gujarat ambuja exports absolute : long ) regular coverage 43% … · 2018. 11. 2. · gujarat...
TRANSCRIPT
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 1 of 11
Before reading this report, you must refer to the disclaimer on the last page.
Gujarat Ambuja Exports Absolute : LONG
Relative : Overweight
2QFY19 Result: Estimate (), TP (), Rating () Regular Coverage 43% ATR in 14 Months
Outlook remains buoyant for both maize & soya — maintain LONG Agricultural Products
© 2018 Equirus All rights reserved
Rating Information
Price (Rs) 240
Target Price (Rs) 360
Target Date 31st Dec'19
Target Set On 30th Oct'18
Implied yrs of growth (DCF) 10
Fair Value (DCF) 306
Fair Value (DDM) 20
Ind Benchmark SPBSMIP
Model Portfolio Position No
Stock Information
Market Cap (Rs Mn) 27,520
Free Float (%) 36.24 %
52 Wk H/L (Rs) 309.85/145.5
Avg Daily Volume (1yr) 1,67,840
Avg Daily Value (Rs Mn) 37
Equity Cap (Rs Mn) 229
Face Value (Rs) 2
Bloomberg Code GAEX IN
Ownership Recent 3M 12M
Promoters 63.8 % 0.0 % -2.2 %
DII 0.7 % -0.3 % 0.6 %
FII 1.4 % 0.6 % 1.0 %
Public 34.1 % -0.2 % 0.6 %
Price % 1M 3M 12M
Absolute 31.8 % 9.6 % 39.5 %
Vs Industry 34.3 % 19.5 % 52.6 %
Sukhjit Starch 4.6 % -8.5 % 12.3 %
Gulshan
Polyols -1.1 % -11.1 % -31.1 %
Consolidated Quarterly EPS forecast
Rs/Share 1Q 2Q 3Q 4Q
EPS (18A) 1.5 1.8 5.5 6.9
EPS (19E) 4.6 2.9 5.8 6.4
Gujarat Ambuja Exports (GAEX) reported below-expected 2QFY19 revenues of ~Rs 7.8bn
(flat yoy, -11% vs. EE) with the agro processing segment posting a 9% yoy decline due to
lower crushing utilization amid shortage of the soybean crop. The maize processing
segment however grew by a robust 17% yoy despite a 25-day maintenance shutdown at
the Hubli plant. EBITDAM expanded 311bps yoy to 9.6% (EE 9.8%) as maize segment
profitability improved sharply. Revenue growth shall further accelerate in H2 on the back
of 1) Strong order book in Agro segment, 2) Maize segment to benefit from improving
utilization levels at the Chalisgaon plant and derivative facilities expected to get
commissioned by year-end. We update our FY19/FY20 EPS estimates by +10%/-2% and roll
over to a SOTP-based Dec’19 TP of Rs 360 (Sept’19 TP: Rs 330). Maintain LONG.
Maize generates 51% of 2Q revenue led by Chalisgaon plant: Maize division revenues
grew ~17% yoy even as the company took a hit of ~Rs 400mn due to maintenance
shutdown at the Hubli plant. Volumes grew by 28% yoy but product mix changes impacted
average realisations. With the Hubli plant is back on track and derivative capabilities at
Chalisgaon expected to come on stream by 4Q, average realisations would improve going
forward. Segment EBITDAM stood at 19% (20% in 1Q, 8% last year) mainly helped by higher
export volumes. Due to an increase in corn’s MSP, the procurement price for GAEX has
risen by Rs 1-1.5/kg; accordingly, starch prices have also increased by Rs 1/kg.
Strong tailwinds for agro segment in H2: Agro processing revenues declined ~9% yoy
due to shortage of the soybean crop, which led to a 50% drop in crushing volumes.
Segment EBITM contracted ~329bps yoy/289bps qoq as the product mix shifted towards
lower-margin refining activities (2-3% margins). Currently, GAEX’s agro segment is
operating at 25-30% utilization; however, as government policies remain supportive
(increase in import duties, export incentives on soya DOC cakes), utilization levels are
set to improve in 2HFY19, especially with the soya crop likely to be better than
last year.
Maintain LONG with a revised SOTP-based Dec’19 TP of Rs 360: We have updated our
numbers and revised our FY19/FY20 EPS estimates by +10%/-2%. We roll over to a SOTP-
based Dec’19 TP of Rs 360 (from a Sept’19 TP of Rs 330; Exhibit 9). The maize segment
continues to show consistent growth and profitability while the agro segment continues
to surprise positively on the back of government support. At CMP of Rs 240, the stock is
trading at a P/E of 12x/10x on our FY19/FY20 estimates. Maintain LONG.
Change in Estimates
Rs. Mn FY19E Chg (%) FY20E Chg (%)
Sales 42,097 5% 50,445 0%
EBITDA 4,299 8% 4,983 0%
EPS 19.7 10% 23.5 -2%
Consolidated Financials
Rs. Mn YE Mar FY18A FY19E FY20E FY21E
Sales 33,644 42,097 50,445 55,621
EBITDA 3,173 4,299 4,983 5,755
Depreciation 763 977 1,036 1,139
Interest Expense 179 244 219 164
Other Income 91 102 72 89
Reported PAT 1,799 2,257 2,698 3,224
Recurring PAT 1,799 2,257 2,698 3,224
Total Equity 10,224 12,320 14,823 17,814
Gross Debt 6,986 6,267 5,717 3,517
Cash 69 173 54 279
Rs Per Share FY18A FY19E FY20E FY21E
Earnings 15.7 19.7 23.5 28.1
Book Value 89 107 129 155
Dividends 0.9 1.2 1.4 1.7
FCFF 2.3 12.2 8.7 25.6
P/E (x) 15.3 12.2 10.2 8.5
P/B (x) 2.7 2.2 1.9 1.5
EV/EBITDA (x) 10.9 7.8 6.7 5.3
ROE (%) 19 % 20 % 20 % 20 %
Core ROIC (%) 12 % 13 % 15 % 17 %
EBITDA Margin (%) 9 % 10 % 10 % 10 %
Net Margin (%) 5 % 5 % 5 % 6 %
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 2 of 13
Quarterly performance, consolidated
Rs Mn 2QFY19 2QFY19E 1QFY19 2QFY18 % Change
Comments 2QFY19E 1QFY19 2QFY18
Net Sales 7,763 8,761 8,042 7,751 -11% -3% 0% 25 days plant shutdown and lower inventory of Soybean impacted growth
Raw Materials Consumed 5,544 6,746 5,626 6,060 -18% -1% -9%
Employee benefits expense 255 271 269 218 -6% -5% 17%
Other expenses 1,222 888 1,170 972 38% 4% 26% MTM forex loss of Rs 180mn led to higher other expenses
Total Operating Expenses 7,020 7,905 7,065 7,250 -11% -1% -3%
EBITDA 743 856 977 501 -13% -24% 48%
Depreciation 247 235 235 188 5% 5% 32%
EBIT 496 622 742 313 -20% -33% 58%
Interest 54 58 69 41 -6% -21% 31%
Other Income 18 17 51 16 3% -65% 9%
PBT 459 581 724 288 -21% -37% 59%
Tax 127 168 193 78 -24% -34% 63%
Recurring PAT 331 412 531 209 -20% -38% 58%
Extraordinaires 0 0 0 0
Reported PAT 331 412 531 209 -20% -38% 58%
EPS (Rs) 2.9 3.6 4.6 1.8 -20% -38% 58%
Gross Margin 28.6% 23.0% 30.0% 21.8% 559 bps -144 bps 678 bps
EBITDA Margin 9.6% 9.8% 12.1% 6.5% -21 bps -258 bps 311 bps
EBIT Margin 6.4% 7.1% 9.2% 4.0% -71 bps -284 bps 235 bps
PBT Margin 5.9% 6.6% 9.0% 3.7% -72 bps -309 bps 220 bps
PAT Margin 4.3% 4.7% 6.6% 2.7% -44 bps -233 bps 157 bps
Tax Rate 27.8% 29.0% 26.7% 27.2% -123 bps 109 bps 55 bps
Cost Items as a % of Sales
RM Cost 71.4% 77.0% 70.0% 78.2% -559 bps 144 bps -678 bps
Employee Cost 3.3% 3.1% 3.3% 2.8% 19 bps -6 bps 46 bps
Other Expenses 15.7% 10.1% 14.5% 12.5% 560 bps 119 bps 320 bps
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 3 of 13
Key takeaways from management interaction
Maize segment
▪ Maize segment revenues were impacted by a 25-day maintenance shutdown at the
Hubli plant.
▪ Capacity utilization for the Chalisgaon plant stood at of ~57% in 2QFY19 vs. 37% in
1QFY19; it would reach ~70% in 3QFY19 and 80-85% in 4QFY19.
▪ The derivative facility in Chalisgaon will begin commercial production in 4QFY19.
▪ EBITDAM for the maize segment came in at ~19% in 2QFY19 vs. 8% in 2QFY18.
▪ About 60% of the Chalisgaon topline comes from exports.
▪ Maize segment exports during the quarter stood at ~Rs 1.12bn.
▪ GAEX did grinding of ~172,000 tons of maize in 2QFY19 vs. ~134,000 tons in 2QFY18; the
number would have touched 190,000 had it not been for the Hubli plant shutdown.
▪ Realizations for the quarter declined because the company produces only starch at
the Chalisgaon plant as of now.
▪ GAEX gets ~5% export incentives on starch and starch derivatives.
▪ Currently, the company is buying corn at Rs 14.5-15/kg.
▪ Current price of starch is ~Rs 22+/kg; it was stable at ~Rs 21/kg for the last 4-5 years.
▪ Prices for derivatives are negotiated every quarter and it is easier to pass on the
increase in input cost.
Agro-processing segment
▪ EBITDAM for the agro segment came in at ~5.11% in 2QFY19 vs. ~8.4% in 2QFY18.
▪ Trading revenues increased to ~Rs 870mn in 2QFY19 from ~Rs 820mn in 2QFY18.
▪ Soya crop has been good, with ~11mn tones expected in 2HFY19 (2-3mn tones higher
than last year); therefore, utilization is expected to improve going ahead.
▪ GAEX has an order book of ~1,00,000 tons for 3QFY19.
▪ Due to the US-China trade war, management sees an opportunity of exporting soya
DOC to China; 4-5 companies in India are eligible to export to China and exports
should begin by 3Q-end or 4Q-beginning. GAEX would be amongst the first 2-3
companies to start exporting DOC to China.
▪ 1, 00,000 tons could be exported to China by GAEX in 4Q; this would be in addition to
what the company is doing right now.
▪ Management has guided for 2.5-3L tons of DOC exports in 2HFY19.
▪ GAEX should be able to clock ~7% EBITDAM for full-year FY19.
▪ Import duties on soy refined oil have gone up from 12% to 45%.
▪ Export incentives on soya DOC are at ~10%.
▪ In the absence of DOC exports, the agro division did exports of only ~Rs 10mn in
2QFY19.
▪ During 2QFY19, GAEX did crushing of only ~34,000 tons of soya vs. 68,000 tones in
2QFY18. 2QFY18 inventory was priced at ~Rs 29/kg vs. ~Rs 32/kg in 2QFY19. MSP for
soybean is ~Rs 34/kg.
▪ EBITDAM for oil refining is 2-3% and covers the segment’s fixed expenses.
Cotton segment
▪ GAEX doesn’t expect any substantial profit in this segment.
▪ Unlike 2QFY19, the company had a huge finished goods inventory in 2QFY18.
▪ GAEX produces ~3,500 tons of cotton yarn every quarter.
▪ Exports for the division stood at ~Rs 270mn.
Other important points
▪ Exports revenue stood at ~Rs 1.4bn in 2QFY19 vs. Rs 1.87bn in 2QFY18.
▪ MTM losses for the quarter were to the tune of ~Rs 180mn.
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 4 of 13
Exhibit 1: Quarterly revenue trends in the agro processing segment
Source: Company, Equirus Securities
Exhibit 2: EBITM has been volatile for agro processing segment
Source: Company, Equirus Securities
Exhibit 3: Commissioning of new plant to drive growth in maize division
Source: Company, Equirus Securities
Exhibit 4: Maize EBITM has recovered post a sharp drop in 1HFY18
Source: Company, Equirus Securities
3,0
88
3,7
76
4,4
01
2,8
49
4,0
45
2,6
76
5,1
02
6,6
41
3,6
49
3,6
34
6,0
82
4,2
32
3,2
68
3,3
17
12%
62%
-14% -13%
31%
-29%
16%
133%
-10%
36%19%
-36%
-10% -9%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
0
1000
2000
3000
4000
5000
6000
7000
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Agro Processing Revenue (Rs. mn) Growth (yoy%)(RHS)
145
-19-15 -6
297
-15
340 187 76 282 490 451 241 148
5%
-1% 0% 0%
7%
-1%
7%
3%
2%
8%8%
11%
7%
4%
-2%
0%
2%
4%
6%
8%
10%
12%
-100
0
100
200
300
400
500
600
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Agro Processing EBIT (Rs mn) EBITM (%)(RHS)
2,6
61
2,7
65
3,1
08
3,2
91
3,1
75
3,2
55
3,1
98
3,4
26
2,8
42
3,3
86
3,4
17
3,8
52
4,1
24
3,9
67
3%
16%
27%31%
19% 18%
3% 4%
-10%
4%7%
12%
45%
17%
-20%
-10%
0%
10%
20%
30%
40%
50%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Maize Processing Revenue (Rs mn) Growth (yoy%)(RHS)
354
326
387
412
418
343
363
416
189
157
549
712
657
578
13%
12%12% 13% 13%
11%11%
12%
7%
5%
16%
18%
16%
15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
100
200
300
400
500
600
700
800
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Maize Processing EBIT (Rs mn) EBITM (%)(RHS)
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 5 of 13
Exhibit 5: Corn prices remain benign, though increased MSP is a key risk
Source: Bloomberg, Equirus Securities
Exhibit 6: Soybean and soymeal prices have started moderating recently
Source: NCDEX, Equirus Securities
Exhibit 7: Soymeal exports decline in FY18 as some big players shut shop
Source: SOPA, Equirus Securities
Exhibit 8: Maize remains the focus area in terms of capital allocation
Source: Company, Equirus Securities
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18
Corn Prices (Rs/qtl) Growth (Yoy%)
500
550
600
650
700
750
800
850
10000
15000
20000
25000
30000
35000
40000
45000
50000
Dec-1
2
Mar-
13
Jun-1
3
Sep-1
3
Dec-1
3
Mar-
14
Jun-1
4
Sep-1
4
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
Mar-
16
Jun-1
6
Sep-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Dec-1
7
Mar-
18
Jun-1
8
Sep-1
8
Soyameal (Rs/tonne) Soya refined oil (RHS) (Rs/10kg)
0
50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY16 FY17 FY18
13%
89%
77%
30%
55%
75%80%
72%
50%
76%
64%
95%
0%
20%
40%
60%
80%
100%
120%
0
500
1000
1500
2000
2500
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Capex in maize segment % of total capex
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 6 of 13
Valuation and risks
GAEX currently trades at 12x/10x/9x P/E and an EV/EBITDA of 8x/7x/5x on our
FY19/FY20/FY21 estimates. The company has historically traded in the range of 5-15x
P/E on TTM EPS and an EV/EBITDA of 5-7x on TTM EBITDA.
We use the SOTP methodology to value GAEX as shown below. Overall, we arrive at a
Dec’19 SOTP-based TP of Rs 360, implying a P/E multiple of 18x/15x/13x and an
EV/EBITDA multiple of 11x/9x/8x on our FY19/FY20/FY21 estimates.
Exhibit 9: We arrive at a SOTP-based Dec’19 TP of Rs 360
TTM Dec’19E (Rs mn) EBITDA Multiple EV
Agro processing 1,397 8x 11,173
Maize processing 3,222 11x 35,446
Others 180 4x 719
Group's EV 47,338
Total debt 6,267
Total cash 599
Equity value 41,670
No. of shares outstanding(mn) 115
Dec’19 Target price (Rs) 360
Source: Equirus Securities
Investment risks
Downside risks:
1. Commodity price risk: Factors like political and regulatory changes, seasonal
variations, weather, technology and market conditions can significantly affect
commodity prices. An unexpected movement in commodity prices can have a bearing
on the company’s profitability. GAEX tries to mitigate the risk by covering positions
through hedging at commodity exchanges like CBOT, REFCO, NCDEX, NMCEX and
others.
2. Foreign currency risk: GAEX manages foreign currency exposures through forward
exchange contracts. Forex risks are partly mitigated by purchase of goods/
commodities in respective currencies.
3. Capital misallocation: GAEX has a good business (maize), an average business (oil) and
a bad business (textile). In the last decade, the company has mainly invested in its
maize business and has no intention of investing further in the oil and textile
businesses. Any major investments in these businesses will be against our investment
thesis.
4. Increased competition: While many players have entered and exited the industry
over the last few years, an increase in the number of entrants ahead should not be
surprising given the industry’s growth potential. This would put pressure on pricing
and utilization levels of existing players.
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 7 of 13
Company Snapshot
How we differ from Consensus
- Equirus Consensus % Diff Comment
EPS FY19E 19.7 - - There are no other estimates available.
FY20E 23.5 - -
Sales FY19E 42,097 - -
FY20E 50,445 - -
PAT FY19E 2,257 - -
FY20E 2,698 - -
Segmental Drivers:
Revenue growth (%) FY18 FY19E FY20E FY21E
Agro processing -5% 29% 18% 9%
Cotton 18% -6% 8% 8%
Maize processing 3% 25% 24% 12%
EBITDA margins (%) FY18 FY19E FY20E FY21E
Agro processing 7.9% 6.9% 6.0% 6.0%
Cotton 1.3% 4.1% 4.0% 4.0%
Maize processing 15.8% 18.7% 17.0% 18.0%
Key downside risks:
a) Volatility in corn and soya prices.
b) Increase in competition may put pressure on prices and utilization levels.
DCF Valuations & Assumptions
Rf Beta Ke Term. Growth Debt/IC in Term. Yr
7.7 % 1.3 15.5 % 6.0 % 31.7 %
- FY19E FY20E FY21E FY22-28E FY29-33E
Sales Growth 25 % 20 % 15 % 11 % 10 %
NOPAT Margin 6 % 6 % 6 % 6 % 6 %
IC Turnover 2.32 2.51 3.30 4.40 5.30
RoIC 13.5 % 14.6 % 17.1 % 24.8 % 30.8 %
Years of strong growth 1 2 3 10 15
Valuation as on date (Rs) 85 104 162 258 261
Valuation as of Dec'19 101 123 192 306 308
Based on DCF, we derive Dec’19 fair value of Rs 308.
Company Description:
Gujarat Ambuja Exports Limited (GAEX) is a leading manufacturer of starch derivatives,
soy derivatives and cotton yarn. It has the second highest crushing capacity in India with
six solvent extraction plants across India with a total capacity of 4,600 MTPD. Currently,
the company’s refining capacity stands at 1,200 MTPD. GAEX’s main focus area has been
wet-milling of corn and it has set up three operational processing plants. With
commencement of operations of its new Chalisgaon plant, the company has become the
largest maize processor in India in terms of installed capacity.
Comparable valuation Mkt Cap
Rs. Mn.
Price
Target
Target
Date
EPS P/E BPS P/B RoE Div Yield
Company Reco. CMP FY18A FY19E FY20E FY18A FY19E FY20E FY18A FY19E FY18A FY19E FY20E FY18A FY19E
Gujarat Ambuja Exports
LONG 240 27,520 360 31st Dec'19 15.7 19.7 23.5 15.3 12.2 10.2 89.2 2.2 19 % 20 % 20 % 0.4 % 0.5 %
Sukhjit Starch NA 430 3,173 NA NA 30.7 - - 14.0 - - 364.1 - 9 % - - 1.2 % -
Gulshan Polyols NA 55 2,578 NA NA 3.9 - - 14.1 - - 58.2 - 7 % - - 18.2 % -
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 8 of 13
Consolidated Quarterly Earnings Forecast and Key Drivers
Rs in Mn 1Q18A 2Q18A 3Q18A 4Q18A 1Q19A 2Q19A 3Q19E 4Q19E 1Q20E 2Q20E 3Q20E 4Q20E FY18A FY19E FY20E FY21E
Revenue 6,913 7,751 10,173 8,808 8,042 7,763 12,754 13,538 9,196 9,521 15,349 16,378 33,644 42,097 50,445 55,621 Raw Materials Consumed 4,878 5,064 7,316 6,234 4,300 4,876 9,565 10,154 7,127 7,379 11,512 12,284 23,492 30,889 38,301 43,106
Increase/Decrease in Stock -6 176 -101 -141 1,038 -206 0 0 0 0 0 0 -72 0 0 0
Purchase of stock-in-trade 605 820 488 62 289 874 0 0 0 0 0 0 1,974 0 0 0
Employee benefits expense 193 218 288 285 269 255 266 273 284 284 284 284 984 1,062 1,137 1,216
Other expenses 899 972 1,078 1,199 1,170 1,222 1,697 1,758 1,506 1,506 1,506 1,506 4,093 5,846 6,024 5,544 EBITDA 344 501 1,105 1,169 977 743 1,225 1,354 279 352 2,047 2,304 3,173 4,299 4,983 5,755 Depreciation 183 188 194 199 235 247 247 248 259 259 259 259 763 977 1,036 1,139 EBIT 162 313 912 970 742 496 978 1,106 20 93 1,788 2,046 2,410 3,322 3,947 4,615 Interest 24 41 46 68 69 54 58 63 55 55 55 55 179 244 219 164 Other Income 64 16 40 24 51 18 17 17 18 18 18 18 91 102 72 89 PBT 202 288 906 926 724 459 937 1,059 -17 56 1,751 2,009 2,322 3,179 3,800 4,540 Tax 33 78 274 137 193 127 272 330 204 215 323 360 523 922 1,102 1,317 PAT bef. MI & Assoc. 168 209 632 789 531 331 666 729 -220 -159 1,429 1,649 1,799 2,257 2,698 3,224 Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Profit from Assoc. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Recurring PAT 168 209 632 789 531 331 666 729 -220 -159 1,429 1,649 1,799 2,257 2,698 3,224 Extraordinaries 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Reported PAT 168 209 632 789 531 331 666 729 -220 -159 1,429 1,649 1,799 2,257 2,698 3,224
EPS (Rs) 1.47 1.83 5.51 6.88 4.63 2.89 5.80 6.36 4.35 4.60 6.89 7.69 15.69 19.68 23.53 28.11
Key Drivers
Agro processing revenue (Rs. mn) - - - - - - - - - - - - 17,597 20,519 26,876 30,459 Cotton revenue (Rs. mn) - - - - - - - - - - - - 2,585 2,722 2,776 2,832 Maize processing (Rs. mn) - - - - - - - - - - - - 13,496 17,575 20,837 23,379 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
Sequential Growth (%)
Revenue -35 % 12 % 31 % -13 % -9 % -3 % 64 % 6 % -32 % 4 % 61 % 7 % - - - - Raw Materials Consumed -32 % 4 % 44 % -15 % -31 % 13 % 96 % 6 % -30 % 4 % 56 % 7 % - - - - EBITDA -51 % 45 % 121 % 6 % -16 % -24 % 65 % 10 % -79 % 26 % 481 % 13 % - - - - EBIT -69 % 93 % 191 % 6 % -24 % -33 % 97 % 13 % -98 % 362 % 1,819 % 14 % - - - - Recurring PAT -50 % 24 % 202 % 25 % -33 % -38 % 101 % 10 % -130 % -28 % -999 % 15 % - - - -
EPS -50 % 24 % 202 % 25 % -33 % -38 % 101 % 10 % -32 % 6 % 50 % 12 % - - - -
Yearly Growth (%)
Revenue -10 % 23 % 17 % -17 % 16 % 0 % 25 % 54 % 14 % 23 % 20 % 21 % 1 % 25 % 20 % 10 % EBITDA -57 % 1 % 49 % 66 % 184 % 48 % 11 % 16 % -71 % -53 % 67 % 70 % 17 % 35 % 16 % 15 % EBIT -75 % -2 % 61 % 88 % 358 % 58 % 7 % 14 % -97 % -81 % 83 % 85 % 21 % 38 % 19 % 17 % Recurring PAT -66 % -30 % 39 % 134 % 215 % 58 % 5 % -8 % -142 % -148 % 115 % 126 % 13 % 25 % 20 % 19 %
EPS -66 % -30 % 39 % 134 % 215 % 58 % 5 % -8 % -6 % 59 % 19 % 21 % 13 % 25 % 20 % 19 %
Margin (%)
EBITDA 5 % 6 % 11 % 13 % 12 % 10 % 10 % 10 % 3 % 4 % 13 % 14 % 9 % 10 % 10 % 10 % EBIT 2 % 4 % 9 % 11 % 9 % 6 % 8 % 8 % 0 % 1 % 12 % 12 % 7 % 8 % 8 % 8 % PBT 3 % 4 % 9 % 11 % 9 % 6 % 7 % 8 % 0 % 1 % 11 % 12 % 7 % 8 % 8 % 8 %
PAT 2 % 3 % 6 % 9 % 7 % 4 % 5 % 5 % -2 % -2 % 9 % 10 % 5 % 5 % 5 % 6 %
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 9 of 13
Consolidated Financials P&L (Rs Mn) FY18A FY19E FY20E FY21E Balance Sheet (Rs Mn) FY18A FY19E FY20E FY21E Cash Flow (Rs Mn) FY18A FY19E FY20E FY21E
Revenue 33,644 42,097 50,445 55,621 Equity Capital 229 229 229 229 PBT 2,322 3,179 3,800 4,540
Op. Expenditure 30,472 37,798 45,462 49,866 Reserve 9,994 12,090 14,593 17,584 Depreciation 763 977 1,036 1,139
EBITDA 3,173 4,299 4,983 5,755 Networth 10,224 12,320 14,823 17,814 Others 81 143 147 75
Depreciation 763 977 1,036 1,139 Long Term Debt 6,469 5,750 5,200 3,000 Taxes Paid 464 922 1,102 1,317
EBIT 2,410 3,322 3,947 4,615 Def Tax Liability 517 517 517 517 Change in WC -1,317 -1,321 -2,056 -1,393
Interest Expense 179 244 219 164 Minority Interest 0 0 0 0 Operating C/F 1,385 2,056 1,825 3,046
Other Income 91 102 72 89 Account Payables 1,228 1,354 1,679 1,890 Capex -1,303 -930 -1,052 -312
PBT 2,322 3,179 3,800 4,540 Other Curr Liabi 510 510 510 510 Change in Invest 45 0 0 0
Tax 523 922 1,102 1,317 Total Liabilities & Equity 18,948 20,451 22,729 23,730 Others 5 104 72 89
PAT bef. MI & Assoc. 1,799 2,257 2,698 3,224 Net Fixed Assets 7,718 8,214 7,430 7,403 Investing C/F -1,254 -827 -980 -224
Minority Interest 0 0 0 0 Capital WIP 543 0 800 0 Change in Debt 113 -719 -550 -2,200
Profit from Assoc. 0 0 0 0 Others 573 573 573 573 Change in Equity 0 0 0 0
Recurring PAT 1,799 2,257 2,698 3,224 Inventory 7,237 8,209 10,179 11,456 Others -242 -407 -414 -397
Extraordinaires 0 0 0 0 Account Receivables 2,293 2,768 3,179 3,505 Financing C/F -129 -1,126 -964 -2,597
Reported PAT 1,799 2,257 2,698 3,224 Other Current Assets 515 515 515 515 Net change in cash 1 103 -119 225
FDEPS (Rs) 15.7 19.7 23.5 28.1 Cash 69 173 54 279 RoE (%) 19 % 20 % 20 % 20 %
DPS (Rs) 0.9 1.2 1.4 1.7 Total Assets 18,948 20,451 22,729 23,730 RoIC (%) 12 % 14 % 15 % 16 %
CEPS (Rs) 22.3 28.2 32.6 38.0 Non-cash Working Capital 8,307 9,627 11,683 13,075 Core RoIC (%) 12 % 13 % 15 % 17 %
FCFPS (Rs) 2.3 12.2 8.7 25.6 Cash Conv Cycle 90.1 83.5 84.5 85.8 Div Payout (%) 7 % 7 % 7 % 7 %
BVPS (Rs) 89.2 107.4 129.3 155.4 WC Turnover 4.1 4.4 4.3 4.3 P/E 15.3 12.2 10.2 8.5
EBITDAM (%) 9 % 10 % 10 % 10 % FA Turnover 4.1 5.1 6.1 7.5 P/B 2.7 2.2 1.9 1.5
PATM (%) 5 % 5 % 5 % 6 % Net D/E 0.6 0.5 0.3 0.2 P/FCFF 102.2 19.6 27.5 9.4
Tax Rate (%) 23 % 29 % 29 % 29 % Revenue/Capital Employed 2.1 2.4 2.6 2.7 EV/EBITDA 10.9 7.8 6.7 5.3
Sales Growth (%) 1 % 25 % 20 % 10 % Capital Employed/Equity 1.7 1.6 1.4 1.3 EV/Sales 1.0 0.8 0.7 0.6
FDEPS Growth (%) 13 % 25 % 20 % 19 % Dividend Yield (%) 0.4 % 0.5 % 0.6 % 0.7 %
TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE
25x
5x
10x
15x
20x
0%
20%
40%
60%
80%
100%
0
400
800
De
c/11
Jun
/12
De
c/12
Jun
/13
De
c/13
Jun
/14
De
c/14
Jun
/15
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c/15
Jun
/16
De
c/16
Jun
/17
De
c/17
Jun
/18
De
c/18
Jun
/19
De
c/19
EPS Growth
-20%
-10%
0%
10%
20%
30%
40%
50%
0
24000
48000
72000
96000
De
c/10
Jun
/11
De
c/11
Jun
/12
De
c/12
Jun
/13
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c/13
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/14
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/15
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/18
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Jun
/19
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c/19
5x
10x
12x
15x
18xEBITDA Growth
0%
10%
20%
30%
0
400
800
1200
De
c/11
Jun
/12
De
c/12
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/13
De
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/14
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/15
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/16
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/17
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/18
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/19
De
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RoE
1x
2x
4x
6x
8x
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 10 of 13
Historical Consolidated Financials P&L (Rs Mn) FY15A FY16A FY17A FY18A Balance Sheet (Rs Mn) FY15A FY16A FY17A FY18A Cash Flow (Rs Mn) FY15A FY16A FY17A FY18A
Revenue 25,313 27,365 33,336 33,644 Equity Capital 277 277 229 229 PBT 977 1,194 1,994 2,322
Op. Expenditure 23,668 25,512 30,628 30,472 Reserve 7,996 8,929 8,302 9,994 Depreciation 610 662 714 763
EBITDA 1,645 1,852 2,708 3,173 Networth 8,273 9,206 8,531 10,224 Others 93 -8 108 81
Depreciation 610 662 714 763 Long Term Debt 3,031 3,285 6,356 6,469 Taxes Paid 177 185 467 464
EBIT 1,035 1,191 1,994 2,410 Def Tax Liability 587 494 492 517 Change in WC 1,031 -290 -1,782 -1,317
Interest Expense 150 99 228 179 Minority Interest 0 0 0 0 Operating C/F 2,534 1,374 567 1,385
Other Income 91 103 228 91 Account Payables 629 834 1,015 1,228 Capex -1,234 -1,187 -1,706 -1,303
PBT 977 1,194 1,994 2,322 Other Curr Liabi 325 351 695 510 Change in Invest -84 -176 440 45
Tax 136 190 408 523 Total Liabilities & Equity 12,844 14,170 17,088 18,948 Others 23 39 92 5
PAT bef. MI & Assoc. 841 1,004 1,586 1,799 Net Fixed Assets 5,428 5,681 6,071 7,718 Investing C/F -1,295 -1,324 -1,173 -1,254
Minority Interest 0 0 0 0 Capital WIP 629 1,027 1,587 543 Change in Debt -984 183 3,071 113
Profit from Assoc. 0 0 0 0 Others 778 658 695 573 Change in Equity 0 0 -2,266 0
Recurring PAT 841 1,004 1,586 1,799 Inventory 4,437 4,308 6,244 7,237 Others -258 -210 -214 -242
Extraordinaires 0 0 0 0 Account Receivables 1,081 1,737 2,078 2,293 Financing C/F -1,242 -26 592 -129
Reported PAT 841 1,004 1,586 1,799 Other Current Assets 322 362 356 515 Net change in cash -3 23 -14 1
EPS (Rs) 7.3 8.8 13.8 15.7 Cash 170 397 58 69 RoE (%) 11 % 12 % 18 % 19 %
DPS (Rs) 0.8 0.8 0.8 0.9 Total Assets 12,844 14,170 17,088 18,948 RoIC (%) 8 % 9 % 12 % 12 %
CEPS (Rs) 10.5 12.0 20.1 22.3 Non-cash Working Capital 4,886 5,222 6,968 8,307 Core RoIC (%) 8 % 8 % 12 % 12 %
FCFPS (Rs) 9.9 1.0 -3.7 2.3 Cash Conv Cycle 70.5 69.7 76.3 90.1 Div Payout (%) 16 % 13 % 7 % 7 %
BVPS (Rs) 59.8 66.5 74.4 89.2 WC Turnover 5.2 5.2 4.8 4.1 P/E 32.7 27.4 17.4 15.3
EBITDAM (%) 6 % 7 % 8 % 9 % FA Turnover 4.2 4.1 4.4 4.1 P/B 4.0 3.6 3.2 2.7
PATM (%) 3 % 4 % 5 % 5 % Net D/E 0.3 0.3 0.7 0.6 P/FCFF 24.3 250.7 -64.8 102.2
Tax Rate (%) 14 % 16 % 20 % 23 % Revenue/Capital Employed 2.1 2.2 2.4 2.1 EV/EBITDA 19.2 16.9 12.9 10.9
Sales growth (%) -18 % 8 % 22 % 1 % Capital Employed/Equity 1.5 1.4 1.6 1.7 EV/Sales 1.2 1.1 1.0 1.0
FDEPS growth (%) -25 % 19 % 58 % 13 % Dividend Yield (%) 0.4 % 0.3 % 0.3 % 0.4 %
Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 11 of 13
Equirus Securities
Research Analysts Sector/Industry Email Equity Sales E-mail
Abhishek Shindadkar IT Services [email protected] 91-22-43320643 Vishad Turakhia [email protected] 91-22-43320633
Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 Subham Sinha [email protected] 91-22-43320631
Bharat Celly Healthcare [email protected] 91-79-61909524 Viral Desai [email protected] 91-22-43320635
Depesh Kashyap Mid-Caps [email protected] 91-22-43320671 Viraj Mehta [email protected] 91-22-43320634
Dhaval Dama FMCG, Mid-Caps [email protected] 91-79-61909518 Ruchi Bhadra [email protected] 91-22-43320601
Manoj Gori Consumer Durables [email protected] 91-79-61909523 Cash Dealing Room E-mail
Maulik Patel Oil and Gas [email protected] 91-79-61909519 Ashish Shah [email protected] 91-22-43320662
Pranav Mehta Building Materials [email protected] 91-79-61909514 Ilesh Savla [email protected] 91-22-43320666
Praful Bohra Healthcare [email protected] 91-22-43320611 Manoj Kejriwal [email protected] 91-22-43320663
Rohan Mandora Banking & Financial Services [email protected] 91-79-61909529 Dharmesh Mehta [email protected] 91-22-43320661
Associates E-mail Sarit Sanyal [email protected] 91-22-43320666
Ankit Choudhary [email protected] 91-79-61909533 Vikram Patil [email protected] 91-22-43320677
Dhairya Dhruv [email protected] 91-79-61909528 Gaurav Mehta [email protected] 91-22-43320680
Harshit Patel [email protected] 91-79-61909522 Compliance Officer E-mail
Meet Chande [email protected] 91-79-61909513 Jay Soni [email protected] 91-79-61909561
Nishant Bagrecha [email protected] 91-79-61909526 Corporate Communications E-mail
Prateeksha Malpani [email protected] 91-79-61909532 Mahdokht Bharda [email protected] 91-22-43320647
Ronak Soni [email protected] 91-79-61909525 Quant Analyst
Rushabh Shah [email protected] 91-79-61909520 Kruti Shah [email protected] 91-22-43320632
Shreepal Doshi [email protected] 91-79-61909541 F&O Dealing Room
Varun Baxi [email protected] 91-79-61909527 Kunal Dand [email protected] 91-22-43320678
Vikas Jain [email protected] 91-79-61909531 Dhananjay Tiwari [email protected] 91-22-43320668
Mukesh Jain [email protected] 91-22-43320667
Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.
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Equirus Securities Private Limited
Unit No. 1201, 12th Floor, C Wing, Marathon Futurex,
N M Joshi Marg, Lower Parel,
Mumbai-400013.
Tel. No: +91 – (0)22 – 4332 0600
Fax No: +91- (0)22 – 4332 0601
Corporate Office:
3rd floor, House No. 9,
Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge,
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Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 12 of 13
© 2018 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not
be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited
Analyst Certification
I, Depesh Kashyap/Harshit Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their
securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures
Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the
Capital Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock
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Regulations, 1993 (Reg. No.INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP-324-2017). There are no disciplinary actions taken by any regulatory
authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to
merchant banking services, private equity, mergers & acquisitions and structured finance.
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received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their
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has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or
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Gujarat Ambuja Exports Absolute – LONG Relative – Overweight 43% ATR in 14 Months
October 30, 2018 Analysts: Depesh Kashyap, CFA (+91-7228934327)/ Harshit Patel (+91 9825406497) Page 13 of 13
A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and www.bseindia.com (Choose a company from the list on the browser and select the
“three years” period in the price chart).
Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest
Research Analyst’ or Relatives’ financial interest No
Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No
Research Analyst’ or Relatives’ material conflict of interest No
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