INSTITUTIONAL EQUITY RESEARCH Cementbackoffice.phillipcapital.in/Backoffice/Research... · CMP, Rs 159 Target Price, Rs 165 Dalmia Bharat Buy CMP, Rs 481 Target Price, Rs 800 HeidelbergCement

INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Cement

Covid-19 impact

INDIA | SECTOR UPDATE

10 April 2020

All cement plants across the nation are at a standstill because of the lock-down announced by the centre to control the spread of Covid-19. Our coverage universe (referred to as sector from here) represents c.70% of the industry, which we believe is a fair representation. It is a given that the sector has lost 20% of the projected volumes for FY21. This note should be read for:

Ground feedback on the lockdown – possibilities that evolve post lockdown. Industry responses to overcome the challenges. How is the sector positioned to tackle the impact of lockdown. How are individual companies placed within the sector. Why supply-chain efficiency will gain further importance in the long-run.

Best picks: Shree Cement (the safest bet), UltraTech Cement, JK Cement (white cement business advantage an added advantage vs. peers), HeidelbergCement India and Dalmia Bharat (unprecedented correction gives an opportunity).

Ground feedback: Activities on the ground were normal in the first fortnight of March 2020. The momentum lost pace in latter half before it came to a standstill because of lockdown. Volume targets achieved for March were 40-70% across regions and prices remained fairly firm. Post lockdown, here are some of the concerns that the ground highlighted: Outstanding in the channels books is relatively higher, as they were unable to collect

payments. March being the year-end month, in normal circumstances, it is the opposite. This implies stretched working capital needs when the lockdown ends.

Customers are asking for extended credit. Companies requested the channel to expedite payment collections, but this could not

happen. Such requests to clear outstanding to channel by companies was an additional stress in few exceptional cases. In such cases, channel partners were requesting companies to adjust outstanding from the security deposits, which they said they would revive once the lockdown is over.

Industry stance: The industry has been fairly accommodative to stakeholders: Relaxations provided to channel partners in most cases for extended days of credit. Assurance given about encashment of discount structures to channel after lockdown. Many industry leaders have come on record on social media and whole-heartedly

expressed their commitment to remain supportive to all stakeholders. In an attempt to strengthen bonds with the ground, industry leaders initiated social

initiatives for the ground and their families to help them remain engaged among themselves during this lockdown period. Few have also urged the ground to consider a more participating relationship (in the form of adding bandwidth of product profiles or dealer exclusivity) after the lockdown.

How we read the situation when the lockdown opens up: Many believe that demand will surge because of pent-up requirements. However, we

believe that there will be issues with logistics and labour availability. Notably, labour availability is one of the reasons highlighted by managements in their commentaries about sluggish demand scenarios. States which are less dependent on migrant labour will be better placed and vice-versa.

Since cement is a continuous-process industry, it can gain normalcy only with continuous ground momentum. We don’t see that happening at least over the next 30 days. It will take at least 10-15 days more for the industry to sync up once the lockdown is fully lifted.

After lockdown, on an immediate basis, minor disruption in pricing cannot be ruled out. Supply-chain efficiencies will get distorted on immediate basis but this crisis will make it gain further importance in the long run. Being better efficient on ground practices will be the only savior for companies to withstand and overcome this crisis. Companies that realise this early would be ahead on the curve.

Companies

ACC Ltd Neutral (Upgrade) CMP, Rs 1,000 Target Price, Rs 1,025 Ambuja Cements Neutral (Upgrade) CMP, Rs 159 Target Price, Rs 165 Dalmia Bharat Buy CMP, Rs 481 Target Price, Rs 800 HeidelbergCement India Buy CMP, Rs 154 Target Price, Rs 230 India Cements Sell (Downgrade) CMP, Rs 103 Target Price, Rs 75 JK Cement Buy CMP, Rs 968 Target Price, Rs 1,400 JK Lakshmi Cement Buy CMP, Rs 188 Target Price, Rs 325 Mangalam Cement Neutral CMP, Rs 150 Target Price, Rs 170 Sanghi Industries Buy CMP, Rs 22 Target Price, Rs 35 Shree Cement Buy CMP, Rs 16,935 Target Price, Rs 21,000 Star Cement Buy CMP, Rs 69 Target Price, Rs 90 UltraTech Cement Buy CMP, Rs 3,366 Target Price, Rs 4,500

Vaibhav Agarwal, Research Analyst (+ 9122 6246 4124 [email protected])

Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

CEMENT SECTOR UPDATE

Volume loss impact on account of Covid-19: We believe it is a given that the industry will face lockdown impact atleast till the end of mid-May ’20 especially because:

News flows nowhere indicate to us that we are at the end of the crisis or even approaching closer to it.

Various state governments have urged the centre for extended lockdowns.

Though few state governments have said cement plants can be allowed to operate but it makes no sense to operate a cement plant when the clinker silos are already full and there is no market to sell even the existing inventory.

The call of operating a cement plant will also depend on visibility of continuity of operations as shutting a kiln and restarting it, have its own nuances and costs.

In our view, the maximum the industry can rather do now is pre-pone scheduled maintenance activities (if the government allows that) but that is too subject to availability of spare parts at the site. If required spare parts are unavailable, even maintenance would be a challenge.

Inter-state transfers play a very critical role in cement industry and unless all adjoining state borders of target markets are fully opened up, volumes will continue to remain under pressure.

Logistics (especially inter-state) will also be a challenge not just with the outward flow of cement but also with inward flow of raw materials (gypsum, additives, fly ash) and fuel (coal and pet coke).

As we see, it may take atleast 10-15 days more for the whole logistics network to fall in place once the lockdown is completely lifted across states.

Revised volume estimates Volumes - Post Covid-19 impact % Change vs. earlier estimates

Company FY20E FY21E FY22E FY20E FY21E FY22E

ACC Ltd.* 28.9 24.5 28.4 0% -18% -10%

Ambuja Cements* 24.1 20.8 24.3 0% -19% -9%

UltraTech Cement 84.2 76.9 93.4 -4% -21% -6%

Shree Cement 24.7 23.7 30.9 -6% -21% -4%

JK Cement 10.2 9.5 12.0 -2% -19% -5%

HeidelbergCement India 4.7 3.9 4.7 -2% -21% -10%

Dalmia Bharat 19.2 18.5 24.0 -5% -20% -4%

JK Lakshmi Cement 10.5 8.3 9.4 0% -20% -9%

Mangalam Cement 2.7 2.2 2.8 -3% -21% -9%

India Cements 11.0 10.2 12.1 -5% -20% -6%

Star Cement 3.0 3.0 4.0 -3% -19% -9%

Sanghi Industries 2.0 2.8 4.2 -16% -21% -4%

Average 18.78 17.02 20.84 -3% -20% -7%

*Dec-year end. Source: PhillipCapital India Research Estimates

For now, on an average, we cut our volume estimates by 20% for FY21 and 7% for FY22. We believe the economic slowdown will have a follow-on impact on cement demand in FY22 too.

We see our current volume cuts as conservative. We don’t rule out further volume cuts.



Q4FY20 and FY20 is through but how does the picture look from Q1 and H1 perspective

Company

% of Annual volumes

in Q4 (FY16-19)

Achieved in

Q4FY20 (E)

% Business lost

in Q4 vs. average

Average business

(past 5 years) in: Linear damage

in 45 days

Incremental damage

vs. linear damage, which

we currently factor in FY21 H1 Q1

ACC Ltd.* 27% 24% 3% 51% 26% 13% -5%

Ambuja Cements* 27% 25% 2% 47% 26% 13% -6%

UltraTech Cement 29% 27% 2% 47% 29% 15% -7%

Shree Cement 28% 28% 0% 47% 25% 13% -8%

JK Cement 28% 28% 0% 46% 23% 12% -8%

HeidelbergCement India 26% 23% 3% 49% 26% 13% -8%

Dalmia Bharat 30% 26% 4% 46% 24% 12% -8%

JK Lakshmi Cement 29% 27% 2% 47% 25% 13% -8%

Mangalam Cement 27% 25% 2% 47% 24% 12% -9%

India Cements 28% 23% 5% 49% 25% 13% -7%

Star Cement 31% 29% 2% 46% 26% 13% -6%

Sanghi Industries 26% 23% 3% 47% 26% 13% -8%

Average 28% 26% 2% 47% 25% 13% -7%


On an average, industry registers 28% of its annual volumes in Q4, which was missed by 2% in FY20 (estimated). This is not a major loss yet from Q4 perspective. Similarly in H1 and Q1 the industry registers 47% and 25% of its annual volumes.

Our estimate of 20% volume loss (assuming 45 days of lockdown either fully or partially) vs. earlier estimate for FY21, factors in an additional volume loss of 7% (beyond linear volume damage of 13%) for the industry in Q1. This is based on the expectations that the ground and the industry will need time of atleast 10-15 days to fall back in place and to be back in sync. The states, which are more dependent on migrated labour, may not see them return immediately. This is bound to impact construction activities in such labour dependent states. Logistics issues such as availability of wagons and trucks may also remain an intermittent issue. As construction may continue to wait for some more time, the immediate focus by centre and states will continue to remain to transport essential commodities like agricultural products and other necessities, which may remain an immediate need.

The EBITDA impact: Supply-chain efficiencies are bound to gain further importance in long-run

As we see, on immediate basis the ground will be more fragile vs. the industry when the lockdown opens up. The immediate task for the industry will be to ensure the needs of channel partners are taken care on priority. To us this implies that an immediate disruption in supply-chain efficiencies is not ruled out resulting in distortion of realisations, atleast for the initial few days as and when the lockdown opens fully.

But, we firmly believe that sooner or later the industry will realise that this distortion is not worthy. The importance of supply-chain is likely to gain significant importance in the long run and this crisis will ensure it happens in a quicker timeframe. The idle deltas on supply-chain ground practices will be the first ones to be addressed, resulting in either net realisations inch-up or costs becoming lower vs. past. Getting better on supply-chain will remain the only rescue path for most in the sector as the debt picture is likely to turn less favourable.

We don’t estimate an impact beyond a 1-2% as far as average net realisations are concerned in FY21. Our sensitivity analysis (on page 6) indicates that the debt-ridden players (which is the case with many in the industry) just cannot afford to go for a price cut. Rather with a 20% volume cut, FY21 average prices have to go up by a minimum of Rs15/bag to ensure minimum disruption in balance sheet strength. A price war on the ground will be a suicidal move.

For now, we see most of the EBITDA/tonne decline being driven by loss of scale efficiencies and recurring fixed costs.



Change in EBITDA estimates

EBITDA factoring in Covid-19 impact % Change


ACC Ltd.* 20,983 16,938 20,254 0% -27% -18%

Ambuja Cements* 20,102 16,677 21,645 0% -28% -16%

UltraTech Cement 90,428 76,032 1,10,741 -4% -32% -14%

Shree Cement 35,662 30,501 41,761 1% -28% -11%

JK Cement 10,671 9,447 13,255 -3% -28% -10%

HeidelbergCement India 4,860 3,211 4,555 -6% -33% -14%

Dalmia Bharat 20,849 16,968 23,889 -5% -34% -12%

JK Lakshmi Cement 6,591 5,682 6,708 -1% -28% -16%

Mangalam Cement 2,010 1,420 2,232 -5% -35% -17%

India Cements 6,827 5,728 7,813 -7% -27% -9%

Star Cement 4,072 3,621 4,865 -3% -25% -13%

Sanghi Industries 1,863 1,979 3,324 -12% -30% -5%

Average 18,743 15,684 21,754 -2% -30% -13%


We cut our absolute EBITDA estimates by 30% for FY21 and 13% for FY22 largely driven by a volume cut.

We don’t see a significant impact in FY20 estimates.

EBITDA/tonne impact EBITDA/tonne - Post Covid-19 impact % Change


ACC Ltd.* 726 691 714 0% -11% -9%

Ambuja Cements* 828 800 892 0% -12% -8%

UltraTech Cement 1,074 988 1,186 0% -13% -8%

Shree Cement 1,442 1,289 1,352 8% -9% -7%

JK Cement 1,051 997 1,103 -1% -11% -5%

HeidelbergCement India 1,032 822 970 -4% -15% -5%

Dalmia Bharat 1,084 919 995 0% -18% -8%

JK Lakshmi Cement 629 687 715 -1% -10% -8%

Mangalam Cement 748 634 784 -2% -18% -9%

India Cements 620 560 647 -2% -10% -3%

Star Cement 1,374 1,222 1,216 0% -7% -5%

Sanghi Industries 912 712 785 5% -12% -1%

Weighted average 998 921 1,044 1% -12% -7%


From FY20 perspective, we don’t see any material downside risks to our EBITDA/tonne estimates for all companies under coverage. But, we see our EBITDA/tonne estimates declining by 12% and 7% for FY21 and FY22, respectively.

Shree Cement & Star Cement are likely to have the least impact on EBITDA/tonne.

At Shree Cement, driven by its strategy shift and directionally rising focus on supply-chain practices, we believe the ‘New Shree’ will continue to deliver an EBITDA/tonne nearly 50% better than the average of peers under our coverage. We expect positive surprises to continue at Shree Cement vs. industry. Shree Cement also remains the most flexible and adaptable company to this crisis, in our view.



The indicative debt picture Net Debt: Equity (%)

Post Covid-19 impact

Company FY20E FY21E FY22E

ACC Ltd.* (48) (39) (31)

Ambuja Cements* (45) (25) (28)

UltraTech Cement 52 46 35

Shree Cement (21) (26) (27)

JK Cement 109 97 77

HeidelbergCement India (13) (19) (38)

Dalmia Bharat 38 51 45

JK Lakshmi Cement 102 93 66

Mangalam Cement 54 71 51

India Cements 67 71 68

Star Cement 0 (0) 11

Sanghi Industries 77 86 86

For the sector (%) 13 15 10

For the sector - Excluding cash rich players (%) 54 52 42

Increase in multiple for sector excluding cash rich players, x 4.3 3.4 4.2

For the sector - Excluding cash rich players & UltraTech Cement (%) 57 62 55

Increase in multiple for sector excluding cash rich players & UltraTech Cement, x 4.5 4.0 5.4


Prima-facie, the net debt picture of the sector looks fairly comfortable with the weighted average at just about 15%.

However, that is misleading. If we exclude the presence of cash rich players from the sector, the net debt proportion rises by 3.4x with net debt to equity at 52%.

When we further exclude the presence of UltraTech Cement, the ratio rises further to 62% with a 4x increase.

This implies clearly that all the debt-ridden manufacturers, mainly mid-caps are clearly more vulnerable to the crisis vs. cash rich peers.

Indicative Net debt:EBITDA, x Net Debt: EBITDA ,x (post Covid-19 impact)

Company FY20E FY21E FY22E

ACC Ltd.* (2.6) (2.8) (2.0)

Ambuja Cements* (2.3) (1.9) (1.8)

UltraTech Cement 2.2 2.4 1.4

Shree Cement (0.8) (1.2) (1.1)

JK Cement 3.0 3.1 2.0

HeidelbergCement India (0.4) (0.9) (1.5)

Dalmia Bharat 2.0 3.2 2.0

JK Lakshmi Cement 2.5 2.9 1.9

Mangalam Cement 1.6 3.1 1.6

India Cements 5.1 6.1 4.3

Star Cement 0.0 (0.0) 0.5

Sanghi Industries 7.0 7.2 4.4

For the sector 0.6 0.9 0.5

For the sector excluding cash rich 2.3 2.8 1.7

For the sector excluding cash rich & UltraTech Cement 2.7 3.4 2.3


The net debt:EBITDA picture also has similar implications.

These debt numbers gives us more confidence as to why cement prices may not be at a huge risk despite very low capacity utilisations.

The net debt:EBITDA stands at 0.9x for FY21. But when we exclude cash rich players it increases to 2.8x. But, when we further exclude UltraTech Cement, it increases to whopping 3.4x.

This further implies that the debt-ridden mid-caps in no way can afford a longer-term ground war, which further deteriorates the supply-chain efficiencies of the sector, at large. It that happens, it will be a miserable move.



Why realisation improvement is a MUST and necessity, especially for debt-ridden companies Indicative scenario analysis for debt-ridden companies FY21E FY22E

Production cut assumed vs. previous estimates -20% -6%

Increase in debt on account of Covid-19, Rs/tonne of production 946 424

Assuming rate of interest @ 9% - additional interest burden per tonne p.a. to service debt, Rs/tonne 85 38

Minimum annual AVERAGE INCREMENTAL price increase MUST required to service interest cost, Rs/bag 4 2

Loan tenure assumed 7 Years

Principal repayment liability in earlier scenario, Rs/year/tonne of production 366 299

Principal repayment liability in post Covid-19 scenario, Rs/year/tonne 501 359

Principal repayment liability in earlier scenario, Rs/bag 18 15

Principal repayment liability in post Covid-19 scenario, Rs/bag 25 18

Minimum annual AVERAGE INCREMENTAL price increase MUST required to repay prinicipal amount (Rs/bag) 7 3

Total price increase required (exclusive of GST), Rs/bag - Prinicipal + Interest 11 5

Total price increase required (Inclusive of GST) with a 20% volume loss in FY21E, Rs/bag - Prinicipal + Interest 15 7

Price increase FURTHER required (inclusive of GST) in FY21E with a possible volume loss of 30% vs. 20% envisaged above,

Rs/bag - Principal + Interest

10

Source: PhillipCapital India Research Estimates

When we accumulate the debt numbers of all cement manufacturers in our

coverage; in a scenario of 20% volume cut, it appears a given that a Rs15/bag is the minimum annual average price increase requirement for FY21 that must happen for these mid-caps to sustain the balance sheet strength.

If the volume scenario further deteriorates in FY21 by another 10% (which we don’t rule out), the annual average price increase requirements for these debt-ridden manufacturers increases disproportionately by another Rs10/bag.

The scenario analysis clearly portrays that there is no room available in the industry for any price reduction, especially to debt-ridden companies. However, we don’t see that happening, as we believe that there are bound to be on ground distortions on many practices, atleast for the initial few days or months post the lockdown fully opens.

Resultantly, we cut our target multiples too.

Revisiting target multiples

Target Multiple (FY22) Target multiple vs. 5 year historic, 1

year forward (sector) Target multiple vs. 5 year historic,

1 year forward Company Earlier Now % Change

ACC Ltd. 8.0 7.5 -6% -41% -47%

Ambuja Cements 9.0 8.0 -11% -37% -47%

UltraTech Cement 14.5 13.0 -10% 2% -22%

Shree Cement 20.0 17.0 -15% 33% -14%

JK Cement 13.0 10.0 -23% -22% -5%

HeidelbergCement India 12.0 10.0 -17% -22% 14%

Dalmia Bharat 11.0 8.5 -23% -33% -12%

JK Lakshmi Cement 9.0 7.5 -17% -41% -45%

Mangalam Cement 4.0 3.5 -13% -73% -70%

India Cements 7.5 7.0 -7% -45% -24%

Star Cement 9.0 8.0 -11% -37% -22%

Sanghi Industries 9.0 7.0 -22% -45% -49%

Average 10.5 8.9 -15% -30% -29%


We cut our target multiples by 6-23%. On an average we cut our target multiples by 15%.

Our target multiple for the sector is 30% lower than the historic 5-year (1-year forward) average the sector has traded.

The individual multiples are also on an average lower by 29% vs. historic 5-year (1-year forward) average.

We firmly reiterate our stance that companies, which remain directionally focused on improving business practices on ground, will re-rate much faster than peers in the long run.

Our supply-chain thesis continues to remain the core base of assigning target multiples to individual companies.



PO Revisions Revised ratings and price targets PO Rating

Company CMP Earlier Now % Change Earlier Now Upside/Downside

ACC Ltd. 1,010 1,300 1,025 -21% Sell Neutral 1%

Ambuja Cements 159 190 165 -13% Sell Neutral 4%

UltraTech Cement 3,280 6,000 4,500 -25% Buy Buy 37%

Shree Cement 16,635 27,500 21,000 -24% Buy Buy 26%

JK Cement 966 2,200 1,400 -36% Buy Buy 45%

HeidelbergCement India 141 320 230 -28% Buy Buy 63%

Dalmia Bharat 464 1,350 800 -41% Buy Buy 72%

JK Lakshmi Cement 182 530 325 -39% Buy Buy 79%

Mangalam Cement 151 300 170 -43% Neutral Neutral 12%

India Cements 103 110 75 -32% Buy Sell -27%

Star Cement 70 110 90 -18% Buy Buy 29%

Sanghi Industries 20 60 35 -42% Buy Buy 75%

Average -30%

Source: PhillipCapital India Research Estimates *Priced as on 7th April 2020

We cut our PO by 30% on an average.

Given our earlier POs are met for ACC Ltd. and Ambuja Cements and factoring in the incremental damage due to Covid-19, we see limited downside in ACC Ltd. and Ambuja Cements. Resultantly, we upgrade them to Neutral.

We downgrade India Cements to Sell rating factoring in an earnings downgrade and multiple cut. The multiple cut is relatively less vs. peers driven by the significant size of its capacity, factoring in a capacity premium in the multiple.

We reiterate BUY on Shree Cement (the safest bet), UltraTech Cement, JK Cement (white cement business advantage an added advantage vs. peers), HeidelbergCement India and Dalmia Bharat (Unprecedented correction gives an opportunity).

Sector valuation snapshot

Company EV/tonne

Target EV/tonne (US$)

Average Historic

EV/tonne

(5-year)

Target EV/tonne vs.

historic average

Premium/Discount to Replacement

(US$100) on CMP Premium/Discount to

Replacement (US$100) on PO

FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E

ACC Ltd. 61 64 62 65 97 -36% -39% -36% -38% -35%

Ambuja Cements 88 85 91 88 107 -15% -12% -15% -9% -12%

UltraTech Cement 130 127 170 167 158 7% 30% 27% 70% 67%

Shree Cement 148 143 190 186 198 -4% 48% 43% 90% 86%

JK Cement 75 71 100 97 83 20% -25% -29% 0% -3%

HeidelbergCement India 63 54 106 98 77 39% -37% -46% 6% -2%

Dalmia Bharat 61 51 89 75 103 -14% -39% -49% -11% -25%

JK Lakshmi Cement 40 37 59 55 67 -12% -60% -63% -41% -45%

Mangalam Cement 29 25 30 27 38 -20% -71% -75% -70% -73%

India Cements 56 55 49 48 57 -14% -44% -45% -51% -52%

Star Cement 63 69 83 88 119 -30% -37% -31% -17% -12%

Sanghi Industries 37 38 44 44 72 -39% -63% -62% -56% -56%

For the sector 100 97 126 123

0% -3% 26% 23%


The sector currently trades at near par to replacement costs.

On an average we have valued the sector at US$126 (1-year forward).

Our target EV/tonne for most companies is at a discount of -4% to 40% vs. historic averages.

In the current scenario, the only companies where we see that they can command a premium are Shree Cement, UltraTech Cement, JK Cement and HeidelbergCement India. Dalmia Bharat and JK Lakshmi Cement can also move closer to trade at near par to replacement costs.

Shree Cement undoubtedly remains the most flexible company to adapt to these circumstances, given the balance sheet strength and flexibility of its business operations.



Risks to assumptions in the current scenario:

If an unreasonable price war happens and sustains, along with a volume cut larger than what we anticipate, many cement manufacturers are at the risk of getting bust. Price wars may have an uncontrollable damage.

The biggest risk to our assumptions is that if the cash rich players push volumes and reach out for a price war. Given a conscious change in stance by Shree Cement and focused management commentary to move towards product premiumisation, we don’t see this happening yet at Shree Cement. However, the risk continues to remain from other pan-India cash rich players.

Though mid-cap manufacturers and few large-cap manufacturers too have no appetite to distort on ground supply-chain efficiencies and damage profit margins, but if they do so, it will be a significant challenge.

The lockdown gets over after 45 days but in a limited way, that impacts inter-state transfers.

The lockdown extends beyond two months. Outcomes of the crisis for the industry:

Deferment of capex by 6 months to 1 year is a given and capacity growth will taper off for sure.

Companies that have already completed capex will have better advantages vs. peers, atleast for the next 1-2 years, as this capex will enable them to capitalize on market share better off vs. peers.

Most mid-caps who were inefficient on supply-chain practices will be pushed to have a relook at their ground strategies and get more efficient directionally on such practices in the long run.

Overall, in sync to what we have been consistently highlighting in our supply-chain thesis, the players who remain more responsible and fair in their on the ground business practices will emerge as long term winners. Any deviations from these fair practices in these circumstances can put the respective balance sheet at a significant risk.



EV/Tonne ACC Ltd. JK Lakshmi Cement Ltd.

Ambuja Cements Ltd. Mangalam Cement Ltd.

Dalmia Bharat Ltd. Sanghi Industries Ltd.

Source: PhillipCapital India Research

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India Cements Ltd. Star Cement Ltd.

JK Cement Ltd. UltraTech Cement Ltd.

Source: PhillipCapital India Research

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ACC Ltd.

Consolidated Income Statement Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Net sales 1,44,775 1,53,431 1,31,702 1,58,030

Growth, % 12 6 -14 20

EBITDA (Core) 17,240 20,983 16,938 20,254

Growth, % 10.6 21.7 (19.3) 19.6

Margin, % 11.9 13.7 12.9 12.8

Depreciation -6,032 -6,064 -6,285 -6,402

EBIT 11,208 14,919 10,653 13,851

Growth, % 22.5 33.1 (28.6) 30.0

Margin, % 7.7 9.7 8.1 8.8

Interest paid -878 -863 -401 -1,049

Other Non-Operating Income 4,668 6,329 4,001 4,201

Pre-tax profit 15,101 20,525 14,393 17,143

Tax provided 105 -6,750 -4,733 -5,638

Profit after tax 15,206 13,775 9,660 11,506

Net Profit 15,206 13,775 9,660 11,506

Growth, % 64.1 (9.4) (29.9) 19.1

Net Profit (adjusted) 15,206 13,775 9,660 11,506

Unadj. shares (m) 188 188 188 188

Wtd avg shares (m) 188 188 188 188

Balance Sheet Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Cash & bank 30,970 46,477 46,477 46,477

Debtors 8,674 6,267 5,379 6,454

Inventory 16,794 11,419 10,782 14,232

Loans & advances 773 290 249 299

Other current assets 7,252 8,084 6,939 8,326

Total current assets 64,462 72,537 69,827 75,788

Investments 7,249 8,861 8,861 8,861

Gross fixed assets 1,56,828 1,61,678 1,52,562 1,67,562

Less: Depreciation -78,706 -84,771 -91,055 -97,458

Add: Capital WIP 3,978 4,457 25,000 25,000

Net fixed assets 82,099 81,364 86,507 95,104

Total assets 1,53,810 1,62,762 1,65,194 1,79,753

Current liabilities 40,039 38,151 26,198 25,148

Provisions 1,676 2,585 1,775 1,704

Total current liabilities 41,715 40,736 27,973 26,852

Non-current liabilities 6,746 6,557 14,310 21,126

Total liabilities 48,461 47,293 42,283 47,978

Paid-up capital 1,880 1,880 1,880 1,880

Reserves & surplus 1,03,439 1,13,558 1,20,999 1,29,863

Shareholders’ equity 1,05,349 1,15,469 1,22,911 1,31,775

Total equity & liabilities 1,53,810 1,62,762 1,65,194 1,79,753

Source: Company, PhillipCapital India Research Estimates

Cash Flow Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Pre-tax profit 15,101 20,525 14,393 17,143

Depreciation 6,032 6,064 6,285 6,402

Chg in working capital -9,862 6,453 -10,052 -7,083

Total tax paid 4,305 -6,938 -4,733 -5,638

Other operating activities 0 0 0 0

Cash flow from operating activities 15,576 26,105 5,893 10,826

Capital expenditure -2,237 -5,330 -11,427 -15,000

Chg in investments -6,211 -1,612 0 0

Cash flow from investing activities -8,730 -7,436 -11,427 -15,000

Free cash flow 6,846 18,669 -5,534 -4,174

Equity raised/(repaid) 0 0 0 0

Debt raised/(repaid) 0 0 7,753 6,816

Dividend (incl. tax) -3,163 -3,163 -2,218 -2,642

Cash flow from financing activities -3,162 -3,162 5,535 4,174

Net chg in cash 3,684 15,507 0 0

Valuation Ratios

CY18 CY19 CY20E CY21E

Per Share data

EPS (INR) 80.9 73.3 51.4 61.2

Growth, % 64.1 (9.4) (29.9) 19.1

Book NAV/share (INR) 560.2 614.1 653.6 700.8

FDEPS (INR) 80.9 73.3 51.4 61.2

CEPS (INR) 113.0 105.5 84.8 95.3

CFPS (INR) 57.5 104.5 9.3 34.5

DPS (INR) 14.0 14.0 9.8 11.7

Return ratios

Return on assets (%) 10.5 9.0 6.0 7.0

Return on equity (%) 14.4 11.9 7.9 8.7

Return on capital employed (%) 14.5 12.0 7.5 8.3

Turnover ratios

Asset turnover (x) 1.9 2.1 1.7 1.7

Sales/Total assets (x) 1.0 1.0 0.8 0.9

Sales/Net FA (x) 1.7 1.9 1.6 1.7

Working capital/Sales (x) (0.0) (0.1) (0.0) 0.0

Working capital days (16.5) (28.8) (7.9) 9.6

Liquidity ratios

Current ratio (x) 1.6 1.9 2.7 3.0

Quick ratio (x) 1.2 1.6 2.3 2.4

Interest cover (x) 12.8 17.3 26.5 13.2

Dividend cover (x) 5.8 5.2 5.2 5.2

Total debt/Equity (%) - - 6.3 11.1

Net debt/Equity (%) (36.3) (47.9) (38.7) (30.9)

Valuation

PER (x) 12.5 13.8 19.7 16.5

Price/Book (x) 1.8 1.6 1.5 1.4

Yield (%) 1.4 1.4 1.0 1.2

EV/Net sales (x) 1.1 0.9 1.1 1.0

EV/EBITDA (x) 9.2 6.8 8.9 7.8

EV/EBIT (x) 14.2 9.6 14.2 11.4



Ambuja Cements Ltd.

Consolidated Income Statement Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Net sales 2,60,409 2,71,036 2,31,789 2,80,052

EBITDA (Core) 40,108 45,970 33,615 41,899

Growth, % 4.0 14.6 (26.9) 24.6

Margin, % 15.4 17.0 14.5 15.0

Depreciation -11,539 -11,525 -16,866 -18,172

EBIT 28,569 34,445 16,749 23,727

Growth, % 8.3 20.6 (51.4) 41.7

Margin, % 11.0 12.7 7.2 8.5

Interest paid -1,705 -1,699 -3,727 -3,728


Pre-tax profit 30,703 38,753 23,705 31,531

Tax provided 542 -10,922 -6,163 -8,198

Profit after tax 31,245 27,832 17,542 23,333

Others (Minorities, Associates) -7,953 -6,882 -5,023 -5,983

Net Profit 23,292 20,950 12,519 17,350

Growth, % 53.6 (10.1) (40.2) 38.6


Unadj. shares (m) 1,986 1,986 1,986 1,986

Wtd avg shares (m) 1,986 1,986 1,986 1,986

Balance Sheet Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Cash & bank 64,393 93,546 31,142 45,152

Debtors 13,045 10,686 7,018 7,454

Inventory 29,579 20,965 15,904 17,354

Loans & advances 3,119 2,409 5,939 3,767


Total current assets 1,34,291 1,50,378 67,320 82,513

Investments 2,920 14,879 50,580 50,580


Less: Depreciation -95,654 -1,07,179 -1,24,045 -1,42,217

Add: Capital WIP 10,082 15,544 30,000 30,000

Net fixed assets 2,36,196 2,36,526 2,67,502 2,74,330

Total assets 3,73,407 4,01,782 3,85,402 4,07,423


Provisions 3,007 3,987 7,571 7,357



Total liabilities 97,391 1,03,634 72,128 74,027

Paid-up capital 3,971 3,971 3,971 3,971





Cash Flow Y/E Dec, Rs mn CY18 CY19 CY20E CY21E

Pre-tax profit 30,703 38,753 23,705 31,531

Depreciation 11,539 11,525 16,866 18,172

Chg in working capital -20,314 20,900 -28,601 -2,708

Total tax paid 273 -12,749 -6,163 -8,198



Chg in investments -239 -11,959 -35,701 0

Other investing activities -2,973 -613 0 0


Free cash flow 7,109 34,203 -77,737 13,797

Debt raised/(repaid) 150 237 17,749 3,423


Cash flow from financing activities -5,033 -5,051 15,334 213

Net chg in cash 2,077 29,153 -62,403 14,010

Valuation Ratios

CY18 CY19 CY20E CY21E

Per Share data

EPS (INR) 11.7 10.6 6.3 8.7

Growth, % 53.6 (10.1) (40.2) 38.6


FDEPS (INR) 11.7 10.6 6.3 8.7

CEPS (INR) 17.5 16.4 14.8 17.9

CFPS (INR) 9.2 26.4 (2.5) 13.7

DPS (INR) 1.5 1.5 1.0 1.4

Return ratios

Return on assets (%) 8.9 7.4 5.0 6.4

Return on equity (%) 10.4 8.7 5.0 6.5


Turnover ratios



Sales/Net FA (x) 1.1 1.1 0.9 1.0

Working capital/Sales (x) (0.0) (0.1) (0.0) 0.0

Working capital days (18.0) (44.1) (0.9) 2.5

Liquidity ratios

Current ratio (x) 1.6 1.7 1.8 2.3

Quick ratio (x) 1.3 1.4 1.4 1.8

Interest cover (x) 16.8 20.3 4.5 6.4


Total debt/Equity (%) 0.2 0.3 7.4 8.3

Net debt/Equity (%) (29.6) (44.7) (25.2) (27.9)

Valuation

PER (x) 13.6 15.1 25.2 18.2

Price/Book (x) 1.4 1.3 1.3 1.2

Yield (%) 0.9 0.9 0.7 0.9

EV/Net sales (x) 1.0 0.8 1.3 1.0

EV/EBIT (x) 8.8 6.5 18.1 12.3



Dalmia Bharat Ltd.

Consolidated Income Statement Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Net sales 94,840 1,00,360 97,156 1,28,570

Growth, % 11 6 -3 32

EBITDA (Core) 19,420 20,849 16,968 23,889

Growth, % (3.6) 7.4 (18.6) 40.8

Margin, % 20.5 20.8 17.5 18.6

Depreciation -12,960 -13,911 -15,277 -15,053

EBIT 6,460 6,938 1,691 8,836

Growth, % (19.4) 7.4 (75.6) 422.6

Margin, % 6.8 6.9 1.7 6.9

Interest paid -5,510 -5,311 -7,188 -5,862


Pre-tax profit 3,390 4,189 -2,935 5,537

Tax provided 110 -1,047 0 -1,384

Profit after tax 3,500 3,142 -2,935 4,153

Others (Minorities, Associates) 100 100 100 100

Net Profit 3,600 3,242 -2,835 4,253

Growth, % 23.3 (10.0) (187.4) (250.0)

Net Profit (adjusted) 3,600 3,242 (2,835) 4,253

Unadj. shares (m) 193 193 193 193

Wtd avg shares (m) 193 193 193 193

Balance Sheet Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Cash & bank 4,690 4,963 4,805 6,358

Marketable securities at cost 34,130 34,769 34,398 38,035

Debtors 5,490 5,810 5,624 7,443

Inventory 10,320 10,921 10,572 13,990

Loans & advances 1,420 1,503 1,455 1,925



Investments 1,070 1,070 1,070 1,070


Add: Capital WIP 5,010 10,000 2,000 2,000

Net fixed assets 1,40,740 1,61,253 1,63,215 1,61,580

Non-current assets 4,010 4,042 3,913 5,179

Total assets 2,05,380 2,28,045 2,28,647 2,40,338


Provisions 1,720 1,820 1,762 2,332



Total liabilities 98,880 1,19,051 1,22,588 1,30,978

Paid-up capital 385 385 385 385





Cash Flow Y/E Mar, Rs mn FY19 FY20E FY21E FY22E

Pre-tax profit 3,390 4,189 -2,935 5,537

Depreciation 12,960 13,911 15,277 15,053

Chg in working capital -2,660 1,179 -907 6,714

Total tax paid 110 -1,047 0 -1,384



Chg in marketable securities 13,620 -639 371 -3,637

Cash flow from investing activities 1,830 -35,063 -15,204 -17,055

Free cash flow 15,630 -16,831 -3,769 8,864

Equity raised/(repaid) -105 0 0 0

Debt raised/(repaid) -14,430 17,753 5,274 -6,460

Dividend (incl. tax) -455 -648 0 -851

Cash flow from financing activities -14,480 17,104 5,274 -7,310

Net chg in cash 1,150 273 1,505 1,554

Valuation Ratios

FY19 FY20E FY21E FY22E

Per Share data

EPS (INR) 18.7 16.8 (14.7) 22.1

Growth, % 23.3 (10.0) (187.4) (250.0)


FDEPS (INR) 18.7 16.8 (14.7) 22.1

CEPS (INR) 85.9 89.0 64.6 100.2

CFPS (INR) 70.5 78.7 47.0 112.2

DPS (INR) 2.4 3.4 - 4.4

Return ratios

Return on assets (%) 3.3 2.9 0.6 3.2

Return on equity (%) 3.4 3.0 (2.7) 3.9


Turnover ratios



Sales/Net FA (x) 0.7 0.7 0.6 0.8

Working capital/Sales (x) (0.2) (0.2) (0.2) (0.2)

Fixed capital/Sales (x) - - - -

Receivable days 21.1 21.1 21.1 21.1

Inventory days 39.7 39.7 39.7 39.7

Payable days 42.4 42.6 40.9 41.5

Working capital days (85.6) (85.6) (85.6) (85.6)

Liquidity ratios

Current ratio (x) 1.4 1.4 1.4 1.2

Quick ratio (x) 1.1 1.1 1.1 1.0

Interest cover (x) 1.2 1.3 0.2 1.5

Dividend cover (x) 7.9 5.0 5.0


Net debt/Equity (%) 30.0 38.3 50.7 44.6

Valuation

PER (x) 24.8 27.6 (31.5) 21.0

PEG (x) - y-o-y growth 1.1 (2.8) 0.2 (0.1)

Price/Book (x) 0.8 0.8 0.8 0.8

EV/Net sales (x) 1.3 1.3 1.5 1.1

EV/EBITDA (x) 6.2 6.3 8.4 5.8

EV/EBIT (x) 18.8 18.9 84.7 15.6



HeidelbergCement India Ltd.


Net sales 21,094 22,117 18,340 22,500

Growth, % 13 5 -17 23

EBITDA (Core) 4,594 4,860 3,211 4,555

Growth, % 37.3 5.8 (33.9) 41.9

Margin, % 21.8 22.0 17.5 20.2

Depreciation -1,018 -989 -1,000 -1,015

EBIT 3,577 3,871 2,211 3,540

Growth, % 53.2 8.2 (42.9) 60.1

Margin, % 17.0 17.5 12.1 15.7

Interest paid -748 -628 -527 -601

Other Non-Operating Income 587 560 675 644

Pre-tax profit 3,416 3,803 2,360 3,584

Tax provided -1,210 -1,347 -836 -1,269

Profit after tax 2,207 2,457 1,524 2,315

Net Profit 2,207 2,457 1,524 2,315

Growth, % 65.7 11.3 (38.0) 51.9


Unadj. shares (m) 227 227 227 227

Wtd avg shares (m) 227 227 227 227


Cash & bank 3,377 5,200 5,972 11,327

Debtors 253 265 220 270

Inventory 1,674 1,755 1,456 1,786




Gross fixed assets 31,478 32,393 32,893 33,393


Add: Capital WIP 172 500 500 500

Net fixed assets 18,581 18,833 18,334 17,819

Total assets 26,955 29,274 28,651 34,476


Provisions 3,335 3,496 2,899 3,557




Paid-up capital 2,266 2,266 2,266 2,266

Reserves & surplus 9,446 11,902 13,427 15,742

Shareholders’ equity 11,712 14,169 15,693 18,008

Total equity & liabilities 26,955 29,274 28,651 34,476



Pre-tax profit 3,416 3,803 2,360 3,584

Depreciation 1,018 989 1,000 1,015

Chg in working capital -329 200 -892 983

Total tax paid -741 -1,347 -836 -1,269


Capital expenditure -379 -1,242 -500 -500

Other investing activities -959 0 0 0

Cash flow from investing activities -1,338 -1,242 -500 -500

Free cash flow 2,026 2,405 1,132 3,813

Dividend (incl. tax) 0 0 0 0

Cash flow from financing activities -774 -581 -360 1,542

Net chg in cash 1,252 1,824 772 5,355

Valuation Ratios


Per Share data

EPS (INR) 9.7 10.8 6.7 10.2


FDEPS (INR) 9.7 10.8 6.7 10.2

CEPS (INR) 14.2 15.2 11.1 14.7

CFPS (INR) 12.3 13.8 4.2 16.2

DPS (INR) - - - -

Return ratios

Return on assets (%) 10.2 10.1 6.4 8.5

Return on equity (%) 18.8 17.3 9.7 12.9


Turnover ratios



Sales/Net FA (x) 1.1 1.2 1.0 1.2



Liquidity ratios

Current ratio (x) 1.3 1.5 1.8 2.3

Quick ratio (x) 1.0 1.2 1.5 2.1



Net debt/Equity (%) 5.0 (13.2) (19.1) (37.8)

Valuation

PER (x) 14.5 13.0 21.0 13.8

Price/Book (x) 2.7 2.3 2.0 1.8

EV/Net sales (x) 1.5 1.4 1.6 1.1

EV/EBITDA (x) 7.1 6.2 9.0 5.5

EV/EBIT (x) 9.1 7.8 13.1 7.1



India Cements Ltd.


Net sales 57,704 53,609 52,812 61,349

Growth, % 6 -7 -1 16

EBITDA (Core) 6,257 6,827 5,728 7,813

Growth, % (11.7) 9.1 (16.1) 36.4

Margin, % 10.8 12.7 10.8 12.7

Depreciation -2,647 -2,708 -2,762 -2,817

EBIT 3,609 4,119 2,966 4,996

Growth, % (16.1) 14.1 (28.0) 68.4

Margin, % 6.3 7.7 5.6 8.1

Interest paid -3,504 -3,570 -3,306 -3,176


Pre-tax profit 436 879 -10 2,151

Tax provided -245 -237 3 -581

Profit after tax 191 642 -7 1,570


Net Profit 191 642 -7 1,570

Growth, % (71.2) 236.0 (101.1)

Net Profit (adjusted) 191 642 (7) 1,570

Unadj. shares (m) 310 310 310 310

Wtd avg shares (m) 310 310 310 310


Cash & bank 487 487 487 487

Debtors 7,456 6,926 6,823 7,926

Inventory 8,468 7,867 7,750 9,003

Loans & advances 19,634 20,073 20,511 20,949

Other current assets 0 0 0 0


Investments 4,257 4,257 4,257 4,257



Add: Capital WIP 1,957 3,000 3,000 3,001

Net fixed assets 72,673 72,372 71,017 69,608

Total assets 1,12,974 1,11,982 1,10,845 1,12,230





Paid-up capital 3,099 3,099 3,099 3,099






Pre-tax profit 436 879 -10 2,151

Depreciation 2,647 2,708 2,762 2,817

Chg in working capital 629 -2,082 -483 15

Total tax paid -245 -237 3 -581



Chg in investments -169 0 0 0

Other investing activities 904 60 211 61



Debt raised/(repaid) -967 2,783 626 -1,352

Dividend (incl. tax) -719 -1,078 -1,078 -1,078

Cash flow from financing activities -1,527 1,704 -452 -2,430

Net chg in cash -48 0 0 0

Valuation Ratios


Per Share data

EPS (INR) 0.6 2.1 (0.0) 5.1

Growth, % (71.4) 236.0 (101.1)


FDEPS (INR) 0.6 2.1 (0.0) 5.1

CEPS (INR) 9.2 10.8 8.9 14.2

CFPS (INR) 10.1 3.0 6.3 13.1

DPS (INR) 2.3 3.5 3.5 3.5

Return ratios

Return on assets (%) 2.1 2.5 1.7 3.1

Return on equity (%) 0.4 1.2 (0.0) 3.1


Turnover ratios



Sales/Net FA (x) 0.8 0.7 0.7 0.9

Working capital/Sales (x) 0.3 0.3 0.3 0.3

Working capital days 103.9 116.4 121.5 104.3

Liquidity ratios

Current ratio (x) 1.9 2.0 2.0 1.9

Quick ratio (x) 1.4 1.5 1.6 1.4


Dividend cover (x) 0.3 0.6 (0.0) 1.5


Net debt/Equity (%) 60.6 67.2 70.5 67.9

Valuation

PER (x) 167.1 49.7 (4,428.1) 20.3

Price/Book (x) 0.6 0.6 0.6 0.6

EV/Net sales (x) 1.0 1.2 1.3 1.1

EV/EBITDA (x) 9.6 9.7 11.6 8.4

EV/EBIT (x) 16.6 16.0 22.5 13.1



JK Lakshmi Cement Ltd.


Net sales 43,163 41,614 33,945 39,408

Growth, % 15 -4 -18 16

EBITDA (Core) 4,536 6,591 5,682 6,708

Growth, % 5.1 45.3 (13.8) 18.1

Margin, % 10.5 15.8 16.7 17.0

Depreciation -2,110 -2,203 -2,308 -2,419

EBIT 2,426 4,387 3,374 4,289

Growth, % 8.1 80.9 (23.1) 27.1

Margin, % 5.6 10.5 9.9 10.9

Interest paid -2,555 -2,204 -2,061 -1,799


Pre-tax profit 562 2,814 1,943 3,120

Tax provided -82 -703 -486 -780

Profit after tax 480 2,110 1,457 2,340

Net Profit 480 2,110 1,457 2,340

Growth, % (4.6) 339.6 (31.0) 60.6

Net Profit (adjusted) 480 2,110 1,457 2,340

Unadj. shares (m) 118 118 118 118

Wtd avg shares (m) 118 118 118 118


Cash & bank 194 194 194 194

Debtors 1,098 1,059 864 1,002

Inventory 3,522 3,396 2,770 3,216

Loans & advances 1,519 1,464 1,195 1,387


Investments 4,314 4,314 4,314 863



Add: Capital WIP 4,166 500 1,000 1,000

Net fixed assets 39,068 37,865 37,056 39,637

Total assets 49,715 48,292 46,393 46,299


Provisions 65 62 51 59










Pre-tax profit 562 2,814 1,943 3,120

Depreciation 2,110 2,203 2,308 2,419

Chg in working capital 1,391 -753 -1,707 464

Total tax paid -182 -703 -486 -780



Chg in investments 414 0 0 3,451

Other investing activities -55 -302 0 0


Free cash flow 1,979 2,259 558 3,674


Debt raised/(repaid) -1,807 -1,897 -267 -3,207

Dividend (incl. tax) -103 -361 -291 -468

Cash flow from financing activities -1,910 -2,258 -558 -3,674

Net chg in cash 70 0 0 0

Valuation Ratios


Per Share data

EPS (INR) 4.1 17.9 12.4 19.9

Growth, % (4.6) 339.7 (31.0) 60.6


FDEPS (INR) 4.1 17.9 12.4 19.9

CEPS (INR) 22.0 36.7 32.0 40.4

CFPS (INR) 22.2 28.5 12.6 45.1

DPS (INR) 0.8 2.6 2.1 3.4

Return ratios

Return on assets (%) 4.1 7.0 5.6 7.3

Return on equity (%) 3.3 13.0 8.4 12.2


Turnover ratios



Sales/Net FA (x) 1.1 1.1 0.9 1.0



Liquidity ratios

Current ratio (x) 0.3 0.3 0.3 0.4

Quick ratio (x) 0.1 0.2 0.1 0.2




Net debt/Equity (%) 107.3 102.1 93.3 66.2

Valuation

PER (x) 44.6 10.1 14.7 9.2

PEG (x) - y-o-y growth (9.7) 0.0 (0.5) 0.2

Price/Book (x) 1.5 1.3 1.2 1.1

EV/Net sales (x) 0.9 0.9 1.1 0.9

EV/EBITDA (x) 8.2 5.7 6.6 5.1

EV/EBIT (x) 15.3 8.6 11.1 7.9



JK Cement Ltd.


Net sales 51,833 54,541 50,377 65,148

Growth, % 8 5 -8 29

EBITDA (Core) 7,591 10,671 9,447 13,255

Growth, % 2.8 40.6 (11.5) 40.3

Margin, % 14.6 19.6 18.8 20.3

Depreciation -2,413 -3,128 -4,408 -4,508

EBIT 5,178 7,543 5,039 8,747

Growth, % 2.8 40.6 (11.5) 40.3

Margin, % 14.6 19.6 18.8 20.3

Interest paid -2,611 -3,085 -3,189 -2,941

Other Non-Operating Income 1,557 802 802 803

Pre-tax profit 4,124 5,260 2,652 6,609

Tax provided -1,488 -1,578 -875 -2,181

Profit after tax 2,636 3,682 1,777 4,428

Net Profit 2,636 3,682 1,777 4,428

Growth, % (12.9) 39.7 (51.7) 149.2


Unadj. shares (m) 77 77 77 77

Wtd avg shares (m) 77 77 77 77


Cash & bank 5,115 5,595 5,145 5,729

Debtors 2,606 2,788 2,564 2,854

Inventory 6,365 6,808 6,261 6,971




Investments 4,383 4,383 4,383 4,383



Add: Capital WIP 5,618 5,000 2,000 5,000

Net fixed assets 52,550 66,421 64,013 64,505

Total assets 74,159 89,352 85,453 87,879


Provisions 948 948 948 948










Pre-tax profit 4,124 5,260 2,652 6,609

Depreciation 2,413 3,128 4,408 4,508

Chg in working capital 1,507 302 -373 484

Total tax paid -1,488 -1,578 -875 -2,181



Chg in investments -3,225 0 0 0


Debt raised/(repaid) -1,078 11,316 -3,314 -2,888

Dividend (incl. tax) -858 -948 -948 -948

Cash flow from financing activities -1,863 10,368 -4,262 -3,837

Net chg in cash -479 479 -450 584

Valuation Ratios


Per Share data

EPS (INR) 34.1 47.6 23.0 57.3

Growth, % (21.1) 39.7 (51.7) 149.2


FDEPS (INR) 34.1 47.6 23.0 57.3

CEPS (INR) 65.3 88.1 80.0 115.7

CFPS (INR) 45.2 77.8 69.7 105.3

DPS (INR) 10.0 10.0 10.0 10.0

Return ratios

Return on assets (%) 6.1 6.8 4.2 7.1

Return on equity (%) 9.8 12.4 5.8 13.0


Turnover ratios



Sales/Net FA (x) 1.0 0.9 0.8 1.0



Liquidity ratios

Current ratio (x) 1.0 1.1 1.1 1.1

Quick ratio (x) 0.7 0.7 0.7 0.7




Net debt/Equity (%) 78.8 109.5 97.1 77.0

Valuation

PER (x) 28.3 20.3 42.0 16.9

Price/Book (x) 2.8 2.5 2.4 2.2

EV/Net sales (x) 1.8 1.9 2.0 1.5

EV/EBITDA (x) 12.0 9.5 10.5 7.2

EV/EBIT (x) 12.0 9.5 10.5 7.2



Mangalam Cement Ltd.


Net sales 11,996 11,777 10,031 12,742

Growth, % 10 -2 -15 27

EBITDA (Core) 571 2,010 1,420 2,232

Growth, % (33.8) 252.2 (29.4) 57.2

Margin, % 4.8 17.1 14.2 17.5

Depreciation -461 -478 -505 -577

EBIT 110 1,532 914 1,655

Growth, % (73.9) 1,297.9 (40.3) 81.0

Margin, % 0.9 13.0 9.1 13.0

Interest paid -508 -569 -469 -484


Pre-tax profit -159 1,202 684 1,410

Tax provided 62 -397 -226 -465

Profit after tax -97 806 458 945

Net Profit -97 806 458 945

Growth, % (185.6) (927.4) (43.1) 106.1

Net Profit (adjusted) (97) 806 458 945




Cash & bank 137 137 137 137

Debtors 352 346 295 374

Inventory 1,166 1,166 1,166 1,166

Loans & advances 2,893 2,473 2,181 2,662


Investments 424 424 424 424



Add: Capital WIP 731 100 100 100

Net fixed assets 9,168 8,847 10,191 10,214

Total assets 14,141 13,393 14,394 14,977


Provisions 392 385 328 416










Pre-tax profit -159 1,202 684 1,410

Depreciation 461 478 505 577

Chg in working capital -928 355 -225 323

Total tax paid 4 -397 -226 -465

Cash flow from operating activities -622 1,639 738 1,845

Capital expenditure -993 -157 -1,850 -600

Cash flow from investing activities -980 157 -1,850 -600

Free cash flow -1,602 1,796 -1,112 1,245


Debt raised/(repaid) 1,515 -1,541 1,257 -946

Dividend (incl. tax) 0 -255 -145 -299

Cash flow from financing activities 1,515 -1,796 1,112 -1,245

Net chg in cash -87 0 0 0

Valuation Ratios


Per Share data

EPS (INR) (3.6) 30.2 17.2 35.4

Growth, % (185.6) (927.4) (43.1) 106.1


FDEPS (INR) (3.6) 30.2 17.2 35.4

CEPS (INR) 13.6 48.1 36.1 57.0

CFPS (INR) (32.2) 52.4 18.7 60.2

DPS (INR) 0.0 8.2 4.6 9.6

Return ratios

Return on assets (%) 1.6 8.3 5.3 8.3

Return on equity (%) (1.9) 13.7 7.4 13.8


Turnover ratios



Sales/Net FA (x) 1.3 1.3 1.1 1.2



Liquidity ratios

Current ratio (x) 1.3 1.2 1.3 1.2

Quick ratio (x) 1.0 0.9 0.9 0.8


Dividend cover (x) (729.5) 3.7 3.7 3.7


Net debt/Equity (%) 93.3 53.5 71.1 50.6

Valuation

PER (x) (41.4) 5.0 8.8 4.3

Price/Book (x) 0.8 0.7 0.6 0.6

EV/Net sales (x) 0.7 0.6 0.8 0.6

EV/EBITDA (x) 15.3 3.6 5.9 3.4

EV/EBIT (x) 79.6 4.7 9.2 4.5



Star Cement Ltd.


Net sales 18,310 19,043 19,614 27,273

Growth, % 13 4 3 39

EBITDA (Core) 4,492 4,072 3,621 4,865

Growth, % (13.8) (9.3) (11.1) 34.3

Margin, % 24.5 21.4 18.5 17.8

Depreciation -1,056 -1,102 -1,362 -1,492

EBIT 3,435 2,971 2,260 3,373

Growth, % (14.3) (13.5) (23.9) 49.3

Margin, % 18.8 15.6 11.5 12.4

Interest paid -144 -95 -56 -138


Pre-tax profit 3,346 2,936 2,270 3,308

Tax provided -296 -440 -341 -496

Profit after tax 3,050 2,495 1,930 2,812

Others (Minorities, Associates) -62 -51 -39 -57

Net Profit 2,988 2,445 1,891 2,754

Growth, % (9.6) (18.2) (22.7) 45.7


Unadj. shares (m) 419 413 413 413

Wtd avg shares (m) 419 413 413 413


Cash & bank 2,113 2,113 2,113 2,113

Debtors 1,438 1,495 1,540 2,356

Inventory 2,772 2,883 2,969 4,542

Loans & advances 3,462 3,600 3,708 5,157



Investments 17 17 17 17


Add: Capital WIP 743 1,500 500 500

Net fixed assets 7,966 11,225 11,725 12,225

Total assets 22,969 25,776 27,102 33,405


Provisions 113 117 121 168










Pre-tax profit 3,346 2,936 2,270 3,308

Depreciation 1,056 1,102 1,362 1,492

Chg in working capital 1,907 588 -720 -4,374

Total tax paid -296 -440 -341 -496

Cash flow from operating activities 6,013 4,185 2,572 -71

Capital expenditure -818 -4,360 -1,862 -1,992

Chg in investments -3 0 0 0



Free cash flow 4,677 -176 710 -2,063

Debt raised/(repaid) -2,762 657 -235 2,538

Cash flow from financing activities -2,762 176 -710 2,063

Net chg in cash 1,915 0 0 0

Valuation Ratios


Per Share data

EPS (INR) 7.1 5.9 4.6 6.7

Growth, % (9.6) (17.0) (22.7) 45.7


FDEPS (INR) 7.1 5.9 4.6 6.7

CEPS (INR) 9.6 8.6 7.9 10.3

CFPS (INR) 14.2 10.0 6.1 (0.3)

Return ratios

Return on assets (%) 13.3 10.6 7.5 9.7

Return on equity (%) 17.3 12.7 9.2 12.0


Turnover ratios



Sales/Net FA (x) 2.3 2.0 1.7 2.3



Inventory days 55.3 55.3 55.3 60.8

Payable days 33.1 31.8 30.7 30.4


Liquidity ratios

Current ratio (x) 4.5 4.2 4.3 4.3

Quick ratio (x) 3.7 3.4 3.5 3.4

Interest cover (x) 23.9 31.2 40.7 24.4


Net debt/Equity (%) (2.8) 0.9 (0.3) 10.8

Valuation

PER (x) 9.8 11.8 15.2 10.4

PEG (x) - y-o-y growth (1.0) (0.7) (0.7) 0.2

Price/Book (x) 1.7 1.5 1.4 1.3

EV/Net sales (x) 1.6 1.5 1.5 1.1

EV/EBITDA (x) 6.4 7.1 7.9 6.4

EV/EBIT (x) 8.3 9.7 12.7 9.3



Sanghi Industries Ltd.


Net sales 10,610 9,010 12,020 18,757

Growth, % 3 -15 33 56

EBITDA (Core) 1,540 1,863 1,979 3,324

Growth, % (28.4) 21.0 6.3 68.0

Margin, % 14.5 20.7 16.5 17.7

Depreciation -713 -775 -1,259 -1,280

EBIT 827 1,088 720 2,044

Growth, % (42.1) 31.6 (33.8) 183.7

Margin, % 7.8 12.1 6.0 10.9

Interest paid -573 -806 -1,304 -1,406


Pre-tax profit 526 391 -474 747

Tax provided 0 0 71 -149

Profit after tax 526 391 -403 598

Net Profit 526 391 -403 598

Growth, % (43.7) (25.6) (203.1) (248.3)

Net Profit (adjusted) 526 391 (403) 598

Unadj. shares (m) 251 251 251 251

Wtd avg shares (m) 251 251 251 251


Cash & bank 1,667 1,667 1,667 1,667

Debtors 442 375 551 945

Inventory 2,373 2,015 2,688 4,195

Other current assets 0 0 0 0



Add: Capital WIP 4,368 500 500 500

Net fixed assets 20,419 29,551 30,051 30,551

Total assets 28,336 36,009 37,357 39,759


Provisions 714 606 808 1,262




Paid-up capital 2,510 2,510 2,510 2,510






Pre-tax profit 526 391 -474 747

Depreciation 713 775 1,259 1,280

Chg in working capital -165 588 243 692

Total tax paid -294 0 71 -149

Cash flow from operating activities 780 1,754 1,098 2,570




Free cash flow -2,330 -8,153 -660 789


Debt raised/(repaid) -284 8,153 660 -789

Cash flow from financing activities -284 8,153 660 -789

Net chg in cash -2,614 0 0 0

Valuation Ratios


Per Share data

EPS (INR) 2.1 1.6 (1.6) 2.4

Growth, % (43.7) (25.6) (203.1)


FDEPS (INR) 2.1 1.6 (1.6) 2.4

CEPS (INR) 4.9 4.6 3.4 7.5

CFPS (INR) 1.4 4.2 2.0 5.0

Return ratios

Return on assets (%) 3.2 2.7 1.0 3.7

Return on equity (%) 3.2 2.3 (2.4) 3.5


Turnover ratios



Sales/Net FA (x) 0.6 0.4 0.4 0.6



Inventory days 81.6 81.6 81.6 81.6

Payable days 77.7 83.7 71.6 65.4


Liquidity ratios

Current ratio (x) 0.9 0.9 0.9 0.9

Quick ratio (x) 0.4 0.5 0.4 0.4



Net debt/Equity (%) 32.5 77.5 86.3 85.7

Valuation

PER (x) 9.5 12.8 (12.4) 8.4

PEG (x) - y-o-y growth (0.2) (0.5) 0.1 (0.0)

Price/Book (x) 0.3 0.3 0.3 0.3

EV/Net sales (x) 1.1 2.2 1.8 1.1

EV/EBITDA (x) 7.9 10.7 10.6 6.5

EV/EBIT (x) 14.8 18.3 29.2 10.5



Shree Cement Ltd.


Net sales 1,25,547 1,33,952 1,28,409 1,67,787

Growth, % 28 7 -4 31

EBITDA (Core) 27,937 35,662 30,501 41,761

Growth, % 13.0% 27.7% -14.5% 36.9%

Margin, % 22.3 26.6 23.8 24.9

Depreciation -14,718 -17,906 -19,583 -20,421

EBIT 13,219 17,756 10,919 21,341

Growth, % -16.0% 34.3% -38.5% 95.5%

Margin, % 10.5 13.3 8.5 12.7

Interest paid -2,479 -1,920 -1,515 -603


Pre-tax profit 11,456 19,454 14,239 26,497

Tax provided -1,306 -2,918 -2,563 -6,624

Profit after tax 10,151 16,536 11,676 19,873

Net Profit 10,151 16,536 11,676 19,873

Growth, % (26.7) 62.9 (29.4) 70.2





Cash & bank 4,393 28,393 28,393 28,393

Debtors 10,237 10,923 10,470 13,681

Inventory 18,703 19,955 19,130 29,995

Loans & advances 14,342 15,302 14,668 23,000



Less: Depreciation -1,01,528 -1,19,433 -1,39,016 -1,59,437

Add: Capital WIP 11,295 11,295 21,295 31,295

Net fixed assets 73,131 76,520 78,232 72,811


Total assets 1,47,714 1,78,001 1,77,801 1,94,789


Provisions 1,427 2,435 1,719 2,926





Reserves & surplus 96,984 1,35,073 1,45,030 1,61,977

Shareholders’ equity 97,332 1,35,434 1,45,391 1,62,338




Pre-tax profit 11,456 19,454 14,239 26,497

Depreciation 14,718 17,906 19,583 20,421

Chg in working capital 16,170 -2,476 1,683 -16,914

Total tax paid -2,387 -2,918 -2,563 -6,624



Other investing activities -358 23,988 0 0

Cash flow from investing activities -38,044 2,694 -21,295 -15,000

Free cash flow 1,914 34,660 11,648 8,380

Debt raised/(repaid) 3,307 -9,245 -9,213 -6,661


Cash flow from financing activities 1,269 -10,660 -11,648 -8,380

Net chg in cash 3,183 24,000 0 0

Valuation Ratios


Per Share data

EPS (INR) 291.4 458.3 323.6 550.8

Growth, % -27 57 -29 70

Book NAV/share (INR) 2,793.9 3,753.6 4,029.6 4,499.3

FDEPS (INR) 291.4 458.3 323.6 550.8

CEPS (INR) 713.9 954.6 866.4 1,116.8

CFPS (INR) 212.7 785.7 779.0 488.3

DPS (INR) 41.0 67.5 47.6 81.1

Return ratios

Return on assets (%) 8.0 10.9 7.1 10.9

Return on equity (%) 10.4 12.2 8.0 12.2


Turnover ratios



Sales/Net FA (x) 2.0 1.8 1.7 2.2



Liquidity ratios

Current ratio (x) 2.2 3.3 3.3 3.3

Quick ratio (x) 1.4 2.4 2.4 2.3




Net debt/Equity (%) (27.9) (21.1) (26.0) (27.4)

Valuation

PER (x) 57.1 36.3 51.4 30.2

Price/Book (x) 6.0 4.4 4.1 3.7

Yield (%) 0.2 0.4 0.3 0.5

EV/Net sales (x) 4.4 4.3 4.2 3.1

EV/EBITDA (x) 19.8 16.0 17.5 12.6

EV/EBIT (x) 41.8 32.2 48.9 24.7



UltraTech Cement Ltd.


Net sales 3,73,792 4,51,683 4,12,757 5,23,527

Growth, % 19 21 -9 27

EBITDA (Core) 67,881 90,428 76,032 1,10,741

Growth, % 10.5 33.2 (15.9) 45.7

Margin, % 18.2 20.0 18.4 21.2

Depreciation -21,398 -23,959 -24,386 -24,078

EBIT 46,483 66,469 51,646 86,663

Growth, % 8.2 43.0 (22.3) 67.8

Margin, % 12.4 14.7 12.5 16.6

Interest paid -15,486 -17,901 -17,623 -16,994


Pre-tax profit 35,384 53,440 39,336 75,421

Tax provided -11,068 -17,635 -12,981 -24,889

Profit after tax 24,316 35,805 26,355 50,532


Net Profit 24,316 35,805 26,355 50,532

Growth, % (5.4) 47.2 (26.4) 91.7


Unadj. shares (m) 275 289 289 289

Wtd avg shares (m) 275 289 289 289


Cash & bank 7,072 7,786 7,786 7,786

Debtors 25,314 41,622 38,035 48,242

Inventory 35,851 57,884 52,896 67,091

Loans & advances 36,245 63,539 58,063 73,645

Total current assets 1,04,482 1,70,831 1,56,780 1,96,764

Investments 39,962 39,962 39,962 39,962


Less: Depreciation -1,78,073 -2,02,032 -2,26,418 -2,50,496

Add: Capital WIP 11,183 11,183 11,183 11,183

Net fixed assets 4,72,442 5,19,003 5,30,109 5,43,299


Total assets 6,45,356 7,58,266 7,55,321 8,08,495

Current liabilities 94,370 1,14,009 1,04,195 1,32,124

Provisions 6,172 7,458 6,815 8,644

Total current liabilities 1,00,541 1,21,467 1,11,009 1,40,768

Non-current liabilities 2,60,926 2,66,183 2,51,345 2,31,909

Total liabilities 3,61,467 3,87,650 3,62,355 3,72,677

Paid-up capital 2,746 2,886 2,886 2,886






Pre-tax profit 35,384 53,440 39,336 75,421

Depreciation 21,398 23,959 24,386 24,078

Chg in working capital -5,322 -44,709 3,594 -10,226

Total tax paid -5,398 -17,635 -12,981 -24,889



Chg in investments 20,403 0 0 0

Other investing activities -543 56,224 0 0


Free cash flow -25,908 759 18,843 27,116


Debt raised/(repaid) 34,487 5,257 -14,837 -19,437


Cash flow from financing activities 30,792 -45 -18,843 -27,116

Net chg in cash 4,884 714 0 0

Valuation Ratios


Per Share data

EPS (INR) 88.5 124.1 91.3 175.1

Growth, % (5.4) 40.1 (26.4) 91.7

Book NAV/share (INR) 1,033.8 1,284.1 1,361.6 1,510.1

FDEPS (INR) 88.5 124.1 91.3 175.1

CEPS (INR) 166.5 207.1 175.8 258.5

CFPS (INR) 217.7 35.3 169.9 203.2

DPS (INR) 11.5 16.1 11.9 22.7

Return ratios

Return on assets (%) 5.6 6.6 4.9 7.7

Return on equity (%) 8.6 9.7 6.7 11.6


Turnover ratios



Sales/Net FA (x) 0.9 0.9 0.8 1.0



Liquidity ratios

Current ratio (x) 1.1 1.5 1.5 1.5

Quick ratio (x) 0.7 1.0 1.0 1.0




Net debt/Equity (%) 68.6 52.5 45.7 34.9

Valuation

PER (x) 37.0 26.4 35.9 18.7

PEG (x) - y-o-y growth (6.8) 0.7 (1.4) 0.2

Price/Book (x) 3.2 2.6 2.4 2.2

Yield (%) 0.4 0.5 0.4 0.7

EV/Net sales (x) 3.0 2.6 2.8 2.2

EV/EBITDA (x) 16.4 12.9 15.1 10.2

EV/EBIT (x) 24.0 17.5 22.3 13.0



Stock Price, Price Target and Rating History – ACC Ltd.

Stock Price, Price Target and Rating History – Ambuja Cements Ltd.

Stock Price, Price Target and Rating History – Dalmia Bharat Ltd.

N (TP 1725) N (TP 1950)

N (TP 1830)

B (TP 1830)

B (TP 1620)

N (TP 1760) S (TP 1220)

S (TP 1300)

800

1000

1200

1400

1600

1800

2000

A-17M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19A-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 290)

N (TP 300)

N (TP 250)

S (TP 185) S (TP 190)

80

130

180

230

280

330

A-17M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19 A-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 1500)

B (TP 1350)

B (TP 1350)

0

200

400

600

800

1000

1200

1400

D-18 F-19 A-19 M-19 J-19 A-19 O-19 N-19 J-20 F-20



Stock Price, Price Target and Rating History – HeidelbergCement India

Stock Price, Price Target and Rating History – India Cements Ltd.

Stock Price, Price Target and Rating History – JK Lakshmi Cement Ltd.

B (TP 180) B (TP 200)

B (TP 200)

B (TP 230) B (TP 320)

0

50

100

150

200

250

A-17 M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 320)

B (TP 320)

B (TP 290)

B (TP 260) B (TP 260)

B (TP 200)

B (TP 180) B (TP 140) B (TP 110)

0

50

100

150

200

250

A-17M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 600)

B (TP 600) B (TP 600) B (TP 600)

B (TP 470) B (TP 480)

B (TP 460)

B (TP 530)

0

100

200

300

400

500

600

A-17 M-17 J-17 A-17 O-17 N-17 J-18 M-18 A-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19 M-19 J-19 A-19 S-19 N-19 D-19 F-20 M-20



Stock Price, Price Target and Rating History – JK Cement Ltd.

Stock Price, Price Target and Rating History – Mangalam Cement Ltd.

Stock Price, Price Target and Rating History – Star Cement Ltd.

B (TP 1400) B (TP 1400)

B (TP 1400)

B (TP 1100) B (TP 1100)

B (TP 1300)

B (TP 2200)

0

200

400

600

800

1000

1200

1400

1600

A-17 M-17 J-17 A-17 O-17 N-17 J-18 M-18 A-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19 M-19 J-19 A-19 S-19 N-19 D-19 F-20 M-20

B (TP 420) B (TP 420)

B (TP 310) B (TP 350)

N (TP 300)

60

90

120

150

180

210

240

270

300

330

360

390

420

450

480

A-17M-17 J-17 A-17 S-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 150)

B (TP 150) B (TP 125)

B (TP 110)

0

20

40

60

80

100

120

140

160

J-18 F-18 A-18 M-18 J-18 A-18 S-18 N-18 D-18 F-19 M-19 M-19 J-19 J-19 S-19 N-19 D-19 J-20 M-20



Stock Price, Price Target and Rating History – Sanghi Industries Ltd.

Stock Price, Price Target and Rating History – Shree Cement Ltd.

Stock Price, Price Target and Rating History - UltraTech Cement Ltd.

B (TP 150)

B (TP 105) B (TP 80)

B (TP 60)

0

20

40

60

80

100

120

140

160

J-18 F-18 A-18 M-18 J-18 A-18 S-18 N-18 D-18 F-19 M-19 M-19 J-19 J-19 S-19 N-19 D-19 J-20 M-20

N (P 17500) N (TP 17500)

N (TP 18000)

N (TP 17000)

B (TP 18500)

B (TP 22500) B (TP 23000) B (TP 23000)

B (TP 27500)

1000

3000

5000

7000

9000

11000

13000

15000

17000

19000

21000

23000

25000

27000

A-17 M-17

J-17 A-17 S-17 N-17 D-17 F-18 M-18

M-18

J-18 A-18 S-18 N-18 D-18 J-19 M-19

M-19

J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 5000) B (TP 4800)

B (TP 4800)

B (TP 4500)

N (TP 4000)

B (TP 5600) B (TP 5600)

B (TP 6000)

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

M-17 A-17 J-17 J-17 S-17 O-17 D-17 J-18 M-18A-18 J-18 J-18 S-18 O-18 D-18 J-19 M-19A-19 J-19 J-19 S-19 O-19 D-19B (TP 6000)M-20



Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. We have different threshold for large market capitalisation stock and Mid/small market capitalisation stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large cap stocks Rating Criteria Definition

BUY >= +10% Target price is equal to or more than 10% of current market price

NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%

SELL <= -10% Target price is less than or equal to -10%.

Mid cap and Small cap stocks Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

This report is issued by PhillipCapital (India) Pvt. Ltd., which is regulated by the SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only, and neither the information contained herein, nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment, or derivatives. The information and opinions contained in the report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication of future performance.

This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.

Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.

Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this

research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

Sr. no. Particulars Yes/No



1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No

4 PCIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the company(ies) covered in the Research report

No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.

Kindly note that past performance is not necessarily a guide to future performance.

For Detailed Disclaimer: Please visit our website www.phillipcapital.in IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report is a product of PhillipCapital (India) Pvt. Ltd. which is the employer of the research analyst(s) who has prepared the research report. PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.

Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.

The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication Compensation and Investment Banking Activities

http://www.phillipcapital.in/



Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report.

PHILLIPCAP may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of PHILLIPCAP.

Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States.

The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments.

Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein.

No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior written consent of PHILLIPCAP and PHILLIPCAP accepts no liability whatsoever for the actions of third parties in this respect.

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Documents

INSTITUTIONAL EQUITY RESEARCH Cementbackoffice.phillipcapital.in/Backoffice/Research... · CMP, Rs 159 Target Price, Rs 165 Dalmia Bharat Buy CMP, Rs 481 Target Price, Rs 800 HeidelbergCement