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INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Logistics Impact of Covid-19

INDIA | SECTOR UPDATE

9 April 2020

The Covid-19 in India has shocked economic activity, hurting cargo movement across the country as well as the globe. Sharp correction in stock prices have made valuations attractive from a historical perspective, though it is not yet clear how long economic activity will remain subdued and to what extent. We believe companies with low-risk balance sheets and unique advantages would be safe havens compared to attractive valuations of leveraged players. We have revised our earnings estimates considering a one-month lockdown and gradual recovery in industrial activity thereafter, and relatively higher impact on SME and non-essential goods movement. We prefer Concor and VRL in our coverage, considering their leadership position, unique business model, cost efficiencies, and better long-term sustainable growth prospects. Logistics: Essential service to support economic activity Cargo movement in India was normal before the lockdown announcement and started declining after 24

th March; since then bookings are down by c.50% for most cargo

companies. The impact was significant for road transport in the first week of the lockdown due to strict action on vehicle movement, limiting cargo to only essential goods. The government has taken the following actions to address the issue: (1) Allowing all type of cargo movement; in most cases, officers and drivers are not in a position to differentiate essential and non-essential cargo, particularly for intermediate products, creating chaos. (2) Worker movement stopped/impacted at ports (particularly at JNPT) has now started with the issue of curfew passes and COVID-19 checks. (3) Port and customs officials continue to work 24x7 to support cargo movement. (4) No haulage charges for movement of empty containers and empty flat wagons from 24 March to 30 April 2020.

Road transport continues to be affected; no material benefit of lower oil prices Cargo movement will depend on production activity in the country and availability of drivers. As per our industry interaction, a sizable number of employees (including drivers) have migrated, and bringing them back fast would be a challenge. Road transport is not able to benefit from a fall in crude prices, as the government has increased tax on diesel and also because of lower cargo availability, which has increased the cost of operations. Some of the companies have not increased the freight rate as a social gesture, but we believe that an increase in rates in some cases could be unavoidable due to the cost push associated with lower fleet utilization. Smaller fleet owners will find this a very difficult time to survive (c.75% road operators have less than 5 trucks) and receive financial support, as most of them deal with NBFCs at very high interest rates, whereas larger operators receive attractive bank funding. We believe VRL will benefit from lower leverage, operational efficiency, availability of drivers with own fleet, and national presence.

Rail and air cargo players are able to get relatively better cargo bookings Most ports in India are congested after the lockdown (import/exports are normally planned 2-4 months ahead) and rail is an efficient way to de-congest by moving cargo to ICDs or warehouses. Companies with strong rail networks and storage facilities should benefit, as most customers are not able to take delivery due to limited storage, lower demand, and liquidity issues. Concor, with its strong cash position and storage facilities across the country, and last leg delivery capabilities, has an opportunity to gain market share.

Declining volumes at JNPT and in global trade remain a concern JNPT’s container volumes fell 2% to 5mn TEU in FY20 (down c.13% in March 2020) vs. growth of c.2% in container volumes at all major ports. Losing market share is a concern, particularly after its capacity expansion and the rollout of its user-friendly DPD policy. We believe cargo is shifting to Mundra and Pipavav due to shorter distances and benefit of double-stacking for container rail movement. The situation could worsen in the medium term, as Mundra and Pipavav will receive DFCC connectivity at least a year ahead of JNPT.

Companies

Container Corporation 0f India BUY

CMP, Rs 375

Target Price, Rs 520

VRL BUY

CMP, Rs 162


Allcargo Logistics BUY

CMP, Rs 67

Target Price, Rs 78

Navkar Corporation BUY

CMP, Rs 21

Target Price, Rs 29

Gateway Distriparks

BUY

CMP, Rs 90


Vikram Suryavanshi, Research Analyst

(+ 9122 6246 4111)

[email protected]

Page | 2 | PHILLIPCAPITAL INDIA RESEARCH

LOGISTICS

SECTOR UPDATE

Container Corporation of India Rating: BUY (upgrade); target price: Rs 520 (+39%) Volume fall will be limited for Concor, revenue to continue in lockdown: Container handling volumes will fall by c.2.8% in FY20 after seeing a CAGR of 9.4% over FY16-19. We have assumed volumes falling 4.2% in FY21 (vs. +8.3% earlier) and a recovery of 15% on a low base in FY22 (vs. +13.7% earlier). Exim volumes are assumed to fall 5%, while domestic volumes fall 4% in FY21. With its strong cash position and storage facilities across the country, along with its last leg delivery capabilities, Concor has an opportunity to gain market share.

Strong balance sheet will help ride out current challenging times: The government has also disallowed claim worth Rs 8.6bn out of a total claim of Rs 10.4 under the SEIS export incentive until FY16-19, and Concor has not accounted for any SEIS income in FY20. It is hopeful of receiving SEIS income of c.Rs 1.7bn and is waiting for clarity from the government on the disallowed claim. The company is debt free with a cash balance of Rs 25bn, which will help it to grow in these challenging times, while most other players have leveraged balance sheets. Due to the COVID-19 disturbance, long-distance cargo booking has shifted to railways, and Concor, with its storage facilities, is able to manage de-congestion at ports by evacuating cargo and storing it at its warehouses/ICDs – thereby gaining market share. The government has removed haulage charges for movement of empty containers and empty flat wagons from 24 March to 30 April 2020, which will help Concor to reduce costs and gain market share from road movement, particularly in the domestic market.

The government is planning a strategic stake with management control: The government has decided to sell 30% stake out of total 54.8% in Concor to a strategic partner along with the transfer of management control. We believe privatization will create value for shareholders in the long term, but clarity on land license fees for Concor’s terminals built on Indian railways land on concession – is crucial for its privatization.

Outlook and valuation: We have cut our earnings by 37% / 27% for FY21 / 22 considering the current weakness in global trade. We have not factored SEIS benefits after FY20, and estimate earnings CAGR at -5% to Rs 10.5bn over FY19-22, excluding these benefits. We continue to value the company on DCF and our revised target is Rs 520 (Rs 585 earlier). We upgrade rating from Neutral to BUY. Revised Est. % Revision

Rs bn FY20E FY21E FY22E FY20E FY21E FY22E

Revenue 64,001 60,572 70,892 -2.9 -19.7 -18.0

EBITDA 15,413 13,208 17,264 -3.5 -30.5 -21.7

Core PAT 9,069 7,797 10,530 -4.4 -37.4 -27.0

EPS (Rs) 14.9 12.8 17.3 -4.4 -37.4 -27.0

Container Corporation one-year forward P/E

Source: Company, PhillipCapital India Research

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LOGISTICS

SECTOR UPDATE

VRL Logistics Rating: BUY (Upgrade); target: Rs 225 (+38%) Market leader in less than truck load with a pan India network: VRL is mainly a parcel delivery service provider with pan-India last-mile connectivity. Goods transportation (GT) is c.80% of its revenue while revenue from passenger buses is c.18%. It own fleet is of 4,879 vehicles (4,525 goods carriers and 354 passenger buses) and it has 693 branches. It has a transportation network in 22 states and 5 union territories providing general‐parcel (LTL- less than truck load) and priority‐parcel deliveries, courier and full‐truckload (FTL) services. Its hub‐and‐spoke model enables it to facilitate last‐mile connectivity to remote areas in India. In the goods segment, we have assumed tonnage declining c.5% in FY21 vs. earlier expectation of +7%. Tonnage growth will recover to 12% (vs. earlier 10%) in FY22 on a low base and network-expansion benefits. We believe the bus segment will be significantly hurt and have assumed 15% fall in revenue to Rs 2.9bn in FY21 from earlier expectations of marginal growth. High operating leverage with an asset ownership model: VRL has c.90% capacity in goods transport with its own fleet and uses 8-10% external vehicles, depending on the market situation. The asset-ownership model helps it to control costs, vehicle customization suitable for parcel business, and provides consistency in service and safety of consignments. VRL also has dedicated in-house facilities for vehicle-body-designing and vehicle-maintenance. The company has own petrol pumps for captive consumption, which provide cost advantage of Rs 2-3 per litre and also use c.20-30% bio-diesel, which significantly reduces fuel costs. VRL also benefits from higher volume discounts for purchasing spare parts, tyres, and other consumables due to its large fleet. It has strong brand equity, backed by over 40 years of operations, and should benefit from lower leverage, operational efficiency, availability of drivers with own fleet and national presence. Outlook and valuation: The stock trades at 13.1x FY22 EPS of Rs 12.4. We have cut our earnings estimates for FY20/21 by 45% and 26.4%; maintained valuation at 18x FY22. Our revised target is Rs 225 vs. Rs 300 earlier. Revised Est. % Revision


Revenue 21,282 19,550 22,276 -1.0 -16.7 -14.9

EBITDA 3,126 2,802 3,507 -1.9 -22.9 -14.3

Core PAT 1,009 670 1,116 -1.2 -45.0 -26.4

EPS (Rs) 11.2 7.4 12.4 -1.2 -45.0 -26.4

VRL one-year forward P/E EV/EBITDA


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LOGISTICS

SECTOR UPDATE

Allcargo Logistics Rating: BUY (unchanged); target: Rs 78 (+18%) Multimodal Transport Operations (MTO) and CFS to get hit due to covid-19: Allcargo is one of the largest less-than-container-load (LCL) consolidators in the world with services spread across 90 countries and shipments across 4,000+ port pairs. MTO business account for c.88% of its consolidated revenue and c.54% of its EBITDA MTO volume has significantly outperformed market growth in the past, with its focus on market-share gains and FCL (Full Container Load). Its volume CAGR was 14% over FY16-19 and it grew c.7.4% in 9MFY20 compared to global container trade annual growth of 2-3%. CFS business contributes c.7% of revenue and c.30% of EBITDA. This business has also reported better than market growth with CAGR of 5.8% over FY16-19 and stable volume in 9MFY20, despite negative impact of DPD (Direct port Delivery) and economic slowdown. MTO and CFS businesses are dependent on containerized trade growth globally, which will be hurt due to COVID-19 and the global trade slowdown. Performance has declined in Allcargo’s project business due to lower utilization of high yielding equipment – some of which the company plans to sell for which it expects to receive c.Rs 1bn. We have assumed a 5% fall to 692,278TEU in FY21 volume (earlier assumed growth of 6%) and a recovery of 5% in FY22. We have assumed 7% volume fall in FY21 for CFS and an 8% recovery in FY22. P&E segment is impacted the most and we have assumed 30% decline in revenue to Rs 2.3bn in FY21. Deleveraging of the balance sheet through stale sale and sale of low RoCE assets: To deleverage its balance sheet and unlock value, AGLL entered into a definitive agreement with Blackstone to sell 90% stake in its warehousing SPV for Rs 3.8bn. This will reduce its consolidated debt by c.Rs 4bn and improve the liquidity position of the group. Allcargo’s P&E business reported an EBIT loss of Rs 56mn in 9MFY20 and contributes to c.15% of capital employed, pulling down return ratios. Outlook and valuation: The stock trades at 10.2x FY22 EPS. We have cut earnings by 44% and 32% for FY21 and FY22 as MTO and CFS businesses are linked to global container trade. After the Blackstone deal is complete, and assets in P&E are sold, the leverage profile will improve significantly. We are maintaining valuation at 12x FY22 with a target price of Rs 78 (Rs 111 earlier). Revised Est. % Revision


Revenue 70,869 66,056 70,605 -2.0 -14.7 -16.0

EBITDA 5,021 4,223 4,875 -2.9 -24.1 -20.3

Core PAT 1,709 1,259 1,801 -5.5 -43.7 -32.3

EPS (Rs) 7.0 5.1 7.3 -6.0 -43.7 -32.1

Allcargo one-year forward P/E EV/EBITDA


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LOGISTICS

SECTOR UPDATE

Navkar Corporation Rating: BUY (unchanged); target price: Rs 29 (+38%) Focus on railway operations with end-to-end services: Navkar has a competitive advantage of rail connectivity at Vapi and JNPT, and creating new market opportunities in the domestic container train movement, with a strong business model offering cost benefits to its customers. The company has received a Container Terminal Operator (CTO) license and has paid Rs 100mn as license fees, and acquired two rakes (trains) which it will receive in 4QFY20. Total capex would be c.Rs 1bn in FY20 (increased from earlier guidance of Rs 800mn) mainly for scaling up rail operations including TXR – train examination facility – and acquisition of two trains. It is focusing on client development and end-to-end delivery of containers as a long-term strategy. Navkar has set up a fully-integrated logistics park, close to its ICD at Vapi, at an estimated cost of Rs 3.14bn which complements its ICD business, giving customers the flexibility of storage at affordable costs along with value-added activities. Short-term impact on profitability; operational flexibility to help: The company has started handing DPD containers at JNPT and should benefit from marketing efforts at Vapi and focus on domestic train operations. The company has reported 6% growth in container handing in 9MFY20 supported by 51% growth at Vapi to 96,687 TEU. We expect 3.4% growth in container volume in FY20 and a decline of 2.2% in FY21, as we believe that a decline in exim trade will be relatively compensated by domestic movement and market share gain in Vapi. EBITDA in FY21 is expected at c.Rs 1.7bn with a debt of Rs 4.8bn – debt / EBITDA at 2.8x. It has a cash profit of c.Rs 900mn (Rs 7 per share). Outlook and valuation: The stock trades at 5.7x our FY22 expected earnings of Rs 3.7 and 4.6x EV/EBITDA. We have cut earnings estimates by 50% and 37% respectively in FY21/22. Strong asset base and operational expertise is expected to benefit expanding rail operations. We value the company at 8x FY22 (earlier 10x FY21) with a revised target price of Rs 29 (previous Rs 46). Revised Est. % Revision


Revenue 5,436 5,209 6,038 -4.2 -16.5 -13.5

EBITDA 1,691 1,396 1,624 -6.0 -24.2 -20.9

Core PAT 503 350 552 -12.0 -50.0 -37.0

EPS (Rs) 3.3 2.3 3.7 -12.0 -50.0 -37.0


Navkar Corporation one-year forward P/E EV/EBITDA


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LOGISTICS

SECTOR UPDATE

Gateway Distriparks Rating: BUY (Upgrade); target: Rs 120 (+33%) Strong asset base for end-to-end container logistics: GDL is one of the largest private CFS operators with a total handling capacity of 660,000 TEU p.a., with five CFS facilities at Mumbai, Chennai, Vizag, Krishnapatnam, and Kochi, covering major container trade in India. Gateway Rail provides intermodal rail transportation service for EXIM containers between its rail-linked ICDs at Gurgaon, Ludhiana, Faridabad and Viramgam, and maritime ports at Mumbai, Mundra, and Pipavav. The company has created a strong asset-based network, which will be the beneficiary of secular growth in containerisation. However, the recent slowdown will be a challenge for the company due to high leverage and increased competition. De-leveraging with the sale of Chandra CFS and stake sale in Snowman Logistics: GDL increased its shareholding in Gateway Rail (GRFL) from 50.01% to 99.93% at the end of FY19 for Rs 8.5bn, resulting in gross debt of Rs 8.3bn, up from Rs 1.1bn in FY18. Debt-to-EBITDA increased to 3.8x in FY19 from 0.5x in FY18. It is focusing on deleveraging its balance sheet, and sold Chandra CFS in Chennai for c.Rs 470mn in 2QFY20. GDL also signed a definitive agreement to sell its 40.2% stake in Snowman to Adani Ports for c.Rs 2.96bn (at Rs 44 per share) in 3QFY20, which will help to repay high-cost NCDs worth c.Rs 2.5bn, resulting in comfortable debt/EBITDA of 2.6x in FY21. Higher operating leverage in railways and overall leverage to impact FY21 earnings: Gateway’s performance depends critically on container handling volumes, which are expected to fall by 5% in CFS and 2% in railways business in FY21. The fall is likely to hurt margins, due to (1) higher operating leverage in rail business, and (2) discounts in a weaker market. We expect EBITDA CAGR of 4.9% to Rs 2.8bn over FY20-22. Financial cost will come down to Rs 679mn in FY21 from Rs 1bn in FY20. Net profit CAGR will be -5.3% to Rs 763mn. The company has other income of c. Rs 548mn from SEIS in FY20 and we have not assumed any SEIS income in FY21 and FY22. Outlook and valuation: At CMP, the stock trades at 13.1x our FY22 earnings. We have adjusted financials, considering stake sale in Snowman Logistics. We have valued rail business at 10x FY21 EV/EBITDA – Rs 118 (Rs 138 earlier); CFS at 6x – Rs 2 (earlier Rs 12) per share. We have revised SOTP-based valuation (excluding Snowman). Our new target is Rs 120 vs. Rs 150 earlier. Revised Est. % Revision


Revenue 12,159 11,835 13,330 -2.2 -11.9 -11.4

EBITDA 2,558 2,405 2,813 -2.2 -14.5 -13.5

Core PAT 821 508 763 10.3* -41.5 -30.8

EPS (Rs) 7.6 4.7 7.0 10.3 -41.5 -30.8

Gateway Distriparks one-year forward P/E EV/EBITDA

Source: Company, PhillipCapital India Research Note: * Impact of tax and minority interest

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LOGISTICS

SECTOR UPDATE

Logistics: 4QFY20 expectations Container Corp Of India

Year end March (Rs mn.) Mar-20 Dec-19 QoQ(%) Mar-19 YoY(%) Result expectations

Revenues 15,053 15,276 -1.5% 17,499 -14.0% Expect volume decline of 7.5% yoy; exim -7% and domestic -10%

EBITDA 3,443 3,717 -7.4% 3,828 -10.1% Yoy; margin improvement due to AS 116 and employee cost

adjustment

EBITDA margin (%) 22.9 24.3 21.9

PBT 2,809 3,021 -7.0% 4,837 -41.9% No SIES income vs. Rs 844mn in 4QFY19

PAT 2,107 1,755 20.1% 3,523 -40.2% Tax rate assumed at 25% in 4QFY20 (it was 27.2% in 4QFY19)

EPS (Rs) 3.5 2.9 20.1% 5.8 -40.2%

VRL


Revenues 5,084 5,573 -8.8% 5,129 -0.9% Good transport growth of 2% yoy; bus segment decline of 11%

EBITDA 690 797 -13.4% 600 15.0% Marginal benefit due to AS 116

EBITDA margin (%) 13.6 14.3 11.7

PBT 221 326 -32.2% 326 -32.2%

PAT 166 258 -35.7% 205 -19.1%

EPS (Rs) 1.8 2.9 -35.7% 2.3 -19.1%

Allcargo


Revenues 16,233 17,868 -9.2% 17,273 -6.0% Impact of global slowdown in container trade on MTO and CFS

EBITDA 1,143 1,265 -9.7% 1,072 6.6% Impact of DPD on CFS

EBITDA margin (%) 7.0 7.1 6.2

PBT 418 541 -22.9% 752 -44.4% Benefit of other income and lower tax in 4QFY19

PAT 323 165 95.3% 793 -59.3% Negative impact of higher leverage, capex

EPS (Rs) 1.3 0.7 95.3% 3.2 -59.3%

Navkar


Revenues 1,364 1,443 -5.4% 1,301 4.8% Weakness in port volume, yoy support due to volume growth at Vapi

ICD

EBITDA 394 466 -15.6% 380 3.5% Cost pressure in providing last leg, domestic train operations

EBITDA margin (%) 28.9 32.3 29.2 PBT 157 248 -36.8% 158 -1.1%

PAT 118 151 -22.1% 102 15.4% Effective tax 25% in 4QFY20 vs 35% in 4QFY19

EPS (Rs) 0.8 1.0 -22.1% 0.7 15.4%

Gateway Distriparks - Standalone


Revenues 750 770 -2.6% 1,018 -26.3% Weakness in port volume

EBITDA 148 166 -10.6% 185 -19.9% DPD, pressure on CFS profitability

EBITDA margin (%) 19.7 21.5 18.2

PBT (139) (120) 16.2% 417 -133.3% Other income of Rs 323mn in 4QFY19

PAT (119) (83) 43.7% 349 -134.1% Impact of increased interest cost after increasing stake in rail

business

EPS (Rs) (1.1) (0.8) 43.7% 3.2 -134.1%

Source: Company, PhillipCapital India Research Estimates


LOGISTICS

SECTOR UPDATE

Financials – Container Corporation of India

Income Statement Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Net sales 65,098 64,001 60,572 70,892

Growth, % 10 -2 -5 17

Total income 65,098 64,001 60,572 70,892

Terminal and Service Charges -37,314 -35,262 -33,499 -38,189

Employee expenses -3,368 -3,452 -3,590 -3,949

Other Operating expenses -10,337 -9,874 -10,275 -11,491

EBITDA (Core) 14,079 15,413 13,208 17,264

Growth, % 15.9 9.5 (14.3) 30.7

Margin, % 21.6 24.1 21.8 24.4

Depreciation -4,246 -5,024 -5,309 -5,768

EBIT 9,833 10,389 7,899 11,496

Growth, % 19.6 5.7 (24.0) 45.5

Margin, % 15.1 16.2 13.0 16.2

Interest paid -7 -330 -237 -244

Other Non-Operating Income 7,063 2,539 2,734 2,789

Pre-tax profit 16,888 12,598 10,396 14,040

Tax provided -4,735 -3,530 -2,599 -3,510

Profit after tax 12,154 9,069 7,797 10,530

Net Profit 12,154 9,069 7,797 10,530

Growth, % 15.9 (25.4) (14.0) 35.1

Net Profit (adjusted) 12,154 9,069 7,797 10,530

Unadj. shares (m) 609 609 609 609

Wtd avg shares (m) 609 609 609 609

Balance Sheet Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Cash & bank 1,704 3,623 4,969 2,812

Debtors 884 972 1,069 1,176

Inventory 233 256 281 309

Loans & advances 1,226 1,275 1,326 1,380

Other current assets 43,817 35,930 37,726 39,613

Total current assets 47,864 42,056 45,372 45,290

Investments 25,854 22,654 22,654 27,654

Gross fixed assets 75,293 83,698 91,198 98,698

Less: Depreciation -33,346 -38,370 -43,679 -49,447

Add: Capital WIP 6,247 4,997 3,998 3,198

Net fixed assets 48,194 50,325 51,517 52,449

Total assets 1,21,911 1,15,035 1,19,543 1,25,393

Current liabilities 12,745 13,452 14,200 14,990

Provisions 719 777 839 906

Total current liabilities 13,464 14,229 15,039 15,896

Non-current liabilities 4,769 -1,852 -1,846 -1,839

Total liabilities 18,233 12,377 13,193 14,057

Paid-up capital 3,047 3,047 3,047 3,047

Reserves & surplus 1,00,633 99,611 1,03,303 1,08,294

Shareholders’ equity 1,03,679 1,02,658 1,06,350 1,11,341

Total equity & liabilities 1,21,912 1,15,035 1,19,543 1,25,398


Cash Flow Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Pre-tax profit 16,888 12,598 10,396 14,040

Depreciation 4,246 5,024 5,309 5,768

Chg in working capital -28,604 8,491 -1,161 -1,217

Total tax paid -9,153 -3,150 -2,599 -3,510

Cash flow from operating activities -16,623 22,964 11,946 15,081

Capital expenditure -9,342 -7,156 -6,501 -6,700

Chg in investments 1,469 3,200 0 -5,000

Other investing activities 0 0 0 0

Cash flow from investing activities -7,873 -3,956 -6,501 -11,700

Free cash flow -24,496 19,009 5,445 3,381

Debt raised/(repaid) 7,097 -7,000 6 6

Dividend (incl. tax) -6,131 -1,552 -4,105 -5,544

Cash flow from financing activities 1,576 -8,552 -4,099 -5,533

Net chg in cash -22,920 10,456 1,346 -2,152

Valuation Ratios

FY19 FY20e FY21e FY22e

Per Share data

EPS (INR) 19.9 14.9 12.8 17.3

Growth, % 15.9 (25.4) (14.0) 35.1

Book NAV/share (INR) 170.2 168.5 174.5 182.7

FDEPS (INR) 19.9 14.9 12.8 17.3

CEPS (INR) 26.9 23.1 21.5 26.7

CFPS (INR) (38.9) 33.5 15.1 20.2

DPS (INR) 8.6 2.2 5.8 7.8

Return ratios

Return on assets (%) 10.8 7.8 6.8 8.7

Return on equity (%) 11.7 8.8 7.3 9.5

Return on capital employed (%) 15.6 12.8 10.2 13.0

Turnover ratios

Asset turnover (x) 1.0 0.8 0.8 0.9

Sales/Total assets (x) 0.6 0.5 0.5 0.6

Sales/Net FA (x) 1.4 1.3 1.2 1.4

Working capital/Sales (x) 0.5 0.4 0.4 0.4

Receivable days 5.0 5.5 6.4 6.1

Inventory days 1.3 1.5 1.7 1.6

Payable days 25.1 28.2 30.9 29.2

Working capital days 187.4 142.5 157.9 141.5

Liquidity ratios

Current ratio (x) 3.8 3.1 3.2 3.0

Quick ratio (x) 3.7 3.1 3.2 3.0

Dividend cover (x) 2.3 6.8 2.2 2.2

Total debt/Equity (%) 7.1 0.3 0.3 0.3

Net debt/Equity (%) 5.4 (3.2) (4.4) (2.2)

Valuation

PER (x) 18.8 25.2 29.3 21.7

PEG (x) - y-o-y growth 1.2 (1.0) (2.1) 0.6

Price/Book (x) 2.2 2.2 2.1 2.1

Yield (%) 2.3 0.6 1.5 2.1

EV/Net sales (x) 3.6 3.5 3.7 3.2

EV/EBITDA (x) 16.6 14.6 16.9 13.1

EV/EBIT (x) 23.8 21.7 28.3 19.7


LOGISTICS SECTOR UPDATE

Financials – VRL

Income Statement Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Net sales 21,095 21,282 19,550 22,276

Growth, % 9.7 0.9 -8.1 13.9

Freight -14,743 -14,088 -12,884 -14,613


Other Operating expenses -245 -279 -307 -369

EBITDA (Core) 2,440 3,126 2,802 3,507

Growth, % 4.2 28.1 (10.4) 25.2

Margin, % 11.6 14.7 14.3 15.7

Depreciation -1,006 -1,630 -1,646 -1,768

EBIT 1,434 1,496 1,156 1,739

Growth, % 5.0 4.3 (22.7) 50.4

Margin, % 6.8 7.0 5.9 7.8

Interest paid -109 -366 -362 -356

Other Non-Operating Income 79 95 100 105

Pre-tax profit 1,405 1,225 893 1,488

Tax provided -486 -216 -223 -372

Profit after tax 919 1,009 670 1,116

Net Profit 919 1,009 670 1,116

Growth, % (0.7) 9.7 (33.6) 66.5

Net Profit (adjusted) 919 1,009 670 1,116

Unadj. shares (m) 90 90 90 90

Wtd avg shares (m) 90 90 90 90

Balance Sheet Y/E Mar, Rsmn FY19 FY20e FY21e FY22e

Cash & bank 131 703 316 369

Debtors 795 991 1,629 1,856

Inventory 298 285 217 248

Loans & advances 390 409 432 457

Other current assets 638 458 481 505


Investments 1 1 1 1



Add: Capital WIP 441 36 37 38

Net fixed assets 7,454 9,736 9,279 9,616

Total assets 9,708 12,584 12,356 13,051

Current liabilities 718 803 516 588

Provisions 264 287 316 347

Total current liabilities 982 1,090 832 935

Non-current liabilities 2,283 4,260 4,042 3,846


Paid-up capital 903 903 903 903

Reserves & surplus 5,556 6,237 6,579 7,367

Shareholders’ equity 6,459 7,140 7,482 8,270

Total equity & liabilities 9,708 12,584 12,356 13,051


Cash Flow Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Pre-tax profit 1,405 1,225 893 1,488

Depreciation 1,006 1,630 1,646 1,768

Chg in working capital -40 -196 -875 -203

Total tax paid -486 -216 -223 -372

Other operating activities 0 0 0 0

Cash flow from operating activities 1,885 2,443 1,441 2,682


Chg in investments 0 0 0 0

Cash flow from investing activities -2,135 -3,912 -1,188 -2,105

Free cash flow -250 -1,469 253 576

Equity raised/(repaid) 83 100 100 100

Debt raised/(repaid) 606 2,259 -219 -196

Dividend (incl. tax) 317 273 273 273

Cash flow from financing activities 1,006 2,632 154 177

Net chg in cash 756 1,163 408 753

Valuation Ratios


Per Share data

EPS (INR) 10.2 11.2 7.4 12.4

Growth, % (0.7) 9.7 (33.6) 66.5


FDEPS (INR) 10.2 11.2 7.4 12.4

CEPS (INR) 21.3 29.2 25.6 31.9

CFPS (INR) 20.0 26.0 14.8 28.5

DPS (INR) (3.5) (3.0) (3.0) (3.0)

Return ratios

Return on assets (%) 11.2 12.3 8.3 11.6

Return on equity (%) 14.2 14.1 9.0 13.5

Return on capital employed (%) 1,641.1 1,312.1 1,003.2 1,435.0

Turnover ratios


Sales/Net FA (x) 3.1 2.5 2.1 2.4


Fixed capital/Sales (x) 0.3 0.5 0.5 0.4



Payable days 1.2 1.5 1.8 1.8


Liquidity ratios

Current ratio (x) 3.1 3.5 6.0 5.8

Quick ratio (x) 2.7 3.2 5.5 5.4

Interest cover (x) 13.2 4.1 3.2 4.9


Net debt/Equity (%) 22.2 43.7 43.9 36.7

Valuation

PER (x) 15.9 14.5 21.8 13.1

PEG (x) - y-o-y growth (22.7) 1.5 (0.7) 0.2

Price/Book (x) 2.3 2.0 2.0 1.8

Yield (%) (2.2) (1.9) (1.9) (1.9)

EV/Net sales (x) 0.8 0.8 0.9 0.8

EV/EBITDA (x) 6.6 5.7 6.4 5.0

EV/EBIT (x) 11.2 11.9 15.5 10.2



Financials – Allcargo

Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 68,949 70,869 65,121 69,603

Growth, % 14.0 2.8 -8.1 6.9

Total income 68,949 70,869 65,121 69,603



EBITDA (Core) 4,485 5,021 3,975 4,610

Growth, % 19.7 11.9 (20.8) 16.0

Margin, % 6.5 7.1 6.1 6.6

Depreciation -1,559 -2,277 -2,288 -2,384

EBIT 2,926 2,744 1,687 2,226

Growth, % 35.6 (6.2) (38.5) 32.0

Margin, % 4.2 3.9 2.6 3.2

Interest paid -295 -560 -561 -517


Pre-tax profit 3,021 2,535 1,485 2,171

Tax provided -542 -722 -350 -503

Profit after tax 2,478 1,812 1,135 1,668

Others (Minorities, Associates) -59 -103 -62 -67

Net Profit 2,420 1,709 1,073 1,602

Growth, % 35.8 (29.4) (37.2) 49.3

Net Profit (adjusted) 2,420 1,709 1,073 1,602

Unadj. shares (m) 246 246 246 246

Wtd avg shares (m) 247 247 247 247

Balance Sheet Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Cash & bank 2,406 2,803 2,479 932

Debtors 9,422 10,835 12,460 14,329

Inventory 89 115 150 195


Other current assets 4,022 4,826 5,791 6,949


Investments 3,405 5,439 3,939 3,139



Add: Capital WIP 1,645 1,678 1,712 1,746

Net fixed assets 17,619 18,374 17,620 17,270

Total assets 37,705 43,195 43,306 43,752


Provisions 421 464 510 561




Paid-up capital 491 491 491 491






Pre-tax profit 3,021 2,535 1,485 2,171

Depreciation 1,559 2,277 2,288 2,384

Chg in working capital -492 -1,403 -1,894 -2,299

Total tax paid -652 -522 -350 -503

Cash flow from operating activities 3,436 2,886 1,529 1,753


Chg in investments 503 -2,034 1,500 800

Cash flow from investing activities -2,795 -5,020 51 -1,073

Free cash flow 641 -2,134 1,580 680

Equity raised/(repaid) -911 150 150 150

Debt raised/(repaid) 1,469 3,208 -1,239 -1,196

Dividend (incl. tax) 705 403 403 604

Cash flow from financing activities 1,240 3,761 -686 -442

Net chg in cash 1,881 1,627 894 238

Valuation Ratios


Per Share data

EPS (INR) 9.8 6.9 4.3 6.5

Growth, % 35.8 (29.4) (37.2) 49.3


FDEPS (INR) 9.8 6.9 4.3 6.5

CEPS (INR) 16.1 16.2 13.6 16.2

CFPS (INR) 12.3 10.3 4.7 5.2

DPS (INR) (3.5) (2.0) (2.0) (3.0)

Return ratios

Return on assets (%) 7.5 5.3 3.4 4.5

Return on equity (%) 12.1 8.1 5.0 7.2


Turnover ratios



Sales/Net FA (x) 4.1 3.9 3.6 4.0





Payable days 44.8 47.4 54.1 53.9


Liquidity ratios

Current ratio (x) 1.3 1.5 1.6 1.6

Quick ratio (x) 1.3 1.5 1.5 1.6


Dividend cover (x) (2.8) (3.5) (2.2) (2.2)


Net debt/Equity (%) 17.7 30.1 25.2 26.0

Valuation

PER (x) 6.7 9.5 15.2 10.2

PEG (x) - y-o-y growth 0.2 (0.3) (0.4) 0.2

Price/Book (x) 0.8 0.8 0.8 0.7

Yield (%) (5.3) (3.0) (3.0) (4.5)

EV/Net sales (x) 0.3 0.3 0.3 0.3

EV/EBITDA (x) 4.4 4.5 5.4 4.8

EV/EBIT (x) 6.8 8.2 12.8 9.9



Financials – Navkar

Consolidated Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 4,826 5,436 5,209 6,038

Growth, % 12.7 12.6 -4.2 15.9

Operating expenses -2,349 -2,696 -2,771 -3,188

Employee expenses -366 -359 -354 -411

Other Operating expenses -584 -690 -688 -815

EBITDA (Core) 1,526 1,691 1,396 1,624

Growth, % -8 11 -17 16

Margin, % 32 31 27 27

Depreciation -400 -438 -442 -447

EBIT 1,126 1,253 954 1,177

Growth, % -21.6 11.3 -23.9 23.4

Margin, % 23.3 23.0 18.3 19.5

Interest paid -451 -482 -501 -456


Pre-tax profit 687 788 472 745

Tax provided -159 -285 -123 -194

Profit after tax 528 503 350 552

Others (Minorities, Associates) - - - -

Net Profit 528 503 350 552

Growth, % -47.7 -4.8 -30.5 57.8

Net Profit (adjusted) 528 503 350 552

Unadj. shares (m) 151 151 151 151

Wtd avg shares (m) 151 151 151 151


Cash & bank 105 238 431 -51

Debtors 695 924 886 1,026

Inventory 93 101 109 118


Other current assets 487 926 1,019 1,141


Investments 667 903 993 1,093



Add: Capital WIP 1,215 1,337 401 393

Net fixed assets 20,284 20,649 20,471 20,516

Total assets 22,338 23,748 23,916 23,851

Current liabilities 446 817 856 941

Provisions 68 69 71 72

Total current liabilities 514 887 927 1,014



Paid-up capital 1,505 1,505 1,505 1,505






Pre-tax profit 687 788 472 745

Depreciation 400 438 442 447

Chg in working capital -134 -303 -22 -186

Total tax paid -1,357 309 -123 -194

Cash flow from operating activities -404 1,231 770 813

Capital expenditure -1,349 -803 -264 -492

Chg in investments 630 -236 -90 -99

Other investing activities 0 0 0 0

Cash flow from investing activities -719 -1,039 -354 -591

Free cash flow -1,123 193 415 221

Equity raised/(repaid) 0 0 0 0

Debt raised/(repaid) 1,041 -60 -43 -434

Dividend (incl. tax) 0 0 -179 -269

Cash flow from financing activities 1,041 -60 -222 -703

Net chg in cash -81 133 193 -481

Valuation Ratios


Per Share data

EPS (INR) 3.5 3.3 2.3 3.7

Growth, % (47.7) (4.8) (30.5) 57.8


FDEPS (INR) 3.5 3.3 2.3 3.7

CEPS (INR) 6.2 6.2 5.3 6.6

CFPS (INR) (2.8) 8.1 5.0 5.2

DPS (INR) - - 1.0 1.5

Return ratios

Return on assets (%) 5.5 5.9 4.3 5.2

Return on equity (%) 3.0 2.8 1.9 3.0


Turnover ratios



Sales/Net FA (x) 0.2 0.3 0.3 0.3




Payable days 20.5 21.2 19.9 20.0


Liquidity ratios

Current ratio (x) 3.1 2.7 2.9 2.4

Quick ratio (x) 2.9 2.6 2.7 2.3



Net debt/Equity (%) 27.2 25.4 23.8 23.7

Valuation

PER (x) 6.0 6.3 9.0 5.7

PEG (x) - y-o-y growth (0.1) (1.3) (0.3) 0.1

Price/Book (x) 0.2 0.2 0.2 0.2

EV/Net sales (x) 1.6 1.4 1.4 1.3

EV/EBITDA (x) 5.2 4.6 5.4 4.6

EV/EBIT (x) 7.0 6.2 7.9 6.4



Financials – Gateway Distriparks

Consolidated Income Statement Y/E Mar, Rs mn FY19 FY20e FY21e FY22e

Net sales 4,306 12,159 11,835 13,330

Growth, % 9 182 -3 13

Total income 4,306 12,159 11,835 13,330

Raw material expenses 0 0 0 0

Employee expenses -236 -496 -536 -563


EBITDA (Core) 824 2,558 2,405 2,813

Growth, % (2.3) 210.5 (6.0) 17.0

Margin, % 19.1 21.0 20.3 21.1

Depreciation -326 -1,311 -1,341 -1,384

EBIT 498 1,248 1,064 1,430

Growth, % (7.6) 150.3 (14.7) 34.3

Margin, % 11.6 10.3 9.0 10.7

Interest paid -128 -1,043 -679 -617


Pre-tax profit 498 935 677 1,017

Tax provided -300 -84 -169 -254

Profit after tax 199 851 508 763

Others (Minorities, Associates) 649 -30 0 0

Net Profit 847 821 508 763

Growth, % 1.9 (3.1) (38.1) 50.2

Net Profit (adjusted) 847 821 508 763

Unadj. shares (m) 109 109 109 109

Wtd avg shares (m) 109 109 109 109


Cash & bank 300 347 259 229

Debtors 1,274 1,401 1,513 1,634


Other current assets 139 209 240 276


Investments 2,549 1,445 1,364 1,427



Add: Capital WIP 16 16 16 16

Net fixed assets 14,973 14,462 13,821 13,238

Non-current assets 3,459 5,261 5,301 5,342

Total assets 22,914 23,389 22,802 22,496


Provisions 320 352 387 426




Paid-up capital 1,087 1,087 1,087 1,087






Pre-tax profit 1,147 905 677 1,017

Depreciation 326 1,311 1,341 1,384

Chg in working capital -3,694 -193 -8 -54

Total tax paid -163 -234 -169 -254

Cash flow from operating activities -2,385 1,789 1,841 2,093

Capital expenditure -12,311 -800 -700 -800

Chg in investments 5,371 1,104 82 -63

Cash flow from investing activities -6,291 274 -618 -863

Free cash flow -8,676 2,064 1,223 1,229

Equity raised/(repaid) 6 44 -50 0

Debt raised/(repaid) 7,243 -2,667 -619 -617

Dividend (incl. tax) -524 -577 -641 -641

Cash flow from financing activities 6,733 -3,297 -1,311 -1,259

Net chg in cash -1,942 -1,234 -88 -30

Valuation Ratios


Per Share data

EPS (INR) 7.8 7.6 4.7 7.0

Growth, % 1.9 (3.1) (38.1) 50.2


FDEPS (INR) 7.8 7.6 4.7 7.0

CEPS (INR) 10.8 19.6 17.0 19.7

CFPS (INR) 0.5 26.6 14.6 17.7

DPS (INR) 4.0 4.5 5.0 5.0

Return ratios

Return on assets (%) 5.6 8.0 5.1 6.1

Return on equity (%) 6.4 5.6 3.5 5.2


Turnover ratios



Sales/Net FA (x) 0.5 0.8 0.8 1.0



Receivable days 108.0 42.1 46.7 44.7

Payable days 77.9 29.7 33.2 31.3


Liquidity ratios

Current ratio (x) 1.9 2.0 1.9 1.9

Quick ratio (x) 1.9 2.0 1.9 1.9


Dividend cover (x) 1.9 1.7 0.9 1.4


Net debt/Equity (%) 61.1 36.3 33.2 28.9

Valuation

PER (x) 11.8 12.2 19.7 13.1

PEG (x) - y-o-y growth 6.1 (3.9) (0.5) 0.3

Price/Book (x) 0.8 0.7 0.7 0.7

Yield (%) 4.3 4.9 5.4 5.4

EV/Net sales (x) 4.2 1.3 1.3 1.1

EV/EBITDA (x) 21.9 6.0 6.2 5.1

EV/EBIT (x) 36.3 12.3 13.9 10.0



Stock Price, Price Target and Rating History – Container Corp

Stock Price, Price Target and Rating History - VRL

Stock Price, Price Target and Rating History – Allcargo

B (TP 690) N (TP 690) B (TP 820)

B (TP 8200)

B (TP 840)

B (TP 840)

B (TP 900)

B (TP 720)

M-19 B (TP 675)

B (TP 650) N (TP 610)

200

250

300

350

400

450

500

550

600

650

700

J-17 A-17 O-17 N-17 J-18 F-18 A-18B (TP 8200)J-18B (TP 840)O-18B (TP 900)J-19 F-19 A-19 M-19 J-19B (TP 675)O-19 D-19 J-20 M-20

N (TP 330)

N (TP 350) N (TP 375)

N (TP 411)

N (TP 405)

B (TP 375)

B (TP 345)

B (TP 340)

B (TP 370) N (TP 290)

0

50

100

150

200

250

300

350

400

450

500

M-17 J-17 J-17 S-17 O-17 D-17 J-18 M-18 A-18 M-18 J-18 A-18 O-18 N-18 J-19 F-19 A-19 M-19 J-19 A-19 O-19 N-19 J-20 F-20 M-20

B (TP 200) B (TP 180)

B (TP 190) B (TP 210)

B (TP 200)

B (TP 165) B (TP 174) B (TP 174) B (TP 170)

B (TP 170) B (TP 170)

B (TP 125) B (TP 125) B (TP 130)

0

50

100

150

200

250

F-17 A-17M-17 J-17 A-17 S-17B (TP 190)D-17 F-18M-18M-18 J-18 A-18 S-18 N-18D-18 J-19 M-19A-19 J-19 J-19 S-19 O-19D-19 J-20 M-20



Stock Price, Price Target and Rating History - Navkar

Stock Price, Price Target and Rating History - Gateway

Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. We have different threshold for large market capitalisation stock and Mid/small market capitalisation stock. The categorisation of stock based on market capitalisation is as per the SEBI requirement.

Large cap stocks Rating Criteria Definition

BUY >= +10% Target price is equal to or more than 10% of current market price

NEUTRAL -10% > to < +10% Target price is less than +10% but more than -10%

SELL <= -10% Target price is less than or equal to -10%.

Mid cap and Small cap stocks 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%.

B (TP 250) B (TP 250)

B (TP 250)

B (TP 240)

B (TP 240)

B (TP 240)

B (TP 205)

B (TP 105)

B (TP 100) B (TP 90)

UR B (TP 43) B (TP 46)

0

50

100

150

200

250

A-17M-17 J-17 A-17 O-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20

B (TP 315) N (TP 265) N (TP 280)

B (TP 280)

B (TP 255) B (TP 255)

B (TP 205)

B (TP 195)

B (TP 188) B (TP 190)

N (TP 113) N (TP 100)

0

50

100

150

200

250

300

A-17M-17 J-17 A-17 O-17 N-17 D-17 F-18 M-18M-18 J-18 A-18 S-18 N-18 D-18 J-19 M-19M-19 J-19 J-19 S-19 O-19 D-19 J-20 M-20



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Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

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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 No

4 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 IMPORTANT DISCLOSURES FOR U.S. PERSONS 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. PhillipCapital (India) Pvt Ltd. is authorized to engage in securities activities in India. PHILLIPCAP is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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.

Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through PHILLIPCAP. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor.

The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither PHILLIPCAP nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report.

PHILLIPCAP may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of PHILLIPCAP.

Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States.

The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments.

Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by PHILLIPCAP with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or

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indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein.

No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior written consent of PHILLIPCAP and PHILLIPCAP accepts no liability whatsoever for the actions of third parties in this respect.

PhillipCapital (India) Pvt. Ltd. Registered office: 18th floor, Urmi Estate, Ganpatrao Kadam Marg, Lower Parel (West), Mumbai – 400013, India.

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