INSTITUTIONAL EQUITY RESEARCH Ideation Mid &...

INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Ideation Mid & Small Cap Conf. Key takeaways

INDIA | CONFERENCE UPDATE

12 December 2019

We are happy to report that our “IDEATION Mid & Small Cap Conference" on 10th December 2019, in which we hosted listed and unlisted companies, WAS A BIG SUCCESS! This report highlights the key takeaways from our interactions

Anarock

Essel Propack

Gandhimati Butterfly

GE Shipping

Himatsingka Seide

Inflame

Jindal saw

Maharashtra Seamless

MCX

Mold-Tek Packaging

Muthoot Capital

Orient Bell

Orient Electric

Praj Industries

Satin Credit Care

Vardhaman Textiles

Water Base

INDIA RESAERCH TEAM

Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

IDEATION MID & SMALL CAP CONFERENCE KEY TAKEAWAYS

Anarock Pan India demand rates remain steady and pegged at around 2,00,000

units/annum over past two years while the supply is pegged around 1,70,000 units/annum

System level inventory overhang for top 7 cities is around 6,50,000 units

The Real Estate AIF fund has raised Rs.10000 crore, Rs. 5000 Crore from lead investors

The estimated total requirement for aiding the stalled projects is around Rs.75,000 Crore

The currently allocated fund of Rs. 25000 crore can be utilised for some estimated 1600 Projects

Currently, the Real Estate market experiences a Demand Push phenomenon rather than a Demand Pull phenomenon

Currently in Residential segment Hyderabad, Greater Noida , Bangalore and Navi Mumbai are performing well

The Commercial total transaction growth is expected to plateau at 40 mn.sq.ft per annum for the next two-three years bringing a mild moderation in rental yields in near term in certain micro-markets

Essel Propack After Blackstone’s acquisition in April-May 2019 things have changed; there is a

focus on capital efficiency and consistent earnings growth. The company has revamped its board (professional), and strengthened the management team through Blackstone’s global advisory network.

The new advisory team: Mr Harish Manwani (ex-Unilever) will help Essel to acquire new customers and leverage its current portfolio company (Blackstone) to drive top line growth. Mr Dhaval Buch (ex-Unilever, supply chain) will help in terms of cost optimisation and capacity utilisation – through project ‘Phoenix’.

Essel plans to increase the revenue contribution of its non-oral care segment 50% in the near term (at 46% as on Q2FY20).

Margins: Margins are similar in both oral care and non-oral care because of higher costs in the B&C segment. However, absolute profit is higher because of higher realisation in non-oral care. Margin profile: Beauty & Cosmetics (3.5-4.0x of oral care); pharma (2.0-2.5x).

Beauty & cosmetics (B&C) is growing faster than oral care, which has remain stagnant for many years. The Indian B&C market is largely laminated packaging, while globally, plastic packaging still has a major share.

Pharma is also a fast-growing segment and divided into OTC (99% laminated packaging) and prescription (largely aluminium packaging).

Capex for FY21-22 stands at Rs 1.3-1.5bn; 70-80% of the capex will go towards the new plant and machinery.

Gandhimati Butterfly One of the oldest (since 1986) kitchen appliances companies in India, known for

its innovation in gas stoves and pressure cookers.

Operates in the southern market under the brand ‘Butterfly’.

Non-south-markets and online channels will be next growth drivers.

All major products are manufactured in-house – a distinct advantage.

It recently re-launched vacuum flasks, which is a Rs 1bn category for it.

Recently launched a highly efficient food processor with a 750w motor; received positive feedback from the channel.

Expects the overall home appliance market to grow at 5-6% and pressure cooker market at 7-8%.



Butterfly has 95% outer-lid pressure cookers and 5% inner lid; TTK has 75% outer and 25% inner; Hawkins has only inner lids.

Top line to grow 15% for next 3 years.

Sold 850,000 cookers in H1FY20, 900,000 in FY19.

Gross margin from retail is 40.5%, OMCs is 32%, online channels is 39%.

Rs 540mn spent on ads and promotions in last fiscal, this year it is expected to be c. Rs 600-650mn.

Expects margin expansion of 0.5% every year till FY22.

Gross debt of Rs 1.45-1.50bn.

Maintenance capex of Rs 120-130mn incurred every year.

GE Shipping GE Shipping is one of the best managed Indian shipping companies and is known

for its timing in purchasing and selling vessels in the second-hand market. It currently operates with a diversified fleet of 47 vessels in shipping, comprising 34 tankers and 13 dry-bulk carriers, with an average age of 11.9 years, aggregating 3.9 mn dwt.

It operates its offshore business through Greatship (India) and owns 23 vessels including 4 PSVs, 8 AHTSVs, 2 MPSSVs, 5 ROVSV, and 4 jack-up rigs.

GE Shipping has one of the strongest balance sheets with gross debt-to-equity of 0.78x standalone, 0.82x consolidated.

GE Shipping makes significant money from asset plays (not factored in estimates) and has a consistent dividend history, despite being in a cyclical industry. Diversified fleet with judicious mix of long-term contracts have helped to sustain the business cycles. It had a cash EPS of Rs 33 (standalone) and Rs 58 (consolidated) in FY19.

New regulations for ballast water treatment (BWTS) and low-sulphur fuel are hurting the sector. Ballast water has to be taken on-board for stability and untreated ballast water is released at ships destinations, which could impact marine species. As per international conventions, all ships in international traffic are required to bring their ballast water up to a certain standard by installing an on-board water-treatment system. To control pollution by the shipping sector, a new regulation framed by the IMO (International Maritime Organization) will be applicable from 1 January 2020. Shipping companies have two options to comply with these norms: (1) They can shift to using low-sulphur fuel oil (LSFO) from the heavy oil that they are presently using, or (2) they can install exhaust gas cleaning systems called “scrubbers”, which clean emissions before they are released into the atmosphere; by doing so, they can continue to use high-sulphur fuel oil (HSFO). The current sulphur content cap is 3.5% (m/m – mass/mass) which will be reduced to less than 0.5% by 2020.

For GE Shipping, total 9 vessels have been fitted with BWTS and 35 vessels are scheduled to be installed with BWTS; this will be done in dry dock scheduled for each vessel. The company is fitting scrubbers on 7 vessels; 2 have been fitted; 5 are scheduled to be installed in CY20.

The company has c.74% fleet on spot contracts (dry bulk 84%, tanker 70%) and the remaining 26% is on long-term contracts. It would be a major beneficiary of a rise in tanker rates in 3QFY20 due to higher exposure to the spot market.

Offshore business has started seeing recovery in utilization and charter rates from a low base of last year.

GE Shipping has been able to pass well through one of the worst cycles in shipping. It has a NAV of Rs 393 (considering offshore investments at cost) and c.Rs 460 considering mark-to-market value of the offshore business. Its management has been getting the cycles right in terms of buying vessels at appropriate times. This will improve its returns.



Himatsingka Seide Himatsingka owns and operates one of the largest integrated capacities for

manufacturing bedding and bath products, drapery and upholstery fabrics, and fine-count cotton yarn. It has a sheeting (bedding) capacity of 61mn mtr per annum and spinning capacity of 211,584 spindles.

In FY19, it began trial production at its new terry-towel facility with an installed capacity of 25,000 tonnes per annum. This complements its bedding portfolio and strengthens its position as a leader in total home textiles solutions.

It has a strong global brands portfolio – both licensed and owned; c.85% of its revenue comes from brands and it grew 40% to Rs 22.5bn in FY19 from Rs 16.1bn in FY18. It has successfully integrated the recently acquired Tommy Hilfiger home brand and entered into a licensing agreement with the Iconix Brand Group for exclusive rights to the Royal Velvet brand. With over 12 licensed / own brands, it is among the largest brand portfolios in home textiles in India.

It meets most of its cotton requirement from the US, and has a control on the entire value chain – from the cotton until when the product is placed on the shelf. It uses a patented DNA-tagging technology that enables it to test and track cotton through its journey from farm to shelf. Himatsingka’s traceable and globally marketed cotton brand portfolio comprising PimaCott®, HomeGrown Cotton®, Organicott® and Gizacott® are available across a full range of bedding, bath, and other textile products.

The company has completed a major capex plan and its focus will be on increasing utilization in terry towels (currently at just c. 15%) and sheeting (current c.70%).

Total gross debt is Rs 26.9bn and net debt is Rs 24.8bn. It will have maintenance capex of Rs 500mn to Rs 1bn annually.

Inflame IAL makes LPG gas stoves and cooktops in varieties such as sheet metal, toughed

glass, etc. It also produces glass-top LPG stoves in premium ranges for brands such as 'Hindware' and 'Avaante'.

Products are marketed under the brand 'Inflame' in the domestic and overseas markets.

To leverage its manufacturing capabilities, it will manufacture a range of hoods (chimneys), electrical chimneys, and glass hobs – which will also increase its presence in the cooking appliances market.

Discontinuation of PMUY schemes by the government has affected its business.

Gas stove is a stagnated market (10-11% gross margin), chimneys are fast growing with 13-14% margins, and hobs are the fastest growing with gross margins of 15-17%. IAL is expecting margins to improve for hobs and chimneys over the medium term to 20-25% and 18-20% respectively, with increasing penetration and leveraging of manufacturing capabilities.

Gradually reduced its import dependency by producing most raw materials (parts) at its in-house facilities.

Going ahead, dependency on China will reduce to about 10% from c.45-50%.

In discussions with Butterfly to market its products in the African market.

Its current order book is Rs 120-125mn. Receivables are c.Rs 40mn and creditors are a similar amount.

Jindal Saw Jindal SAW (JSAW) expects blended volume growth of 5-7% in FY20 (since 1H was

softer) with EBITDA/t hovering at Rs 9,000-10,000.

The current order book stands at 1.1mn tonnes. LSAW and HSW account for 650KT and 450-500KT of DI pipes and the balance is in the seamless steel-pipe segment.



The company expects the JTIF settlement to happen within the next 1.0-1.5 years, which can lead to a potential cash inflow of Rs 15-20bn (Rs 3.5bn already received), which it plans to use for debt reduction.

JSAW has a debt of Rs 41bn (Rs 17bn long-term and the rest is working capital). It has no major capex plans and maintenance capex is Rs 1.5-2.0bn annually.

Management guides for cash-flow generation of Rs 7-8bn in FY20.

The Sathvahana deal is likely to take some time as Sathvahana’s lenders are still looking into the restructuring plan that JSAW submitted. It expects a potential turnover of Rs 10bn from this Sathvahana, with operating margins of 15-20%.

The US operations are doing fairly well. Expects new cash generation of Rs 1bn from these assets.

Abu Dhabi plant should be cash neutral in FY20. It has an order book of 100KT tonnes.

JSAW has a stainless seamless pipe capacity of 25k tonnes and is still capturing commodity-grade business from this plant. For now, it has approval only from EIL and is in the process of receiving approvals from other companies, which will open high-margin business potential.

JSAW has set up a HDPE pipe unit at Bhilwara and it caters to only EPC contractors. For now, the business is very small, but if it sees incremental value and orders from the EPC business, it will set up small pipe plants across its existing plants.

Maharashtra Seamless Considering softer 1H, MHS is expecting flat volumes in FY20. The management

sees seamless pipe margins at Rs 17,000-18,000/tonne, ERW at Rs 5,000-7,000/tonne. However it expects EBITDA/t to be maintained above Rs 18,000/t.

It has a seamless-pipe order book of Rs 7.8bn, which translates to c.90KT.

ERW-pipes order book is Rs 3.5bn, c.40KT. This is in the oil and gas segment, and the mill is booked till March 2020.

The decision on the United Seamless takeover is pending at the Supreme Court (hearing completed, next date is 12th December). MHS is likely to start the mill in about 6 months if the judgment is in their favour. It will take 3-4 months to revamp the plant and additional start-up cost of Rs 100-120mn will be necessary.

Basically, MHS can produce c.100KT from the United Seamless plant without putting in major capex. To increase production by another 100KT, it will have to spend Rs 1bn as capex.

MHS managed to deploy the remaining two additional rigs at US$ 44,700 per day. The daily cost of operating a rig is about US$ 21,000, including interest. Now all 6 rigs are deployed, which will generate cash flows of c.Rs 1.5bn annually (will be used to pay off debt and return MHS’s loans).

MHS is setting up a 15MW solar power plant. With the commissioning of this plant, it will be able to meet 70% of its power requirement through captive sources.

MCX Transaction volume is major source of revenue, contributing c.95% of the total.

Market data contribution to total revenue is very low at 3-4%, compared to this global peers generate 20-25% of their revenue from Market Data.

SEBI has allowed Index trading; this should bring in volumes.

MCX charges Rs 210 per 10mn of transaction volume vs. Rs 2 by the BSE. MCX does not charge any transaction fee for options.



Mold-Tek Packaging Paints, lubricants, and foods & beverages segments contribute 52%, 34%, and

14% to packaging volumes.

Management stated that it wants its customers to view it as a packaging solutions provider, rather than a mere packaging supplier. It has been able to provide innovative solutions to ice cream (HUL) and edible oils players (Sanchi

IML (in-mould labelling) contributes 60% of its total revenue; in the paints vertical, it is only 50% of revenues.

Plant utilization levels are 72% and management said it will have to set up a new plant only once it crosses 77-78%.

Is targeting 18-20% volume growth in the medium term; should come via: (1) paint industry seeing double-digit volume growth in the medium term, (2) lubricants industry, which is declining 15-20% per year since a couple of years, will see some revival as the government has mandated usage of certain products for the diesel-based industry, and (3) food and beverages industry will continue very high growth (+50%); this industry is replacing its traditional forms of packaging.

Muthoot Capital Muthoot Capital is one of the leading Two wheeler finance NBFC in southern India

with AUM of Rs27.8bn. It has presence across 22 States with ~70% portfolio concentrated in Southern India.

Borrowing profile largely skewed towards bank loans with 68% share followed by securitization (25%). Looking to raise NCDs. Have taken shareholders approval for Rs2bn NCDs. If market remains good can also look at doing QIP in H1FY21.

Two wheeler finance penetration in India is 37-40%. Cheque bounce rate in Two wheeler finance is 40-45% for the industry.

Average ticket size for the company is Rs57000; LTV 75%

The company target customer are Bop Clients in Tier II, III and IV towns. The company has live customer base of 724101. Only 35-40% of these customers have CIBIL score and rest 60-65% are new to credit customers.

The company also got into used car financing. Currently doing from 17 locations. The company is also doing a pilot in consumer durable financing. Distribution channel is completely different from that of Bajaj Finance. Want to be a multiproduct Company offering complete lifecycle product range to customers.

Dealers BSIV inventory is coming down. Average inventory is of 3-4 weeks. OEMs to manufacture BSIV vehicle till December.

Demand may come down post BSVI implementation due to higher prices.

Orient Bell Since the last few years, Orient Bell has been trying to spruce up its balance sheet

and is now all set to scale up and drive topline growth.

It has hired talent with rich industry experience and was able to remove underperformers.

Bonuses, incentives, and recognition for sales and marketing teams, which was not offered in the past, has begun, after it hired a new management team.

Performance-linked ESOPs will soon be offered to senior management executives.

Going ahead, marketing spends in ATL activities will steadily increase.

Last fiscal, 75% of the sales were retail and rest 25% were contributed by institutional sales; this trend is expected to continue.

Total 170 exclusive showrooms across the country, out of which 160 are franchisee and 10 are owned.



Morbi, after the ban of imports of ceramics by Gulf countries, is seeing temporary shut downs of local manufacturing units. This may bring pricing pressure on tiles in the short term, but it will benefit the organized market in the longer term.

Currently, there are 2,000 SKUs available in vitrified tiles; going ahead, it may consider expanding its SKU base.

Vitrified to ceramics ratio improved to 36% vs. 35% during 1HFY19.

Working capital cycle improved by 19 days and net debt reduced by 40% in the last 6 months to Rs 610mn.

Consistently putting in efforts to bring its working capital days down, by effectively planning its production, constant monitoring of collections and renegotiation with its creditors.

Working capital released will be used to repay its short-term bank loans.

Orient Electric OEL is differentiating its products through innovation and product development;

its recent launches are an example of its new strategy.

It has consistently made investments in expanding its design capability to create products with better performance and aesthetics.

In lighting, it recently launched new bulb series- iLove LED bulbs, a health centric lighting series, which tries to reduce the impact of inherent invisible flickering in LED bulbs.

In switches & switchgear segment, it brought switchgear technology from Slovenia few years ago to bring innovation in its product portfolio.

In fans, it has launched the aero series fans, which are aero dynamically designed for delivering higher air density.

New BEE ratings in fans is going to hit the industry hard as current 5-star rated fans will become 1-star rated. It is expected to be effective by the middle of next year.

New launches (incl. launches in fans, lighting and appliances) contributed in double-digits to the top line.

All launches in recent years are not tactical short-term launches, but designed and developed for longer-term growth.

These efforts towards innovation and better product offerings should defy slowdown.

Most of its differentiated products are manufactured in-house and it outsources its commodity-oriented/non-differentiated production to third parties.

Advertisement cost will be maintained at 4-5% of net sales.

Working capital improved by 15 days from channel financing, vendor financing and inventory management.

Debt repayment at Rs 450mn in the first half; hopes to reduce debt further.

Praj Industries Praj is a market leader in bio-fuel technology with 70% market share in the

domestic ethanol market and a strong presence in the international market. It has diversified within its core competency into emerging businesses – industrial water treatment, critical process equipment, and bio products.

It is a knowledge-based company and has developed expertise and experience in bio-processes, engineering and projects. Praj Matrix – its R&D centre – is its backbone of technology development and is working on bio-ethanol and bio-chemicals processes.

70% revenue from the domestic market, 30% from exports.

The government’s target is 20% ethanol blending by 2030 from the current c.7%. There is an opportunity for 3x capacity expansion over next 10-15 years. Ethanol



is also used as a basic building block for the development of bio chemicals and jet fuels, which is also opening new opportunities.

Expect strong demand for distillery plants with the government addressing three major issues - (1) movement of ethanol between states is easy after GST, as ethanol is under GST with 5% duty. (2) Production from different feed material like agri water, damaged food grain and fruits, cane Juice and B-heavy molasses. (3) Attractive and differentiated prices for ethanol produced from different raw materials.

All future blending initiatives will come from 2G technology globally, with the governments pushing for it. EU is increasing ethanol blending from 7.5% to 15% with a strong mandate from 2G technologies.

CBG (compressed bio gas) has the opportunity to convert current CNG stations to CBG stations in the future. CBG has 10% higher energy content with similar price, which will drive demand. CBG technology is viable from day one, and can prove solutions with smaller capacity size (c.Rs 500mn) compared to 2G plants with a size of Rs 10bn. There are already around 250 LOIs for setting up CBG plant.

The Government of India, under the “Sustainable Alternative towards Affordable Transportation” (SATAT) policy, envisages implementation of 5,000 Compressed Bio-Gas plants in the next five years in phased manner with c.250 plants by 2020, c.1,000 plants by 2022, and c.5000 plants by 2025. On completion, these will produce c.15mn tons of Bio-CNG per annum which is 40% of current CNG consumption in India of c.44mn tonnes.

CCEA has allocated Rs 18bn under the "Pradhan Mantri JI-VAN Yojana” for supporting twelve 2G Bio ethanol projects. Additionally, Rs 1.5bn have been allocated for supporting ten advanced biofuel demonstration projects.

The company has entered into a cooperation agreement with Dedini S/A, Brazil to provide ethanol production technologies using corn as raw material.

‘Enfinity’, Praj’s proprietary technology for 2G will be deployed to produce ethanol and other co-products using sugarcane bagasse in USA’s first bagasse-based bio-refinery.

Balance-sheet remains strong with net-cash at Rs 2.9bn.

Satin Credit Care Assam: Issue in Assam started around few months ago, as a couple of associations

wanted debt waivers. Whole thing is limited to 3-4 districts and has probably seen its peak.

Growth: Growth in FY20 is likely to remain flat because of process re-engineering, which is now 70-80% complete. Management expects FY21 growth to be around 25-30%.

Disbursement is mainly online, cashless, and directly to the bank, while collection is mainly through cash drops; 15% of collection is via digital channels.

Plan to move to SFB: The company will apply for SBF only when it is sure of a smooth transition. It wants to make sure that structuring is clear and operating cost is under control. For liability, distribution franchise is the key.

Vardhaman Textiles Vardhman Textiles is one of India’s largest integrated textiles manufactures

producing yarn, fabric, sewing threads, and garments. The company has manufacturing facilities in Punjab, Himachal Pradesh, and Madhya Pradesh.

It is one of the largest capacities in term of 1.2mn spindles in spinning (2% of industry and 4% of production). c.35% of yarn is consumed for captive requirements for garment manufacturing and the remaining is sold in the open market. It also exports 30-35% of its yarn production.

The company buys cotton at the start of the season from November (cotton inventory of 6-8 month as of March), which allows consistency in quality



throughout the year. It is a preferred buyer for cotton and gets good quality cotton due to prompt payment to dealers and farmers during harvesting time. Cotton production for new cotton-crop season started in November 2019; it is expected at c.40mn bales and domestic cotton prices are 7-8% lower than international markets, which is positive for spinning companies.

Vardhman is an integrated fabric supplier for both tops and bottoms in the apparel segment, catering to many retailers in USA, Europe, Asia, and others. It has a 200mn mtr per annum grey fabric capacity and 175mn mtr processed fabric capacity. Forward integration in fabric helps the company to reduce the volatility in margins as margins in fabric become counter cyclical to margins in spinning business.

The company has completed a capex of Rs 14bn for 100,000 spindles and 275 looms and a third processing line at Budhni, MP. It has a gross debt of Rs 24bn and its cash balance is Rs 10bn. D/E is healthy at 0.43x.

The Waterbase Ltd (TWL) TWL is niche player in the aquaculture industry with a presence in feed and farm-

care products.

Its FY19 revenue was Rs 3.72bn (CAGR of 10% during FY14-19). It has a pan-India presence with 184 dealers.

Feed: A delayed farming season due to extended winter and lower farm-gate prices reduced acreage, causing subdued demand for feed. Higher input prices in H1FY20 impacted margins. It expects RM prices to remain firm in H2FY20. Demand is expected to improve in H2 with gradual improvement in farmers’ sentiments and export prices.

Farm-care: Growth momentum to continue in H2 with stronger volume growth from repeat customers and newer markets. It has expanded its portfolio of products across distribution networks (existing and new).

Key markets for TWL are Tamil Nadu and Andhra Pradesh; new and developing markets are Gujarat, West Bengal, and Odisha. TWL is also focusing on premiumisation via branding and packaging, after-sales services, R&D inputs, feed performance, and enhancing farming techniques for disease management.

It has a capacity of 1 hatchery (500mn Post Larvae) with a shrimp-feed capacity of 110,000 tonnes and processing capacity of 4,000 tonnes.

Launched farm care products under the brand name “Baylife”. Also, launched packaged shrimp and crab meat in retail markets under the brand “Prize Catch”.

It has taken new initiatives in farm-care products such as NutriSorb (absorbs ammonia) and NutriGut (protects gut). It has also taken new initiatives in processed seafood in the domestic market by launching the brand ‘Prize Catch’ for raw shrimps and pasteurised crab meat with a soft launch in Chennai, Bangalore, and Goa. In phase 1, it plans to scale up in other major cities.

In FY19, the industry was affected by an overall slowdown in prices of culture, an extended winter, and high raw material prices.



Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. We have different threshold for large market capitalisation stock and Mid/small market capitalisation stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large cap stocks Rating Criteria Definition

BUY >= +10% Target price is equal to or more than 10% of current market price

NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%

SELL <= -10% Target price is less than or equal to -10%.

Mid cap and Small cap stocks Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

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5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.

Kindly note that past performance is not necessarily a guide to future performance.

For Detailed Disclaimer: Please visit our website www.phillipcapital.in IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report is a product of PhillipCapital (India) Pvt. Ltd. which is the employer of the research analyst(s) who has prepared the research report. PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.

Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.

The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication Compensation and Investment Banking Activities

http://www.phillipcapital.in/



Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report.

PHILLIPCAP may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of PHILLIPCAP.

Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States.

The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments.

Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein.

No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior written consent of PHILLIPCAP and PHILLIPCAP accepts no liability whatsoever for the actions of third parties in this respect.

PhillipCapital (India) Pvt. Ltd. Registered office: 18th floor, Urmi Estate, Ganpatrao Kadam Marg, Lower Parel (West), Mumbai – 400013, India.

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