Target : | 3180 Target Period : 9-12 months Higher ... · Jaypee Cement Corporation Ltd from June...

April 28, 2015

ICICI Securities Ltd | Retail Equity Research

Result Update

Higher realisation drives margins… • UltraTech Cement reported a good set of Q4FY15 numbers. Standalone

revenue of | 6,135 crore was higher than our estimates (| 5,941 crore) led by higher realisation. However, volumes declined 2.8% QoQ to 12.16 MT in Q4FY15. Excluding the Jaypee Plant, total volumes de-grew 9.0% in Q4FY15

• EBITDA/tonne increased 35.4% QoQ in Q4FY15 to | 1013/tonne due to better realisations and a decline in power & fuel costs as there was an increase in pet coke consumption (from 51% to 64% QoQ in fuel mix)

• However, net profit declined 26.6% mainly due to a rise in interest cost (due to additions in loans pertaining to Jaypee plant) and tax expenses

• The company plans to add 9.7 MT capacity (including 4.9 MT acquisition in Madhya Pradesh) in FY16E and 2.2 MT in FY17E, which would continue to fuel growth, going forward

Largest pan-India player in cement industry

UltraTech Cement is the largest player in terms of capacity (~63.2 MT including Jaypee plant) 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% over the past five years. In Q3FY15, UltraTech included earnings from the recently acquired Jaypee Cement Corporation Ltd from June 12, 2014. The company has also approved acquisition of the 4.9 MT cement plants (in Madhya Pradesh) of Jaiprakash Associates. Further, with expansion projects under execution, the total capacity is set to increase 18% to ~71 MT (consolidated capacity at 74.8 MT) by FY16E while the industry capacity is expected to grow at a CAGR of 5% over the next three years. This, in turn, is expected to help the company to further gain its leadership position, going forward. The total power capacity of the company (including WHRS) stands at 754 MW, which is around 80% of the company’s power requirement.

To benefit from strong recovery in demand due to pan-India exposure

We expect the company to grow at a higher rate than the industry in the coming years led by capacity expansion. The same has also been reflected in the current quarterly results with volume growth of 7.7% QoQ. 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 with a stronger presence in the western and northern regions.

Healthy operating cash flow, low debt/equity to fuel expansion

The company is expected to generate over ~| 4200 crore of operating cash flows annually and incur capex of | 4,500 crore over FY15-17E. Further, considering the strong balance sheet of the company with minimal debt (D/E of 0.4:1), 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!!!

Being a net debt-free company, UltraTech is well positioned to reap the benefit of a recovery in demand and generate healthy free cash flows in future. After the recent fall in share prices, valuations now factor in the near-term slowdown challenges. Hence, we continue to maintain our positive view on the stock with BUY rating and revised target price of | 3180/share (i.e. at 13.0x FY17E EV/EBITDA and EV/tonne of $185/tonne).

UltraTech Cement (ULTCEM) | 2655 Rating matrix Rating : BuyTarget : | 3180Target Period : 9-12 monthsPotential Upside : 20%

What’s changed? Target Price Changed from | 3240 to | 3180EPS FY16E Changed from | 102.6 to | 101.4EPS FY17E Changed from | 143.5 to | 139.9Rating Change from Hold to Buy

Quarterly performance

Q4FY15 Q4FY14 YoY (%) Q3FY15 QoQ (%)Revenue 6,135.5 5,831.9 5.2 5,489.8 11.8EBITDA 1,232.3 1,143.0 7.8 845.6 45.7EBITDA (%) 20.1 19.6 49 bps 15.4 468 bpsPAT 614.7 838.0 -26.6 364.3 68.7

Key financials | Crore FY14 FY15E FY16E FY17E

Net Sales 20077.9 22656.5 26947.6 32072.7

EBITDA 3616.0 3915.3 5401.9 7015.3

Net Profit 2144.5 1898.5 2770.2 3857.5

EPS (|) 78.2 69.2 101.0 140.6 Valuation summary

FY14 FY15 FY16E FY17E

PE (x) 34.0 36.2 26.2 19.0

EV to EBITDA (x) 20.4 19.6 14.4 11.1

EV/Tonne(US$) 217 202 171 164

Price to book (x) 4.3 3.9 3.4 2.9

RoNW (%) 12.5 10.7 12.9 15.3

RoCE (%) 11.7 11.0 13.8 17.0 Stock data

Amount

Mcap | 72853 crore

Debt (FY15) | 7,574 crore

Cash & Invest (FY15) | 2,916 crore

EV | 77,511 crore

52 week H/L | 3398 / | 1950

Equity cap | 274.2 crore

Face value | 10

Particular

Price performance

1M 3M 6M 12M

ACC -3.3 -0.7 3.2 13.7

Ambuja Cement -7.9 -7.6 7.3 6.7

Shree Cement -5.1 -9.0 16.6 70.0

UltraTech Cement -3.4 -14.0 11.2 24.8 Research Analyst

Rashesh Shah [email protected]

Devang Bhatt [email protected]


Variance analysis Q4FY15 Q4FY15E Q4FY14 YoY (%) Q3FY15 QoQ (%) Comments

Net Sales 6,135.5 5,940.8 5,831.9 5.2 5,489.8 11.8The revenue growth was driven by expanded capacity through acquisitions and higher realisation

Other Incomes 129.6 204.3 185.8 -30.2 144.5 -10.3

Raw Material Expenses 966.5 984.0 973.5 -0.7 876.2 10.3The increase in RM cost was mainly due to hike in limestone royalty and additional levies by MMDR Act

Employee Expenses 326.8 319.8 235.2 38.9 305.6 6.9 Employee cost increased due to one-time provision of gratuity

Power and fuel 1,184.7 1,322.3 1,186.9 -0.2 1,205.8 -1.7Energy cost declined due to an increase in pet coke consumption in fuel mix and increase in share of thermal power plant and WHRMS

Freight 1,460.9 1,414.5 1,365.5 7.0 1,317.5 10.9Logistic cost increased due to a hike in rail freight and change in plant/market mix. For the quarter, rail:road: sea mix stood at 28:68:4 vs. 37:60:3 in Q4FY14

Others 964.4 1,027.1 927.8 3.9 939.0 2.7EBITDA 1,232.3 873.2 1,143.0 7.8 845.6 45.7

EBITDA Margin (%) 20.1 14.7 19.6 49 bps 15.4 468 bps The EBITDA margin improved due to better realisation and lower energy costDepreciation 287.9 404.1 278.5 3.4 278.3 3.5

Interest 149.9 174.9 73.9 102.7 154.0 -2.6Interest cost rose sharply due to ~| 700 crore addition in the loan pertaining to Jaypee Cement plant acquisition

PBT 924.1 498.5 976.4 -5.4 557.8 65.7Total Tax 309.3 64.8 138.4 123.5 193.5 59.9

PAT 614.7 433.7 838.0 -26.6 364.3 68.7

PAT declined mainly on account of higher tax expense due to increase in surcharge (| 49.9 crore). Further, in Q4FY14, the company had made a reversal of tax provision of | 96 crore

Key Metrics

Volume (MT) 12.16 12.30 12.51 -2.8 11.30 7.7 The volume delcine was due to a slowdown in rural spend and government spending

Realisation (|) 5,045 4,830 4,662 8.2 4,860 3.8 Prices during the quarter increased sequentially due to price hikes in the southEBITDA per Tonne (|) 1,013 710 914 10.9 749 35.4 EBITDA/t improved mainly due to higher realisations and lower energy cost

Source: Company, ICICIdirect.com Research

Change in estimates

(| Crore) Old New % Change Old New % Change Old New % Change Comments

Revenue 23,696.2 22,656.5 -4.4 28,470.9 26,908.7 -5.5 33,888.2 31,664.5 -6.6

Revenue estimates have been revised downwards due to a decline in rural spend (UltraTech share : ~50% vs. industry average : 34%)

EBITDA 4,088.0 3,915.3 -4.2 5,379.8 5,348.2 -0.6 7,033.5 6,961.2 -1.0

EBITDA Margin (%) 17.3 17.3 3 bps 18.9 19.9 98 bps 20.8 22.0 123 bps

EBITDA margin is expected to improve due to increased rationalisation in power cost led by increased usage of pet coke

PAT 2,296.4 2,014.7 -12.3 2,813.6 2,783.6 -1.1 3,934.2 3,840.1 -2.4EPS (|) 83.7 73.4 -12.3 102.6 101.4 -1.1 143.5 139.9 -2.5

FY15E FY16E FY17E

Source: Company, ICICIdirect.com Research Assumptions

CommentsFY13 FY14 FY15E FY16E FY17E FY15E FY16E FY17E

Volume (MT) 41.7 42.6 46.1 53.2 59.8 49.4 56.9 64.6 We have lowered volume growth due to a decline in rural spend

Realisation (|) 4,800 4,713 4,918 5,057 5,294 4,800.0 5,000.0 5,215.0 We expect realisation to improve due to higher realisation in south

EBITDA per Tonne (|) 1,084 849 850 1,005 1,164 828.0 945.0 1,060.0We expect healthy margin expansion by FY17E on acount of improved realisation and lower power cost

EarlierCurrent



Company Analysis Largest pan-India player in cement Industry

UltraTech Cement is the largest player in terms of capacity (~63.2 MT including Jaypee plant) with a market share of over ~18% in India. The company has consistently remained ahead of its peers in terms of capacity expansion with CAGR of 23% vs. peer’s CAGR of 13% over the past five years. In Q3FY15, UltraTech included earnings from the recently acquired Jaypee Cement Corporation Ltd from June 12, 2014. The company has also approved acquisition of 4.9 MT cement plants (located at Madhya Pradesh) of Jaiprakash Associates. Further, with expansion projects under execution, total capacity is set to increase 18% to ~71 MT (consolidated capacity at 74.8 MT) by FY16E while the industry capacity is expected to grow at a CAGR of 5% over the next three years. This, in turn, would help the company to further gain its leadership position, going forward.

Diversified presence with largest share in north, western regions

UltraTech had majority of its revenue from northern and western India, at 28% and 33%, respectively. Other than this, 14% of revenue was 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 the country is well distributed, indicating lower volatility in blended realisation, going forward. The company currently generates ~30% of sales from non-trade (sales to institutions) and remaining ~70% of sales from trade (retailers) segment, which keeps its average realisation healthy vs. its peers. The company has a dealer network of around 15,000 well spread across the company.

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 ~80% is met through captive power plants, which helps the company in reducing per tonne cost. Other than this, the company also has coal linkages with Coal India that helps in lowering dependence on imports.

Exhibit 1: Gradual reduction in power requirement

85.1

83.182.0

81.3 81.1

79.0

74

76

78

80

82

84

86

FY09 FY10 FY11 FY12 FY13 FY14

Kwh/T of cement


Exhibit 2: Higher EBITDA/tonne vis-à-vis peer group

1,03

7

1,05

0

1,01

6

704 765 91

4

843

779

749

1,01

3

821

867

837

548 610 78

2

820

725

636 74

8

-200

400600800

1,0001,200

Q3FY

13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

Q2FY

15

Q3FY

15

Q4FY

15

EBIT

DA/to

nne

(|)

Ultratech Industry

Source: Company, ICICIdirect.com Research Peer set includes ACC, Ambuja, Shree cement and India cement

Regional presence

North28%

West33%

South25%

East14%


Expect revenue CAGR of 16.4% during FY14-17E

Revenues have grown at a CAGR of 15.0% in FY11-14 mainly led by higher realisations (CAGR of 8.4%). However, due to higher capacity addition, we expect expansion led revenue CAGR of 16.4% in FY14-17E. The company is well on track on the capacity expansion front and will likely remain ahead of its target of 71 MT by FY16E (including the Jaypee deal). Considering this, we expect volume CAGR of 12.0% during FY14-17E. We expect the blended realisation to increase at a CAGR of 4.0% during FY14-17E on account of sustained discipline by producers and an expected pick-up in demand.

Exhibit 3: Expect expansion led revenue CAGR of 16.4% during FY14-17E

1321018184 20021 20078

2265626909

31664

-5,000

10,00015,00020,00025,00030,00035,000

FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Sales (| crore)


Exhibit 4: Capacity addition plans (standalone) Clinker Grey Cement White Cement

Opening FY15 48 60.2 5.6

Additions Q1FY16 - - -

Q2FY16 - 1.6 -

Q3FY16 - 4.9* -

Q4FY16 - 3.2 -

Q2FY17 - 1.6

Closing FY17 48 71.5 5.6

Source: Company, ICICIdirect.com Research * Board approval for acquisition of Jaypee’s MP plant with capacity of 4.9MT

Exhibit 5: Volume to grow at CAGR of 12.0% during FY14-17E

41.6 41.7 42.6 46.153.2

59.8

0.010.020.030.040.050.060.070.0

FY12 FY13 FY14 FY15E FY16E FY17E

Sales Volumes


Exhibit 6: Realisation to pick up led by higher price realisation in south

43744800 4713 4918 5057 5294

0

1000

2000

3000

4000

5000

6000

FY12 FY13 FY14 FY15E FY16E FY17E

-5.0

0.0

5.0

10.0

15.0

20.0

Realisation (|/tonne) -LS Growth (%) -RS


Exhibit 7: Robust volume growth led by capacity expansion…

9.911.4

10.39.4 10.0

12.5 12.010.7 11.3 12.2

02468

101214

Q3FY

13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

Q2FY

15

Q3FY

15

Q4FY

15

Milli

on T

onne

Sales Volume


Exhibit 8: …realisation growth increases 8.2% YoY during the quarter

4915

4718 47

99

4802

4792

4662 4725

5052

4860 50

45

4000

4250

4500

4750

5000

5250

5500

Q3FY

13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

Q2FY

15

Q3FY

15

Q4FY

15

(|)

Realisation



Margins to improve but excess capacity in industry to limit expansion

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 recovery in demand. This, in turn, would help the company in achieving over 22% margins by FY17E.

Exhibit 9: Expect EBITDA/tonne of |1164 in FY17E

713

9621084

849 8501005

1164

0200400600800

100012001400


EBITDA/Tonne


Exhibit 10: Margins to improve led by improvement in realisations

19.222.0 22.6

18.0 17.319.9

22.0

10.0

15.0

20.0

25.0

30.0


EBITDA Margin (%)


Exhibit 11: Q4FY15 EBITDA per tonne improves due to higher realisations

1037 1050 1016

704 765914 843 779 749

1013

0200400600800

10001200

Q3FY

13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

Q2FY

15

Q3FY

15

Q4FY

15

| pe

r ton

ne


Exhibit 12: Pick-up in margins expected, going forward

21.1 22.3 21.2

14.7 16.019.6

17.815.4 15.4

20.1

0

5

10

15

20

25Q3

FY13

Q4FY

13

Q1FY

14

Q2FY

14

Q3FY

14

Q4FY

14

Q1FY

15

Q2FY

15

Q3FY

15

Q4FY

15

(%)

EBITDA Margin


Expect net profit CAGR of 21.4% during FY14-17E

After witnessing a sharp decline in profit in FY14, we expect net margins to improve to 12.1% in FY17E which is still lower than the average NPM of 12.7 during FY10-14. Exhibit 13: Profitability trend

1404.0

2446.2 2655.62144.5 2014.7

3840.12783.6

12.110.310.6

13.5 13.310.7

8.9

0

1000

2000

3000

4000

5000


| cr

ore

0.02.04.06.08.010.012.014.016.0

(%)

Net profit - LS Net profit margin -RS



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 FY16E (including the Jaiprakash Associates deal). Considering this, we expect volume growth at 12.0% CAGR in FY14-17E. We expect the blended realisation to increase moderately at 4.0% CAGR over the same period. We estimate blended EBITDA/tonne at | 1005/tonne (previous | 945/tonne) in FY16E and | 1164/tonne in FY17E. At the CMP of | 2656, the stock is trading at 14.4x and 11.1x 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 10 year’s average vs. CAGR of 5.5% and 7.5% in the last five and 10 years, respectively). Being a net debt-free company, UltraTech is well positioned to reap the benefit of a recovery in demand and generate healthy free cash flows in future. After the recent fall in share prices, valuations now factor in near-term slowdown challenges. Hence, we continue to maintain our positive view on the stock with BUY rating and revised target price of | 3180/share (i.e. at 13.0x FY17E EV/EBITDA and EV/tonne of $185/tonne). Exhibit 14: Key assumptions | per tonne FY13 FY14 FY15E FY16E FY17E

Sales Volume* 41.7 42.6 46.1 53.2 59.8

Net Realisation* 4800 4713 4918 5057 5294

Total Expenditure 3716 3864 4068 4052 4130

Raw material 671 781 773 780 790

Power & Fuel 1031 971 1030 962 960

Freight 1012 1075 1172 1205 1225

Employees 232 238 264 270 285

Others 771 799 829 835 870

EBITDA per Tonne 1084 849 850 1005 1164

Source: ICICIdirect.com Research; * Blended (grey + white + clinker)


Exhibit 15: One year forward EV/EBITDA

9000

19000

29000

39000

49000

59000

69000

79000

Oct-0

7

Apr-0

8

Oct-0

8

Apr-0

9

Oct-0

9

Apr-1

0

Oct-1

0

Apr-1

1

Oct-1

1

Apr-1

2

Oct-1

2

Apr-1

3

Oct-1

3

Apr-1

4

Oct-1

4

Apr-1

5

(| C

rore

)

EV 15.5x 14.0x 12.5x 11.1x 8.0x


Exhibit 16: One year forward EV/Tonne

0

5000

10000

15000

Oct-0

6

Apr-0

7

Oct-0

7

Apr-0

8

Oct-0

8

Apr-0

9

Oct-0

9

Apr-1

0

Oct-1

0

Apr-1

1

Oct-1

1

Apr-1

2

Oct-1

2

Apr-1

3

Oct-1

3

Apr-1

4

Oct-1

4

Apr-1

5

Milli

on $

EV $190 $170 $150 $130 $90


Exhibit 17: Valuation Sales Growth EPS Growth PE EV/Tonne EV/EBITDA RoNW RoCE

(Rs cr) (%) (Rs) (%) (x) ($) (x) (%) (%)FY13 20020.9 0.3 96.8 -19.3 27.4 236 16.2 17.4 18.7FY14 20077.9 0.3 78.2 -19.3 34.0 217 20.4 12.5 11.7FY15 22656.5 12.8 73.4 -6.1 36.2 202 19.6 10.7 11.0FY16E 26908.7 34.0 101.4 29.7 26.2 171 14.4 12.9 13.8FY17E 31664.5 39.8 139.9 90.6 19.0 164 11.1 15.3 17.0



Company snapshot

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan-

09

Apr

-09

Jul-0

9

Oct-0

9

Jan-

10

Apr

-10

Jul-1

0

Oct-1

0

Jan-

11

Apr

-11

Jul-1

1

Oct-1

1

Jan-

12

Apr

-12

Jul-1

2

Oct-1

2

Jan-

13

Apr

-13

Jul-1

3

Oct-1

3

Jan-

14

Apr

-14

Jul-1

4

Oct-1

4

Jan-

15

Apr

-15

Jul-1

5

Oct-1

5

Jan-

16

Apr

-16

Target price: | 3180

Source: Bloomberg, Company, ICICIdirect.com Research Key events Date EventMar-09 Increases production capacity of cement from 18.2 MT to 21.9 MT. As a result, threre was an expansion of capacity at the company's unit at Andhra Pradesh

Cement Works (APCW) together with a new split grinding unit at Ginigera, KarnatakaMar-10 Increases the production capacity from 21.9 MT to 23.1 MT. Incorporates a wholly-owned subsidiary company in UAE in the name of 'UltraTech Cement Middle East

Investments Ltd'May-10 The cement business of Grasim Industries de-merged and merged in Samruddhi Cement

Jul-10 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 10 cement companies in the world and largest in India

Mar-11 The company's wholly-owned subsidiary, UltraTech Cement Middle East Investments Ltd completed the acquisition of ETA Star Cement (ETA) and acquired 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 0.5 times of the profit for the year 2009-10 and 2010-11. 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 100% equity shares of GKUPL. With this acquisition, GKUPL has become 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, ~ 10 MTPA capacity will be commissioned by FY15. Total cement capacity is expected to reach ~70 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

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Last filing date % O/S Position (m) Change (m)1 Aditya Birla Group 31-Mar-15 61.66 169.2 0.02 Aberdeen Asset Management (Asia) Ltd. 31-Mar-15 2.53 6.9 -3.43 Life Insurance Corporation of India 31-Mar-15 2.17 6.0 -1.44 OppenheimerFunds, Inc. 31-Mar-15 1.41 3.9 -0.45 UTI Asset Management Co. Ltd. 28-Feb-15 0.81 2.2 0.06 The Vanguard Group, Inc. 31-Mar-15 0.66 1.8 -0.17 APG Asset Management 31-Dec-13 0.58 1.6 0.48 Aberdeen Asset Managers Ltd. 28-Feb-15 0.55 1.5 0.19 Franklin Advisers, Inc. 28-Feb-15 0.55 1.5 0.510 Fidelity Worldwide Investment (UK) Ltd. 31-Mar-15 0.52 1.4 0.1

(in %) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14Promoter 61.95 61.73 61.70 61.70 61.70FII 21.01 20.95 20.44 20.56 20.56DII 4.62 4.91 5.26 5.18 5.18Others 12.42 12.41 12.60 12.56 12.56

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor Name Value Shares Investor Name Value SharesFIL Investment Management (Hong Kong) Limited 25.94m 0.55m Aberdeen Asset Management (Asia) Ltd. -154.57m -3.35m Franklin Advisers, Inc. 25.45m 0.51m Life Insurance Corporation of India -63.30m -1.37m GMO LLC 16.75m 0.39m Fidelity Management & Research Company -20.10m -0.61m APG Asset Management 10.75m 0.38m Driehaus Capital Management, LLC -17.77m -0.47m Norges Bank Investment Management (NBIM) 8.39m 0.29m Columbia Management Investment Advisers, LLC -16.52m -0.42m

Buys Sells

Source: Reuters, ICICIdirect.com Research


Financial summary Profit and loss statement | Crore (Year-end March) FY14 FY15E FY16E FY17E

Total operating Income 20,077.9 22,656.5 26,908.7 31,664.5

Growth (%) 0.3 12.8 18.8 17.7

Raw material cost 3327.4 3560.1 4150.2 4725.3

Power & Fuel cost 4135.4 4742.9 5119.4 5742.2

Freight cost 4580.8 5400.4 6411.5 7327.2

Employees cost 1014.6 1218.3 1436.6 1704.7

Others 3403.7 3819.5 4442.8 5203.8

Total Operating Exp. 16,461.9 18,741.2 21,560.5 24,703.2

EBITDA 3,616.0 3,915.3 5,348.2 6,961.2

Growth (%) -20.0 8.3 36.6 30.2

Depreciation 1,052.3 1,133.1 1,337.3 1,456.1

Interest 319.2 547.5 658.2 658.2

Other Income 531.0 651.5 681.5 718.5

PBT 2,775.6 2,886.2 4,034.2 5,565.4

Total Tax 631.0 871.5 1250.6 1725.3

PAT 2,144.5 2,014.7 2,783.6 3,840.1

Growth (%) -19.2 -6.1 38.2 38.0

Adjusted EPS (|) 78.2 73.4 101.4 139.9


Cash flow statement | Crore (Year-end March) FY14 FY15E FY16E FY17E

Profit after Tax 2,144.5 2,014.7 2,783.6 3,840.1

Add: Depreciation 1,052.3 1,133.1 1,337.3 1,456.1

(Inc)/dec in Current Assets -641.7 -599.7 -1,018.2 -2,821.7

Inc/(dec) in CL and Provisions -886.7 1,566.5 506.0 1,800.4

CF from operating activities 1,668.4 4,114.6 3,608.7 4,274.9

(Inc)/dec in Investments -602.4 1,206.4 -200.0 0.0

(Inc)/dec in Fixed Assets -2,338.0 -6,240.8 -3,950.0 -3,900.0

Others 389.9 496.2 0.0 0.0

CF from investing activities -2,550.5 -4,538.3 -4,150.0 -3,900.0

Issue/(Buy back) of Equity 0.2 0.2 0.0 0.0

Inc/(dec) in loan funds 979.6 1,638.1 800.0 0.0

Dividend paid & dividend tax -288.8 0.0 -802.6 -802.6

Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0

Others 6.9 -254.8 814.6 450.0

CF from financing activities 697.9 1,383.5 812.0 -352.6

Net Cash flow 135.2 -63.7 270.7 22.2

Opening Cash 142.3 277.5 213.9 484.6

Closing Cash 277.5 213.9 484.6 506.8


Balance sheet | Crore (Year-end March) FY14 FY15E FY16E FY17E

Liabilities

Equity Capital 274.2 274.4 274.4 274.4

Reserve and Surplus 16,823.3 18,583.2 21,378.8 24,866.3

Total Shareholders funds 17,097.6 18,857.6 21,653.2 25,140.7

Total Debt 4,875.1 6,513.2 7,313.2 7,313.2

Deferred Tax Liability 2,295.8 2,792.0 2,792.0 2,792.0

Minority Interest / Others 0.0 0.0 0.0 0.0

Total Liabilities 24,268.5 28,162.8 31,758.4 35,245.9

Assets

Gross Block 25,317.3 31,558.1 35,308.1 37,496.5

Less: Acc Depreciation 9,442.3 10,575.4 11,912.7 13,368.8

Net Block 15,875.0 20,982.7 23,395.4 24,127.7

Capital WIP 2,038.4 2,038.4 2,238.4 3,950.0

Total Fixed Assets 17,913.5 23,021.2 25,633.8 28,077.7

Investments 5,391.7 5,208.8 5,408.8 5,408.8

Inventory 2,368.4 2,751.4 3,146.4 3,793.8

Debtors 1,281.0 1,203.2 2,040.6 1,776.5

Loans and Advances 2,506.7 2,800.5 2,581.2 5,018.3

Other Current Assets 15.3 16.0 21.1 22.5

Cash 277.5 213.9 484.6 506.8

Total Current Assets 6,448.9 6,985.0 8,273.9 11,117.9

Creditors 4,512.6 5,749.1 6,046.5 7,486.8

Provisions 973.0 1,303.0 1,511.6 1,871.7

Total Current Liabilities 5,485.6 7,052.1 7,558.1 9,358.5

Net Current Assets 963.3 -67.1 715.8 1,759.4

Others Assets 0.0 0.0 0.0 0.0

Application of Funds 24,268.5 28,162.8 31,758.4 35,245.9


Key ratios (Year-end March) FY14 FY15E FY16E FY17E

Per share data (|)

EPS 78.2 73.4 101.4 139.9

Cash EPS 116.6 114.7 150.2 193.0

BV 623.5 687.2 789.1 916.2

DPS 9.0 0.0 25.0 25.0

Cash Per Share 10.1 7.8 17.7 18.5

Operating Ratios (%)

EBITDA Margin 18.0 17.3 19.9 22.0

PBT / Total Operating income 13.8 12.7 15.0 17.6

PAT Margin 10.7 8.9 10.3 12.1

Inventory days 42.9 41.2 40.0 40.0

Debtor days 20.9 20.0 22.0 22.0

Creditor days 89.2 82.7 80.0 78.0

Return Ratios (%)

RoE 12.5 10.7 12.9 15.3

RoCE 11.7 11.0 13.8 17.0

RoIC 14.1 11.9 15.2 19.6

Valuation Ratios (x)

P/E 34.0 36.2 26.2 19.0

EV / EBITDA 20.4 19.6 14.4 11.1

EV / Net Sales 3.7 3.4 2.9 2.4

Market Cap / Sales 3.6 3.2 2.7 2.3

Price to Book Value 4.3 3.9 3.4 2.9

Solvency Ratios

Debt/EBITDA 1.3 1.7 1.4 1.1

Debt / Equity 0.3 0.3 0.3 0.3

Current Ratio 1.2 1.0 1.1 1.2

Quick Ratio 1.1 1.0 1.0 1.1



ICICIdirect.com coverage universe (Cement)

M Cap(| Cr) FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E FY14 FY15E FY16E FY17E

ACC* 28,071 18.7 21.2 14.3 11.3 139 144 123 120 9.9 8.3 10.9 13.0 14.0 14.1 10.9 13.2Ambuja Cement* 35,667 20.1 16.2 17.1 13.9 164 164 186 184 11.4 14.0 11.2 12.0 13.6 14.8 11.7 12.2UltraTech Cem 72,853 20.4 19.6 14.4 11.1 217 202 171 164 11.7 11.0 13.8 17.0 12.5 10.7 12.9 15.3Shree Cement^ 34,723 25.6 26.4 21.9 18.2 279 232 212 212 13.0 8.9 10.4 12.0 16.7 11.2 12.8 14.0Heidelberg Cem 1,623 33.2 10.3 11.6 9.6 88 87 87 87 -0.5 6.2 6.1 8.0 -4.9 5.1 4.9 8.1India Cement 2,703 10.2 8.5 6.6 5.4 65 60 65 57 3.9 5.8 8.8 9.4 -0.9 -0.5 3.8 4.8JK Cement 4,427 5.5 6.0 7.4 11.7 131 92 97 89 5.2 6.3 4.4 10.9 5.2 6.3 4.4 10.9JK Lakshmi Cem 4,238 17.6 15.2 11.3 8.1 133 102 95 85 6.1 7.8 9.6 13.4 7.1 9.6 12.6 15.7Mangalam Cem 685 21.4 13.3 6.9 5.2 50 51 53 52 2.1 4.7 12.4 15.7 5.8 2.8 11.2 14.2

CompanyRoE (%)RoCE (%)EV/Tonne ($)EV/EBITDA (x)

*CY14, CY15E, CY16E ; ^June year end Source: Company, ICICIdirect.com Research


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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai – 400 093

[email protected]


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Target : | 3180 Target Period : 9-12 months Higher ... · Jaypee Cement Corporation Ltd from June...

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Transcript of Target : | 3180 Target Period : 9-12 months Higher ... · Jaypee Cement Corporation Ltd from June...