1. 1QFY2011 Result Update | Cement
July 30, 2010
Ultratech Cement BUY
CMP Rs864
Performance Highlights Target Price Rs1,087
Y/E Mar (Rs cr) 1QFY2011 4QFY2010 % chg qoq 1QFY2010 % chg yoy Investment Period 12 Months
Net revenue 1,810 1,923 (5.9) 1,969 (8.1)
Operating profit 425 416 2.3 733 (41.9) Stock Info
OPM (%) 23.5 21.6 188bp 37.2 (1,371)bp Sector Cement
Net profit 243 229 6.2 418 (41.9) Market Cap (Rs cr) 10,760
Source: Company, Angel Research Beta 0.7
52 Week High / Low 1172/669
For 1QFY2011, Ultratech’s net realisations declined 4.9% due to its substantial Avg. Daily Volume 41890
exposure (~33%) to the southern region, which was affected by lower off-take Face Value (Rs) 10
and shortage of wagons. Further, the increase in operating expenditure resulted BSE Sensex 17,868
in a 1,371bp yoy decline in OPM to 23.5% (37.2%). Going ahead, we expect Nifty 5,368
Ultratech to benefit from its pan-India presence due to the Samruddhi merger and
Reuters Code ULTC.BO
not face a comparatively lower pricing pressure. We maintain Buy on the stock.
Bloomberg Code UTCEM@IN
Lower realisations, higher expenses pull down bottom line: Ultratech’s net sales
declined by 8.1% yoy because of a 3.6% decline in despatches to 5.12mn tonnes
and a 4.9% decline in realisations to Rs3,496/tonne. The company’s operating Shareholding Pattern (%)
expenses for the quarter increased by 12% yoy to Rs1,384cr, lead by higher Promoters 54.8
power costs, resulting in a substantial 41.9% decline in operating profits. Power MF / Banks / Indian Fls 18.7
costs increased due to higher open market power purchases and reduced coal FII / NRIs / OCBs 11.6
supply through linkages.
Indian Public / Others 14.9
Outlook and valuation: We have incorporated the post-merger numbers in our
estimates and expect Ultratech to post a 45.3% CAGR in top line over
FY2010–12E aided by higher volumes. At the current levels, the stock is trading at Abs. (%) 3m 1yr 3yr
an EV/EBITDA of 6.7x and EV/tonne of US $94 based on FY2012E estimates. Sensex 1.8 16.1 17.1
We have valued Ultratech at an average target EV/EBITDA of 7x and an EV/tonne Ultratech (11.1) 7.8 (3.7)
of US $105/tonne to arrive at a fair value of Rs1,087. We maintain a Buy view
on the stock.
Key Financials
Y/E March ( Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 6,383 7,103 13,022 15,003
% chg 15.9 11.3 83.3 15.2
Net Profit 977 1,093 1,633 2,042
% chg (3.0) 11.9 49.4 25.1
OPM (%) 26.7 28.5 25.4 27.0
FDEPS(Rs) 78.5 87.8 59.6 74.5
P/E (x) 11.0 9.8 14.5 11.6
P/BV (x) 3.0 2.3 1.9 1.5
RoE (%) 31.0 26.6 18.8 14.0
Rupesh Sankhe
RoCE (%) 24.2 24.2 19.3 15.2 022-40403800; Ext 319
EV/Sales (x) 2.0 1.7 2.1 1.8 rupeshd.sankhe@angeltrade.com
EV/tonne 119 112 107 94
V Srinivasan
Installed cap (mtpa) 22 23 52 57
022-40403800; Ext 330
EV/EBITDA 7.5 6.1 8.2 6.7 v.srinivasan@angeltrade.com
Source: Company, Angel Research; Post merger numbers for FY2011E and FY2012E
Please refer to important disclosures at the end of this report 1

2. Ultratech Cement | 1QFY2011 Result Update
Exhibit 1: 1QFY2011- Financial performance
Y/E March (Rs cr) 1QFY2011 4QFY2010 % chg (qoq) 1QFY2010 % chg (yoy) FY2010 FY2009 % chg
Net sales 1,810 1,923 (5.9) 1,969 (8.1) 7,104 6,383 11.3
Net raw-material costs 255 361 (29.5) 243 4.7 1,027 616 66.7
(% of sales) 14.1 18.8 12.4 14.5 9.6
Power & fuel 418 365 14.4 383 9.0 1,431 1,727 (17.1)
(% of sales) 23.1 19.0 19.5 20.1 26.8
Staff costs 69 66 5.2 59 17.9 251 218 15.1
(% of sales) 3.8 3.4 3.3 3.5 3.4
Freight & forwarding 359 349 2.9 305 17.6 1,229 1,058 16.1
(% of sales) 19.8 18.1 16.8 17.3 16.4
Other expenses 283 366 (22.5) 245 15.5 1,142 1,060 7.7
(% of sales) 15.7 19.0 13.6 16.1 16.5
Total expenditure 1,384 1,507 (8.1) 1,236 12.0 5,079 4,679 8.5
Operating profit 425 416 2.3 733 (41.9) 2,025 1,704 15.2
OPM (%) 23.5 21.6 37.2 28.5 26.7
Interest 28 28 (2.1) 33 (15.5) 118 126 (6.4)
Depreciation 102 99 2.2 94 8.5 388 323 20.1
Other income 29 13 125.4 18 57.2 59 104 (52.8)
PBT (incl. extr. items) 325 301 7.9 624 (48.0) 1,578 1,361 15.9
Provision for taxation 82 72 13.6 207 (60.4) 485 384 26.1
(% of PBT) 25.2 24.0 33.1 30.7 28.2
Reported PAT 243 229 6.2 418 (41.9) 1,093 977 11.9
PATM 13.4 11.9 21.2 15.4 15.2
EPS (Rs) 19 18 6.2 34 (41.9) 88 78 11.9
Adjusted PAT 243 229 6.2 418 (41.9) 1,093 977 11.9
Source: Company, Angel Research
Exhibit 2: Financial performance trend
(Rs cr) (%)
2,500 40
2,000 35
30
1,500
25
1,000
20
500 15
0 10
4QFY09 1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
Net Sales Net Profit OPM
Source: Company, Angel Research
July 30, 2010 2

3. Ultratech Cement | 1QFY2011 Result Update
Exhibit 3: 1QFY2011 - Actual v/s Angel estimates
(Rs cr) Actual Estimates Variation (%)
Net sales 1,810 2,041 (11.3)
Operating profit 425 478 (11.0)
Net profit 243 277 (12.3)
Source: Company, Angel Research
Operational performance
For 1QFY2010, the company’s realisation per tonne fell by 4.9% on a yoy basis to
Rs3,496. The company’s net realisations were down due to its substantial exposure
(~33%) to the southern region, which was affected by lower off-take and shortage
of wagons. As per management, the western and eastern regions were also
constrained on account of logistical issues and partial disruptions in
operations. Further, raw-material costs per tonne grew by 8.3% yoy. Freight costs
per tonne rose by 21.9% yoy due the increase in diesel costs. Net profit per tonne
for the quarter stood at Rs474, down 39.7% on a yoy basis.
Exhibit 4: Operating performance trend
%chg % chg
Particulars (Rs) 1QFY11 4QFY10 1QFY10
yoy qoq
Realisation/tonne 3,496 3,373 3,678 (4.9) 3.6
Raw-material cost/tonne 498 638 460 8.3 (22.0)
Power & fuel cost /tonne 816 645 721 13.1 26.5
Freight cost/tonne 700 616 574 21.9 13.7
Operating profit/tonne 831 735 1350 (38.5) 13.1
Depreciation/tonne 198 175 177 12.0 13.0
Net profit/tonne 474 404 785 (39.7) 17.4
Source: Company, Angel Research
July 30, 2010 3

4. Ultratech Cement | 1QFY2011 Result Update
Investment Arguments
To emerge as India’s largest cement manufacturer post the Samruddhi merger:
After the merger of Samruddhi (erstwhile cement division of Grasim) with itself,
Ultratech is set to become India’s largest cement player having pan-India presence
with a capacity of 48mtpa. The company is in the process of acquiring the
overseas cement assets of Dubai-based ETA Star, which would take its overall
capacity to 52mn tonnes. ETA Star’s manufacturing facilities include a 2.3mtpa
clinkerisation plant and a 2.1mtpa grinding capacity in the UAE, and 0.4mtpa and
0.5mtpa of grinding facilities in Bahrain and Bangladesh, respectively. In addition,
Ultratech is set to embark on its next round of expansion and the company has
envisaged a capital outlay of Rs5,600cr to enhance its capacity by 9.2mtpa. The
expansion would come by setting up brown-field expansion at the Chhattisgarh
and Karnataka plants.
Pan-India presence to insulate Ultratech from price volatility: Ultratech enjoys a
good brand equity and would have an even more strong brand equity post the
Samruddhi merger and would be insulated from wide variation in regional
demand and price volatility. We believe Ultratech would enjoy synergic benefits in
terms of superior operating efficiencies post the merger due to its larger size.
Increased use of captive power to protect margins: Currently, Ultratech has
504MW of capacity. The company is setting up another 86MW of capacity which,
when commissioned, would cater to 80% of its overall power requirements in
FY2012E. Besides, an increase in blending aided by its grinding unit, will likely
result in increased overall efficiency and lower power consumption from the
current 87units/tonne to about 80units/tonne.
Strong balance sheet: Ultratech has a strong balance sheet with a net debt to
equity of 0.33x and cash balance of Rs112cr. We expect the company to generate
strong cash flows over the next few years, which would help Ultratech to fund its
expansion plans through internal accruals.
July 30, 2010 4

5. Ultratech Cement | 1QFY2011 Result Update
Outlook and valuation: We have incorporated the post-merger numbers in our
estimates and expect the company to register a 45.3% CAGR in top line over
FY2010–12E, aided by higher volumes. We expect Ultratech to benefit from its
pan-India presence and not face a major price correction. At the current levels, the
stock is trading at an EV/EBITDA of 6.7x and EV/tonne of US $94 based on
FY2012E estimates. We have valued Ultratech at an average target EV/EBITDA of
7x and an EV/tonne of US $105/tonne to arrive at a fair value of Rs1,087. We
maintain a Buy view on the stock.
Exhibit 5: Target valuation on FY2012 estimates
Target EV/EBITDA 7x Target EV/tonne US $105
EV (Rs cr) 28,344 EV (Rs cr) 29,195
CPP*(580 MW) 2,320
Market cap (Rs cr) 29,467 Market cap (Rs cr) 30,138
No. of shares (cr) 27.4 No. of shares (cr) 27.4
Fair price (Rs) 1,075 Fair price (Rs) 1,099
Source: Angel Research; Note:*Captive power plant
Exhibit 6: One-year forward EV/EBITDA band
(Rs cr) EV 1.5x 4x 6.5x 9x
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
July 30, 2010 5

6. Ultratech Cement | 1QFY2011 Result Update
Exhibit 7: One-Year forward EV/tonne band
(Rs cr) EV 70$ 100$ 130$ 160$
40,000
30,000
20,000
10,000
0
Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
Exhibit 8: Recommendation summary
Company Reco. CMP Tgt. Price Upside FY2012E FY2012E FY2010-12E FY2012E FY2012E
(Rs) (Rs) (%) P/BV (x) P/E (x) EPS CAGR (%) RoCE (%) RoE (%)
ACC Neutral 831 - - 1.9 11.1 (7.5) 21.3 19.0
Ambuja Cements Neutral 118 - - 2.2 15.0 (3.5) 19.1 16.3
Grasim Buy 1,833 2,216 20.9 0.8 6.9 (12.2) 15.0 13.0
India Cem Buy 107 135 26.6 0.8 9.4 0.4 5.8 4.7
JKLC Buy 61 92 50.0 0.6 4.2 (2.3) 12.8 14.9
Madras Cem Buy 102 141 38.0 1.3 9.9 (15.3) 8.4 10.7
Ultratech Buy 864 1,087 25.8 1.5 11.6 (7.9) 15.2 14.0
Source: Company, Angel Research
July 30, 2010 6

7. Ultratech Cement | 1QFY2011 Result Update
Profit and loss statement
Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Net revenue 4,911 5,509 6,383 7,103 13,022 15,003
% chg 48.8 12.2 15.9 11.3 83.3 15.2
Total expenditure 3,493 3,783 4,677 5,079 9,709 10,954
Net raw materials 608 524 616 1,027 1,736 1,961
Other mfg costs 1,138 1,253 1,713 1,431 2,976 3,274
Personnel 117 168 218 251 490 535
Other 1,630 1,838 2,130 2,370 4,508 5,185
EBITDA 1,418 1,726 1,706 2,025 3,313 4,049
% chg 155.8 21.7 (1.1) 18.7 63.6 22.2
(% of net Sales) 29 31 27 29 25 27
Depreciation& amortisation 226 237 323 388 864 959
EBIT 1,192 1,489 1,383 1,637 2,449 3,090
% chg 252.3 24.9 (7.1) 18.3 49.6 26.2
(% of net Sales) 24 27 22 23 19 21
Interest & other Charges 87 82 126 118 247 269
Other income 61 101 104 59 234 225
(% of PBT) 5 7 8 4 10 7
Recurring PBT 1,166 1,507 1,361 1,578 2,436 3,047
% chg 308.3 29.2 (9.7) 15.9 54.4 25.1
Extraordinary expense/(Inc.) - - - - - -
PBT (reported) 1,166 1,507 1,361 1,578 2,436 3,047
Tax 384 499 384 485 803 1,004
(% of PBT) 33 33 28 31 33 33
PAT (reported) 782 1,008 977 1,093 1,633 2,042
ADJ. PAT 782 1,008 977 1,093 1,633 2,042
% chg 240.5 28.8 (3.0) 11.9 49.4 25.1
(% of net Sales) 15.9 18.3 15.3 15.4 12.5 13.6
Basic EPS (Rs) 63 81 78 88 60 75
Fully Diluted EPS (Rs) 63 81 78 88 60 75
% chg 240.5 28.8 (3.0) 11.9 (32.1) 25.1
July 30, 2010 7

8. Ultratech Cement | 1QFY2011 Result Update
Balance sheet
Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity share capital 124 124 124 124 274 274
Preference capital
Reserves& surplus 1,639 2,573 3,476 4,482 12,506 16,030
Shareholders funds 1,764 2,697 3,600 4,607 12,780 16,304
Total loans 1,579 1,741 2,143 1,605 4,697 5,197
Deferred tax liability 560 542 723 831 831 831
Total liabilities 3,903 4,981 6,467 7,042 18,308 22,332
APPLICATION OF FUNDS
Gross block 4,785 4,973 7,401 8,078 19,117 21,417
Less: Acc. Depreciation 2,267 2,472 2,765 3,136 6,586 7,544
Net block 2,517 2,500 4,636 4,942 12,531 13,872
Capital work-in-progress 697 2,283 677 259 1,252 1,952
Goodwill
Investments 483 171 1,035 1,670 3,708 4,408
Current Assets 960 1,305 1,362 1,669 4,579 5,721
Cash 90 101 105 84 1,154 1,912
Loans & advances 254 377 379 351 976 991
Other 617 826 878 1,235 2,449 2,818
Current liabilities 755 1,279 1,243 1,301 2,475 2,899
Net current assets 205 26 119 171 816 2,099
Mis. Exp. not written off - - - - - -
Total Assets 3,903 4,981 6,467 7,042 18,308 22,332
July 30, 2010 8

9. Ultratech Cement | 1QFY2011 Result Update
Cash flow statement
Y/E March (Rs cr) FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 1,166 1,507 1,361 1,578 2,436 3,047
Depreciation 226 237 323 388 864 959
Change in Working Capital 51 205 186 121 449 1,150
Less: Other income 61 101 104 59 234 225
Direct taxes paid 384 499 384 485 803 1,004
Cash Flow from Operations 998 1,349 1,382 1,543 2,714 3,930
(Inc)/ Decin Fixed Assets (735) (1,774) (823) (259) (2,993) (3,000)
(Inc)/ Dec in Investments (311) 313 (864) (635) (2,039) (700)
(Inc)/ Dec in loans and
advances
Other income 61 101 104 59 234 225
Cash Flow from Investing (985) (1,361) (1,583) (835) (4,797) (3,475)
Issue of Equity - - - 150 -
Inc./(Dec.) in loans 127 163 402 (539) 3,093 500
Dividend Paid (Incl. Tax) 25 57 73 73 90 197
Others 87 82 126 118
Cash Flow from Financing 15 24 204 (729) 3,153 303
Inc./(Dec.) in Cash 28 12 3 (21) 1,070 758
Opening Cash balances 62 90 101 105 84 1,154
Closing Cash balances 90 101 105 84 1,154 1,912
July 30, 2010 9

10. Ultratech Cement | 1QFY2011 Result Update
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 13.8 10.7 11.0 9.8 14.5 11.6
P/CEPS 10.7 8.6 8.3 7.3 9.5 7.9
P/BV 6.1 4.0 3.0 2.3 1.9 1.5
Dividend yield (%) 0.2 0.5 0.7 0.7 0.4 0.8
EV/Sales 2.5 2.3 2.0 1.7 2.1 1.8
EV/EBITDA 8.6 7.2 7.5 6.1 8.2 6.7
EV / Total Assets 3.1 2.5 2.0 1.7 1.5 1.2
Per Share Data (Rs)
EPS (Basic) 62.8 80.9 78.5 87.8 59.6 74.5
EPS (fully diluted) 62.8 80.9 78.5 87.8 59.6 74.5
Cash EPS 81.0 100.0 104.4 119.0 91.1 109.5
DPS 2.0 4.6 5.8 5.8 3.3 7.2
Book Value 141.7 216.6 289.2 370.0 466.4 595.0
Dupont Analysis
EBIT margin 24.3 27.0 21.7 23.0 18.8 20.6
Tax retention ratio 67.1 66.9 71.8 69.3 67.0 67.0
Asset turnover (x) 1.4 1.3 1.1 1.1 1.1 0.8
ROIC (Post-tax) 23.4 22.9 17.7 17.0 13.6 11.0
Cost of Debt (Post Tax) 3.8 3.3 4.6 4.3 5.3 3.6
Leverage (x) 1.1 0.7 0.6 0.4 0.3 0.2
Operating ROE 44.8 37.1 25.3 22.7 16.2 12.8
Returns (%)
ROCE (Pre-tax) 34.2 33.5 24.2 24.2 19.3 15.2
Angel ROIC (Pre-tax) 39.8 52.1 33.4 26.4 21.7 18.0
ROE 55.8 45.2 31.0 26.6 18.8 14.0
Turnover ratios (x)
Asset Turnover (Gross
1.0 1.1 1.0 0.9 1.0 0.7
Block)
Inventory / Sales (days) 30 35 37 39 34 42
Receivables (days) 13 13 12 10 16 23
Payables (days) 69 98 98 91 71 90
Working capital cycle (ex-
10 1 (2) 3 (4) (2)
cash) (days)
Solvency ratios (x)
Net debt to equity 0.8 0.6 0.6 0.3 0.3 0.2
Net debt to EBITDA 1.1 1.0 1.2 0.8 1.1 0.8
Interest Coverage (EBIT /
13.7 18.1 11.0 13.9 9.9 11.5
Interest)
July 30, 2010 10

11. Ultratech Cement | 1QFY2011 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement Ultratech Cement
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
July 30, 2010 11