External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

External broker reports(aggregated public sources)

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Thematic (Sector/Industry)

<div><div><div><div><ul><li>Weak seasonal demand and decline in prices against the backdrop of high input costs would mean muted realizations</li><li>The trend in cement pricing has been discouraging so far.</li><li>The news regarding CCI’s investigation on cement companies might be a factor for subdued pricing.</li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Weak seasonal demand and decline in prices against the backdrop of high input costs would mean muted realizationsThe trend in cement pricing has been discouraging so far.The news regarding CCI’s investigation on cement companies might be a factor for subdued pricing.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Cement Sector - Elevated Energy Costs to Weigh on Margins

Equity Bottom-Up

<div><ul><li>Market share gains for Ultratech will be difficult going forward</li><li><p>Sizeable improvement in EBITDA/mt for Adani possible: Holcim group’s aggregate EBITDA/mt is ~Rs200/mt lower than Ultratech’s for the past three years or so.</p></li><li><p><span style="font-size: var(--content-font-size);">Valuation multiples have room to grow for the combined ACC-Ambuja entity</span></p></li></ul></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Market share gains for Ultratech will be difficult going forwardSizeable improvement in EBITDA/mt for Adani possible: Holcim group’s aggregate EBITDA/mt is ~Rs200/mt lower than Ultratech’s for the past three years or so.Valuation multiples have room to grow for the combined ACC-Ambuja entityContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

UltraTech Cement Ltd - Steep Correction Has Made Valuations Reasonable

<div><div><div><div><ul><li>Summary of change in recommendation of our coverage universe: We have cut targets prices for our covered companies by 10-30% on account of reduced earnings expectations as well as lower target multiples.</li></ul><div><div><div><div><ul><li>Near term earnings outlook weak and positive triggers missing: We expect earnings to remain weak for the cement sector for the next two quarters on account of elevated costs and weak realizations amid a seasonally weak demand period.</li></ul><div><div><div><div><ul><li>Reversal in coal and crude prices can offer some solace: We believe that high competitive intensity will subside once the inflationary pressures recede and hence reversal of higher coal and crude prices is important.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Summary of change in recommendation of our coverage universe: We have cut targets prices for our covered companies by 10-30% on account of reduced earnings expectations as well as lower target multiples.Near term earnings outlook weak and positive triggers missing: We expect earnings to remain weak for the cement sector for the next two quarters on account of elevated costs and weak realizations amid a seasonally weak demand period.Reversal in coal and crude prices can offer some solace: We believe that high competitive intensity will subside once the inflationary pressures recede and hence reversal of higher coal and crude prices is important.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Cement Sector - Headwinds Galore; Turning 'neutral' on the Sector

<div><div><div><div><ul><li>Deal contours in brief: Holcim, through an offshore entity, owns 63.11% stake in Ambuja, which in turn owns 50.05% stake in ACC.</li></ul><div><div><div><div><ul><li>Why is Holcim selling its assets in India?: Holcim group had earlier announced its “Strategy 2025”, wherein it had outlined its focus on increasing its share of revenue from the ‘solutions &amp; products’ business.</li></ul><div><div><div><div><ul><li>How Adani pipped other bidders: Given the strong brands, pan-India network and large capacities, ACC- Ambuja assets were sought by multiple stakeholders.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Deal contours in brief: Holcim, through an offshore entity, owns 63.11% stake in Ambuja, which in turn owns 50.05% stake in ACC.Why is Holcim selling its assets in India?: Holcim group had earlier announced its “Strategy 2025”, wherein it had outlined its focus on increasing its share of revenue from the ‘solutions &amp; products’ business.How Adani pipped other bidders: Given the strong brands, pan-India network and large capacities, ACC- Ambuja assets were sought by multiple stakeholders.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Cement Sector - Landmark Deal – New Chapter Unfolds in Cement Industry

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<div><ul><li>EBITDA 5% above estimates; Cement prices increase in Apr’22 - <span style="font-size: var(--content-font-size);">UltraTech (UTCEM)’s operating performance was marginally ahead of our estimates led by higher volumes/lower opex.</span></li></ul><div><ul><li>Cost inflation impacts profitability; EBITDA/t fell 16% YoY - <span style="font-size: var(--content-font-size);">Consolidated revenue/EBITDA/adjusted PAT stood at INR157.7b/INR30.7b/ INR14.8b (+9%/-17%/-19% YoY; +1%/+5%/+2% v/s our estimate).</span></li></ul><div><div><div><ul><li>Highlights from the management commentary - <span style="font-size: var(--content-font-size);">Cement demand should improve, led by demand from Infrastructure, rural India, as well as an improvement in urban Real Estate.</span></li></ul></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

EBITDA 5% above estimates; Cement prices increase in Apr’22 - UltraTech (UTCEM)’s operating performance was marginally ahead of our estimates led by higher volumes/lower opex.Cost inflation impacts profitability; EBITDA/t fell 16% YoY - Consolidated revenue/EBITDA/adjusted PAT stood at INR157.7b/INR30.7b/ INR14.8b (+9%/-17%/-19% YoY; +1%/+5%/+2% v/s our estimate).Highlights from the management commentary - Cement demand should improve, led by demand from Infrastructure, rural India, as well as an improvement in urban Real Estate.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

UltraTech Cement - Cost Inflation Guidance Lower than Estimates

India

Ultra Tech Cement Ltd. produces a wide range of cement products. This Company represents the cement operations of Larsen & Toubro which were spun-off into a separate entity in which Grasim Industries holds a majority interest.

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Ultratech Cement (UTCEM IN)

Cement Sector - Elevated Energy Costs to Weigh on Margins

1QFY23 earnings for the cement sector will be muted as we expect margin pressure to continue in the near term due to higher operating costs,...

Nirmal Bang

UltraTech Cement Ltd - Steep Correction Has Made Valuations Reasonable

Ultratech stock has corrected by ~33% from its 52-week high on concerns about increased competition in the cement industry post the entry of Adani...

Nirmal Bang

Cement Sector - Headwinds Galore; Turning 'neutral' on the Sector

We are turning ‘neutral’ on the cement sector as we believe that there are multiple headwinds, which will inhibit earnings growth and in turn lead...

Nirmal Bang

Cement Sector - Landmark Deal – New Chapter Unfolds in Cement Industry

Adani group has sealed the deal to acquire Ambuja and ACC from Holcim in one of the biggest M&A deals in the Indian cement industry.

Nirmal Bang

UltraTech Cement - Cost Inflation Guidance Lower than Estimates

UltraTech (UTCEM)’s operating performance was marginally ahead of our estimates led by higher volumes/lower opex. EBITDA was at INR30.7b v/s...

Motilal Oswal

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