spark capital - cement sector

Cement Sector India Cement SectorIndia Cement Sector

Market dataBSE SENSEX 27831NIFTY 8355

Date Dec 10, 2014

Interaction with cement equipment manufacturers Supply pressure to ease ahead

We recently interacted with two leading equipment manufacturers for cement plants to assess (1) the currentordering scenario; (2) execution of the projects in hand; and (3) current capex costs involved in setting up anew plant. Overall, equipment suppliers are continuing to witness a significant slowdown in new order intakewhich is directionally positive sign for the cement manufacturers.We highlight below our key takeaways:Order inflows and order book continues to remain depressed: Equipment suppliers have seen only three-four major orders tothe tune of 8-10 mt placed in CY2014. This is a significant slowdown comparing the past annual ordering of ~25mt seen in CY06-CY08. Notable orders placed in CY2014 are from Wonder Cement (3mt plant in Rajasthan), Emami Cement (3mt in Chhattisgarh),and Sanghi Cement (1.2mt brownfield plant in Kutch, Gujarat). Of late, more enquires are coming up for split grinding units fromcement players. This helps reduce lead distance, however will not add up to the industry nameplate capacityPipeline of projects also remain weak: The intensity of enquires and the potential pipeline of projects from cement companies alsoremains weak. As of now there are only 8-10 manufacturers who are in very early discussion stage for new capacities. Of this 4-5are from South, where these projects are dependent on tax incentive announcement from the new government in AP/Telangana.Another 3-4 projects are for setting up grinding capacities., where these will not add up to the nameplate capacity. Overall, the likelyhood of these orders getting executed is atleast one-two years away.Current capex costs involved in setting up a new plant: Current average cost of setting up a greenfield cement plant is in therange of US$110-125/t or Rs. 6.5-7.5bn for a 1mt plant vs. Rs. 7.8bn-8.5bn last year. The costs of setting up capex are down 12-

Performance (%)1M 3M 6M 12M

Sensex -1 3 9 33

ACC -5 -6 -5 28

ACEM 2 4 -2 21

UTCEM -2 -6 -10 34

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13% versus a year back due to decrease in steel prices and competitive bidding given lack of orders in the industry. Of the totalcapex ~45% is towards equipment, 20% land, 15% towards erection and balance primarily towards land. Setting up a standalonegrinding unit will cost ~2.5-3bn. Imported component is ~15% of the total capex.Our take: Supply pressure to ease, however significant overcapacity to remain in the systemPost ~146mt of additions from FY10-FY14, we expect pace of additions to come down over the next three years. We expect ~41mtof capacity additions over the next three years. Further, we believe supply to structurally slow down in the industry over the nextthree to five years due to: Pipeline of projects with equipment suppliers remains weak Inorganic expansion may become a preferred route, esp from large companies with strong balance sheets. This will help them

access volumes with immediate effect and hence participate in the expected demand uptick. Mid tier companies have expanded aggressively over the last two to tree years leading to levered balance sheets. Hence appetite

for incremental expansions looks challenging. Current capital costs make the projects unviable at current cement prices and profitabilitySector and stocks view:We expect industry utlisations to bottom out in FY15E at 70% and thereon will see a structural shift upwards. This will beled by declining pace of capacity additions coupled with demand pick up from a low base of 5% CAGR between FY11-FY15E. We expect incremental demand to outpace incremental supply from FY16E onwards, resulting in better pricingpower for the cement manufacturers. In the past, during periods of incremental demand outpacing incremental supply,cement companies saw margin expansion. We remain selectively positive on companies having efficient cost structure,better regional exposure and strong balance sheet. We prefer UltraTech Cement and Shree Cements in the large cap space.Ramco Cements , Dalmia Bharat, JK Lakshmi, and Orient Cement are our preferred pick in the mid cap space.

UTCEM -2 -6 -10 34

SRCM -1 6 23 112

TRCL -6 -6 8 89

ICEM -20 -30 -31 49

BCORP -2 -12 27 82

DBL 20 4 2 263

ORCMNT 9 19 47 251

JKLC -3 26 83 474

PRSC 6 4 6 212

VIJAYARAGHAVAN SWAMINATHAN [email protected] +91 44 4344 0022GIRISH CHOUDHARY [email protected] +91 44 4344 0021

Find Spark Research on Bloomberg (SPAK ),Thomson First Call, Reuters Knowledge and Factset

Cement Sector India Cement SectorIndia Cement SectorComparative valuations

Stock CMP MCAP (Rs. mn) RatingRs. FY15E FY16E FY17E FY15E FY16E FY17E

ACC 1,430 268,769 15.2 10.6 8.4 7,484 7,352 6,853 BUYAmbuja Cement 225 347,819 14.0 10.5 8.5 10,045 9,351 7,720 BUYBirla Corporation 470 36,195 8.2 5.3 4.2 3,104 2,886 2,567 BUYDalmia Bharat 490 39,788 17.5 7.4 5.7 4,944 4,852 4,637 BUYIndia Cements 86 26,424 8.1 5.6 4.0 3,828 3,861 3,703 ADDRamco Cement 330 78,507 13.6 8.7 6.6 7,545 7,229 6,794 ADDOrient Cement 147 30,116 8.2 8.8 5.3 5,513 5,330 4,976 BUYJK Lakshmi 407 47,904 9.9 9.3 7.6 7,178 6,596 5,284 BUYShree Cement 9,100 317,019 14.0 10.2 8.1 12,946 11,335 9,727 BUYUltraTech Cement 2,525 692,753 16.2 11.8 9.4 10,982 10,319 9,983 BUY

EV/EBITDA EV/t (Rs.)

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Effective capacity additions to moderate post a robust growth

Source: Company, Spark Capital

Supply Expect structural slow down in capacity additions

Capacity additions pace will moderate over the next three years:Post ~146mt of additions (~41% of the current installed capacity) fromFY10-FY14, we expect pace of addition to come down over the next threeyears. We expect ~41mt of capacities to be added over the next threeyears, which is ~11% of the FY14.Supply growth is moderating and will slow down structurally due to: Significant over capacity in the system of ~108mnt by FY15E which is

around 30% of the capacity. This has led to weak pricing power forcement companies, leading to below optimal returns on investment

Due to aggressive expansions from mid tier companies, the balance

23

63

33

1419 18 16 17

6

12%

30%

12%

5% 6% 5% 4% 5%2% 0%

5%

10%

15%

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25%

30%

35%

0

10

20

30

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50

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70

FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Capacity additions (mt) % of installed base

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All India cement installed cement capacity


Due to aggressive expansions from mid tier companies, the balancesheets are highly leverage.

Current capital costs make the projects unviable at current cementprices and profitability.

Preference over inorganic expansion versus Greenfield, esp from cashrich large companies.

Beyond FY16, we see low visibility of huge capacity additions as mostmid-tier companies are already under expansionary phase with theirbalance sheets are stretched. In our opinion, incremental additionsbeyond FY16 will majorly come from large tier companies (ACC, ACEM,UTCEM, and SRCM), who have the balance sheet strength to support

212

275308 322

341 358376 393 399

050

100150200250300350400450

FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Installed capacity (mt)

Cement Sector India Cement SectorIndia Cement SectorList of Capacity Additions

Details of Additions Location FY15E FY16E FY17E FY18E Comments

Shree Cement Ras, Rajasthan 2.0 CommissionedShree Cement Bihar 2.0 Commissioned

Ultratech (Grasim) Raipur, Chhattisgarh 3.2 Expected commissioning by 4QFY15JK Lakshmi Cement Durg, Chhattisgarh 1.7 1.0 Likely commissioning by Dec-14. The 1mt grinding unit in Cuttack by 4QFY16Century Textiles Chandrapur, Maharashtra 2.8 Likely commissioning by 4QFY15Dalmia Cements Belgaum, Karnataka 2.5 Likely commissioning by Dec-14Calcom Cement Lanka, Assam 0.9 Likely commissioning by Mar-15

JK Cement Mangrol, Rajasthan 3.0 Commissioned Sanghi Industries Kutch, Gujarat 1.2 Commissioning by 1QFY16Orient Cement Belgaum, Karnataka 3.0 Commissioning by 1QFY16. Smooth project executionShree Cement Raipur, Chhattisgarh 2.0 Commissioning by 2QFY16JK Lakshmi Cement Udaipur, Rajasthan 1.4 Order placed

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JK Lakshmi Cement Udaipur, Rajasthan 1.4 Order placedACC Jamul, Chhattisgarh 3.5 Company expects commissioning by 2QCY15Shree Cements Bulandshahr, UP 2.0 Order placed

UltraTech Rajasthan 2.9 Order placedEmami Cement Chhattisgarh 3.0 Order placed

Wonder Cement Rajasthan 3.0 Order placedAmbuja Cements Marwah Mundwa, Rajasthan 4.5 Order yet to be placed. Sanghi Industries Gujarat 4.0 Order yet to be placedTotal additions 18.1 17.0 6.0 8.5

The above additions are based on our interactions with the company, equipment suppliers and annual reports. Also we have excluded proposed addition of split grindingunits which do not add to the industry name plate capacity. These are projects which aid reduction in lead distance and proximity to end markets. Some of the split grindingadditions are (1) Ramco Cements, 1mt plant in Vizag, scheduled to commission by 4QFY15; and (2) OCLs 1.35mt in West Bengal, commissioned in 1QFY15.


Cement Sector India Cement SectorIndia Cement SectorDemand and Utilisations

We expect demand growth of 8% in FY16E and 10% in FY17E


Utilisations to recover steadily from FY16E onwards


9%8% 8%

10%

6%7%

5%3%

6%

8%

10%

0%

2%

4%

6%

8%

10%

12%

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Demand growth

94% 96% 89% 86%75% 73% 71% 70% 70% 72%

77%

0%

20%

40%

60%

80%

100%

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E

Utilisation

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Incremental demand to be > incremental supply in FY16E


Source: Company, Spark Capital Source: Company, Spark Capital

Incremental supply Incremental demand Surplus/deficitFY06 5.9 14.4 (8.5)FY07 7.9 13.3 (5.4)FY08 10.2 12.8 (2.6)FY09 29.1 13.3 15.8 FY10 29.2 18.4 10.8 FY11 46.6 11.0 35.6 FY12 29.0 13.7 15.3 FY13 19.7 10.1 9.6 FY14 14.7 7.0 7.7 FY15E 19.5 14.5 5.0 FY16E 18.9 20.4 (1.5)FY17E 11.7 27.6 (16.0)

Major margin expansion during periods of increasing utilisations

Source: Company; Margins are wtd average of ACC, ACEM, ICEM, MC, SRCM, and JKLC

23%21%19%20%23%

34% 35%

29%30%

21%23%23%16%

20% 23%25%

0%5%10%15%20%25%30%35%40%

0%10%20%30%40%50%60%70%80%90%

100%

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

F

Y

1

5

E

F

Y

1

6

E

F

Y

1

7

E

Utilisations % Margins %

Cement Sector India Cement SectorIndia Cement SectorRegion-wise demand-supply model

NorthFY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 59.4 62.4 63.6 67.2 73.7 78.7 85.0 88.0Additions 11.1 3.0 1.2 3.6 6.5 5.0 6.3 3.0Effective Capacity 48.5 58.2 60.4 63.5 67.0 72.9 80.6 83.0Production 45.6 47.7 52.5 55.6 58.4 63.7 68.7 75.6Consumption 38.3 41.5 45.7 48.4 50.8 55.4 59.8 65.8Demand growth 9.1% 8.4% 10.0% 6.0% 5.0% 9.0% 8.0% 10.0%Utilisation 94% 82% 87% 88% 87% 87% 85% 91%

EastFY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 39.4 41.9 44.0 46.2 47.8 55.6 62.1 65.1 Additions 8.7 2.5 2.1 2.2 1.6 7.8 6.5 3.0

SouthFY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 99.8 115.4 123.9 131.7 136.1 138.6 141.6 141.6Additions 26.8 15.6 8.5 7.8 4.4 2.5 3.0 0.0Effective Capacity 81.2 102.3 116.9 127.7 132.8 136.8 140.9 141.6Production 61.8 62.2 64.6 66.2 67.8 71.2 77.8 88.2Consumption 55.5 56.0 54.9 57.6 57.6 60.5 65.3 73.2Demand growth 3.2% 0.9% -2.0% 5.0% 0.0% 5.0% 8.0% 12.0%Utilisation 76% 61% 55% 52% 51% 52% 55% 62%

CentralFY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 32.8 38.1 40.4 45.9 50.9 50.9 50.9 50.9 Additions 4.6 5.3 2.3 5.5 5.0 0.0 0.0 0.0

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Additions 8.7 2.5 2.1 2.2 1.6 7.8 6.5 3.0 Effective Capacity 32.8 38.7 41.8 44.0 45.9 49.2 55.9 62.5 Production 28.5 31.3 33.8 35.5 36.5 40.5 43.8 47.3 Consumption 33.0 35.0 38.9 40.8 42.0 45.4 49.0 52.9 Demand growth 17.9% 6.1% 11.0% 5.0% 3.0% 8.0% 8.0% 8.0%Utilisation 87% 81% 81% 81% 80% 82% 78% 76%

WestFY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 43.0 49.4 49.4 49.4 49.4 52.2 53.4 53.4 Additions 7.7 6.4 0.0 0.0 0.0 2.8 1.2 0.0 Effective Capacity 36.6 44.4 49.4 49.4 49.4 50.8 53.1 53.4 Production 35.5 36.8 41.9 42.3 43.6 45.1 48.3 50.6 Consumption 43.5 45.2 50.7 51.2 52.7 56.4 60.9 65.8 Demand growth 7.1% 4.0% 12.0% 1.0% 3.0% 7.0% 8.0% 8.0%Utilisation 97% 83% 85% 86% 88% 89% 91% 95%

Additions 4.6 5.3 2.3 5.5 5.0 0.0 0.0 0.0 Effective Capacity 28.3 34.1 38.1 41.7 45.9 50.9 50.9 50.9 Production 29.8 33.0 35.3 35.7 37.5 40.9 43.3 45.9 Consumption 30.8 34.0 36.4 37.5 39.0 42.1 45.5 49.1 Demand growth 17.6% 10.4% 7.0% 3.0% 4.0% 8.0% 8.0% 8.0%Utilisation 105% 97% 93% 86% 82% 80% 85% 90%

All IndiaAll India FY10 FY11 FY12 FY13 FY14E FY15E FY16E FY17E

Total capacity 274.7 307.5 321.6 340.6 358.1 376.2 393.2 399.2 Additions 62.7 32.8 14.1 19.1 17.5 18.1 17.0 6.0 Effective Capacity 234.0 280.6 309.5 329.2 343.9 363.4 382.3 394.0 Production 200.4 210.9 224.6 234.1 241.1 255.6 276.1 303.7 Consumption 199.4 210.4 224.0 234.1 241.1 255.6 276.1 303.7 Demand growth 10.2% 5.5% 6.5% 4.5% 3.0% 6.0% 8.0% 10.0%Utilisation 86% 75% 73% 71% 70% 70% 72% 77%

Cement Sector India Cement SectorIndia Cement SectorRecommendation History (1/3)

0

500

1000

1500

2000

1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14

Historical Target

ACC

200250300 Ambuja cement

Report Date CMP (Rs.) TP (Rs.) Recommendation30/Oct/14 1,490 1,595 Add25/Jul/14 1,430 1,600 Buy25/Apr/14 1,307 1,360 Buy21/Mar/14 1,260 1,360 Buy20/Mar/14 1,260 1,360 Buy10/Feb/14 1,050 1,165 Buy12/Dec/13 1,120 1,310 Buy24/Oct/13 1,150 1,200 Add25/Jul/13 1,190 1,215 Add03/May/13 1,215 1,250 Add28/Mar/13 1,157 1,335 Buy11/Feb/13 1,280 1,460 Buy29/Oct/12 1,390 1,700 Buy19/Oct/12 1,405 1,700 Buy

Report Date CMP (Rs.) TP (Rs.) Recommendation08/Aug/12 1,345 1,395 Add26/Jul/12 1,260 1,395 Add22/Jun/12 1,255 1,245 Reduce19/Apr/12 1,245 1,240 Reduce11/Apr/12 1,300 1,246 Reduce02/Mar/12 1,258 1,230 Reduce01/Mar/12 1,322 1,230 Reduce27/Feb/12 1,258 1,230 Reduce13/Feb/12 1,355 1,230 Reduce04/Nov/11 1,230 1,120 Reduce14/Oct/11 1,119 939 Reduce03/Aug/11 1,013 920 Reduce07/Jul/11 992 927 Sell27/Apr/11 1,114 927 Sell

Report Date CMP (Rs.) TP (Rs.) Recommendation03/Nov/14 220 255 Buy24/Jul/14 210 240 Buy25/Apr/14 208 180 Sell21/Mar/14 183 175 Sell20/Mar/14 183 175 Sell10/Feb/14 162 155 Sell

Report Date CMP (Rs.) TP (Rs.) Recommendation08/Aug/12 193 180 Reduce26/Jul/12 180 180 Reduce03/Jul/12 176 160 Reduce22/Jun/12 173 156 Reduce20/Apr/12 161 156 Reduce11/Apr/12 168 151 Reduce

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050

100150


Historical Target

0500

10001500200025003000


Historical Target

Ultratech Cement

10/Feb/14 162 155 Sell12/Dec/13 182 175 Sell24/Oct/13 195 160 Sell17/Sep/13 180 162 Reduce25/Jul/13 172 162 Reduce03/May/13 188 193 Add28/Mar/13 171 196 Buy11/Feb/13 190 215 Buy29/Oct/12 207 235 Buy19/Oct/12 205 235 Buy

11/Apr/12 168 151 Reduce09/Mar/12 160 150 Reduce02/Mar/12 160 150 Reduce27/Feb/12 160 150 Reduce13/Feb/12 173 150 Sell04/Nov/11 161 137 Sell14/Oct/11 149 125 Reduce03/Aug/11 129 121 Reduce07/Jul/11 129 121 Sell27/Apr/11 158 121 Sell

Report Date CMP (Rs.) TP (Rs.) Recommendation21/Oct/14 2,450 2,700 Buy21/Jul/14 2,500 2,700 Buy25/Apr/14 2,090 2,200 Buy21/Mar/14 1,950 2,100 Buy20/Jan/14 1,720 2,050 Buy12/Dec/13 1,860 2,150 Buy19/Oct/13 1,960 1,975 Add17/Sep/13 1,700 1,860 Add12/Sep/13 1,745 1,860 Add29/Jul/13 1,890 1,985 Add04/Jul/13 1,914 2,000 Add26/Apr/13 1,930 2,020 Add28/Mar/13 1,843 1,970 Add21/Jan/13 1,930 2,100 Add

Report Date CMP (Rs.) TP (Rs.) Recommendation22/Oct/12 2,020 2,100 Add08/Aug/12 1,640 1,730 Add23/Jul/12 1,597 1,730 Add22/Jun/12 1,475 1,407 Sell24/Apr/12 1,462 1,407 Sell11/Apr/12 1,500 1,214 Sell02/Mar/12 1,400 1,214 Sell27/Feb/12 1,400 1,214 Reduce30/Jan/12 1,230 1,139 Reduce24/Oct/11 1,130 1,008 Reduce14/Oct/11 1,125 937 Reduce03/Aug/11 1,028 921 Reduce07/Jul/11 984 922 Reduce27/Apr/11 1,059 922 Reduce


02000400060008000

1000012000


Historical Target

Shree cement Report Date CMP (Rs.) TP (Rs.) Recommendation05/Dec/14 9,300 10,400 Buy10/Nov/14 9,200 10,400 Buy25/Aug/14 7,850 8,750 Buy28/Apr/14 5,700 5,950 Buy21/Mar/14 5,100 5,400 Buy27/Jan/14 4,330 4,700 Buy12/Dec/13 4,300 4,800 Buy25/Oct/13 4,400 4,700 Buy01/Oct/13 4,150 4,700 Buy31/Jul/13 4,400 4,875 Buy29/Apr/13 4,435 5,000 Buy28/Mar/13 4,200 4,625 Buy21/Jan/13 4,400 5,000 Buy16/Oct/12 4,020 4,650 Buy

Report Date CMP (Rs.) TP (Rs.) Recommendation26/Sep/12 3,675 4,200 Buy04/Sep/12 3,330 3,900 Buy24/Aug/12 3,450 3,900 Add08/Aug/12 3,100 2,900 Add22/Jun/12 2,715 2,900 Add13/Jun/12 2,630 2,900 Add16/May/12 2,640 2,920 Add11/Apr/12 2,900 2,890 Add02/Mar/12 2,700 2,890 Add27/Feb/12 2,700 2,890 Add23/Feb/12 2,700 2,890 Add30/Jan/12 2,225 2,450 Add11/Nov/11 2,025 2,175 Add14/Oct/11 1,840 1,970 Add

300

400 Madras cementReport Date CMP (Rs.) TP (Rs.) Recommendation06/Nov/14 350 335 Add28/Jul/14 280 285 Add23/May/14 280 250 Add21/Mar/14 188 185 Buy12/Feb/14 165 185 Buy12/Dec/13 170 195 Buy

Report Date CMP (Rs.) TP (Rs.) Recommendation04/Aug/12 173 190 Add02/Jul/12 160 142 Reduce22/Jun/12 157 133 Reduce24/May/12 136 133 Reduce11/Apr/12 150 146 Reduce02/Mar/12 139 133 Reduce

Page 8

0

100

200


Historical Target

12/Dec/13 170 195 Buy23/Oct/13 167 165 Add30/Jul/13 168 200 Buy01/Jul/13 222 260 Buy31/May/13 225 260 Buy28/Mar/13 245 270 Add13/Feb/13 240 275 Buy05/Nov/12 204 245 Buy20/Sep/12 177 190 Add08/Aug/12 173 190 Add

02/Mar/12 139 133 Reduce27/Feb/12 139 133 Reduce09/Feb/12 140 133 Reduce09/Nov/11 115 103 Reduce14/Oct/11 98 88 Reduce11/Aug/11 88 84 Reduce14/Jul/11 85 84 Reduce07/Jul/11 83 84 Reduce15/Jun/11 90 84 Reduce26/May/11 91 84 Reduce

020406080

100120140


Historical Target

India cementReport Date CMP (Rs.) TP (Rs.) Recommendation12/Nov/14 108 115 Add08/Aug/14 104 110 Add26/May/14 100 80 Sell21/Mar/14 55 48 Sell11/Feb/14 53 48 Sell12/Dec/13 60 55 Sell07/Nov/13 52 40 Sell23/Aug/13 50 40 Sell12/Aug/13 44 51 Buy06/Jun/13 65 90 Buy21/May/13 87 90 Add28/Mar/13 83 96 Buy21/Feb/13 83 103 Buy06/Nov/12 98 108 Add14/Aug/12 85 110 Buy

Report Date CMP (Rs.) TP (Rs.) Recommendation08/Aug/12 86 110 Buy23/Jul/12 79 110 Buy22/Jun/12 83 108 Buy25/Apr/12 86 108 Buy11/Apr/12 105 120 Buy02/Mar/12 90 105 Buy27/Feb/12 90 105 Buy07/Feb/12 94 105 Buy19/Dec/11 68 93 Buy16/Nov/11 70 90 Buy14/Oct/11 76 84 Add24/Aug/11 70 79 Add16/Aug/11 72 79 Add07/Jul/11 76 77 Add29/Jun/11 70 77 Add


0100200300400500600


Historical Target

Dalmia Bharat Enterprises

400500600700 Birla Corp

Report Date CMP (Rs.) TP (Rs.) Recommendation20/Oct/14 420 485 Buy04/Aug/14 450 520 Buy16/May/14 260 350 Buy21/Mar/14 250 265 Buy13/Feb/14 160 185 Buy12/Dec/13 135 165 Buy31/Oct/13 120 140 Buy29/Aug/13 105 140 Buy05/Jun/13 135 200 Buy28/Mar/13 151 210 Buy11/Feb/13 165 230 Buy14/Dec/12 150 235 Buy

Report Date CMP (Rs.) TP (Rs.) Recommendation08/Aug/14 450 605 Buy11/Jun/14 350 500 Buy21/Mar/14 268 300 Buy12/Dec/13 252 305 Buy

Page 9

0100200300400


Historical Target

01/Nov/13 225 275 Buy26/Jul/13 215 260 Buy21/May/13 265 300 Buy28/Mar/13 242 303 Buy11/Feb/13 260 320 Buy15/Nov/12 287 350 Buy08/Aug/12 225 290 Buy31/Jul/12 215 290 Buy22/Jun/12 235 290 Buy03/May/12 250 290 Buy11/Apr/12 285 380 Buy02/Mar/12 264 380 Buy27/Feb/12 264 380 Buy01/Feb/12 255 380 Buy02/Nov/11 320 418 Buy14/Oct/11 320 418 Buy29/Jul/11 325 418 Buy07/Jul/11 335 412 Buy


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Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies

Disclaimer

Page 10

referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. Thisdocument is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published,copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to or use by any person or entity who is a citizen or resident of or located inany locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Spark Capitaland/or its affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or toa certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such applicable restrictions. Thismaterial should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in thisdocument. Spark Capital , its affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, ordeal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicitinvestment banking or other business from, any company referred to in this report.

This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by SparkCapital. While we would endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information.Also, there may be regulatory, compliance or other reasons that prevent Spark Capital and its affiliates from doing so. Neither Spark Capital nor its affiliates or their respectivedirectors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contentsor any errors or discrepancies herein or for any decisions or actions taken in reliance on the report or the inability to use or access our service in this report or for any loss ordamages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use ofor reliance on this report.


Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:

Disclosure of interest statement Yes/No

Analyst financial interest in the company NoGroup/directors ownership of the subject company covered NoInvestment banking relationship with the company covered NoSpark Capitals ownership/any other financial interest in the company covered NoAssociates of Spark Capitals ownership more than 1% in the company covered NoAny other material conflict of interest at the time of publishing the research report No

Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months: Managing/co-managing public offering of securities Investment banking/merchant banking/brokerage services products or services other than those above

No

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products or services other than those above in connection with research report

Whether Research Analyst has served as an officer, director or employee of the subject company covered NoWhether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No

Analyst Certification of IndependenceThe views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of the researchanalysts compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

Additional Disclaimer for US Institutional InvestorsThis research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 underthe Securities Exchange Act of 1934, as amended) only by Decker and Co, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange Actof 1934, as amended). Decker and Co accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities discussed inthe research material may do so through Decker and Co. All responsibility for the distribution of this report by Decker and Co, LLC in the US shall be borne by Decker and Co,LLC. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if Spark CapitalAdvisors (India) Private Limited or Decker and Co, LLC is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You shouldsatisfy yourself before reading it that Decker and Co, LLC and Spark Capital Advisors (India) Private Limited are permitted to provide research material concerning investmentto you under relevant legislation and regulations;

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