comparative analysis mgl ipo details -...

Comparative Analysis & MGL IPO Details

Sabri [email protected] | +91 22 6667 9756 May 2016

mailto:[email protected]

IGL was incorporated in 1998-99 todevelop the city gas distribution(CNG/PNG) project in Delhi region.Subsequently, IGL expanded intoNoida, Greater Noida andGhaziabad. It recently acquired 50%stake each in Central UP Gas andMaharashtra Natural Gas whichoperates in Kanpur/Bareilly/Jhansi(UP) and Pune (Maharashtra) areasrespectively.

ShareholdingGAIL -22.5% (P)BPCL -22.5% (P)Delhi Govt -5.0%DII+FII -42.3%Others -7.7%

Chairman – Mr. M. Ravindran (GAIL)MD – Mr. Narendra Kumar (GAIL)

Company Background

MGL was established in 1995 todevelop the CGD business inMumbai and neighbouring areas.MGL currently operates in theareas of Mumbai, Thane, NaviMumbai, Mira, Ambernath, Kalyanetc. MGL is presently unlisted andhas recently filed a DRHP for anIPO (25% divestment planned bythe promoters in equalproportion).

ShareholdingGAIL - 49.75% (P)BG Group - 49.75% (P)MaharashtraGovt -0.5% (optional)

Chairman– Dr. A. Karnatak (GAIL)MD – Mr. Rajeev Mathur (GAIL)

GGL was formed in 2015 by themerger of two of the largest CGDcompanies in Gujarat- erstwhile BGpromoted Gujarat Gas Co. lateracquired by state promoted GSPCwith GSPC Gas (CGD arm of GSPC).GGL currently operates in 19 districtsof Gujarat and has recently enteredDadra & NH and Thane areas. GGL isthe largest CGD player by volumesbut is different to IGL/MGL with ~70%industrial PNG share.

ShareholdingGSPC -28.4% (P)GSPL -25.8% (P)Gujarat Govt -6.5% (P)GSEG -0.2% (P)DII+FII -17.3%Others -21.8%

Chairman – Mr. G. R. Aloria (IAS)CEO – Mr. Nitin Patil (in charge)

IGL / GGL / MGL

Operational ParametersGGL

• CNG outlets – 235• CNG vehicles - ~0.5mn pro-rata

(0.8mn total in Gujarat on 350R.Os), Penetration* 18%

• Dom. PNG customers – 1.00mn• Comm./Ind. PNG customers –

11,500/2,700• Pipeline network – 15,000kms

(steel+MDPE+captive trunk)• State presence, IPNG model

IGL

• CNG outlets – 326• Compression capacity –

6.85mnkg/day• CNG vehicles - 0.84mn (0.57mn pvt),

Penetration* 27%• R.O type: OMCs 145, Own 128• Dom. PNG customers – 0.58mn• Comm./Ind. PNG customers – 2,371• Steel pipelines – 686kms• MDPE pipelines – 9,020kms

Gas Sales mix Gas Sourcing

Total 3.83 Total 4.17

CNG 2.95 APM 2.80

DPNG 0.23 PMT 0.88

C+IPNG 0.42 Term LNG 0.44

TPT trading 0.23 Spot LNG 0.05


Total 2.33 Total 2.35

CNG 1.72 APM 1.54

DPNG 0.27 PMT etc 0.54

CPNG 0.14 Term LNG 0.15

IPNG 0.20 Spot LNG 0.12

Q1FY16 run as per MGL DRHP

MGL

• CNG outlets – 180• Compression capacity –

2.50mnkg/day• CNG vehicles - 0.43mn (0.18mn

pvt), Penetration* 40%• R.O type: OMCs 134, Own 13• Dom.PNGcustomers–0.82mn• Comm./Ind. PNG customers –

2,655• Steel pipelines – 407kmsMDPE pipelines – 4,057kms


Total 5.8 Total 6.0

CNG 0.9 APM 1.1

DPNG 0.5 PMT (APM) 0.3

CPNG 0.3 PMT+C/N (I) 0.6

IPNG 4.1 BG LNG 2.2

RasGas LNG 1.0

Spot LNG 0.9 Sales/sourcing in mmscmd* Core area penetration

IGL / GGL / MGL

Volumes & Margins - IGLIGL sales volume IGL sales breakup

IGL gross margin IGL EBITDA margin

2.142.73

3.343.67 3.79 3.85 3.83

28%

22%

10%

3% 1%0%

-5%

0%

5%

10%

15%

20%

25%

30%

0.00.51.01.52.02.53.03.54.04.5

FY10 FY11 FY12 FY13 FY14 FY15 Q1FY16

mmsc

md

Total sales YoY Growth

1.9 2.2 2.6 2.8 2.8 2.9 3.00.2

0.50.8

0.9 1.0 0.9 0.9

0.00.51.01.52.02.53.03.54.04.5


mmsc

md

CNG volumes PNG volumes

7.5 7.6 8.0 8.7 9.2 9.5 9.5

0.01.02.03.04.05.06.07.08.09.0

10.0


Rs./s

cm

Gross margin

4.9 4.95.2

5.6 5.6 5.6 5.6

4.4

4.6

4.8

5.0

5.2

5.4

5.6

5.8


Rs./s

cm

EBITDA margin

IGL / GGL / MGL

Volumes & Margins - GGLGGL sales volume GGL sales breakup

GGL gross margin GGL EBITDA margin

7.15 7.17 6.955.95

6.49

5.820%

-3%

-14%

9%

-10%

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

0.15

0.01.02.03.04.05.06.07.08.0

FY11 FY12 FY13 FY14 FY15 Q1FY16

mmsc

md


0.6 0.6 0.7 0.7 0.8 0.9

6.6 6.6 6.35.2 5.7 4.9

0.01.02.03.04.05.06.07.08.0


mmsc

md


4.1 3.5 3.7 4.2

6.1 5.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0


Rs./s

cm

Gross margin

2.4 2.3 2.3 2.3

4.43.5

0.00.51.01.52.02.53.03.54.04.55.0


Rs./s

cm

EBITDA margin

IGL / GGL / MGL

Volumes & Margins - MGLMGL sales volume MGL sales breakup

MGL gross margin MGL EBITDA margin

1.66 1.761.96 2.08

2.26 2.38 2.33

6%

11%

6%9%

5%

-2%

-4%-2%0%2%4%6%8%10%12%14%

0.0

0.5

1.0

1.5

2.0

2.5


mmsc

md


1.3 1.3 1.4 1.5 1.7 1.8 1.7

0.3 0.50.5 0.6

0.6 0.6 0.6

0.0

0.5

1.0

1.5

2.0

2.5


mmsc

md


6.9 8.19.6 9.2 9.0 9.2 9.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0


Rs./s

cm

Gross margin

4.65.7

7.0 6.4 5.9 5.6 6.0

0.01.02.03.04.05.06.07.08.0


Rs./s

cm

EBITDA margin

IGL / GGL / MGL

Historical Financials ‐ IGL

IGL is standalone

Rs.mn FY10 FY11 FY12 FY13 FY14 FY15Revenue 10,781 17,472 25,187 33,670 39,138 36,810 COGS 4,949 9,835 15,392 21,970 26,292 23,408 OPEX 2,025 2,683 3,450 4,118 5,022 5,471 EBITDA 3,808 4,953 6,345 7,582 7,824 7,930 Margin 35% 28% 25% 23% 20% 22%Depreciation 775 1,029 1,432 1,867 2,195 1,487 Interest cost ‐ 132 479 562 441 298 Other income 211 64 67 129 211 345 Tax rate 34% 33% 32% 33% 33% 33%PAT 2,155 2,598 3,064 3,541 3,603 4,377 EPS (Rs.) 15.4 18.6 21.9 25.3 25.7 31.3 Growth 21% 18% 16% 2% 22%Shares O/S (mn) 140 140 140 140 140 140 DPS (Rs.) 4.5 5.0 5.0 5.5 5.5 5.5 DPR 29% 27% 23% 22% 21% 18%RoAE 29% 28% 27% 26% 22% 23%RoACE 37% 33% 28% 26% 23% 24%Networth 8,254 10,039 12,289 14,930 17,632 20,981 Gross block 11,053 17,160 22,673 27,186 29,733 31,761 Capex 3,891 7,705 5,840 3,675 2,257 1,946 Net debt ‐1,383 2,854 4,086 2,650 530 ‐1,273 Net curr.assets 705 ‐307 688 1,464 2,927 2,780 Debt:equity ‐ 0.3 0.4 0.3 0.2 0.1

IGL / GGL / MGL

Historical Financials - GGL

P is proforma numbers

Rs.mn FY11P FY12P FY13P FY14 FY15Revenue 37,943 58,113 73,272 77,974 90,063 COGS 27,251 49,035 63,866 68,077 74,781 OPEX 4,302 3,124 3,539 4,156 4,220 EBITDA 6,391 5,954 5,867 5,741 11,062 Margin 17% 10% 8% 7% 12%Depreciation 982 1,096 1,283 2,826 2,377 Interest cost 372 477 582 3,003 3,332 Other income 1,095 1,149 965 1,011 1,062 Tax rate 32% 32% 35% 69% 31%PAT 4,165 3,740 3,229 284 4,436 EPS (Rs.) 30.3 27.2 23.5 2.1 32.2 Growth ‐10% ‐14% ‐91% 1460%Shares O/S (mn) 138 138 138 138 138 DPS (Rs.) 2.2 5.0 DPR 105% 16%RoAE 3% 24%RoACE 8% 15%Networth 16,358 19,909 Gross block 47,550 50,114 Capex 4,500 3,437 Net debt 24,109 20,509 Net curr.assets 8,098 10,793 Debt:equity 2.0 1.6

IGL / GGL / MGL

Historical Financials ‐MGLRs.mn FY10 FY11 FY12 FY13 FY14 FY15Revenue 7,728 10,514 13,090 15,144 18,852 20,949 COGS 3,558 5,331 6,209 8,122 11,443 12,957 OPEX 1,394 1,517 1,894 2,192 2,526 3,095 EBITDA 2,776 3,667 4,987 4,830 4,882 4,897 Margin 36% 35% 38% 32% 26% 23%Depreciation 481 556 638 711 807 799 Interest cost 19 9 3 11 2 12 Other income 159 221 194 315 345 407 Tax rate 34% 32% 32% 33% 33% 33%PAT 1,618 2,255 3,077 2,985 2,972 3,010 EPS (Rs.) 18.1 25.2 34.4 33.4 33.3 33.7 Growth 39% 36% ‐3% 0% 1%Shares O/S (mn) 89 89 89 89 89 89 DPS (Rs.) 5.5 5.5 8.7 15.0 17.5 17.5 DPR 30% 22% 25% 45% 53% 52%RoAE 21% 27% 31% 27% 24% 22%RoACE 27% 34% 41% 34% 31% 28%Networth 7,799 9,151 10,670 11,826 12,970 14,075 Gross block 7,962 9,640 11,523 13,737 15,176 16,715 Capex 2,500 2,212 2,080 2,143 1,745 1,881 Net debt ‐1,239 ‐1,364 ‐2,761 ‐3,583 ‐4,229 ‐5,008 Net curr.assets 786 430 293 47 322 518 Debt:equity 0.0 0.0 0.0 0.0 0.0 0.0

IGL / GGL / MGL

Delhi type mandates in Gujarat and Greater Mumbai a material volume driver. Court decisions remain event based triggers though Govt. is pushing for same

IGL / GGL / MGL

Future Volume OutlookIGL• Recent policy drivers in Delhi/NCR like even odd rule and new outlets (opened 72 in CY16 YTD),

mandatory conversion of public vehicles to CNG and introduction of new buses can lead to overallvolume growth pickup from near stagnation in FY15 to 6‐7% yoy in FY17 and ~10% in FY18.CUGL/MNGL likely to grow at 10‐15%. IGL has bid in new areas offered under PNGB bidding whilegreen corridor/highway outlets can be an area of growth in northern markets. Some possibility ofGurgaon being handed back at least partially. Potential of 2‐3mmscmd.

GGL• GGL has witnessed lower volumes due to general slowdown in Gujarat and adverse gas to oil

economics. However with reversal of the same and expansion in new areas like Bhavnagar, Jamnagar,Navasari etc growth could recover to 10‐15% yoy. Thane GA and Dadra & NH are promising areaswhere there is significant potential of 2‐2.5mmscmd combined. Have bid under PNGRB rounds forareas like Dahej (1.5mmscmd), Amreli, Dahod etc. These areas will add materially by decade end.

MGL• Expect 6‐8% yoy growth in core Mumbai (GA‐1) and GA‐2 (suburbs) with 3,000‐4,000 private vehicle

conversion/month. Raigarh can add 2mmscmd cumulatively in 8‐10years. Material volume addition tobe seen starting decade end. GA‐2 also has good potential. Have bid in PNGRB rounds, but not tooaggressive

IGL / GGL / MGL

Margins and CapexIGL• Gross margin to remain robust under declining gas price scenario, both domestic gas as well as LNG

which would last for a year. RSP cuts have been lower than expected. However increase in opex due to higher share of OMC based outlets, midnight discounts and minimum wage hike would offset partially. Expect Rs.5.1‐5.3 EBITDA/scm in FY17‐18 versus Rs.5.7 in FY15. Normal capex of ~Rs.2bn. However Rs.2.5bn reported to have spent on 72 new outlets (7mn kg/day total capacity) opened in CY16 YTD.

GGL• EBITDA/scm bottomed out in Q2FY16 at Rs.2.6. Q4FY16 to see sharp jump to Rs.4/scm+ and H1FY17

likely to see further uptick as gas costs bottom out. Expect FY17/18 margins at Rs.4.5‐5/scm. GGL aims to target a margin where internal cash generation can take care of capex and dividend. Capex of Rs.5bn annually going forward within Gujarat. Rs.1bn annually to be spent in Thane/D&NH for next 5years.

MGL• Strong gross margin of Rs.9.5/scm in Q1FY16 and EBITDA/scm of Rs.6. Higher costs may impact

margins, but opex profile not similar to IGL. Has displayed margin accretive retail pricing during reduction in domestic gas price. I/CPNG exposure less hence APM/PMT costing to dominate. Pricing may be sticky during recovery in domestic gas pricing due to local issues. Normal capex of Rs.1.5‐2bn annually. Raigarh to entail Rs.5bn cumulatively.

Valuations ‐ Listed Entities

Base case scenarioOn a 6/9% volume growthfor FY17/18 andconservative Rs.5.2/scmEBITDA margin, IGL tradesat 14.4x FY18 EPS. At a 15‐16x sector target multiple,IGL has 5‐10% upside.Further rerating triggersfrom volume /margin beat,Gurgaon, new areas etc.

IGL CMP (Rs.) 575 Mcap (Rs.mn) 80,500 Standalone FY13 FY14 FY15 FY16E FY17E FY18EVolumes (mmscmd) 3.7 3.8 3.8 4.0 4.2 4.6Growth 10% 3% 1% 3% 6% 9%EBITDA/scm (Rs.) 5.7 5.7 5.7 5.4 5.2 5.2EPS (Rs.) 25.3 25.7 31.3 30.9 31.9 35.9Growth 16% 2% 22% ‐1% 3% 13%RoE 26% 22% 23% 19% 17% 17%PE (x) 22.7 22.3 18.4 18.6 18.0 16.0PB (x) 5.4 4.6 3.8 3.3 2.9 2.6EV/EBITDA (x) 11.0 10.4 10.0 9.9 9.3 8.2Div. Yield 1.0% 1.0% 1.0% 1.1% 1.2% 1.6%Consol EPS (Rs.) 33.6 34.1 35.5 40.0Adj. Consol PE (x) 17.1 16.9 16.2 14.4

GGL CMP (Rs.) 520 Mcap (Rs.mn) 71,594 No Subsidiaries FY13 FY14 FY15 FY16E FY17E FY18EVolumes (mmscmd) 7.0 6.0 6.5 5.6 6.2 6.8Growth ‐3% ‐14% 9% ‐13% 10% 10%EBITDA/scm (Rs.) 2.3 2.6 4.7 3.6 4.7 4.7EPS (Rs.) 23.5 2.1 32.2 13.2 33.6 38.6Growth ‐14% ‐91% 1460% ‐59% 154% 15%RoE 3% 24% 9% 20% 20%PE (x) 22.2 251.8 16.1 39.3 15.5 13.5PB (x) 4.4 3.6 3.4 2.9 2.5EV/EBITDA (x) 16.7 8.3 12.4 8.8 7.9Div. Yield 0.4% 1.0% 1.0% 1.3% 1.5%

Base case scenarioOn a 10% volume growthfor FY17/18 and Rs.4.7/scmEBITDA margin, GGL tradesat 13.5x FY18 EPS. At a 15‐16x sector target multiple,GGL has 10‐20% upside,However rerating requiresvolume growth to show.

IGL / GGL / MGL

MGL – IPO DynamicsThe divestment process includes conversion of Maharashtra Govt’s CCD in the company to equitywhich would raise its stake to 10% from 0.5% as of now. This would raise paid up share capitalfrom Rs.893mn currently to Rs.988mn. Post this, 25% will be up for listing on the exchanges forpublic. GAIL‐BG’s shareholding would reduce to 32.5% each.

MGL Shareholding

IPO Pre Post

GAIL 49.75% 32.5%

BG 49.75% 32.5%

Maharashtra Govt. 0.50% 10.0%

Public 0.00% 25.0%

Total 100.00% 100.00%

Shares O/S (mn) 89.3 98.8

We build in a valuation of Rs.46.5bn market cap for MGL which implies 12.5x FY18 PE. We estimate0%/7%/7% volume growth under our base case and EBITDA/scm of Rs.5.8/5.9/6 for FY16/17/18.Hence, we project FY18 EPS at Rs.37.8/sh post accounting for the dilution. RoE of 21% at thisvaluation looks reasonably attractive while 50%+ dividend payout would mean an yield of ~4%.

IGL / GGL / MGL

MGL – Valuation CaseImplied CMP (Rs.) 471 Mcap (Rs.mn) 46,500 No Subsidiaries FY13 FY14 FY15 FY16E FY17E FY18EVolumes (mmscmd) 2.1 2.3 2.4 2.4 2.6 2.7Growth 6% 9% 5% 0% 7% 7%EBITDA/scm (Rs.) 6.4 5.9 5.6 5.8 5.9 6.0EPS (Rs.) 33.4 33.3 33.7 34.9 34.5 37.8Growth ‐3% 0% 1% 4% ‐1% 10%RoE 27% 24% 22% 21% 21% 21%PE (x) 14.1 14.1 14.0 13.5 13.7 12.5PB (x) 3.6 3.2 3.0 2.7 2.8 2.6EV/EBITDA (x) 8.9 8.7 8.5 8.3 7.6 7.0Div. Yield 3.2% 3.7% 3.7% 3.9% 3.8% 4.2%

ICMP (Rs) 398 Mcap (Rs.mn) 39,300 Std (x) FY13 FY14 FY15 FY16E FY17E FY18EEPS (Rs.) 33.4 33.3 33.7 34.9 34.5 37.8 PE 11.9 12.0 11.8 11.4 11.5 10.5PB 3.0 2.7 2.5 2.3 2.3 2.2 EV/EBITDA 7.4 7.2 7.0 6.8 6.3 5.8 Div. yield 3.8% 4.4% 4.4% 4.6% 4.5% 4.9%

ICMP (Rs) 537 Mcap (Rs.mn) 53,000 Std (x) FY13 FY14 FY15 FY16E FY17E FY18EEPS (Rs.) 33.4 33.3 33.7 34.9 34.5 37.8 PE 16.1 16.1 15.9 15.4 15.6 14.2PB 4.1 3.7 3.4 3.1 3.2 2.9 EV/EBITDA 10.2 10.0 9.8 9.6 8.8 8.0 Div. yield 2.8% 3.3% 3.3% 3.4% 3.3% 3.7%

Base case scenarioAttractive at implied IPOprice of Rs.471/sh which isRs.46.5bn market cap. At12.5x FY18 PE, we wouldsubscribe looking at theearnings profile till FY18.Beyond Raigarh is keygrowth driver

Bull case scenarioAt Rs.398 or Rs.39.3bnMcap, IPO is highlyattractive at 10.5x PE, vs.15‐16x for sector.

Bear case scenarioAt Rs.537 or Rs.53bnMcap, IPO would not seemattractive at 14x+ FY18 PE.

IGL / GGL / MGL

Appendix – CNG Penetration: Delhi & MumbaiDelhiSale (kt) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Petrol 702 749 762 807 825 813 787 797 831 Diesel 1,326 1,394 1,221 1,093 804 930 1,029 1,129 1,269 CNG 345 380 450 500 596 649 695 698 720 Total 2,373 2,523 2,433 2,400 2,225 2,392 2,511 2,624 2,820 CNG Penetration 15% 15% 18% 21% 27% 27% 28% 27% 26%MumbaiSale (kt) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Petrol 507 532 559 587 616 647 679 713 749 Diesel 296 319 345 372 406 452 493 538 586 CNG 293 299 312 345 360 394 417 456 484 Total 1,095 1,151 1,216 1,304 1,381 1,493 1,589 1,706 1,819 CNG Penetration 27% 26% 26% 26% 26% 26% 26% 27% 27%

DelhiValue (Rs.mn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Petrol 44,970 46,184 50,426 50,216 61,696 74,450 75,555 78,382 77,857 Diesel 49,899 51,952 49,050 43,379 37,065 45,293 55,531 70,627 83,070 CNG 6,417 7,182 8,415 10,200 15,794 20,119 26,063 29,176 26,640 Total 1,01,285 1,05,317 1,07,891 1,03,795 1,14,555 1,39,862 1,57,149 1,78,186 1,87,567 CNG Penetration 6% 7% 8% 10% 14% 14% 17% 16% 14%MumbaiValue (Rs.mn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Petrol 36,664 36,522 40,761 39,687 49,570 63,245 71,035 78,410 78,802 Diesel 13,403 13,518 15,604 16,389 20,378 24,353 29,648 38,606 44,116 CNG 6,442 6,285 7,493 8,275 11,145 12,199 13,764 15,946 18,623 Total 56,508 56,325 63,858 64,350 81,093 99,797 1,14,447 1,32,962 1,41,542 CNG Penetration 11% 11% 12% 13% 14% 12% 12% 12% 13%

For GAIL, MGL IPO would imply Rs.14‐17/sh in valuation (Rs.5 from divestment cash), Money to be raised Rs.10‐13bn for 25%

IGL / GGL / MGL

16

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No

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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 thepast 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 materiallyinterested 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 recipienthereof. 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 referredto 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 notnecessarily 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 researchanalyst 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 dateappearing 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 eventshall 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 anydirect 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, ispermitted 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. The recipient should carefully consider whether trading/investment is appropriate for therecipient in light of the recipient’s experience, objectives, financial resources and other relevant circumstances. PCIPL and any of its employees, directors, associates, group entities, or affiliates shall not beliable for losses, if any, incurred by the recipient. The recipient is further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek trading/investment advicebefore investing. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PCIPL and any of its employees, directors, associates, group entities, affiliates are not inducingthe recipient for trading/investing in the financial market(s). Trading/Investment decision is the sole responsibility of the recipient.

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 broker-dealer and therefore the analyst(s) is/are not subject to supervisionby a U.S. broker-dealer, 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.

This report is intended for distribution by PhillipCapital (India) Pvt Ltd. only 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 the 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 itshould not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated, and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.

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, PhillipCapital (India) Pvt Ltd. has entered into an agreement with a U.S. registered broker-dealer, Decker & Co, LLC. Transactions in securities discussed in this research report should be effected through Decker & Co, LLC or another U.S. registered broker dealer.

PhillipCapital (India) Pvt. Ltd.Registered office: No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013

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