18 October 2014
2QFY15 Results Update | Sector:
Cement
Ultratech Cement
BSE SENSEX
26,109
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,780
UTCEM IN
274.4
2,868/1,635
-9/-11/-9
CMP: INR2,323
TP: INR3,216
Buy
M.Cap. (INR b)/(USD b) 637.3/10.4
Financials & Valuation (INR Billion)
Y/E March
Sales
EBITDA
NP
AdjEPS(INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
EV/EBITDA
( )
EV/Ton
(
)
23.5
3.3
12.7
165
17.0
2.8
9.4
157
12.0
2.3
6.6
145
2015E 2016E 2017E
246.2
50.8
27.1
98.7
30.7
14.8
17.5
11.8
291.3
68.8
37.6
136.9
38.6
17.7
19.7
9.3
344.3
90.6
52.9
192.9
40.9
20.9
24.1
9.0
BV/Sh (INR) 709.7
833.8 1,009.3
Grey Cement revenue beat est, RMC, White cement in line:
With contribution
from recently acquired Gujarat (JPA) plant, Ultratech’s (UTCEM) 2QFY15 net sales
grew 19.5%YoY (-5% QoQ) to INR53.8b (v/s est of INR51.9b). Grey Cement
revenue 22%YoY (beat est of 17% YoY), while RMC and White cement were in line.
Volume at par, realizations stronger:
Grey Cement volume grew 12% YoY (-12%
QoQ) at 10.35mt v/s est of 10.25mt, while realizations stood at INR4,316 (+8.7%
YoY, +4.8% QoQ), ahead of estimates of INR4,177/ton. White cement (incl. Putty)
volume grew just 2.7% YoY (v/s est of 9.1%YoY) to 0.302mt, while RMC volume
disappoints with de-growth of 2.6%YoY (v/s est of 9.8% YoY growth)
EBITDA in line as cost push negates realization uptick:
EBITDA grew 26% YoY
(-18% QoQ) to INR 8.3b (v/s est INR8.2b). Blended EBITDA/ton stood in line with
est. at INR790 (+INR87 YoY, -INR62 QoQ). Higher realizations was negated by cost
push (+INR412/ton QoQ), led by (1) higher energy cost owing to pet coke price
increase, (2) higher RM cost due to rise in input materials and increase in royalty
on limestone, and (3) higher freight cost due to seasonality. High other income
and lower tax rate boost PAT to INR4.1b (+55.3% YoY) v/s est of INR3.2b.
Guidance of 8% industry growth:
Management guided for demand growth of
~8%, with required renewed government focus on housing and infrastructure.
Raising FY15/16 EPS by 10%/3%, maintain Buy:
We are raising FY15/16 EPS by
10%/3.4% respectively to factor in higher FY15 realization growth of INR20/bag
YoY (v/s earlier est of INR15/bag), which was partially moderated by assumptions
of higher freight and energy cost, lower white cement and RMC volumes. The
stock trades at FY16E EV/EBITDA of 9.4x and EV/ton of USD 157/ton. Maintain
Buy
target price of INR3,216 (USD200/ton, implied FY16E EV/EBITDA of 13x).
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.

Ultratech Cement
Realization beat drives revenue, volume in line
With contribution from recently acquired Gujarat (JPA) plant, Ultratech’s
(UTCEM) 2QFY15 net sales grew 19.5%YoY (-5% QoQ) to INR53.8b (v/s est of
INR51.9b).
Cement revenue 22%YoY (beat est of 17% YoY), while RMC and White cement
were in line.
Grey Cement volume grew 12% YoY (-12% QoQ) at 10.35mt v/s est of 11%YoY
growth, while realizations stood at INR4,316 (+8.7% YoY, +4.8% QoQ), ahead of
estimates of INR4,177/ton.
White cement (incl. Putty) volume grew moderately by 2.7% YoY v/s est of
9.1%YoY) to 0.302mt, while RMC volume disappoints with de-growth of
2.6%YoY (v/s est of 9.8%YoY)
Cement volume and realizations marginally beat estimates
Realizations (INR/ton)
11.5
10.1
9.2
10.3
9.3
9.9
11.1
10.1
9.2
10.0
Dispatches (m ton)
12.2
11.7
10.4
Source: Company, MOSL
RMC business grew weaker than estimates…
RMC Volumes (m cu mtr)
16
11
19
10
10
1
-9
-14
-9
-5
Growth (%)
5
... so is White cement business
White Cement incl Putty('000 ton)
21
2
-3
10
11
17 13
5
8
11
5
3
3
23
11
Growth (%)
Source: Company, MOSL
Source: Company, MOSL
EBITDA in line as cost push negates realization uptick
EBITDA grew 26%YoY (-18% QoQ) to INR 8.3b (v/s est INR8.2b), translating into
EBITDA margins of 15.4% (-2.4pp QoQ; +0.8pp YoY v/s est 15.8%).
Blended EBITDA/ton stood in line with est. at INR790 (+INR87 YoY, -INR62 QoQ).
Better realization growth (+INR199/ton QoQ) was negated by cost push
(+INR412/ton QoQ), led by (1) higher energy cost owing to pet coke price, (2)
higher RM cost due to rise in input materials and royalty on limestone, and (3)
higher freight cost due to seasonality. High other income and lower tax rate
boost PAT to INR4.1b (+55.3% YoY) v/s est of INR3.2b.
2
18 October 2014

Ultratech Cement
Profitability in line, but down QoQ on higher cost
EBITDA (INR m)
25.4
22.2 21.2
14.9 23.7
21.4 21.1
EBITDA (%)
19.6 17.8
Trend in EBITDA/ton (INR)
20.9
14.6 16.0
15.4
Source: Company, MOSL
Source: Company, MOSL
Trend in key operating parameters (incl RMC & white cement business)
INR/Ton
Realization
RM Cost
Power & Fuel
Staff Cost
Freight & Forwarding
Other Expenditure
Total Expenditure
EBITDA
2QFY15
5,125
796
1,090
295
1,230
923
4,335
790
2QFY14
4,796
806
1,019
303
1,059
907
4,093
703
YoY (%)
6.9
-1.3
7.0
-2.5
16.2
1.8
5.9
12.4
1QFY15
4,774
745
1,020
233
1,124
800
3,922
852
QoQ (%)
7.3
6.8
6.8
26.7
9.5
15.5
10.5
-7.3
Source: Company, MOSL
Guidance of 8% industry growth; other updates
Management guided for demand growth of ~8%, with required renewed
government focus on housing and infrastructure
On-going capex is on track. UltraTech commissioned a 1.4mt at Rajashree
Cement, Karnataka and a 25MW thermal power plant at Tadipatri, Andhra
Pradesh. With this the Company’s total cement capacity in India stands at 60.2mt
and the total power capacity (including WHRS) at 733 MW. This caters to around
80 % of the Company’s power requirement.
Raising FY15/16 EPS 10%/3%, maintain Buy
We are raising FY15/16 EPS by 10%/3.4% respectively to factor in higher FY15
realization growth of INR20/bag YoY (v/s earlier est of INR15/bag), which was
partially moderated by assumptions of higher freight and energy cost, lower
white cement and RMC volumes.
The stock trades at FY16E EV/EBITDA of 9.4x and EV/ton of USD 158/ton.
Maintain
Buy
target price of INR3,216 (USD200/ton, implied FY16E EV/EBITDA
of 13x).
18 October 2014
3

Ultratech Cement
Ultratech: Revised forecast
(INR b)
Rev
Net Sales
EBITDA
Net Profit
EPS (INR)
Key Assumptions
Volume Gr (%)
Real Chg (INR/ton)
EBITDA (INR/ton)
13.0
404
1,070
13.1
305
1,000
9.2
400
1,327
9.8
400
1,285
Source: Company, MOSL
246.2
50.8
27.1
98.7
FY15E
Old
240.8
47.5
24.6
89.8
Chg (%)
2.2
6.9
10.0
10.0
Rev
291.3
68.8
37.6
136.9
FY16E
Old
288.3
67.1
36.3
132.4
Chg (%)
1.0
2.5
3.4
3.4
18 October 2014
4

Ultratech Cement
Story in charts
Demonstrated s a steady growth in capacity
Capacity (MT)
83
83
79
71
21.9
18.2
FY09
48.8
34.7
FY10
73
70
49.4
34.7
FY11
49.4
40.7
FY12
51.5
40.7
FY13
70
59.1
41.5
68.7
50.0
Dispatches (MT)
Cap. Util (%)
84
26.7
76
71.6
54.6
71.6
59.8
17,041 19,711 25,597
FY09
FY10
FY11
40,039 44,946 36,160
FY12
FY13
50,800
68,776
Expect margins to improve over FY15-16
EBITDA (INR m)
28.0
19.4
22.0
22.5
18.0
20.6
Margin (%)
23.6
26.3
90,591
FY14 FY15E FY16E FY17E
FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Trend in EBITDA/ton (INR)
Trend in net profit
EPS (INR)
71.3
11.9
-3.0
-41.7
78.5
87.8
51.2
87.8
96.0
75.6
98.7
9.3
-21.2
136.9
192.9
EPS Growth (%)
30.6
38.6
40.9
FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Return ratio to see gradual uptick (%)
RoE
29.2
31.0
26.6
18.4
20.5
18.7
12.8
28.5
21.1
23.5
21.3
14.4
24.1
17.5
14.8
19.7
17.7
20.9
RoCE
Strengthening of operating cash flow to drive FCF
CFO (INR b)
CAPEX (INR b)
FCF (INR b)
51.8
30.0
6.8
13.0
8.6
3.0
3.1
12.3
-34.8
FY09
FY10
FY11
FY12
FY13
FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
18 October 2014
5

Ultratech Cement
Ultratech Cement: an investment profile
Company description
UltraTech Cement, the erstwhile cement division of L&T
Ltd, is a subsidiary of Grasim, a part of the Aditya Birla
Group. Post merger of Grasim’s cement business, it is
the largest cement company in India with a total
cements capacity of 61.5mt (by 1QFY16) with a pan-
India presence. It is the largest exporters of cement and
clinker from India. Post merger, it would be the largest
cement company in India and 10th largest in the world.
Key investments risks
Any major global acquisition would result in reduced
earnings visibility and increase financial gearing.
Recent developments
UltraTech commissioned a 1.4mt at Rajashree Cement,
Karnataka and a 25MW thermal power plant at Tadipatri,
Andhra Pradesh.
Valuation and view
Key investment arguments
The largest cement company with pan-India
presence.
Potential to increase throughput without incurring
major capex by increasing utilization and blending,
along with locational advantage, gives it the
flexibility to either export or sell in the domestic
market.
Significant potential to increase throughput by
increasing blending.
Allied businesses of white cement and RMC lend
stability to overall performance.
The stock trades at FY16E EV/EBITDA of 9.4x and
EV/ton of USD 157/ton.
Maintain
Buy
target price of INR3,216 (USD200/ton,
implied FY16E EV/EBITDA of 13x).
Sector view
Demand and pricing environment may deteriorate in
monsoon but expected to revive in 2HFY15.
Stable government and strong focus on infrastructure
should drive demand and pricing recovery
Structural increase in cost base (both capex and
opex) would necessitate higher cement prices.
Comparative valuations
UltraTech
ACC
ACEM
EPS: MOSL forecast v/s consensus (INR)
23.5
17.0
3.3
2.8
165
157
12.7
9.4
27.2
17.2
3.3
3.0
116
118
15.6
10.0
20.7
30.7
3.6
3.4
160
154
11.1
17.6
MOSL
Forecast
FY15
FY16
98.7
136.9
Consensus
Forecast
98.8
135.4
Variation
(%)
-0.1
1.1%
P/E (x)
P/BV (x)
EV/Ton (USD)
EV/EBITDA (x)
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
Target price and recommendation
Current
Price (INR)
2,323
Target
Price (INR)
3,216
Upside
(%)
38.4
Reco
Buy
Shareholding pattern (%)
Sep-14
Promoter
DII
FII
Others
61.7
5.7
21.7
11.0
Jun-14
61.7
5.3
22.2
10.8
Sep-13
62.0
4.8
22.5
10.7
Stock performance (1-year)
Note: FII Includes depository receipts
18 October 2014
6

Ultratech Cement
Financials and valuations
18 October 2014
7

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Ultratech Cement
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Analyst ownership of the stock
ULTRATECH CEMENT LTD
No
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8