JK Lakshmi

May 29, 2014
ICICI Securities Ltd | Retail Equity Research

Result Update

Higher vol ume resul ts in better quarter
The company reported 21% YoY growth in revenue at | 648.2 crore
(vs. I-direct estimate of | 535.8 crore)
Higher revenue was a result of strong volume growth (up 18% YoY
to 1.69 MT) led by capacity expansion (1.3 MT) and healthy demand
while realisation grew 2.5% YoY to | 3,834/tonne during the quarter
EBITDA margin for the quarter declined marginally by 50 bps YoY
mainly due to higher P&F and employee costs on a per tonne basis
Higher sales volume and a marginal decline in EBITDA/tonne (0.4%
YoY to | 663/tonne) have led to 58.5% YoY increase in PAT at | 52.9
crore while adjusted PAT increased 43.7% YoY to | 71.4 crore
One of the most efficient players in cement midcap space
JK Lakshmi Cement is one of the best cost efficient players in the
industry. It has been operating at close to ~100% capacity utilisation for
the last three years with healthy operating margins vs. industry. Its cost
efficiency emanates from high usage of alternate fuel (pet coke), logistic
advantage led by expansion strategy through split grinding unit and self
sufficiency in power. Its per tonne power consumption remains best in
the industry with utilisation of 73 Kwhr/tonne against industry norms of
90-95 Kwhr/tonne. Its fuel consumption is also lower at 726 KCal/kg for
the company against industry norms of 800 KCal/kg. The company also
has more than 100% low cost power availability for its plants. Due to the
combined effect of operational efficiency and lower power costs, P&F cost
has been lower for the company.
Healthy expansion plans to fuel growth in future
We expect JK Lakshmi to report healthy revenue CAGR of over 21% in
the next two years led by capacity expansion and healthy demand in the
northern region (to add 3.4 MT capacity i.e. 56% of its existing capacity
over next two years) coupled with operating efficiency leading to better
volume growth and higher profitability. The companys ongoing
greenfield project at Durg is expected to come on stream by Q2FY15E.
Apart from this, the company is expanding its grinding capacity by 7.0
lakh tonne per annum in Gujarat. Both projects are expected to be
complete by end of FY15E, FY16E, respectively, leading to total capacity
of 9.3 MT in FY15E & 10.0 MT by FY16E from current capacity of 6.6 MT.
Expect D: E to remain in comfort zone despite aggressive expansion
We expect net debt equity ratio to remain in the comfortable zone (i.e.
below 1.0x) despite the aggressive expansion undertaken by the
company. As per our estimates, we expect the company to generate free
operating cash flow of over | 1000 crore over the next two year, which
will be sufficient to fund the balance pending capex.
Timely commissioning of new capacity remains key value driver
On the back of timely expansion, we expect volume CAGR of 18.3% (vs.
~9.3% during FY11-14) in FY14-16E to 7.8 MT. We expect cement
EBITDA of | 596/tonne in FY15E and | 620/tonne in FY16E vs. | 534/tonne
in FY14 due to favourable demand-supply matrix in North India. Further, a
strong balance sheet and better efficiency in terms of cost remain key
positives for this company. We roll over our valuation base to FY16E and
upgrade our target price to | 225/share with a BUY rating on the stock (i.e.
at 7.5x FY16E EV/EBITDA, $61/tonne on FY16E capacity of 10.0 MT).
JK Lakshmi Cement (JKCORP) | 188

Rating matrix
Rating : Buy
Target : | 225
Target Period : 12-15 months
Potential Upside : 20%

Whats changed?
Target Changed from | 77 to | 225
EPS FY15E Changed from |9.0 to |10.3
EPS FY16E Introduced at | 16.4
Rating Unchanged

Quarterly performance
Q4FY14 Q4FY13 YoY (%) Q3FY14 QoQ (%)
Revenue 648.2 535.8 21.0 502.6 29.0
EBITDA 112.1 95.3 17.6 63.4 76.7
EBITDA (%) 17.3 17.8 -50 bps 12.6 467 bps
PAT 52.9 33.4 58.5 14.1 275.5

Key financials
| Crore FY13 FY14 FY15E FY16E
Net Sales 2054.9 2056.6 2387.7 3048.0
EBITDA 428.7 302.0 377.1 487.5
Net Profit 175.7 93.0 121.4 193.4
EPS (|) 14.9 7.9 10.3 16.4

Valuation summary
FY13 FY14 FY15E FY16E
P/E 12.6 23.8 18.2 11.4
Target P/E 15.1 28.5 21.8 13.7
EV/EBITDA 6.9 10.9 8.8 6.7
EV/Tonne($) 92 82 59 54
P/BV 1.8 1.7 1.5 1.4
RoNW (%) 13.9 7.1 8.3 12.0
RoCE (%) 11.5 6.1 6.9 9.5

Stock data
Amount
Mcap | 2091 crore
Debt (FY14) | 1446 crore
Cash & Invest (FY13) | 35 crore
EV | 3163 crore
52 week H/L | 190 / | 49
Equity cap | 274.2 crore
Face value | 10
Particular

Price performance
1M 3M 6M 12M
Heildelberg Cem. 24.8 50.1 40.3 20.7
India Cement 32.0 66.7 59.9 32.6
JK Cement 40.3 103.7 81.0 44.4
JK Lakshmi Cem. 49.1 121.6 160.4 70.6

Analyst
Rashesh Shah
rashes.shah@icicisecurities.com
Darpan Thakkar
darpan.thakkar@icicisecurities.com

Page 2
Variance analysis
Q4FY14 Q4FY14E Q4FY13 YoY (%) Q3FY14 QoQ (%) Comments
Net Sales 648.2 554.5 535.8 21.0 502.6 29.0
Healthy revenue growth for the quarter mainly led by high volume growth supported
by capacity expansion of 1.3 MT and coupled with supply constraint in the region of
operations of the company
Other Incomes 24.5 15.0 23.4 4.5 8.2 199.5
Raw Material Expenses 98.4 95.2 89.0 10.6 90.1 414.6
Employee Expenses 32.7 30.5 26.3 24.4 30.3 7.9
Change in stock 31.4 0.0 24.7 27.2 4.6 589.5
Power and fuel 114.1 109.3 88.4 29.1 104.4 9.3
Per tonne P&F cost has increased 9.4% YoY due to increased cost of pet coke during
the quarter
Freight 134.0 126.0 118.2 13.3 120.4 11.3 Freight cost on per tonne basis has declined due to lower lead distance
Others 125.6 99.8 93.9 33.8 89.5 40.4
EBITDA 112.1 93.7 95.3 17.6 63.4 76.7
EBITDA Margin (%) 17.3 16.9 17.8 -50 bps 12.6 467 bps
Higher P&F cost and employees cost has led to a decline in margins during the
quarter
Interest 18.9 19.1 18.2 3.8 19.1 -1.2
Depreciation 31.0 41.1 49.4 -37.3 34.7 -10.8
Less: Exceptional Items 18.5 NA 16.3 13.3 0.0 NA
Company reported exceptional loss, which represents provision made by it against
old duties/cess in respect of earlier years for matters under litigation
PBT 68.2 48.4 34.8 96.1 17.7 284.2
Total Tax 15.2 12.3 1.4 1004.3 3.7 317.5
PAT 52.9 36.2 33.4 58.5 14.1 275.5
Better revenue growth along with margin expansion led to healthy growth in
profitability
Adjusted PAT 71.4 36.2 49.7 43.7 14.1 406.8
Key Metrics
Volume (MT) 1.69 1.49 1.43 18.0 1.29 31.2
Volume increase is led by capacity expansion as well as good demand in the
northern region due to supply constraint
Realisation (|) 3,834 3,734 3,739 2.5 3,482 10.1
EBITDA per Tonne (|) 663 436 665 -0.4 436 51.8
In the absence of any substantial increase in realisation and higher per tonne cost,
EBITDA/tonne remained flat YoY

Source: Company, ICICIdirect.com Research

Change in estimates
(| Crore) Old New % Change Old New % Change Comments
Revenue 2,212.8 2,451.7 10.8 NA 3,112.0 NA
We build in higher capacity taking into account timely commissioning of Durg
expansion
EBITDA 373.9 377.1 0.8 NA 487.5 NA
EBITDA Margin (%) 16.9 15.4 -152 bps NA 15.7 NA
We lower EBITDA margin forecast to take into account the impact of commissioning
of new capacity
PAT 105.8 121.4 14.7 NA 193.4 NA
EPS (|) 9.0 10.3 14.7 NA 16.4 NA Net EPS to remain higher than previous estimates due to better topline growth
FY15E FY16E


Assumptions
Comments
FY13 FY14 FY15E FY16E FY15E FY16E
Volume (MT) 5.3 5.6 6.3 7.9 6.8 NA
We expect revenue CAGR of 18.2% during FY14-16E led by capacity expansion of
3.4 MT
Realisation (|) 3,889 3,661 3,774 3,879 3,961 NA We build in realisation growth of 3% on per annum basis
EBITDA per Tonne (|) 808 537 596 620 699 NA
We expect moderate growth in EBITDA/tonne taking into account the impact of
new capacity on operating costs
Current Earlier


Page 3
Company Analysis
Presence in better performing markets
JK Lakshmi has a strong presence in North India with a dominant position
in Rajasthan. Other states where the company has a presence include
Haryana, Delhi, Punjab and Uttaranchal in the North. In the western part
also, the company has a healthy presence in Gujarat and has made
inroads in the Mumbai markets as well. Sales wise, Gujarat contributes
highest of ~34% of sales while Rajasthan contributes 23% and the
contribution from the rest of the northern region is at ~35%. Maharashtra
contributes ~8% to the topline.
Cost effective operational efficiency
JK Lakshmi has been one of the most cost effective players in the
industry. The company has gradually shifted from coal usage to low cost
pet coke. This also avoids uncertainty about coal availability. As a result,
fuel consumption has reduced gradually. The company has 100% captive
power capacity with 54 MW of thermal power plant and 12 MW of waste
heat recovery. Other than this, the company has an external arrangement
with VS Lignite for sourcing 21 MW. Effectively, the company has captive
power availability of 87 MW against current requirement ~65 MW. The
available surplus power can be sold in the open market by the company.
Exhibit 1: Gradual reduction in power & fuel consumption
762 763
746
742
738
726 79
78
75
73
80
79
650
700
750
800
FY09 FY10 FY11 FY12 FY13 FY14
K
C
a
l
/
K
g
60
70
80
90
K
w
h
/
M
T
Fuel Consumption (Kcal/Kg of Clinker) Electricity (Kwh/T)


Exhibit 2: Lower P&F costs than industry
695
674
761
633
846
769
652
759
807
759
908
1,015
986
911
0
200
400
600
800
1,000
1,200
FY07 FY08 FY09 FY10 FY11 FY12 FY13
|

/

T
o
n
n
e
JK Laxmi Cement Industry


Due to combined effect of a shift in fuel components and
captive power plants, P&F cost has been lower for the
company
Capacity spread
North
(excluding
Rajasthan
)
35%
Maharash
tra
8%
Gujarat
34%
Rajasthan
23%

Page 4
Operates at healthy utilisation in industry
Due to the companys strong focus on northern and western regions
where the demand is continuously rising, the company has been able to
maintain higher utilisation even in a difficult business environment.
During FY12 and FY13, the company reported over 100% capacity
utilisation while in FY14 the company managed to maintain an effective
capacity utilisation of nearly 98% despite the slowdown in the economy.

Exhibit 3: Higher utilisation levels
93
100
85
97 96
103
101
91
88
84
81
75
79 79
0
20
40
60
80
100
120
FY07 FY08 FY09 FY10 FY11 FY12 FY13
(
%
)
JK Lakshmi Industry


Strong balance sheet with manageable D/E ratio even after expansion
In terms of debt: equity ratio, the company has consistently managed it
below 1.0 in recent years. We expect net D/E ratio to remain in a
comfortable zone (i.e. below 1.0x) despite the aggressive expansion
undertaken by the company. As per our estimates, we expect the
company to generate free operating cash flow of over | 1000 crore over
the next two years, which will be sufficient to fund the balance pending
capex.

Exhibit 4: Manageable D/E ratio
708 703
922
1025
1100
1175
1446
1571
1496
1.1
0.8
0.9
1.0
0.9 0.9
1.1
1.1
0.9
0
500
1000
1500
2000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
|

C
r
o
r
e
0.5
0.8
1.0
1.3
1.5
Debt (| Crore) (LHS) D/E (RHS)

Source: Company, ICICIdirect.com, Research

Exhibit 5: Capacity expansion plans (Standalone)
3.4 3.7
4.8 4.8 4.8
5.3 5.3
6.6
9.3
10.0
0
2
4
6
8
10
12
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
M
i
l
l
i
o
n

T
o
n
n
e
Capacity(MT)


Page 5
Expect revenue CAGR of 21.7% in FY14-16E led by capacity expansion
and pick-up in demand
The companys revenue has grown at a CAGR of 8.4% during FY10-14 led
by realisation CAGR of 3.0% and volume CAGR of 5.2% during the same
period. Going forward, with an expected recovery in demand along with
additional capacity of 3.4 MT, we expect revenue CAGR of 21.7% during
FY14-16E. We expect volume to grow at a CAGR of 18.3% during FY14-
16E while realisation is expected to grow at 3% on an annual basis.

Exhibit 6: Expect expansion led revenue CAGR of 21.7% during FY14-16E
1491
1317
1711
2053 2057
2388
3048
-
500
1,000
1,500
2,000
2,500
3,000
3,500
FY10 FY11 FY12 FY13 FY14 FY15E FY16E
Sales (| crore)


Exhibit 7: Capacity addition plans
State Region MT
Current Capacity
Rajasthan North 4.6
Gujarat West 0.7
Haryana North 1.3
Total Current Capacity 6.6
Addition
Haryana East 1.7
Odisha East 1.0
Total Capacity by FY15E 9.3
Gujarat West 0.7
Rajasthan (Subsidiary) West 1.6
Total Consolidated Capacity by FY16E 11.6


Exhibit 8: Volume to grow at CAGR of 18.3% during FY14-16E
4.59
4.30
4.89
5.28
5.62
6.33
7.86
0.00
2.00
4.00
6.00
8.00
10.00
Sales Volumes


Exhibit 9: Realisation to pick up from FY15 led by recovery in demand
3062
3498
3889
3661
3774
3879
0
1000
2000
3000
4000
5000
FY11 FY12 FY13 FY14 FY15E FY16E
-10
0
10
20
30
40
Realisation (|/tonne) -LS Growth (%) -RS


Exhibit 10: Q4FY14 revenue growth remains robust due to higher sales
volumes (up 18% YoY)
1.4
1.4
1.2
1.3
1.4
1.2
1.3
1.4
1.7
0.0
0.5
1.0
1.5
2.0
Q
4
F
Y
1
2
Q
1
F
Y
1
3
Q
2
F
Y
1
3
Q
3
F
Y
1
3
Q
4
F
Y
1
3
Q
1
F
Y
1
4
Q
2
F
Y
1
4
Q
3
F
Y
1
4
Q
4
F
Y
1
4
I
n

M
T
-25
-15
-5
5
15
25
(
%
)
Sales volume -LHS Growth (%) -RHS


Exhibit 11: Q4FY14 realisation increases 2.5% YoY
3
7
1
7
3
8
5
1
4
0
6
4
3
9
3
4
3
7
3
9
3
7
4
5
3
4
8
2
3
5
4
4
3
8
3
4
0
1000
2000
3000
4000
5000
Q
4
F
Y
1
2
Q
1
F
Y
1
3
Q
2
F
Y
1
3
Q
3
F
Y
1
3
Q
4
F
Y
1
3
Q
1
F
Y
1
4
Q
2
F
Y
1
4
Q
3
F
Y
1
4
Q
4
F
Y
1
4
-15
-5
5
15
25
(
%
)
Realisation (|) -LHS Growth (%) -RHS


Page 6
Margins to improve but low capacity utilisation of new capacity to limit its
expansion
Despite an expected recovery in demand, we expect the companys
operating margins to improve progressively given the initial higher
operating cost post commissioning of new capacities.

Exhibit 12: Expect EBITDA/tonne of |620 in FY15E
925
431
656
808
537
596
620
0
200
400
600
800
1000
EBITDA/Tonne


Exhibit 13: Margins to improve led by improvement in utilisation
28.5
14.1
18.8
20.9
14.7
15.8 16.0
10.0
15.0
20.0
25.0
30.0
(
%
)
EBITDA Margin (%)


Exhibit 14: Q4FY14 EBITDA per tonne remains flat YoY
799
878
925
782
665
576
436 447
663
0
200
400
600
800
1000
Q
4
F
Y
1
2
Q
1
F
Y
1
3
Q
2
F
Y
1
3
Q
3
F
Y
1
3
Q
4
F
Y
1
3
Q
1
F
Y
1
4
Q
2
F
Y
1
4
Q
3
F
Y
1
4
Q
4
F
Y
1
4
EBITDA/Tonne (|)


Exhibit 15: Margins decline 50 bps YoY
21.2 21.5
22.8 22.8
19.9
17.8
15.4
12.5 12.6
17.3
0
5
10
15
20
25
Q
3
F
Y
1
2
Q
4
F
Y
1
2
Q
1
F
Y
1
3
Q
2
F
Y
1
3
Q
3
F
Y
1
3
Q
4
F
Y
1
3
Q
1
F
Y
1
4
Q
2
F
Y
1
4
Q
3
F
Y
1
4
Q
4
F
Y
1
4
(
%
)
EBITDA Margin


Expect net profit CAGR of 44% during FY14-16E
After witnessing a sharp decline in profit in FY14, we expect net margins
to improve to 6.3% in FY16E from 4.5% in FY14. Overall, we expect net
profit to grow at a CAGR of 44% during FY14-16E.

Exhibit 16: Profitability trend
241
59
109
176
93
121
193
16.2
4.5
6.4
8.5
4.5
5.1
6.3
0
50
100
150
200
250
|

c
r
o
r
e
3
5
7
9
11
13
15
17
(
%
)
Net profit - LS Net profit margin -RS


Page 7

Outlook and valuation
With the commissioning of new capacity at Durg, Udaipur and Jhajjar the
company will have a total standalone cement capacity of over 10.0 MT by
the end of FY16E. However, the full benefit of the Durg expansion would
start accruing only from H2FY15E. Considering this, we expect cement
volumes to grow at ~18.3% CAGR during FY14-16E to 7.9 MT in FY16E
from 5.6 MT in FY14.
At the CMP of | 176, the stock is trading at 17.1x and 10.7x its FY15E and
FY16E earnings, respectively. The stock is trading at an EV/EBITDA of 8.4x
and 6.4x FY15E and FY16E EBITDA, respectively, as against average
trailing multiple of 8.5x. This leaves scope for appreciation over the
longer term despite a sharp rally in stock prices over the past two
months. Given the upcoming new capacity from FY15E, we expect
growth in profitability to remain healthy over the next two years. We roll
over our valuation base to FY16E and upgrade our target price to
| 225/share (i.e. at 7.5x FY16E EV/EBITDA, $61/tonne on FY16E capacity
of 10.0 MT).

Exhibit 17: Assumptions
| per tonne FY12 FY13 FY14 FY15E FY16E
Sales Volume (mtpa) 4.9 5.3 5.6 6.3 7.9
Net Realisation 3498 3889 3661 3774 3879
Total Expenditure 2842 3081 3123 3178 3258
Stock Adjustment 1 32 5 0 0
Raw material 525 639 644 655 670
Power & Fuel 846 769 751 757 773
Employees 201 214 219 211 220
Freight 677 798 813 845 856
Others 592 628 692 710 740
EBITDA per Tonne 656 808 537 596 620


Page 8

Exhibit 18: One year forward EV/EBITDA
0
1000
2000
3000
4000
J
u
n
-
0
6
F
e
b
-
0
7
O
c
t
-
0
7
J
u
n
-
0
8
F
e
b
-
0
9
O
c
t
-
0
9
J
u
n
-
1
0
F
e
b
-
1
1
O
c
t
-
1
1
J
u
n
-
1
2
F
e
b
-
1
3
O
c
t
-
1
3
(
|

C
r
o
r
e
)
EV 8.4x 7.6x 6.1x 5.2x 3.9x


Exhibit 19: One year forward EV/tonne
0
200
400
600
J
u
n
-
0
6
F
e
b
-
0
7
O
c
t
-
0
7
J
u
n
-
0
8
F
e
b
-
0
9
O
c
t
-
0
9
J
u
n
-
1
0
F
e
b
-
1
1
O
c
t
-
1
1
J
u
n
-
1
2
F
e
b
-
1
3
O
c
t
-
1
3
M
i
l
l
i
o
n

$
EV $71 $62 $53 $44 $35


Exhibit 20: Valuations
Sales Growth EPS Growth PE EV/EBITDA EV/Tonne RoNW RoCE
(| cr) (%) (|) (%) (x) (x) ($) (%) (%)
FY13 2054.9 20.1 14.9 68.0 12.6 6.9 92 13.9 11.5
FY14 2056.6 0.1 7.9 -47.1 23.8 10.9 82 7.1 6.1
FY15E 2387.7 16.1 10.3 30.5 18.2 8.8 59 8.3 6.9
FY16E 3048.0 27.7 16.4 59.3 11.4 6.7 54 12.0 9.5


Page 9

Company snapshot
Target Price: 225
0
50
100
150
200
250
J
a
n
-
0
8
A
p
r
-
0
8
J
u
l
-
0
8
O
c
t
-
0
8
J
a
n
-
0
9
A
p
r
-
0
9
J
u
l
-
0
9
O
c
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-
0
9
J
a
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-
1
0
A
p
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-
1
0
J
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l
-
1
0
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c
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-
1
0
J
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-
1
1
A
p
r
-
1
1
J
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-
1
1
O
c
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-
1
1
J
a
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-
1
2
A
p
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-
1
2
J
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l
-
1
2
O
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-
1
2
J
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-
1
3
A
p
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-
1
3
J
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-
1
3
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c
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-
1
3
J
a
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-
1
4
A
p
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-
1
4
J
u
l
-
1
4
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c
t
-
1
4
J
a
n
-
1
5
A
p
r
-
1
5

Source: Bloomberg, Company, ICICIdirect.com Research
Key events
Date News/Event
Jul-08 The company commenced work on the 2.7 million tonne (MT) greenfield cement plant at Durg, Chhattisgarh at an investment of over | 1,100 crore. The plant is
scheduled to be commissioned by 2011
Feb-09 Government announces excise duty cut of 2% to boost cement sales
Mar-11 The company completes the setting up of 18 MW power plant and 12 MW green power project, through waste heat recovery
Apr-11 The company registers de-growth of ~ 12% in sales and ~6% in volume due to subdued demand. However, capacity utilisation for the company stood at 91%, much
higher than industry trend of ~75%
Feb-12 Stock surges as board approves buyback of equity shares up to | 97.5 crore at maximum price of | 70/share (i.e 1.39 crore shares)
Mar-12 The government proposes to raise excise duty on the building material from 10% to 12% against the expectations of a cut in the same
Apr-12 The company reports one of the best quarterly results in recent times with 39% YoY increase in net sales due to a sharp increase in cement demand after the
monsoon season. Net profit increased 10 times compared to the previous year on the back of a lower base and higher margin expansion
Apr-13 Expansion plant at Durg got delayed by four to six months to Q1FY15 from Q4FY14 as projected earlier due to damage caused to properties by local villagers. The
expected loss from this damage works out to ~| 140 crore, which was fully covered by insurance
Mar-14 The company increased its stake in Udaipur Cement Works (UCWL) from 27.72% to 75.46% with the allotment of fresh equity shares worth | 78 crore, thereby
making UCWL a subsidiary company
Apr-14 Company increased its capacity from 5.3 MTPA in FY13 to 6.6 MTPA by FY14 via brownfield expansion and de-bottlenecking at existing plants
May-14 With the commissioning of the 2.7 MTPA plant in eastern region, the company will have a standalone capacity of 9.3 MTPA by Q3FY15

Top 10 Shareholders Shareholding Pattern
Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Yadu International, Ltd. 31-Mar-14 32.40 22.7 0.0
2 Singhania (Yadupati) 31-Mar-14 18.94 13.3 0.0
3 Juggilal Kamlapat Holding, Ltd. 31-Mar-14 10.34 7.2 0.0
4 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-Mar-14 6.83 4.8 2.3
5 Capital Research Global Investors 31-Mar-14 3.90 2.7 0.0
6 Fidelity Management & Research Company 31-Mar-14 3.66 2.6 -0.1
7 Templeton Asset Management Ltd. 31-Dec-13 3.63 2.5 0.1
8 Singhania (Kavita Y) 31-Mar-14 1.86 1.3 0.0
9 Singhania (Gaur Hari) 31-Mar-14 1.48 1.0 0.0
10 General Insurance Corporation of India 31-Mar-14 1.34 0.9 0.0

(in %) Mar-13 Jun-13 Sep-13 Dec-13 Mar-14
Promoter 66.71 66.74 66.93 66.93 66.93
FII 10.85 10.80 11.23 12.11 12.37
DII 10.08 10.29 10.38 9.79 9.56
Others 12.36 12.17 11.46 11.17 11.14

Source: Reuters, ICICIdirect.com Research
Recent Activity
Investor name Value Shares Investor name Value Shares
Franklin Templeton Asset Management (India) Pvt. Ltd. 9.04m 2.26m Reliance Capital Asset Management Ltd. -2.71m -0.72m
IDFC Asset Management Company Private Limited 2.55m 0.68m DSP BlackRock Investment Managers Pvt. Ltd. -0.72m -0.17m
L&T Investment Management Limited 0.57m 0.14m BNP Paribas Investment Partners Netherlands N.V. -0.52m -0.11m
Templeton Asset Management Ltd. 0.32m 0.09m Fidelity Management & Research Company -0.42m -0.11m
Principal PNB Asset Management Company Ltd. 0.28m 0.08m Birla Sun Life Asset Management Company Ltd. -0.22m -0.07m
Buys Sells

Source: Reuters, ICICIdirect.com Research

Page 10
Financial summary

Profit and loss statement | Crore
(Year-end March) FY13 FY14 FY15E FY16E
Total operating Income 2,054.9 2,056.6 2,387.7 3,048.0
Growth (%) 20.1 0.1 16.1 27.7
Raw material 354.0 364.3 414.4 526.5
Power & Fuel 406.2 422.0 478.9 607.4
Employees 113.2 123.0 133.5 172.5
Freight 421.5 456.8 534.8 672.5
Others 331.3 388.5 449.2 581.5
Total Operating Exp. 1,626.2 1,754.6 2,010.7 2,560.5
EBITDA 428.7 302.0 377.1 487.5
Growth (%) 33.6 -29.6 24.9 29.3
Depreciation 148.9 135.2 167.6 191.3
Interest 83.5 77.2 117.8 112.2
Other Income 55.4 44.3 64.0 64.0
Exceptional items 16.3 18.5 0.0 0.0
PBT 235.3 115.4 155.6 248.0
Total Tax 59.6 22.4 34.2 54.6
PAT 175.7 93.0 121.4 193.4
Adjusted PAT 192.0 111.5 121.4 193.4
Growth (%) 26.5 -41.9 8.9 59.3
Adjusted EPS (|) 16.3 9.5 10.3 16.4

Cash flow statement | Crore
Profit after Tax 175.7 93.0 121.4 193.4
Add: Depreciation 148.9 135.2 167.6 191.3
(Inc)/dec in Current Assets 17.6 -1.8 196.5 -293.2
Inc/(dec) in CL and Provisions 208.3 99.5 127.2 311.8
CF from operating activities 550.6 325.9 612.7 403.4
(Inc)/dec in Investments 47.3 -41.3 -70.0 -70.0
(Inc)/dec in Fixed Assets -648.3 -552.4 -620.0 -250.0
Others -9.9 9.2 8.0 8.0
CF from investing activities -611.0 -584.5 -682.0 -312.0
Issue/(Buy back) of Equity -2.3 0.0 0.0 0.0
Inc/(dec) in loan funds 75.0 270.7 125.0 -75.0
Dividend paid -34.2 -23.5 -34.4 -34.4
Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0
Others -54.6 -26.0 64.9 0.0
CF from financing activities -16.1 221.2 155.5 -109.4
Net Cash flow -76.5 -37.4 86.2 -18.0
Opening Cash 149.1 72.6 35.2 121.4
Closing Cash 72.6 35.2 121.4 103.4


Balance sheet | Crore
Liabilities
Equity Capital 58.9 58.9 58.9 58.9
Reserve and Surplus 1,200.9 1,244.4 1,396.2 1,555.2
Total Shareholders funds 1,259.8 1,303.2 1,455.1 1,614.1
Total Debt 1,175.4 1,446.1 1,571.1 1,496.1
Deferred Tax Liability 113.4 122.6 130.6 138.6
Minority Interest / Others 0.0 0.0 0.0 0.0
Total Liabilities 2,548.5 2,871.9 3,156.8 3,248.8
Assets
Gross Block 2,966.6 3,409.0 4,039.0 4,464.0
Less: Acc Depreciation 1,203.9 1,339.1 1,506.7 1,698.0
Net Block 1,762.7 2,069.9 2,532.3 2,766.0
Capital WIP 300.0 410.0 400.0 225.0
Total Fixed Assets 2,062.7 2,479.9 2,932.3 2,991.0
Investments 375.7 338.9 338.9 338.9
Inventory 114.8 102.4 93.8 156.7
Debtors 50.1 55.5 42.6 82.7
Loans and Advances 436.9 445.7 270.6 460.9
Non current Investments 30.8 108.8 178.8 248.8
Cash 72.6 35.2 121.4 103.4
Total Current Assets 705.3 747.6 707.3 1,052.4
Creditors 551.2 653.1 733.7 1,003.2
Provisions 43.9 41.5 88.0 130.4
Total Current Liabilities 595.1 694.6 821.8 1,133.6
Net Current Assets 110.2 53.1 -114.5 -81.2
Application of Funds 2,548.5 2,871.9 3,156.8 3,248.8

Key ratios
Per share data (|)
Adjusted EPS 12.4 16.3 9.5 10.3
Cash EPS 27.6 19.4 24.6 32.7
BV 107.0 110.7 123.6 137.1
DPS 2.5 2.0 2.5 2.5
Cash Per Share 6.2 3.0 10.3 8.8
Operating Ratios (%)
EBITDA Margin 20.9 14.7 15.8 16.0
PAT Margin 8.5 4.5 5.1 6.3
Inventory days 20.9 19.3 15.0 15.0
Debtor days 7.9 9.4 7.5 7.5
Creditor days 80.2 106.9 106.0 104.0
Return Ratios (%)
RoE 13.9 7.1 8.3 12.0
RoCE 11.5 6.1 6.9 9.5
RoIC 15.5 8.0 9.1 11.5
Valuation Ratios (x)
P/E 10.8 18.6 17.1 10.7
EV / EBITDA 6.5 10.4 8.4 6.4
EV / Net Sales 1.4 1.5 1.3 1.0
Market Cap / Sales 1.0 1.0 0.9 0.7
Price to Book Value 1.6 1.6 1.4 1.3
Solvency Ratios
Debt/EBITDA 2.7 4.8 4.2 3.1
Debt / Equity 0.9 1.1 1.1 0.9
Current Ratio 1.1 0.9 0.6 0.7
Quick Ratio 1.0 0.9 0.5 0.6


Page 11

ICICIdirect.com coverage universe (Cement)
CMP M Cap
(|) TP(|) Rating (| Cr) FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E
ACC (ACC)* 1381 1,375 HOLD 25,954 23.7 19.9 17.9 17.1 15.5 12.5 127 126 114 10.0 10.2 12.0 14.0 15.1 15.4
Ambuja Cement (GUJAMB)* 220 215 HOLD 33,947 26.7 19.4 17.3 19.0 15.8 12.9 164 152 149 11.4 7.7 8.8 13.6 9.0 9.4
UltraTech Cem (ULTCEM) 2376 2,250 HOLD 65,138 30.4 25.1 20.9 18.1 13.9 11.7 193 172 151 11.9 14.4 15.8 12.5 13.2 13.8
Shree Cement (SHRCEM) 6987 6,180 HOLD 24,315 24.2 35.2 25.7 15.8 18.4 14.1 258 229 177 21.4 13.4 15.7 26.1 16.8 19.1
Heidelberg Cem (MYSCEM)* 56 58 BUY 1,270 41.2 0.0 23.6 29.1 10.8 8.8 78 66 65 -0.5 4.9 6.6 -4.9 6.3 5.3
India Cement (INDCEM)^ 97 50 HOLD 2,969 18.2 0.0 0.0 6.9 10.7 15.6 62 63 57 3.9 0.8 0.0 -0.9 -4.1 0.0
JK Cement (JKCEME) 345 370 BUY 2,415 10.3 26.5 11.9 6.0 12.1 7.5 93 67 66 5.5 9.6 13.6 5.2 10.4 14.2
JK Lakshmi Cem (JKCORP) 188 225 BUY 2,213 23.8 18.2 11.4 10.9 8.8 6.7 82 59 54 6.1 6.9 9.5 7.1 8.3 12.0
Mangalam Cem (MANCEM) 178 210 BUY 561 7.3 18.9 8.1 5.5 18.7 5.5 44 43 40 2.1 11.9 13.3 5.8 12.3 13.2
Sector / Company
RoE (%) P/E (x) EV/EBITDA (x) RoCE (%) EV/Tonne ($)

Page 12
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,
1
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Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai 400 093

research@icicidirect.com

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