A

PROJECT REPORT ON

EQUITY RESEARCH ON CEMENT SECTOR

done at
EINZ CONSULTANCY, VASHI, NAVI MUMBAI
SUMMER INTERNSHIP REPORT SUBMITTED TO
UNIVERSITY OF MUMBAI
IN
PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF
MASTER OF MANAGEMENT STUDIES
SUBMITTED BY:
SUBODH UJJANKAR
ROLL NO. 36
BATCH: 2013-2015
Under the supervision of
PROF. ASMAT ARA KHAN

Bharati Vidyapeeths

Institute of Management Studies & Research

Sector 8, CBD-Belapur, Navi Mumbai - 400 614.

DECLARATION

I Subodh Ujjankar student of Bharati Vidyapeeths Institute of Management Studies and

Research hereby declare that the project work titled EQUITY RESEARCH ON CEMENT
SECTOR submitted in partial fulfillment of the required for the award of the degree of
Masters of Management Studies (MMS). The results embodied in this report have not been
submitted to any other university or institute for award of any degree or diploma.

SUBODH UJJANKAR

CERTIFICATE
This is to certify that this project report submitted in partial fulfillment of the MMS degree of
University of Mumbai to Bharati Vidyapeeths Institute of Management Studies and Research is
a result of bonafide research work carried out by Mr. Subodh Ujjankar under my supervision
and guidance during the period from 03th May 2014 to 03th July 2014.
No part of this report has been submitted for award of any other degree, diploma or other similar
titles or prizes. The work has also not been published in any Journals/Magazines.

Date:
Place:

(Dr. D.Y. Patil)

Director
BVIMSR

(Prof. Asmat Ara Khan)

Internal Guide
BVIMSR

ACKNOWLEDGMENT

I would like to thank our Director Dr. D.Y. Patil. It gives me a great pleasure in presenting the
Project Report on EQUITY RESEARCH ON CEMENT SECTOR. I would like to thanks Prof.

Deep Kapadia, my guide at the EINZ Consultancy, Vashi, Navi Mumbai, for his valuable
guidance and motivation and also, his assistance in the project work and his valuable feedback. I
would also like to thank my faculty mentor, Prof. Asmat Ara Khan, BVIMSR for allowing me
to take up this project at EINZ and his valuable inputs before the start of the SIP and through the
periodic electronic interactions during the period of the project.
It is the matter of utmost pleasure to express my bliss and deep sense of gratitude to various
persons who extended their maximum help to supply the necessary information for the project,
which became available on account of the most selfless and honest co-operation. I am also
grateful to many EINZ employees for their sincere helping hands and providing supporting aids.
I owe the reality of this report to Prof. Deep Kapadia whose analytical skills and phenomenal
thought process helped me in completing the project successfully. Evidences of his vision and
expertise are sprinkled throughout the report.
Even if I put all my efforts to the concise, the word of acknowledgement itself will require more
space then rest of the project. Though it is impossible to put my token of thanks towards every
person individually within the limited apace available, I have tried to subsume everybodys name
that has made the project a successful one.
I would also like to thank my family and friends for their constant support throughout the
project. I also want to thank all the respondents who helped me gather information and their view
about the Cement Sector.

TABLE OF CONTENTS
Chapter
No.

SUBJECTS COVERED
i.
ii.
iii.

DECLARATION
CERTIFICATE
ACKNOWLEDGMENT

INTRODUCTION TO THE PROJECT

1.1
TITLE OF THE PROJECT
1.2
INTRODUCTION TO THE TOPIC
1.3
OBJECTIVES OS THE STUDY
1.4
LITRATURE REVIEW
INTRODUCTION TO THE COMPANY
2.1
COMPANY PROFILE
2.2 AN OVERVIEW OF EINZ
2.3 ORGANISATION STRUCTURE
2.4 COMPANYS PERFORMANCE
2.5 GROWTH

INTRODUCTION TO THE INDUSTRY

3.1 OVERVIEW OF THE INDUSRTY
3.2 MAJOR PLYER IN THE INDUSRTY
3.3 THE INDIAN MARKET PREDICTION

CURRENT STATUS OF THE COMPANY

4.1 SWOT ANALYSIS
4.2 INTRODUCTION TO DATA ANALYSIS AND
INTERPRETATION TECHNIQUES

ANALYSIS OF CEMENT INDUSTRY

5.1

5.2
5.3

EQUITY RESEARCH TECHNIQUES

PE RATIO
INTRODUCTION TO CEMENT SECTOR
ANALYSIS OF CEMENT SECTOR

CONCLUSION & LIMITATION

6.1
6.2
6.3
6.4

Outlook
Limitation
Conclusion
Bibliography

PAGE
NO.

CHAPTER 1
INTRODUCTION TO THE PROJECT

1.1 Title of the Project:

EQUITY RESEARCH ON CEMENT SECTOR

The main aim of this project is to do equity research on Cement sector and to find out the
opportunities of investment in this sector where returns can be maximized. This report starts with
Sector Analysis of Cement sector followed by the fundamental analysis of the companies.
Analysis of the sector has been done. Economy of India, cement industry is analyzed on the basis
of various factors and indicators. After analyzing these companies, stock price is estimated by
Relative Valuation Method and the stocks were purchased by creating a portfolio. Ratios are
calculated and then the growth and value of the stocks were estimated.
Technical analysis is used to study stock chart patterns of these companies. The observed
patterns are tested with various oscillators and decision about particular stock is made. Based on
these factors, trend of a particular stock is observed.
This report will help the investors to know about the current growth prospects of Indian
Economy in relation with Cement sector. They will get to understand various factors affecting
this sector and their impact on the growth of the sector. This report will help them in comparing
the stocks and their estimated future share prices, so that they can invest in better options and get
maximum returns.
This report will help Wealth Management on their investment decisions of the wealth
management team.

1.2 Introduction of project -

To study the cement sector stock in the market and the factors that affect the share prices of the
stocks of the sector. The growth of the Indian economy has slowed down in recent times on
account of the rising inflation, high interest rates, high prices of commodities and fuels.
Cement is the main binding agent in concrete and, thus, the most common building and
construction material in the world. A key feature of the cement industry is the strong direct
relationship between economic growth and cement consumption. It has been a very good sector
in terms of growth. The Indian cement industry is the 2nd largest market after China accounting
for about 7-8% of the total global production. It had a total capacity of about 330 m tons (MT) as
of financial year ended 2011-12. Cement is a cyclical commodity with a high correlation with
GDP, growing at around 1.2x of GDP growth rate. The housing sector is the biggest demand
driver of cement, accounting for about 64% of the total consumption. The other major consumers
of cement include infrastructure, commercial & institutional and industrial segment.

1.3 Objective To provide an overview of Indian Cement Industry.

To study about some of the major players in Indian Cement Industry which has good
investment prospects.
To identify the growth drivers of the sector.
To identify the top-line and bottom-line of the companies selected under the sector and
the factors that affect them.

The analysis of various stocks of the Cement sector by calculating the various ratios, the
price targets and the technical analysis which would help us know which stock is
outperforming and which stock is underperforming. Apart from this the price target will
help us know that by how much our shares would rise or fall when the market fluctuates
in future.

1.4 Literature Review

NAIR N.K. (1991) has studied the productivity aspect of Indian Cement Industry. This
study emphasized that cement, being a construction material, occupied a strategic place in
the Indian economy. This study has revealed that, in 1990-91, the industry had an
installed capacity of 60 million tones with a production of 48 million tones. In this study,
the cement industry was forecasted to have a capacity growth of about 100 million tons
by the year 2000. This study has also analyzed the productivity and performance ratios of
the cement industry with a view to identifying the major problem areas and the prospects
for solving them.

SUBIR COKAVN AND REJENDRA VAIDHA (1993) have made and attempt to
evaluate the performance of cement industry after decontrol. He found that the
performance of the cement industry after decontrol was characterized by outcomes that
were generally competitive and welfare enhancing. This study has revealed that the
structure of the industry changed significantly with large magnitude of relative
technologically and superior capacity being created by many new entrants into the
industry. It was noticed in this study that there were significant real price increase and an
associated increase in profitability. The performance of firms across the strategic group
was different with firms operating relatively new and large plants appeared to have an
advantage. Further, the study has dealt with the nature and effect of inter-firm
heterogeneities in the cement industry.

CHANDRASEKARAN N (1993) has made an attempt to examine determinants of

profitability in cement industry. He identified that profitability was determined by
structural, as well as, behavioral variables. He also identified that the other variables
which influenced profitability were growth of the firm, capital turnover ratio,
management of working capital, inventory turnover ratio etc. Some of the main changes
in the cement industry environment during 1980s identified this study were: from
complete control to decontrol, number of new entrants and substantial additions of
capacity, changing technology from inefficient wet process to efficient dry process and
from conditions of scarcity of cement to near gloat in the market.

CHAPTER 2

INTRODUCTION TO THE COMPANY

2.1 COMPANY PROFILE -

An investment strategy is a crucial element of wealth management. It is a combination of

expertise and perception, complex market dynamics and innate planning. With the variety and
complexity of the investment options available in today's marketplace, it is important to have
disciplined, experienced professionals to provide advice at every stage in your life. And this is
where they come in.
Wealth Management offers unique services: so personalized, that the customers get the best of
both the worlds. Its focus and dedication is towards the success of its clients and clients
aspirations regarding his finances.
That is why; more than a plan, a customer need a partner with the financial expertise and cuttingedge tools and processes to maximize their hard-earned wealth. Wealth Management works with
its customers to help ensure their goals are not just met - but exceed their expectations at every
step.
Wealth Management is a trusted advisor and partner in helping customers achieve the pinnacle of
financial success.

2.2 An Overview of Einz Consultancy Wealth Management

MISSION:
To consistently pursue investor's wealth optimization by:

Achieving superior and consistent investment results.

Creating a conducive environment to hone and retain talent.
Providing customer delight.
Institutionalizing system-approach in all aspects of functioning
Upholding highest standards of ethical values at all times.

VISION:
To be leader and role model in a broad based and integrated financial services business.

2.3 COMPANY PERFORMANCE

Company achieved gross revenue of Rs. 53.84 lakh during the year under review as against the gross
revenue of 64.51 lakh during the previous year, a decrease of 19%. Total expenditure reduced marginally
to 69.12 lakh as compared to 69.52 lakh during the previous year. As a result, the total loss before
depreciation and tax was 15.28 lakh as against a loss of 5.01 lakh in the previous year. This increase in
loss was primarily due to continuous downside witnessed in domestic equities participation which
resulted in the growth of AUM of Mutual Funds, thus impacting overall revenue. The Company however
continues to expand its distribution channel across various asset classes of financial products and range of
product offering for its clients. During the year, Company mobilized aggregate funds under different asset
classes.

2.4 GROWTH
These regulatory changes remain dynamic and may change the overall structure for investment
management as well as the distribution industry. The state of equity market will be the key for growth.
Though the MF industry continues to be under pressure and the revenue is at the decline, the Company
has plans to strengthen its wealth management segment, streamline its retail distribution network, focus
on client acquisition and engagement through its product offering across all segments, improved
processes to increase the revenue stream and at the same time work on cost optimizations measures .

CHAPTER 3

INTRODUCTION TO THE INDUSTRY

3.1 OVERVIEW OF THE CEMENT SECTOR

The Indian cement industry is the 2nd largest market, responsible for 7-8 percent of global
cements production, and is also an exporter to 30 countries. The cement industry in India is
divided into five geographical segments, wherein the North and South regions are the leading
suppliers of cement. The East, West and Central regions face deficit of cement, thereby relying
on purchases from the North and South. According to the Cement Manufacturers Association
(CMA), there are 139 large cement plants and 365 mini and white cement plants in the country.
The Cement industry in India had a total capacity of about 330 m tonnes (MT) as of financial
year ended 2011-12. According to the Cement Manufacturers Association (CMA), cement sales
for May 2012 were registered at 16.26 million tonnes (MT), which signifies a 14 percent growth
over the same period in 2011. Cement is a cyclical commodity with a high correlation with GDP,
growing at around 1.2x of GDP growth rate. The housing sector is the biggest demand driver of
cement, accounting for about 64% of the total consumption. The other major consumers of
cement include infrastructure (17%), commercial & institutional (13%) and industrial segment
(6%).
Though cement is the most preferred construction material in both housing and industrial works,
its demand is directly linked to the development and growth of others industry domains, such as
construction, infrastructure, finance, etc. The housing segment that accounts for a major portion
of domestic demand for cement in India is expected to witness a demand of 4.3 million housing
units between 2010 and 2014. Government initiatives to boost infrastructure development and
ease transportation costs should keep the demand for cement on a consistent rise. Furthermore,
there are unexplored markets in the country, like the under-supplied North-east region, that are
currently experiencing increasing demand for cement.
Despite the fact that the Indian cement industry has grown at a commendable rate in the last
decade, registering a compounded growth of about 8%, the per capita consumption still remains
substantially poor when compared with the world average. Its per capita consumption is only
around 170 kg, much lower than the global average consumption of about 430 kg. According to
the latest report from the working group on the industry for the 12th five-year Plan (2012-17),
India would require overall cement capacity of around 480 million tonnes. This would mean the
industry will have to add another 150 million tonnes of capacity during the period and our
country has tremendous scope for growth in the Indian cement industry in the long term.
Leading players in this sector (by market share) are Shree Cement, Ultratech Cement, Ambuja
Cement, Binani Cement, ACC Cement, India Cement, Dalmia Cement, Madras Cement, Lafarge,
and OCL India. Given the high potential for growth, quite a few foreign transnational companies
have ventured into the Indian markets. Already, while companies like Lafarge, Heidelberg and
Italicementi have made a couple of acquisitions, Holcim has increased its stake in domestic
companies Ambuja Cements and ACC to over 50% to gain full control. Consolidation has taken
place with the top two cement groups controlling nearly one-third of the total domestic capacity.
However, the balance capacity still remains quite fragmented.
3.2 MAJOR PLAYERS IN THE INDUSRTY

ACC Limited (Formerly The Associated Cement Companies Limited) one of the largest
producers of cement in India. It's registered office is called Cement House. It is located on
Maharishi Karve Road, Mumbai. The stock price of company contributes in calculating
BSESensex.
The management control of company was taken over by Swiss cement major Holcim in 2004.
On 1 September 2006 the name of The Associated Cement Companies Limited was changed to
ACC Limited. The company is only cement company to get Superbrand status in India
ACC Limited is Indias foremost manufacturer of cement and ready mix concrete with a
countrywide network of factories and marketing offices.Established in 1936, ACC has been a
pioneer and trend-setter in cement and concrete technology. ACCs brand name is synonymous
with cement and enjoys a high level of equity in the Indian market. Among the first companies in
India to include commitment to environment protection as a corporate objective, ACC has won
several prizes and accolades for environment friendly measures taken at its plants and mines. The
company has also been felicitated for its acts of good corporate citizenship.

PRICE CHART

 INCOME STATEMENT

EVOLUTION

Actuals in
M INR
Fiscal Period December

Estimates in M INR
2011

2012

2013

2014

2015

2016

Sales

94 387

111 305

109 084

121898

136174

156401

Operating income (EBITDA)

21 126

21 956

16 300

17 925

22 027

28 078

Operating profit (EBIT)

16 373

16 367

10 462

17 454

21 380

20 906

Pre-Tax Profit (EBT)

15 404

14 515

12 136

15 412

18 647

23 134

Net income

13 253

10 612

10 947

11 382

13 416

15 880

EPS ( INR)

70,4

56,4

56,3

61,0

72,2

86,0

Dividend per Share ( INR)

30,0

30,1

33,7

39,6

Yield

2,07%

2,07%

2,33%

2,73%

02/09/2012

02/07/2013

02/06/2014

Announcement Date

Annual Income Statement Data

Ambuja Cement Limited (Ambuja or the Company) is one of the leading cement
manufacturing companies in India. The Company was set up in the year 1983 and commenced
cement production in 1986. Global cement major Holcim acquired management control of
Ambuja in 2006. Holcim today holds a little over 46% equity in Ambuja. The Company was
initially called as Gujarat Ambuja Cements Ltd and was founded by Narotam Sekhsaria in 1983
in partnership with Suresh Neotia. Ambuja Cement is an established brand in India for Ordinary
Portland Cement (OPC) and Pozzolana Portland Cement, with significant presence across
western, eastern and northern markets of India. The Company's customers range from individuals
house
builders
to
governments
to
global
construction
firms.
In FY 2012, the Company grew from 0.7 million tonne Cement Grinding capacity to 27.35
million tonnes. The Company has five integrated cement manufacturing plants and eight cement
grinding units across the country. Ambuja has a captive port with three terminals along the
countrys western coastline to facilitate timely, cost effective and environmentally cleaner
shipments
of
bulk
cement
to
its
customers.
The Companys subsidiaries include Kakinada Cements Ltd., M.G.T. Cements Private Ltd.,
Chemical Limes Mundwa Private Ltd., Dang Cement Industries Private Ltd. and Dirk India
Private Ltd. In June 2011, the Company acquired Dang Cement Industries Pvt. Ltd. In September
2011, ACL acquired 60% interest in Dirk India Pvt. Ltd.

 The Equity Research Report presented below is based on a Fundamental Analysis of

Ambuja Cement.

PRICE CHART

INCOME STATEMENT EVOLUTION

Annual Income Statement Data

Actuals in M INR
Fiscal Period December

2011

2012

Estimates in M INR
2013

2014

2015

2016

Sales

85 145

96 749

90 868

104 904

117 646

127 408

Operating income (EBITDA)

22 249

24 730

16 508

21 116

25 455

31 261

Operating profit (EBIT)

17 798

19 078

11 608

17 252

21 019

25 185

Pre-Tax Profit (EBT)

17 029

19 018

15 141

19 013

23 334

29 834

Net income

12 289

12 971

12 946

13 742

16 651

20 510

EPS ( INR)

8,00

8,41

8,37

8,55

10,4

13,1

Dividend per Share ( INR)

3,20

3,60

3,70

4,13

4,92

1,43%

1,61%

1,66%

1,85%

2,20%

02/09/2012

02/07/2013

02/06/2014

Yield
Announcement Date

UltraTech Cement Limited (UltraTech or the Company) was set up in the year 1945 and
has emerged as India's largest and worlds 10th largest manufacturer of cement with an installed
capacity of 52 Million Tonnes Per Annum. The Company is part of the US$ 40 billion Aditya
Birla Group. UltraTech provides a range of products including ordinary portland cement,
portland blast furnace slag cement, white cement, ready mix concrete, building products and a
host of other building solutions.
White cement is manufactured under the brand name of Birla White , ready mix concretes
under UltraTech Concrete and new age building products under the name of UltraTech
Building Products Division.
UltraTech operates through 11 integrated plants, 15 grinding units, 6 bulk terminals and 101
RMC plants spanning India, UAE, Bahrain, Bangladesh and Sri Lanka. The Company is also
India's largest exporter of cement and clinker in countries around the Indian Ocean, Africa,
Europe and the Middle East.

 The Equity Research Report presented below is based on a Fundamental Analysis of

UltraTech Cement.

PRICE CHART

INCOME STATEMENT EVOLUTION

Annual Income Statement Data

Actuals in M INR

Estimates in M INR

Fiscal Period March

2012

2013

2014

2015

2016

2017

Sales

181 664

200 179

200 779

233 691

265 625

313 861

Operating income (EBITDA)

41 474

46 755

38 179

47 257

57 282

72 509

Operating profit (EBIT)

32 449

37 301

27 656

46 782

57 770

55 565

Pre-Tax Profit (EBT)

33 929

38 254

27 755

34 110

42 815

57 956

Net income

24 462

26 554

21 445

25 022

30 475

40 722

EPS ( INR)

89,2

96,9

78,2

91,6

111

149

Dividend per Share ( INR)

8,00

9,00

9,00

10,4

11,9

14,5

0,31%

0,35%

0,35%

0,40%

0,46%

0,56%

04/23/2012

04/22/2013

04/23/2014

Yield
Announcement Date

Shree Cements Limited ("Shree Cements" or the "Company") is engaged in the manufacture
and sale of cement in India. The Company offers cement under brands like Shree Ultra, Bangur
Cement, and Rockstrong Cement. The Company's cement plants are located at Beawar, Ras,
Khushkhera, Jobner (Jaipur) and Suratgarh in Rajasthan and Laksar (Roorkee) in Uttarakhand.
Shree Cement sells majority of the cement it produces in North India.
The Company has a cement production capacity of 13.5 Million Tons Per Annum (MTPA). Shree
Cement plans to increase its existing capacity by setting up two new clinker manufacturing units
of 2 MTPA capacities. The Company has also planned a new grinding unit in the state of Bihar
and an integrated unit in the state of Chattisgarh. Shree Cement has a power generation capacity
of 560 MW with plants located at Beawar and Ras in Rajasthan. The Company's heat recovery
power plants have a total capacity of 46MW which is the largest such capacity in the global
cement industry (excluding China).
For FY 2013, the Companys total income from operations went down by 5.22 % to
Rs. 5,590.25 Cr. as against Rs. 5,898.12 Cr. in FY 2012. For the same period, net profit went up
by 62.32 % to Rs. 1,003.97 Cr. as against Rs. 618.50 Cr. in FY 2012.

 The Equity Research Report presented below is based on a Fundamental Analysis of

Shree Cements.

PRICE CHART

 INCOME STATEMENT EVOLUTION

Annual Income Statement Data

Actuals in M INR
Fiscal Period June
Sales

2011

2012

Estimates in M INR
2013

2014

2015

2016

35 119

46 251

55 671

57 559

67 589

79 194

Operating income (EBITDA)

9 324

11 646

15 609

13 331

17 149

21 089

Operating profit (EBIT)

2 566

3 733

11 253

8 352

11 587

14 674

Pre-Tax Profit (EBT)

1 103

3 042

11 194

8 490

11 547

15 214

Net income

2 097

2 670

10 039

7 151

9 429

12 230

EPS ( INR)

60,2

76,6

288

203

272

349

Dividend per Share ( INR)

14,0

20,0

19,4

21,7

24,8

0,19%

0,27%

0,27%

0,30%

0,34%

05/27/2011

05/15/2012

07/30/2013

Yield
Announcement Date

In the year-1982 a remote area in the zero-industry district of Sirohi in Rajasthan.the story of JK Lakshmi
Cement Limited thus began. And today as it completes 25 yearsof existence, it is a company thats renowned for
its strength, quality and performance.
One of the established names in the cement industry, JK Lakshmi Cement Ltd has state of the art plants at
Jaykaypuram, distt. Sirohi, Rajasthan having a capacity of more than 3.5million tonnes. With use of the latest
technology from M/s Blue Circle Industries andModern equipments from M/s Fuller International of USA, we
are going from strength to strength.
It is also the first grey cement producer of northern India to be awarded an ISO 9002certificate and be accredited
by NABL (Department of Science & Technology,Government of India) for its Lab Quality Management
systems.
Primarily a cement focused company, we have now diversified into a variety of productsincluding Cement (OPC
& PPC), Power Mix (RMC) and Plaster of Paris to meet thestated needs of our customers. We are also in the
midst of finalising certain customercentric services to provide a much better cement purchasing experience.

Products
Upholding the tradition of JK Organisation for maintaining the highest standards inquality, JK Lakshmi Cement
today is one of the most preferred brands in its marketingarea with a network of about 1500 dealers spread in the
states of Rajasthan, Gujarat,Delhi, Haryana, U.P., Uttaranchal, Punjab, J&K, H. P. and Mumbai. Our endeavor
isalways to give our best and maintain the highest standards of customer satisfaction.
No wonder the discernible buyers prefer this cement over other brands owing to itsconsistency, higher level of
quality and impeccable customer service

PRICE CHART

 INCOME STATEMENT EVOLUTION

Annual Income Statement Data

Actuals in M INR
Fiscal Period March
Sales

2012

2013

Estimates in M INR
2014

2015

2016

2017

25 378

29 040

27 815

33 940

42 291

48 556

Operating income (EBITDA)

5 166

5 600

3 749

5 370

7 352

9 600

Operating profit (EBIT)

3 911

4 318

2 409

3 915

5 126

7 923

Pre-Tax Profit (EBT)

2 858

3 406

1 363

1 974

3 261

5 471

Net income

1 773

2 335

970

1 415

2 216

3 830

EPS ( INR)

25,4

33,4

13,9

19,1

30,6

54,8

Dividend per Share ( INR)

5,00

6,50

3,00

4,91

6,93

6,00

1,26%

1,64%

0,76%

1,24%

1,75%

1,52%

05/26/2012

05/13/2013

05/19/2014

Yield
Announcement Date

3.3 The Indian Prediction

Cement is one of the core industries and plays a vital role in the growth and development of a
nation. The cement industry of India is the second largest producer in the world. The production
of cement has increased at a compound annual growth rate (CAGR) of 9.7 per cent to reach 272
million tonnes (MT) during FY 0613. The production capacity is expected to grow to 550 MT
by FY 20.
India's potential in infrastructure is huge. The country is expected to become the world's third
largest construction market by 2025, adding 11.5 million homes a year to become a US$ 1
trillion a year market, according to a study by Global Construction Perspectives and Oxford
Economics.
Notwithstanding its current position as one of the leaders in cement production, Indias riches in
the sector remain somewhat untapped. Lafarge's India business has been very successful and the
country is among the top 10 markets globally for Lafarge. But going forward, we should rank
higher because of the potential of the Indian market, says Mr Martin Kriegner, CEO of the
Indian branch of the worlds largest cement manufacturer, Lafarge.

CHAPTER - 4
CURRENT STATUS OF THE COMPANY

4.1 SWOT ANANLYSIS

Strength:1.) Emphasis on Customer Satisfaction through Transparent Functioning

2.) Strong Capital Base
Weakness:1.) Low Presence in Rural Market
2.) Lesser advertising as compared to competitors
Opportunity:1.) Growing potential in the Rural Market
2.) Alignment with Government Schemes
3.) Better awareness amongst people for getting insurance
Threats:1.) Economic crisis and economic instability.

4.2 DATA ANALYSIS AND INTERPRETATION

RESEARCH TECHNIQUE

The project is on equity research analysis of the Cement sectors. Hence study has to be done on
the basis of information and news available about the Cement sectors i.e. secondary data by
various modes. This research had to be completed by doing Fundamental analysis and Technical
analysis of the companies.
Secondary data was collected from the internet, companys websites, magazines and various
articles. However the main source of information is Annual Report issued by the companies and
also quarterly reports of the current year showing their performances in current market scenario.
Firstly data was analyzed on the basis of the industry. Both the industry i.e. banking and cement
were focused on and its performance and relation with the Indian economy was monitored and
then specific stocks were chosen to be invested in depending upon the fundamentals of the
company stocks. These stocks were individually analyzed and then measured whether it would
give maximum returns if invested in.

FUNDAMENTAL ANALYSIS

Fundamental analysis of a business involves analyzing its financial statements and health, its
management and competitive advantages, and its competitors and markets. When analyzing a
stock, futures contract, or currency using fundamental analysis there are two basic approaches
one can use; bottom up analysis and top down analysis. The term is used to distinguish such
analysis from other types of investment analysis, such as quantitative analysis and technical
analysis.
Fundamental analysis is performed on historical and present data, but with the goal of making
financial forecasts. There are several possible objectives:
To conduct a company stock valuation and predict its probable price evolution,
To make a projection on its business performance,
To evaluate its management and make projected decisions,
Fundamental analysis includes:
1. Economic analysis
2. Industry analysis
3. Company analysis
On the basis of these three analyses the intrinsic value of the shares are determined. This is
considered as the true value of the share. If the intrinsic value is higher than the market price it is
recommended to buy the share. If it is equal to market price then hold the share and if it is less
than the market price then sell the shares.

TECHNICAL ANALYSIS

Technical analysis is a financial term used to denote a security analysis discipline for forecasting
the direction of prices through the study of past market data, primarily price and volume.
Behavioural economics and quantitative analysis incorporate technical analysis, which being an
aspect of active management stands in contradiction to much of modern portfolio theory.
Technical analysis employs models and trading rules based on price and volume transformations,
such as the relative strength index, moving averages, regressions, inter-market and intra-market
price correlations, business cycles, stock market cycles or, classically, through recognition of
chart patterns. Technical analysis stands in contrast to the fundamental analysis approach to
security and stock analysis. Technical analysis analyzes price, volume and other market
information, whereas fundamental analysis looks at the actual facts of the company, market,
currency or commodity.
Most large brokerage, trading group, or financial institutions will typically have both a technical
analysis and fundamental analysis team.

Concepts
Resistance a price level that may prompt a net increase of selling activity
Support a price level that may prompt a net increase of buying activity
Breakout the concept whereby prices forcefully penetrate an area of prior support
or resistance, usually, but not always, accompanied by an increase in volume.
Trending the phenomenon by which price movement tends to persist in one
direction for an extended period of time
Average true range averaged daily trading range, adjusted for price gaps
Chart patterns distinctive pattern created by the movement of security prices on a
chart
Momentum the rate of price change

Chart Types:

There are three main types of charts that are used by investors and traders depending on the
information that they are seeking and their individual skill levels. The chart types are: the line
chart, the bar chart, the candlestick chart.

i.

Line Chart

The most basic of the three charts is the line charts because it represents only the closing prices
over a set period of time. The line is formed by connecting the closing prices over the time
frame. Line charts do not provide visual information of the trading range for the individual points
such as the high, low and opening prices. However, the closing price is often considered to be the
most important price in stock data compared to the high and low for the day and this is why it is
the only value used in line charts.

ii.

Bar Chart

The bar chart expands on the line chart by adding several more key pieces of information to each
data point. The chart is made up of a series of vertical lines that represent each data point. This
vertical line represents the high and low for the trading period, along with the closing price. The
close and open are represented on the vertical line by a horizontal dash.
The opening price on a bar chart is illustrated by the dash that is located on the left side of the
vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the left
dash (open) is lower than the right dash (close) then the bar will be shaded black, representing an
up period for the stock, which means it has gained value. A bar that is colored red signals that the
stock has gone down in value over that period. When this is the case, the dash on the right (close)
is lower than the dash on the left (open).

iii.

Candlestick Charts

The candlestick chart is similar to a bar chart, but it differs in the way that it is visually
constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the
period's trading range. The difference comes in the formation of a wide bar on the vertical line,
which illustrates the difference between the open and close. And, like bar charts, candlesticks
also rely heavily on the use of colors to explain what has happened during the trading period.
There are two color constructs for days up and one for days that the price falls. When the price of
the stock is up and closes above the opening trade, the candlestick will usually be white or clear.
If the stock has traded down for the period, then the candlestick will usually be red or black,
depending on the site. If the stock's price has closed above the previous days close but below the
day's open, the candlestick will be black or filled with the color that is used to indicate an up day.

Chart Patterns

 Head and Shoulder

This is one of the most popular and reliable chart patterns in technical analysis. Head and
shoulders is a reversal chart pattern that when formed, signals that the security is likely to move
against the previous trend Head and shoulders top is a chart pattern that is formed at the high of
an upward movement and signals that the upward trend is about to end. Head and shoulders
bottom, also known as inverse head and shoulders is the lesser known of the two, but is used to
signal a reversal in a downtrend.
Cup and Handle
A cup with handle chart is a bullish continuation pattern in which the upward trend has paused
but will continue in an upward direction once the pattern is confirmed. This price pattern forms
what looks like a cup, which is preceded by an upward trend. The handle follows the cup
formation and is formed by a generally downward/sideways movement in the security's price.
Once the price movement pushes above the resistance lines formed in the handle, the upward
trend can continue. There is a wide ranging time frame for this type of pattern, with the span
ranging from several months to more than a year.
Double Tops and Bottoms
This chart pattern is another well-known pattern that signals a trend reversal - it is considered to
be one of the most reliable and is commonly used. These patterns are formed after a sustained
trend and signal to chartists that the trend is about to reverse. The pattern is created when a price
movement tests support or resistance levels twice and is unable to break through. This pattern is
often used to signal intermediate and long-term trend reversals.
Triangles
Triangles are some of the most well-known chart patterns used in technical analysis. The three
types of triangles, which vary in construct and implication, are the symmetrical triangle,
ascending and descending triangle. These chart patterns are considered to last anywhere from a
couple of weeks to several months.

Flag and Pennant

These two short-term chart patterns are continuation patterns that are formed when there is a
sharp price movement followed by a generally sideways price movement. This pattern is then
completed upon another sharp price movement in the same direction as the move that started the
trend. The patterns are generally thought to last from one to three weeks.
Wedge
The wedge chart pattern can be either a continuation or reversal pattern. It is similar to a
symmetrical triangle except that the wedge pattern slants in an upward or downward direction,
while the symmetrical triangle generally shows a sideways movement. The other difference is
that wedges tend to form over longer periods, usually between three and six months.
Triple Tops and Bottoms
Triple tops and triple bottoms are another type of reversal chart pattern in chart analysis. These
are not as prevalent in charts as head and shoulders and double tops and bottoms, but they act in
a similar fashion. These two chart patterns are formed when the price movement tests a level of
support or resistance three times and is unable to break through; this signals a reversal of the
prior trend.
Rounding Bottom
A rounding bottom, also referred to as a saucer bottom, is a long-term reversal pattern that
signals a shift from a downward trend to an upward trend. This pattern is traditionally thought to
last anywhere from several months to several years.

CHAPTER-5

ANALYSIS OF CEMENT INDUSTRY

5.1 EQUITY RESEARCH TECHNIQUE

Sector Analysis -

Sector Analysis was done on the basis of research and understanding various companies of
the sector i.e. Cement sector, which had strong Fundamentals over other companies of the
same sector. Companies growth and past performance was taken into account along with its
top-line (Revenue) and Bottom-line (Profits) for that period.
Companies with strong fundamentals were preferred.
The Ratios that were taken into consideration were:
P/E Ratio
Formula:
PE Ratio= Market Value per Share / Earnings per Share
In general, a high P/E suggests that investors are expecting higher earnings growth in the future
compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story
by itself. It's usually more useful to compare the P/E ratios of one company to other companies
in the same industry, to the market in general or against the company's own historical P/E. It
would not be useful for investors using the P/E ratio as a basis for their investment to compare
the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has
much different growth prospects.
The P/E is sometimes referred to as the "multiple", because it shows how much investors are
willing to pay per rupee of earnings. If a company were currently trading at a multiple (P/E) of
20, the interpretation is that an investor is willing to pay Rs.20 for Re.1 of current earnings.
It is important that investors note an important problem that arises with the P/E measure, and to
avoid basing a decision on this measure alone. The denominator (earnings) is based on an
accounting measure of earnings that is susceptible to forms of manipulation, making the quality
of the P/E only as good as the quality of the underlying earnings number.
Generally a high P/E ratio means that investors are anticipating higher growth in the
future.
The average market P/E ratio is 20-25 times earnings.
The p/e ratio can use estimated earnings to get the forward looking P/E ratio.

5.2 CEMENT SECTOR ANALYSIS

5.3 CEMENT COMPANY ANALYSES

COMPANIES

PRICE

P/E

EPS

ACC

1452.40

25.83

56.23

AMBUJA

223.70

26.10

8.57

ULTRATECH

2604.30

33.32

78.16

SHREE

7276.00

31.90

228.07

RAIN

43.00

100.00

0.43

PRISM

73.00

NIL

NIL

RAMCO

303.60

52.44

5.79

JK

390.00

28.42

13.88

SECTOR P/E

SELECTED COMPANIES

37.25

COMPANIES

PRICE
AS ON
05/07/2014

PRICE
AS ON
01/07/2014

PROFIT
AS ON
05/07/2014

VOLUME

AMT

P/E

ACC

1481.00

1452.40

28.60

6,752

1 cr

25.83

AMBUJA

225.00

223.70

1.3

33,333

26.10

ULTRATECH

2631.00

2604.30

26.7

950

SHREE

7417.10

7276.00

141.1

674

JK

394.45

390.00

4.45

12,676

75
lakhs
25
lakhs
50lakh
s
50lakh
s
3crs

TOTAL

33.32
31.90
28.42

INTERPRETATION
The main aim of this project which was to do equity research in Cement sector and it
also shows the opportunities of investment where returns can be maximized.
The major players in Indian Cement Industry which has good investment prospects are

ACC
AMBUJA
ULTRATECH
SHREE
JK

The top-line (Revenue) and bottom-line (Profit) of the companies selected under cement
sector are performing better than others in similar sector.

CHAPTER-6
OUTLOOK, LIMITATION,

CONCLUSION, BIBLIOGRAPHY

6.1 Indian Cement Industry Outlook

Cement is one of the core industries that plays a vital role in the growth and development of a
nation. In India, which is second largest producer of cement worldwide, the cement industry has
been expanding on back of increasing infrastructure activities and demand from housing sector

over the past many years.

In order to apprise our clients about the direction in which the cement industry is likely to
progress in the coming years, our new report, Indian Cement Industry Outlook 2016 has
presented the forecasts for production, consumption, capacity utilization, and installed capacity.
The sector is expected to witness positive growth in coming years, with demand set to increase at
CAGR of more than 8% during 2013-14 to 2015-16.
The overall study also provides the regional analysis of cement consumption, production,
capacity utilization, and installed capacity in the country. On analyzing the regional trend of
cement consumption, we observed that the Southern region is creating maximum demand, which
is expected to increase more in future. Besides, we have also provided the state-wise statistics for
cement consumption, production, capacity utilization, and installed capacity.
For complete understanding of the market, we have studied government regulations, cement
pricing and export & import scenario. Our comprehensive study has also included types of
cement production by region and state. In addition, the report provides statistics on the plants by
installed capacity and production, along with the cement dispatch by transportation modes to
present clients valuable information of different aspects of the cement industry.
With a view to helping our clients in understanding the market dynamics and recent activities of
key players, we have covered the competitive landscape. This section covers the major four
cement manufacturers business description, strategic analysis and recent developments. Overall,
the report is an optimum presentation of Indian cement industry, which caters to all those
interested in construction/infrastructure domain.

6.2 Limitation of the Study

 Shortage of capital-- The cement industry is capital-intensive in nature. On

account of its record on declining profitability, it is unable to raise the
required finance from the capital market.
Power shortage-- Power is an important infrastructure, which the cement
industry needs. The cement industry is being adversely affected with the State
Electricity Boards (SEBs), raising costs year after year accompanied by
diminishing quality of power supplied, in terms of frequent voltage
fluctuations, power cuts and interruptions.
By installing captive power plants-- The Indian cement Industry is today
supplementing grid power supply as a result, capacity has crossed 700MW.
Location problems-- Cement industries are mainly situated in Western and
Southern regions producing about 71 per cent of the total output, while the
Northern and Eastern regions account for 29 per cent of the total output. The
Southern and Western regions consume only 57 per cent of their total output,
while the Northern and Eastern regions consume 43 per cent of their total
production. There is excess production in the Southern and Western regions
while there is excess demand from Northern and Eastern regions. These
factors lead do heavy transport cost.

6.3 CONCLUSION
This project has given me broad aspect to gain knowledge of the financial activities. This project
was a good exposure for us to get acquainted with the sector analysis as well as other financial

aspects i.e. equity markets, debt markets, mutual funds, derivatives, etc. and how the work in the
real life.
From the project it can be concluded on the sector that,
Cement industry is a cyclical commodity industry where the profit and return on
capital is dependent on the demand cycle picture. Given the high potential growth,
quite a few foreign transnationals have been eyeing the Indian Markets and are
planning to acquire domestic companies. This could lead to higher prospects of
growth to this sector in the coming years.
This Internship and project has not only exposed us to do this research but has also given us an
opportunity to understand the corporate world, work culture and professionalism, which would
help us to excel in our career

6.4 BIBLIOGRAPHY
i.

ii.

REFERENCES
NAIR N.K.
SUBIR COKAVN AND REJENDRA VAIDHA
CHANDRASEKARAN

NEWSPAPER
Economic Times of India
Business Standard

iii.

WEBSITES
www.equimaster.com
www.indiainfoline.com
www.moneyworks4me.com