Result Update Rating matrix Rating : Buy Target : 458 Target Period : 12-15 months Potential Upside : 23% What s changed? Target Changed from 423 to 458 EPS FY15E Changed from 13.2 to 14.6 EPS FY16E Unchanged EPS FY17E Unchanged Rating Unchanged Quarterly performance Q2FY15 Q2FY14 YoY (%) Q1FY15 QoQ (%) Revenue 572.6 448.9 27.6 6.4-4.6 EBITDA 89.2 56.3 58.5 113.5-21.4 EBITDA (%) 15.6 12.5 34 bps 18.9-333 bps PAT 3.8 1.3 198.9 4.5-23.9 Key financials Crore FY14 FY15E FY16E FY17E Net Sales 256.6 2485.6 3271. 4218. EBITDA 32. 467.1 69.8 775.9 Net Profit 93. 171.4 228.8 336.9 EPS ( ) 7.9 14.6 19.4 28.6 Valuation summary FY14 FY15E FY16E FY17E P/E 47. 25.5 19.1 13. Target P/E 58. 31.5 23.6 16. EV/EBITDA 18. 12.2 9.7 7.1 EV/Tonne($) 137 11 98 85 P/BV 3.4 2.9 2.6 2.2 RoNW (%) 7.1 11.4 13.5 16.8 RoCE (%) 6.1 9. 11.1 14.3 Stock data Particular Amount Mcap 4437 crore Debt (FY14) 1446 crore Cash & Invest (FY14) 374 crore EV 559 crore 52 week H/L 66 / 153 Equity cap 274.2 crore Face value 1 Price performance 1M 3M 6M 12M Heildelberg Cem. 1.9 31.8 91.8 15.4 India Cement -7.9-4.8 46.2 111.1 JK Cement.4 35.2 117.7 187.8 JK Lakshmi Cem. 3.9 47.5 163.9 341.9 Analyst Rashesh Shah rashes.shah@icicisecurities.com Beats estimates November 3, 214 JK Lakshmi Cement (JKCORP) 374 JK Lakshmi reported a robust set of Q2FY15 numbers. Sales volumes for the quarter remained ahead of our estimates at 1.46 MT (vs. I- direct estimate: 1.33 MT) while realisations of 3922/tonne were marginally lower than our estimates (I-direct estimate: 3971/tonne) The EBITDA margin of 15.6% (up 34 bps YoY) remained in line with estimates due to operating leverage benefits. In absolute terms, the company reported an EBITDA of 89.2 crore (up 58.5% YoY) and EBITDA/tonne of 62/tonne, which remained in line with our estimates ( 63/tonne) Better volume along with good margins led to 3x YoY jump in net profit to 3.8 crore against PAT of 1.3 crore in Q2FY14 One of the most efficient players in cement midcap space JK Lakshmi Cement is one of the most cost efficient players in the industry. It has been operating close to ~1% capacity utilisation for the last three years with healthy operating margins vs. industry. Its cost efficiency emanates from high usage of alternate fuel (pet coke), logistic advantage led by expansion strategy through split grinding unit and self sufficiency in power. Its per tonne power consumption remains best in the industry with usage of 72 Kwhr/tonne against industry norms of 9-95 Kwhr/tonne. Its fuel consumption is also lower at 76 kcal/kg for the company against industry norms of 8 kcal/kg. The company has also more than 1% low cost power availability for its plants. Due to this operational efficiency, P&F cost has remained lower for the company. Healthy expansion plans to fuel growth in future We expect JK Lakshmi to report healthy revenue CAGR of over 27.1% over the next three years led by capacity expansion and healthy demand in the northern region (to add 3.4 MT capacity i.e. 56% of its existing capacity over the next two years) coupled with operating efficiency leading to better volume growth and higher profitability. The company s ongoing greenfield project at Durg is expected to come on stream by Q3FY15E. Apart from this, the company is expanding grinding capacity by 7. lakh tonne per annum at Gujarat. Both projects are expected to be complete by the end of FY15E and FY16E, respectively, leading to total capacity of 9.3 MT in FY15E, 1. MT in FY16E and 1.8MT by FY17E from current capacity of 6.6 MT. Expect D/E to remain in comfort zone despite aggressive expansion We expect the net debt-equity ratio to remain in a comfortable zone (i.e. below 1.x) despite aggressive expansion undertaken by the company. As per our estimates, we expect the company to generate free operating cash flow of ~ 49 crore each over the next three years, which will be sufficient to fund the balance pending capex. Timely commissioning of new capacity remains key value driver On the back of expansions and improvement in demand, we expect volume CAGR of 2.6% (vs. ~9.3% during FY11-14) in FY14-17E to 9.8 MT. We expect cement EBITDA of 776/tonne in FY16E and 788/tonne in FY17E vs. 537/tonne in FY14 due to favourable demand-supply matrix in North India. Further, a strong balance sheet and better efficiency in terms of cost remain key positives for the company. Hence, we further upgrade our target price to 458/share with a BUY rating on the stock (i.e. at 8.5x FY16E EV/EBITDA, $1/tonne on FY17E capacity of 1.8 MT). ICICI Securities Ltd Retail Equity Research
Variance analysis Q2FY15 Q2FY15E Q2FY14 YoY (%) Q1FY15 QoQ (%) Comments Net Sales 572.6 527.3 448.9 27.6 6.4-4.6 Healthy revenue growth for the quarter mainly led by high volume growth (up 13.3% YoY) supported by capacity expansion of 1.3 MT and coupled with improvement in realisations (up 12.6% YoY) Other Incomes 1.2 16. 8.6-86.1 2.5-52.4 Raw Material Expenses 154.3 127.5 83.9 84. 159.5 617.5 Raw material cost continued to remain higher during the quarter Employee Expenses 34.6 34.5 3. 15.2 37.4-7.4 Change in stock 1.3. -8.9-114.7-12.5-11.5 Power and fuel 115.8 112.9 1.1 15.6 121.8-5. Higher fuel efficiency (76 K.Cal/kg v/s 729 K Cal/kg YoY) led to lower growth in power & fuel costs on per tonne basis Freight 125.3 118.2 1. 25.3 126. -.6 Others 52.1 5.6 87.5-4.4 54.8-4.9 EBITDA 89.2 83.7 56.3 58.5 113.5-21.4 EBITDA Margin (%) 15.6 15.9 12.5 34 bps 18.9-333 bps Better operating leverage along with lower cost of production led to 34 bps improvement in margins Interest 21.8 29.5 19.2 13.7 21.5 1.3 Depreciation 28.3 39.9 34. -16.6 28.3. Less: Exceptional Items 5... NA 16.5-69.7 PBT 35.2 3.3 11.7 2.8 49.6-29.1 Total Tax 4.4 5.6 1.4 214.2 9.2-51.8 PAT 3.8 24.7 1.3 198.9 4.5-23.9 Better revenue growth along with margin expansion led to healthy growth in profitability Adjusted PAT 35.8 24.7 1.3 247.5 57. -37.2 Key Metrics Volume (MT) 1.46 1.33 1.29 13.3 1.44 1.4 Volume increase led by capacity expansion as well as good demand in the northern region Realisation ( ) 3,922 3,971 3,482 12.6 4,171-6. Price rise in north backed by recovery in demand led to better realisation growth during the quarter. On a QoQ basis, prices saw a healthy correction due to seasonality. However, the management expects average realisations to remain higher than Q2FY15 EBITDA per Tonne ( ) 62 63 436 42. 788-21.4 Increase in realisation led to substantial increase in EBITDA/tonne Change in estimates FY15E FY16E FY17E ( Crore) Old New % Change Old New % Change Old New % Change Comments Revenue 2,464.5 2,521.2 2.3 3,219.9 3,335. 3.6 NA 4,286. NA EBITDA 435.4 467.1 7.3 566.5 69.8 7.6 NA 775.9 NA EBITDA Margin (%) 17.7 18.5 86 bps 17.6 18.3 69 bps NA 18.1 NA PAT 154.9 171.4 1.6 193.4 228.8 18.3 NA 336.9 NA EPS ( ) 13.2 14.6 1.6 16.4 19.4 18.3 NA 28.6 NA Given the strong recovery in demand supported by higher cement prices, we expect realisation growth to remain strong, going ahead. Hence, we increase our revenue expectations for FY15E and FY16E The company's continuous efforts on margin improvement has been refletced in the results. Going ahead, we expect this trend to continue. So we build in higher margin expansion Net EPS to remain higher than previous estimates due to better operating performance Assumptions Current Earlier Comments FY13 FY14 FY15E FY16E FY17E FY15E FY16E FY17E Volume (MT) 5.3 5.6 6.1 7.9 9.8 6.3 7.9 NA No change Realisation ( ) 3,889 3,661 4,75 4,163 4,284 3,874 3,979 NA We expect realisation growth to remain healthy backed by strong demand in the coming quarters EBITDA per Tonne ( ) 88 537 766 776 788 596 62 NA Higher realisation along with cost efficiencies is expected to lead to higher EBITDA/tonne. So we revise our assumption upwards ICICI Securities Ltd Retail Equity Research Page 2
North (excluding Rajasthan ) 35% Maharash tra 8% Capacity spread Gujarat 34% Rajasthan 23% Company Analysis Presence in better performing markets JK Lakshmi has a strong presence in North India with a dominant position in Rajasthan. Other states where the company has a presence include Haryana, Delhi, Punjab and Uttarakhand in north. In the west also, the company has a healthy presence in Gujarat and has made inroads in the Mumbai markets as well. Sales wise, Gujarat contributes highest at ~34% of sales while Rajasthan contributes 23% while contribution from the rest of the north region is at ~35%. Maharashtra contributes ~8% in topline. Cost effective operational efficiency JK Lakshmi has been one of the most cost effective players in the industry. The company has gradually shifted from coal usage to low cost pet-coke, which also avoids uncertainty about coal availability. As a result, fuel consumption has reduced gradually. The company has 1% captive power capacity with 54 MW of thermal power plant and 12 MW of waste heat recovery. Other than this, the company has an external arrangement with VS Lignite for sourcing 21 MW. Effectively, the company has captive power availability of 87 MW against current requirement of ~65 MW. The available surplus power can be sold in the open market by the company. Exhibit 1: Gradual reduction in power & fuel consumption KCal/Kg 8 75 7 762 763 8 79 746 742 738 79 78 75 726 73 9 8 7 Kwh/MT 65 FY9 FY1 FY11 FY12 FY13 FY14 6 Fuel Consumption (Kcal/Kg of Clinker) Electricity (Kwh/T) Exhibit 2: Lower P&F costs than industry Due to the combined effect of a shift in fuel components and captive power plants, the P&F cost has been lower for the company / Tonne 1,2 1, 8 6 4 2 911 956 993 949 819 849 846 761 73 769 751 633 FY9 FY1 FY11 FY12 FY13 FY14 JK Laxmi Cement Industry ICICI Securities Ltd Retail Equity Research Page 3
Operates at healthy utilisation in industry Due to the company s strong focus on the northern and western regions where demand is continuously rising, the company has been able to maintain higher utilisation even in a difficult business environment. During FY12 and FY13, the company reported over 9% capacity utilisation while in FY14 the company managed to maintain effective capacity utilisation of 85% despite a slowdown in the economy. Exhibit 3: Higher utilisation levels (%) 12 1 8 6 4 2 97 91 92 85 84 86 73 1 81 8 85 77 FY9 FY1 FY11 FY12 FY13 FY14 JK Lakshmi Industry Strong balance sheet with manageable D/E ratio even after expansion In terms of D/E ratio, the company has consistently managed it below 1. in the recent years. We expect the net debt-equity ratio to remain in a comfortable zone (i.e. below 1.x) despite aggressive expansion undertaken by the company. As per our estimates, we expect it to generate free operating cash flow of ~ 49 crore each over the next two years, which will be sufficient to fund the balance pending capex. Exhibit 4: Manageable D/E ratio Exhibit 5: Capacity expansion plans (standalone) Crore 25 2 15 1 5 1.5 1996 1996 1746 1.3 1446 1.2 1.2 1.1 922 125 11 1175 1.1 1. 1. 78 73.9.9.9.9.8.8.5 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15EFY16EFY17E Million Tonne 12 1 8 6 4 2 9.3 1. 1.8 6.6 3.4 3.7 4.8 4.8 4.8 5.3 5.3 FY7 FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15EFY16EFY17E Debt ( Crore) (LHS) D/E (RHS) Capacity(MT) ICICI Securities Ltd Retail Equity Research Page 4
Exhibit 6: Expect expansion led revenue CAGR of 27.1% during FY14-17E 5, 4, 3, 2, 1, - 1491 1317 1711 253 257 2486 Expect revenue CAGR of 27.1% in FY14-17E led by capacity expansion, better realisations The revenue has grown at 8.4% CAGR in FY1-14 led by realisation CAGR of 3.% and volume CAGR of 5.2% during the same period. Going forward, with an expected recovery in demand along with additional capacity of 3.4 MT, we expect revenue CAGR of 27.1% during FY14-17E. We expect volume to grow at a CAGR of 2.6% during FY14-17E while realisation is expected to grow at 5.4% on an annual basis. 3271 4218 FY1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E Sales ( crore) Exhibit 7: Capacity addition plans Current Capacity State Region MT Rajasthan North 4.6 Gujarat West.7 Haryana North 1.3 Total Current Capacity 6.6 Addition Chhattisgarh East 2.7 Total Capacity by FY15E 9.3 Gujarat West.7 Rajasthan (Subsidiary) West 1.6 Total Consolidated Capacity by FY16E 11.6 Exhibit 8: Volume to grow at 2.6% CAGR during FY14-17E 9.85 1. 7.86 8. 6.1 4.59 4.89 5.28 5.62 6. 4.3 4. 2.. FY1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E Exhibit 9: Realisation to pick up from FY15 led by recovery in demand 5 4 3889 475 4163 4284 4 3498 3661 3 362 3 2 2 1 1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E -1 Source: Company, ICICIdirect.com, Research Sales Volumes Realisation ( /tonne) -LS Source: Company, ICICIdirect.com, Research Growth (%) -RS Exhibit 1: Q2FY15 revenue growth remains robust due to higher sales volume (up 13.3% YoY) In MT 2. 1.5 1..5. 1.4 Q1FY13 1.2 1.3 Q2FY13 Q3FY13 1.4 Q4FY13 1.2 1.3 Q1FY14 Q2FY14 Sales volume -LHS 1.4 Q3FY14 1.7 Q4FY14 1.4 1.5 Q1FY15 Q2FY15 Growth (%) -RHS 25 15 5-5 -15-25 (%) Exhibit 11: Q2FY15 realisations up 12.6% YoY 5 4 3 2 1 3851 464 3934 3739 3745 3482 3544 3834 4171 3922 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Realisation ( ) -LHS Growth (%) -RHS 25 15 5-5 -15 (%) ICICI Securities Ltd Retail Equity Research Page 5
Margins to improve but low utilisation of new capacity to limit expansion Exhibit 12: Expect EBITDA/tonne of 788 in FY17E Despite an expected recovery in demand, we expect the company s operating margins to improve progressively given the initial higher operating cost post commissioning of new capacity. Exhibit 13: Margins to improve led by improvement in realisation 1 8 6 4 925 431 656 88 537 766 776 788 (%) 3. 25. 2. 28.5 18.8 2.9 18.8 18.6 18.4 2 15. 14.1 14.7 1. FY1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E FY1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E EBITDA/Tonne EBITDA Margin (%) Exhibit 14: Q2FY15 EBITDA per tonne increases 42% YoY Exhibit 15: Margins increase 34 bps YoY 1 8 6 4 2 878 Q1FY13 925 Q2FY13 782 Q3FY13 665 576 436 447 Q4FY13 Q1FY14 Q2FY14 Q3FY14 EBITDA/Tonne ( ) 663 Q4FY14 788 Q1FY15 62 Q2FY15 (%) 25 2 15 1 5 22.8 22.8 Q1FY13 Q2FY13 Q3FY13 19.9 17.8 15.4 12.5 12.6 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 EBITDA Margin 17.3 18.9 15.6 Q1FY15 Q2FY15 Expect net profit CAGR of 54% during FY14-17E After witnessing a sharp decline in profit in FY14, we expect net margins to improve to 8.% in FY17E from 4.5% in FY14. Overall, we expect net profit to grow at a CAGR of 54% during FY14-17E. Exhibit 16: Profitability trend crore 4 35 3 25 2 15 1 5 16.2 337 241 229 176 171 19 8.5 59 6.4 93 6.9 7. 8. 4.5 4.5 FY1 FY11 FY12 FY13 FY14 FY15E FY16E FY17E 17 15 13 11 9 7 5 3 (%) Net profit - LS Net profit margin -RS ICICI Securities Ltd Retail Equity Research Page 6
Outlook and valuation With the commissioning of new capacity at Durg, Udaipur and Jhajjar, the company will have a total standalone cement capacity of over 1.8 MT by the end of FY17E. However, the full benefit of the Durg expansion would start accruing only from H2FY15E. Considering this, we expect cement volumes to grow at ~2.6% CAGR in FY14-17E to 9.8 MT in FY17E from 5.6 MT in FY14. At the CMP of 372, the stock is trading at 19.1x and 13.x its FY16E and FY17E earnings, respectively. The stock is trading at an EV/EBITDA of 9.7x and 7.1x FY16E and FY17E EBITDA, respectively, vs. average trailing multiple of 8.5x. This leaves scope for appreciation over the longer term despite a sharp rally in stock prices over the past two months. Given the upcoming new capacity from FY15E and strong Q2FY15E operating performance backed by sharp improvement in prices and operating efficiencies, we expect growth in profitability to remain healthy over the next three years. Hence, we remain positive on JK Lakshmi Cement and upgrade our target price to 458/share with a BUY rating on the stock (i.e. at 8.5x FY17E EV/EBITDA, $1/tonne on FY17E capacity of 1.8 MT). Exhibit 17: Assumptions per tonne FY12 FY13 FY14 FY15E FY16E FY17E Sales Volume (mtpa) 4.9 5.3 5.6 6.1 7.9 9.8 Net Realisation 3498 3889 3661 475 4163 4284 Total Expenditure 2842 381 3123 3328 3387 3496 Stock Adjustment 1 32 5 Raw material 525 639 823 169 18 111 Power & Fuel 846 769 751 85 83 875 Employees 21 214 219 228 235 243 Freight 677 798 813 862 862 863 Others 592 628 512 363 38 45 EBITDA per Tonne 656 88 537 747 776 788 ICICI Securities Ltd Retail Equity Research Page 7
Exhibit 18: One year forward EV/EBITDA 4 3 ( Crore) 2 1 Nov-6 Jul-7 Mar-8 Nov-8 Jul-9 Mar-1 Nov-1 Jul-11 Mar-12 Nov-12 Jul-13 Mar-14 Nov-14 EV 8.5x 7.5x 6.5x 5.5x 3.5x Exhibit 19: One year forward EV/Tonne 6 Million $ 4 2 Nov-6 Jul-7 Mar-8 Nov-8 Jul-9 Mar-1 Nov-1 Jul-11 Mar-12 Nov-12 Jul-13 Mar-14 Nov-14 EV $71 $62 $53 $44 $35 Exhibit 2: Valuations Sales Growth EPS Growth PE EV/EBITDA EV/Tonne RoNW RoCE ( cr) (%) ( ) (%) (x) (x) ($) (%) (%) FY14 256.6.1 7.9-47.1 24.9 11.9 137 7.1 6.1 FY15E 2485.6 2.9 14.6 84.3 47.1 18.1 12 11.4 9. FY16E 3271. 31.6 19.4 33.5 25.5 12.2 98 13.5 11.1 FY17E 4218. 28.9 28.6 47.2 19.1 9.7 85 16.8 14.3 ICICI Securities Ltd Retail Equity Research Page 8
Company snapshot 5 45 Target Price: 458 4 35 3 25 2 15 1 5 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 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 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date News/Event Jul-8 The company commences work on the 2.7 million tonne (MT) greenfield cement plant at Durg, Chhattisgarh at an investment of over 1,1 crore. The plant is scheduled to be commissioned by 211 Feb-9 Government announces excise duty cut of 2% to boost cement sales Mar-11 The company completes the setting up of 18 MW power plant and 12 MW green power project, through waste heat recovery Apr-11 The company registers de-growth of ~ 12% in sales and ~6% in volume due to subdued demand. However, capacity utilisation for the company stood at 91%, much higher than industry trend of ~75% Feb-12 Stock surges as board approves buyback of equity shares up to 97.5 crore at maximum price of 7/share (i.e 1.39 crore shares) Mar-12 The government proposes to raise excise duty on the building material from 1% to 12% against the expectations of a cut in the same Apr-12 The company reports one of the best quarterly results in recent times with 39% YoY increase in net sales due to a sharp increase in cement demand after the monsoon season. Net profit increased 1 times compared to the previous year on the back of a lower base and higher margin expansion Apr-13 Expansion plant at Durg gets delayed by four to six months to Q1FY15 from Q4FY14 as projected earlier due to damage caused to properties by local villagers. The expected loss from this damage works out to ~ 14 crore, which was fully covered by insurance Mar-14 The company increased its stake in Udaipur Cement Works (UCWL) from 27.72% to 75.46% with the allotment of fresh equity shares worth 78 crore, thereby making UCWL a subsidiary company Apr-14 Company increases its capacity from 5.3 MTPA in FY13 to 6.6 MTPA by FY14 via brownfield expansion and de-bottlenecking at existing plants May-14 With the commissioning of the 2.7 MTPA plant in eastern region, the company will have a standalone capacity of 9.3 MTPA by Q3FY15 Top 1 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Bengal & Assam Company Ltd 3-Jun-14 23.73 27.9. 2 JK Organisation 3-Jun-14 2.31 23.9. 3 HDFC Standard Life Insurance Company Limited 3-Jun-14 5.39 6.3 -.2 4 Life Insurance Corporation of India 3-Jun-14 4.53 5.3 -.2 5 Bansal (Sachin & Vivek) 3-Jun-14 3.64 4.3.3 6 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-May-14 2.25 2.7 -.2 7 DNB Asset Management (Asia) Limited 3-Jun-14 1.7 2. -.3 8 Bansal (Parveen Kumar & Vivek) 3-Jun-14 1.69 2..3 9 DSP BlackRock Investment Managers Pvt. Ltd. 3-Jun-14 1.19 1.4 1.4 1 Ashoka Pte. Ltd. 3-Jun-14 1.16 1.4 1.4 Source: Reuters, ICICIdirect.com Research Recent Activity Shareholding Pattern (in %) Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Promoter 45.96 45.96 45.96 45.96 45.94 FII 6.19 5.52 6.32 8.57 1.85 DII 13.6 12.18 11.2 17.65 18.28 Others 34.79 36.34 36.52 27.82 24.93 Buys Sells Investor name Value Shares Investor name Value Shares GMO LLC 6.94m 1.2m Franklin Templeton Asset Management (India) Pvt. Ltd. -1.99m -.34m Ashoka Pte. Ltd. 4.49m.78m HDFC Standard Life Insurance Company Limited -1.38m -.24m Tata Asset Management Limited 4.12m.72m IDFC Asset Management Company Private Limited -.71m -.21m DNB Asset Management (Asia) Limited 3.23m.56m The New India Assurance Co. Ltd. -.18m -.2m L&T Investment Management Limited 1.65m.29m Manulife Asset Management (Taiwan) Co., Ltd -.16m -.13m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 9
Financial summary Profit and loss statement Crore (Year-end March) FY14 FY15E FY16E FY17E Total operating Income 2,56.6 2,485.6 3,271. 4,218. Growth (%).1 2.9 31.6 28.9 Raw material 465.2 652.1 848.7 192.9 Power & Fuel 422. 491.3 652.2 861.5 Employees 123. 139.1 184.7 239.2 Freight 456.8 526. 677.1 849.7 Others 287.7 221.2 298.6 398.7 Total Operating Exp. 1,754.6 2,29.7 2,661.2 3,442. EBITDA 32. 455.9 69.8 775.9 Growth (%) -29.6 51. 33.8 27.2 Depreciation 135.2 173.1 2.8 218.2 Interest 77.2 18.8 179.6 18.1 Other Income 44.3 35.7 64. 68. Exceptional items 18.5 21.5.. PBT 115.4 188.2 293.4 445.6 Total Tax 22.4 28. 64.5 18.7 PAT 93. 16.2 228.8 336.9 Adjusted PAT 111.5 192.9 228.8 336.9 Growth (%) -41.9 73. 18.7 47.2 Adjusted EPS ( ) 9.5 16.4 19.4 28.6 Cash flow statement Crore (Year-end March) FY14 FY15E FY16E FY17E Profit after Tax 93. 171.4 228.8 336.9 Add: Depreciation 135.2 173.1 2.8 218.2 (Inc)/dec in Current Assets -1.8 155.1-273.4-65.4 Inc/(dec) in CL and Prov. 99.5 68.8 86.7 18.3 CF from operating activities 325.9 568.4 242.9 67. (Inc)/dec in Investments -41.3-7. -7. -4. (Inc)/dec in Fixed Assets -552.4-78. -35. -2. Others 9.2 8. 8. 8. CF from investing activities -584.5-842. -412. -232. Issue/(Buy back) of Equity.... Inc/(dec) in loan funds 27.7 3. 25. -1. Dividend paid -23.5-34.4-34.4-34.4 Inc/(dec) in Sec. premium.... Others -26. 64.9.. CF from financing activities 221.2 33.5 215.6-134.4 Net Cash flow -37.4 56.9 46.4 33.5 Opening Cash 72.6 35.2 92.1 138.5 Closing Cash 35.2 92.1 138.5 442. Balance sheet Crore (Year-end March) FY14 FY15E FY16E FY17E Liabilities Equity Capital 58.9 58.9 58.9 58.9 Reserve and Surplus 1,244.4 1,446.2 1,64.6 1,943.1 Total Shareholders funds 1,33.2 1,55.1 1,699.5 2,1.9 Total Debt 1,446.1 1,746.1 1,996.1 1,896.1 Deferred Tax Liability 122.6 13.6 138.6 146.6 Minority Interest / Others.... Total Liabilities 2,871.9 3,381.7 3,834.2 4,44.6 Assets Gross Block 3,49. 4,199. 4,724. 4,974. Less: Acc Depreciation 1,339.1 1,512.2 1,712.9 1,931.1 Net Block 2,69.9 2,686.8 3,11.1 3,42.9 Capital WIP 41. 4. 225. 175. Total Fixed Assets 2,479.9 3,86.8 3,236.1 3,217.9 Investments 338.9 338.9 338.9 338.9 Inventory 12.4 11.9 149.1 174.5 Debtors 55.5 46.6 87.8 85.5 Loans and Advances 445.7 3. 485. 527.3 Non current Investments 18.8 178.8 248.8 288.8 Cash 35.2 92.1 138.5 442. Total Current Assets 747.6 719.4 1,19.2 1,518.2 Creditors 653.1 681.6 752.3 911.8 Provisions 41.5 81.8 97.8 118.5 Total Current Liabilities 694.6 763.4 85.1 1,3.3 Net Current Assets 53.1-44. 259.2 487.8 Application of Funds 2,871.9 3,381.7 3,834.2 4,44.6 Key ratios (Year-end March) FY14 FY15E FY16E FY17E Per share data ( ) Adjusted EPS 16.3 9.5 16.4 19.4 Cash EPS 19.4 29.3 36.5 47.2 BV 11.7 127.9 144.4 17.1 DPS 2. 2.5 2.5 2.5 Cash Per Share 3. 7.8 11.8 37.6 Operating Ratios (%) EBITDA Margin 14.7 18.8 18.6 18.4 PAT Margin 4.5 6.9 7. 8. Inventory days 19.3 15. 14. 14. Debtor days 9.4 7.5 7.5 7.5 Creditor days 16.9 98. 8. 72. Return Ratios (%) RoE 7.1 11.4 13.5 16.8 RoCE 6.1 9. 11.1 14.3 RoIC 8. 11.5 13.1 18.1 Valuation Ratios (x) P/E 39.3 22.7 19.1 13. EV / EBITDA 18.1 12.2 9.7 7.1 EV / Net Sales 2.7 2.3 1.8 1.3 Market Cap / Sales 2.1 1.8 1.3 1. Price to Book Value 3.4 2.9 2.6 2.2 Solvency Ratios Debt/EBITDA 4.8 3.7 3.3 2.4 Debt / Equity 1.1 1.2 1.2.9 Current Ratio.9.7 1. 1.2 Quick Ratio.9.6.8.8 ICICI Securities Ltd Retail Equity Research Page 1
ICICIdirect.com coverage universe (Cement) CMP M Cap EV/EBITDA (x) EV/Tonne ($) RoCE (%) RoE (%) Company ( ) TP( ) Rating ( Cr) FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E ACC* 15 1,635 HOLD 28,185 18.8 17.8 15.4 13.8 14 14 129 129 9.9 9.9 1.9 11.3 14. 12.6 13.3 13.9 Ambuja Cement* 227 241 HOLD 35,91 19.7 15.5 14.6 12.3 164 165 163 149 11.4 8.3 8.1 8.7 13.6 9.2 9.1 9.7 UltraTech Cem 256 3,18 BUY 68,2 18.9 16.4 12.4 9.4 22 183 163 148 11.9 12.3 14.9 18.1 12.5 12.9 14.9 16.6 Shree Cement^ 99 8,6 HOLD 3,165 22.3 17.6 13.5 11.6 259 237 193 183 13. 14. 16.7 16.7 16.7 16.8 18.9 17.5 Heidelberg Cem* 88 15 BUY 1,994 37.5 11.9 9.7 6.7 1 89 89 84 -.5 6. 7.8 12.1-4.9 7.5 7.1 12.7 India Cement 114 141 BUY 3,195 11.1 8.1 6.4 5.4 71 65 63 58 3.9 6.4 8.3 9.1 -.9 1.2 4. 5.1 JK Cement 663 66 BUY 3,916 5.5 7.8 11.1 15.3 12 85 85 78 5.2 7.4 9.9 15.1 5.2 7.4 9.9 15.1 JK Lakshmi Cem 367 458 BUY 4,378 18.1 12.2 9.7 7.1 137 12 98 85 6.1 9. 11.1 14.3 7.1 11.4 13.5 16.8 Mangalam Cem 295 322 BUY 7 21.7 6.7 5.6 3.7 51 5 52 49 2.1 11.7 14.6 2.7 5.8 9.5 13.4 18.7 ICICI Securities Ltd Retail Equity Research Page 11
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