Systematix

Institutional Equities

Indian Cement Sector 11 April 2023

Margin expansion to continue

4QFY23 RESULT PREVIEW We expect 3QFY23 earnings recovery momentum of cement companies within our
coverage to continue in 4QFY23E, primarily driven by 1) higher volumes, 2) lower
Industry Cement energy costs, and 3) operating leverage benefits. Though March quarter was
primarily volume driven, channel checks suggest demand during the month was
Relative performance: UltraTech v/s Sensex weak compared to that seen during Jan-Feb’23, mainly because of a) unseasonal
8,000 rains, b) festival and marriage season in some regions, c) labour and sand mining
7,500 issues, d) extreme weather conditions in Jan’23 (cold) and Mar’23 (summer), e)
7,000
slowdown in government projects in certain states, and f) rise in interest rate.
6,500
6,000
Notwithstanding these aberrations, we estimate ~10% YoY and 13.3% QoQ volume
5,500
growth within our cement universe for 4QFY23. We expect UltraTech, Shree
5,000 Cement, JK Cement, Ramco Cement to report double-digit volume growth YoY,
4,500 with ACC, Ambuja, Dalmia Bharat likely posting low single-digit growth and de-
4,000 growth in Birla Corp on a high base. Our universe is estimated to report 4Q revenue
Jun-22

Jul-22
Apr-22

Jan-23

Feb-23

Apr-23
Aug-22

Sep-22

Nov-22

Mar-23
May-22

Oct-22

Dec-22

growth of 14.1% YoY/ 13.8% QoQ, with EBITDA slated to improve by 9% YoY/
UltraTech Sensex
42.5% QoQ and PAT to likely witness 15.9% YoY decline but 72.6% QoQ growth,
supported by higher volumes, easing input costs and operating leverage benefits,
Source: Systematix Institutional Research
despite lower realisations (+3.8% YoY/ flattish QoQ). EBITDA/tn is estimated to
improve 25.8% QoQ (flattish YoY) to Rs 941 from Rs 750 in 3QFY23.
All India average cement prices were flattish QoQ: Our channel checks suggest that
although companies attempted Rs10-20/bag of price hikes during the quarter, this
could not sustain for long due to 1) year-end sales pressure and subdued demand in
Mar’23. Major price cuts in were seen in south (~5% QoQ) and east (~2% QoQ) India,
while prices in the north and central regions were up ~2.4% and ~1.1% QoQ,
respectively; prices in the western region were flattish QoQ. All-India average price
remained flattish QoQ in 4QFY23. However, cement companies are planning price
hikes of Rs40-45/bag in Apr’23, as demand has picked up in certain regions, spurred
by pre-general election construction work. We estimate 3.8% YoY and flattish QoQ
realisations within our universe.
EBITDA/tn to improve QoQ: The gradual fall in energy costs over last few months
should provide some respite to operating costs; international petcoke and coal prices
eased gradually by 25-30% QoQ. Price of benchmark Newcastle coal slid ~36% in
Mar’23 and currently hovers at ~USD 179/tn from its peak of USD 432/tn in Sep’22;
imported average petcoke price fell by ~24% in Mar’23 to ~USD 232, from a peak of
~USD 377 in Sep’22. While stable diesel prices (Rs93/ltr) should help control freight
costs despite busy season surcharges, we expect Opex/tn to decline by ~3.7% QoQ,
but remains elevated at 4.9% YoY. Therefore, we estimate EBITDA/tn to increase by
~25.8% QoQ and remain flattish YoY to Rs 941 for our coverage universe.
Outlook and valuation: Despite large capacity additions and limited pricing power,
industry average EBITDA/tn should improve further, led by 1) higher volumes, 2)
gradual decline in petcoke and coal prices, and 3) stable diesel prices. We expect
better volumes, lower energy costs and operating leverage benefits to aid margin
recovery during 4QFY23. The expected positive trajectory in 4QFY23 may continue in
1QFY24E, in our view, and accelerate margin recovery, led by low-cost P&F inventory
Girija Shankar Ray and demand uptick. We reiterate our HOLD rating on ACC, ACL, DLABHARA, TRCL and
[email protected]
+91 22 6704 8098 JKCE, SELL on UTCEM and SRCEM and BUY on BCORP.

Investors are advised to refer disclosures made at the end of the research report.

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
4QFY23E result estimates.
UltraTech Cement (SELL): The company reported consolidated volumes of 31.7mt
(incl. 1.3mt of gray cement sold overseas) for 4QFY23. We estimate realisation of Rs
6,074 (+6.7% YoY, +1.2% QoQ) as all-India average prices were up 1-2% QoQ by
Rs4/bag. We expect blended EBITDA/tn to improve 21.6% QoQ (-1% YoY) to Rs 1,099
led by 1). higher volumes coupled with marginal increase in realisation, and 2)
softening energy costs.
Shree Cement (SELL): Though demand was weak in India’s south and east markets
compared to the north, we expect the company to deliver volumes of 8.81mt (+9.7%
YoY and QoQ), backed by 1) improved demand in Jan-Feb’23 and 2) higher clinker
sales despite subdued demand in Mar’23. Also, higher premium sales should boost
the topline. We have factored in blended capacity utilisation at 76% on seasonal
tailwinds (specify?), vs. 71% in 3QFY23. Blended realisation is estimated at Rs 5,141
(+0.7% YoY, +1.5% QoQ). EBITDA/tn is estimated at Rs 1,080 (-~5% YoY, +22% QoQ)
driven by 1) strong volumes, and 2) easing energy costs.
Ambuja Cement (HOLD): Our estimate of 7.95mt volumes (+6.2% YoY, 3.3% QoQ)
takes into consideration the superior demand in its key northern and western
markets, despite subdued volumes in the east and plant shut down in Himachal
Pradesh for more than a month. We believe our estimated 1% QoQ growth in
realisation would be led by marginal price appreciation in the northern, central and
western markets, despite the price dip in the east. EBITDA/tn estimated at Rs 1,132
(+7.3% YoY, +39.3% QoQ) factors in 1) better volumes and realisation, 2) easing P&F
costs, and 3) synergy benefits from the group company.
ACC (HOLD): Our volume estimate of 7.86mt (+2% YoY, +2.1% QoQ) for ACC is
disappointing, caused by plant shutdown for more than a month in Himachal Pradesh
and subdued volumes in its key southern and eastern markets. We estimate 1.9%
QoQ de-growth in realisation due to major price cut (~2.5% to 5% QoQ) in its key
market. Estimated EBITDA/tn of Rs 804 (-2.2% YoY, +63.6% QoQ) comes from 1)
easing P&F costs, and 2). synergy benefits from the group company.
Dalmia Bharat (HOLD): Our estimate of DALBHARA's volumes at 6.96mt (+5.5% YoY,
+10.52% QoQ) appears disappointing, likely caused by subdued volumes in its key
markets of south and east India due to 1) slowdown in government projects arising
from liquidity issues, 2) unexpected rains, 3) labour unavailability, 4) a slew of
festivities (Pongal, Holi and Makarsankranti), 5) and excessive summer heat, etc.
Despite the anomalies, we expect the company to deliver relatively better volumes
vs. other players, given that it has higher market share in the east and south and it
recently commissioned its Murli plant at Maharashtra. We expect 4Q capacity
utilisation to improve to 75% (including Murli) from 68% in 3Q, but believe
realisation could slip by 4% QoQ because of higher 4-5% price cut in the eastern
market, followed by 2% cut in the south during 4Q. Despite easing energy costs, the
company should be able to report a marginal increase in EBITDA/tn to Rs 1,048
(+1.4% YoY, +2.4% QoQ), mainly due to lower realisation.
JK Cement (HOLD): We expect volume addition from its newly commissioned 2mtpa
at Panna, 2mtpa at Hamirpur and 2mtpa through debottlenecking at its existing
integrated units and split grinding units. We estimate volumes (gray cement) of
4.42mt (incl. 0.42mt clinker sales) an increase of 12.3% YoY and 12.4% QoQ,
factoring in peak capacity utilisation of 85% at its old units, 65% at central units and
55% for debottlenecking units, considering the company recorded relatively better
demand in its key markets of north and central India vs. south India. While we
believe white cement and wall putty segment would deliver better volumes of
0.42mt in 4Q on synergy from its paint business. We expect blended realisation of Rs

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
5,810/tn (+0.7% YoY, flattish% QoQ), likely arising from 1) better pricing in its key
markets, and 2) higher sales in the premium segment. We estimate EBITDA/tn at Rs
883 (-9.3% YoY, +32% QoQ) on 1) better volumes and realisation, and 2) improved
cost efficiency.
The Ramco Cement (HOLD): We expect its newly commissioned 2mtpa Kolimigundla
unit to add to 4Q volumes, which is why we have factored in 73%/ 55% capacity
utilisation for its existing units (19.4mtpa) / Kolimigundla unit (2mtpa) to arrive at
3.81mt volumes (19.5% YoY, 6.9% QoQ). Despite subdued demand in its key markets
(especially south and east), we expect the company to deliver superior volume
growth, given that the company added new capacity that supported the strong
demand during Jan-Feb’23. Although we believe its premium products support
topline growth, we estimate 2.5% QoQ decline in realisation at Rs 5,486, as the
company effected a major 3-5% price cut in in its key market during 4Q. EBITDA/tn is
estimated to increase 6.5% QoQ (-8.1% YoY) to Rs 849, mainly led by 1) softening
energy costs, 2) efficient fuel mix, and 3), cost savings from its newly-commissioned
WHRS.
Birla Corporation (BUY): BCL’s current capacity utilisation is at a peak level of ~97%,
while that of RCCPL is at ~65%, which makes us believe that the ramp up of its newly-
added capacity should add to 4Q volumes; we expect 12.6% QoQ volume growth (-
1.2% YoY due to a high base). Volumes are estimated at 4.19mt, led by better
demand in its key markets and ramp up of new capacity. Realisation is estimated at
Rs 5,517(+3.3% YoY, +1.8% QoQ), likely a result of better pricing in its key western,
northern and central markets. EBITDA/tn estimated at Rs633 (-3% YoY, +63.1% QoQ)
led by better volume and ease in fuel cost.
Exhibit 1: 4QFY23E summary
4QFY23E Change in Revenue Change in EBITDA Change in PAT
Company Revenue EBITDA PAT YoY QoQ YoY QoQ YoY QoQ
(Rs bn) (Rs bn) (Rs bn) % % % % % %
UltraTech Cement 192.6 34.8 19.0 22.1 24.1 13.3 49.1 (22.7) 79.6
Shree Cement 45.3 9.5 4.5 10.5 11.3 4.5 34.4 (29.7) 63.9
Ambuja Cement 43.1 9.0 6.0 9.7 4.3 14.0 43.9 20.8 39.0
ACC 45.4 6.3 3.7 2.7 0.2 (0.3) 67.0 (6.4) 93.4
Dalmia Bharat 35.6 7.3 2.8 5.3 6.1 7.0 13.2 6.2 29.6
JK Cement 25.7 3.9 1.9 13.1 12.1 1.9 48.3 (6.2) 96.3
Ramco Cements 20.9 3.2 1.1 22.5 4.2 9.8 13.8 (8.4) 68.7
Birla Corporation 23.1 2.7 0.4 2.0 14.6 (4.2) 83.6 (61.7) (185.3)
Coverage Universe (Total) 431.7 76.8 39.5
Coverage Universe (Average) 14.1 13.8 9.0 42.5 (15.9) 72.6

4QFY23E Chang in EBITDA/tn Change in volume Change in realisation

Company EBITDA/tn Volume Realisation YoY QoQ YoY QoQ YoY QoQ
(Rs/tn) mt (Rs/tn) % % % % % %
UltraTech Cement 1099 31.7 6074 (1.0) 21.6 14.5 22.6 6.7 1.2
Shree Cement 1080 8.8 5141 (4.8) 22.5 9.7 9.7 0.7 1.5
Ambuja Cement 1132 8.0 5415 7.3 39.3 6.2 3.3 3.3 1.0
ACC 804 7.9 5778 (2.2) 63.6 2.0 2.1 0.6 (1.9)
Dalmia Bharat 1048 7.0 5112 1.4 2.4 5.5 10.5 (0.2) (4.0)
JK Cement 883 4.4 5810 (9.3) 32.0 12.3 12.4 0.7 (0.2)
Ramco Cements 849 3.8 5486 (8.1) 6.5 19.5 6.9 2.5 (2.5)
Birla Corporation 633 4.2 5517 (3.0) 63.1 (1.2) 12.6 3.3 1.8
Coverage Universe (Total) 75.7
Coverage Universe (Average) 941 5542 (0.9) 25.8 9.9 13.3 3.8 0.4
Source: Company, Systematix Institutional Research

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
Exhibit 2: 4QFY23E key performance indicators
4QFY23E Change in Volume Change in Realization Change in EBITDA/tn
Company Volume Realization EBITDA/tn YoY QoQ YoY QoQ YoY QoQ
(mt) (Rs/tn) (Rs/tn) % % % % % %
UltraTech Cement 31.7 6,074 1,099 14.5 22.6 6.7 1.2 (1.0) 21.6
Shree Cement 8.8 5,141 1,080 9.7 9.7 0.7 1.5 (4.8) 22.5
Ambuja Cement 8.0 5,415 1,132 6.2 3.3 3.3 1.0 7.3 39.3
ACC 7.9 5,778 804 2.0 2.1 0.6 (1.9) (2.2) 63.6
Dalmia Bharat 7.0 5,112 1,048 5.5 10.5 (0.2) (4.0) 1.4 2.4
JK Cement 4.4 5,810 883 12.3 12.4 0.7 (0.2) (9.3) 32.0
Ramco Cements 3.8 5,486 849 19.5 6.9 2.5 (2.5) (8.1) 6.5
Birla Corporation 4.2 5,517 633 (1.2) 12.6 3.3 1.8 (3.0) 63.1
Coverage Universe ( Total) 75.7
Coverage Universe (Average) 5,542 941 9.9 13.3 3.8 0.4 (0.9) 25.8
Source: Company, Systematix Institutional Research

Exhibit 3: Valuation snapshot

Systematix Price target EV/ ton (USD) EV/ EBITDA (x) RoCE (%) P/E (x)
Company Name
Rating (Rs/ share) FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E
UltraTech Cement SELL 5,241 206 204 22.3 18.2 11.3 12.6 42.4 32.1
Shree Cement SELL 17,700 239 211 29.8 20.7 9.6 15.0 76.8 39.6
Ambuja Cement HOLD 365 188 183 3.0 2.0 37.9 16.2 19.0 32.2
ACC HOLD 1,855 91 85 11.7 7.7 11.1 16.9 27.2 15.5
Dalmia Bharat HOLD 1,680 110 86 14.5 10.2 6.9 11.8 45.1 23.7
JK Cement HOLD 2,531 155 144 19.9 14.8 7.2 9.2 44.9 29.0
Ramco Cements HOLD 753 138 131 20.9 13.2 5.3 9.1 61.3 23.2
Birla Corporation BUY 1,945 65 57 6.8 5.4 8.2 10.0 11.3 8.3
Coverage Average 149 137 16.1 11.5 12.2 12.6 41.0 25.4
Source: Company, Systematix Institutional Research

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
Exhibit 4: 4QFY23E result estimates and key highlights
Ultratech
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Consolidated)
CMP (Rs) 7,740 Volumes (mt) 31.7 27.7 25.9 14.5 22.6
Mkt Cap (Rs bn) 2,234 Net Sales (Rs bn) 192.6 157.7 155.2 22.1 24.1
Reco SELL EBITDA (Rs bn) 34.8 30.7 23.4 13.3 49.1
Target Price (Rs) 5,241 EBITDA Margin (%) 18.1 19.5 15.1 (140)bps 303bps
% Upside (32.3) Adj. PAT (Rs bn) 19.0 24.6 10.6 (22.7) 79.6
EPS (Rs/share) 65.6 84.9 36.5 (22.7) 79.6

Shree Cement
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Standalone)
CMP (Rs) 26,210 Volumes (mt) 8.8 8.0 8.0 9.7 9.7
Mkt Cap (Rs bn) 946 Net Sales (Rs bn) 45.3 41.0 40.7 10.5 11.3
Reco SELL EBITDA (Rs bn) 9.5 9.1 7.1 4.5 34.4
Target Price (Rs) 17,700 EBITDA Margin (%) 21.0 22.2 17.4 (122)bps 360bps
% Upside (32.5) Adj. PAT (Rs bn) 4.5 6.5 2.8 (29.7) 63.9
EPS (Rs/share) 125.7 178.9 76.7 (29.7) 63.9

Ambuja Cement
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Standalone)
CMP (Rs) 384 Volumes (mt) 8.0 7.5 7.7 6.2 3.3
Mkt Cap (Rs bn) 763 Net Sales (Rs bn) 43.1 39.3 41.3 9.7 4.3
Reco HOLD EBITDA (Rs bn) 9.0 7.9 6.3 14.0 43.9
Target Price (Rs) 365 EBITDA Margin (%) 20.9 20.1 15.2 77bps 574bps
% Upside (5.1) Adj. PAT (Rs bn) 6.0 5.0 4.3 20.8 39.0
EPS (Rs/share) 3.9 3.3 2.8 20.8 39.0

ACC
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Standalone)
CMP (Rs) 1,739 Volumes (mt) 7.9 7.7 7.7 2.0 2.1
Mkt Cap (Rs bn) 327 Net Sales (Rs bn) 45.4 44.3 45.4 2.7 0.2
Reco HOLD EBITDA (Rs bn) 6.3 6.3 3.8 (0.3) 67.0
Target Price (Rs) 1,855 EBITDA Margin (%) 13.9 14.3 8.3 (41)bps 557bps
% Upside 6.7 Adj. PAT (Rs bn) 3.7 3.9 1.9 (6.4) 93.4
EPS (Rs/share) 19.5 20.8 10.1 (6.4) 93.4

Dalmia Bharat
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Consolidated)
CMP (Rs) 2,003 Volumes (mt) 7.0 6.6 6.3 5.5 10.5
Mkt Cap (Rs bn) 376 Net Sales (Rs bn) 35.6 33.8 33.6 5.3 6.1
Reco HOLD EBITDA (Rs bn) 7.3 6.8 6.5 7.0 13.2
Target Price (Rs) 1,680 EBITDA Margin (%) 20.5 20.2 19.2 33bps 128bps
% Upside (16.1) Adj. PAT (Rs bn) 2.8 2.7 2.2 6.2 29.6
EPS (Rs/share) 15.3 14.4 11.8 6.2 29.6

J.K. Cement
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Standalone)
CMP (Rs) 2,945 Volumes (mt) 4.4 3.9 3.9 12.3 12.4
Mkt Cap (Rs bn) 228 Net Sales (Rs bn) 25.7 22.7 22.9 13.1 12.1
Reco HOLD EBITDA (Rs bn) 3.9 3.8 2.6 1.9 48.3
Target Price (Rs) 2,531 EBITDA Margin (%) 15.2 16.9 11.5 (167)bps 371bps
% Upside (14.1) Adj. PAT (Rs bn) 1.9 2.0 1.0 (6.2) 96.3
EPS (Rs/share) 24.5 26.2 12.5 (6.2) 96.3

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11 April 2023 Indian Cement Sector – 4QFY23E Preview

Ramco Cements
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Standalone)
CMP (Rs) 755 Volumes (mt) 3.8 3.2 3.6 19.5 6.9
Mkt Cap (Rs bn) 178 Net Sales (Rs bn) 20.9 17.1 20.1 22.5 4.2
Reco HOLD EBITDA (Rs bn) 3.2 3.0 2.8 9.8 13.8
Target Price (Rs) 753 EBITDA Margin (%) 15.5 17.3 14.2 (179)bps 131bps
% Upside (0.3) Adj. PAT (Rs bn) 1.1 1.2 0.7 (8.4) 68.7
EPS (Rs/share) 4.8 5.3 2.9 (8.4) 68.7

Birla Corporation
4QFY23E 4QFY22 3QFY23 YoY (%) QoQ (%)
(Consolidated)
CMP (Rs) 923 Volumes (mt) 4.2 4.2 3.7 (1.2) 12.6
Mkt Cap (Rs bn) 71 Net Sales (Rs bn) 23.1 22.6 20.2 2.0 14.6
Reco BUY EBITDA (Rs bn) 2.7 2.8 1.4 (4.2) 83.6
Target Price (Rs) 1,945 EBITDA Margin (%) 11.5 12.2 7.2 (75)bps 431bps
% Upside 110.7 Adj. PAT (Rs bn) 0.4 1.1 (0.5) (61.7) (185.3)
EPS (Rs/share) 5.5 14.4 (6.5) (61.7) (185.3)
Source: Company, Systematix Institutional Research

Exhibit 5: ~9.9% YoY avg. volume growth for our cement coverage Exhibit 6: ~13.3% QoQ avg. volume growth for our cement
coverage
(%) (%)
25 25
20
20
15
15
10
10
5
0 5

-5 0
Shree Cement
UltraTech

ACC

Dalmia Bharat

Birla Corporation
Ambuja

ACC
JK Cement

UltraTech
Ramco Cements

Shree Cement

Dalmia Bharat

Birla Corporation
Ambuja

JK Cement

Ramco Cements
Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

Exhibit 7: Coverage NSR to imporve by ~3.8% YoY Exhibit 8: Coverage NSR remained flattish QoQ
(%) (%)
8 3.0
7 2.0
6 1.0
5
0.0
4
3 -1.0
2 -2.0
1 -3.0
0 -4.0
Dalmia Bharat
ACC

JK Cement
UltraTech

Shree Cement

Birla Corporation
Ambuja

Ramco Cements

-1 -5.0
Shree Cement

ACC
UltraTech

Dalmia Bharat

Birla Corporation
Ambuja

JK Cement

Ramco Cements

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
Exhibit 9: Avg. EBITDA/tn estimated at Rs 941 in 4QFY23 Exhibit 10: … and EBITDA margin has improved sequentially
(Rs) (%) (%) (bps)
2,000 30 400
20
1,600 25
0 20
1,200
-20 15 0
800
10
400 -40
5
0 -60 0 -400

Birla Corporation
ACC
UltraTech

Shree Cement

Dalmia Bharat
Ambuja

JK Cement

Ramco Cements
Dalmia Bharat

JK Cement
ACC
UltraTech

Shree Cement

Birla Corporation
Ambuja

Ramco Cements
EBITDA/ton Change YoY (RHS) EBITDA margin Change YoY (RHS)

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

Exhibit 11: EBITDA/tn to improve QoQ on easing energy costs Exhibit 12: Coverage volumes to increase 9.9% YoY
(Rs) (%) (mt) (%)
2,000 80 50
60
1,600 70
40
30 60
1,200 30
0 50
800
40 20
400 -30 30
10
0 -60 20
0
ACC
UltraTech

Shree Cement

Birla Corporation
Ambuja

Dalmia Bharat

JK Cement

Ramco Cements

10
0 -10
4QFY21
3QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23E
EBITDA/ton QoQ (RHS) Volume YoY growth (RHS)

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

Exhibit 13: Coverage EBITDA to recover on lower Opex Exhibit 14: Coverage PAT to recover YoY on a low base
(Rs bn) (%)
100 60 (Rs bn) (%)
90 60 120
80 40 100
50 80
70 20
60 40 60
40
50 0
30 20
40
-20 0
30 20 -20
20 -40
10 -40
10 -60
0 -60 0 -80
4QFY23E
2QFY22

1QFY23
3QFY21

4QFY21

1QFY22

3QFY22

4QFY22

2QFY23

3QFY23

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23E

Sector EBITDA YoY growth (RHS) Sector PAT YoY growth (RHS)

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

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11 April 2023 Indian Cement Sector – 4QFY23E Preview
Exhibit 15: Stable diesel prices to provide comfort to logistic costs Exhibit 16: Average imported coal price fell by~35% QoQ in 4Q

102 20% 500 300%

100 450 250%
15%
98 400
10% 200%
96 350
300 150%
94 5%
250 100%
92
0% 200
90 50%
-5% 150
88 0%
100
86 -10% 50 -50%

Dec-22
Jun-22
Mar-22

Jan-23
Apr-22

May-22

Oct-22
Aug-22

Mar-23
Jul-22

Sep-22

Nov-22

Feb-23
0 -100%

Apr-22
Mar-22

May-22

Dec-22

Mar-23
Jun-22

Aug-22
Jul-22

Oct-22

Nov-22

Jan-23
Sep-22

Feb-23
Diesel - Average retail prices in Top-4 cities of India (Rs/ltr)
YoY growth (RHS) Newcastle coal prices (6000kcal/kg) YoY growth (RHS)

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

Exhibit 17: Average imported petcoke prices fell by ~23% QoQ in 4Q Exhibit 18: CIL’s coal price up by 5% in 3QFY23
400 250% 1,500 10%
350 8%
200%
1,450 6%
300
150%
4%
250 1,400
100% 2%
200
0%
50% 1,350
150 -2%
0%
100 1,300 -4%
50 -50% -6%
1,250 -8%
0 -100%
3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23
Jan-23
Apr-22

May-22

Mar-23
Mar-22

Dec-22
Oct-22

Nov-22
Jun-22

Aug-22
Jul-22

Sep-22

Feb-23

Avg Imported Pet-Coke price (USD/tn) YoY growth (RHS) FSA realization (Coal India) (Rs/mt) QoQ growth (RHS)

Source: Company, Systematix Institutional Research Source: Company, Systematix Institutional Research

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11 April 2023 Indian Cement Sector – 4QFY23E Preview

Institutional Equities Team

Nikhil Khandelwal Managing Director +91-22-6704 8001 [email protected]
Equity Research
Analysts Industry Sectors Desk-Phone E-mail
Dhananjay Sinha Co Head of Equities & Head of Research - Strategy & Economics +91-22-6704 8095 [email protected]
Ashish Poddar Consumer Durables, Building Materials, Small & Midcaps +91-22-6704 8039 [email protected]
Girija Ray Cement +91-22-6704 8098 [email protected]
Himanshu Nayyar Consumer Staples & Discretionary +91-22-6704 8079 [email protected]
Pradeep Agrawal NBFCs & Diversified Financials +91-22-6704 8024 [email protected]
Pratik Tholiya Specialty & Agro Chem, Fertilisers, Sugar, Textiles and Select Midcaps +91-22-6704 8028 [email protected]
Rahul Jain Metals & Mining +91-22-6704 8066 [email protected]
Rakesh Kumar Banking, Insurance +91-22-6704 8041 [email protected]
Sudeep Anand Oil & Gas , Telecom, Logistics +91-22-6704 8085 [email protected]
Vishal Manchanda Pharmaceuticals and Healthcare +91-22-6704 8064 [email protected]
Aniket Shah Banking, Insurance +91-22-6704 8034 [email protected]
Bezad Deboo Pharmaceuticals and Healthcare +91-22-6704 8046 [email protected]
Chetan Mahadik Consumer Staples & Discretionary +91-22-6704 8091 [email protected]
Hena Vora NBFCs & Diversified Financials +91-22-6704 8045 [email protected]
Pranay Shah Consumer Durables, Building Materials, Small & Midcaps +91-22-6704 8017 [email protected]
Pratik Oza Midcaps +91-22-6704 8036 [email protected]
Prathmesh Kamath Oil & Gas , Telecom, Logistics +91-22-6704 8022 [email protected]
Purvi Mundhra Macro-Strategy +91-22-6704 8078 [email protected]
Rajesh Mudaliar Consumer Staples & Discretionary +91-22-6704 8084 [email protected]
Shraddha Kapadia Consumer Durables, Building Materials, Small & Midcaps +91-22-6704 8019 [email protected]
Shweta Dikshit Metals & Mining +91-22-6704 8042 [email protected]
Varun Gajaria Midcaps +91-22-6704 8081 [email protected]
Equity Sales & Trading
Name Desk-Phone E-mail
Vipul Sanghvi Co Head of Equities & Head of Sales +91-22-6704 8062 [email protected]
Sidharth Agrawal Sales +91-22-6704 8090 [email protected]
Pawan Sharma Director and Head - Sales Trading +91-22-6704 8067 [email protected]
Mukesh Chaturvedi Vice President and Co Head - Sales Trading +91-22-6704 8074 [email protected]
Vinod Bhuwad Sales Trading +91-22-6704 8051 [email protected]
Rashmi Solanki Sales Trading +91-22-6704 8097 [email protected]
Karan Damani Sales Trading +91-22-6704 8053 [email protected]
Vipul Chheda Dealer +91-22-6704 8087 [email protected]
Paras Shah Dealer +91-22-6704 8047 [email protected]
Rahul Singh Dealer +91-22-6704 8054 [email protected]
Corporate Access
Pearl Pillay Sr. Associate +91-22-6704 8088 [email protected]
Production
Madhu Narayanan Editor +91-22-6704 8071 [email protected]
Mrunali Pagdhare Production +91-22-6704 8057 [email protected]
Vijayendra Achrekar Production +91-22-6704 8089 [email protected]
Operations
Sachin Malusare Vice President +91-22-6704 8055 [email protected]
Jignesh Mistry Manager +91-22-6704 8049 [email protected]
Sushant Chavan Manager +91-22-6704 8056 [email protected]

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11 April 2023 Indian Cement Sector – 4QFY23E Preview

DISCLOSURES/APPENDIX

I. ANALYST CERTIFICATION
I, Girija Ray, hereby certify that (1) views expressed in this research report accurately reflect my/our personal views about any or all of the subject securities or issuers referred to in this
research report, (2) no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research report by
Systematix Shares and Stocks (India) Limited (SSSIL) or its group/associate companies, (3) reasonable care is taken to achieve and maintain independence and objectivity in making any
recommendations.

Disclosure of Interest Statement Update

Analyst holding in the stock No
Served as an officer, director or employee No

II. ISSUER SPECIFIC REGULATORY DISCLOSURES, unless specifically mentioned in point no. 9 below:

1. The research analyst(s), SSSIL, associates or relatives do not have any financial interest in the company(ies) covered in this report.

2. The research analyst(s), SSSIL, associates or relatives collectively do not hold more than 1% of the securities of the company(ies) covered in this report as of the end of the
month immediately preceding the distribution of the research report.

3. The research analyst(s), SSSIL, associates or relatives did not have any other material conflict of interest at the time of publication of this research report.
4. The research analyst, SSSIL and its associates have not received compensation for investment banking or merchant banking or brokerage services or any other products or
services from the company(ies) covered in this report in the past twelve months.
5. The research analyst, SSSIL or its associates have not managed or co-managed a private or public offering of securities for the company(ies) covered in this report in the previous
twelve months.
6. SSSIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party in connection with this research
report.

7. The research analyst has not served as an officer, director or employee of the company(ies) covered in this research report.

8. The research analyst and SSSIL have not been engaged in market making activity for the company(ies) covered in this research report.

9. Details of SSSIL, research analyst and its associates pertaining to the companies covered in this research report:

Sr. Yes /
Particulars
No. No.
1 Whether compensation was received from the company(ies) covered in the research report in the past 12 months for investment banking transaction by SSSIL. No
2 Whether research analyst, SSSIL or its associates and relatives collectively hold more than 1% of the company(ies) covered in the research report. No
3 Whether compensation has been received by SSSIL or its associates from the company(ies) covered in the research report. No
Whether SSSIL or its affiliates have managed or co-managed a private or public offering of securities for the company(ies) covered in the research report in the
4 No
previous twelve months.
Whether research analyst, SSSIL or associates have received compensation for investment banking or merchant banking or brokerage services or any other
5 No
products or services from the company(ies) covered in the research report in the last twelve months.

10. There is no material disciplinary action taken by any regulatory authority that impacts the equity research analysis activities.

STOCK RATINGS
BUY (B): The stock's total return is expected to exceed 15% over the next 12 months.
HOLD (H): The stock's total return is expected to be within -15% to +15% over the next 12 months.
SELL (S): The stock's total return is expected to give negative returns of more than 15% over the next 12 months.
NOT RATED (NR): The analyst has no recommendation on the stock under review.

INDUSTRY VIEWS
ATTRACTIVE (AT): Fundamentals/valuations of the sector are expected to be attractive over the next 12-18 months.
NEUTRAL (NL): Fundamentals/valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months.
CAUTIOUS (CS): Fundamentals/valuations of the sector are expected to deteriorate over the next 12-18 months.

III. DISCLAIMER
The information and opinions contained herein have been compiled or arrived at based on the information obtained in good faith from sources believed to be reliable. Such information
has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy completeness or correctness.

This document is for information purposes only. This report is based on information that we consider reliable; we do not represent that it is accurate or complete and one should exercise
due caution while acting on it. Description of any company(ies) or its/their securities mentioned herein are not complete and this document is not and should not be construed as an
offer or solicitation of an offer to buy or sell any securities or other financial instruments. Past performance is not a guide for future performance, future returns are not guaranteed and
a loss of original capital may occur. All opinions, projections and estimates constitute the judgment of the author as on the date of the report and these, plus any other information
contained in the report, are subject to change without notice. Prices and availability of financial instruments are also subject to change without notice. This report is intended for
distribution to institutional investors.
This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity that is a citizen or resident or located in any
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11 April 2023 Indian Cement Sector – 4QFY23E Preview
redistribution or disclosure of this report including, but not limited to, redistribution by electronic mail, posting of the report on a website or page, and/or providing to a third party a link,
is prohibited by law and will result in prosecution. The information contained in the report is intended solely for the recipient and may not be further distributed by the recipient to any
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SSSIL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any
companies that the analysts cover. Additionally, SSSIL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of
any companies that they cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that
reflect opinions that are contrary to the opinions expressed herein. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the
recommendations expressed herein. The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The
compensation of the analyst who prepared this document is determined exclusively by SSSIL; however, compensation may relate to the revenues of the Systematix Group as a whole, of
which investment banking, sales and trading are a part. Research analysts and sales persons of SSSIL may provide important inputs to its affiliated company(ies).
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations which could have an adverse effect on their value or price or the income
derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. SSSIL, its directors, analysts
or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on the basis of this report
including but not restricted to fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.

SSSIL and its affiliates, officers, directors, and employees subject to the information given in the disclosures may: (a) from time to time, have long or short positions in, and buy or sell, the
securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation (financial interest)
or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential material
conflict of interest with respect to any recommendation and related information and opinions. The views expressed are those of the analyst and the company may or may not subscribe
to the views expressed therein.
SSSIL, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall SSSIL, any of its affiliates or any third
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shall have no liability arising out of, or in connection with, any such referenced website.
SSSIL will not be liable for any delay or any other interruption which may occur in presenting the data due to any technical glitch to present the data. In no event shall SSSIL be liable for
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through this presentation.

SSSIL or any of its other group companies or associates will not be responsible for any decisions taken on the basis of this report. Investors are advised to consult their investment
and tax consultants before taking any investment decisions based on this report.

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