Grasim Industries

May 25, 2014
India Rising
Indian cement sector at the beginning
of a sustained upcycle

Equity Research
Cement demand at a crossroads identifying winners in a structural upturn
Cross-country analysis suggests per capita
consumption to more than double in 9 years
Given a lack of bottom-up data, most analysts and
investors forecast cement demand using a top-
down multiple of GDP growth (1.1x historically).
We believe this approach underestimates
potential demand given the new governments
focus on infrastructure and low-cost housing.
It took 5 years for other emerging countries starting
at similar per capita consumption (PCC) levels as
Indias to increase PCC by 50%. At the same 9%
CAGR, Indias PCC can rise more than 50%/100% in
the next 5/9 years. With 2% pa population growth,
we estimate demand at 11% CAGR, implying 1.7x
cement demand/GDP growth in FY14-18E. Post
liberalization (FY94-98), this multiplier was 1.8x.
Capacity growth to lag demand increase,
due to rising barriers to entry
We expect capacity to grow more slowly than
demand over the next 4 years (3% vs. 11% CAGR).
Barriers to entry have increased structurally, given
issues in land acquisition and limited limestone
reserves even if we assume environment/forest
clearance issues are streamlined by the new govt.
Rising utilizations and high consolidation to
drive EBITDA/t up 150% in next 4 years
We expect industry utilizations to have bottomed
out and forecast all-India/all-India ex-South
utilizations at 85%/97% by FY18E (vs 67%/82% in
FY14E). Given high consolidation and strong
demand we see +25% CAGR in EBITDA/t in the next
4 years. New greenfield capacity should generate
break-even ROCE by FY18E even at higher RC
(Rs9,200/t) and generate c.Rs1,800/t of EBITDA.
Buy mispriced opportunity Grasim (CL-Buy)
and pure cement stocks Shree and Ultratech
We add Grasim to the Conviction Buy List, seeing
a mispricing opportunity at a 56% discount to
NAV, and reiterate our Buy on Shree. We upgrade
Ultratech to Buy (from Neutral) and ACC, Ambuja
to Neutral (from Sell). We raise earnings
estimates significantly overall, and our target
prices increase by 52-104%, partly due to a change
in valuation methodology to EV/EBITDA.
Blue-sky analysis: We also consider a scenario
with a higher 14% CAGR in cement demand,
which would give 46-109% implied upside for our
coverage stocks (vs. 10-69% in base case).

Navin Gupta
+91(22)6616-9038 navin.gupta@gs.com
Goldman Sachs India SPL

Indrajit Agarwal
+91(22)6616-9040 indrajit.agarwal@gs.com
Goldman Sachs India SPL

SUMMARY OF RATINGS AND TARGET PRICES

Source: Datastream, Goldman Sachs Global Investment Research.
* denotes stock is on regional Conviction List. Target prices are based
on a 12-month timeframe.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US
affiliates are not registered/qualified as research analysts with FINRA in the U.S.
The Goldman Sachs Group, Inc. Global Investment Research
Company Rating Currentprice Targetprice Potential
Upside
ShreeCement Buy 6,249.10 9,600 54%
Grasim Buy* 2,953.85 5,000 69%
Ultratech Buy 2,267.15 2,850 26%
ACC Neutral 1,379.55 1,650 20%
Ambuja Neutral 214.40 235 10%
Rs/share
May 25, 2014 Indian cement sector at the beginning of a sustained upcycle

Goldman Sachs Global Investment Research 2
Table of contents
Structural shift in demand to lead to sustained upcycle 3
Our top picks: Buy Grasim (on CL), Shree Cement, Ultratech 10
Five key trends that are likely to shape the Indian cement sector 12
Comparing the upcoming cycle with the previous upcycle of FY04-08 21
Cement consumption to grow at 11% CAGR based on cross-country analysis 23
Blue-sky analysis: Factoring in higher growth environment 31
Grasim Industries (GRAS.BO, CL-Buy): Significantly mispriced opportunity 37
Shree Cement Ltd (SHCM.BO, Buy): Top-quartile CROCI, reiterate Buy 42
Ultratech Cement (ULTC.BO, Buy): Still more steam left for the industry leader 47
Ambuja Cements (ABUJ.BO, Neutral): Upgrade to Neutral; least upside in cement pack 51
ACC (ACC.BO, Neutral): Limited potential upside; upgrade to Neutral 54
Appendix 57
Disclosure Appendix 64

Prices mentioned in this report are as of the market close of May 21, 2014, unless otherwise indicated.
Exhibit 1: India cement stocks trading at a premium to ASEAN/China peers, which we believe is justified

Note: * denotes stock is on regional Conviction List; Prices (and peer estimates) are as at the close of May 21, 2014. Note: FY15 is year to Dec 2014 for companies with a Dec financial year-end, and year to June 15 for
companies with a Jun financial year end
Source: Datastream, company data, Goldman Sachs Global Investment Research.
GS Current Mkt Cap 12m Target Potential
Name Ticker Rating Crncy Price (US $ Mn) PriceUp/ Downside FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E
India
Shree Cement Ltd SHCM.BO Buy Rs 6,249.10 3,704 9,600 53.6% 13.7 10.1 7.2 26.5 18.0 14.7 4.5 3.6 2.8 165 139 117
Grasim Industries GRAS.BO Buy* Rs 2,953.85 4,608 5,000 69.3% 7.8 7.0 5.2 12.7 12.3 9.0 1.1 1.2 1.0
Ultratech Cement ULTC.BO Buy Rs 2,267.15 10,570 2,850 25.7% 16.6 13.2 9.8 23.8 21.3 15.8 2.9 3.1 2.7 147 162 147
ACC ACC.BO Neutral Rs 1,379.55 4,417 1,650 19.6% 17.1 16.7 11.6 25.4 26.8 18.9 2.8 3.2 2.9 110 140 121
Ambuja Cements ABUJ.BO Neutral Rs 214.40 5,605 235 9.6% 18.8 14.8 11.2 30.3 23.5 18.0 3.0 3.2 2.9 149 173 151
India Average 13.6 11.3 8.3 24.4 19.8 14.4 2.5 2.5 2.2 126 134 118
ASEAN, China
PT Indocement Tunggal Prakarsa TbkINTP.JK Buy Rp 23,075.00 7,382 24,500.00 6.2% 10.6 9.4 8.7 15.9 15.3 14.3 3.5 3.2 2.8
Lafarge Malaysia Berhad LAFA.KL Sell RM 9.48 2,506 8.30 -12.4% 12.4 12.5 11.8 23.1 22.1 21.1 2.6 2.5 2.4
Siam City Cement Public Co. (ForeignSCCCn.BK Neutral Bt 388.00 2,748 405.00 4.4% 13.1 11.6 10.7 20.3 16.1 14.9 5.1 4.2 3.8
PT Holcim Indonesia Tbk SMCB.JK Neutral Rp 2,685.00 1,788 2,650.00 -1.3% 9.1 9.8 8.7 23.3 18.4 16.0 2.5 2.2 2.1
Semen Indonesia Persero Tbk SMGR.JK Neutral Rp 14,975.00 7,719 13,300.00 -11.2% 11.1 10.2 9.5 17.3 15.3 14.5 4.4 3.7 3.2
Anhui Conch Cement (A) 600585.SS Buy Rmb 16.18 13,755 20.80 28.6% 6.4 5.1 4.5 9.4 7.7 7.3 1.6 1.3 1.2
Anhui Conch Cement (H) 0914.HK Buy* HK$ 27.10 18,523 34.30 26.6% 8.2 6.7 6.1 11.9 10.4 9.9 2.0 1.8 1.6
China National Building Material 3323.HK Neutral HK$ 7.02 4,889 8.10 15.4% 8.4 7.9 7.9 6.6 4.8 4.9 1.1 0.7 0.7
BBMG Corporation (H) 2009.HK Neutral HK$ 5.14 2,840 5.40 5.1% 9.2 9.0 9.2 6.3 6.2 6.5 0.8 0.6 0.6
Regional Average 9.8 9.1 8.6 14.9 12.9 12.2 2.6 2.2 2.0
EV/ EBITDA (x) P/ B (x) EV/ T ($/ t) P/ E (x)

Structural shift in demand to lead to sustained upcycle
Demand has been weak in the last 12-18 months but this is likely to change
Demand has been consistently weak over the last 12-18 months FY14 production (proxy for demand) grew 3% vs. FY04-14E
demand growth of 7% pa. The key reason for demand weakness has been a slowdown in both government and private expenditure
and a slow pace of infrastructure growth.
As a result, pricing power in the sector has eroded significantly and our coverage universe EBITDA/t declined 24% yoy in FY14.
Consensus earnings for FY15E have been consistently downgraded over the last 12-15 months. This has left stocks trading at high
valuations 13.2x-16.7x FY15E EV/EBITDA. Despite this, we see upside from current levels as we believe FY15/16E earnings are
likely to under-represent normalized earnings.
Outlook for demand boosted by new governments focus on infrastructure and low-cost housing
Historical cement demand/GDP multiplier of 1.1x underestimates potential demand, in our view
Despite weak fundamentals currently (due to weak demand) we believe there is a silver lining. The recent election win by the right of
center BJP-led NDA has positive implications for the sector. Cement demand should be boosted by the new governments stated
focus on infrastructure and low-cost housing in the coming years. We believe there is likely to be a step change in Indias cement
demand environment.
Estimating supply over the next 4-5 years is relatively simple given the availability of capacity addition data even from non-covered
smaller and mid cap cement companies (since most of them are listed). However, the key challenge is estimating demand.
In the absence of reliable bottom-up demand estimation, analysts and investors have historically relied on a top-down approach to
estimate demand usually a cement demand / GDP multiplier. Historically, this multiplier has been 1.1x (since FY92).
We instead try and assess Indias potential cement demand based on a cross-country analysis of the rise in per capita cement
consumption (PCC). We look at emerging countries at a point in time when their PCC was similar to Indias current PCC level of
around 195kg.
We find that it took five years (median) for PCC to rise by 50%, implying a 9% CAGR. We believe this is a base case PCC growth rate
that India can achieve in the next four years or more. With a population growth rate of 2%, this would imply a cement demand
growth rate of 11% CAGR and a cement demand / GDP multiplier of 1.7x based on our economists GDP forecasts.
As a reference, we can consider the cement demand scenario in FY94-98 the period just after economic liberalization. In this period,
the cement demand/GDP multiplier was 1.8x, supporting our demand growth assumption.

Estimating demand is
the key challenge
Cross-country analysis
suggests 11% CAGR
demand growth is
reasonable

Our base case is for 11% CAGR in demand in the medium term
In our base case we assume a structural shift in cement demand based on the above demand estimation. We estimate demand to
bottom out in FY14 and grow at a CAGR of 11% in FY14-FY18, implying 1.7x cement/GDP growth.
Consequently, we expect industry utilizations to have bottomed out- all India / all India (ex South) utilizations to rise to 85%/97% by
FY18E (vs. 67%/82% in FY14E).
Given high consolidation (top 6 companies in all regions except South India have almost 80% of capacity) and rising utilization we
expect pricing power to return.
We expect new greenfield capacity to generate break-even returns (ROCE) by FY18E even at higher RC (Rs9,200/t) and generate
Rs1,800/t of EBITDA.
Key changes
We revise estimates for all the companies incorporating our new demand scenario, as well as lower forecasts for Grasims viscose
staple fibre business. We change our valuation methodology from EV/GCI vs. CROCI/WACC to EV/EBITDA for the four pure cement
stocks (keeping SOTP for Grasim). Our back-testing yields highest alpha for the EV/EBITDA approach. We apply a peak-cycle
EV/EBITDA of 7.1x to FY18E EBITDA and discount back two years. We believe FY15/16E earnings are not representative of
normalized earnings.
Reiterate Buy on Grasim and add to CL-Buy as we believe it is significantly mispriced trading at a 56% discount to NAV,
at high the end of historical range.
Reiterate Buy on Shree Cements - the stock is trading at 32%/34% discount to large caps on FY15E/FY16E EV/EBITDA in spite
of commanding highest CROCI.
Upgrade Ultratech to Buy (from Neutral) as we believe it is best positioned among large-cap pure play cement companies to
benefit from the upcoming upturn it is also trading at 16%/14% discount to ACC/Ambuja on FY15/FY16E EV/EBITDA.
Upgrade ACC and Ambuja to Neutral (from Sell).
Base-case outcome: 1) +10% to +26% upside for pure-play large caps; 2) target FY16E EV/EBITDA of 12.3x-13.9x; 3) +3% to +24%
above consensus on FY16E earnings.
Blue-sky scenario analysis points to significant upside in all stocks
In our blue-sky scenario, we assume higher growth in cement demand, 14% CAGR (vs. 11% in our base case).
In our base case we expect FY18E coverage EBITDA/t to be almost equal to required EBITDA/t - EBITDA required for 15% pre-tax
ROCE for greenfield capacity. In our blue sky analysis we forecast the coverage EBITDA/t to be at a 21% premium to required break-
even EBITDA/t by FY18E (peak-cycle premium in FY08 was 11%).
Blue-sky scenario outcome: 1) +46% to +62% upside for pure-play large caps; 2) target FY16E EV/EBITDA of 13.4x-16.2x.

Strong demand should
restore pricing power.
We expect industry
EBITDA/t to rise by
150% in next 4 years,
driving CROCI to
previous peaks

Valuation: We discount FY18E EBITDA and use peak-cycle EV/EBITDA of 7.1x
Exhibit 2: EV/EBITDA-based 12-month target price derivation

Exhibit 3: Key risks to our thesis and target prices

Source: Company data, Bloomberg, Goldman Sachs Global Investment Research.

Source: Goldman Sachs Global Investment Research.

Exhibit 4: Grasim: Our SOTP-based target price implies 69% upside
Target price derivation based on SOTP

Targetpricederivation Shree Ultratech Ambuja ACC
FY18E - EBITDA - Rs mn 48,030 122,691 55,752 50,083
EV/EBITDA 7.10x 7.10x 7.10x 7.10x
Implied EV - Rs mn 341,016 871,108 395,838 355,593
Less: Net debt - FY18E - Rsmn (86,778) (126,112) (76,111) (44,477)
Less: Minorities - FY18E - Rs mn 2,418 27
Implied market cap - Rs mn 427,794 994,803 471,949 400,043
No. of shares - mn 35 274 1,537 188
Implied value - Rs/share 12,280 3,629 307 2,125
Discounting factor 0.78 0.78 0.77 0.77
Implied valuation - Rs/share 9,560 2,834 236 1,637
Target price - Rs/ share 9,600 2,850 235 1,650
Risks
GrasimIndustries
Downside:1)Riseinimportedcoalcosts,2)Majorriseinfreightcosts,3)lower
VSFprices.
ShreeCements
Downside:1)Significantriseinpetcokeprices/freightcosts;2)Delaysin
capacityexpansion.
Ultratech
Downside:1)Significantriseinpetcokeprices/freightcosts;2)Delaysin
capacityexpansion3)expensiveacquisitions.
Ambuja
Upside:Higherthanexpecteddemandleadingtobetterpricingability
Downside:Significantriseinpetcokeprices/freightcosts
ACC
Upside:Higherthanexpecteddemandleadingtobetterpricingability
Downside:Significantriseindomesticcoalprices/railwayfreightcosts
Grasim's SOTP Based PT Valuation
Methodology
Valuation
Base (INR)
Value
(INR Mn)
Grasim's
Stake (%)
Value to Grasim
(INR Mn)
NAV/ Share
(INR)
Holding
Co.
Discount
Value to
Grasim
(INR/ Sh)
Value to Grasim
(INR/ Sh)
OLD
NAV (Rs/ share) -
on market price of
subs
Ultratech
EV/EBITDA based
Share Price 2,850 781,359 60.33% 471,394 5,135 25% 3,851 2,102 4,085
Standalone Business 10x P/E on FY16E EPS 111 103,034 100.0% 103,034 1,122 25% 842 827 842
Idea Cellular Current Share Price 138 454,988 5.18% 23,568 257 25% 193 193 257
L&T Current Share Price 1,273 7,353 80 25% 60 58 80
ABNL Current Share Price 1,091 3,651 40 25% 30 29 40
Hindalco Current Share Price 142 7,729 84 25% 63 56 84
Total Equity Value 616,729 6,718 5,039 3,264
12-m Target Price 5,000 3,300 5,388
Current Price 2,954
Potential Upside/Downside (%) 69%
Discount to NAV -56%
Discount to market price based NAV -45%

Valuation: Target prices based on EV/EBITDA and SOTP
Moving to EV/EBITDA valuation methodology as it generates highest alpha in back-testing
We change our valuation methodology for the pure play cement companies to EV/EBITDA from EV/GCI vs. CROCI/WACC as our back
testing results show that highest alpha is generated using EV/EBITDA. For Grasim, we continue to use a sum-of-the-parts (SOTP)
methodology, valuing separately its cement and standalone businesses.
We use peak-cycle multiples of 7.1x on FY18E EBITDA and discount back two years
We believe the sector fundamentals to have bottomed out in FY14. However, even though the upturn in the sector would start from
FY15E we believe capturing normalized earnings of FY18E is needed to capture the upcoming cycle.
Based on target prices, our implied FY16E EV/EBITDA for pure-play cement companies is 11.9x-13.9x they are currently trading in
the range of 7.2x-11.6x.
We triangulate the valuation derived from EV/EBITDA with DCF and PB/ROE and arrive at similar valuations.

Exhibit 5: Valuation summary

*The stock is on our regional Conviction List.
Note: FY14E is March-2014 for Grasim, Ultratech / June-2014 for Shree Cement / December-2013 for ACC and Ambuja

FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E
SHCM.BO ShreeCementLtd Buy Buy 6,249 5,600 9,600 54% 71% 15.8x 11.9x 27.5x 22.4x 5.4x 4.3x 219 195
GRAS.BO GrasimIndustries Buy Buy* 2,954 3,300 5,000 69% 52% 10.5x 7.9x 20.7x 15.2x 2.0x 1.8x
ULTC.BO UltratechCement Neutral Buy 2,267 1,555 2,850 26% 83% 16.1x 12.3x 26.6x 19.8x 3.9x 3.3x 196 184
ABUJ.BO AmbujaCements Sell Neutral 214 125 235 10% 88% 16.6x 12.4x 25.8x 19.8x 3.6x 3.2x 190 164
ACC.BO ACC Sell Neutral 1,380 810 1,650 20% 104% 20.0x 13.9x 31.8x 22.4x 3.8x 3.5x 165 142
ImpliedPB ImpliedEV/T(USD)
NewTP
Potentialup/
downside
TPchange
ImpliedEV/EBITDA ImpliedPE
Basecase
Rating
(New)
Current
Price
OldTP
Rating
(Old)

Exhibit 6: EV/EBITDA, DCF and PB/ROE are the most relevant valuation methodology for our cements coverage group EV/EBITDA generates highest alpha
Base case triangulation under various valuation methodologies

Source: Company data, Datastream, Goldman Sachs Global Investment Research.

Exhibit 7: Shree has consistently generated top quartile CROCI
South East Asia companies CROCI profile

Note: (1) FY14E is March-2014 for Ultratech / June-2014 for Shree Cement / December-2013 for the rest;
Source: Company data, Goldman Sachs Global Investment Research.
Ticker CurrentPrice
EV/EBITDA
SHCM.BO 6,249 9,600
ULTC.BO 2,267 2,850
ABUJ.BO 214 235
ACC.BO 1,380 1,650
Ticker
EV/
EBITDA
DCF
SHCM.BO 9,600 10,804
ULTC.BO 2,850 3,209
ABUJ.BO 235 252
ACC.BO 1,650 1,774
Ticker
EV/
EBITDA
PBvsROE
avgoflargecaps
PBvsROE
cohistory
SHCM.BO 9,600 7,760 7,896
SHCM.BOadj 9,600 8,928
ULTC.BO 2,850 2,734 2,563
ABUJ.BO 235 209 249
ACC.BO 1,650 1,609 1,474
Ticker
EV/
EBITDA
EV/GCIvsCROCI/WACC
SHCM.BO 9,600 9,232
ULTC.BO 2,850 2,533
ABUJ.BO 235 201
ACC.BO 1,650 1,537
Ticker
EV/
EBITDA
EV/TvsRC
avgoflargecaps
EV/TvsRC
cohistory
SHCM.BO 9,600 9,179 8,306
ULTC.BO 2,850 2,782 2,655
ABUJ.BO 235 232 264
ACC.BO 1,650 1,889 1,710
>Generatesbestreturnonbacktesting
>Minimaldistortionduetodifferentaccountingpoliciesasonlytakescashincome/costsintoaccount
>Nextbestalternativeasitdiscountsfutureearningspotentialandnothistoricalvaluation
>Italsotakesintoaccountonlycashinflowsandoutflows
>Terminalvalueaccountsfor52%54%ofvalue
>ValuationsandpeckingordersimilartoEV/EBITDAforlargecapsexceptforShree
>AccelerateddepreciationpolicyofShreehasloweredROEandBV.
>Averagedepreciation/GFAforShree10.8%,vslargecaps4.5%Bookvalueunderstatedby28%
(Rs1,020/share)
>Regressionofjust4pureplayIndiancompanieshasverylowRsquare
>ResultssimilartoEV/EBITDAonarelativebasis
Notrelevantforcompanieswhichhaveundergonesignificantchangeincapacity
>UltratechmajorchangeincapacitypostrestructuringacquisitionofGrasimscementassetsin
2010whichalmostdoubleditscapacity
>ShreeTransformedfrom2mtpacapacityinFY02to13.5mtpacapacityinFY13
DCF
EV/GCIvs
CROCI/WACC
PBvsROE
EV/TvsRC
EV/EBITDA
Name FY 2004 FY 2005 FY 2006 FY 2007 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14E FY 15E FY 16E FY 17E FY 18E
ACC.BO 11% 16% 16% 27% 35% 26% 30% 23% 18% 23% 11% 12% 15% 19% 26%
ABUJ.BO 14% 18% 0% 26% 31% 18% 21% 23% 19% 24% 14% 16% 18% 22% 29%
ULTC.BO 11% 19% 20% 20% 20% 16% 16% 19% 12% 14% 15% 19% 25%
SHCM.BO 5% 23% 15% 28% 32% 29% 35% 20% 26% 21% 19% 21% 24% 27% 34%
INTP.JK 10% 11% 14% 12% 13% 16% 21% 22% 24% 32% 27% 28% 25%
SCCCn.BK 14% 16% 14% 14% 11% 10% 10% 10% 11% 11% 15% 14% 14%
SMCB.JK 5% 4% 4% 5% 10% 15% 15% 12% 16% 13% 13% 11% 11%
SMGR.JK 17% 16% 19% 19% 22% 32% 32% 26% 26% 24% 21% 22% 21%
Average 10% 13% 10% 17% 20% 19% 20% 16% 17% 19% 15% 16% 16% 22% 28%
1st 2nd 3rd 4th
CROCI

Valuations at historical high, but we see further upside
Pure-play large cap cement companies (ACC, Ambuja, Ultratech) share prices have increased by 18%-33% since Jan-1, 2014, vs BSE
Sensex up 15%. Consequently, the stocks are now trading 9.8x-11.6x on FY16E EV/EBITDA (13.2x-16.7x FY15E) above historical
trading ranges. However, we believe given a structural upturn ahead, this may not be expensive.

Exhibit 8: Our TPs factor in peak-cycle multiple of 7.1x EV/EBITDA applied to
FY18E EBITDA (discounted back two years)

Exhibit 9: Valuation multiples across cycles

Source: Datastream, company data.

Source: Datastream, company data, Goldman Sachs Global Investment Research.

Exhibit 10: Profitability and returns across cycles

0
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A
Ambuja ACC Ultratech
PeakCyclemultiple7.1x
EV/EBITDA
Previous
upcycle Peakcycle
Previous
downcycle Trough Acrosscycle
Current
multiple
Apr04Mar07 Mar07 Apr01Mar03 Feb02 Historical FY15E
Ambuja 7.2x 7.4x 8.8x 10.8x 8.9x 14.8x
ACC 7.9x 7.1x 10.2x 11.8x 9.3x 16.7x
Ultratech 7.8x 6.6x 8.2x 13.2x
ShreeCements 5.3x 4.7x 4.3x 4.5x 5.0x 10.1x
Medianlargecaps 7.8x 7.1x 9.5x 11.3x 8.9x 14.8x
P/B
Previous
upcycle Peakcycle
Previous
downcycle Trough Acrosscycle
Current
multiple
Apr04Mar07 Mar07 Apr01Mar03 Feb02 Historical FY15E
Ambuja 3.1x 3.3x 1.6x 2.2x 2.4x 3.2x
ACC 3.4x 3.4x 2.1x 2.4x 2.8x 3.2x
Ultratech 4.2x 3.7x 3.0x 3.1x
ShreeCements 4.0x 4.9x 0.4x 0.4x 2.2x 3.6x
Medianlargecaps 3.4x 3.4x 1.9x 2.3x 2.8x 3.2x
Profitabilityand
returns
Previous
upcycle Peakcycle
Previous
downcycle Trough Acrosscycle Current
Apr04Mar07 FY08 Apr01Mar03 FY03 Historical FY15E FY14EFY18E FY18E FY14EFY18E FY18E
EBITDAmargin
High 34% 22% 34% 32% 37%
Low 18% 18% 18% 18% 18%
Average 25% 34% 19% 18% 24% 18% 24% 32% 27% 37%
ROE
High 37% 11% 37% 24% 28%
Low 10% 10% 4% 12% 12%
Average 24% 34% 11% 11% 17% 12% 17% 24% 20% 28%
CROCI
High 29% 11% 29% 27% 35%
Low 8% 8% 5% 13% 13%
Average 18% 29% 10% 8% 15% 13% 19% 27% 22% 35%
Basecase Bluesky
Stocks look expensive
vs history

However, FY15/16E
earnings likely to
under-represent
normalized earnings

We have back-tested the key valuation methodologies namely EV/GCI vs. CROCI/WACC, EV/EBITDA, PB/ROE and PE. We find that
EV/EBITDA generates the highest alpha amongst all the valuation methods tested.
Exhibit 11: Shree looks most undervalued among the four pure-play Indian
cement companies under coverage

Exhibit 12: We change our valuation methodology to EV/EBITDA as back-
testing yields best results


Summary of estimate changes
Exhibit 13: We change our FY15E-FY17E EPS estimates by -19% to +47%

Note: Sales/EBITDA: Rs mn, EPS: Rs/share. Note FY14E is year to June 2014 for Shree Cements
Source: Bloomberg, Goldman Sachs Global Investment Research.
R = 0.5594
0.8
1.3
1.8
2.3
2.8
0.8 1.3 1.8 2.3 2.8
FY16E
E
V
/
G
C
I
(
X
)
CROCI/WACC (X)
Buy
ACC.BO
ABUJ.BO
ULTC.BO
SHCM.BO
Buy
15%
18%
6%
18%
17%
23%
8%
18%
43%
58%
16%
47%
0%
10%
20%
30%
40%
50%
60%
70%
DC EV/EBITDA PB/ROE PE
Longonly Shortonly Long+Short
ACC CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY14E CY15E CY16E CY14E CY15E CY16E
Sales 117,277 134,335 160,169 202,923 1% 6% 14% 119,705 134,470 144,807 2% 0% 11%
EBITDA 15,118 21,810 31,689 50,083 4% 15% 36% 16,984 21,418 24,396 11% 2% 30%
NetIncome 9,692 13,744 20,299 33,816 4% 19% 47% 10,856 13,307 15,880 11% 3% 28%
EPS 51.50 73.03 107.87 179.70 4% 19% 47% 57.69 70.71 84.39 11% 3% 28%
Ambuja CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY14 CY15 CY16 CY14 CY15 CY16
Sales 100,698 115,903 142,507 181,509 3% 7% 14% 103,994 116,543 120,757 3% 1% 18%
EBITDA 19,717 26,381 37,377 55,752 6% 15% 37% 20,721 25,026 27,237 5% 5% 37%
NetIncome 14,102 18,391 24,602 36,918 6% 16% 41% 13,274 15,793 17,555 6% 16% 40%
EPS 9.14 11.92 15.95 23.93 6% 16% 41% 8.60 10.24 11.38 6% 16% 40%
Ultratech FY15E FY16E FY17E FY18E FY15E FY16E FY17E FY15 FY16 FY17 FY15 FY16 FY17E
Sales 237,528 279,526 335,722 404,954 0% 3% NA 252,886 290,857 NA 6% 4% NA
EBITDA 47,506 62,264 86,605 122,691 1% 10% NA 50,584 61,541 NA 6% 1% NA
NetIncome 29,224 39,242 56,880 82,908 1% 13% NA 27,363 34,646 NA 7% 13% NA
EPS 106.60 143.14 207.47 302.82 1% 13% NA 99.81 126.37 NA 7% 13% NA
ShreeCement FY14E FY15E FY16E FY17E FY18E FY14E FY15E FY16E FY14 FY15 FY16 FY14 FY15 FY16
Sales 57,424 65,795 79,331 98,999 121,891 0% 1% 6% 58,355 68,792 81,335 2% 4% 2%
EBITDA 14,191 18,489 24,657 34,193 48,030 0% 8% 20% 13,695 17,607 21,705 4% 5% 14%
NetIncome 8,202 12,105 14,847 20,343 29,601 0% 12% 30% 7,461 9,739 12,479 10% 24% 19%
EPS 235.42 347.45 426.14 583.91 849.63 0% 12% 30% 214.14 279.53 358.17 10% 24% 19%
Grasim FY15E FY16E FY17E FY18E FY15E FY16E FY17E FY15 FY16 FY17 FY15 FY16 FY17E
Sales 320,232 376,249 437,777 512,210 1% 2% NA 325,022 366,245 NA 1% 3% NA
EBITDA 52,081 69,333 95,270 132,736 12% 3% NA 59,065 70,819 NA 12% 2% NA
NetIncome 22,141 30,198 40,788 57,028 19% 5% NA 23,468 28,267 NA 6% 7% NA
EPS 241.08 328.81 444.12 621.70 19% 5% NA 255.53 307.78 NA 6% 7% NA
Difference Bloombergconsensus Change Newestimates

Our top picks: Buy Grasim (on CL), Shree Cement, Ultratech
Grasim (GRAS.BO, CL-Buy, 12-m TP Rs5,000)
We believe Grasim is significantly mispriced and add it to CL-Buy trading at a 56% discount to NAV. We revise our TP to Rs5,000
(from Rs3,300) primarily as we increase earnings estimates and TP for Ultratech (from Rs1,555 to Rs2,850) despite lowering our
Grasim FY15E/FY16E earnings by 19%/5% primarily due to lower earnings estimates for the VSF business. Grasim holds 60% in
Ultratech (largest cement company in India in terms of capacity) and has standalone businesses such as VSF and chemicals.
Key catalysts:
1) Upturn in Ultratechs profitability due to improvement in cement demand We expect Ultratechs EBITDA/t to more than double
(2.4x) to US$30.4/t by FY18E and expect EBITDA to increase at a 34% CAGR in the same period to US$2bn.
2) Commissioning of capacities in cement, VSF and chemicals division.
3) Reduction of holdco discount in a sustained upcycle in cement We believe the current structure of Grasim (i.e., all cement
capacity in Ultratech) was created in June 2010 and was not there in the previous upcycle (FY04-08). Hence, the holding co history of
the last 4 years is not reflective of the holding co discount that would prevail in an upcycle We believe this current discount should
significantly narrow in the upcycle. Ultratechs earnings are consolidated on a line by line basis in Grasims earnings (holds 60% in
Ultratech) and we see no reason for such a large holdco discount.
Our 12-month SOTP-based TP is Rs5,000, implying 69% potential upside. Our NAV for Grasim includes: (1) Grasims stake in
Ultratech valued at our target price for Ultratech of Rs2,850; (2) standalone businesses (VSF, Chemicals) valued at 10.1X FY16E P/E;
and (3) its stake in L&T, Aditya Birla Nuvo and Hindalco at current market prices. We apply a 25% holding company discount to the
NAV, in line with the regional average of 20%-30%. Ultratech/standalone business and minority stakes in group companies
contribute 77%, 17% and 7% of Grasims TP, respectively.
Shree Cement (SHCM.BO, Buy, 12-m TP Rs9,600)
We reiterate our Buy rating with a revised target price of Rs9,600 (from Rs5,600) as we increase EBITDA estimates for FY14-16E by 0-
20% and EPS estimates by 0-30% on higher volumes and ASPs. We believe Shree Cements is a structural story which will benefit
both from earnings growth and multiple re-rating. It is the best placed pure-play cement stock amongst our coverage universe.
We see Shree as on track to expand capacity to 26.5 mtpa by FY17E from 13.5mtpa currently. We believe this will help Shree in
continued market share gains and is a key reason for significant rise in earnings/returns driving re-rating. Moreover, Shree is one of
the lowest cost producers We expect it to have the highest cement EBITDA/t (among our India coverage) of US$16/t in FY14E rising
to US$36/t by FY18E (remaining the highest EBITDA/t in our coverage). On our estimates, Shree should continue to generate top-
quartile returns within India. We expect Shrees CROCI to almost double from 18.7% to 34.2% over FY14-18E.
It is trading at 10.1X/7.2X FY15E/FY16E EV/EBITDAat 32%/34% discounts to large peers under coverage, which we believe is not
justified given its superior cash return profile.

Ultratech (ULTC.BO, Buy, 12-m TP Rs2,850)
We upgrade Ultratech to Buy from Neutral as we turn more positive on the sector. We revise our 12-month target price to Rs2,850
(from Rs1,555) as we increase EBITDA estimates for FY15-16E by -1% to +10% and EPS estimates by -1% to +13%. We believe being
the industry leader (in terms of capacity) Ultratech would be the best large cap pure play exposure to the structural upturn in the
Indian cement sector.
Ultratech has upfront capacity expansions We expect Ultratech will benefit from upfront capacity expansions targets to increase
capacity by c20% in FY15E/16E from 52.5mt to 61.4mt. We believe this will help Ultratech in market share gains vs. ACC/Ambuja
where capacity expansion is backended (largely in CY15E end).
Highest EBITDA/t amongst large caps: We expect Ultratech to have the highest cement EBITDA/t (among our India coverage) of
US$12.5/t in FY14E rising to US$30.4/t by FY18E (next only to Shree Cements).
Ultratech is trading at 13.2x/9.8x FY15E/FY16E EV/EBITDA a 16%/14% discount to ACC/Ambuja, which we believe is unjustified.
ACC (ACC.BO, Neutral, 12-m TP Rs1,650)
We remove ACC from Sell rating driven by positive cement demand outlook and no downside potential. We upgrade the stock to a
Neutral rating with a new 12-month target price of Rs1,650 (Rs810 prior), now implying 20% upside as we increase earnings
estimates and change valuation methodology
ACC is planning to increase its capacity by 5mt but it is back ended expected to come on-stream by CY15.
ACC is trading at 27%/19% premium on FY15E/FY16E EV/EBITDA to industry leader Ultratech, which we believe is not justified given
the constraints related to its parent company Holcim.
Ambuja (ABUJ.BO, Neutral, 12-m TP Rs235)
We remove Ambuja Cement from Sell rating driven by positive cement demand outlook and no downside potential. We upgrade the
stock to a Neutral rating with a new 12-month target price of Rs235 (Rs125 prior), now implying 10% upside as we increase earnings
estimates and change valuation methodology
Ambuja is planning to increase its capacity by 5.3mt, however much of this expansion is back-endedscheduled to come on-stream
largely in CY15.
Ambuja is trading at 13%/14% premium on FY15E/FY16E EV/EBITDA to industry leader Ultratech, which we believe is not justified
given the constraints related to its parent company and Ambujas holding company structure post ownership of ACC shares.


Five key trends that are likely to shape the Indian cement sector
Trend 1: Per capita consumption to double in next 9 years driving structural upturn in the sector
In this report we try and assess Indias potential cement demand based on cross-country analysis of the rise in per capita cement
consumption (PCC). We look at other emerging countries at a point in time when there PCC was similar to Indias current PCC levels.
We find that it took five years (median) for PCC to rise by 50%, implying 9% CAGR. We believe this is a base case PCC growth rate
that India can achieve in the medium term. With a population growth rate of 2%, this would imply cement demand growth rate of
11% CAGR. This implies a ratio of cement demand to GDP growth of 1.7x.
We also triangulate it with the cement demand scenario in FY04-98 the period just after the economic liberalization. Cement
demand/GDP multiplier in this period was 1.8x.
We believe this is a better approach than using an historical GDP multiplier to assess cement demand. Given lack of bottom-up data
most analysts and investors have relied on a top down multiple of GDP growth. Historically, this multiplier has been 1.1x on an
average. Given the new governments significant focus on infrastructure development and low cost housing (which hasn't been in
the past), this historical cement/GDP multiplier is likely to under-estimate potential demand in the future.
We believe 11% CAGR in the coming decade is going to significantly alter the current overcapacity scenario.
After witnessing an average 9% growth CAGR during FY05-FY10, domestic cement demand growth fell below 5% during FY10-
FY14E.
FY14E has seen one of the lower demand growths (3%) in over a decade due to lower infrastructure growth and weakening
government and consumer expenditure. However, we believe demand growth will rebound to 8%-11% levels in FY15E/FY16E with
pick-up in economic growth (ECS Research team forecasts India GDP at 5.5%/6.5%, respectively) and higher PCC growth.
During FY14E-FY18E we expect incremental cement demand to increase by 128mt, ahead of effective capacity addition of 73mtpa.
Exhibit 14: All India incremental demand of 79mt in FY08-FY14E @ 7% CAGR

Exhibit 15: We expect demand to grow at 11% CAGR (+128mt) in FY14E-
FY18E

Source: Cement Manufacturers Association, company data, Goldman Sachs Global Investment Research.

0
50
100
150
200
250
300
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E
M
T
Consumption
249
269
298
334
377
0
50
100
150
200
250
300
350
400
FY14E FY15E FY16E FY17E FY18E
M
T
Consumption

Exhibit 16: India ex-South incremental demand of 65mt in FY08-FY14E

Exhibit 17: We expect demand to grow at 11% CAGR (+95mt) in FY13E-
FY18E



Trend 2: Rising barriers to entry and higher replacement costs
While the overcapacity created during the previous capex cycle (FY08-FY14E) has also led to slower capacity addition going forward,
we believe barriers to entry have increased in the sector, structurally. Further, most companies under our coverage have exhausted
brownfield options.
We believe that conceptualization-to-commissioning cycle for a greenfield cement plant has almost doubled to around 5 years
(compared with 2-2.5 years in CY08-CY09) driven by the following:
Acquiring limestone reserves has become increasingly difficult.
Land acquisition cost and issues contiguous piece of industrial land has become harder to obtain as land acquisition has
become politically sensitive.
Environment/forest clearances have become time-consuming and difficult to obtain.
Based on our discussion with company managements, and plant and equipment suppliers to Indian cement companies, we estimate
that the replacement cost for a cement plant (including land and captive power plant) has increased from Rs5,200/t to Rs8,250/t in
the past 6 years at a 8% CAGR. We expect the replacement cost to reach Rs9,700/t at 4% CAGR by FY18E. We believe that this
increase in replacement cost for new marginal capacity will require a higher EBITDA/t to recover investments, thereby driving higher
cash returns for incumbents.
Based on our demand-supply analysis, we expect total nameplate capacity to reach 453mt / 468mt by FY17E/FY18E. We expect
59mt of capacity addition between FY14E-FY18E (next 4 years) based on the projects under implementation at a CAGR of 3%. We
note that the pace of capacity addition is slowing down as about 210mt of cement capacity was added in the past 6 years at a CAGR
of 13%.
0
20
40
60
80
100
120
140
160
180
200
M
T
Consumption
184
199
220
247
279
0
50
100
150
200
250
300
M
T
Consumption

Exhibit 18: All India cement capacity addition 210mt in FY08-FY14E

Exhibit 19: We expect cement capacity addition of 59mt during FY14-18E


Pace of capacity addition in South India is also likely to slow down we expect 3% CAGR (+18mt) in FY14E-FY18E vs. 16% CAGR
(+88mt) during FY08-FY14E. In the previous expansion cycle (FY08-FY14E), capacity additions in South India accounted for 42% of
all India capacity addition.
Exhibit 20: India ex-South cement capacity addition 122mt in FY08-FY14E

Exhibit 21: We expect cement capacity addition of 42mt during FY14-18E for
India ex-South


0
50
100
150
200
250
300
350
400
450
M
T
Nameplate Capacity Effective Capacity
409
421
442
453
468
372
393
418
435
445
0
100
200
300
400
500
M
T
Nameplate Capacity Effective Capacity
0
50
100
150
200
250
300
M
T
Nameplate Capacity Eff Capacity
258
269
288 288
300
225
244
267
281
287
0
50
100
150
200
250
300
350
M
T
Nameplate Capacity Eff Capacity

Trend 3: High consolidation to continue, ensuring supply/pricing discipline
The consolidated nature of the industry has helped weather the overcapacity witnessed in the past 6 years to some extent. The top 6
companies account for more than 80% of capacity in most regions (except South India). During the previous overcapacity period
(FY08-FY14E), the industry has been able to pass on a significant portion of cost pressure (increase in cash cost/t Rs1,225/t) by ASP
increase (Rs868/t) mainly due to the consolidated nature of the industry. However, margins and EBITDA/t declined though the
impact was significantly cushioned due to the supply discipline.
We estimate that the industry will be able to increase ASP by Rs1,565/t (8% CAGR) through FY14E-FY18E, exceeding cash cost/t
inflation of Rs502/t (4% CAGR), thereby driving incremental EBITDA/t (expect EBITDA/t CAGR of 25%) as we expect the industry
consolidation to remain high ensuring supply and pricing discipline. We note that during FY08-FY14E, although all-India utilization
declined 28 pp from 95% to 67%, the industry EBITDA/t declined by only 6% CAGR.
Exhibit 22: Cement prices have increased at a CAGR of 4-6% in the past 16
years (since FY1997)
Wholesale cement price level across regions

Exhibit 23: as regional consolidation remains high
Top 6 companies share of capacity across regions in FY14E (%)

Source: CMIE, Cement Manufacturers Association, Goldman Sachs Global Investment Research.

-
50
100
150
200
250
300
350
400
450
1
Q
F
Y
0
1
4
Q
F
Y
0
1
3
Q
F
Y
0
2
2
Q
F
Y
0
3
1
Q
F
Y
0
4
4
Q
F
Y
0
4
3
Q
F
Y
0
5
2
Q
F
Y
0
6
1
Q
F
Y
0
7
4
Q
F
Y
0
7
3
Q
F
Y
0
8
2
Q
F
Y
0
9
1
Q
F
Y
1
0
4
Q
F
Y
1
0
3
Q
F
Y
1
1
2
Q
F
Y
1
2
1
Q
F
Y
1
3
4
Q
F
Y
1
3
3
Q
F
Y
1
4
Rs / 50kg bag
Mumbai Kolkata Chennai Delhi
79%
85%
79%
53%
86%
21%
15%
21%
47%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
North Central East South West
Others
Top6

Exhibit 24: Industry ASPs have increased at 4% CAGR over the last 6 years

Exhibit 25: but we expect 8% CAGR over the next 4 years


Trend 4: Utilization levels to rise structurally
We believe utilization levels will rise structurally over the next four years as: 1) pace of capacity growth is likely to slow down, and 2)
demand growth is likely to recover with a pick-up in economic growth from FY15E with increase in per capita consumption.
We expect industry utilizations to have bottomed out- expect all India / all India (ex South) utilizations to increase to 85%/97% by
FY18E (vs 67%/82% in FY14E).
Exhibit 26: We expect utilization to reach 85% (97% India ex South) by FY18E
India Cement demand supply model

Source: Cement Manufacturers Association, Company data, Goldman Sachs Global Investment Research.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
0
1,000
2,000
3,000
4,000
5,000
6,000
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E
CAGR
Unit FY04 FY05 FY06 FY07 FY08 FY13 FY14E FY15E FY16E FY17E FY18E FY14-18E
All India
Installed Capacity MT 146 153 160 166 199 378 409 421 442 453 468 3%
Effective Capacity MT 144 152 158 166 179 345 372 393 418 435 445 5%
Total Consumption (incl Exports) MT 123 133 145 158 170 240 249 269 298 334 377 11%
Consumption growth, YoY % 7.3% 8.4% 9% 9% 7% 6% 3% 8% 11% 12% 13%
Consumption as % of Effective Capacity % 85% 88% 92% 95% 95% 70% 67% 68% 71% 77% 85%
All India Ex-South
Previous up-cycle Recent downcycle Base case

Exhibit 27: All-India consumption/capacity declined 28pp in FY08-FY14E

Exhibit 28: We expect utilization levels to rise 18pp during FY14-18E


Trend 5: Key cost pressures to be muted going forward
The Indian cement industry has witnessed significant cost pressures in two key cost components: energy and freight. Power and
fuel accounts for almost 30% of total cash cost as of FY14E, while freight accounts for almost 25%.
Energy costs increased significantly due to: 1) higher global coal prices, 2) higher domestic coal prices (linkage and e-auction), and
3) INR depreciation of 32% during FY08-FY14E.
Average cash cost per tonne for our coverage companies increased at an 8% CAGR in the previous upcycle. However, going
forward we expect a more muted increase with cash cost per tonne forecast to rise at a 4% CAGR in the next four years.
Coal costs: We do not expect a significant rise in coal costs Globally, we are not expecting coal prices to rise significantly our
CY14/15E and long term thermal coal price forecasts are US$75/US$78/t (long term US$77/t) vs. current spot of US$73/t. We don't
expect domestic coal prices to rise by more than 5% CAGR.
Freight costs: We are not bullish on Brent oil prices as well Our CY14/15E/long-term forecasts are US$100/t vs. current spot of
US$108/t. Global oil prices impact domestic diesel prices, which is the main inflationary component of freight costs. We have
factored in the phasing out of diesel price under-recovery in our estimates. Our India Oil & Gas team believes that current diesel
price under-recovery of Rs4.4/litre will be over by FY16E. Current under-recovery is 6.8% of diesel prices (ex Mumbai).
83%
80%
84%
85%
88%
92%
95% 95%
90%
80%
70%
67%
70%
67%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
(
%
)
Cons. as % of Cap.
67%
68%
71%
77%
85%
50%
55%
60%
65%
70%
75%
80%
85%
90%
(
%
)
Cons. as % of Cap.

Exhibit 29: Cash cost/t has increased at 8% CAGR over the last 6 years

Exhibit 30: We expect cash cost/t to increase at 4% CAGR over the next 4
years



These trends should lead to improvement in pricing power and returns
We think the above trends i.e., 1) structural uptick in demand 2) slower pace of capacity growth (vs demand) due to high barriers to
entry 3) continued high consolidation 4) rising utilizations and 5) lower cost environment should lead to revival of pricing power and
improved profitability in the industry.
We forecast cement EBITDA/t of coverage companies to increase by 25% CAGR over FY14E-FY18E.
Given high consolidation we expect EBITDA/t to rise 2.5x in the next 4 years.
We believe higher replacement cost for new marginal capacity will drive up prices as companies seek to recover their investments,
thereby driving up EBITDA/t and returns for incumbents.
We expect new greenfield capacity to generate break-even returns (ROCE) by FY18E even at higher RC (Rs9,200/t) and generate
Rs1,800/t of EBITDA
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E

Exhibit 31: We expect All India (ex South) utilizations to reach 97% by F18E
vs 98% in the previous peak, leading to EBITDA/t recovery

Exhibit 32: Similarly, we expect margins to be closer to previous peak by
FY18E



40%
50%
60%
70%
80%
90%
100%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
F
Y
9
8
F
Y
9
9
F
Y
0
0
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E
C
o
n
s
u
m
p
t
i
o
n

a
s

%

o
f

c
a
p
a
c
i
t
y
I
n
d
u
s
t
r
y

E
B
I
T
D
A
/
T

(
R
s
)
Industry EBITDA/T Cons as % cap (India Ex South) - RHS Cons as % cap (All India) - RHS
17%
18%
17%
22%22%
18%18%
20%
23%
32%
34%
28%
31%
22%
23%
23%
18%
20%
23%
27%
32%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
40%
F
Y
9
8
F
Y
9
9
F
Y
0
0
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E
C
o
n
s
u
m
p
t
i
o
n

a
s

%

o
f

c
a
p
a
c
i
t
y
E
B
I
T
D
A

m
a
r
g
i
n

Industry EBITDA Margin Average EBITDA margin
Cons as % cap (India Ex South) - RHS Cons as % cap (All India) - RHS

Our forecast EBITDA/t is in line with implied EBITDA/t for a new capacity calculated based on 15% ROCE (pre-tax) assumption on
replacement cost. We assume industry EBITDA/t levels would be set by new capacities which would seek to recover at least their
cost of capital. We assume that the new capacities will strive to earn at least 15% ROCE (pre-tax) on the capital expenditure spent on
setting up the capacities.
Based on these assumptions, the implied EBITDA/t for new capacity in FY18E would be around Rs1,800/twe expect our coverage
average EBITDA/t of Rs1,787/t by FY18E Please note that while we estimate actual replacement cost of Rs9,700/t in in FY18E we
have assumed a two-year lagged replacement cost of Rs9,200/t while calculating the required EBITDA/t for FY18E.
Exhibit 33: We estimate ROCEs will exceed previous peak by FY18E
Sector ROCE trajectory

Exhibit 34: and coverage EBITDA/T will be close to required EBITDA/t for
new greenfield capacity

Note: Required for 15% pre-tax ROCE (breakeven returns)

0%
5%
10%
15%
20%
25%
30%
35%
40%
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E
70%
60%
50%
40%
30%
20%
10%
0%
10%
20%
30%
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
F
Y
1
4
E
F
Y
1
5
E
F
Y
1
6
E
F
Y
1
7
E
F
Y
1
8
E
E
x
c
e
s
s
/
S
h
o
r
t
f
a
l
l
(
%
)
E
B
I
T
D
A
/
T
(
R
s
)
ReqdEBITDA/T CoverageEBITDA/T Excess/Shortfall(RHS)

Comparing the upcoming cycle with the previous upcycle of FY04-08
We believe the upcoming upcycle in the sector will be driven by a strong uplift in demand similar to the previous upcycle. We
expect cement demand CAGR of 11% over FY14-18E - Implying 1.7x cement / GDP growth. In the previous upcycle in cement we
saw the industry demand grow by 8%.
We estimate that all India / all India (ex South) utilizations to rise to 85%/97% by FY18E (vs 67%/82% in FY14E). In our base case we
don't assume utilizations will reach the previous peak levels.
In FY08 (peak year of the previous upcycle), our coverage EBITDA/T was Rs1,081/T almost 11% higher than what was required for a
new-greenfield capacity to generate break-even returns (15% pre-tax ROCE). However, in our estimate of the coming upcycle, we
estimate that by FY18E our coverage EBITDA/T will be in line with the required break-even returns for a new greenfield capacity
(unlike a premium of 11% in FY08).
We expect EBITDA/t CAGR of 25% (vs 32%) in the previous upcycle. We expect ASP increases of 8% CAGR and average cash cost
per tonne increase of 4% CAGR in the previous upcycle ASPs/Cash Cost per tonne increased by 16% / 8% CAGR.
Exhibit 35: We assume base case EBITDA/t CAGR of 25% vs previous cycle (FY04-08) CAGR of 36%
Summary of key operating metrics

Source: CSO, company data, Goldman Sachs Global Investment Research.

9%
8% 9%
16%
10%
36%
25%
20%
6%
11%
10%
8%
4%
25%
24%
19%
0%
5%
10%
15%
20%
25%
30%
35%
40%
GDP
growth
Industry
volume
Coverage
volume
ASP Cash
cost/T
EBITDA/T Avg
EBITDA
margin
Average
CROCI
FY04FY08 Basecase

We expect cash returns (CROCI) to reach close to previous up-cycle peak levels by FY18E
We expect coverage CROCI to almost double over FY14-18E
We believe sector CROCI has bottomed out in FY14E and will start recovering FY15E onwards on the back of higher asset turn and
margins (on higher volumes/prices). We expect our coverage CROCI to more than double to 27% by FY18E (from current levels)
reaching closer to the peak CROCI of 28.5% in FY18E.
We forecast that Shree Cement will continue to command the highest CROCI among our India cement coverage.
Exhibit 36: CROCI to rise in FY14-18E driven largely by higher EBITDA/t
Indian companies CROCI decomposition

FY08 FY13 FY14E FY15E FY16E FY17E FY18E FY14E-FY18E
Ultratech Cement GCI Productivity (T / GCI) 267 165 147 140 140 145 151 4
EBITDA / T (Rs / T) 1,002 990 748 895 1,097 1,396 1,825 1,077
Diversification Index (x) 1.01 1.16 1.23 1.21 1.18 1.16 1.14 -9.2%
Cash Conversion Index (%) 74% 100% 91% 90% 85% 81% 79% -12%
CROCI (%) 20.1% 19.1% 12.3% 13.7% 15.4% 19.0% 24.8% 12.4%
Ambuja Cements GCI Productivity (T / GCI) 305 260 234 215 196 201 217 (17)
EBITDA / T (Rs / T) 1,219 1,100 713 868 1,094 1,380 1,794 1,081
Diversification Index (x) 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.0%
CROCI (%) 30.8% 23.9% 13.6% 15.9% 17.6% 21.6% 28.5% 14.9%
Shree Cement GCI Productivity (T / GCI) 294 208 194 185 181 181 183 (11)
EBITDA / T (Rs / T) 1,306 1,031 936 1,153 1,385 1,687 2,138 1,201
CROCI (%) 32.3% 21.4% 18.7% 21.3% 23.6% 27.4% 34.2% 15.5%
ACC GCI Productivity (T / GCI) 377 272 249 220 197 199 215 (34)
EBITDA / T (Rs / T) 958 810 569 599 816 1,083 1,489 919
Cash Conversion Index (%) 96% 104% 79% 95% 92% 89% 83% 4%
CROCI (%) 34.8% 22.9% 11.2% 12.5% 14.8% 19.1% 26.4% 15.2%
Industry GCI Productivity (T / GCI) 311 207 186 173 167 171 180 (6)
EBITDA / T (Rs / T) 1,081 976 724 855 1,073 1,365 1,787 1,063
CROCI (%) 28.5% 20.9% 13.2% 14.8% 16.8% 20.6% 27.1% 13.9%

Cement consumption to grow at 11% CAGR based on cross-country analysis
Historical growth rates likely to underestimate future growth in demand
Given a lack of bottom-up data, most analysts and investors have relied on a top-down multiple of GDP growth to forecast cement
demand. Housing (including rural housing) accounts for 68% of total cement consumption in India. Of this a significant proportion is
constituted by repairs, which makes it difficult to estimate cement demand from the housing sector.
We believe that, with the new governments focus on infrastructure and low-cost housing, a historical multiplier approach would
underestimate the potential demand. Historically, the cement demand to GDP growth multiplier in India has averaged 1.1x. However,
we find that the multiplier has varied significantly post liberalization (FY94-98) the multiplier was 1.8x given the opening up of the
economy, while over the last five years (2009-13) it declined to 0.8x due to the decline in fixed assets investments.
Given this backdrop, we prefer a different approach, estimating demand by looking at per capita consumption levels. We note that
per capita consumption of cement in India is much lower than in other major emerging markets, at around 195kg compared with
352kg in Brazil, 442kg in Russia and 1,632kg in China.
Exhibit 37: Historically, cement demand/GDP has been 1.1x

Exhibit 38: Indias per capita consumption (195kg) is lower than most
emerging markets

Source: CSO, Cement Manufacturers Association, Goldman Sachs Global Investment Research.

Source: CSO, Cement Manufacturers Association, WDI, Global Cement Report 9
th
Edition.

-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
F
Y
9
3
F
Y
9
4
F
Y
9
5
F
Y
9
6
F
Y
9
7
F
Y
9
8
F
Y
9
9
F
Y
0
0
F
Y
0
1
F
Y
0
2
F
Y
0
3
F
Y
0
4
F
Y
0
5
F
Y
0
6
F
Y
0
7
F
Y
0
8
F
Y
0
9
F
Y
1
0
F
Y
1
1
F
Y
1
2
F
Y
1
3
Cement Demand growth (%) Cement Intensity (Cement demand growth/GDP growth) - RHS
Due to 6% Agri GDP
growth previous year +
c8% growth in IIP/Gross
Fixed Capital Formation
Fall in demand due to 1) high base
effect 2) Decline in Agri GDP (-.2%
YoY) 1.4% decline in GFCF (-1.4%)
Cement multiplier below
1x in FY94 - Agri GDP
declined by 6.6% previous
year
Due to 6% Agri GDP growth in FY02
+ c15% growth in Gross Fixed Capital
Formation
Cement multiplier 0.7x in
FY11 despite high GFCF
(11%) & IIP (9.7%) - Due to
low agri GDP growth in
FY10 (0.8%)
Cement demand negative
in FY94 - GFCF declined
0.9% in FY94
High Cement demand in FY98 -
high GFCF (8.9%) and high real
GDP growth (5%). Cement demand high in
FY97due to high Agro
growth : 10%
Argentina
Brazil
CzechRepublic
France
Germany
India
Indonesia
Italy
Japan
Malaysia
Mexico
Nigeria
Philippines
Poland
Russia
SouthAfrica
SouthKorea
Spain
Taiwan
Thailand
Turkey
UnitedKingdom
USA
100
200
300
400
500
600
700
800
900
1,000
5 10 15 20 25 30 35 40 45 50 55
C
e
m
e
n
t
c
o
n
s
u
m
p
t
i
o
n
p
e
r
c
a
p
i
t
a
GDPpercapita(US$'000s)
China
Australia,
Switzerland
Canada
FY19E

Globally, we find a high correlation between per capita income and per capita cement consumption. The correlation in developed
markets is as high as 80% while in emerging markets it is 57%. Within emerging markets we find some variation in per capita
consumption with respect to per capita income between countries, with South Korea, Turkey, China and Malaysia showing high PCC
relative to per capita income.
Exhibit 39: We find high correlation between per capita income and cement
consumption in emerging markets
Cement consumption vs. per capita GDP EM (ex China)

Exhibit 40: and also in developed markets
Cement consumption vs. per capita GDP DM

th
Edition.

th
Edition.
We believe that in the medium term India can achieve PCC growth similar to what other emerging economies in the past have
achieved at similar PCC levels. We look at other emerging countries at a point in time when their PCC was similar to Indias current
PCC levels. We find that it took a median of five years for PCC to rise by 50%, implying a 9% CAGR over the period. We believe this
is a base case PCC growth rate that India can achieve in the medium term. With a population growth rate of 2%, this would imply a
cement demand growth rate of 11% CAGR.
R=0.5692
100
200
300
400
500
600
700
800
900
1,000
5,000 10,000 15,000 20,000 25,000
C
e
m
e
n
t
c
o
n
s
u
m
p
t
i
o
n
p
e
r
c
a
p
i
t
a
F
Y
1
3
NominalGDPpercapita FY13
Argentina
Brazil
India
Indonesia
Malaysia
Mexico
Nigeria
Philippines
Poland
Russia
SouthAfrica
SouthKorea
Taiwan
Thailand
Turkey
R=0.8063
100
200
300
400
500
600
700
30,000 40,000 50,000 60,000 70,000 80,000 90,000
C
e
m
e
n
t
c
o
n
s
u
m
p
t
i
o
n
p
e
r
c
a
p
i
t
a
F
Y
1
3
NominalGDPpercapita FY13
Australia
Canada France
Germany Japan
Switzerland
UnitedKingdom
USA

Exhibit 41: We forecast 11% CAGR for cement demand over the next 5-9 years
Cement demand growth derivation

However, we expect the demand growth to be back ended
We expect 8% growth in FY15E, to escalate to 13% by FY18E. We think the full benefit of infrastructure investment and low-cost
housing likely to be brought in by the new government will only start to accrue from FY16. We believe FY15 will benefit from a
lower base (3% demand growth in FY14) and the first signs of reforms introduced by the government.
Exhibit 42: We expect all India utilization to reach 85% (97% ex-South India) by FY18E
Cement demand supply model

Source: Company data, Cement Manufacturers Association, Goldman Sachs Global Investment Research.
IndiaImpliedcementconsumptiongrowth 50%increase 100%increase
FY14percapitalconsumption(kg) A 195 195
Population(mn) B 1,275 1,275
Cementconsumption(mt) C=AXB 249 249
NoofyearsforPCCtoincrease D 5 9
Exityear FY19E FY23E
ImpliedPCCCAGR E 9.00% 8.73%
ExitPCCIndia(kgs) F=AX(1+E)^D 300 414
EstpopulationCAGR G 1.70% 1.70%
ExitPopulationIndia(mn) H=BX(1+G)^D 1,387 1,484
Impliedcementconsumption(mt)Exit I=FXH 416 615
ImpliedcementdemandCAGR(%) J=(I/C)^(1/D)1 10.9% 10.6%
CAGR
Unit FY04 FY05 FY06 FY07 FY08 FY13 FY14E FY15E FY16E FY17E FY18E FY14-18E
All India
All India Ex-South
Previous up-cycle Recent downcycle Base case

PCC in other emerging countries (ex China) grew by 50% in 5 years, implying 9% CAGR
Our growth estimate is based on growth registered by emerging economies at similar PCC levels. We analyse seven emerging
economies with PCC levels of 192-388kg in the last 25 years. We find that these countries were able to increase their PCC by 50% in
five years (median) registering 9% CAGR. However, there have been some outliers with Malaysia increasing its PCC growth by 50%
in 3 years and Mexico taking 12 years. We exclude China from this analysis due to exceptionally high GDP growth and fixed assets
investment growth during this period (1990-1993).
Exhibit 43: Cement consumption (PCC) has increased 50% over five years
No. of years for PCC to increase 50% (from levels similar to India)

Exhibit 44: PCC rise of 50% in 5 years implies 9% CAGR
PCC CAGR vs per capita income CAGR

Note: Size of bubble represents exit cement PCC
Source: WDI, Global Cement Report 9
th
Edition.

th
Edition.

12
6
5
5
5
5
5
4
3
0 2 4 6 8 10 12 14
Mexico
Argentina
Turkey
Thailand
Russia
SouthAfrica
Brazil
Poland
Malaysia
278
311
453
336
449
322
289
427 600
300
336
0%
2%
4%
6%
8%
10%
12%
14%
16%
0% 5% 10% 15% 20% 25% 30%
P
e
r
c
a
p
i
t
a
c
m
e
n
t
c
o
n
s
u
m
p
t
i
o
n
C
A
G
R
NominalGDPCAGRpercapita(localccy)
Argentina
Brazil
Malaysia
Mexico
Poland
Russia
SouthAfrica
Thailand
Turkey
India FY19E
Median

Triangulating PCC-based demand growth to GDP multiplier
Furthermore, we find that the cement demand growth to GDP multiplier implied by 11% growth over FY14E-FY18E is about 1.7x
(average real GDP growth of 6.4% in the period). This multiplier is similar to the median of other emerging economies and also
Indias historical multiplier in FY94-98.
During FY94-98 just post liberalization, the multiplier was 1.8x. Cement demand during this phase grew at a 12% CAGR.

Exhibit 45: Starting at similar per capita consumption (PCC) levels (~200kg) as India, it has taken other emerging economies a median of 5 years to increase PCC
by 50%, implying a 9% CAGR
Cement demand growth vs macro indicators

Source: WDI, IMF, Global Cement Report 9
th
Edition, Goldman Sachs Global Investment Research.
50%growthin
cementconsper
capita
Beginning
Year
Percapita
cement
(kgs)
GDPper
capita
(US$)
Industry
as%GDP
Services
as%GDP
Ending
Year
Percapita
cement
(kgs)
GDPper
capita
(US$)
Industry
as%GDP
Services
as%GDP
No.of
years
Percapita
cement
Percapita
Nominal
GDP
Cement
demand
growth
GFCF
growth
RealGDP
growth
Cement
demand
multiplier/GDP
GFCFgrowth/
RealGDP
growth
Argentina 2005 192 4,686 36% 55% 2011 278 10,496 31% 60% 6 6% 21% 7% 11% 7.1% 1.0x 0.5x
Brazil 2005 200 4,845 29% 65% 2010 311 11,112 28% 68% 5 9% 11% 10% 10% 4.5% 2.3x 6.1x
Malaysia 1990 302 2,419 42% 43% 1993 453 3,411 40% 46% 3 14% 10% 17% 17% 9.4% 1.8x 1.8x
Mexico 1995 230 3,145 33% 62% 2007 336 9,573 36% 61% 12 3% 15% 5% 7% 3.7% 1.3x 4.6x
Poland 2004 301 6,549 31% 64% 2008 449 14,447 32% 65% 4 11% 10% 11% 12% 5.4% 1.9x 2.2x
Russia 2000 209 1,778 38% 56% 2005 322 5,342 38% 57% 5 9% 25% 8% 10% 6.1% 1.4x 1.6x
SouthAfrica 2002 211 2,458 33% 63% 2007 289 5,852 31% 66% 5 6% 10% 8% 0% 4.8% 1.7x NA
Thailand 2000 284 1,933 42% 49% 2005 427 2,682 44% 46% 5 9% 7% 9% 9% 5.1% 1.9x 1.6x
Turkey 2001 388 3,010 30% 60% 2006 600 7,627 29% 62% 5 9% 24% 11% 18% 7.2% 1.5x 2.4x
Median 230 3,145 33% 60% 336 9,573 32% 61% 5 9% 10% 9% 10% 5.1% 1.7x 2.0x
India
19912013 1991 63 344 25% 45% 2013 195 1,458 26% 56% 22 5% 11% 7% 9% 6.7% 1.1x 1.2x
19911997 1991 63 344 25% 45% 1997 82 433 26% 48% 6 4% 12% 6% 8% 6.2% 1.0x 1.3x
19931997 1993 57 324 25% 46% 1997 82 433 26% 48% 4 9% 12% 12% 9% 6.5% 1.8x 1.5x
19972002 1997 82 433 26% 48% 2002 109 486 26% 53% 5 6% 8% 8% 6% 5.6% 1.5x 1.0x
20032007 2003 115 563 26% 53% 2007 151 1,043 29% 53% 4 7% 13% 8% 18% 8.8% 1.0x 2.1x
20042009 2004 123 645 28% 53% 2009 171 1,060 28% 55% 5 7% 12% 9% 11% 8.7% 1.0x 1.3x
20092013 2009 171 1,060 28% 55% 2013 195 1,458 26% 56% 4 3% 14% 5% 6% 6.2% 0.8x 0.8x
20132018 2013 195 1,458 26% 56% 2018 300 2,170 NA NA 5 9% 9% 11% 6% 6.4% 1.7x 0.9x

PCC for six emerging economies shown in Exhibit 48 doubled in 9 years (median) at 8.7% CAGR
We analyse six emerging economies with PCC levels of 91-388kgs in the last 25 years. We find that these countries were able to
increase their PCC by 100% in nine years (median) registering 9% CAGR. We exclude China from this analysis due to exceptionally
high GDP growth and fixed assets investment growth during this period (1990-1994).
This 8.7% CAGR ties in to the 9% CAGR growth rate witnessed by other emerging countries (starting at PCC of ~200kgs) to increase
their consumption by 50% (as highlighted in the previous section).
However, if we add to the group China (which doubled its PCC during 1990-1994), average PCC growth would be about 12%.
Factoring in population growth of 2%, total cement demand growth would be about 14% and this is the base assumption for our
blue-sky scenario analysis.
Exhibit 46: Cement consumption (PCC) has doubled over nine years
No. of years for PCC to double

Exhibit 47: PCC doubled, increasing at 8.7% CAGR
PCC CAGR vs. per capita income CAGR

Note: Size of bubble represents exit cement PCC
th
Edition.

th
Edition.
18
12
11
7
6
4
0 5 10 15 20
Brazil
Indonesia
Turkey
Russia
Malaysia
Argentina
719
430
771
227
311
197
414
370
2%
3%
8%
13%
18%
23%
28%
33%
5% 10% 15% 20% 25% 30%
P
e
r
c
a
p
i
t
a
c
m
e
n
t
c
o
n
s
u
m
p
t
i
o
n
C
A
G
R
NominalGDPCAGRpercapita(localccy)
Malaysia
Russia
Turkey
Argentina
Brazil
Indonesia
India FY23E
Median

Exhibit 48: Six emerging economies have taken 9 years (median) to double PCC, increasing at 8.7% CAGR
Cement demand growth vs. macro indicators

th
We see a structural shift in cement consumption in India
Cement consumption in India has been muted in spite of high GDP growth. This could be attributed to lower infrastructure growth
and weakness in both government and private expenditure. However, on our PCI to PCC matrix, we find India to be in the high
potential structural shift quadrant. We believe we are likely see a step change in cement demand growth.
Exhibit 49: Cement consumption in India has remained low in spite of high
GDP growth
Real GDP growth vs per capita cement consumption

Exhibit 50: With rise in per capita income levels, Indias PCC is likely to rise
Per capita income growth vs per capita cement consumption

th
Edition.

th
Edition.
100%growthin
cementconsper
capita Year
Percapita
cement
(kgs)
GDPper
capita
(US$)
Industry
as%GDP
Services
as%GDP Year
Percapita
cement
(kgs)
GDPper
capita
(US$)
Industry
as%GDP
Services
as%GDP
No.of
years
Percapita
cement
Percapita
Nominal
GDP
Cement
demand
growth
GFCF
growth
RealGDP
growth
Cementdemand
multiplier/GDP
GFCFgrowth/
RealGDP
growth
Malaysia 1990 302 2,419 42% 43% 1996 719 4,773 44% 45% 6 16% 11% 11% 16% 9.6% 1.1x 1.8x
Russia 2000 209 1,778 38% 56% 2007 430 9,187 36% 59% 7 11% 25% 10% 13% 6.8% 1.5x 1.9x
Turkey 2001 388 3,010 30% 60% 2012 771 10,509 27% 64% 11 6% 16% 8% 10% 5.2% 1.5x 2.1x
Argentina 2002 102 2,702 32% 57% 2006 227 5,445 36% 56% 4 22% 18% 23% 28% 8.9% 2.6x 3.1x
Brazil 1992 158 2,544 39% 54% 2010 311 11,112 28% 67% 18 4% 15% 5% 5% 3.4% 1.5x 1.4x
Indonesia 1999 91 679 43% 37% 2011 197 3,468 47% 38% 12 7% 16% 8% 8% 5.2% 1.6x 1.4x
Median 183 2,482 38% 55% 370 7,316 36% 57% 9 9% 16% 9% 11% 6.0% 1.5x 1.8x
China 1990 183 342 41% 32% 1994 351 466 47% 34% 4 18% 25% 19% 22% 12.6% 1.5x 1.7x
0%
1%
2%
3%
4%
5%
6%
7%
8%
100 200 300 400 500 600 700 800 900 1,000
R
e
a
l
G
D
P
g
r
o
w
t
h
(
F
Y
0
1
F
Y
1
3
)
Percapitacementconsumption(FY01FY13)
Argentina
Brazil
Canada
CzechRepublic
France
Germany
India
Indonesia
Japan
Malaysia
Mexico
Philippines
Poland
Russia
SouthAfrica
Taiwan
Thailand
Turkey
UnitedKingdom
USA
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
100 200 300 400 500 600 700 800 900 1,000
P
e
r
c
a
p
i
t
a
i
n
c
o
m
e
U
S
$
(
F
Y
0
1
F
Y
1
3
)
Percapitacementconsumption(FY01FY13)
Argentina
Brazil
Canada
CzechRepublic
France
Germany
India
Indonesia
Japan
Malaysia
Mexico
Philippines
Poland
Russia
SouthAfrica
Taiwan
Thailand
Turkey
UnitedKingdom
USA
Exceptionalcases:
Highintensity
HighGrowth High
Income
High Potential
structualshifts
Mature markets
declingintensity

Bottom-up demand analysis is challenging given lack of data on housing starts
Housing accounts for about 68% of demand, commercial & industrial about 19% and infrastructure 13% of cement demand in India.
Bottom-up demand analysis is challenging given a lack of data on housing starts (especially rural), repairs and unauthorized
construction.
Exhibit 51: Our bottom-up demand estimates (excluding demand from rural housing) account for less than 20% of total annual cement consumption

Source: L&T Construction, Planning Commission, Indian Railways, NHAI, PropEquity, Dalmia Cements presentation, company data, Goldman Sachs Global Investment Research.

Roads(NHAI)constructionrequires2mtcementannuallyonanaverage
>WeestcementneededperkmforNHAIroadsisaround475tonnesforbitumenroads(Source:PlanningCommission),
1000kmforconcreteroad(GoI)andweestimate10%ofroadsareconcrete
>Wehavenotbeenabletogetdataonstateandintercityroads/flyoverswhicharecementintensive
Cementrequiredforpowerplantconstructionisintherangeof56mtpa
>BasedoninputsfromInfrateamwehaveusedassumptionsonEPCcostas%oftotalcostandcementcostas%ofEPC
cost
Annualpresalesdataoftop15citiessuggestsalesof300500mnsqftinlast6yearsimplying1321mtofcementdemand
(58%ofIndiastotalcementdemand)
>Forconsumptionof1mtcement,40mnsqftofconstructionisrequired.Residentialhousingrequires0.8bag(40kg)for
everysqfeetofconstruction
>HousingdataforruralIndianotavailable
Delhimetro(Phase1&2)consumed4.7mt189kmsover12years0.4mtcementpa
>13projectsunderimplementationlikelytoneed4mt(for167kms)innext4years
>27projectsplannedWillneed24mt8mtduringFY1518and16mtinFY1925E
>Weestapprox25,000tonnesofcementrequiredperkmofmetroconstruction
Cementconsumptioninairportshasnotbeenverysignificant
>MumbaiT2&DelhiT3airportsconsumed0.3mt/0.4mtofcementintotal(for4.3/5.4mnsqftofconstruction)
>Indiahas10citieswith>3mnpopulationbutoutofwhich6citieshavecompletedairportrenovations
IndianRailwaysconsume1.4mtcementannuallyonanaverage
>Weestcementneededperkmforrailwaysisaround250tonnessignificantlylowerthanmetroconstruction(asmost
metrotracksareelevated(onoverheadbridges)andhavemorestationsperkm)
>DedicatedFreightCorridorsCementrequired0.8MTtillFY21Eforconstructionof3,295kms
>DMICwillneedsignificantlylargeramountofcementduetoconstructionofdedicatedcitiesHowever,DMICconstruction
onlyafterFY18
Metro(subway)
construction
Airports
Roads
(NHAI)
Railways
Power
Plants
Urban
Housing

Blue-sky analysis: Factoring in higher growth environment
In our base case we expect FY18E coverage EBITDA/t to be almost equal to required EBITDA/t - EBITDA required for 15% pre-tax
ROCE for greenfield capacity. In our blue sky analysis we forecast the coverage EBITDA/t to be at a 21% premium to required break-
even EBITDA/t by FY18E (peak cycle premium in FY08 was 11%).
Blue sky scenario: Coverage EBITDA/t 21% higher than required EBITDA/t for greenfield capacity to generate break-even
returns
14% CAGR cement demand growth (FY14-18E) taking utilizations to 94% /106% (India/India Ex South) by FY18E.
ASP CAGR of 10% over FY14E-FY18E
This would imply:
Cement/GDP multiplier of 2.2x vs. 1x in previous upcycle (FY04-FY08) and 1.7x in base case
EBITDA margin of 32% in FY18E average of 27% over FY14E-FY18E vs. previous up-cycle average of 25% and base case
average of 24%.
EBITDA/t CAGR of 32% vs. base case 25% and previous bull cycle 36%.
Potential upside of 46%-62% for pure-play large caps, with FY16E target EV/EBITDA of 13.4x-16.2x. We apply the previous
peak cycle average EV/EBITDA for large caps of 7.1x to FY18E EBITDA and discount it back by two years.

Exhibit 52: In our blue-sky scenario analysis we expect demand CAGR of 14% taking utilization to 94% (106% India ex South) by FY18E
India cement demand supply model under blue-sky scenario


CAGR CAGR
Unit FY04 FY05 FY06 FY07 FY08 FY13 FY14E FY15E FY16E FY17E FY18E FY14-18E FY15E FY16E FY17E FY18E FY14-18E
All India
Installed Capacity MT 146 153 160 166 199 378 409 421 442 453 468 3% 421 442 453 468 3%
Effective Capacity MT 144 152 158 166 179 345 372 393 418 435 445 5% 393 418 435 445 5%
Total Consumption (incl Exports) MT 123 133 145 158 170 240 249 269 298 334 377 11% 271 310 361 420 14%
Consumption growth, YoY % 7.3% 8.4% 9% 9% 7% 6% 3% 8% 11% 12% 13% 9% 15% 16% 16%
Consumption as % of Effective Capacity % 85% 88% 92% 95% 95% 70% 67% 68% 71% 77% 85% 69% 74% 83% 94%
All India Ex-South
Installed Capacity MT 99 104 108 112 136 227 258 269 288 288 300 4% 269 288 288 300 4%
Effective Capacity MT 98 104 107 112 121 210 225 244 267 281 287 6% 244 267 281 287 6%
Total Consumption (incl Exports) MT 85 93 102 110 118 178 184 199 220 247 279 11% 199 227 263 305 14%
Consumption growth, YoY % 5.0% 9.9% 9% 8% 8% 5% 3% 8% 11% 12% 13% 8% 14% 16% 16%
Consumption as % of Effective Capacity % 87% 90% 95% 98% 98% 85% 82% 81% 83% 88% 97% 81% 85% 94% 106%
Blue sky Previous up-cycle Recent downcycle Base case

Exhibit 53: We expect EBITDA/t CAGR of 32% in blue-sky scenario over
FY14E-FY18E
EBITDA per tonne trajectory in blue-sky scenario

Exhibit 54: We expect EBITDA margin to increase from 18% in FY14E to 37%
in FY18E
Cement EBITDA margin trajectory in blue-sky scenario



Exhibit 55: and CROCI to increase from 13% in FY14E to 35% in FY18E
Coverage CROCI vs Industry utilization in blue-sky scenario

Exhibit 56: We assume coverage EBITDA/t to be 21% higher than required
EBITDA/t by FY18E in blue-sky scenario
Required EBITDA/t for new greenfield capacity in blue-sky scenario

EBITDA required for 15% pre-tax ROCE (break-even returns)


0
500
1,000
1,500
2,000
2,500
60%
65%
70%
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85%
90%
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100%
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EBITDA/TRHS UtilizationAllIndia UtilizationIndiaexSouth
18%
20%
22%
32%
34%
28%
31%
22%
23%
23%
18%
21%
26%
31%
37%
0%
5%
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15%
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EBITDAmarginRHS UtilizationAllIndia
UtilizationIndiaexSouth
0%
5%
10%
15%
20%
25%
30%
35%
40%
60%
65%
70%
75%
80%
85%
90%
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100%
105%
110%
F
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F
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C
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CROCIRHS UtilizationAllIndia UtilizationIndiaexSouth
70%
60%
50%
40%
30%
20%
10%
0%
10%
20%
30%
500
1,000
1,500
2,000
2,500
F
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x
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(
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)
E
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/
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(
R
s
)
ReqdEBITDA/T CoverageEBITDA/T Excess/Shortfall(RHS)

Exhibit 57: We see 46-109% upside for our coverage under a blue-sky scenario
Implied valuation under blue-sky scenario

* denotes the stock is on our regional Conviction List.
Exhibit 58: EV/EBITDA-based valuation under a blue-sky scenario

FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E
SHCM.BO ShreeCementLtd Buy 6,249 9,600 12,672 103% 18.5x 13.5x 30.2x 23.5x 6.9x 5.3x 300 267
GRAS.BO GrasimIndustries Buy* 2,954 5,000 6,172 109% 11.4x 8.1x 23.2x 16.0x 2.4x 2.1x
ULTC.BO UltratechCement Buy 2,267 2,850 3,664 62% 18.8x 13.4x 30.6x 21.3x 5.0x 4.1x 257 243
ABUJ.BO AmbujaCements Neutral 214 235 313 46% 19.9x 13.8x 30.6x 21.7x 4.6x 4.0x 255 221
ACC.BO ACC Neutral 1,380 1,650 2,222 61% 27.0x 16.2x 42.8x 25.5x 5.1x 4.6x 224 192
Blueskyscenario Rating
Current
Price
NewTP
Implied
value
Potentialup/
downside
ImpliedEV/EBITDA ImpliedPE ImpliedPB ImpliedEV/T(USD)
Targetpricederivation Shree Ultratech Ambuja ACC
FY18E - EBITDA - Rs mn 63,753 157,148 73,763 67,069
EV/EBITDA 7.10x 7.10x 7.10x 7.10x
Implied EV - Rs mn 452,644 1,115,752 523,715 476,190
Less: Net debt - FY18E - Rsmn (114,394) (172,625) (102,917) (66,820)
Less: Minorities - FY18E - Rs mn 2,418 27
Implied market cap - Rs mn 567,039 1,285,959 626,632 542,984
No. of shares - mn 35 274 1,537 188
Implied value - Rs/share 16,277 4,691 408 2,885.38
Discounting factor 0.78 0.78 0.77 0.77
Implied valuation - Rs/share 12,672 3,664 313 2,222

Exhibit 59: Grasim SOTP-based valuation under a blue-sky scenario

Exhibit 60: In our blue-sky scenario analysis, we assume EBITDA/t CAGR of 32% vs. 36% in previous upcycle and 25% in base case
Key operating metrics under various scenarios

Source: Company data, Cement Manufacturers Association, Goldman Sachs Global Investment Research.
Methodology
Valuation
Base (INR)
Value
(INR Mn)
Grasim's
Stake (%)
Value to Grasim
(INR Mn)
INR/ Share Holding
Co.
Discount
Value to
Grasim
(INR/ Sh)
NAV (Rs/ share) -
on market price
of subs
Ultratech
EV/EBITDA based Share
Price 3,664 1,004,426 60.33% 605,970 6,601 25% 4,951 4,085
Standalone Business 10.1x P/E on FY16E EPS 115 107,179 100.0% 107,179 1,168 25% 876 876
Idea Cellular Current Share Price 138 454,988 5.18% 23,568 257 25% 193 257
L&T Current Share Price 1,273 7,353 80 25% 60 80
ABNL Current Share Price 1,091 3,651 40 25% 30 40
Hindalco Current Share Price 142 7,729 84 25% 63 84
Implied valuation 6,172 5,421
Current Price 2,954
Discount to current market based NAV -46%
9%
8%
9%
16%
10%
36%
25%
20%
6%
11%
10%
8%
4%
25%
24%
19%
6%
14%
11%
10%
3%
32%
27%
22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
GDP
growth
Industry
volume
Coverage
volume
ASP Cash
cost/T
EBITDA/T Avg
EBITDA
margin
Average
CROCI
FY04FY08 Basecase Bluesky

Exhibit 61: In our blue sky scenario, we are up to 51%/81% higher than our base case/Bloomberg consensus earnings
Summary of estimates blue sky scenario


ACC CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY14E CY15E CY16E
Sales 119,374 141,743 175,102 229,677 2% 6% 9% 13% 119,705 134,470 144,807 0% 5% 21%
EBITDA 15,175 25,308 40,611 67,069 0% 16% 28% 34% 16,984 21,418 24,396 11% 18% 66%
NetIncome 9,765 16,400 27,138 46,665 1% 19% 34% 38% 10,856 13,307 15,880 10% 23% 71%
EPS 51.89 87.15 144.21 247.97 1% 19% 34% 38% 57.69 70.71 84.39 10% 23% 71%
Ambuja CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY17E CY14 CY15 CY16 CY14 CY15 CY16
Sales 103,575 122,841 155,302 203,245 3% 6% 9% 12% 103,994 116,543 120,757 0% 5% 29%
EBITDA 22,156 31,849 47,460 73,763 12% 21% 27% 32% 20,721 25,026 27,237 7% 27% 74%
NetIncome 15,784 22,284 31,780 49,802 12% 21% 29% 35% 13,274 15,793 17,555 19% 41% 81%
EPS 10.23 14.44 20.60 32.28 12% 21% 29% 35% 8.60 10.24 11.38 19% 41% 81%
Ultratech FY15E FY16E FY17E FY18E FY15E FY16E FY17E FY18E FY15 FY16 FY17 FY15 FY16 FY17E
Sales 244,519 296,218 366,442 455,714 3% 6% 9% 13% 252,886 290,857 NA 3% 2% NA
EBITDA 52,190 73,095 106,836 157,148 10% 17% 23% 28% 50,584 61,541 NA 3% 19% NA
NetIncome 32,789 47,232 71,702 108,505 12% 20% 26% 31% 27,363 34,646 NA 20% 36% NA
EPS 119.60 172.28 261.53 395.77 12% 20% 26% 31% 99.81 126.37 NA 20% 36% NA
ShreeCement FY14E FY15E FY16E FY17E FY18E FY14E FY15E FY16E FY17E FY18E FY14 FY15 FY16 FY14 FY15 FY16
Sales 57,424 70,589 86,022 111,750 141,748 0% 7% 8% 13% 16% 58,355 68,792 81,335 2% 3% 6%
EBITDA 14,191 21,350 29,406 43,882 63,753 0% 15% 19% 28% 33% 13,695 17,607 21,705 4% 21% 35%
NetIncome 8,202 14,615 18,822 29,492 44,575 0% 21% 27% 45% 51% 7,461 9,739 12,479 10% 50% 51%
EPS 235.42 419.48 540.23 846.49 1,279.43 0% 21% 27% 45% 51% 214.14 279.53 358.17 10% 50% 51%
Grasim FY15E FY16E FY17E FY18E FY15E FY16E FY17E FY18E FY15 FY16 FY17 FY15 FY16 FY17E
Sales 327,223 392,941 468,497 562,970 2% 4% 7% 10% 325,022 366,245 NA 1% 7% NA
EBITDA 56,764 80,164 115,502 167,193 9% 16% 21% 26% 59,065 70,819 NA 4% 13% NA
NetIncome 24,480 35,428 49,745 72,486 11% 17% 22% 27% 23,468 28,267 NA 4% 25% NA
EPS 266.55 385.75 541.65 789.26 11% 17% 22% 27% 255.53 307.78 NA 4% 25% NA
Differencefrombasecase Bloombergconsensus Difference Blueskyestimates

Exhibit 62: We see highest upside in Shree Cements among pure-play cement companies


Ticker CurrentPrice
EV/EBITDA
peakcyclemult
SHCM.BO 6,249 12,672
ULTC.BO 2,267 3,664
ABUJ.BO 214 313
ACC.BO 1,380 2,222
Ticker
EV/
EBITDA
DCF
SHCM.BO 12,672 14,889
ULTC.BO 3,664 4,299
ABUJ.BO 313 364
ACC.BO 2,222 2,537
Ticker
EV/
EBITDA
PBvsROE
avgoflargecaps
PBvsROE
cohistory
SHCM.BO 12,672 12,004 12,214
SHCM.BOadj 12,672 13,111
ULTC.BO 3,664 3,645 3,417
ABUJ.BO 313 288 345
ACC.BO 2,222 2,289 2,097
Ticker
EV/
EBITDA
EV/GCIvsCROCI/WACC
SHCM.BO 12,672 12,080
ULTC.BO 3,664 3,217
ABUJ.BO 313 263
ACC.BO 2,222 2,035
Ticker
EV/
EBITDA
EV/TvsRC
avgoflargecaps
EV/TvsRC
cohistory
SHCM.BO 12,672 9,796 8,923
ULTC.BO 3,664 2,914 2,788
ABUJ.BO 313 245 278
ACC.BO 2,222 1,981 1,801
>Generatesbestreturnonbacktesting
>Minimaldistortionduetodifferentaccountingpoliciesasonlytakescashincome/costsintoaccount
>Nextbestalternativeasitdiscountsfutureearningspotentialandnothistoricalvaluation
>Italsotakesintoaccountonlycashinflowsandoutflows
>Terminalvalueaccountsfor52%54%ofvalue
>ValuationsandpeckingordersimilartoEV/EBITDAforlargecapsexceptforShree
>AccelerateddepreciationpolicyofShreehasloweredROEandBV.
>Averagedepreciation/GFAforShree10.8%,vslargecaps4.5%Bookvalueunderstatedby28%
(Rs1,020/share)
>Regressionofjust4pureplayIndiancompanieshasverylowRsquare
>ResultssimilartoEV/EBITDAonarelativebasis
Notrelevantforcompanieswhichhaveundergonesignificantchangeincapacity
>UltratechmajorchangeincapacitypostrestructuringacquisitionofGrasimscementassetsin
2010whichalmostdoubleditscapacity
>ShreeTransformedfrom2mtpacapacityinFY02to13.5mtpacapacityinFY13
EV/EBITDA
DCF
EV/GCIvs
CROCI/WACC
PBvsROE
EV/TvsRC

Grasim Industries (GRAS.BO, CL-Buy): Significantly mispriced opportunity
Source of opportunity
We believe Grasim is significantly mispriced and add it to the Conviction Buy List trading at a 56% discount to
NAV. We revise our TP to Rs5,000 (from Rs3,300) primarily as we increase earnings estimates and TP for
Ultratech (from Rs1,555 to Rs2,850) despite lowering our Grasim FY15E/FY16E earnings by 19%/5% primarily due
to lower earnings estimates for the viscose staple fibre (VSF) business. Grasim holds 60% in Ultratech, the largest
cement company in India, and has businesses such as VSF and chemicals in the standalone entity. We believe 1)
risk reward for Grasim is compelling as the current 56% discount to NAV is unwarranted with the cement sector
headed towards a sustained upturn. 2) Grasim should benefit due to upfront capacity additions in cement and
also in the VSF/chemicals business. 3) While VSF business is under pressure due to overcapacity in China,
standalone business contributes less than 20% to SOTP.
Catalyst
1) Upturn in Ultratechs profitability due to improvement in cement demand We expect Ultratechs EBITDA/t to
more than double (2.4x) to US$30.4/t by FY18E and expect EBITDA to increase at a 34% CAGR in the same period
to US$2bn. 2) Commissioning of capacities in cement, VSF and chemicals division. 3) Reduction of holdco
discount in a sustained upcycle in cement The current structure of Grasim (i.e., all cement capacity in Ultratech)
was created in June 2010 and was not there in the previous upcycle (FY04-08). Hence, the holding co history of
the last 4 years is not reflective of the holding co discount that would prevail in an upcycle. We believe this
current discount should significantly narrow in the upcycle. Ultratechs earnings are consolidated on a line by line
basis in Grasims earnings (holds 60% in Ultratech).
Valuation
Our 12-month target price of Rs5,000 for Grasim is based on a sum of the parts. We apply a 25% holding
company discount to the NAV, in line with the regional average of 20%-30%.
Our NAV for Grasim includes: (1) Grasims stake in Ultratech valued at our target price for Ultratech of Rs2,850;
(2) standalone businesses (VSF, Chemicals) valued at 10X FY16E P/E, at a discount to the P/E of Lenzing (the
largest VSF player globally) based on Bloomberg consensus; and (3) its stake in L&T, Aditya Birla Nuvo and
Hindalco at current market prices. Ultratech, standalone business and minority stakes in group companies
contribute 77%, 17% and 7% of Grasims TP respectively.
Grasim is trading at 7.0X/5.2X FY15E/FY16E EV/EBITDA at a 56% discount to the average of ACC and Ambuja.
We also introduce FY17E earnings estimates.
Key risks
1) Rise in imported coal costs, 2) major rise in freight costs, 3) lower VSF prices.

Growth
Returns *
Multiple
Volatility Volatility
Multiple
Returns *
Growth
Investment Profile
Low High
Percentile 20th 40th 60th 80th 100th
* Returns = Return on Capital For a complete description of the investment
profile measures please refer to the
disclosure section of this document.
Grasim Industries (GRAS.BO)
Asia Pacific Industrials Peer Group Average
Key data Current
Price (Rs) 2,953.85
12 month price target (Rs) 5,000.00
Market cap (Rs mn / US$ mn) 270,819.5 / 4,608.9
Foreign ownership (%) 23.4
3/14 3/15E 3/16E 3/17E
EPS (Rs) 211.98 241.08 328.81 444.12
EPS growth (%) (22.2) 13.7 36.4 35.1
EPS (diluted) (Rs) 225.56 241.08 328.81 444.12
EPS (basic pre-ex) (Rs) 212.28 241.08 328.81 444.12
P/E (X) 12.7 12.3 9.0 6.7
P/B (X) 1.1 1.2 1.0 0.9
EV/EBITDA (X) 7.3 7.0 5.2 3.5
Dividend yield (%) 0.8 0.6 0.8 1.1
ROE (%) 10.0 9.8 12.2 14.6
CROCI (%) 10.6 10.8 12.5 15.3
17,000
19,000
21,000
23,000
25,000
27,000
29,000
2,000
2,200
2,400
2,600
2,800
3,000
3,200
May-13 Aug-13 Nov-13 Mar-14
Price performance chart
Grasim Industries (L) India BSE30 Sensex (R)
Share price performance (%) 3 month 6 month 12 month
Absolute 18.0 14.6 (3.4)
Rel. to India BSE30 Sensex 0.6 (4.6) (20.1)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 5/21/2014 close.

Grasim Industries: Summary financials
Profit model (Rs mn) 3/14 3/15E 3/16E 3/17E Balance sheet (Rs mn) 3/14 3/15E 3/16E 3/17E
Total revenue 290,041.9 320,232.4 376,249.1 437,776.8 Cash & equivalents 3,966.9 9,893.3 25,831.1 31,028.9
Cost of goods sold (208,410.7) (226,859.9) (259,726.1) (290,968.8) Accounts receivable 25,091.5 27,462.5 31,803.9 35,995.6
SG&A (18,201.1) (21,453.8) (24,929.0) (27,889.1) Inventory 42,565.0 41,420.3 46,256.7 49,909.1
R&D -- -- -- -- Other current assets 18,738.8 17,327.4 15,788.9 14,138.8
Other operating profit/(expense) (32,059.0) (35,883.6) (39,049.4) (42,851.9) Total current assets 90,362.2 96,103.5 119,680.6 131,072.4
EBITDA 45,945.8 52,080.7 69,332.7 95,270.4 Net PP&E 259,686.3 282,159.8 300,838.6 308,222.9
Depreciation & amortization (14,574.8) (16,045.6) (16,788.1) (19,203.4) Net intangibles 32,884.9 32,884.9 32,884.9 32,884.9
EBIT 31,371.0 36,035.1 52,544.6 76,067.1 Total investments 68,269.3 64,505.1 62,581.9 60,519.3
Interest income 2,044.1 2,910.0 3,393.9 4,549.0 Other long-term assets 26,263.3 33,305.0 40,911.2 49,107.9
Interest expense (4,473.2) (4,390.1) (4,265.0) (2,592.2) Total assets 477,466.0 508,958.3 556,897.2 581,807.4
Income/(loss) from uncons. subs. 1,028.7 1,131.6 1,244.7 1,369.2
Others 6,920.3 8,027.2 8,669.3 9,302.6 Accounts payable 32,458.8 34,494.8 39,339.9 44,140.3
Pretax profits 36,890.9 43,713.8 61,587.5 88,695.7 Short-term debt 15,300.2 15,300.2 15,300.2 15,300.2
Income tax (8,595.3) (10,599.5) (16,565.4) (26,247.8) Other current liabilities 37,822.0 39,913.7 44,420.3 49,170.9
Minorities (8,827.6) (10,973.5) (14,823.8) (21,660.3) Total current liabilities 85,581.0 89,708.7 99,060.4 108,611.4
Long-term debt 76,119.9 71,619.9 67,119.9 22,684.1
Net income pre-preferred dividends 19,468.0 22,140.8 30,198.3 40,787.6 Other long-term liabilities 30,262.7 32,026.9 33,950.1 36,012.7
Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 106,382.6 103,646.8 101,070.0 58,696.8
Net income (pre-exceptionals) 19,468.0 22,140.8 30,198.3 40,787.6 Total liabilities 191,963.6 193,355.5 200,130.3 167,308.3
Post-tax exceptionals 1,247.4 0.0 0.0 0.0
Net income 20,715.4 22,140.8 30,198.3 40,787.6 Preferred shares 0.0 0.0 0.0 0.0
Total common equity 216,144.0 235,270.9 261,611.1 297,683.0
EPS (basic, pre-except) (Rs) 212.28 241.08 328.81 444.12 Minority interest 69,358.4 80,331.9 95,155.7 116,816.1
EPS (basic, post-except) (Rs) 225.88 241.08 328.81 444.12
EPS (diluted, post-except) (Rs) 225.56 241.08 328.81 444.12 Total liabilities & equity 477,466.0 508,958.3 556,897.2 581,807.4
DPS (Rs) 21.00 16.88 23.02 31.09
Dividend payout ratio (%) 9.3 7.0 7.0 7.0 BVPS (Rs) 2,353.48 2,561.75 2,848.55 3,241.32
Free cash flow yield (%) (1.3) 3.3 6.7 14.1
Growth & margins (%) 3/14 3/15E 3/16E 3/17E Ratios 3/14 3/15E 3/16E 3/17E
Sales growth 4.9 10.4 17.5 16.4 CROCI (%) 10.6 10.8 12.5 15.3
EBITDA growth (18.8) 13.4 33.1 37.4 ROE (%) 10.0 9.8 12.2 14.6
EBIT growth (28.8) 14.9 45.8 44.8 ROA (%) 4.5 4.5 5.7 7.2
Net income growth (23.4) 6.9 36.4 35.1 ROACE (%) 8.5 8.9 11.3 14.6
EPS growth (23.4) 6.7 36.4 35.1 Inventory days 70.0 67.6 61.6 60.3
Gross margin 28.1 29.2 31.0 33.5 Receivables days 29.5 30.0 28.7 28.3
EBITDA margin 15.8 16.3 18.4 21.8 Payable days 53.7 53.9 51.9 52.4
EBIT margin 10.8 11.3 14.0 17.4 Net debt/equity (%) 6.7 4.0 (1.7) (12.9)
Interest cover - EBIT (X) 12.9 24.3 60.3 NM
Cash flow statement (Rs mn) 3/14 3/15E 3/16E 3/17E Valuation 3/14 3/15E 3/16E 3/17E
Net income pre-preferred dividends 19,468.0 22,140.8 30,198.3 40,787.6
D&A add-back 14,574.8 16,045.6 16,788.1 19,203.4 P/E (analyst) (X) 12.7 12.2 8.9 6.6
Minorities interests add-back 8,827.6 10,973.5 14,823.8 21,660.3 P/B (X) 1.1 1.1 1.0 0.9
Net (inc)/dec working capital (13,109.9) 2,901.4 173.9 1,706.9 EV/EBITDA (X) 7.3 7.0 5.2 3.5
Other operating cash flow (1,966.3) (2,101.9) (2,221.4) (2,421.2) EV/GCI (X) 0.8 0.8 0.7 0.6
Cash flow from operations 27,794.2 49,959.4 59,762.7 80,937.1 Dividend yield (%) 0.8 0.6 0.8 1.1
Capital expenditures (32,019.9) (38,519.1) (35,466.8) (26,587.7)
Acquisitions 0.0 0.0 0.0 0.0
Divestitures 0.0 0.0 0.0 0.0
Others 2,000.0 2,000.0 0.0 0.0
Cash flow from investments (30,019.9) (36,519.1) (35,466.8) (26,587.7)
Dividends paid (common & pref) (3,158.3) (3,013.9) (3,858.1) (4,715.8)
Inc/(dec) in debt 4,199.0 (4,500.0) (4,500.0) (44,435.8)
Common stock issuance (repurchase) 0.0 0.0 0.0 0.0
Other financing cash flows 7,846.5 0.0 0.0 0.0
Cash flow from financing 8,887.3 (7,513.9) (8,358.1) (49,151.6)
Total cash flow 6,661.6 5,926.4 15,937.8 5,197.9 Note: Last actual year may include reported and estimated data.
Source: Company data, Goldman Sachs Research estimates.


Exhibit 63: Our SOTP-based 12-month target price implies 69% upside
SOTP-based target price derivation


Exhibit 64: We change our FY15E/FY16E EPS estimates by -19%/-5%
Summary of estimate changes

Source: Bloomberg, Goldman Sachs Global Investment Research.

Methodology
Valuation
Base (INR)
Value
(INR Mn)
Grasim's
Stake (%)
Value to Grasim
(INR Mn)
NAV/ Share
(INR)
Holding
Co.
Discount
Value to
Grasim
(INR/ Sh)
Value to Grasim
(INR/ Sh)
OLD
NAV (Rs/ share) -
on market price of
subs
Ultratech
EV/EBITDA based
Share Price 2,850 781,359 60.33% 471,394 5,135 25% 3,851 2,102 4,085
Standalone Business 10x P/E on FY16E EPS 111 103,034 100.0% 103,034 1,122 25% 842 827 842
Idea Cellular Current Share Price 138 454,988 5.18% 23,568 257 25% 193 193 257
L&T Current Share Price 1,273 7,353 80 25% 60 58 80
ABNL Current Share Price 1,091 3,651 40 25% 30 29 40
Hindalco Current Share Price 142 7,729 84 25% 63 56 84
12-m Target Price 5,000 3,300 5,388
Current Price 2,954
Discount to NAV -56%
Discount to market price based NAV -45%
Consolidated New estimate Old estimate Change GS vs Consensus
Summary Financials - Rs bn FY15E FY16E FY17E FY18E FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E
Net Sales 320.2 376.2 437.8 512.2 323.4 367.3 -1% 2% 325.0 366.2 -1% 3%
EBITDA 52.1 69.3 95.3 132.7 59.5 71.2 -12% -3% 59.1 70.8 -12% -2%
EBITDA Margin (%) 16% 18% 22% 26% 18% 19% 18% 19%
Net Income 22.1 30.2 40.8 57.0 27.3 31.9 -19% -5% 23.6 28.3 -6% 7%
Net Margin (%) 7% 8% 9% 11% 13% 13% 7% 8%
EPS 241.08 328.81 444.12 620.95 297.72 347.30 -19% -5% 256.66 308.23 -6% 7%
Standalone
Summary Financials FY15E FY16E FY17E FY18E FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E
Net Sales 61.7 75.1 81.3 86.9 63.1 73.5 -2% 2% 62.3 71.1 -1% 6%
EBITDA 7.0 9.6 11.7 13.6 10.8 13.7 -35% -30% 11.3 11.6 -38% -18%
EBITDA Margin (%) 11% 13% 14% 16% 17% 19% 18% 16%
Net Income 8.3 10.2 10.4 11.2 10.8 12.0 -24% -15% 9.6 10.2 -14% 0%
Net Margin (%) 13% 14% 13% 13% 17% 16% 15% 14%
Consensus

Exhibit 65: Ultratech contributes 74%-84% of consolidated PAT
Contribution to PAT

Exhibit 66: Grasim is trading +1SD above historical EV/EBITDA
1 yr fwd EV/EBITDA trajectory



Exhibit 67: Grasim is trading above +1.5SD on P/E
1-yr fwd PE

Exhibit 68: ..but below median P/B
1-yr fwd P/B



Contribution to consolidated PAT FY15E FY16E FY17E FY18E
Standalone as % of PAT 37% 34% 26% 20%
Ultratech standalone (post minority)
as % of PAT 75% 74% 80% 84%
Others -12% -8% -6% -4%
Ultratech standalone PAT (Rs bn) - (a) 27.5 37.2 54.4 80.1
Attributable to Grasim - 60% of (a) 16.5 22.3 32.7 48.1
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Exhibit 69: Asian conglomerates are trading at a median discount of 19%

Exhibit 70: Our China conglomerates research team attribute a median
discount of 13% to NAV



Exhibit 71: Current stock price is implying discount to NAV at wide end of historical range
Grasim: Discount to NAV based on market price

Note: Valuation of standalone business based on 10x P/E (same as current target multiple)
Source: Bloomberg, Datastream, Goldman Sachs Research estimates
(70) (60) (50) (40) (30) (20) (10) 10 20
ShunTakHoldings
MelcoIntlDevelopment
WharfHoldings
HopewellHoldings
CheungKongHldgs
MGMChina
China Merchants
SJMHoldings
JardineMatheson
MTRCorporation
COSCOPacific
FosunInternational
CheungKongInfra.
GrandKoreaLeisure
KangwonLand
DalianPort(PDA)(H)
SembCorpMarineLtd
HPHTrust
PTUnitedTractors
JardineCycle&Carriage
(60) (50) (40) (30) (20) (10)
ShunTakHoldings
Tianjin DevHldgs
Wheelock &Co.
CheungKongHldgs
WharfHoldings
HopewellHoldings
JardineMatheson
FosunInternational
MelcoIntlDevelopment
Swire Pacific'A'
NWSHoldings
ShanghaiIndustrial
CITIC Pacific
HutchisonWhampoa
MTRCorporation
CheungKongInfra.
HPHTrust
China Merchants
COSCOPacific
ShanghaiInt'lPortGp
Tianjin PortDev (H)
DalianPort(PDA)(H)
MGMChina
Melco Crown
GalaxyEntertainment
SandsChina
SJMHoldings
Wynn Macau
55%
50%
45%
40%
35%
30%
25%
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DiscounttoNAV Median +1STDEV 1STDEV

Shree Cement Ltd (SHCM.BO, Buy): Top-quartile CROCI, reiterate Buy
We reiterate our Buy rating on Shree Cements with a revised target price of Rs9,600 (from Rs5,600) as we
increase our EBITDA estimates for FY14-17E by 0-20% and EPS estimates by 0-30% on higher volumes and ASPs.
We also change our valuation method from EV/GCI vs. CROCI/WACC to EV/EBITDA. We believe Shree Cements is
a structural story which will benefit from both earnings growth and multiple re-rating. Key reasons for our
positive stance on the stock:
1) Superior cash returns: We expect Shree to continue to generate top quartile CROCI among our Indian
coverage. We expect Shrees CROCI to almost double from 18.7% to 34.2% over FY14E-FY18E.
2) Doubling of capacity: We expect Shree is on track to expand its capacity to 26.5 mtpa by FY17E from 13.5mtpa
currently. We believe this will help Shree in continued market share gains and a key reason for significant rise in
earnings/returns driving re-rating. We expect sales/EBITDA CAGR of 21%/36% over FY14E-FY18E.
3) Lowest-cost cement producer: We expect Shree to have the highest cement EBITDA/t (among our India
coverage) of US$16/t in FY14E rising to US$36/T by FY18E (to continue to have the highest EBITDA/t in our
coverage). Shrees key cost advantages lie in lower freight costs (split grinding units), captive power, surplus
power sales, use of petcoke, other efficiencies such as better pricing from suppliers via faster payments. With
roadways being its primary mode of transport (80%) it is relatively insulated from railway fare hikes.
4) Shree is trading at 10.1X/7.2X FY15E/FY16E EV/EBITDA, at a 32%/34% discount to large caps (ACC, Ambuja
and Ultratech), which we believe is unjustified given its highest cash returns among Indian peers.
5) We are 10%-24% above Bloomberg consensus on FY14E-FY16E EPS and 4-14% higher on EBITDA.
Catalyst
1) Timely capacity expansion of 13mtpa over FY14E-FY17E; 2) Receipt of environment and forest clearance for
2.6mt greenfield project in Chhattisgarh; 3) Stable/appreciating US$/INR as it imports 40% of its pet-coke
requirements.
Valuation
Our 12-month target price of Rs9,600 implies 54% upside. We apply a 7.1x EV/EBITDA multiple (peak cycle
average of large-caps) on FY18E EBITDA and discount it back by two years to capture normalized earnings. Our
target price implies 15.8x/11.9x FY15E/FY16E EV/EBITDA.
Key risks
1) Significant rise in pet coke prices / freight costs; 2) Delays in capacity expansion.

Growth
Returns *
Multiple
Multiple
Returns *
Growth
Investment Profile
Low High
Shree Cement Ltd (SHCM.BO)
Key data Current
Price (Rs) 6,299.40
6/13 6/14E 6/15E 6/16E
EPS (Rs) 288.47 235.42 347.45 426.14
EPS growth (%) 59.3 (18.4) 47.6 22.7
EPS (diluted) (Rs) 288.17 235.42 347.45 426.14
P/E (X) 14.2 26.8 18.1 14.8
P/B (X) 3.7 4.6 3.6 2.8
EV/EBITDA (X) 8.1 13.8 10.2 7.3
Dividend yield (%) 0.6 0.3 0.4 0.5
ROE (%) 30.5 19.0 22.1 21.5
CROCI (%) 21.4 18.7 21.3 23.6
17,000
19,000
21,000
23,000
25,000
27,000
29,000
31,000
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
Shree Cement Ltd (L) India BSE30 Sensex (R)
Absolute 38.6 47.5 31.1
Rel. to India BSE30 Sensex 18.1 22.8 8.5


Shree Cement Ltd: Summary financials
SG&A (3,067.0) (3,645.1) (3,774.4) (4,319.2) Inventory 5,304.8 5,188.0 5,203.7 6,014.1
EBITDA 15,609.2 14,190.8 18,489.0 24,656.5 Net PP&E 19,152.7 24,786.6 31,144.1 37,349.0
Depreciation & amortization (4,356.3) (4,792.6) (5,279.5) (7,460.2) Net intangibles 0.0 0.0 0.0 0.0
Interest income 657.4 885.2 1,142.0 1,125.8 Other long-term assets 937.7 937.7 937.7 937.7
Interest expense (1,931.4) (1,142.7) (766.7) (612.9) Total assets 61,601.2 70,024.1 81,879.3 99,402.4
Income/(loss) from uncons. subs. 0.0 0.0 0.0 0.0
Others 1,225.9 287.1 329.0 396.7 Accounts payable 807.4 3,458.6 3,784.5 4,373.9
Minorities 0.0 0.0 0.0 0.0 Total current liabilities 14,170.0 14,954.9 16,016.2 17,794.7
Long-term debt 4,430.8 2,430.8 0.0 0.0
Post-tax exceptionals (10.6) 0.0 0.0 0.0
EPS (basic, pre-except) (Rs) 288.47 235.42 347.45 426.14 Minority interest 0.0 0.0 0.0 0.0
DPS (Rs) 23.34 19.06 28.14 34.51
Dividend payout ratio (%) 8.1 8.1 8.1 8.1 BVPS (Rs) 1,103.23 1,379.86 1,759.45 2,211.36
Free cash flow yield (%) 1.5 2.6 2.8 3.7
Sales growth (3.6) 2.7 14.6 20.6 CROCI (%) 21.4 18.7 21.3 23.6
EBITDA growth (5.2) (9.1) 30.3 33.4 ROE (%) 30.5 19.0 22.1 21.5
EBIT growth 45.6 (16.5) 40.6 30.2 ROA (%) 16.5 12.5 15.9 16.4
Net income growth 62.3 (18.3) 47.6 22.7 ROACE (%) 25.6 17.2 22.2 24.3
EPS growth 62.3 (18.3) 47.6 22.7 Inventory days 52.3 51.5 46.4 42.7
EBIT margin 20.1 16.4 20.1 21.7 Net debt/equity (%) (43.2) (49.4) (50.7) (52.1)
Interest cover - EBIT (X) 8.8 36.5 NM NM
Minorities interests add-back 0.0 0.0 0.0 0.0 P/B (X) 3.7 4.6 3.6 2.8
Net (inc)/dec working capital (644.1) 3,119.7 461.0 (485.8) EV/EBITDA (X) 8.1 13.8 10.2 7.3
Other operating cash flow (2,689.7) 0.0 0.0 0.0 EV/GCI (X) 1.9 2.6 2.2 1.8
Others 4,557.3 2,100.0 2,100.0 2,100.0
Dividends paid (common & pref) (689.9) (664.2) (980.2) (1,202.3)
Inc/(dec) in debt (8,761.3) (4,000.0) (2,430.8) 0.0
Cash flow from financing (7,580.7) (4,664.2) (3,411.0) (1,202.3)
Total cash flow (895.7) 3,123.8 4,897.5 9,054.0 Note: Last actual year may include reported and estimated data.


Exhibit 72: Our 12-m EV/EBITDA based target price implies 54% upside
Shree Cement target price derivation

Exhibit 73: Shree to almost double its capacity by FY17E from FY13
Shree Cements capacity addition schedule

Assumption: Risk free rate: 8.78%, Equity risk premium: 5%, Beta: 0.91



Exhibit 74: We expect EBITDA/t to recover
Shree Cements EBITDA/t trajectory

Exhibit 75: We expect 1500bps CROCI increase over FY14E-FY18E
Shree Cements CROCI trajectory

Source: Cement Manufacturers Association, Company data, Goldman Sachs Global Investment Research.


EV/ EBITDA based TP derivation Discounting
FY18E
EBITDA - FY18E (Rs mn) 48,030
EV/EBITDA 7.10x
Implied EV - Rs mn 341,016
Less: Net debt - FY18E (Rs mn) (86,778)
Implied market cap - Rs mn 427,794
No. of shares - mn 35
Implied value - Rs/share 12,280
Discounting factor 0.78
Discounted value - Rs/share 9,560
Target price - Rs/ share 9,600
2.0
6.8
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FY01 FY01-FY08 FY08 FY08-
FY12E
FY12 FY13 FY14E FY15E FY16E FY17E FY17E
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CementEBITDA/T
Cons.as%ofCap.(IndiaExSouth)RHS
Cons.as%ofCap.(AllIndia)RHS
7.8%
32.3%
18.7%
24.6%
-14%
2.6%
2.3%
3.7%
6.8% 34.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
FY02 FY02-FY08 FY08 FY08-FY14E FY14E FY15E FY16E FY17E FY18E FY18E

Exhibit 76: Shree plans to add 7.8mtpa capacity over FY15-17E
Schedule of capacity addition

Exhibit 77: We increase our estimates on the back of higher cement volumes and EBITDA
Key operating metrics


ShreeCement
Capacity(MT)
Clinker
(MT)
Cement
(MT)
Incremental
Clinker(MT)
Incremental
Cement(MT)GU
Location
Current 10.5 13.5
Mar14E 10.5 16.1 2.6 Rajasthan
Jun14E 12.5 18.7 2.0 2.6 ClinkeratRas(Rajasthan),GrindingUnitinBihar
Dec14E 12.5 21.3 0.0 2.6 Rajasthan
Jun15E 14.5 21.3 2.0 0.0 Raipur,Chattisgarh
Jun16E 16.5 23.9 2.0 2.6 Raipur,Chattisgarh
Jun17E 18.5 26.5 2.0 2.6 Karnataka
Change
Key operating metrics FY14E FY15E FY16E FY17E FY18E FY14E FY15E FY16E FY14E FY15E FY16E
Cement Business:
Volume inc clinker (mt) 13.7 14.8 16.7 19.3 21.7 13.7 14.8 16.1 0% 0% 4%
YoY growth (%) 10% 8% 13% 15% 12% 10% 8% 9%
ASP / T (Rs/T) 3,646 3,946 4,306 4,743 5,297 3,646 3,910 4,193 0% 1% 3%
YoY growth (%) 0% 8% 9% 10% 12% 0% 7% 7%
Cement Sales (Rs bn) 50.0 58.3 72.0 91.4 114.7 50.0 57.7 67.6 0% 1% 7%
YoY growth (%) 10% 17% 23% 27% 26% 10% 16% 17%
EBITDA / T (Rs/T) 936 1,153 1,385 1,687 2,138 936 1,057 1,179 0% 9% 17%
YoY growth (%) -9% 23% 20% 22% 27% -9% 13% 12%
EBITDA (Rs bn) 13.0 17.2 23.3 32.7 46.5 13.0 15.8 19.2 0% 9% 22%
YoY growth (%) -1% 33% 36% 40% 42% -1% 21% 22%
Power Business:
Units Sold (mn kwh) 2,129 2,047 1,937 1,914 1,734 2,129 2,048 1,983 0% 0% -2%
YoY growth (%) -18% -4% -5% -1% -9% -18% -4% -3%
Power ASP (Rs/kwh) 3.44 3.57 3.72 3.87 4.02 3.4 3.6 3.7 0% 0% 0%
YoY growth (%) -14% 4% 4% 4% 4% -14% 4% 4%
Power Sales (Rs bn) 7.5 7.5 7.4 7.6 7.2 7.5 7.5 7.5 0% 0% -2%
YoY growth (%) -30% 0% -1% 3% -6% -30% 0% 1%
EBITDA (Rs/kwh) 0.57 0.62 0.69 0.78 0.88 0.57 0.62 0.69 0% 0% 0%
EBITDA (Rs bn) 1.2 1.3 1.3 1.5 1.5 1.2 1.3 1.4 0% 0% -2%
YoY growth (%) -52% 6% 4% 13% 2% -52% 6% 6%
Old estimates New estimates

Exhibit 78: Shree has traded at a discount to large caps due to its size
12-m fwd EV/EBITDA

Exhibit 79: but we believe Shree should re-rate given significant capacity
increases and superior returns generated vs large caps
12-m fwd P/E



2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
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p
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Shree Ultratech Ambuja ACC
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
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Shree Ultratech Ambuja ACC

Ultratech Cement (ULTC.BO, Buy): Still more steam left for the industry leader
We upgrade Ultratech to Buy from Neutral as we turn more positive on the sector. We revise our target price to
Rs2,850 (from Rs1,555) as we revise FY15-16E EBITDA by -1% to +10% and EPS by -1% to +13%. We also change
our valuation method from EV/GCI vs. CROCI/WACC to EV/EBITDA. We believe being the industry leader (in terms
of capacity) it offers attractive exposure among the large caps to the structural upturn in the Indian cement sector.
1) Significant improvement in cash returns: We expect Ultratech CROCI to double from 12.3% to 24.8% over
FY14E-FY18E driven by significant improvement in EBITDA/t.
2) Upfront capacity addition: We expect Ultratech to benefit from upfront capacity expansions targets to
increase capacity by c20% in FY15E/16E from 52.5mt to 61.4mt. We believe this will help Ultratech in market
share gains vs. ACC/Ambuja where capacity expansion is backended (largely in CY15E end). We expect
EBITDA/PAT CAGR of 34%/39% over FY14E-FY18E. We have not consolidated capacity and earnings from the
4.8mt Gujarat plant acquired from JPA in Sep 2013, which is pending completion. Management has been guiding
that the company will continue to add capacity to maintain market share.
3) Highest EBITDA/t amongst large caps: We expect Ultratech to have the highest cement EBITDA/t (among our
India coverage) of US$12.5/t in FY14E rising to US$30.4/t by FY18E (next only to Shree Cements).
4) Ultratech is trading at 13.6x/10.1x FY15E/FY16E EV/EBITDA 16%/14% discount to ACC, Ambuja which we
believe is unjustified.
5) We are 7%-13% above Bloomberg consensus on FY15-16E EPS.
Catalyst
1) Timely capacity expansions - adding 6mt in Malkhed, Raipur in FY15E and 2.9mt in Rajasthan in FY16E 2)
Inorganic growth - Ultratechs D/E is low (FY14) at 0.08x. We believe this provides significant headroom to pursue
inorganic growth opportunities. Ultratech is also not constrained by its parent company unlike ACC and Ambuja
whose expansions are constrained by high leverage at Holcim. Ultratech has shown its intent of growing
inorganically announced acquisition 4.8mt capacity from JPA in Sep 2013.
Valuation
Our 12-month target price of Rs2,850 implies 26% upside. We apply a 7.1x EV/EBITDA multiple (peak cycle
target price implies 16.1x/12.3x FY15E/FY16E EV/EBITDA
Key risks
1) Significant rise in pet coke prices / freight costs; 2) delays in capacity expansion; 3) expensive acquisitions.

Growth
Returns *
Multiple
Multiple
Returns *
Growth
Investment Profile
Low High
Ultratech Cement (ULTC.BO)
Key data Current
Price (Rs) 2,267.15
3/14 3/15E 3/16E 3/17E
EPS (Rs) 76.98 106.60 143.14 207.47
EPS growth (%) (21.2) 38.5 34.3 44.9
EPS (diluted) (Rs) 80.46 106.60 143.14 207.47
P/E (X) 23.8 21.3 15.8 10.9
P/B (X) 2.9 3.1 2.7 2.2
EV/EBITDA (X) 13.5 13.2 9.8 6.5
Dividend yield (%) 0.5 0.4 0.6 0.9
ROE (%) 13.6 15.8 18.2 22.1
CROCI (%) 12.3 13.7 15.4 19.0
17,000
18,000
19,000
20,000
21,000
22,000
23,000
24,000
25,000
26,000
27,000
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
Ultratech Cement (L) India BSE30 Sensex (R)
Absolute 26.3 22.4 17.3
Rel. to India BSE30 Sensex 7.6 1.9 (2.9)

Ultratech Cement: Summary financials
SG&A (13,659.8) (15,113.3) (17,024.6) (19,300.1) Inventory 25,803.5 26,881.6 29,648.9 32,750.5
EBITDA 38,263.5 47,506.5 62,263.6 86,604.6 Net PP&E 193,110.0 211,147.5 230,571.4 239,331.1
Depreciation & amortization (11,390.0) (12,002.5) (12,026.1) (13,830.3) Net intangibles 9,665.9 9,665.9 9,665.9 9,665.9
Interest income 563.7 1,944.0 2,169.9 4,031.4 Other long-term assets 9,280.4 9,280.4 9,280.4 9,280.4
Interest expense (3,609.5) (3,652.3) (3,652.3) (2,029.6) Total assets 321,927.9 353,573.1 398,772.2 417,396.9
Minorities (67.5) (421.9) (511.0) (612.8) Total current liabilities 65,325.6 70,547.5 80,346.7 92,784.1
Long-term debt 60,207.6 60,207.6 60,207.6 15,271.8
Post-tax exceptionals 955.6 0.0 0.0 0.0
EPS (basic, pre-except) (Rs) 77.01 106.64 143.19 207.55 Minority interest 166.4 588.3 1,099.4 1,712.1
DPS (Rs) 9.01 10.05 13.58 19.86
Dividend payout ratio (%) 11.2 9.4 9.5 9.6 BVPS (Rs) 626.93 721.80 849.10 1,033.40
Free cash flow yield (%) (0.1) 2.0 3.6 8.1
Sales growth 1.4 10.8 17.7 20.1 CROCI (%) 12.3 13.7 15.4 19.0
EBIT growth (26.4) 32.1 41.5 44.9 ROA (%) 7.1 8.7 10.4 13.9
EBIT margin 12.5 14.9 18.0 21.7 Net debt/equity (%) 8.4 2.5 (5.6) (20.1)
Interest cover - EBIT (X) 8.8 20.8 33.9 NM
Minorities interests add-back 67.5 421.9 511.0 612.8 P/B (X) 2.9 3.2 2.7 2.2
Net (inc)/dec working capital (7,450.4) 1,081.3 1,968.6 1,984.7 EV/EBITDA (X) 13.5 13.2 9.8 6.6
Other operating cash flow 0.0 0.0 0.0 0.0 EV/GCI (X) 1.7 1.9 1.7 1.5
Others (3,593.0) 2,000.0 0.0 0.0
Inc/(dec) in debt 6,089.1 0.0 0.0 (44,935.8)
Cash flow from financing 5,728.2 (3,222.9) (4,353.5) (51,305.4)
Total cash flow 1,637.0 11,467.2 17,944.5 (587.6) Note: Last actual year may include reported and estimated data.


Exhibit 80: Our 12-m EV/EBITDA-based target price implies 26% upside
Target price derivation

Exhibit 81: We expect meaningful recovery in margins
Key financial metrics



Exhibit 82: Ultratech to add 8.9mtpa capacity (domestic) over FY15E/FY16E
on our estimates
Capacity addition schedule

Exhibit 83: We expect 1200bps CROCI increase over FY14-18E
CROCI trajectory



EV/ EBITDA based TP derivation
FY16-18E - EBITDA 122,691
EV/EBITDA 7.10x
Implied EV 871,108
Less: Net debt (126,112)
Less: Minorities 2,418
Implied market cap 994,803
No. of shares 274
Implied value 3,629
Discounting factor 0.78
Implied value - discounted 2,834
Target price 2,850
Consolidated (Rs bn)
Summary Financials FY14 FY15E FY16E FY17E FY18E
Net Sales 214.4 237.5 279.5 335.7 405.0
EBITDA 38.3 47.5 62.3 86.6 122.7
EBITDA Margin (%) 18% 20% 22% 26% 30%
Net Income 22.1 29.2 39.2 56.9 82.9
Net Margin (%) 10% 12% 14% 17% 20%
EPS (Rs/share) 80.46 106.60 143.14 207.47 302.41
CROCI %) 12.3% 13.7% 15.4% 19.0% 24.8%
50.9
61.4
1.6
6.0
2.9
45
49
53
57
61
65
FY13 FY14E FY15E FY16E End of
FY16E
C
a
p
a
c
i
t
y

(
m
t
p
a
)
Jharsuguda
Malkhed,
Raipur
Sambhupura
8.1%
20.1%
12.3%
24.8%
1.3%
1.7%
3.6%
5.8%
0%
5%
10%
15%
20%
25%
30%
F
Y
0
5

F
Y
0
5
-
F
Y
0
8
F
Y
0
8

F
Y
0
8
-
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1
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E

F
Y
1
4
E

F
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1
5
E

F
Y
1
6
E

F
Y
1
7
E

F
Y
1
8
E
F
Y
1
8
E

Exhibit 84: We increase cement volume and EBITDA/t estimates by 4% in FY16E

Exhibit 85: Ultratech has traded at a discount to ACC, Ambuja
12-m fwd EV/EBITDA

Exhibit 86: Given its industry leading position, relatively cleaner structure (no
overhang of parent co unlike ACC, Ambuja) it should at least trade in line
with ACC, Ambuja
12-m fwd P/E



Key Operating Metrics
Summary Financials FY14 FY15E FY16E FY17E FY18E FY15E FY16E FY15E FY16E
Cement + Clinker vol (mt) 41.5 43.9 48.3 53.6 58.9 43.4 46.5 1% 4%
YoY growth (%) 2% 6% 10% 11% 10% 7% 7%
Cement + Clinker ASP (Rs/T) 4,074 4,261 4,626 5,068 5,629 4,392 4,694 -3% -1%
YoY growth (%) -3% 5% 9% 10% 11% 5% 7%
Blended ASP (Rs/T) 4,842 5,064 5,434 5,903 6,510 5,179 5,508 -2% -1%
YoY growth (%) -2% 5% 7% 9% 10% 5% 6%
Cement + Clinker EBITDA (Rs/T) 748 895 1,097 1,396 1,825 945 1,053 -5% 4%
YoY growth (%) -24% 20% 22% 27% 31% 18% 11%
Blended EBITDA (Rs/T) 872 1,023 1,227 1,551 2,015 1,066 1,179 -4% 4%
YoY growth (%) -22% 17% 20% 26% 30% 16% 11%
Blended Cash Cost/T (Rs/T) 3,970 4,041 4,206 4,352 4,495 4,112 4,328 -2% -3%
YoY growth (%) 4% 2% 4% 3% 3% 3% 5%
Old Estimates Change
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Ultratech Ambuja ACC
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Ultratech Ambuja ACC

Ambuja Cements (ABUJ.BO, Neutral): Upgrade to Neutral; least upside in cement pack
What happened
We upgrade Ambuja Cement to Neutral from Sell driven by the positive cement demand outlook and no
downside potential. Our new 12-month target price of Rs235 (Rs125 prior) implies 10% upside as we increase
earnings estimates and change valuation methodology from EV/GCI vs. CROCI/WACC to EV/EBITDA.
Since we added the stock to our Sell list on March 19, 2013, the stock has gained 19% vs. the BSE30 up 30%. We
attribute Ambujas weaker performance to muted macro conditions in the past 12 months and uncertainty related
to control of the company by Holcim.
Current view
Our 12-month target price of Rs235 implies 10% potential upside. We apply a 7.1x EV/EBITDA multiple (peak cycle
target price implies 16.6x/12.4x FY15E/FY16E EV/EBITDA.
We do not incorporate ACCs earnings and valuation in our Ambuja model at this stage. The proposed
restructuring is still subject to FIPB (Foreign Investment Promotion Board) approval. Ambuja expects approvals
by 3QCY14E. Please refer our note Ambuja to acquire 50% stake in ACC from Holcim dated July 25, 2013.
Both Ambuja and ACC is our least preferred cement names as we believe both are likely to underperform our
other cement covered names as:
1) Capacity growth is back-ended. Ambuja is adding 5.3mt mostly in CY15E. Hence we believe it is likely to lose
market share in CY14/CY1E (as the benefit of CY15E expansion will come from CY16E) as it did in CY12/13. We
estimate it will lose market share to companies like Ultratech/Shree Cements in CY14/CY15 and this be one of the
key reasons for its underperformance.
2) Capacity growth constrained by leverage at Holcim. Although Ambuja is a net cash company we believe it
is unlikely to participate aggressively in any inorganic growth opportunities given high leverage at Holcim
Holcim consolidates Ambujas P&L and balance sheet on a line by line basis. Further, post the recent merger
announcement of Holcim and Lafarge, there have been media reports (Economic Times dated Apr 7, 2014) that
the Competition Commission of India may require some assets in India to be sold by ACC/Ambuja.
3) Trading at 15% /17% premium on FY15E/FY16E EV/EBITDA to industry leader Ultratech which we believe
is not justified given the constraints arising from its parent company and Ambujas expected holding company
structure.
Key risks: Upside Higher than expected demand growth leading to higher margins; lower coal prices.
Downside Significant rise in petcoke prices/freight costs; investor concerns about treatment of minority
shareholders following Holcims decision to double royalty rates to 1% from January 1, 2013 and in relation to
restructuring of ACC/Ambuja in July 2013 where Ambuja would acquire Holcims stake in ACC.

Growth
Returns *
Multiple
Multiple
Returns *
Growth
Investment Profile
Low High
Ambuja Cements (ABUJ.BO)
Key data Current
Price (Rs) 214.40
12 month price target (Rs) 235.00
12/13 12/14E 12/15E 12/16E
EPS (Rs) 6.10 9.14 11.92 15.95
EPS growth (%) (40.2) 49.9 30.4 33.8
EPS (diluted) (Rs) 8.29 9.14 11.92 15.95
P/E (X) 30.3 23.5 18.0 13.4
P/B (X) 3.0 3.2 2.9 2.5
EV/EBITDA (X) 15.9 14.9 11.2 7.4
Dividend yield (%) 1.9 1.7 1.7 1.7
ROE (%) 14.0 14.3 17.0 20.0
CROCI (%) 13.6 15.9 17.6 21.6
17,000
18,000
19,000
20,000
21,000
22,000
23,000
24,000
25,000
150
160
170
180
190
200
210
220
230
Ambuja Cements (L) India BSE30 Sensex (R)
Absolute 32.4 25.1 15.5


Ambuja Cements: Summary financials
SG&A (3,219.6) (3,434.4) (3,775.8) (4,383.6) Inventory 9,364.1 10,006.5 11,061.8 12,990.5
EBITDA 15,397.4 19,716.9 26,380.5 37,377.1 Net PP&E 67,974.0 78,959.6 93,773.0 92,637.8
EBIT 10,352.3 14,617.5 21,143.9 31,241.9 Total investments 0.0 0.0 0.0 0.0
Interest income 2,289.9 4,063.7 3,520.9 3,010.4 Other long-term assets 5,852.1 5,852.1 5,852.1 5,852.1
Interest expense (667.5) (547.5) (547.5) (547.5) Total assets 129,567.4 139,265.6 154,533.7 177,176.6
Pretax profits 14,013.4 20,707.1 27,045.8 36,718.9 Short-term debt 10.8 10.8 10.8 10.8
Minorities 1.3 0.0 0.0 0.0 Total current liabilities 34,431.3 36,523.6 39,896.2 44,433.1
Long-term debt 334.3 334.3 334.3 334.3
Net income pre-preferred dividends 9,408.5 14,101.5 18,391.2 24,601.7 Other long-term liabilities 175.8 175.8 175.8 175.8
Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 510.1 510.1 510.1 510.1
DPS (Rs) 3.60 3.60 3.60 3.60
Dividend payout ratio (%) 43.3 39.3 30.1 22.5 BVPS (Rs) 61.35 66.29 74.00 85.74
Free cash flow yield (%) 2.5 1.2 1.5 7.7
EBIT growth (44.0) 41.2 44.6 47.8 ROA (%) 10.1 10.5 12.5 14.8
Interest cover - EBIT (X) NM NM NM NM
Minorities interests add-back (1.3) 0.0 0.0 0.0 P/B (X) 3.0 3.2 2.9 2.5
Net (inc)/dec working capital 377.9 796.1 1,273.0 (230.8) EV/EBITDA (X) 15.9 14.9 11.2 7.4
Other operating cash flow (776.7) 0.0 0.0 0.0 EV/GCI (X) 2.5 2.6 2.2 2.0
Others (92.8) 0.0 0.0 0.0
Inc/(dec) in debt 2.2 0.0 0.0 0.0
Other financing cash flows 0.0 0.0 0.0 0.0
Total cash flow 988.8 (2,583.7) (1,644.9) 19,010.4 Note: Last actual year may include reported and estimated data.

Exhibit 87: We increase volume assumptions by 3-9% and EBITDA/t by 3-26%

Exhibit 88: Ambuja is trading at 2.5SD above median on EV/EBITDA
12-m fwd EV/EBITDA

Exhibit 89: and 2.6SD above median P/E
12-m fwd P/E



CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY14E CY15E CY16E
Net Sales - Rs mn 100,698 115,903 142,507 181,509 98,037 108,685 124,525 3% 7% 14%
Cash Cost - Rs mn 80,982 89,522 105,130 125,757 79,377 85,832 97,325 2% 4% 8%
EBITDA - Rs mn 19,717 26,381 37,377 55,752 18,660 22,853 27,200 6% 15% 37%
Pre-Ex PAT - Rs mn 14,102 18,391 24,602 36,918 13,363 15,879 17,461 6% 16% 41%
Pre-ex EPS - Rs 9.14 11.92 15.95 23.93 8.66 10.29 11.32 6% 16% 41%
CROCI 15.9% 17.6% 21.6% 28.5% 15.2% 15.6% 16.5%
Sales Vol - MT 22.72 24.11 27.08 31.08 22.08 23.01 24.87 3% 5% 9%
ASP - Rs/T 4,431 4,807 5,262 5,839 4,440 4,724 5,008 0% 2% 5%
Cash Cost/T - Rs 3,564 3,713 3,882 4,046 3,595 3,731 3,914 -1% 0%
EBITDA/T - Rs 868 1,094 1,380 1,794 845 993 1,094 3% 10% 26%
EBITDA Margin 20% 23% 26% 31% 19% 21% 22%
Summary of
Estimate changes
New Estimate Old estimate Change (%)
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Ambuja Ultratech ACC
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Ambuja Ultratech ACC

ACC (ACC.BO, Neutral): Limited potential upside; upgrade to Neutral
What happened
We upgrade ACC to Neutral from Sell driven by the positive cement demand outlook and no downside potential. Our
new 12-month target price of Rs1,650 (Rs810 prior) implies 20% upside as we increase earnings estimates and change
valuation methodology from EV/GCI vs. CROCI/WACC to EV/EBITDA.
Since it was added to the Sell list on Sep 10, 2013, the stock has gained 35% vs. the BSE30 up 23%. We attribute
ACCs outperformance to the recent shift in sentiment towards domestic cyclical stocks and the markets anticipation
of a recovery in the sector although current fundamentals have remained weak.
Current view
Our 12-month target price of Rs1,650 implies 20% potential upside. We apply a 7.1x EV/EBITDA multiple (peak cycle
average of large-caps) on FY18E EBITDA and discount it back by two years to capture normalized earnings. Our target
price implies 20x/13.9x FY15E/FY16E EV/EBITDA.
Ambuja and ACC are our least preferred Indian cement names for the following reasons:
1) Capacity growth is back-ended. ACC is adding 5mt in CY15E at Jamul. The benefit of CY15E expansion is likely to
come from CY16E onwards, as it did in CY12/13. Therefore we estimate ACC will lose market share to companies such
as Ultratech and Shree Cements in CY14/CY15.
2) Capacity growth constrained by leverage at Holcim. Although ACC is a net cash company we believe it is
unlikely to participate aggressively in any inorganic growth opportunities given high leverage at Holcim Holcim
consolidates ACCs P&L and balance sheet on a line by line basis. Further, post the recent merger announcement of
Holcim and Lafarge, there have been media reports (Economic Times dated Apr 7, 2014) that the Competition
Commission of India may require some assets in India to be sold by ACC/Ambuja.
3) Trading at 27%/20% premium on FY15E/FY16E EV/EBITDA to industry leader Ultratech, which we believe is
not justified given the constraints arising from its parent company.
Key risks: Upside Higher than expected demand growth leading to higher margins; lower coal prices. Downside
Significant rise in domestic coal prices/railway freight costs; investor concerns about treatment of minority
shareholders following Holcims decision to double royalty rates to 1% from January 1, 2013 and in relation to
restructuring of ACC/Ambuja in July 2013 where Ambuja would acquire Holcims stake in ACC.

Growth
Returns *
Multiple
Multiple
Returns *
Growth
Investment Profile
Low High
ACC (ACC.BO)
Key data Current
Price (Rs) 1,379.55
12/13 12/14E 12/15E 12/16E
EPS (Rs) 46.65 51.50 73.03 107.87
EPS growth (%) (37.1) 10.4 41.8 47.7
EPS (diluted) (Rs) 58.17 51.50 73.03 107.87
P/E (X) 25.4 26.8 18.9 12.8
P/B (X) 2.8 3.2 2.9 2.5
EV/EBITDA (X) 14.4 16.7 11.6 7.5
Dividend yield (%) 2.5 2.2 2.2 2.2
ROE (%) 14.4 12.2 16.2 21.3
CROCI (%) 11.2 12.5 14.8 19.1
17,000
19,000
21,000
23,000
25,000
27,000
29,000
900
1,000
1,100
1,200
1,300
1,400
1,500
ACC (L) India BSE30 Sensex (R)
Absolute 29.4 33.8 12.9


ACC: Summary financials
SG&A (4,013.5) (4,256.7) (4,577.1) (5,109.9) Inventory 11,223.0 14,812.9 16,316.1 18,629.6
EBITDA 13,689.4 15,118.4 21,809.9 31,688.8 Net PP&E 63,688.4 77,165.4 85,440.2 83,431.7
EBIT 7,851.5 9,245.4 15,034.8 23,540.3 Total investments 866.6 1,010.6 1,169.0 1,343.2
Interest income 1,587.2 1,888.8 702.4 607.8 Other long-term assets 11,882.0 11,882.0 11,882.0 11,882.0
Interest expense (516.7) (337.6) (337.6) (337.6) Total assets 121,010.6 120,816.0 130,297.5 147,547.3
Pretax profits 12,267.1 13,497.1 19,050.5 28,149.0 Short-term debt 801.7 801.7 801.7 801.7
Minorities (1.5) 0.1 0.1 0.1 Total current liabilities 32,763.0 29,466.4 31,794.2 35,334.9
Long-term debt 0.0 0.0 0.0 0.0
DPS (Rs) 30.00 30.00 30.00 30.00
Dividend payout ratio (%) 51.5 58.1 41.0 27.7 BVPS (Rs) 416.17 432.69 470.80 543.82
Free cash flow yield (%) 1.1 (4.6) 2.0 8.3
EBIT growth (43.9) 17.8 62.6 56.6 ROA (%) 9.1 8.0 10.9 14.6
Net income growth 3.3 (11.5) 41.8 47.7 ROACE (%) 16.3 13.3 17.0 24.2
EPS growth 3.3 (11.5) 41.8 47.7 Inventory days 54.2 58.4 63.0 60.9
Interest cover - EBIT (X) NM NM NM NM
Minorities interests add-back 1.5 (0.1) (0.1) (0.1) P/B (X) 2.8 3.2 2.9 2.5
Net (inc)/dec working capital (2,169.2) (7,887.1) (238.1) (625.6) EV/EBITDA (X) 14.4 16.7 11.6 7.5
Other operating cash flow (3,052.3) (144.0) (158.4) (174.2) EV/GCI (X) 1.9 2.0 1.8 1.6
Others 0.0 0.0 0.0 0.0
Inc/(dec) in debt (850.3) 0.0 0.0 0.0
Other financing cash flows (29.4) 0.0 0.0 0.0
Total cash flow (5,108.7) (18,406.0) (1,517.7) 14,917.8 Note: Last actual year may include reported and estimated data.

Exhibit 90: We increase our volume assumptions by 3-9% and change EBITDA/t by -6% to +24%

Exhibit 91: ACC is trading at 1.3SD above median EV/EBITDA
12-m fwd EV/EBITDA

Exhibit 92: and 1.7SD above median P/E
12-m fwd P/E



CY14E CY15E CY16E CY17E CY14E CY15E CY16E CY14E CY15E CY16E
Net Sales - Rs mn 117,277 134,335 160,169 202,923 115,953 126,916 140,849 1% 6% 14%
Cash cost - Rs mn 102,158 112,525 128,480 152,840 100,285 107,997 117,556 2% 4% 9%
EBITDA - Rs mn 15,118 21,810 31,689 50,083 15,668 18,919 23,293 -4% 15% 36%
Pre-Ex PAT - Rs mn 9,692 13,744 20,299 33,816 10,065 11,547 13,806 -4% 19% 47%
Pre-ex EPS - Rs 51.50 73.03 107.87 179.70 53.49 61.36 73.36 -4% 19% 47%
CROCI 12.5% 14.8% 19.1% 26.4% 12.8% 13.2% 14.8% -3% 12% 29%
Sales Vol - MT 25.2 26.7 29.3 33.6 24.5 25.5 26.75 3% 5% 9%
ASP - Rs/T 4,649 5,025 5,473 6,032 4,731 4,980 5,265 -2% 1% 4%
Cash cost/T - Rs 4,050 4,209 4,390 4,544 4,092 4,238 4,394 -1% -1% 0%
EBITDA/T - Rs 599 816 1,083 1,489 639 742 871 -6% 10% 24%
EBITDA Margin 13% 16% 20% 25% 14% 15% 17%
Summary of
Estimate changes
New Estimate Old estimate Change (%)
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
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ACC Ambuja Ultratech
5.0
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ACC Ambuja Ultratech

Appendix
Exhibit 93: Per capita consumption in select emerging countries rose by 50% in 5 years and doubled in 9 years, implying 9% CAGR

th

50%/100% PCC increase (kg) PCC: Per capita cement consumption
50% PCC increase (kg) PCI: Per capita income (local ccy)
100% PCC increase (kg)
Mexico
PCC: 230-336, 3% CAGR
Yr: 1995-2007
PCI: 15% CAGR
Brazil
50% increase
PCC: 200-311, 9% CAGR
Yr: 2005-2010
PCI: 11% CAGR
100% increase
PCC: 158-311, 4% CAGR
Yr: 1992-2010
PCI: 15% CAGR
Argentina
50% increase
PCC: 192-278, 6% CAGR
Yr: 2005-2011
PCI: 21% CAGR
100% increase
PCC: 102-227, 22% CAGR
Yr: 2002-2006
PCI: 18% CAGR
Russia
50% increase
PCC: 209-322, 9% CAGR
Yr: 2000-2005
PCI: 25% CAGR
100% increase
PCC: 209-430, 11% CAGR
Yr: 2000-2007
PCI: 25% CAGR
China
50% increase
PCC: 183-275, 19% CAGR
Yr: 1990-1993
PCI: 22% CAGR
100% increase
PCC: 183-351, 18% CAGR
Yr: 1990-1994
PCI: 25% CAGR
Poland
PCC: 301-449, 11% CAGR
Yr: 2004-2008
PCI: 10% CAGR
Turkey
50% increase
PCC: 388-600, 9% CAGR
Yr: 2001-2006
PCI: 24% CAGR
100% increase
PCC: 388-771, 6% CAGR
Yr: 2001-2012
PCI: 16% CAGR
South Africa
PCC: 211-289, 6% CAGR
Yr: 2002-2007
PCI: 10% CAGR
Thailand
PCC: 284-427, 9% CAGR
Yr: 2000-2005
PCI: 17% CAGR
Malaysia
50% increase
PCC: 302-453, 14% CAGR
Yr: 1990-1993
PCI: 10% CAGR
100% increase
PCC: 302-719, 16% CAGR
Yr: 1990-1996
PCI: 11% CAGR
India
PCC: 195-300, 9% CAGR
Yr: 2013-2018E
PCI: 8% CAGR
Indonesia
PCC: 91-197, 7% CAGR
Yr: 1999-2011
PCI: 16% CAGR

Exhibit 94: Sensitivity analysis to volumes and ASPs


Exhibit 95: Domestic linkage and e-auction coal prices have increased
+51%/+66% over FY08-FY14E
Coal India domestic coal prices

Exhibit 96: Global thermal coal price (in US$) has declined 8% in FY08-14E
Thermal Coal Prices FOB Newcastle; 6700kcal


Source: Bloomberg.
Sensitivitytonetincome
1%changeinvolume FY15E FY16E FY17E
ACC 1.6% 1.7% 1.7%
Ambuja 1.7% 1.8% 2.1%
Ultratech 1.6% 1.5% 1.5%
ShreeCement 2.6% 3.0% 3.0%
1%changeinASP FY15E FY16E FY17E
ACC 8.0% 8.1% 7.8%
Ambuja 4.8% 4.7% 5.0%
Ultratech 4.6% 4.4% 4.2%
ShreeCement 4.4% 4.7% 4.7%
-20%
-10%
0%
10%
20%
30%
40%
50%
-
500
1,000
1,500
2,000
2,500
3,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14E
R
s

/
T
Raw Coal (ex E-auction) Coal (E-Auction)
Raw Coal (ex E-auction) - YoY (%) Coal (E-Auction) - YoY (%)
50.0
100.0
150.0
200.0
M
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U
S
$
/
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e
McCloskeyNewcastle6700kcGADfobSteamCoalSpotPrice/Australia

Exhibit 97: DCF-based valuation base case

ShreeCements DCFbasedvalue
YeartoJune FY16E FY17E FY18E FY19E FY20E FY21E FY22E FY23E FY24E FY25E FY26E
SalesRsmn 79,331 98,999 121,891 139,961 160,798 184,831 212,554 242,392 276,507 315,515 347,267 NPVRsmn 336,261
EBITDARsmn 24,657 34,193 48,030 55,151 63,361 72,831 83,755 95,513 108,956 124,327 136,838 Less:NetdebtFY16ERsmn (40,129)
Margin 31% 35% 39% 39% 39% 39% 39% 39% 39% 39% 39% Less:MinoritiesFY16ERsmn
TaxRsmn (3,095) (5,500) (8,057) (12,026) (13,774) (20,860) (23,967) (27,292) (31,111) (35,497) (39,042) ImpliedmarketvalueRsmn 376,390
Taxrate 18% 22% 22% 25% 25% 33% 33% 33% 33% 33% 33% No.ofshares 35
CapexRsmn (13,665) (12,505) (10,138) (21,860) (24,340) (27,102) (30,177) (33,603) (37,399) (41,623) (35,395) Impliedvalue 10,804
Capexas%ofGFA 17% 13% 9% 18% 17% 16% 16% 15% 15% 14% 11%
WorkingcapitalRsmn (486) (689) (719) (826) (949) (1,091) (1,255) (1,431) (1,632) (1,862) (2,050) Terminalgrowthrate 3%
WCas%ofsales 0.6% 0.7% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6%
FreeCashflowRsmn 9,510 17,599 31,216 20,439 24,299 23,779 28,357 33,187 38,814 45,344 60,352
DiscountedcashflowRsmn 9,510 15,529 24,303 14,040 14,727 12,717 13,381 13,817 14,259 14,698 17,260
TerminalvalueRsmn 172,020
Ultratech DCFbasedvalue
Financialyear FY16E FY17E FY18E FY19E FY20E FY21E FY22E FY23E FY24E FY25E FY26E
SalesRsmn 279,526 335,722 404,954 455,257 511,985 575,972 648,163 729,629 821,580 925,388 1,025,809 NPVRsmn 867,940
EBITDARsmn 62,264 86,605 122,691 137,932 155,119 174,505 196,378 221,060 248,919 280,370 310,795 Less:NetdebtFY16ERsmn (12,987)
Margin 22% 26% 30% 30% 30% 30% 30% 30% 30% 30% 30% Less:MinoritiesFY16ERsmn 1,099
Capexas%ofGFA 10% 6% 6% 12.8% 12.7% 12.5% 12.4% 12.2% 12.1% 12.0% 9.1%
WorkingcapitalRsmn 1,969 1,985 1,013 1,366 1,536 1,728 1,944 2,189 2,465 2,776 3,077 Terminalgrowthrate 3%
WCas%ofsales 0.7% 0.6% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
Ambuja DCFbasedvalue
Calendaryear 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
EBITDARsmn 26,381 37,377 55,752 62,637 70,373 79,064 88,828 99,799 112,124 125,971 138,883 Less:NetdebtCY15ERsmn (35,072)
Margin 22.8% 26.2% 30.7% 30.7% 30.7% 30.7% 30.7% 30.7% 30.7% 30.7% 30.7% Less:MinoritiesCY15ERsmn
Taxrate 32% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% No.ofshares 1,537
CapexRsmn (20,050) (5,000) (13,500) (24,345) (26,830) (29,570) (32,589) (35,916) (39,583) (43,624) (35,245) Impliedvalue 252
Capexas%ofGFA 15% 3% 8% 14.0% 13.6% 13.2% 12.8% 12.5% 12.3% 12.0% 8.7%
WorkingcapitalRsmn 1,273 (231) 1,893 612 687 772 868 975 1,095 1,230 1,356 Terminalgrowthrate 3%
WCas%ofsales 1% 0.2% 1.0% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
ACC DCFbasedvalue
Calendaryear 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
EBITDARsmn 21,810 31,689 50,083 56,172 63,005 70,673 79,279 88,938 99,780 111,949 123,338 Less:NetdebtCY15ERsmn (5,890)
Margin 16% 20% 25% 25% 25% 25% 25% 25% 25% 25% 25% Less:MinoritiesCY15ERsmn (27)
Capexas%ofGFA 11.4% 4.2% 7.5% 15.8% 15.0% 14.4% 13.9% 13.4% 13.1% 12.7% 7.5%
WorkingcapitalRsmn (238) (626) (861) (455) (511) (573) (642) (721) (809) (907) (999) Terminalgrowthrate 3%
WCas%ofsales 0.2% 0.4% 0.4% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
1STSTAGE 2NDSTAGE
1STSTAGE 2NDSTAGE
1STSTAGE 2NDSTAGE
1STSTAGE 2NDSTAGE

Cement consumption for metro (subway) construction
Exhibit 98: India plans to build 497km in FY15-18E (330km planned and 167
under construction)

Exhibit 99: Cement needed in FY15-18E for metro projects under construction
is 4mt (8mt for projects under planning)

Source: Company data, Planning Commission, Goldman Sachs Global Investment Research.


Exhibit 100: India plans to build 629km of metro projects post FY18E
accounting for 16MT cement consumption

Exhibit 101: India plans to build/renew 5,900km railways every year leading
to 1.5mtpa of cement demand


Source: Indian Railways, company data, Planning Commission, Goldman Sachs Global Investment
Research.

85
55
24
3
35
35
111
150
20
40
60
80
100
120
140
160
180
FY15E FY16E FY17E FY18E
M
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o
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s
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(
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Underconstruction Underplanning
2.1
1.4
0.6
0.1
0.9
0.9
2.7
3.7
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
FY15E FY16E FY17E FY18E
C
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t
r
e
q
u
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r
e
m
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t
(
M
T
)
Underconstruction Underplanning
144
163
130
80
60
29
22
3.6
4.0
3.2
2.0
1.5
0.7
0.5
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
20
40
60
80
100
120
140
160
180
FY19E FY20E FY21E FY22E FY23E FY24E FY25E
C
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e
n
t
r
e
q
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e
m
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(
M
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)
M
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o
c
o
n
s
t
r
u
c
t
i
o
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(
k
m
s
)
MetroConstruction Cementrequirement(RHS)
0.2 0.2 0.3 0.2
0.4 0.3
0.7 0.7
0.5 0.5 0.5
0.8 0.7
1.1
1.5
0.6
1.5
0.8 0.9
0.6 0.5
0.8
0.3 0.2
0.4
0.4
0.4
0.4 0.8 0.8
0.7 0.8
0.8
5.6
4.7
4.7 4.0
3.8
3.8
3.5 3.3
3.8 3.8
3.8
1.7
1.5
1.6
1.5
1.3
1.5
1.4
1.4
1.4 1.4
1.5
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
C
e
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n
t
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s
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d
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m
s
)
Newlines Conversiontobroadgauge
Doubling Renewal
Cementconsumption(RHS)

Exhibit 102: We expect 2,368km of DFC construction over FY14E-FY18E to
lead to 0.6mt cement consumption

Exhibit 103: Status of Dedicated Freight Corridors

Source: DFCCIL, Planning Commission, Goldman Sachs Global Investment Research.

Source: DFCCIL, Planning Commission, Goldman Sachs Global Investment Research.

Exhibit 104: Cement consumption in airports

Note: Data on concrete consumption in Mumbais T2 from L&T Construction.

316
344 344 344
114
28
78
314 314 314
236
236
236
0.10
0.16 0.16 0.16
0.09
0.07
0.06
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
100
200
300
400
500
600
700
FY15 FY16 FY17 FY18 FY19 FY20 FY21
C
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WFC EFC Cementconsumption(RHS)
WFC
Length
(kms)
Original
Timeline
Revised
starttime
Comple
tion Yrs Status
PhaseI 920 FY11FY17 FY15 FY18 4 AwardedtoL&TinDec2013
PhaseII 430 FY12FY18 FY15 FY19 5 TobeawardedbyJune2014
PhaseIII 140 FY13FY18 FY16 FY20 5 TobeawardedbyDec2014
Totallength(A) 1,490
EFC
PhaseI 343 FY11FY17 FY16 FY21 6 Notawarded.Noclarityontimeline
PhaseII 390 FY13FY18 FY14 FY18 5 AwardedtoTataProjectsin2013
PhaseIII 397 FY14FY19 FY16 FY21 6 Notawarded.Noclarityontimeline
PhaseIV(PPPfunding) 550 FY14FY19 FY16 FY21 6 LastlegofprojectStuck
PhaseIa 125 FY10FY16 FY16 FY21 6 Notawarded.Noclarityontimeline
Totallength(B) 1,805
TotalDFC+EFC(A+B) 3,295
Cementdemand(MT) 0.82
Cementreqdperkmof
track(kg)GSe 250
Airports MumbaiT2 NewDelhiT3 Populationdetails
Capex(Rsbn) 123.8 128.5 Numberofcitieswith>10mnpopulation 3
Concretemncum 1.0 1.3 Numberofcitieswith>3mnpopulation 10
CementMT 0.3 0.4
Numberofcitieswith>3mnpopulation
whererenovationsdone 6
Area(mnsqf) 4.3 5.4
Balancelargecitieswhereairport
renovationpossible 4
Cement(kgs)/sqf 77.5 77.5 Cement(mt)requiredperairport 0.3
Cost(Rs/tonne) 6,000 6,000 Cementrequired(mt) 1.33
CementCost(Rsmn) 2,000 2,512
%oftotalCapex 1.6% 2.0%

Exhibit 105: Cement consumption in power sector

Source: CEA, Planning Commission, company data, Goldman Sachs Global Investment Research.

Installedcapacity(MW) FY09 FY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E
Coal(incl.Lignite) 77,649 84,198 93,918 112,022 130,221 143,676 164,946 182,531 197,256
Gas 14,877 17,056 17,706 18,381 20,110 21,382 21,795 23,327 24,127
Diesel 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200
Renewables 13,242 15,521 18,455 24,503 27,542 29,901 33,271 37,315 42,708
Hydro 36,878 36,864 37,567 38,990 39,491 40,043 42,047 42,968 43,754
Nuclear 4,120 4,520 4,780 4,780 4,780 5,780 6,780 6,780 6,780
Total 147,965 159,358 173,626 199,877 223,344 241,982 270,039 294,121 315,824
Increaseinthermalpowercapacity(MW) 2,010 6,549 9,720 18,104 18,199 13,455 21,270 17,585 14,725
Capex(Rsmn/MW) 48 48 48 63 63 63 63 63 63
EPCCost 18% 18% 18% 18% 18% 18% 18% 18% 18%
EPCCost(Rsmn/MW) 8.6 8.6 8.6 11.3 11.3 11.3 11.3 11.3 11.3
Cementas%ofEPC 16% 16% 17% 13% 14% 14% 15% 16% 16%
CementCost(Rsmn/MW) 1.35 1.40 1.46 1.52 1.58 1.64 1.71 1.77 1.84
CementCost(Rsmn) 2,709 9,180 14,171 27,448 28,695 22,064 36,275 31,190 27,162
Cementconsumption(MT) 0.6 1.9 2.8 4.8 4.7 3.7 5.7 4.6 3.8
IncreaseinGaspowercapacity(MW) 475 2,179 651 675 1,729 1,272 413 1,532 800
Capex(Rsmn/MW) 34 34 34 45 45 45 45 45 45
EPCCost 18% 18% 18% 18% 18% 18% 18% 18% 18%
EPCCost(Rsmn/MW) 6.1 6.1 6.1 8.1 8.1 8.1 8.1 8.1 8.1
Cementas%ofEPC 16% 16% 17% 13% 14% 14% 15% 15% 16%
CementCost(Rsmn) 450 2,148 667 719 1,917 1,467 495 1,911 1,038
Cementconsumption(MT) 0.1 0.4 0.1 0.1 0.3 0.2 0.1 0.3 0.1
IncreaseinHydropowercapacity(MW) 969 704 1,423 501 552 2,004 920 786
Capex(Rsmn/MW) 64 64 64 85 85 85 85 85 85
EPCCost 30% 30% 30% 30% 30% 30% 30% 30% 30%
EPCCost(Rsmn/MW) 19.125 19.125 19.125 25.5 25.5 25.5 25.5 25.5 25.5
Cementas%ofEPC 31% 32% 34% 26% 27% 28% 30% 31% 32%
CementCost(Rsmn) 5,782 4,543 9,551 3,497 4,007 15,131 7,227 6,419
Cementconsumption(MT) 1.2 0.9 1.7 0.6 0.7 2.4 1.1 0.9
TotalThermal+Gas+Hydro(MT) 1.8 2.3 3.9 6.6 5.6 4.6 8.2 6.0 4.9

Exhibit 106: Cement consumption in roads sector

Source: Planning Commission, company data, Goldman Sachs Global Investment Research.

Exhibit 107: Real estate pre-sales trends in top 15 cities

Exhibit 108: Real estate new launches trends in top 15 cities

Note: We have assumed 0.8 bags required psf of residential construction

Note: We have assumed 0.8 bags required psf of residential construction
Source: PropEquity, Goldman Sachs Global Investment Research.

Source: PropEquity, Goldman Sachs Global Investment Research.

CementconsumptionforNationalHighways FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
LengthCompleted(Kms) 105 262 480 391 1,318 2,351 754 636 1,614 2,148 2,716 1,636 2,247 2,704
Consumptionforconcreteroad(MT) 0.02 0.04 0.07 0.06 0.20 0.35 0.11 0.10 0.24 0.32 0.41 0.25 0.34 0.41
Consumptionfornonconcreteroad(MT) 0.07 0.17 0.31 0.25 0.85 1.51 0.48 0.41 1.03 1.38 1.74 1.05 1.44 1.73
Total 0.08 0.21 0.38 0.31 1.04 1.86 0.60 0.50 1.28 1.70 2.15 1.29 1.78 2.14
Assumptions
Cementconsumption
perkmof2laneconcreteroad 1,000
perkmof2lanenonconcreteroad 475
Proportionofconcreteroad(GSe) 10%
Assumed2lane 50%
Assumed4lane 50%
Absorptiontrends(Areamnsqft)presales
City 2008 2009 2010 2011 2012 2013
Bangalore 46.9 31.5 41.8 60.4 67.5 79.9
Chennai 17.1 18.1 27.2 37.6 35.8 29.2
GreaterNoida 6.6 6.5 64.1 36.2 27.0 42.9
Gurgaon 33.4 40.0 49.4 59.9 50.7 28.1
Mumbai 23.7 22.6 35.1 30.9 18.8 16.9
Noida 6.7 29.5 77.2 57.1 33.5 17.5
Ahmedabad 7.9 13.9 23.0 30.0 16.6 26.7
Hyderabad 40.6 27.3 28.6 28.5 26.1 30.6
Kolkata 16.2 10.3 16.3 18.8 18.9 16.2
NaviMumbai 10.9 12.7 28.1 24.0 14.9 13.5
Pune 44.2 39.4 45.6 49.2 45.9 40.5
Thane 20.9 31.2 50.5 42.5 31.3 30.2
Faridabad 15.9 18.2 9.3 5.9 5.2 4.7
Ghaziabad 20.8 14.3 18.6 22.4 22.8 20.3
NewDelhi 0.8 5.3 1.3 1.9 0.2 0.3
Total 312.8 320.9 515.8 505.2 415.2 397.7
Cementrequired(MT) 12.5 12.8 20.6 20.2 16.6 15.9
India'stotalcement
demand 184.1 202.7 214.9 227.5 240.3 248.7
%oftotalCement
consumption 7% 6% 10% 9% 7% 6%
Newlaunches(mnsqft)
City 2008 2009 2010 2011 2012 2013
Bangalore 39.4 20.1 50.2 95.5 75.2 106.8
Chennai 22.9 15.4 35.7 46.6 35.0 30.3
GreaterNoida 6.1 7.4 123.3 33.8 40.8 56.8
Gurgaon 41.7 35.4 54.0 55.8 54.1 37.1
Mumbai 13.1 29.0 50.3 30.4 17.9 28.8
Noida 4.8 46.7 86.0 66.0 38.9 18.8
Ahmedabad 9.6 19.4 39.7 31.8 8.6 14.6
Hyderabad 43.1 24.5 26.4 30.4 25.0 32.5
Kolkata 13.4 7.2 18.9 24.4 23.5 18.8
NaviMumbai 18.0 15.9 33.2 24.7 19.5 19.2
Pune 41.8 26.4 48.0 53.3 47.1 41.8
Thane 20.2 41.0 60.3 44.3 36.7 40.0
Faridabad 13.3 13.6 6.0 3.3 3.6 4.7
Ghaziabad 19.6 8.2 13.4 31.1 29.5 28.3
NewDelhi 1.1 4.4 1.3 1.7 1.3 0.1
Total 308.3 314.5 646.7 573.1 456.6 478.5
Cementrequired(MT) 12.3 12.6 25.9 22.9 18.3 19.1
TotalCement
consumption 184.1 202.7 214.9 227.5 240.3 248.7
%oftotalCement
consumption 7% 6% 12% 10% 8% 8%

Disclosure Appendix
Reg AC
We, Navin Gupta and Indrajit Agarwal, hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their
securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth,
returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage
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The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI,
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volatility adjusted for dividends.
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environmental, social and governance issues facing their industry).
Disclosures
Coverage group(s) of stocks by primary analyst(s)
Navin Gupta: Asia Commodities Companies, Asia Pacific Steel.
Asia Commodities Companies: ACC, Aluminum Corporation of China (A), Aluminum Corporation of China (H), Ambuja Cements, Angang Steel (A), Angang Steel (H), Anhui Conch Cement (A), Anhui
Conch Cement (H), BBMG Corporation (A), BBMG Corporation (H), Banpu Public Company, Baoshan Iron & Steel, Beijing Zhongke Sanhuan High-Tech Co Ltd, Bumi Resources, China Coal Energy (A),
China Coal Energy (H), China Conch Venture Holdings Limited, China Minmetals Rare Earth Co., Ltd, China Molybdenum Co., China National Building Material, China Resources Cement Holdings,
China Shanshui Cement Group, China Shenhua Energy (A), China Shenhua Energy (H), Chongyi Zhangyuan Tungsten Co.,Ltd.,, Coal India Ltd., Dongpeng Holdings Co Ltd, Grasim Industries, Harum
Energy Tbk PT, India Cements, Inner Mongolia Baotou Steel Rare-Earth Group Hi-Tech Co Ltd, Jiangxi Copper (A), Jiangxi Copper (H), Korea Zinc, Maanshan Iron & Steel (A), Maanshan Iron & Steel
(H), Mongolian Mining Corp., Ningbo Yunsheng Group Co Ltd, PT Adaro Energy Tbk, PT Indo Tambangraya Megah, PT Tambang Batubara Bukit Asam, Shandong Gold Mining Co, Shenzhen Zhongjin
Lingnan Nonfemet, Shougang Fushan Resources Group, Shree Cement Ltd, Sino-Platinum Metals Co., Ltd, Tongling Nonferrous Metals Group Co., Ultratech Cement, Xiamen Tungsten Co., Ltd.,
Yanzhou Coal Mining (A), Yanzhou Coal Mining (H), Yunnan Chihong Zinc & Germanium, Yunnan Copper Co., Zhaojin Mining Industry, Zhongjin Gold, Zijin Mining (A), Zijin Mining (H).
Asia Pacific Steel: Dongkuk Steel Mill, Hyundai Steel, JSW Steel, POSCO, POSCO (ADR), SeAH Besteel Corp., Steel Authority of India, Tata Steel.
Company-specific regulatory disclosures
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of
Goldman Sachs and referred to in this research.
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Grasim Industries (Rs2,994.00) and Ultratech Cement (Rs2,269.25)
There are no company-specific disclosures for: ACC (Rs1,381.25), Ambuja Cements (Rs213.50) and Shree Cement Ltd (Rs6,514.20)
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe
Rating Distribution Investment Banking Relationships
Buy Hold Sell Buy Hold Sell
Global 32% 53% 15% 53% 47% 40%

As of April 1, 2014, Goldman Sachs Global Investment Research had investment ratings on 3,662 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment
Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage
groups and views and related definitions' below.
Price target and rating history chart(s)

ACC (ACC.BO)
810 740
760
1250
1030 1031
940
934
600
800
1,000
1,200
1,400
1,600
14,000
16,000
18,000
20,000
22,000
24,000
Goldman Sachs rating and stock price target history
Stock Price Currency : Indian Rupee
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2014.
The price targets shown should be considered in the context of all prior published Goldman Sachs research, which may or
may not have included price targets, as well as developments relating to the company, its industry and f inancial markets.
Rating
Price target
Price target at removal
Covered by Navin Gupta,
as of Mar 18, 2013
Not covered by current analyst
India BSE30 Sensex
In
d
e
x
P
r
ic
e
S
to
c
k
P
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eJul 16 Mar 18 Sep 9
S NA N
M
S
J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M
2011 2012 2013 2014
Shree Cement Ltd (SHCM.BO)
5600
4500
4200
5550
1,000
2,000
3,000
4,000
5,000
6,000
14,000
16,000
18,000
20,000
22,000
24,000
Rating
Price target
as of Mar 18, 2013
India BSE30 Sensex
In
d
e
x
P
r
ic
e
S
to
c
k
P
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eMar 18
M
B
2011 2012 2013 2014
Ambuja Cements (ABUJ.BO)
125 115
120
170
144
132
100
120
140
160
180
200
220
240
14,000
16,000
18,000
20,000
22,000
24,000
Rating
Price target
as of Mar 18, 2013
India BSE30 Sensex
In
d
e
x
P
r
ic
e
S
to
c
k
P
r
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eJul 16 Mar 18
N NA
M
S
2011 2012 2013 2014
Grasim Industries (GRAS.BO)
3300 3100
3000
3750
2985
2984
2,000
2,500
3,000
3,500
4,000
14,000
16,000
18,000
20,000
22,000
24,000
Rating
Price target
as of Mar 18, 2013
Apr 1, 2011 N
India BSE30 Sensex
In
d
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x
P
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ic
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S
to
c
k
P
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eApr 5 Jul 16 Mar 18
B NA
M
B
2011 2012 2013 2014
Ultratech Cement (ULTC.BO)
1555
1300
1800
1100
1097
500
1,000
1,500
2,000
2,500
14,000
16,000
18,000
20,000
22,000
24,000
Rating
Price target
as of Mar 18, 2013
May 24, 2012 to S fromN
India BSE30 Sensex
In
d
e
x
P
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S
to
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P
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eJul 16 Mar 18
N NA
M
N
2011 2012 2013 2014

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