGR over the same period. We estimate blended EBITDA/tonne at 932/tonne in FY16E and 1,6/tonne in FY17E. At the CMP of 2,674, the stock is trading at 17.2x and 14.8x its FY16E and FY17E EV/EBITDA, respectively. We believe the industry s capacity utilisation bottomed at ~69% in FY14. With the government taking measures to boost infrastructure development through steps like long-term fund availability for major infra projects and higher budgetary allocation towards public infrastructure development, we expect robust cement demand growth in FY15-17E to reach 319 MT (i.e. at CAGR of 8.6%, 1.1x of GDP in line with last 1 year s average vs. CAGR of 5.5% and 7.5% in the last five and 1 years, respectively). The company expects government infra spends to gain momentum especially in construction of concrete roads and new capital city creation in Andhra Pradesh. UltraTech is well positioned to reap the benefit of a recovery in demand and generate healthy free cash flows in future. We assign premium valuations multiple to UltraTech vs. its peer companies due to its ability to generate higher margins and healthy cash flows. Hence, we continue to maintain our positive view on the stock with a BUY recommendation with a target price to 3,6/share (i.e. at 2.x FY17E EV/EBITDA and EV/tonne of $225/tonne). Exhibit 14: Key assumptions per tonne FY13 FY14 FY15 FY16E FY17E Sales Volume* 42 43 46 48 52 Net Realisation* 48 4713 4963 4996 515 Total Expenditure 3716 3864 415 464 499 Raw material 671 781 78 86 79 Power & Fuel 131 971 139 98 98 Freight 112 175 1182 1219 12 Employees 232 238 267 29 31 Others 771 799 836 842 9 EBITDA per Tonne 184 849 858 932 16 Source: ICICIdirect.com Research; * Blended (grey + white + clinker) ICICI Securities Ltd Retail Equity Research Page 6

Exhibit 15: One year forward EV/EBITDA ( Crore) 98 9 82 74 66 58 5 42 34 26 18 1 2 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 EV 2.5x 18.5x 16.5x 14.5x 1.5x Exhibit 16: One year forward EV/Tonne 2 15 Million $ 1 5 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 EV $2 $17 $15 $132 $9 Exhibit 17: Valuation Sales Growth EPS Growth PE EV/Tonne EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) ($) (x) (%) (%) FY13 22.9.3 96.8-19.3 27.6 238 16.4 17.4 18.7 FY14 277.9.3 78.2-19.3 34.2 218 2.5 12.5 11.7 FY15 22651.5 12.8 73.4-6.1 36.4 23 19.7 1.6 1.9 FY16E 24171.5 2.4 82.2 5.1 32.5 191 17.2 1.8 11.6 FY17E 26376.7 16.4 1.5 36.8 26.6 169 14.8 11.9 12.9 ICICI Securities Ltd Retail Equity Research Page 7

Company snapshot 4,5 4, 3,5 Target price: 36 3, 2,5 2, 1,5 1, 5 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Mar-11 The company's wholly-owned subsidiary, UltraTech Cement Middle East Investments Ltd completes acquisition of ETA Star Cement (ETA) and acquires management control of ETA's operations in the UAE, Bahrain and Bangladesh. The company's capacity stands augmented to 52 MTPA Jun-12 CCI publishes an order against several cement manufacturers including ACC Ltd and imposes a penalty of.5 times of the profit for the year 29-1 and 21-11. For UltraTech, the amount works out to 1175.49 crore Jul-12 Announces that the company has signed an agreement with the shareholders of Gotan Lime Stone Khanij Udyog Pvt Ltd (GKUPL), Rajasthan to acquire 1% equity shares of GKUPL. With this acquisition, GKUPL becomes a wholly-owned subsidiary of the company Sep-13 Announces that the company will acquire 4.8 MT of Gujarat Cement plant of Jaypee Cement. Other than this, ~ 1 MTPA capacity will be commissioned by FY15. Total cement capacity is expected to reach ~7 MTPA Jun-14 Company starts including Jaypee Cement operations in quarterly result from Q1FY15 Sep-14 Commissions 1.4 MT cement mill at Karnataka and 25 MW power plant at AP Dec-14 Board approves acquisition of cement business of Jaiprakash Associates in MP with capacity of 4.9 MT Aug-15 Commissions a bulk terminal with a capacity of 2 MT in Pune, Maharashtra. Sep-15 Commissions a cement grinding unit with a capacity of 1.6 MT at Jhajjar, Haryana. Sep-15 Commissions a cement grinding unit with a capacity of 1.6 MT at Dankuni, West Bengal. Dec-15 Compat sets aside the Competition Commission of India (CCI) order of alleged cartelisation Top 1 Shareholders Rank Name Last filing date % O/S Position (m) Change (m) 1 Aberdeen Asset Management (Asia) Ltd. 3-Jun-15 2.5 6.94. 2 Life Insurance Corporation of India 3-Sep-15 2.2 6.9 (.1) 3 Aberdeen Asset Managers Ltd. 3-Nov-15 1.5 4.. 4 OppenheimerFunds, Inc. 3-Sep-15 1.4 3.88. 5 UTI Asset Management Co. Ltd. 3-Nov-15.8 2.14. 6 The Vanguard Group, Inc. 3-Nov-15.7 1.82. 7 Franklin Advisers, Inc. 3-Sep-15.6 1.66. 8 Franklin Templeton Asset Management (India) Pvt. Ltd. 3-Nov-15.6 1.63. 9 DSP BlackRock Investment Managers Pvt. Ltd. 3-Nov-15.5 1.44. 1 APG Asset Management 3-Jun-15.5 1.44 (.1) Source: Reuters, ICICIdirect.com Research Recent Activity Shareholding Pattern (in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Promoter 61.69 61.69 61.69 61.69 61.69 FII 19.89 19.52 19.32 18.52 18.43 DII 5.68 5.88 5.86 6.77 7.1 Others 12.74 12.91 13.13 13.2 12.78 Buys Sells Investor Name Value Shares Investor Name Value Shares William Blair Investment Management, LLC 25.4.6 Aditya Birla Group -753-168 SBI Funds Management Pvt. Ltd. 4.3.1 William Blair & Company, L.L.C. -22.1 -.5 Axiom International Investors LLC 3.9.1 T. Rowe Price Hong Kong Limited -12. -.3 Kotak Mahindra Asset Management Company Ltd. 2.9.1 Life Insurance Corporation of India -4.5 -.1 ICICI Prudential Asset Management Co. Ltd. 1.9. Sydinvest -3.6 -.1 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 8

Financial summary Profit and loss statement Crore (Year-end March) FY14 FY15 FY16E FY17E Total operating Income 2,77.9 22,651.5 24,171.5 26,376.7 Growth (%).3 12.8 6.7 9.1 Raw material cost 3327.4 356.1 3898. 481.8 Power & Fuel cost 4135.4 4742.9 439.9 4691.4 Freight cost 458.8 5397. 5895.7 62.1 Employees cost 114.6 1218.3 141.6 1555.2 Others 343.7 3817.9 475.2 465.1 Total Operating Exp. 16,461.9 18,736.2 19,661.4 21,178.6 EBITDA 3,616. 3,915.3 4,51.1 5,198.1 Growth (%) -2. 8.3 15.2 15.3 Depreciation 1,52.3 1,133.1 1,252.4 1,32.6 Interest 319.2 547.5 519.9 52.6 Other Income 531. 651.5 493.2 616.5 PBT 2,775.6 2,886.3 3,231. 3,991.4 Total Tax 631. 871.5 976.2 1234.6 PAT 2,144.5 2,14.7 2,254.8 2,756.7 Growth (%) -19.2-6.1 11.9 22.3 Adjusted EPS ( ) 78.2 73.4 82.2 1.5 Cash flow statement Crore (Year-end March) FY14 FY15 FY16E FY17E Profit after Tax 2,144.5 2,14.7 2,254.8 2,756.7 Add: Depreciation 1,52.3 1,133.1 1,252.4 1,32.6 (Inc)/dec in Current Assets -641.7-599.7 462.9-2,711.3 Inc/(dec) in CL and Provisions -886.7 1,566.5-993.8 1,975.1 CF from operating activities 1,668.4 4,114.6 2,976.3 3,341.2 (Inc)/dec in Investments -62.4 1,26.4.. (Inc)/dec in Fixed Assets -2,338. -6,24.8-3,. -2,5. Others 389.9 496.2.. CF from investing activities -2,55.5-4,538.3-3,. -2,5. Issue/(Buy back) of Equity.2.2.. Inc/(dec) in loan funds 979.6 1,638.1 825. -5. Dividend paid & dividend tax -288.8-288.5-82.6-82.6 Inc/(dec) in Sec. premium.... Others 6.9 217.3 342.5 45. CF from financing activities 697.9 1,567. 364.9-852.6 Net Cash flow 135.2 119.9 341.2-11.5 Opening Cash 142.3 277.5 397.5 738.7 Closing Cash 277.5 397.5 738.7 727.3 Balance sheet Crore (Year-end March) FY14 FY15 FY16E FY17E Liabilities Equity Capital 274.2 274.4 274.4 274.4 Reserve and Surplus 16,823.3 18,766.9 2,561.6 22,965.7 Total Shareholders funds 17,97.6 19,41.3 2,836. 23,24.1 Total Debt 4,875.1 6,513.2 7,338.2 6,838.2 Deferred Tax Liability 2,295.8 2,792. 2,792. 2,792. Minority Interest / Others.... Total Liabilities 24,268.5 28,346.4 3,966.2 32,87.3 Assets Gross Block 25,317.3 31,558.1 34,358.1 35,146.5 Less: Acc Depreciation 9,442.3 1,575.4 11,827.8 13,148.4 Net Block 15,875. 2,982.7 22,53.3 21,998.2 Capital WIP 2,38.4 2,38.4 2,238.4 3,95. Total Fixed Assets 17,913.5 23,21.2 24,768.7 25,948.2 Investments 5,391.7 5,28.8 5,28.8 5,28.8 Inventory 2,368.4 2,751.4 2,546.4 3,234.8 Debtors 1,281. 1,23.2 1,71.6 1,469. Loans and Advances 2,56.7 2,8.5 2,33.8 4,296.6 Other Current Assets 15.3 16. 17.4 19. Cash 277.5 397.5 738.7 727.3 Total Current Assets 6,448.9 7,168.6 7,46.9 9,746.7 Creditors 4,512.6 5,749.1 4,846.6 6,426.7 Provisions 973. 1,33. 1,211.7 1,66.7 Total Current Liabilities 5,485.6 7,52.1 6,58.3 8,33.4 Net Current Assets 963.3 116.5 988.6 1,713.3 Others Assets.... Application of Funds 24,268.5 28,346.4 3,966.1 32,87.2 Key ratios (Year-end March) FY14 FY15 FY16E FY17E Per share data ( ) EPS 78.2 73.4 82.2 1.5 Cash EPS 116.6 114.7 127.8 148.6 BV 623.5 693.9 759.3 846.9 DPS 9. 9. 25. 25. Cash Per Share 1.1 14.5 26.9 26.5 Operating Ratios (%) EBITDA Margin 18. 17.3 18.7 19.7 PBT / Total Operating income 13.8 12.7 13.4 15.1 PAT Margin 1.7 8.9 9.3 1.5 Inventory days 42.9 41.2 4. 4. Debtor days 2.9 2. 22. 22. Creditor days 89.2 82.7 8. 78. Return Ratios (%) RoE 12.5 1.6 1.8 11.9 RoCE 11.7 1.9 11.6 12.9 RoIC 14.1 11.9 12.8 15.1 Valuation Ratios (x) P/E 34.2 36.4 32.5 26.6 EV / EBITDA 2.5 19.7 17.2 14.8 EV / Net Sales 3.7 3.4 3.2 2.9 Market Cap / Sales 3.7 3.2 3. 2.8 Price to Book Value 4.3 3.9 3.5 3.2 Solvency Ratios Debt/EBITDA 1.3 1.7 1.6 1.3 Debt / Equity.3.3.4.3 Current Ratio 1.2 1. 1.2 1.2 Quick Ratio 1.1 1. 1. 1.1 ICICI Securities Ltd Retail Equity Research Page 9

ICICIdirect.com coverage universe (Cement) CMP M Cap EPS ( ) EV/EBITDA (x) EV/Tonne ($) RoCE (%) RoE (%) Company ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E ACC* 1224 1475 Hold 22,999 61.8 3.1 68.8 17.1 18.1 1.7 117 16 14 13.7 11. 18.9 14.1 8.8 14.4 Ambuja Cement* 192 225 Hold 29,771 9.7 5.7 7.7 13. 18.2 13.9 164 135 13 17.8 12.4 15.9 14.4 8.6 11.3 UltraTech Cem 2674 36 Buy 73,375 73.4 82.2 1.5 19.7 17.2 14.8 23 191 169 1.9 11.6 12.9 1.6 1.8 11.9 Shree Cement 952 12,5 Buy 33,13 122.5 123.6 232.5 25.4 26.7 16.7 259 198 185 6.2 6.5 11.8 8.1 7.6 12.7 Heidelberg Cem 68 81 Hold 1,836 2.6.8 2.5 9.1 13.6 9.9 81 82 82 9.2 6.7 9.5 -.1 2.2 6.2 India Cement 82 9 Hold 2,519 1. 4.6 4.9 7.7 6.1 5.7 56 53 54 6.8 9. 1.1.8 4.2 4. JK Cement 455 71 Hold 3,182 22.4 11.2 8.7 12. 11.2 13. 76 73 85 8.5 8.4 7.4 9.5 4.6 3.5 JK Lakshmi Cem 276 373 Hold 3,249 8.1-3. 6.7 13.5 17.9 12.3 119 82 74 7.8 3.3 7.3 7.2-2.8 5.8 Mangalam Cem 175 22 Hold 467 8.9-19.2 18.4 1.2 61.6 7.1 4 4 44 7.2-1.7 1.7 5.3-1.7 9.3 SFCL 123 215 Buy 2,731 2.9 5.7 11.9 8.2 6.9 4.9 158 154 17 11.2 16.9 24.3 9.4 15.4 24.8 *CY14, CY15E, CY16E ; ^June year end ICICI Securities Ltd Retail Equity Research Page 1

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/15% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 11

ANALYST CERTIFICATION We /I, Rashesh Shah, CA, and Devang Bhatt, PGDBM Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a SEBI registered Research Analyst having registration no. INH99.ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Rashesh Shah, CA, and Devang Bhatt, PGDBM, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Rashesh Shah, CA, and Devang Bhatt, PGDBM, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. ICICI Securities Ltd Retail Equity Research Page 12