Cement Sector Report - SPA Sec

1

CEMENT SECTOR

Sensex: 29095 Nifty: 8806

THEME REPORT

Cement at the cusp of new growth phase - Southern region favourably placedCement industry being one of the essential sectors for economic growth in India remains a long term play. After twoyears of low single digit growth, we expect +11.3% CAGR in demand over next couple of years as infrastructureprojects and initiatives announced by the new government (Swachh Bharat Abhiyan, Freight corridors, Concreteroads, "Housing for All", Smart cities projects, etc) comes on stream. Cement/GDP multiplier after declining to 0.98xover FY10-14 (lowest levels for a full 5 year term of a government in the past 30 years) is expected to bounce backsharply to 1.82x over FY14-17.

Pace of capacity addition will witness structural slowdown (+50 mt over FY14-17E vis--vis +114 mt over FY10-14)as new projects at prevailing profitability levels are unlikely to be planned. Resultantly, industry utilizations willbottom out at 71.5% in FY14 (lowest since 1990) and improve at scorching pace to 85.8% in FY17 owing to expectedimprovement in demand and considerable decline in capacity additions.

Consolidation is expected to gain momentum as a) large cement producers having cash rich balance sheet wouldprefer inorganic route to expand owing to various bottlenecks in organic expansion, b) balance sheet of mid capcompanies are over leveraged resulting in sub-par profitability levels, c) expectations of sellers have tapered offlate (as evident in recent M&A deals which have been done at

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Investment Rationale 3-14

Cement/GDP multiplier to bounce back from 0.59x in FY14 to 1.61x in FY17 3

Cement demand to grow at 10.5% CAGR over next 3 years 4-6

Swachh Bharat Abhiyan 4

Concretization of roads 4

Dedicated freight corridor project 4

"Housing for All" with higher allocation for rural housing 5

Stress on low-cost housing programme 5

Rural Roads under Pradhan Mantri Gram Sadak Yojana 5

Metro projects 6

Smart cities projects 6

Rising entry barriers limiting new capacity additions 7-10

Average set up time for green-field plant has doubled 7

Increasing cost of setting up new unit resulting in single digit RoCE 7

Smaller cement companies - leveraged balance sheet & Large producers to prefer inorganic route 8

Linkages of raw materials like limestone also serve as an entry barrier 9

Industry utilizations bottomed out, substantial improvement in south imminent 11

New State formation leads to more than double digit growth 12

Southern Region - Muted demand to be a history 12

Costs pressure ebbing, margin improvement on anvil 13

Outlook 15

Companies Section 16-22

Orient Cement 17-19

The Ramco Cements Ltd 20-22

TABLE OF CONTENTS

Cement Sector Contents Investment Rationale Outlook Orient Cement The Ramco Cement

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Investment RationaleCement/GDP multiplier to bounce back from 0.59x in FY14 to 1.61x in FY17Cement demand has historically grown in tandem with economic growth owing to high correlationwith gross domestic product (GDP) growth - directly as well as indirectly. Directly, becauseinfrastructure investment and construction activity, accounting for +40% of cement demand, arethe key components of GDP. Indirectly, because housing (both rural and urban), again a keydeterminant accounting for ~60% of cement demand, depends on agricultural productivity andincome levels, which in turn are the key components of GDP.

Cement demand in India has historically increased at 1.2x the GDP growth rate over the past twodecades. The Cement demand/GDP growth ratio has remained highly volatile throughout, expandingto 2.4x of GDP during the upcycle and contracting to 0.5x of GDP during the downcycle. This growthmultiplier has declined to 0.98x over FY10-14 and was at the lowest levels for a full 5 year term ofa government in the past 30 years.

Cement/GDP multiplier to recover from lows

-5.0

0.0

5.0

10.0

15.0

20.0

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

E

FY16

E

FY17

E

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

GDP (%) Cement Demand (%) Multiplier (RHS)

Source: CMA, RBI, SPA Research

Given the new government's significant focus on large infrastructure development, Freight corridors,Concrete roads, "Housing for All", Smart cities projects, etc in addition to expected recovery indemand from ailing South India, we expect the cement/GDP multiplier to bounce back sharply to1.82x over FY14-17 (from 2.8% demand growth in FY14 to 13.2% in FY17). Historically we havewitnessed similar demand pull with the launch of golden Quadrilateral project (connecting 4major metros) and other major highway projects during the NDA regime a decade ago.

Demand boost from Golden Quadrilateral project

0

500

1000

1500

2000

2500

FY01 FY02 FY03 FY04 FY05 FY06 FY07

0

2

4

6

8

10

12

14

Completion (kms) Cement Growth (%)

Source: SPA Research


Cement/GDP multiplier expandsfrom 0.5x during downcycle to 2.4xduring upcycle.

to bounce back sharply to 1.82xover FY14-17

Golden Quadrilateral project resultedin +15 mt incremental cement demandduring execution period..

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Cement demand to grow at 10.5% CAGR over next 3 yearsCement demand after remaining subdued for the past two years (sub 4%) is expected to reboundsharply by clocking a growth of ~11.3% over FY14-17. While consumption is expected to improve by7.3% YoY in FY15 (owing to low base last year), we expect sharp uptick of 13.6% in FY16 and 13.2%in FY17 as infrastructure projects and initiatives announced by the new government comes onstream. We provide a bottom up framework of key demand drivers of cement below:-

a) Swachh Bharat Abhiyan - Government is looking to build 110 mn toilets across rural India in next5 years. Incremental cement demand owing to this sanitation drive would be ~44 mt (8.8 mt p.a),given 8 bags of cement are required per toilet.

Clean India campaignNo. of toilets to be built across Rural India (mn) 110

Cost of setting up a toilet (INR) 20000

No. of cement bags required/toilet 8

Cement demand over 5 years (mt) 44

Cement demand p.a (mt) 8.8

b) Concretization of roads - Government is planning to construct 45000 km of concrete roads overnext 5 years. Incremental cement demand owing to this would be 40 mt (8.1 mt p.a), given quantityof cement used for concrete roads/km is 900 tons (vis a vis 170 tons of bitumen).

Usage of cement to make concrete roadsConcrete roads to built over 5 years (km) 45000

Quantity of cement used for concrete roads/km (tons) 900



c) Dedicated freight corridor project - DFCCI is expected to build 3323 km long dedicated freightcorridor (DFC) between Eastern and Western regions as part of two such corridors proposed inEast - West and North -South India. Total opportunity size is INR 958 bn and full commissioning ofboth the eastern (EDFC) and western (WDFC) corridors is likely between March and December2019. Out of this, total amount to be incurred on Civil works is ~INR 665 bn based on INR 200 mn/km. Amount to be incurred on cement consumption is INR 166 bn (25% of civil work). Thereforeincremental demand of cement over next 4 years @ INR 270/bag is 31 mn tn i.e 7.6 mt p.a.

Source: DFCCIL, SPA Research

Length of dedicated freight corridor (km) 3323

Amount to be Spent (bn) 958

Exp. on Civil works @ INR 200 mn/km (bn) 665

Exp. on Cement @ 25% of civil work 166

Cemand demand over 4 years @ 270/bag (mt) 30



Western DFC:Haryana 192 kmsRajasthan 553 kmsGujarat 588kmsMaharashtra 150 kms

Eastern DFC:Punjab 88kmsHaryana 72 kmsUttar Pradesh 1049 kmsBihar 93 kmsW-Bengal/Jharkhand 538kms

Dedicated Freight Corridor

........8.8 mtpa of incremental demand



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d) "Housing for All" with higher allocation for rural housing - Rural housing demand accounts for+30% of overall cement consumption and is largely driven by conversion of 'Kutcha' homes (mud orthatch) into Cemented homes. With an aim to provide "pucca houses to all" by 2022, governmenthas launched new more powerful rural housing scheme, National Gramin Awaas Mission, whereinit has doubled the allocation per house to INR 1.5 lakh and increased the unit size to 30 sq mt (20sq mt previously) with toilet and bathing space as its integral part. The government proposes toconstruct 32 mn houses over a period of 8 years with a minimum annual target of 2.5 mn houses.Incremental cement demand owing to this thrust would be 129 mt over the next 8 years (16.1 mtpa),given 4 tonnes of cement is required per house.

Cement requirement under new rural housing scheme GRAMTotal housing shortage (mn) 32

Min . annual target of new houses (mn) 2.5

Minium size (sq mt) 30

Govt assistance (Rs) 150000

Cost of house (Rs) 225000

Cement component % 10%

Cement required (tonnes/house) 4.0


e) Stress on low-cost housing programme - In-line with their manifesto, government has beenpromoting low cost housing by providing various exemptions inform of increasing interest exemptionon housing loans by INR 50000 and sanctioning INR 40 bn to the National Housing Board forpromoting affordable housing. Currently India faces a shortage of 22 mn houses which is expectedto escalate to 30 mn by 2020 owing to increasing urbanization. Incremental cement demand wouldbe immense given ~40kg of cement is required per sq ft of residential building.

Urban Housing Shortage (mn)

1518

25

1921

1922

30

0

5

10

15

20

25

30

35

2001 2005 2007 2008 2010 2012 2014E 2020E

Source: MHUPA 2012, SPA Research

f) Rural Roads under Pradhan Mantri Gram Sadak Yojana (PMGSY) - 35000 km of new rural roads areto be built under Pradhan Mantri Gram Sadak Yojana (PMGSY) each year. Assuming 20% of totalrural roads to be made concrete, incremental cement demand per year owing to this works out to1.4 mtpa, given 200 tons of cement is used per km

Rural Roads under Pradhan Mantri Gram Sadak Yojana (PMGSY)km of new rural roads to be built pa 35000

Cement used per km (tonnes) 200

km of concrete roads @ 20% 7000

Cement required (mt) 1.4


........16.1 mtpa of incrementaldemand


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g) Metro projects - Around 931 kms of new metro lines are under different stages of planning/implementation, which if allotted, would lead to addition cement demand of 23 mt given 25000tons of cement is required per km.

Source: IBEF, SPA Research

h) Smart cities projects - The government plans to build smart cities across the country and hasallocated INR 71 bn for 100 smart cities. The plan provides a fillip to infrastructure development,housing and in turn would boost cement demand.

Broadly taking into account all the above factors, incremental cement demand per year would bemore than 45 mt. It is important to note that normally, yearly demand increase of more than 25 mthas not been witnessed in past several years. Taking cues from past, mega infrastructure projectshave always driven cement demand during execution period. Golden quadrilateral project (2001-2012, but ~90% completed by FY06) which comprised connecting 4 metros through 4/6-lane nationalhighway network of total length of 5846 km had led to incremental cement demand to the tune of~15 mt during execution period aiding 2-3% additional annual growth.

Incremental demand outpacing supply (mt)

0

10

20

30

40

50

60

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Incremental Supply Incremental Demand

Source: CMA, SPA Research

Growing number of Metro Projects


........23 mt of incremental demand

..+45 mtpa of incremental demandvis--vis less than 25 mtpa for pastseveral years

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Rising entry barriers limiting new capacity additionsWe expect pace of capacity addition to structurally slowdown in coming years on the back of increasinggestation period, difficulty in getting various clearances, coal linkages, limestone availability andsub-par returns enjoyed based on current replacement cost. We highlight some of the major issueswhich will create hurdles for cement producers to add further new capacities over next 4 years:-

a) Average set up time for green-field plant has doubled - The time required to set up a green-fieldcement plant has more than doubled from ~3 years earlier to over 6 years now, owing to severe'policy paralysis' of the erstwhile central government, which made land acquisition difficult (Theclause requiring mandatory consent of 80% of owners for private projects and consent of 70% landownersfor PPP projects under the 'Land Acquisition Bill' 2013, has made acquisition of land more difficult),obtaining environment/forest clearances time consuming in addition to difficulties in obtainingmining licenses, sand mining bans, coal linkage issues etc. While some of this is expected to beresolved by new government, threat of new capacity addition in the next 3-4 years remains low.

Increasing time period to set up a new cement unit

~36 months

~12 months

~20 months

~12 months

~34 months

~30 months

Now

Previously

Land Acquisition Environmental clearances Plant build up

Source: A.T.Kearney Analysis, SPA Research

b) Increasing cost of setting up new unit resulting in single digit RoCE - Cost of setting up newintegrated cement unit has increased at +7% CAGR over last 4 years to INR 7500/tn largely driven bysurging land prices, increasing construction costs and general inflation. This in addition to risingoperational cost will deter players to add further capacities given the current cement prices. Atcurrent realisations of INR 300/bag (INR 6000/tn) and assuming new green-field capacity works atcapacity utilization of 80%, RoCE works out to mere 4.2%. The same improves to 8.7% if the realisationimproves to INR 330/bag. Assuming cost of capital if 12%, cement realisations need to improve toINR 352/bag for the investment to become viable.

Single digit return at prevailing pricesCapacity (mt) 2.0 2.0 2.0Capex (INR mn) @ INR 7500/tn 15000 15000 15000D/E 0.7 0.7 0.7CAUT (%) 80% 80% 80%Production/Sales 1.6 1.6 1.6Gross Realisations/tn 6000 6600 7040Net Realisations/tn 4260 4686 4998Revenue 6816 7498 7997Operating Cost @ INR 3400/tn 5440 5440 5440EBIDTA 1376 2058 2557Dep Exp. @ 5% 750 750 750EBIT 626 1308 1807RoCE 4.2% 8.7% 12.0%


.....threat of new capacity additionremains low over next 4 years

.....replacement cost has surged to INR7500/tn

RoCE 4.2% at 80% caut @ INR 300/bag.Pricing needed to cover capital costINR 352/bag

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Break-even EBIDTA, for a 1 mtpa capacity, operating at 80% utilization, and assuming a 70:30 debtto equity ratio, works out to ~INR 1125/tonne. In other words, this is the minimum a new cementcapacity must earn in order to provide for depreciation and interest costs. However average annualEBITDA/tonne earned by the industry over past 4 year is ~INR 820/tonne. Hence setting up newcapacities will not be feasible until cement demand and prices head northwards.

Break even analysis for a new green-field unitCapacity Utilization assumed (%) 100% 80% 100% 80%

Project Cost @ 1 mt (INR mn) 7500 7500 7500 7500

Debt (%) 70% 70% 50% 50%

Debt (INR mn) 5250 5250 3750 3750

Equity (INR mn) 2250 2250 3750 3750

Dep Cost @ 5% of Gross Block 375 375 375 375

Int Cost @ 10% of Loan 525 525 375 375

Total capital cost (INR mn) 900 900 750 750

Breakeven EBITDA (Rs mn) 900 900 750 750

Breakeven EBITDA per MT (INR) 900 1125 750 938

c) Smaller cement companies - leveraged balance sheet & Large producers to prefer inorganic route- Around 63 mt of new capacities has been added over the past three years out of which more than60% of capacity addition has been done by mid-cap cement companies. This has resulted in overleveraging of their balance sheet making incremental expansion challenging.

Further although large cement producers enjoy strong cash rich balance sheets, we believe theywould go for inorganic route for expanding capacities as expectations of sellers have tapered off abit (as evident in recent M&A deals which have been done at

9

d) Linkages of raw materials like limestone also serve as an entry barrier - Availability of limestone,which is a key raw material in manufacturing cement, is limited to few states like Andhra Pradesh,Karnataka, Rajasthan, Gujarat and Madhya Pradesh, thus resulting in concentration of cementunits in these states. Southern region which accounts for 49% of limestone resources is alreadyflooded with large surplus cement capacities and hence is unlikely to witness any large capacityaddition (2.2% CAGR over FY14-17). Further total available cement grade limestone reserves in thecountry is ~90 bn tonnes and are expected to last only for another 35-41 years.


Again domestic reserves of gypsum which is another key input material for cement production isfast depleting. Reserves currently stand at ~125 mt, 99% of which is in Rajasthan, and is goodenough to last only till 2022 end.

Cement Clusters largely concentrated in southern region


.....99% of gypsum reserves inRajasthan, enough to last till 2022 end

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Domestic coal supply has also become a major bottleneck. Post 2007, cement manufacturers havenot been granted new coal linkages. Even in cases where linkages have been granted, actual supplyagainst linkages is very poor. Recently, there have been scams in coal block allocation and severalblocks which were allotted earlier were cancelled. Given this scenario, we believe that acquiringnew linkages will be more difficult going forward and manufacturers will have to import coal fortheir needs.

Linkage coal availability declining (% mtpa)

70% 65%50% 41% 35%

5% 7%17%

17% 32%

17% 15% 21%26% 15%

8% 13% 11% 16% 18%

19 23 29 26 30

0%

20%

40%

60%

80%

100%

120%

140%

FY04 FY06 FY08 FY10 FY12

Linkage Open Market Import Lignite/petcoke

Source: A.T.Kearney Analysis, SPA Research

We henceforth expect pace of capacity additions to slow down to a CAGR of 4.7% for FY14-FY17E(10.7% over FY10-14), as new projects at prevailing profitability levels are unlikely to be planned.Although we expect 50 mt of new capacity to be added over 3 years (vis--vis 114 mt over FY10-14),there is a downside risk to our estimates owing to likehood of some delays as has been the casehistorically.

Capacity additions declining

0

10

20

30

40

50

60

FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

-60%

-10%

40%

90%

140%

Capacity Addition % Increase



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Industry utilizations bottomed out, substantial improvement in south imminentWith all India cement consumption slated to grow at 11.3% CAGR over FY14-17 and capacityaddition to rise at mere 4.7% during the same period, industry utilization has bottomed out at71.5% in FY14 (lowest levels since FY1990, Capacity CAGR 10.7% over FY10-14 - 2.2x demand CAGR).While incremental supply of 50 mt is expected over FY14-17, improving demand environmentwould result in incremental demand of 92 mt. As a result we expect capacity utilization to improvegradually to 79.8% in FY16 and to 85.8% in FY17. The surplus capacity (as a % of effective supply)is expected to decline from 28.5% in FY14 to 14.2% in FY17.

Demand improving, Utilizations bottoming out

Particulars FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17EInstalled Capacity (mt) 166 198 221 274 307 321 340 358 376 393 399Effective Capacity (mt) 165 176 203 227 278 307 326 341 361 381 391% Growth 5.0% 8.0% 14.0% 17.0% 22.1% 10.4% 6.4% 4.5% 5.7% 5.8% 2.6%Production (mt) 154 168 181 201 211 228 235 244 261 304 336% Growth 5.0% 8.0% 14.0% 17.0% 4.9% 8.1% 3.2% 3.6% 7.2% 16.4% 10.4%Capacity utilisation 93.3% 95.5% 89.2% 88.5% 76.0% 74.4% 72.1% 71.5% 72.5% 79.8% 85.8%Consumption 148 164 177 201 212 227 236 242 260 295 334% Growth 10.0% 10.8% 7.9% 13.6% 5.3% 7.0% 3.9% 2.8% 7.3% 13.6% 13.2%


Unlike previous years, demand pick up is expected to be broad based across India with South Indiawitnessing highest incremental demand of 23 mt over FY14-17 as compared to 21 mt in North, 18 mtin West and 15 mt each in East and Central region.

Broad based demand pick up

Region FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17ENorth 30 34 35 38 42 46 48 51 55 63 71South 44 49 54 56 56 55 58 58 61 70 80East 24 25 28 33 35 39 41 42 45 51 57West 28 32 34 44 45 51 51 53 56 64 71Central 22 24 26 31 34 36 38 39 42 48 54


In terms of capacity utilization, Southern region, which witnessed sub-par utilization of 51% in FY14(owing to 13.1% CAGR in capacity built up vis-a vis mere 0.9% CAGR in demand over FY10-14), isexpected to register 26 ppts gain utilization levels to 77% in FY17 aided by demand pick up post thecreation of two new states from the erstwhile Andhra Pradesh. Also southern region having largesurplus capacity is expected to meet some of demand requirement of Maharashtra (imported 15mt in FY14, 40% from South) and eastern region (imported 4 mt in FY14), owing to lack of sufficientcapacity in both the regions.

In contrast to the South, while Eastern region is expected to operate at 85% utilization levels, rest ofthe regions are expected to operate in excess of 90% utilisation levels on the back of better demandand lower capacity addition.

Ramp up in utlisations fuelled by sharp improvement in southern region

Region FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

North 99% 100% 86% 94% 82% 87% 88% 87% 87% 85% 91%

South 93% 96% 89% 76% 61% 55% 52% 51% 52% 66% 77%

East 88% 87% 87% 87% 81% 81% 81% 80% 82% 86% 85%

West 94% 98% 89% 97% 83% 85% 86% 88% 89% 94% 94%

Central 94% 97% 99% 105% 97% 93% 86% 82% 80% 88% 94%



.....FY14-17 Consumption CAGR 11.3%& Capacity addition CAGR 4.7%, resultin 1430 bps surge in caut to 85.8% inFY17

South India witnessing highestincremental demand of 23 mt....

.....will result in 26 ppt gain in caut to77% in FY17

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New State formation leads to more than double digit growthHistorically we have seen that new state formations result in significant increase in cement demandowing to pick up in construction activities in both the parent and the new state. This was seen in 3different cases when states of Chattisgarh, Jharkhand and Uttarakhand came out of states ofMadhya Pradesh, Bihar and Uttar Pradesh respectively, wherein consumption in all cases hadregistered significant growth after creation of new states.

We believe this is a strong evidence and expect similar demand pull in Andhra Pradesh (AP) with theformation of Telengana as more than INR 10 bn is expected to be incurred on cement consumptionover next 5 years (since INR 200 bn has been earmarked for next 5 years and at-least 5% is assumedto be on cement), which translates into incremental cement demand of 6 mtpa. This is significantconsidering AP's cement demand has declined by 22% over past five years to mere 14 mt in FY14 asagainst peak demand of 18 mt in FY09.

Southern Region - Muted demand to be a historySouth India after negligible demand growth over past 5 years is expected to grow by leaps andbounds post bifurcation of Andhra Pradesh - the largest manufacturing and consuming market inthe southern region - into Telangana and Seemandhra.

Some of the factors that would drive the cement demand in the region area) Creation of new capital city (investment in airport, public infrastructure, etc) and associated

infrastructure to be built for Seemandhra,b) +INR 1.5 trillion worth of irrigation projects in AP and Telangana over 7-8 years (cumulative

demand of ~38 mt),c) the Vizag-Chennai Industrial Corridor (investment of +INR 1000 bn),d) Planned power generation capacity expansion in both Andhra Pradesh and Telangana,e) developing Kakinada as a hardware manufacturing hubf) Launch of low cost housing program by the Telangana and AP government,g) building a smart city in Krishnapatnam in the Nellore district of Andhra Pradesh as part of the

Chennai-Bangalore Industrial Corridorh) Robust pent-up demand and revival in investment cycle,i) Revival in the real estate market (property transactions recorded 28% growth in Hyderabad post

the split) andj) Stable government at the centre.With business friendly Mr. Chandrababu Naidu as Chief Minister of Seemandhra, it is only a matterof time that big projects are being implemented. During his earlier term as Chief Minister of AP,cement demand grew at +20% on an average every year.

Cement Consumption - Before formation of New States Cement Consumption - After formation of New States



+INR 10 bn to be incurred on cementconsumption in Telengana over next 5yrs. 6 mtpa of incremental cementdemand.

13

Strong demand recovery of 11.8% CAGR between FY14-FY17 in Southern region (0.9% over FY10-14) in addition to 2.2% CAGR in capacity additions (13.1% over FY10-14), would result in sharpimprovement in capacity utilizations from 51% in FY14 to 77% in FY17. While we don't expect animmediate sharp pick-up in cement dispatches in the region, we see a meaningful improvement ininfrastructure led demand from H2FY16.

Worst over for Southern Region

Particulars FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Effective Capacity (mt) 57 67 81 102 117 128 133 137 141 142

% Growth 8% 18% 21% 26% 14% 9% 4% 3% 3% 0%

Production (mt) 54 60 62 62 65 66 68 71 93 109

% Growth 10% 11% 3% 1% 4% 2% 2% 5% 30% 18%

Capacity utilisation 95% 90% 76% 61% 55% 52% 51% 52% 66% 77%

Consumption 49 54 56 56 55 58 58 61 70 80

% Growth 11% 10% 3% 1% -2% 5% 0% 5% 15% 16%


Costs pressure ebbing, margin improvement on anvilCement Industry has been facing severe cost pressure over the past five years (cost/tonne hasescalated at +9% CAGR from FY08 onwards) largely owing to surge in Power & Fuel and Freight rateswhich together accounts for 57% of overall operating cost (P&F 29% + Freight 28%).

While P&F costs have escalated (by ~8% CAGR over FY08-14) owing to a) reduction in linkage coaland (from 64% in FY07 to 38% in FY14, given no new linkage coal was allotted post FY07) rise in e-auction coal prices b) surge in imported coal prices (almost doubled over FY08-14) and c) rupeedepreciation, freight rates have soared (by +11% CAGR over FY08-14) owing to a) increasing dieselprices (+9% CAGR) leading to higher road transportation cost and increase in railway freight ratesb) longer lead distance. This coupled with sharp decline in utilization levels for past few years hasmade matter worse for cement players.

However the tide has changed in favour of cement industry off-late with the industry expected tobenefit from all fronts.

a) Firstly, trend of increasing international coal price is behind us. With +12% decline over averageFY14 prices, we expect coal prices to remain subdued owing to weak demand from developedcountries & dwindling growth prospects in China, the world's biggest user, producer and importerof coal. IEA sees coal demand to grow at 2.1% CAGR through 2019. This bodes well for cementcompanies importing coal from Indonesia, South Africa and pet coke from the US gulf region,more so in current times when there is severe shortage of coal availability domestically. Furtherthis benefit of lower coal/pet coke prices are expected to get reflected in P&L from currentquarter onwards as cement companies usually holds 4-6 months on coal inventory.

.....Power & Fuel cost moving in tandem

0

2000

4000

6000

FY08 FY09 FY10 FY11 FY12 FY13 FY14 H1FY15

0

500

1000

1500

Imported Coal price (INR/ton) Energy Cost (INR/ton) - RHS

Landed coal prices......

0

2,000

4,000

6,000

8,000

Dec

-04

Jul-0

5

Feb-

06

Sep-

06

Apr-

07

Nov

-07

Jun-

08

Jan-

09

Aug-

09

Mar

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep-

13

Apr-

14

Nov

-14



14

b) Secondly, freight costs (~28% of total costs) depend on diesel costs which in turn depend onglobal oil prices. Given the sharp decline in crude oil prices, diesel prices have declined by+15% (under recoveries over) and this is expected to percolate to freight rates. The industry willbenefit from lower rates on two counts - when selling cement to end users and when rawmaterial is transported to cement plants. The quantum of cost decline will depend on mode ontransportation i.e by road or by railway. Of the total cement produced in India, 64% of thecement dispatches are done through roads, whereas the balance is mainly transported throughrailways.

Road transportation rates have stayed firm as of now despite correction in diesel prices as a)transporters earlier suffered owing to increasing diesel prices as they were unable to pass onthe cost increase due to weak economic environment; b) restrictions on truck over-loading inlast few months. Hence we expect road freight rates to decline albeit slowly as transportersstart to pass on this price decline with a lag to cement companies.

Railway freight rates, which are determined through fuel adjustment component (FAC) and arerevised every six months, i.e., April and October, have increased +30% since March 2012. Nextreview is due on Q4FY15. We do not expect railway freight rates to rise materially in near term.

Diesel Prices cooling off (INR/lt).....

0

10

20

30

40

50

60

70

Jan-

08M

ay-0

8

Sep-

08Ja

n-09

May

-09

Sep-

09Ja

n-10

May

-10

Sep-

10Ja

n-11

May

-11

Sep-

11Ja

n-12

May

-12

Sep-

12Ja

n-13

May

-13

Sep-

13Ja

n-14

May

-14

Sep-

14

.....Freight cost having direct correlation

0

200

400

600

800

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c) Thirdly Packaging material cost (~4% of total costs) has already declined by +20% owing toglobal decline in polypropylene prices and is expected to remain under pressure given subduedcrude oil prices.

d) Fourthly fixed costs per tonne which accounts for 18% of operating cost/INR 600 per tonne, isexpected to moderate given expected improvement in utilizations levels by 1430 bps to 85.8% inFY17.

Hence with subdued cost inflation outlook coupled with improving demand and cement prices, weexpect margins and return ratios of cement companies to head northwards.

Declining diesel prices to reduce transportation costs



15

OutlookWe continue to remain positive on Indian Cement Industry as utilisation levels across the industryis set to accelerate at scorching pace owing to expected improvement in demand and considerabledecline in capacity additions. After two years of low single digit growth, we model a demand CAGRof 11.3% over FY14-17 as infrastructure projects and initiatives announced by the new governmentcomes on stream. Unlike the recent past, we expect south based cement companies to participatedominantly in next leg of growth as working environment would be more conductive for firmsoperating in that region. This is owing to:-

Firstly, demand improvement would be sharper in southern region as infrastructure builds outin the newly created states.

Secondly, owing to already surplus capacity, new addition would be least in South (at 2.2%CAGR over FY14-17 vis--vis 6.3% CAGR ex-south).

Thirdly, surplus capacity would come in handy as companies based in southern region willpartially cater to incremental demand from Maharashtra and eastern region, owing to lack ofsufficient capacity in both the regions.

Fourthly, since South Indian cement players are largely dependent on imported coal, decliningcoal prices would provide comfort on energy front.

We henceforth initiate coverage on Orient Cement and The Ramco Cement as they remain bestplaced to benefit from recovery in southern region.

We choose to ignore India Cements owing to its mounting debt of INR 34 bn (Debt/EBIDTA 7.0x) andinefficient operations. ICL's return ratios would continue to remain depressed in low single digitsas more than 35% of company's balance sheet remains invested in non-core assets like advances/investments in various related party entities resulting in miss-allocation of capital. Despite theongoing restructuring activities in the company to pare debts, since nothing concrete is expected innear term that will materially address cash flow concerns from consolidated entity point of view.Plans of monetizing its non-core assets have not yielded any fruits till date. Board's approval forQIP of INR 5 bn if done at prevailing rates (INR 89) would result in dilution of more than 18%.

Dalmia Cement too was ignored as it continues to remain in investment phase with expected peaknet debt of ~INR 59 bn resulting Debt/EBIDTA of 12.4x. While utilization levels are expected toimprove, free cash flows would continue to remain weak owing to higher interest outgo. Though itwill also benefit from expected recovery in south demand, given the sharp run up and weak balancesheet, risk reward at current valuations, is unfavorable.


16

Company MCAP CMP Target(INR bn) (INR) (INR)

Orient Cement 35.84 175 224

The Ramco Cement 78.02 328 421

CompaniesSection


17

Orient Cement Ltd.CMP: INR 175 Target: INR 224

Orient Cement, a CK Birla group company incorporated in 1979, is a mid-sized south based cement manufacturer with a capacityof 5 mtpa (3 mt in AP & 2 mt in Maharashtra) and captive power capacity of 50MW. One of the lowest cost producer, OCL, has adealer network of +2750 dealers & enjoys +25% market share in AP, Telengana & pockets of Maharashtra. We recommend a BUYon the stock with a target of INR 224.

Market Presence - Encouraging demand outlookOCL's market mix is skewed to Maharashtra and Telangana (marketleader in Khandesh, Marathwada, Vidarbha in Maharashtra andTelengana, with +25% MS) which together account for 80-85% ofits cement sales. It is well placed to benefit from demand recoveryin South India given 60% of its current capacity is located in theregion & additional 3 mt capacity will be commissioned atKarnataka by Q1FY16. Also existing plants at Devapur and Jalgaonwill dispatch some of their output to newer markets of MP andChhattisgarh. Resolution of Telengana-Seemandhra dispute alongwith progressive state governments in OCL's key markets willdrive cement demand going forward. We expect OCL to registervolume CAGR of 15.3% over FY14-17.

Capacity expansion to aid growthTo fuel next leg of growth, OCL is expanding its cement capacity by60% by setting up 3 mt integrated green-field unit in Karnataka alongwith 45 MW CPP & 7 MW WHRP at a capex of INR 17 bn. The plant isexpected to commence operations by Q1FY16 and has sufficientlimestone reserves to go for a further 3 mt expansion at the same site.

Targeting to be 15 mt company by 2020OCL is targeting to be 15 mt cement company by 2020. Althoughnothing concrete has been finalized yet, OCL is eyeing a Greenfieldexpansion of ~2 mt in North, acquisition of ~2 mt in Central Indiaand ~3 mt brownfield expansion in Devapur/Gulbarga.

Most cost efficient producerOCL is amongst the most cost efficient cement company with9MFY15 cost/tonne of ~INR 3051 (industry avg. INR 3200/tonne)owing to (a) Proximity to both input resources and end-market

Shareholding (%) Dec-14

Promoters 37.50

FIIs 7.35

DIIs 30.33

Others 24.82

Relative Price Performance

Key Data

BSE Code 535754

NSE Code ORIENTCEM

Bloomberg Code ORCMNT IN

Reuters Code ORCE.BO

Shares O/S (mn) 204.90

Face Value 1

Mcap (INR bn) 35.84

52 Week H/L 200.00/36.75

2W Avg. Qty, NSE 239896

Free Float (INR bn) 22.40

Beta 1.12

INR mn FY14 FY15E FY16E FY17E

Net Sales 14385 16342 21312 27698

Growth (%) -4.20% 13.61% 30.41% 29.97%

EBITDA Margin % 14.93% 19.45% 22.29% 24.06%

APAT 1014 1760 2045 2829

Growth (%) -37.39% 73.55% 16.16% 38.34%

EPS 4.95 8.59 9.98 13.81

P / E 9.66 20.36 17.52 12.67

P / BV 1.18 3.79 3.32 2.83

EV/EBIDTA 5.47 14.96 10.25 6.90

Net Debt-Equity 0.30 1.33 1.25 0.83

RoACE (%) 16.25 16.30 16.89 22.64

RoAE (%) 12.80 19.85 20.21 24.13

thus capitalising on the best pricing scenario across regionsand resulting in lower lead distance of 300km; (b) Proximityto captive limestone (2 km away from the Devapur plant) andcoal mines (sourced from Singareni Collieries which is 40 kmfrom the Devapur plant); (c) Higher PPC mix of 73-75%(>industry ~60%) ensuring higher CC conversion ratio; (d) 50MW CPP with power consumption of ~70 unit /tn & coalconsumption of ~720 kCal/tn.

Financial OutlookOCL is expected to register revenue CAGR of 30.2% over FY15-17aided by 22.5% & 6.5% CAGR in cement volumes & realisationsrespectively. Operating margins are expected to improve by 461bps to 24.1% in FY17 on the back of 18.2% CAGR in improvementin EBIDTA/tonne to INR 1033 owing to benign operating costs. NetProfit is expected to register a CAGR of 26.8% owing to surge ininterest & depreciation expenses post expansion.

Outlook & ValuationOCL with its large distribution network, remains best placed tobenifit from demand revival in AP & Telengana region. Beingamongst the lowest cost cement producer, OCL enjoys industryleading return ratios and has successfully captured higher marketshare despite muted industry growth. With capacity expansionon track, we expect revenue and net profit to register a CAGR of30.2% and 26.8% respectively over FY15-17E. Any visible progresson plans of becoming a 15 mt company by 2020 would lead torerating of the company. We recommend a BUY on the stock witha target of INR 224 based on an average of 9.0x FY17 EV/EBIDTA &FY17 EV/tonne of INR 6600.

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Demand surge + Benign costs = Improved Profitability

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Valuation Snapshot:Particulars Value/Share

A) Replacement Cost

No of shares (mn) 204.9

Capacity (MTPA) - FY17 8.0

EV/Tonne Multiple 6600

Target EV (INR mn) 52800 258

Less: Net Debt 10567

Target 42233 206

B) EV/EBIDTA

EBIDTA (mn) - FY17 6664

EV/EBIDTA Multiple 9



Target 49410 241

Target Price 224


19

FinancialsIncome Statement

Y/E March (INR mn) FY14 FY15E FY16E FY17E

Net Sales 14385 16342 21312 27698

Growth (%) -4.20% 13.61% 30.41% 29.97%

Power & Fuel Cost 3893 4301 5464 6949

Selling & Dist Exp 4068 4494 5570 7084

Total Expenditure 12237 13164 16563 21034

EBIDTA (without OI) 2147 3178 4749 6664

Growth (%) -32.61% 47.99% 49.45% 40.32%

EBITDA Margin % 14.9% 19.4% 22.3% 24.1%

Depreciation 563.8 469.6 809.2 1136.3

EBIT 1584 2708 3940 5528

EBIT Margin % 11.0% 16.6% 18.5% 20.0%

Interest Expenses 144 150 956 1362

Other Income 93 55 60 63

EBT 1532 2613 3044 4229

Tax Expenses 522 853 999 1400

PAT 1010 1760 2045 2829

Exceptional/Extraordinary Items (4) 0 0 0

APAT 1014 1760 2045 2829

Growth (%) -37.39% 73.55% 16.16% 38.34%

APAT Margin (%) 7.05% 10.77% 9.60% 10.21%

Balance Sheet


SOURCES OF FUNDS

Share Capital 205 205 205 205

Reserves 8083 9248 10579 12455

Total Networth 8288 9453 10784 12660

Minority Interest 0 0 0 0

Secured Loans 824 7884 8678 9018

Unsecured Loans 2463 5003 5568 2678

Total Debt 3286 12886 14245 11695

Total Liabilities 11574 22339 25029 24355

APPLICATION OF FUNDS

Net Block 8256 8008 24629 23743

Capital Work in Progress 3276 16376 720 800

Investments 0 0 0 0

Total Current Assets 4081 3744 5322 6668

Total Current Liabilities 2773 4503 4339 5539

Net Current Assets 1308 (759) 983 1128

Net Deferred Tax (1266) (1286) (1303) (1316)

Total Assets 11574 22339 25029 24355

Cash Flow


EBT 1532 2613 3044 4229

Depreciation 564 470 809 1136

Interest 144 150 956 1362

Inc./Dec. in working capital 160 1596 (1283) 179

Tax paid (550) (873) (1017) (1412)

Other Income (93) (55) (60) (63)

Cash from operations (a) 1758 3901 2449 5431

Inc./Dec. in investments (0) 0 0 0

Change in Fixed Assets (169) (222) (17430) (250)

Change in CWIP (2878) (13100) 15656 (80)

Others 37 15 20 23

Cash from investments (b) (3010) (13307) (1755) (307)

Inc./Dec. in capital 0 0 0 0

Inc./Dec. in debts 1797 9600 1359 (2550)

Dividend paid (307) (512) (615) (820)

Interest paid (144) (150) (956) (1362)

Others (41) (3) (25) (68)

Financial cash flow ( c ) 1305 8935 (236) (4799)

Opening cash balance 763 816 345 804

Cash Flow during the year (a+b+c) 53 (471) 459 324

Closing cash balance 816 345 804 1128

Key Ratios

Y/E March FY14 FY15E FY16E FY17E

Per Share Data (INR)

Adjusted EPS 4.95 8.59 9.98 13.81

CEPS 7.57 10.79 13.84 19.29

DPS 1.50 2.50 3.00 4.00

BVPS 40.45 46.13 52.63 61.79

Return Ratios

RoACE (%) 16.25 16.30 16.89 22.64

RoAE (%) 12.80 19.85 20.21 24.13

Balance Sheet Ratios

Net Debt-Equity Ratio 0.30 1.33 1.25 0.83

Current Ratio 1.47 0.83 1.23 1.20

Interest Cover Ratio 11.65 18.43 4.19 4.11

Efficiency Ratios

Total asset turnover 1.39 0.96 0.90 1.12

Inventory Days 21 22 23 22

Debtors Days 18 15 13 12

Creditors Days 38 41 36 36

Valuations

P / E 9.66 20.36 17.52 12.67

P / BV 1.18 3.79 3.32 2.83

Dividend Yield (%) 3.14% 1.43% 1.72% 2.29%

Market Cap / Sales 0.68 2.19 1.68 1.29

EV/EBIDTA 5.47 14.96 10.25 6.90


20

The Ramco Cements Ltd.CMP: INR 328 Target: INR 421

The Ramco Cements Ltd., established in 1961, is the fifth largest cement producer in the country and the second largest in south,with an integrated grinding capacity of 15.5 mtpa & CPP of 157 MW. It also produces Ready Mix Concrete & Dry Mortar productsand operates one of the India's largest wind farms with a capacity of 159 MW. TRCL remains the best bet to play the cementdemand recovery theme across South India. We henceforth recommend a BUY on the stock with a target of INR 421.

Best placed in southern regionTRCL, being the 2nd largest player with +12% MS in South India(Mix - TN 38%, Kerala 26%, AP 9%, KTK 11%, WB 10%, Others 6%) isbest placed to benefit from revival in cement demand. Its abilityto clock 5.6% volume growth over FY11-14 vs. 0.7% demand CAGRin South India, illustrates its superior brand presence (Tier-I brandenjoying higher prices, 60% retail segment).Cost efficient producerTRCL is one of the most cost efficient cement producers in SouthIndia, with cost advantage emerging from having CPP of 157MW, reducing energy consumption (down by 3 unit/tn to 81unit/tn) and strategic plant location (split grinding unit nearthe markets and clinker plant near the mines). In addition TRCLalso has a windmill capacity of 126 MW, out of which it is ableto produce and sell ~32 MW @ ~INR 3.2/unit to TNSEB.1 mt grinding unit & CPP - Cost savings lined upTRCL has adopted a strategy of setting up split grinding unitscloser to high growth markets and fly ash abundant areas (inTN, Karnataka and WB). This enables it to cater to demand in atimely manner and results in saving in transportation cost as itneeds to transport only clinker (sources fly ash from nearbyregion at negligible costs). TRCL is setting up a 1 mt grinding unitin Vizag (AP) at a capex of INR 3.5 bn by Q4FY15, to reduce thelead distance of transporting cement from TN to Orissa (by 500km from 1100 km currently).In addition TRCL is also expanding thermal capacity in Alathiyur,Ariyalur and Jayanthipuram by adding one more turbine of 6 MWeach, thereby increasing the CPP capacity by 10% to 175 MW at acapex of INR 1.25 bn.Dependency on imported coal - Blessing in disguiseDependency on imported coal would prove to be blessing indisguise for players like TRCL that depends largely on imported

Shareholding (%) Dec-14

Promoters 42.31

FIIs 18.02

DIIs 15.85

Others 23.82

Relative Price Performance

Key Data

BSE Code 500260

NSE Code RAMCOCEM

Bloomberg Code TRCL IN

Reuters Code TRCE.BO

Shares O/S (mn) 238.00

Face Value 1

Mcap (INR bn) 78.02

52 Week H/L 380.00/159.85

2W Avg. Qty, NSE 160872

Free Float (INR bn) 45.01

Beta 0.87

INR mn FY14 FY15E FY16E FY17E

Net Sales 36835 36769 42730 52704

Growth (%) -3.84% -0.18% 16.21% 23.34%

EBIDTA Margin (%) 15.31% 19.37% 19.95% 24.30%

APAT 1230 2392 3653 5968

Growth (%) -69.60% 94.46% 52.71% 63.38%

EPS 5.17 10.05 15.35 25.07

P / E 41.58 32.62 21.36 13.07

P / BV 2.06 2.93 2.65 2.29

EV/EBIDTA 12.31 13.31 11.06 7.37


RoACE (%) 6.57 9.85 12.05 19.02

RoAE (%) 5.07 9.29 13.02 18.79

coal to meet their energy requirements (Fuel mix - 75% importedcoal & balance through mix of petcoke & e-auction). +12% declinein international coal prices (vis--vis avg. FY14 prices) wouldresult in ~INR 50/tonne savings on P&F cost front.Capex plans almost overTRCL after more than doubling its capacities to 15.5 mt over thelast 5 years will complete most of its capex plans in the currentquarter. Debt levels will decline by INR 5.0 bn to INR 24.2 bn inFY17, led by improved profitability and strong operating cashflows. Net D/E is expected to steadily decline to 0.7x in FY17Evis-a-vis 1.2x in FY14. Subsequently, return ratios are expectedto improve by more than 3x to ~19% levels in FY17.Financial OutlookTRCL is expected to register revenue CAGR of 19.7% over FY15-17aided by 11.7% & 9.5% CAGR in cement volumes & realisationsrespectively. Operating margins are expected to improve by 493bps to 24.3% in FY17 owing to 20.1% CAGR in improvement inEBIDTA/tonne to INR 1318 on the back of benign operating costs.This along with declining interest expenses will result in 58.0%CAGR in Net profit over the same period.Outlook & ValuationTRCL remains one of our best mid cap bets to play to the cementdemand recovery theme in South India. Superior operatingprofitability, dominant market share backed by strong brandrecognition ensures buoyant growth prospects for the company.Having split grinding unit near to high consumption marketsminimizes transportation costs and helps in timely servicing ofthe demand. Return ratios too are expected to improve as RCL hasalready completed majority of its capex plans. We recommend aBUY on the stock with a target of INR 421 based on an average of9x FY17 EV/EBIDTA & FY17 EV/tonne of INR 6900.

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Ramco Cem Sensex


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Valuation Snapshot:Particulars Value/Share

A) Replacement Cost

No of shares (mn) 238.0

Capacity (MTPA) - FY17 16.5

EV/Tonne Multiple 6900



Target 95806 403

B) EV/EBIDTA

EBIDTA (mn) - FY17 13658

EV/EBIDTA Multiple 9



Target 104599 439

Target Price 421

Improving demand to drive volume growth

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FinancialsIncome Statement


Net Sales 36835 36769 42730 52704

Growth (%) -3.84% -0.18% 16.21% 23.34%

Cost of goods sold 6897 7087 8077 9335

Power & Fuel Cost 8324 7239 8235 9485

Employees Cost 2218 2171 2511 2930

Total Expenditure 31197 29647 34204 39896

EBIDTA (without OI) 5639 7121 8526 12808

Growth (%) -43.97% 26.30% 19.73% 50.22%

EBITDA Margin % 15.31% 19.37% 19.95% 24.30%

Depreciation 3063 2558 2793 2874

EBIT 2576 4563 5733 9933

EBIT Margin % 6.99% 12.41% 13.42% 18.85%

Interest Expenses 1890 1952 1772 1696

Other Income 857 720 785 850

EBT 1543 3332 4747 9087

Tax Expenses 166 940 1094 3120

PAT 1377 2392 3653 5968

Exceptional/Extraordinary Items 147 0 0 0

APAT 1230 2392 3653 5968

Growth (%) -69.60% 94.46% 52.71% 63.38%

APAT Margin (%) 3.34% 6.51% 8.55% 11.32%

Balance Sheet


SOURCES OF FUNDS

Share Capital 238 238 238 238

Reserves 24583 26415 29229 33798

Total Networth 24821 26653 29467 34036

Total Debt 29288 26473 25638 24244

Total Liabilities 54109 53127 55105 58280

APPLICATION OF FUNDS

Net Block 46411 48603 46011 43437

Capital Work in Progress 3542 2000 3500 4000

Investments 2834 3337 3337 4337

Total Current Assets 15898 14310 16714 21456

Total Current Liabilities 7203 8415 7768 8291

Net Current Assets 8695 5895 8946 13165

Net Deferred Tax (7374) (6709) (6689) (6659)

Total Assets 54109 53127 55105 58280

Cash Flow


EBT 1543 3332 4747 9087

Depreciation 3063 2558 2793 2874

Interest 1890 1952 1772 1696

Inc./Dec. in working capital (1410) 2509 (2515) (3323)

Tax paid (323) (833) (1424) (3090)

Other Income (857) (720) (785) (850)

Cash flow from operations (a) 3905 8797 4587 6395

Inc./Dec. in investments (176) (503) 0 (1000)

Change in Fixed Assets (2425) (4750) (200) (300)

Change in CWIP (1972) 1542 (1500) (500)

Others 70 75 75 75

Cash flow from investing (b) (4504) (3636) (1625) (1725)

Inc./Dec. in capital 0 0 0 0

Inc./Dec. in debts 2618 (2815) (835) (1394)

Dividend paid (238) (476) (714) (1190)

Interest paid (1890) (1952) (1772) (1696)

Others 15 (210) 895 507

Cash flow from financing ( c ) 505 (5453) (2426) (3774)

Opening cash balance 540 446 155 691

Cash Flow during the year (a+b+c) (93) (292) 536 896

Closing cash balance 446 155 691 1587

Key Ratios

Y/E March FY14 FY15E FY16E FY17E

Per Share Data (INR)

Adjusted EPS 5.17 10.05 15.35 25.07

CEPS 18.92 23.59 27.16 37.28

DPS 1.00 2.00 3.00 5.00

BVPS 104.29 111.99 123.81 143.01

Return Ratios

RoACE (%) 6.57 9.85 12.05 19.02

RoAE (%) 5.07 9.29 13.02 18.79

Balance Sheet Ratios


Current Ratio 2.21 1.70 2.15 2.59

Interest Cover Ratio 1.82 2.71 3.68 6.36

Efficiency Ratios

Total Asset Turnover 0.71 0.69 0.79 0.93

Inventory Days 75 81 72 71

Debtors Days 30 30 27 25

Creditors Days 19 22 20 20

Valuations

P / E 41.58 32.62 21.36 13.07

P / BV 2.06 2.93 2.65 2.29

Dividend Yield (%) 0.47% 0.61% 0.92% 1.53%

Market Cap / Sales 1.39 2.12 1.83 1.48

EV/EBIDTA 12.31 13.31 11.06 7.37


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