UltraTech Cement (ULTCEM) 2922

Result Update Rating matrix Rating : Buy Target : 36 Target Period : 9-12 months Potential Upside : 23% What s changed? Target Price Changed from 365 to 36 EPS FY16E Changed from 1.1 to 13.8 EPS FY17E Changed from 138. to 143.4 Rating Unchanged Quarterly performance Q2FY16 Q2FY15 YoY (%) Q1FY16 QoQ (%) Revenue 5,62. 5,379. 4.5 6,37. -6.9 EBITDA 927.4 829.5 11.8 1,92.6-15.1 EBITDA (%) 16.5 15.4 18 bps 18.1-16 bps PAT 393. 41.1-4.2 59.8-33.5 Key financials Crore FY14 FY15 FY16E FY17E Net Sales 277.9 22653.7 2755.8 32337.5 EBITDA 3616. 3915.3 5514.5 7229.8 Net Profit 2144.5 214.7 2847.3 3934.9 EPS ( ) 78.2 73.4 13.8 143.4 Valuation summary FY14 FY15 FY16E FY17E PE (x) 37.2 39.6 28. 2.3 EV to EBITDA (x) 22.3 21.3 15.3 11.6 EV/Tonne(US$) 237 22 187 18 Price to book (x) 4.7 4.2 3.7 3.2 RoNW (%) 12.5 1.6 13.3 15.7 RoCE (%) 11.7 1.9 14.5 17.9 Stock data Particular Amount Mcap 87 crore Debt (FY15) 7,574 crore Cash & Invest (FY15) 2,916 crore EV 84728 crore 52 week H/L 3399 / 2386 Equity cap 274.2 crore Face value 1 Price performance 1M 3M 6M 12M ACC 1.5-6.1-8.3 -.8 Ambuja Cement.1-16.2-14.9 1.3 Shree Cement 2.2 5.3 22.6 46.4 UltraTech Cement -1.3-1.1 3.2 25.1 Research Analyst Rashesh Shah rashes.shah@icicisecurities.com Devang Bhatt devang.bhatt@icicisecurities.com October 2, 215 UltraTech Cement (ULTCEM) 2922 Power cost rationalisation drives margin Standalone revenues increased 4.5% YoY (down 6.9% QoQ) to 5,62 crore (vs. I-direct estimate: 5,526 crore) due to 4.% YoY growth in volumes (led by capacity expansion) &.5%YoY increase in realisations EBITDA/tonne increased 7.6% YoY in Q2FY16 to 834/tonne (vs. I- direct estimate: 842/tonne) due to a decline in power & fuel costs as there was an increase in pet coke consumption (from 5% to 65% YoY in fuel mix). RM cost during the quarter increased due to DMF levy (3% of royalty on limestone with effect from December 1, 215) Acquisition of Jaiprakash Associates 5 MT Madhya Pradesh asset has been delayed by six months due to provision on transfer of mines in the recently introduced MMR&D Act. The management expects clarity on these provisions/amendments by the government in next three months 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 1.6 MT grinding unit at Jhajjar, Haryana and 1.6 MT grinding unit at Dankuni, West Bengal. Further, with ongoing organic, inorganic expansion, total capacity is set to reach ~71 MT (consolidated capacity at 74.8 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. During the quarter, the company commissioned the 5 MW WHR plant taking total capacity of WHR plant to 53 MW. UltraTech plans to further add 5 MW of WHR plant by FY16, which will further help lower fuel cost in coming quarters. To benefit from strong demand recovery due to pan-india exposure We expect the company to grow at a higher rate than the industry in coming years led by capacity expansion. The same has also been reflected in the current quarterly results with volume growth of 4.% YoY. Further, given the likelihood of higher spending on infra development coupled with a rebound in economic growth, we expect strong demand recovery over the next three years. UltraTech, being the largest pan-india player, would be one of the major beneficiaries of a demand recovery. Healthy operating cash flow, low debt/equity to fuel expansion The company is expected to generate over ~ 4 crore of operating cash flows annually and incur capex of 3,9 crore annually. Further, considering the strong balance sheet of the company with minimal debt (D/E of.3:1), we believe the expansion plan will not add any stress to the balance sheet. This will consolidate the company s position in the industry. Well positioned to reap benefits of recovery in demand!!! With the government s focus on infrastructure and initiatives like smart cities, concretisation of roads, and housing for all, 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 revise our target price to 3,6/share (i.e. at 14.x FY17E EV/EBITDA and EV/tonne of $22/tonne). ICICI Securities Ltd Retail Equity Research

Variance analysis Q2FY16 Q2FY16E Q2FY15 YoY (%) Q1FY16 QoQ (%) Comments Net Sales 5,62. 5,526.6 5,379. 4.5 6,37. -6.9 The revenue growth was driven by expanded capacity through acquisitions Other Incomes 15. 115.6 121.7-13.7 159.2-34.1 Raw Material Expenses 94.4 946. 835.7 8.2 1,45.3-13.5 Employee Expenses 34.5 34.3 31.1 9.8 312.8 8.9 Increase in RM cost was mainly due to a hike in limestone royalty and impact of DMF, which will be 3% of limestone royalty w.e.f. December 1, 215 Power and fuel 1,58.9 999.4 1,144.9-7.5 1,97.3-3.5 Energy cost declined due to an increase in pet coke consumption in the fuel mix (65% in Q2FY16 vs 5% in Q2FY15), decline in pet coke cost and increase in share of thermal power plant & WHRMS (53 MW) Freight 1,347.3 1,45.2 1,29.9 4.4 1,552.7-13.2 Logistic cost increased due to a hike in rail freight (2.7% hike from April 1 215), increase in lead distance and higher share of road transport. For the quarter, rail:road: sea mix was at 29:69:3 vs. 3:67:2 in Q2FY15 Others 1,41.5 926.4 968.1 7.6 936.3 11.2 Other expenses increased due to higher maintenance cost EBITDA 927.4 945.3 829.5 11.8 1,92.6-15.1 EBITDA Margin (%) 16.5 17.1 15.4 18 bps 18.1-16 bps The EBITDA margin improved due to lower energy cost The increase in depreciation expenses was due to change in useful life of ancillary Depreciation 333.3 278.7 32.4 1.2 282.7 17.9 asset Interest 13.3 138.3 143.4-9.1 138.3-5.8 PBT 568.9 643.8 55.5 12.5 83.9-31.5 Total Tax 175.9 199.6 95.4 84.3 24.1-26.8 PAT 393. 444.3 41.1-4.2 59.8-33.5 PAT declined mainly on account of a decline in other income and increase in depreciation expenses Key Metrics Volume (MT) 11.12 11.23 1.7 4. 12.41-1.4 The volume growth was mainly led by capacity expansion Realisation ( ) 5,53 4,922 5,28.5 4,866 3.8 Prices during the quarter were flat due to poor demand led by monsoon EBITDA per Tonne ( ) 834 842 775 7.6 881-5.3 EBITDA/tonne improved mainly due to lower energy cost Change in estimates FY16E FY17E ( Crore) Old New % Change Old New % Change Comments Revenue 27,38.5 27,55.8 1.7 31,933.9 32,337.5 1.3 Revenues are expected to improve led by a demand revival in H2FY16 EBITDA 5,388.3 5,514.5 2.3 7,32.9 7,229.8 2.8 We expect EBITDA to improve led by a decline in energy cost EBITDA Margin (%) 19.9 2. 12 bps 22. 22.4 33 bps PAT 2,745.5 2,847.3 3.7 3,787.2 3,934.9 3.9 EPS ( ) 1.1 13.8 3.7 138. 143.4 3.9 Assumptions Current Earlier FY13 FY14 FY15 FY16E FY17E FY15 FY16E FY17E Comments Volume (MT) 41.7 42.6 46.1 54. 6.4 46.1 53.9 6.4 We expect volumes to increase mainly led by capacity expansion Realisation ( ) 4,8 4,713 4,913 5,98 5,351 4,918. 5,17. 5,29. We expect realisation to remain healthy mainly due to better realisation in south EBITDA per Tonne ( ) 1,84 849 849 1,22 1,196 85. 1,. 1,165. 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 UltraTech Cement is the largest player in terms of capacity (~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. Further, with ongoing organic and inorganic expansion, the total capacity is set to reach ~71 MT (consolidated capacity at 74.8 MT) by FY17E while the industry capacity is expected to grow at a modest pace over the next three years. This, in turn, is expected to help the company to further gain its leadership position, going forward. Demand expected to revive in H2FY16 South 25% East 14% North 28% UltraTech derives majority of its revenue from northern, western India, at 28%, 33%, respectively. Other than this, 14% of revenue is from eastern India where prices remain strong while 25% 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 H2FY16. In south, the company expects demand from Seemandhra and Telangana to pick up in H2FY16. West 33% Exhibit 1: Gradual reduction in power requirement 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. 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 2-1,5 867 Q4FY13 1,16 837 Q1FY14 74 548 Q2FY14 765 61 Q3FY14 914 787 Q4FY14 843 82 Q1FY15 775 724 Q2FY15 749 624 Q3FY15 1,13 845 Q4FY15 881 718 Q1FY16 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 19.5% during FY15-17E Revenues have grown at a CAGR of 14.4% in FY11-15 mainly led by higher realisations (CAGR of 7.3%). However, due to higher capacity addition, we expect expansion led revenue CAGR of 19.5% in FY15-17E. The company is well on track on the capacity expansion front and will likely remain ahead of its target of 71 MT by FY17E (including the Jaiprakash Associate s deal). Considering this, we expect volume CAGR of 14.5% during FY15-17E. We expect the blended realisation to increase at a CAGR of 4.4% during FY15-17E on account of an expected pick-up in demand. Exhibit 3: Expect expansion led revenue CAGR of 19.5% during FY15-17E Exhibit 4: Capacity addition plans (standalone) 35, 3, 25, 2, 15, 1, 5, - 1321 18184 221 278 22654 2756 32338 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Sales ( crore) Clinker Grey Cement White Cement Opening FY15 48 6.2 5.6 Additions Q1FY16 - - - Q2FY16-3.2 - Q3FY16 - - - Q4FY16-1.6 - Q1FY17-4.9* - Q2FY17-1.6 Closing FY17 48 71.5 5.6 * Board approval for acquisition of Jaiprakash s MP plant with capacity of 4.9MT Exhibit 5: Volume to grow at CAGR of 14.5% during FY15-17E Exhibit 6: Realisation to pick up led by higher price realisation in south 7. 6. 5. 4. 3. 2. 1.. 6.4 54. 41.6 41.7 42.6 46.1 FY12 FY13 FY14 FY15 FY16E FY17E 6 5 4 3 2 1 48 4713 4913 598 5351 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: realisation growth increases.5% YoY during the quarter Million Tonne 14 12 1 8 6 4 2 1.3 9.4 1. 12.5 12. 1.7 11.3 12.2 12.4 11.1 ( ) 55 525 5 475 45 425 4799 482 4792 4662 4725 528 486 545 4866 553 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 4 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Sales Volume Realisation ICICI Securities Ltd Retail Equity Research Page 4

Margins to improve but excess capacity in industry to limit expansion Exhibit 9: Expect EBITDA/tonne of 1196 in FY17E Given the expected recovery in demand, we expect industry operating margins to improve at a faster pace due to high operating leverage. However, we expect the benefit to start flowing in from FY16E onwards with some moderation in operating costs due to lower fuel cost advantage along with healthy demand recovery. This, in turn, would help the company in achieving over 22% margins by FY17E. Exhibit 1: Margins to improve led by improvement in realisations 14 12 1 8 6 4 2 713 962 184 849 849 122 1196 3. 25. 2. 15. 19.2 22. 22.6 18. 17.3 2. 22.4 1. FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY11 FY12 FY13 FY14 FY15 FY16E FY17E EBITDA/Tonne EBITDA Margin (%) Exhibit 11: Q2FY16 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 2 116 74 765 914 843 775 749 113 881 834 (%) 25 2 15 1 5 21.2 14.7 16. 19.6 17.8 15.4 15.4 2.1 18.1 16.5 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 EBITDA Margin Expect net profit CAGR of 39.8 % during FY15-17E After witnessing a sharp decline in profit in FY15, we expect net margins to improve to 12.2% in FY17E, which is still lower than the average NPM of 13.5% in FY12. Exhibit 13: Profitability trend crore 5 4 3 (%) 2 1 1.6 144. 13.5 13.3 2446.2 2655.6 1.7 2144.5 1.4 8.9 214.7 2847.3 12.2 3934.9 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 71 MT by FY17E (including the Jaiprakash Associates deal). Considering this, we expect volume growth at 14.5% CAGR in FY15-17E. We expect blended realisations to increase moderately at 4.4% CAGR over the same period. We estimate blended EBITDA/tonne at 1,22/tonne in FY16E and 1,196/tonne in FY17E. At the CMP of 2,922, the stock is trading at 15.3x and 11.6x 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, 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 on 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 and revise our target price to 3,6/share (i.e. at 14.x FY17E EV/EBITDA and EV/tonne of $22/tonne). Exhibit 14: Key assumptions per tonne FY13 FY14 FY15 FY16E FY17E Sales Volume* 42 43 46 54 6 Net Realisation* 48 4713 4913 598 5351 Total Expenditure 3716 3864 463 476 4155 Raw material 671 781 772 82 79 Power & Fuel 131 971 129 896 955 Freight 112 175 1171 1221 1225 Employees 232 238 264 294 285 Others 771 799 828 846 9 EBITDA per Tonne 184 849 849 122 1196 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 Oct-7 Apr-8 Oct-8 Apr-9 Oct-9 Apr-1 Oct-1 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 EV 15.5x 14.x 12.5x 11.1x 8.x Exhibit 16: One year forward EV/Tonne 2 15 Million $ 1 5 Oct-7 Apr-8 Oct-8 Apr-9 Oct-9 Apr-1 Oct-1 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 EV $2 $17 $15 $13 $9 Exhibit 17: Valuation Sales Growth EPS Growth PE EV/Tonne EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) ($) (x) (%) (%) FY13 22.9.3 96.8-19.3 3.1 259 17.8 17.4 18.7 FY14 277.9.3 78.2-19.3 37.3 238 22.4 12.5 11.7 FY15 22653.7 12.8 73.4-6.1 39.7 221 21.4 1.6 1.9 FY16E 2755.8 37. 13.8 32.7 28.1 188 15.3 13.3 14.5 FY17E 32337.5 42.7 143.4 95.3 2.3 18 11.7 15.7 17.9 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 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Jul-1 Samruddhi Cement amalgamated with UltraTech Cement. Combined capacity of the company stayed at 48.8 MTPA with additional capacity of 25.7 MTPA of Samruddhi Cement placing the company among the top 1 cement companies in the world and largest in India 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 Commissioned a bulk terminal with a capacity of 2 MT in Pune, Maharashtra. Sep-15 Commissioned a cement grinding unit with a capacity of 1.6 MT at Jhajjar, Haryana. Sep-15 Commissioned a cement grinding unit with a capacity of 1.6 MT at Dankuni, West Bengal. Top 1 Shareholders Shareholding Pattern Rank Name Last filing date % O/S Position (m) Change (m) 1 Aditya Birla Group 3-Jun-15 61.66 169.2. 2 Aberdeen Asset Management (Asia) Ltd. 3-Jun-15 2.53 6.9. 3 Life Insurance Corporation of India 3-Jun-15 2.26 6.2.2 4 Aberdeen Asset Managers Ltd. 31-Aug-15 1.93 5.3. 5 OppenheimerFunds, Inc. 3-Jun-15 1.41 3.9. 6 UTI Asset Management Co. Ltd. 31-Aug-15.77 2.1 -.1 7 The Vanguard Group, Inc. 3-Sep-15.67 1.8. 8 Franklin Advisers, Inc. 31-Jul-15.6 1.7. 9 APG Asset Management 31-Mar-15.56 1.5 -.1 1 J.P. Morgan Asset Management (Hong Kong) Ltd. 31-Aug-15.48 1.3. Source: Reuters, ICICIdirect.com Research Recent Activity (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 GMO LLC 26.41m.57m William Blair & Company, L.L.C. -28.3m -.6m Life Insurance Corporation of India 11.13m.24m Driehaus Capital Management, LLC -2.1m -.47m Tata Asset Management Limited 6.92m.16m Columbia Threadneedle Investments (US) -18.35m -.43m Franklin Templeton Asset Management (India) Pvt. Ltd. 5.82m.13m HDFC Asset Management Co., Ltd. -13.4m -.3m British Columbia Investment Management Corp. 3.29m.9m Morgan Stanley Investment Management Inc. (US) -7.6m -.16m 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 22,653.7 27,55.8 32,337.5 Growth (%).3 12.8 21.4 17.6 Raw material cost 3327.4 356.1 4423.6 4773.8 Power & Fuel cost 4135.4 4742.9 4833.5 577.9 Freight cost 458.8 5399.2 6585.5 742.4 Employees cost 114.6 1218.3 1584.7 1722.2 Others 343.7 3817.9 4563.9 5438.5 Total Operating Exp. 16,461.9 18,738.4 21,991.3 25,17.7 EBITDA 3,616. 3,915.3 5,514.5 7,229.8 Growth (%) -2. 8.3 4.8 31.1 Depreciation 1,52.3 1,133.1 1,337.3 1,456.1 Interest 319.2 547.5 546.5 658.2 Other Income 531. 651.5 469.7 587.2 PBT 2,775.6 2,886.2 4,1.4 5,72.7 Total Tax 631. 871.5 1253.1 1767.8 PAT 2,144.5 2,14.7 2,847.3 3,934.9 Growth (%) -19.2-6.1 41.3 38.2 Adjusted EPS ( ) 78.2 73.4 13.8 143.4 Cash flow statement Crore (Year-end March) FY14 FY15 FY16E FY17E Profit after Tax 2,144.5 2,14.7 2,847.3 3,934.9 Add: Depreciation 1,52.3 1,133.1 1,337.3 1,456.1 (Inc)/dec in Current Assets -641.7-599.7-1,341.3-2,566.7 Inc/(dec) in CL and Provisions -886.7 1,566.5 833.2 1,55.6 CF from operating activities 1,668.4 4,114.6 3,676.5 4,329.9 (Inc)/dec in Investments -62.4 1,26.4-2.. (Inc)/dec in Fixed Assets -2,338. -6,24.8-3,95. -3,9. Others 389.9 496.2.. CF from investing activities -2,55.5-4,538.3-4,15. -3,9. Issue/(Buy back) of Equity.2.2.. Inc/(dec) in loan funds 979.6 1,638.1 8.. 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. 339.9-352.6 Net Cash flow 135.2 119.9-133.6 77.2 Opening Cash 142.3 277.5 397.4 263.8 Closing Cash 277.5 397.4 263.8 341.1 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 18,766.8 21,154. 24,736.2 Total Shareholders funds 17,97.6 19,41.2 21,428.4 25,1.6 Total Debt 4,875.1 6,513.2 7,313.2 7,313.2 Deferred Tax Liability 2,295.8 2,792. 2,792. 2,792. Minority Interest / Others.... Total Liabilities 24,268.5 28,346.4 31,533.6 35,115.8 Assets Gross Block 25,317.3 31,558.1 35,38.1 37,496.5 Less: Acc Depreciation 9,442.3 1,575.4 11,912.7 13,368.8 Net Block 15,875. 2,982.7 23,395.4 24,127.7 Capital WIP 2,38.4 2,38.4 2,238.4 3,95. Total Fixed Assets 17,913.5 23,21.2 25,633.8 28,77.7 Investments 5,391.7 5,28.8 5,48.8 5,48.8 Inventory 2,368.4 2,751.4 3,277.3 3,81.4 Debtors 1,281. 1,23.2 2,112.6 1,785.6 Loans and Advances 2,56.7 2,8.5 2,7.6 5,6.4 Other Current Assets 15.3 16. 22. 22.7 Cash 277.5 397.4 263.8 341.1 Total Current Assets 6,448.9 7,168.6 8,376.3 11,2.2 Creditors 4,512.6 5,749.1 6,38.2 7,512.7 Provisions 973. 1,33. 1,577.1 1,878.2 Total Current Liabilities 5,485.6 7,52.1 7,885.3 9,39.9 Net Current Assets 963.3 116.5 491. 1,629.3 Others Assets.... Application of Funds 24,268.5 28,346.4 31,533.5 35,115.8 Key ratios (Year-end March) FY14 FY15 FY16E FY17E Per share data ( ) EPS 78.2 73.4 13.8 143.4 Cash EPS 116.6 114.7 152.5 196.5 BV 623.5 693.9 78.9 911.5 DPS 9. 9. 25. 25. Cash Per Share 1.1 14.5 9.6 12.4 Operating Ratios (%) EBITDA Margin 18. 17.3 2. 22.4 PBT / Total Operating income 13.8 12.7 14.9 17.6 PAT Margin 1.7 8.9 1.4 12.2 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 13.3 15.7 RoCE 11.7 1.9 14.5 17.9 RoIC 14.1 11.9 15.9 2.5 Valuation Ratios (x) P/E 37.3 39.7 28.1 2.3 EV / EBITDA 22.4 21.4 15.3 11.7 EV / Net Sales 4. 3.7 3.1 2.6 Market Cap / Sales 4. 3.5 2.9 2.5 Price to Book Value 4.7 4.2 3.7 3.2 Solvency Ratios Debt/EBITDA 1.3 1.7 1.3 1. Debt / Equity.3.3.3.3 Current Ratio 1.2 1. 1.1 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 (%) Company ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 ACC* 1377 156 Hold 25,367 61.8 41.3 68.9 19. 16.2 1.8 13 111 18 13.7 12.6 16.6 14.1 Ambuja Cement* 21 248 Hold 32,475 9.7 7.3 8.5 14.5 16.4 13.6 164 16 151 18.2 14.4 15. 14.8 UltraTech Cem 2922 365 Buy 76,36 73.4 13.8 143.4 2.3 14.6 11.1 221 188 18 12.1 14.7 18.1 1.6 Shree Cement^ 12748 12,5 Hold 43,674 122.5 118.7 24.8 33.8 29.8 21. 33 252 231 9.2 1.5 16.4 1.1 Heidelberg Cem 82 8 Buy 1,813 2.6 2.7 5.3 1. 11.4 8.1 86 86 83 9.2 9.1 12.6 -.1 India Cement 84 75 Hold 2,34 1. 5.8 6.4 7.8 6.5 5.4 52 52 45 6.8 9.1 9.8.8 JK Cement 654 71 Hold 4,965 22.4 12.2 26.7 15.5 14.4 12.1 91 88 94 8.5 8.5 1.8 9.5 JK Lakshmi Cem 374 373 Hold 4,39 8.1 -.2 7.5 16.9 2.9 15.8 143 12 92 8.3 5. 8.2 12. Mangalam Cem 231 212 Hold 566 8.9-17.3 19.3 12.2 6.1 8.3 45 46 49 7.2 -.9 1.9 5.3 SFCL 137 266 Buy 5,95 4.1 9. 15.2 8.2 5.6 3.7 169 162 11 12.8 21. 31.1 13.4 *CY14, CY15E, CY16E ; ^June year end ICICI Securities Ltd Retail Equity Research Page 1

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