Cement - Annual Report AnalysisSeptember 05, 2019content.icicidirect.com/mailimages/IDirect_CementSector_AnnRepAn… · remained at 44.4% reflecting efficient plant utilisations vs

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September 5, 2019

Cement

Annual report analysis of cement majors…

The cement industry’s volume growth for FY19 has remained healthy with

sales volume growth of 13.3% to 337 MT mainly led by strong execution in

government led infra projects and low cost housing programmes. The top

five players like UltraTech, Shree, ACC, Ambuja, and Ramco Cements

accounted for 47.6% market share while capacity share of these companies

remained at 44.4% reflecting efficient plant utilisations vs. other players.

UltraTech and Shree Cement remained leaders in terms of gaining capacity

share while ACC, Ambuja and Ramco Cement’s capacities remained

unchanged. UltraTech’s capacity rose from 85 MT to 94.8 MT owing to

commissioning of its unit and addition of Binani Cement’s portfolio. Shree

Cement also commissioned grinding units in the east and an integrated unit

in Karnataka during FY19. Despite capacity additions, D/E mix and

debt/EBITDA of the sector remains quite comfortable at 0.3x and 1.8x,

respectively.

Capacity enhancement mode on, mainly grinding units; clinker

capacity growth to remain in low single digits…

All major cement companies are on a capacity addition spree. While

UltraTech has taken the inorganic route and added ~27.5 MT capacity in the

last two years, it will be adding another 14.6 MT through the Century deal.

Shree Cement would be taking its grinding capacity to 46.4 MT by FY21E

from the current 40.4 MT (includes Jharkhand grinding unit that was

announced earlier and now operational). Ramco Cement has also

announced a slew of capacity addition plans and would enhance its capacity

by ~25% from 16.5 MT in FY19 to ~20.5 MT by FY21E. Ambuja and its

subsidiary ACC, on the other hand, have had a cautious stance on the

capacity addition front. On a combined capacity of 63 MT (33.4 MT ACC and

29.7 MT Ambuja), they are adding ~10.5 MT of grinding capacity (5.9 MT

ACC and 4.6 MT Ambuja), on the current capacity. Going ahead, UltraTech

and Shree are expected to continue their market share gaining traction with

Ramco further increasing its presence in the eastern region.

Ramco focusing on cost efficiency, followed by Shree Cement

On the back of its strong power generation capacity of 340 MW out of which

wind power generation forms ~50%, Ramco has been the industry leader

in terms of power costs per tonne. It is also setting up ~37 MW WHRMS

plants (combined) at its integrated units, which will further help the company

save on power costs. The power consumption per tonne of cement has also

reduced by 1.5 kwh/tonne in FY19. Further, with the setting up of satellite

grinding units, the company would also save on freight costs. Shree Cement

has the highest WHRMS capacity in the country of 141 MW. In FY19, the

company also set up a 21 MW wind power plant in Karnataka. Also, owing

to the lowest raw material costs per tonne, the company has been and would

continue to remain the cost and profitability leader (refer Exhibit 1).

Valuation & Outlook

With the government’s focus on rural and urban housing, road and other

infrastructure development aided by lower interest rate in the economy,

cement demand is expected to remain healthy. However, there would be

short-term hiccups on account of floods in several states and the ongoing

liquidity scenario. Hence, we remain positive on the growth oriented

companies with efficient cost structures. Accordingly, we maintain BUY

rating on UltraTech Cement, Ramco Cements and Shree Cement. While the

balance sheet of ACC and Ambuja remain strong, we have a HOLD rating on

these companies owing to capacity constraint (for Ambuja) and higher

operational costs (for ACC).

Key Highlights

Capacity share of top five players

increased from 42.3% in FY18 to 44.4

in FY19

Utilisation levels for top five players

increased from 71.3% to 75.1% in

FY19

UltraTech to have highest capacity

addition of 18.6 MT, followed by Shree

at 6 MT

Ramco Cements’ P&F costs lowest in

the industry, whereas Shree Cement

continues to be lowest cost producer

Research Analyst

Rashesh Shah

[email protected]

Romil Mehta

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Sector Update | Cement - Annual Report Analysis

Exhibit 1: Production costs per tonne

Production costs per tonne (|) FY16 FY17 FY18 FY19

UltraTech Cement 3939 3867 4012 4161

Shree Cement 2883 2949 3264 3507

Ambuja^ 3684 3564 3708 3915

ACC^ 4342 4138 4337 4491

Ramco 3459 3322 3551 3696

I-Direct coverage universe 3780 3689 3817 3964

Source: Company, ICICI Direct Research ^Follows CY instead of FY

Exhibit 2: Capacity addition plans

Company

Current

Capacity

(MT)

Capacity

addition

(MT)

Total Post

addition

(MT)

Ultratech Cement 94.8 18.6* 113.4

Shree Cement (Effective capacity) 37.9 6 43.9

Ambuja Cement 29.7 1.8 31.5

ACC 33.4 5.9 39.3

Ramco Cement 16.7 4 20.7

Source: Company, ICICI Direct Research *Includes Century assets

Exhibit 3: Utilisation levels improving

Utilization (%) FY16 FY17 FY18 FY19

Ultratech Cement 76.0 73.0 71.0 76.0

Shree Cement 73.4 73.8 69.6 66.1

Ambuja Cement 72.6 71.5 77.5 82.1

ACC 77.0 73.0 79.0 86.0

Ramco Cement 43.9 50.4 55.8 63.6

Source: Company, ICICI Direct Research

Exhibit 4: UltraTech, Shree add capacity aggressively

Capacity (MT) FY16 FY17 FY18 FY19

Ultratech Cement 64.7 66.3 85.0 94.8

Shree Cement (Effective capacity) 25.6 27.5 31.9 37.9

Ambuja Cement 29.7 29.7 29.7 29.7

ACC 31.0 33.4 33.4 33.4

Ramco Cement 16.5 16.5 16.7 16.7


Exhibit 5: Installed capacity – Regional mix

North South East West Central

Ultratech 25 22 12 23 18

Shree cement 59 7 25 0 0

Ambuja 40 0 20 40 0

ACC 18 30 27 12 13

Ramco cement 0 94 6 0 0


Exhibit 6: Debt/EBITDA highest for UltraTech on acquisition

0

0.5

1

1.5

2

2.5

3

3.5

ACC Ambuja

Cement

Shree

Cement

UltraTech

Cement

Ramco

Cement

Top 5

players

combined

Debt/EBITDA (x)

FY18 FY19


Exhibit 7: Debt/equity ratio at comfortable levels

0

0.2

0.4

0.6

0.8

ACC Ambuja

Cement

Shree

Cement

UltraTech

Cement

Ramco

Cement

Top 5

players

combined

Debt/Equity (x)

FY18 FY19


Shree Cement has the lowest production cost owing

to efficient raw material procurement while its

power & fuel costs per tonne are the second lowest

in the industry, after Ramco. UltraTech’s cost of

production increased mainly on account of

consolidation of Jaypee assets & Binani assets




Annual Report Highlights

UltraTech Cement –Undisputed leader…

Performance - During the year, the company produced 67.2 MT of cement

and 52.94 MT of clinker. This strong volume growth came on the back of

strong volume offtake and ramping up of capacity acquired in FY18, where

utilisation levels improved from 53% in FY18 to 72% in FY19. Consolidated

revenues were at | 36,775 crore, up 20% YoY. The company launched 6

VAP during the year. While standalone EBITDA margins contracted YoY,

absolute EBITDA (excluding other income) increased 11.9% YoY to | 6520

crore.

Binani Cement - The company completed the acquisition of Binani Cements

and turned it into a subsidiary. The company was acquired for ~| 7950

crore, with an installed capacity of 6.25 MT in India. The deal also provides

UltraTech access to high quality limestone along with increased presence in

North and Western India. While UNCL has capacities in UAE and China,

totalling to 5.2 MT, these would be sold off by UltraTech and, thus, shown

as assets held for sale.

Capacity - During the year, the company commissioned 3.5 MT greenfield

capacity at Dhar, MP. Further, the company has a grinding unit under

construction at Bara (4 MT capacity). Currently, its capacity is at 94.75 MT.

Further, the company expects the consolidation of Century's assets (14.6

MT) in the ongoing fiscal. On completion of the century deal, UltraTech will

issue its own shares in the ratio of 1:8 to the issuers of Century. The white

cement capacity is currently at ~1.5 MT, which operated at 91% utilisation

levels.

Input costs - Overall energy costs rose 14% YoY on the back of higher prices

of petcoke and coal, further aggravated by rupee depreciation. Import duty

on petcoke was raised from 2.5% to 10% in December 2017. Domestic

petcoke prices rose 27% YoY. Prices of slag, fly ash and iron ore were also

higher pushing raw materials costs higher. Higher diesel prices during the

year increased freight costs, the effects of which were softened by relaxation

in axle load norms and synergy benefits that arrived from acquired assets

and commissioning of the MP plant. Lead distance was reduced by 5% YoY.

Ratios and profitability - While EBITDA margins contracted YoY, higher

volumes (which led to EBITDA growing ~12% higher) contributed to RoCE

remaining flat YoY despite margin contraction. Interest coverage ratio

worsened from 3.96x to 3.53x while net debt/equity increased from 0.46x to

0.53x. Inventory turnover improved with inventory days reducing from 46

days to 41 days.

Leverage - The company during the year raised | 5360 crore of debt to

refinance the loans that were availed/transferred in 2017 owing to

acquisitions. The total debt as on March 31, 2019 (consolidated) at at

| 22,818 crore (out of which ~| 20090 crore is non-current) while standalone

debt is at | 18,118 crore. Also, the company raised | 1500 crore for

repayment of financial and operational creditors of Binani.

Sustainability - WHR capacity increased from 59 MW to 85 MW. The

company is also setting up another WHR plant of 46 MW capacity. CO2

emissions during the year reduced from 625.7 kg/tonne to 618.86 kg/tonne.

The use of alternate raw materials (fly ash, slag, industrial waste) increased

from 14.2% in FY18 to 16.2% in FY19. Also, 8% of total power consumption

was served by WHRMS and renewable energy capacity was at 66.2 MW.

Thermal energy consumption per kg of clinker was at 708 kcal. The company

has also entered into agreement to procure solar power for ~500 MW from

63 MW currently.

Price Chart

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Nov-18

Aug-18

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Mar-18

Dec-17

Sep-1

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Mar-17

Dec-16

Sep-1

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Price (R.H.S) Nifty (L.H.S)




Capex - UltraTech spent | 1600 crore on various capex - Dhar integrated

unit, Bara grinding unit, WHRMS and modernisation. For FY20, ~| 2000

crore would be spent towards Bara GU, WHR, development of coal block,

setting up packaging terminal at Mumbai, wall care putty projects and

maintenance capex.

Exhibit 8: Capex plans and market share

Zone

Current

Capacity

(MT)

Industry

Capacity

(MT)

Current Capacity

Share

Additons - Century

& Bara Grinding

(MT)

Total post merger

and expansion

(MT)

North 23.8 102 23% 23.8

Central 17.1 62 27% 8.2 25.3

East 11.7 92 13% 4.4 16.1

West 21.7 64 34% 6 27.7

South 20.5 159 13% 20.5

Domestic Total 94.8 480 20% 18.6 113.4

Overseas 4.0 4.0

Total 98.8 117.4


Exhibit 9: Utilisation improving on higher capacity

64.7 66.3

85.0

94.8

76

73

71

76

68

69

70

71

72

73

74

75

76

77

0.0

20.0

40.0

60.0

80.0

100.0

FY16 FY17 FY18 FY19

Cement Capacity (MT) - LHS Util ization (%) (LHS)


Exhibit 10: Captive power capacity to near 1600 MW

1113 1126 1126

1596

0

500

1000

1500

2000

0

200

400

600

800

1000

1200

FY18 FY19 FY20E FY21E

Captive power generation capacity (MW)

Thermal Renewable WHRMS Total (RHS)


Exhibit 11: Share of non-conventional power sources to rise

0%

20%

40%

60%

80%

100%


Thermal Renewable WHRMS





Shree Cement –Powerful king in north

Current capacity - Shree Cement ended FY19 with a domestic capacity of

37.9 MT and overseas capacity of 4 MT. During FY19, the company forayed

into southern India via commissioning of 3 MT integrated unit in Karnataka.

Its domestic capacity is as follows - 26.3 MT in north, 8 MT in east and 3 MT

in south.

Acquisition - Shree Cement also completed the acquisition of Union Cement

Company in UAE for an EV of ~$350 million for a 4 MT grinding and 3 MT

clinker capacity. The company also acquired 100% stake in Raipur Handling

and Infrastructure Pvt Ltd in May 2018 for | 59 crore, which will help Shree

use the acquired company's freight terminal, which is situated in close

proximity to Shree's Chhattisgarh plant

Performance - During the year, led by higher infrastructure spends and

construction of houses under PMAY, the industry witnessed strong traction.

While realisations improved YoY, cost inflation overshadowed the same

leading to lower profitability. Power prices during Q3 were strong owing to

coal shortage that supported overall EBITDA and the power division's

EBITDA shot up from | 14 crore in FY18 to | 181.5 crore in FY19.

Ratios - The Company’s profitability reduced during the year owing

significant input cost inflation. Thus, RoCE and RoE for FY19 contracted from

16.8% to 9.8% and 16.47% to 9.61%, respectively. The company's debtor

days also increased from 17 days to 22.8 days in FY19 while inventory days

improved from 58.2 days to 49.5 days.

P&F consumption - Post commissioning of WHRMS and wind power plant

at the Karnataka plant, the company's power generation capacity was at 646

MW. The share of green power (wind, solar and WHRMS) in its total power

consumption was at 41%. Shree's CO2 emissions per tonne of cement have

reduced from 549 kg in FY17 to 543 kg in FY19. While power consumption

per tonne of cement increased from 68.67 in FY18 to 69.05 in FY19, the fuel

consumption per kg of clinker reduced from 728 kcal to 719 kcal. Further,

the company secured coal linkage for partly meeting fuel requirements of its

Raipur plant.

Premium products - Led by the company's R&D strength, the company

launched two premium products, 'Roofon - Concrete Master' and 'Bangur

Power'.

Expansion - To further increase its presence in the east, the company had

announced two projects. It will be adding 3 MT capacity in Cuttack, Odisha

and 2.5 MT grinding capacity in Kharsawan District, Jharkhand. The total

capex outlay for the same has been slated at ~| 900 crore. The Jharkhand

unit has already been commissioned and the Odisha unit expected to be

commissioned in Q2FY20. Work has also started for setting up a greenfield

grinding unit in Maharashtra.

Leverage and finance costs - The Company’s average short-term borrowing

costs was at 7.06% while its D/E ratio was at 0.26x. The interest costs

increased significantly over FY18 on account of various expansion projects,

which were commissioned in the end of FY18 and in Q1FY19. The interest

costs relating to these projects were being capitalised prior to their

commissioning.

Price Chart

8,000

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0

5,000

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15,000

20,000

25,000

Aug-19

May-19

Feb-19

Nov-18

Aug-18

May-18

Mar-18

Dec-17

Sep-1

7

Jun-17

Mar-17

Dec-16

Sep-1

6





Exhibit 12: Capacity expansion plans

Cost (| crore) Clinker (MT) Cement (MT)

Capacity as on July 2019 23.4 40.4

Additions

Odisha 423 3.0

Pune 650 3.0

Total domestic by FY21E (In MT) 23.4 46.4

Overseas capacity Middle East 3.3 4.0

Total by FY21E (In MT) 26.7 50.4


Exhibit 13: Crosses 25 MT production in FY19

14.1

20.3

22.2

25.1

73.473.8

69.6

66.1

62.0

64.0

66.0

68.0

70.0

72.0

74.0

76.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

FY16 (9m) FY17 FY18 FY19

Cement Production (MT) - LHS Util ization (%) (RHS)


Exhibit 14: Highest capacity of WHRMS in cement industry

625

646 646 646

610

615

620

625

630

635

640

645

650

0

100

200

300

400

500

600



Thermal Wind WHRMS Total (RHS)


Exhibit 15: Fuel consumption broadly stable

719.0

718.0

728.0

719.0

712.0

714.0

716.0

718.0

720.0

722.0

724.0

726.0

728.0

730.0

FY16 (9M) FY17 FY18 FY19

Fuel Consumption (kcal/kg of Clinker)


Exhibit 16: Shree Cement one of the most efficient players

72.1

70.0

68.769.0

66.0

67.0

68.0

69.0

70.0

71.0

72.0

73.0

FY16 (9M) FY17 FY18 FY19

Power Consumption (Kwh/T of Cement)





Ambuja Cement – Conservative but efficient player

Industry performance - Led by strong macro level growth, cement industry

posted 9% growth YoY in CY2018, higher than the growth rate of 6% in

2017. Demand was led by road and rail infra projects and Housing for All.

Industry capacity utilisation improved 3%.

Performance - Sales volumes recorded 5.4% growth YoY to 24.18 MT. Sales

of premium products were up 38% YoY. Ambuja Plus Roof Special: 27%

YoY growth and Ambuja Compocem: 125% YoY growth.

Capex - During the year, further investment in the Rajasthan greenfield plant

was approved. The total cost for 3.1 MT clinker and grinding capacity along-

with CPP & WHRMS is estimated at | 2350 crore. Completion is expected in

H2CY20.

Input cost - Total operating expenses for the year was up 11% YoY as the

industry faced challenges in the form of rising costs for power and fuel,

diesel and packing bags coupled with volatility in exchange rates. Also, rakes

availability curtailed the movement of clinker to grinding units. Packing costs

increased 10% YoY on account of increase in prices of PP Granules. A 17%

increase in diesel prices YoY, pushed freight costs per tonne by 8%.

Power & fuel - Alternative fuel were used to the extent of 5.5% of total fuel

requirement. During the year, power consumption per tonne of cement was

at 76.63 kwh/t in CY18 vs. 77.62 kwh/t in CY17 while fuel consumed per kg

of clinker was at 760 kcal/kg in CY18 vs. 759 kcal/kg in CY17. Clinker factor

improved by 2 PP to 64.99% with fly ash consumption at 32.66% in PPC and

composite cement.

Product launches - Ambuja Purasand and Ambuja Plus Cool Walls. Ambuja

Plus Cool Walls was launched as an environment friendly, strong and cool

wall solution. As a substitute to river sand, Ambuja launched Ambuja

Purasand.

Investments - During the year the company purchased 96 acres of land at

Darlaghat, Ambujanagar, Rabriyawas and Bhatpara for | 113 crore to meet

limestone requirements. The railway line at Rabriyawas unit would be

completed by Q1 in the coming calendar year. The estimated total project

cost for the same is | 180 crore.

Coal mines - The company started mining operations at the Gare-Palma-IV/8

coal block in Chhattisgarh, which it had secured in 2015. Open cast mining

operations started from April 2018, with commercial production

commencing from November 2018. Also, in relation to underground mining,

site development activities are underway. The mine has estimated reserves

of 45 MT.

Limestone mines - During the year, the company won two limestone blocks

for the MCW and Marwa-Mundwa plants. Also the Mangu limestone mines

at Darlaghat started operations. Environment clearances for both Bhatpara

and Loadhva limestone mines had been received. Loadhva mine were

expected to commence operations from March 2019 with land acquisition

underway. Work for requisite clearances for the Nandgaon Ekadi limestone

mines are in progress.

Price Chart

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Nov-18

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May-18

Mar-18

Dec-17

Sep-1

7

Jun-17

Mar-17

Dec-16

Sep-1

6





Exhibit 17: Capacity expansion to be funded from internal accruals

Particulars Capacity (MT) Cost

Existing Grinding capacity(MT) 29.7

Ongoing expansion:

Marwar, Rajasthan (3.1 MT clinker capacity) 4.6 | 2350 crore

Total 4.6

Total capacity by CY20E (MT) 34.3 | 2350 crore


Exhibit 18: Capacity nearing optimal utilisation levels

21.521.2

23.0

24.372.6

71.5

77.5

82.1

66.0

68.0

70.0

72.0

74.0

76.0

78.0

80.0

82.0

84.0

19.0

20.0

21.0

22.0

23.0

24.0

25.0

CY15 CY16 CY17 CY18

Cement Production (MT) - LHS Util ization (%) - RHS


Exhibit 19: Higher fuel consumption pushing P&F costs higher

747

753

759760

740

745

750

755

760

765

CY15 CY16 CY17 CY18



Exhibit 20: Power consumption reducing

79.2

77.4

77.6

76.6

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

CY15 CY16 CY17 CY18






ACC – Highest costs of production but strong balance sheet

Sector performance: The cement industry in CY18 witnessed growth of

~8.5% YoY backed by strong demand from the infrastructure side. Cement

production for the year was at 325 MT against 301MT produced a year back.

Installed capacity was at 502 MT and is expected to reach 550 MT in two

years.

Demand drivers: Housing and real estate continue to have a major share,

accounting for 65% of total consumption in India. The setting up of National

Housing Bank for easing credit to homebuyers, is expected to further boost

demand growth for cement. Other major demand for cement would come

from public infra which forms 20% of the consumption. The government is

strongly focused on infra development to boost economic growth.

Performance highlights: Revenues of the company grew 12% YoY to

| 14477 crore while operating profit was at | 2045 crore. Volume growth of

8.2% pushed cement volume sales to 28.4 MT for CY18, up from 23.2 MT in

CY17. Thus, the company ended the year at a capacity utilisation of 86% vs.

79% in CY17. Trade sales formed 80% of volumes sold. RMC segment

clocked 16% volume growth. However, realisations were down 1%. RMC

segment’s margins expanded 16 bps to 10.24% whereas the company’s

overall margins contracted from 12.1% in CY17 to 11.9% in CY18.

Input cost pressure: During CY18, the industry witnessed several headwinds

with regards to input costs, leading to a unitary cost increase of 3.5% YoY.

Higher procurement costs of slag severely impacted material costs. The

surge in demand for slag and procurement from long lead sources led to a

surge in its prices, eventually having an impact of 55% increase in the landed

costs of slag for the company. Adverse levels of crude severely impacted

power & fuel as well as freight costs. Fuel costs per tonne increased from

| 1310/t to | 1406/t, indicating a 7% increase YoY attributing to high diesel

prices and an increase in lead distance by 2%. Imported petcoke price had

increased 22% over the previous year. Landed cost of imported and

domestic coal has also increased in the range of 9% to 12%. Power

generation costs also increased as a result of the above from 5.05/unit in

CY17 to | 5.39/unit in CY18.

Operational efficiency: ACC has steadily reduced power consumption from

88.7 kWHR per tonne of cement in CY16 to 81.1 kWHR per tonne in CY18.

Fuel consumption has improved slightly by 1 kcal per tonne of clinker to 741

kcal per tonne consumption. To mitigate the impact of adverse petcoke

prices, the company reduced the proportion of petcoke usage in its

production process. The company generated ~53 million units of power

using waste heat recovery system, thus leading to a | 22 crore saving in

power costs for the year.

Expansion: Capacity bottleneck was addressed during the year by

announcing capacity addition plans, which includes brownfield expansion

at Sindri, greenfield integrated plant at Ametha, MP and satellite grinding

units in UP. The grinding capacity of the company would be enhanced by

5.9 MT and clinker capacity by 3 MT at an estimated cost of | 3000 crore

over three years.

Working capital- Trade receivables days moderately increased by two days

to 13 days (vs. 11 days in CY17) while for the RMC division the same was at

80 days (vs. 77 days in CY17). Cash balance as at the end of CY18 was at

| 2836 crore. Trade payable days increased to 47 days as at the end of CY18

(vs. 43 days in CY17).

Price Chart

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500

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Aug-19

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Aug-18

May-18

Mar-18

Dec-17

Sep-1

7

Jun-17

Mar-17

Dec-16

Sep-1

6





Exhibit 21: New capacities to be commissioned in CY20

Particulars MT MT

Current installed capacity 33.4

Cement Clinker Cost

Newly announced expansions

UP (Greenfield) 2.2

Tikaria Unit, UP (Brownfield) 1.6

Ametha/ MP 1 3

Sindri (brownfield) 1.1

Total 5.9 | 3000 cr

Capacity post expansion 39.3

| 3000 cr


Exhibit 22: Capacity nearing optimum utilisation levels

23.923.2

26.6

28.4

77

73

79

86

65

70

75

80

85

90

0.0

5.0

10.0

15.0

20.0

25.0

30.0

CY15 CY16 CY17 CY18



Exhibit 23: ACC in CY18 consumes 81.1 kwh/tonne of cement

84.5

88.7

84.3

81.1

76.0

78.0

80.0

82.0

84.0

86.0

88.0

90.0

CY15 CY16 CY17 CY18



Exhibit 24: Fuel consumption reduces to 741 kcal/kg of clinker

730

748

742741

720

725

730

735

740

745

750

CY15 CY16 CY17 CY18






Ramco Cement – South king with efficient cost matrix

Growth - During the year, while the cement industry grew by ~13.3%,

Ramco’s clinker and cement production increased 20% each YoY to 8.61 MT

and 11.18 MT respectively. Thus, capacity utilisation of clinker and cement

was at 82% and ~64%, respectively. The growth came in despite southern

India, the company's major market, witnessing 45% lower rainfall over the

average of previous three years. The growth was supported by the grinding

units of Kolaghat and Vizag that helped the company expand its presence in

the eastern region.

Capacity expansion - During FY19, the company embarked on its growth

journey with announcement of a slew of capacity expansions, both

greenfield and brownfield. The company would be adding more than 4 MT

to its satellite grinding capacity, taking the total satellite grinding capacity to

9.5 MT. Its plan also include 3.75 MT of clinker capacity addition (Greenfield

and brownfield combined).

Markets - The Kolaghat unit would serve West Bengal, Odisha and North

East. Vizag unit would serve the markets of Coastal Andhra Pradesh and

South Odisha. The greenfield unit at Odisha would cater to the eastern

markets.

Input costs - During the year, several input cost pressures were witnessed.

Diesel prices increased 17% on an average, the impact of which was partly

softened by the softening of axle load norms. Petcoke and coal prices also

went up significantly during the year, and began to soften from January

2019. The company has been taking steps to manage the increasing costs

by using low cost fuels such as lignite

Through its R&D facility, the company developed 12 different types of

cement, meant for different applications in construction. This would help in

supplying the right product for the right application.

Ratios, profitability - The company’s debtor and inventory days reduced by

~7-8 days YoY to 33 days and 40 days, respectively. Return ratios

contracted during the year, with RoCE contracting 200 bps to 10% and RoE

contracting by similar levels to 12%. The blended EBITDA/t also declined

~21% YoY owing to input cost pressures.

Power generation capacity - The total power generation capacity of the

company was at ~301 MW, comprising 175 MW of thermal power plants

and 125.95 MW from its wind farms. The company is further enhancing its

power generation capacity by adding 27 MW TPP at Jayanthipuram

integrated unit and 25 MW (TPP + WHRMS) at its Greenfield plant at

Kurnool.

Debt - The company's long term debt obligations are currently at | 701 crore

including ~| 130 crore of soft loans from government and | 145 crore of

deferred sales tax liability. Out of the total interest paid, the company has

capitalised | 29.17 crore of interest

Threats - The MMDR Act, 2015 has made limestone a notified mineral. Under

the amended act, the grant of mining license for all notified minerals would

be through public auction process by the respective state governments.

Unavailability of geological data of reserves with the state governments, is

restricting the stated to proceed with the auction and is delaying the process

of getting fresh mining lease. Due to the delay in auction and allotments, the

cement companies are depleting their existing mining reserves faster,

shortening the lifespan of the existing mines.

Price Chart

8,000

9,000

10,000

11,000

12,000

0

200

400

600

800

1,000

Aug-19

May-19

Feb-19

Nov-18

Aug-18

May-18

Mar-18

Dec-17

Sep-1

7

Jun-17

Mar-17

Dec-16

Sep-1

6





Exhibit 25: Capex plans

Location Expected timeline Clinker Grinding Cost (| crore)

Jajpur, Odisha 2019-20 1 515

Vizag, Andhra Pradesh 2019-20 1 250

Kolaghat, West Bengal 2019-20 1 425

Jayanthipuram, Andhra Pradesh

(Including 27 MW WHRMS)

2019-20 1.5 740

Kurnool, Andhra Pradesh 2020-21 2.25 1 1600

Total addition (MT) 3.75 4 3530

Total capacity Post addition (MT) 14.25 20.5

Capacity Addition (MT)


Exhibit 26: Utilisation levels inching higher

7.2

8.3

9.3

11.2

44

50

56

67

0

10

20

30

40

50

60

70

80

0.0

2.0

4.0

6.0

8.0

10.0

12.0

FY16 FY17 FY18 FY19



Exhibit 27: Power consumption declining gradually

82

75

78

76.5

70

72

74

76

78

80

82

84

FY16 FY17 FY18 FY19



Exhibit 28: Total power generation capacity to reach 374 MW

175 175 175172

165 165 165

165

37

0%

20%

40%

60%

80%

100%



Thermal Wind WHRMS





Financial summary – UltraTech Cement

Exhibit 29: Profit and Loss Statement | crore

(Year-end March) FY18 FY19 FY20E FY21E

Total operating Income 29,526.3 35,703.5 41,447.5 48,183.1

Growth (%) 23.6 20.9 16.1 16.3

Raw material cost 4679.7 6215.7 7177.7 8169.7

Power & Fuel cost 5959.5 7831.0 8613.2 10281.0

Freight cost 7281.6 8782.3 9291.1 10556.4

Employees cost 1706.2 1926.0 2272.9 2570.2

Others 4073.5 4428.3 5183.9 6012.5

Total Operating Exp. 23,700.5 29,183.2 32,538.8 37,589.8

EBITDA 5,825.8 6,520.3 8,908.7 10,593.3

Growth (%) 17.2 11.9 36.6 18.9

Depreciation 1,763.6 2,010.3 2,184.4 2,245.8

Interest 1,186.3 1,419.2 1,551.4 1,884.0

Other Income 652.2 471.5 450.0 468.0

PBT 3,528.1 3,562.3 5,622.9 6,931.5

Total Tax 1070.6 1106.7 1765.6 2245.8

Adj. PAT 2,457.6 2,455.6 3,857.3 4,685.7

Growth (%) -7.0 -0.1 57.1 21.5

Adj. EPS (|) 89.6 89.5 140.6 170.8


Exhibit 30: Cash Flow Statement | crore


Profit after Tax 2,231.3 2,455.6 3,857.3 4,685.7

Add: Depreciation 1,763.6 2,010.3 2,184.4 2,245.8

(Inc)/dec in Current Assets -3,781.5 -413.8 -1,730.4 -3,051.9

Inc/(dec) in CL and Provisions 1,678.0 -50.0 1,153.2 587.9

CF from operating activities 1,891.3 4,002.0 5,464.5 4,467.5

(Inc)/dec in Investments 1,457.2 2,433.9 -2,000.0 -1,000.0

(Inc)/dec in Fixed Assets -16,338.2 -1,742.9 -1,100.0 -1,500.0

Others 283.8 -78.0 0.0 0.0

CF from investing activities -14,597.2 612.9 -3,100.0 -2,500.0

Issue/(Buy back) of Equity 0.1 0.0 0.0 0.0

Inc/(dec) in loan funds 11,148.4 2,605.7 -1,500.0 -1,000.0

Dividend paid & dividend tax -347.6 -380.6 -397.1 -397.1

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

Others 419.2 0.0 0.0 0.0

CF from financing activities 11,220.1 2,225.2 -1,897.1 -1,397.1

Net Cash flow -1,697.2 471.6 594.5 570.4

Opening Cash 1,896.7 199.4 671.1 1,265.6

Closing Cash 199.4 671.1 1,265.6 1,835.9


Exhibit 31: Balance Sheet | crore


Liabilities

Equity Capital 274.6 274.6 274.6 274.6

Reserve and Surplus 25,648.4 27,723.4 31,183.6 35,472.2

Total Shareholders funds 25,923.0 27,998.1 31,458.2 35,746.8

Total Debt 17,420.0 20,025.7 18,525.7 17,525.7

Deferred Tax Liability 3,622.4 3,544.4 3,544.4 3,544.4

Minority Interest / Others 0.0 0.0 0.0 0.0

Total Liabilities 46,965.3 51,568.1 53,528.3 56,816.9

Assets

Gross Block 52,107.6 54,254.3 55,630.1 57,180.1

Less: Acc Depreciation 14,895.9 16,912.7 19,097.1 21,342.9

Net Block 37,211.8 37,341.6 36,533.1 35,837.2

Capital WIP 1,473.0 1,075.9 800.0 750.0

Total Fixed Assets 38,684.8 38,417.4 37,333.1 36,587.2

Investments 6,162.9 9,970.4 11,970.4 12,970.4

Inventory 3,101.5 3,273.6 3,993.9 4,454.7

Debtors 1,714.2 2,097.6 2,312.2 2,704.1

Loans and Advances 776.7 2,762.0 3,040.7 3,705.0

Other Current Assets 3,733.7 1,606.7 2,123.6 3,658.4

Cash 199.4 671.1 1,265.6 1,835.9

Total Current Assets 9,525.5 10,411.0 12,735.9 16,358.1

Creditors 2,343.6 2,660.0 2,934.8 3,137.6

Provisions 5,064.2 4,697.9 5,576.2 5,961.3

Total Current Liabilities 7,407.9 7,357.9 8,511.0 9,098.9

Net Current Assets 2,117.6 3,053.1 4,224.8 7,259.2

Others Assets 0.0 127.2 0.0 0.0

Application of Funds 46,965.3 51,568.1 53,528.2 56,816.8


Exhibit 32: Key Ratios


Per share data (|)

EPS 89.6 89.5 140.6 170.8

Cash EPS 145.6 162.8 220.2 252.6

BV 944.7 1,020.3 1,146.4 1,302.7

DPS 10.5 11.5 12.0 12.0

Cash Per Share 7.3 24.5 46.1 66.9

Operating Ratios (%)

EBITDA Margin 19.7 18.3 21.5 22.0

PBT / Total Operating income 11.2 10.0 13.6 14.4

PAT Margin 7.6 6.9 9.3 9.7

Inventory days 32.9 32.6 32.0 32.0

Debtor days 18.5 19.0 19.0 19.0

Creditor days 25.1 26.0 25.0 23.0

Return Ratios (%)

RoE 9.5 8.8 12.3 13.1

RoCE 10.0 9.7 13.4 15.5

RoIC 9.8 10.0 14.9 17.8

Valuation Ratios (x)

P/E 47.3 43.0 27.4 22.5

EV / EBITDA 20.4 18.9 13.4 11.0

EV / Net Sales 4.0 3.5 2.9 2.4

Market Cap / Sales 3.6 3.0 2.5 2.2

Price to Book Value 4.1 3.8 3.4 3.0

Solvency Ratios

Debt/EBITDA 3.0 3.1 2.1 1.7

Debt / Equity 0.7 0.7 0.6 0.5

Current Ratio 1.3 1.4 1.5 1.8

Quick Ratio 1.3 1.3 1.3 1.6





Financial Summary – Shree Cement




Growth (%) 14.9 19.2 15.3 15.7


Power & Fuel cost 1979.7 2745.0 2778.1 3101.7

Freight cost 2524.9 2864.1 3097.7 3587.9

Employees cost 588.1 677.8 745.6 820.2

Others 1497.4 1918.0 2153.6 2526.7


EBITDA 2,472.8 2,652.8 3,689.9 4,371.3

Growth (%) -0.6 7.3 39.1 18.5

Depreciation 899.4 1,391.7 1,379.4 1,535.6

Interest 135.3 247.0 226.1 175.8

Other Income 389.1 245.4 204.6 320.0

PBT 1,827.2 1,259.6 2,288.9 2,979.9

Others 0.0 178.1 0.0 0.0

Total Tax 443.0 130.4 503.6 684.1

PAT 1,384.2 951.0 1,785.3 2,295.8

Adjusted PAT 1,384.2 1,107.7 1,785.3 2,295.8

Growth (%) 3.4 -20.0 61.2 28.6

Adjusted EPS (|) 397.8 318.3 513.0 659.7




Profit after Tax 1,384.2 951.0 1,785.3 2,295.8

Add: Depreciation 899.4 1,391.7 1,379.4 1,535.6

Add: Interest 135.3 247.0 226.1 175.8

(Inc)/dec in Current Assets -862.0 -73.5 -401.9 -627.9

Inc/(dec) in CL and Provisions 515.6 -263.1 218.7 -245.2


(Inc)/dec in Investments -1,391.7 889.0 -350.0 -350.0

(Inc)/dec in Fixed Assets -2,606.2 -1,971.5 -1,721.1 -1,528.9

Others -5.4 -77.3 0.0 0.0

CF from investing activities -4,003.3 -1,159.8 -2,071.1 -1,878.9


Inc/(dec) in loan funds 2,261.5 -408.4 -500.0 -500.0



Others -135.3 -247.0 -226.1 -175.8

CF from financing activities 1,940.7 -906.9 -1,019.7 -969.3

Net Cash flow 9.9 186.4 116.9 285.9

Opening Cash 111.0 120.9 307.3 424.2

Closing Cash 120.9 307.3 424.2 710.1




Liabilities

Equity Capital 34.8 34.8 34.8 34.8



Total Debt 3,919.5 3,511.2 3,011.2 2,511.2

Deferred Tax Liability -513.1 -590.4 -590.4 -590.4

Minority Interest / Others 0.0 0.0 0.0 0.0


Assets

Gross Block 12,189.0 14,466.5 16,187.6 17,937.6


Net Block 3,589.2 4,475.0 4,816.7 5,031.1

Capital WIP 1,427.2 1,121.1 1,121.1 900.0


Investments 5,434.3 4,545.3 4,895.3 5,245.3

Inventory 1,569.0 1,589.1 1,666.4 1,843.1

Debtors 459.3 732.4 703.6 814.4

Loans and Advances 349.6 61.5 135.2 156.4

Other Current Assets 1,679.4 1,747.8 2,027.5 2,346.7

Cash 120.9 307.3 424.2 710.1


Creditors 1,138.9 873.8 1,036.9 1,071.5

Provisions 1,186.5 1,188.6 1,244.3 964.4







Per share data (|)

EPS 397.8 318.3 513.0 659.7

Cash EPS 656.2 673.2 909.4 1,101.0

BV 2,556.6 2,757.6 3,186.2 3,761.6

DPS 50.0 60.0 70.0 70.0

Cash Per Share 34.7 88.3 121.9 204.1


EBITDA Margin 25.1 22.6 27.3 27.9

PAT Margin 14.1 8.1 13.2 14.7

Inventory days 58.2 49.5 45.0 43.0

Debtor days 17.0 22.8 19.0 19.0

Creditor days 42.3 27.2 28.0 25.0

Return Ratios (%)

RoE 15.6 11.5 16.1 17.5

RoCE 15.3 11.5 17.8 20.2

RoIC 18.6 11.5 19.5 21.4


P/E 44.1 64.3 34.2 26.6

EV / EBITDA 25.3 24.2 17.2 14.4

EV / Net Sales 6.4 5.5 4.7 4.0



Solvency Ratios

Debt/EBITDA 1.6 1.3 0.8 0.6

Debt / Equity 0.4 0.4 0.3 0.2


Quick Ratio 1.1 1.4 1.4 2.0





Financial Summary – Ambuja Cement


(Year-end March) CY17 CY18 CY19E CY20E


Growth (%) 13.6 8.7 6.1 6.7

Raw material 846.5 942.3 1119.9 1202.1

Power & Fuel 2234.2 2549.0 2651.8 2796.3

Employees 661.4 679.5 723.2 784.0

Freight 2872.0 3277.6 3202.5 3397.3

Others 1900.8 2016.9 2056.6 2221.3


EBITDA 1,932.0 1,891.5 2,292.5 2,449.7

Growth (%) 15.7 -2.1 21.2 6.9

Depreciation 572.9 548.1 514.1 528.6

Interest 107.2 82.3 92.0 107.4

Other Income 359.1 375.0 418.2 420.0

Exceptional items 0.0 130.0 0.0 0.0

PBT 1,611.0 1,506.1 2,104.5 2,233.7

Total Tax 369.6 19.1 621.3 670.1

PAT 1,241.4 1,487.0 1,483.2 1,563.6

Adjusted PAT 1,249.6 1,617.0 1,483.2 1,563.6

Growth (%) 34.0 29.4 -8.3 5.4

Adjusted EPS (|) 6.3 7.5 7.5 7.9




Profit after Tax 1,249.6 1,487.0 1,483.2 1,563.6

Add: Depreciation 572.9 548.1 514.1 528.6

(Inc)/dec in Current Assets -841.8 -613.8 -109.9 -370.6

Inc/(dec) in CL and Provisions 461.8 -484.8 -618.0 -122.2

CF from operating activities 1,442.5 936.5 1,269.3 1,599.4

(Inc)/dec in Investments 1,384.3 30.9 -30.9 0.0

(Inc)/dec in Fixed Assets -394.1 -701.8 -1,200.0 -1,200.0

Others

CF from investing activities 990.2 -670.9 -1,230.9 -1,200.0


Inc/(dec) in loan funds 1.5 15.0 -15.0 0.0



Others 527.0 481.6 0.0 0.0

CF from financing activities -312.8 -432.7 -944.3 -929.3

Net Cash flow 2,119.8 -167.0 -905.9 -529.9

Opening Cash 1,377.3 3,497.1 3,330.0 2,424.1

Closing Cash 3,497.1 3,330.0 2,424.1 1,894.2




Liabilities

Equity Capital 397.1 397.1 397.1 397.1



Total Debt 33.1 48.1 33.1 33.1

Deferred Tax Liability 1,454.5 977.3 154.5 -345.5


Assets

Gross Block 12,357.6 12,847.3 13,857.3 15,507.3


Net Block 5,722.0 5,663.6 6,159.6 7,281.0

Capital WIP 397.9 610.0 800.0 350.0


Investments 11,844.7 11,813.8 11,844.7 11,844.7

Inventory 1,052.5 1,277.8 1,017.0 1,431.0

Debtors 308.0 470.3 348.1 398.3

Loans and Advances 1,668.2 1,763.3 2,370.7 2,255.6

Other Current Assets 126.9 258.0 143.4 165.0

Cash 3,497.1 3,330.0 2,424.1 1,894.2


Creditors 2,519.8 2,403.1 2,842.0 3,162.2

Provisions 636.6 745.8 511.6 569.2







Per share data (|)

Adjusted EPS 6.3 7.5 7.5 7.9

Cash EPS 9.2 10.2 10.1 10.5

BV 100.6 105.8 108.6 111.8

DPS 3.6 4.0 4.0 4.0

Cash Per Share 17.6 16.8 12.2 9.5


EBITDA Margin 18.6 16.7 19.0 19.1

PAT Margin 12.0 13.1 12.3 12.2

Inventory days 34.8 34.8 34.8 34.8

Debtor days 10.6 10.6 10.6 10.6

Creditor days 85.3 85.3 85.3 85.3

Return Ratios (%)

RoE 8.6 11.3 10.0 10.6

RoCE 11.3 11.4 14.9 16.1

RoIC 10.4 10.5 13.6 14.0


P/E 30.2 23.3 25.4 24.1

EV / EBITDA 12.6 12.5 10.6 9.9

EV / Net Sales 3.3 3.0 2.9 2.8



Solvency Ratios

Debt/EBITDA 0.0 0.0 0.0 0.0

Debt / Equity 0.0 0.0 0.0 0.0


Quick Ratio 1.0 1.2 1.2 1.1





Financial Summary - ACC




Growth (%) 20.1 12.0 8.9 5.6

Raw material 1966.0 2332.5 2697.4 2827.4

Power & Fuel 2716.9 3000.8 3321.4 3509.9

Employees 821.4 883.6 857.8 921.7

Freight 3433.8 3992.8 4157.8 4257.7

Others 2434.7 2543.8 2661.4 2796.0


EBITDA 1,558.3 1,724.0 2,068.2 2,329.7

Growth (%) 24.0 10.6 20.0 12.6

Depreciation 643.6 603.2 602.3 661.6

Interest 98.5 87.8 84.6 109.1

Other Income 483.0 466.8 632.9 696.2

Exceptional items 0.0 0.0 0.0 0.0

PBT 1,299.1 1,499.8 2,014.3 2,255.2

Total Tax 385.6 -10.5 661.1 699.1

PAT 924.4 1,520.7 1,363.9 1,565.5

Adjusted PAT 924.4 1,520.7 1,363.9 1,565.5

Growth (%) 32.6 64.5 -10.3 14.8

EPS (|) 49.2 80.9 72.6 83.3




Profit after Tax 924.4 1,520.7 1,363.9 1,565.5


(Inc)/dec in Current Assets -812.7 -209.7 -603.9 48.5

Inc/(dec) in CL and Prov. 752.6 224.4 709.4 -193.1


(Inc)/dec in Investments 1,595.2 -1,600.0 -1,000.0 -1,000.0

(Inc)/dec in Fixed Assets -416.6 -506.5 -500.0 -500.0

Others -26.3 0.0 0.0 0.0

CF from investing activities 1,152.2 -2,106.5 -1,500.0 -1,500.0


Inc/(dec) in loan funds 0.0 0.0 0.0 0.0



Others 366.2 0.0 0.0 0.0

CF from financing activities -209.9 -681.5 -835.4 -835.4

Net Cash flow 2,450.2 -649.4 -263.7 -252.8

Opening Cash 278.4 2,728.6 2,079.2 1,815.5

Closing Cash 2,728.6 2,079.2 1,815.5 1,562.7




Liabilities

Equity Capital 188.0 188.0 188.0 188.0



Total Debt 70.0 70.0 70.0 70.0

Other Liabilities 554.4 554.4 554.4 554.4


Assets

Gross Block 14,315.5 14,794.7 14,584.7 15,834.7


Net Block 7,264.5 7,147.0 6,334.7 6,923.1

Capital WIP 269.3 290.0 1,000.0 250.0


Investments+Goodwill 110.4 1,710.4 2,710.4 3,710.4

Debtors 666.0 595.4 778.1 671.9

Loans and Advances 2,389.2 2,533.2 2,826.6 2,831.8


Cash 2,728.6 2,079.2 1,815.5 1,562.7


Creditors 4,203.1 4,277.2 4,956.7 4,791.6

Provisions 662.4 812.7 842.6 814.6







Per share data (|)

EPS 49.2 80.9 72.6 83.3

Cash EPS 83.5 113.0 104.6 118.5

BV 497.9 542.6 570.7 609.6

DPS 26.0 31.0 38.0 38.0

Cash Per Share 145.2 110.7 96.6 83.2


EBITDA Margin 12.1 11.9 13.1 14.0

PAT Margin 7.1 10.5 8.7 9.4

Inventory days 37.1 37.1 37.1 37.1

Debtor days 16.0 15.9 15.9 15.9

Creditor days 106.9 106.9 106.9 106.9

Return Ratios (%)

RoE 9.9 14.9 12.7 13.7

RoIC 13.1 16.4 24.8 25.1


P/E 29.3 17.8 19.8 17.3

EV / EBITDA 15.7 13.6 11.0 9.4

EV / Net Sales 1.9 1.6 1.4 1.3



Solvency Ratios

Debt/EBITDA 0.0 0.0 0.0 0.0

Debt / Equity 0.0 0.0 0.0 0.0


Quick Ratio 0.9 0.9 0.9 0.9





Financial Summary – Ramco Cement




Growth (%) 11.6 16.8 13.3 16.8


Employee Expenses 304.0 329.5 369.0 396.7

Power, Oil & Fuel 729.1 1057.3 1090.9 1265.7

Freight cost 1135.4 1411.5 1490.9 1751.3

Other Expenses 595.2 688.1 769.7 894.2


EBITDA 1,099.4 1,036.5 1,402.1 1,664.8

Growth (%) -6.5 -5.7 35.3 18.7

Depreciation 292.2 298.5 379.4 456.8

Interest 59.2 50.9 109.9 148.0

Other Income 36.6 28.4 25.0 25.0

PBT 784.7 715.6 937.7 1,085.1

Total Tax 229.0 209.7 273.8 325.5

PAT 555.7 505.9 663.9 759.6

Adjusted PAT 555.7 505.9 663.9 759.6

Growth (%) -14.4 -9.0 31.2 14.4

EPS (|) 23.5 21.5 28.2 32.2




Profit after Tax 555.7 505.9 663.9 759.6


(Inc)/dec in Current Assets 121.6 -197.8 -86.8 -245.5

Inc/(dec) in CL and Provisions 54.7 184.9 183.4 256.0

CF from operating activities 1,063.5 977.4 1,327.6 1,496.5

(Inc)/dec in investment 28.8 23.9 25.0 25.0

(Inc)/dec in Fixed Assets -465.0 -1,050.0 -1,600.0 -680.0

CF from investing activities -436.3 -1,026.0 -1,575.0 -655.0

Issue/(Buy back) of Equity -112.1 0.0 0.0 0.0

Inc/(dec) in loan funds -311.7 461.8 545.0 -350.0


Interest paid -59.2 -50.9 -109.9 -148.0

CF from financing activities -625.9 198.0 223.0 -710.0

Opening Cash 118.1 119.4 268.8 244.4

Closing Cash 119.4 268.8 244.4 375.9




Liabilities

Equity Capital 23.6 23.6 23.6 23.6



Total Debt 1,113.2 1,575.0 2,120.0 1,770.0

Deferred Tax Liability 759.7 952.1 1,078.8 1,259.8

Non Current Liabilities 21.4 17.9 18.5 19.5


Assets

Gross Block 8,237.4 8,237.4 10,037.4 11,717.4


Net Block 5,085.4 4,786.9 6,207.5 7,430.7

Capital WIP 174.9 1,200.0 1,000.0 0.0


Investments 396.8 401.3 401.3 401.3

Inventory 559.9 654.2 687.0 802.2

Debtors 442.3 516.6 543.2 634.3

Loans and Advances 31.1 36.0 40.8 47.7


Cash 119.4 268.8 244.4 375.9


Creditors 267.1 311.6 353.1 412.3

Other Current Liability 886.9 1,027.3 1,169.2 1,366.0


Net Current Assets 304.1 491.8 395.5 551.8





Per share data (|)

Adjusted EPS 23.5 21.5 28.2 32.2

Cash EPS 35.8 34.1 44.3 51.6

BV 170.8 184.0 203.2 226.4

DPS 6.0 9.0 9.0 9.0

Cash Per Share 5.0 11.4 10.4 16.0


EBITDA Margin 25.0 20.1 24.0 24.4

PAT Margin 12.6 9.8 11.4 11.2

Inventory days 46.4 46.4 43.0 43.0

Debtor days 36.6 36.6 34.0 34.0

Creditor days 22.1 22.1 22.1 22.1

Return Ratios (%)

RoE 13.7 11.7 13.9 14.2

RoCE 10.4 8.1 9.7 10.8

RoIC 10.3 9.8 11.1 11.1


P/E 29.6 32.4 24.7 21.6

EV / EBITDA 16.0 17.2 13.1 10.8

EV / Net Sales 4.0 3.5 3.2 2.6



Solvency Ratios

Debt/EBITDA 1.0 1.5 1.5 1.1

Debt / Equity 0.3 0.4 0.4 0.3


Quick Ratio 0.7 0.7 0.6 0.6





Exhibit 49: ICICI Direct coverage universe (Cement)

Company CMP M Cap

(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

ACC* 1,440 1,765 HOLD 27,063 81 73 83 13.6 11.0 9.4 108 105 101 14.7 18.5 19.6 14.9 12.7 13.7

Ambuja Cem* 190 205 HOLD 37,727 8.1 7.5 7.9 18.2 15.4 14.6 124 122 120 11.4 14.9 16.1 11.3 10.0 10.6

UltraTech Cem 3,850 5,350 BUY 105,644 89 141 171 18.9 13.4 11.0 218 175 171 9.7 13.4 15.5 8.8 12.3 13.1

Shree Cement 17,560 23,500 BUY 61,109 318 513 660 24.2 17.2 14.4 179 141 137 11.5 17.8 20.2 11.5 16.1 17.5

Heidelberg Cem 188 220 HOLD 4,260 9.7 11.3 13.1 10.3 8.7 7.8 134 126 111 21.8 24.7 25.2 20.5 20.7 20.8

India Cement 72 95 HOLD 2,201 2.2 7.9 8.5 9.0 6.4 6.0 58 62 65 4.5 7.2 7.5 1.3 4.5 4.6

JK Cement 980 1,150 BUY 6,853 42.0 58.6 65.7 10.3 8.8 7.4 105 103 102 12.5 13.3 14.3 11.2 13.9 13.9

JK Lakshmi Cem 325 425 BUY 3,827 6.8 23.5 27.7 12.2 7.0 6.0 63 60 57 5.2 15.7 15.7 5.2 15.7 15.7

Mangalam Cem 250 280 HOLD 667 -3.7 33.0 35.5 22.1 5.1 4.5 48 46 41 3.2 16.7 16.2 -2.0 14.9 13.9

Star Cement 94 105 HOLD 3,920 7.2 6.8 8.3 8.3 8.7 7.2 134 135 91 18.9 16.6 18.2 17.3 15.3 16.1

Ramco Cement 696 950 BUY 16,570 21.5 28.2 32.2 17.2 13.1 10.8 178 157 146 8.1 9.7 10.8 11.7 13.9 14.2

Sagar Cement 556 800 BUY 1,134 6.7 25.7 34.1 10.7 7.9 7.5 50 51 56 6.4 9.7 10.2 1.6 5.4 6.2

EV/EBITDA (x) EV/Tonne ($) RoE (%)RoCE (%)EPS(|)





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Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

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Cement - Annual Report AnalysisSeptember 05, 2019content.icicidirect.com/mailimages/IDirect_CementSector_AnnRepAn… · remained at 44.4% reflecting efficient plant utilisations vs