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INSTITUTIONAL EQUITY RESEARCH

Ashok Leyland (AL IN) Not a plain field any more

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

INDIA | AUTOMOBILES | Company Update

12 December 2017

• In this report, read about our exciting and revealing experiences as we travelled in a

truck from Mumbai to Jaipur! Sadly, we found that there were no structural changes at state borders due to GST and that time saving earlier was just a temporary phenomenon due to low traffic

• Our industry checks across the chain indicated that competitive intensity is at its peak in the MHCV industry. Few players are offering heavy discounts with schemes similar to ‘Buy 3 Get 1 Truck Free’!

• Tata has rolled up its sleeves: It is (1) offering lucrative discounts, (2) strengthening channel support by offering 15‐days credit to dealers, (3) redesigning its existing products, and (4) launching half dozen products in the next six months. Bharat Benz’ sales have surged substantially after a shift to BS4 (waiting periods of up to two months). AL is fighting 4:1 competition – with all players offering SCR systems

• Initial experience of iEGR engines is strictly OKAY. Fuel efficiency and power is lower than SCR engines (even lower than BS3 in hilly areas). The perception about iEGR engines (not yet proven) is that they have higher maintenance and lower life. Sales teams of Tata, Benz, Eicher, M&M are leaving no opportunity to label iEGR as inferior

• Industry discounts should remain elevated as replacement demand is driving sales and players have become aggressive about establishing their new technology products after initial production constraints

Considering the current industry scenario and our discussions with the entire supply chain, we won’t be surprised if AL loses some market share in the near term (process already started). We also see margin headwinds (high discounts and rising steel prices) unless the scenario changes. Hence, we tweak our estimates and downgrade to Sell with a revised TP of Rs 100 (Rs 110 earlier). Competition stepping up on the gas AL has had a dream run – gaining 12% market share in the last five years, partly due to lax competition rather than just its own strength. However, with competition rolling up its sleeves, the industry scenario will not be so benign ahead. Our checks suggest that Tata Motors, a sleeping giant, has awakened and become extremely aggressive – offering mouth‐watering lifetime‐high discounts of up to Rs 6‐700,000 on 25T trucks. Bharat Benz has a waiting period of two months after transition to BS4. M&M’s Blazo has tasted success and it is offering mileage guarantee (or money back) and huge discounts to push its products. 4:1 match When the industry transitioned to BS4, players with SCR faced teething issues due to low availability of the adblue additive. With this now widely available, at 50% lower cost, players on the SCR engine platform have gained muscle. With only AL offering the iEGR platform, it is pitted against the sales teams of the four players who are using their muscle to win market share. Strategies used by competition include: (1) high discounts to place as many trucks as possible with fleet operators, and (2) sales team of all four players labelling iEGR as inferior. Valuation AL has seen a sharp rerating, and its stock price has had a secular bull run, mainly led by steady market share gains and improving margins (see charts on the next page). With competition ramping up rapidly, high discounts, and RM pressures, we see the risk of AL losing market share and facing margin pressures. We tweak our estimates and downgrade to Sell with a revised TP of Rs 100 (Rs 110 earlier). We value the stock at 10x FY19 EBIDTA.

Key risks: Sharper than estimated industry volume growth, competitive scenario easing.

Downgrade to Sell CMP RS 118 TARGET RS 100 (‐15%) COMPANY DATA O/S SHARES (MN) : 2927MARKET CAP (RSBN) : 347MARKET CAP (USDBN) : 5.452 ‐ WK HI/LO (RS) : 134 / 75LIQUIDITY 3M (USDMN) : 23.1PAR VALUE (RS) : 1 SHARE HOLDING PATTERN, % Sep 17 Jun 17 Mar 17PROMOTERS : 51.3 51.3 50.4FII / NRI : 23.5 22.3 18.0FI / MF : 10.4 9.4 9.8NON PRO : 4.1 4.7 8.3PUBLIC & OTHERS : 10.7 12.3 13.6 PRICE PERFORMANCE, %

1MTH 3MTH 1YRABS ‐9.7 10.2 47.2REL TO BSE ‐11.9 5.3 20.1 PRICE VS. SENSEX

Source: Phillip Capital India Research KEY FINANCIALS Rs mn FY17 FY18E FY19ENet Sales 196,201 226,140 259,139EBIDTA 22,025 21,851 26,362Net Profit 15,739 11,362 14,348EPS, Rs 5.5 4.0 5.0PER, x 21.4 29.7 23.5EV/EBIDTA, x 15.5 15.9 13.1PBV, x 5.5 4.7 4.0ROE, % 25.7 16.0 17.2Debt/Equity (%) 22.7 19.6 14.3 Dhawal Doshi (+ 9122 6246 4128) [email protected] Nitesh Sharma, CFA (+ 9122 6246 4126) [email protected]

30

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90

110

130

150

Apr‐16 Oct‐16 Apr‐17 Oct‐17

Ashok BSE Sensex

ASHOK LEYLAND COMPANY UPDATE

AL has seen sharp market share improvement over the last five years…

23% 26% 23% 26% 26% 29% 33% 34%

63% 60% 59% 53% 55% 55% 52% 49%

0% 0% 1% 1% 2% 2% 2% 3%9% 9% 11% 13% 12% 11% 10% 11%5% 5% 6% 6% 5% 4% 3% 3%

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014 2015 2016 2017

Ashok Tata M&M Eicher Others

Source: Company, PhillipCapital India Research …however, it has been losing share after the shift to BS4

54%53%

52% 52%

48%

50%52%

54%

32%

30%

32%33%

36%

34%

33%

30%

25%

27%

29%

31%

33%

35%

37%

45%

47%

49%

51%

53%

55%

Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Oct‐17

Tata Ashok (RHS)

Source: Company, PhillipCapital India Research Multiples have expanded with market‐share gains… …and margin expansion

20

24

28

32

36

40

4

6

8

10

12

14

16

6/4/2014 6/4/2015 6/4/2016 6/4/2017

Ev/Ebitda Mkt Share (3 Month Moving)

4

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12

14

16

06/04/2014 06/04/2015 06/04/2016 06/04/2017

Ev/Ebitda EBITDA Mgn

Source: Company, PhillipCapital India Research



On the road – Horn OK Please!

Nitesh Sharma, PC auto analyst, in the driver’s seat of a Bharat Benz truck Our truck tales begin… There has been a lot of talk about 25‐30% saving in travel time after GST implementation. We met Mr Rathi (a large fleet operator) to understand what has actually changed on the ground, and if it was sustainable. He told us that there haven’t been any structural changes at the border, and that his fleet was seeing 10‐15% time saving only because of low traffic at border check posts. On noting our surprise, Mr Rathi offered us a ride in a truck from Mumbai to Jaipur (Rajasthan) and we eagerly hopped on (this happened mid September). Our journey started from Bhiwandi, an industrial hub bordering Mumbai at 4 PM where we were sickened to see the quality of warehouses, roads, and parked trucks submerged in rain water. We could only pity the conditions that fleet operators have to deal with. Trucks parked outside ware houses submerged in water



Our journey begins “15 saal se gaadi chalaa rahaa hu sir (I have been driving from the past 15 years),” Baghirath, our driver for the day told us. He hails from a small village in Rajasthan and assures us of a safe and sound two‐day ride till Jaipur. The truck for our journey was a Bharat Benz 25‐tonne truck and Baghirath swore that his vehicle is so smooth that it feels like driving in an Innova. Our driver for the journey Baghirath Our ride: A 25‐tonne Bharat Benz

This truck had already run 420,000km in three years We pray to god before our journey begins

Cashless – yet cash for greasing Our first pit stop before hitting the highway was refueling our truck. As soon as the truck started moving, a traffic cop came running towards it. Apparently, for every truck leaving, Bhiwandi cops need to be greased Rs 600 – for which they give an official challan (ticket) of only Rs 200. After the mandatory palm greasing, we went to an Indian Oil petrol pump just five minutes away from the warehouse where Bhagirath showed off his fuel card and told us how easy this has made his life. Earlier, his bosses used to give him huge cash for fuel, which increased his risk (theft, etc.) while travelling, or forced him to rely only on known petrol pumps, where his bosses could get credit. With fuel cards, he is ‘tension‐free’, he said. Traffic cops handed us a ticket for Rs 200 while actually taking Rs 600 from our driver



Fuel card used by the driver for refueling

While we were still two km away from the national highway, Baghirath started talking about how he was happy with his job with this large fleet operator, as he always received his salary on time. He said he earns Rs 18,000 per month plus Rs 400 as daily allowance and that he had been driving on this route for over a decade and knows the ins and outs of the journey. He kept telling us how smooth Bharat Benz’s trucks are with a ‘car like; suspension quality, and no engine noise or heat coming in the cabin. In his own words: “Ab main sirf Benz hi chalaataa hu, gaadi ki tarah smooth aur powerful hai, engine back bhi nahi maartaa, Tata Ashok mein mazaa nahi hai (now I only drive Benz as it’s as smooth as a car; Tata and Ashok are not as comfortable or fun to drive and have a weaker engine)”. He also told us that Bharat Benz 25‐tonne trucks have a fuel efficiency of 5km per litre vs. competition’s 4.00‐4.25 km per litre. Our Bharat Benz fanboy driver could certainly give an Apple fanboy a run for his money! With roads fully clogged with trucks, we took two hours to hit the highway, which was just 2km away. This journey should have ideally taken no more than 15 minutes.



A toll story We were very eager to find if there were any changes after GST at state borders – and the trip made us understand just how much time, fuel, and money, fleet operators end up wasting at tolls. In our two‐day 1,200 km journey, we passed through around 20 toll booths, where we paid a total of Rs 5,500, or a whopping 15% of the revenue of the fleet operator! 20 tolls on our two‐day journey

Has nothing really changed after GST? About six hours into our journey, we reached the Maharashtra border where we stopped to have dinner at a small restaurant. Baghirath explained that its routine for him to eat before crossing borders, as traffic at weighing bridges can get gruelling – it can sometimes take up to three hours. However, he told us that traffic had been pretty low from June due to GST, leading to about four hours of time saving in his two‐day journey between Mumbai and Jaipur. To our surprise, he explained that nothing has changed after GST; truck operators/drivers had to pay bribes before GST at borders, and they continue to do so after the rollout. “Sahab koi paper check nahi



kartaa hai, fixed rate hai. Maharashtra pe 200 aur Gujarat border pe 100 khilaanaa padtaa hai (Sir, no one checks any papers, we have to grease border officials palms. They have a fixed rate at the Maharashtra border of Rs 200 and Rs 100 at the Gujarat border). And whatever Bhagirath told us panned out – we saw low number of trucks at the weighing bridges in Maharashtra, Gujarat, and Rajasthan. At the Maharashtra border we paid Rs 136 for weighing charges, after which we parked our vehicle. Despite having all the papers in place, Bhagirath went to the RTO official and paid a Rs 200 bribe before we could proceed. It was the same story at the Gujarat and Rajasthan borders – where the RTO officers were a bit more ‘generous’ and asked ‘only’ Rs 100 as a bribe. Trucks entering the weighing bridge Our truck weighed 25 tonnes

Trip P&L Km 1200

Total Revenue 39000Fuel 16800Toll 5500Driver + Clener 4100Bribes 1100Other expenses 4100Total Expenses 31600EBITDA 7400Margin 19%Depreciation 2400EBIT 5000Margin 13%Interest cost 1667PBT 3333Margin 9%

In the two‐day journey, we paid a total toll of Rs 5,500 at 20 toll plazas. We spent Rs 16,800 towards fuel and Rs 1,100 as bribes. With a revenue of Rs 39,000, the fleet operator earned an EBITDA margin of 19% and PBT of 9%. So what really changed after GST? After these two days of a tiring journey, we concluded, quite sadly, that nothing has really changed after GST on a structural basis – at least not on the Mumbai‐Delhi route. Fleet operators are experiencing saving in time mainly due to lower traffic as demonetisation and GST had led to lower number of trucks plying on roads and crossing borders. We have also concluded that the improvement of road transport efficiency due to GST is just temporary. Our talks with various fleet operators and this journey helped us to realise that before GST as well, document scrutiny was minimal – palm greasing was the ‘accepted practice’, then and now. As demand picked up during the festive season, traffic density increased and travel time reverted to normal (this was after our journey).




Financials

Statement Y/E Mar, Rs mn FY16 FY17 FY18e FY19eNet sales 185,771 196,201 226,140 259,139Growth, % 41 6 15 15Other income 2,445 3,986 4,384 5,042Total income 188,216 200,187 230,524 264,180Raw material expenses ‐132,620 ‐139,573 ‐161,877 ‐185,511Employee expenses ‐13,987 ‐15,309 ‐19,595 ‐21,927Other Operating expenses ‐19,949 ‐23,279 ‐27,202 ‐30,381EBITDA (Core) 21,660 22,025 21,851 26,362Growth, % 111.0 1.7 (0.8) 20.6Margin, % 11.7 11.2 9.7 10.2Depreciation ‐4,437 ‐5,179 ‐5,693 ‐6,023EBIT 17,223 16,846 16,157 20,338Growth, % 182.2 (2.2) (4.1) 25.9Margin, % 9.3 8.6 7.1 7.8Interest paid ‐2,735 ‐1,554 ‐1,671 ‐1,551Other Non‐Operating Income 811 1,517 1,744 2,006Pre‐tax profit 15,586 16,809 16,231 20,794Tax provided ‐4,474 ‐1,070 ‐4,869 ‐6,446Profit after tax 11,112 15,739 11,362 14,348Net Profit 11,112 15,739 11,362 14,348Growth, % 375.1 41.6 (27.8) 26.3Net Profit (adjusted) 11,112 15,739 11,362 14,348Unadj. shares (m) 2,846 2,846 2,846 2,846Wtd avg shares (m) 2,846 2,846 2,846 2,846

Balance Sheet Y/E Mar, Rs mn FY16 FY17 FY18e FY19eCash & bank 15,681 9,120 2,515 3,491Debtors 12,509 8,601 15,228 17,450Inventory 17,306 25,011 21,067 24,141Loans & advances 16,583 10,855 10,855 10,855Total current assets 63,227 55,100 51,178 57,450Investments 19,179 30,019 45,019 55,019Gross fixed assets 82,770 87,393 92,393 97,393Less: Depreciation ‐32,023 ‐37,202 ‐42,895 ‐48,919Add: Capital WIP 546 1,576 1,576 1,576Net fixed assets 51,293 51,767 51,073 50,050Total assets 133,700 136,885 147,269 162,518 Current liabilities 46,938 54,982 55,656 60,208Provisions 5,161 6,169 6,169 6,169Total current liabilities 52,099 61,151 61,825 66,378Non‐current liabilities 26,615 14,473 14,481 12,489Total liabilities 78,714 75,624 76,306 78,867Paid‐up capital 2,846 2,846 2,846 2,846Reserves & surplus 52,296 58,415 68,117 80,806Shareholders’ equity 54,986 61,261 70,963 83,652Total equity & liabilities 133,700 136,885 147,270 162,519 Source: Company, PhillipCapital India Research Estimates

Cash Flow Y/E Mar, Rs mn FY16 FY17 FY18e FY19ePre‐tax profit 11,692 13,301 16,231 20,794Depreciation 4,437 5,179 5,693 6,023Chg in working capital ‐3,162 10,003 ‐2,009 ‐744Total tax paid ‐1,174 ‐6,674 ‐4,861 ‐6,438Cash flow from operating activities 10,074 17,275 15,046 19,627Capital expenditure ‐1,973 ‐5,652 ‐5,000 ‐5,000Chg in investments 7,310 ‐10,840 ‐15,000 ‐10,000Cash flow from investing activities 5,337 ‐16,492 ‐20,000 ‐15,000Free cash flow 15,411 783 ‐4,954 4,627Equity raised/(repaid) 0 0 ‐228 ‐228Debt raised/(repaid) ‐5,820 ‐5,922 0 ‐2,000Dividend (incl. tax) ‐1,423 ‐1,423 ‐1,423 ‐1,423Cash flow from financing activities ‐7,243 ‐7,345 ‐1,651 ‐3,651Net chg in cash 8,168 ‐6,562 ‐6,605 976 Valuation Ratios

FY16 FY17 FY18e FY19ePer Share data EPS (INR) 3.9 5.5 4.0 5.0Growth, % 375.1 41.6 (27.8) 26.3Book NAV/share (INR) 19.3 21.5 24.9 29.4FDEPS (INR) 3.9 5.5 4.0 5.0CEPS (INR) 5.5 7.4 6.0 7.2CFPS (INR) 5.2 8.4 4.7 6.2DPS (INR) 0.5 0.5 0.5 0.5Return ratios Return on assets (%) 9.7 12.4 8.7 9.9Return on equity (%) 20.2 25.7 16.0 17.2Return on capital employed (%) 15.7 21.3 15.4 16.8Turnover ratios Asset turnover (x) 3.6 4.2 5.3 6.0Sales/Total assets (x) 1.4 1.5 1.6 1.7Sales/Net FA (x) 3.5 3.8 4.4 5.1Working capital/Sales (x) (0.0) (0.1) (0.1) (0.0)Working capital days (8.9) (28.2) (21.2) (17.5)Liquidity ratios Current ratio (x) 1.2 0.9 0.8 0.9Quick ratio (x) 0.9 0.5 0.5 0.5Interest cover (x) 7.0 10.8 9.7 13.1Dividend cover (x) 7.8 11.1 8.0 10.1Total debt/Equity (%) 36.1 22.7 19.6 14.3Net debt/Equity (%) 7.6 7.8 16.1 10.1Valuation PER (x) 30.3 21.4 29.7 23.5Price/Book (x) 6.1 5.5 4.7 4.0Yield (%) 0.4 0.4 0.4 0.4EV/Net sales (x) 1.8 1.7 1.5 1.3EV/EBITDA (x) 15.7 15.5 15.9 13.1EV/EBIT (x) 19.8 20.3 21.6 17.0


Stock Price, Price Target and Rating History

S (TP 52)

B (TP 98) B (TP 98)B (TP 98)

B (TP 125)B (TP 120)

B (TP 120)B (TP 120)B (TP 105)

N (TP 110)

N (TP 110)

0

20

40

60

80

100

120

140

D‐14 J‐15 M‐15 A‐15 J‐15 J‐15 S‐15 O‐15 D‐15 J‐16 M‐16 A‐16 J‐16 J‐16 S‐16 O‐16 D‐16 J‐17 M‐17 A‐17 J‐17 J‐17 S‐17 O‐17

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

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

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

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




Management Vineet Bhatnagar (Managing Director) (91 22) 2483 1919 Kinshuk Bharti Tiwari (Head – Institutional Equity) (91 22) 6246 4101 Jignesh Shah (Head – Equity Derivatives) (91 22) 6667 9735 Research Automobiles Engineering, Capital Goods Pharma & Specialty Chem Dhawal Doshi (9122) 6246 4128 Jonas Bhutta (9122) 6246 4119 Surya Patra (9122) 6246 4121 Nitesh Sharma, CFA (9122) 6246 4126 Vikram Rawat (9122) 6246 4120 Mehul Sheth (9122) 6246 4123 Banking, NBFCs IT Services & Infrastructure Strategy Manish Agarwalla (9122) 6246 4125 Vibhor Singhal (9122) 6246 4109 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Pradeep Agrawal (9122) 6246 4113 Shyamal Dhruve (9122) 6246 4110 Neeraj Chadawar (9122) 6246 4116 Paresh Jain (9122) 6246 4114 Logistics, Transportation & Midcap Telecom Consumer & Retail Vikram Suryavanshi (9122) 6246 4111 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Media Preeyam Tolia (9122) 6246 4129 Naveen Kulkarni, CFA, FRM (9122) 6246 4122 Technicals Vishal Gutka (9122) 6246 4118 Vishal Gutka (9122) 6246 4118 Subodh Gupta, CMT (9122) 6246 4136 Cement Metals Production Manager Vaibhav Agarwal (9122) 6246 4124 Dhawal Doshi (9122) 6246 4128 Ganesh Deorukhkar (9122) 6667 9966 Economics Vipul Agrawal (9122) 6246 4127 Editor Anjali Verma (9122) 6246 4115 Mid-Caps Roshan Sony 98199 72726 Shruti Bajpai (9122) 6246 4135 Deepak Agarwal (9122) 6246 4112 Sr. Manager – Equities Support

Oil & Gas Rosie Ferns (9122) 6667 9971

Sabri Hazarika (9122) 6246 4130 Sales & Distribution Corporate Communications Ashvin Patil (9122) 6246 4105 Asia Sales Zarine Damania (9122) 6667 9976 Kishor Binwal (9122) 6246 4106 Dhawal Shah 8522 277 6747 Bhavin Shah (9122) 6246 4102 Sales Trader Ashka Mehta Gulati (9122) 6246 4108 Dilesh Doshi (9122) 6667 9747 Execution Archan Vyas (9122) 6246 4107 Suniil Pandit (9122) 6667 9745 Mayur Shah (9122) 6667 9945

Contact Information (Regional Member Companies)

SINGAPORE: Phillip Securities Pte Ltd 250 North Bridge Road, #06‐00 RafflesCityTower,

Singapore 179101 Tel : (65) 6533 6001 Fax: (65) 6535 3834

www.phillip.com.sg

MALAYSIA: Phillip Capital Management Sdn Bhd B‐3‐6 Block B Level 3, Megan Avenue II,

No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Tel (60) 3 2162 8841 Fax (60) 3 2166 5099

www.poems.com.my

HONG KONG: Phillip Securities (HK) Ltd 11/F United Centre 95 Queensway Hong Kong Tel (852) 2277 6600 Fax: (852) 2868 5307

www.phillip.com.hk

JAPAN: Phillip Securities Japan, Ltd 4‐2 Nihonbashi Kabutocho, Chuo‐ku

Tokyo 103‐0026 Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141

www.phillip.co.jp

INDONESIA: PT Phillip Securities Indonesia ANZTower Level 23B, Jl Jend Sudirman Kav 33A,

Jakarta 10220, Indonesia Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809

www.phillip.co.id

CHINA: Phillip Financial Advisory (Shanghai) Co. Ltd. No 550 Yan An East Road, OceanTower Unit 2318

Shanghai 200 001 Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940

www.phillip.com.cn

THAILAND: Phillip Securities (Thailand) Public Co. Ltd. 15th Floor, VorawatBuilding, 849 Silom Road,

Silom, Bangrak, Bangkok 10500 Thailand Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921

www.phillip.co.th

FRANCE: King & Shaxson Capital Ltd. 3rd Floor, 35 Rue de la Bienfaisance

75008 Paris France Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017

www.kingandshaxson.com

UNITED KINGDOM: King & Shaxson Ltd. 6th Floor, Candlewick House, 120 Cannon Street

London, EC4N 6AS Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835

www.kingandshaxson.com

UNITED STATES: Phillip Futures Inc. 141 W Jackson Blvd Ste 3050

The Chicago Board of TradeBuilding Chicago, IL 60604 USA

Tel (1) 312 356 9000 Fax: (1) 312 356 9005

AUSTRALIA: PhillipCapital Australia Level 10, 330 Collins Street

Melbourne, VIC 3000, Australia Tel: (61) 3 8633 9800 Fax: (61) 3 8633 9899

www.phillipcapital.com.au

SRI LANKA: Asha Phillip Securities Limited Level 4, Millennium House, 46/58 Navam Mawatha,

Colombo 2, Sri Lanka Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

www.ashaphillip.net/home.htm

INDIA PhillipCapital (India) Private Limited

No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013 Tel: (9122) 2483 1919 Fax: (9122) 6667 9955 www.phillipcapital.in

http://www.phillip.com.sg/

http://www.poems.com.my/

http://www.phillip.com.hk/

http://www.phillip.co.jp/

http://www.phillip.co.id/

http://www.phillip.com.cn/

http://www.phillip.co.th/

http://www.kingandshaxson.com/

http://www.kingandshaxson.com/

http://www.phillipcapital.com.au/

http://www.ashaphillip.net/home.htm

http://www.phillipcapital.in/


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research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co‐managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report: Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No4 PCIL or its affiliates have managed or co‐managed in the previous twelve months a private or public offering of securities for the

company(ies) covered in the Research report No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.




Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

Copyright: The copyright in this research report belongs exclusively to PCIPL. All rights are reserved. Any unauthorised use or disclosure is prohibited. No reprinting or reproduction, in whole or in part, is permitted without the PCIPL’s prior consent, except that a recipient may reprint it for internal circulation only and only if it is reprinted in its entirety.

Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. Investment in securities market are subject to market risks, you are requested to read all the related documents carefully before investing. You should carefully consider whether trading/investment is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. PhillipCapital and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by you. You are further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek independent third party trading/investment advice outside PhillipCapital/group/associates/affiliates/directors/employees before and during your trading/investment. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PhillipCapital and any of its employees, directors, associates, and/or employees, directors, associates of PhillipCapital’s group entities or affiliates is not inducing you for trading/investing in the financial market(s). Trading/Investment decision is your sole responsibility. You must also read the Risk Disclosure Document and Do’s and Don’ts before investing.

Kindly note that past performance is not necessarily a guide to future performance.

For Detailed Disclaimer: Please visit our website www.phillipcapital.in

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 supervision by 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 it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated, and/or transmitted onward to any U.S. person, which is not 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. If Distribution is to Australian Investors This report is produced by PhillipCapital (India) Pvt Ltd and is being distributed in Australia by Phillip Capital Limited (Australian Financial Services Licence No. 246827). This report contains general securities advice and does not take into account your personal objectives, situation and needs. Please read the Disclosures and Disclaimers set out above. By receiving or reading this report, you agree to be bound by the terms and limitations set out above. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately. 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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