INDIA

BUY UltraTech Cement Cement

Result Update 26 April 2018

Target Price Rs4,980 Key Data
Higher utilisation & good cost controls offset cost pressure CMP* Rs4,135 Bloomberg Code UTCEM IN
UltraTech’s (UTCEM) Q4FY18 standalone EBITDA rose 33% YoY buoyed by 31% YoY volume Upside 20% Curr Shares O/S (mn) 274.6
growth (core volume up 8% YoY), and better cost control amid rising input and freight Previous Target Rs5,140 Diluted Shares O/S(mn) 274.6
costs. Strong demand bolstered volume growth and boosted utilisation. Continued Previous Rating BUY Mkt Cap (Rsbn/USDbn) 1135.5/17
improvement in energy consumption metrics and lead distance reduction partly moderated Price Performance (%)* 52 Wk H / L (Rs) 4600/3773
the impact of rising energy costs YoY. Amid a good demand outlook, we expect UTCEM to 1M 6M 1Yr 5 Year H / L (Rs) 4600/1402
deliver an industry leading 13% volume CAGR during FY18-20E. We also expect UTCEM’s UTCEM IN 6.7 (7.3) (2.5) Daily Vol. (3M NSE Avg.) 209,136
margins to benefit from better pricing, UTCEM’s economies of scale and prudent cost NIFTY 5.7 2.7 13.6
controls. We reiterate BUY with a revised TP of Rs4,980.
*as on 25 April 2018; Source: Bloomberg, Centrum Research

Strong demand boost utilisation, driving 31% YoY volume growth: UTCEM’s total
Shareholding pattern (%)*
volume rose 31% YoY and 17% QoQ to 18.5mn MT. Its (ex-JPA) grey sales rose 8% YoY, thus
Mar -18 Dec -17 Sep -17 Jun -17
boosting core utilisation to 90% vs 83% YoY and 79% QoQ. Amid good demand and strong
distribution, JPA’s assets utilisation also firmed up to 75% vs 60% QoQ. Total grey cement Promoter 62.0 62.1 62.1 62.1
utilisation thus rose to 87% vs 83% YoY and 74% QoQ. JPA’s assets utilisation has further FIIs 22.3 22.2 22.1 21.9

increased to 85% during Q1. Management guided overall demand traction to remain strong, Dom. Inst. 5.6 5.7 5.3 5.5

thus leading to 8-10% industry growth outlook. White/putty volume rose 4% YoY and 21% Public & Others 10.1 10.1 10.5 10.5

QoQ to 0.4mn MT. Good demand also led to 2% QoQ blended NSR improvement, leading to Source: BSE, *as on 25 April 2018

4% YoY NSR increase. On YoY basis, both NSR and freight cost is higher by ~Rs33/MT owing Operational Trends
to FOR based reporting. Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%)

Good cost control amid rising input costs: Unitary opex rose 5% YoY and fell 1% QoQ to Sales vol
18.5 14.1 31.3 15.9 16.5
Rs3952/MT (vs our est of Rs4006/MT). While waw materials cost remained flat QoQ and YoY (mn MT)
Rs/ MT trends
(per MT), energy cost increased 4% QoQ and 18% YoY. The QoQ increase in driven by ban on
NSR 4,874 4,687 4.0 4,788 1.8
petcoke usage in CPPs leading to increased use of thermal coal (higher per Kcal cost). On YoY
Raw materials 801 818 (2.1) 840 (4.7)
basis, rising fuel cost is driving sharp cost inflation. Fuel prices have further increased 10%
Power & fuel 1,028 820 25.3 952 7.9
QoQ in Q1FY19. Freight cost increase (+4% QoQ and 6% YoY) is driven by rising diesel prices
Freight 1,232 1,183 4.1 1,176 4.8
(QoQ and YoY) and FOR based reporting (3% increase YoY). On YoY basis, UTCEM moderated
Employee 227 245 (7.4) 292 (22.3)
cost inflation impact through increased fuel consumption efficiency (3-5%), use of alternative
Other Exp 665 713 (6.6) 728 (8.6)
fuels/additives (2-5%) and reduced lead distance (by 6%). Increased utilisation also resulted in
Opex 3,952 3,779 4.6 3,988 (0.9)
operating leverage gains and as a result other expenses per MT fell 7% YoY and 9% QoQ.
EBITDA 922 908 1.5 801 15.1
Employee cost fell 9% QoQ owing to a fall in gratuity provisioning (yield hardening impact).
Source: Company, Centrum Research

Unitary EBITDA up 2% YoY to Rs922: Higher realisation and utilisation YoY and rising cost
controls more than offset input cost increase, leading to marginal increase in unitary EBITDA. Earning Revisions summary
Thus, EBITDA rose 33% YoY. Higher capital charges YoY moderated PAT growth to 2% YoY. Particulars FY19E FY20E
(Rs bn) New Old Chg (%) New Old Chg (%)

On-going expansions to bolster UTCEM’s market share gain; Reiterate BUY: UTCEM’s on-
Sales 360.0 345.8 4.1 414.2 404.5 2.3
going ramp-up of JPA’s assets, its upcoming expansions in UP, MP and Rajasthan during
EBITDA 76.7 80.0 (4.2) 94.1 96.9 (2.9)
FY19-20, should further bolster UTCEM 13% volume CAGR during FY18-20 (on 21% growth in
Ebitda margin (%) 21.3 23.1 22.7 24.0
FY18). We model in 7% organic volume CAGR during FY17-20E and the rest of the growth
Adj PAT 33.0 35.2 (6.2) 46.8 48.5 (3.5)
should come from JPA’s capacity ramp-up to 80% by FY20 (on 21 mn MT). We estimate good
Source: Centrum Research Estimates
demand to boost industry utilisation and hence model in 4% NSR increase for UTCEM. Also,
better pricing and increased utilisation should drive margin expansion. We trim FY19/20E Centrum vs. Bloomberg Consensus*
EBITDA estimates by 4%/3% respectively to account for ongoing increase seen in fuel and
Particulars FY19E FY20E
diesel prices. We continue to like UltraTech owing to its industry leadership, prudent cost (Rs bn) Centrum BBG Var (%) Centrum BBG Var (%)
structure, and steady capacity growth without straining its balance sheet. We reiterate BUY
Net Sales 360.0 359.1 0.2 414.2 412.5 0.4
with a revised TP of Rs4980 (15x FY20E EBIDTA).
EBITDA 76.7 75.5 1.5 94.1 90.5 4.0
Y/E Mar (Rs mn) Q4FY18 Q4FY17 YoY (%) Q3FY18 QoQ (%) Q4FY18E Variance %
PAT 33.0 32.8 0.5 46.8 45.1 3.8
Net Sales 90,025 65,953 36.5 75,899 18.6 87,760 2.6
Op. cost 72,997 53,171 37.3 63,207 15.5 73,047 (0.1) Bloomberg Consensus* Centrum Variance
EBITDA 17,028 12,782 33.2 12,691 34.2 14,713 15.7 Target (%)
Target Price Price (Rs)
BUY SELL HOLD
EBITDA margin (%) 18.9 19.4 (47) 16.7 219 16.8 215 (Rs)
Depreciation 4,806 3,357 43.2 4,744 1.3 4,700 2.3 30 7 6 4,561 4980 9.2
Interest 3,348 1,529 118.9 3,472 (3.6) 3,500 (4.4) Source: Bloomberg, Centrum Research Estimates; *as on 25 April 2018
Other Income 1,059 2,401 (55.9) 1,556 (31.9) 1,550 (31.7)
PBT 9,934 10,297 (3.5) 6,031 64.7 8,063 23.2
Taxes Paid 2,791 3,276 (14.8) 1,816 53.7 2,419 15.4
Adjusted PAT 7,142 7,020 1.7 4,215 69.5 5,644 26.5 Rajesh Kumar Ravi, rajesh.ravi@centrum.co.in; 91 22 4215 9643
Source: Company, Centrum Research Estimate, Standalone Financials Vinay Menon, vinay.menon@centrum.co.in; 91 22 4215 9141

Y/E Mar (Rs mn) Revenue YoY (%) EBITDA EBITDA (%) APAT YoY (%) DEPS Rs. RoE (%) RoCE (%) P/E (x) EV/EBITDA (x)
FY16 2,37,143 3.4 46,266 19.5 23,702 17.6 86.4 11.5 8.6 33.5 17.3
FY17 2,38,915 0.7 49,690 20.8 26,414 11.4 96.2 11.6 9.0 37.3 19.3
FY18 2,97,901 24.7 58,833 19.7 24,576 (7.0) 89.5 9.9 7.8 46.6 21.5
FY19E 3,60,031 20.9 76,683 21.3 33,014 34.3 120.2 12.0 8.9 34.4 16.0
FY20E 4,14,239 15.1 94,100 22.7 46,806 41.8 170.4 15.1 11.4 24.3 12.5
Source: Company, Centrum Research Estimates, Standalone Financials

Centrum Equity Research is available on Bloomberg, Thomson Reuters and FactSet

 Key operational highlights and other details from the concall

As per the company presentation, cement sales has been strong YoY across most markets in
Q4FY18. Infrastructure construction and a low cost housing demand has contributed mainly to the
robust industry growth in Q4FY18.

UTCEM’s standalone total sales volume rose 31% YoY (+17% QoQ) to 18.5mn MT. Grey sales
volume rose 32% YoY and (+16% QoQ) to 18.1 mn MT. White cement/putty volume rose 4% YoY at
0.4mn MT (+21% QoQ). The JPA plants contributed ~3.2mn MT to the total sales volume which
implies UltraTech (ex-JPA plant) delivered ~8% volume growth YoY.

Company’s ex-JPA capacity utilisation increased to 90% vs 83% YoY and vs 79% QoQ. UTCEM
operated the JPA units at ~75% utilisation in Q4FY18 and is confident of a higher ramp-up in
subsequent quarters (~85% in Q1FY19E).

Higher than estimated ramp-up of JPA assets led to cash-break-even in Q4FY18 (1 quarter ahead of
management expectations). UTCEM guided that JPA asset will become PBT break-even by Q1FY20.

During Q4FY18, JPA units’ opex were higher by ~Rs200/MT that of UTCEM. Out of this, ~ Rs64/MT is
on account of higher royalty which will continue going forward. UTCEM is hopeful to bridge the
residual cost gap over next the 1-2 quarters through ongoing process improvement projects.

The management highlighted its regional utilisation as follows: North (88% vs 80% QoQ), Central
(76% vs 60% QoQ), East (90% vs 80% QoQ), West (82% vs 70% QoQ) and South (70% vs 53% QoQ).
This implies that UTCEM registered 25%+ QoQ production growth in its central and southern
plants.

Amid strong growth in grey cement sales, the share of white cement/putty and RMC revenue fell
to 6% and 6% of total revenue in Q4FY18 vs 8% and 7% respectively YoY.

UltraTech noted that rural markets accounted for ~40% of overall sales. The share has been
maintained over the past three quarters.

UTCEM’s reported energy cost rose 17% YoY and 4% QoQ to Rs987/MT. Average cost of pet-coke
for Q4FY18 rose 0% QoQ and 22% YoY to USD104/MT. With ban on pet-coke for captive power
generation, company consumed coal leading to higher cost QoQ.

UTCEM’s logistics cost rose 6% YoY to Rs1,166/MT mainly on account of an increase in diesel prices
and increased FOR based sales. On QoQ basis, its logistics cost is up 4% as a result of high diesel
prices.
Exhibit 1: Energy cost trends
Q2 FY16 Q3 FY16 Q4 FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18
Power Mix
TPP + WHRS (% of total) 86 87 87 88 89 N/A N/A N/A N/A N/A N/A
Kiln Fuel Mix (%)
Pet coke 65 74 70 74 76 76 71 71 76 70 75
Imp coal 23 18 21 18 11 11 11 13 15 17 NA
Indigenous coal and others 12 8 9 8 14 12 18 17 9 13 NA

Energy costs (Rs/MT) 909 824 685 682 737 785 840 870 925 949 987
QoQ (%) 0.9 (9.4) (16.9) (0.4) 8.1 6.5 7.0 3.6 6.3 2.6 4.0
YoY (%) (10.6) (17.1) (27.1) (24.3) (18.9) (4.7) 22.6 27.6 25.5 20.9 17.5
Source: Company, Centrum Research, N/A- data not available

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UltraTech Cement
 Exhibit 2: Transport mix and logistics cost trend
Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1FY18 Q2 FY18 Q3 FY18 Q4 FY18
Freight Mix (%)
Rail 29 26 27 26 23 24 26 25 23 24 NA
Road 69 71 70 71 73 72 70 72 73 73 NA
Sea 3 3 3 3 3 3 4 3 3 3 NA

Logistics cost (Rs/MT) 1,089 1,089 1,088 1,081 1,041 1,060 1,104 1,098 1,089 1,127 1,166
QoQ (%) 3.2 (3.6) (0.1) (0.6) (3.7) 1.8 4.2 (0.5) (0.8) 3.5 3.5
YoY (%) 11.4 (1.1) (0.6) (4.3) (4.4) (2.7) 1.5 1.6 4.6 6.3 5.6
Source: Company, Centrum Research

UTCEM reported QoQ reduction in net debt by Rs10bn and a working capital release of Rs4.65bn
QoQ. Net debt/EBITDA improved from 2.1x in Q2FY18 to 1.85x in Q4FY18.

Capex updates

UTCEM’s green-field expansion of 3.5mn MT at Dhar, MP is ahead of schedule. It commissioned
1.75 mn MT in April 2018 with the remainder expected by Sep 2018. The pending Bara grinding
unit is expected to be commissioned in Q1FY20. The 3.5mn MT grey cement expansion in Pali,
Rajasthan is expected to be completed in FY20 (capex ~Rs18.5bn). Post these, UTCEM’s India
capacity will increase to 87mn MT/ 95mn MT by end of FY19/ FY20.

UTCEM is also working on0.4mn MT of white putty plant expansion project, to be completed by
Q2FY20. This would entail capex of Rs2bn. Post this expansion, its white/putty capacity will
increase to 1.72 mnMT.

3
UltraTech Cement
 Valuation and operational assumptions

Exhibit 3: 1-yr forward EV/EBITDA chart Exhibit 4: 1-yr forward EV/MT chart
25 250
20
200
15
10 150
5
100
0

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18
Apr-06

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17

Apr-18
EV/EBITDA Mean EV/MT Mean
Mean + 1 Std Dev Mean - 1 Std Dev Mean + 1 Std Dev Mean - 1 Std Dev
Source: Bloomberg, Company, Centrum Research Estimates Source: Bloomberg, Company, Centrum Research Estimates

Exhibit 5: Comparative Valuations

Mkt Cap CAGR FY18-20E (%) EBITDA margin (%) RoCE (%) RoE (%) EV/EBITDA (x) EV/MT(USD)
Company
(Rs bn) Rev. EBITDA PAT FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E
UltraTech Cement 1135.5 17.9 26.5 38.0 19.7 21.3 22.7 7.8 8.9 11.4 9.9 12.0 15.1 21.5 16.0 12.5 230 214 189
ACC 294.1 10.0 15.3 23.1 14.2 14.5 15.6 10.1 11.5 13.5 10.1 11.9 14.0 14.7 12.1 9.9 134 125 119
Ambuja Cements 487.5 9.9 14.9 24.8 18.1 19.0 19.8 6.5 8.3 9.1 6.3 8.3 9.0 18.6 15.2 12.9 183 172 168
Shree Cement ** 605.2 18.5 19.6 (9.3) 26.2 26.4 26.7 18.3 13.6 12.1 19.8 14.4 12.6 21.7 18.3 15.1 293 224 219

Source: Company, Centrum Research Estimates, For ACC/ Ambuja – FY17/18/19 = CY16/17/18, Shree Cement FY18 numbers are estimates

4
UltraTech Cement
 Exhibit 6: Key Operational Assumptions
Particulars FY15 FY16 FY17 FY18 FY19E FY20E
Total Cement capacity (mn MT) 61.5 66.0 67.6 84.8 88.3 96.2
Total Sales Volume (mn MT) 46.1 49.3 50.2 60.7 70.3 77.7
YoY change (%) 8.1 7.0 1.8 20.9 15.8 10.6
Capacity utilisation (%) 75.0 74.7 74.3 71.6 79.6 80.8
(Rs/ MT trend)
Blended NSR 4,976 4,812 4,761 4,911 5,124 5,333
YoY change (%) 4.6 (3.3) (1.1) 3.2 4.3 4.1
Raw Materials 773 806 803 771 793 809
Power & Fuel 1,029 861 782 982 1,032 1,063
Freight costs 1,171 1,204 1,165 1,208 1,243 1,275
Employee cost 264 273 282 281 280 280
Other expense 829 730 739 698 685 695
Total Opex 4,066 3,873 3,771 3,941 4,033 4,121
EBITDA per MT 910 939 990 970 1,091 1,211
Source: Company, Centrum Research Estimates

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UltraTech Cement
Exhibit 7: Quarterly financials trend (Standalone)
Y/E Mar (Rs mn) Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18
Net Sales 62,325 54,576 56,091 65,953 66,265 65,713 75,899 90,025
Total Expenditure 48,100 43,028 44,956 53,171 50,664 52,200 63,207 72,997
Raw Materials 10,924 8,609 9,236 11,508 9,547 9,153 13,310 14,786
Power and Fuel 9,237 8,797 9,689 11,543 12,174 13,348 15,093 18,980
Employee 3,466 3,572 3,647 3,449 3,803 4,440 4,628 4,192
Transport 15,452 12,749 13,606 16,645 15,880 15,553 18,634 22,750
Others 9,021 9,301 8,779 10,027 9,261 9,707 11,541 12,289
EBITDA 14,225 11,548 11,135 12,782 15,601 13,513 12,691 17,028
Depreciation 3,027 3,139 3,156 3,357 3,098 4,988 4,744 4,806
EBIT 11,198 8,409 7,978 9,425 12,503 8,525 7,947 12,222
Interest 1,525 1,367 1,293 1,529 1,285 3,759 3,472 3,348
Other Income 1,504 1,725 970 2,401 1,652 1,680 1,556 1,059
PBT 11,177 8,767 7,655 10,297 12,870 6,447 6,031 9,934
Taxes 3,428 2,757 2,021 3,276 3,963 2,135 1,816 2,791
Exceptional expense/ (income) (173) 113 44 (179) (75) (93) 0 (2,263)
Reported PAT 7,576 6,123 5,678 6,842 8,832 4,220 4,215 4,879
Adjusted PAT 7,749 6,011 5,634 7,020 8,906 4,312 4,215 7,142
Adj EPS (Rs) 28.2 21.9 20.5 25.6 32.4 15.7 15.4 26.0
YoY Growth (%)
Sales volume 6.4 0.5 (1.3) 0.8 (0.2) 17.5 35.1 31.3
Cement NSR (2.5) (2.8) (0.8) 2.2 6.5 2.4 0.1 4.0
Revenue 3.8 (2.3) (2.1) 3.0 6.3 20.4 35.3 36.5
EBITDA 23.4 17.6 (0.1) (7.2) 9.7 17.0 14.0 33.2
PBT 32.1 35.2 1.9 (2.2) 15.1 (26.5) (21.2) (3.5)
Adj PAT 28.3 31.4 6.7 (10.1) 14.9 (28.3) (25.2) 1.7
Margins (%)
EBITDA 22.8 21.2 19.9 19.4 23.5 20.6 16.7 18.9
EBIT 18.0 15.4 14.2 14.3 18.9 13.0 10.5 13.6
PBT 17.9 16.1 13.6 15.6 19.4 9.8 7.9 11.0
Adj PAT 12.4 11.0 10.0 10.6 13.4 6.6 5.6 7.9
Operational Trend
Cement & clinker Sales Vol (mn MT) 13.2 11.2 11.7 14.1 13.2 13.1 15.9 18.5
Trends (Rs/mt)
NSR 4,720 4,882 4,782 4,687 5,026 5,001 4,788 4,874
Raw material cost 827 770 787 818 724 697 840 801
Power and fuel cost 700 787 826 820 923 1,016 952 1,028
Employee cost 263 320 311 245 288 338 292 227
Transport cost 1,170 1,140 1,160 1,183 1,204 1,184 1,176 1,232
Other expenses 683 832 748 713 702 739 728 665
Operating cost 3,643 3,849 3,833 3,779 3,843 3,973 3,988 3,952
EBITDA per MT 1,077 1,033 949 908 1,183 1,028 801 922

Source: Company, Centrum Research

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UltraTech Cement
 Financials (Standalone)
Exhibit 8: Income Statement Exhibit 10: Balance Sheet
Y/E March (Rsmn) FY16 FY17 FY18 FY19E FY20E Y/E March (Rsmn) FY16 FY17 FY18 FY19E FY20E
Revenues 2,37,143 2,38,915 2,97,901 3,60,031 4,14,239 Equity Share Capital 2,744 2,745 2,746 2,746 2,746
Materials cost 39,906 39,514 46,797 55,701 62,860 Reserves & surplus 2,13,574 2,36,665 2,56,486 2,86,289 3,29,561
% of revenues 16.8 16.5 15.7 15.5 15.2 Total Shareholders' Fund 2,16,318 2,39,410 2,59,232 2,89,035 3,32,307
Employee Cost 13,430 14,134 17,066 19,674 21,750 Total Debt 82,496 62,404 1,74,195 1,38,195 88,195
% of revenues 5.7 5.9 5.7 5.5 5.3 Def tax liab. (net) 24,320 27,736 31,741 31,741 31,741
Others 1,37,541 1,35,577 1,75,205 2,07,973 2,35,529 Total Liabilities 3,23,134 3,29,550 4,65,168 4,58,971 4,52,243
% of revenues 58.0 56.7 58.8 57.8 56.9
EBITDA 46,266 49,690 58,833 76,683 94,100 Gross Block 2,39,127 2,56,747 4,14,179 4,57,179 4,80,179
EBIDTA Margins (%) 19.5 20.8 19.7 21.3 22.7 Less:- Accumulated Depreciation 12,241 24,424 42,059 63,843 87,277
Depreciation & Amortisation 12,970 12,679 17,636 21,784 23,434 Net Block 2,26,886 2,32,324 3,72,120 3,93,336 3,92,902
EBIT 33,296 37,011 41,198 54,899 70,666 Capital WIP 14,145 8,778 14,730 (3,270) 1,730
Interest expenses 5,117 5,714 11,863 13,277 9,622 Net Fixed assets 2,41,031 2,41,101 3,86,850 3,90,066 3,94,632
PBT from operations 28,179 31,297 29,335 41,623 61,045 Investments 57,932 74,087 61,629 51,629 51,629
Other Income 4,807 6,600 5,947 6,224 6,790 Inventories 22,776 22,250 31,015 35,510 39,722
Exceptional loss/(gain) 26 (333) (2,263) - - Sundry Debtors 14,149 12,762 17,142 19,728 22,131
PBT 33,012 37,564 33,019 47,847 67,835 Cash & bank balances 22,352 22,177 1,993 1,713 1,141
Taxes 9,284 11,482 10,706 14,832 21,029 Loans & Advances 10,372 5,390 6,364 6,905 7,944
Effective tax rate (%) 28.1 30.6 32.4 31.0 31.0 Other Assets 14,294 15,044 38,740 39,455 34,047
Net Profit 23,728 26,081 22,313 33,014 46,806 Total current assets 83,943 77,623 95,254 1,03,311 1,04,985
Reported Net Profit 23,728 26,081 22,313 33,014 46,806 Trade payables 15,815 17,138 23,435 22,290 25,185
Adj Net Profit 23,702 26,414 24,576 33,014 46,806 Other current liabilities 39,811 41,821 48,908 57,043 66,564
Source: Company, Centrum Research Estimates Provisions 4,146 4,302 6,221 6,702 7,254
Net current assets 24,171 14,362 16,689 17,276 5,982
Exhibit 9: Key Ratios Total 3,23,134 3,29,550 4,65,168 4,58,971 4,52,243
Y/E March FY16 FY17 FY18P FY19E FY20E Source: Company, Centrum Research Estimates
Growth ratios (%)
Exhibit 11: Cash Flow
Revenues 3.4 0.7 24.7 20.9 15.1
EBIDTA 10.3 7.4 18.4 30.3 22.7 Y/E March (Rsmn) FY16 FY17 FY18E FY19E FY20E
Adj Net Profit 17.6 11.4 (7.0) 34.3 41.8 Op profit before WC changes 38,333 42,334 52,132 61,851 73,071
Margin ratios (%) Working capital changes 5,211 4,878 (2,512) (867) 10,723
EBITDA Margin 19.5 20.8 19.7 21.3 22.7 Cash from Operations 43,544 47,213 49,621 60,984 83,794
PBT from operations Margin 11.9 13.1 9.8 11.6 14.7 Adj. OCF (OCF-Interest) 38,156 41,742 37,758 47,707 74,173
Adj PAT Margin 10.0 11.1 8.2 9.2 11.3 Net capex (20,595) (12,316) (65,814) (25,000) (28,000)
Return Ratios (%) Adj. FCF (AOCF-Capex) 17,561 29,426 (28,057) 22,707 46,173
RoE 11.5 11.6 9.9 12.0 15.1 Cash from investing (37,567) (23,635) (47,410) (8,776) (21,210)
RoCE 8.6 9.0 7.8 8.9 11.4 Cash from financing (5,824) (23,826) (23,445) (52,488) (63,156)
RoIC 9.3 10.0 8.3 8.9 11.5 Net change in cash 153 (249) (21,234) (280) (571)
Turnover Ratios (days) Source: Company, Centrum Research Estimates
Gross block turnover (x) 1.1 1.0 0.9 0.8 0.9
Debtors 21.8 19.5 21.0 20.0 19.5
Inventory 35.1 34.0 38.0 36.0 35.0
Creditors 24.3 26.2 28.7 22.6 22.2
Cash conversion cycle 32 27 30 33 32
Solvency Ratio
Net debt-equity 0.0 (0.1) 0.5 0.3 0.1
Debt-equity 0.4 0.3 0.7 0.5 0.3
Interest coverage ratio 6.5 6.5 3.5 4.1 7.3
Gross debt/EBITDA 1.8 1.3 3.0 1.8 0.9
Current Ratio 1.4 1.2 1.2 1.2 1.1
Per Share (Rs)
Adjusted EPS 86.4 96.2 89.5 120.2 170.4
BVPS 788.2 872.1 944.0 1,052.5 1,210.1
CEPS 133.6 142.4 153.7 199.5 255.8
DPS 9.0 9.5 10.5 10.0 11.0
Dividend payout % 12.5 11.9 15.1 9.7 7.6
Valuations (x)(Avg Mkt Cap)
P/E (adjusted) 33.5 37.3 46.6 34.4 24.3
P/BV 3.7 4.1 4.4 3.9 3.4
EV/EBITDA 17.3 19.3 21.5 16.0 12.5
EV/ton (USD $) 187 218 230 214 189
Dividend yield % 0.3 0.3 0.3 0.2 0.3
5 Yr Avg AOCF/EV yield % 4.1 3.7 2.9 3.3 4.1
Source: Company, Centrum Research Estimates

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UltraTech Cement
Appendix A
Disclaimer
Centrum Broking Limited (“Centrum”) is a full-service, Stock Broking Company and a member of The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Ltd. (NSE). Our holding company, Centrum Capital Ltd, is an investment banker and an underwriter of securities. As a group Centrum
has Investment Banking, Advisory and other business relationships with a significant percentage of the companies covered by our Research Group. Our
research professionals provide important inputs into the Group's Investment Banking and other business selection processes.
Recipients of this report should assume that our Group is seeking or may seek or will seek Investment Banking, advisory, project finance or other
businesses and may receive commission, brokerage, fees or other compensation from the company or companies that are the subject of this
material/report. Our Company and Group companies and their officers, directors and employees, including the analysts and others involved in the
preparation or issuance of this material and their dependants, may on the date of this report or from, time to time have "long" or "short" positions in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Centrum or its affiliates do not own 1% or more in the
equity of this company Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to
our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. We may have earlier issued or may issue in future reports on the
companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you
should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We and our Group may rely on
information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or
affiliates of Centrum. Centrum or its affiliates do not make a market in the security of the company for which this report or any report was written.
Further, Centrum or its affiliates did not make a market in the subject company’s securities at the time that the research report was published.
This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy,
purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is for the general
information of the clients of Centrum. Though disseminated to clients simultaneously, not all clients may receive this report at the same time. Centrum
will not treat recipients as clients by virtue of their receiving this report. It does not constitute a personal recommendation or take into account the
particular investment objectives, financial situations, or needs of individual clients. Similarly, this document does not have regard to the specific
investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities
discussed in this report may not be suitable for all investors. The securities described herein may not be eligible for sale in all jurisdictions or to all
categories of investors. The countries in which the companies mentioned in this report are organized may have restrictions on investments, voting rights
or dealings in securities by nationals of other countries. The appropriateness of a particular investment or strategy will depend on an investor's
individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for
his/ her/their particular circumstances and, if necessary, seek professional/financial advice. Any such person shall be responsible for conducting
his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved
in the securities forming the subject matter of this document.
The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates
on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase
over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company.
These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting
principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not
regard the inclusion of the projections and forecasts described herein as a representation or warranty by or on behalf of the Company, Centrum, the
authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you
should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the
assumptions underlying such projections and forecasts.
The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may
realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital
may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
change without notice. Centrum does not provide tax advice to its clients, and all investors are strongly advised to consult regarding any potential
investment. Centrum and its affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Foreign currencies
denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from
the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies effectively assume currency risk.
Certain transactions including those involving futures, options, and other derivatives as well as non-investment-grade securities give rise to substantial
risk and are not suitable for all investors. Please ensure that you have read and understood the current risk disclosure documents before entering into any
derivative transactions.
This report/document has been prepared by Centrum, based upon information available to the public and sources, believed to be reliable. No
representation or warranty, express or implied is made that it is accurate or complete. Centrum has reviewed the report and, in so far as it includes
current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. The opinions expressed in
this document/material are subject to change without notice and have no obligation to tell you when opinions or information in this report change.
This report or recommendations or information contained herein do/does not constitute or purport to constitute investment advice in publicly accessible
media and should not be reproduced, transmitted or published by the recipient. The report is for the use and consumption of the recipient only. This
publication may not be distributed to the public used by the public media without the express written consent of Centrum. This report or any portion
hereof may not be printed, sold or distributed without the written consent of Centrum.
The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions. Neither Centrum nor its directors, employees, agents or representatives shall be liable for any
damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with
the use of the information.
This document does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything
contained herein shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you
solely for your information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other person. The
distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves
about, and observe any such restrictions. By accepting this report, you agree to be bound by the fore going limitations. No representation is made that
this report is accurate or complete.

8
UltraTech Cement
The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking
and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this
report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection.
This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its
directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its
directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or
any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection
therewith.
Centrum and its affiliates have not managed or co-managed a public offering for the subject company in the preceding twelve months. Centrum and
affiliates have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this
report for service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a
merger/acquisition or some other sort of specific transaction.
As per the declarations given by them, Mr. Rajesh Kumar Ravi, & Mr. Vinay Menon, research analyst and and/or any of their family members do not serve
as an officer, director or any way connected to the company/companies mentioned in this report. Further, as declared by them, they are not received any
compensation from the above companies in the preceding twelve months. They do not hold any shares by them or through their relatives or in case if
holds the shares then will not to do any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals
are our employees and are paid a salary. They do not have any other material conflict of interest of the research analyst or member of which the research
analyst knows of has reason to know at the time of publication of the research report or at the time of the public appearance.
While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum
from doing so.
Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
regulations and/or Centrum policies, in circumstances where Centrum is acting in an advisory capacity to this company, or any certain other
circumstances.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject
Centrum Broking Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, this document does
not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any
transaction to any U.S. person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this
document may be distributed in Canada or used by private customers in United Kingdom.
The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading,
dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk
Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Indian
Securities Market.

Ultratech Cement price chart

5000
4500
4000
3500
3000
2500
2000
Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Apr-18

Ultratech Cement

Source: Bloomberg, Centrum Research

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UltraTech Cement

Business activities of Centrum Broking Limited
1 (CBL)
Details of Disciplinary History of CBL
2
3 Registration status of CBL:
Disclosure of Interest Statement
Centrum Broking Limited (hereinafter referred to as “CBL”) is a registered member of NSE (Cash, F&O
and Currency Derivatives Segments), MCX-SX (Currency Derivatives Segment) and BSE (Cash
segment), Depository Participant of CDSL and a SEBI registered Portfolio Manager.
CBL has not been debarred/ suspended by SEBI or any other regulatory authority from accessing
/dealing in securities market.
CBL is registered with SEBI as a Research Analyst (SEBI Registration No. INH000001469)

Ambuja Shree
Ultratech ACC
Cements Cement
Whether Research analyst’s or relatives’ have any financial interest in the subject
4 No No No No
company and nature of such financial interest
Whether Research analyst or relatives have actual / beneficial ownership of 1% or more in
5 securities of the subject company at the end of the month immediately preceding the No No No No
date of publication of the document.
6 Whether the research analyst or his relatives has any other material conflict of interest No No No No
Whether research analyst has received any compensation from the subject company in
7 the past 12 months and nature of products / services for which such compensation is No No No No
received
Whether the Research Analyst has received any compensation or any other benefits from
8 No No No No
the subject company or third party in connection with the research report
Whether Research Analysts has served as an officer, director or employee of the subject
9 No No No No
company
Whether the Research Analyst has been engaged in market making activity of the subject
10 No No No No
company.

Rating Criteria
Rating Market cap < Rs20bn Market cap > Rs20bn but < 100bn Market cap > Rs100bn
Buy Upside > 20% Upside > 15% Upside > 10%
Hold Upside between -20% to +20% Upside between -15% to +15% Upside between -10% to +10%
Sell Downside > 20% Downside > 15% Downside > 10%

Member (NSE and BSE)

Regn No.:
CAPITAL MARKET SEBI REGN. NO.: BSE: INB011454239
CAPITAL MARKET SEBI REGN. NO.: NSE: INB231454233
DERIVATIVES SEBI REGN. NO.: NSE: INF231454233
(TRADING & CLEARING MEMBER)
CURRENCY DERIVATIVES: MCX-SX INE261454230
CURRENCY DERIVATIVES:NSE (TM & SCM) – NSE 231454233

Depository Participant (DP)

CDSL DP ID: 120 – 12200
SEBI REGD NO. : CDSL : IN-DP-CDSL-661-2012

PORTFOLIO MANAGER

SEBI REGN NO.: INP000004383

Website: www.centrum.co.in
Investor Grievance Email ID: investor.grievances@centrum.co.in

Compliance Officer Details:

Kavita Ravichandran
(022) 4215 9842; Email ID: compliance@centrum.co.in

Centrum Broking Ltd. (CIN :U67120MH1994PLC078125)

Registered Office Address Corporate Office & Correspondence Address
Bombay Mutual Building , Centrum House
2nd Floor, 6th Floor, CST Road, Near Vidya Nagari Marg, Kalina,
Dr. D. N. Road, Santacruz (E), Mumbai 400 098.
Fort, Mumbai - 400 001 Tel: (022) 4215 9000

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UltraTech Cement