Fundamental analysis

PGDM INDUSTRY IMMERSSION PROJECT Kohinoor Business School
TOPIC
Fundamental Analysis of Cement Industry
By
Nilesh P Shingote
Batch 2014 – 2016
In partial fulfillment of the requirements for
POST GRADUATE DIPLOMA IN MANAGEMENT
September 2015

DECLARATION
I hereby declare that the Industrial Immersion project report entitled
“Fundamental Analysis of Cement Industry” carried out at “Rubycapital”
is my work submitted in partial fulfillment of the requirement for the Post
Graduate Diploma in Management from KOHINOOR BUSINESS SCHOOL,
KURLA, MUMBAI and not submitted for the award of any degree, diploma,
fellowship or any similar titles or prizes.
Date: Signature: _______________
Place: Mumbai Student Name: Nilesh P Shingote

CERTIFICATE
This is to certify that the project entitled “Fundamental Analysis of Cement
Industry” is successfully completed by “Nilesh P Shingote” in partial
fulfillment of the Post Graduate Diploma In Management, AICTE Approved ,
through KOHINOOR BUSINESS SCHOOL, Kurla, Mumbai-400070.
Date:
Place: Mumbai “Prof. Hemal Thakker”

ACKNOWLEDGEMENT
I am using this opportunity to express my sincere gratitude to everyone who supported me to complete
this project. I am very thankful for their guidance and friendly advice during the project work.
I express my warm thanks to My Mentor Prof. Hemal Thakker, Mr. Nirav Morakhia and Mr. Ashutosh
Zawar for their support and guidance.
Prof. Hemal Thakker is guiding me from first day of my college and he motivate and show me right
direction at every step of my college life.
Mr. Nirav Morakhia and Mr. Ashutosh Zawar has gave me platform to learn, understand and practice
fundamental analysis at Rubycapital.
Nevertheless, we express our gratitude toward colleagues for their kind co-operation and
encouragement which help me in completion of this project.
Thank You,

Contents
Executive Summary.......................................................................................................................................6
1. Introduction to Fundament analysis.........................................................................................................7
A. Economy analysis..................................................................................................................................7
B. Industry Analysis...................................................................................................................................9
C. Company analysis................................................................................................................................11
2. RubyCapital .............................................................................................................................................14
Work done during Internship..................................................................................................................14
Key Job ....................................................................................................................................................14
3. Economy and Cement Industry..............................................................................................................15
Indian Economy Snapshot:......................................................................................................................15
4. Fundamental of Cement Industry...........................................................................................................16
Industry Snap shot: .................................................................................................................................18
Growth Drivers:.......................................................................................................................................18
Five Region and leading companies........................................................................................................19
Opportunities in North-East....................................................................................................................20
5. Company analysis....................................................................................................................................21
Bibliography ................................................................................................................................................22
Books:......................................................................................................................................................22
Website:..................................................................................................................................................22

Executive Summary
Fundamental analysis is analysis of all the fundamental factors which impact performance of business.
Fundamental factors includes economic factor which cannot be control by single company, industry
factors like demand supply gap, competition and company factors like management capacity to deliver
return and company’s Competitiveness.
Cement industry is cyclical in nature. Its performance is strongly correlated to construction activity and
infrastructure spending. Transportation and power are the two major cost in cement industry. Due to slow
down in economy, it is not working at its full capacity.
India economy is growing at 7.3% which is make India fastest growing economy in world. Increasing
economy activity will increase capacity utilization rate of cement industry in future. Increased capacity
utilization rate will have positive impact on margin of Cement Company.
Currently, leading companies are trading at higher valuation simply at higher P/E which reduce
attractiveness in cement industry. Investor can investment in this sector when there in huge correction
and fall with long term view of 4-5 years.

1. Introduction to Fundament analysis
Fundamental analysis means a detailed analysis of the fundamental factors affecting the company
performance. It systematic approach to estimating the future dividends and share price. It is based on the
basic premise that share price is determined by a number of fundamental factors relating to the economy,
industry and company.
Each share has real value based on its present and future ability to generate profit. This real value is called
intrinsic value. It is believed that market price of share will move toward real price of share in near future.
When market price of share is less than intrinsic value, it create buying opportunity for investor and wise
versa.
Fundamental analysis involves three steps as follows:
A. Economic analysis
B. Industry analysis
C. Company analysis
A. Economy analysis
The performance of a company depends on number of economic factors. Here we will look at some key
economic variable which help analyst to understand economic situation and its impact on stock prices.
National Income:
Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP) are the different
measures of national income. Analysts prefer to look at National income in term of growth rate. Growth
rate of national income is key indicator to know state of economy.
Growth rate of the economy would be a pointer towards the state of the economy. An economy typically
passes through different stages of prosperity known as economic Cycle. The four stages of an economic
cycle are
1. Depression: is the worst of the four stages. During a depression, demand is low and declining.
Inflation is often high. In this period, GDP growth rate keep declining or negative for number of
quarters or years. In depression, many people lose their job and because of this, spending and
investment activity declines which have direct impact on demand and earning of companies.
2. Recovery stage: In recovery stage, Economy start recovering from depreciation phase. Demand
picks up leading to more investments in the economy. Production, employment and profits are on
the increase. Early Recovery stage is right time to invest in stock market for long term investors.

3. Boom: Boom Phase is of high demand and high spending. Production and investments activities
remain on top to satisfy the high demand. During this period, company earn high profit.
4. Recession: When demand reach at maximum level, the boom phase gradually slowdown .the
economy slowly begin to experience a downturn in demand, production employment etc., the
profits of companies are also start to decline. Investors who are looking for long term investment,
must avoid investment in this phase.
Inflation
Inflation reduce purchasing power of money. It impact consumer demand and spending. It also increase
production cost because of increasing cost of raw materials and other factor of production. High Inflation
has impact on corporate earnings and expansion. Many Central banks takes interest rate decision on basis
of current inflation number and target.
Interest rates
Interest rate determine availability and cost of credit for companies. Low interest rate available credit at
cheap cost which help companies in expansion of bottom line growth. On other side, higher interest rates
lead to higher production cost which may result into contraction in bottom line growth.
Government revenue, spending and deficits
Government is the largest spender and investor in infrastructure, defense, social security etc. Trend in
government revenue, spending and deficit have large impact on the performance of economy. Higher
government spending creates jobs and demand in economy. But if government spending is higher than its
revenue it called deficits which can create problems in longer term not only for particular sector or
company but also whole economy.
Exchange rates
Domestic currency value against major currencies of the world plays important role in today’s economy.
Industries and companies who depends on export or impact get impacted due to fluctuation in exchange
rate. Depreciation of domestic currency improve competitive position of domestic product in international
market but it would also make import more expensive. Devaluation of domestic currency, increase
profitability of exporter and have negative impact on importers’ profitability.
Infrastructure
Infrastructure plays key role in economic development of country. Bad infrastructure facilities like
transportation, power, communication, storage lead to inefficiencies, lower productivity, wastage and
delays.
Monsoon

More than half population of India depends on agriculture and large amount of agriculture activities are
depend on monsoon. Monsoon not only impact agriculture sector but whole economy because earning of
more than half population get impacted by monsoons.
Political and Economic policies stability
Political and economic policies stability is foundation for balanced and steady growth. Stable government
led to quick decision making and stable policies. Unstable government and policies can impact business
sentiment and industry growth.
B. Industry Analysis
Industry analysis is analysis of fundamental factors and competiveness of industry. Industry influences
performance of the companies which operate in the industry. Even the best stocks can post low returns if
they are in a struggling industry. It is often said that a weak stock in a strong industry is preferable to a
strong stock in a weak industry.
In industry analysis we will try to cover key variable which has significant impact on performance of
company. Some key variable are as follows:
Industry life cycle
The Industry life cycle is useful for an investor because the profitability of a company or an industry
depends upon its life cycle stage. The life cycle of industry can be divides into to pioneering stage,
expansion stage, stagnation stage and decay stage.
1. Pioneering stage: It is first stage in life cycle of new industry or product where product or service
have not reached state of perfection. This Stage is known for rapid growth in demand for the
output of industry. As a result there is a greater opportunity for profit. Number of firms compete
with each other. Weak firms are get out of race and lesser number of firms survive in the
pioneering industry. It’s very important to choose right company with strong promoter and
management team in pioneering stage industry.
2. Expansion stage: Once an industry has established itself it enters the second stage of expansion
or growth. These companies continue to become stronger. Each company finds a market for itself
and develops its own strategies to sell and maintain its position in the market. The competition
among the surviving companies brings about improved products at lower prices. Companies in
the expansion stage of an industry are quite attractive for investment purposes.
3. Stagnation stage: In this stage the growth of the industry stabilizes. The ability of the industry to
grow appears to have been lost. Sales may be increasing but at a slower rate than that
experienced by competitive industries or by the overall economy. The transition of an industry
from the expansion stages to stagnation stages is very slow. Important reason for this
transition is change in social habits and development of improved technology. e. g. the black and

white television industry in India provides a good example of an industry which passed from the
expansion stages to stagnation stage.
4. Decaystage: Decay stage occurs when the products of the industry are no longer in demand. New
products and new technologies have come to the market. Customers have changed their habits,
style and liking. As a result, the industry become obsolete and gradually ceases to decay of an
industry
Demand supply gap
The demand for the product usually trends to change at a steady rate, whereas the capacity to produce
the product tends to change at irregular intervals, depending upon the installation of additional
production capacity. As result an industry is likely to experience under supply and over supply of
capacity at different times. Excess supply reduces the profitability of the industry through a decline in
the unit price realization. On the contrary, i n s u f f i c i e n t supply tends to improvethe profitability
through higher unit price realization.
Competitiveconditions in the industry
The level of competition among various companies in an industry is determined by certain competitive
forces. These competitive forces are: barriers to entry, the threat of substitution, bargaining power
of the suppliers and the rivalry among competitors.
Permanence
Permanence is the phenomenon related to the products and the technology used by the industry. If an
analyst feels that the need for a particular industry will vanish in a short period, or that the rapid
technological changes would render the products obsolete within short period of time, it would be
foolish to invest such industry.
Labour conditions
In India, the labour unions are very power full .if the labour in a particular industry is rebellious and
is inclined to resort to strikes frequently, the prospects of that industry cannot become bright.
Government Attitude
The government may encourage certain industries and can assist such industries through favorable
legislation. On the contrary, the government may look with disfavor on certain other industries .in India
this has been the experience of alcoholic drinks and cigarette industries. A prospective investor should
consider the role of government is likely to play in the industry.
Supply of raw materials
Supply of raw materials is the important factor determine the profitability of an industry. Some industry
may have no difficulty in obtaining the major raw materials as they may be indigenously available easily.
Other industries may have to depend on a few manufactures within the country or on imports from
outside the country for their raw material supply.
Cost structure

Cost structure effect the profitability of the firm. Broadly cost structure is consist of fixed cost and variable
cost. The higher the fixed cost components, need high volume of sales to achieve breakeven point.
Profitability after breakeven point is higher in case of higher the fixed cost components. Conversely, the
lower the proportion of fixed cost relative to variable cost lower would be the breakeven point and
provides higher margin of safety even for small volume of sales. Most analyst prefer industry that has
a lower breakeven point.
C. Company analysis
Company analysis is next stage in fundamental analysis after Economic and Industry analysis. The economic
analysis provides the analyst a broad outline of the prospects of growth in the economy, the industry
analysis helps the analyst to select the industry in which investment would be rewarding (Generally, one
analyst focus on one or two industry at a time). Now he has to decide the company in which he should
invest his money. Company analysis provides answer to this question. Last few years Annual report is one
of the key available resource to do company analysis.
One of the most important variable in company analysis is promoter background and management ability
to deliver its promises.
In company analysis, the analyst tries to forecast the future earnings of the company because there is a
strong evidence that the earnings have a direct and powerful effect upon share prices. However, earning
is not only variable to effect share price. Following are the standard practices to do company analysis.
Analysis of Financial statements
The financial statements of a company help to assess the profitability and financial health of the company.
The three basic financial statements provided by a company are the balance sheet, the profit and loss
account and cash flow statement. The balance sheet indicates the financial position of the company on a
particular date, generally end of each financial year. The profit and loss account indicates overall revenue,
expenditure and profit after deduction of various expenses during particular period, generally during each
financial year or quarter. The profit and loss account also called income statement. In balance sheet and
income statement amount are recorded as per transaction date but it does not consider cash flow. Cash
flow statement record actual cash going out of business and coming in business during particular period.
Financial ratios are one of the power tool to analysis financial health and performance of company, namely,
Analyst prefer to compare 5-10 year financial ratios of particular company. It help to assess the whether
the financial performance and financial strengths are improving or deteriorating, ratios can be used for
comparative analysis either with other firms in the industry through a cross sectional analysis or a time
series analysis. Four groups of ratios may be used for analyzing the performance of the company
Profitability ratios:
As name Suggest, It help to measure the profitability of the company.
 EBIDTA Margin = EBITDA / (Total Revenue – Other Income)
 PAT Margin = (PAT/Total Revenues)
 ROE = Net Profits / Avg. shareholders’ Equity

For More Accurate and meaning full insight, analyst prefer to find ROE by DuPont Method as
follows
ROE: PAT Margin*Asset Turnover*Financial Leverage
[ROE: (PAT/Revenue)*(Revenue*Avg. Total Assets)*(Avg. Total Assets/Shareholder Equity]
 ROA = Net income/ Total Average Assets
 ROCE = [Profit before Interest & Taxes / Overall Capital Employed]
Leverage Ratios:
It is also known as solvency ratio, it measures what extent the company uses debt to finance business and
help to understand company’s long term sustainability.
 Interest Coverage Ratio= EBIT/Interest Payment
 Debt to Equity Ratio= Total Debt/Total Equity
 Debt to Assets Ratio= Total Debt/Total Assets
 Financial Leverage Ratio= Avg. Total Asset / Avg. Total Equity
Valuation Ratios:
Here, Analyst compare the stock price of the company with profitability and overall value of company to
get sense of expensive the stock to invest.
 Price to sales ratio = Current Share Price / Sales per Share
 (The earnings figure may not be true as some companies might be experiencing a cyclical low in
their earning cycle. Additionally due to some accounting rules, a profitable company may seem to
have no earnings at all, due to the huge write oﬀs applicable to that industry)
 Price to Book Value (P/BV) Ratio: Price /Book value
Note: BV = Share Capital + Reserves (excluding revaluation reserves) / Total Number of shares
 Price to Earning (P/E) Ratio= Market Price/PAT
Note: Frequently changing accounting policy can manipulate PAT. It is always better to compare
trend of cash flow and PAT before taking investment)
 Index Valuation ratios: Same as company valuation, we can find index valuation ratios which give
sense about overall market and also help to compare company valuation ratios with index valuation
ratios. P/E, P/B of nifty available at NSE site on daily basis.
Operating Ratios:
Operating ratios also knows as efficiency or management ratio. It measures how efficiently business can
convert its assets into revenues.
 Fixed Assets Turnover = Operating Revenues /Avg. Total Assets
 Working Capital Turnover = Revenue / Average Working Capital
 Total Asset Turnover = Operating Revenue / Avg. Total Assets
 Inventory Turnover= Cost of Goods Sold / Avg. Inventory
 Inventory Number of Days = 365 / Inventory Turnover
 Accounts Receivable Turnover Ratio = Revenue / Avg. Receivables
 Inventory Number of Days = 365 / Inventory Turnover
/

 Days Sales outstanding = 365 / Receivable Turnover Ratio
Important thing to remember. A financial ratio on its own conveys very little information. To make sense
of it, we should either see the trend or compare it with its peers.
Other variables
The future prospects of the company would also depend upon the number of other factors some of
which is given below:
 Market Share
 Brand Name
 Level of Capacity Utilization
 Expansion and Modernization Plan
 Order book Position
 Availability of raw Material
 Modernization and expansion plans

2. RubyCapital
Ruby Capital is Started by investment banking and investing professionals and primarily engaged in
providing analytical support to financial services companies across the Globe including Investment Banks,
PE/VC, Consulting firms, Hedge Funds and firms engaged in other corporate finance services, providing
fund-raising and M&A advisory services to SME companies in India.
Name Ruby Capital
Business Corporate Advisory
Key Activities Capital Raising(Debt/Equity)
Transaction Advisory(M&A, JVs, Restricting)
Business Modeling and Financial Research
Preparation of Business Plan for investor
Market and company Analyses
Valuation Analysis
Investment Recommendation to HNO
Corporate Training
Strategic Consulting(SME)
Key Personal Mr. Ashutosh Zawar, Director
Mr. Nirav Morakhia, Director
Work done during Internship
Work as Associates analyst on various project from following industries
 Renewable Energy
 Electrical Vehicles
 Media
 Survey industry in US
 Brand licensing
 Homeopathy
 Cruise liner
 RFID
 Cement Industry
Key Job
 Sector and Company Analysis
 Investor Presentation
 Financial Modeling

3. Economy and Cement Industry
Cement is essential commodity for fast growing economies like India which is second largest cement
producer (280 MT output as on Dec. 2014) in world after china, accounting for 7% of world’s total output.
Cement industry provides employment to millions of people directly or indirectly since it was deregulated
in 1982. India’s Infrastructure development and construction industry have huge potential and the cement
industry is going to be largely benefited from it. Government’s 100 smart city project and other
Infrastructure initiative will boost cement demand in near future.
Cement is basic commodity for construction. Cement industry is driven by the growth in housing sector
and infrastructure development in country. Contribution of various industry to total cement consumption
in India follows:
Cement is a cyclical commodity with a high correlation with GDP and other economic variables. As per
MOSPI’s GDP estimates, dated 29/05/2015, India’s GDP growth rate were 7.5 during 4th
quarter of 2014-
15. The government expects gross domestic product (GDP) to expand 8% in 2015-16. The International
Monetary Fund and the Asian Development Bank have forecast growth of 7.5% and 7.8%, respectively.
According to The World Bank, Indian economy is expected to grow at 7.5 per cent in 2015-16, followed by
further acceleration to 7.9 per cent in 2016-17 and 8 per cent in 2017.
Indian Economy Snapshot:
67%
13%
11%
9%
Industry Wise Consumption
Housing
Infrastructure
Commercial Construction
Industrial Construction
Source: Ministry of statistics and Programme Implementation

Composite Leading Indicator
Source: OECD
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Core Industry Perfomance
Overall Growth % Cement Growth %
Source: MOSPI, RBI
Source: Nielsen India
Consumer Confidence Index CPI
Source: Trading Economics, RBI
WPI
Interest Rate
Improved consumer confidence, Lower Inflation, better policy reforms are key elements
which indicates bright future for Indian economy ahead. Following are key events which
will have significant impact on india economy as well as cement industry.
 GST: Government has set April 2016 deadline for GST implementation. GST will bring
qualitative changes in tax system by redistributing taxes equitably between manufactures
and services. NCEAR study explore reduction in direct cost and capital input cost due to
GST. Study find out, GST can boost GDP by 2%
 Smart City and other Similar Initiatives: Government has gave a big push to
infrastructure by launching three flagship schemes -- Smart Cities Mission, Housing for all
by 2022 and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) -- at
an expenditure of close to Rs 4 lakh crore.

4. Fundamental of Cement Industry
Cement industry has total installed capacity of 377.1 million tone out of which 366 million tone is held by
188 large cement plants and remain 11.1 million tone is held by 365 mini and white cement plants. Plant
are not working at full capacity due to slow down in economy in last few years. As per Edelweiss research,
total installed capacity will reach 550 million tonnes in 2020.
India is 2nd
largest cement producer and consumer in world after China.
There is too much gap between cement production as well as consumption activity of various country
specially china and India. India is emerging economy, its demand for cement will increase in future. In
today’s market scenario, Surplus production is concern for cement manufacturers.
2500
280
83 72
2160
242
79 59
0
500
1000
1500
2000
2500
3000
China India USA Iran
Source: International Cement Review, IBEF Report
Camparing to Other Contries
Production Consumption
1683
1581
911
770
644
232 191
Saudi Arabia China South Korea Iran Turkey USA India
Source: International Cement Review, IBEF Report
Per Capita Cement Consumption in 2012 (kg)

323
336
315
333
405
441
479
229
247
251
256
332
368
407
222
242
265
293
324
359
398
FY 11 FY 12 FY 13 FY 14 FY 15E FY 16E FY 17E
INMILLIONTONNES
SOURCE: WOKRING GROUP ON 12TH FIVE YEAR AND IBEF REPORT
CAPACITY-PRODUCTION-CONSUMPTION
Capacity Production Domestic Consumption 2
India’s per capital consumption of cement is low as compare to other country. India per capital
consumption will increase in coming year as growing urbanization and changing lifestyle of people.
Industry Snap shot:
In FY 2011, production to capacity and Domestic consumption to capacity ratios were 71% and 69%
respectively which is expected to reach 85% and 83% in 2017. This growth in capacity utilization increase
margin and profitability of cement manufacture.
Growth Drivers:
Real Estate Growth:
Real estate segment demand is major portion of overall demand for cement in India. Real estate is
expected to grow at a CAGR 17.2% during 2011-15 to reach USD 126 billion. Government Smart city
Project and other similar initiative will give boost to real estate industry.
71%
74%
80%
77%
82%
83%
85%
69%
72%
84%
88%
80%
81%
83%
FY 11 FY 12 FY 13 FY 14 FY 15E FY 16E FY 17E
SOURCE: WOKRING GROUP ON 12TH FIVE YEAR AND IBEF REPORT
CAPACITY RATIOS
Production to Capacity Domestic Consumption to Capacity

Infrastructure Growth:
Infrastructure is second largest contributor to cement demand in India. Government is focusing on
infrastructure development and government has double its spending on infrastructure in 12th
plan (2012-
17). Infra Spending 11TH
plan was 7.6 which increase to 10.1 in 12th
plan.
Five Region and leading companies
250
450
1000
10th Plan (2002-07) 11th Plan (2007-12 12th Plan (2012-17)
Source: Planning Commision, IBEF Report
Infrastructure Spending in USD Billion
5.2%
7.6%
10.1%
10th Plan (2002-07) 11th Plan (2007-12 12th Plan (2012-17)
Source: Planning Commision, IBEF Report
Infrastructure Spending % of GDP

10%
13.70%
16.40%
11th Year Plan 12th Year Plan 13TH Year Plan
Source: IBEF Report
North-East State Project
Growth
Opportunities in North-East
North-east region is has been in cement deficit in last several years. Indian cement industry is not
working at its full installed capacity because of lower demand but as per IBEF report, north-east region is
facing shortage of supply. There is deficit of 2.2 mtpa in these region which creates opportunity for
cement manufacture.
5.2
3
0
1
2
3
4
5
6
Estimated Demand Estimated Supply
Source: IBEF Report
Demand supply Gap in
North-east
Deficit of 2.2
mtpa

5. Company analysis

Ultratech Cement is largest cement producer in india.
Earning growth is is strongly correlated to construction
activity and infrastructure spending.Ultratech cement has
own power plant satisfy 80% power requirement and high
plant efficiency which give competitive advantage over
competitors.
Ultratech will be biggest beneficiary of increasing
demand from construction and infrasturce activity as
increase in government infrastructure spending and other
initiative like smart city, home for every one etc.
Economic slow down in last few years, has created price
pressure where excess capacity was evident. Even
thought, ultratech able to achieve good returen on capital
invested.
In India, any new entrant in cement industry faces the
number of problems like high capital cost, Long time
duration of govement approval for land, power, coal and
limestone reservation.
More than 25% of its loan is in foreign currency Japanese
Yen and USD which may create considerable currency risk
Shareholding Pattern
Ultratech Cement
31/08/2015
Key Stats
Promoter 63%
DII 7%
FII 19%
Other
11%
Key Financial Metrics ( Rs. Crore)
Source: BSE
Management:
Mr. Kumar Mangalam Birla, Chairman
Mr. Kumar Mangalam Birla is the Chairman of UltraTech Cement. He is at the helm of the US$40
billion multinational Aditya Birla Group, which operates in 36 countries across six continents. Over 53
per cent of its revenues flow from its operations outside India.
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
Operaring Revenue 13798 19077 21324 21652 24349
Growth(%) 92% 38% 12% 2% 12%
Operating Exp. 11102 15039 16485 17616 19923
Operating Profit 2696 4039 4839 4035 4425
OPM( %) 20% 21% 23% 19% 18%
EBITDA 2850 4565 5143 4358 4776
EBITDA Margin % 21% 24% 24% 20% 20%
Net Profit 1367 2403 2678 2206 2098
NPM(%) 10% 13% 13% 10% 9%
EPS (INR) 49 86 96 79 75
P/E (X) 22X 18X 18X 29X 40X
ROE 13% 19% 18% 13% 11%
Price Graph
Current price (₹) 2898.1
52 weeks range (₹) 3399.00/2299.55
Market Cap(₹ Cr) 79526
P/E 40X
EV(₹ Cr) 86092
EV/EBITDA 19X
BV 687
P/B 4X
Debt-Equity 0.35X
Interest Coverage 6X

ACC Ltd. is India’s oldest and second largest cement
company with a total Capacity of about 30 MMTPA. It was
acquired in 2005 by Holcim Ltd – one of the world’s
leading suppliers of cement. Ambuja Cements is also a
part of the Holcim group.
The company's operations are spread throughout the
country with 16 modern cement factories, more than 40
Ready mix concrete.
The recent modernization of Wadi and Chanda and
upcoming commissioning of modernized Jamul plant
should see reduction in cost and enhanced efficiencies
Company’s sales growth is not satisfactory and there is
constant decline in OPM last five years.
ACC consistently disappointed On the earnings despite
modernized facilities.
ACC LTD
31/08/2015
Key Stats
Promoter 50%
DII 17%
FII 17%
Other
16%
Source: BSE
Latest Update
For 2QCY2015, ACC’s net revenue declined by 1.6% yoy to Rs2,961cr. The net profit saw a decline of
45.5% yoy to Rs131.5cr. One of the reason for decline in profit is increase in railway freight.
Further, an Emkay Global Financial Services report highlights that the delay in commissioning of ACC’s
new plant will stymie volume expansion until the second half of calendar year 2016
Operaring Revenue 8,261 10,237 11,358 11,150 11,739
Growth(%) -3% 24% 11% -2% 5%
Operating Exp. 6,718 8,316 9,497 9,520 10,226
Operating Profit 1,542 1,921 1,861 1,630 1,513
OPM( %) 19% 19% 16% 15% 13%
EBITDA 1901 2112 2125 1911 1770
EBITDA Margin % 23% 21% 19% 17% 15%
Net Profit 1,415 1,505 1,441 1,214 1,120
NPM(%) 17% 15% 13% 11% 10%
EPS (INR) 52 65 52 53 55
P/E (X) 18X 11X 25X 22X 23X
ROE 23% 22% 20% 16% 14%
Source: Company, BSE, CMIE
Price Graph
52 weeks range (₹) 1774.80/1320.00
P/E 25X
EV(₹ Cr) 25969
EV/EBITDA 15X
BV 438.64
P/B 3X
Debt-Equity 0X

Ambuja Cement is 3rd cement company in india. It is a
part of Holcim Group and also owns 50.1% of ACC,
another top-four cement producer in India. It has total
production capacity 28.75 million tones
It has strong presence in western and northern India,
where prospects for robust demand for building materials
are brighter than in southern India. Geographic location
gives flexibility to choose between domestic and export
market
In Ambuja, People has freedom to set their own targets,
and achieve it. As a result, Ambuja is the most profitable
cement company in India, and one of the lowest cost
producer of cement in the world.
Company has reduce debt and it is virtually debt free
company. As result it has high interest coverage ratio.
Company is enjoying good margin and trading at lower P/E
compare to other peers.
Ambuja Cement LTD
31/08/2015
Key Stats
Promoter 50%
DII 10%
FII 33%
Other 7%
Source: BSE
Latest Update
In June Quarter 2015. Net sales were reported at Rs.2,492.76 crore, 8% lower from Rs.2,706.35 crore
reported a year back. The company posted a net profit of Rs.226.35 crore compared with Rs.408.70
crore, in the year-ago period. Net profit has drop by 45% on account of lower operating profit and
Rs.22 crore depreciation charge.
The company sold 5.88 million tonne of cement in the April-June period, 1.6% higher than a year back
Price Graph
52 weeks range (₹) 286.85/198.00
P/E 29X
EV(₹ Cr) 33014
EV/EBITDA 14X
BV 65
P/B 3X
Debt-Equity 0X
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
Operarting Revenue 7,390 8,571 9,795 9,206 10,000
Growth(%) 4% 16% 14% -6% 9%
Operating Exp. 5,613 6,618 7,601 7,547 8,071
OPM( %) 24% 23% 22% 18% 19%
EBITDA 2,097 2,201 2,543 2,059 2,353
EBITDA Margin % 28% 26% 26% 22% 24%
Net Profit 1,263 1,228 1,293 1,279 1,487
NPM(%) 17% 14% 13% 14% 15%
EPS (INR) 7.83 7.48 7.80 7.66 8.65
P/E (X) 17X 19X 23X 23X 23X
ROE 17% 15% 15% 14% 15%

Shree Cement is leading cement manufacturing in North
India with 13.5 million tons per annum per
manufacturing capacity.
The company follows a multibrand strategy and sells
cement under the highly recognized brands of Shree Ultra,
Bangur and Rockstrong which together enjoy the largest
market share in high value markets of Rajasthan, Delhi
and Haryana.
It also has a power generation capacity of 260 MW with
plants located at Beawar and Ras in Rajasthan which help
to reduce cost.
The company was promoted by Calcutta-based
industrialists P D Bangur and B G Bangur. The company is
one of the largest cement producers in Rajasthan
(Beawar) and is the largest single location manufacturer in
Northern India.
Shree cements is well-positioned for a recovery in
infrastructure spending in northern India, where the
prospects for strong demand for building materials are
much brighter.
Shree Cement LTD
31/08/2015
Key Stats
Promoter 65%
DII 5%
FII 14%
Other
16%
Source: BSE
Latest Update
The Company has posted a net profit of Rs. 1197.30 million for the quarter ended March 31, 2015 as
compared to Rs. 2225.10 million for the quarter ended March 31, 2014.
Total Income has decreased from Rs. 17145.60 million for the quarter ended March 31, 2014 to Rs.
16268.40 million for the quarter ended March 31, 2015.
Price Graph
Jun-10 Jun-11 Jun-12 Jun-13 Jun-14
Operarting Revenue 3,587 4,040 4,350 5,590 5,887
Growth(%) 22% 13% 8% 29% 5%
Operating Exp. 2,310 3,013 3,125 4,030 4,578
OPM( %) 36% 25% 28% 28% 22%
EBITDA 1567 961 1796 1748 1494
EBITDA Margin % 44% 24% 41% 31% 25%
Net Profit 461 680 423 1004 787
NPM(%) 13% 17% 10% 18% 13%
EPS (INR) 131 185 129 285 222
P/E (X) 17X 10X 26X 15X 31X
ROE 25% 34% 15% 26% 17%
Note: Adjusted figures Source: Company, BSE, CMIE
52 weeks range (₹) 12388.85/7884.00
P/E 82X
EV(₹ Cr) 26287
EV/EBITDA 18X
BV 1514
P/B 7X
Debt-Equity 0.29X

Prism Cement Ltd is the leading cement manufacture in
india. It caters mainly to markets of UP, MP and Bihar,
It sales its cement under brand name 'Champion' and
Ordinary Portland Cement (OPC).
Prism Cement is India’s largest integrated Building
Materials Company; with a wide range from cement,
ready–mixed concrete, tiles, bath products to kitchens.
The company has three Divisions, viz. Prism Cement, H &
R Johnson (India), and RMC Readymix (India).
Company is under loss for last 3 years even though there
is increase in sales.
Prism Cement is highly depend on borrowed capital. It
may failed to meet its short term obligation as interest
coverage ratio is below one.
It has 7mn tones cement and clinker production capacity.
81% of company sales Primarily caters to rural and tier 2
& 3 city Housing.
Prism Cement ltd
31/08/2015
Key Stats
Promoter 75%
DII 7% FII 9%
Other 9%
Source: BSE
Latest Update
Prism Cement reported a standalone net loss of Rs 8.04 crore for the quarter ended June 30, 2015.
Net sales of the company for the quarter stood at Rs 1,365.94 crore, against Rs 1,383.91 crore in the
year-ago period.
The company sold 13.60 lakh tonnes of cement and clinker in April-June 2015 as against 15.12 lakh
tonnes for the quarter ended June 30, 2014,
Launched premium cement Hi-Tech in Bihar and recently in UP
Price Graph
Operating Revenue 2,875 3,447 4,596 4,821 5,040
Growth(%) 254% 20% 33% 5% 5%
Operating Exp. 2,362 3,069 4,284 4,509 4,855
Operating Profit 513 378 312 312 185
OPM( %) 18% 11% 7% 6% 4%
EBITDA 548 391 326 329 352
EBITDA Margin % 19% 11% 7% 7% 7%
Net Profit 260 105 -18 -62 -86
NPM(%) 9% 3% 0% -1% -2%
EPS (INR) 5 2 0.00 0.00 0.00
P/E (X) 11X 25X 0X 0X 0X
ROE 22% 8% -2% -5% -8%
52 weeks range (₹) 133.60/65.25
Market Cap(₹ Cr) 4930.41
P/E -
EV(₹ Cr) 3701
EV/EBITDA 13
BV (₹) 20
P/B 4.856222112X
Debt-Equity 1.66X
Interest Coverage 0.48X

Comparison
31/08/2015
Risk And Concern:
• Ultratech primary business is driven by construction activity which highly dependent on economic
condition
• Government spending and fulfillment off its promises remain key driver and risk factor for industry
performance.
• More than 25% of its loan is in foreign currency Japanese Yen and USD which may create
considerable currency risk.
Peer Comparison Matric:
Comaparny Ultratech ACC
Ambuja
Cement
Shree
Cement
Prisam
Cement
Revenue(₹ Cr) 24349 11739 10000 5887 5040
Revenue Growth YOY % 2% 5% 9% 5% 3%
Market Cap(₹ Cr) 80,862 25,614 31,985 38,375 4,835
P/E(X) 40X 25X 28.77X 83.59X 0X
OPM% 13% 8% 14% 14% 0%
NPM% 10% 10% 15% 13% 0%
RONW 13% 14% 15% 18% 5%
Dividend Yield % 0.31 2.49 2.42 0.2 0
Interest Coverage Ratio(X) 6X 14.62X 17.71X 4.32X 0.81X
Debt/Equity(X) 0.39X 0X 0X 0.25X 1.81X
Conclusiion:
Among top five companies by sales, Ambuja cement is an attractive script to invest with long term
horizon of 3 years. Ambuja Cement has performed better on most parameters. It is enjoying good
operating margin and trading at lower P/E compare to other.

Bibliography
Books:
Guide to Economic Indicators: Making Sense of Economics by Economist, Edition 7th
Equity Research Valuation by Dun and Bradsstreet, Edition 2007
Website:
www.nasdaq.com/investing/how-to-invest.aspx
www.bseindia.com
www.nseindia.com
www.rbi.com
www.screener.com
www.moneycontrol.com
www.ultratechcement.com
www.tradingeconomics.com
www.ambujacement.com
www.ultratechcement.com
www.prismcement.com
www.shreecement.in
www.acclimited.com

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