Cement Sector | Q3FY15E Results Preview (Ultratech Cement, ACC, Ambuja Cement, Prism Cement & Mangalam Cement):: IndiaNivesh

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Cement demand recovery continued in Q3FY15, primarily driven by uptick in
execution of stuck infra projects. We estimate top-line growth in the range of 14.2%
to 28.8% for the cement stock under our coverage.
Cement companies are likely to benefit positively on margin front in Q3FY15E, on
account of 1) positive operating leverage from higher volume and 2) decline in coal
and diesel prices

Ultratech Cement | Rating: HOLD | TP: Rs.3,029
 We expect Ultratech to report 6.1% q-o-q top-line growth to Rs 57.6 bn
reflecting (1) volume growth of 3% to 10.7 mnt and (2) ~5% growth in cement
realization to Rs 5,641/ton.
 EBITDA margin is likely to expand by 55 bps q-o-q to ~16.7% on account of
lower fuel prices (coal & diesel). Consequently, EBITDA/ton may climb to
Rs 902/ton (Rs 847/ton in Q2FY15).
Key things to watch out:
 Timeline and clarity on proposed JP cement plant acquisition
Valuation:
At CMP of Rs 2,705; Ultratech Cement is trading at FY15E and FY16E EV/EBITDA
multiple of 16x and 12.2x. we maintain hold rating on the stock with PT of Rs 3,029.
 We expect ACC to report q-o-q top-line growth of 8.1%, on back of (1) volumes
growth 3% to 5.8 mnt and (2) ~5% growth in cement realization to Rs 4,447/
ton.
 EBITDA margin is likely to expand q-o-q by 55 bps to 14% on account of lower
fuel prices (coal & diesel). Consequently, EBITDA/ton is likely to increase to
Rs 736/ton (Rs 673/ton in Q3CY14).
Key things to watch out:
 Volume growth recovery and outlook


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