balrampur chini nov 27, 2017 - hdfc securities pcg - pick...balrampur chini investment idea nov 27,...
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1 | P a g e
Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Recommendation
Buy at CMP and add on Dips
Add on dips to
Rs. 149-163
Target
Rs. 198
Time Horizon
4 Quarters
Industry
Sugar
CMP
Rs. 163
Company Background
Balrampur Chini Mills is an integrated sugar manufacturing company. It is engaged in the manufacturing of sugar,
ethanol and power. The Company's segments include Sugar, Distillery, Co-generation and Others. Its products
include molasses and bagasse. Company has sugar crushing capacity of approximately 76,500 tons of cane per
day, distillery capacity of 360 kiloliters (KL) per day and saleable co-generation capacity of approximately 163
megawatts (MW). The Company has over 10 manufacturing units at Balrampur, Babhnan, Tulsipur, Haidergarh,
Akbarpur, Rauzagaon, Mankapur, Kumbhi, Gularia and Maizapur in Uttar Pradesh.
Investment Highlights
Balrampur Chini Mills is one of the largest integrated sugar manufacturing companies in India.
Revenue/EBITDA/Net Profit witnessed 26%/124%/170% rise yoy respectively in FY17 on account of exceptionally
high sugar segment performance led by strong sugar realisation, especially on low cost opening inventory. Distillery
and cogeneration reported steady performance (Combined EBIT of Rs 330cr, +6% YoY). The management is
optimistic about business outlook on account of a) tight inventory scenario domestically leading to firm sugar
prices, b) expectation of sanity in sugarcane pricing, c) rising mix of early variety driving crushing volume (+7%
YoY in FY17; expect strong in FY18). Having started its operations four decades ago, company is now one of India’s
largest integrated sugar mills and most efficient sugar producers in the country and is best placed to capitalize on
the positive structural changes witnessed by the industry. Improving ethanol dynamics and robust balance sheet
will aid profitability. Company has done large prepayments in FY17 on the back of healthy cash accruals, leading
to substantial reduction in long term loans, thereby further strengthening the capital structure. The company has
RoE 39% and has bought back shares leading to cash outflow of ~Rs. 175 crore in FY17, the liquidity of the
company is expected to remain comfortable with unutilised working capital limits and adequate drawing power
going forward.
Balrampur Chini Mills has reported 182% increase in cash profit to Rs 697 crore over the previous year; this cash
profit was 108.5% higher than the previous cash profit peak reported by company during September 2009, which
proves investments made in business and capabilities during the last few years.
We feel EBIDTA margin would remain sustainably above 18%, unlike the past when companies struggled to turn
an operating profit in the face of unbearable cane SAP. In years of bumper output when sugar prices could dip
below ~Rs 30/kg, we believe that the government would 1) bridge the gap between (Fair & Remunerative Price)
FRP and linkage price from the price stabilization fund and/or 2) allow exports to relieve some of the inventory
overhang in the domestic market.
Kushal Rughani
HDFC Scrip Code BALCHI
BSE Code 500038
NSE Code BALRAMCHIN
Bloomberg BRCM:IN
CMP as on 24 Nov-17 163
Equity Capital (Rs cr) 23.5
Face Value (Rs) 1
Equity O/S (cr) 23.5
Market Cap (Rs Cr) 3822
Book Value (Rs) 85
Avg. 52 Week Vol 1752113
52 Week High (Rs) 182
52 Week Low (Rs) 115
Shareholding Pattern (%)
Promoters 40.90
Institutions 34.80
Non Institutions 24.30
PCG Risk Rating*
Yellow
* Refer Rating explanation
2 | P a g e
Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Albeit, management remain confident that formula‐based cane pricing would be a big step in ensuring
the sector’s stability as it would eliminate the huge production swings encountered in the past.
Company and its operations details
Company is one of India’s largest and most stable private sugar mills. It has cumulative sugar
manufacturing capacity of 76500 tonnes per day. It has invested in the distillery business with cumulative
capacity of 360 kilolitres per day. It has invested in bagasse-based cogeneration power facilities with
saleable power capacity of ~163 MW. The Company’s 10 manufacturing units are located in Balrampur,
Babhnan, Tulsipur, Haidergarh, Akbarpur, Rauzagaon, Mankapur, Kumbhi, Gularia, Maizapur and
Khalilabad in Uttar Pradesh, India. With improving prospects of sugar industry, we expect company to
report revenue of Rs 4389 Cr and Rs 4653 Cr in FY17 and FY18 respectively. With higher bagasse next
season, power segment is expected to register robust performance. We expect integrated players like
Balrampur to benefit immensely due to improving ethanol dynamics as the central government is mulling
to go after ethanol production in big way.
Sugar Segment
Balrampur Chini has capacity of 76500 TCD (tonnes of cane per day) across 10 business units in UP.
Sugar has remained the largest revenue generator for company yielding steady cash flows. Over the
years, the Company has been investing in enhancing the efficiencies of production process, which has
thereby helped in generating better quality sugar. Nearly ~12% of the production is refined sugar,
resulting in better price realisation. It has also initiated energy reduction measures that have helped in
generating more bagasse for by-product generation and has also strengthened revenues.
Sugar business accounts for nearly ~83% of total revenues of Rs 3641cr (FY17). This segment’s share
of revenue declined to 83% in FY17 against 86% in FY13 and going forward we believe, this segment will
maintain a share of ~80% over the next two years. Company has already invested in distillery capacities
to produce industrial alcohol and ethanol and is among the few in India to invest in distillery capacity
capable of consuming its entire molasses output captively, reducing its dependence on external sources.
The Company has ability to convert ethanol from molasses, enabling it to service OMC contracts. These
large volume contracts are backed by strong realizations and quicker off-take, thereby enhancing revenue
visibility and improving bottom-line.
Key Highlights
Balrampur Chini Mills is one of the largest integrated sugar manufacturing companies in India Revenue/EBITDA/Net Profit witnessed 26%/124%/170% rise yoy respectively in FY17 on account of exceptionally high sugar segment performance led by strong
sugar realisation, especially on low cost opening inventory We feel EBIDTA margin would remain sustainably above 18%, unlike the past when companies struggled to turn an operating profit in the face of unbearable cane SAP
Company is one of India’s largest and most stable private sugar mills. It has cumulative sugar manufacturing capacity of 76500 tonnes per day. It has invested in the distillery business with cumulative capacity of 360 kilolitres per day It has invested in bagasse-based cogeneration power facilities with saleable power capacity of ~163 MW out of total capacity of 266 MW Sugar business accounts for nearly ~83% of total revenues of Rs 3641cr (FY17) while the balance from Distillery and CoGen business We forecast 13% revenue cagr largely led by strong growth from sugar segment. Further, we expect that sustained sugar
prices of Rs 37-38 per kg will result in healthy PAT growth in FY19
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Company has 266 MW of bagasse-based power capacity of which 163 MW of surplus power is sold to the State Electricity Board (SEB’s).
Foray into bagasse-based power generation has helped it to access seamless supply of power for its critical sugar operations on one hand
and generate additional revenues through sale on the other. While profitability in sugar segment is highly volatile and depends on market
cycles, sale of power is assured and adds significantly to the bottom-line. Over past five years, company was able to achieve higher PLF,
thereby improving its power revenue contribution from ~6.5% in FY13 to ~9% in FY16.
Its Operations across Verticals
Units Sugar Cane Crashing Capacity (TCD) Distillery (kl) Installed Power Capacity (MW) Saleable Power
Balrampur 12000 160 49.5 27.2
Babhnan 10000 100 21.7 8
Tulsipur 7000 9.5 -
Haidergarh 5000 23.2 21
Akbarpur 7500 18 11
Manakpur 8000 100 43.6 30
Rauzagaon 8000 30.8 23
Kumbhi 8000 32.7 23
Gularia 8000 31.3 20
Maizapur 3000 6 -
Total 76500 360 266 163
Source: Company, HDFC sec Research
Government's thrust on ethanol blending program to benefit distillery segment
Government's thrust on ethanol blending program continued to benefit company as its sales volumes of Ethanol in H1 FY18 marginally up
at 39211 kl. Ethanol prices have been hiked Rs 1.85 to Rs 40.85/lt. We expect integrated players like company to benefit immensely due
to improving ethanol dynamics as the central government is mulling to go after ethanol production in a big way.
The sugar industry in India is cyclical in nature, where sugar production is mainly dependent on (1) sugarcane cultivation (2) cane drawl
by sugar industry and (3) Government policies. During years of oversupply (up-cycle), sugar prices tend to decline thereby negatively
impacting sugar mills’ profitability (lower realization) and higher sugarcane arrears for farmers. Simultaneously, lower sugar production
results in higher sugar prices, improved profitability for sugar mills and lower cane arrears.
Sugar Manufacturing Process: The process of manufacturing sugar starts with crushing of sugarcane to extract juice followed by boiling
which results in thickening of juice and sugar begins to crystallize. Crystals are spun in a centrifuge to remove syrup, thereby producing
raw sugar. Raw sugar is then transported to a refinery where it is washed and filtered to remove remaining non-sugar ingredients and
colour. It is then followed by crystallization, drying and resultant packaging of the refined sugar.
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
By-products - An integral part of sugar industry
In case of integrated sugar player, a substantial part of earning contribution comes from selling by-products, thereby de-risking the overall
business. Greater the level of integration better is the ability to wither the downturn and de-risk the business from cyclicality. Major by-
products comprise of bagasse, molasses which are utilized to generate power, produce industrial alcohol/ethanol and fertilizers.
Bagasse is the fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice. It is used as a combustible
in furnaces to produce steam, which is used to generate power. Integrated sugar companies have established cogeneration power plants
using bagasse as raw material for both power generation for captive consumption and sell to state grids. Current realizations for mills
stand between Rs 4-5 per unit. Molasses, a by-product, is further processed to produce industrial alcohol/ethyl alcohol to be used in other
industries. In India molasses is used mainly in manufacturing of industrial/ potable alcohol, ethanol rectified spirit and various value added
chemicals. Ethanol is consumed by chemical industry and is also used in blending with petroleum to produce Ethanol Blended Petroleum
(EBP).
H1 FY18 performance
Sugar sales during the quarter stood at 31.07 lakh quintals as compared to 21.38 lakh quintals in Q2FY17. Sales during H1 FY18 was 55.7
lakh quintals as compared to 40.3 lakh quintals during H1 FY17 Sugar realizations for the quarter improved to Rs 37.3 per kg compared
to Rs 36.2 per kg in Q2FY17 Realizations for H1 FY18 improved to Rs 37.0 per kg compared to Rs 35.4 per kg in H1 FY17 Sugar inventory
stood at 12.66 lakh quintals valued at an average rate of Rs 33.73 per kg. As on September, stock of molasses stood at 11.93 lakh qntls.
as compared to 6.93 lakh qntls. For H1 FY18, company posted 34.5% yoy rise in revenues led by 38% increase from Sugar segment.
Other two segments revenue remained muted for the same period. Margin got impacted on the back of lower gross margins and PAT
dipped 7% yoy to Rs 202cr.
Sugar H1 FY18 H1 FY17
Revenue 2181 1572
EBIT 260 223
EBIT (%) 11.9 14.2
Distillery
Revenue 166 185
EBIT 49 84
EBIT (%) 29.5 45.4
CoGen
Revenue 119 80
EBIT 24.7 16.4
EBIT (%) 20.8 20.5
Source: Company, HDFC sec Research
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Domestic Sugar Balance
Source: Company, HDFC sec Research
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
De-leveraging balance sheet with low capex commitment
Over the last few years, Company has reduced long term borrowings significantly from Rs 432cr in FY15 to Rs 124cr in FY17 and guides
continuous debt reduction on account of better operational performance and working capital management and will reward shareholders
with higher dividend payouts (declared interim dividend of Rs 3.5/share after a gap of six years for FY17) on strong cash flow generation.
The management is committed towards optimal utilisation of cash; hence, they are also open to consider attractive inorganic opportunities
coming their way to expand capacities. Company guides Rs 90cr each outlay on capital expenditure for the next two years.
Venture into Education Finance Business
In Sep 2017, Board has approved Rs 175 crore investment to finance educational activities over the five years. Balrampur Chini has
incorporated company named Auxilo Finserve Pvt. Ltd. The amount will be spend in tranches and in the first tranche, an investment of Rs
37.5 crore will be made in education sector. The management has guided that no further capital apart from the Rs. 175 cr already
announced will be allocated towards this venture, and they will look to garner similar resources by selling non-core assets like surplus land
and monetise other unrelated business like solar.
Balrampur - key beneficiary of strong sugar cycle
Sugar Prices have remained firm over the last few quarters and we expect similar trend to continue which would help in strong realisations
for Sugar companies. Balrampur Chini is well positioned to capitalize on the positive structural changes witnessed by the industry led by
improving sugar prices and recovery rates coupled with strong relationship with farmers, close proximity to raw materials and favorable
government policies (in the form of soft loans, increasing Ethanol blending from 5% to 10% etc.) We forecast 13% revenue cagr led by
strong growth from all the segments. EBITDA margin for H1 FY18 dipped 550bps to 14.8%. We have assumed 18.8% margin for FY18
and 20.3% for FY19. We believe there will be improvement in sugar realizations and uptick in the distillery business. Net profit during the
same period is likely to remain almost flat at Rs 615cr over FY17-19E. Further, we expect that sustained sugar prices of Rs 37-38 per kg
will result in healthy PAT growth in FY19. We have valued the stock on 8x FY19E EPS and arrive to TP of Rs 198 in 9-12 months.
Risks
Favourable change in weather could increase supply of sugar cane and sugar produced thereby putting pressure on sugar prices.
Tinkering of relevant policy measures by government like import duty, export subsidy and imposing stock limits may affect
profitability and sentiments.
Higher than expected increase in sugarcane cost could hurt profitability.
Company’s venture into education financing (unrelated business diversification) may remain concern.
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Revenues to see strong ~13% cagr over FY17-19E
Source: Company, HDFC sec Research
3001 2874 3641 4389 4661
12.2
-4.2
26.7
20.6
6.2
-10
-5
0
5
10
15
20
25
30
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
FY15 FY16 FY17 FY18E FY19E
Total Income Growth %
EBITDA trend over FY17-20E
Source: Company, HDFC sec Research
141 411 870 823 955
-38.4
191.5
111.6
-5.316.0
-50
0
50
100
150
200
250
0
200
400
600
800
1000
1200
FY15 FY16 FY17 FY18E FY19E
EBITDA EBITDA Growth
Average Realisation per kg : Sugar
Source: Company, HDFC sec Research
10
15
20
25
30
35
40
FY13 FY14 FY15 FY16 FY17 H1 FY18
Sugar Cane Crushed (Lac Qntals)
Source: Company, HDFC sec Research
0
100
200
300
400
500
600
700
800
900
FY13 FY14 FY15 FY16 FY17 H1 FY17 H1 FY18
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Source: Company, HDFC sec Research
2000
2500
3000
3500
4000
4500
De
c-1
2
Mar
-13
Jun
-13
Sep
-13
De
c-1
3
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5
Mar
-16
Jun
-16
Sep
-16
De
c-1
6
Mar
-17
Jun
-17
Sep
-17
Sugar M30 Mumbai Price per Qntl.
Revenue Mix (%)
Source: Company, HDFC sec Research
88.4
4.8
6.8
Sugar
Cogen
Distillery
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Income Statement
(Rs Cr) FY15 FY16 FY17 FY18E FY19E
Net Revenue 3001 2874 3641 4389 4661
Other Income 15 47 25 30 33
Total Income 3016 2921 3666 4420 4694
Growth (%) 12.2 -4.2 26.7 20.6 6.2
Operating Expenses 2860 2463 2773 3566 3706
EBITDA 141 458 893 853 988
Growth (%) -38.4 191.5 111.6 -5.3 16.0
EBITDA Margin (%) 4.7 14.3 23.9 18.8 20.5
Depreciation 116 110 105 107 115
EBIT 25 348 788 746 873
Interest expenses 102 67 55 84 94
PBT -77 108 734 661 777
Tax -18 7 142 146 171
RPAT -59 101 592 503 615
Growth (%) -600.0 -330.5 483.9 -12.7 17.6
EPS -2.4 4.1 25.2 21.4 26.2 Source: Company, HDFC sec Research
Balance Sheet
As at March FY15 FY16 FY17 FY18E FY19E
SOURCE OF FUNDS
Share Capital 24.5 24.5 23.5 23.5 23.5
Reserves 1105 1205 1537 1976 2489
Shareholders' Funds 1129 1229 1561 2000 2513
Long Term Debt 432 502 124 128 154
Net Deferred Taxes 229 159 150 162 172
Long Term Provisions & Others 9 10 4 8 16
Minority Interest 0 0 0 0 0
Total Source of Funds 1799 1901 1839 2298 2854
APPLICATION OF FUNDS
Net Block (incl CWIP) 1385 1427 1428 1411 1371
Deferred Tax Assets (net) 19 18 1 1 1
Long Term Loans & Advances 301 52 26 56 104
Total Non Current Assets 1705 1497 1455 1468 1476
Current Investments 0 0 0 0 0
Inventories 1670 1865 2314 1840 2047
Trade Receivables 159 199 163 253 349
Short term Loans & Advances 30 1 1 3 12
Cash & Equivalents 82 9 5 158 336
Other Current Assets 278 120 88 105 152
Total Current Assets 2219 2194 2571 2358 2896
Short-Term Borrowings 1183 994 1577 1050 952
Trade Payables 737 423 295 262 372
Other Current Liab & Provisions 183 359 302 214 191
Short-Term Provisions 4 3 2 2 3
Total Current Liabilities 2107 1779 2176 1528 1517
Net Current Assets 112 415 396 830 1378
Total Application of Funds 1799 1901 1839 2298 2854 Source: Company, HDFC sec Research
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Cash Flow Statement
(Rs Cr) FY15 FY16 FY17 FY18E FY19E
Reported PBT -62 108 734 662 779
Non-operating & EO items -15 -47 -25 -30 -33
Interest Expenses 102 67 55 84 94
Depreciation 116 110 105 107 115
Working Capital Change 1 -376 16 -282 -370
Tax Paid 18 -7 -142 -146 -171
OPERATING CASH FLOW ( a ) 160 -145 743 396 413
Capex -22 -146 -106 -90 -75
Free Cash Flow 138 -292 637 306 338
Investments -37 250 43 -30 -48
Non-operating income 15 47 25 30 33
INVESTING CASH FLOW ( b ) -44 150 -38 -89 -90
Debt Issuance / (Repaid) -95 1 -393 20 44
Interest Expenses -102 -67 -55 -84 -94
FCFE -60 -357 188 241 288
Share Capital Issuance 0 0 -1 0 0
Dividend -1 -1 -70 -77 -94
FINANCING CASH FLOW ( c ) -198 -66 -519 -142 -145
NET CASH FLOW (a+b+c) -83 -62 185 165 179 Source: Company, HDFC sec Research
Key Ratios
(Rs Cr) FY15 FY16 FY17 FY18E FY19E
EBITDA Margin 4.7 14.3 23.9 18.8 20.5
EBIT Margin 1.3 12.1 21.7 17.0 18.7
APAT Margin -1.5 3.5 16.3 11.8 13.0
RoE -4.9 8.6 42.5 28.3 27.3
RoCE 2.2 18.3 42.9 32.5 30.6
Solvency Ratio
Net Debt/EBITDA (x) 10.9 3.6 2.0 1.2 0.8
D/E 1.4 1.2 1.1 0.6 0.4
Net D/E 1.4 1.2 1.1 0.5 0.3
PER SHARE DATA
EPS -2.4 4.1 25.2 21.4 26.2
CEPS 2.4 8.6 29.7 26.0 31.1
BV 46 50 66 85 107
Dividend 0.0 0.0 2.5 2.7 3.2
Turnover Ratios (days)
Debtor days 19 25 16 21 27
Inventory days 229 224 209 153 160
Creditors days 118 66 38 44 49
VALUATION
P/E -68.4 39.1 6.4 7.6 6.2
P/BV 3.5 3.2 2.4 1.9 1.5
EV/EBITDA 37.5 12.9 6.1 6.4 5.5
EV / Revenues 1.8 1.8 1.5 1.2 1.1
Dividend Yield (%) 0.0 0.0 1.5 1.7 2.0
Dividend Payout 0.0 0.0 9.9 12.6 12.2 Source: Company, HDFC sec Research
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Balrampur Chini INVESTMENT IDEA
Nov 27, 2017
Rating Chart
R E T U R N
HIGH
MEDIUM
LOW
LOW MEDIUM HIGH
RISK
Ratings Explanation:
RATING Risk - Return BEAR CASE BASE CASE BULL CASE
BLUE LOW RISK - LOW RETURN STOCKS
IF RISKS MANIFEST PRICE CAN FALL 20% OR MORE
IF RISKS MANIFEST PRICE CAN FALL 15%
& IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 15%
IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 20% OR
MORE
YELLOW MEDIUM RISK - HIGH RETURN STOCKS
IF RISKS MANIFEST PRICE CAN FALL 35% OR MORE
IF RISKS MANIFEST PRICE CAN FALL 20%
& IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 30%
IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 35% OR
MORE
RED HIGH RISK - HIGH RETURN STOCKS
IF RISKS MANIFEST PRICE CAN FALL 50% OR MORE
IF RISKS MANIFEST PRICE CAN FALL 30%
& IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 30%
IF INVESTMENT RATIONALE
FRUCTFIES PRICE CAN RISE BY 50%
OR MORE
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Nov 27, 2017
Price Chart
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Rating Definition:
Buy: Stock is expected to gain by 10% or more in the next 1 Year. Sell: Stock is expected to decline by 10% or more in the next 1 Year.
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Disclosure: I, Kushal Rughani, MBA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or HDFC Securities Ltd. Does not have financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or HDFC Securities Ltd. or its associate does not have material conflict of interest. Any holding in stock – No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purposes without prior written approval of HSL. Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail and/or its attachments. HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
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