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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.

Capital Goods & Engineering

3QFY20 preview: Weak macros to impact order inflows

INDIA | CAPITAL GOODS | Sector Update

7 January 2020

We expect our capital-goods coverage of 14 companies to report a 11% yoy growth in Q3FY20 in terms of recurring earnings, despite flat PBT, benefiting from the lower tax rate that most companies opted for, excluding BDL, BHE, BHEL, VATW. Revenues should grow 11% yoy, but excluding L&T services, revenue growth is likely to be muted (+7% yoy) for the 4

th consecutive quarter due to a sluggish economic environment. EBITDA should grow

10% yoy as margins are likely to remain stable yoy. A major highlight would be a 10% decline in order inflows for our coverage. Key monitorables would be: (1) outlook on ordering and execution for 4QFY20/FY21, (2) pressure on working capital.

Order inflows continue to be weak as L&T orders are likely to decline After weak ordering in the previous four quarters (-7% yoy), order inflows are expected to be weak even in Q3FY20 despite a low base yoy, as government ordering is yet to pick-up after general elections and is now exacerbated with a weak fiscal. We expect new orders for our coverage (ex-L&T services) to decline 16% yoy. This is because of a significant decline in new orders for L&T (ex-services -43% yoy) even on a low base, along with GETD (-20%), KPP standalone (-34%), and VATW (-59%). Order inflows are expected to be strong for KEC (+47%) led by railways and metro orders, BHE (+39%), and TMX (20%) on a large FGD order and ENGR (+65%, on a weak base).

Pace of execution will be slow for the fourth straight quarter The consolidated orderbook for companies is likely to grow by 2% yoy with a book-to-bill of 2.6x TTM revenues. Revenue is expected to grow at 11% yoy as most companies should report a healthy double-digit growth. L&T is likely to report 12% growth in revenues aided by strong services revenue on consolidation of MindTree. However, execution of core E&C segments (ex-E&A) will continue to be slow, as revenue (ex-L&T services) would only grow by 5% yoy. ENGR should report highest revenue growth (+30%) on strong turnkey segment sales. CSL revenue (+20%) would be driven by IAC execution. BHE’s revenue should grow 16%. Revenues are expected to decline for GETD, Cummins, and TMX.

Margin to remain stable with a slight contraction in gross margins due to sales mix We expect a contraction in the sector’s gross margins - with seven companies likely to report a contraction due to sales mix. With decline in steel prices (lowest in 15 quarters) and marginal rise in copper prices, rise in material costs are now behind us. EBITDA margin should be flat at 11.4% for our coverage group - resulting in a 10% yoy growth in EBITDA (in-line with revenue growth). Companies that are likely to see significant margin expansion include BDL, BHEL, TMX and VATW (operating leverage, low base, and sales mix). The sharpest decline in margins would be in BHE, CSL, Cummins, ENGR and GETD due to sales mix and weak execution. L&T’s margin will remain flat (11%) despite contraction in core E&C and services margins due to a shift in sales mix because of MindTree’s consolidation.

Recurring earnings growth of 11% despite muted PBT led by cut in tax rates We expect recurring earnings to grow 11% yoy despite muted PBT because of lower taxes (27.5% vs. 33.3%). PBT will be muted due to higher depreciation and interest costs.

Working capital intensity to remain high We believe companies skewed towards government orders should see increase in working capital intensity, which would be impacted by lower advances and higher receivables.

What would we look for in management commentaries? Impact of: (1) outlook on 4QFY20/FY21 ordering, execution and margins, and (2) working capital intensity in view of delayed payments by the government and continued tight liquidity.

Picks for the result season Positive: KEC. Negative: Cummins, GETD, L&T.

__Growth % YoY – Q2FY20E__

Inflows Revenue EBITDA Rec.PAT

ABB* 8% 10% -2% 12%

BDL 330% 15% 19% 30%

BEL 39% 16% -2% -4%

BHEL 12% 8% 23% -7%

CSL nm 20% 3% 15%

Cummins nm -6% -25% -11%

EIL 65% 30% 7% 22%

GE T&D -20% -10% -36% -41%

KEC 47% 16% 15% 42%

KPP (SA) -34% 15% 16% 24%

JMC (SA) 51% 15% 23% 16%

L&T -28% 12% 13% 12%

Siemens 8% 11% 4% 18%

Thermax 20% -5% 17% 36%

Va Tech -59% 3% 16% 43%

Coverage -10% 11% 10% 11%

*ABBs PAT include profit from discontinued operations

Jonas Bhutta, Research Analyst (+ 9122 6246 4119) [email protected] Vikram Rawat, Research Associate (+ 9122 6246 4120) [email protected] Sandesh Shetty, Research Associate (+ 9122 6246 4139) [email protected]

mailto:[email protected]



Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

CAPITAL GOODS AND ENGINEERING SECTOR UPDATE

Capital Goods – Q3FY20 Result preview

(Rs mn) Dec-19E Sep-19 qoq (%) Dec-18 yoy (%) Key expectations / assumptions

Capital goods

Order inflows 6,02,152 7,41,492 -19% 6,66,143 -10% Expect a weak new orders due to slowed government orderings Revenues likely to grow 11% yoy driven by double-digit growth in most

companies; Cummins, GETD and TMX revenues should decline EBITDA growth of 10% yoy led by improved margins for BDL, BHEL, TMX,

VATW along with execution-led growth in KEC, KPP and L&T (due to services).

Excluding L&T services, our coverage EBITDA should grow by 4% Recurring PAT to grow 11% yoy supported by lower tax rates

Order book 56,11,768 56,66,344 -1% 54,84,058 2%

Revenues 6,81,335 6,26,147 9% 6,13,761 11%

EBITDA 77,875 67,412 16% 71,039 10%

EBITDA Margin (%) 11.4% 10.8% 66bps 11.6% -14bps

PBT 66,443 57,728 15% 65,870 1%

PAT 46,039 45,049 2% 41,658 11%

ABB India

Order inflows 20,551 16,060 28% 19,000 8% Expect slow growth in new orders. Revenues to grow 10% yoy supported by healthy growth in robotics, motion

and electrification products segments EBITDA margin to contract by 117bps yoy on a high base last year PAT growth would be supported by lower effective tax rate

Order book 42,737 43,720 -2% 42,270 1%

Revenues 21,534 17,456 23% 19,663 10%

EBITDA 2,108 1,234 71% 2,154 -2%


PBT 2,005 1,127 78% 2,023 -1%

PAT (ex-PG) 1,440 1,054 37% 1,286 12%

EPS (Rs) 6.8 7.6 -11% 9.3 -27%

Bharat Dynamics

Order inflows 10,000 1,000 900% 2,324 330% Expect strong growth in order inflows on a low base. Revenue growth would be led by deferred sales of Akash missiles of earlier

quarters. Improved gross margins and operating leverage benefits to drive EBTIDA PAT growth would be aided by lower tax rate on a high base last year (35%

vs. 42.5%)

Order book 71,431 73,368 -3% 74,420 -4%

Revenues 11,937 6,595 81% 10,380 15%

EBITDA 3,725 1,577 136% 3,122 19%

EBITDA Margin (%) 31.2% 23.9% 729bps 30.1% 113bps

PBT 3,763 1,611 134% 3,272 15%

PAT 2,446 1,065 130% 1,883 30%

EPS (Rs) 13.3 5.8 130% 10.3 30%

Bharat Electronics Order inflows 30,000 70,880 -58% 21,640 39% Order inflows likely to be strong at 40% yoy driven by base orders

Revenue should grow 16% yoy with strong growth in non-EVM sales on a low base

EBITDA margins likely to shrink on a high base but remain healthy Consequently, both EBITDA and PAT should decline by 2%/ 4% yoy

Order book 5,61,232 5,61,780 0% 4,84,020 16%

Revenues 31,048 27,427 13% 26,665 16%

EBITDA 7,010 5,447 29% 7,181 -2%


PBT 6,323 4,729 34% 6,560 -4%

PAT 4,521 3,395 33% 4,716 -4%

EPS (Rs) 1.8 1.4 33% 1.9 -4%

BHEL

Order inflows 86,301 74,040 17% 77,010 12% Expect healthy growth in new orders aided by large order from THDC Revenue to grow 6% yoy due to muted power segment revenue because of

continued execution challenges; industry revenue should grow 20% yoy EBITDA margins to expand 80bps on lower provisions for receivables

resulting in strong growth in EBITDA However, PAT is expected to decline due to increased interest costs

Order book 10,95,211 10,86,030 1% 11,67,430 -6%

Revenues 79,371 62,257 27% 73,364 8%

EBITDA 5,251 2,249 133% 4,257 23%


PBT 3,934 1,225 221% 3,951 0%

PAT 2,557 913 180% 2,760 -7%

EPS (Rs) 0.7 0.3 180% 0.8 -2%

Cochin Shipyard

Revenues 8,608 9,712 -11% 7,164 20% Revenue should grow 20% yoy led by strong shipbuilding revenue along with healthy growth in ship repair sales

Margins to contract 310bps due to unfavourable sales mix in shipbuilding and high base in ship-repair margins, resulting in muted growth in EBTIDA.

PAT growth would be driven by lower tax rate.

EBITDA 1,636 2,057 -20% 1,585 3%

EBITDA Margin (%) 19.0% 21.2% -217bps 22.1% -312bps

PBT 2,045 2,626 -22% 1,969 4%

PAT 1,493 2,076 -28% 1,297 15%

EPS (Rs) 11.3 15.8 -28% 9.9 15%

Cummins

Revenues 14,187 13,084 8% 15,038 -6% Expect a 6% decline in revenue due to weak export sales (-22% yoy) and muted growth in domestic sales

Margins to shrink 305bps yoy due to negative operating leverage and unfavourable sales mix

EBITDA 1,704 1,525 12% 2,267 -25%


PBT 2,211 2,102 5% 2,702 -18%

PAT 1,658 1,833 -10% 1,871 -11%

EPS (Rs) 6.0 6.6 -10% 6.7 -11%

Source: PhillipCapital India Research




Engineers India

Order inflows 1,500 1,667 -10% 908 65% Revenue growth would be driven by strong execution in the turnkey segment; consultancy segment to have a moderate revenue growth

EBITDA margins to contract 315bps due to change in sales mix Recurring PAT growth would be driven by lower effective tax rate

Order book 1,01,564 1,07,590 -6% 1,07,870 -6%

Revenues 7,526 7,237 4% 5,770 30%

EBITDA 1,060 1,070 -1% 995 7%

EBITDA Margin (%) 14.1% 14.8% -70bps 17.2% -316bps

PBT 1,596 1,663 -4% 1,458 9%

PAT 1,165 1,499 -22% 954 22%

EPS (Rs) 1.8 2.4 -22% 1.5 22%

GE T&D

Order inflows 11,531 6,902 67% 14,414 -20% Expect 20% yoy decline in order inflows due to high base yoy Execution likely to be weak with decline in revenues due to depleting order

book Margins to shrink 275bps impacted by negative operating leverage and

weak gross margins

Order book 59,012 57,991 2% 64,000 -8%

Revenues 10,510 8,211 28% 11,678 -10%

EBITDA 726 39 1780% 1,126 -36%


PBT 421 (237) nm 880 -52%

PAT 315 (177) nm 531 -41%

EPS (Rs) 1.2 (0.7) nm 2.1 -41%

KEC

Order inflows 66,060 8,450 682% 45,070 47% Robust order inflows led by orders from railways and metro rail projects accounting 60% of new orders

Revenue growth would be supported by strong execution in SAE along with healthy growth in standalone T&D and railways

EBITDA margins likely to be flat yoy Recurring PAT growth to be strong on lower effective tax rate

Order book 2,15,485 1,80,850 19% 1,84,870 17%

Revenues 30,625 28,088 9% 26,466 16%

EBITDA 3,243 2,938 10% 2,814 15%


PBT 2,149 1,805 19% 1,684 28%

PAT 1,574 1,657 -5% 1,109 42%

EPS (Rs) 6.1 6.4 -5% 4.3 42%

KPP (standalone)

Order inflows 9,210 22,380 -59% 13,920 -34% Expect order inflows to decline due to weak T&D orders Revenue likely to grow 15% yoy while EBITDA margins remain flat at 10.7% Recurring PAT growth will be aided by lower effective tax rate

Order book 1,35,026 1,45,650 -7% 1,41,670 -5%

Revenues 19,834 19,670 1% 17,247 15%

EBITDA 2,125 2,070 3% 1,839 16%


PBT 1,569 1,610 -3% 1,412 11%

PAT 1,146 1,270 -10% 920 24%

EPS (Rs) 7.4 8.2 -10% 6.0 23%

JMC (standalone)

Order inflows 16,740 5,600 199% 11,100 51% JMC (subsidiary of KPP) to report a strong growth in its new orders Revenue is expected to grow by 15% led by strong order book 2.6x b-t-b. EBITDA will grow 23% yoy with 70bps expansion in margins However, higher depreciation and interest cost to lower PAT growth to 16%

vs. EBTIDA growth of 23%

Order book 1,03,490 97,020 7% 99,300 4%

Revenues 10,270 9,417 9% 8,930 15%

EBITDA 1,123 1,015 11% 912 23%


PBT 586 519 13% 506 16%

PAT 428 391 9% 368 16%

EPS (Rs) 2.5 2.3 9% 2.2 16%

L&T

Order inflows 2,93,494 4,82,920 -39% 4,06,281 -28% Expect 28% decline in order inflows with ex-services declining by 46% - as L&T has announced only Rs 53bn of orders in 3Q (assuming average range of new orders)

Revenues to grow 12% yoy led by IT services on MindTree consolidation and development projects; while core E&C revenue is expected to grow at 5%

EBITDA margins to remain flat yoy on account of favourable sales mix Higher depreciation and interest costs would result in flat PBT PAT growth would be supported by the lower tax rate

Order book 29,41,365 30,32,220 -3% 28,40,490 4%

Revenues 3,84,349 3,53,285 9% 3,42,340 12%

EBITDA 42,474 40,219 6% 37,514 13%

EBITDA Margin (%) 11.1% 11.4% -33bps 11.0% 9bps

PBT 33,981 33,028 3% 34,012 0%

PAT 22,947 25,273 -9% 20,416 12%

EPS (Rs) 8.2 9.0 -9% 7.3 12%

Siemens

Order inflows 36,623 31,890 15% 33,910 8% Order inflows are expected to grow 8% yoy Expect a moderate growth of 11% in revenues EBITDA margins to shrink 77bps yoy on lower gross margins Recurring earnings growth would be aided by higher other income and

lower effective tax rate.

Order book 1,24,375 1,18,790 5% 1,29,359 -4%

Revenues 31,038 41,288 -25% 28,071 11%

EBITDA 3,810 4,056 -6% 3,661 4%


PBT 4,233 4,353 -3% 4,004 6%

PAT 3,153 3,574 -12% 2,679 18%

EPS (Rs) 8.9 10.0 -12% 7.5 18%




Thermax

Order inflows 17,792 17,230 3% 14,800 20% Expect 20% growth in new orders driven by large FGD order in the environment segment

Revenue should decline by 5% yoy due to weak execution in the energy segment impacted by depleting order book

However, EBITDA margins to expand 170bps yoy on improved energy margins and sales mix

Recurring earnings to grow 36% led by lower effective tax rate

Order book 57,233 53,340 7% 64,750 -12%

Revenues 13,680 16,059 -15% 14,366 -5%

EBITDA 1,255 1,303 -4% 1,073 17%


PBT 1,276 1,204 6% 1,121 14%

PAT 932 957 -3% 684 36%

EPS (Rs) 8.3 8.5 -3% 6.1 36%

VA Tech Wabag

Order inflows 2,350 2,473 -5% 5,766 -59% Order inflows are expected to be weak Revenue growth likely to be muted due to weak overseas execution Improved gross margins to support 100bps expansion in EBITDA margins and

to result in 16% growth in EBITDA. PAT growth would be aided by lower effective tax rate.

Order book 1,03,606 1,07,995 -4% 83,609 24%

Revenues 6,818 6,361 7% 6,619 3%

EBITDA 624 615 2% 539 16%

EBITDA Margin (%) 9.2% 9.7% -50bps 8.1% 101bps

PBT 348 363 -4% 315 10%

PAT 264 271 -3% 184 43%

EPS (Rs) 4.8 5.0 -3% 3.4 43%



Trend of actual results vs. our quarterly estimates

Growth trend of our coverage


Average steel prices in 3Q were down 25% yoy /9% qoq....

...while average copper prices were up 2% yoy /1% qoq

Source: Steelmint, Bloomberg, PhillipCapital India Research

Interest rates are 60-65bps lower yoy

Rupee depreciated 2% yoy and 1% qoq to Rs 71.4/USD

Source: SBI, Bloomberg, PhillipCapital India Research

4%

14

%

-7%

10

%

-4%

7%

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-6%

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0%

5%

-7%

-20

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2%

14

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-18

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12

%

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-20%

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-10%

-5%

0%

5%

10%

15%

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Sep-18 Dec-18 Mar-19 Jun-19 Sep-19

Actual vs PC estimates

Order inflows Revenues EBITDA PAT

-14

%

15

%

28

%

33

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-12

%

7%

7%

11

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2%

5%

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23

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11

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10

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11

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-25%

-15%

-5%

5%

15%

25%

35%

45%

Inflows Sales EBITDA Rec PAT

Dec-18 Mar-19 Jun-19 Sep-19 Dec-19E

30,000

32,000

34,000

36,000

38,000

40,000

42,000

44,000

46,000

48,000

50,000

Ap

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Oct

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Dec

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Dec

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HRC plate prices (Rs / tn)

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

Ap

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6

Jul-

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8

Jul-

18

Oct

-18

Jan

-19

Ap

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9

Jul-

19

Oct

-19

Jan

-20

LME Copper (US$/tn)

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

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-15

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Jan

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Jul-

16

Jan

-17

Jul-

17

Jan

-18

Jul-

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Jan

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Jul-

19

SBI Base rate (%) SBI MCLR 1 yr

60

62

64

66

68

70

72

74

76

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6

Jul-

16

Oct

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Jan

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Ap

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7

Jul-

17

Oct

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Jan

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8

Jul-

18

Oct

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Jan

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Ap

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9

Jul-

19

Oct

-19

Jan

-20

USD INR



Stock price performance Price Return (%)

Company Name 06-Jan-20 1 month 3 month 6 month 12 month

ABB India 1,287 -1% -2% -7% 10%

BEL 97 -6% -8% -11% 6%

BDL 294 -2% 1% -8% 7%

CSL 403 2% 21% 5% 9%

HAL 730 -5% 5% 5% -10%

BHEL 43 -8% -7% -39% -40%

Cummins 571 10% 4% -23% -31%

ENGR 98 -4% -10% -13% -22%

GE T&D 152 3% -13% -35% -50%

JMC 100 3% -9% -26% 14%

KPTL 415 -5% -9% -19% 9%

KEC 303 12% 15% -8% 4%

L&T 1,317 2% -8% -16% -5%

Siemens 1,475 0% -4% 17% 39%

Thermax 1,094 11% -3% 5% -4%

Va Tech 217 31% -17% -31% -18%




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%.

Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

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Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.

Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this

research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

Sr. no. Particulars Yes/No



1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No

4 PCIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the company(ies) covered in the Research report

No

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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