This document provides an analysis on UltraTech Cement. It rates the stock as a "Buy" with a target price range of Rs. 3400-3550 over the next 12 months, representing potential upside of 14%. UltraTech is India's largest cement company and is expected to benefit from recovering economic growth and increasing cement demand in India. The company plans to aggressively expand its capacity which will help drive strong volume growth.

1. UltraTech Cement
Rating Matrix
CMP Rs. 3121
Rating Buy
Potential Price Range Rs.3400-Rs. 3550
Target Period 12 Months
Upside Potential Upto 14%
52 week H/L Rs 3,196/1,820
Face value Rs.10
Sector Cement
ULTRATECH CEMENT LIMITED is a leading
cement manufacturing company in India with
total 63 Million Tonnes/annum installed capacity.
UltraTech Cement, being the most aggressive
among its peers in adding capacity, has highly
efficient operations and sizeable capacity to
remain the major beneficiary of acceleration in
demand growth in Indian economy.
Cement Consumption Witnessing Improvement
Cement industry, being highly sensitive to country’s
GDP growth, has been witnessing improvement in
demand during current fiscal led by recovering
economic scenario. Revival in construction activity,
increasing demand from housing sector, low base of
last year as well as delayed onset of monsoons this
year has augmented the domestic consumption.
Indian cement industry has shown significant
recovery in demand and profitability in FY15. The
growth in cement production picked up to 7.9%
during the first nine months of FY15 as against 3.7%
in the corresponding period last fiscal. We expect a
strong recovery in Indian cement demand led by
thrust of government given for infrastructure
development, low-cost affordable housing projects
and setting up of smart cities.
UltraTech to remain Prime Beneficiary of
Acceleration in Demand Growth
UltraTech is a leading cement manufacturing
company in the country having 63 MT/annum
installed capacity and accounts for around 17% of
domestic market revenue. UltraTech, being the
largest pan India player, will be the major
beneficiary of acceleration in demand growth in the
Indian markets. UltraTech is also the lowest-cost
producer amongst Indian cement players, moreover
proactive initiatives taken by the management to
save energy and logistics cost will further strengthen
the company position in market.
Shareholding Pattern as on Dec 2014
Particulars Dec'14 Sep'14 Jun'14 Mar'14
Promoters 61.7% 61.7% 61.7% 61.7%
FIIs 19.5% 19.9% 20.4% 21.0%
DIIs 5.9% 5.7% 5.3% 4.9%
Non
Institutions 10.6% 11.0% 10.8% 10.6%
Others 2.3% 1.8% 1.8% 1.8%
www.choiceindia.com
Key Financials (Standalone) Rs. Crore
Particulars FY13 FY14 FY15E FY16E FY17E
Net Sales 20172 20280 23599 29252 31929
Growth 9.5% 0.5% 16.4% 24.0% 9.2%
EBIDTA 4675 3818 4606 5899 6426
EBIDTA
Margin 23.2% 18.8% 19.5% 20.2% 20.1%
PAT 2656 2144 2296 2855 3226
NPM 13.2% 10.6% 9.7% 9.8% 10.1%
EPS 96.9 78.3 83.7 104.0 117.6
ROE 17.4% 12.5% 12.0% 13.2% 13.1%
ROCE 17.2% 11.3% 11.1% 12.9% 13.1%
Net Worth 15235 17098 19127 21668 24556
BVPS 556 624 697 790 895

2. UltraTech Cement
www.choiceindia.com
Aggressive Capacity Expansion to lead to Volume Growth for Company
To keep volume growth ahead of other players, the company adopts a strong aggressive
expansion policy and has made capacity expansion of CAGR of 23% as compared to peer’s
average CAGR of 13% over the past five years. UltraTech has earmarked Rs.10,000 crores
to be incurred in setting up the remaining grinding units, clinkerisation plants, cement
terminals and brownfield expansion in Rajasthan. These are likely to be commissioned in a
phased manner by 2015. The acquisition of the 4.8 MTPA Gujarat Cement Unit of Jaypee
Cement Corporation also strengthened its presence in the growing Western market.
Moreover, the latest acquisition of ‘Jaiprakash Associates’ two cement units and associated
power plants in Madhya Pradesh (MP) will help UltraTech to strength the presence in eastern
side of MP.
Healthy Operating Cash Flow and low debt/equity to Fuel Expansion
Operating cash flows for UltraTech is expected to remain over Rs.4,000 crore annually
during the projected FY14-19E period. The company is well positioned to reap the benefit of
a recovery in domestic demand and will generate healthy free cash flows during the
forecasted five years period. Furthermore, with a minimal debt in capital structure, UltraTech
has strong balance sheet and ongoing capacity expansion plans are not expected to add any
pressure to balance sheet.
Valuations
To value the UltraTech stock, we conducted fundamental analysis using the Economy-
Industry-Company (E-I-C) framework and used the Discounted Cash Flow (DCF) as well as
Relative Valuation (RV) methods. On the basis of DCF and RV, we arrived at Potential Price
Range of Rs.3400-Rs.3550 for a period of 12 months. With the double digit potential upside,
we have a ‘BUY’ recommendation on the stock.

3. UltraTech Cement
www.choiceindia.com
DCF VALUATION Rs. Crore
Particulars FY12 FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Net Sales 18427.4 20172.4 20279.8 23599.0 29252.0 31928.8 36885.8 40576.9
EBITDA 4242.6 4674.6 3817.9 4605.8 5899.1 6426.5 7687.8 8861.7
NOPLAT 3295.6 3504.6 3186.9 3773.8 4647.4 5092.0 6147.3 7040.8
Free Cash Flows 236.6 402.1 201.9 1485.6 -1563.3 1560.9 1172.6 5984.8
It is assumed Free Cash flow beyond FY19 grows at 8%
PV of Estimated FC Flows 1326.8 -1246.8 1111.8 745.9 3399.8
Horizon Value 162617.3
PV of Estimated Perpetuity
Flows 92377.6
Total Present Value (EV) 97715.0
Fundamental Value of Equity 92842.2
No of Outstanding Shares 27.4 Beta 1.11
Fundamental Value per Share Rs.3383.5 WACC 11.97%
DCF Sensitivity Rs. Crore
Continuing Growth (%) Weighted Average Cost of Capital (%)
11.00% 11.50% 11.97% 12.00% 12.50% 13.00% 14.00%
6.00% 2768 2460 2215 2203 1987 1802 1504
6.50% 3087 2716 2427 2413 2162 1949 1612
7.00% 3487 3030 2682 2665 2368 2121 1735
7.50% 4000 3422 2993 2973 2615 2323 1876
8.00% 4684 3926 3383 3358 2918 2567 2042
8.50% 5642 4598 3886 3853 3296 2864 2238
9.00% 7078 5538 4557 4513 3783 3236 2472
Relative Valuation
Particulars FY12 FY13 FY14 FY15E FY16E FY17E FY18E FY19E
BVPS 469.3 556.0 624.0 697.1 789.7 894.9 1030.4 1190.3
EBIDTA (RS. Crore) 4242.6 4674.6 3817.9 4605.8 5899.1 6426.5 7687.8 8861.7
Valuation Parameters P/BV EV/EBIDTA
Industry Average 4.53 18.2
At CMP of Rs.3121, the stock is trading at 3.95x its FY16E BVPS of Rs.789.7, 3.49x FY17E BVPS and 16.1x of its EV/EBIDTA
FY16E and 14.1x EV/EBIDTA FY17E. On the basis of Relative Valuation we arrive at Potential Price at Rs.3580.
Peer Group Analysis (@TTM Price)
ACC (2014) Ambuja Cement (2014) Ultra-tech Cement (FY14)
Market Cap. ( Rs Crore) 26,636.3 33,699.3 68,511.9
Book Value 8,235.61 10,103.33 17,097.51
Debt / Equity 0.00 0.002 0.28
P/E (Trailing) * 22.78 22.49 32.0
P/BV 3.23 3.34 4.0
EV/EBIDTA 17.47 16.21 19.1
P/Sales 2.27 2.67 1.3
EPS 62 9.7 78
Return on Net Worth 13.3% 12.8% 12.5%

4. UltraTech Cement
www.choiceindia.com
Improving Indian Economic Condition
Cement industry is highly correlated to economic scenario as cement demand is largely
depended upon housing segment and growing industrial and infrastructure sector. Indian
cement industry volumes grow 1‐1.2x India’s GDP. After registering an average growth rate
of 8% during FY08-FY12, Indian economic growth had slowed down to below 5% (with 2004-
05 base year) during the past two financial years. Prevailing high interest rate, stubborn
inflation, low investments and slow execution of infrastructure projects were the leading
factors, impacted country’s economy growth. However, Indian economy has shown signs of
nascent recovery and grew by 5.5% during the first half (April-September) of FY15 as
compared to 4.9% in the same period in FY14. Besides, key macro-economic indicators
such as inflation, industrial production, CAD and infrastructure activity are also reviving,
putting positive influence on economic growth. Industrial production during April-December
FY15 grew by 2.1% as against 0.1% in the April-December FY14, indicating that the
economy is far better position now from previous fiscal. Indian economic growth is likely to
improve to 5.5% in FY15 and further enhanced to 6-7% in FY16 and FY17. Improved
consumers sentiments, the renewed policy thrust by new government and a pickup in
consumer demand are likely to provide impetus to economic growth in coming future. We
expect 8% growth for Indian economy during the stable growth period. With the gradually
growing Indian economy, per capita income of people in India has been growing at a pace of
CAGR of 10% over the eight years. Household income in the top 20 boom cities in India is
expected to grow at around 10% annually over the next ten years, which is likely to increase
cement demand.
129.9
138.4 145.3
154.7 160.5
167.6
0
50
100
150
200
FY10 FY11 FY12 FY13 FY14 FY15*
Core Infrastructure Index

5. UltraTech Cement
www.choiceindia.com
Industry Scenario
Indian cement industry has evolved significantly over the last two decades and today the sector is
aptly described as the next sun rise sector to Indian economy. The Indian cement Industry is very
large, second only to China in terms of installed capacity at around 380 Million Tonnes (MT) per
annum, and has grown at a brisk pace in recent years on back of rising infrastructure activities,
increasing demand from housing sector and industries. India is the second largest producer of
cement and housing sector is the biggest demand driver of industry, accounting for about 65% of
the total country’s consumption. Infrastructure and commercial real estate & industrial sector
constitute 20% and 15% share in total domestic cement demand. Indian cement industry is highly
organized with top 12 cement firms have around 70% share in the total country’s demand.
However, India’s per capita consumption of cement still remains substantially lower at 195 kg
when compared with the world average at 520 kg, showing strong growth potential in the domestic
market. Over the past two fiscals, cement demand in India remained sluggish due to the economic
recession, forcing the manufactures to operate at low capacity at around 72%. Amid expectation
of strong growth in future, industry added 65 MTPA cement capacities between
FY11-FY14, as against 92 MTPA in FY08-FY11.
Capacity, Demand Growth
9.8%
8.5%
14.0%
5.4%
7.0%
5.2%
2.5%
6.1%
0.0%
4.0%
8.0%
12.0%
16.0%
0
100
200
300
400
500
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E
MillionTonnes
Cement Capacity Cement Demand Demand Growth
Over 100
MT surplus
capacity

6. UltraTech Cement
www.choiceindia.com
Revival in Economic Growth to provide Impetus to Sector
The cement demand scenario in India has improved significantly in current fiscal driven by
reviving economic condition. The growth in cement production picked up to 7.9% during first nine
months of FY15 as against 3.7% in the corresponding period last fiscal and 3.0% in FY14. The
outlook looks very much promising for domestic cement industry given the huge untapped
housing demand and increasing infrastructure development in the country. Cement consumption
is expected to improve to 6.1% in FY15E from 2.5% in FY14. With the expectation of 8.5-9%
growth in coming years, all-India cement capacity utilization is likely to improve to around 80% by
FY17.
Furthermore, industry players are presently also benefiting from easing of cost side pressures.
Power & fuel and freight costs are the major costs for industry with a share of 28% and 29% in the
operating cost structure. Global coal and diesel prices have declined by around 20-25% during the
past twelve months which is expected to reduce the power & fuel and freight costs for cement
companies.
Financial Forecasts and Projections (UltraTech Cement)
We expect net sales of the company to grow at a CAGR of 14.9% between FY14-FY19E mainly
led by volume improvement on the back growing economy. Cement volumes are expected to
grow by a CAGR of 9% to 63.75 MT in FY19E from 41.13 MT in FY14.
EBIDTA margin is expected to improve to around 20% in next three forecasted years and further
rise to 22% by FY19, given the company ongoing initiatives to control the operating expenditures
mainly fuel and freight costs.
We expect net profits to grow at a CAGR of 18% between FY14-FY19E as we believe that growth
going forward is likely to be led by volume as well as strong pricing improvement in FY18E and
FY19E.

7. UltraTech Cement
www.choiceindia.com
Company Analysis
ULTRATECH CEMENT LIMITED is a leading cement manufacture company in India with total 63
Million Tonnes (MT) installed capacity. Earlier the company was incorporated on 24th August
2000 as Larsen & Toubro cement, however it was demerged and acquired by Grasim later and
renamed as Ultra Tech Cement in 2004. UltraTech has 11 composite plants, 101 ready-mix
concrete plants, one white cement plant, one clinkerisation plant, 15 grinding units and six bulk
terminals. The company has wide spread retail network in the country and thus accounts for
around 17% share in total revenue of the Indian cement industry. Besides, the company exports
market span countries around the Indian Ocean, Africa, Europe and the Middle East. The
company has maintained its leadership position in industry supported by a strong product profile,
premium brand image, geographically widespread manufacturing facilities and extensive
distribution network. To keep volume growth ahead of peer members, the company adopts a
strong aggressive expansion policy and has witnessed capacity expansion of CAGR of 23% as
compared to peer’s average CAGR of 13% over the past five years.
Products and Services
UltraTech Cement provides a host of products ranging from grey cement to white cement, from
building products to building solutions and an assortment of ready mix concretes catering to
varied needs and applications of the construction industry. Though, company’s flagship cement
products come into the category as Ordinary Portland Cement, Portland Blast Furnace slag
Cement and Portland Pozzolana Cement. Among these, Ordinary portland cement is most
commonly used for a wide range of applications such as dry-lean mixes, general-purpose ready-
mixes, high strength pre-cast and pre-stressed concrete. On the other hand, Portland blast-
furnace slag cement, having lighter colour, better concrete workability and flexural strength, is
used in a concrete mixture to make concrete better and more consistent. The uses of portland
pozzolana cement give strength and enhance durability and helps in minimizing shrinkage and
thermal cracking, increases workability and cohesion in concrete and mortar.

8. UltraTech Cement
www.choiceindia.com
Business Model Analysis
Core Capabilities: Superior quality cement, concrete and allied products and superior strength
for durable structure that can weather any condition are the top features of the company which
derived the UltraTech to market leader position. Apart from that, well-spread network with multiple
logistic feed, bringing in innovation in every application, connectivity and ensure availability of
products and deep collaboration with customers in providing end-to-end solution are the other
core capabilities of the firm, driving the company growth.
The company has also showed significant process on technological front. To improve process
efficiency and product quality, the company is using different newer generation, mathematical and
computational modeling. The company has also made multiple collaborative research projects
with national and international institutes for future generation building materials, providing training
to R&D personnel and increased focus towards energy conservation through various in-house
initiatives. Robust development on technological front has been helping the firm to reduce specific
energy consumption, increase use of alternative fuels, compliance with PAT (Perform, Achieve
and Trade) targets and decline the operation costs and improve product quality.
Premium Product Quality, Uses of New Technology adding Value to Firm
The Company is specialized in cement manufacturing product and thus primarily generates
revenue by the sale of cement. Top features of the firm such as to provide premium quality
cement, concrete and allied products, maintain well distributed sales network, uses of new
technology and strong aggressive expansion policy approach have been directly contributing
toward the value addition of the company. As the company has been maintained strong value
proposition, UltraTech has become the most trusted and preferred brand of engineers, builders,
contractors and individual house builders and its cement is used in vital structures such as dams,
bridges, flyovers, airports, metro railways apart from residential and commercial structures.
UltraTech Cement has been honoured with the title of the consumer validated award
'SUPERBRAND' for the years 2011, 2012, 2013 and 2014 by the Superbrands Council, a global
organisation that recognizes, showcases and pays tribute to the best brands in each country.

9. UltraTech Cement
www.choiceindia.com
Targets Customers: UltraTech’s business is mainly driven by the construction activity, which
includes infrastructure development and housing segment. About 40% of the demand comes from
rural housing, while 20% comes from urban housing, 20% from infrastructure, and the balance
from other commercial construction. Amid expectation of strong growth in infrastructure segment,
the company has also started focusing on infrastructure development over the recent years. Some
of the India's most ambitious infrastructure projects such as Bandra Worli Sea Link, Kolkata and
Bangalore metro link are powered by UltraTech. Growing economy leading to high demand from
housing segments and increasing infrastructure development in the country are likely to provide
impetus to company growth in future.
Diversified Presence with Well Distributed Network across India
UltraTech cement has well distributed network sales mix across India, however majority of
revenue coming from northern and western India at around 30% and around 29%. Though, the
company has strong present in all regions of the country. UltraTech has robust logistics network of
30 plants, 500 plus warehouses and 150 plus railheads and 50000 plus dealers, retailers and
institutional customers. With the robust processes for planning, distribution, network design, order
execution, visibility and optimal resource utilization, UltraTech serves 14000 orders per day by
using a mix of various logistics modes including rail, road and sea, keeping its average realization
healthy as compared to the peers. With an eye on the future, UltraTech is adopting some best in
class Supply Chain Management (SCM) processes such as web and mobile based order
management system with real time visibility of order status, customer service level measurement
on real time basis, GPS based vehicle tracking system for dedicated fleet and automation at
secondary service points like railheads and godowns.
Business Analysis
UltraTech collects 99% of revenue from the
domestic markets. In the Indian market,
UltraTech cement is the market leader and
accounts for around 17% share in the cement
business followed by ACC Cement and Ambuja
Cement with a share of around 8% and 7%.
Ultratech’s main business-cement production is
characterized by high capital intensity, solid
barriers to entry, high energy intensity; besides
the company's strong investment in plant
efficiency has helped establishing solid cost-
competitiveness in regional markets. The
company will continue its dominance in the
domestic market.
North
30%
West
29%
East
15%
South
20%
Exports
6%
Regional Presence

10. UltraTech Cement
www.choiceindia.com
Sales Volume likely to witness Firm Recovery in Future
In line with the industry trend, sales growth of the UltraTech cement was remained sluggish over
the past two fiscal owing to the prevailing economic slowdown. Indian economy’s growth declined
to a decade low at 4.5% in FY13 and 4.7% during FY14 (with 2004-04 base year). Sluggish
infrastructure development in the country as well as subdued demand for India’s housing sector
owing to the prevailing high interest rates as well as high inflation are the leading factors
responsible for the declining domestic cement consumption. During the FY14, sales growth has
remained flat at Rs 20,279 crore, while net profit declined by 19% YoY to Rs.2144 crore due to the
high operating expenditure amid low demand.
However, the situation is improving and the recent quarter (Q3FY15) financial result indicated
strong growth in volume. UltraTech sales volume grew by 16% to Rs.5601.4 crore in Q3FY15 from
Rs.4818 crore in the same quarter of previous fiscal. Despite showing strong performance in sales
volume, net profit of the company declined marginally by 1.5% due to the high finance cost rose
70% to Rs.153.9 crore from a year ago. Though EBIDTA margin during the reported quarter was
rose to 20% YoY driven by high sales volume. Improving fundamentals of Indian economy are
providing impetus to domestic demand. During the 9MFY15, sales volume increased by 17% to
Rs.16722.8 crore from Rs.14319.9 crore in 9MFY14. We expect a strong recovery in sales volume
at CAGR of 14.9% to Rs.40576.9 crore in FY19E from Rs.20279.8 crore recorded in FY14.
0
5000
10000
15000
20000
25000
30000
35000
FY12 FY13 FY14 FY15E FY16E FY17E
RsCrore
4522
4818
5960
5692
5429 5601.4
Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15
Expect Growth at CAGR of 14.9% in Net Sales
during Projected Period
Sales Growth (up 16% YoY) robust during
Q3FY15 (Rs. Crore)

11. UltraTech Cement
www.choiceindia.com
Cost Analysis
Among total operating expenditure, power and fuel and freight are the two major expenditure of
the company with a share of around 25% and 27% in the total company expenditure. UltraTech’s
continued focus on controlling cost and optimization of fuel mix helped in curtailing cost to some
extent. Power and fuel cost eased by around 6% YoY to Rs.1005 per sales tonne during FY14.
Ongoing focus on improving efficiencies in consumption, increasing usage of pet coke and
alternative fuel and softening in imported coal prices helped the company to lower energy cost.
However, the saving in energy cost was offset by the soaring fright cost. The company reported
freight and forwarding cost at Rs.4580 crore in FY14 which was around 8.45% higher on annual
basis. Furthermore, during the first nine month of this fiscal, freight and forwarding cost increased
by 22% to Rs.3939.5 crore as compared to Rs.3215.3 crore during the same period of
corresponding fiscal. Freight cost is likely to increase at a CAGR of 12.4% during FY14-FY19E.
On the other hand, power and fuel cost is expected to remain Rs.1100-1200 per tonne during
FY14-FY17E. EBIDTA margin of the company, which declined to 18.8% in FY14, is expected to
improve to above 20% in next five year mainly driven by high revenue growth as well as company
continued policy for cost control and optimization of fuel.
EBIDTA Margin to Improve in Coming Years
1067
1164
928 958
1039
1088
23.0%
23.2%
18.8%
19.5%
20.2%
20.1%
0
200
400
600
800
1000
1200
15.0%
20.0%
25.0%
FY12 FY13 FY14 FY15E FY16E FY17E
EBIDTA/Tonne (Rs.) EBITDA Margin
4304
4299
4135
1082
1070
1005
960
980
1000
1020
1040
1060
1080
1100
4050
4100
4150
4200
4250
4300
4350
FY12 FY13 FY14
RsCrore
Power & Fuel Energy Cost Rs per tonne
Gradual reduction in Energy Cost

12. UltraTech Cement
www.choiceindia.com
Realization to pick up led by Improving Demand
Amid expectation of strong growth in future arising out of the thrust given for infrastructure
development in the country by the government, industry witnessed Rs.50,000 crore rapid
expansions during 2007-2014 to nearly double cement capacity from 180 MT, fastest in domestic
sectors history. As against the CAGR of around 12% witnessing during FY08-FY14, Indian cement
consumption grew by CAGR of about 8-9%, forcing the manufactures to operate at low capacity.
On the other hand, cement prices continued to remain under pressure owing to the weak demand,
impacting margins of the industry players. In line with the industry, UltraTech capacity utilization
declined below 70% in FY14 and realization per tonne also remained sluggish due to the
prevailing low cement prices in the market driven by subdued demand and over-capacity.
However, an improvement in realization is expected on the back of recovery witnessing in the
domestic economy leading to rise in Indian cement consumption. Realisation per tonne is
expected to improve to Rs.5,150/tonne in by FY16E and Rs.5,408/tonne in FY17E. Installed
capacity is likely to increase to 71 MT by FY16E and capacity utilization is projected to remain at
80-85 MT in the next five years.
49.7
54.4 58.4
63.0 71.0 72.0
79.4% 73.8%
69.9%
74.0%
80.0%
82.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0.0
20.0
40.0
60.0
80.0
FY12 FY13 FY14 FY15E FY16E FY17E
MillionTonnes
Installed Capacity Capacity Utilisation
4633
5023
4931 4906
5150
5408
FY12 FY13 FY14 FY15E FY16E FY17E
UltraTech Capacity Expansion Plans
Realisation per tonne (Rs)

13. UltraTech Cement
www.choiceindia.com
UltraTech’s Net Profit to Improve during Projected Period
During the FY14, net profit declined to Rs.2,144 crore which was 19% lower than the previous
year profit. In spite of sluggish revenue due to economic recession, high operating cost also put
pressure on the margin. With the recovery in economic situation, the financial condition of
company has improved and during first three quarter of FY15, PAT grew significantly by 7.2% to
Rs.1399 crore. Company’s PAT is expected to increase to Rs.3226.1 crore in FY17E and further
enhance to Rs.4903.5 crore in FY19E. Accordingly, Return on Equity (ROE) is likely to improve
to 13.1% in FY17E and 15% in FY19E from 12.5% in FY14.
2656
2144
2296
2855
3226
4153.6
4903.5
FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Portability Trend of UltraTech (PAT Rs. Crore)
17.4%
12.5%
12.0% 13.2% 13.1%
14.7% 15.0%
FY13 FY14 FY15E FY16E FY17E FY18E FY19E
ROE

14. UltraTech Cement
www.choiceindia.com
Low Debt/Equity to fuel Capital Expansion
UltraTech cement has strong balance sheet with minimal debt (D/E of 0.3:1) as compared to other
industry players. Though company D/E ratio is likely to increase to 0.44 in FY15E due to the debt
financing required for acquisition of Jaiprakash Associate plant located in Madhya Pradesh, this
expansion plan will not put any stress to the balance sheet and in turn will further strengthen the
company’s position in the industry.
Furthermore, the company has made a strategy to maintain highest credit rating for both long- and
short-term debt which in turn is helping firm to attract the best proposals from lending agencies at
fine pricing levels.
0.30
0.29
0.28
0.44
0.43
0.36
FY12 FY13 FY14 FY15E FY16E FY17E
Debt/Equity Ratio

15. UltraTech Cement
www.choiceindia.com
Growth Strategies
Considering that freight cost accounting for around 28% of the total expenditure, UltraTech has
been taking certain initiatives to control logistic cost. As cement is extremely bulky commodity, the
firm is investing optimum mix of rail, road and sea transportation, which will lead to the quick
dispatch of material from the plants, as well as better customer service and lowered freight cost.
Furthermore, the company is also investing to enhance power capacity, which stands at around
709 mega watt and caters to around 80% of Company’s power requirement. Continued initiatives
for cost optimization are likely to improve EBIDTA margins in coming years.
UltraTech focus on creation on new capacities through organic and inorganic growth. Despite the
slowdown in the cement industry, UltraTech acquired the 4.8 mtpa Gujarat Cement Unit of Jaypee
Cement, moreover, company organic capacity expansion plans are also on track to cater well the
increasing demand from the housing and infrastructure sectors.
Acquisition of JP Associates' MP plant to enhance UltraTech Market presence
UltraTech Cement planned to acquire Jaiprakash Associates' two cement units and associated
power plants in Madhya Pradesh for Rs.5,400 crore. Among these units, one plant is situated at
Bela, Madhya Pradesh with clinker capacity of 2.1 MTPA and cement grinding capacity of 2.6
MTPA along with captive power plant (CPP) of 25 MW. Other integrated cement plant include
clinker capacity of 3.1 MTPA and cement grinding capacity of 2.3 MTPA at Sidhi, MP along with
CPP capacity of 155 MW. This acquisition deal will provide impetus to growth as UltraTech does
not have a significant presence in eastern side of MP, while these are well established assets with
good market share.
Outlook
We believe that likely revival in economic growth, India’s low per capita consumption of cement,
increasing urbanization and reviving growth in infrastructure and industrial sectors will continue to
act as the driving forces behind the rise in demand of cement. To value the UltraTech stock, we
conducted fundamental analysis using the Economy-Industry-Company (E-I-C) framework and
used the Discounted Cash Flow (DCF) as well as Relative Valuation (RV) methods. On the basis
of DCF and RV, we arrived at Potential Price Range of Rs.3400-Rs.3550 for a period of 12
months. With the double digit potential upside, we have a ‘BUY’ recommendation on the stock.

16. UltraTech Cement
www.choiceindia.com
Key Risk
Economic Uncertainties:
Demand of cement in India is cyclical and barring short term disruptions it grows entirely in
tandem with economic growth. UltraTech Cement demand is mainly derived from the domestic
housing real estate and infrastructure sectors, which are closely linked to overall economy’s
growth. Though, Indian economy growth is reviving, prevailing high interest rates in order to
contain the inflation can impact the housing sector’s demand and infrastructure development.
Excess Cement Capacity in Industry to Put Pressure on Realization:
Currently, India’s cement production capacity stands at around 380 MT, which is over 100 MT
higher than around 262 MT cement demand. The industry had created the capacity on the back of
government's projection of potential cement demand arising out of the thrust given for
infrastructure development in the country and the allocation of funds earmarked for the purpose.
Though, the demand of cement is likely to improve in coming years, the surge in cement price
would be marginal in next two fiscal as one fourth of the industry’s capacity is presently remain
unutilized.
Rising Cost of Manufacturing:
EBIDTA margin of the company declined to 18% in FY14 from around average 23% EBIDTA
margin recorded in previous few fiscal on account of high raw material and freight expenditures.
Therefore, managing these costs at appropriate level could a challenge for management going
forward.
Growing Presence of Regional Players:
The presence of small players has been growing across some region of the country. Most of these
cement players have been constantly increasing their installed capacity in order to cater to
increasing cement demand. Besides this, they are also creating fierce or irrational competition in
regional markets that leads to unfavorable pricing also would compromise UltraTech Cement’s
profitability.
Government Regulations:
Cement industry is a freight intensive sector and transporting cement and coal over long
distances can prove to be expensive for industry players. Therefore, the Government decision to
hike the rail freight rate can put pressure on industry margins.

17. UltraTech Cement
www.choiceindia.com
Profit And Loss Statement (Rs. Crore) Balance Sheet (Rs. Crore)
Particulars FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Net Sales 20172.4 20279.8 23599.0 29252.0 31928.8 36885.8 40576
% Growth 9.5% 0.5% 16.4% 24.0% 9.2% 15.5% 10.0%
Total Revenue 20478.7 20608.7 23948.1 29627.1 32344.0 37338.6 41068
% Growth 9.5% 0.6% 16.2% 23.7% 9.2% 15.4% 10.0%
EXPENDITURES
Staff Costs 968.4 1014.6 1145.7 1401.7 1552.6 1799.3 1966.7
% of Net Sales 4.8% 5.0% 4.9% 4.8% 4.9% 4.9% 4.8%
Other
Operating
costs 11387.6 12011.1 13599.7 16978.3 18560.3 21052.1
22850.
5
% of Net Sales 56.5% 59.2% 57.6% 58.0% 58.1% 57.1% 56.3%
Other
Expenses 3141.9 3436.2 4247.8 4972.8 5389.5 6346.5 6898.1
% of Net Sales 15.6% 16.9% 18.0% 17.0% 16.9% 17.2% 17.0%
Total
Expenditures 15497.8 16461.9 18993.2 23352.9 25502.4 29198.0
31715.
2
% of Net Sales 76.8% 81.2% 80.5% 79.8% 79.9% 79.2% 78.2%
EBITDA 4674.6 3817.9 4605.8 5899.1 6426.5 7687.8 8861.7
EBITDA
Margin % 23.2% 18.8% 19.5% 20.2% 20.1% 20.8% 21.8%
Growth % #REF! -18.3% 20.6% 28.1% 8.9% 19.6% 15.3%
Depreciation &
Amortisation 945.4 1052.3 1274.3 1579.6 1724.2 1936.5 2110.0
EBIT 3729.2 2765.6 3331.5 4319.5 4702.3 5751.3 6751.7
Financial
Charges 210.0 319.2 552.5 588.2 556.9 510.0 518.5
Other Income 306.3 328.9 349.1 375.1 415.1 452.8 491.1
PBT 3825.5 2775.3 3128.1 4106.5 4560.5 5694.1 6724.3
Pre-tax Margin
% 19.0% 13.7% 13.3% 14.0% 14.3% 15.4% 16.6%
Tax 1170.0 631.0 832.0 1251.8 1334.5 1540.5 1820.8
Effective Tax
Rate % 30.6% 22.7% 26.6% 30.5% 29.3% 27.1% 27.1%
Reported PAT 2655.5 2144.3 2296.1 2854.7 3226.1 4153.6 4903.5
Net Profit
Margin % 13.2% 10.6% 9.7% 9.8% 10.1% 11.3% 12.1%
Growth in
Reported PAT
% #REF! -19.3% 7.1% 24.3% 13.0% 28.8% 18.1%
Extrodinary
Income 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted PAT 2655.5 2144.3 2296.1 2854.7 3226.1 4153.6 4903.5
Shares In
Issue 27.4 27.4 27.4 27.4 27.4 27.4 27.4
Adjusted EPS 96.9 78.3 83.7 104.0 117.6 151.4 178.7
Particulars FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Gross Asset 21447.5 25252.3 27846.6 33235.0 36803.7 41994.6 43900.2
Accumulate
Depreciation 9377.3 10651.6 10651.6 12231.2 13955.4 15891.9 18001.9
Capital WIP 3505.3 2038.4 2769.8 3743.4 4163.5 4235.9 4453.2
Net Fixed
Asset 16627.7 17913.5 19964.8 24747.2 27011.8 30338.5 30351.5
Investments
& Deposits 6091.9 6571.7 10957.0 9516.7 9803.5 9741.7 14826.1
Current
Asset 4689.3 5268.3 5856.7 7066.9 7838.6 9175.8 9982.2
Cash 142.7 277.5 244.7 301.1 328.2 410.5 426.7
Inventories 2350.5 2368.4 2870.3 3409.6 3769.1 4365.2 4814.3
Trade
Debtors 1017.2 1281.0 1177.6 1493.1 1709.7 2004.0 2118.4
Loans and
Advances 1173.2 1326.2 1554.7 1849.5 2016.6 2376.9 2604.0
Other
Current
Assets 5.7 15.3 9.4 13.6 14.9 19.1 18.7
Current
Liabilities &
Provisions 5669.6 5347.7 6717.3 7818.1 8753.8 10049.2 11564.4
Net Current
Asset
Excluding
Cash -1123.0 -356.8 -1105.3 -1052.3 -1243.4 -1283.9 -2009.0
Capital
Deployed 21739.3 24405.9 30061.2 33512.7 35900.1 39206.8 43595.4
Non-Current
Liabilities
Borrowings 4462.7 4872.8 8500.0 9410.8 8910.8 8500.0 8500.0
Other Long-
term
Liabilities 2.3 1.8 0.0 0.0 0.0 0.0 0.0
Deferred
Tax
Liabilities 1905.9 2295.8 2295.8 2295.8 2295.8 2295.8 2295.8
Long-term
Provisions 134.0 137.9 137.9 137.9 137.9 137.9 137.9
Total
Liabilities 6504.9 7308.4 10933.8 11844.6 11344.6 10933.8 10933.8
Contingent
Liabilities
Share
Capital 274.2 274.2 274.3 274.4 274.4 274.4 274.4
Reserve and
Surplus 14960.6 16823.3 18853.1 21393.8 24281.1 27998.6 32387.2
Total Stock
Holder's
Equity 15234.8 17097.5 19127.4 21668.2 24555.6 28273.0 32661.6
Capital
Employed 21739.7 24405.9 30061.2 33512.7 35900.1 39206.8 43595.4
DIFF 0.0 0.0 0.0 0.0 0.0 0.0 0.0

18. UltraTech Cement
www.choiceindia.com
Cash Flow Statement (Rs. Crore) Financial Ratios (%) (Rs. Crore)
Cash Flow from Operating Activities
Particulars FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Profit before tax 3825.5 2775.3 3128.1 4106.5 4560.5 5694.1 6724.3
Depreciation 945.4 1052.3 1274.3 1579.6 1724.2 1936.5 2110.0
Interest Expense 210.0 319.2 552.5 588.2 556.9 510.0 518.5
Operating Profit
Before WC
Changes 4980.9 4146.8 4954.9 6274.2 6841.6 8140.6 9352.8
Changes In WC 680.2 -766.2 748.5 -53.0 191.2 40.5 725.0
Gross cash
generated from
Operations 5661.1 3380.6 5703.4 6221.2 7032.8 8181.1 10077.9
Direct Taxes Paid 1170.0 631.0 832.0 1251.8 1334.5 1540.5 1820.8
Net Cash
Generated From
Operations 4491.1 2749.6 4871.4 4969.5 5698.3 6640.6 8257.0
Cash Flow from Investing Activities
Capital Expenditure
(CAPEX) (4042) (2338) (3325) (6362.0) (3988.8) (5263.2) (2123.0)
Investments (840) (479) (4385) 1440.3 (286.8) 61.8 (5084.4)
Net Cash Used In
Investing Activities (4883) (2817) (7710) (4921.8) (4275.6) (5201.4) (7207.4)
Cash Flow from Financing Activities
Change in Debt 836.1 803.4 3625.4 910.8 -500.0 -410.8 0.0
Change in Equity 0.1 0.1 0.1 0.1 0.1 0.0 0.0
Dividends Paid -289.0 -289.0 -266.2 -314.0 -338.7 -436.1 -514.9
Interest Paid -210.0 -319.2 -552.5 -588.2 -556.9 -510.0 -518.5
Others 8.4 7.3 0.0 0.0 0.0 0.0 0.0
Net Cash used in
Financing Activities 345.5 202.6 2806.7 8.6 -1395.6 -1356.9 -1033.4
Net Increase in
Cash and Cash
Equivalents -46.4 134.4 -32.8 56.3 27.1 82.3 16.3
Cash and cash
equivalents At the
beginning 189.6 142.7 277.5 244.7 301.1 328.2 410.5
Net Increase in
Cash and Cash
Equivalents -46.4 134.4 -32.8 56.3 27.1 82.3 16.3
Cash and cash
equivalents At the
end 143.1 277.0 244.7 301.1 328.2 410.5 426.7
Cash balance as
per balance sheet 142.7 277.5 244.7 301.1 328.2 410.5 426.7
Difference 0.5 -0.5 0.0 0.0 0.0 0.0 0.0
Particulars FY13 FY14 FY15E FY16E FY17E FY18E FY19E
Profitability Ratios
Return on Assets (ROA) 9.7% 7.2% 6.2% 6.9% 7.2% 8.4% 8.9%
Return on Equity (ROE) 17.4% 12.5% 12.0% 13.2% 13.1% 14.7% 15.0%
Return on Capital
Employed (ROCE) 17.2% 11.3% 11.1% 12.9% 13.1% 14.7% 15.5%
Dupont Analysis-ROE
Decomposition
PAT/PBT (Tax
Efficiency) 0.7 0.8 0.7 0.7 0.7 0.7 0.7
PBT/EBIT (Interest
Burden) 1.0 1.0 0.9 1.0 1.0 1.0 1.0
EBIT/Sales (OPM) 0.2 0.1 0.1 0.1 0.1 0.2 0.2
Sales/Total Assets
(Asset Turnover) 0.7 0.7 0.6 0.7 0.7 0.7 0.7
TA/NW (Financial
Leverage) 1.8 1.7 1.9 1.9 1.8 1.7 1.7
ROE 17.4 12.5 12.0 13.2 13.1 14.7 15.0
Liquidity Ratios
Current Ratio 0.8 1.0 0.9 0.9 0.9 0.9 0.9
Acid Test Ratio 0.4 0.5 0.4 0.5 0.5 0.5 0.4
Debt-Equity Ratio 0.3 0.3 0.4 0.4 0.4 0.3 0.3
Efficiency Ratios
Assets Turnover Ratio 0.7 0.7 0.6 0.7 0.7 0.7 0.7
Working Capital
Turnover Ratio -20.6 -255.7 -27.4 -38.9 -34.9 -42.2 -25.6
F.A. Turnover Ratio 1.2 1.1 1.2 1.2 1.2 1.2 1.3
C.A. Turnover Ratio 4.3 3.8 4.0 4.1 4.1 4.0 4.1
Debtors Velocity 18 23 18 19 20 20 19
Margin Ratios (%)
EBITDA Margin 23.2% 18.8% 19.5% 20.2% 20.1% 20.8% 21.8%
Pre-Tax Margin 19.0% 13.7% 13.3% 14.0% 14.3% 15.4% 16.6%
Net Profit Margin 13.2% 10.6% 9.7% 9.8% 10.1% 11.3% 12.1%
Growth Ratios YoY (%)
Net Sales 9.5% 0.5% 16.4% 24.0% 9.2% 15.5% 10.0%
EBITDA 10.2% -18.3% 20.6% 28.1% 8.9% 19.6% 15.3%
Adj.PAT 8.4% -19.3% 7.1% 24.3% 13.0% 28.8% 18.1%
Adj.EPS 8.4% -19.3% 6.9% 24.3% 13.0% 28.8% 18.1%
Working Ratios (Days)
Inventory 43 43 44 43 43 43 43
Debtors 18 23 18 19 20 20 19
Other Ratios (%)
Other Income/PBT 8.0% 11.9% 11.2% 9.1% 9.1% 8.0% 7.3%
FCF Margin 2.0% 1.0% 6.3% -5.3% 4.9% 3.2% 14.7%
Capex/Sales 20.0% 11.5% 14.1% 21.7% 12.5% 14.3% 5.2%
Enterprise Value 52763.2 55148.3 79324.9
106521.
7
105994.
6
105501.
5
105485.
3
Net Working Capital
Excluding Cash -1123.0 -356.8 -1105.3 -1052.3 -1243.4 -1283.9 -2009.0
Per Share (Rs.)
Adj.EPS 96.9 78.3 83.7 104.0 117.6 151.4 178.7
CEPS 131.4 116.7 130.1 161.6 180.4 221.9 255.6
DPS 9.0 9.0 9.7 11.4 12.3 15.9 18.8
BVPS 556.0 624.0 697.1 789.7 894.9 1030.4 1190.3
Cash Per Share 5.2 10.1 8.9 11.0 12.0 15.0 15.6
Valuation Parameters
P/E 18.2 23.6 31.0 34.1 30.2 23.5 19.9
P/CEPS 13.5 15.8 19.9 22.0 19.7 16.0 13.9
P/BV 3.2 3.0 3.7 4.5 4.0 3.4 3.0
EV/EBITDA 11.3 14.4 17.2 18.1 16.5 13.7 11.9
EV/SALES 2.6 2.7 3.4 3.6 3.3 2.9 2.6
12 Months Average
Share Price 1768 1845 2590 3550 3550 3550 3550

19. UltraTech Cement
www.choiceindia.com
Contact Us
Satish Kumar Sharma
Research Associate
satish.kumar@choiceindia.com www.choiceindia.comcustomercare@choiceindia.com
Disclaimer
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shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this
recommendation or any action taken on basis of this information. This report is based on the fundamental analysis with a view to forecast future price. The Research
analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and
its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this
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POTENTIAL CONFLICT OF INTEREST DISCLOSURE (as on date of report) Disclosure of interest statement – • Analyst interest of the stock /Instrument(s): - No. • Firm
interest of the stock / Instrument (s): - No.