Kansai Nerolac Paints18Jun20images.moneycontrol.com/static-mcnews/2020/06/Kansai...Kansai Lanka Paints Pvt Ltd 60% Srilanka 121.9 121.1 (100.1) (108.8) Marpol Pvt Ltd 100% India 590.3

June 18, 2020 1

Rating: BUY | CMP: Rs389 | TP: Rs487

Product diversification is new mantra

Quick Pointers:

FY20 Auto volumes declined, Decorative paint volumes increased despite

pressure in J&K

KNPL is increasing presence in Coil coatings, Rebar, Railways and Infra

coatings and entry into Wood coatings, Adhesives and Construction chemicals

to reduce dependence on auto paints

KNPL Annual report highlights intent of the company to achieve broad based

growth and reduce cyclicality by increasing presence in emerging coating

segments of coil coatings, rebar, pipe coatings, floor and Infra coatings. It

has also formed JV/tie ups and entered segments like Adhesives,

Construction chemicals and Wood coatings mostly on the liens of what

Pidilite has been doing. Capex plans have been on track and decorative unit

in Goindwal (Punjab) has started while Gujarat plant has started getting

orders from auto OEMs. Nerolac continues to achieve above market growth

in decorative paints and success of soldier will enable it to get more share in

the economy segment. Capex has declined to Rs2.3bn while lower

inventories have resulted in higher OCF at Rs5.6bn. FCF has increased strong

free cash flow with cash/investments of Rs4.7bn. Although KNPL has passed

on input costs benefits in auto and industrials, we expect improved gross

margins due to sharp decline in input costs.

We believe structural drivers like shift towards organized sector, housing

push in Tier2/3 cities and shorter painting cycle will continue to power

demand for decorative paints although 1H21 demand will be impacted due to

Covid 19 impact. We estimate flattish profits in FY21 and 31% growth in FY22

which would provide 15.5% PAT CAGR over FY20-22. The stock trades at

30.2xFY22 EPS which is at 29% discount to Asian paints. We value the stock

at 38xFY22 EPS and retain BUY with a target price of Rs487, a 26% upside

Monsoons, J&K and Auto demand impact volumes: Prolonged monsoons,

floods in many key states, and changed policy in Kashmir (market leader)

impacted Decorative paints. This coupled with the credit crisis impacted

demand for Automotive Paints. The slowdown extended to other Original

Equipment Manufacturers (OEM) industries impacting demand there as well.

Capacity expansion on Track: Kansai is on track for capacity expansion and

has increased capacity from 452mn liter in Fy19 to 518 mn liter in FY20. It

commissioned a new decorative facility at Goindwal Sahib in Punjab and is

setting up another unit at Vishakhapatnam in AP. It also commissioned a

dedicated coil coating line at Sayakha (Gujarat) and got client approvals for

supply of paints to auto OEM’s from this facility.

KNPL enters new categories in Industrial coatings: Kansai drives ~40%

sales from industrial paints and coatings and 70% of which is cyclical auto

paints business. Kansai is diversifying industrial paints and entered niche

segments like coil coatings, bridges and pipe coatings, rebar coatings and floor

Kansai Nerolac Paints (KNPL IN)

June 18, 2020

Annual Report Analysis

☑ Change in Estimates | ☑ Target | Reco

Change in Estimates

Current Previous

FY21E FY22E FY21E FY22E

Rating BUY BUY

Target Price 487 486

Sales (Rs. m) 47,971 57,874 48,653 58,566

% Chng. (1.4) (1.2)

EBITDA (Rs. m) 8,167 10,420 8,188 10,462

% Chng. (0.3) (0.4)

EPS (Rs.) 9.8 12.8 9.8 12.8

% Chng. 0.3 0.1

Key Financials - Standalone

Y/e Mar FY19 FY20 FY21E FY22E

Sales (Rs. m) 51,736 49,432 47,971 57,874

EBITDA (Rs. m) 7,420 7,816 8,167 10,420

Margin (%) 14.3 15.8 17.0 18.0

PAT (Rs. m) 4,673 5,354 5,279 6,903

EPS (Rs.) 8.7 9.9 9.8 12.8

Gr. (%) (14.7) 14.6 (1.4) 30.8

DPS (Rs.) 2.6 2.6 3.3 3.8

Yield (%) 0.7 0.7 0.8 1.0

RoE (%) 14.3 14.8 13.4 16.0

RoCE (%) 19.8 18.3 17.3 20.8

EV/Sales (x) 4.0 4.1 4.2 3.4

EV/EBITDA (x) 27.9 26.2 24.7 19.0

PE (x) 44.8 39.1 39.7 30.4

P/BV (x) 6.1 5.5 5.1 4.6

Key Data KANE.BO | KNPL IN

52-W High / Low Rs.573 / Rs.294

Sensex / Nifty 34,208 / 10,092

Market Cap Rs.210bn/ $ 2,752m

Shares Outstanding 539m

3M Avg. Daily Value Rs.253.35m

Shareholding Pattern (%)

Promoter’s 74.99

Foreign 3.93

Domestic Institution 12.01

Public & Others 9.07

Promoter Pledge (Rs bn) -

Stock Performance (%)

1M 6M 12M

Absolute 13.8 (28.7) (13.1)

Relative (0.1) (13.3) (0.8)

Amnish Aggarwal

[email protected] | 91-22-66322233

Charmi Mehta


Heet Vora


Kansai Nerolac Paints

June 18, 2020 2

coatings. Kansai started supply of Anti Carbonation coatings, Polysiloxane

Coatings and C5 Fluoro Polymer coatings for Metro Projects and Railways.

Kansai also launched Weather-proof Polyurethane Coating, Water-based

Black Coating for Engines, Matt Coating System for Helmets, Anti-Corrosive

Primers and Fusion-Bonded Epoxy (FBE) Valves and Fittings. KNPL

strengthened presence in auto refinish paints and gained market share in Auto

coatings, powder coatings and performance coatings in FY20.

Kansai looking at new segments/geographies to drive growth: Kansai, is

entering adjacent categories to broad base its product portfolio and use its

brand and distribution network. As SE Asia is allocated by parent company to

KNPL, it has entered markets of Bangladesh, Nepal and Sri lanka.

Neroflix JV with Polygel: KNPL has set up a 60% JV, Neroflix (Rs120mn)

with Polygel for entry in B2B and B2C adhesives market to capitalize on

supply chain and ‘go to market’ capabilities. Nerofix started operations in

December 2019 and achieved sales of Rs229mn.

Perma Constructions: KNPL acquired Prema constructions to boost

construction chemicals business and launched a new range of

construction chemicals product under the Nerolac Perma Brand. Perma

achieved net sales Rs352mn and EBDITA of 9.5% with PAT of Rs22.8mn.

ICRO tie up for wood coatings: KNPL entered into a tie up with Icro

Coatings, Italy for launch of premium wood coatings, a high growth

segment which has seen entry of Pidilite (ICA JV) and Sirca (JV) paints.

KNPL is looking at wood coatings as a future growth area and is already

setting up a production line at its Jainpur facility

Sri lanka: Kansai Paints Lanka (Private) Limited (60% stake) sales were

Rs122mn (Rs121mn in FY19) with a loss of Rs100mn (Rs108.8mn in

FY19). Weak economy due to terrorist attacks and prolonged heavy rains

in island impacted industry demand. Kansai changed its strategy from

dealers to distributors in 4Q and received reasonable success.

RAK Paints, Bangladesh (68% stake): RAK launched Nerolac

Decorative paints with sales of Rs1.35bn (Rs0.94bn in 9m19) with EBIDTA

breakeven. Loss is Rs92.7mn (Rs96.5mn) due to interest cost.

KNP Japan, Nepal: KNP Japan (55% stake) reported sales of Rs851mn

(Rs845mn in FY19) with EBIDTA margin of 16.1% (17.1%). It achieved

PAT of Rs103.4mn (Rs115.2mn). It started plant upgradation at Birgunj.

Revenues and Profit of subsidiaries

Subsidiaries/JV % holding Place of incorporation Revenue (Rs m) Profit/(loss) Rs m

FY20 FY19 FY20 FY19

KNP Japan Pvt Ltd 68% Nepal 854.3 845.1 103.4 115.2

Kansai Lanka Paints Pvt Ltd 60% Srilanka 121.9 121.1 (100.1) (108.8)

Marpol Pvt Ltd 100% India 590.3 688.8 29.0 16.9

RAK Paints 55% Bangladesh 1,357.8 930.4 (92.7) (96.5)

Perma Const Aids Pvt Ltd 100% India 345.5 - 22.8 -

Nerofix Pvt Ltd 60% Inda 229.1 - (8.6) -

Source: Company, PL


June 18, 2020 3

Other Highlights

Kansai implemented RPA (Robotic Process Automation) in Supply chain to

bring further efficiency in Supply Chain processes. It also undertook utilization

of advanced digital tools, such as Machine Learning, Robotic Process

Automation, Internet of Things (IoT) and Catboats, to secure increased

business benefits

Financials: The company was able to reduce and control other expenses at

Rs 8.3bn during FY20, as compared to Rs 8.7bn in the previous year. Improved

Operating cash flow from Rs 3.6bn to Rs 5.6bn in FY20. Incurred capex of Rs

3.8bn. Net working capital increased by 22 days to 100. Dividend payout at

36% resulting into DPS of Rs 2.6.RoE at 14.8% and RoCE at 19.1%.KNPL

does not have any debt as on March-20.

Steadfastly focuses on water management where it has achieved zero liquid

discharge at all its manufacturing plants, reduction in hazardous waste,

reduction in carbon footprint, energy management

Pan-India presence through 104 sales locations and 27500+ customers

4QFY20 Results: FY20 Auto Paints (58% market share) de-grew 17% in value

and 19% in volumes. Decorative segment grew volume and sales value by 6%

and 4% respectively. A shift towards low end emulsions, distempers and putty

was witnessed in decorative segment. Jan and Feb witnessed double digit

volume growth while Lockdown impacted sales in March. KNPL increased

presence in non- auto industrials with new segments like coil coatings, rebar

coatings and increasing presence in auto refinish (6% share) and powder

coatings (35% share).

4QFY20 Concall Takeaways: 1) Bangladesh subsidiary witnessed highest

growth of 20% while Nepal grew 2% and Srilanka grew 3.5%. While

Bangladesh subsidiary turned EBITDA positive this quarter, Nepal clocked in

margins of 16.4%. Srilanka is expected to break-even in 3 years, 2) KNPL’s

Soldier branded low cost emulsion has been a success and accounts for 4%

of sales 3) No sales during the lockdown period will hurt as April accounts for

13% sales. Although, 90 depots (total 106) are now operational, visibility on

volume growth remains poor 4) 5 out of 6 plants have resumed production,

however demand will recovery in Industrial paint will take some-time. 5) KNPL

added 3000 net dealers in FY20 taking the total to 25000 6) KNPL has not

extended any additional credit to the distributors and do not expect dealers to

face liquidity issues however it will provide addition support if necessary, 7)

Only 30% labour in industry are migrants hence the company does not see

availability of labour as an issue, 7) Lower crude oil prices are passed onto

customers, 8) Ad spend at 5% of sales during FY20 and the company intends

to incur ad spends in line with sales growth going forward, 9) FY21 Capex has

been estimated at Rs1.9bn including maintenance capex of Rs700mn 10)

KPNL has huge margin of safety as only 50% costs are fixed.


June 18, 2020 4

KNPL has forayed into emerging segments like Rebar Coatings, Pipe coatings, floor coatings etc.

Source: Company, PL

Nerolac Perma JV enabled entry in Adhesives and Construction aid

Source: Company, PL

Foray into new segments

Source: Company, PL


June 18, 2020 5

Kansai to focus on Core but expanding horizons

Source: Company, PL

EBITDA margins to expand 220bps over next 2 years

36.6 34.6

37.2 34.5 33.1 32.0 32.6 33.4

37.2

41.4 39.5

36.2 38.1

40.7 39.9

22.4 23.1 21.7 21.0 20.1 20.2 21.1 20.8 21.7 23.1 22.3 21.8 22.3 23.7 21.9

14.1 11.5

15.5 13.6 13.0 11.8 11.4 12.5

15.5 18.3 17.2

14.3 15.8 17.0 18.0

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20E

FY

21E

FY

22E

Gross Margins Overheads EBITDA Margins

Source: Company, PL


June 18, 2020 6

Systematic vendor development process

Source: Company, PL

Being digital is very crucial for any company in todays time, Kansai is connected digitally to various stakeholders

Source: Company, PL


June 18, 2020 7

Volumes to bounce back from 2HFY21

4.1

22.9

20.2

10.0

8.5

5.5 8

.5 13.0

11.1

13.5

11.0

-1.5

2.0

17.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20E

FY

21E

FY

22E

(%)

Source: Company, PL

COVID and Automotive paints drag sales

18

15

15

15

9 15

4 7 1

-3

-10-1.8 -1.1

2.51.8 1.7

2.9

0.0 -0.4

-4.8 -5.2-4.1

-6.0-5.0-4.0-3.0-2.0-1.00.01.02.03.04.0

-15

-10

-5

0

5

10

15

20

Sept-

17

Dec-

17

Mar-

18

Jun-1

8

Sep-1

8

Dec-

18

Mar-

19

Jun-1

9

Sep-1

9

Dec

-19

Mar-

20

Volume Growth (%) Realization Growth (%)

Source: Company, PL

Sales to grow at 8.2% CAGR from FY20-22E

13

.7

17

.1

21

.4

26

.0

28

.6

31

.6

35

.5

37

.4

40

.0

45

.9

51

.7

49

.4

48

.0

57

.9

4.1

24.1 25.5 21.5

9.8 10.8 12.2

5.3 7.0

14.7 12.8

(4.5)(3.0)

20.6

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

FY

21

FY

22

Sales (Rs bn) Sales Growth (% - RHS)

Source: Company, PL

Ti02 prices down 8.8% YoY and 1.6% QOQ

Source: Company, PL

PAT to bounce back post 1HFY21

98

6

1,6

55

1,8

06

2,1

59

2,1

52

2,0

66

2,7

17

3,6

35

5,0

60

5,1

64

4,6

73

5,3

54

5,2

79

6,9

03

-17.7

67.9

9.119.5

-0.3 -4.0

31.533.839.2

2.1

-9.5

14.6

-1.4

30.8

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY

9

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20E

FY

21E

FY

22E

Adj PAT (Rs m) PAT Growth (% - RHS)

Source: Company, PL

Robust return ratios

23.221.4

21.818.3

15.316.017.319.1

17.414.314.8 13.4

16.0

29.828.4

28.9

24.2

20.922.9

25.228.2

26.3

21.719.118.1

21.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20E

FY

21E

FY

22E

(%)

ROE RoCE

Source: Company, PL

-15

-10

-5

0

5

10

15

20

25

30

35Ja

n-1

7

Mar-

17

May-

17

Jul-17

Sep-1

7

Nov-

17

Jan-1

8

Mar-

18

May-

18

Jul-18

Sep-1

8

Nov-

18

Jan-1

9

Mar-

19

May-

19

Jul-19

Sep-1

9

Nov-

19

Jan-2

0

Mar-

20

TiO2 - YoY Price Change (%)


June 18, 2020 8

Financials

Income Statement (Rs m)


Net Revenues 51,736 49,432 47,971 57,874

YoY gr. (%) 12.8 (4.5) (3.0) 20.6

Cost of Goods Sold 33,025 30,576 28,459 34,779

Gross Profit 18,711 18,856 19,512 23,095

Margin (%) 36.2 38.1 40.7 39.9

Employee Cost 2,554 2,694 2,878 3,241

Other Expenses 4,879 8,346 4,701 5,151

EBITDA 7,420 7,816 8,167 10,420

YoY gr. (%) (9.6) 5.3 4.5 27.6

Margin (%) 14.3 15.8 17.0 18.0

Depreciation and Amortization 905 1,199 1,334 1,436

EBIT 6,515 6,617 6,833 8,984

Margin (%) 12.6 13.4 14.2 15.5

Net Interest - 50 90 79

Other Income 619 269 313 320

Profit Before Tax 7,134 6,836 7,055 9,225

Margin (%) 13.8 13.8 14.7 15.9

Total Tax 2,461 1,482 1,776 2,322

Effective tax rate (%) 34.5 21.7 25.2 25.2

Profit after tax 4,673 5,354 5,279 6,903

Minority interest - - - -

Share Profit from Associate - - - -

Adjusted PAT 4,673 5,354 5,279 6,903

YoY gr. (%) (14.7) 14.6 (1.4) 30.8

Margin (%) 9.0 10.8 11.0 11.9

Extra Ord. Income / (Exp) - - - -

Reported PAT 4,673 5,354 5,279 6,903

YoY gr. (%) (14.7) 14.6 (1.4) 30.8

Margin (%) 9.0 10.8 11.0 11.9

Other Comprehensive Income 9 (10) - -

Total Comprehensive Income 4,683 5,344 5,279 6,903

Equity Shares O/s (m) 539 539 539 539

EPS (Rs) 8.7 9.9 9.8 12.8

Source: Company Data, PL Research

Balance Sheet Abstract (Rs m)


Non-Current Assets

Gross Block 21,068 24,896 27,050 29,560

Tangibles 20,889 24,707 26,851 29,351

Intangibles 179 188 198 208

Acc: Dep / Amortization 7,909 8,920 10,034 11,249

Tangibles 7,765 8,759 9,866 11,073


Net fixed assets 13,159 15,976 17,015 18,310

Tangibles 13,124 15,948 16,985 18,278


Capital Work In Progress 3,147 1,644 2,000 2,000

Goodwill - - - -

Non-Current Investments 1,222 1,648 1,660 1,673

Net Deferred tax assets (1,051) (850) (892) (937)

Other Non-Current Assets 3,910 4,023 1,237 1,414

Current Assets

Investments 1,956 3,051 3,109 3,168

Inventories 10,528 9,301 11,246 11,246

Trade receivables 6,740 6,745 6,539 7,892

Cash & Bank Balance 814 1,663 4,720 7,953

Other Current Assets 1,539 1,831 1,439 1,736

Total Assets 43,059 45,924 49,014 55,450

Equity

Equity Share Capital 539 539 539 539

Other Equity 33,706 37,330 40,465 44,900

Total Networth 34,245 37,869 41,004 45,439

Non-Current Liabilities

Long Term borrowings 34 - 50 50

Provisions - - - -

Other non current liabilities - 490 - -

Current Liabilities

ST Debt / Current of LT Debt - - - -

Trade payables 6,319 5,195 6,261 7,999

Other current liabilities 1,411 1,521 1,317 1,536

Total Equity & Liabilities 43,059 45,925 49,525 55,961



June 18, 2020 9

Cash Flow (Rs m)

Y/e Mar FY19 FY20 FY21E FY22E Year

PBT 7,134 6,836 7,055 9,225

Add. Depreciation 905 1,199 1,334 1,436

Add. Interest - 50 90 79

Less Financial Other Income 619 269 313 320

Add. Other (2,255) 150 1,706 (145)

Op. profit before WC changes 5,783 8,235 10,185 10,595

Net Changes-WC 266 (1,177) (438) 238

Direct tax (2,461) (1,482) (1,776) (2,322)

Net cash from Op. activities 3,589 5,576 7,971 8,511

Capital expenditures (3,714) (2,513) (2,729) (2,731)

Interest / Dividend Income - - - -

Others (831) (441) - -

Net Cash from Invt. activities (4,545) (2,954) (2,729) (2,731)

Issue of share cap. / premium 0 0 - -

Debt changes (149) (34) 50 -

Dividend paid (1,689) (1,689) (2,144) (2,469)

Interest paid - (50) (90) (79)

Others - - - -

Net cash from Fin. activities (1,839) (1,773) (2,184) (2,548)

Net change in cash (2,795) 849 3,058 3,233

Free Cash Flow (125) 3,063 5,242 5,780


Quarterly Financials (Rs m)

Y/e Mar Q1FY20 Q2FY20 Q3FY20 Q4FY20

Net Revenue 14,635 12,435 12,481 9,880

YoY gr. (%) 6.4 (3.9) (7.6) (14.3)

Raw Material Expenses 9,036 7,661 7,801 6,078

Gross Profit 5,598 4,774 4,681 3,802

Margin (%) 38.3 38.4 37.5 38.5

EBITDA 2,490 2,129 1,919 1,278

YoY gr. (%) 13.0 9.2 8.4 (14.6)

Margin (%) 17.0 17.1 15.4 12.9

Depreciation / Depletion 278 286 314 320

EBIT 2,212 1,843 1,605 958

Margin (%) 15.1 14.8 12.9 9.7

Net Interest 13 12 12 13

Other Income 65 39 124 40

Profit before Tax 2,265 1,870 1,717 985

Margin (%) 15.5 15.0 13.8 10.0

Total Tax 786 (64) 490 270

Effective tax rate (%) 34.7 (3.4) 28.6 27.4

Profit after Tax 1,479 1,934 1,227 715

Minority interest - - - -

Share Profit from Associates - - - -

Adjusted PAT 1,479 1,934 1,227 715

YoY gr. (%) 5.8 58.5 8.8 (23.0)

Margin (%) 10.1 15.6 9.8 7.2

Extra Ord. Income / (Exp) - - - -

Reported PAT 1,479 1,934 1,227 715

YoY gr. (%) 5.8 58.5 8.8 (23.0)

Margin (%) 10.1 15.6 9.8 7.2

Other Comprehensive Income (4) (5) (4) (4)

Total Comprehensive Income 1,475 1,929 1,222 711

Avg. Shares O/s (m) 539 539 539 539

EPS (Rs) 2.7 3.6 2.3 1.3


Key Financial Metrics


Per Share(Rs)

EPS 8.7 9.9 9.8 12.8

CEPS 10.4 12.2 12.3 15.5

BVPS 63.5 70.3 76.1 84.3

FCF (0.2) 5.7 9.7 10.7

DPS 2.6 2.6 3.3 3.8

Return Ratio(%)

RoCE 19.8 18.3 17.3 20.8

ROIC 14.2 16.5 16.2 20.9

RoE 14.3 14.8 13.4 16.0

Balance Sheet

Net Debt : Equity (x) (0.1) (0.1) (0.2) (0.2)

Net Working Capital (Days) 77 80 88 70

Valuation(x)

PER 44.8 39.1 39.7 30.4

P/B 6.1 5.5 5.1 4.6

P/CEPS 10.4 12.2 12.3 15.5

EV/EBITDA 27.9 26.2 24.7 19.0

EV/Sales 4.0 4.1 4.2 3.4

Dividend Yield (%) 0.7 0.7 0.8 1.0


Key Operating Metrics


Volume Gr % 11.0 (1.5) 2.0 17.0

Gross Margins % 36.2 38.1 40.7 39.9



June 18, 2020 10

Price Chart Recommendation History

No. Date Rating TP (Rs.) Share Price (Rs.)

1 08-May-20 BUY 486 360

2 13-Apr-20 BUY 486 379

3 31-Jan-20 Accumulate 545 499

4 03-Jan-20 Accumulate 546 513

5 01-Nov-19 Accumulate 548 539

6 03-Oct-19 Accumulate 507 496

7 29-Jul-19 Accumulate 479 434

8 04-Jul-19 Accumulate 464 442

Analyst Coverage Universe

Sr. No. Company Name Rating TP (Rs) Share Price (Rs)

1 Asian Paints Accumulate 1,687 1,651

2 Avenue Supermarts Reduce 1,658 2,398

3 Britannia Industries BUY 3,744 3,510

4 Colgate Palmolive Reduce 1,224 1,313

5 Crompton Greaves Consumer Electricals BUY 267 199

6 Dabur India Hold 422 431

7 Emami Hold 285 227

8 Future Retail Under Review - 332

9 GlaxoSmithKline Consumer Healthcare Hold 9,377 9,247

10 Havells India Reduce 485 511

11 Hindustan Unilever Hold 2,017 2,195

12 ITC BUY 250 189

13 Jubilant FoodWorks Hold 1,392 1,530

14 Kansai Nerolac Paints BUY 486 360

15 Marico Hold 318 284

16 Nestle India Reduce 13,127 17,462

17 Pidilite Industries Hold 1,327 1,349

18 Titan Company Hold 936 997

19 Voltas Accumulate 564 539

PL’s Recommendation Nomenclature (Absolute Performance)

Buy : > 15%

Accumulate : 5% to 15%

Hold : +5% to -5%

Reduce : -5% to -15%

Sell : < -15%

Not Rated (NR) : No specific call on the stock

Under Review (UR) : Rating likely to change shortly

299

368

437

506

575

Jun

- 1

7

Dec -

17

Jun

- 1

8

Dec -

18

Jun

- 1

9

Dec -

19

Jun

- 2

0

(Rs)


June 18, 2020 11

ANALYST CERTIFICATION

(Indian Clients)

We/I, Mr. Amnish Aggarwal- MBA, CFA, Ms. Charmi Mehta- CA, Mr. Heet Vora- CA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

(US Clients)

The research analysts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and No part of his or her or their compensation was, is or will be directly related to the specific recommendation or views expressed in this research report.

DISCLAIMER

Indian Clients

Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for third party financial products. PL is a subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various subsidiaries engaged in business of commodity broking, investment banking, financial services (margin funding) and distribution of third party financial/other products, details in respect of which are available at www.plindia.com.

This document has been prepared by the Research Division of PL and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security.

The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.

Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.

Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication.

PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document.

PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014

PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities.

PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company.

PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.

PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report.

PL or its associates might have received compensation from the subject company in the past twelve months.

PL or its associates might have managed or co-managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any other assignment in the past twelve months.

PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

PL or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months

PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report.

PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or other benefits from the subject Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest at the time of publication of this report.

It is confirmed that Mr. Amnish Aggarwal- MBA, CFA, Ms. Charmi Mehta- CA, Mr. Heet Vora- CA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.

The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analysts have not engaged in market making activity for the subject company

Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest.

PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company or act as an advisor or lender/borrower to the subject company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

US Clients

This research report is a product of Prabhudas Lilladher 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.

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