INSTITUTIONAL EQUITY RESEARCH Consumer & Retail sectorbackoffice.phillipcapital.in/Backoffice/Researchfiles/Researchfiles... · biometrics of respective civil servants being linked

INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Consumer & Retail sector

Commodity tailwinds to support valuations INDIA | Consumer & Retail| Q3FY19 Results Preview Consumer sector’s revenue growth to accelerate qoq to 14.7% vs. 11.5% on: (1) entire

festive season falling in 3QFY19 vs. split between 2Q (Dasshera) and Diwali (3Q) in the base

quarter, (2) judicious price hikes in key segments, (3) CSD channel (5-7% of industry sales) on

recovery path, and (4) increased distribution reach. However, we believe revenue growth

could have been much better, but for the following challenges: (1) Rural demand not seeing

any meaningful uptick from 2QFY19 levels due to agri distress and deficit rainfall, (2) late

start to the winter season, and (3) currency-related depreciation continuing to hurt

international business for some companies.

Retail and consumer discretionary companies (Jubilant/Titan/Asian Paints) should see

strong growth vs. staples companies, as the larger theme of formalization remains intact.

Sector to see sales/EBITDA/PAT growth (aggregate) of 14.7%/15.2%/14.6% in 3Q.

EBITDA margin expansion trajectory (expect 10bps yoy) to moderate significantly because

of: (1) inflationary pressure in key commodities, particularly crude derivatives (although

pressure has significantly eased off from early December), (2) late start to winter season

denting sales of high-margin personal care products, and (3) anniversary of GST-related

savings.

Our top picks / avoid recommendations are based on net income for 3QFY19 and valuations:

Top picks: Titan (44%), Jubilant Foodworks (38%), Nestle (28%), Asian Paints (24%), Marico (20%)

Avoid: Bajaj Corp (6%), GCPL (0%), Emami (-6%)

Key themes

Winter season has started late: Winter season has picked up late this year and this is likely to

setback sales of companies with higher contribution from personal care. Emami (Boroplus, Zandu

Chyawanprash), HUL (Vaseline, Ponds etc), and Dabur (Chyawanprash) are likely to see maximum

impact due to this.

Rural growth, yet to see meaningful up-tick: Rural demand (although outpacing urban demand)

is yet to see any meaningful up-tick from 2QFY19 levels due to lower crop prices and the

government’s inability in procuring most crops (ex. wheat and rice) at MSPs. We believe there is

a high probability that the government may announce farm-loan waiver/fiscal stimulus package

ahead of General Elections in May 2019, which in turn may aid medium-term rural demand.

CSD channel is recovering after seeing disruption in 2Q due to inventory rationalization and with

biometrics of respective civil servants being linked with their monthly off-takes. Managements of

most FMCG companies had noted that impact of CSD has eased off in 3Q.

International business; mixed signals: Marico and GCPL are likely to see decent improvement as

most macro-related challenges are over, along with scaling up of their product portfolios. Dabur’s

international business is likely to remain weak due to currency depreciation and muted consumer

sentiment hurting category-related growth in the MENA region.

Retail and discretionary companies are on a strong wicket: We expect jewellers (Titan,

Thangamayil) and paint companies to report solid numbers on market share gains and a healthy

festive season. Jubilant Foodworks should see 16% SSS growth because of momentum in railway

deliveries and online food aggregators expanding their operations.

RM costs have cooled off: Prices of most crude-related derivatives (LLP, HDPE, LAB, PP) had

cooled off significantly towards the end of 3QFY19, which should aid margins of HPC companies

from 4Q. However, food companies may face margin pressure in coming quarters because of

inflationary pressure in milk, SMP, wheat, and barley. Nevertheless, FMCG companies always

have the option of hiking prices.

7 January 2019

Vishal Gutka (+ 9122 6246 4118) [email protected] Preeyam Tolia (+ 9122 6246 4129) [email protected]

mailto:[email protected]

mailto:[email protected]


FMCG Q3FY19 RESULTS PREVIEW

Quarterly snapshot

____________Q3FY19E____________ ____________Q3FY18____________ _________yoy change (%)_________

(Rs mn) Revenue EBITDA PAT Revenue EBITDA PAT Revenue EBITDA PAT

Large caps

ITC 1,07,202 43,168 30,916 96,726 38,891 28,202 10.8% 11.0% 9.6%

HUL 94,023 19,757 13,916 83,230 16,800 11,980 13.0% 17.6% 16.2%

Asian Paints 51,446 10,782 6,870 42,605 8,912 5,546 20.8% 21.0% 23.9%

Total 2,52,671 73,707 51,702 2,22,561 64,602 45,728 13.5% 14.1% 13.1%

Mid-caps

Colgate 11,535 3,120 1,852 10,270 2,838 1,707 12.3% 9.9% 8.5%

Marico 19,817 3,743 2,651 16,243 3,021 2,205 22.0% 23.9% 20.2%

Emami 8,011 2,611 1,386 7,552 2,647 1,472 6.1% -1.3% -5.8%

Dabur 22,010 4,516 3,740 19,664 4,035 3,330 11.9% 11.9% 12.3%

GCPL 28,708 6,168 4,326 26,037 5,987 4,322 10.3% 3.0% 0.1%

Total 90,081 20,158 13,956 79,766 18,527 13,036 12.9% 8.8% 7.1%

Food’s companies

Nestle 29,292 6,766 3,976 25,896 5,639 3,118 13.1% 20.0% 27.5%

GSK consumer 11,437 2,540 2,045 10,382 2,075 1,637 10.2% 22.4% 25.0%

Britannia 28,459 4,730 3,116 25,583 3,984 2,636 11.2% 18.7% 18.2%

Total 69,187 14,035 9,137 61,861 11,698 7,391 11.8% 20.0% 23.6%

Retail

Titan 54,045 6,392 4,438 42,248 4,447 3,082 27.9% 43.7% 44.0%

Jubilant Foods 9,425 1,673 912 7,952 1,369 660 18.5% 22.2% 38.1%

Thangamayil 3,844 164 58 3,151 129 42 22.0% 27.3% 38.6%

Total 67,313 8,230 5,407 53,350 5,945 3,784 26.2% 38.4% 42.9%

Small caps

Bajaj Corp 2,165 701 583 1,973 679 552 9.7% 3.3% 5.6%

Agro Tech Foods 2,355 199 101 2,144 179 90 9.8% 11.6% 12.3%

Total 4,519 900 684 4,117 857 642 9.8% 5.0% 6.5%

Total Consumer & Retail 4,83,772 1,17,030 80,885 4,21,656 1,01,630 70,581 14.7% 15.2% 14.6%

Source: PhillipCapital India Research



Commodity snapshot

Commodities Base Unit INR Unit Q3FY19 Q3FY18 yoy (%) Q2FY19 qoq (%)

HPC

LAB INR INR 118 106 11.4% 112 4.7%

Soda Ash INR/50kg INR/50kg 1,388 1,177 17.9% 1,307 6.2%

PFAD USD/mt INR/mt 27,352 40,425 -32.3% 34,010 -19.6%

Copra INR/qt INR/qt 9,429 11,757 -19.8% 10,830 -12.9%

Mentha oil INR/kg INR/kg 1,869 1,645 13.6% 1,800 3.8%

Corn (Sorbitol) USD/bu INR/bu 26,651 22,407 18.9% 24,772 7.6%

Palm oil (India) INR INR 539 555 -3.0% 606 -11.2%

Food & Beverages

Barley INR/qt INR/qt 1,867 1,503 24.2% 1,610 16.0%

Maize USD/bu INR/bu 26,651 22,407 18.9% 24,772 7.6%

Cocoa USD/mt INR/mt 1,56,049 1,34,807 15.8% 1,59,976 -2.5%

Soyabean Oil INR/10 kg INR/10 kg 740 683 8.3% 748 -1.1%

Coffee Robusta USD/mt INR/mt 1,15,714 1,20,148 -3.7% 1,15,449 0.2%

Coffee Arabica USD/lb INR/lb 7,873 8,068 -2.4% 7,264 8.4%

Skimmed Milk Powder EUR/mt INR/mt 1,37,655 1,12,556 22.3% 1,29,004 6.7%

Wheat INR/qt INR/qt 2,055 1,815 13.2% 1,966 4.5%

Milk Powder INR/ltr INR/ltr 32 33 -3.0% 33 -0.7%

Gur & Sugar INR/qt INR/qt 3,460 3,953 -12.5% 3,560 -2.8%

Sunflower INR/10kg INR/10kg 775 683 13.6% 792 -2.2%

Safflower INR/10kg INR/10kg 1,310 1,326 -1.1% 1,271 3.1%

Rice Bran INR/10kg INR/10kg 656 581 12.9% 690 -5.0%

Packing materials

HDPE INR INR 101 86 18.1% 104 -3.0%

PP INR INR 99 89 10.8% 102 -2.4%

LLP INR INR 55 45 21.5% 48 14.4%

Other data

TiO2 INR/kg INR/kg 273 239 14.3% 264 3.7%

Vinyl Acetate Monomor USD/mt INR/mt 83,235 70,461 18.1% 87,922 -5.3%

Brent Crude USD/bbl INR/bbl 5,75,559 4,66,032 23.5% 5,98,351 -3.8%

WTI Crude USD/bbl INR/bbl 4,907 3,987 23.1% 5,322 -7.8%

Gold spot (MCX) INR/10g INR/10g 4,237 3,590 18.0% 4,880 -13.2%

Gold USD/ounce INR/ounce 31,258 29,238 6.9% 30,052 4.0%

Diamond USD/carat INR/carat 88,568 82,665 7.1% 85,024 4.2%

Currency

USD INR INR – US Dollar

72.0 64.7 11.3% 70.1 2.7%

EUR INR INR - Euro

82.2 76.2 7.9% 81.5 0.9%

CNY INR INR - China Yuan

10.4 9.8 6.5% 10.3 1.1%

INR BDT INR-Bangladesh

1.2 1.3 -8.4% 1.2 -2.9%

INR BRL INR-Brazilian

0.1 0.1 5.3% 0.1 -6.0%

INR EGP INR-Egyptian Pound

0.2 0.3 -9.2% 0.3 -2.7%

INR IDR INR-Indonesia

205.3 209.2 -1.8% 208.3 -1.4%

INR KES INR-Kenya shilling

1.4 1.6 -11.4% 1.4 -1.6%

INR NGN INR-Nigerian Naira

5.0 5.6 -9.3% 5.2 -2.3%

INR SAR INR-Saudi Riyal

0.2 0.2 -5.5% 0.2 -1.0%

INR AED INR-UAE Dirham

0.1 0.1 -10.2% 0.1 -2.8%

INR MYR INR-Malaysia Ringgit

17.3 15.6 10.9% 17.1 0.8%

INR VND INR-Vietnam Dong

323.6 351.0 -7.8% 331.5 -2.4%

Source: PhillipCapital India Research



Commodity snapshot

Mcap

(Rs bn) Rating CMP

Target

Multiple

(X)

______P/E______ _____EV/Ebitda______ ___% Cagr ( FY18-FY21___

ROE

FY20 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 Rev Ebitda PAT

Large Caps

ITC 3,459 BUY 281 30 32 29 26 23 21 19 17 16 10 11 11 23

HUL 3,884 BUY 1,782 50 73 62 54 41 53 44 39 28 18 24 25 76

Asian Paints 1,337 BUY 1,386 45 68 61 50 42 42 37 31 27 15 16 17 26

Food companies

Nestle 1,041 BUY 10,851 50 85 63 54 46 47 36 32 28 13 20 23 45

GSK consumer 315 BUY 7,450 35 45 35 32 28 31 25 22 20 12 17 17 22

Britannia 755 NEU 3,123 40 37 33 29 25 50 42 36 31 12 17 14 26

Indian companies

Colgate ** 356 BUY 1,310 35 51 48 39 36 32 27 24 21 11 14 13 60

Marico 500 BUY 379 40 60 50 42 36 43 37 30 26 15 18 19 36

Emami 189 NEU 419 30 38 36 31 27 27 25 22 19 12 11 12 19

Dabur 746 BUY 419 40 55 50 44 38 46 41 36 31 13 14 13 26

GCPL 821 BUY 803 40 50 54 47 41 40 38 33 30 11 11 12 24

Retail & Discretionary

Titan 845 BUY 928 45 66 57 45 37 50 41 32 27 19 23 22 24

Jubilant Foods 162 BUY 1,212 25* 77 50 38 31 35 26 20 17 16 27 36 25

Thangamayil 5 BUY 377 20 23 17 12 9 11 9 7 5 18 27 37 19

Small - Caps

Bajaj Corp 57 NEU 383 22 27 26 28 25 21 21 19 17 9 7 2 40

Agro Tech Foods 15 SELL 612 30 47 43 37 33 22 21 18 16 9 11 13 10

Source: Company, PhillipCapital India Research; * We value Jubilant Foodworks on EV / EBITDA basis ** Colgate is a MNC



Earnings estimates

(Rs mn) Dec-18E Sep-18 qoq (%) Sec-17 yoy (%) Comments

ITC

Volume growth (est.) 3.0 7.0 (4.0) Cigarette volume growth to bounce back (6-7%) due to favourable

base (4% decline).

Cigarette EBIT growth to inch-up to double-digits on operating

efficiencies, price hikes (1%) taken in selected brands. Despite not

taking meaningful price hikes in cigarettes, EBITDA margins to expand

marginally due to positive contribution from FMCG and significant

improvement in cyclical and capex -intensive (hotels, paper)

businesses on an industry upturn.

Net income growth to be lower than EBITDA growth due to higher

taxation.

Revenues 1,07,202 1,08,912 -1.6% 96,726 10.8%

Gross Profit 66,251 66,116 0.2% 60,761 9.0%

Gross margin (%) 61.8 60.7 109bps 62.8 -102bps

EBITDA 43,168 42,060 2.6% 38,891 11.0%

EBITDA margin (%) 40.3 38.6 165bps 40.2 6bps

PAT 30,916 29,547 4.6% 28,202 9.6%

EPS (Rs) 2.5 2.4 4.6% 2.31 9.6%

Hindustan Unilever

Volume growth (est.) 8.0 10.0 11.0 Volume growth to taper to high single digits after seeing four

consecutive quarters of double-digit growth, as GST-related benefit

completes one year.

Gross margin to remain flat yoy due to lower contribution from

personal care because of a late start to winter and RM inflation for a

significant part of the quarter.

EBITDA margin expansion to continue yoy on healthy volume growth

and premiumization trends panning out.

Net income to be lower than EBITDA growth due to higher taxation.

Revenues 94,023 91,380 2.9% 83,230 13.0%

Gross Profit 49,926 47,030 6.2% 44,180 13.0%

Gross margin (%) 53.1 51.5 163bps 53.1 2bps

EBITDA 19,757 20,190 -2.1% 16,800 17.6%

EBITDA margin (%) 21.0 22.1 -108bps 20.2 83bps

PAT 13,916 15,220 -8.6% 11,980 16.2%

EPS (Rs) 6.4 7.0 -8.6% 5.5 16.2%

Dabur India Ltd

Volume growth 10.0 8.1 13.0 Volume growth to just inch-upto 10% as rural has not picked up as

expected

Gross margin to remain almost flat yoy due to higher contribution

from low-margin juice, limited price hikes.

EBITDA margin to remain flat yoy due to: (1) investment behind

creation of distribution infrastructure and higher A&P spends.

Revenues 22,010 21,250 3.6% 19,664 11.9%

Gross Profit 11,335 10,491 8.0% 10,141 11.8%


EBITDA 4,516 4,508 0.2% 4,035 11.9%


PAT 3,740 3,766 -0.7% 3,330 12.3%

EPS (Rs) 2.1 2.1 -0.7% 1.9 12.3%

Godrej Cons. Products

Revenues 28,708 26,418 8.7% 26,037 10.3% Domestic business: HI to remain weak due to increase penetration of

incense sticks from the unorganised sector; soaps and hair colours to

see moderate growth due to high base effect.

Reported international growth to look muted despite gradual

recovery in Indonesia, Africa, because of divestment of the UK

business.

Ebitda growth to remain subdued due to high ad intensity.

Gross Profit 15,933 13,860 15.0% 14,774 7.8%


EBITDA 6,168 4,865 26.8% 5,987 3.0%

EBITDA margin (%) 21.5 18.4 307bps 23.0 -151bps

PAT 4,326 3,180 36.0% 4,322 0.1%

EPS (Rs) 6.3 8.5 -25.1% 6.3 0.6%

Marico Industries

Volume growth (est.) 7 6 7 Volume growth of 7% on back of healthy recovery in coconut hair oil.

International business is likely to clock double digit sales growth

Gross margin pressure to ease qoq due to correction in copra price,

price hikes taken in the VAHO portfolio.

EBITDA margin to expand yoy on operating leverage & relatively soft

RM costs.

Revenues 19,817 18,368 7.9% 16,243 22.0%

Gross Profit 8,918 8,081 10.3% 7,556 18.0%


EBITDA 3,743 2,941 27.3% 3,021 23.9%


PAT 2,651 2,142 23.8% 2,205 20.2%

EPS (Rs) 2.1 1.7 23.8% 1.7 20.2%

Jubilant Foodworks

SSSG 16.0 20.5 17.8 Solid SSS growth to continue as (1) entire festival season falls in 3Q

and (2) supply to railway stations seeing decent traction.

Gross margin to see some pressure due to higher discounting towards

the later part of the festive season.

PAT growth to be above EBITDA due to higher other income.

Revenues 9425 8814 6.9% 7952 18.5%

Gross Profit 7003 6575 6.5% 5926 18.2%

Gross margin (%) 74.3 74.6 -31bps 74.5 -22bps

EBITDA 1673 1475 13.4% 1369 22.2%


PAT 912 777 17.4% 660 38.1%

EPS (Rs) 7.0 5.9 17.4% 5.0 38.1%




Colgate

Volume growth 8.0 7.0 12.0 Volume growth to inch-up despite high base on: (1) market share

gains in natural portfolio and (2) aggression on driving core product

portfolio.

Gross margin to decline c.70bps yoy due to higher corn (Sorbitol) price

and packaging costs.

Distribution expansion initiatives, higher promotion, RM inflation to

weigh on operating profitability.

Revenues 11,535 11,606 -0.6% 10,270 12.3%

Gross Profit 7,411 7,491 -1.1% 6,672 11.1%


EBITDA 3,120 3,296 -5.3% 2,838 9.9%

EBITDA margin (%) 27.0 28.4 -135bps 27.6 -59bps

PAT 1,852 1,964 -5.7% 1,707 8.5%

EPS (Rs) 6.8 7.2 -5.7% 6.3 7.7%

Nestle

Volume growth 10.0 0.0 18.0 Innovation in existing categories, entry into new categories and

distribution revamp to drive high single-digit volume growth.

Margin expansion journey to continue on: (1) benign input costs, (2)

cost efficiencies, and (3) operating leverage.

Revenues 29,292 29,220 0% 25896 13.1%

Gross Profit 17,062 17,379 -1.8% 15204 12.2%


EBITDA 6766 7252 -6.7% 5639 20.0%


PAT 3976 4461 -11% 3118 27.5%

EPS (Rs) 41.2 46.3 -10.9% 32.3 27.5%

Glaxo Smithkline Cons

Volume 8.0 13.7 16.0 High single-digit volume growth driven by good traction on sachets

portfolio, high-science based portfolio, and pick-up in Horlicks variants

& Boost

Gross expansion to moderate on inflationary pressure in barley,

packaging costs.

EBITDA margin to see healthy expansion on operating leverage.

Revenues 11437 12720 -10.1% 10382 10.2%

Gross Profit 7971 8861 -10.0% 7159 11.4%


EBITDA 2540 3537 -28.2% 2075 22.4%


PAT 2045 2755 -25.8% 1637 25.0%

EPS (Rs) 48.6 65.5 -25.8% 38.9 25.0%

Britannia

Volume growth (est.) 8.0 12.0 13.0 High single-digit volume growth on foray into newer categories,

increasing distribution network in weaker areas, and premiumisation.

Gross margin to expand yoy as it has already covered RM at lower

costs.

EBITDA margin to see a c.100bps expansion on account of cost-savings

initiatives.

Revenues 28,459 28,548 0% 25,583 11%

Gross Profit 11,383 11,343 0% 9,838 16%


EBITDA 4,730 4,544 4% 3,984 19%


PAT 3,116 3,030 3% 2,636 18%

EPS (Rs) 26 25 3% 22 18%

Emami

Volume growth (est.) 2.0 (4.0) 6.0 Volume growth to be dented due to a late start to the winter season

and continued pressure on the wholesale channel.

Gross margin to remain under pressure due to higher mentha oil

prices, LLP, and packaging costs.

Negative operating leverage to weigh on operating profitability.

Net income to be lower than EBITDA growth despite lower interest

costs due to higher taxation.

Revenues 8,011 6,280 28% 7,552 6%

Gross Profit 5,528 4,308 28% 5,357 3%


EBITDA 2,611 1,894 38% 2,647 -1%


PAT 1,386 827 68% 1,472 -6%

EPS (Rs) 3.0 1.8 67% 3.2 -6%

Asian Paints

Volume growth (est.) 15.0 12.5 6.0 Mid-teen volume growth due to: (1) festival season falling entirely in

3Q vs. split in the base quarter, and (2) market share gains in the

distemper segment.

Gross margin pressure to ease qoq, despite spiralling Tio2 price,

because of annualized weighted average price hike of 5%.

Benefits of healthy volume growth to be negated by start -up costs

because of the Mysuru plant starting operations.

Revenues 51,446 46,391 11% 42,605 21%

Gross Profit 21,093 18,467 14% 17,995 17%


EBITDA 10,782 7,842 38% 8,912 21%


PAT 6,870 4,928 39% 5,546 24%

EPS (Rs) 7.2 5.1 39% 5.8 24%




Bajaj Corp

Volume growth 6.0 0.0 5.2 Volume growth continues to remain subdued due to increasing

competition, new launches yet to gain meaningful traction, and

continued pressure in international and CSD businesses.

Gross margin to remain under pressure despite annualized price hikes

of 4-5% due to commodity inflation for majority part of the quarter.

EBITDA growth to remain subdued despite human-resources related

inflation subsiding.

Revenues 2,165 2,057 5.2% 1,973 9.7%

Gross Profit 1,434 1,362 5.2% 1,329 7.9%


EBITDA 701 606 15.7% 679 3.3%


PAT 583 517 12.8% 552 5.6%

EPS (Rs) 4.0 3.5 12.8% 3.7 5.6%

Agro Tech Foods

Revenues 2,355 2,108 11.7% 2,144 9.8% Foods and edible oil (Crystal) to drive revenue growth

Inflation in sunflower and rice-bran oil will lead to gross margin

pressure.

Gross Profit 767 682 12.5% 720 6.5%


EBITDA 199 178 12.0% 179 11.6%


PAT 101 91 11.7% 90 12.3%

EPS (Rs) 4.2 3.7 11.7% 3.7 12.3%

Titan

Revenues 54,045 44,068 22.6% 42,248 27.9% Benefits of improved gold exchange programme, increasing salience

from wedding /studded jewellery, and improved festive season to aid

growth.

Gross margin to expand yoy because of inventory-related gains and

higher share of studded jewellery.

EBITDA margin expansion to continue on operating leverage,

improved SSS growth trends

Gross Profit 6,392 4,671 36.8% 4,447 43.7%

Gross margin (%) 11.8 10.6 10.5

EBITDA 6,392 4,671 36.8% 4,447 43.7%

EBITDA margin (%) 11.8 10.6 10.5

PAT 4,438 3,144 41.2% 3,082 44.0%

EPS (Rs) 5.0 3.5 41.2% 3.5 44.0%

Thangamayil

Revenues 3,844 3,627 6.0% 3,151 22.0% Jewellery grammage growth to be 20%+ as couple of store openings

shifted to 4QFY19.

Gross margin expansion to remain flat yoy as it has reduced discounts

vs. 2QFY19 significantly.

Operating leverage shall drive EBITDA margin expansion.

Gross Profit 346 324 6.7% 288 20.1%

Gross margin (%) 9.0 8.9 9.1

EBITDA 164 172 -4.4% 129 27.3%

EBITDA margin (%) 4.3 4.7 4.1

PAT 58 70 -17.5% 42 38.6%

EPS (Rs) 4.2 5.1 -17.5% 3.0 38.6%

Source: Company, PhillipCapital India Research



Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year.

Rating Criteria Definition

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

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

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

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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 comanaged 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 comanaged 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.

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For U.S. persons only: 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. 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 brokerdealer and therefore the analyst(s) is/are not subject to supervision by a U.S. brokerdealer, and is/are not required to satisfy the regulatory licensing requirements of 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.

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