All‐India cement production grew 1.9% YoY at 46.4 million for the Jan‐Feb period, as per the published data of Economic Advisor of India. Growth was held back due to sluggish demand from private sector and curtailment in government spending in order to meet fiscal deficit target.

1.
April 10, 2015 71
Jan‐Mar 2015 Earnings Preview
Kamlesh Bagmar
kamleshbagmar@plindia.com
+91‐22‐6632 2237
Ankit Shah
ankitshah@plindia.com
+91‐22‐6632 2244
Top picks
UltraTech Cement
ACC
JK Lakshmi Cement
Cement
All‐India cement production grew 1.9% YoY at 46.4m for the Jan‐Feb period, as per
the published data of Economic Advisor of India. Growth was held back due to
sluggish demand from private sector and curtailment in government spending in
order to meet fiscal deficit target. Based on our channel checks, demand remained
subdued in March 2015 which pushed producers to curtail production. Hence,
production is expected to grow by a paltry 1% YoY, and we we expect all‐India
production to grow by 1.6% YoY in Q4FY15 at 71.4m tonnes.
All‐India Cement Production
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0 Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15
Q4FY15E
(m tonnes)
India cement production‐LHS Growth (%)
Source: Economic Advisor to Ministry of Commerce & Industry
Despite being a seasonally strong quarter, price hike by players in the beginning of
the quarter failed to sustain, with all‐India average rising just 3.4% QoQ (up 4.5%
YoY). Prices increased the most in the South, with average prices rising 11.8% QoQ
due to tight discipline by players. On the other hand, Northern region witnessed flat
prices QoQ.
 North ‐ Average price were flat QoQ: Despite a price hike of Rs20‐30/bag from
mid‐March on the back of cut in supplies, average prices in the region remain
flat QoQ due to price cuts in January (from second half) and February 2015.
 West – Maharashtra prices up Rs15/bag; prices in Gujarat unchanged: Average
price in Maharashtra rose by Rs15/bag QoQ due to a steep hike of Rs30/bag in
prices of Pune, partially off‐set by lower hike of Rs20/bag and Rs5/bag in prices
of Mumbai and rest of the state, respectively. Gujarat prices remained flat due
to weak prices in adjoining states in the Northern region despite better
demand.

2.
April 10, 2015 72
Jan‐Mar 2015 Earnings Preview
 Central – UP’s price fell by Rs4/bag QoQ; MP settles with a cut of Rs5: Prices in
UP fell due to weak secondary sales and infra sector. Prices in MP fell by Rs5/bag
QoQ due to weak prices in UP and Bihar (key market for MP‐based producers)
and subdued demand in the state.
 South – Discipline drives steep hike of Rs40/bag QoQ in region's average: After
witnessing a dip in prices in the previous quarter, producers resorted to a tight
discipline during the quarter. Hence, average prices in Tamil
Nadu/Bengaluru/Hyderabad/Kerala rose by Rs50/Rs30/Rs35/Rs45 per bag QoQ,
 East – Mild price hike of Rs5/bag QoQ: Region's demand was impacted due to
contraction in industrial activities across the resource rich states of the region
and poor public spending. Prices in West Bengal and Orissa, the most prominent
states in the region, rose by Rs5/bag QoQ, while prices in Bihar rose by Rs8/bag.
Region‐wise prices
230
245
260
275
290
305
320
335
350
365
380
Apr‐13
May‐13
Jun‐13
Jul‐13
Aug‐13
Sep‐13
Oct‐13
Nov‐13
Dec‐13
Jan‐14
Feb‐14
Mar‐14
Apr‐14
May‐14
Jun‐14
Jul‐14
Aug‐14
Sep‐14
Oct‐14
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
Rs/50kg bag
North South West Central East
Source: Industry, PL Research
EBITDA for our coverage universe is expected to decline by 8% YoY. Lower volumes
and weak realisations were the key variables behind the poor performance. PAT is
expected to fall by 20% on account of higher depreciation and interest cost.
We reiterate our Overweight outlook on the sector on the back of improved demand
outlook, slowing pace of capacity addition and exit of weak players. UltraTech
cement remains our top pick in the large cap space, given its play on sizeable and
efficient operations. In mid‐caps, we continue to like JK Lakshmi cement on the back
of its attractive valuations, efficient operations and play on large capacity base.

3.
April 10, 2015 73
Jan‐Mar 2015 Earnings Preview
Stock Performance
1M 3M 6M 12M 1M 3M 6M 12M
ACC (0.9) 17.0 16.6 17.8 (1.4) 11.8 6.8 (9.4)
Ambuja Cement (0.5) 15.4 22.2 21.6 (1.1) 10.2 12.3 (5.5)
JK Lakshmi Cement (3.6) (4.7) 6.6 203.2 (4.2) (9.9) (3.2) 176.0
Shree Cement (1.9) 17.6 29.7 92.5 (2.5) 12.4 19.9 65.4
The Ramco Cements (0.8) 1.3 4.8 51.7 (1.4) (3.9) (5.0) 24.6
Ultratech Cement (1.6) 8.8 19.7 32.2 (2.2) 3.6 9.8 5.1
Absolute Relative to Sensex
Source: Bloomberg, PL Research
Summary Financials ‐ Quarterly (Rs m)
Companies Q4FY15E Q4FY14 YoY gr. (%) Q3FY15 QoQ gr. (%) 12MFY15E 12MFY14 YoY gr. (%)
Sales 29,692 29,671 0.1 27,623 7.5 128,947 114,803 12.3
EBITDA 3,330 3,653 (8.9) 1,823 82.7 16,902 12,548 34.7
Margins (%) 11.2 12.3 (110)bps 6.6 461 bps 13.1 10.9 218 bps
PAT 2,129 2,501 (14.9) 1,076 97.9 10,586 8,068 31.2
Sales 25,072 26,398 (5.0) 23,790 5.4 110,248 99,107 11.2
EBITDA 4,965 5,776 (14.0) 3,324 49.4 23,908 18,610 28.5
Margins (%) 19.8 21.9 (208)bps 14.0 583 bps 21.7 18.8 291 bps
PAT 3,281 4,075 (19.5) 3,198 2.6 110,248 99,107 11.2
Sales 6,126 6,482 (5.5) 5,559 10.2 24,295 20,566 18.1
EBITDA 850 1,121 (24.1) 754 12.8 3,896 3,020 29.0
Margins (%) 13.9 17.3 (341)bps 13.6 32 bps 16.0 14.7 135 bps
PAT 467 696 (32.9) 285 64.0 1,822 1,073 69.9
Sales 16,198 16,600 (2.4) 15,419 5.1 44,092 45,822 (3.8)
EBITDA 3,308 4,261 (22.4) 3,035 9.0 8,837 10,331 (14.5)
Margins (%) 20.4 25.7 (525)bps 19.7 74 bps 20.0 22.5 (250)bps
PAT 1,091 2,284 (52.2) 945 15.4 3,768 4,626 (18.5)
Sales 10,107 9,244 9.3 7,861 28.6 36,178 36,321 (0.4)
EBITDA 2,152 682 215.5 1,001 115.0 6,264 5,117 22.4
Margins (%) 21.3 7.4 1,391 bps 12.7 856 bps 17.3 14.1 323 bps
PAT 1,105 20 5,426.5 230 381.4 2,436 1,001 143.4
Sales 61,839 58,319 6.0 54,898 12.6 246,972 214,437 15.2
EBITDA 11,521 11,430 0.8 8,457 36.2 42,352 38,264 10.7
Margins (%) 18.6 19.6 (97)bps 15.4 323 bps 17.1 17.8 (70)bps
PAT 6,531 7,424 (12.0) 3,644 79.2 22,440 21,105 6.3
Ultratech Cement
ACC
Ambuja Cement
Shree Cement
JK Lakshmi Cement
The Ramco
Cements
Source: Company Data, PL Research ACC & Ambuja Cement ‐ Y/e Dec; Shree Cement ‐ Y/e Jun

4.
April 10, 2015 74
Jan‐Mar 2015 Earnings Preview
Consolidated Sectoral Data
Quarterly Table (Rs m)
Jan‐Mar'15 Jan‐Mar'14 YoY gr. (%) Oct‐Dec'14 QoQ gr. (%)
Net Sales 132,801 130,988 1.4 121,729 9.1
EBITDA 23,124 25,121 (8.0) 16,638 39.0
Margin (%) 17.4 19.2 (177)bps 13.7 374 bps
PAT (Excl. Ex Items) 13,032 16,284 (20.0) 8,862 47.1
Note: Revenue, EBITDA and PAT numbers are arrived by totaling corresponding numbers of all companies under our coverage in this
sector.
Net revenue is expected to be flat YoY as a 6.7% or Rs292/t YoY rise in realizations
and 15% growth in RMC revenue is negated by 7.0% fall in volumes. On QoQ basis,
realizations are expected to rise by 3.2%/Rs145 per tonne. Cost/t is expected to
increase by 8.9%/Rs359/t YoY due to higher freight and raw material cost (due to
outsourcing of clinker). Hence, EBITDA/t is expected to fall by 2.0% YoY to Rs553.
PAT is likely to fall by 14.9% YoY to Rs2.1bn.
Quarterly Table (Rs m)
Y/e Dec
Q1
CY15E
Q1
CY14
YoY gr.
(%)
Q4
CY14
12M
CY15E
12M
CY14
YoY gr.
(%)
Net Sales 29,692 29,671 0.1 27,623 128,947 114,803 12.3
EBITDA 3,330 3,653 (8.9) 1,823 16,902 12,548 34.7
Margin (%) 11.2 12.3 (110)bps 6.6 13.1 10.9 218 bps
Reported PAT 2,129 3,999 (46.8) 3,129 10,586 11,618 (8.9)
PAT (Excl. Ex Items) 2,129 2,501 (14.9) 1,076 10,586 8,068 31.2
Operating Metrics
Volume (mn te) 6.0 6.5 (7.0) 5.8 25.4 24.2 5.0
Net Real. (Rs/te) 4,642 4,350 6.7 4,497 4,784 4,742 0.9
EBITDA (Rs/ te) 553 564 (2.0) 316 665 518 28.3
Key Figures (Rs m)
2015E 2016E 2017E
Net Sales 529,987 616,487 720,909
Growth (%) 12.1 16.3 16.9
EBITDA 88,755 119,930 152,250
Margin (%) 16.7 19.5 21.1
PAT 49,603 69,034 93,999
Growth (%) 2.9 39.2 36.2
PE (x) 38.3 27.5 20.2
ACC
Rating BUY
Price (Rs) 1,636
Target Price (Rs) 1,690
M/Cap (Rs bn) 307.5
Shares o/s (m) 188.0
Key Figures (Rs m)
Y/e Dec CY14E CY15E CY16E
Net Sales 114,803 128,947 149,563
EBITDA 12,548 16,902 23,203
Margin (%) 10.9 13.1 15.5
PAT 8,068 10,586 14,652
EPS (Rs) 42.9 56.3 78.0
Growth (%) (10.4) 31.2 38.4
RoE (%) 10.1 12.5 16.3
PE (x) 38.1 29.0 21.0
P / BV (x) 3.7 3.6 3.3
EV / E (x) 23.2 17.3 12.1

5.
Jan‐Mar 2015 Earnings Preview
April 10, 2015 134
Prabhudas Lilladher Pvt. Ltd.
3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai‐400 018, India
Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
Rating Distribution of Research Coverage PL’s Recommendation Nomenclature
44.6%
39.1%
16.3%
0.0%
0%
10%
20%
30%
40%
50%
BUY Accumulate Reduce Sell
% of Total Coverage
BUY : Over 15% Outperformance to Sensex over 12‐months
Accumulate : Outperformance to Sensex over 12‐months
Reduce : Underperformance to Sensex over 12‐months
Sell : Over 15% underperformance to Sensex over 12‐months
Trading Buy : Over 10% absolute upside in 1‐month
Trading Sell : Over 10% absolute decline in 1‐month
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
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