Result Update

August 19, 2016

India Cement (INDCEM)

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Hold
| 145
12-15 months
10%

Focus shifts towards non-southern region

Whats changed?
Target
EPS FY17E
EPS FY18E
Rating

Changed from | 105 to | 145

Changed from | 5.7 to | 6.3
Changed from | 8.3 to | 8.5
Changed from Buy to Hold

Quarterly performance
Q1FY17* Q1FY16* YoY (%) Q4FY16* QoQ (%)
Revenue
1,052.5 1,074.3
-1.5 1,147.1
4.8
EBITDA
201.4
196.0
2.7
211.5
-4.8
EBITDA (%)
19.1
18.2 89 bps
18.4 70 bps
PAT
44.0
48.5
(9.4)
51.2
-14.1
* Adjusted for excise duty

Key financials
| Crore

FY15

FY16

FY17E*

FY18E*

Net Sales

4,418.8

4,377.1

5,068.6

5,426.5

EBITDA
Net Profit

677.8

782.4

864.2

971.9

29.4

135.6

194.7

260.2

EPS (|)
1.0
4.4
6.3
8.5
* FY17E and FY18E has been adjusted to factor in impact of IND AS

Valuation summary
FY15

FY16

FY17E*

FY18E*

P/E

136.8

29.7

20.7

15.5

Target P/E

147.2

31.9

22.2

16.6

EV/EBITDA

10.7

8.9

7.8

6.7

78

75

73

70

RoNW (%)

1.1
0.8

1.1
3.7

1.1
5.1

1.0
6.5

RoCE (%)

6.1

8.5

9.7

10.8

EV/Tonne($)
P/BV

Stock data
Amount

Particular
Mcap

| 4024 crore

Debt (FY16)

| 2955 crore

Cash & Invest (FY16)

| 1 crore

EV
52 week H/L

| 6978 crore
| 132 / 64

Equity cap

| 307.2 crore

Face value

| 10

Price performance
1M

| 131

3M

6M

12M

Heildelberg Cem

6.9

31.2

105.1

76.9

India Cement

7.8

38.8

75.6

49.5

JK Cement

12.0

36.0

78.9

23.2

JK Lakshmi Cem

13.0

31.3

72.6

24.8

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

ICICI Securities Ltd | Retail Equity Research

India Cements results are not directly comparable with our estimates
due to adoption of new accounting standard Ind-AS. During the quarter,
the company reported sales including excise duty of | 1202.5 crore.
Adjusting for excise duty, revenues declined 1.5% YoY to | 1,052.5
crore (below I-direct estimate of | 1,083.5) mainly due to 11.0% YoY
decline in realisation while volumes increased 10.1% YoY led by
volume push outside the southern region (mainly to Maharashtra)
Cement EBITDA/t dropped 3.7% YoY to | 857/tonne (vs. I-direct
estimate: | 725/t) led by pricing pressure in Andhra Pradesh-Telangana
Adjusted net profit declined 9.4% YoY to | 44.0 crore. However, it
remained above our estimates due to better-than-expected margins
Demand in AP-Telangana to remain soft in medium term
The demand in AP-Telangana has remained soft during the quarter. This also
had a negative impact on pricing. Although demand remains weak in AP at
present, we expect the same to improve given the sharp rise in tendering
activity in AP/Telangana. In addition, higher volume push to non southern
region (like Maharashtra) as visible in the current quarter, increase in
demand from individual house builders and housing scheme for poor in
Tamil Nadu, we expect volume growth to improve (albeit at cost of
realisation) over the next two years. Considering this, we expect volumes to
grow at 5.8% CAGR in FY16-18E.
Higher usage of pet coke, captive power plant to drive margins
India Cement (ICL) is one of the least efficient players in the industry. Its
power cost per tonne (| 1,247) was 25% higher than industry in FY15.
However, the company has taken initiatives to improve power & fuel cost by
increasing pet coke consumption to 34% of overall requirement. This has
helped reduce power cost per tonne by 12.5% YoY in FY16. Further, ICL is
planning to increase pet coke usage to 80%. Also, the company has installed
a captive power plant of 50 MW at Vishnupuram in Andhra Pradesh, which is
expected to stabilise from FY17E. The plant has helped the company
increase overall captive consumption to 70%. In addition, ICL is investing
| 250 crore in FY17E to improve efficiency of its cement plants. This coupled
with refinancing of debt (from 11.5% to 11.0%) will further boost margins.
Improving cash flow, reduction in debt a key positive
ICL has reduced its debt by ~ | 286 crore to | 2,955 crore mainly due to
improvement in margins and lower working capital outflow. Going forward,
we expect debt to further reduce by | 420 crore to | 2,535 crore in FY18E
mainly led by improving cash flow and working capital efficiency. Given this,
we expect Debt to Equity to improve from 0.8x in FY16 to 0.6x in FY18E.
Recent run up in stock offers limited upside; downgrade to HOLD
Going forward, we expect robust volume growth to be mainly led by higher
sales outside southern region. However, oversupply in southern region and
subdued realisation (mainly due to pricing pressure in Maharashtra, AP,
Telangana) is expected to limit revenue growth. Nevertheless, we expect
cost rationalisation led by better fuel mix, installation power plant in AP and
improving efficiency of plants to drive margins. Also, with improving cash
flow we expect debt to reduce in the next two years. Hence, we remain
positive on the stock from a long term perspective. However, recent run up
in stock offers limited upside. Hence, we downgrade the stock from BUY to
HOLD with a revised target price of | 145 (i.e. EV/EBITDA of 7x).

Variance analysis
Q1FY17* Q1FY17E Q1FY16*

Total Operating Income

Other Income
Raw Material Expenses
Employee Expenses
Stock Adjustment

1052.5
3.2
177.7
79.3
0.0

Power & Fuel

Freight cost
Others
EBITDA
EBITDA Margin (%)
Interest
Depreciation
PBT
Total Tax
PAT
Key Metrics
Volume (MT)
Net realisation (|)
Cement EBITDA per Tonne (|)

1083.5
7.0
172.6
87.4
0.0

Comments

YoY (%) Q4FY16* QoQ (%)

1074.3
4.4
171.0
91.0
13.3

-1.5 1,147.1
-26.8
7.0
3.9
199.2
-12.9
93.3
NA
-23.2

201.9
232.5
309.7
201.4
19.1
82.5
51.1
71.0
27.1
44.0

253.1
224.3
161.0
185.1
17.1
90.2
54.9
47.0
15.7
31.2

235.2
221.0
293.7
196.0
18.2
96.5
55.4
37.8
0.0
48.5

-14.2
5.2
5.4
2.7
89 bps
-14.6
-7.7
87.9
NA
-9.4

258.9
234.4
173.2
211.5
18.4
91.3
52.2
75.0
23.8
51.2

2.31

2.30

2.10

10.1

2.47

4,562
857

4,630
725

5,128
890

-11.0
-3.7

4,644
844

The decline in revenues was mainly due to pricing pressure in AP and Telangana
4.8 while volume increased 10.1% YoY due to volume push in non southern regions
-53.9
-10.8
-14.9
N.A
The decline in power & fuel cost on a YoY basis was due to higher pet coke usage
(coal:pet coke mix 60:40 vs. 34:66 in Q1FY15) and increase in captive power
-22.0 consumption (70:30)
-0.8 Increase in freight cost was due to increase in lead distance
78.8
-4.8
70 bps Margin improvement was mainly due to lower power & fuel cost
-9.7 Repayment of debt led to lower interest cost
-2.1 Fall in depreciation charge was due to a change in rate of depreciation
-5.3
13.8
-14.1 Higher tax expenses and lower other income led to fall in net profit

-6.6 Volume push in non-south regions led to higher volumes

-1.8 Pricing pressure in AP, Telangana and Maharashtra led to lower realisation
1.6

Source: Company, ICICIdirect.com Research, * adjusted for excise duty

Change in estimates
FY17E*

(| Crore)
Gross revenues
Excise duty
Revenue*
EBITDA

FY18E*

Old estimate
as per Ind AS
5,151.4
642.6

New
5,068.6
632.3

4,508.8
829.5

4,436.3
864.2

-1.6
4.2

16.1
174.5
5.7

17.1
194.7
6.3

95 bps
11.6
10.6

EBITDA Margin (%)

PAT
EPS (|)

Old estimate
% Change as per Ind AS
5,590.0
697.3

New
5,426.5
676.9

% Change

4,892.7
937.2

4,749.6
971.9

-2.9
3.7

16.8
256.4
8.3

17.9
260.2
8.5

114 bps
1.5
2.0

Comments

Margins are expected to stabilise at 17.9% in FY18E

Reduction in debt to positively impact PAT

Source: Company, ICICIdirect.com Research, *FY17E and FY18E has been adjusted to factor in impact of IND AS

Assumptions

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

FY13

FY14

FY15

Current
FY16

FY17E

FY18E

Earlier
FY17E FY18E

10.1
4,362

10.0
4,183

9.1
4,605

8.7
4,983

9.3
5,374

9.7
5,535

9.1
5,661

783

289

500

833

869

940

844

Comments

9.6 We expect volume to increase at a CAGR of 5.8% in FY16-18E

5,823
Expect EBITDA/tonne to improve to | 940 in FY18E from | 833 in
901 FY16

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis
Capacity spread
Rajasthan
10%

Maharastra
7%

Tamilnadu
38%

Andhra
Pradesh
45%

Largest manufacturer of cement in South India

India Cement is the largest cement manufacturer in the southern region with
an installed capacity of 13.1 MTPA in the southern region. While 1.1 MTPA of
capacity is in Maharashtra, 1.5 MTPA of capacity is in Banswara, Rajasthan.
Out of total revenue, ~85-90% of sales come from the southern region for
the company. Due to excess capacity in the southern region, the company is
vulnerable to the demand supply mismatch of the southern region. Going
ahead, after the resolution of the Telangana issue in the region, we expect
demand to improve from here on. However, given the additional capacity,
the utilisation level is unlikely to exceed ~70% till FY18E, which will limit the
volume growth for the company.
Exhibit 1: Demand supply dynamics of South India
Million tonnes

FY10
83.0

Effective Capacity

Sales mix
West
17%

East
4%

FY12
110.0

FY13
119.0

FY14P
123

FY15

FY16

101.5

FY11

140.0

144.0

Production

63.0

66.0

67.2

68.3

69

74.0

76.0

Capacity Utilisation (%)

75.9

65.0

61.1

57.4

56

52.9

52.8

Consumption

62.9

66.0

67.2

68.3

69

72.5

74.5

5.4

4.9

1.8

1.6

0.8

5.4

2.7

20.1

35.5

42.8

50.7

54

67.5

69.5

Consumption Growth(%)
Surplus/Deficit

Source: ICICIdirect.com Research

Telengana
12%
Kerala
10%

Tamil Nadu
and Andhra
prdesh
57%

Improving operating efficiency to drive margins

The company is one of the least efficient players in the industry. Its power
cost per tonne (| 1,247) was 20% higher than the industry in FY16. However,
ICL has taken initiatives to improve power and fuel cost by increasing pet
coke consumption to 34% of overall requirement, which has helped in
reducing power cost per tonne by 12.5% YoY in FY16. In addition, the
company has installed captive power plant of 50 MW at Vishnupuram in
Andhra Pradesh, which is expected to stabilise from FY17E. The plant will
cater to the requirement of cement plants in Andhra Pradesh. Further, ICL is
investing | 250 crore in FY17E to improve efficiency of its cement plants.

832
707

720
500

289

400

693

962
783

887
879
412

600

693

800
(|)

1,017
754

1,000

931
940

1,200

1,117
1,063

Exhibit 2: EBITDA/tonne compared to industry

200

India Cement

FY 16

FY 15

FY14

FY13

FY12

FY11

FY10

FY09

FY08

Industry

Source: Company, ICICIdirect.com Research

Improving cash flow and reduction in debt a key positive

ICL has reduced its debt by ~ | 286 crore to | 2,955 crore mainly due to
improvement in margins and lower working capital outflow. Going forward,
we expect debt to further reduce by | 420 crore to | 2,535 crore mainly led
by improving cash flow and working capital efficiency. Given this, we expect
debt to equity to improve from 0.8x in FY16 to 0.6x in FY18E.

ICICI Securities Ltd | Retail Equity Research

Page 3

Expect revenue CAGR of 11.3% in FY16-18E

Revenues have grown at 4.6% CAGR in FY11-16 while in FY12-14, growth
was lower at 2.8% led by a slowdown in AP coupled with higher cement
capacity. Going forward, with the resolution of the Telangana issue and a
strong focus towards infrastructure development by the government, we
expect gross revenue to grow at 11.3% CAGR in FY16-18E on account of an
improvement in capacity utilisation.
Exhibit 3: Expect revenue CAGR of 11.3% during FY16-18E

Exhibit 4: Capacity addition plans

State

5427

5069

Net Sales (| crore)

Source: Company, ICICIdirect.com Research

Andhra Pradesh

South

Yerraguntla, Kadapa
Vishnupuram, Nalgonda

Andhra Pradesh

South

Andhra Pradesh

South

Malkapur, Ranga Reddy

Parli Vaijnath, Beed

Andhra Pradesh

South

Maharashtra

West

Rajasthan

North

10.05

10.02

9.11

8.66

9.00

9.33

9.69

6.00

(|/tonne)

6000
9.53

3.00

4000

2.4
1.1
1.5
15.7

3375

5374 5535
4605 4983
4215 4362 4183

2000

FY15

FY16

FY15

FY14

FY13

FY16 FY17E* FY18E*

Cement Realisation (|/tonne) -LS

Sales Volumes (In mn)

Growth (%) -RS

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

4709

4610

Q3FY16

Q4FY16

4904

4799
Q4FY15

Q2FY16

4795
Q3FY15

Realisation-LHS

Q1FY16

4655

4244
Q1FY15

Q2FY15

4027
Q4FY14

4429
Q3FY14

4189

4116
Q2FY14

5500
5000
4500
4000
3500
3000
2500
2000

Q1FY14

2.31
Q1FY17*

Growth (%) -RHS

|/tonne

2.47

2.16
Q2FY16

Q4FY16

2.10
Q1FY16

1.94

2.09
Q4FY15

Sales volumes (In MT) -LHS

Q3FY16

2.11
Q3FY15

2.56

2.35

Q1FY15

Q2FY15

2.64
Q4FY14

2.29

Q1FY14

Q3FY14

Exhibit 8: Quarterly realisation trend

2.65

Exhibit 7: Q1FY17 volumes increase 10.1% YoY

2.44

Source: Company, ICICIdirect.com Research,* Gross realisation

Q2FY14

Source: Company, ICICIdirect.com Research

30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0

FY18E*

FY14

5173

FY13

30
25
20
15
10
5
0
-5
-10

50
40
30
20
10
0
-10

Q1FY17*

FY12

FY17E*

FY11

FY12

FY11

0.00

3.00
2.50
2.00
1.50
1.00
0.50
0.00

0.7
2.5

Exhibit 6: Realisation trend

15.00
9.97

1.1
1.5

Source: Company, ICICIdirect.com Research

Exhibit 5: Volume trend

12.00

0.9
1.9

South

banswara
Total

*Gross revenues

South
South

Tamilnadu

Vallur Village, Tiruvallur

Chilamakur, Kadapa

FY11 FY12 FY13 FY14 FY15 FY16 FY17E*FY18E*

Tamilnadu
Tamilnadu

Sankari, Salem
Dalavoi, Ariyalur

(%)

3501

4597 4441 4419 4377

4203

MT
2.1

Tamilnadu

Growth (%) -RHS

Source: Company, ICICIdirect.com Research,* Gross realisation

Page 4

(%)

6000
5000
4000
3000
2000
1000
0

Region
South

Sankarnagar, Tirunelveli

Margins to improve gradually, going forward

We expect margins to improve gradually during our forecast period of FY1618E led by healthy realisations, cost rationalisation and higher utilisation.
Exhibit 9: Expect EBITDA/tonne of | 940 in FY18E
1000

887

800

400

940

869

25.0
18.3

15.0

500

412

21.5

20.0
12.4

10.0

289

17.9

15.3
12.1

5.0

200

0.0

0
FY11

FY12

FY13

FY14

FY15

FY11

FY16 FY17E* FY18E*

FY12

FY13

FY14

FY15

FY16 FY17E* FY18E*

EBITDA Margin (%)

Cement EBITDA/Tonne

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research,* as per gross realisation

Exhibit 11: Q1FY17 cement EBITDA at | 857/t

Exhibit 12: Margin trend (%)

900

755
408

500

388

25

994
732

618

592

572

825

890

20

844 857
(%)

1100

10

448

11.7

13.9

12.9

15.8 15.3

17.8

21.2
16.1

18.4
16.7
15.7

6.9

Q4FY16

Q3FY16

Q2FY16

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q4FY13

Q1FY17

Q4FY16

Q3FY16

Q2FY16

Q1FY16

Q4FY15

Q3FY15

Q2FY15

Q1FY15

Q4FY14

Q3FY14

Q2FY14

Q1FY14

100

Q2FY14

300

-100

14.1 15.4

15

Q1FY14

700

17.9

17.1

Q1FY17

600

833

783

Exhibit 10: Margins to improve gradually

EBITDA Margin (%)

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Expect net margins to improve during FY16-18E

After reporting a loss in FY14, we expect net margins to improve to 4.8% in
FY18E from 3.1% in FY16. Overall, we expect the company to report a net
profit of | 260.2 crore during FY18E from a loss of | 35.9 crore in FY14.
Exhibit 13: Profitability trend

| crore

300
200
100
0
-100

20

296.0

7.0
65.7

260.2
176.3
3.6

1.9
FY11

FY12

FY13

Net profit - LS

150.3
-35.9
-0.8
FY14

29.4
0.7

3.1

FY15

FY16

194.7
3.8

4.8

15
10

(%)

400

5
0

FY17E* FY18E*

-5

Net profit margin -RS

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

Outlook and valuation

Going forward, we expect robust volume growth mainly led by increased
sales outside the southern region. However, oversupply in the southern
region and subdued realisation (mainly due to pricing pressure in
Maharashtra, AP and Telangana) is expected to limit revenue growth.
Nevertheless, we expect cost rationalisation led by better fuel mix,
installation power plant in AP and improving efficiency of plants to drive
margins. In addition, with improving cash flow, we expect debt to reduce
over the next two years. Hence, we remain positive on the stock from a long
term perspective. However, the recent run up in the stock offers limited
upside. Hence, we downgrade the stock from BUY to HOLD with a revised
target price of | 145 (i.e. EV/EBITDA of 7x).
Exhibit 14: Key assumptions
| per tonne (Blended)

FY13

FY14

FY15

FY16E

FY17E

FY18E

Realisation

4362

4183

4605

4983

5374

5535

Total Expenditure

3579

3894

4106

4150

4505

4595

Stock Adj

-19

-31

38

-11

Raw material

575

604

685

783

778

810

Power & fuel

950

1249

1273

1247

1090

939

Employee

332

350

349

393

348

360

Freight

954

1007

1046

1005

1040

1075

Others

489

691

741

890

1400

1400

EBITDA per Tonne

783

289

500

833

869

940

Source: ICICIdirect.com Research

Exhibit 15: Valuations

FY15
FY16
FY17E
FY18E

Sales Growth
(| cr)
(%)
4418.8
-0.5
4377.1
-0.9
5068.6
15.8
5426.5
7.1

EPS
(|)
1.0
4.4
6.3
8.5

Growth
PE
(%)
(x)
NA 136.8
360.8 29.7
43.6 20.7
33.6 15.5

EV/EBITDA
(x)
10.7
8.9
7.8
6.7

EV/Tonne
(x)
78
75
73
70

RoNW
(%)
0.8
3.7
5.1
6.5

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoCE
(%)
6.1
8.5
9.7
10.8

Recommendation history vs. consensus estimate

70.0
60.0
50.0
40.0
30.0

(%)

(|)

200
180
160
140
120
100
80
60
40
20
0

20.0
10.0
0.0
Oct-14

Jan-15
Price

Mar-15

Jun-15

Idirect target

Aug-15

Oct-15

Jan-16

Consensus Target Mean

Mar-16

Jun-16

Aug-16

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date
Feb-09
Apr-09
Sep-09
Jan-10

Event
Completes and commences commercial production of 1 MT grinding plant at Parli (Maharashtra). The company's subsidiary, namely, Trishul Concrete Products Ltd
gets completed and commences commercial production of 1 lakh cubic metre ready mix concrete plant at Hyderabad (Andhra Pradesh)
The company upgrades capacity of kiln I to 3000 TPD (1700 TPD) at Vishnupuram
Announces plans to set up two 50 MW power plant in Shankar Nagar, Tamil Nadu and Andhra Pradesh with total capex of | 500 crore

Jun-10

ICL Financial Services (ICLFSL), the company's wholly-owned subsidiary, acquires 60.89% (including shares acquired under open offer) equity share capital in Indo
Zinc (IZL). Consequently, IZL became a subsidiary of ICLFSL and ultimate subsidiary of the company. The company set up PT. Coromandel Minerals Resources as
subsidiary in Indonesia for acquiring coal concessions
Completes upgradation of capacity at Chilamakur to 4500 tonnes per day

Jun-12

CCI fines company with penalty of | 187.5 crore on alleged cartelisation

Sep-12

COMPAT serves notice to CCI in cement cartelisation case

May-13

COMPAT directs cement companies to pay 10% penalty

Oct-13
Feb-15

Supreme Court bars company promoter N Srinivasan from taking charge as BCCI President till investigation gets completed in IPL probe
Company transfers IPL division into separate subsidiary company Chennai Super Kings Cricket (CSKC)

Feb-15

Trinetra Cement and Trishul Concrete Products amalgamated with India Cements

May-15

CARE downgrades India Cements' long term bank facilities from 'CARE A' to 'CARE A-' and short-term facilities from 'CARE A1' to 'CARE A2+'

Feb-16

CARE downgrades India Cements' long term bank facilities from 'CARE A-' to 'CARE BBB+' and short-term facilities from 'CARE A2+' to 'CARE A2'

Source: Company, ICICIdirect.com Research

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

Name
EWS Finance & Investments Ltd.
Prince Holdings Madras Pvt. Ltd.
Subramanian (Vidya)
Life Insurance Corporation of India
Trishul Investments Pvt. Ltd.
AfrAsia Capital Management Ltd
Anna Investments Pvt. Ltd.
Dimensional Fund Advisors, L.P.
Reliance Nippon Life Asset Management Limited
Hirtle, Callaghan & Co., LLC

Shareholding Pattern
Latest Filing Date % O/S Position (m) Change (m)
30-Jun-16
9.0
27.6
0.0
30-Jun-16
8.3
25.5
0.0
30-Jun-16
6.5
20.0
0.0
30-Jun-16
6.1
18.6
0.0
30-Jun-16
5.7
17.5
0.0
30-Jun-16
5.0
15.4
0.0
30-Jun-16
4.2
13.0
0.0
31-May-16
3.7
11.3
0.0
30-Jun-16
3.6
11.0
0.4
30-Sep-15
2.9
8.8
0.9

(in %)
Promoter
FII
DII
Others

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

28.23
28.23
28.56
28.63 28.63
27.65
21.91
27.86
26.24 24.22
13.47
14.82
14.13
16.60 17.59
30.65
35.04
29.45
28.53 29.56

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys
Investor name
L&T Investment Management Limited
Kotak Mahindra Asset Management Company Ltd.
Principal PNB Asset Management Company Ltd.
Grantham Mayo Van Otterloo & Co LLC
Reliance Nippon Life Asset Management Limited

Value
3.42
3.07
1.98
1.29
0.61

Shares
2.04
1.83
1.18
0.92
0.36

Sells
Investor name
The Boston Company Asset Management, LLC
IDFC Asset Management Company Private Limited
Damani (Radhakishan S)
Deutsche Bank AG
Banque Degroof Luxembourg S.A.

Value
-11.94
-0.39
-0.22
-0.14
-0.08

Shares
-7.13
-0.23
-0.13
-0.08
-0.06

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Financial summary
Profit and loss statement
(Year-end March)
Total operating Income

| Crore
FY15

FY16

FY17E

FY18E

4,418.8

4,377.1

5,068.6

5,426.5

-0.5

-0.9

15.8

7.1

Growth (%)

Cash flow statement

(Year-end March)
Profit after Tax
Add: Depreciation

| Crore
FY15

FY16

FY17E

FY18E

29.4

135.6

194.7

260.2

257.9

218.0

225.7

262.7

Raw material cost

658.7

668.7

725.7

785.3

(Inc)/dec in Current Assets

478.3

-96.2

-173.7

-71.7

Employee Expenses

318.2

340.4

325.2

349.0

Inc/(dec) in CL and Provisions

-629.1

124.8

247.2

108.8
560.0

1136.4

944.6

876.5

921.0

CF from operating activities

136.5

382.1

494.0

Freight cost

953.1

870.3

970.1

1042.2

(Inc)/dec in Investments

-639.7

0.5

0.0

0.0

Other Expenses

674.8

770.9

1306.9

1357.2

(Inc)/dec in Fixed Assets

329.8

-45.5

-250.0

-250.0

3,741.1

3,594.7

4,204.3

4,454.6

Others

677.8

782.4

864.2

971.9

CF from investing activities

Issue/(Buy back) of Equity

Power, Oil & Fuel

Total Operating Exp.

EBITDA

0.0

0.0

0.0

-200.0

-220.0

Dividend paid & dividend tax

0.0

-36.1

-36.1

-36.1

Inc/(dec) in Sec. premium

0.0

0.0

0.0

0.0

Others

-287.6

-46.6

0.0

0.0

420.3

CF from financing activities

174.2

-369.0

-236.1

-256.1
53.9

10.5

12.5

218.0

225.7

262.7

Inc/(dec) in loan funds

Interest

419.6

373.7

340.8

316.9

29.1

22.2

16.7

28.0

0.0

14.7

0.0

0.0

29.4

198.1

314.5

Total Tax

0.0
-250.0

-286.3

15.4

257.9

PBT

0.0
-250.0

0.0

26.2

Depreciation

Exceptional items

29.2
-15.7

461.8

Growth (%)

Other Income

0.0
-309.9

0.0

62.5

119.8

160.1

Net Cash flow

0.8

-2.5

7.9

PAT

29.4

135.6

194.7

260.2

Opening Cash

3.1

3.9

1.4

9.3

Adjusted PAT

29.4

150.3

194.7

260.2

Closing Cash

3.9

1.4

9.3

63.1

-182.1

410.8

29.6

33.6

1.0

4.4

6.3

8.5

FY15

FY16

FY17E

FY15

FY16

FY17E

FY18E

1.0

4.4

6.3

8.5

Growth (%)
EPS (|)

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March)

| Crore
FY18E

Liabilities
Equity Capital

Key ratios
(Year-end March)
Per share data (|)

307.2

307.2

307.2

307.2

Reserve and Surplus

3,285.9

3,338.8

3,497.5

3,721.6

Cash EPS

Total Shareholders funds

3,593.1

3,646.0

3,804.7

4,028.7

BV

Total Debt

3,241.5

2,955.2

2,755.2

2,535.2

329.7

358.9

358.9

358.9

Deferred Tax Liability

Minority Interest / Others
Total Liabilities

0.0

0.0

0.0

0.0

7,164.3

6,960.2

6,918.8

6,922.9

Assets

Adjusted EPS

9.4

11.5

13.7

17.0

117.0

118.7

123.8

131.1

DPS

0.0

1.0

1.0

1.0

Cash Per Share

0.1

0.0

0.3

2.1

15.3

17.9

17.1

17.9

0.7

3.1

3.8

4.8
44.0

Operating Ratios (%)

EBITDA Margin
PAT Margin

Gross Block

6,533.8

6,579.3

6,974.3

7,224.3

Inventory days

47.8

50.1

46.0

Less: Acc Depreciation

3,158.9

3,377.0

3,602.6

3,865.3

Debtor days

38.5

42.8

44.3

44.3

Net Block

3,374.9

3,202.3

3,371.7

3,359.0

Creditor days

89.9

96.5

99.9

99.9

300.0

300.0

155.0

155.0

Capital WIP

Return Ratios (%)

Total Fixed Assets

3,674.9

3,502.3

3,526.7

3,514.0

RoE

0.8

4.1

5.1

6.5

Investments

1,585.2

1,584.7

1,584.7

1,584.7

RoCE

6.3

8.4

9.5

10.6

6.1

8.5

9.5

10.6

136.8

29.7

20.7

15.5

10.7

8.9

7.8

6.7

EV / Net Sales

1.6

1.6

1.3

1.2

Inventory

606.9

595.3

682.3

626.0

RoIC

Debtors

466.1

513.4

615.2

658.6

Valuation Ratios (x)

Loans and Advances

1,974.4

2,035.0

2,019.8

2,104.3

Other Current Assets

0.0

0.0

0.0

0.0

Cash

3.9

1.4

9.3

63.1

P/E
EV / EBITDA

Total Current Assets

3,051.3

3,145.0

3,326.6

3,452.1

Market Cap / Sales

0.9

0.9

0.8

0.7

Creditors

1,088.3

1,157.1

1,387.3

1,485.2

Price to Book Value

1.1

1.1

1.1

1.0

58.8

114.8

131.8

142.6

1,147.1

1,271.8

1,519.0

1,627.8

Debt/EBITDA

4.8

3.8

3.2

2.6
0.6

Provisions
Total Current Liabilities

Solvency Ratios

Net Current Assets

1,904.3

1,873.2

1,807.5

1,824.3

Debt / Equity

0.9

0.8

0.7

Application of Funds

7,164.3

6,960.2

6,918.9

6,922.9

Current Ratio

2.7

2.5

2.2

2.1

Quick Ratio

2.7

2.5

2.2

2.1

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
(|)
1695
273
3785
17153
132
131
792
440
356
115

TP(|)
1875
300
4000
18650
135
145
855
480
365
132

Rating
Buy
Buy
Buy
Hold
Hold
Hold
Buy
Buy
Buy
Buy

M Cap
(| Cr)
31,856
42,315
103,860
59,692
3,059
4,024
5,538
5,179
950
2,553

EPS (|)
EV/EBITDA (x)
FY16 FY17E FY18E FY16 FY17E FY18E
31.3 57.8 68.2
26.1
18.2
14.9
5.2
7.5
8.3
26.0
19.7
17.4
79.8 100.7 124.6
24.0
19.3
16.5
131
356
535
46.2
23.7
16.6
1.7
4.1
6.0
17.8
12.1
10.0
4.4
6.3
8.5
8.9
7.8
6.7
14.9 34.3 44.9
15.7
11.5
10.3
0.5
6.1 13.9
25.1
15.6
11.3
0.0 20.0 29.4
36.4
9.0
6.8
4.1
5.9
8.4
8.3
7.0
5.6

EV/Tonne ($)
FY16 FY17E FY18E
166
150
145
164
179
178
257
241
237
372
344
339
115
113
110
75
73
70
111
106
108
136
115
83
66
56
52
176
173
131

RoCE (%)
RoE (%)
FY16 FY17E FY18E FY16 FY17E FY18E
6.0 11.9 13.4
7.0 12.0 12.9
7.9 12.0 13.3
7.8 10.8 11.3
12.0 13.9 16.4 10.6 11.6 13.3
5.3 14.5 21.5
7.4 16.9 20.6
7.1 12.1 14.6
4.3
9.3 12.2
8.4
9.5 10.6
4.1
5.1
6.5
8.8 12.3 13.6
6.1 13.1 14.3
3.4
8.0 12.1
0.5
5.2 10.7
1.4 13.0 16.6
NA 10.1 13.1
12.0 14.5 18.1 12.3 15.4 18.4

*CY14E, CY15E, CY16E

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

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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reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this
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ICICI Securities Ltd | Retail Equity Research

Page 11