Kotak Sec, UltraTech Cement: Still on the prowl

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UltraTech Cement: Still on the prowl
 Acquires Madhya Pradesh assets aggregating 4.9 mtpa for Rs54 bn
(US$175/ton)
 Jaiprakash has now sold 13 mtpa of cement capacity, still has a large
outstanding debt
 Acquisition likely to be fruitful in the long term, rich valuations force us to
maintain our stance

Still on the prowl. Ultratech Cement is looking to acquire 4.9 mtpa of cement assets
in Madhya Pradesh from Jaiprakash Associates for an enterprise value of `54 bn, which
implies an EV/ton of US$175/ton—appears rich in reference to recent transactions
though should be seen in the context of clinker capacity of 5.2 mtpa. Ultratech
continues to aggressively acquire/add new capacities, leading to continued
consolidation in the industry. Maintain SELL rating with revised TP of `2,300

LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily24122014an.pdf