Adi finechem Ltd Initiating Coverage 170516 - GEPL · AFL is has unique product portfolio of Dimer...

Equity | India | Specialty Chemicals

Adi Finechem Ltd. (AFL)

May 17, 2016

BUY

*Investors are advised to refer through important disclosures made at the last page of the Research Report. Institutional Research 1

Analyst: Omkar Tanksale +91-22- 6614 2692 [email protected]

Initiating Coverage

CMP (`) Target (`)

280 349

Potential Upside Absolute Rating

25% BUY

Market Info (as on May 16, 2016)

BSE Sensex 25,653

Nifty S&P 7,860

Stock Detail

BSE Group B

BSE Code 530117

NSE Code ADI

Bloomberg Code ADFI IN

Market Cap (`bn) 3.86

Free Float (%) 38%

52wk Hi/Lo 326.40 / 170.00

Avg. Daily Volume (NSE) 5409

Face Value / Div. per share (`) 10.00 / 2.50

Shares Outstanding (mn) 13.7

Shareholding Pattern (in %)

Promoters Public

62.77 37.23

Financial Snapshot (`mn)

Y/E Mar FY15 FY16 FY17E FY18E

Net Sales 1,506 1,517 1,790 2,077

EBITDA 249 225 308 336

PAT 137 106 152 168

EPS 9.92 7.68 11.05 14.60

ROE (%) 24% 17% 22% 22%

ROCE (%) 27% 22% 26% 26%

P/E 9.17 34.60 25.43 19.25

EV/EBITDA 19.56 15.78 17.56 18.45 Share Price Performance

Rel. Perf. 1Mth 3 Mths 6Mths 1Yr

Adi Fin (%) (5.0) 42.5 29.1 (3.3)

Sensex (%) (1.4) 8.2 (1.1) (6.5)

Source: Company data, Institutional Research

Company Snapshot

Adi Finechem Ltd.(AFL) is a specialty chemical manufacturing and distributing company situated

near the city of Ahmadabad in the western region of India. AFL is mainly involved in the

manufacturing of oleochemical and nutraceutical products. Unique business structure and robust product portfolio makes AFL a lucrative company. The company uses state of the art

technology with the critical equipment acquired from the Germany and Switzerland. By product

fraction of the natural oils and fats generated during refining of sun flower and soybean oils are the raw materials for the products.

Investment Rationale

Unique Business Structure and better product mix provides edge to the AFL

AFL is has unique product portfolio of Dimer acid, Linoleic acids and natural vitamin E. These

fatty acids are widely used in mainly industries like paints, inks, textiles, lubricants etc. AFL has

a low cost of manufacturing and their quality is also at par or better in many cases with Chinese and European suppliers. This provides edge to the company over other competitors. AFL makes

this product by using relatively cheaper raw material which is a by-product of refinery (Acid Oil)

whereas world at large makes them from virgin Vegetable oils or Tall Oils. These products are widely used in the paints, inks, lubricant industry. These agents are served as primary

ingredient and prime raw material. These dimer acids also widely used in textile industry which

is used primarily as to increase life of the nylon products.

Fastly growing Indian Oleochemical Industry will help AFL to grow at faster rate.

India is one of the fastest developing economies in the world. Encouraging government policies

like industrialization and make in India campaign will help each industry to grow at higher momentum. Higher consumption of neutraceutical products will also help to grow such as

natural vitamin E. Textile industry, paint industry also have higher growth prospects. Indian

Oleochemical players are well positioned with abundant raw material supply, lower manpower cost and improving infrastructure which should be the key market drivers for the industry at

large. Fatty acids, Fatty Alcohol and Methyl Ester and Refined Glycerin are basic Oleo Chemicals

which then go into end use application of Surfactant, Soap and Detergents, Cosmetics, Food

Emulsifiers, Paints and Inks & Lubricants.

Healthy balance sheet and return ratios makes AFL a safer bet

AFL is having very healthy balance sheet. The company has maintained the operating margins instead of making the strong volume growth. This shows the high operational efficiency in the

business. EBITDA margin has grown from 14% in FY13 to 16% in FY17E in the span of four year.

Whereas operating margins has grown from 12% in FY13 to 15% in FY17E. The company has strong ROE which makes company more lucrative. ROE for FY 16 stood at 17% which will likely to

grow to 23% in FY17. We also believe that current capital expenditure of the company will likely

to boost their return on capital employed. Nominal debt burden on the balance sheet also guarantees positive cash flow and long term business efficiency. Valuation

At the CMP of `280, Adi Finechem Ltd. (AFL) is trading at 25.4x, and 19.3x its FY17E, and FY18E

EPS of `11.05 and `14.6 respectively. Compared to its peers; Adi finechem at a discount P/E

multiple, although its margins are better than or comparable to peers. We initiate coverage on AFL with a BUY rating and attach a multiple of 23.9 xs to AFL’s FY18E earnings (EPS) to arrive at

the target price of `349, indicating a potential upside of 25%.

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Adi Finechem Ltd BSE SENSEX


Adi Finechem Ltd. (AFL) May 17, 2016

Institutional Research | Initiating Coverage 2

Index & Content

Sr. No. Topic Page No.

1 Company Background......................................... 03

2 Company History............................................... 04

3 Key Management Personnel.................................. 05

4 Investment Rationale......................................... 07

5 Financial Overview............................................ 12

6 Key Risks........................................................ 15

7 SWOT Analysis.................................................. 16

8 Michael Porter's Analysis...................................... 17

9 Valuation & Outlook........................................... 18

10 Financials........................................................ 19

11 Disclaimer....................................................... 20




Company Background

Adi Finechem Ltd. (AFL) is a specialty oleochemical manufacturing and distributing company situated near the city of Ahmadabad in the western region of India. The company uses state of

the art technology with the critical equipment acquired from the Germany and Switzerland. By product fraction of the natural oils and fats generated during refining of sun flower and soybean

oils are the raw materials for the products.

AFL is involved in the manufacturing of mainly Dimer acid, Linoleic acids and other fatty acids

which have extensive use in the industries like paints, inks, lubricants, cosmetic industry. The company also involved in the manufacturing of natural vitamin E which has extensive use in the

healthcare segments.

Adi Finechem ltd. Manufacturing Plant in Gujarat





Company History

AFL is incorporated in 1985 near Ahmadabad and formerly known as H. K Finechem Ltd. Is engaged in the business of manufacturing of specialty chemicals viz. Oleochemical and

intermediate Nutraceutical & health products. AFL has a state -of-the-art manufacturing unit

which was set up in 1995. The company has acquired critical equipments from Germany and Switzerland. The Installed capacity measured in terms of throughput of raw materials was 2,500

M. tones per month during the quarter.

Consistent product development


• The Company was incorporated to process Rice Bran Oil

• Commenced project in late 1993

• The Company was Listed on the BSE in 1995

1985-1995

• Shifted its focus to producing Fatty Acids

• Was the first and only company to manufacture Mixed TocopherolConcentrate in India and supply to Henkel Corp subsequently taken over by Congnis

• Increase in Manufacturing Capacity to 8,000 MT p.a.

1996-2010

• Strategic initiatives taken by the management :

o Main focus on reduction of manufacturing cost per ton

o Complete Re- Engineering of its Energy Consumption System

o Installation of new balancing equipment

o Increase in manufacturing Capacity to 18,000 MT p.a.

2011-2012

• Increased capacity to 25,000MT p.a. In December 2013

• Further increased its capacity to 30,000 MT p.a. in September 2014

• Completed final brownfieldcapacity expansion of 45,000 MT in July 2015

2013 –Onwards

Journey – ADI Finechem Ltd (AFL)




Key Management Personnel

AFL is blessed with rich experience of sound management that takes company on a successful

path.

Mr. Utkarsh Shah (Executive Chairman & managing Director ):

Mr. Shah Holds a Bachelor degree in Science. He has served on the advisory committee in

Various State Government Corporations and Boards. He was the president of Gujarat Chamber of Commerce in 1998 to 1999.

Mr. Nahoosh Jariwala (Managing Director) : He is associated with the company since more than 20 years. He holds a Commerce Degree. He

has more than 25 years of experience in chemical manufacturing and trading of various textile

products.

Mr. Ganpatraj Chaudhary :

He is the Managing Director and overall in charge of operations in M/s. Riddhi Siddhi Gluco Biols

Limited, a Company listed on Bombay Stock Exchange, promoted by him and his family.

Mr. Nitin Patel :

He is the Chairman of M/s. Shree Bhagwati Flour and Foods Private Limited and is also associated with M/s. Shri Bhagwati Flour Mills Private Limited. He is associated with the Food

Industry since last 35 years.

Mr. Bhavin Shah He is currently working with Equirus Securities Private Limited, Merchant Banker, as a Managing

Director and Chief Executive Officer and has set up Institutional equities business. He is an

expert on IPO matters and managed and got the success of IPO of TD Power in spite of negative market opinions. He was also associated with JP Morgan, Hong Kong and India as head of Asia-

Pacific Technology Research and Global Sector Leader. He has also worked in Credit Suisse First

Boston, Hong Kong as a Director (Head, Asia-Pacific Technology Research).

Ms. Sonal V. Ambani

She holds a Bachelor’s Degree in Chemistry, an MBA in Marketing & Finance and a Ph. D. in

Business Management. She has worked as an Assistant Vice President in Morgan Stanley Dean Witter. She is a sculptor at an art aficionado and act as a Director and Curator of Samara Art

Gallery.




Manufacturing Process


SSCC* seeds

Decanter

Separator

Deodorization

Vacuums Drying

Bleaching

SSCC refined oil

Acid Oil

Soya, Sunflower, Corn, Cotton (SSCC) Refining

Deodorizer Distillate

By Product

Splitting

Fractionation

Acid Oil Pretreatment

Dimerising

Distillation

Glycerine

Linoleic/Palmitic

Crude Dimer

Dimer/Monomer

Amines, Amides, Soap

Ink, Paint

Paints, Inks, Epoxy Hardeners


Pretreatment

Splitter

Distillation

Distillation

Distilled Fatty Acid

Tocopherol

Soaps and Paints

FMCG,& Animal Feed

Basic Raw Material

Process Product Industry




Investment Rationale Unique Business Structure and better product mix provides edge to the AFL

AFL is manufacturer of two niche chemical segments oleochemicals and Nutraceuticals. Both are specialty chemicals and have wide use in the industry that can provide a better business

opportunity.

Oleo chemicals: - These chemicals derived from the plants and animal fats. They are analogues

to petrochemicals derived from petroleum. The formation of basic oleochemical substances like Fatty Acids, Fatty Acid Methyl Esters (FAME), Fatty Alcohols, Fatty Amines and Glycerol are by

various chemical and enzymatic reactions.

AFL is a leading producer of Fatty Acids from natural oils and fats derived from renewable raw materials such as Soya, Sun Flower, Corn and Cotton.

AFL has over the years developed and mastered the process of manufacturing its entire product range from waste/by product streams of natural vegetable oils by utilizing state of the art

equipments of acceptable local and international quality.

Revenue Distribution (`Mn)

Source: Company data, GEPL Capital Research

Product wise Industry Distribution

Products Application

Linoleic Paints and Inks

Dimer Paints, Ink, Epoxy Hardeners

Monomer Paints and Resins

Distilled Fatty Acid Liquid Soap, Textile auxi and low Value paints

Palmitic Amines, Amides, Soap Source: Company data, Institutional Research

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Manufacturer of Dimer Acids a sole player in India

Dimer acids, or dimerized fatty acids, are dicarboxylic acids prepared by dimerizing unsaturated fatty acids obtained from tall oil, usually on clay catalysts. Dimer acids are used primarily for

synthesis of polyamide resins and polyamide hot melt adhesives. They are also used in Alkyd

Resins, Adhesives, Surfactants, Fuel Oil Additives, Lubricants, etc. It is a light yellow or yellow

viscous transparent liquid. It is non-toxic.

Advantages to AFL for manufacturing of Dimer Acids

• AFL has a low cost of manufacturing and their quality is also at par or better in many cases with Chinese and European suppliers.

• AFL makes this product by using relatively cheaper raw material which is a by-product of refinery (Acid Oil) whereas world at large makes them from virgin Vegetable oils or Tall

Oils.

• India’s requirement of Dimer Acid is around 10,000 MT p.a. out of which AFL supplies close to 3,500MT p.a.

Advantages of using Dimer Acids

• Offers improved bonding.

• Used as curing agents for epoxy-based anti-corrosion coatings and for priming and protecting metal.

• Dimer acids act as a stabilizer in lubricants used for Cold Rolling Mills.

• Increase the life span of nylon products.

Application of Dimer Acids

• It has wide use in Industrial paints.

• Ink industry has also wide range of use.

• Lubricants Industry

• Epoxy Hardeners

• Textile industry also widely use



Other Revenues,

1214

Dimer Fatty Acid, 283




Large manufacturer of the Linoleic Acids

Linoleic acid is an unsaturated omega-6 fatty acid. It is a colorless liquid at room temperature. In physiological literature, it has a lipid number of 18:2 cis,cis-9,12. Chemically, linoleic acid is

a carboxylic acid with an 18-carbon chain and two cis double bonds; the first double bond is located at the sixth carbon from the methyl end. Linoleic acid belongs to one of the two

families of essential fatty acids. The body cannot synthesize linoleic acid from other food

components.

AFL is one of the lowest cost manufacturers of Linoleic Acid.

AFL makes it from relatively cheaper raw materials; its nearest substitute is Pure Refined Soybean oil.

Purpose of Use

Linoleic Acid is designed especially to produce fast drying protective coating having lighter color.

Applications that require both wetting and drying properties, such as printing ink vehicles and caulking and sealant compositions.

Linoleic acid helps skin with problems such as acne, dryness, and swelling.

Linolic Applications

Making quick-drying oils

Cosmetics

Inks

Amines

Lubricants

Paints



Other Revenues,

1227

Linoleic Fatty Acid,

220




Fastly growing Indian Oleochemical Industry will help AFL to grow at faster rate.

India is one of the fastest developing economies in the world. Encouraging government policies

like industrialization will help each industry to grow at higher momentum. Higher consumption

neutraceutical products will also help to grow the products such as natural vitamin E. Textile

industry, paint industry have also higher growth prospects. Indian Oleo Chemical players are

well positioned with abundant raw material supply, lower manpower cost and improving

infrastructure which should be the key market drivers for the industry at large. Fatty acids,

Fatty Alcohol and Methyl Ester and Refined Glycerin are basic Oleo Chemicals which then go into

end use application of Surfactant, Soap and Detergents, Cosmetics, Food Emulsifiers, Paints and

Inks & Lubricants. In India while processing crude soft vegetable oils like SSCC, Groundnut and

Rapeseeds 3 key products are generated by these oil refineries

Prime Oil (~98.5%)

Acid Oil (AO) (~1.25%)

Deodorizer Distillate (DOD) (~0.25%)

The Prime Oil is converted into oils for edible purpose and AO and DOD which are composed of

Free Fatty Acids, Mix Glycerides and other important neutraceutical products are sold to

chemical companies to derive fatty Acids. AO from different sources of Vegetable Oil can

generate varied Fatty Acids that have different applications.

India Product Market

Oils By-product Fatty Acids Application

SSCC, Groundnuts, Rice Bran & Rapeseeds

Acid Oils Palmitic, Linoleic, Dimer, Monomer

Inks & Paints, Epoxy hardeners

SSCC, Groundnuts, Rice Bran & Rapeseeds


Mixed Tocopherol, Distilled Fatty Acids

Natural Vitamin E Low grade resins and Soap’

Palm, Palm Kernel & Coconut


Stearic, Lauric, Distilled Fatty Acids

Soap Noodles, Rubber Tyre, Cosmetic





Strong global demand will provide encouraging environment and may help to grow top line

The global market for Oleo Chemicals was estimated to be over 12 million tons in 2013 which is expected to reach 15 million tons by 2018, growing at a CAGR of around 6.0% from 2013 to 2018.

Asia Pacific is the fastest growing market for Oleo Chemicals, growing at a CAGR of 8.2% from

2013 to 2018. The Oleo Chemicals industry is expected to grow on account of demand for new

applications, innovative and sustainable products. The prospects of the industry are further enhanced by the hike in demand from a growing consumer market and wider availability of raw

materials. These products primarily find end-use applications in Surfactants, Soap and

Detergents, Cosmetics, Food Emulsifiers, Paints and Inks, and Lubricants. South East Asia (SEA) has emerged as a major supplier of palm based Oleo Chemical based on availability of raw

material and sophisticated Infrastructure; this trend is turning SEA into a manufacturing hub for

Fatty Acids.

World Production of Leading Oil & Fat, 2012 - 183MT India’s leading consumption of Leading Oils, 2012 - 15.8MT

Source: Company data, GEPL Capital Research Source: Company data, GEPL Capital Research

Palm, 27.8%

Sunflower, 7.7%Soya bean,

23.4%

Rape, 12.7%

Others, 28.4% Palm, 42.7%

Sunflower, 6.5%

Soya bean, 16.4%

Rape, 14.2%

Others, 10.3%

Cotton , 6.6%

Groundnut, 3.2%




Financial Overview Pretax Margin

EBITDA Margins As shown in the chart below, AFL has consistent growing EBITDA over the period of time. There

is a marginal decline of the EBITDA in the 1QFY16 but regain the momentum in the upward

direction. We also can see from the above chart that EBIDTA margin are stable over the period

of time. This shows the operational efficiency is maintain or increasing even if the input cost is rising.

EBITDA Margins


Operating Margins The chart below shows EBIT and EBIT margin in last 3 years. Operating margins are maintained over the period of time. Instead we can see that it is being growing from last few quarters. This

shows that operational efficiency is improving. This makes business more robust and promising

over the longer run horizon.

Operating Margins


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Net Profit Margin

As we can see from the chart below, PAT is increasing with the higher growth rate and margins are also improving. Rising NPAT margins shows the lesser debt burden on the companies

shoulder. We believe that the in the upcoming period the growth momentum will likely to

continue.

NPAT Margin


Return Margin

ROE performance

The Return on equity is increasing at the smoother pace. However some capital expenditure in FY15 and FY16 will impact negatively on the growth momentum but we believe that the ROE

will likely to maintain the momentum.

RoE


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Return on the capital Employed (ROCE)

Return on capital employed (ROCE) have maintained the growth momentum. Lower debt burden help to maintain the ROCE over the period of time. The ratio has also maintained the synchronous movement with the movements in the net profit. This shows that invested capital

can optimize the net profit. We believe that in the upcoming period the growth momentum

likely to continue.

RoCE


Net Profit to Payout Ratio

AFL has history of paying dividend to its share holder. As shown in the diagram below we can see that company had given dividends as proportion to the net profit. We believe that payout ratio to net profit ratio will likely to remain same. This also makes stock more lucrative.

Investor can also take privilege of higher payout ratio.

Net Profit to Payout Ratio


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Key Risks

Investment Risk :

Increase in the raw material prices like soyabean, sunflower seeds may increase the raw

material prices. This can affect the margins negatively.

Seasonal production and monsoon dependency of the raw materials may put to the

limitation on the production.

As business structure is business to business. They have few clients which have large in the

order. Loss on one client may affect the significant portion of the top line.

Fluctuation in the $- ` Rate will affect the revenue.




SWOT Analysis

Source: Institutional Research

AdiFinechem

Ltd.

Strengths• Strong domain focus

• Diversification of business.

• Strong management and

technology backup.

Opportunities• Further penetration in pain and

textile industry

• Mining the existing and the new

clients

Weaknesses• High client concentration

• Single domain dependence

Threats• Slowdown in the consumer

spending

• Loss of top client




Michael Porter's Analysis

Source: Institutional Research

Inter-firm Rivalry–High

Lower Entry barriers in the industry have led to high concentration in

the industry.

Threat of new entrants –

Increasing

• More no of small scale industry is

started producing fatty acids.

Bargaining Power of Suppliers – High• Less competition in the fatty acids

market puts lesser pressure and

increasing trend of attrition is

witnessed.

Bargaining Power of Buyers –

Increasing

• With availability of multiple

vendors, Buyers have a lot of

choice and this has led to

pressures on the billing rates.

Threat from Substitutes -Increasing• Emerging economies like China,

Brazil and Russia can be the

substitute places for ‘offshoring’

taking away the India advantage

to certain extent.




Valuation & Outlook

At the CMP of `280, Adi Finechem Ltd. (AFL) is trading at 25.4x, and 19.3x its FY17E, and FY18E

EPS of `11.05 and `14.6 respectively. Compared to its peers; Adi finechem at a discount P/E

multiple, although its margins are better than or comparable to peers. We initiate coverage on

AFL with a BUY rating and attach a multiple of 23.9 xs to AFL’s FY18E earnings (EPS) to arrive at

the target price of `349, indicating a potential upside of 25%.

1 year forward P/E Chart

Source: Capitaline, Institutional Research

1 year forward P/ BV Chart

Source: Capitaline, Institutional Research

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Income Statement

Y/E Mar (`mn) FY14 FY15 FY16 FY17E FY18E

Net revenues 1,518 1,506 1,517 1,790 2,077

Operating Cost 1,187 1,258 1,292 1,482 1,740

EBITDA 331 249 225 308 336

EBITDA Margin (%) 22% 17% 15% 17% 16%

Depreciation 26 22 46 50 55

Other Income 6 7 8 6 6

Interest (Net) 27 27 49 30 30

Exceptional Items - - - - -

PBT 284 205 165 234 257

PBT Margin (%) 19% 14% 11% 13% 12%

Tax 97 69 60 82 90

Reported PAT 187 137 106 152 168

Balance Sheet


Equity capital 125 138 138 138 138

Reserves & Surplus 348 430 481 555 627

Net worth 473 568 619 692 765

Total debt 291 288 290 320 340

Deferred Tax Liability (40) (61) (37) (42) (42)

Total Liabilities & Equity 724 795 872 970 1,063

Net block 328 617 650 750 800

Investments 116 77 20 60 90

Total Non-Current Assets 444 694 670 810 890

Debtors 213 156 140 170 140

Cash & bank 1 2 7 5 18

Loans & advances 57 50 60 50 65

Other Current Assets 157 133 160 145 190

Total Current Assets 428 340 367 370 413

Creditors 38 64 100 150 165

Provisions 34 52 65 60 75

Current Liab. & Prov. 72 116 165 210 240

Total Assets 724 795 872 970 1,063

Key Ratio


Per Share Ratios

Fully diluted E P S 14.90 9.92 7.68 11.05 14.60

Book Value 39 41 45 50 55

Dividend per share 12.12 13.79 13.79 13.79 13.79

Valuation Ratio

P/E 8.73 9.17 34.60 25.43 19.25

P/BV 1.98 3.62 8.33 5.60 5.07

EV/EBITDA 5.92 19.56 15.78 17.56 18.45

EV/Sales 4.58 9.46 8.56 7.56 8.32

Growth Ratios

Sales Growth 24% (1)% 1% 18% 16%

EBITDA Growth 94% (25)% -9% 37% 9%

Net Profit Growth 123% (27)% -23% 44% 10%

Common size Ratios

EBITDA Margin 22% 17% 15% 17% 16%

EBIT margin 20% 15% 13% 15% 14%

PAT margin 12% 9% 7% 9% 8%

Return ratios

RoNW 40% 24% 17% 22% 22%

RoCE 41% 27% 22% 26% 26%

Turnover ratios (days)

Debtors ( Days) 51 38 34 35 25

Creditors ( Days) 9 15 24 31 29

Inventory (Days) 61 49 59 45 51

Solvency Ratios

Total Debt/Equity 61% 51% 47% 46% 44%


Cash Flow


PBT 284 205 165 234 257

Add: Depreciation 26 22 46 50 55

Chg. in working capital (138) 133 27 40 0

Taxes paid 81 69 60 82 90

CF from operations 122 324 234 277 258

Capex (191) (289) (33) (100) (50)

Purchase of investment (14) (16) (18) (14) (15)

CF from Investing acti. (190) (289) (33) (100) (50) Proceeds from the borrowing

17 25 25 27 30

Debt Charges 91 15 (35) (50) (75)

Other changes (11) (29) (78) (58) (48)

CF from Financing acti. 68 (34) (196) (178) (196)

Chg. in cash 0 0 5 (1) 13

Opening cash 1 1 2 7 5

Closing cash 1 2 7 5 18

Du-Pont Analysis (%) FY14 FY15 FY16 FY17E FY18E

PAT/ PBT 66% 67% 64% 65% 65%

PBT/ PBIT 91% 88% 81% 89% 90%

PBIT/ sales 20% 15% 13% 15% 14%

Sales/ Assets 3 2 2 2 2

Assets /Equity 1 1 1 1 1

ROE 39% 24% 17% 22% 22%




NOTES Recommandation Rationale

Recommendation Expected Absolute Return (%) over 12 months

BUY >15%

ACCUMULATE <10% and >15%

NEUTRAL <-10% and <10%

REDUCE >-10% and <-20%

SELL >-10

Expected absolute returns are based on share price at market close unless otherwise stated. Stock recommendations are based on absolute upside (downside) and have a 12-month horizon. Our target price represents the fair value of the stock based upon the analyst’s discretion. We note that future price fluctuations could lead to a temporary mismatch between upside/downside for stock and our recommendation.

Name Designation Email Contact

Omkar Tanksale Sr. Analyst - Fundamental Research [email protected] 91 (22) 6614 2692

I, Mr. Omkar Tanksale (Research Analyst of GEPL), having Education Qualification MBA Finance, hereby certify that all of the views expressed in this research report accurately reflect my views about the subject issuer(s) or securities. I, also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Disclosure :-

This document has been prepared by Research Department of GEPL Capital Pvt. Ltd. (hereinafter referred to as GEPL) and this report is for personal information of the selected recipient/s and does not construe to be any investment, recommendation, prospectus, offering circular or legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and GEPL is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. GEPL makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability or obligation with respect to, the fairness, accuracy, completeness or correctness of any information or update information or opinions contained herein.

All investments including Future and Options are involving risks and investors should exercise prudence in making their investment decisions. The report should not be regarded by the recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this report are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or GEPL as a result of using different assumptions and criteria. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument mentioned in this report.

The information contained in this report has been obtained from sources that are considered to be reliable. However, GEPL has not independently verified the accuracy or completeness of the same. Neither GEPL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.

GEPL and its affiliates and/or their officers, directors and employees may have similar position in any securities mentioned in this document (or in any related investment) and may from time to time add to or dispose of any such securities (or investment. GEPL specifically prohibits the redistribution of this material in whole or in part without the written permission of GEPL and GEPL accepts no liability whatsoever for the actions of third parties in this regard. GEPL or its director or its research analysts or its associates or his relatives and/or its affiliates and/or employees do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.

Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

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Analyst Certification:

The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.

GEPL Capital Private Limited is a SEBI registered Research Analyst entity bearing SEBI Reg. No. “INH000000081” under SEBI (Research Analysts) Regulations, 2014.

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