in Tractors and PVsvid.investmentguruindia.com/report/2020/September... · production of the recommendation: Raghunandhan N L [email protected] +91 22 6624 2428 Mumuksh

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India Equity Research | Automobiles

September 2, 2020

Sector Update

Automobiles Refer to important disclosures at the end of this report

Aug’20 volume review: Robust growth in Tractors and PVs

Ashok Leyland (AL) BUY

CMP Target Price

69 89

Atul Auto (ATA) BUY

CMP Target Price

177 258

Bajaj Auto (BJAUT) HOLD

CMP Target Price

2,960 2,978

Eicher Motors (EIM) BUY

CMP Target Price

2,128 2,673

Escorts (ESC) BUY

CMP Target Price

1,117 1,256

Hero Motocorp (HMCL) HOLD

CMP Target Price

2,997 2,798

Mahindra & Mahindra (MM) BUY

CMP Target Price

609 718

Maruti Suzuki (MSIL) BUY

CMP Target Price

6,912 6,910

TVS Motors (TVSL) SELL

CMP Target Price

442 331

This report is solely produced by Emkay Global. The following person(s) are responsible for the production of the recommendation:

Raghunandhan N L [email protected] +91 22 6624 2428

Mumuksh Mandlesha [email protected] +91 22 6612 1334

Robust growth continued in Tractors at over 60%. Growth in PVs turned positive yoy with

double-digit growth (~20%), aided by early festive period and improved dispatches driven

by higher plant utilization levels. Volumes were flat yoy in 2Ws.

Driven by positive rural sentiment and channel filling, Tractor wholesales were robust, with

ESC registering growth of 79%, and MM positing 69% in the domestic market. As per our

checks, states with strong growth were Andhra Pradesh, Karnataka, Madhya Pradesh,

Maharashtra, Gujarat, Tamil Nadu, Rajasthan, Haryana and Punjab, while states with

muted performance were West Bengal and Bihar.

Domestic PV industry volumes have been robust (~20%), helped by positive growth for

OEMs such as MSIL, TTMT, Hyundai, Renault, Kia Motors and MG Motors. Among listed

companies, domestic volumes grew yoy, by 20% for MSIL and 1% for MM.

Domestic 2W industry wholesales were flat yoy, supported by festive demand and higher

production levels. Domestic volumes increased yoy - by 9% for HMCL and 3% for BJAUT,

while there was a marginal decline of 1% for TVSL and 2% for EIM-RE. Despite strong

order bookings (over 60,000 units in Aug’20), EIM-RE witnessed a volume decline due to

the slow ramp-up in utilization levels at its plants.

Domestic CV industry volumes remained in the slow lane due to surplus capacity with fleet

operators. The fall was higher in MHCVs than in LCVs. Domestic CV volumes declined

yoy by 30% each for AL/EIM-VECV, while it slightly improved by 4% for MM.

We expect volumes to improve in the coming quarters on pent-up demand, better

rural sentiment, low interest rates, improvement in finance availability, and a

gradual pick-up in business/economic activity. Our top picks are Eicher Motors,

Mahindra & Mahindra and Ashok Leyland.

Please see our sector model portfolio (Emkay Alpha Portfolio): Automobiles & Auto Ancillaries (Page 3)

Company-wise volume snapshot (Total volumes)

Companies Aug20 Aug19 YoY (%) Jul20 MoM (%) YTD FY21 YTD FY20 YoY (%)

Maruti Suzuki 124,624 106,413 17 108,064 15 309,287 618,271 (50)

M&M Auto 30,426 36,085 (16) 25,678 18 85,755 207,916 (59)

M&M Farm 24,458 14,817 65 25,402 (4) 115,517 121,159 (5)

Ashok Leyland MHCV 2,222 4,585 (52) 1,499 48 4,444 35,936 (88)

Ashok Leyland Total 6,325 9,231 (31) 4,775 32 14,914 59,766 (75)

Eicher Motors CV 2,477 3,538 (30) 2,184 13 6,790 20,917 (68)

Bajaj Auto 356,199 390,026 (9) 255,832 39 1,055,134 2,018,730 (48)

Hero MotoCorp 584,456 543,406 8 514,509 14 1,662,391 2,922,136 (43)

Royal Enfield 50,144 52,904 (5) 40,334 24 147,747 290,678 (49)

TVS Motors 287,398 290,455 (1) 252,744 14 807,075 1,493,065 (46)

Escorts 7,268 4,035 80 5,322 37 30,740 29,946 3

Atul Auto 1,311 3,681 (64) 1,241 6 4,029 17,467 (77)

Source: Company, Emkay Research

http://www.emkayglobal.com/

Automobiles India Equity Research | Sector Update


September 2, 2020 | 2

Story in Charts

Exhibit 1: Robust growth in PVs and Tractors


Exhibit 2: CVs remain in slow lane


Exhibit 3: Double-digit positive growth in PVs


Exhibit 4: 2W volumes were flat yoy


Exhibit 5: Robust growth in Tractors


Exhibit 6: Sequential improvement across players


(100)

(80)

(60)

(40)

(20)

0

20

40

60

80

100

Aug15 Aug16 Aug17 Aug18 Aug19 Aug20

2W PV CV Tractors

Growth yoy (%)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

80

100


AL EIM MM

Growth yoy (%)

(100)

(80)

(60)

(40)

(20)

0

20

40

60


MSIL MM

Growth yoy (%)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

80

100


HMCL BJAUT TVSL EIM

Growth yoy (%)

(100)

(80)

(60)

(40)

(20)

0

20

40

60

80

100


MM ESC

Growth yoy (%)

(80)

(60)

(40)

(20)

-

20

40

60

80

100

AT

A

AL

EIM

-VE

CV

MM

Auto

BJA

UT

EIM

-RE

TV

SL

HM

CL

MS

IL

MM

FE

S

ES

C

Jul-20 Aug-20





Emkay Alpha Portfolio – Automobiles & Auto Ancillaries

EAP sector portfolio

Company Name BSE200 Weight

EAP Weight

OW/UW (%)

OW/UW (bps)

EAP Weight (Normalised)

Auto & Auto Ancillaries 5.56 5.56 0% 0 100.00

Amara Raja Batteries 0.10 0.10 0% 0 1.73

Apollo Tyres 0.07 0.00 -99% -6 0.01

Ashok Leyland 0.16 0.22 37% 6 3.89

Atul Auto 0.00 0.00 NA 0 0.01

Bajaj Auto 0.62 0.61 0% 0 11.05

Bharat Forge 0.20 0.26 29% 6 4.62

Eicher Motors 0.47 0.53 12% 6 9.55

Escorts 0.00 0.00 NA 0 0.00

Exide Industries 0.12 0.12 0% 0 2.18

Hero Motocorp 0.62 0.68 9% 5 12.16

Mahindra & Mahindra 0.93 0.98 6% 5 17.70

Maruti Suzuki India 1.47 1.47 0% 0 26.38

Motherson Sumi 0.22 0.22 0% 0 3.93

Tata Motors 0.41 0.31 -25% -10 5.55

Tata Motors DVR 0.04 0.04 0% 0 0.74

TVS Motor 0.14 0.03 -80% -11 0.52

Cash 0.00 0.00 NA 0 0.00

Source: Emkay Research

* Not under coverage: Equal Weight

High Conviction/Strong Over Weight High Conviction/Strong Under Weight

Sector portfolio NAV

Base Latest

1-Apr-19 29-Nov-19 3-Mar-20 2-Jun-20 31-Jul-20 1-Sep-20

EAP - Auto & Auto Ancillaries 100.0 93.5 80.7 73.0 82.0 91.2

BSE200 Neutral Weighted Portfolio (ETF) 100.0 95.5 81.4 75.6 85.0 93.4

*Performance measurement base date 1st April 2019


NAV chart


Please see our model portfolio (Emkay Alpha Portfolio): Nifty

Please see our model portfolio (Emkay Alpha Portfolio): SMID

“Emkay Alpha Portfolio – SMID and Nifty are a supporting document to the Emkay Alpha

Portfolios Report and is updated on regular intervals”

50

62

74

86

98

110

Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20

NAV

EAP - Auto & Auto Ancillaries BSE200 Neutral Weighted Portfolio (ETF)

Analyst: Raghunandhan Nl

Contact Details

[email protected]

+91 22 6624 2428

Sector

Automobiles and Ancillaries

Analyst bio

Raghu holds an MBA and comes with

total 11 years of research experience. His

team currently covers 14 stocks in the

Indian Automobiles and Ancillaries

space.


https://web3.emkayglobal.com/ResearchAccess/Upload/Nifty_Sep20.pdf

https://web3.emkayglobal.com/ResearchAccess/Upload/SMID_Sep20.pdf

mailto:[email protected]




Exhibit 7: Segment-wise volume snapshot (Domestic volumes)

Company Aug20 Aug19 YoY (%) Jul20 MoM (%) YTD FY21 YTD FY20 YoY (%)

2Ws (Domestic)

Hero MotoCorp 568,674 524,003 8.5 506,946 12.2 1,613,961 2,841,008 (43.2)

Bajaj Auto 178,220 173,024 3.0 152,474 16.9 516,675 954,938 (45.9)

TVS Motor 218,338 219,528 (0.5) 189,647 15.1 593,869 1,139,559 (47.9)

Royal Enfield 47,571 48,752 (2.4) 37,925 25.4 140,435 272,364 (48.4)

PVs (Domestic)

Maruti Suzuki 114,412 95,506 19.8 99,075 15.5 279,325 561,693 (50.3)

Mahindra & Mahindra 13,651 13,507 1.1 11,025 23.8 36,618 89,738 (59.2)

CVs (Domestic)

Ashok Leyland 5,824 8,296 (29.8) 4,282 36.0 13,515 56,401 (76.0)

VECV 2,190 3,144 (30.3) 1,734 26.3 5,408 19,084 (71.7)

Mahindra & Mahindra 15,299 14,684 4.2 13,103 16.8 43,989 82,247 (46.5)

Tractors (Domestic)

Mahindra & Mahindra 23,503 13,871 69.4 24,463 (3.9) 112,543 115,958 (2.9)

Escorts 6,750 3,763 79.4 4,953 36.3 29,393 28,390 3.5


Company-wise highlights

Maruti Suzuki’s volume grew 17% yoy to 124,624 units, above our estimate of 118,000 units.

Production levels have been increasing due to the commencement of second shift in Gujarat

plant, and this should help dispatches further in Sep’20. Domestic PV volume (including sales

to other OEMs) grew 20% to 114,412 units, while Exports fell 15% to 7,920 units. The Mini

segment has done well with 95% growth. The share of the Mini segment increased to 16% YTD

from 13% last year due to strong rural demand and a shift toward personal mobility. UVs

registered 14% growth, but competitive intensity is set to increase for the Brezza model ahead,

with the launch of Kia Sonet. YTD volume has declined 50% yoy to 309,287 units.

Dealer inventory stands at around three weeks, and is expected to increase further in Sep’20.

Q2FY21 volume performance is likely to be positive, led by improving retails and channel

filling by dealers.

Exhibit 8: Maruti Suzuki

Volume (units) Aug20 Aug19 YoY (%) Jul20 MoM (%) YTD FY21 YTD FY20 YoY (%)

Domestic Cars (incl. Toyota sales) 84,267 68,326 23.3 71,397 18.0 202,682 417,878 (51.5)

Domestic UVs 21,030 18,522 13.5 19,177 9.7 53,607 92,684 (42.2)

Domestic Vans 9,115 8,658 5.3 8,501 7.2 23,036 51,131 (54.9)

Domestic PVs 114,412 95,506 19.8 99,075 15.5 279,325 561,693 (50.3)

Domestic LCVs 2,292 1,555 47.4 2,232 2.7 5,713 9,855 (42.0)

Exports 7,920 9,352 (15.3) 6,757 17.2 24,249 46,723 (48.1)

Total 124,624 106,413 17.1 108,064 15.3 309,287 618,271 (50.0)






Mahindra & Mahindra’s volume grew 8% yoy to 54,884 units, above our estimate of 45,900

units. Numbers were better than expected in both Farm and Auto. The Farm segment’s volume

grew strongly by 65% to 24,458 units. In comparison, Auto segment volume fell 16% to 30,426

units. Within this, PVs/LCVs grew 1%/6%, while 3Ws/MHCVs/Exports fell 94%/71%/54%. YTD,

total volumes declined 39% yoy to 201,272 units. Tractor volume growth expected to

continue its positive momentum. In comparison, we expect a gradual improvement in

Auto volumes, with positive growth by FY21-end.

Exhibit 9: Mahindra & Mahindra


Domestic PVs 13,651 13,507 1.1 11,025 23.8 36,618 89,738 (59.2)

Domestic LCVs 15,195 14,330 6.0 13,033 16.6 43,725 79,660 (45.1)

Domestic MHCVs 104 354 (70.6) 70 48.6 264 2,587 (89.8)

Domestic 3Ws 307 5,373 (94.3) 83 269.9 442 23,183 (98.1)

Exports Auto 1,169 2,521 (53.6) 1,467 (20.3) 4,706 12,748 (63.1)

Total Auto 30,426 36,085 (15.7) 25,678 18.5 85,755 207,916 (58.8)

Domestic Tractors 23,503 13,871 69.4 24,463 (3.9) 112,543 115,958 (2.9)

Exports Tractors 955 946 1.0 939 1.7 2,974 5,201 (42.8)

Total Tractors 24,458 14,817 65.1 25,402 (3.7) 115,517 121,159 (4.7)

Total 54,884 50,902 7.8 51,080 7.4 201,272 329,075 (38.8)


Escorts’ tractor volumes grew 80% yoy to 7,268 units, above our estimate of 6,000 units. Higher

growth in Aug’20 was supported by better utilization. Utilization levels had fallen from 90% in

June’20 to below 60% in July’20 due to supply constraints for fuel-injection related components.

It has recovered toward peak levels during Aug’20. Domestic/Export volumes grew 79%/90% to

6,750/518 units. The company has built inventory with domestic dealers, and our channel checks

indicate dealer inventory levels of 2-3 weeks (vs. 1-2 weeks last month). YTD volume growth has

turned positive with 3% growth to 30,740 units. Positive growth trajectory is expected to

continue in Sep’20, supported by strong rural sentiment and inventory build-up with

dealers. Channel checks indicate positive expectations for the festive season.

Exhibit 10: Escorts


Domestic Tractors 6,750 3,763 79.4 4,953 36.3 29,393 28,390 3.5

Exports Tractors 518 272 90.4 369 40.4 1,347 1,556 (13.4)

Total Tractors 7,268 4,035 80.1 5,322 36.6 30,740 29,946 2.7


Ashok Leyland’s volume declined 31% yoy to 6,325 units, broadly in line with our estimate of

6,400 units. Domestic MHCVs fell 52%, LCVs fell 3% and Exports were lower by 46%. YTD

volumes have been lower by 75% to 14,914 units. LCV volumes are expected to improve

ahead, with the launch of the Phoenix model, which expands the addressable market

notably. In MHCVs, weak demand conditions to persist in the near term due to surplus

capacity with transporters, and expect recovery only by FY21-end.

Exhibit 11: Ashok Leyland


Domestic MHCVs 2,222 4,585 (51.5) 1,499 48.2 4,444 35,936 (87.6)

Domestic LCVs 3,602 3,711 (2.9) 2,783 29.4 9,071 20,465 (55.7)

Exports 501 935 (46.4) 493 1.6 1,399 3,365 (58.4)

Total CVs 6,325 9,231 (31.5) 4,775 32.5 14,914 59,766 (75.0)






Eicher Motors – Royal Enfield’s volume declined 5% yoy to 50,144 units, slightly above our

estimate of 48,000 units. Domestic/Export volumes declined 2%/38%. The fall in volumes was

due to a slow ramp-up in production. Aug’20 order bookings were over 60,000 units. The order

bookings were significantly higher than wholesales in Jun-Aug’20, resulting in a waiting period

of 30-40 days. YTD volumes have been lower by 49% to 147,747 units. Led by ramp-up in

production and healthy order book, the volume momentum is expected to notably

improve in Sep-Oct’20.

Eicher Motors – VECV volumes stood at 2,477 units, a decline of 30% yoy, slightly better than

expectation of a 34% fall. Domestic/Export volumes fell 30%/21%. YTD volumes were lower by

68% to 6,790 units. Weak demand conditions should persist in the near term and we expect

recovery by only by FY21-end.

Exhibit 12: Eicher Motors


Domestic 2Ws 47,571 48,752 (2.4) 37,925 25.4 140,435 272,364 (48.4)

Exports 2Ws 2,573 4,152 (38.0) 2,409 6.8 7,312 18,314 (60.1)

Total 2Ws 50,144 52,904 (5.2) 40,334 24.3 147,747 290,678 (49.2)

Domestic CVs 2,190 3,144 (30.3) 1,734 26.3 5,408 19,084 (71.7)

Volvo (Traded) 37 76 (51.3) 49 (24.5) 154 320 (51.9)

Exports CVs 250 318 (21.4) 401 (37.7) 1,228 1,513 (18.8)

Total CVs 2,477 3,538 (30.0) 2,184 13.4 6,790 20,917 (67.5)


Bajaj Auto’s volume declined 9% to 356,199 units, broadly in line with our estimate of 350,000

units. 2Ws fell 1%, while 3Ws fell 46%. Within 2Ws, domestic grew 3%, while exports declined

6%. The company expects dispatches to be higher at ~400,000 units in Sep’20. Overall Q2

volumes are expected at ~1mn units. YTD, volume declined by 48% to 1.1mn units. Led by the

ramp-up in production, volume momentum is expected to increase ahead.

Exhibit 13: Bajaj Auto


Domestic 2Ws 178,220 173,024 3.0 152,474 16.9 516,675 954,938 (45.9)

Exports 2Ws 142,838 152,276 (6.2) 86,082 65.9 442,868 775,199 (42.9)

Total 2Ws 321,058 325,300 (1.3) 238,556 34.6 959,543 1,730,137 (44.5)

Domestic 3Ws 7,659 35,085 (78.2) 6,502 17.8 19,443 155,794 (87.5)

Exports 3Ws 27,482 29,641 (7.3) 10,774 155.1 76,148 132,799 (42.7)

Total 3Ws 35,141 64,726 (45.7) 17,276 103.4 95,591 288,593 (66.9)

Total 356,199 390,026 (8.7) 255,832 39.2 1,055,134 2,018,730 (47.7)


Hero MotoCorp’s volume grew 8% yoy 584,456 units, broadly in line with expectation of 580,000

units. Motorcycles grew 9%, while Scooters declined 11%. Exports declined 19%. Wholesales

were higher than retails, and Dealer inventory has increased to 4-5 weeks. YTD volumes were

lower by 43% to 1.7mn units. Led by the ramp-up in production, inventory re-stocking

should continue in Sep’20, resulting in a continuation of volume momentum.

Exhibit 14: Hero MotoCorp


Domestic 568,674 524,003 8.5 506,946 12.2 1,613,961 2,841,008 (43.2)

Exports 15,782 19,403 (18.7) 7,563 108.7 48,272 81,128 (40.5)

Total 2Ws 584,456 543,406 7.6 514,509 13.6 1,662,391 2,922,136 (43.1)

Scooters 39,798 44,859 (11.3) 35,843 11.0 115,472 205,797 (43.9)

Motorcycles 544,658 498,547 9.2 478,666 13.8 1,546,761 2,716,339 (43.1)






TVS Motor’s volume declined 1% yoy to 287,398 units, slightly above expectation of 280,000

units. 2Ws were flat in comparison to 8% growth for Hero MotoCorp, owing to higher exposure

to Scooters (decline of 20%). In comparison, 3Ws fell 30%, led by a steep fall in exports. Positive

highlight was 2W exports, which grew 5%. YTD volumes were lower by 46% to 0.8mn units.

Considering the increase in production, volume performance should be better in Sep’20,

in comparison with Aug’20.

Exhibit 15: TVS Motors


Domestic 2Ws 218,338 219,528 (0.5) 189,647 15.1 593,869 1,139,559 (47.9)

Export 2Ws 58,888 56,323 4.6 54,141 8.8 182,573 285,641 (36.1)

Total 2Ws 277,226 275,851 0.5 243,788 13.7 776,442 1,425,200 (45.5)

Domestic 3Ws 713 1,225 (41.8) 708 0.7 2,000 5,026 (60.2)

Export 3Ws 9,459 13,379 (29.3) 8,248 14.7 28,633 62,839 (54.4)

Total 3Ws 10,172 14,604 (30.3) 8,956 13.6 30,633 67,865 (54.9)

Total 287,398 290,455 (1.1) 252,744 13.7 807,075 1,493,065 (45.9)


Atul Auto’s volume stood at 1,311 units, a decline of 64% yoy, broadly in line with expectation

of a 62% fall. Near-term demand is expected to remain weak and recovery is expected only

by FY21-end.

Exhibit 16: Atul Auto


Total 3Ws 1,311 3,681 (64.4) 1,241 5.6 4,029 17,467 (76.9)


Exhibit 17: Peer comparison

CMP (Rs)

Target (Rs)

Mcap (Rs.bn)

Reco EPS (Rs) PE (x) ROE (%) ROCE (%)

FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E FY20 FY21E FY22E

Ashok Leyland 69 89 203 Buy 1.3 0.0 3.4 54.5 NM 20.4 4.8 0.1 13.2 6.3 1.8 14.0

Atul Auto 177 258 4 Buy 23.9 7.5 22.9 7.4 23.4 7.7 18.6 5.3 14.9 23.9 7.3 19.5

Bajaj Auto 2,960 2,978 857 Hold 176.2 136.6 192.2 16.8 21.7 15.4 24.5 19.1 24.6 30.7 24.5 31.6

Eicher Motors 2,128 2,673 581 Buy 66.9 52.7 99.4 31.8 40.4 21.4 19.3 13.7 22.4 23.7 17.9 27.0

Escorts Ltd 1,117 1,256 151 Buy 55.4 53.2 72.0 20.2 21.0 15.5 15.2 12.7 13.7 19.4 16.8 17.8

Hero Motocorp 2,997 2,798 599 Hold 159.4 122.6 179.8 18.8 24.4 16.7 23.6 17.1 23.7 28.1 22.0 30.5

Mahindra & Mahindra 609 718 757 Buy 30.0 24.0 38.1 20.3 25.4 16.0 10.3 8.0 11.8 14.2 10.0 14.5

Maruti Suzuki India 6,912 6,910 2088 Buy 187.1 133.4 268.8 36.9 51.8 25.7 11.9 8.1 15.4 15.0 10.5 19.8

Tata Motors 144 120 471 Hold -20.7 -28.0 12.6 -6.9 -5.1 11.4 -12.1 -18.2 8.4 0.8 -2.0 8.1

TVS Motor 442 331 210 Sell 13.0 5.8 13.6 34.0 76.3 32.5 17.7 7.4 16.2 16.5 8.4 16.8

Amara Raja Batteries 734 803 125 Buy 38.7 34.4 48.9 19.0 21.3 15.0 18.9 15.3 19.4 23.7 20.0 25.3

Apollo Tyres 123 111 70 Hold 8.3 4.1 10.9 14.7 30.0 11.2 4.8 2.5 6.1 5.0 3.8 6.5

Exide Industries 166 205 141 Buy 9.9 8.2 10.8 16.7 20.3 15.3 13.7 10.7 13.1 17.0 14.0 17.1

Motherson Sumi 115 120 363 Buy 3.7 2.5 5.4 31.0 46.4 21.5 10.7 6.9 14.2 10.3 4.5 14.3

Bharat Forge 498 537 232 Buy 12.2 8.0 18.1 40.8 62.1 27.5 10.6 6.8 14.4 9.7 7.1 13.7






Emkay Rating Distribution

Ratings Expected Return within the next 12-18 months.

BUY Over 15%

HOLD Between -5% to 15%

SELL Below -5%

Completed Date: 02 Sep 2020 20:44:28 (SGT) Dissemination Date: 02 Sep 2020 20:45:28 (SGT)

Sources for all charts and tables are Emkay Research unless otherwise specified.

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However, SEBI and Stock Exchanges have conducted the routine inspection and based on their observations have issued advice letters or levied minor penalty on EGFSL for certain operational deviations in ordinary/routine course of business. EGFSL has not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has its certificate of registration been cancelled by SEBI at any point of time. EGFSL offers research services to clients as well as prospects. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Other disclosures by Emkay Global Financial Services Limited (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject company(s) covered in this report EGFSL and/or its affiliates may seek investment banking or other business from the company or companies that are the subject of this material. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that may be inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest including but not limited to those stated herein. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject EGFSL or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, this document does not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any transaction to any U.S. person. Unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this document may be used by private customers in United Kingdom. All material presented in this report, unless specifically indicated otherwise, is under copyright to Emkay. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of EGFSL . All trademarks, service marks and logos used in this report are trademarks or registered trademarks of EGFSL or its Group Companies. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Indian Securities Market. In so far as this report includes current or historic information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

This publication has not been reviewed or authorized by any regulatory authority. There is no planned schedule or frequency for updating research publication relating to any issuer.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets Disclaimer for U.S. persons only: This research report is a product of Emkay Global Financial Services Limited (Emkay), which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of Financial Institutions Regulatory Authority (FINRA) or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. This report is intended for distribution to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). 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 the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors.






ANALYST CERTIFICATION BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL) The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible of the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer, director or employee of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant). The research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. EGFSL has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the EGFSL and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of EGFSL compensation to any specific investment banking function of the EGFSL. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interest that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at the arm’s length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL):

Disclosures by Emkay Global Financial Services Limited (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject company(s) covered in this report-: 1. EGFSL, its subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of September 2,

2020 2. EGFSL, and/or Research Analyst does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report Disclosure of previous investment recommendation produced: 3. EGFSL may have published other investment recommendations in respect of the same securities / instruments recommended in this research

report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by EGFSL in the preceding 12 months.

4. EGFSL , its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have any material conflict of interest in the securities recommended in this report as of September 2, 2020.

5. EGFSL, its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the September 2, 2020

6. EGFSL, its subsidiaries and/or other affiliates and Research Analyst have not received any compensation in whatever form including compensation for investment banking or merchant banking or brokerage services or for products or services other than investment banking or merchant banking or brokerage services from securities recommended in this report (subject company) in the past 12 months.

7. EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst have not received any compensation or other benefits from securities recommended in this report (subject company) or third party in connection with the research report.

8. Securities recommended in this report (Subject Company) has not been client of EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst during twelve months preceding the September 2, 2020




September 2, 2020| 10

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In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.

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