Result Update

August 5, 2015
Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

JK Cement (JKCEME)

Hold
| 710
9-12 months
7%

Poor sales realisations hit profitability

Whats changed?
Target
EPS FY16E
EPS FY17E
Rating

Changed from | 650 to | 710

Changed from | 25.0 to | 23.4
Changed from | 42.1 to | 40.5
Unchanged

Quarterly performance
Q1FY16
Revenue
EBITDA
EBITDA (%)
PAT

Q1FY15

810.7
84.4
10.4
0.2

| 662

YoY (%)

Q4FY15 QoQ (%)

801.4
1.2
98.5
(14.3)
12.3 -188 bps
38.0
(99.6)

911.4
(11.0)
159.1
(47.0)
17.5 -705 bps
69.8
(99.8)

JK Cements Q1FY16 revenues increased a mere 1.2% YoY to | 810.7

crore (below I-direct estimate of | 932.2 crore) led by pricing pressure in
the north and south regions (especially Maharashtra). Average
realisation for the quarter declined 3.3% YoY while volumes during the
quarter grew 4.6% YoY due to capacity expansion
The blended EBITDA/tonne declined 18.1% YoY to | 466/tonne (below Idirect estimate of | 739/tonne) mainly due to a poor pricing
environment coupled with higher RM & employee cost per tonne. White
cement EBITDA/tonne also declined 7.3% YoY to | 2,410/tonne
The company reported a net loss of | 1.1 crore at the PBT level led by a
weak operating performance, higher interest cost and depreciation
expenses. However, due to tax credit of | 1.3 crore, the company
reported a net profit of | 16 lakh
Commissioning of new capacity to drive revenue growth

Key financials
| Crore

FY14

FY15

FY16E

FY17E

Net Sales

2,783.6

3,337.3

3,924.1

4,692.4

EBITDA
Net Profit

360.6

444.0

555.1

717.7

91.0

156.9

164.0

283.1

13.0

22.4

23.4

40.5

FY17E

EPS (|)

Valuation summary
FY14

FY15

FY16E

P/E

50.9

29.5

28.2

16.4

Target P/E

49.5

28.7

27.5

15.9

EV/EBITDA

18.2

15.2

11.8

9.2

EV/Tonne($)

135

96

93

100

P/BV
RoNW (%)

2.6
5.2

2.8
9.5

2.6
9.1

2.2
13.5

RoCE (%)

5.5

7.3

9.7

12.5

The company has expanded its cement capacity by 3.0 MT in North India
during Q2FY15. Further, JK Cement also commissioned the grey cum white
cement plant with an installed capacity of 0.6 MTPA (white cement) and 1.02
MTPA (grey cement) in Fujairah (UAE), which would start providing full
benefit once demand improves. With stabilisation of this expanded capacity,
we expect the growth momentum to continue and project revenue CAGR of
over 18.6% in FY15-17E.
Demand environment in south to improve; Maharashtra a concern
Total 30% of the companys current capacity is in Karnataka (i.e. 3.0 MT), in
the southern region. The companys major markets in the south are
Maharashtra (with more than 50% share) while the balance quantum is sold
in Karnataka and Kerala. During the quarter, the southern region witnessed a
decline in realisation on a QoQ basis led by pricing pressure in Maharashtra.
However, going forward, we expect demand in Karnataka and Kerala to gain
traction post monsoons leading to better realisations in H2FY16E.
New efficient plants to help improve margins, going forward

Stock data
Amount

Particular
Mcap

| 4629 Crore

Debt (FY15)

| 2539 Crore

Cash & Invest (FY15)

| 408 Crore

EV

| 6760 Crore
| 754 / 395

52 week H/L
Equity cap

| 69.9 crore

Face value

| 10

Price performance
1M

3M

6M

12M

Heildelberg Cem

0.5

4.2

-17.1

17.3

India Cement

-1.8

1.9

-13.9

-10.4

JK Cement

1.2

5.7

-2.1

75.0

JK Lakshmi Cem

-2.9

-6.3

-12.9

36.9

Research Analyst
Rashesh Shah
rashes.shah@icicisecurities.com
Devang Bhatt
devang.bhatt@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

The new expanded capacity of 3 MT has stabilised, which is more efficient

than older plants. During the quarter, the company utilised the new capacity
at optimum levels while the older three kilns remained partly closed due to
lower demand. This has helped the company to reduce power consumption
by ~10 units. Further, railway siding at these newer capacities coupled with
grid connection at the UAE plant by September 2015 would help the
company to improve margins, going ahead.
Near term challenges to remain; maintain HOLD
With incremental cash generation from new capacity, we expect debt levels
to peak out in FY15. However, a domestic slowdown in demand would likely
drag overall profitability of the company during H1FY16. At the CMP of
| 662, the stock is trading at 11.8x its FY16E and 9.2x its FY17E EV/EBITDA,
respectively. On an EV/tonne basis, the stock is trading at $100 on FY17E
capacity of 11.7 MT. Although we remain positive on the company from a
longer-term perspective, moderation in domestic demand and slowdown in
GCC remain near term concerns. Hence, we maintain HOLD rating with a
revised target price of | 710/share (i.e. at 10x FY17E EV/EBITDA, $105/tonne
on FY17E capacity (11.7 MT).

Variance analysis
Q1FY16 Q1FY16E

Q1FY15

Total Operating Income

Other Income
Raw Material Expenses
Employee Expenses
Stock Adjustments

810.7
17.3
143.9
59.8
11.3

932.2
18.8
141.9
57.4
0.0

801.4
15.7
114.9
48.3
15.9

1.2
10.6
25.3
23.8
NA

911.4
23.7
150.4
58.2
-12.6

-11.0
-26.8
-4.3
2.8
NA

Power & Fuel

178.6

219.6

194.2

-8.0

207.5

-13.9

Freight cost
Others
EBITDA
EBITDA Margin (%)

177.5
155.2
84.4
10.4

202.8
164.2
146.3
15.7

177.5
0.0
152.1
2.1
98.5
-14.3
12.3 -188 bps

66.3
36.6
-1.1
-1.3

69.0
42.4
53.7
9.5

40.3
28.5
45.3
7.3

64.2
28.4
-102.4
-117.4

68.6
37.6
76.6
6.7

-3.5
-2.7
-101.4
-118.9

0.2

44.2

38.0

-99.6

69.8

-99.8

Interest
Depreciation
PBT
Total Tax
PAT
Key Metrics
Volume (MT)

1.81

Realisation (|)
4,476
EBITDA per Tonne (|)
466
Source: Company, ICICIdirect.com Research

Comments

YoY (%) Q4FY15 QoQ (%)

195.2
-9.1
153.6
1.1
159.1
-47.0
17.5 -705 bps

1.98

1.73

4.6

1.91

-5.3

4,711
739

4,630
569

-3.3
-18.1

4,767
832

-6.1
-44.0

Cement volume growth of 4.6% YoY was backed by capacity expansion. However,
realisation declined 3.3% YoY led by pricing pressure in North and west

Employee expenses increased due to capacity expansion

Power and fuel expenses declined due to a fall in pet coke prices and decline in
power unit consumption led by utilisation of efficient plants
Freight cost was flat YoY and down QoQ due to a reduction in lead distance from 650
km to 600 km

EBITDA margin declined due to a fall in realisation and higher employee cost
The increase in interest expenses was mainly led by higher debt for capacity
expansion

Poor operating performance, higher interest expenses and increase in depreciation

led to lower PAT

Volume growth was mainly led by YoY increase in grey cement volumes
The decline in realisation was due to increased competition in northern region
EBITDA/tonne declined 18.1% YoY led by decline in realisation

Change in estimates
(| Crore)

Old

FY16E
New

% Change

Old

FY17E
New

% Change

Revenue
EBITDA

4,199.6
589.1

3,994.2
555.1

-4.9
-5.8

4,839.4
749.0

4,692.4
717.7

-3.0
-4.2

14.0

13.9

-13 bps

15.5

15.3

-18 bps

174.7
25.0

164.0
23.4

-6.1
-6.1

294.4
42.1

283.1
40.5

-3.8
-3.8

EBITDA Margin (%)

PAT
EPS (|)

Comments
We have revised our FY16E revenue estimates downwards due to
near term pressure on pricing. However, we expect pricing to
improve post Q3FY15 led by higher government spends on
infrastructure
We expect EBITDA margins to improve in FY17E led by lower
freight cost (due to split grinding unit) and cost rationalisation
High depreciation and interest cost to keep PAT under pressure

Source: Company, ICICIdirect.com Research

Assumptions

Volume (MT)
Realisation (|)
EBITDA per Tonne (|)

FY13

FY14

Current
FY15 FY16E

FY17E

Earlier
FY15 FY16E

FY17E

6.4
4,569
869

6.2
4,517
585

7.2
4,659
620

9.5
4,946
757

7.2
4,659
620

9.5
5,073
785

8.4
4,658
659

8.6
4,796
684

Comments
We expect volume growth to be mainly driven by capacity expansion in the
north
We expect realisation to improve post Q3FY15
We expect EBITDA/tonne to improve led by cost efficiency

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
Capacity expansion to drive growth
The company has expanded its cement capacity by 3.0 MTPA through two
split grinding units (1.5 MTPA each), one at Mangrol (Rajasthan) and another
at Jhajjar (Haryana). The total project cost is estimated at | 1730 crore, which
includes a 25 MW coal-based thermal power plant, a 9 MW waste heat
recovery-based power plant and also a railway siding at both units. Apart
from this, the company has installed a grey cum white cement plant with an
installed capacity of 0.6 MTPA (white cement) and 1.02 MTPA (grey cement)
in Fujairah (UAE), which would start providing once the demand starts
improving. With these expansions coupled with demand improvement, we
expect revenue CAGR of over 18.6% during FY15-17E.
Demand environment in south to improve; Maharashtra a concern
Total 30% of the companys current capacity is in Karnataka (i.e. 3.0 MT), in
the southern region. The companys major markets in South are
Maharashtra (with more than 50% share), while balance quantum is sold in
Karnataka and Kerala. During the quarter, the southern region witnessed a
decline in realisation on QoQ basis led by pricing pressure in Maharashtra.
However, going forward, we expect demand in Karnataka and Kerala to gain
traction post monsoon leading to better realisations in H2FY16E.
White cement Strong hold in domestic market
JK Cement has 0.6 MTPA of white cement capacity. With only two major
players manufacturing white cement, the other being UltraTech Cement,
coupled with relatively stable white cement demand, white cement
commands around three times the realisation fetched by grey cement..

Realisation (|)

15000
10000

11592
11196
10874
10725
10332 27.9 10545
26.5
26.2
25.9
25.5
25.2
18.6

5000

3669

15.9
3851

3584
7.5

3812
8.3

3894
10.3

3733
10.1

0
FY12

FY13

FY14

FY15

FY16E

35
30
25
20
15
10
5
0

EBITDA Margin (%)

Exhibit 1: White cement & grey cement comparative analysis of realisation, margin trends

FY17E

White Cement (LHS)

Grey Cement (LHS)

Grey Cement (RHS)

White Cement (RHS)

Source: Company, ICICIdirect.com Research

New efficient plants to help in cost rationalisation

The new expanded capacity of 3 MT has stabilised and the company is
expected to reap its benefits in the coming quarters. The company is
utilising the new capacity at 100% while the older three kilns are either
closed or unutilised due to low demand. This has helped the company to
reduce power consumption by 10 units. Further, railway siding at these
newer capacities is expected to reduce freight cost. This coupled with grid
connection at UAE plant by September 2015 will help the company to
improve profitability by ~| 6 crore per quarter.

ICICI Securities Ltd | Retail Equity Research

Page 3

Expect revenue CAGR of 18.6% during FY15-17E

Revenues have grown at 12.5% CAGR during FY11-15 where volume has
grown at a CAGR of 7.0% with realisation also growing at a CAGR of 5.1%.
Going forward, with capacity expansion of 3.0 MT and 0.6 MT white cement
expansion, we expect expansion led revenue CAGR of 18.6% during FY1517E. We expect volume CAGR of 15.1% during FY15-17E. We expect the
realisation to grow annually at 3.0% on account of better realisation in south.
Exhibit 2: Expect expansion led revenue CAGR of 18.6% during FY15-17E
5000
4000
(|)

3000
2000
1000

2538

2904

2784

719

858

3924

3337

1169

4692
1503

1827

2081

370

438

1992

2185

1926

2396

3190

1642

2755

1457
FY10

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

546

941

Grey Cement Sales (| crore)

White Cement Sales (| crore)

Sales (| crore)

Source: Company, ICICIdirect.com Research

Exhibit 3: Capacity addition plans

Grey Cement
Nimbahera
Mangrol
Gotan
Muddapur
Total
White Cement
Gotan
Total
Grey Cemnet Expansion plan
Mangrol
Jhajjar
Total (after expansion)
International Expansion plan
Habhab, Tawian Fujariah

State

Region

MT

Rajasthan
Rajasthan
Rajasthan
Karnataka

North
North
North
South

3.3
0.8
0.5
3.0
7.5

Rajasthan

North

0.6
0.6

Rajasthan
Haryana

North
North

1.5
1.5
10.5

Country
UAE

0.6 white or 1 grey

Source: Company, ICICIdirect.com Research

0.68

0.8

7.2

1.04

1.30

4000

0.88

6.0

4.6

4.0

0.31

2.0

4.3

5.1

5.4

5.7

5.4

6.3

FY10

FY11

FY12

FY13

FY14

FY15

5000

3963

3815

4074

4659

4658

FY16E

0.35

6.2

4517

FY15

0.33

6.4

4569

FY14

5.5

5.8

6000

7.4

2000
1000

0.0

White Cement Volume

FY16E FY17E

Total Sales Volumes

Blended Realisation (|/tonne) -LS

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Exhibit 6: Volume grows 4.6% YoY in Q1FY16

Exhibit 7: Realisations declined 3.3% YoY in Q1FY16

0.2

1.0
1.3

1.5

0.2

0.2

0.2

1.3

1.3

1.3

1.91 1.81
1.73 1.73 1.77 1.75
0.23 0.21
0.2 0.19 0.23 0.23

5000
4500

1.5 1.55 1.52 1.68 1.61

4000
3500
3000

1.5

4485 4589

4260 4405

Growth (%) -RS

4773 4630 4669

4767
4560
4476

White Cement Volume

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q2FY14

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q2FY14

Q1FY14

Q4FY13

Q3FY13

Grey Cement Volume

Q1FY14

2500
2000

0.0

Q4FY13

0.5

0.2

1.43 1.47 1.53

|/tonne

Million Tonne

1.5

1.45

1.71

FY17E

Grey Cement Volume

2.0

14
12
10
8
6
4
2
0
-2
-4
-6

4946

3000
8.2

FY12

Million Tonne

8.0

9.5

FY13

8.4

FY11

10.0

Exhibit 5: Realisation to grow at 3.0% CAGR during FY15-17E

FY10

Exhibit 4: Volume to grow at 15.1% CAGR during FY15-17E

Blended Realisation-LHS

Source: Company, ICICIdirect.com Research

Page 4

Margins to improve, going forward

With expanded capacity now in place, the company should be able to benefit
from economies of scale. White cement commands better margins than grey
cement. Hence, we expect blended margins to improve, going forward,
despite concerns over the high cost environment. Focus on two regions
along with enough captive power also bodes well for the company towards
improving margins.
Exhibit 8: Expect EBITDA/tonne of | 757 in FY17E
1200
1000

953

877

869
585

484

659

620

757
(%)

800
600

Exhibit 9: Higher contribution of white cement to aid in margin expansion

400
200
0
FY10

FY11

FY12

FY13

FY14

35
30
25
20
15
10
5
0

24.0

19.0

FY11

13.3

13.0

12.7

FY10

FY15 FY16E FY17E

20.0

FY12

FY13

FY14

FY15

15.3

14.1

FY16E FY17E

Blended EBITDA Margin (%)

Blended EBITDA/Tonne

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Exhibit 10: Q1FY16 grey cement EBITDA/tonne at | 218

Exhibit 11: EBITDA/tonne of white cement declines 7.3% YoY in Q1FY16

White Cement EBITDA/tonne(|)

Grey Cement EBITDA Margin (%)

Source: Company, ICICIdirect.com Research

(%)

2410

3103

2819

2651

2601

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q2FY14

Q1FY14

20
Q4FY13

Q1FY16

Q4FY15

Q3FY15

Q2FY15

-5

30
25

1500
0

Grey Cement EBITDA/tonne (|)

2955

|/tonne

(%)

218

10

3000

2745

4500

15

35
2433

6000

20

2804

25

3085

519
228

179

315

625

`
Q1FY15

-67
Q2FY14

Q1FY14

-100

Q4FY13

100

Q4FY14

113

300

Q3FY14

500

343

White Cement EBITDA Margin(%)

Source: Company, ICICIdirect.com Research

Expect net profit CAGR of 34% during FY15-17E

After witnessing a sharp decline in profit in FY14, we expect net margins to
improve to 6.0% in FY17E from 3.3% in FY14. Overall, we expect net profit
to grow at CAGR of 34% to | 283.1 crore during FY15-17E.
Exhibit 12: Profitability trend
500

| crore

400
300

20
12.4

6.0
7.0

200
100

225.7

3.1
64.1

0
FY10

FY11

177.3

8.0
233.6

3.3

156.9

91.0
FY12

Net profit - LS

FY13

FY14

10

4.2

4.7

15

283.1
164.0

5
0

FY15

FY16E

FY17E

Net profit margin -RS

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

(%)

|/tonne

700

468

900

Outlook and valuation

With incremental cash generation from new capacity, we expect the debt
level to peak out in FY15. Further, we expect the freight cost to decline led
by split grinding unit and railway sliding. However, a domestic slowdown in
demand would likely drag overall profitability of the company during
H1FY16. At the CMP of | 662, the stock is trading at 11.8x its FY16E and 9.2x
its FY17E EV/EBITDA, respectively. On an EV/tonne basis, the stock is trading
at $100 on FY17E capacity of 11.7 MT. Although we remain positive on the
company from a longer-term perspective, moderation in domestic demand
and slowdown in GCC remain near term concerns. Hence, we maintain
HOLD rating with a revised target price of | 710/share (i.e. at 10x FY17E
EV/EBITDA, $105/tonne on FY17E capacity (11.7 MT).
Exhibit 13: Key assumptions
| per tonne

FY12

FY13

FY14E

FY15E

FY16E

5.8

6.4

6.2

7.2

8.4

9.5

Net Realisation

4390

4569

4517

4659

4658

4946

Total Expenditure

3514

3701

3927

4039

3985

4190

EBITDA per Tonne

877

869

590

620

672

757

Sales Volume (mtpa)

FY17E

Source: ICICIdirect.com Research

EV

12.4x

10.4x

8.5x

6.5x

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

8000
7000
6000
5000
4000
3000
2000
1000
0
Jul-07

(| Crore)

Exhibit 14: One year forward EV/EBITDA

2.5x

Source: Company, ICICIdirect.com Research

Exhibit 15: One year forward EV/tonne

1500
1250
Million $

1000
750
500
250

EV

$120

$100

$80

$60

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

Jul-07

$20

Source: Company, ICICIdirect.com Research

Exhibit 16: Valuations

FY14
FY15
FY16E
FY17E

Sales Growth
(Rs cr)
(%)
2783.6
-4.1
3337.3
19.9
3924.1
17.6
4692.4
19.6

EPS
(Rs)
13.0
22.4
23.4
40.5

Growth
(%)
-61.0
72.3
4.5
72.6

PE
(x)
50.9
29.5
28.2
16.4

EV/EBITDA
(x)
18.2
15.2
11.8
9.4

EV/Tonne
($)
135.1
96.3
93.4
99.5

RoNW
(%)
5.2
9.5
9.1
13.5

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoCE
(%)
5.5
7.3
9.7
12.5

Company snapshot
800
Target Price: 710

700
600
500
400
300
200
100

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Oct-09

Jul-09

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Feb-09

Event
Government announces excise duty cut of 2% to boost cement sales

Oct-09

The company inaugurated first plant in south, coming out of its existing northern and western markets

Oct-10

Impacted by all-time high coal and petcoke prices, company reports lowest ever EBITDA margin of 1.3%

Mar-12

The company expands its white putty production capacity from 1 lakh tonne to 3 lakh tonne. White cement constitutes ~20% of total revenue for the company with
high EBITDA margin of more than 25% compared to grey cement EBITDA margin of 15% to 20%
The government proposes to raise excise duty on the building material from 10% to 12% against expectations of a cut in the same

Mar-12
Jun-12
Oct-13
Mar-14

The CCI imposes a fine of 50% of annual profit for the fiscal year ending 2010 and 2011, a total of | 6000 crore on 11 cement companies including JK Cement (|
128.5 crore) for alleged cartelisation
Revenue contribution from white cement reached 33% in Q2FY14. During the quarter, grey cement reported negative EBITDA while white cement reported ~22%
EBITDA margin, thus proving to be a face saviour for the company
The company is expanding its total grey cement capacity from current 7.5 MTPA to 10.5 MTPA and further capacity of 0.6 MTPA of white cement in UAE. The
production from expanded capacity is expected to start from Q2FY15

Jun-14

Jk Cement commenced grey cement production at Jharli, Haryana having grey cement grinding capacity of 1.5 MT

Sep-14

Jk Cement commissioned 1.5 MT grey cement plant at Mangrol, Rajasthan

Source: Company, ICICIdirect.com Research

Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10

Name
Yadu International, Ltd.
Singhania (Yadupati)
Juggilal Kamlapat Holding, Ltd.
Franklin Templeton Asset Management (India) Pvt. Ltd.
Fidelity Management & Research Company
HDFC Standard Life Insurance Company Limited
Templeton Asset Management Ltd.
Singhania (Kavita Y)
Singhania (Sushila Devi)
General Insurance Corporation of India

Shareholding Pattern
Latest Filing Date
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15
30-Jun-15

% O/S Position (m) Change (m)

32.40
22.7
0.0
20.42
14.3
0.0
10.34
7.2
0.0
4.99
3.5
0.0
4.29
3.0
0.4
3.68
2.6
0.0
3.63
2.5
0.0
1.86
1.3
0.0
1.32
0.9
0.0
1.07
0.8
0.0

(in %)
Promoter
FII
DII
Others

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15

66.93 66.93 66.93 66.93 66.93
12.84
9.87 10.04 10.61 10.95
8.86
8.79
9.53
9.86
9.71
11.37 14.41 13.50 12.60 12.41

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
Fidelity Management & Research Company
Birla Sun Life Asset Management Company Ltd.
HDFC Standard Life Insurance Company Limited
Franklin Templeton Asset Management (India) Pvt. Ltd.
Kotak Mahindra Asset Management Company Ltd.

Value
4.14m
0.46m
0.22m
0.21m
0.11m

Shares
0.39m
0.05m
0.02m
0.02m
0.01m

Sells
Investor name
Singhania (Gaur Hari)
IDFC Asset Management Company Private Limited
HSBC Global Asset Management (India) Private Limited
L&T Investment Management Limited
BNP Paribas Asset Management India Pvt. Ltd.

Value
-11.06m
-1.79m
-0.59m
-0.39m
-0.26m

Shares
-1.03m
-0.18m
-0.06m
-0.06m
-0.03m

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Financial summary
Profit and loss statement

| Crore

(Year-end March)
Total operating Income

Cash flow statement

FY14

FY15

FY16E

FY17E

2,783.6

3,337.3

3,924.1

4,692.4

-4.1

19.9

17.6

19.6

Growth (%)

| Crore

(Year-end March)

FY14

Profit after Tax

FY15

FY16E

FY17E

91.0

156.9

164.0

283.1

Add: Depreciation

140.0

136.6

154.4

187.2

-112.7

-55.5

97.8

-543.1

66.9

89.4

36.3

77.4

185.2

327.4

452.4

4.6

Raw material cost

424.6

556.3

698.4

787.2

(Inc)/dec in Current Assets

Employee Expenses

167.8

202.5

259.5

302.6

Inc/(dec) in CL and Provisions

Power, Oil & Fuel

673.9

793.5

836.8

1041.7

Freight cost

633.4

734.4

838.9

970.5

(Inc)/dec in Investments

0.0

0.0

-1.0

-1.0

(Inc)/dec in Fixed Assets

-1,082.8

-251.2

-250.0

-200.0

-110.8

-3.6

0.0

0.0

-1,193.6

-254.8

-251.0

-201.0

Other Expenses
Total Operating Exp.
EBITDA

CF from operating activities

523.3

606.7

735.4

872.8

2,423.0

2,893.3

3,369.0

3,974.7

360.6

444.0

555.1

717.7

CF from investing activities

Issue/(Buy back) of Equity

Others

Growth (%)

-34.7

23.1

25.0

29.3

Depreciation

140.0

136.6

154.4

187.2

Inc/(dec) in loan funds

Interest

152.6

219.5

259.2

224.6

Dividend paid & dividend tax

62.2

71.2

70.1

66.6

0.0

0.0

0.0

0.0

130.3

159.1

211.6

372.5

Other Income
Exceptional items
PBT

0.0

0.0

0.0

0.0

1,053.4

256.6

-200.0

-200.0

-21.0

0.0

0.0

0.0

Inc/(dec) in Sec. premium

0.0

0.0

0.0

0.0

Others

-9.0

-268.8

0.0

0.0

1,023.4

-12.2

-200.0

-200.0

CF from financing activities

Total Tax

39.2

2.2

47.7

89.4

Net Cash flow

15.0

60.3

1.4

-396.4

PAT

91.0

156.9

164.0

283.1

Opening Cash

332.5

347.6

407.9

409.3

Growth (%)

-61.0

72.3

4.5

72.6

Closing Cash

347.6

407.9

409.3

12.9

Adjusted EPS (|)

13.0

22.4

23.4

40.5

Source: Company, ICICIdirect.com Research

FY14

FY15

FY16E

FY17E

FY15

FY16E

FY17E

69.9

69.9

69.9

69.9

Adjusted EPS

13.0

22.4

23.4

40.5

1,688.5

1,576.6

1,740.6

2,023.7

Cash EPS

33.0

42.0

45.5

67.3

251.5

235.5

258.9

299.4

3.0

0.0

0.0

0.0

49.7

58.3

58.5

1.9

13.0

13.3

14.1

15.3

3.3

4.7

4.2

6.0

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(Year-end March)

Key ratios

Equity Capital
Total Shareholders funds

1,758.5

1,646.5

1,810.5

2,093.6

BV

Total Debt

2,282.3

2,538.9

2,338.9

2,138.9

DPS

268.5

279.8

279.8

279.8

Deferred Tax Liability

Minority Interest / Others
Total Liabilities

FY14

Per share data (|)

Liabilities
Reserve and Surplus

(Year-end March)

0.0

0.0

0.0

0.0

4,309.3

4,465.3

4,429.3

4,512.3

Cash Per Share

Operating Ratios (%)
EBITDA Margin
PAT Margin

Assets
3,153.4

4,314.5

4,505.7

4,855.7

Inventory days

65.8

57.5

43.0

44.0

841.9

978.5

1,132.9

1,320.1

Debtor days

14.6

15.2

12.0

12.0

Net Block

2,311.5

3,336.0

3,372.8

3,535.6

Creditor days

97.7

89.5

75.0

68.0

Capital WIP

1,102.0

191.2

250.0

100.0

Total Fixed Assets

3,413.5

3,527.2

3,622.8

3,635.6

RoE

5.2

9.5

9.1

13.5

1.1

2.0

2.0

2.0

RoCE

5.5

7.3

9.7

12.5

Investments

299.5

314.5

315.5

316.5

RoIC

7.7

8.0

10.6

12.1

Inventory

542.0

509.8

414.8

716.5

Valuation Ratios (x)

Debtors

111.7

139.4

129.0

154.3

P/E

50.9

29.5

28.2

16.4

Loans and Advances

387.5

447.5

455.1

671.1

EV / EBITDA

18.2

15.2

11.8

9.4

Cash

347.6

407.9

409.3

12.9

EV / Net Sales

2.4

2.0

1.7

1.4

1,388.7

1,504.6

1,408.2

1,554.9

Market Cap / Sales

1.7

1.4

1.2

1.0

745.1

818.5

806.3

874.2

Price to Book Value

2.6

2.8

2.6

2.2

Gross Block
Less: Acc Depreciation

Intangible Asset

Total Current Assets

Creditors

Return Ratios (%)

48.4

64.5

112.9

122.4

Solvency Ratios

Total Current Liabilities

793.5

882.9

919.2

996.6

Debt/EBITDA

6.3

5.7

4.2

3.0

Net Current Assets

595.2

621.6

489.0

558.3

Debt / Equity

1.3

1.5

1.3

1.0

4,309.3

4,465.3

4,429.3

4,512.4

Current Ratio

1.8

1.7

1.5

1.6

Quick Ratio

1.3

1.2

1.1

1.5

Provisions

Application of Funds

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

ICICIdirect.com coverage universe (Cement)

Company
ACC*
Ambuja Cement*
UltraTech Cem
Shree Cement^
Heidelberg Cem
India Cement
JK Cement
JK Lakshmi Cem
Mangalam Cem
SFCL

CMP
(|)
TP(|)
1388
1560
229
248
3157
3650
11459 11,200
71
80
91
92
662
710
350
402
264
277
156
266

*CY13, CY14E, CY15E CY16E

Rating
Hold
Hold
Buy
Hold
Buy
Hold
Hold
Buy
Buy
Buy

M Cap
(| Cr)
26,297
35,644
87,122
39,936
1,632
2,857
4,629
4,120
716
3,510

EV/EBITDA (x)
FY15 FY16E FY17E
19.8
14.3
11.2
16.2
17.0
13.8
23.2
16.9
13.0
30.1
23.4
19.8
9.4
11.7
9.2
8.2
6.8
5.7
15.2
11.8
9.4
16.0
13.2
9.6
13.4
8.3
6.1
9.5
7.2
5.2

EV/Tonne ($)
FY15 FY16E FY17E
135
115
112
164
160
150
240
203
195
325
268
244
84
84
82
60
59
58
96
93
96
141
100
89
53
52
52
194
189
132

FY15
8.3
14.0
11.0
6.1
7.2
6.7
7.3
7.8
5.7
12.8

RoCE (%)
FY16E
9.7
11.2
14.0
9.3
5.3
8.8
9.7
8.7
9.5
20.5

FY17E
11.8
12.0
17.2
10.7
7.5
10.6
12.5
11.6
13.2
27.3

FY15
14.1
14.8
10.7
8.8
6.8
0.8
9.5
7.2
4.6
13.3

RoE (%)
FY16E
10.0
11.4
12.7
11.6
3.6
3.0
9.1
13.8
7.3
16.8

^JY14,JY15E,JY16E,JY17E

ICICI Securities Ltd | Retail Equity Research

Page 9

FY17E
12.4
12.0
15.1
12.7
6.9
5.4
13.5
14.4
11.1
23.0

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 10

ANALYST CERTIFICATION
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Page 11