Divestment of Holcim's Indian Business for CHF 6.4 billion Is Consistent With Our Investment Thesis

We support Holcim’s decision to divest its Indian business, which is consistent with our investment thesis and believe will help justify a multiple rerating in the business. The divestment accelerates the group’s shift in product mix toward less carbon-intensive cement operations, one of the contributors to a discount being placed on the group’s share price. The divestment of its Indian business, which is Holcim’s second-largest geographic market also supports our narrow moat rating. Permits are easier to obtain in emerging markets, resulting in lower barriers to entry and thus easier for a region to become oversupplied. We view the sale price of CHF 6.4 billion as fair, translating into a 13% premium over the average three-month share price and a 14.5 times EV/EBITDA multiple. We maintain our CHF 56 fair value estimate and view shares as undervalued.