august 2, 2017 · kotak securities – private client research please see the disclosure/disclaimer...

AUGUST 2, 2017

Kotak Securities – Private Client Research Please see the Disclosure/Disclaimer on the last page For Private Circulation 2

Market Strategy April 2019

MARKET OUTLOOK FOR APRIL 2019 Market Outlook: Indian markets continued to rally in March on strong FII flows even though domestic flows have been losing traction. Indian equities had underperformed in January and February compared to other emerging markets. The Indian market’s strong performance over the past few weeks reflects (1) the market’s increased confidence about the BJP-led NDA coalition retaining power post the 2019 national elections albeit with fewer number of seats compared to its current position, (2) ‘catch-up’ in the Indian market given its under-performance to other EM markets in the first six weeks of CY2019, (3) growing confidence about the earnings of the financial sector, the primary driver of earnings of the broad market in FY2020 and (4) re-rating in multiples of beaten-down stocks, especially PSU stocks and mid- and small-cap names.

Portfolio Strategy: Keeping in mind the volatility expected in 2019 led by factors such as developed market slowdown, US-China trade fears, Brexit, domestic elections, oil prices, it would be ideal to have a bottom up approach and pick & choose good quality, beaten down stocks from respective sectors. To weather the on-going volatility which may remain till middle of CY19 (i.e. till General elections), it is ideal to have higher allocation into high earnings growth large caps and midcaps (with strong management pedigree and reasonable valuations). Among the large caps one can focus on select stocks from sectors like banks, pharmaceuticals, IT services, metals & mining and oil & gas. In the mid-caps, one can focus on select stocks from sectors like capital goods, construction and auto ancillaries. Also, PSU as a space is looking good in view of the limited risk of share sale by government and attractive valuations.

Valuations: Based on 13%/25% (Source: KIE) estimated growth in earnings of FY19E/20E, the Nifty is currently trading at 17.8x/15.3x FY20E/21E, respectively (free float basis). Valuation of Nifty looks reasonable when viewed against recent historical valuations of ~18-20x on forward PE basis (mainly due to high earnings growth expectation). The Sensex has rallied 7% in March, which is significant. The mid and small caps indices have also rallied 7% respectively. Given the political developments, we believe that markets may continue to trade higher though the upmove may be lower than in March. Stable inflation, rate cuts by RBI, sustained FII flows are some of the positives. On the other hand, geopolitical tensions, firming up of crude prices and US China trade issues/Brexit could be negative factors for markets.

PSU stocks investment theme – In this month’s market strategy, we advocate an investment theme based on select PSU stocks. We have handpicked some of the promising PSUs based on their undervaluation and strength of business. In view of the upcoming elections, we believe that risk of share sale by government (which dampens stock price) is limited in the near term. Our selected PSU stocks offer attractive upside from the current levels. Good dividend yield is an added advantage.

TOP INVESTMENT IDEAS Recommended Stocks

Company CMP* Target Price Potential Upside 52 Week H/L Market Cap (Rs) (Rs) (%) (Rs) (Rs mn)

Coal India 236 290 22.7 303 / 211 1467431 GAIL (India) 355 455 28.3 399 / 295 799874 ONGC 157 215 36.7 192 / 128 2018027 SBI 321 370 15.0 340 / 232 2880411 Power Grid 196 235 20.1 217 / 173 1023299 EIL 120 153 27.9 168 / 100 75608 Cochin Shipyard 392 555 41.5 544 / 333 51590

Source: Kotak Institutional Equities; Kotak Securities – Private Client Research; *CMP as on 1 April 2019.

Sanjeev Zarbade [email protected]

+91 22 6218 6424



1-month performance of benchmark global indices (%) - (March 2019)

Source: Bloomberg

Market performance – sector wise (March 2019)

Source: Bloomberg

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Nasdaq Index

NIKKEI Index

S&P 500 Index

Dow Jones Index

MSCI World Index

DAX Index

FTSE Index

MSCI Asia Pacific

Hang Seng Index

MSCI India

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GLOBAL MARKETS Pace of global economic growth showing signs of weakness The ongoing concerns about the health of the world economy heightened in March after key economic data from the US and Germany showed weakening manufacturing activity. The IHS Markit US Manufacturing PMI fell to 52.5 in March from 53 in February and below market expectations of 53.6. The reading pointed to the lowest expansion in factory activity since June of 2017 amid softer rises in output, new orders and employment. On the Eurozone front, the IHS Markit's Purchasing Managers' Index for German manufacturing sank to 44.7, the lowest level since 2012 and below economists' median estimate of 48. Fading of the tailwinds provided by Trump’s tax benefits announced in 2017 and concerns on global trade due to tariffs put into place by Donald Trump are believed to be the reasons behind weakening economic activity. In the Euro area, the European Central Bank cut its forecast for growth in the euro zone.

IHS Markit US Manufacturing PMI IHS Markit German Manufacturing PMI

Source: Bloomberg Source: Bloomberg

Yield Curve turns inverted The yield on the U.S. 10-year Treasury note dipped below the yield on the 3-month paper for the first time since mid-2007, leading to the yield curve (which plots bond yields from shortest maturity to highest and is considered a barometer of economic sentiment) turning inverted. In normal circumstances, the longer term bonds trade at a higher yield compared to the shorter term ones due to uncertainty and risk in taking longer calls on inflation. However, in rare settings, this yield curve starts to get inverted, meaning longer-dated yields are lesser than shorter-dated yields. An inverted yield curve is generally considered a recession predictor. It won't be immediate, but recessions have followed inversions a few months to two years later several times over many decades.

The latest inversion between the 3-month and 10-year bond yields was a result of several factors such as Fed's dovish signal over rate hikes in 2019 and a whole set of disappointing data in Europe, along with the uncertainty surrounding Britain's exit from the European Union.

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Source: Bloomberg

With risk of economic slowdown looming large, Federal Reserve and ECB turn dovish Federal Reserve officials scaled back their projected interest-rate increases this year to zero and said they would end the drawdown of the central bank's bond holdings in September. The Fed's signal that it will keep interest rates on hold for the full year reflects concerns that economic growth is slowing, lower energy prices are weighing on inflation and risks from abroad are dimming the outlook.

The European Central Bank (ECB) decided to hold the interest rate on its main refinancing operations and held steady interest rates on the marginal lending facility and the deposit facility. The Governing Council now expects the benchmark interest rates to remain at their present levels at least through the end of 2019. The central bank also announced it was to start a fresh set of loans to banks (known as TLTROs) to keep credit flowing to companies in the euro zone, in the hope that an already marked economic downturn will not be exacerbated by a sudden crunch in lending. The TLTRO (Targeted Long Term Refinancing Operations) program, which will be launched in September this year will end in March 2021.

Crude oil prices have risen in 2019 but further upside may be restricted on account of global slowdown worries Crude oil prices have moved up by nearly 26 percent since the start of the year, when the Organization of the Petroleum Exporting Countries and non-member producers, such as Russia, began cutting production in an effort to reduce a global glut. From January 2019, OPEC, Russia and several other producers have launched new production cuts that aim to remove 1.2 million barrels per day from the market. The alliance will again meet in April, 2019 to determine whether market conditions warrant keeping the curbs in place which expire in June, 2019. This can result in some upward spurt in oil prices from the current levels. But we believe that if global economic growth continues to weaken then it could also pull down crude prices.

Brent crude (US$/bbl)

Source: Bloomberg

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DOMESTIC MARKETS With benign inflation and sagging growth, RBI is expected to cut rates by another 25 bps in April The meeting of the six-member Monetary Policy Committee (MPC) to decide on the first bi-monthly policy statement for 2019-20 will be held from April 2 to 4 and the policy will be announced on April 4. The bi-monthly policy assumes significance as it will be announced just a week before the commencement of the seven-phase general elections beginning April 11.

February CPI and WPI inflation firmed to 2.57% and 2.93% primarily on account of some reversal in food inflation. The readings, however, remain benign and would provide comfort to the MPC to cut repo rate by 25 bps to 6% in April. CPI inflation has been within the RBI’s target of 4% for the past seven months and is likely to remain so in the near term given the muted inflation-growth dynamics. If inflation expectations continue to fall and with some opening up of the output gap, we do not rule out further rate cuts given our expectations of sub-4% inflation till October 2019. Potential rate cuts should be positive for banks.

Concern on liquidity is easing on dollar swaps by the RBI Faced with liquidity concerns in the aftermath of the IL&FS crisis, the RBI has been undertaking OMO operations to infuse liquidity. However, with liquidity likely to be under pressure due to upcoming general elections, the RBI has introduced the Dollar Rupee Swap (current quantum of USD 5 bn) as another instrument for infusing liquidity into the system. Under this, the RBI buys dollars at a premium, from authorized banks/corporates and pays them INR in return. After three years, these banks will buy back the same amount of dollars at the premium offered by RBI. The current auction injected Rs 345.6 billion in fresh rupee liquidity, and given the good response from corporates/banks, there are expectations of more forex swap auctions (may be another five auctions in the year ahead).

For the banks, it is a way to earn some interest out of the forex reserves lying idle in their kitty. As far as interest rates are concerned, liquidity infusion should be supportive of the short-end sovereign curve.

INR appreciation The INR has gained ~ 7% from its all-time lows made in Oct’18, as CAD stabilised and foreign capital inflows improved due to global factors and expectations of a stable Government. Declining global bond yields should also support the INR well. Impending large rights issues/FDI deals are also supportive of a stronger currency. The Fed’s decision to keep policy rates unchanged at 2.25-2.5% through the course of 2019 could also result in some dollar weakness in the near-term. Appreciation in INR would have negative repercussions for exporters like IT & Pharma.

INR/USD

Source: Bloomberg

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Mixed signs of economic recovery – Consumption weakening but Investment cycle holding up GST collections dropped to Rs 972 bn in February from Rs 1020 bn in January 2019. The government has already lowered the GST collection target for FY19 to Rs 11.47 trn in the revised estimates, from Rs 13.71 trn as budgeted. GST collection for 2019-20 fiscal has been budgeted at Rs 13.71 trn, which indicates a monthly run-rate of Rs 1.14 trn.

Retail demand in the automobile industry remained weak in February 2019. Auto manufacturers have corrected dealer inventory levels in February 2019, which led to weakness in production volumes across segments. We expect the weakness in volumes to continue until general elections across auto segments. FY2020 could also be a challenging year for the sector due to transition to BS-6 norms from April 1, 2020.

On the positive side, overall quantum of financial sanctions by banks/FIs are stabilizing at levels last seen in FY2012/13 after a very weak period of financial sanctions over FY2014-16. This has improved visibility of future capex. The IIP based capital goods index has registered a growth of 5.9% in April-Jan 2019 period as against 3.6% in FY18. So on a net basis, we are seeing definite slack in consumption demand but investment demand is holding up. These are early days, but it is probable that the outlook for Corporate banks and Capital Goods companies is turning favourable, in our opinion.

Movement in key economic and industrial variables

Monthly YoY change (%) Sep-18 Oct-18 Nov-18 Dec-18 Jan-19

Credit growth (Industry) 2.3 3.7 4 4.4 5.1 Credit growth (Personal Loans) 15.1 16.8 17.2 17 16.9 Steel 4.5 6.2 3.7 6.6 1.6 Cement 11.8 18.4 8.8 11.6 11 Heavy Commercial Vehicles 26 17.8 -11 -20.7 0.7 Passenger Car -5.6 1.6 -3.4 -0.4 -1.9 Air Passenger Traffic 19 13.3 11 12.9 9.3

Source: Kotak Institutional Equities

Financial Sanctions from Banks/FIs for private sector > Rs 100 mn value

Source: Kotak Institutional Equities

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2011 2012 2013 2014 2015 2016 2017 2018 1HFY19



Recent opinion polls suggest a comeback for the BJP-led NDA coalition but with fewer seats Recent opinion polls on the 2019 General Elections project the BJP-led NDA coalition winning 264-290 seats, close to or above the half-way mark of 272 seats (out of 543 seats in the lower house of the parliament) required to form a government. The state of UP will be key given it has the highest number of seats (80 seats) and whether the BJP can repeat its dominant performance in UP in the 2014 national elections due to presence of a powerful regional alliance of BSP and SP with dedicated voter bases.

Pre poll surveys

Pollster Date NDA UPA Others

News Nation Mar-19 270 134 139 VDP Associates Mar-19 290 120 132 ABP News - C Voter Mar-19 264 141 138 India TV - CNX Mar-19 285 126 132 Times Now-VMR Jan-19 252 147 144 ABP News - C Voter Dec-19 247 171 125

Source: Media Reports, KIE

FII and MF inflows Overseas funds have turned buyers again in Mar 2019 as Indian markets had underperformed during Jan-Feb 2019 and there was room for catching up with other emerging markets. Easing of geopolitical tensions as well as the market’s increased confidence about the BJP-led NDA coalition retaining power post the 2019 national elections also drove foreign fund purchases. FIIs have bought stocks worth Rs.282 bn whereas domestic Mutual Funds have sold stocks worth Rs.5.6 bn till 28th March, 2019. There is a role reversal of sorts in CY2019 as the FIIs have turned large buyers while buying from MFs has been weak. Going ahead, foreign fund flows into India would be contingent upon formation of stable government and macroeconomic datapoints.

MF/FII flows (Rs bn)

Source: Bloomberg

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Investment Theme PSU Stocks



INVESTMENT THEME - PSU STOCKS Investment rationale Investors usually do not favour public sector units (PSUs) because of various reasons like government interference in their operations, bureaucracy, frequent management changes and lack of adequate motivation towards creation of shareholder value. As a result, most PSU stocks are not able to withstand competitive pressures and fail to create value over the long term.

In recent times, government’s stake sale through various modes has also become a major factor that has put pressure on PSU stocks. Apart from OFS (Offer for Sale), the government has also been using the exchange-traded fund (ETF) route to divest its stake, which has led to some short-term technical pressure. Many retail investors are getting into these ETFs only because of the ~ 5% discounts being offered by the government. The immediate redemption of these units by investors has led to heightened selling pressure on PSU counters.

Not surprisingly, the PSU stocks have continued to lose investor faith in general. The S&P BSE PSU Index has fallen 2% over the past year even as the Sensex has risen 16%. Post this sharp underperformance, we have begun to see pockets of value that more than discounts the risks and concerns that come with PSUs. When such opportunities arise, investors can profit by taking “Tactical” bets on beaten down and fundamentally strong PSU stocks.

Why PSUs hold promise Some PSUs are blue-chip Maharatna, Navaratna & Miniratna and are sector leaders or

virtual monopolies in their businesses. For example, in Power Transmission, there is noalternate plays of significant size other than Power Grid, or for that matter in gasliquefaction (Petronet LNG).

Attractive valuation and Dividend Yield: P/E ratio and dividend yields better compared tobroader market index.

We have shortlisted Seven PSU stocks with substantial upside potential, attractive valuations, good dividend yields and reduced risk of immediate stake sale by the government.

Valuation Summary of Select PSU

Upside P/E (X) P/B (X) RoE (%) Company Rating CMP TP (%) 2019E 2020E 2019E 2020E 2019E 2020E

Coal India BUY 236 290 22.7 9.2 8.7 5.7 5.9 64.2 67.5 GAIL (India) BUY 355 455 28.3 12.4 10.9 1.8 1.7 15.3 16 ONGC BUY 157 215 36.7 6.5 6.1 0.8 0.8 13.3 13 SBI BUY 321 370 15.0 45.9 8.5 1.9 1.4 3 13.9 Power Grid BUY 196 235 20.1 10.7 9.1 1.7 1.6 16.7 17.6 EIL BUY 120 153 27.9 20.3 16.4 3.2 3.19 16.5 20.2 Cochin Shipyard BUY 392 555 41.5 11.2 10.6 1.6 1.4 13.8 13.8

Source: Kotak Institutional Equities; Kotak Securities – Private Client Research



S&P BSE PSU vs NIFTY (5 Year Daily) (Normal)

Source: Bloomberg

S&P BSE PSU One year Forward PE & 10 Year Average FW PE

Source: Bloomberg

S&P BSE PSU One year Forward PE discount to NIFTY 50 & NIFTY MID CAP 100

Source: Bloomberg

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The BSE - PSU Index is trading at a discount to Its

average one year forward PE

The PSU forward PE trades at 48%

discount to Nifty forward PE & 42%

discount to BSE Mid-cap Index

forward PE

PSU Index has underperformed

sharply in 2018-19



S&P BSE PSU Index discount to NIFTY 50 & NIFTY MID CAP 100

Source: Bloomberg

S&P BSE PSU Index Dividend Yield 3 Year Blended Forward (%)

Source: Bloomberg

Divestment Since 2014

Particulars FY14 FY15 FY16 FY17 FY18 9MFY19 Divestment Since 2014

Coal India 89.7% 79.7% 79.7% 78.9% 78.6% 72.9% 16.7% ONGC 68.9% 68.9% 68.9% 68.1% 67.7% 65.6% 3.3% GAIL 56.1% 56.1% 56.1% 54.4% 53.6% 53.1% 3.0% SBI 58.6% 58.6% 60.2% 61.2% 58.0% 57.7% 0.9% PGCIL 57.9% 57.9% 57.9% 57.9% 56.9% 56.3% 1.6% EIL 69.4% 69.4% 59.4% 57.0% 52.0% 52.0% 17.4% Cochin Shipyard NA NA NA 75.0% 75.0% 75.2% -0.2%

Source: Kotak Institutional Equities, Kotak Securities – Private Client Research

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The BSE PSU Index has underperformed

the Nifty and BSE Mid-cap Index by

26% and 18% respectively over the past 3 years



Coal India SBI


ONGC PGCIL


EIL GAIL

Source: Bloomberg & Kotak Securities - PCG Source: Bloomberg

Cochin Shipyard

Source: Bloomberg & KIE

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Coal India Limited

CMP (Rs) 52 Week H/L (Rs) Mkt Cap (Rs mn) 236 303 / 211 1467431

Financials (Rs mn)* FY18 FY19E FY20ESales 830,011 943,315 1,015,648 Growth (%) (0.3) 13.7 7.7 EBITDA 83,845 197,624 217,916 EBITDA margin (%) 10.1 20.9 21.5 PBT 107,264 253,444 254,594 Net profit 70,198 160,367 169,588 Adjusted EPS (Rs) 11.0 25.8 27.3 Growth (%) 4.5 128.5 5.7 P/E (x) 21.5 9.2 8.7 BV (Rs/share) 32.0 34.0 32.0 ROE (%) 32.0 78.0 82.0 Source: BloombergROCE (%) 38.0 94.0 99.0 Free Cash Flow 154,810 33,201 167,985

Source: Kotak Insitutional Equities; *Consolidated

Financials (Rs mn)* 9M-FY18 9M-FY19 % ChgRevenues 565,913 666,959 17.9 EBITDA 70,088 116,257 65.9 EBITDA Margin (%) 12.4% 17.4%PAT 57,251 114,362 99.8 PAT Margin (%) 10.1% 17.1%EPS (Rs) 9.1 18.1 99.8 Source: Kotak Insitutional Equities; *Consolidated Source: Bloomberg

This one pager on the company is extracted from last KIE update dated February 13, 2019 & March 5, and it does not contain events beyond that date. We take no obligation toupdate the KIE recommendations. While source of all other information is taken from Kotak Institutional Equities, the price performance and shareholding pattern chart is inputtedby Kotak PCG research team (with source as Bloomberg). It is advisable to read the full KIE report before taking any investment decision on the above company recommendation.

Share Holding Pattern (%)

Analyst: Murtuza Arsiwalla, Samrat Verma (Email: [email protected]; Contact: +91 22 6218 6427)

Price Performance (3 Years)

Target Price (Rs)290 22.7%

Potential Upside (%)

Promoter72.9%

FII6.0%

DII17.6%

Others3.5%

Key Highlights:

Coal India reported volume growth of 3% yoy in coal dispatches at 51.5 mn tons in February 2019, despite threesubsidiaries reporting decline in volumes. The performance is a marked improvement over the weak dispatchnumbers in the preceding three months, and YTD growth of 4.5% is ahead of our own estimates of 4% yoy growth,and closely tracking 4.3% YTD growth in coal-based generation.

Among subsidiaries, WCL and ECL showed the highest dispatch growth of 23% yoy and 7.6% yoy, respectivelyfollowed by MCL (+3.8% yoy). On the production front, five subsidiaries reported volume growth with MCL reportingthe highest growth of 17.1% yoy followed by WCL at 10.1% yoy in February 2019.

E-auction premiums increased to 131% in December 2018 from 111% seen in November 2018. Premiums are stillwell above those seen in FY2018, and continue to maintain their uptrend despite the weakness in prices of importedcoal.

Coal inventory improved to 16 days in February 2019, seeing a gradual improvement over the last two months.Plants with critical inventories in West stand reduced to four, at the same level as seen in January 2019. East andSouth have no plants with critical inventory while North has only one plant.

Coal India has had a much improved year with 9MFY19 delivering 100% yoy growth in earnings on the back of 18%yoy growth in revenue. The continued divestment by the government has made for valuations to be incrementallyattractive.

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Coal India Limited Nifty

GAIL (India) Ltd


Financials (Rs mn)* FY18 FY19E FY20ESales 536,616 717,413 806,121 Growth (%) 11.4 33.7 12.4 EBITDA 76,339 102,124 116,799 EBITDA margin (%) 14.2 14.2 14.5 PBT 69,307 96,073 109,328 Net profit 46,000 64,375 73,291 Adjusted EPS (Rs) 20.4 28.5 32.5 Growth (%) 20.7 39.7 14.0 P/E (x) 17.4 12.4 10.9

ROAE (%) 10.5 13.7 14.4 Source: BloombergROACE (%) 10.1 13.4 14.1 Free Cash Flow 57,354 13,332 31,947


Financials (Rs mn)* 9M-FY18 9M-FY19 % ChgRevenues 382,309 562,299 47 EBITDA 59,451 79,197 33 EBITDA Margin (%) 15.6% 14.1%PAT 36,018 49,538 38 PAT Margin (%) 9.4% 8.8%EPS (Rs) 16.0 22.0 38 Source: Kotak Insitutional Equities; *Standalone Source: Bloomberg

This one pager on the company is extracted from last KIE update dated February 5, 2019 and it does not contain events beyond that date. We take no obligation to update the KIErecommendations. While source of all other information is taken from Kotak Institutional Equities, the price performance and shareholding pattern chart is inputted by Kotak PCGresearch team (with source as Bloomberg). It is advisable to read the full KIE report before taking any investment decision on the above company recommendation.


Analyst: Tarun Lakhotia, Hemang Khanna (Email: [email protected]; Contact: +91 22 6218 6427)




Promoter58.0%

FII22.6%

DII15.2%

Others4.2%

Key Highlights:

We expect the company to benefit from imminent upward revision in regulated tariffs for key pipelines andsustainability of gas marketing profits at reasonable levels.

In 9MFY19, the company delivered a robust 33-38% jump in adjusted EBITDA and net income (EPS of Rs.22) led bysharp improvement in profitability across all segments.

The company indicated that ~90% of contracted LNG volumes have been placed for CY2019 through a combinationof sale, hedges and swapping contracts with locked-in margins.

The Petrochemical plant has stabilized now and is operating near-full utilization; the company has introducedmetallocene PE (15% of expanded capacity), which will yield higher realization and margins.

Kochi-Mangalore pipeline has achieved 87% physical completion and is expected to be commissioned in 3-4months; the company has already tied up 3 mcm/d of incremental volumes. The breakwater project for Dabholterminal is expected to be awarded soon.

GAIL incurred capex of Rs.55 bn in 9MFY19, out of Rs. 64 bn guidance for the full year; debt reduced to modestRs.10 bn.

Our SoTP valuation, based on average of FY2020 and FY2021 estimates, remains unchanged at Rs.455.

Our reverse valuation implies that the stock is trading at attractive 8X FY2020E core-business EPS.

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GAIL (India) Ltd Nifty

Oil & Natural Gas Corporation Ltd


Financials (Rs mn)* FY18 FY19E FY20ESales 1,557,670 2,080,353 2,114,016 Growth (%) 11.7 33.6 1.6 EBITDA 573,191 769,646 814,668 EBITDA margin (%) 36.8 37.0 38.5 PBT 330,634 487,703 515,611 Net profit 223,467 312,169 328,638 Adjusted EPS (Rs) 17.4 24.3 25.6 Growth (%) 3.0 39.7 5.3 P/E (x) 9.0 6.5 6.1

ROAE (%) 9.0 11.8 11.6 Source: BloombergROACE (%) 9.3 12.0 11.6 Free Cash Flow 84,838 263,106 214,478


Financials (Rs mn)* 9M-FY18 9M-FY19 % ChgRevenues 610,343 828,961 36 EBITDA 328,746 470,916 43 EBITDA Margin (%) 53.9% 56.8%PAT 140,301 226,712 62 PAT Margin (%) 23.0% 27.3%EPS (Rs) 10.9 17.7 62 Source: Kotak Insitutional Equities; *Standalone Source: Bloomberg



Analyst: Tarun Lakhotia, Hemang Khanna (Email: [email protected]; Contact: +91 22 6218 6427)




Promoter65.6%

FII5.9%

DII14.8%

Others13.7%

Key Highlights: We expect the government to exempt upstream PSUs from sharing subsidies on LPG, finding comfort from the

recent increase in budget provision for Direct Benefit Transfer of LPG subsidy to Rs.295 bn for FY2020, which isadequate up to Dated Brent crude price of US$65-70/bbl on a recurring basis.

We assume the government will manage entire burden related to DBT of LPG subsidies going forward.

Recent adequate increase in FY2020 budget provision for LPG subsidies should allay investor concerns on subsidysharing for upstream PSUs, which we believe will be certain by 4QFY19 results.

Gas production has grown well in the recent months.

OVL production volumes increased in 3QFY19.

We expect ONGC’s net oil realization to remain steady over the next few years.

Domestic gas price to increase further in 1HFY20.

We raise EPS estimates, excluding HPCL, to Rs.24.3 (+7%) in FY2019E and Rs.25.6 (+3%) in FY2020E, factoring in (1)modestly higher gas volumes, (2) higher other income and (3) other minor changes.

We assume stable crude realization, higher gas price and modest increase in production volumes.

Our fair value based on 9X FY2020E EPS plus value of investments increases to Rs.215 from Rs.210.

ONGC's earnings are highly sensitive to oil and gas prices and exchange rate assumptions.

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Oil & Natural Gas Corporation LtdNifty

State Bank of India


Financials (Rs mn)* FY18 FY19E FY20ENet Interest Income 748,537 881,484 976,982 Non-interest Income 446,007 338,931 485,034 Total Income 1,194,544 1,220,415 1,462,016 Growth (%) 1.4% 2.2% 19.8%PBT (155,282) 96,780 480,938 Net profit (65,475) 65,810 336,657 EPS (Rs) (7) 7 38 ABVPS (Rs.) 126 166 219 P/B (x) 2.6 1.9 1.5

Slippages (%) 6.0% 2.3% 1.5% Source: BloombergGross NPL (%) 10.7% 7.6% 5.8%Net NPL (%) 5.7% 3.4% 2.2%ROE (%) -3.2% 3.0% 13.9%RoA (%) -0.2% 0.2% 0.9%Source: Kotak Insitutional Equities; *ConsolidatedFinancials (Rs mn)* 9M-FY18 9M-FY19 % ChgNet Interest Income 548,794 653,950 19%Non-Interest Income 321,059 240,898 -25%Total Income 869,853 894,848 3%PBT (33,154) 11,763 NMPAT 11,707 238 -98%Slippages (%) 5.7% 4.8%Source: Kotak Insitutional Equities; *Consolidated Source: Bloomberg



Analyst: MB Mahesh, CFA / Nischint Chawathe / Dipanjan Ghosh / Shrey Singh (Email: [email protected]; Contact: +91 22 6218 6427)




Promoter58.6%

FII9.4%

DII24.5%

Others7.5%

Key Highlights: SBI reported a profit of Rs. 40 bn in 3QFY19 on the back of strong NII growth at 21% yoy and sharp drop in

provisions at 68% yoy. Calculated slippages dropped in 3QY19 on the back of decrease in slippages from the corporate book. Provision

coverage ratio (including technical write-off) improved 390 bps qoq to 75% (up from 66% yoy). Overall loan growth (net) improved to 12% yoy driven by robust growth in retail loans and revival in corporate loan

growth. We are building ~11% loan CAGR over FY2019-21E (growth to remain lower at 10% yoy in FY2019E) driven by strong

traction in retail loans and gradual increase in corporate lending. CASA ratio stood at 44% in 3QFY19 (up 40 bps yoy; flat qoq) led by 9% growth in SA balances while CA growth

declined by 1% yoy (down 60 bps qoq). We forecast 8% CASA CAGR over FY2019-21E and stable CASA ratio of 45%in the medium term.

Overall operating expenses growth was strong at 21% yoy, led by 32% yoy growth in staff cost while other expensesgrowth was muted at 6% yoy. We expect 7% CAGR in operating expenses over FY2018-21E.

We forecast non-interest income to maintain steady pace of growth at 26% CAGR during FY2019-21E (down 5% yoygrowth in FY2019E) driven by strong traction in recovery of written-off accounts and gradual improvement intreasury income while fee income will see modest increase sequentially going ahead.

CAR and CET-1 stood comfortable at 12.7% and 9.6%, respectively. Credit RWA to total advances dropped to ~60%from 63% yoy (up 150 bps qoq).

We maintain BUY rating on SBI with a fair value of Rs. 370 (unchanged), valuing the bank at 1.2X book and 7XDecember 2020E EPS for RoEs in the range of ~15% in the medium term. We believe that the bank is well poised toshow sharp reduction in credit costs, which would act as a key trigger for RoE improvement

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Power Grid Corporation of India Limited


Financials (Rs mn)* FY18 FY19E FY20ESales 301,140 348,082 385,182 Growth (%) 17.1 15.6 10.7 EBITDA 262,992 300,908 333,291 EBITDA margin (%) 87.3 86.4 86.5 PBT 104,906 121,945 139,094 Net profit 82,527 95,776 112,014 Adjusted EPS (Rs) 15.8 18.3 21.4 Growth (%) 10.0 15.8 16.9 P/E (x) 12.4 10.7 9.1 BV (Rs/share) 109.0 121.0 134.0 Net Debt / Equity (%) 220.0 205.0 191.0 Source: BloombergROE (%) 17.5 16.0 16.9 ROCE (%) 8.0 8.7 9.1 Gross debt 1,234,302 1,301,739 1,356,249 Source: Kotak Institutional Equities; *Consolidated

Financials (Rs mn)* 9M-FY18 9M-FY19 % ChgRevenues 220,918 253,360 14.7 EBITDA 195,642 219,237 12.1 EBITDA Margin (%) 88.6% 86.5%PAT 63,362 68,812 8.6 PAT Margin (%) 28.7% 27.2%EPS (Rs) 12.1 13.2 9.1 Source: Kotak Institutional Equities; *Standalone Source: Bloomberg

This one pager on the company is extracted from last KIE update dated March 11, 2019 & February 1, 2019 and it does not contain events beyond that date. We take no obligationto update the KIE recommendations. While source of all other information is taken from Kotak Institutional Equities, the price performance and shareholding pattern chart isinputted by Kotak PCG research team (with source as Bloomberg). It is advisable to read the full KIE report before taking any investment decision on the above companyrecommendation.


Analyst: Murtuza Arsiwalla / Samrat Verma (Email: [email protected]; Contact: +91 22 6218 6427)




Promoter56.3%

FII24.0%

DII15.3%

Others4.4%

Key Highlights: PGWR has delivered 14% CAGR in earnings over the past five years—a feat that has not been replicated by peers

Asset capitalization for FY2018 stood at Rs273 bn (-6% yoy) and we currently factor asset capitalization of Rs242bn for FY2019E.

Recently, CERC has issued the final regulations for the control period 2019-24, wherein it withdrew the proposal for reduction in regulated equity for plants beyond their useful life.

Outstanding investment approvals stand at Rs717 bn that lend visibility to asset capitalization for another three years.

We note that of the outstanding investment approvals of Rs717 bn, ordering has been completed for Rs445 bn

With PWGR starting investment in interstate transmission infrastructure, we build a high growth earnings trajectory for the company up to FY2022E based on incremental project visibility.

Concerns on growth beyond FY2021 and the regulatory review may be overplayed, and are already factored intrading multiples

Incremental stake sale by GOI poses a lower risk for PWGR compared to peers.

Maintain BUY rating with revised fair value of Rs235/share

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Power Grid Corporation of India LimitedNifty

Engineers India Ltd


Financials (Rs mn)* FY18 FY19E FY20ESales 17,876 24,812 29,579 Growth (%) 23.4 38.8 19.2 EBITDA 4,131 3,888 5,139 EBITDA margin (%) 23.1 15.7 17.4 PBT 5,682 5,609 6,903 Net profit 3,779 3,758 4,625 EPS (Rs) 6.0 5.9 7.3 Growth (%) 17.6 (1.7) 23.7 P/E (x) 19.9 20.3 16.4

Source: BloombergNet debt/equity - - -ROE (%) 15.0 16.5 20.2 RoCE (%) 15.3 15.9 21.2 BVPS 35.9 36.1 36.4 Source: Kotak Securities - Private Client Research; *ConsolidatedFinancials (Rs mn)* 9M-FY18 9M-FY19 % ChgRevenues 12,779 18,317 43 EBITDA 3,555 2,727 (23) EBITDA Margin (%) 27.8% 14.9%PAT 3,089 2,764 (11) PAT Margin (%) 24.2% 15.1%EPS (Rs) 4.9 4.4 (11) Source: Kotak Securities - Private Client Research; *Consolidated Source: Bloomberg

This one pager on the company is extracted from last Kotak Securities – Private Client Research update dated 14 March 2019 and it does not contain events beyond that date.Above company recommendation is of Kotak Securities – Private Client Research. Detailed rating scale and disclaimer is provided at the end of this report. It is advisable to readthe last report of Kotak Securities – Private Client Research before taking any investment decision on the above company recommendation.


Analyst: Ruchir Khare (Email: [email protected]; Contact: +91 22 6218 6431)




Promoter52.1%

FII6.5%

DII26.5%

Others15.0%

Key Highlights: Engineers India Ltd (EIL) is a leading global engineering consultancy and EPC, Public Sector company. It provides

services principally focused on the oil & gas and petrochemical sector.

Domestic hydrocarbon market is expected to remain buoyant in the long term driven by the ambitious target set byMinistry of Petrolium and Natural Gas of expanding India’s refining capacity to 440 MMTPA from 247 MMTPA currentlyby the year 2040.

EIL management reiterated positive outlook on the domestic order inflows driven by 1/ brownfield expansion of refineries(including small refineries with capacity of less than 3 mmtpa) 2/ set up & integration of petrochemical plants withexisting refineries and 3/ greenfield refinery expansion- including Maharashtra Refinery.

Order inflows remained strong in 9MFY19-order backlog reported at record Rs 107.8 Bn implies four to five years ofrevenue visibility. Management is optimistic about winning 1/ IOCL Panipat refinery (planned brownfield expansion 15 to25 MMTPA, EIL already declared L1) and 2/ BPCL (polypropylene unit) orders in the near term.

In our estimates we build, revenue growth at 29% CAGR between FY 18-20E from Rs. 17.8 Bn in FY18 to Rs 29.5 Bn inFY20E. Within the revenue streams, we expect PMC business to grow at 3.8% CAGR (we expect meaningful growth inPMC division beyond FY21supported by execution of HPCL Balmer project) and Lumpsum turnkey project segment(LSTP) is expected to grow at 90% CAGR (on low base of FY18) between FY18-20E.

We build EBITDA margin at 15.7% and 17.4% in FY19E and FY20E respectively driven by operating leverage. As permanagement, the major revenue/margin growth would follow in FY20/21E driven by pick up in execution of current orderbook in 2HFY20-FY21.

We believe that EIL stock is trading at cheap valuation at PER 14.7x FY20 core earnings (FY20 core EPS estimated at Rs5.2). We value FY20 core earnings (excluding other income adjusted for tax) at PER 22x and recommend BUY with targetprice of Rs 153.

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Engineers India LtdNifty

Cochin Shipyard Limited (CSL)


Financials (Rs mn)* FY18 FY19E FY20ESales 23,551 25,935 30,967 Growth (%) 14.4 10.1 19.4 EBITDA 4,651 5,136 6,040 EBITDA margin (%) 19.7 19.8 19.5 PBT 6,007 7,010 7,459 Net profit 3,926 4,560 4,853 Adjusted EPS (Rs) 29.8 34.7 36.9 Growth (%) 22.1 16.4 6.3 P/E (x) 13.1 11.2 10.6BV (Rs/share) 248.0 255.0 279.0 Net WC days 114.0 123.0 121.0 Source: BloombergROE (%) 14.9 13.8 13.8 ROCE (%) 14.7 14.7 14.7 Net debt (cash) (33,673) (26,502) (22,816) Source: Kotak Institutional Equities; *Consolidated

Financials (Rs mn)* 1H-FY18 1H-FY19 % ChgRevenues 11,766 14,581 23.9 EBITDA 2,456 3,033 23.5 EBITDA Margin (%) 20.9 20.8PAT 1,915 2,539 32.6 PAT Margin (%) 16.3 17.4EPS (Rs) 14.1 18.7 32.6 Source: Kotak Institutional Equities; *Consolidated Source: Bloomberg

This one pager on the company is extracted from last KIE update dated February 14, 2019 and it does not contain events beyond that date. We take no obligation to update theKIE recommendations. While source of all other information is taken from Kotak Institutional Equities, the price performance and shareholding pattern chart is inputted by KotakPCG research team (with source as Bloomberg). It is advisable to read the full KIE report before taking any investment decision on the above company recommendation.


Analyst: Ajinkya Bhat, Aditya Mongia (Email: [email protected]; Contact: +91 22 6218 6427)

Price Performance (Since August 2017)



Promoter75.2%

FII2.9%

DII9.8%

Others12.1%

Key Highlights: Cochin Shipyard (CSL) is a Government company, incorporated on March 29, 1972 and was conferred the 'Miniratna'

status in 2008, by the Department of Public Enterprise. It is the largest public sector shipyard in India in terms of dockcapacity

The company caters to clients engaged in the defence sector in India and clients engaged in the commercial sectorworldwide. In addition to shipbuilding and ship repair

CSL currently has two docks - dock number one, primarily used for ship repair (Ship Repair Dock) and dock number two,primarily used for shipbuilding (Shipbuilding Dock).

CSL will be the key beneficiary of the Indian Navy’s modernization plans as well as the government’s policy actions fordeveloping the domestic shipbuilding industry.

The company has several competitive advantages such as (1) capability to build and repair a broad range of vessels, (2)efficient and profitable operations led by modern infrastructure, processes and cost - control strategies, (3) a diverse customer base across defence and commercial sectors and (4) an experienced and agile management willing to invest incapabilities for growth.

Over FY19 to FY22E, there is good visibility on execution due to large projects of IAC-1 phase 3 and ASW corvettes that are already under contract negotiations.

On the ship repair side, CSL has mentioned current visibility on ~Rs8 bn of revenues. CSL will benefit from the uptick in naval capex, commissioning of new facilities and expansion of the ship repair

business. We recommend BUY with a fair value of Rs555/share on 14X March 2021E EPS. The key risk is dependence on a large

aircraft carrier (IAC-2) order, which we believe will get mitigated by CSL’s versatility.

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Cochin Shipyard Limited (CSL)Nifty

RATING SCALE (KOTAK SECURITIES – PRIVATE CLIENT RESEARCH) / KOTAK INSTITUTIONAL EQUITIES Definitions of ratings BUY – We expect the stock to deliver more than 15% returns over the next 12 months ADD – We expect the stock to deliver 5% - 15% returns over the next 12 months REDUCE – We expect the stock to deliver -5% - +5% returns over the next 12 months SELL – We expect the stock to deliver < -5% returns over the next 12 months NR – Not Rated. Kotak Securities is not assigning any rating or price target to the stock. The report has been prepared for

information purposes only. SUBSCRIBE – We advise investor to subscribe to the IPO. RS – Rating Suspended. Kotak Securities has suspended the investment rating and price target for this stock, either because there

is not a Sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon.

NA – Not Available or Not Applicable. The information is not available for display or is not applicable NM – Not Meaningful. The information is not meaningful and is therefore excluded. NOTE – Our target prices are with a 12-month perspective. Returns stated in the rating scale are our internal benchmark.

FUNDAMENTAL RESEARCH TEAM (PRIVATE CLIENT RESEARCH) Rusmik Oza Arun Agarwal Amit Agarwal Nipun Gupta Deval Shah Head of Research Auto & Auto Ancillary Transportation, Paints, FMCG Information Tech, Midcap Research Associate [email protected] [email protected] [email protected] [email protected] [email protected] +91 22 6218 6441 +91 22 6218 6443 +91 22 6218 6439 +91 22 6218 6433 +91 22 6218 6423

Sanjeev Zarbade Ruchir Khare Jatin Damania Cyndrella Carvalho Ledo Padinjarathala Cap. Goods & Cons. Durables Cap. Goods & Cons. Durables Metals & Mining, Midcap Pharmaceuticals Research Associate [email protected] [email protected] [email protected] [email protected] [email protected] +91 22 6218 6424 +91 22 6218 6431 +91 22 6218 6440 +91 22 6218 6426 +91 22 6218 7021

Teena Virmani Sumit Pokharna Pankaj Kumar Krishna Nain K. Kathirvelu Construction, Cement, Buildg Mat Oil and Gas, Information Tech Midcap M&A, Corporate actions Support Executive [email protected] [email protected] [email protected] [email protected] [email protected]+91 22 6218 6432 +91 22 6218 6438 +91 22 6218 6434 +91 22 6218 7907 +91 22 6218 6427

TECHNICAL RESEARCH TEAM (PRIVATE CLIENT RESEARCH) Shrikant Chouhan Amol Athawale Faisal Shaikh, FRM, CFTe Siddhesh Jain [email protected] [email protected] Research Associate Research Associate +91 22 6218 5408 +91 20 6620 3350 [email protected] [email protected]

+91 22 62185499 +91 22 62185498

DERIVATIVES RESEARCH TEAM (PRIVATE CLIENT RESEARCH) Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas, CMT, CFTe [email protected] [email protected] [email protected] [email protected] +91 79 6607 2231 +91 22 6218 6420 +91 22 6218 5497 +91 33 6625 9810

mailto:[email protected]







Disclosure/Disclaimer – Kotak Securities Ltd

Following analysts: Ajinkya Bhat, Aditya Mongia, Nischint Chawathe, M B Mahesh, Dipanjan Ghosh, Shrey Singh, Murtuza Arsiwalla, Samrat Verma, Tarun Lakhotia, Hemang Khanna of Kotak Institutional Equities and Ruchir Khare of Kotak Securities – Private Client Research hereby certify that all of the views expressed in this report accurately reflect their personal views about the subject company or companies and its or their securities. They also certify that no part of their compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house. Kotak Securities Limited is a corporate trading and clearing member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE), Metropolitan Stock Exchange of India Limited (MSE), National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX). Our businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI). We are registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise/warning/deficiency letters/ or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. We offer our research services to clients as well as our prospects. This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of Kotak Securities Ltd. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither Kotak Securities Limited, nor any person connected with it, accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the investments referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures, options and other derivatives as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a stock's price movement and trading volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been prepared by the Private Client Group. We and our affiliates/associates, officers, directors, and employees, Research Analyst(including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of Research Report or at the time of public appearance. Kotak Securities Limited (KSL) may have proprietary long/short position in the above mentioned scrip(s) and therefore may be considered as interested. The views provided herein are general in nature and does not consider risk appetite or investment objective of particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with KSL. Kotak Securities Limited is also a Portfolio Manager. Portfolio Management Team (PMS) takes its investment decisions independent of the PCG research and accordingly PMS may have positions contrary to the PCG research recommendation. Kotak Securities Limited does not provide any promise or assurance of favourable view for a particular industry or sector or business group in any manner. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and take professional advice before investing. 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. No part of this material may be duplicated in any form and/or redistributed without Kotak Securities' prior written consent. Details of Associates are available on www.kotak.com 1. “Note that the research analysts contributing to the research report may not be registered/qualified as research analysts with FINRA; and 2. Such research analysts may not be associated persons of Kotak Mahindra Inc and therefore, may not be subject to NASD Rule 2711 restrictions on communications

with a subject company, public appearances and trading securities held by a research analyst account Any U.S. recipients of the research who wish to effect transactions in any security covered by the report should do so with or through Kotak Mahindra Inc. (Member FINRA/SIPC) and (ii) any transactions in the securities covered by the research by U.S. recipients must be effected only through Kotak Mahindra Inc. (Member FINRA/SIPC)at 369 Lexington Avenue 28th Floor NY NY 10017 USA (Tel:+1 212-600-8850). Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. This research report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services. Accordingly, any brokerage and investment services including the products and services described are not available to or intended for Canadian persons or US persons.” Research Analyst has served as an officer, director or employee of subject company(ies): No We or our associates may have received compensation from the subject company(ies) in the past 12 months. We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months: No We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report. Our associates may have financial interest in the subject company(ies). Research Analyst or his/her relative's financial interest in the subject company(ies): No Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: Engineers India, Power Grid, ONGC, GAIL, SBI - Yes Nature of financial interest is holding of equity shares or derivatives of the subject company. Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report.

http://www.kotak.com/

tel:+1

Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No. Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report. "A graph of daily closing prices of securities is available at https://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the "three years" icon in the price chart)." Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com/www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: INZ000200137 (Member of NSE, BSE, MSE, MCX & NCDEX), AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Our research should not be considered as an advertisement or advice, professional or otherwise. The investor is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and the like and take professional advice before investing. Investments in securities market are subject to market risks, read all the related documents carefully before investing. Derivatives are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. In case you require any clarification or have any concern, kindly write to us at below email ids: Level 1: For Trading related queries, contact our customer service at '[email protected]' and for demat account related queries contact us at

[email protected] or call us on: Toll free numbers 18002099191 / 1860 266 9191

Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208.

Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Mr. Manoj Agarwal) at [email protected] or call on 91- (022) 4285 8484.

Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] orcall on 91- (022) 4285 8301.

https://www.nseindia.com/ChartApp/install/charts/mainpage.jsp

august 2, 2017 · kotak securities – private client research please see the disclosure/disclaimer...

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