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INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Ramkrishna Forgings (RMKF IN)

Play the cycle, win the game INDIA |AUTOMOBILES | Initiating Coverage

4 September 2017

RMKF faced a thorny two years (FY16‐17), mainly as its key market of US Class‐8 trucks saw a sharp downturn and also because of the delayed ramp up of its new plant. We see the company doing well from here with an improving end‐market outlook and new order wins. Key positives: • New order wins from three OEMs in Europe worth upto EUR 4mn each • Increased penetration within existing domestic OEMs – over five product approvals

leading to market‐share gains • The North American Class‐8 market is in a strong sustained growth mode • In advanced stages of winning more orders in the export market • Scouting for orders in new segments – aeronautics, defence, and oil & gas We see RMKF’s financials showing marked improvement from here: • 23% revenue CAGR in FY17‐20 • With the new press reaching optimal utilisation, 270bps improvement in margins to

21.5% in FY20; earnings to rise 8x by FY20 • The capex cycle is over; see substantial improvement in FCF and return ratios Strong order wins and new segments (heavy press) to drive growth RMKF has been consistently working on increasing content per vehicle and gaining market share from key OEM clients, which is visible from its development of +150 new products per year over the last five years. With its heavy 12,500‐tonne press commercialising in early FY17, it has gained considerable capability in manufacturing complex components. While the scaling‐up of its new press has been slower than street expectations, this was because of the sudden collapse of the US Class‐8 truck market. RMKF has come out strong from difficult times and has steadily gained fresh orders – both domestic and export. Its growth outlook looks good with the addition of three new European OEMs, share gain in the domestic and North American market and the improving global CV cycle. We expect strong 23% revenue CAGR in FY17‐20, mainly led by high‐margin exports and complex value‐added products. End market improving Of RMKF’s total FY17 revenues, 70% came from India. With the industry sailing through multiple issues – demonetisation, emission norms, GST transition – we see steady improvement in domestic MHCV sales (PC: 0/11% volume growth in FY18/19). Moreover, our analysis of North American Class‐8 trucks industry suggests a high correlation between ISM new orders and Class‐8 truck demand. With ISM New Orders showing strength, and low inventory, we see robust demand in this market in FY18‐19. Financials strengthening, valuations lucrative We expect a marked improvement in RMKF’s financials – 23% revenue CAGR in FY17‐20. With its capex cycle over, FCF should show substantial improvement and ROE should rise to 16%. Trading at 12x FY20 earnings, we see immense value in the company with its strong potential. Initiate with a BUY rating, valuing the company at Rs 700/share, 15x FY20 earnings, which is a hefty 30%+ discount to Bharat Forge. Key risks to our call include a slowdown in US Class‐8 trucks, slower execution of newly won orders, and market‐share loss by any key OEMs.

BUY (Initiate) CMP RS 550 TARGET RS 700 (+27%) COMPANY DATA O/S SHARES (MN) : 33MARKET CAP (RSBN) : 18MARKET CAP (USDBN) : 0.352 ‐ WK HI/LO (RS) : 583 / 256LIQUIDITY 3M (USDMN) : 0.4PAR VALUE (RS) : 10 SHARE HOLDING PATTERN, % Jun 17 Mar 17 Dec 16PROMOTERS : 50.4 50.4 50.4FII / NRI : 12.6 12.4 12.6FI / MF : 11.1 10.6 10.6NON PRO : 10.1 10.4 10.1PUBLIC & OTHERS : 15.8 16.2 16.3 PRICE PERFORMANCE, %

1MTH 3MTH 1YRABS 5.4 19.4 36.9REL TO BSE 7.8 17.5 25.3 PRICE VS. SENSEX

Source: Phillip Capital India Research KEY FINANCIALS Rs mn FY18E FY19E FY20ENet Sales 10,900 13,306 16,145EBIDTA 2,189 2,803 3,512Net Profit 529 989 1,521EPS, Rs 16.2 30.3 46.7PER, x 34.3 18.4 11.9EV/EBIDTA, x 10.8 8.0 5.7P/BV, x 2.5 2.2 1.9ROE, % 7.2 12.0 15.8Debt/Equity (%) 93.8 74.0 55.0

Source: PhillipCapital India Research Est. Nitesh Sharma, CFA(+ 9122 6246 4126) [email protected] Dhawal Doshi(+ 9122 6246 4128) [email protected]

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RAMKRISHNA FORGINGS INITIATING COVERAGE

Strong order wins, new segments to drive growth Focus on new complex products, increasing content per vehicle Develops more than 150 new products every year RMKF has been consistently working on increasing content per vehicle and gaining market share of key OEMs, which is visible in the development of over 150 new products (per annum) over the last five years. Very few companies globally have such heavy‐duty capacities With its heavy 12,500‐tonne press commercialising in early FY17, RMKF gained considerable strength in manufacturing complex components. It spent Rs 700mn to set up four new heavy presses (3,100, 4,300, 6,300, and 12,500 MT), the only company after Bharat Forge to own a 12,500MT press. With sub‐30% utilisation in FY17, this new unit holds a strong opportunity for RMKF, as very few companies globally have such heavy‐duty capacities. At full utilisation, RMKF has the potential to generate Rs 1.2bn revenue from this unit. Sailed through difficult times While the new press’ has scaled up slower than street anticipated, this was because of the sudden collapse of the US Class‐8 truck market. RMKF has sailed through difficult times strongly, and has steadily garnered fresh orders in both domestic and export markets. New product development

Source: Company, PhillipCapital India Research RMKF’s revenue CAGR between FY10‐17 was a strong 19% – with exports posting a stellar 52% CAGR. However, in FY17, its exports revenue declined 36% mainly due to the double‐digit drop in North American Class‐8 truck sales. Our analysis (below) suggests that the Class‐8 truck market is in a strong recovery mode as ISM new orders remain strong and US freight index post robust improvement. In addition, RMKF has recently won multi‐year contracts from three new European OEMs; the execution of these will be mainly towards the end FY18. We see a robust outlook for RMKF with: (1) the three new European OEM contracts, (2) market share gains in the Indian and north American markets, and (3) the improvement in the global CV cycle. We forecast strong 23% revenue CAGR in FY17‐20 mainly led by the high‐margin export segment and complex value‐added products; exports should clock 36% CAGR in FY17‐20.

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We forecast strong 23% revenue CAGR in FY17‐20 mainly led by the high‐margin export segment and complex value‐added products



Exports’ contribution to increase materially Europe to contribute majority of exports growth

Source: Company, PhillipCapital India Research Significant headway in the domestic segment with fresh order wins With its new heavy‐tonnage press, RMKF has increased its capabilities in manufacturing heavy‐ and critical‐forged products – namely front axles, bell crank, connecting rods, crankshafts, and knuckles. With already strong client relationships, RMKF has not only won orders in exports, but has also made significant headway in the domestic segment – where it has won fresh orders from Tata Motors and Ashok Leyland for knuckles, front axles, and bell cranks. RMKF should nearly double its revenue from its key domestic clients (TTMT and AL) based on increasing content and market share wins. Domestic revenue CAGR of 18% in FY17‐20. Topline to see 23% CAGR – mainly led by exports

Source: Company, PhillipCapital India Research

71.9% 66.6% 64.0% 61.9%

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RMKF should nearly double its revenue from its key domestic clients (TTMT and AL) based on increasing content and market share wins



End‐market improvement Class‐8 trucks should see healthy double‐digit growth rates until 2019 Our analysis suggests that the North American Class‐8 truck market is highly correlated to the US ISM New Orders Index (see chart below). Class‐8 truck orders saw a sharp 36% drop in 2016 mainly as the ISM new orders and freight shipments remained in the negative territory – which led to sharp inventory correction by OEMs. With steady improvement in the ISM New Orders Index and a pick up in freight demand, the Class‐8 orders have seen a sharp jump of 42% YTD‐CY17. This segment should report healthy double‐digit growth rates until 2019. Historically, the Class‐8 industry has seen a 3‐5 years of growth cycle before falling off – ze believe the industry is in its early days of recovery, and this is beneficial for RMKF, which has a meaningful exposure to the segment. North American Class‐8 orders are highly correlated with ISM New Orders Index

Source: Company, PhillipCapital India Research Class‐8 orders are up 42% YTD CY17 after posting a 36% decline in 2016


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We believe the industry is in its early days of recovery, and this is beneficial for RMKF, which has a meaningful exposure to the segment



Our analysis of historical data suggests that after 2‐3 years of falling, North American Class‐8 truck sales see a 3‐5‐year growth cycle. With Class 8 vehicle sales in North America recently picking up sharply, we expect the industry to remain in an upswing until 2020 – going by historical precedents. NA Class‐8 sales have historically seen a 3‐5 year growth cycle

Source: Company, PhillipCapital India Research Cass freight shipments Index, which measures freight activity, has steadily been in the positive territory since mid‐2016 Cass Freight Shipments Index


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Our analysis of historical data suggests that after 2‐3 years of falling, North American Class‐8 truck sales see a 3‐5‐year growth cycle. With Class 8 vehicle sales in North America recently picking up sharply, we expect the industry to remain in an upswing until 2020 – going by historical precedents.

Cass freight shipments Index, which measures freight activity, has steadily been in the positive territory since mid‐2016



After peaking out in 2016, Class‐8 inventory levels remained at comfortable levels, providing more legs to the recovery. Also, inventory/sales ratio remains below the historical average of 2.5x. North American Class‐8 inventory at comfortable levels… …and inventory‐to‐sales below historical average


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Europe cooling off, but not a problem While North America is experiencing strong growth in its Class‐8 truck market, the European region is seeing steady yet slowing growth. However, this is not a concern as the company generates less than 4% revenue from European OEMs and has recently won orders from three OEMs – worth upto EUR 4mn each. European heavy commercial vehicle growth cooling off

Source: Company, PhillipCapital India Research Domestic MHCV market bottoming out The domestic MHCV segment has seen declining volumes over the past 12 months, mainly impacted by demonetisation, GST, and the emission‐norms transition. With these behind, a smooth roll out of GST, and recovering rural demand should see the MHCV segment remaining flattish in FY18 and posting double‐digit growth in FY19/20. RMKF is likely to see higher‐than‐industry growth as it has recently received approvals for more varieties of front‐axle beams, knuckles, and crankshafts from Ashok Leyland and Tata Motors. We estimate its domestic revenues to clock 18% CAGR in FY17‐20. Domestic MHCV market has bottomed out


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Financials strengthening, valuations lucrative Financials to make a sharp improvement • With improving demand outlook and strong order wins, RMKF should post strong

23% CAGR in revenue in FY17‐20. o Exports should clock 36% CAGR, led by fresh new orders from European

OEMs, ramp up of existing clients Dana and Meritor, and overall strong market outlook

o Domestic revenue CAGR should be 18%, led by increasing content and market‐share wins from key clients (TTMT and AL)

• Utilisation levels will cross 90% in FY20 • Margins will see significant (270bps) improvement in FY17‐20 as operating

leverage kicks in • Profits will increase 8x to Rs 1.5bn in FY20 (PAT) Strong revenue CAGR of 23% over FY17‐20


Improving utilisation and margin profile


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Free cash flow and return ratios to perk up With big capex (new presses) over, and a material turnaround in outlook, RMKF will see a strong increase in free cash flows, as it sweats assets. We expect ROE and ROCE to increase to 17% by FY20. FCF to improve as capex cycle is behind


Return ratios to improve substantially


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Valuation Trading at 12x FY20 earnings, we see immense value in the company with its strong potential. Initiate with a BUY rating, valuing the company at Rs 700/share, 15x FY20 earnings, which is a hefty 30%+ discount to Bharat Forge 1yr forward band chart


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PE Band ‐ Ramkrishna Forgings Ltd.



Company snapshot • Second‐largest forgings player in India, established in 1981. • Total capacity of 150,000 tonnes of which press lines constitute 80,000MT. • Key clientele: Tata Motors, Ashok Leyland, Dana Corp, Meritor. • Plants in Jamshedpur (Jharkhand) and Howrah (West Bengal). Revenue CAGR of 19% over FY10‐17 Consistent improvement in margin profile


Well‐diversified revenue


Key risks • Slowdown in the US Class‐8 trucks • Slower execution of newly won orders • Market‐share loss by any key OEMs

SWOT analysis Strengths Weaknesses • Robust new product development capabilities • Graduated from component manufacturer to

offering sub‐assemblies • Consistently increasing market share

• No major OEM exposure in exports • Lack of experience in heavy forged parts • Non‐auto exposure is low

Opportunities Threats • Increasing market‐share with existing

relationships • Improving exposure to the non‐auto segment

• Highly dependent on the MHCV industry • Raw‐material volatility


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Key people Mr Mahabir Prasad Jalan – Chairman • Promoter, Experienced technocrat • BITS, Pilani (1970) – Mechanical Engineering • He has more than 45 years of experience in the forgings industry • Promoted Ramkrishna Forgings in 1981 Mr. Naresh Jalan – Managing Director • MBA in Finance & Marketing • 20 years of experience in forgings Mr Pawan Kumar Kedia – Executive Director • Diploma in taxation • 28 years total experience • Joined the company in 1998 Mr Sandipan Chakravortty – Independent Director • Mechanical Engineering Graduate from IIT Kharagpur (1970) • M.Tech in Industrial Engineering in Operations Research from from IIT Kharagpur

(1972) • More than 40 years in Tata Steel and its group companies



GLOBAL AUTO ANCILLARY COMP SHEET Market cap _____________Sales_____________ __________OPM (%)__________ ___________EPS___________ ________EPS Growth (%)_______ __________P/E__________ Company $ Mn FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E Auto comps RK Forgings 278 11,415 13,804 16,317 20.4% 21.4% 21.9% 22 36 46 221% 64% 31% 25 15 12 Mahindra CIE 1,405 68,044 75,038 78,414 13.6% 14.5% 12.2% 9 12 15 79% 35% 22% 26.4 19.5 16.0 Motherson Sumi Systems 10,488 548,420 634,876 747,021 10.4% 11.1% 11.5% 11 14 16 66% 29% 17% 29.6 22.9 19.6 Balkrishna Industries 2,494 43,841 50,349 55,791 29.1% 29.5% 28.7% 83 100 110 28% 21% 10% 20.0 16.6 15.0 Exide Industries 2,711 121,358 133,459 147,630 12.7% 12.8% 12.9% 12 14 16 29% 13% 12% 16.7 14.8 13.2 Bharat Forge 4,119 76,457 87,738 98,968 21.1% 22.2% 22.5% 35 45 53 6% 29% 18% 32.4 25.1 21.3 Apollo Tyres 2,038 148,424 169,507 190,879 12.0% 13.6% 14.5% 18 24 28 ‐17% 33% 16% 14.2 10.7 9.2 MRF 4,315 154,461 172,227 182,328 18.0% 20.6% 19.6% 3,885 5,048 4,904 27% 30% ‐3% 17 13 13 Bosch 10,566 124,275 140,857 163,878 18.8% 19.4% 20.3% 558 658 792 20% 18% 20% 40 34 28 Minda IND 1,184 24,076 19,821 22,198 6.8% 9.8% 9.8% 41 24 50 97% ‐42% 110% 21 37 18 Gabriel 393 17,432 19,768 ‐ 9.7% 10.0% ‐ 7 8 ‐ 16% 23% ‐ 26 21 ‐ Ceat 1,094 65,132 74,040 81,341 10.4% 12.6% 13.7% 88 126 149 ‐4% 44% 19% 20 14 12 WABCO India 1,623 23,364 27,277 31,638 16.6% 17.5% 18.1% 139 174 205 31% 25% 18% 40 32 27 Suprajit Eng 582 15,103 17,346 18,383 17.1% 17.5% 17.7% 11 13 8 17% 21% ‐38% 26 22 35 Average 44% 25% 19% 25.3 21.2 18.3 Global component playersFrench Players Faurecia 8,108 19,316 19,931 21,353 10.2% 10.4% 10.6% 4 5 5 14% 12% 7% 11 10 10 Compagnie Plastic Omnium 5,806 7,265 7,741 8,299 14.0% 14.4% 14.5% 3 3 3 13% 9% 12% 12 11 11 Valeo 16,238 21,190 22,985 23,755 13.2% 13.5% 14.2% 4 5 6 10% 14% 12% 13 11 11 German Players Continental AG 45,310 46,063 48,461 50,478 16.1% 16.3% 16.2% 16 18 19 10% 10% 7% 12 11 11 Other Europe CIE Auto 3,315 3,719 3,955 4,136 15.0% 15.4% 15.8% 2 2 2 18% 14% 11% 13 11 11 SKF AB 9,132 78,994 80,804 82,065 14.5% 14.5% 14.3% 11 12 13 29% 9% 5% 14 13 13 NA Players Wabco Hondings 7,703 3,260 3,470 3,779 17.9% 18.4% 18.0% 6 7 8 12% 13% 13% 23 20 20 Magna International Inc. 17,818 41,264 44,291 46,512 10.4% 10.3% 10.1% 6 7 7 13% 11% 9% 8 7 7 Autoliv 9,441 11,051 11,920 12,672 12.8% 13.4% 13.1% 6 7 8 ‐11% 14% 17% 18 15 15 BorgWarner 9,795 9,873 10,517 11,037 17.0% 17.0% 17.2% 4 4 4 13% 8% 7% 13 12 12 Lear Corp. 10,170 20,763 21,540 22,957 10.3% 10.4% 10.3% 17 17 19 18% 5% 6% 9 9 9 Johnson Controls Inc. 36,914 31,009 31,956 33,464 16.5% 16.9% 17.1% 3 3 3 ‐35% 16% 14% 15 13 13 Delphi Automotive PLC 25,724 17,962 19,171 20,412 17.9% 17.7% 17.8% 7 7 8 7% 9% 10% 14 13 13 Japanese Players Denso 38,193 4,757,649 4,940,042 5,114,698 13.1% 13.3% 13.8% 362 385 449 11% 7% 17% 15 14 14 Aisin Seiki 14,850 3,771,724 3,915,527 4,073,387 12.3% 12.7% 12.9% 472 512 552 ‐3% 8% 8% 12 11 11 Global tyre players Bridgestone 35,350 3,772,154 3,902,316 ‐ 18.8% 18.9% ‐ 389 430 458 12% 10% 7% 12 11 11 Michelin 24,812 23,118 23,809 24,338 20.0% 20.4% 21.3% 10 11 11 9% 12% 7% 12 11 11 Goodyear 7,628 15,741 16,276 16,922 16.5% 17.4% 17.5% 3 4 5 ‐20% 38% 16% 10 7 7 Average 14.8% 15.1% 15.0% 6.6% 12.3% 10.3% 13 12 12

Source: Company, PhillipCapial India Research Estimates



Financials

Income Statement Y/E Mar, Rs mn FY17 FY18e FY19e FY20eNet sales 8,600 10,900 13,306 16,145Growth, % ‐2 27 22 21Other income 155 171 188 206Total income 8,755 11,071 13,493 16,352Raw material expenses ‐3,457 ‐4,371 ‐5,328 ‐6,456Employee expenses ‐808 ‐1,022 ‐1,245 ‐1,509Other Operating expenses ‐2,845 ‐3,489 ‐4,117 ‐4,875EBITDA (Core) 1,645 2,189 2,803 3,512Growth, % (6.9) 33.1 28.0 25.3Margin, % 18.8 19.8 20.8 21.5Depreciation ‐690 ‐785 ‐819 ‐844EBIT 955 1,404 1,984 2,668Growth, % (22.8) 47.0 41.3 34.4Margin, % 11.1 12.9 14.9 16.5Interest paid ‐732 ‐677 ‐602 ‐528Other Non‐Operating Income 25 28 31 34Non‐recurring Items 0 0 0 0Pre‐tax profit 249 755 1,412 2,173Tax provided ‐58 ‐227 ‐424 ‐652Profit after tax 190 529 989 1,521Others (Minorities, Associates) 0 0 0 0Net Profit 190 529 989 1,521Growth, % (65.3) 177.8 87.0 53.9Net Profit (adjusted) 190 529 989 1,521Unadj. shares (m) 29 33 33 33Wtd avg shares (m) 29 33 33 33 Balance Sheet Y/E Mar, Rs mn FY17 FY18e FY19e FY20eCash & bank 11 1,358 1,808 3,375Marketable securities at cost 0 0 0 0Debtors 3,029 3,434 3,828 4,202Inventory 3,220 3,285 3,645 3,539Loans & advances 615 615 615 615Other current assets 119 119 119 119Total current assets 6,994 8,811 10,014 11,849Investments 193 193 193 193Gross fixed assets 12,313 13,013 13,413 13,813Less: Depreciation ‐2,839 ‐3,625 ‐4,444 ‐5,288Add: Capital WIP 351 251 151 51Net fixed assets 9,824 9,639 9,120 8,576Non‐current assets 697 697 697 697Total assets 17,708 19,341 20,025 21,316Current liabilities 7,766 7,751 8,344 9,044Provisions 0 0 0 0Total current liabilities 7,766 7,751 8,344 9,044Non‐current liabilities 5,033 4,233 3,433 2,633Total liabilities 12,799 11,984 11,777 11,677Paid‐up capital 287 326 326 326Reserves & surplus 4,622 7,031 7,921 9,312Shareholders’ equity 4,909 7,357 8,247 9,638Total equity & liabilities 17,708 19,341 20,025 21,316 Source: Company, PhillipCapital India Research Estimates

Cash Flow Y/E Mar, Rs mn FY17 FY18e FY19e FY20ePre‐tax profit 249 755 1,412 2,173Depreciation 690 785 819 844Chg in working capital 721 ‐485 ‐161 432Total tax paid 0 ‐227 ‐424 ‐652Other operating activities 0 0 0 0Cash flow from operating activities 1,660 829 1,647 2,798Capital expenditure ‐771 ‐600 ‐300 ‐300Chg in investments ‐126 0 0 0Chg in marketable securities 0 0 0 0Other investing activities 0 0 0 0Cash flow from investing activities ‐897 ‐600 ‐300 ‐300Free cash flow 763 229 1,347 2,498Equity raised/(repaid) 0 2,000 0 0Debt raised/(repaid) ‐770 ‐800 ‐800 ‐800Dividend (incl. tax) 58 81 98 130Other financing activities 0 0 0 0Cash flow from financing activities ‐712 1,281 ‐702 ‐670Net chg in cash 51 1,510 645 1,828 Valuation Ratios Y/E Mar, Rs mn FY17 FY18e FY19e FY20ePer Share dataEPS (INR) 6.6 16.2 30.3 46.7Growth, % (65.3) 144.3 87.0 53.9Book NAV/share (INR) 171.2 225.7 253.1 295.7FDEPS (INR) 6.6 16.2 30.3 46.7CEPS (INR) 30.7 40.3 55.5 72.6CFPS (INR) 41.3 24.6 49.6 84.8DPS (INR) (2.0) (2.5) (3.0) (4.0)Return ratiosReturn on assets (%) 5.4 6.5 8.1 9.9Return on equity (%) 3.9 7.2 12.0 15.8Return on capital employed (%) 9.0 11.2 13.7 17.1Turnover ratiosAsset turnover (x) 0.7 0.9 1.1 1.4Sales/Total assets (x) 0.5 0.6 0.7 0.8Sales/Net FA (x) 0.9 1.1 1.4 1.8Working capital/Sales (x) (0.1) (0.0) (0.0) (0.0)Fixed capital/Sales (x) ‐ ‐ ‐ ‐Receivable days 128.6 115.0 105.0 95.0Inventory days 136.6 110.0 100.0 80.0Payable days 138.8 110.5 112.0 113.2Working capital days (33.2) (10.0) (3.8) (12.9)Liquidity ratios Current ratio (x) 0.9 1.1 1.2 1.3Quick ratio (x) 0.5 0.7 0.8 0.9Interest cover (x) 1.3 2.1 3.3 5.1Dividend cover (x) Total debt/Equity (%) 156.8 93.8 74.0 55.0Net debt/Equity (%) 156.6 75.3 52.0 20.0Valuation PER (x) 83.9 34.3 18.4 11.9PEG (x) ‐ y‐o‐y growth (1.3) 0.2 0.2 0.2Price/Book (x) 3.3 2.5 2.2 1.9Yield (%) EV/Net sales (x) 2.8 2.2 1.7 1.2EV/EBITDA (x) 14.4 10.8 8.0 5.7EV/EBIT (x) 24.8 16.9 11.3 7.5



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) 6667 9764 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 Manoj Behera (9122) 6246 4118 Preeyam Tolia (9122) 6246 4129 Manoj Behera (9122) 6246 4118 Technicals Metals Subodh Gupta, CMT (9122) 6246 4136 Cement Dhawal Doshi (9122) 6246 4128 Production Manager Vaibhav Agarwal (9122) 6246 4124 Ganesh Deorukhkar (9122) 6667 9966 Economics Mid-Caps & Database Manager Editor Anjali Verma (9122) 6246 4115 Deepak Agarwal (9122) 6246 4112 Roshan Sony 98199 72726 Shruti Bajpai (9122) 6246 4135 Oil & Gas Sr. Manager – Equities Support

Sabri Hazarika (9122) 6667 9756 Rosie Ferns (9122) 6667 9971

Sales & Distribution Corporate Communications Ashvin Patil (9122) 6246 4105 Sales Trader Zarine Damania (9122) 6667 9976 Shubhangi Agrawal (9122) 6246 4103 Dilesh Doshi (9122) 6667 9747 Kishor Binwal (9122) 6246 4106 Suniil Pandit (9122) 6667 9745 Bhavin Shah (9122) 6246 4102 Ashka Mehta Gulati (9122) 6246 4108 Execution Archan Vyas (9122) 6246 4107 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) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in



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This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.

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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

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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.



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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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