information technology - 1qfy18... · 130bps qoq in 1q (over 4% appreciation in gbp and eur)....

Information Technology

1QFY18E Results Preview

11 July 2017

Amit Chandra [email protected] +91-22-6171 7345

Apurva Prasad [email protected] +91-22-6171-7327

2

1QFY18E RESULTS PREVIEW

1QFY18E: Cross currency tailwinds

Our IT sector coverage universe is expected to post revenue growth of 2.3% QoQ and 6% YoY. Within the IT universe, large cap IT stocks are expected to post USD revenue growth of 2.1% QoQ, as compared to 1.9% QoQ in 4QFY17 and 3.3% QoQ in 1QFY17. Tailwinds of cross currency will support revenue growth, with the benefit of 20bps to 130bps QoQ in 1Q (over 4% appreciation in GBP and EUR).

EBITDA% of the IT sector is expected to decline by 100bps QoQ impacted by (1) INR appreciation, (2) Visa cost and (3) Wage increase. Within large cap IT companies, HCLT and TCS are expected to lead growth at 4.6% and 2.8% QoQ, respectively. INFY’s revenue growth is estimated at 2.5%, while TECHM and Wipro are expected to decline sequentially. Within midcap IT, Mindtree and Persistent are expected to lead growth in 1Q at 4.3/4.1%, respectively.

Midcap IT valuations (12x FY19E) are at a 10% discount to large cap valuations (13.5x FY19E). NIFTY-IT index has underperformed the benchmark by 9% in the June quarter, and 19% in 1HCY17. Large cap-IT median PEG is at 1.9x, as compared to the Mid cap-IT median PEG at 0.9x. We maintain a selective accumulation stance in the sector within large caps (HCLT, INFY) and mid caps (LTI, Mphasis, Persistent, Zensar).

Key monitorables and reco changes: Growth and outlook in major verticals such as BFSI, Retail and CPG, and greater growth in services such as IMS and ER&D. Client mining within top accounts and revenue productivity trends will reflect on the penetration of digital services. We downgrade TECHM to NEUTRAL from BUY. We also upgrade Cyient to BUY from NEUTRAL.

We maintain our BUY rating on TeamLease (despite a 65% rally since our IC in March-17), and like MCX and BLS International in the new age business space.

QoQ USD Revenue Growth Trend

EBITDA Margin Trend

Source : Company, HDFC sec Inst Research

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4QFY15 2QFY16 4QFY16 2QFY17 4QFY17

TCS Infosys Wipro

HCLT Tech Mahindra(%, QoQ)

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25

28

31

4QFY15 2QFY16 4QFY16 2QFY17 4QFY17

TCS Infosys Wipro

HCLT Tech Mahindra(%)

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Currency Movements

Source : Bloomberg, HDFC sec Inst Research

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USD-INR Average Change QoQ % - RHS %

1.55 1.62

1.65

1.68

1.67

1.58

1.52

1.54

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1.52

1.43

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1.31

1.24

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2QFY

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1QFY

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GBP-USD Average Change QoQ % - RHS %

1.32 1.36

1.37

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1.25

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1.11

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(12)(10)(8)(6)(4)(2)0 2 4 6

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EUR-USD Average Change QoQ % - RHS %

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78

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AUD-USD Average Change QoQ % - RHS %

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1QFY18E : Cross currency tailwinds

COMPANY 1QFY18E

OUTLOOK WHAT’S LIKELY KEY MONITORABLES

TCS AVG

Revenue estimated at USD 4,575mn, 2.8% QoQ and 4.9% YoY on 2% CC QoQ, and +80bps cross currency tailwind.

INR revenue estimated at Rs295.1bn and EBIT% at 24.5%, -120bps QoQ impacted by INR appreciation and wage increase.

APAT estimated at Rs 62.09bn, -6% QoQ and -1.7% YoY.

FY18 growth outlook relative to industry (NASSCOM) estimate (FY18E revenue growth at 7.9%)

Digital revenue performance and large client bucket

Performance of BFSI and Retail & CPG verticals (core verticals)

Margin outlook expected to be moderated from 26-28% earlier (our FY18E EBIT% at 25.3%)

Infosys AVG

Revenue estimated at USD 2,634mn, 2.5% QoQ and 5.3% YoY, based on 1.9% CC QoQ growth and +60bps cross currency tailwinds.

INR revenue at Rs169.88bn and EBIT% at 23.3%, -130bps QoQ impacted by INR appreciation, with wage hike being deferred to 2Q.

APAT estimated at Rs34.46bn, -4.4% QoQ and 0.3% YoY.

FY18E revenue guidance; expect 6.5-8.5% CC guidance for FY18E to be maintained

EBIT margin guidance of 23-25% also likely to be maintained, wage hike impact in 2Q

TCV of deal wins in 4Q and automation impact in 1Q (FTEs released)

BFSI outlook, top accounts’ growth

Consulting & SI business performance and outlook

PPS segment growth and its penetration in large accounts

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1QFY18E : Cross Currency Tailwinds

COMPANY 1QFY18E


Wipro BAD

Expect USD de growth of 0.3% QoQ (US$ 1,947mn), CC revenue de growth 1% QoQ (in line with management guidance of 0-2% CC decline).

EBITDA margin to contract 110bps QoQ to 19.0% owing to currency appreciation, wage hike and visa cost.

Net profit is expected to decline 12.8% QoQ to Rs 19.71 bn.

1QFY18E guidance is expected to be in the range of 0-2%.

Update on the new initiatives outlined by the CEO and the measures taken to improve sales and account mining. Integration process of various acquisitions.

Outlook on healthcare vertical and HPS acquisition in view of recent developments n the US.

HCL Technologies AVG

HCLT revenue estimated at USD 1,900mn, 4.6% QoQ and 12.4% YoY based on 3.4% CC growth (1.5% organic and 1.9% from Geometric and IBM) and +120bps cross currency tailwind. Growth expected to be led by ER&D services and IMS expected to recover.

INR revenue at Rs122.57bn, 1.7% QoQ and 8.1% YoY and EBIT% estimated at 19.2%, -80bps QoQ. APAT estimated at Rs 19.88bn.

Outlook and automation impact on mode-1 services

Performance and outlook of IMS and ER&D services

Guidance expected to be maintained at 10.5-12.5% CC revenue growth

Tech Mahindra BAD

USD revenue to fall by 0.5% QoQ (US$ 1,125mn, CC -1.4% QoQ), owing to seasonally weak Comviva and problems in LCC. Enterprise will continue to do well led by integration of CJS acquisition and ramp up in SI projects.

EBITDA margin will expand 26bps QoQ on account absence of one time cost last quarter offset by weak LCC and rupee appreciation. Net profit to decline 1.1% QoQ to Rs 5.82bn

Strategy for turn around in the LCC (Network services) business and deal pipeline for the Enterprise segment.

Outlook for core telecom and over growth in Telecom owing to unstable LCC.

Road map for margin improvement in FY18E taking into account the recent appreciation in rupee.

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COMPANY 1QFY18E


L&T Infotech AVG

LTI’s revenue estimated at USD 261mn, 2.6% QoQ and 12.9% YoY and INR revenue estimated at Rs 16.82bn.

EBITDA% estimated at 17.9% in 1Q, -110bps QoQ on INR appreciation. APAT estimated at Rs2.38bn, -6.4% QoQ.

Top account and top-10 account performance

Digital revenue performance

Energy vertical performance

Deal pipeline and TCV of wins

Mphasis AVG

Mphasis’ 1Q revenue estimated at USD 226mn, 2.1% QoQ factoring HP-channel at 1.2% QoQ and direct core at 3% QoQ.

EBITDA% estimated at 14.2%, -160bps QoQ with impact of INR appreciation and APAT estimated at Rs1.66bn.

Direct core and Digital risk performance and outlook

HP-channel performance and growth outlook, progress in DXC channel

Progress on Blackstone portfolio and wins

Mindtree GOOD

MIndtree’s revenue estimated at USD 204mn, 4.3% QoQ and 2.6% YoY and INR revenue at Rs 13.16bn, -0.1% QoQ.

EBITDA% estimated at 12.8%, -140bps QoQ even as margin trajectory expected to improve over FY17-19E. APAT estimated at Rs 1.14bn.

Digital revenue performance and TCV of digital deals

Top-10 account performance and outlook; commentary on large accounts headwinds

BlueFin outlook, offshore pricing performance and margin outlook

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COMPANY 1QFY18E


L&T Tech GOOD

LTT’s 1Q revenue estimated at USD 125mn, 3.4% QoQ and 4.4% YoY and INR revenue at Rs8.09bn, -0.4% QoQ.

EBITDA% estimated at 15.9%, -60bps QoQ impacted by INR appreciation and APAT estimated at Rs 952mn, -1.4% QoQ.

Top-10 account performance

Process industry vertical performance

Deal trends and margin outlook

Hexaware Technologies*

AVG

Hexaware’s 2QCY17 revenue estimated at USD 149mn, 3.3% QoQ supported by 2.8% CC and +50bps cross currency tailwind and INR revenue at Rs 9.63bn, 0.3% QoQ.

EBITDA% estimated at 16.1%, -80bps QoQ and APAT at Rs1.16bn, 1.5% QoQ.

Offshore revenue performance

TCV of deal bookings

Top account performance

Travel & transportation vertical performance and margin outlook

Cyient AVG

Expect USD revenue growth of 2.4% QoQ to USD 144mn, owing to strong traction in Rangsons and Communication vertical.

EBITDA margin to contract 65bps QoQ to 12.6%, led by weaker dollar. Net profit to grow 18.8% QoQ to Rs 0.93bn due to lack of exceptional loss of Rs 0.26bn last quarter.

Reiteration of double digit growth guidance for FY18.

Possible change in margin guidance of 50bps expansion in FY18E in light of the recent currency appreciation.

Investments in the business and possible levers for margin expansion.

8



COMPANY 1QFY18E


Persistent Systems GOOD

Persistent’s 1Q revenue estimated at USD 114mn, 4.1% QoQ supported by improvement in IP-revenue and services ex-ISV led growth.

INR revenue at Rs 7.32bn, 0.7% QoQ and EBITDA% at 16.1%, -20bps QoQ as higher growth in IP-business expected to offset INR appreciation impact. APAT at Rs 711mn, -2.3% QoQ.

Enterprise segment performance

ISV division performance and IP-revenue

FY18 growth and margin outlook

eClerx Services AVG

eClerx’ revenue is estimated at USD 49mn, 2.5% QoQ and -2.2% YoY.

Operating margin expected to be impacted by wage increase and INR appreciation with 1Q EBIT% at 28.5%, -100bps QoQ.

APAT estimated at Rs 782mn.

Outlook on financial vertical

Outlook on cable and digital segment

Top accounts and emerging accounts performance

Zensar Technologies AVG

Expect USD revenue growth at 3.6% QoQ (USD 116mn), led by revival in IMS.

EBITDA margin to expand 102bps QoQ despite INR appreciation , owing to lack of one-time charges in the last quarter. Improvement in IMS business and operational efficiencies will act as margin levers.

Net profit is likely to bounce back sharply to Rs 0.60bn in the quarter.

Strategy adopted for mining of top client accounts and growth in the Digital business .

Deals pipeline , TCV and PA performance.

Outlook on margins expansion after hiving off the loss-making product businesses and restructuring of the IMS business.

Update on client pruning activity that is hurting growth.

9



COMPANY 1QFY18E


KPIT Technologies AVG

KPIT’s 1Q revenue estimated at USD 131mn, 2% QoQ and 9.2% YoY, and INR revenue estimated at Rs8.44bn, -1.7% QoQ.

EBITDA% estimated at 9.1%, -100bps QoQ even as margin trajectory over FY17-19E is expected to improve. APAT estimated at Rs 407mn.

SAP and IES SBU performance and outlook

Top account performance and margin outlook

Sonata Software AVG

Expect USD revenue growth of 2.5% QoQ in the international IT services business, led by continued recovery in OPD business and IMS traction.

International IT services/DPS EBITDA margin is expected to be 18.5/2.9% in the quarter.

Consolidated revenue will stand at Rs 7.80bn ,up 9.0% QoQ owing to seasonally strong DPS business.

Growth outlook for the IITS segment, deal pipeline and investments made for the scaling up of the Digital business.

Growth trends in the platforms business, namely Rezopia, Halosys and IBIS, and cross-selling efforts.

Margin outlook for the IITS business and possible margin levers.

10



COMPANY 1QFY18E


Intellect Design Arena GOOD

We expect USD revenue to stand at USD 38.5mn, up 3.0% QoQ, aided by new deal wins. EBITDA margin to be 6.9% vs. 6.3% QoQ. Non-linearity will kick in, with growth in the top-line.

We expect breakeven at the EBITDA level in FY18E as the SG&A and R&D spend has peaked out.

EBITDA to come in at Rs 176mn vs Rs 157mn in the last quarter.

Update on the deal wins ratio after aggressive hiring for sales. Deal funnel size for the year and the deal conversion ratio.

Launch of new products and update on new product launches.

Gross margin outlook for FY18E and the amount of R&D being capitalised for new product development.

Majesco Ltd AVG

We expect USD revenue of US$ 28.3mn (+2.8% QoQ), some stability after four bad quarters. Client specific issue has still not been solved yet but is likely to be resolved.

Recovery in FY18E will be back ended , deal wins to resume after the IBM partnership.

Gross margin will stand at 51.3% while EBITDA margin to contract 52 bps QoQ to 6.3% led by INR appreciation.

Stability of the cloud business and commentary on the spending pattern of US P&C insurers.

Progress on the IBM Watson partnership, deal wins and update on client-specific issues.

Gross margin trend and impact on margins owing to the partnership.

11


1QFY18E: Exchanges, Staffing and Processing

COMPANY 1QFY18E


MCX BAD

We expect revenue to decline 3.0% QoQ to Rs 607mn, lead by 3.5% QoQ fall in ADTV. ADTV was impacted after demonetisation, and has not yet recovered. Bullion/Energy ADTV grew 2.1/1.6% QoQ, while Metals/Agri ADTV fell by 10.2/26.4% QoQ.

EBITDA margin to expand 185bps to 22.8%, led by absence of one-time expenses in the last quarter. APAT to increase 6.0% QoQ to Rs 0.23bn.

Outlook regarding pick up in ADTV, which is falling since demonetisation.

Possible timeline for the launch of options trading.

Commentary on the launch of new products (Indices) and strategy to increase Agri ADTV.

TeamLease GOOD

We expect revenue to increase 4.0% QoQ to Rs 8.50bn led by strong core staffing business.

EBITDA margin will remain flat at 1.8% while APAT will decline sharply to Rs 0.18bn due to lack of 80JJAA tax benefit last quarter.

We are assuming very gradual improvement in EBITDA margin with higher contribution from higher margin IT staffing business.

Core staffing Mark-up will remain at Rs 700/employee/month.

Business outlook post GST implementation and any visible impact of the shift from unorganised to organised employment.

Associate addition in core staffing and NETAP programme.

Growth outlook for IT staffing in FY18E and margin profile.

Levers for increasing mark-up in core staffing business.

12


1QFY18E: Exchanges, Staffing and Processing

COMPANY 1QFY18E


BLS International GOOD

Revenue to grow 31% QoQ to Rs 2.55bn led by full quarter contribution from Spain visa contract.

EBITDA margin to decline 309bps QoQ to 14.6% led by higher cost of the Spain contract which will improve gradually.

NET profit will stand at Rs 0.22bn up 30.1% QoQ.

Growth outlook on the Visa processing business, specially after kick off of the Spain contract.

Developments on the Punjab e-governance project. No of applications processed and realisation.

Update of future deal wins in the global visa-processing outsourcing space.

13


1QFY18E : Financial Summary

Source : Company, HDFC sec Inst Research * YE Dec estimates for Q2CY17

Company NET SALES (US $mn) NET SALES (Rs bn) EBITDA (Rs bn) EBITDA Margin (%) APAT (Rs bn) Adj. EPS (Rs)

1QFY18E QoQ (%) YoY (%) 1QFY18E QoQ (%) YoY (%) 1QFY18E QoQ (%) YoY (%) 1QFY18E 4QFY17 1QFY17 1QFY18E QoQ (%) YoY (%) 1QFY18E 4QFY17 1QFY17

TCS 4,575 2.8 4.9 295.10 (0.4) 0.7 77.05 (5.3) (1.7) 26.1 27.4 26.7 62.09 (6.0) (1.7) 32.4 33.5 32.1

Infosys 2,634 2.5 5.3 169.88 (0.8) 1.2 43.97 (5.6) (1.1) 25.9 27.2 26.5 34.46 (4.4) 0.3 15.1 15.8 15.0

Wipro 1,949 (0.3) 0.9 133.67 (4.4) (1.7) 25.46 (9.7) (4.0) 19.0 20.1 19.5 19.71 (12.8) (3.9) 4.1 4.7 4.2

HCLT 1,900 4.6 12.4 122.57 1.7 8.1 25.99 (1.9) 3.1 21.2 22.0 22.2 19.88 (14.5) (2.9) 13.9 14.2 14.5

Tech M. 1,125 (0.5) 9.1 72.58 (3.2) 4.9 8.89 (1.0) (13.6) 12.3 12.0 14.9 5.82 (1.1) (22.3) 6.5 6.6 8.4

L&T Infotech

261 2.6 12.9 16.82 0.3 8.2 3.01 (5.7) (1.3) 17.9 19.0 19.6 2.38 (6.4) 1.0 14.0 14.9 13.9

Mphasis 226 2.1 0.8 14.59 (3.1) (3.8) 2.07 (13.0) (15.1) 14.2 15.8 16.1 1.66 (14.2) (18.7) 8.6 9.2 9.7

Mindtree 204 4.3 2.6 13.16 (0.1) (0.8) 1.69 (9.5) (13.3) 12.8 14.2 14.7 1.15 17.9 (7.3) 6.8 5.8 7.4

L&T Tech 125 3.4 4.4 8.09 (0.4) 0.7 1.29 (3.6) (13.5) 15.9 16.5 18.6 0.95 (1.4) (11.9) 9.4 9.5 10.6

Hexaware* 149 3.3 15.2 9.64 0.3 10.8 1.55 (4.6) 14.3 16.1 16.9 15.6 1.16 1.5 15.6 3.9 3.9 3.3

Cyient 144 2.4 15.8 9.31 (1.0) NA 1.17 (5.9) 7.7 12.6 13.3 13.1 0.93 18.8 26.1 8.3 7.0 6.6

Persistent 114 4.1 8.4 7.32 0.7 4.3 1.18 (0.7) 11.6 16.1 16.3 15.1 0.71 (2.3) (2.9) 8.9 10.2 9.2

eClerx 49 2.5 (2.2) 3.24 (2.3) (4.8) 1.04 (6.9) (17.6) 32.1 33.7 37.0 0.78 4.3 (18.4) 19.7 18.9 23.5

Zensar 116 3.6 1.6 7.49 (0.1) (1.9) 0.78 10.8 (27.1) 10.4 9.4 14.0 0.60 175.0 (21.8) 13.3 4.8 17.2

KPIT Tech. 131 2.0 9.2 8.44 (1.7) 5.0 0.76 (12.2) (10.8) 9.1 10.1 10.7 0.41 (24.3) (26.1) 2.1 2.7 2.8

Sonata 31 2.5 7.8 7.80 9.0 13.9 0.54 7.2 12.2 7.0 7.1 7.1 0.43 6.1 16.5 4.1 3.8 3.5

Intellect 38 3.0 25.2 2.54 1.5 23.4 0.18 12.2 (243.4) 6.9 6.3 (6.0) 0.08 (21.2) (251.4) 0.7 0.9 (0.4)

Majesco 29 2.8 (11.1) 1.90 (0.5) (13.7) 0.12 (8.1) 56.6 6.3 6.8 3.5 0.04 (36.5) 173.6 1.8 1.6 0.6

Aggregate 13,802 2.3 6.0 904 (1.0) 2.1 197 (5.4) (2.1) 21.8 22.8 22.7 153 (7.1) (2.9)

MCX NA NA NA 0.61 (3.0) (3.6) 0.14 5.6 (37.5) 22.8 21.0 35.2 0.23 6.0 (29.3) 4.6 4.3 6.5

TeamLease NA NA NA 8.50 4.0 23.6 0.16 5.7 150.2 1.8 1.8 0.9 0.18 (53.3) 143.6 10.5 22.5 4.3

BLS NA NA NA 2.55 31.0 105.0 0.37 8.1 385.1 14.6 17.7 6.2 0.22 30.1 206.3 2.2 1.7 0.7

14


Peer Valuation

Source: HDFC sec Inst Research, * Dec Y/E, ^ ex-Intellect, Majesco

Company MCap CMP TP

RECO EPS (Rs) P/E (x) RoE (%) Rev CAGR%

FY17-19E EPS CAGR%

FY17-19E (Rs bn) (Rs) (Rs) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E

TCS 4,849 2,476 2,520 NEU 133.4 137.2 149.4 18.6 18.0 16.6 33.4 31.0 31.8 8.0 5.8

Infosys 2,230 975 1,130 BUY 62.8 62.0 69.9 15.5 15.7 14.0 22.0 20.6 22.4 8.6 5.5

Wipro 1,276 263 265 NEU 16.9 18.3 20.4 15.5 14.4 12.9 15.8 16.5 17.1 5.5 9.8

HCL Tech 1,214 851 950 BUY 57.6 60.4 67.4 14.8 14.1 12.6 27.1 24.6 24.6 11.0 8.2

TechM 342 385 406 NEU 31.6 30.4 33.9 12.2 12.7 11.4 18.1 15.8 15.9 8.0 3.5

Large-cap IT AVG 15.3 15.0 13.5 23.3 21.7 22.3 8.2 6.5

Large-cap IT Median 15.5 14.4 12.9 22.0 20.6 22.4 8.0 5.8

LTI 134 785 880 BUY 56.9 57.1 67.7 13.8 13.8 11.6 36.9 28.4 28.8 10.2 9.1

Mphasis 127 602 680 BUY 38.8 40.2 48.8 15.5 15.0 12.3 13.4 13.4 16.7 7.7 12.2

Mindtree 88 525 500 NEU 24.9 31.0 38.7 21.1 16.9 13.6 16.8 19.3 21.7 8.9 24.5

LTT 78 767 805 NEU 41.8 44.4 53.8 18.4 17.3 14.3 33.3 27.3 27.2 11.1 13.4

Hexaware * 75 252 215 NEU 13.8 14.4 16.6 18.3 17.6 15.2 26.5 23.0 23.4 10.7 9.5

Cyient 59 528 581 BUY 30.6 37.8 44.7 17.3 14.0 11.8 17.4 18.8 19.7 13.4 20.8

Persistent 53 663 720 BUY 38.8 41.2 51.4 17.1 16.1 12.9 17.0 16.1 17.4 10.4 15.1

eClerx 52 1,313 1,225 SELL 87.8 79.7 93.9 15.0 16.5 14.0 30.8 24.5 25.5 5.4 3.4

Zensar 36 806 980 BUY 55.5 64.3 75.4 14.5 12.5 10.7 16.7 17.7 18.0 6.7 16.5

KPIT Tech 27 134 130 NEU 11.1 11.3 14.5 12.1 11.9 9.3 14.8 13.5 15.5 8.5 14.2

Sonata 17 163 207 BUY 14.6 16.0 18.8 11.2 10.2 8.7 31.2 30.6 31.7 13.2 13.5

Intellect 15 124 225 BUY (2.0) 0.7 4.9 NA 165.5 25.0 (4.0) 1.3 7.3 12.7 NA

Majesco 7 316 553 BUY 7.9 14.7 22.1 39.9 21.4 14.3 6.4 10.9 14.4 14.4 67.0

Mid-cap IT AVG^ 15.8 14.7 12.2 23.2 21.2 22.3 9.7 13.8

Mid-cap IT Median^ 15.5 15.0 12.3 17.4 19.3 21.7 10.2 13.5

MCX 56 1,098 1,359 BUY 24.8 26.3 34.0 44.3 41.7 32.3 9.9 9.6 11.8 17.5 17.2

TeamLease 26 1,500 1,568 BUY 38.8 45.7 60.7 38.7 32.8 24.7 19.2 18.6 20.3 22.5 25.1

BLS International 20 203 271 BUY 4.9 9.7 10.9 41.6 21.0 18.7 35.2 47.2 36.4 45.0 49.2

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Rating Definitions

BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period

NEUTRAL : Where the stock is expected to deliver (-) 10% to 10% returns over the next 12 month period

SELL : Where the stock is expected to deliver less than (-) 10% returns over the next 12 month period

Disclosure: We, Apurva Prasad, MBA & Amit Chandra, 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 his/her relative or HDFC Securities Ltd. does not have any 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 his relative or HDFC Securities Ltd. or its associate does not have any 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. 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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. HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE-INB/F/E 231109431, BSE-INB/F 011109437, AMFI Reg. No. ARN: 13549, PFRDA Reg. No. POP: 04102015, IRDA Corporate Agent License No.: HDF 2806925/HDF C000222657, SEBI Research Analyst Reg. No.: INH000002475, CIN - U67120MH2000PLC152193 Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.

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