19 July 2014
1QFY15 Results Update | Sector:
Cement
Ultratech Cement
BSE SENSEX
25,642
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,664
UTCEM IN
274.0
2,868/1,405
-11/27/5
Financials & Valuation (INR b)
Y/E Mar
Sales
EBITDA
NP
AdjEPS(INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
EV/EBITDA
( )
EV/Ton
(
)
32.2
3.7
15.7
184
21.0
3.2
11.0
176
14.1
2.6
7.4
163
2015E 2016E 2017E
243.4 294.6 349.7
45.0
21.7
79.3
4.8
12.1
14.4
14.7
64.8
33.3
121.4
53.2
805.8
16.2
18.3
10.5
88.5
49.4
180.1
48.3
978.6
20.2
23.6
7.7
CMP: INR2,548
TP: INR2,945
Buy
M.Cap. (INR b)/(USD b) 698.3/11.6
BV/Sh (INR) 690.5
Net sales in line, marginal beat in cement:
With marginal contribution from
recently acquired Gujarat (JPA) plant (contributing since 12
th
June 2014 onward),
Ultratech’s (UTCEM) 1QFY15 net sales grew 14%YoY (-3% QoQ) to INR56.5b (in
line v/s est of INR55.8b). Cement revenue marginally beat estimates, while RMC
and White cement were lower than estimates.
Cement volume, realizations at par:
Grey Cement volume grew 16% YoY (-4%
QoQ) at 11.7mt v/s est of 14.7%YoY growth, while realizations stood at INR4,117
(flat YoY, +3.6% QoQ), ahead of estimates of INR4,032/ton. White cement (incl.
Putty) volume grew by 2.9% YoY v/s est of 8%YoY) to 0.257mt, while RMC volume
grew by 1.7% YoY (v/s est of 7%YoY)
EBITDA in line with moderate QoQ cost push:
EBITDA de-grew 4%YoY (+12%
QoQ) to INR 10.1b (v/s est INR10.2b), translating into EBITDA margins of 17.8% (-
1.8pp QoQ; v/s est 18.3%). Blended EBITDA/ton stood at INR852 (-INR174 YoY, -
INR74 QoQ), v/s est INR855/ton. Cost/ton was up INR125/ton QoQ led by (1)
higher pet coke price, (2) higher spends of sales and marketing, and (3) higher
staff cost. PAT was in line at INR6.2b (-7% YoY).
Guidance of double growth in 2HFY15:
Management guided for cement demand
growth over 7-8%, with double digit growth in 2HFY15.
Cutting EPS to factor in Gujarat plant impact:
We are keeping cement
assumptions unlettered, while lowered RMC and White cement revenue by 3-8%.
To factor in for newly acquired Gujarat (JPA) plant of 4.8mt, we are cutting our
FY15/16 EPS by 13%/8% due to higher depreciation and interest cost. The stock
trades at 21x/14.1x FY16E/17E EPS, 11/7.4x EV/EBITDA and USD176/163 per ton.
We maintain
Buy
with target price of INR2,945 (FY16 EV/ton of USD200/ton and
implied EV/EBITDA of 12.6x FY16E).
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
Net sales in line with at par volume, realizations; Marginal revenue beat in
cement, while RMC, White cement weaker
Ultratech (UTCEM)’s 1QFY15 financial and operational performances comprise
contribution from recently acquired Gujarat cement plant (of JPA), which has
been combined with effective date of 12
th
June 2014. New plant, albeit
contributed for a short period in 1QFY15, makes the financials not fully
comparable YoY/QoQ.
Net sales grew 14%YoY (-3% QoQ) to INR56.5b (v/s est of INR55.8b). Cement
revenue marginally beat estimates, while RMC and white cement revenue were
lower than estimates.
Grey Cement volume grew 16% YoY (-4% QoQ) at 11.7mt v/s est of 14.7%YoY
growth, while realizations stood at INR4,117 (flat YoY, +3.6% QoQ), ahead of
estimates of INR4,032/ton.
White cement (incl. Putty) volume grew by 2.9% YoY v/s est of 8%YoY) to
0.257mt, while RMC volume grew by 1.7% YoY (v/s est of 7%YoY)
Cement volume and realizations marginally beat estimates
Realizations (INR/ton)
11.5
9.9
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
Source: Company, MOSL
RMC business grew weaker than estimates…
16
2
RMC Volumes (m cu mtr)
19
11
10
10
1
5
-14
-9
-5
Growth (%)
... so is White cement business
White Cement incl Putty('000 ton)
21 17
2
2
-1
10
11
13
5
8
11
15
10
Growth (%)
11
3
Source: Company, MOSL
Source: Company, MOSL
EBITDA in line; lower depreciation and higher other income keeps PBT
ahead of estimates, PAT in line on higher tax
EBITDA de-grew 4%YoY (+12% QoQ) to INR 10.1b (v/s est INR10.2b), translating
into EBITDA margins of 17.8% (-1.8pp QoQ & -3.4pp YoY; v/s est 18.3%).
Blended EBITDA/ton stood at INR852 (-INR174 YoY, -INR74 QoQ), v/s est
INR855/ton, led by in-line movement in realizations and costs.
2
19 July 2014

Ultratech Cement
Overall cost/ton was up INR125/ton QoQ led by (1) higher pet coke price, (2)
higher spends of sales and marketing, and (3) higher staff cost.
PBT was higher than estimates by 8% owing to (1) lower depreciations (partially
led by some adjustments pertaining to new Companies Act 2013, and (2) higher
other income (impact of FMPs). However higher tax rates keeps PAT in line at
INR6.2b (-7% YoY).
Trend in EBITDA/ton (INR)
Profitability in line, but down QoQ on higher cost
EBITDA (INR m)
27.3
14.9
20.9
EBITDA (%)
19.6 17.8
23.7
21.4 21.1 22.2 21.2
25.4
14.7 16.0
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
1QFY15
4,774
745
1,020
233
1,124
800
3,922
852
1QFY14
4,846
763
967
245
1,077
768
3,821
1,026
YoY (%)
-1.5
-2.3
5.5
-4.9
4.3
4.1
2.7
-17.0
4QFY14
4,723
788
961
190
1,106
751
3,797
QoQ (%)
1.1
-5.5
6.2
22.4
1.6
6.4
3.3
926
-8.0
Source: Company, MOSL
Guidance of double growth in 2HFY15; other updates
Outlook Improved:
Cement demand in likely to grow over 7-8%, with
expectation of double digit growth in 2HFY15. The value drivers for growth will
continue to be housing demand and infrastructure development.
During 1QFY15, it commissioned a 25MW thermal power plant at Rajashree
Cement, Karnataka and a 6.5 MW Waste Heat Recovery system at Awarpur,
Maharashtra. With this the total power capacity of (including WHRS) stands at
709 MW. This caters to around 80 % of the Company’s power requirement.
During the Quarter, the Company has revised depreciation rate on certain fixed
assets as per the useful life specified in the Schedule 11 of Companies Act, 2013
or re-assessed by the Company. Based on current estimates, depreciation of
INR1.2b on account of assets whose useful life is already exhausted as on
01/04/2014 and deferred tax of INR0.4b thereon have been adjusted to General
Reserve.
19 July 2014
3

Ultratech Cement
Cutting FY15/16 EPS 8-13% to factor in for newly acquired JPA plant;
Cement operational assumptions unaltered
We are keeping our cement operational assumptions for Ultratech, while
lowering revenue from RMC and White cement business by 3-8%.
To factor in for newly acquired Gujarat (JPA) plant of 4.8mt, we are cutting our
FY15/16 EPS by 13%/8% due to higher depreciation and interest cost.
The stock trades at 21x/14x FY16E/17E EPS, 11/7.4x EV/EBITDA and
USD176/163 per ton. Being the largest cement player with pan India presence
and superior profitability, Ultratech offers best proxy to cement recovery cycle.
We maintain
Buy
with target price of INR2,945 (FY16 EV/ton of USD200/ton and
implied EV/EBITDA of 12.6x FY16E).
Ultratech: Revised forecast
(INR b)
Rev
Net Sales
EBITDA
Net Profit
EPS (INR)
Key Assumptions
Volume Gr (%)
Real Chg (INR/ton)
EBITDA (INR/ton)
11.5
197
927
11.5
197
943
9.8
400
1,204
9.8
400
1,221
Source: Company, MOSL
243.4
45.0
21.7
79.3
FY15E
Old
234.6
44.2
25.0
91.3
Chg (%)
3.8
1.9
-13.2
-13.2
Rev
294.6
64.8
33.3
121.4
FY16E
Old
280.8
62.8
36.5
133.0
Chg (%)
4.9
3.1
-8.7
-8.7
19 July 2014
4

Ultratech Cement
Story in charts
Demonstrated s a steady growth in capacity
Capacity (MT)
Cap. Util (%)
83
71
83
70
79
59.1
41.5
70
63.9
49.4
77
66.8
54.1
81
66.8
59.4
17,041 19,711 25,597
FY09
FY10
FY11
40,039 44,946 36,160 45,003
FY12
FY13
Dispatches (MT)
26.7
89
28.0
Expect margins to improve over FY15-16
EBITDA (INR m)
22.0
22.5
18.0
18.5
Margin (%)
22.0
25.3
19.4
21.9
18.2
FY09
88,518
64,776
48.8
34.7
FY10
49.4
34.7
FY11
49.4
40.7
FY12
51.5
40.7
FY13
FY14 FY15E FY16E FY17E
FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Trend in EBITDA/ton (INR)
Trend in net profit
EPS (Rs)
71.3
122.2
55.6
75.6
-21.2
78.6
3.9
EPS Growth (%)
180.1
78.5
-3.0
87.8
11.9
51.2
87.8
96.0
9.3
47.4
-41.7
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
28.5
21.1
18.4
23.5
20.5
21.3
14.4
18.7
12.8
11.9
14.2
16.1
23.4
18.2
19.9
RoCE
Strengthening of operating cash flow to drive FCF
CFO (INR b)
CAPEX (INR b)
FCF (INR b)
48.7
25.2
6.8
13.0
8.6
3.0
3.1
12.3
-34.7
FY09
FY10
FY11
FY12
FY13
FY14 FY15E FY16E FY17E
FY09
FY10
FY11
FY12
FY13
FY14 FY15E FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
19 July 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.
Recent developments
Started combining newly acquired JPA plant post
approval of scheme of arrangement by all
stakeholders.
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.
We are keeping our cement operational assumptions
for Ultratech, while lowering revenue from RMC and
White cement business by 3-8%.
To factor in for newly acquired JPA plant of 4.8mt, we
are cutting our FY15/16 EPS by 13%/8% due to higher
depreciation and interest cost.
The stock trades at 21x/14.1x FY16E/17E EPS, 11/7.4x
EV/EBITDA and USD176/163 per ton. We maintain
Buy
with target price of INR2,945 (FY16 EV/ton of
USD200/ton and implied EV/EBITDA of 12.6x FY16E).
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)
32.2
21.0
3.7
3.2
199
190
15.7
11.0
26.8
17.3
3.4
3.1
121
117
16.3
10.6
22.0
32.5
3.9
3.6
174
168
11.9
18.8
MOSL
Forecast
FY15
FY16
79.3
121.4
Consensus
Forecast
95.4
125.0
Variation
(%)
-16.9
-2.9
P/E (x)
P/BV (x)
EV/Ton ($)
EV/EBITDA (x)
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
Target price and recommendation
Current
Price (INR)
2,548
Target
Price (INR)
2,945
Upside
(%)
15.6
Reco
Buy
Shareholding pattern (%)
Jun-14
Promoter
DII
FII
Others
61.7
5.3
22.2
10.8
Mar-14
61.7
4.9
22.7
10.6
Jun-13
62.0
4.6
22.7
10.8
Stock performance (1-year)
Note: FII Includes depository receipts
19 July 2014
6

Ultratech Cement
Financials and valuations
19 July 2014
7

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Ultratech Cement
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Analyst ownership of the stock
ULTRATECH CEMENT
No
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19 July 2014
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8