Orient Cement Ltd (Orient), a CK
Birla group company having its plants in Telengana (capacity 3mtpa) and
Maharashtra (capacity 2mtpa), is expanding its cement capacity by 3mtpa (an
increase of 60%) to 8mtpa by 1QFY2016. The new plant is expected to be the
next growth driver as it would contribute significantly to volume growth. We expect
Orient to report a healthy 14.1% volume CAGR during FY2014-16E, aided by
expected improvement in cement demand. The improvement in demand is
expected on the back of pick up in infrastructure activities with a stable
government at the centre, resolution of Telengana-Seemandhara dispute, and
progressive state governments in the companys key markets (Telengana, Andhra
Pradesh and Maharashtra, which account for 89% of sales). Improvement in
cement demand is expected to take cement prices higher; we expect realizations
for Orient to increase at a CAGR of 8.5% over FY2014-16E (in 1HFY15
realizations grew by 7.2%).

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