FUNDAMENTAL ANALYSIS

FUNDAMENTAL ANALYSIS

ECONOMY ANALYSIS INDUSTRY ANALYSIS COMPANY ANALYSIS

COUNTRY ANALYSIS

The Indian economy grew at 9.6 per cent in 2006-07 and 9 per cent in 2007-08, emerging as the second fastest growing major economy in the world

2006-07
Foreign Exchange Reserves FII FDI $247.76

2007-08
309.72

10.3 15.7

16.1 24.57

GDP
GDP 12 10 Growth % 8 6 4 2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Year 3.84 8.52 7.45 GDP 9.42 9.6 9.03

INVESTMENT IN FIXED ASSETS % OF GDP
Investment (GDP %) 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 23.1 23.8 28.1 29.2 31.8

INFLATION
% of change 14 12 10 inflation rate 8 6 4 2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 year 4.3 3.8 3.8 4.4 5.5 5.4 % of change 12.64

Industrial Production
Industrial production growth rate 12.00% 10.00% 8.00% GROWTH % 6.00% 4.00% 2.00% 0.00% 2003 2004 2005 YEAR 2006 2007 2008 6.00% 6.50% 7.40% 7.90% 7.50% 10.00%

annual percentage increase in industrial production (includes manufacturing, mining, and construction).

POSITION OF INDIA
Rank Country 1 United States 2 China 3 Japan 4 India 5 Germany 6 United Kingdom 7 Russia 8 France 9 Brazil 10 Italy GDP (purchasing power parity) (Billion $) 13,860 7,043 4,417 2,965 2,833 2,147 2,076 2,067 1,838 1,800

FUTURE OF INDIAN ECONOMY

Over 300 million Indians are expected to have a household income of over US$ 6,000 by 2015. India is among the world's youngest nations with a median age of 25 years India has the second largest area of arable land in the world, making it one of the world's largest food producers - over 200 million tonnes of foodgrains are produced annually. With the largest number of listed companies 10,000 across 23 stock exchanges,

FUTURE OF INDIAN ECONOMY

India's healthy banking system with a network of 70,000 branches is among the largest in the world According to a study by the McKinsey Global Institute (MGI), India's consumer market will be the world's fifth largest (from twelfth) in the world by 2025 India's middle class will swell by over ten times from its current size of 50 million to 583 million people by 2025 The number of companies incorporated has increased at an annual average of 55,000 companies in the last two years

INDUSTRY ANALYSIS

CEMENT INDUSTRY

CEMENT INDUSTRY

India is the world’s second largest producer of cement after China with industry capacity of over 200 million tonnes (MT) Total installed capacity was 204.29 MT as on August 31, 2008 Total despatches has been 100.17 MT during April–October 2008–09 100.96 MT during April–October 2008–09.

CEMENT INDUSTRY ANALYSIS
India’s cement consumption grew 9.6% yoy.  South market witnessed strong demand supporting firm pricing (up 4.7% yoy) in the region.  The key concern dip in construction and infrastructure activities in the country.

CEMENT INDUSTRY ANALYSIS
Rebound in consumption growth; Central and South region outperform. Region Growth % India 9.6 South 16.3 West 9.8 Central 14.3 North 3.7 East 2.1

CEMENT INDUSTRY ANALYSIS

Contradictory pricing trend emerge; realizations remained robust in South Capacity utilization improves MoM but remains lower yoy Key performers were players who have recently added capacities Coal prices cool from peak; freight index fell to the lowest levels since 2002.

Consumption Growth & Capacity Addition

Consumption in Million Tonnes and Capacity addition in Million Tonnes p a

Region South North West East

Consumption
Sep 08 Sep 07 Aug 08

Capacity Addition

4.43 3.8

4.49 27.6

2.85 2.75 2.41 15.0 2.4 2.35 2.4 11.3 1.91 1.74 1.86 7.5

Mergers and Acquistions

The cement sector contributing to 7 per cent to the total deal value Holcim strengthened its position in India by increasing its holding in Ambuja Cement from 22 per cent to 56 per cent. Leading foreign funds have together bought around 7.5 per cent in India’s third-largest cement firm, India Cements (ICL), for US$ 124.91 million Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim Industries’ 53.63 per cent stake in Shree Digvijay Cement

Cement Industry

Entry barriers:
    

Economies of scale Capital requirement Avg gestation period of 2-3 years Access to distribution channels Threat of new entrants: low

Bargaining power of suppliers: High
  

Large and few sellers No substitutes Sellers’ product important input for buyer

Cement Industry

Bargaining power of buyers: low/medium
 

Standard product No substitute

Intensity of competition: Medium
     

Equally balanced competitors Average industry growth High fixed costs Lack of switching cost Capacity augmentation in large increments High exit barriers

Substitutes: None

SWOT
STRENGTHS  Second largest in the world in terms of capacity  Low cost of production

SWOT
WEAKNESS Effect of global recession on Real Estate and Infrastructure.  Demand-Supply gap, Overcapacity  Increasing Cost of Production  High Interest rates

SWOT
OPPORTUNITIES  Strong growth of economy in the long run.  Increase in infrastructure projects  Growing middle class  Technological Changes  Increase in govt spending.

SWOT
THREATS Imports from Pakistan affecting markets in Northern India.  Excess over capacity can hurt margins as well as prices.

CHALLENGES
Cement industry currently has one of the highest inventory levels in recent times.  Growth rates have slowed.  Capacity additions putting pressure on prices.  As a result the cement companies are looking for cutting production

COMPANY ANALYSIS

Corporate office

Cement House 121, Maharishi Karve Road Mumbai - 400 020 India Tel: 91-22-66654321 Fax: 91-22-66317440

Overview

Established in 1936, ACC has been a pioneer and trend-setter in cement and concrete technology. ACC's operations are spread throughout the country with 14 modern cement factories, more than 30 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of about 10,000 persons and a countrywide distribution network of over 9,000 dealers. It is the only cement company that figures in the list of Consumer SuperBrands of India

F. E. Dinshaw – the founder of ACC

ACC's First Board Meeting in 1936 at The Esplanade

BOARD OF DIRECTORS Mr N. S. Sekhsaria Chairman   Mr Paul Hugentobler Deputy Chairman  Mr Sumit Banerjee Managing Director  Mr S M Palia Mr Naresh Chandra Mr Markus Akermann Mr M L Narula Mr D K Mehrotra Mr R A Shah Dr Nirmalya Kumar Mr Shailesh Haribhakti Ms Shikha Sharma

Plant wise capacity
Units Bargarh Chaibasa Chanda Damodhar Gagal Jamul Kymore Lakheri Madukkarai Sindri Wadi New Wadi Plant Tikaria Total Capacity (MTPA) 0.96 0.87 1.00 0.53 4.40 1.58 2.20 1.50 0.96 0.91 2.59 2.60 2.31 22.41

Subsidiaries
Bulk Cement Corporation (India) Ltd. (BCCI)  ACC Concrete Limited  Lucky Minmat

Products & Services
    

  

Ordinary Portland Cements OPC 43 Grade OPC 53 Grade Blended Cements Fly-ash based Portland Pozzolana Cement Portland Slag Cement Ready Mix Concrete Consultancy Services

Financial analysis
Balance sheet  Profit & loss Account  Fund flow statement

Financial highlight
All figures in Rs. Million or as indicated
2007 Gross Revenue Profit After Tax Dividend Net Worth Capital Employed Borrowings Debt-Equity Ratio 79,771 14,386 4,389 41,527 49,533 4,691 0.11 2006 65,860 12,318 3,220 31,420 43,787 9,160 0.29 167.77 66.02 15.00 9,231 1,10,455 2005 (9M) 38,151 5,442 1,686 21,300 36,070 11,762 0.55 115.00 30.02 8.00 9,170 97,219 2004-05 46,405 3,784 1,430 15,770 33,820 15,093 0.96 88.00 21.23 7.00 8,995 1,05,165 2003-04 40,388 2,002 800 13,184 30,109 13,272 1.07 74.41 11.68 4.00 9,115 1,20,803

Book Value per 221.33 Share (Rs) Earning per Share Dividend per Share Employees (Number) Shareholders (Number) 76.75 20.00 10,032 1,27,476

Gross Revenue
Year 2001-02 2002-03 2003-04 2004-05 2005 (9M) 2006 2007 Gross Revenue(in Rs. million) 33338 34654 40388 46405 38151 65947 79771

EBITDA
Year
2001-02 2002-03 2003-04 2004-05 2005 (9M) 2006 2007 EBITDA(in Rs. million) 4923 4036 5339 7200 6337 17561 20462

PAT
Year 2001-02 2002-03 2003-04 2004-05 2005 (9M) 2006 2007 PAT(in Rs. million) 1304 1039 2002 3784 5442 12318 14386

Dividends
Year 2001-02 2002-03 2003-04 2004-05 2005 (9M) 2006 2007 Dividends (%) 30 25 40 70 80 150 200

Net Worth & Return on the Net Worth

Year 2001-02 2002-03 2003-04 2004-05 2005(9M) 2006 2007

Net Worth(in Rs. million) 9459 10242 13184 15770 21300 31420 41530

Return on Net Worth (%) 14 10 15 24 33 39 35

Book Value Per Share
Year 2001-02 2002-03 2003-04 2004-05 2005 (9M) 2006 2007 Book Value Per Share(in Rs.) 55 60 74 88 115 168 221

EQUITY SHARE
Company's Financial year Earnings Per Share Earning-price Ratio Yield Debt - Equity Ratio Current Ratio a) High b) Low Rs. Rs. % 2007 Rs. 76.75 # 13.74 1.90 0.11 1.07 1,315 680 2006 66.02# 16.44 1.38 0.29 1.26 1,192 501 2005 30.02# 17.74 1.50 0.55 1.16 569 318 200405 21.23# 17.25 1.91 0.96 1.25 385 218 200304 11.68# 21.62 1.58 1.09 1.22 283 127

Key Ratios
Ratio 2007 Liquidity Ratios Current ratio Quick ratio 1.58 1.05 Leverage ratio Debt-equity ratio Total debt-equity Proprietary ratio Interest coverage ratio 0.11 0.68 0.60 70.72 0.29 1.00 0.53 27.03 1.87 1.26 2008

Cont..
Ratio Return on assets Return on capital employed Return on equity EPS Dividend pay out ratio 2007 2008 Profitability ratios 20.5 20.85 3.41 3.21

0.39 76.75 Rs 26.31%

0.34 66.02 Rs 22.72%

Shareholding Pattern
Indian Bodies Corporate

shareholding
Foreign Bodies Corporate Mutual Funds/ UTI Financial Institutions/ Banks Central Government/ State Government(s) Foreign Institutional Investors Bodies Corporate Individuals i. Individual shareholders holding nominal share capital upto Rs. 1 lakh. ii. Individual shareholders i.Shares held by Pakistani Citizens vested

Expected Dividend (TA)
YEAR (X) 2003-04 2004-05 2005 (9 M) 2006 2007 DIVIDEND (y) 4 7 8 15 20 x -2 -1 0 1 2 xy -8 -7 0 15 40

54

40

Time series analysis
A=10.8  B=3

Y=a+bX  2008= 10.8+3(2008-2005) = 19.8  2009=10.8+3(2009-2005) = 22.8

Intrinsic value

For 2008; ROR =7.5% So= Div/(1+Ke)t+MV/(1+Ke)n = 19.8/(1.075)1+ 403/(1.075)1 = 374.9

Here, So<MV so Sale Is Good for investor

2009

So will be 387.03 AS,So<MV seller should sell at current

BIBLIOGRAPY

www.indexmundi/India%20Invest  www.indiainfoline.com  www.business-standard.com  www.bseindia.com  www.moneycontrol.com  www.rediff/money.com/myportfoli www.rediff/money.com/myportfol

BIBLIOGRAPY
Portfolio Management by S.Kevin  Security Analysis and portfolio mgmt : Fischer Jordan  Capital market nov 2 edition  Business standard Nov 26

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