Ambuja Cement

Divya Pandey – UID: 2019-0306-0001-0010

Target Price Rs.220 CMP Rs. 172 FY21E PE - 20.87

Investment Rationale Brief/Summary

Index Cracks seen in the form of higher cost/t,
NIFTY 9,154.40 lower realization
SENSEX 31,327.22 ➢ Volumes, realizations below estimate:
CMP 172 Volumes grew 4.4% YoY to 6.13mt (our
Industry CEMENT – MAJOR estimate: 6.22mt) in 4QFY18. Realizations
declined 2.4% QoQ to INR4,671/t (our
Scrip Details estimate: INR4,818), led by weaker prices in
Target Price: 220 core markets. Revenue increased 7% YoY to
Mkt. Cap ( Cr. ) 33,348.91 INR28.63b (our estimate: INR29.9b).
Book Value
111.83 ➢ Margins shrink due to cost push: Cost/t
(Rs)/BVPS
O/S shares (M) 1,549.74 increased 8% YoY (-3% QoQ) to INR4,012
Face Value/FVPS(RS) 2 (our estimate: INR3,918), led by higher raw
material cost/t and power & fuel cost/t.
52 week High: 240.24 EBITDA/t of INR659, thus, came in lower than
52 Week High: 136.55 our estimate of INR901. EBITDA declined 20%
Dividend Yield.(%) 0.89 YoY but increased 13% QoQ to INR4.04b (our
estimate: INR5.6b), translating into a margin of
Share Holding Pattern 14.1% (-4.8pp YoY, +0.4pp QoQ). Exceptional
items amounting to INR2.4b were booked in the
Holder's Name No of Shares % Share Holding
quarter. Hence, adj. PAT stood at INR2.95b (-
No.Of Shares 1985645229 100% 3% YoY) versus our estimate of INR3.2b, while
Promoters 1253156361 63.11% reported PAT stood at INR5.37b.
Foreign Institutions 310049312 15.61%
Central Govt 3862572 0.19% ➢ Key highlights from management
presentation: (1) Power & fuel cost increased
Others 45773779 2.31% due to high-cost inventory. (2) ACEM
NBanks MutualFunds 139496954 7.03% commissioned the Gare Palma coal block,
GeneralPublic 87123520 4.39% which should help optimize fuel mix. (3) Mr
Financial Institutions 140934991 7.10% Bimlendra Jha appointed as MD & CEO with
effect from 1st March 2019.
GDR 5247740 0.26%
➢ FY18 performance: Volumes grew 5% YoY,
resulting in sales/EBITDA/PAT growth of
Shareholding Summary % 9%/1%/2% YoY in FY18.
➢ Pan India footprint with consolidated
6.7 Promoter
7.32 cement capacity of 63 mn tonnes.
MF

15.66 FII ➢ Attractive geographical positioning.

63.28
Other Institutions ➢ Market leading brands with large network of
7.04
Public
dealers/retailers (trade sales >80% of total
volume).

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
➢ Strong balance sheet with consolidated net cash in excess of INR 51 bn.

Ambuja’s- Strategies in place to enhance value.

➢ Q1’19 cement capacity utilization at 86.6%.

➢ Focus on Master Supply Agreement to unlock
synergies in the areas of sales & marketing and logistics.
➢ The addition of 4.6 mn tonnes of cement volumes
from Greenfield integrated cement plant at Marwar
Mundwa, Rajasthan will further strengthen our position in
core markets of North and Gujarat. To be operational in Q3 2020.
➢ Commercial transformation: New and innovative premium product launches, focus on customer
excellence and on margin management levers.
➢ To continue to optimize cost structure: Optimisation of fuel including alternative fuel journey, reduction
in lead distance and savings in fixed overheads.

Infrastructure & Housing program

➢ Infrastructure & Housing program drove
cement demand to 9.1% in 2018; projected to
grow by 7.0%- 8.0% in 2019
➢ In Jan-Mar’ 2019 demand is expected to
remain firm between 7.5% to 8.5% due to
accelerated pre-election spending & faster
execution of government sponsored housing &
infrastructure projects.
➢ Election process in Apr-Jun’19 and
Monsoon in JulSep’19 may slowdown the
cement demand growth momentum on the back of subdued construction activities
➢ During Oct-Dec’19, we expect demand growth to improve with new Government in place; All the
ongoing infrastructure/construction projects most likely would continue and the new Government may
also initiate new demand drivers/projects that would further boost cement demand.
➢ Overall demand in 2019 is estimated to grow in the range of ~7.0% - 8.0%

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Company Name VS. Sensex

Valuation Paragraph.

We reduce our FY19 EBITDA estimate by 7% to factor in lower realization and higher cost. We, however, cut
our FY19 PAT estimate by a lower rate of 6%, given lower depreciation. We reduce our FY20 EBITDA/PAT
estimate by 6%, led by higher cost. The stock trades at 10.3/8.9x FY19/20E EV/EBITDA. We value ACEM at
10x FY20E EBITDA and its stake in ACC at a holdco discount of 20% to arrive at a target price of INR194.
Maintain Neutral.

Key Financials (Rs Cr)

EPS EV/EBIT
Net RONW ROCE P/E
Y/E Dec EBITDA PAT EPS Growth DA
Sales (%) (%) (x)
(%) (x)
2018 11353 1981 1487 7.49 43.59 7.26 13.75 20.46 12.40
2019 10977 2149 1529 7.70 -3.78 7.07 14.27 18.61 7.37
2020E 13640 2578 1834 9.24 20.22 8.4 15.69 20.47 8.84
2021E 15686 3093 2200 11.08 50.55 10.08 17.25 22.04 10.60

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Shareholder’s Funds (cr) Total Debt ( Cr.)

30000 70
25000 60
50
20000
40
15000
30
10000
20
5000 10
0 0
2017 2018 2019 2020(E) 2021(E) 2017 2018 2019 2020(E) 2021(E)

2017 2018 2019 2020(E) 2021(E) Total Debt ( Cr.)

Capital Employed ( Cr.) Net Sales (Cr.)

3000 20000
2500
15000
2000
1500 10000
1000
5000
500
0 0
2017 2018 2019 2020(E) 2021(E) 2018 2019 2020(E) 2021(E)

Capital Employed ( Cr.) Net Sales (Cr.)

EBITDA ( Cr.) EPS

3500 3093 12 11.08
3000 2578 10 9.24
2500 2149 7.49 7.7
1981 8
2000
6
1500
1000 4
500 2
0 0
2018 2019 2020(E) 2021(E) 2018 2019 2020(E) Category 4

EBITDA ( Cr.) EPS

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Key highlights from management.
• Cement volumes for the company grew 5% YoY for FY19, led by 30% YoY growth in premium
product portfolio and increased market share in the retail segment.
• The company increased sale of premium products (Roof Special, Compocem and Cool Walls).
• ACEM has adopted various initiatives such as optimization of additives and correctives in raw mix to
contain raw material costs.
• Power & fuel costs increased in the quarter due to high-cost inventory. This impact was partly mitigated
by improved efficiencies.
• Efficiency parameters and cost-saving initiatives helped offset the impact of rising input cost
• The company commissioned the new Coal block Gare Palma ahead of schedule, which will help further
to optimize fuel mix.
• Freight cost increased due to higher diesel prices; cost also increased due to inter-regional cement and
clinker movement, adequately compensated by improved contribution. Better network management and
operational efficiencies largely enabled mitigation of the fuel hike effect.
• Following exceptional items were booked by the company :
• INR814.1m on account of charge toward separation scheme for employees.
• INR379.4m and INR106m as provision toward loans and interest,
• respectively, related to Dirk India Private Limited (DIPL) – a wholly owned
• subsidiary of the company
• The company has also reversed provision so of INR 3.72b related to incentives
• for its plants in Himachal Pradesh and Uttarakhand and recorded the same
• in current tax adjustments for earlier years.
• Mr. Bimlendra Jha has been appointed as Managing Director & CEO of Ambuja
• Cement with effect from 1st March 2019.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Company Background:
Ambuja Cements Limited, formerly known as Gujarat
Formation Details
Ambuja Cement Limited, is an Indian
Company Type: Public Ltd.
Industry Name: major cement producing company. The Group's market
Cement - Pan India
cement and clinker for both domestic and export
House Name: Ambuja Group
markets.
Company Name Ambuja Cement Ltd. (ACL) ACL has grown manifold over the past decade.
Incorporation
Date: 20/10/1981 Its current cement capacity is 27.25 million tonnes.
The Company has 5 integrated cement manufacturing
Year of
September,1986 plants
Establishment
ISIN: and 8 cement grinding units across the country. ACL
INE079A01024 INE079A01024
enjoys a reputation of being one of the most efficient
Market Lot: cement manufacturers in the world. Its environment
1
P.O. Ambujanagar, protection measures are considered to be on par with
Taluka Kodinar, the finest in the country. It is also one of the most
Dist. Gir Somnath,
City: Junagadh profitable and innovative cement companies in India.
Registered State: Gujarat
Address Pincode: 362715
Email ID: ACL is the first Indian cement manufacturer to build a
[email protected] captive port with three terminals along the country's
Web Url:
http://www.ambujacement.com western coastline to facilitate timely, cost effective and
environmentally cleaner shipments of bulk cement to its
Registrar Link Intime India Pvt. Ltd.
customers. The Company has its own fleet of ships.
Auditor
Deloitte Haskins & Sells LLP
ACL has also pioneered the development of the
Headquarters Mumbai, Maharashtra, India
multiple, bio-mass, co-fired technology for generating
Suresh Kumar Neotia, Founder
: Narotam Sekhsaria, Co- greener power in its captive plants.
Key people Founder, Chairman Neeraj
company has entered into a strategic partnership with
Akhouri, Managing Director &
CEO Holcim, the second largest cement manufacturer in the
Products Cement world from 2006. Holcim had, in January, bought a
14.8 per cent promoters' stake in the GACL for INR 21.4 billion. Currently Holcim holds 61.62% of shares in
Ambuja Cements.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Milestones & Journey

1981
• The Company was Incorporated on 20th October, as Ambuja Cements Pvt. Ltd. It was jointly promoted
by Gujarat Industrial Investment Corporation Ltd. (GIIC) and N.S. Sekhsaria and his associates, Vinod
K. Neotia and Suresh Mulani, for setting up a cement project in the joint
• sector. The Company was converted into a public limited company on 19th March, 1983 and its name
was changed to Gujarat Ambuja Cements, Ltd., on 19th May, 1983.
1983
• All shares subscribed for by signatories to the Memorandum of Association, promoters, etc.
1985
• A letter of intent was received to increase the installed capacity from 7,00,000 tonnes to 14,00,000
tonnes per annum.
• 146,44,500 No. of equity shares issued at par out of which the following shares were reserved for firm
allotment: 38,24,448 shares to GIIC; 21,20,000 shares to overseas companies of non-resident Indian
promoters on repatriation basis and 15,50,052 shares to N.S. Sekhsaria, Vinod K. Neotia and their
associates.
1986
• 20,00,000 No. of equity shares issued at par of which 2,00,000 shares allotted to private promoters and
their associates and the balance of 18,00,000 shares offered and allotted to the equity shareholders as
rights in prop. 1:1.
1988
• Production declined marginally to 8,02,301 tonnes due to heavy rains in July-August 1989 coupled with
flash floods on 16th July.
1989
• The 12.6 MW diesel generating sets which were imported during 1988-89 were commissioned during
the year.
1990
• Necessary approvals were received for setting up another cement plant with 1 million tonne capacity per
annum at village Suli, Tehsil Arki, District Solan of Himachal Pradesh.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
1991
• In order to meet long-term working capital requirements, the Company issued 10,00,000 - 17.5%
secured redeemable non-convertible debentures on private placement basis.
• In order to part finance its expansion projects, the Company proposed to issue 52,62,500 No. of equity
shares of Rs.10 each at a prem. of Rs.190 per share.
• In order to part finance its expansion projects, the Company also proposed to issue 52,62,500 - 17.5%
secured redeemable non-convertible debentures aggregating to Rs.210.
• GACL Finance Ltd., Concrete Investments, Ltd., and Indo Nippon Special Cements, Ltd. are the
subsidiaries of the company.
1992
• The Company undertook bulk cement transportation, by sea, to the major markets of Mumbai, Surat and
other deficit zones on the West Coast. Transportation was to be carried out by three specially designed
ships. The units bulk terminal at Kodinar and one at New Mumbai was completed and work on the third
terminal near Surat began.
1993
• 51,60,165 rights equity shares allotted at a prem. of Rs.190 per share (49,66,815 shares, prop. 1:4;
90,850 shares to employees and 1,02,500 shares to Associates); 1,10,281 shares of Rs.10 each allotted at
a prem. of Rs.215 per share on exercise of warrants by warrant holders.
1994
• The Company's muller location 1.5 million tonne cement project with clinkeriation facility at site in H.P
and grinding facility both at Suli & Ropar in Punjab was commissioned. Land was acquired at
Sahranpur to serve as another site for grinding cement.
• The Company also undertook to set up a new unit, `Gajambuja Cement' with an installed capacity of 9.4
lakh tonnes, at the existing premises. The kiln was fired on 1st March 1993 and the unit produced its
first batch of clinker on 4th March, 1993.
• The Company undertook to set up the third 1 million tonne cement plant at Ambujanagar.

1995
• The Company proposed to install one more cement mill at Himachal plant.
1996

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
• Two more ships `Ambuja Keerti' and `Ambuja Shakti' were added to the Fleet. The Company has
submitted a proposal to revive Modi Cements Ltd. to IDBI during the year.
• Another 19724 No. of equity shares allotted on conversion of warrants.
1997
• 100,000,000-10% non-convertible redeemable pref. shares of Rs. 10 each allotted and 30,000,000-
12.75% non-convertible redeemable pref. shares of Rs. 10 each redeemed.
• Gujarat Ambuja Cements Ltd's (GACL) Kodinar plant is set to commence commercial production with
an enhanced capacity by mid-April.
• Gujarat Ambuja Cement Ltd. has offered to set up a multi-crore cement plant in Jammu and Kashmir.
• Gujarat Ambuja Cement Ltd. (GACL) was set up in 1981 as a joint sector company, promoted by
Narottam Sekhsaria and Gujarat Industrial Investment Company (GIIC). Its cement plant which was
commissioned in 1985 was set up in technical collaboration with Krupp Polysius, Germany, Bakau Wolf
and Fuller KCP.
• Gujarat Ambuja Cement Ltd. (GACL) is setting up two new units with a capacity of 1.5 m.t. each
through its subsidiaries.
• The company has signed a memorandum of understanding (MoU), with the promoters of Modi Cement
to take control of the sick company and has prepared a revival proposal to be submitted to the Board for
Industrial and Financial Reconstruction (BIFR).
1998
• Gujarat Ambuja Cements to set up a $20 million clinker Grinding unit in Sri Lanka.
1999
• Gujarat Ambuja is setting up a 0.50 MT bulk terminal and a packaging facility at Tuticorin for Rs 16
crore to increase its presence in the south, especially Tamil Nadu.
• Maratha Cements Ltd, a wholly-owned subsidiary of Gujarat Ambuja Cements is to be amalgamated
with the latter.
2000
• Cement giants Larsen & Tubro (L&T) and Gujarat Ambuja Cements have entered a unique agreement to
reduce transportation costs in despatching bulk cement in Gujarat.
• The Company has entered the fray for setting up a slag cement unit near the integrated steel complex of
Jindal Vijayanagar Steel Ltd. in Karnataka.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
• The Company has entered into a contract with a Soinhalese firm, Mahaveli Marine Cement, to supply
around 2.5 lakh tonnes of cement annually.
• Eastern Ambuja Cement, a 92-per cent subsidiary of Gujarat Ambuja Cement, is in talks with Orissa-
based Shiva Cement for a possible joint venture.
• The Company has kickstarted its operations in Sri Lanka with the setting up of a cement terminal in the
port of Galle, in the south of the island country.
• Ambuja Cement Eastern, a subsidiary of Gujarat Ambuja Cements is making a preferential allotment of
equity to its promoters to mop up Rs 30 crore to part-finance its Rs 130-crore expansion project.
2001- 2002
• Commences work on a 2 million ton capacity plant at Maratha cement works Chandanpur Maharashtra.
2005 - 2006
• Holcim raises stake in Gujarat Ambuja Cements
2007
• Company name has been changed from Gujarat Ambuja Cements Ltd to Ambuja Cements Ltd.
2008
• Ambuja Cements Ltd has appointed Mr. Naresh Chandra as an additional director.
2009 - 2010

• The Company launched its knowledge initiative i.e. Ambuja Knowledge Center,to enable industry
professionals get a first-hand feel of the world of cement and concrete. During the year, three centers
became operational in the cities of Jaipur, Ahmedabad and Kolkata.
• On 27 March, 2010, Ambuja Cements Ltd (ACL) inaugurated its cement plant (grinding unit) at
Nalagarh, Himachal Pradesh. Capacity: 1.5 million tonnes.
2011
• Completes 25 years of operation. Celebrates silver jubilee at all integrated plants.
• Achieves water-positive status, as certified by an independent foundation, Det Norske Veritas. Ambuja
Cements gives back to the community double the amount of water the Company consumes at its
facilities.
• Ambuja Cements Ltd has acquired 85% equity shares of Dang Cement Industries Pvt. Ltd., Nepal
• Ambuja Cements Ltd has acquired 60% equity shares from the existing promoters of Dirk India Pvt.
Ltd.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
2012 - 2013
• Ambuja presented 2 awards at the CII Sustainability Awards 2012 by Honorable President of India.
• Ambuja Cements Limited’s (ACL) integrated plant unit at Chandrapur, (Maharashtra), the Maratha
Cement Works (MCW) bagged the gold award for the best safety systems under the Large size category
of the FICCI Safety Excellence System Awards 2012
• Ambuja Cement bagged the Asia's Most Promising Brand & Leader Award at the Asian Brand and
Leadership Summit 2013
• Ambuja Cements has unanimously approved a proposal to first acquire a 24% stake Holcim
2014
• Ambuja Cement Foundation - Chirawa has won the UNESCO supported Water Digest Water Award
2013-14
• Ambuja Cement Foundation - Bathinda won the NABARD 'Partnership Excellence Award' in the
category of "Improving productivity of crops"
2015
• Ambuja Cement created another benchmark among cement industries in India, it obtained a whopping
4.03 times water positive factor
2016
• Ambuja Cement won FICCI CSR award 2016 under 'Category 5 - Any Other' for its exemplary Water
Resource Management Program
• Ambuja Cement conferred with the Bombay Chamber Civic Award for social development
• Ambuja Cement & ACC win prestigious accolades at CII-ITC Sustainability Awards 2016
2017
• Ambuja notches up a perfect score bags six prestigious accolades @ CII-ITC Sustainability Awards
2017
• Ambuja Cement wins two prestigious awards at NCB International seminar
• Ambuja Cement a key partner in India’s longest highway tunnel in Jammu & Kashmir

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Bulk Cement Terminals of the company:

Region Storage Capacity (tonnes)

Surat 15,000

Panvel 17,500

Galle 10,00,000

Ambuja Cement exports almost 17% of its production in a very competitive international environment. For the
last ten years, Ambuja Cement remains India’s highest exporter of cement.

Major geographies of the company:

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Owners / Promoters

NS Sekhsaria(Chairman) Jan Jenisch(Vice Martin Christof Hassig

Chairman) Kriegner(Director) (Director)

Roland Nasser Rajendra P Shailesh

Kohler(DIRECTOR) Munjee(Independent Chitale(Independent Haribhakti(Independent
Director) Director) Director)

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Dr Omkar Goswami Shikha Praveen Kumar Molri Then Hwee Tan

(Independent Director) Sharma(Independent (Director) (Director)
Director)

Mahendra Kumar Ranjit Shahani (Director) Neeraj Akhoury

Sharma (Director) (Managing Director &
CEO)

Source: Ambuja Cement, PIBM Research

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Product Segment

Source: Ambuja Cement, PIBM Research

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Company Business Structure

MD

Sr Vp System & Audit

Director Director

Joint president Mine &

GM A/C Joint president works
Geology

Chief Security DGM

GM IT GM R&D GM Geology GM Mine DGM Mine GM Coomunication
Officer personnel

DGM Comm. Liasoning

Land
Managers & Assistance
Department

GM B.C.T.

GM Power & Plant

GM Mech.

Source: Ambuja Cement, PIBM Research

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Industry / Sector Background

Industry brief

The indigenous Indian cement industry traces its history back to 1914, at the time the market was dominated by
imports.
India’s overall cement production capacity was nearly 502 million tonnes as of FY19 and consumption has
increased by 5 per cent in the FY19 due to the high growth in housing segment and higher infrastructure
spending.

Second largest cement market

• Cement production capacity of around 455 million tonnes, as of 2017-18.

• India’s cement production capacity is expected to reach 550 million tonnes by 2020.
• India is the second largest cement producer in the world.

Dominated by private players

• Of the total capacity, 98 per cent lies with the private sector & the rest with public sector.
• The top 20 companies accounting for around 70 per cent of the total production

Higher share of large plants.

• 210 large cement plants account for a cumulative installed capacity of over 410 million tonnes, while
over 350 mini cement plants have an estimated production capacity of nearly 11.10 million tonnes.

Large concentration in south and west.

• Of the total 210 large cement plants in India, 77 are situated in the states of Andhra Pradesh, Rajasthan
& Tamil Nadu.

Market in India

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

MARKET OVERVIEW

Production

Cement Production in MTPA

600

500

400 401
337.32
279.81 297.56
300
238.46 247.43
200

100

0
FY16 FY17 FY18 FY19 FY20 FY21(E)
FY16 FY17 FY18 FY19 FY20 FY21(E)
Source: moneycontrol.com

Key Market & Capacity

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Installed Capacity & Key Market
140 132.7
120
MILLION TONNES

100
86.5
80

60 57.6
52.8 49.4
40

20

0
North South Cetral East West
CAPACITY - Geographic Regions
Source: moneycontrol.com, , PIBM Research

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Market Consumption (Million Tonnes)

350 328
296
300 272 272
269
249 257
243
250 230
MILLION TONNES

200

Covid-19 Impact
150

100 CAGR 4.35%

50

0
Cement Industry- Future Forecast
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 (E)
Source: moneycontrol.com, , PIBM Research
Cement Demand /Growth Driver- India

9%

11%

13%

67%

Housing Infrastructure
Commercial Industrail
Source: moneycontrol.com, , PIBM Research

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

EXPORT AND IMPORT OF CEMENT

Source: IBEF

• India’s exports of cement, clinker and asbestos cement increased at CAGR of 10.37 per cent between
FY12-FY18 to reach US$ 433.87 million. During the same period imports of cement, clinker and
asbestos cement increased at a CAGR of 11.14 per cent to US$ 174.36 million in FY18.

• The country’s top export destinations for cement, clinker and asbestos cement in FY18 were Nepal, Sri
Lanka, USA, Maldives and UK.
• The country’s top five import sources for cement, clinker and asbestos cement in FY18 were Pakistan,
Bangladesh, Japan, Vietnam and Thailand.

Industry growth

GROWTH DRIVERS AND OPPORTUNITIES

Housing.
• Forms the major portion of cement demand at around 67 per cent
• Real estate market to increase at 11.6 per cent CAGR in 2011-20.
• Government initiatives like Housing for all to push demand in the sector

Infrastructure.
• Strong focus of government
• 100 smart cities planned
This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
• Projects like Dedicated Freight Corridors and ports under development.
• Metro rail projects already underway in most major cities.

Urbanisation
• Development of 500 cities with population of more than 100,000 under new Urban Development
Mission

POLICIES AND INITIATIVES

Union Budget 2018-19

• The Union Budget has allocated US$ 92.22 billion for infrastructure development in 2018-19 as
compared to US$ 76.31 billion in 2017-18 (RE). Government’s infrastructure push combined with
housing for all, Smart Cities Mission and Swachh Bharat Abhiyan is going to boost cement demand in
the country.

Affordable Housing Fund

• In Budget 2018-19, Government of India announced setting up of an Affordable Housing Fund of Rs
25,000 crore (US$ 3.86 billion) under the National Housing Bank (NHB) which will be utilised for
easing credit to homebuyers. The move is expected to boost the demand of cement from the housing
segment.

Pradhan Mantri Awaas Yojana - Gramin scheme

• An outlay of Rs 33,000 crore (US$ 5.097 billion) has been proposed for building 4.9 million houses
under Pradhan Mantri Awas Yojana – Gramin in Union Budget 2018-19.

Auction of limestone block (Deora-SitapuriUdipyapura)

• In May 2018, Ultratech Cement emerged as the winning bidder in the auction for Deora-Sitapuri-
Udipyapura limestone mining block in Madhya Pradesh. The block contains reserves of about 54 million
tonnes and is spread over an area of 344.78 hectares. The company will be able to leverage this mining
block to augment production capacity of its Dhar unit.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

PERFORMANCE HIGHLIGHT:
• EBITDA Margin at 21.9% up by 560 bps YoY
• EBITDA up 30% YoY Profit after tax at ₹ 399 crore up 35% YoY
• Net Sales de-grew 3% YoY, however till February Ambuja had recorded a good growth
• Cement realisations up 6% YoY
• Higher growth in Premium Products, 3% growth YoY
• Total Operating expenses, ₹ PMT is at same level YoY

PERFORMANCE ANALYSIS
Sales Volumes and Net Sales
EBITDA ₹ Cr and EBITDA / Tonne trend

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Source: ambujacement.com

Key Costs - Power & Fuel and Freight & Forwarding Costs trend

Source: ambujacement.com
Key Costs - Raw Material Costs and Other Expenses trend

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Source: ambujacement.com

Total cost flat YoY basis i.e. Q1 20 vs Q1 19

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Source: ambujacement.com

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

RISKS AND AREAS OF CONCERN

• The Company has laid down a well-defined risk management mechanism covering the risk
mapping and trend analysis, risk exposure, potential impact and risk mitigation process.

• In line with the new regulatory requirements, the Company has formally framed a Risk
Management Policy to identify and assess the key risk areas, monitor and report compliance
and effectiveness of the policy and procedure.

• A Risk Management Committee under the chairmanship of Mr. Rajendra Chitale,

Independent Director, has also been constituted to oversee the risk management process in
the Company. Based on a detailed review, the following key risks have been identified:

➢ SECURING RESOURCES FOR FUTURE

Even though we have sufficient reserves, but to sustain our brand and quality for the
future, as well as securing additional reserves are critical

➢ FUTURE REGULATION
Identified by the Company, related to air quality, energy and carbon management,
biodiversity, land and water.compliance to all regulations is the prime concern for the
organisation and its management, which will require substantial CAPEX in the future.

➢ DEMAND SLOWDOWN
Global jitters are already being felt in India leading to uncertainty in the general
economic perception. It is hoped that India will continue to shine and be a destination of
choice for global investment.

➢ TAXATION & ADMINISTRATIVE BURDEN A NEED FOR UNIFORMITY

Risk Profile(NSE):

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Quarterly Financial Performance

Source: ambujacement.com
moneycontrol.com

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Peer Comparison:

Comparison report on ACC vs Ambuja cement VS JK Cement Vs UltraTech Cem.

Balance Sheet

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Profit & loss Comparison report on ACC vs Ambuja cement VS JK Cement Vs UltraTech Cem.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Financial ratios Comparison report on ACC vs Ambuja cement VS JK Cement Vs UltraTech Cem.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
Financials and Projections.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
PROFIT & LOSS

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

RATIOS

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010

Cash Flow

Pune Institute of Business Management

Disclaimer:

PIBM is a SEBI registered intermediary. PIBM is member of BSE, NSE and MCX-SX. PIBM is a depository participant of NSDL. PIBM states that no
disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and
venial lapses observed while inspection of books of accounts and records. PIBM Private Limited are associates of PIBM. Research Analyst (RA)
involved in the preparation of this research report and PIBM disclose that neither RA nor PIBM nor its associates (i) have any financial interest in the
company which is the subject matter of this research report (ii) have any material conflict of interest at the time of publication of this research report RA
involved in the preparation of this research report discloses that he / she has not served as an officer, director or employee of the subject company. RA
involved in the preparation of this research report and PIBM discloses that they have not been engaged in the market making activity for the subject
company. Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients
that reflect opinions that are contrary to the opinions expressed herein. We may have earlier issued or may issue in future

reports on the companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this
document, you should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We may rely on
information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or
affiliates of PIBM. This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of
an offer to buy, purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied
upon in connection with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is
for the general information of the clients / prospective clients of PIBM. PIBM will not treat recipients as clients by virtue of their receiving this report. It

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020
 Ambuja Cement
Divya Pandey – UID: 2019-0306-0001-0010
does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of clients /
prospective clients. Similarly, this document does not have regard to the specific investment objective, financial situation/circumstances and the
particular needs of any specific person who may receive this document. The institute discussed in this report may not be suitable for all investors. The
appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive
this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek
professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information
contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document.
The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the
estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will
likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of
the Company. These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted
accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You
should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by PIBM, its associates, the authors of
this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only
consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions
underlying such projections and forecasts. The price and value of the investments referred to in this document/material and the income from them may
go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Future returns are
not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward looking
statements are not predictions and may be subject to change without notice. We do not provide tax advice to our clients, and all investors are strongly
advised to consult regarding any potential investment. PIBM, the RA involved in the preparation of this research report and its associates accept no
liabilities for any loss or damage of any kind arising out of the use of this report. This report/document has been prepared by PIBM, based upon
information available to the public and sources, believed to be reliable. No representation or warranty, express or implied is made that it is accurate or
complete. PIBM has reviewed the report and, in so far as it includes current or historical information, it is believed to be reliable, although its accuracy
and completeness cannot be guaranteed. The opinions expressed in this document/material are subject to change without notice and have no obligation
to tell you when opinions or information in this report change. This report or recommendations or information contained herein do/does not constitute or
purport to constitute investment advice in publicly accessible media and should not be reproduced, transmitted or published by the recipient. The report
is for the use and consumption of the recipient only. This publication may not be distributed to the public used by the public media without the express
written consent of PIBM. This report or any portion hereof may not be printed, sold or distributed without the written consent of PIBM. This document
does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything contained herein
shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you solely for your
information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other perso n. The opinions and
projections expressed herein are entirely those of the author and are given as part of the normal research activity of PIBM and are given as of this date
and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report and there can be no
assurance that future results or events will be consistent with any such opinions, estimate or projection. This document has not been prepared by or in
conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its directors or any other person. Information in this
document must not be relied upon as having been authorized or approved by the company or its directors or any other person. Any opinions and
projections contained herein are entirely those of the authors. None of the company or its directors or any other person accepts any liability whatsoever
for any loss arising from any use of this document or its contents or otherwise arising in connection therewith. The information contained herein is not
intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of
this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market
and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Securities Market.

PIBM Private Limited

Corporate Office: 605/1 Lavasa Road, Pirangut, Tal-Mulashi, Paud, Pune-411042, Maharashtra.

This document is meant for sole use by the recipient and is not for circulation.
This document is not to be reported, copied, forwarded, or made available to others Thursday 30th April, 2020