Diwali Picks – consistent track record

Return (%)
Year
Diwali Picks Vs. Diwali Picks Vs.
Diwali Picks Nifty Nifty CNX Midcap Midcap
2015 18.0 8.2 20.1

2016 38.0 14.7 15.8

2017 4.0 3.0 -11.0

2018 8.0 10.0 -5.7

- Outperformance

- Underperformance
 Sharekhan Diwali Picks 2019 (Samvat 2076)
Samvat 2075 has been a difficult year for investors. Though the CNX Nifty Index rose by 10.0% (since our Diwali Picks in 2018),
it was largely driven by a select few companies. On the other hand, the correction in the broader markets has been quite
severe in the last one year. In that context, our Diwali picks 2018 basket, which was a mix of both large-caps and mid-caps, has
done reasonably well by delivering an 8% return, convincingly outperforming the CNX MidCap Index, which fell by 5.7%.

From investors’ perspective, the message is loud and clear -- Quality Matters!

In troubled times, it is the quality companies with a reputed management, strong balance sheet and healthy growth trend
that perform well. On the other hand, it is once again proven that chasing momentum stocks could be quite a risky
proposition.

So essentially it means that one needs to stick to basics. Invest in quality companies with a healthy growth outlook and
reasonable valuations. Moreover, building a portfolio is all about understanding the macroeconomic conditions. Accordingly,
these are reflected in our sector‐wise allocations.

For Samvat 2076, we have hand‐picked 12 quality stocks to create a portfolio, which is a mix of both large-caps and quality
mid-caps.

Wish you a Very Happy Diwali and a Prosperous New Year!

 Sharekhan Diwali Picks 2019 (Samvat 2076)
EPS/BV (Rs.) PER /PBV (x) RoE (%)
Company CMP (Rs.)
FY20E FY21E FY20E FY21E FY20E FY21E
Atul 4,022 193.6 230.0 20.8 17.5 19.3 19.2
Bata India 1,730 32.8 38.7 52.7 44.7 22.1 21.9
Colgate Palmolive 1,525 33.3 37.3 45.8 40.9 59.4 58.7
HCL Technologies 1,086 74.6 82.6 14.6 13.1 23.0 22.8
ICICI Bank* 429 176.9 194.2 2.4 2.2 11.3 13.7
Kotak Mahindra Bank* 1,584 262.4 300.8 6.0 5.3 13.7 14.2
Larsen & Toubro 1,423 71.9 82.5 19.8 17.2 15.2 15.7
Mahanagar Gas 942 68.2 72.6 13.8 13.0 26.2 24.4
Polycab India 674 43.5 54.4 15.5 12.4 19.2 19.0
Reliance Industries 1,358 82.2 91.2 16.5 14.9 12.6 12.4
Spandana Sphoorty* 1,090 424.6 511.9 2.6 2.1 18.6 20.1
UltraTech Cement 4,180 149.3 187.7 28.0 22.3 14.2 15.5

* BV and PBV multiples are for banks and NBFCs

# CMP as on October 14, 2019
Atul
Sector: Specialty Chemicals
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 4,022
• Headquartered in Gujarat, Atul Limited is a member of the Lalbhai Group and was incorporated in 1947. Atul’s
businesses are broadly classified into two segments i) lifescience chemicals and ii) performance & other chemicals.
It is an integrated chemicals company with a diverse product portfolio that caters to customers across the globe.
11,928 • The company has planned a capex of Rs. 569 crore at the parent level and Rs. 370 crore has been set aside for
investments in subsidiaries and JVs for FY2019-20. The company intends to expand its capacities in a calibrated
4,160/ 3,063 manner without relying on external borrowings.
• The situation in China is still beneficial for other players in the South Asian region, as Chinese government cracks
0.2 Lakh down further polluting companies in chemical industry. Future growth is expected to be driven by improved
utilisation, backed by a strong demand outlook, positive pricing tailwinds and operating leverage.
500027
• We expect the company to report revenue and earnings CAGRs of 13.5% and 25.1%, respectively, over FY2019-
FY2021E. At current market price, the stock is trading at 20.8x/17.5x its FY2020E/ FY2021E earnings.
ATUL

Promoter’s share (%) 45 • Key risks: Slowing demand, delay in launch of new products, high raw-material prices, delay in ability to pass on
price hikes adequately and deferred commissioning of the project might affect earnings performance.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 3,296 4,038 4,594 5,203
OPM (%) 15.3 19.0 19.0 19.6
Adjusted PAT (Rs. crore) 281 436 574 683
Adjusted EPS (Rs.) 94.8 146.9 193.6 230.0
P/E (x) 42.4 27.4 20.8 17.5
P/B (x) 5.3 4.4 3.7 3.1
EV/EBIDTA (x) 23.6 15.3 13.2 11.0
RoNW (%) 13.4 17.6 19.3 19.2
RoCE (%) 17.6 25.1 23.9 24.0
Source: Sharekhan
Bata India
Sector: Consumer Discretionary
Market cap (Rs. crore)
CMP: Rs. 1,730
• Bata India (Bata) is India’s largest retailer and manufacturer of footwear, selling ~47 million pairs of footwear every
year. It has recently transformed itself into a modern and branded footwear player from a conventional footwear
player, improved its existing store layouts and introduced premium products, which have helped the company
22,120 increase footfalls in the last few quarters.

52-week high/low (Rs.):
NSE volume (No. of shares):
BSE code:
NSE code:
1,790/834 • Bata has posted resilient performance in a slowing discretionary environment and going ahead, we expect decent
performance with 6-8% same store sales growth (SSSG) in the near term driven by premiumisation.
7.5 lakh • Bata will benefit significantly from the reduction in the corporate tax rate to 25.2% (the company was earlier
paying tax at ~33-34%), which would result in earnings accretion of ~12-13%. The company will utilise the
500043 incremental cash flows to enhance promotions and to meet its guidance of adding 80-100 stores every year
• We expect the company to clock a revenue CAGR of ~13% and earnings CAGR of ~23% over FY2019-21E.
BATAINDIA

Promoter’s share (%) 53 • Key risks: Any slowdown in SSSG due to fall in demand/footfalls and heightened competition.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenues (Rs. crore) 2,636 2,928 3,262 3,709
OPM (%) 13.4 16.3 17.1 17.3
Adjusted PAT (Rs. crore) 224 330 422 498
Adjusted EPS (Rs.) 17.4 25.6 32.8 38.7
P/E (x) 99.5 67.4 52.7 44.7
P/B (x) 15.0 12.7 10.7 9.0
EV/EBIDTA (x) 53.5 39.2 34.2 29.0
RoNW (%) 15.9 20.4 22.1 21.9
RoCE (%) 16.1 19.4 19.3 19.1
Source: Sharekhan
Colgate Palmolive (India)
Sector: Consumer Goods
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 1,525
• Colgate Palmolive (India) [Colgate] is India’s largest-selling domestic toothpaste brand with an almost 50% market
share. Recent actions taken by the company such as entry into the naturals category, enhanced focus on the kids
and freshness categories and differentiated campaigns for existing products would help it regain lost market share
41,478 of ~800 bps from some new entrants such as Patanjali.
• The above moves and renewed strategies under the leadership of new MD-Mr. Ram Raghavan would help boost
1,588 / 1,077 volume growth to ~5-7% in H2FY2020 from 3-4% currently.
• The reduction in effective tax rate to 25.2% from ~33% earlier would result in an earnings accretion of ~11% per
4.7 lakh annum, which can be ploughed back into the company to improve market share and overall growth (coupled with
strong dividend payout).
500830
• We expect Colgate’s earnings to clock a CAGR of ~16% over FY2019-21. Improvement in market share and volume
growth trajectory will be a key re-rating triggers for the stock.
COLPAL

Promoter’s share (%) 51 • Key risks: Any increase in competition from new entrants or a slowdown in demand will affect revenue as well as
earnings growth.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 4,328 4,462 4,779 5,209
OPM (%) 25.7 27.7 28.0 28.4
Adjusted PAT (Rs. crore) 681 751 905 1,014
Adjusted EPS (Rs.) 25.0 27.6 33.3 37.3
P/E (x) 60.9 55.2 45.8 40.9
P/B (x) 27.2 28.7 25.9 22.3
EV/EBIDTA (x) 36.8 33.3 29.9 26.8
RoNW (%) 48.7 50.6 59.4 58.7
RoCE (%) 69.5 71.5 76.0 77.0
Source: Sharekhan
HCL Technologies
Sector: IT
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 1,086
• HCL Technologies (HCL Tech) is a leading global technology company that provides software-led IT solutions,
remote infrastructure management, and BPO services and engineering-related services.
• HCL Tech has guided for industry-leading constant currency (CC) revenue growth of 14-16% for FY2020E on the
1,47,292
back of acceleration in organic revenue and consolidation of revenue from the acquisition of IBM products.
Organic growth guidance has been increased to 8-10% from 7-9% earlier, higher than FY2019 number of 6.5%.
1,190/920
• HCL Tech has strong capabilities in the hybrid cloud space. Rising adoption of hybrid cloud provides good
opportunities to HCL Tech in gaining market share. Higher investments in digital technology for last 2-3 years
18.6 lakh
provides the company a platform to reap benefits from these investments, evidenced from the acceleration in
Mode-2 growth.
532281
• At current market price, the stock trades at 15x/13x of its FY2020/FY2021E earnings estimates, which look
HCLTECH attractive and is at a discount to peers despite better revenue growth.

Promoter’s share (%) 60 • Key risks: Any integration issues in current M&A of select IBM products and pressure in renewal of IMS deals.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 50,570 60,427 69,502 76,643
OPM (%) 22.6 23.1 22.8 22.9
Adjusted PAT (Rs. crore) 8,780 10,123 10,119 11,208
Adjusted EPS (Rs.) 62.6 73.6 74.6 82.6
P/E (x) 17.3 14.8 14.6 13.1
P/BV (x) 4.3 3.7 3.2 2.8
EV/EBIDTA (x) 12.9 10.5 9.3 8.4
RoNW (%) 25.3 26.0 23.0 22.8
RoCE (%) 30.0 29.2 26.0 25.7
Source: Sharekhan
ICICI Bank
Sector: Banks & Finance
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
Promoter’s share (%)
CMP: Rs. 429
• We believe that strong and well-capitalised private banks like ICICI Bank have tailwind benefits of supportive
structural drivers, helped by peaking of the elevated NPA recognition phase and an improving growth outlook.
• ICICI Bank is well-placed to benefit from the slew of stimulus measures announced by the government and the
2,76,866
regulator of late. We expect the bank to see a reduction in effective tax rate (ETR) that will provide earnings
458/310 upsides, which will further improve profitability.
• We continue to view ICICI Bank as a potential re-rating candidate on the back of improving trend in its asset
171.3 lakh quality.
• ICICI Bank has got a strong liability franchise, where current and savings account (CASA) deposits constitute nearly
532174
half of overall deposits, which helps the bank manage its cost of funds and in turn sustain its net interest margins.
ICICIBANK
• Key risks: Rise in NPAs in unsecured and other retail banking segments may pose risks to profitability.
-

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Net Interest Income (NII) (Rs. crore) 23,026 27,015 30,521 36,882
Net profit (Rs. crore) 6,764 2,971 12,765 16,814
EPS (Rs.) 10.5 4.6 19.9 26.2
P/E (x) 40.7 92.8 21.6 16.4
BVPS (Rs.) 157.8 163 176.9 194.2
P/BV (x) 2.7 2.6 2.4 2.2
RoE (%) 6.60 2.80 11.30 13.70
RoA (%) 0.08 0.03 1.20 1.30
Source: Sharekhan
Kotak Mahindra Bank CMP: Rs.1,584
• We believe Kotak Mahindra Bank (KMB) is an attractive business franchise, with a well-rounded products and
Sector: Banks & Finance services portfolio, shaping up well for the long term.

Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
3,02,501 • Consistent performance across interest rate and asset cycles is a key differentiator and indicates the
management’s quality and strength of the franchise.
1,682/1,099 • We believe that strong and well-capitalised private banks such as Kotak Mahindra Bank (KMB) have tailwind
benefits of supportive structural drivers, helped by peaking of the elevated NPA recognition phase and an
27.04 lakh improving outlook.

BSE code: 500247 • Its subsidiaries are also shaping up well and are strong market players in their respective segments. While at
present, the insurance subsidiary is comparatively small, we believe it’s well on its way to be a significant value
NSE code: KOTAKBANK contributor to the consolidated business in the medium to long term.

Promoter’s share (%) 30

• Key risks: The possibility of a large equity dilution due to the requirement mandated by the RBI continues to be
an overhang.
Valuation summary
Particulars FY18 FY19 FY20E FY21E
Net Interest Income (NII) (Rs. crore) 9,532 11,259 13,690 16,540
Net profit (Rs. crore) 4,084 4,865 6,381 7,622
EPS (Rs.) 21.4 25.5 33.5 40.0
P/E (x) 73.9 62.1 47.3 39.6
BVPS (Rs.) 196.8 224.7 262.4 300.8
P/BV (x) 8.0 7.0 6.0 5.3
RoE (%) 12.5 12.1 13.7 14.2
RoA (%) 1.7 1.7 1.9 1.9
Source: Sharekhan
Larsen & Toubro
Sector: Capital Goods & Engineering
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 1,423
• Larsen & Toubro (L&T) is the best play on the recovery in the domestic capex cycle. The management is focusing on
a multi-pronged strategy of achieving profitable growth, driving up RoE in the medium term and superior capital
allocation. This augurs well for the company’s earnings that is likely to clock a 16% CAGR from FY2019 to FY2021E.
1,99,636 • L&T began FY2020 with strong order inflows in the infrastructure, hydrocarbon and heavy engineering businesses
that took total order backlog to Rs. 2.9 lakh crore for Q1FY2020. The company is expected to meet its order inflow
1,607/1,183 growth guidance of 10-12% for FY2020E.
• L&T is expected to be a major and probably the only one player to bag big ticket size government infrastructure
30.2 lakh projects. The government’s recent efforts towards reviving execution and project awards are expected to benefit
L&T.
500510
• The management has retained its forecast of a 10-12% and 12-15% rise in order inflows and topline, respectively,
for FY2020E. Expectation of a strong earnings performance is backed by growth in order inflows that is likely to be
LT led by government capex and continued growth momentum in subsidiaries.

Promoter’s share (%) -

• Key risks: Slowdown in government and private capex, led by macroeconomic issues such as rising interest rates,
higher crude oil prices and a liquidity crunch, among others.
Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 119,683 141,007 163,725 182,346
OPM (%) 11.4 11.6 12.0 12.2
Adjusted PAT (Rs. crore) 7,247 8,610 10,077 11,570
Adjusted EPS (Rs.) 52.5 63.4 71.9 82.5
P/E (x) 27.1 22.4 19.8 17.2
P/B (x) 3.6 3.2 2.9 2.6
EV/EBIDTA (x) 18.9 16.1 14.3 12.7
RoNW (%) 14.0 15.2 15.2 15.7
RoCE (%) 7.2 8.0 9.0 9.9
Source: Sharekhan
Mahanagar Gas
Sector: Oil & Gas
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
Promoter’s share (%)
CMP: Rs. 942
• Mahanagar Gas (MGL) is a dominant city-gas distribution (CGD) player in and around Mumbai with CNG/PNG sales
volumes of 2.2 mmscmd/0.8 mmscmd in FY2019. MGL derives 73% of its volumes from CNG, 13% from domestic
PNG and the remaining 14% from commercial/industrial PNG.
9,301 • Better economics of CNG versus alternative fuel and a rise in PNG penetration in Mumbai would propel volume
growth for MGL and thus we expect it to clock a volume CAGR of 6% over FY2019-FY2021E.
1,057/755 • EBITDA margin is likely to remain strong given a downward revision in domestic gas prices for H2FY2020, low spot
LNG prices and pricing power in CNG and domestic PNG business.
4.9 lakh
• MGL is the cheapest stock in the CGD space with a FY2021E P/E ratio of 13.0x, which is at a 26% discount to
historical one-year forward P/E multiple). We expect MGL’s valuation gap with peers to shrink with decent volume
539957
growth, industry-leading margins and an RoE of ~24-26%.
MGL
• Key risks: Change in domestic gas allocation policy, depreciation of Indian Rupee and any adverse regulatory
43 changes could affect volumes, margins and valuations.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 2,233 2,791 3,055 3,502
OPM (%) 34.9 31.7 31.4 29.3
Adjusted PAT (Rs. crore) 478 546 674 717
Adjusted EPS (Rs.) 48.4 55.3 68.2 72.6
P/E (x) 19.5 17.0 13.8 13.0
P/B (x) 4.4 3.9 3.4 3.0
EV/EBIDTA (x) 11.8 10.2 9.2 8.3
RoNW (%) 24.3 24.3 26.2 24.4
RoCE (%) 34.2 34.3 32.4 30.5
Source: Sharekhan
Polycab India
Sector: Capital Goods & Engineering
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 674
• Polycab India Limited (PIL) is the largest manufacturer of wires and cables in India with a market share of ~18% in
the organised wires & cables (W&C)industry and a ~12% overall share, twice the size of its leading competitors.
• PIL is expected to continue to outperform industry growth rates in the W&C industry (86% of FY2019 revenue,
10,021 which is expected to grow at 14-15%) going ahead as it increases its distribution reach (~3,400
dealers/distributors) of its diverse product range (for the infrastructure, industrial & consumer sectors)
709/525 • Fast-moving electrical goods (FMEG), which comprises 8% of FY2019 revenue, is expected to maintain a strong
revenue growth trajectory and clock a 23.5% CAGR over FY2019-FY2021E by leveraging its already strong
4.3 lakh distribution strength and introduction of new products
• Additionally, the recent reduction in effective tax rate would provide the twin benefits of an increase in net
542652
earnings and demand shift from unorganised sector (66% share in organised market expected to go up to 74-75%
in five years) due to improved compliance and reducing product price differential.
POLYCAB

Promoter’s share (%) 69 • Key risks: Any sharp increase in key raw material copper and aluminium will affect margins sharply.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 6,770 7,956 8,971 10,270
OPM (%) 10.8 11.6 11.0 11.3
Adjusted PAT (Rs. crore) 359 500 645 807
Adjusted EPS (Rs.) 25.4 35.4 43.5 54.4
P/E (x) 26.6 19.0 15.5 12.4
P/BV (x) 4.1 3.3 2.6 2.2
EV/EBIDTA (x) 13.0 9.2 8.8 7.5
RoNW (%) 16.5 19.3 19.2 19.0
RoCE (%) 22.0 28.3 26.4 25.2
Source: Sharekhan
Reliance Industries
Sector: Oil & Gas
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
Promoter’s share (%)
CMP: Rs. 1,358
• Reliance Industries (RIL) is a diversified company with business interests across oil refining, petrochemicals, retail
and digital services. The core businesses of refining and petrochemicals accounted for ~69% of consolidated
EBITDA in FY2019.
860,631 • Earnings outlook for the refining business has improved considerably given a recent sharp recovery in refining
margins, which we expect to sustain, backed by strong diesel crack spreads supported by the implementation of
1,417/1,017 revised International Maritime Organisation (IMO) regulations for marine fuels from January 2020. We also expect
petrochemcial EBIT margin to remain high given the feedstock advantage.
92 lakh • Efforts to deleverage consolidated balance sheet through divestments, target to increase share of high-growth
consumer centric business (retail and digital services) to 50% in coming years (from 32% in Q1FY2020) and likely
500325 higher dividends and periodic bonuses as the company nears its target of being a zero net debt company by March
2021 addresses key concerns, especially regarding high debt.
RELIANCE • Likely reduction in debt and value unlocking from retail and digital services businesses would be key re-rating
catalyst for RIL.
47

• Key risks: Lower-than-expected refining and petrochemical margins in case global capacity additions surpass
incremental demand.
Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 391,677 567,135 590,696 633,651
OPM (%) 16.4 14.8 15.8 16.1
Adjusted PAT (Rs. crore) 34,993 39,837 48,641 53,995
Adjusted EPS (Rs.) 59.1 67.3 82.2 91.2
P/E (x) 23.0 20.2 16.5 14.9
P/BV (x) 2.7 2.1 2.1 1.8
EV/EBIDTA (x) 16.6 12.7 11.4 10.5
RoNW (%) 11.9 10.3 12.6 12.4
RoCE (%) 10.6 9.7 11.0 11.0
Source: Sharekhan
Spandana Sphoorty Financial
Sector: Banks & Finance
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
Promoter’s share (%)
CMP: Rs. 1,090
• Spandana Sphoorty Financials Limited (SSFL) is a non-banking financial company (NBFC) focusing on the
microfinance segment. SSFL is a strong NBFC-MFI, better placed in terms of business quality (strong risk
management and diversified book), which provides comfort on future asset quality trends.
6,994 • SSFL has reported strong CAGR (FY2017 - FY2019) in AUM (~80+%), net worth (~40+%) and PBT (~200+%)
indicating strong recovery and performance over the years.
1,142/690
• It has a sufficiently capitalised balance sheet and is structurally well-placed with a reputed management team
2.04 lakh with rich domain expertise, strong risk management and a diversified book to show healthy growth over the next
few years.
542759 • On net NPA (NNPA) basis, the company’s asset quality is strong (at near-zero levels), which along with strong
collection efficiency, lends comfort on the present book quality. We believe there are significant positive levers
SPANDANA available for growth and re-rating of the stock.
63
• Key risks: Any downgrade of credit ratings may increase borrowing costs and constrain access to capital and debt
markets and as a result, may adversely affect NIMs and results of operations.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Net Interest Income (NII) (Rs. crore) 345 655 950 1,377
Net profit (Rs. crore) 188 312 506 660
EPS (Rs.) 29.3 48.6 78.8 102.8
P/E (x) 37.2 22.4 13.8 10.6
BVPS (Rs.) 216.7 294.6 424.6 511.9
P/BV (x) 5.0 3.7 2.6 2.1
RoE (%) 13.5 16.5 18.6 20.1
Source: Sharekhan
UltraTech Cement
Sector: Cement
Market cap (Rs. crore)
52-week high/low (Rs.)
NSE volume (No. of shares):
BSE code:
NSE code:
CMP: Rs. 4,180
• UltraTech Cement is India’s largest cement company. We expect it to report industry-leading volume growth owing
to timely capacity expansion (acquisition of Jaypee Group’s cement assets, Century’s assets and Binani Cement’s
assets) and a likely revival in demand, with the start of affordable housing projects and enhanced spending on
1,14,804 infrastructure development.
• The company will focus on deleveraging, with minimal capex requirement going ahead. Further, the recent cut in
4,904/3,264 corporate tax rate benefits the company and gives a fillip to its net earnings; incremental demand is expected to
arise from revival of private capital expenditure.
5.5 lakh • We believe UltraTech, being the market leader, will reap the benefits of multi-year industry upcycle on account of
ramping of capacities and profitability of all assets in the shortest possible time period.
532538
• We expect strong demand post the monsoons, revival in cement pricing and benign costs of inputs like Power, fuel
and freight to boost profitability going ahead.
ULTRACEMCO

Promoter’s share (%) 62 • Key risks: Slowdown in government spending on infrastructure and increase in key input costs led by petcoke and
diesel prices.

Valuation summary
Particulars FY18 FY19 FY20E FY21E
Revenue (Rs. crore) 30,979 37,379 47,744 54,537
OPM (%) 19.8 18.2 19.6 19.9
Adjusted PAT (Rs. crore) 2,569 2,435 4,309 5,418
Adjusted EPS (Rs.) 93.5 88.7 149.3 187.7
P/E (x) 44.7 47.2 28.0 22.3
P/B (x) 4.4 4.0 3.7 3.2
EV/EBIDTA (x) 20.9 19.7 14.7 12.4
RoNW (%) 10.1 8.9 14.2 15.5
RoCE (%) 8.9 7.2 10.5 11.6
Source: Sharekhan
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