Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

1 August 2017

Research Team (Gautam.Duggad@MotilalOswal.com)

SBI reduces savings rate, sets stage for RBI rate cut v State Bank of India (SBI) cut the interest rate on savings accounts with balance

of up to Rs1 crore by 50 basis points to 3.5%—the first time the key rate…

Equities - India Close Chg .% YTD.% Sensex 32,515 0.6 22.1 Nifty-50 10,077 0.6 23.1 Nifty-M 100 18,515 0.2 29.0 Equities-Global Close Chg .% YTD.% S&P 500 2,470 -0.1 10.3 Nasdaq 6,348 -0.4 17.9 FTSE 100 7,372 0.0 3.2 DAX 12,118 -0.4 5.5 Hang Seng 10,828 0.7 15.3 Nikkei 225 19,925 -0.2 4.2 Commodities Close Chg .% YTD.% Brent (US$/Bbl) 52 1.0 -5.8 Gold ($/OZ) 1,268 0.7 9.3 Cu (US$/MT) 6,336 0.6 14.7 Almn (US$/MT) 1,896 0.6 11.3 Currency Close Chg .% YTD.% USD/INR 64.1 -0.1 -5.5 USD/EUR 1.2 0.2 11.2 USD/JPY 110.6 -0.6 -5.5 YIELD (%) Close 1MChg YTDchg 10 Yrs G-Sec 6.5 0.0 0.0 10 Yrs AAA Corp 7.5 0.0 0.0 Flows (USD b) 31-Jul MTD YTD FIIs -0.2 0.4 8.8 DIIs 0.3 1.0 4.3 Volumes (INRb) 31-Jul MTD* YTD* Cash 324 301 288 F&O 3,386 5,806 5,041 Note: YTD is calendar year, *Avg

Today’s top research idea

Market snapshot

Cos/Sector Key Highlights Shilpa Medicare (INITIATING COVERAGE): Injecting growth Financials SBIN cuts SA deposits rate, other banks likely to follow suit Pidilite Inds Focus on double-digit volume growth Godrej Consumer Price hike-led sales growth in India, Indonesia drags international performance Shree Cement EBITDA beat driven by better realization and lower other expenses Siemens In-line operational performance; expensive valuations warrant Neutral Interglobe EBITDAR above est. led by higher yields and lower fuel cost Tech Mahindra Significant 1Q beat drives 9.5% FY18 earnings upgrade LIC Housing Fin. Under pressure Shriram Trans. Strong quarter; Reaping the benefits on cost of funds Torrent Pharma. Weak revenue; margins remain stable Coromandel Intl Strong performance; better monsoon to aid growth GE T&D India Operating performance above expectations; Maintain Neutral Hexaware Tech. Beat-and-raise as revenue momentum continues Equitas Holdings Steady shift to secured products; at PAR delinquencies in MF up marginally Automobiles Industry witnesses inventory build-up to meet festive demand Metals Weekly Steel and its input prices moving up across the world Results Flash BHE | CCRI | RADIOCIT Results Expectation JSTL| MRCO | PWGR | SCUF

Piping hot news

Shilpa Medicare (Initiating Coverage): Injecting growth Product approvals, superior execution to drive earnings; Buy with TP of 805

v We believe that Shilpa Medicare (SLPA) is on cusp of strong growth in earnings led by product approvals in US market. From just an API player, it has forward integrated and transformed itself into formulator with revenue rising from from nil till 9MFY17 to Rs3.3b in FY19E. The products are majorly in oncology space with 23 ANDAs pending for approval.

v We expect its base business (CRAMS), which currently forms 52% of total sales, to remain stable and sustainable with 13% CAGR over FY17-20. We value SLPA at a premium valuation of 25x 12M forward earnings due to strong growth visibility from US market, backed by healthy product pipeline, which would also support margins improvement. We initiate with Buy rating and target price of INR805.

Potential for US revenue to grow at strong rate

Chart of the Day: Shilpa Medicare - Injecting growth

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1 August 2017 2

Crackdown on power theft by Yogi Adityanath government gives rise to UP electricity bill collection by 28.5 pct Uttar Pradesh witnessed a 28.5% rise in electricity bill collection in the first quarter of FY18. Collection in the April-June period by Uttar Pradesh utilities was Rs 7,822 crore…

NCLT order may help revive Nagarjuna Oil's TN refiner The appointment of an insolvency resolution professional (IRP) for Nagarjuna Oil Corporation Ltd (NOCL) by the Chennai Bench of the National Company Law Tribunal (NCLT) is expected to help the company revive its refinery project in Tamil Nadu. NOCL’s 6-million-tonne refinery on the east coast of Tamil Nadu was supposed to be commissioned in 2012 at a cost of about Rs 3,500 crore, but cyclone Thane stalled it…

Boeing expects India orders worth $290 billion over next 20 years American plane maker Boeing Co. has upgraded its India demand forecast and now expects airlines in the world’s fastest growing aviation market to order as many as 2,100 planes worth $290 billion over the next 20 years…

Infosys, TCS, Tech Mahindra see workforce shrink for the first time The $154 billion Indian information technology (IT) sector, once India’s largest creator of jobs, is now struggling to even add to its workforce. For the first time, three of the five largest IT companies saw their workforce shrink in the quarter ended 30 June…

Snapdeal to lay off 950 to 1000 employees; no merger with rival Flipkart Beleaguered e-retailer Snapdeal said on Monday a proposed deal to merge with rival Flipkart had been called off. The e-commerce firm will, nevertheless, continue to operate as a smaller entity by laying off close to 950-1,000 staffers, company executives told FE…

Birla Corporation planning to invest around Rs 2400 crore to set up cement plant in Maharashtra M P Birla Group company Birla Corporation on Monday said it is planning to invest around Rs 2,400 crore for setting up a greenfield cement manufacturing plant in Maharashtra...

State electricity boards hurting renewable power by reneging on contracts Rapidly falling prices of renewable power, under normal circumstances, should help the government achieve its 2022 target of 175GW on such electricity from both wind and solar sources —by then, hopefully, improvements in storage technology will also make …

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In the news today

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1 August 2017 3

`Injecting growth Product approvals, superior execution to drive earnings

n Shilpa Medicare (SLPA) has been engaged in the manufacture of active pharmaceutical ingredients (APIs) since 1987. However, over a period of time, it has shifted its focus toward creating a niche in pharmaceutical manufacturing. In the process, it has developed a strong capability in manufacturing oncology APIs and formulations. Besides this, SLPA is investing in novel drug delivery systems (NDDS) and biotechnology.

n We believe that SLPA is well poised to deliver robust earnings growth over the next 2-3 years, led by the commencement of sales in the US market and the introduction of more products in the EU market.

n In our view, SLPA has the necessary manufacturing capacity and the US FDA clearances to succeed in both APIs and formulations. It has done well on the compliance part in recent past. The company also has a healthy pipeline of ~23 pending ANDAs (owned and for partners combined).

n We expect its base business (custom synthesis) to remain stable following two years of strong growth, as volume off-take by ICE (JV partner) has reached a steady base.

n The five-year average P/E for SLPA stands at 21x. P/E multiples for many pharma companies are lowered due to slowdown in the US business on account of regulatory hurdles/pricing pressure in the base business. However, we value SLPA at a premium valuation of 25x 12M forward earnings due to strong growth visibility from the US market, backed by a healthy product pipeline, which would also support margins improvement. We expect US sales (just started in 4QFY17) to increase to INR3.3b by FY19, with potential to grow 50% YoY in FY20 as well. On overall basis, we expect revenue and PAT CAGR of 29% and 41%, respectively, over FY17-20E.

n We thus initiate coverage on SLPA with a Buy rating and a price target of INR805 on 12M forward earnings.

Superior execution in US market to drive sales and PAT n With capex in APIs/formulations already behind and regulatory clearances in

place for both these businesses, we expect strong revenue and profit growth over the next 2-3 years. SLPA has about 26 DMFs and 25 ANDAs filed till date.

n There are already two ANDA approvals in place, and the company has a healthy pipeline of ~23 ANDAs awaiting approvals. We expect SLPA to grow its revenues in the US market from nil in December 2016 (no business until then) to ~INR3.3b in FY19, subject to product approvals.

JV formation secures base business of CRAMS n The base business (custom synthesis) has witnessed strong 37% revenue CAGR.

It constituted ~60% of FY16 sales due to higher off-take by JV partner, ICE. n The shift of this business to the JV in December 2016 and the doubling of

capacity under this JV might curtail revenues due to a change in accounting. However, profit would rise with greater consolidated-level efficiency.

Initiating Coverage | Sector: Healthcare

Shilpa Medicare CMP: INR646 TP: INR805(+24%) Buy

BSE Sensex S&P CNX 32,310 10,015

Stock Info Bloomberg SLPA IN Equity Shares (m) 80 52-Week Range (INR) 787 / 517 1, 6, 12 Rel. Per (%) -2/-25/-4 M.Cap. (INR b) 57.1 M.Cap. (USD b) 0.8 Avg Val, INRm 43 Free float (%) 45.3

Financial Snapshot (INR m) Y/E Mar FY17 FY18E FY19E Net Sales 7,836 10,682 14,028 EBITDA 1,754 2,457 3,507 PAT 1,123 1,689 2,435 EPS (INR) 14.0 21.1 30.4 Gr. (%) 6.2 50.5 44.2 BV/Sh (INR) 114.4 134.3 163.1 P/E (x) 46.2 30.7 21.3 P/BV (x) 5.7 4.8 4.0 RoE (%) 14.4 17.0 20.4 RoCE (%) 11.5 12.9 16.4 Shareholding pattern (%) As On Mar'17 Dec'16 Sep'16 Promoter 54.7 54.7 56.9 DII 0.1 0.1 0.1 FII 30.0 26.0 15.2 Others 15.2 19.2 27.8 FII Includes depository receipts

Shilpa Medicare

Injecting growth

Tushar Manudhane

+91 22 3010 2498 tushar.manudhane@motilaloswal.com

1 August 2017 4

Capex in progress for future growth n SLPA has guided for further INR4.5b capex over two years toward R&D,

enhancing API/formulation capacities and investing in bio-similars. This would strengthen its foundation for future growth.

Valuation and view n Many pharma companies have been de-rated over the past year due to

slowdown in the US business on account of regulatory woes/pricing pressure on the base business. However, we value SLPA at 25x FY19E earnings, given strong growth visibility over FY17-19E, backed by approved products and a strong pipeline pending approvals. The US product pipeline has the potential to drive US revenue growth of ~45% YoY in FY20 as well. Relatively superior margin from the US business would also improve overall margin for SLPA.

n We expect sales, EBITDA and PAT CAGR of 29%, 36% and 41% to INR16.8b, INR4.3b and INR3b, respectively, over FY17-20E. Assuming PAT growth and improving return ratios, we value SLPA at 25x 12M forward earnings. We thus initiate coverage on the stock with a Buy rating and a price target of INR805.

n At CMP of INR647, SLPA trades at 30.7x FY18E EPS of INR21.1 and 21.3x FY19E EPS of INR30.4.

n Our sensitivity analysis indicates downside of 9.9% in bear case, upside of 24.8% in base case and 65% in bull case from the current levels.

Risks n Delay in approval for its products n Longer-than-expected time taken to execute in terms of manufacturing and

selling n Higher-than-expected competition for its key products n Any untoward outcome of future regulatory inspections, which may have an

impact on existing business and/or future product approvals

Stock Performance (1-year)

1 August 2017 5

SBIN cuts SA deposits rate, other banks likely to follow suit Expect reduction in cost of deposits by ~15bp and higher PBT benefit

n The State Bank of India (SBIN) has lowered the rate on savings deposits up to INR10m by 50bp to 3.5% from the existing rate of 4%. According to management, savings accounts with balances of INR10m and below contribute ~90% of overall savings deposits for the bank, and thus, the cut in rates could lead to interest savings of INR44.5b on annualized basis (21% of estimated FY18 PBT).

n In our view, other banks are likely to follow suit, which should lead to FY18E interest cost savings of ~INR136b for the banking sector. In our view, 80% of system SA deposits are below INR10m.

n While banks with low RoA and high SA balance (PSU banks) are likely to be the key beneficiaries of the same, MCLR cuts in the ensuing quarters cannot be ruled out, thereby likely negating the benefit of SA rate cut.

n Among the high SA balance banks under our coverage, we like HDFCB, SBIN and ICICIBC. We expect the emerging private banks to be more aggressive now to mobilize SA deposits. These banks now will have greater headroom to cut rates without losing the customer. We like YES and KMB among the emerging names.

SA rate cut – a step in the right direction… As of FY17, total system deposits of ~INR106t include ~INR34t of savings deposits. Assuming ~80% of SA deposits have balances of INR10m and below, total interest savings (assuming all banks cut SA rates) would amount to ~INR136b for FY18. In our view, for SBI, the 50bp SA rate cut would lower cost of deposits/cost of funds by ~15bp for FY18, leading to FY18 PBT/PAT uptick of INR44.5b (+21%)/INR31b (+21%) and RoA/RoE uptick of 9bp/160bp from our present estimate of 0.43%/8%.

…however, PBT impact will be partially offset by MCLR cut A reduction in savings rates will also bring down marginal cost of funds, leading to a reduction in MCLR for banks with a lagged effect. This should lower yields and partly offset interest cost savings due to a reduction in cost of deposits, thereby fading the positive impact on PBT/PAT.

Prefer SBIN, ICICIBC and HDFCB among large banks Among the high SA balance banks in our coverage universe, we like HDFCB, SBIN and ICICIBC. We expect the emerging private banks to be more aggressive now to mobilize SA deposits. These banks will also now have greater headroom to cut rates without losing the customer. Our back-of-the-envelope calculation suggests that the large private banks (if not passed on) could see profit upgrade of 2-3% from a 50bp cut in SA deposits rate. PSU bank profit upgrade could be 15%.

Exhibit 1: Bank-wise market share of total and SA deposits

FY17 data (INRb) System SBI PNB BoB HDFC Bank ICICI Bank Axis Bank Kotak

Mahindra Bank

YES Bank IndusInd

Total deposits 1,06,199 20,448 6,217 6,017 6,436 4,900 4,144 1,574 1,429 1,266 SA deposits 33,939 7,639 2,142 1,510 1,936 1,718 1,260 415 328 270 % of SA deposits 32.0 37.4 34.4 25.1 30.1 35.1 30.4 26.4 22.9 21.4 SA market share 22.5 6.3 4.4 5.7 5.1 3.7 1.2 1.0 0.8 Deposits market share 19.3 5.9 5.7 6.1 4.6 3.9 1.5 1.3 1.2 % of SA deposits < INR10m 90 90 90 75 75 75 60 60 60 Impact on RoA (bp) 9 7 5 7 5 7 4 3 Impact on RoE (bp) 170 137 51 55 59 44 32 26

Source: MOSL, Company

Financials

Sector Update | 31 July 2017

1 August 2017 6

Focus on double-digit volume growth All-time high adhesives margins a near-term risk

n Pidilite Industries (PIDI) is cautious on near-term performance, given GST implementation. While it might take a month or so to assess the impact of GST, PIDI perceives it as a positive reform for the Adhesives industry.

n Underlying demand remains healthy, and during our meeting, Mr Puri reiterated time and again PIDI’s long-term target of delivering double-digit volume growth. He also reiterated that current margins are unsustainable, prioritizing volumes over margins.

n While he highlighted the attractive long-term opportunity in a variety of categories, PIDI does not intend to enter Paints unless it gets a disruptive proposition. The company has a strategy of deriving 2/3rd growth from “Growth” and “Pioneer” categories and the remaining 1/3rd from “Core” categories. It will continue to expand reach and make significant investments in R&D to build a strong foundation for multiple years of growth.

Our view: Its track record of consistent delivery on volumes and profits drives our preference for PIDI. We prefer PIDI to Asian Paints (both NEUTRAL-rated stocks), as return ratios have converged – Asian Paints’ RoCE has come off from mid-40s to late 20s in five years while its valuations have expanded. Even fixed asset turns are similar now. Asian Paints’ growth moderation over the last 3-4 years also makes it relatively unattractive.

Prioritizing volumes over margins PIDI is prioritizing volume growth over margins. During our meeting, Mr Puri emphasized the company’s overarching focus on growth, with margins at risk at current high levels: “When we have 12 months of economy without any disruption, we should go to double-digit volume growth.” In CY16, PIDI had expected record volume growth, and had planned accordingly, but demonetization played spoilsport. Mr Puri reminisced about the good old days when the Consumer sector grew at 2x (GDP + Inflation), and how growth fell to 1.5x (GDP + Inflation), and then to the current 1x (GDP + Inflation). Yet, PIDI is confident of double-digit volume growth in the medium term.

Pricing premium vis-à-vis unorganized players to narrow PIDI has candidly stated that its current margins are unsustainable. The company currently enjoys 35% premium over unorganized players; in Adhesives, its margins are at all-time highs. PIDI sees this premium narrowing to 15-20%. Recent price increases by the company have been modest; in 1QFY18, the gap between volume growth and value growth was 1%. PIDI intends to pass on only ~75% of the cost inflation to customers and has lately been passing on the benefits of declines in raw material costs in the form of discounts. VAM prices have shot up due to unusual shutdowns and maintenance problems at suppliers’ end. Prices went up from USD750/MT (recent low when crude prices corrected) to USD950/MT, and are now stabilizing at USD900/MT. A large part of this price rise is due to supply disruptions rather than demand improvement. GST – lot of flux; will take another month or so to figure out actual impact In the run-up to GST, the wholesale channel was impacted the most in June. In July, sales are returning to normal, but are also boosted because of re-stocking post the de-stocking in June. PIDI will need another 30-45 days to see how sustainable the sales growth is and this will also be a function of tertiary consumer demand. PIDI was first off the block in educating the supply chain on GST. The company started billing on 2nd July, while most others are still finding their way and are sending consignments just now. It is too early to figure out the reset in the channel. Most traders are still confused on billing.

31 July 2017

CornerOffice

Pidilite Industries

Mr Bharat Puri—

Managing Director Mr Puri’s association with Pidilite began as an Independent Director in 2008. He started his career with Asian Paints in 1982 and rose to the position of General Manager - Sales & Marketing. He then moved to Cadbury in 1998 as Director of Sales and Marketing for Cadbury India. In 2002, he was appointed Managing Director South Asia, after which he moved to Singapore in 2006 where he was responsible for Strategy, Marketing and Sales for the Asia Pacific region. In his last assignment, he was President - Global Chocolate, Gum and Candy Categories at Mondelez International, Zurich with worldwide responsibilities for the growth of these categories. Mr Puri has completed his MBA from the Indian Institute of Management, Ahmedabad.

the

Interaction with the CEO

1 August 2017 7

PIDI expects the proportion of official sales to go up post GST. For unorganized players, there will be a dramatic difference between sales post-GST and sales pre-GST. Unorganized players are concerned about the repercussions if the extent of their real sales is detected by the tax authorities. As far as the consumers are concerned, they were in any case paying taxes in the earlier regime. It is just that now CGST and SGST are shown separately on the bill. In the Arts & Stationery segment, business is largely unaffected. However, in the Building Materials segment (Plywood, Hardware, and Paints & Allied Products), business is at a virtual stand-still. The unorganized segment is sizable, and there has been very little supply in the last 20-25 days. Players are adopting a wait-and-watch strategy.

Consistently evaluating new categories, markets for future growth PIDI classifies its business in three buckets: Core, Growth and Pioneer categories. Fevicol and Fevikwik constitute the Core categories. Construction, Waterproofing, and Joinery segments constitute the Growth categories. In the Pioneer categories, PIDI currently has Tiling Adhesives. PIDI targets to grow its Core categories at 1-1.5x GDP, its Growth categories at 2-3x of GDP, and intends to ensure that today’s Pioneer categories become tomorrow’s Growth categories. It targets 2/3rd growth from Pioneer and Growth categories, and 1/3rd from Core categories. There are a lot of Pioneer categories in India. PIDI needs to choose a few, and make it BIG. While the company is spoilt for choice, it will enter only those categories where it believes it has a ‘right to win’. It has invested aggressively in R&D over the last four years – as a cost item, R&D has seen the highest jump. It has set up a research lab in USA through a tie-up with University of North Carolina. It will be looking at technologies and how to make them relevant for emerging markets. PIDI keeps looking at markets similar to India. Some of these, including Turkey and Brazil are 7-8 years ahead of India in a few categories. This enables PIDI to decide category adjacencies for future. The company has set up a separate entity, PLUB Pidilite to focus large institutional (including government) business.

Waterproofing – successfully transitioned from Pioneer to Growth category PIDI is a pioneer in the waterproofing segment. Having created the market, it now sees expanding the market as its task. Eight out of 10 houses in India have waterproofing issues, and the opportunity is immense. Some competition is welcome, as it will help to expand the size of the market. The big competition is from MNCs. World over, new construction constitutes 70% of the waterproofing market and repairs constitute 30%. In India, repairs constitute the major part of the waterproofing market. PIDI believes the key ingredients for success are a strong brand, better-informed service offering, and wide reach. Its Dr Fixit brand has become a dominant brand in the segment. PIDI has often emphasized its ‘four feet on the street’ – two extra feet to educate the consumer on how to use the product. One of PIDI’s strengths is that its sales personnel focus not only on sales but also on servicing and creating demand. The company has resisted suggestions from consultants on consolidation of its sales force and thus expanding margins by a few basis points. For its waterproofing products, PIDI reaches 25,000 paints dealers, next only to APNT. The retail segment constitutes ~70% of Dr Fixit sales. However, institutional business has been a large growth driver. PIDI believes RERA is positive; good builders will now look at waterproofing more seriously. Competition / entry into paints / APNT’s Loctite adhesive launch n PIDI will enter Paints only when it feels it can disrupt the category – does not want to be number-5 in Paints. n APNT’s entry in Adhesives (Loctite launch in 1HCY16) has not created much flutter (corroborated by our own

dealer checks – we had released a note (link) after doing a survey of 46 dealers in Mumbai).

1 August 2017 8

BSE SENSEX S&P CNX CMP: INR1,035 TP:INR995(-4%) Neutral 32,515 10,077 Bloomberg GCPL IN Equity Shares (m) 340.6 M.Cap.(INRb)/(USDb) 518.0 / 7.8

52-Week Range (INR) 1084 / 643 1, 6, 12 Rel. Per (%) 2/13/14 Avg. Val, INRm/ Vol.

425

Free float (%) 36.7

Financials & Valuation (INR b) Y/E Mar 2017 2018E 2019E Net Sales 92.4 106.3 121.2 EBITDA 18.9 21.6 24.7 PAT 12.9 14.7 16.8 EPS (INR) 18.9 21.5 24.7 Gr. (%) 12.4 14.0 14.6 BV/Sh (INR) 77.8 100.0 116.2 RoE (%) 24.6 24.2 22.8 RoCE (%) 16.8 16.5 16.3 P/E (x) 54.7 48.0 41.9 EV/EBITDA (x) 38.5 33.8 29.4

Estimate change TP change Rating change

Price hike-led sales growth in India, Indonesia drags international performance n Godrej Consumer’s (GCPL) 1QFY18 consolidated net sales grew 2.8% YoY to

INR21.7b (est. of +9%). Consol. EBITDA declined by 9.3% YoY to INR3.5b (est. of +2.9%) and adj. PAT by 9.2% YoY to INR2.3b (est. of +1.3%), representing a miss on all counts. Organic consolidated CC sales grew 6% YoY in 1QFY18, with India business exhibiting similar growth on organic CC basis.

n Gross margin shrunk 20bp YoY to 53.4%. Higher adspend (+80bp YoY to 8.8%) and other expenses (+150bp YoY to 17.6%) were partially offset by lower staff costs (-40bp YoY to 11.1%). Thus, EBITDA margin shrunk 210bp YoY to 15.9%.

n India branded business volume growth came in flat YoY. All three key domestic segments reported YoY sales growth, which came in 4% YoY for Household Insecticides, 7% YoY for Soaps and 5% YoY for Hair Color. India primary net sales growth stood at 6%, while secondary sales increased 9% YoY.

n International: Organic CC net sales grew 7%, while EBITDA fell 5% YoY. CC sales fell 11% YoY in Indonesia, but grew 26% YoY in Africa, 4% in LatAm and 24% in Europe. Indonesia, Africa and LatAm saw EBITDA margin contraction of 390bp, 80bp and 610bp YoY, respectively, while Europe saw expansion of 260bp.

n Valuation view: There is no material change to our EPS forecasts. At 42x March 2019E EPS, the stock is by no means undervalued. While earnings growth has been more consistent than FMCG peers (FY17 was 8th straight year of double-digit EBITDA and PAT growth), we believe the stock does not warrant a higher multiple due to its exposure to various geographies, attendant currency risks and relatively low RoE (mid-20s). Maintain Neutral with a revised TP of INR995 (39x June 2019E EPS, 10% premium to three-three average).

Quarterly Performance (Consolidated)Y/E March FY17 FY18E FY18 Var.

1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%)Net Sales 21,144 23,563 23,916 23,805 21,728 27,333 28,461 28,753 92,428 106,273 23,110 -6.0% YoY Change (%) 6.5 11.3 8.9 11.8 2.8 16.0 19.0 20.8 9.7 15.0 9.0EBITDA 3,806 4,631 5,063 5,414 3,452 5,509 6,168 6,466 18,915 21,594 3,883 -11.1% Margins (%) 18.0 19.7 21.2 22.7 15.9 20.2 21.7 22.5 20.5 20.3 16.8

YoY Growth (%) 21.6 13.7 12.0 19.5 -9.3 19.0 21.8 19.4 16.4 14.2 2.9Depreciation 327 358 363 369 374 393 417 430 1,416 1,614 359Interest 326 350 397 379 397 333 357 376 1,452 1,463 310Other Income 166 194 294 350 282 213 221 213 1,004 928 149PBT 3,330 4,118 4,474 4,972 2,960 4,996 5,614 5,872 16,894 19,446 3,364 -12.0%Tax 770 907 986 1,145 634 1,199 1,347 1,399 3,808 4,580 794 Rate (%) 23.1 22.0 22.0 23.0 21.4 24.0 24.0 23.8 22.5 23.6 23.6Adj PAT 2,561 3,212 3,489 3,827 2,327 3,797 4,266 4,433 13,088 14,826 2,570 -9.5% YoY Change (%) 18.3 7.3 5.0 21.4 -9.2 18.2 22.3 15.8 12.5 13.3 1.3E: MOSL Estimates

(INR Million)FY17 FY18

31 July 2017

Q1FY18 Results Update | Sector: Consumer

Godrej Consumer

1 August 2017 9

BSE SENSEX S&P CNX CMP: INR18,638 TP: INR22,360(+20%) Buy 32,515 10,077 Bloomberg SRCM IN Equity Shares (m) 35 M.Cap.(INRb)/(USDb) 649.3 / 9.7

52-Week Range (INR) 20560 / 12477 1, 6, 12 Rel. Per (%) 5/3/0 Avg Val, INRm 287 Free float (%) 35.2

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 84.3 98.9 123.0 EBITDA 23.7 25.0 31.9 PAT 13.4 16.0 19.1 EPS (INR) 384.4 460.4 547.8 Gr. (%) 5.4 19.8 19.0 BV/Sh (INR) 2,210 2,623 3,125 RoE (%) 18.4 19.1 19.1 RoCE (%) 17.5 17.7 18.0 P/E (x) 48.5 40.5 34.0 P/BV (x) 8.4 7.1 6.0

Estimate change TP change Rating change

EBITDA beat driven by better realization and lower other expenses n Volume growth led by ramp-up in east: SRCM’s 1QFY18 volumes increased

~15% YoY (-1% QoQ) to 5.89mt, led by capacity ramp-up in east, with utilization in excess of 90-95%. Realizations rose ~10% QoQ (+6.7% YoY) due to higher cement prices in north and east markets. However, exit realizations were lower than average realization for the quarter. Revenue increased 15% YoY to INR25.36b (est. of INR24.5b). Cement revenue stood at INR24.4b (+22% YoY), with cement EBITDA at INR6.81b (+4% YoY). Power revenue declined 54% YoY to INR958m, with power EBITDA at -INR14m due to weak merchant power rates.

n Lower other expenses and higher realization drive margin improvement: EBITDA of INR6.8b (-7% YoY) came in higher than our estimate of INR6.21b due to lower other expenses and higher realization. Overall margin shrunk 6.4pp YoY to 26.8% (+5.3pp QoQ) due to an increase in YoY unitary costing on higher freight costs (led by an increase in diesel prices and underlying freight rates) and power & fuel costs (led by a rise in petcoke prices).

n Capex and capacity addition plans: The company is likely to incur capex of INR12-13b in FY18 and INR14-15b in FY19 toward capacity addition, including 1) 3.6mt of GU in Rajasthan, 2) 2mt of GU in Bihar, 3) 0.9mt of GU in Bihar (will get commissioned by 2QFY18), 4) 2.8mt of clinker unit in Chhattisgarh and 5) 3mt of integrated unit in Karnataka.

n Deserves premium valuation: SRCM is the most cost-efficient player in the industry. Its superior execution capability enables it to achieve RoIC of over ~50% (FY19E). SRCM’s gross-block-to-capacity (GB/capacity) – currently at ~USD53/tonne – has been structurally trending downward, as the proportion of brownfield expansion has increased. Its GB/capacity is at 28% discount to peers, which is also reflected in its superior RoCE profile. In our view, SRCM deserves to trade at premium valuations, and we thus value the cement business at 15x FY20E EV/EBITDA to arrive at a target price of INR 22,360. Maintain Buy.

Quarterly Performance - Shree Cement (S/A) (INR mn) FY17 FY18 FY17 FY18E FY18 Var. 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%) Sales Dispat. (m ton) 5.13 4.57 4.91 5.93 5.89 5.30 5.65 6.42 20.54 23.25 5.90 0 YoY Change (%) 18.0 9.2 4.5 10.7 14.8 16.0 15.0 8.2 10.5 13.2 15.0 Realization (INR/Ton) 3,885 3,965 3,699 3,771 4,146 3,946 4,096 4,209 3,825 4,105 4,071 2

YoY Change (%) 11.8 9.6 7.2 13.9 6.7 -0.5 10.7 11.6 10.7 7.3 4.8 QoQ Change (%) 17.4 2.1 -6.7 1.9 9.9 -4.8 3.8 2.8 8.0

Net Sales 21,987 20,068 18,434 23,803 25,363 21,590 23,794 28,203 84,292 98,950 24,534 3 YoY Change (%) 27.9 17.2 2.2 19.1 15.4 7.6 29.1 18.5 16.5 17.4 11.6 Total Expenditure 14,678 13,506 13,744 18,691 18,563 16,836 17,905 20,601 60,619 73,905 18,316 -46 EBITDA 7,308 6,563 4,689 5,112 6,800 4,754 5,889 7,602 23,672 25,045 6,219 9 Margins (%) 33.2 32.7 25.4 21.5 26.8 22.0 24.8 27.0 28.1 25.3 25.3 Depreciation 1,540 4,322 3,176 3,109 2,312 2,000 2,000 4,367 12,147 10,678 3,120 Interest 276 293 411 314 329 320 320 349 1,294 1,318 320 Other Income 979 1,233 1,356 1,510 1,307 1,500 1,900 2,293 5,077 7,000 1,500 PBT before EO Exp 6,471 3,180 2,459 3,199 5,466 3,934 5,469 5,180 15,308 20,048 4,279 28 Extra-Ord Expense 0 0 21 0 0 0 0 0 0 0 0

PBT 6,471 3,180 2,438 3,199 5,466 3,934 5,469 5,180 15,308 20,048 4,279 28 Tax 1,394 265 83 154 1,065 393 547 2,125 1,917 4,010 642

Rate (%) 21.5 8.3 3.4 4.8 19.5 10.0 10.0 41.0 12.5 20.0 15.0 Reported PAT 5,077 2,915 2,354 3,045 4,401 3,540 4,922 3,054 13,391 16,039 3,637 21 Adj. PAT 5,077 2,915 2,375 3,045 4,401 3,540 4,922 3,054 13,391 16,039 3,637 YoY Change (%) 106.1 18.3 1.6 -51.4 -13.3 21.5 107.3 0.3 5.4 19.8 -28.4

31 July 2017

1QFY18 Results Update | Sector: Cement

Shree Cement

1 August 2017 10

BSE SENSEX S&P CNX CMP: INR1,452 TP: INR1,335(-8%) Neutral 32,515 10,077 Bloomberg SIEM IN Equity Shares (m) 356.1 M.Cap.(INRb)/(USDb) 505.7 / 7.9

52-Week Range (INR) 1470 / 1011 1, 6, 12 Rel. Per (%) 4/9/-6 Avg Val, INRm 265 Free float (%) 25.0

Financials & Valuations (INR b) Y/E Sep 2016 2017E 2018E Net Sales 108.1 116.3 142.2 EBITDA 10.2 11.8 15.6 PAT 6.3 8.6 11.9 EPS (INR) 17.8 24.3 33.3 Gr. (%) 5.2 36.2 37.3 BV/Sh (INR) 191.6 221.3 242.6 RoE (%) 9.3 11.0 13.7 RoCE (%) 15.1 15.8 19.2 P/E (x) 79.6 58.4 42.6 P/BV (x) 7.4 6.4 5.8

Estimate change TP change Rating change

In-line operational performance; expensive valuations warrant Neutral n 3QFY17 operating performance came in line with expectations. On a reported

basis, revenues increased 1.2% YoY to INR26.5b (in line with est. of INR26.3b; revenue from continuing business up 22% YoY), supported by strong growth in Energy Management (+54% YoY) and Building Technologies (+25% YoY) segments. EBIDTA declined 2% YoY to INR2.3b, with the margin at 8.5% (-30bp YoY; est. of 8.4%). Net profit from operations rose 27% YoY to INR1.6b, in line with our estimate of INR1.6b.

n Gross margin expanded 40bp YoY to 34.1% in 3QFY17. EBITDA margin of 8.5% came in line with our estimate of 8.4%. EBIT margin from continuing business expanded 30bp YoY to 6.0% on account of margin improvement across segments, except for Power & Gas and Process industries & Drives.

n Order inflow down 12% YoY; book-to-bill at 1.0x: Order intake for the quarter stood at INR28.5b (-12% YoY; IN32.2b in 3QFY16), led by delay in finalization of large-ticket orders. The company’s book-to-bill stood at 1.0x, with order book position of INR112b.

n Valuation and view: We cut our FY17 estimates by 7% to factor in margin pressure on account of fluctuations in product mix, currency and accounting norm change. At CMP, SIEM trades at 63.9/43.7/38x its FY17/18/FY19E EPS of INR22.7/33.2/38.1. Given expensive valuations, we maintain Neutral with a TP of INR1,335, based on 35x FY19E EPS.

Quarterly Performance (Standalone) (INR Million)

Y/E September FY16 FY17

FY16 FY17 MOSLe

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE 3Q Var % Total Revenues 23,142 27,836 26,204 30,906 22,933 29,288 26,508 39,794 108,094 118,523 26,300 0.8% Change (%) -12.8 4.9 10.3 -6.3 -0.9 5.2 1.2 28.8 1.4 12.7 0.4 EBITDA 1,888 3,218 2,303 2,414 2,337 2,786 2,255 3,819 10,176 11,197 2,200 2.5% Change (%) -0.1 70.3 -7.9 -4.6 23.8 -13.4 -2.1 58.2 36.8 14.7 -5.9 As % of Revenues 8.2 11.6 8.8 7.8 10.2 9.5 8.5 9.6 9.4 9.4 8.4 Depreciation 586 590 625 462 483 502 480 460 2,263 1,924 625 interest 9 14 15 21 20 21 14 29 64 84 20 Other Income 411 270 279 683 623 529 731 819 1,645 2,701 740 Extra-ordinary Items 0 0 0 22,825 0 72 0 0 22,825 0 0 PBT 1,705 2,884 1,942 25,439 2,456 2,864 2,492 4,150 32,446 12,058 2,295 8.6% Tax 592 1,003 661 770 856 1,001 863 1,085 3,148 3,805 677 Effective Tax Rate (%) 34.7 34.8 34.0 3.0 34.9 34.9 34.6 26.1 9.7 31.6 29.5 Reported PAT 1,113 1,881 1,282 24,670 1,600 1,863 1,629 3,065 29,298 8,253 1,618 0.7% Adjusted PAT 1,113 1,881 1,282 1,845 1,600 1,791 1,629 3,065 6,346 8,086 1,618 0.7% Change (%) 4.9 21.8 -23.8 7.1 43.8 -4.8 27.1 66.2 39.9 34.0 24.4

31 July 2017

3QFY17 Results Update | Sector: Capital Goods

Siemens

1 August 2017 11

BSE SENSEX S&P CNX CMP: INR1,291 TP: INR1,312(+2%) Neutral 32,515 10,077 Bloomberg INDIGO IN Equity Shares (m) 361 M.Cap.(INRb)/(USDb) 411.2 / 6.2 52-Week Range (INR) 1170 / 790 1, 6, 12 Rel. Per (%) 9/11/-11 Avg Val, INRm 757.9 Free float (%) 14.1

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 185.8 239.0 303.4 EBITDA 21.4 34.1 46.5 PAT 16.6 23.0 33.8 EPS (INR) 46.0 63.9 93.7 Gr. (%) -16.6 38.8 46.6 BV/Sh (INR) 55.9 62.9 73.2 RoE (%) 86.2 107.5 137.7 RoCE (%) 38.9 51.7 88.6 P/E (x) 28.0 20.2 13.8 P/BV (x) 23.1 20.5 17.6 Adj. EV/EBITDAR 13.0 10.1 8.4

Estimate change TP change Rating change

EBITDAR above est. led by higher yields and lower fuel cost IndiGo reported revenue of INR57.5b (in-line; +26% YoY, +19% QoQ) and EBITDAR of INR19.5b (est. of INR17.5b; +28% YoY, +46% QoQ), led by lower fuel cost of INR17.9b (est. of INR19.3b; +31% YoY, +1% QoQ). PAT of INR8.1b (est. of INR6.1b; +37% YoY, +84% QoQ) was further boosted by higher other income of INR2b (est. of INR1.5b; +25% YoY) and lower depreciation of INR983m (est. of INR1.4b; -14% YoY). n EBITDAR above est.: 1QFY18 EBITDAR margin expanded to 34% from 33.4% in

1QFY17, led by higher yield of INR4.33 (est. of INR4.22; flat YoY, +9% QoQ) and lower fuel cost per ASK of INR1.19 (est. of INR1.25; +11% YoY, -5% QoQ).

n Surprised by lower fuel cost: While ATF price grew ~16% YoY, INDIGO’s fuel cost per ASK rose 11% in 1QFY18, which management ascribed to increased contribution of fuel-efficient A320Neo (~16% of fleet) and better fuel procurement strategies.

n Lowered ASK addition guidance: Management has lowered its ASK addition guidance to 20% YoY from 25% earlier for FY18 (incl. planned ATR operation). For 2QFY18, ASKs are expected to increase 15% YoY. Management expects to increase capacity (ASKs) at the rate of 20% over FY18-20.

n Raising estimates: We raise our earnings estimate by ~10/2% for FY18/19 to factor in the revised ASK guidance. We believe lower capacity addition should result in better yields and higher load factor for INDIGO. Thus, for FY18/19E, we increase yield to INR4.21/4.35 (v/s INR4.14/4.3 earlier) and passenger load factor (PLF) to 87/88% (v/s 86% earlier).

n Promoters to dilute stake: To meet promoter holding norms, INDIGO is planning a follow-on public offer, which is likely to be a mix of a fresh issue and an offer for sale. Promoters currently hold 85.8% stake in the company.

n Valuation and view: The stock trades at 13.8x FY19E EPS of INR93.7 and at 8.4x FY19E adj. EV/EBITDAR. We value INDIGO at 14x FY19E EPS to arrive at a fair value of INR1,312. Maintain Neutral.

Quarterly performance (INR Million) Y/E March FY17 FY18E FY17 FY18E FY18 Var. 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE vs est Net Sales 45,789 41,669 49,865 48,482 57,529 52,362 64,517 64,625 185,805 239,034 57,216 1% YoY Change (%) 8.7 17.7 16.0 18.5 25.6 25.7 29.4 33.3 15.1 28.6 25.0

Fuel cost 13,674 15,524 16,712 17,734 17,929 19,969 21,851 23,358 63,644 83,108 19,320 -7% Employee cost 4,789 5,080 5,273 5,339 5,843 5,957 6,530 8,179 20,482 83,108 6,200 -6% Other expenses 12,046 11,388 13,471 12,087 14,250 13,127 14,767 16,165 48,992 58,309 14,184 0%

Total Expenditure 30,509 31,992 35,457 35,160 38,022 39,053 43,149 47,702 133,118 167,926 39,704 -4% EBITDAR 15,279 9,677 14,409 13,322 19,507 13,309 21,369 16,923 52,687 71,108 17,512 11% Margins (%) 33 23 29 27 34 25 33 26 28 30 31 Net Rentals 7,127 7,721 8,164 8,242 8,537 8,558 9,453 10,426 31,254 36,974 8,485 1% EBITDA 8,152 1,956 6,245 5,080 10,970 4,751 11,916 6,497 21,433 34,134 9,028 22% Margins (%) 17.8 4.7 12.5 10.5 19.1 9.1 18.5 10.1 11.5 14.3 15.8 21% Depreciation 1,148 1,189 1,184 1,052 983 1,426 1,421 1,688 4,573 5,519 1,378 -29% Interest 1,163 610 759 777 770 770 770 770 3,308 3,079 487 58% Other Income 1,626 1,608 1,719 2,938 2,026 2,026 2,026 2,026 7,891 8,105 1,498 35% PBT 7,467 1,765 6,022 6,190 11,243 4,581 11,752 6,065 21,443 33,641 8,660 30% Tax 1,549 367 1,149 1,786 3,132 1,329 3,408 1,759 4,852 9,627 2,512 25% Rate (%) 20.7 20.8 19.1 28.9 27.9 29.0 29.0 29.0 22.6 28.6 29.0 Reported PAT 5,918 1,398 4,873 4,403 8,111 3,253 8,344 4,306 16,592 24,014 6,149 32% EPS 16.4 3.9 13.5 12.2 22.5 9.0 23.2 12.0 46.0 66.6 17.1 32% YoY Change (%) -8.8 24.1 -25.9 -24.0 37.1 132.6 71.2 -2.2 -17.0 44.7 3.9

31 July 2017

1QFY18 Results Update | Sector: Aviation

InterGlobe Aviation

1 August 2017 12

BSE SENSEX S&P CNX CMP: INR178 TP: INR200 Buy 32,515 10,077

We will revisit our estimates post earnings call/management interaction. Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 86.1 110.1 122.8 EBITDA 17.6 19.6 21.4 NP 15.5 16.4 18.5 EPS (INR) 6.9 7.3 8.3 EPS Gr. (%) 27.2 5.7 12.9 BV/Sh. (INR) 33.6 43.6 48.7 RoE (%) 20.6 16.8 17.0 RoCE (%) 18.9 19.0 17.9 P/E (x) 23.1 22.5 21.5 P/BV (x) 4.8 3.8 3.7

Results significantly beat estimates n Sales stood at INR17.3b (+98% YoY) v/s our estimate of INR11.7b. We note that

1QFY17 was a weak quarter, as shipments worth ~INR3b could not be shipped out.

n Gross margin of 44.7% (-130bp YoY) was in line with our estimate of 45%. n EBITDA stood at INR1.63b v/s our estimate of a loss of INR195m, with the

margin at 9.5% v/s our estimate of -1.7%. Employee costs rose 46% YoY to INR4.6b, primarily due to the impact of 7th Pay Commission.

n Other income declined in the quarter due to lower cash balance post the buyback in 3QFY17.

n PAT stood at INR1.25b (+247% YoY) v/s our estimate of INR0.4b.

Valuation and view: We will revisit our estimates post our interaction with management. We maintain our Buy rating with a TP of INR200 @25x FY19E EPS.

Quarterly Performance (INR Million) Y/E March FY17 FY18 FY17 FY18 MOSL 1QE 2Q 3QE 4QE 1QE 2QE 3QE 4QE 1QE Var Sales 8714 17033 20867 39877 17248 20921 24775 47166 86119 110110 11715 47.2 Change (%) -20.8 15.9 37.2 23.7 97.9 22.8 18.7 18.3 17.5 27.9 34.4 EBITDA -467 3349 4828 9796 1633 2932 3823 11203 17617 19592 -195 -935.8 Change (%) -699 85 74 8 -450 -12 -21 14 28 11 -58 As of % Sales -5.4 19.7 23.1 24.6 9.5 14.0 15.4 23.8 20.5 17.8 -1.7 Depreciation 435 455 455 571 561 550 520 550 1915 2180 460 Interest 0 3 106 9 3 0 0 47 118 50 0 Other Income 1387 1714 776 909 723 850 1200 1227 4710 4000 1150

Exceptional items (reported) 0 0 0 0 0 0 0 0 0 0 0 PBT 486 4606 5043 10125 1793 3232 4503 11834 20294 21361 495 262.5 Tax 125 1178 1307 2208 540 711 991 2766 4818 5007 109 Effective Tax Rate (%) 25.7 25.6 25.9 21.8 30.1 22.0 22.0 23.4 23.7 23.4 22.0 Reported PAT 361 3427 3735 7917 1253 2521 3513 9068 15476 16354 386 224.9 Change (%) -52.9 66.5 33.3 6.3 247.2 -26.5 -6.0 14.5 18.4 5.7 6.9 Adj PAT 361 3427 3735 7917 1253 2521 3513 9068 15476 16354 386 224.9 Change (%) -52.9 66.5 33.3 6.3 247.2 -26.5 -6.0 14.5 18.4 5.7 6.9 E: MOSL Estimates

31 July 2017

Results Flash | Sector: Capital Goods

Bharat Electronics

RESULTS FLASH

1 August 2017 13

BSE SENSEX S&P CNX CMP: INR385 TP: INR490(+27%) Buy 32,515 10,077 Bloomberg TECHM IN Equity Shares (m) 976 M.Cap.(INRb)/(USDb) 375.9 / 5.9

52-Week Range (INR) 515 / 358 1, 6, 12 Rel. Per (%) -4/-32/-37 Avg Val, INRm 1293 Free float (%) 63.9

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 291.4 307.6 344.0 EBITDA 41.8 42.2 49.9 PAT 27.5 30.2 32.7 EPS (INR) 30.9 34.0 36.8 Gr. (%) -11.9 9.9 8.3 BV/Sh (INR) 187.9 207.1 232.5 RoE (%) 18.4 17.4 16.9 RoCE (%) 15.2 14.5 14.2 P/E (x) 12.5 11.3 10.5 P/BV (x) 2.1 1.9 1.7

Estimate change TP change Rating change

Significant 1Q beat drives 9.5% FY18 earnings upgrade n Weak but not to the extent thought: TECHM’s 1QFY18 CC revenue declined ~2.1%

QoQ, but was ahead of our estimate of a 3.4% decline, led by stabilization of LCC revenues and above-estimate BFSI performance. Including revenues from HCI (two months), CC revenue declined 0.6% v/s our estimate of -2.2%. EBITDA margin expanded 70bp QoQ to 12.7%, only slightly ahead of our estimate of 12.4%, helped by improvement in LCC profitability. Significant forex gains (INR2.7b v/s estimate of INR1.8b) drove PAT beat (INR8b v/s estimate of INR6.5b).

n Profitability recovery visible: TECHM saw a 4.1% QoQ reduction in Software Professionals headcount (3,407 employees), cost impact from which only accrued toward the end of the quarter. Benefits from the same will fully reflect in 2Q EBITDA margins, more than offsetting 30-40bp impact from wage hikes during the period. Utilization at 77% including trainees was flat for the third quarter and down 100bp YoY, and remains a few points below management’s target. These should drive margin improvement QoQ for the remainder of the year.

n Communications outlook optimistic, but with gestation: TECHM defended its growth in Communications v/s peers, highlighting that it has not lost any business to competitors. Also, stabilization of operations in LCC is largely behind, and the segment is already adding to growth in some geographies. Digital deals are also kicking in and growing in sizes too. Digital is also impacting Enterprise, changing the complexion of pipeline, driving the need for significant organization-wide up-skill.

n Valuation view: Our earnings estimates for FY18/19 are up by 9.5%/1.6%. The significant FY18 upgrade comes on the back of combined effect from forex gains and revenue beat. TECHM trades at 11.4x/10.6x FY18/19E earnings. There remains some tailwinds to improve profitability in the near term, which will feed positively into valuation multiple. Improvement in Communications revenue growth is an option value over and above the same. Our price target of INR490 discounts FY18E earnings by 13x, implying an upside of 26%. Maintain Buy.

Quarterly Performance (Consolidated)

Y/E March FY17 FY18E Est. (

bp)1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

Revenue (USD m) 1,032 1,072 1,116 1,131 1,138 1,166 1,192 1,218 4,351 4,715 1,117 1.9QoQ (%) 0.9 4.0 4.1 1.4 0.6 2.5 2.3 2.1 7.8 8.4 -1.3 188bpRevenue (INR m) 69,209 71,674 75,575 74,950 73,361 75,797 78,106 80,386 291,408 307,650 71,979 1.9YoY (%) 10.0 8.3 12.8 8.9 6.0 5.8 3.3 7.3 10.0 5.6 4.0 200bpGPM (%) 29.5 30.6 30.7 26.9 28.0 28.7 29.4 29.9 29.4 29.0 27.4 58bpSGA (%) 14.6 15.7 15.0 14.9 15.3 15.3 15.3 13.8 15.1 15.3 15.0 26bpEBITDA 10,290 10,701 11,865 8,987 9,347 10,210 11,030 11,611 41,843 42,198 8,943 4.5EBITDA Margin (%) 14.9 14.9 15.7 12.0 12.7 13.5 14.1 14.4 14.4 13.7 12.4 32bpEBIT Margin (%) 12.0 11.5 12.4 8.2 9.4 10.2 10.9 11.2 11.0 10.5 8.9 49bpOther income 1,519 1,387 1,552 2,378 4,106 2,391 1,218 1,196 6,836 8,912 2,542 61.5Interest expense 274 345 349 318 370 311 296 282 1,286 1,259 356 3.9ETR (%) 25.9 30.8 20.2 28.2 25.4 23.5 23.5 23.5 26.0 24.0 23.5PAT excl. BT amort & EOI 6,561 6,447 8,560 5,879 7,985 7,419 7,170 7,618 27,447 30,192 6,481 23.2QoQ (%) -23.5 -1.7 32.8 -31.3 35.8 -7.1 -3.4 6.2 10.2YoY (%) 5.4 -17.9 12.8 -31.5 21.7 15.1 -16.2 29.6 -12.0 10.0 -1.2EPS (INR) 7.4 7.3 9.6 6.6 9.0 8.3 8.1 8.6 31.9 34.0 7.3Headcount 107,216 111,743 117,095 117,693 115,990 120,350 123,517 126,413 117,693 126,413 115,532 0.4Uti l excl . tra inees (%) 78.0 78.0 77.0 77.0 77.0 78.4 78.6 78.9 77.5 78.3 76.7 27bpAttri tion (%) 21.0 19.0 18.0 17.0Offshore rev. (%) 36.6 36.5 36.1 35.7 36.3 36.4 36.1 36.2 36.2 36.2 35.5 80bp

FY17 FY18E

31 July 2017

1QFY18 Results Update | Sector: Technology

Tech Mahindra

1 August 2017 14

BSE SENSEX S&P CNX CMP: INR692 TP: INR708 (+3%) Neutral 32,515 10,077 Bloomberg LICHF IN Equity Shares (m) 505.0 M.Cap.(INR b)/(USD b) 350.5/5.2

52-Week Range (INR) 794/470 1, 6, 12 Rel. Per (%) -12/7/17 Avg Val. (INR m) 1259 Free float (%) 59.7

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E NII 36.5 39.1 44.2 PPP 32.4 34.2 39.0 Adj PAT 19.3 21.0 24.7 Adj EPS.INR 38.2 41.6 48.9

PS Gr. (%) 16.3 8.7 17.7 BV/Sh (INR) 212.1 245.5 284.7 RoAA (%) 1.5 1.4 1.5 RoE (%) 19.4 18.2 18.5 Payout (%) 18.8 19.7 19.7 Valuations

P/E (x) 18.1 16.6 14.1 P/BV (x) 3.3 2.8 2.4 Div. Yld (%) 0.9 1.0 1.2

Under pressure n LIC Housing Finance (LICHF) reported PAT of INR4.7b for 1QFY18, missing our

estimate by 20%. Sharp sequential decline in margins and largely stable provisions YoY (despite high base in 1QFY17) were the key reasons for the miss. Overall, it was a subdued quarter for LICHF.

n Loan book growth remained in line with past trends at ~15% YoY, with retail loan book growth muted at 9-10% YoY. There was slight shift in mix towards non-core loans. However, after two quarters of INR10b+ disbursements in builder loans, LICHF has reverted to average disbursements of INR4b-5b in this segment. Also, disbursements in the core home loan segment were up 16% YoY. This was a key positive in the results.

n Margins declined sharply (11bp YoY, 47bp QoQ), driven by decline in both retail and non-retail yields. Calculated spreads of 1.46% are the lowest in the last 12 quarters. We believe loan yields would decline a further 30-40bp in the near term. This should be offset by decline in cost of funds, though we expect CoF re-pricing in the medium-to-long term.

n GNPL ratio was up 13bp YoY to 0.72%, with individual portfolio GNPL ratio increasing 7bp YoY to 0.42%. While this is not a concern, credit cost declined only 10% YoY to INR1.05b. Three builder loans amounting to INR1.2b slipped into NPL in the quarter.

n Valuation and view: Despite being the second largest HFC, LICHF has managed to grow at ~15% YoY, consistently. However, over the past 4-8 quarters, growth has been driven largely by non-core loans. With the retail portfolio witnessing moderate growth and sustained yield pressure, topline growth has been sluggish. While we acknowledge that its LAP book is not as risky as peers (INR1m-1.5m average ticket size at 30% LTV), we believe valuation will re-rate only with growth returning in the core home loan portfolio. We cut our FY18/19 EPS estimates by 13%/9%. Maintain Neutral.

31 July 2017 1QFY18 Results Update | Sector: Financials

LIC Housing Finance

1 August 2017 15

BSE SENSEX S&P CNX CMP: INR1,147 TP: INR1,180(+3%) Neutral 32,515 10,077

We will revisit our estimates post earnings call/management interaction.

Conference Call Details

Date: 1st Aug 2017 Time: 11:00am IST Dial-in details: +91-22-3960 0983

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E

Sales 56.1 60.6 67.5 EBITDA 12.5 11.9 13.1 NP 8.6 9.6 11.1 EPS (INR) 38.0 39.4 45.4 EPS Gr.(%) -2.6 3.7 15.1 BV/Sh.(INR) 363.0 379.6 398.8 RoE (%) 10.8 10.6 11.7 RoCE (%) 10.5 10.4 11.4 Payout (%) 57.7 57.7 57.7 Valuations P/E (x) 30.2 29.1 25.3 P/BV (x) 3.2 3.0 2.9 EV/EBITDA (x) 22.1 23.2 21.3 Div. Yield (%) 1.5 1.6 1.9

Beat led by higher margins and volumes n CONCOR’s 1QFY18 reported revenue stood at INR14.5b (est. of INR13.8b; +9%

YoY, -6% QoQ), led by higher-than-estimated volumes. n EBITDA stood at INR3.3b (est. of INR2.6b; +25% YoY, -34% QoQ), led by

improved margins in both EXIM and domestic segments. EBITDA margin expanded to 22.4% in 1QFY18 from 19.6% in 1QFY17, led by 0.9pp improvement in EXIM margin and 6.9pp in domestic margin.

n Reported PAT of INR2.4b (est. of INR1.7b; +36% YoY, -42% QoQ) was further boosted by higher other income of INR936m (+35% YoY).

n Volumes higher than est.: Overall volumes stood at 842.7k teu (est. of 782k teu; +15% YoY). EXIM volumes stood at 712k (est. of 663k; +13% YoY) and domestic volumes at 129k (est. of 118k; +26% YoY).

n Realization trend: Overall realization was at INR17,287/teu (est. of INR17,637/teu; -5% YoY). EXIM and domestic realization stood at INR15,875 and INR25,033, respectively.

n Overall segmental EBIT stood at INR2,959/teu (est. of INR2,373; -3% YoY), led by EXIM EBIT at 3,112/teu (-3% YoY) and domestic EBIT at INR2,121/teu (+457% YoY).

Key questions for management n Volume guidance for 2QFY18/FY18, both for the industry and CONCOR n Reasons for sharp improvement in margins n Impact of increased competitive intensity in the focused market n Capex guidance for 2QFY18/FY18 Valuation and view: We will revisit our estimates post earnings call. Based on our current estimates, it trades at 23.2x/21.3x FY18/FY19E EBITDA. Maintain Neutral.

Container Corporation (INR Million) Y/E March FY17 FY18E 1Q 2Q 3Q 4Q 1QE 1QAct Var (%) YoY (%) QoQ (%) Net Sales 13,392 13,786 13,304 15,579 13,795 14,568 6% 9% -6% YoY Change (%) -5.7 -8.2 -5.3 -2.3 3.0 8.8 EBITDA 2,619 2,288 2,612 4,950 2,550 3,267 28% 25% -34% Margins (%) 19.6 16.6 19.6 31.8 18.5 22.4 YoY Change (%) -9.0 -27.6 -6.7 6.2 -2.6 24.8 Depreciation 841 873 927 877 880 953 8% 13% 9% Interest 0 3 1 32 9 0 -98% -99% Other Income 692 763 845 593 600 936 56% 35% 58% PBT before EO expense 2,470 2,175 2,529 4,634 2,261 3,251 44% 32% -30% Extra-Ord expense 0 0 0 865 0 0 PBT 2,470 2,175 2,529 3,768 2,261 3,251 44% 32% -14% Tax 685 596 669 411 565 817 44% 19% 99% Rate (%) 27.7 27.4 26.4 10.9 25.0 25.1 Adj PAT 1,785 1,578 1,860 4,223 1,696 2,434 44% 36% -42% YoY Change (%) -13.7 -32.4 -9.7 37.9 -5.0 36.4 Margins (%) 13.3 11.4 14.0 27.1 12.3 16.7 E: MOSL Estimates

31 July 2017

Results Flash | Sector: Logistics

CONCOR

RESULTS FLASH

1 August 2017 16

BSE SENSEX S&P CNX CMP: INR1,018 TP: INR1,330 (+31%) Buy 32,515 10,077 Bloomberg SHTF IN Equity Shares (m) 226.9 M.Cap.(INRb)/(USDb) 231.0 / 3.6 52-Week Range (INR) 1325 / 778 1, 6, 12 Rel. Per (%) -3/-11/-36 Avg Val, INRm 830 Free float (%) 73.9

Financials & Valuations (INR b) Y/E March 2017 2018E 2019E Net Inc. 55.2 64.7 72.2 PPP 43.7 52.3 58.0 PAT 12.6 17.9 22.9 Cons.PAT 12.6 18.1 23.2 EPS (INR) 55.4 78.9 100.7 Cons. EPS (INR) 55.6 80.0 102.4 BV/Sh (INR) 498 556 639.3 Cons. BV (INR) 494 560 644.4 RoA on AUM (%) 2.0 2.7 3.1 RoE (%) 11.7 15.0 16.9 Payout (%) 20.9 18.6 17.4 Valuations

P/Cons. EPS (x) 18.3 12.7 9.9 P/Cons. BV (x) 2.1 1.8 1.6 Div. Yield (%) 1.0 1.2 1.5

Strong quarter; Reaping the benefits on cost of funds n Shriram Transport’s (SHTF) 1QFY18 PAT of INR4.5b was largely in line with our

estimate. Strong sequential AUM growth, continued decline in cost of funds and reduction in GNPL ratio (QoQ) were the key positives of the quarter.

n Disbursements have started to pick up post the subdued performance in 2HFY17. AUM growth of 3.6% QoQ is encouraging – we believe that if the economic scenario in 2HFY18 picks up, the company would be able to better its 12-15% AUM growth guidance.

n Calculated NIM on AUM expanded 60bp QoQ to 7.9%. CoF declined 34bp sequentially to 9.44%. This is in line with our fundamental thesis that SHTF will be the biggest beneficiary on CoF reduction among all NBFC peers due to a larger share of high-cost legacy borrowings. Also, yields moderated just 13bp YoY to 14.31%, allaying fears that yields will reduce drastically as the company moves toward financing more younger-vintage vehicles.

n GNPL ratio decreased 13bp QoQ to 8.03%. However, credit costs of INR4b were higher than the quarterly FY17 average of INR3.1b. If one were to normalize the quantum of write-offs, the GNPL ratio would have been flat sequentially. However, the PCR of 71% gives us enough comfort that credit costs will decline sharply over the next two years, despite migration to 90dpd.

n Valuation and view: SHTF’s return ratios are at cyclical lows, with decadal high credit cost and NPLs. However, credit costs over the past two years have been statutory, rather than economic, i.e., write-offs as % of AUM have been steady. Additionally, we believe margin compression fears are overplayed with the company yet to reap significant benefit on CoF. We increase our FY18-19 estimates by 2%/4% to factor in stronger revenue. The stock trades at 1.8x/1.6x FY18/19E BV. Buy with a TP of INR1,330 (2x June 2019E BVPS).

31 July 2017

1QFY18 Results Update | Sector: Financials

Shriram Transport Finance

1 August 2017 17

BSE SENSEX S&P CNX CMP: INR1,317 TP: INR1,350(+3%) Neutral 32,515 10,077 Bloomberg TRP IN Equity Shares (m) 169 M.Cap.(INRb)/(USDb) 222.8 / 3.5

52-Week Range (INR) 1768 / 1144 1, 6, 12 Rel. Per (%) 3/-16/-25 Avg. Val, INRm 389 Free float (%) 28.8 Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 58.6 63.7 74.5 EBITDA 13.8 14.8 18.3 PAT 9.3 9.0 11.4 EPS (INR) 55.2 53.4 67.3 Gr. (%) -7.7 -3.2 26.0 BV/Sh (INR) 257.1 291.2 334.2 RoE (%) 23.8 19.5 21.5 RoCE (%) 18.6 15.7 17.0 P/E (x) 23.9 24.7 19.6 P/BV (x) 5.1 4.5 3.9

Estimate change TP change Rating change

Weak revenue; margins remain stable n TRP reported sales of INR13.5b (-11% YoY; >10% below est.). The miss is

attributed to a decline in domestic revenue due to GST roll-out. Despite this, gross margin stood at 70.3% (up >500bps QoQ), a positive surprise, as India is the most profitable business. EBITDA margin came in at 22% (+60bp QoQ). R&D as % of sales stood at 7.5% in 1Q v/s 9.8% in 4QFY17 and 6.0% in 1QFY17.

n India biz impacted by GST; pricing pressure continues in US: India business declined ~9% YoY due to channel destocking ahead of GST rollout. Secondary sales remained strong (at mid-teens). The company expects India business to grow in double-digits, led by strategic initiatives undertaken since 2QFY16. US business remained largely flat QoQ at INR2.7b due to continued pricing pressure in base business, offset by recent launches, including gCelecoxib. We expect this business to remain under pressure in FY18 due to further price erosion in base business, partially offset by 5-6 new launches in FY18E (~25 pending ANDAs). TRP is also focusing on in-licensing of products in the US.

n Earnings call takeaways: 1) Plans to file 15-16 ANDAs in FY18. 2) Pricing pressure in US in 1QFY18. 3) Tax rate guidance of 21-22% in FY18. 4) Dahej- formulations facility inspected in Jun-17, and received five 483 observations. 5) Renvela launch deferred for more than a year. 6) Tax rate to stay at ~20% in FY18. 7) According to AIOCD, secondary sales of Novartis brand acquired were ~INR31cr (annualized at June-end). 8) Local currency growth in Germany was ~12% YoY (~8% YoY in reported terms). 9) Capex guidance of INR4b in FY18 and FY19.

n Upside potential capped; downgrading to Neutral: Although TRP remains one of the better plays on India’s growth story (because of chronic heavy portfolio and one of the best margins), challenges in the US business will keep growth and margins under check in the near term. We downgrade the stock to Neutral due to limited upside at current valuations. Our TP is INR1,350@20x FY19E PER (v/s INR1,450 @ 20x FY19E EPS). We cut FY18E/19E EPS by ~6% as we build in the impact of higher pricing pressure in the US and lower EBITDA margin.

31 July 2017

1QFY18 Results Update | Sector: Healthcare

Torrent Pharmaceuticals

1 August 2017 18

BSE SENSEX S&P CNX CMP: INR449 TP: INR523 (+16%) Buy 32,515 10,077 Bloomberg CRIN IN Equity Shares (m) 291.3 M.Cap.(INRb)/(USDb) 75.4/ 1.1

52-Week Range (INR) 274/146 1, 6, 12 Rel. Per (%) 5/34/12 Avg. Val, (INR m) 68 Free float (%) 37.9

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Sales 100.3 117.2 131.4 EBITDA 9.8 12.1 13.7 NP 4.8 7.0 8.5 EPS (INR) 16.6 24.1 29.0 EPS Gr. (%) 36.0 45.1 20.4 BV/Sh. (INR) 99.1 114.8 133.7 RoE (%) 17.5 22.5 23.4 RoCE (%) 12.3 15.6 17.1 P/E (x) 27.0 18.6 15.5 P/BV (x) 4.5 3.9 3.4

Estimate change TP change Rating change

Strong performance; better monsoon to aid growth n Exhibits recovery in PAT: CRIN reported overall revenue of INR22.7b (est. of

INR22.2b) in 1QFY18, as against INR20.6b in 1QFY17, marking growth of 10.6%. EBITDA margin expanded significantly by 320bp YoY in 1QFY18 to 7.5% (est. of 4.6%) on account of gross margin expansion of 240bp YoY. EBITDA increased 94% YoY to INR1,715m (est. of INR1,025m). Consequently adj. PAT grew from INR75m in 1QFY17 to INR754m (est. of INR364m) in 1QFY18 on account of significant reduction in finance cost (INR441m v/s INR651m in 1QFY17).

n Better monsoon aids crop acreages: The country is witnessing better monsoon in 2017 (southwest monsoon 5% above normal level), leading to an increase of 3% in sowing of Kharif crops. Cotton sowing increased impressively by 29%, followed by pulses (+6.9%) and rice (2.4%). CRIN is set to benefit from better monsoon and increased sowing.

n DBT rollout to prove beneficial: Rollout of direct benefit transfer (DBT) for fertilizers has been pushed to 2018 as distribution of POS machines has not been completed yet due to low availability. However, once implemented, it will significantly ease the subsidy receivables situation for CRIN. DBT rollout is expected to require end-to-end supply chain management and last mile reach, both of which will benefit CRIN on account of the strong brand pull.

n Valuation and view: We believe increased sowing on account of better monsoon, moderating raw material prices, and regular disbursement of subsidy will be the major triggers for margin expansion. We thus maintain our revenue estimates for FY18 and FY19, and raise our EBITDA/PAT by 9.2%/9.9% for FY18E and by 10.2%/11.4% for FY19E. We expect 14% revenue CAGR (FY17-19) and 32% PAT CAGR. Maintain Buy with a TP of INR523, 18x FY19E EPS.

31 July 2017

1QFY18 Results Update | Sector: Fertilizers

Coromandel International

1 August 2017 19

BSE SENSEX S&P CNX CMP: INR395 TP: INR395(0%) Neutral 32,515 10,077 Bloomberg GETD IN Equity Shares (m) 256 M.Cap.(INRb)/(USDb) 91.4 / 1.4

52-Week Range (INR) 425 / 277 1, 6, 12 Rel. Per (%) 10/11/-2 Avg Val, INRm 36 Free float (%) 25.0

Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E Net Sales 40.5 47.8 51.1 EBITDA 2.2 4.1 5.1 PAT 1.5 2.4 2.9 EPS (INR) 5.7 9.3 11.3 Gr. (%) 325.3 62.1 21.5 BV/Sh (INR) 40.3 46.1 53.1 RoE (%) 12.4 21.5 22.7 RoCE (%) 15.7 26.0 29.3 P/E (x) 69.3 42.7 35.2 P/BV (x) 9.8 8.6 7.5

Estimate change TP change Rating change

Operating performance above expectations; Maintain Neutral n Performance aided by strong execution: Sales rose 41% YoY to INR12.1b in

1QFY18, meaningfully above our estimate of INR9.5b, led by strong execution of projects in hand. Adj. EBITDA stood at INR1.1b v/s INR21m (one-time tax provision of INR1.8b) in 1QFY17, with the margin expanding 850bp YoY to 8.7%. Adj. PAT stood at INR616m v/s INR360m in 1QFY17.

n EBIDTA margin expands led by better execution, cost rationalization: EBIDTA stood at INR1.1b as against profit of INR21m, with the margin expanding YoY to 8.7% from 0.2%. Operating margin expansion was driven by better operating leverage and cost control (employee cost rationalization). Management guided for 7-8% EBIDTA margin on a sustainable basis due to intense competition in the sector.

n Order inflow and book grow strongly: Order intake rose 98% YoY to INR15.8b in 1QFY18, driven by strong order finalization in the substation segment (46% of order inflow). Order backlog stands at INR84.2b, providing revenue visibility for the next two years. Of the total order book, 40% are from PGCIL, 40% from private and the rest from the state. Key orders bagged in 1Q were (1) 765/230kv GIS substation order from Doosan (INR4.0b), (2) 765kv AIS substation order at Warangal (INR3.3b), (3) Solar project from Odisha from PAN India Infra (INR1.6b) and (4) 765kv 80MVAR reactor order from PGCIL (INR662m).

n Maintaining Neutral; raising estimates: We raise EPS for FY18E/19E by 4/6% to INR9/11 to factor in improved execution of the projects in hand. Maintain Neutral with a revised TP of INR395, valuing the stock at 35x FY19E EPS of INR11.3.

Quarterly Performance

(INR Million)

FY17 FY18 FY17 FY18 MOSL Var.

Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QE Vs Est Sales 8,546 8,340 11,623 11,963 12,093 9,700 12,914 13,124

40,521 47,831 9,500 27

Change (%) 11.6 -4.4 62.8 26.9 41.5 16.3 11.1 9.7 22.7 18.0 11.2 EBITDA 21 339 722 1,097 1,055 900 1,214 1,569

2,230 4,113 500 111

Change (%) -70.3 -50.1 -235.7 81.7 4,875.9 165.2 68.3 43.0

-9.0 -9.0 2,258 As of % Sales 0.2 4.1 6.2 9.2 8.7 9.3 9.4 12.0 5.5 8.6 5.3 Depreciation 217 220 221 224 224 210 210 197

873 873 210

Interest 226 239 343 344 278 220 220 207

589 589 171 Other Income 326 435 522 177 421 310 200 326 427 427 339 PBT -2,425 315 679 705 974 780 984 1,491

1,195 3,078 458 113

Tax -455 109 236 244 358 234 295 338

508 508 137 Effective Tax Rate (%) 18.8 34.6 34.7 34.6 36.8 30.0 30.0 22.7 42.5 16.5 30.0 Reported PAT -1,970 206 443 461 616 546 689 1,153

687 2,570 321 92

Change (%) -2,041.0 -43.0 -215.4 70.9 -131.3 165.3 55.5 150.0 0.0 0.0 -116.3 Adj PAT 360 206 443 461 616 546 689 1,153

687 2,570 321 92

Change (%) 254.6 -43.0 -215.4 70.9 71.1 165.3 55.5 150.0 2.0 2.0 -10.9 E: MOSL Estimates

31 July 2017

1QFY18 Results Update | Sector: Capital Goods

GE T&D India

1 August 2017 20

BSE SENSEX S&P CNX CMP: INR262 TP: INR250(-5%) Neutral 32,515 10,077 Bloomberg HEXW IN Equity Shares (m) 302 M.Cap.(INRb)/(USDb) 79.2 / 1.2 52-Week Range (INR) 268 / 178 1, 6, 12 Rel. Per (%) 3/17/3 Avg Val, INRm 242 Free float (%) 28.8

Financials & Valuations (INR b) Y/E Dec 2016 2017E 2018E Net Sales 35.3 39.5 44.2 EBITDA 5.7 6.4 6.9 PAT 4.2 4.7 5.0 EPS (INR) 13.7 15.7 16.5 Gr. (%) 5.8 14.8 4.8 BV/Sh (INR) 56.3 65.0 77.2 RoE (%) 26.5 25.7 23.1 RoCE (%) 24.2 24.0 22.5 P/E (x) 19.1 16.7 15.9 P/BV (x) 4.7 4.0 3.4

Estimate change TP change Rating change

Beat-and-raise as revenue momentum continues n Revenue momentum intact: HEXW continued its strong revenue momentum in

2QCY17 (USD152.6m; 2.3pp beat). In constant currency terms, revenue grew 4.9% QoQ and 18.2% YoY to USD151.8m. EBITDA margin, including ESOP charges, shrunk 70bp QoQ to 16.2%, marginally below our estimate, due to elevated ESOP charges (INR121m v/s estimate of INR54m). PAT grew 7.5% QoQ to INR1.22b (7pp beat) on the back of better-than-expected revenue, forex gains, and lower tax rates.

n Broad-based traction drives guidance raise: Broad-based growth across geographies and verticals was a highlight for the quarter, with IMS and BPS as the stars among services. After the second quarter of high-teens growth, HEXW upgraded its revenue growth guidance for CY17 to 14-15% from 10-12%. Even flat revenue sequentially for the remainder of the year will put HEXW at the higher end of the band. It expects to sustain EBITDA margins at last year’s levels (16.3%).

n Alleviates concerns around top clients: Sluggish outlook for the second half is a function of weakness in two of its top five clients, ramp-down in one of which was embedded in the 10-12% guidance at the beginning of the year. The situation in new account is expected to impact HEXW’s revenue by 2.5-3% in CY18 – it will still exit CY17 with close to double-digit growth. Margins in these accounts were close to company average, and should thus remain unaffected. Also, HEXW noted it lost only a share of the larger piece and continues to grow in other areas of the relationship.

n Valuation and view: We have upgraded our revenue estimates by 4-4.5% and earnings estimates by 2.5-3.5% for CY17 and CY18. For CY16-18, we expect revenue CAGR of 12.5% and earnings CAGR of 10%. HEXW trades at 16.7x CY17E and 16x CY18E earnings. Our target price of INR250 discounts forward earnings by 14x, factoring the risks in top clients playing out in some measure. Maintain Neutral.

Quarterly Performance (Consolidated)

31 July 2017

2QCY17 Results Update | Sector: Technology

Hexaware Technologies

Y/E Dec CY16 CY17E Est. 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE 2QCY17

Revenue (USD m) 121.7 129.7 135.2 138.9 144.7 152.6 153.7 153.6 525 605 150.2 1.6QoQ (%) -1.9 6.6 4.2 2.7 4.2 5.5 0.7 0.0 8.2 15.2 3.8 167bpRevenue (INR m) 8,202 8,697 9,041 9,409 9,605 9,836 9,991 10,064 35,349 39,496 9,679 1.6YoY (%) 15.0 12.6 10.5 14.8 17.1 13.1 10.5 7.0 13.2 11.7 11.3 179bpGPM (%) 33.6 34.6 35.4 34.6 34.1 33.7 33.9 32.3 34.6 33.5 33.1 56bpSGA (%) 19.0 19.0 18.0 17.3 17.2 17.4 17.0 17.0 18.3 17.1 17.0 42bpEBITDA 1,194 1,353 1,576 1,624 1,623 1,598 1,686 1,539 5,747 6,445 1,561 3683bpEBITDA Margin (%) 14.6 15.6 17.4 17.3 16.9 16.2 16.9 15.3 16.3 16.3 16.1 14bpEBIT Margin (%) 12.9 14.0 15.9 15.8 15.3 14.6 15.2 13.7 14.7 14.7 14.7 -5bpOther income 55 132 67 140 28 146 146 74 394 394 113 29.2ETR (%) 24.2 25.8 25.8 25.1 23.8 22.9 23.5 23.5 25.3 23.4 25.5PAT 842 999 1,114 1,216 1,139 1,224 1,277 1,108 4,171 4,748 1,142 7.2QoQ (%) -15.3 18.6 11.5 9.2 -6.3 7.4 4.4 -13.2 0.3 715bpYoY (%) 1.0 1.0 -0.1 22.3 35.3 22.5 14.7 -8.9 6.1 13.8 14.3 821bpEPS (INR) 2.8 3.3 3.7 4.0 3.8 4.1 4.2 3.7 13.7 15.7 3.8Headcount 11,599 11,875 11,859 12,115 12,734 13,098 13,255 13,492 12,115 13,492 13,434 -2.5Uti l i zation (%) 69.6 70.0 74.1 78.6 78.9 80.8 80.0 77.0 73.9 80.3 77.0 380bpAttri tion (%) 16.0 16.6 16.5 16.1 14.9Offshore rev. (%) 36.9 38.6 36.8 38.1 35.5 35.3 35.0 33.8 37.6 34.9 32.9 236bp

CY16 Var. (% / bp)

CY17

1 August 2017 21

BSE SENSEX S&P CNX CMP: INR167 TP: INR201 (+20%) Buy 32,515 10,077 Bloomberg EQUITAS IN Equity Shares (m) 337.8 M.Cap.(INR b)/(USD b) 56.4/0.9

52-Week Range (INR) 201 / 139 1, 6, 12 Rel. Per (%) 6/-16/-31 Avg Val, INRm 284 Free float (%) 100.0 Financials & Valuations (INR b) Y/E March 2018E 2019E 2020E NII 9.3 11.5 14.4 OP 2.1 4.1 6.5 NP 0.6 2.1 3.4 EPS (INR) 1.7 6.1 10.1 EPS Gr. (%) -65.7 252.9 65.2 BV/Sh. (INR) 68 73 82 RoE (%) 2.6 8.7 13.0 RoA (%) 0.6 1.7 2.0 P/E(X) 96.4 27.3 16.5 P/BV (X) 2.5 2.3 2.0

Steady shift to secured products; at PAR delinquencies in MF up marginally n Equitas reported PAT growth of 126% QoQ (-75% YoY) to INR156m (15% miss).

PPoP exceeded estimate by 31%, helped by lumpy PSLC fees and largely in-line NII. Other income of INR820m (1.6x beat) included INR600m of PSLC fees. However, provisions of INR441m (above est. of INR250m; includes INR240m of additional provision for MF portfolio) led to PAT miss of 9%.

n AUM/loan book grew -2%/7% YoY and 7%/5% QoQ. The share of microfinance AUM fell to 42% of total v/s 46% in 4QFY17, as microfinance disbursements declined 21%/57% QoQ/YoY. Overall disbursements declined to INR10.6b v/s INR13.9b a year ago (largely stable QoQ).

n In line with its strategy, Equitas has lowered unsecured portion of AUMs to 44% v/s 47% in 4Q, with robust growth in secured lending products like UCV (+21% YoY) and M-LAP/LAP (+29% YoY), and new product additions (business, gold, agri loans, etc.).

n Non-MF GNPA % increased to 4.9% v/s 4.5% a quarter ago, while MF portfolio NPA increased from 2.5% to 5%. The RBI’s 90-day relaxation window closure led to higher NPA in non-MF portfolio. Total pool of at PAR delinquencies in MF portfolio increased to INR2.08b v/s INR1.9b a quarter ago.

n GNPA increased 46% in absolute terms, and calculated PCR rose 270bp QoQ to 51.7%. GNPA/NNPA stood at 4.91% (4.99% in microfinance portfolio and 4.85% in non-MF)/2.95%. Coverage ratio on MF portfolio is healthy at 58%.

n Other highlights: (1) Deposits grew 20% QoQ, helped by strong CASA growth of 80% QoQ; CASA ratio stood at 26% (+900bp QoQ). (2) MF collection efficiency declined marginally to 94.6% v/s 95.4% in 4Q. (3) Management mentioned that PAR delinquencies in microfinance have largely stabilized, and collection efficiency for MF loans disbursed in CY17 is ~99.8%.

n Valuation view: Equitas targets to take MFI share in overall loans to ~30% by FY18. This would be partially offset by high growth in secured products like micro LAP and VF, and newly launched products like housing, business, gold and agri loans. We expect near-term recalibration of the growth strategy to yield positive results over medium-to-long term. We cut our FY18/FY19 PAT estimates sharply (64%/18%) to reflect higher opex toward branch expansion and employee additions, and higher provision requirement for MF book. Reiterate Buy with TP of INR201.

31 July 2017

1QFY18 Results Update | Sector: Financials

Equitas Holdings

1 August 2017 22

BSE SENSEX S&P CNX CMP: INR359 TP: INR469 Buy 32,515 10,077

We will revisit our estimates post earnings call/management interaction.

Conference Call Details

Date: 01st Aug 2017 Time: 11:30am IST Dial-in details: +91-22-3960 0711

Financials & Valuations (INR m) Y/E Mar 2017 2018E 2019E Net Sales 2,714 3,172 3,611 EBITDA 913 1037 1296 Adj PAT 367 548 794 Adj EPS (INR) 6.4 9.6 13.9 Gr. (%) 0.3 49.5 44.9 BV/Sh (INR) 96.1 105.7 119.6 RoE (%) 11.2 9.5 12.4 RoCE (%) 8.8 9.6 12.2 P/E (x) 55.9 37.4 25.8 P/BV (x) 3.7 3.4 3.0 EV/EBITDA (x) 21.2 17.7 13.4

Results above estimates

n Revenues stood at INR703m (+12% YoY, +6% QoQ), exceeding our estimate by 12%, led by hikes in ad rates at legacy stations and higher utilization levels (70-80% at 28 legacy stations; 25-35% at newer stations).

n EBITDA surged 16% YoY (+34% QoQ) to INR222m (13% above estimates). n EBITDA margin expanded 100bp YoY (+660bp QoQ) to 31.5% (in-line), led by

operating leverage from employee cost and other expenditure. n Fall in finance cost by 6% YoY (-35% QoQ) to INR39m, coupled with higher

margin, provided impetus to PAT (INR108m; +42% YoY, +140% QoQ).

Valuation and view: We will revisit our estimates post the earnings call. At CMP of INR359, the stock is trading at EV/EBITDA of 13x on FY19E. We have a Buy rating on the stock with a TP of INR469.

Quarterly Earning Model (INR m) Y/E March FY17 FY18 FY17 FY18E 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QFY18E Var. (%) Net Sales 628 810 728 666 703 903 817 749 2,714 3,172 626 12.2 YoY Change (%) 38.0 45.9 12.3 12.7 11.9 11.5 12.2 12.6 20.7 16.9 -0.3 Total Expenditure 437 531 462 500 481 600 529 524 1,802 2,135 429 12.1 EBITDA 192 279 266 166 222 303 287 225 913 1,037 197 12.5 Margins (%) 30.5 34.4 36.6 24.9 31.5 33.5 35.2 30.1 33.6 32.7 31.5 8 bps Depreciation 45 49 50 56 64 72 65 38 197 240 50 27.7 Interest 41 81 50 59 39 39 39 34 190 150 36 6.2 Other Income 11 13 9 17 47 47 47 51 44 191 56 -16.1 PBT before EO expense 116 162 175 68 166 239 230 203 570 838 166 -0.2 Extra-Ord expense 0 0 0 0 0 0 0 0 0 0 0 0.0 PBT 116 162 175 68 166 239 230 203 570 838 166 -0.2 Tax 40 0 54 23 57 83 80 70 203 290 58 -0.2 Rate (%) 34.5 0.0 30.9 33.3 34.6 34.6 34.6 34.6 35.7 34.6 34.6 0.1 Reported PAT 76 162 121 45 108 156 151 133 367 548 109 -0.3 Adj PAT 76 162 121 45 108 156 151 133 367 548 109 -0.3 YoY Change (%) -27.5 50.1 -43.9 -75.7 42.3 -3.6 24.7 195.7 32.7 49.5 42.6

Margins (%) 12.1 20.0 16.6 6.8 15.4 17.3 18.4 17.8 13.5 17.3 17.4 -193 bps

Source: MOSL, Company

31 July 2017

Results Flash | Sector: Media

Music Broadcast Ltd

RESULTS FLASH

1 August 2017 23

Industry witnesses inventory build-up to meet festive demand PV and 2W sales to see healthy growth in dispatches 2W and PV wholesales volume is expected to be healthy, led by inventory build-up to meet festive demand and gradually improving retails post GST implementation. Growth in the CV segment will be largely led by LCVs. Our interaction with mass market 2W channel partners points toward a gradual recovery in retails from the second half of July. Factors such as good monsoon and increase in MSPs have lifted sentiment in rural/semi-urban areas. Pre-festive demand is evident in states like Maharashtra and Gujarat. Key highlights: n MSIL’s domestic dispatches growth is expected to come in at 11% YoY. Demand for

Baleno, Brezza and New Dzire continues to remain robust as these models enjoy a healthy waiting period of 3-4 months. Within the domestic portfolio, CIAZ sales are expected to be weak due to GST impact on hybrid cars (forms ~60% of CIAZ sales).

n Tata Motors’ PV segment is expected to decline 5% YoY, while the CV segment is likely to continue its downtrend with a decline of 3% YoY, led by a 12% fall in HCVs.

n MM’s volumes are expected to increase by 7% YoY, as tractor volumes are likely to increase by 25% YoY and UV volumes by 2.3% YoY. However, 3W sales are expected to decline 27% YoY.

n In the 2W segment (barring BJAUT), HMCL and TVSL wholesales are expected to increase at a healthy 20% and 15%, respectively, led by improving retails in key states and inventory build-up to meet festive demand. BJAUT is likely to record a decline of 2.3% YoY due to weak 3W and exports sales.

n We expect RE volumes to grow at 19.9% YoY to 64k units. n CV manufacturers are expected to see a sharp recovery in wholesales, led by strong

growth in LCV sales. We expect AL to outperform other CV manufacturers, with 9.6% YoY growth (LCVs +30% YoY, HCVs +3.9% YoY), while TTMT and VECV’s CV sales are expected to decline by 3.2% and 2.7%, respectively.

n We prefer 4Ws over 2Ws and CVs due to stronger volume growth and a stable competitive environment. While we expect 2W volumes to benefit from rural recovery in the near term, competitive intensity remains high in this segment witnessing changing customer preferences. For CVs, we expect a gradual volume recovery from 2HFY18.

n Our top picks are Tata Motors, Maruti Suzuki and Amara Raja. We also consider MM as the best way to participate in rural market recovery.

July-17 Sales Estimates

31 July 2017 Sector Update

Automobiles

1 August 2017 24

Steel and its input prices moving up across the world n Indian steel: Long product (TMT Mumbai) prices were marginally higher WoW. Sponge iron prices were up

~4% WoW while domestic scrap prices were up ~3% WoW. Domestic iron ore were unchanged. Pellet prices were marginally higher. Domestic HRC prices were up ~1% WoW, while import HRC price offers were unchanged.

n Raw Materials: Iron ore prices (China cfr) were up ~2% WoW. Chinese iron ore port inventories were unchanged. Thermal coal prices were down ~2% WoW. Coking coal prices were up ~3% WoW on strong buying activity in China. China’s pellet import prices were up ~1% WoW, as premium over iron ore remains strong.

n Europe: HRC prices were up ~2% WoW, third consecutive week of increase. EU steel spreads improved on higher steel prices, offset partly by increase in iron ore and coking coal. CIS export HRC prices were up ~8% WoW. Rotterdam scrap prices were also up ~8% WoW.

n China: local HRC prices were up ~3% WoW, while rebar prices were unchanged. Steel inventories were marginally higher. Export HRC/rebar prices were up ~1%/flat WoW, respectively.

n Base metals: Aluminum (cash LME) was unchanged. Zinc (cash LME) was unchanged while lead was up ~3% WoW. Copper was up ~5% WoW. Crude oil (Brent) prices were up ~9% WoW.

31 July 2017 Update

Metals Weekly

1 August 2017 25

Quarterly Performance (Consolidated) (INR Million) Y/E March FY17 FY18E FY17 FY18E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Net Sales 117,080 132,278 140,126 166,562 137,271 142,241 160,491 160,491 556,046 600,495 Change (YoY %) 1.1 21.3 61.1 55.7 17.2 7.5 14.5 -3.6 32.8 8.0 EBITDA 32,694 29,586 28,669 31,649 24,145 30,300 40,535 40,105 122,598 135,086 Change (YoY %) 100.9 71.1 221.5 73.5 -26.1 2.4 41.4 26.7 101.9 10.2 EBITDA (INR per ton) 9,789 7,705 7,876 7,992 6,899 8,080 9,538 9,436 8,295 8,577 EBITDA (USD per ton) 146 115 117 119 107 123 145 142 124 131 Interest 9,358 9,646 9,201 9,476 10,046 9,954 9,862 9,771 37,681 39,633 Depreciation 8,315 8,915 9,146 8,779 9,400 9,484 9,568 9,739 35,154 38,191 Other Income 334 296 333 558 841 846 852 857 1,521 3,396 PBT (before EO Item) 15,356 11,320 10,655 13,953 5,540 11,709 21,957 21,452 51,284 60,658 EO Items 0 0 0 0 0 0 0 0 0 0 PBT (after EO Item) 15,356 11,320 10,655 13,953 5,540 11,709 21,957 21,452 51,284 60,658 Total Tax 4,507 4,734 3,511 3,992 1,690 3,418 6,287 6,146 16,743 17,541

% Tax 29.4 41.8 32.9 28.6 30.5 29.2 28.6 28.6 32.6 28.9 Reported PAT 10,848 6,587 7,145 9,961 3,850 8,291 15,670 15,306 34,541 43,117 MI (Profit)/Loss 112 -117 13 57 -117 -117 -117 -117 64 -469 Share of P/(L) of Ass. 130 795 143 125 795 795 795 795 1,193 3,181 Pref. Dividend 0 0 0 0 0 0 0 0 0 0 Adjusted PAT 11,090 7,265 7,300 10,143 4,528 8,969 16,348 15,984 35,798 45,829 Change (YoY %) -1,076.8 557.5 -529.2 515.1 -59.2 23.5 123.9 57.6 -42,485.0 28.0 E: MOSL Estimates

June 2017 Results Preview | Sector: Metals

JSW Steel

CMP: INR195 TP: INR283 (+14%) Buy n Consolidated EBITDA is estimated to decline 26% YoY/24% QoQ

to INR24b on lower steel prices and elevated coking coal cost. n Standalone steel sales are estimated to increase 5% YoY to 3.5mt,

impacted by GST-led de-stocking. n Steel realization is estimated to decline 6% QoQ due to lower

domestic and export prices and lower mix of exports. n Standalone EBITDA/t is estimated at INR6,413, down from

INR9,276 in 1QFY17 and 7,586 in 4QFY17. n Adj. PAT is estimated to decline 59% YoY to INR4.5b. Key issues to watch for: Ø Steel price hikes and impact of coking coal. Ø Domestic steel demand growth.

Bloomberg JSTL IN

Equity Shares (m) 2417.2 M. Cap. (INR b)/(USD b) 472 / 7 52-Week Range (INR) 201 / 124

1,6,12 Rel Perf. (%) 2 / 3 / 35 Financial Snapshot (INR Billion) Y/E March 2017 2018E 2019E 2020E

Sales 556.0 600.5 605.5 624.8 EBITDA 122.6 135.1 146.5 147.4 Adj. PAT 35.8 45.8 54.6 50.6

Adj. EPS (INR) 14.8 19.0 22.6 20.9 EPS Gr(%) 28.0 19.1 -7.3 BV/Sh. (INR) 93.7 108.9 128.9 147.3

RoE (%) 17.3 18.7 19.0 15.1 RoCE (%) 7.9 8.6 8.9 8.3 Payout (%) 18.4 7.9 6.5 13.0

Valuation P/E (x) 14.3 11.2 9.4 10.1 P/BV 2.3 1.9 1.6 1.4

EV/EBITDA (x) 8.4 7.5 6.8 6.7 Div. Yield (%) 1.1 0.6 0.6 1.0

1 August 2017 26

Quarterly Performance (INR Million) Y/E March FY17 FY18 FY17 FY18E 1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE

Domestic volume growth (%) 8.0 3.4 -4.0 10.0 -3.0 14.0 16.0 8.0 3.6 9.0 Net Sales 17,499 14,390 14,140 13,152 17,499 17,412 17,392 15,217 59,180 67,520 YoY Change (%) 0.1 -0.9 -7.5 2.2 0.0 21.0 23.0 15.7 -3.3 14.1 COGS 8,419 6,847 6,859 6,365 9,119 8,285 8,349 7,160 28,491 32,914 Gross Profit 9,079 7,543 7,281 6,787 8,379 9,127 9,043 8,057 30,690 34,607

Gross margin (%) 51.9 52.4 51.5 51.6 47.9 52.4 52.0 52.9 51.9 51.3 Other Expenditure 5,384 5,050 4,585 4,262 5,209 6,198 5,726 5,039 19,276 22,172

% to Sales 30.8 35.1 32.4 32.4 29.8 35.6 32.9 33.1 32.6 32.8 EBITDA 3,695 2,493 2,697 2,525 3,170 2,929 3,317 3,019 11,414 12,435 Margins (%) 21.1 17.3 19.1 19.2 18.1 16.8 19.1 19.8 19.3 18.4

YoY Change (%) 16.8 9.8 -6.4 20.1 -14.2 17.5 23.0 19.6 8.1 8.9 Depreciation 208 209 213 273 260 262 266 337 903 1,124 Interest 54 21 44 47 70 27 58 66 166 220 Other Income 319 285 260 293 383 342 312 336 1,152 1,373 PBT 3,753 2,548 2,700 2,497 3,224 2,982 3,305 2,952 11,497 12,464 Tax 1,072 740 781 784 903 835 925 827 3,377 3,490 Rate (%) 28.6 29.1 28.9 31.4 28.0 28.0 28.0 28.0 29.4 28.0 Minority Interest 2 2 2 4 2 2 2 4 10 10 Adjusted PAT 2,679 1,806 1,916 1,709 2,319 2,146 2,378 2,121 8,110 8,964 YoY Change (%) 17.2 18.1 -6.8 25.5 -13.4 18.8 24.1 24.1 14.4 10.5 E: MOSL Estimates

June 2017 Results Preview | Consumer

Marico

CMP: INR323 TP: INR360 (+12%) Neutral n We expect sales to remain flat YoY at INR17.5b, with 3% decline in

domestic volumes. In our opinion, Parachute, VAHO and Saffola should post mid-single-digit decline in volumes, mostly led by destocking by trade in the month of June.

n We observe that copra prices are up 59% YoY (data available till May-2017), while kardi oil prices are down 2% YoY. We are modeling 400bp YoY gross margin contraction and 300bp EBITDA margin contraction for 1QFY18 due to the unfavorable base. Price increases will protect margins from 2QFY18.

n PAT is projected to decline by 13.4% YoY to INR2.3b. n We like MRCO’s franchise, portfolio strength, management

quality and multiple growth drivers. Valuations remain fair. The stock trades at 38.3x FY19E EPS of INR8.4; maintain Neutral.

Key issues to watch for: Ø Comments on volume growth trends across key categories. Ø Outlook for raw materials. Ø Margin expansion and guidance for the international business.

Bloomberg MRCO IN

Equity Shares (m) 1289.6 M. Cap. (INR b)/(USD b) 416 / 6 52-Week Range (INR) 330 / 235

1,6,12 Rel Perf. (%) 0 / 8 / 7 Financial Snapshot (INR b) Y/E March 2017 2018E 2019E 2020E

Sales 59.2 67.5 78.1 90.4 EBITDA 11.4 12.4 14.9 17.2 Adj. PAT 8.1 9.0 10.9 12.7

Adj. EPS (INR) 6.3 6.9 8.4 9.8 EPS Gr. (%) 12.1 10.5 21.1 16.5 BV/Sh.(INR) 18.0 21.1 23.0 26.2

RoE (%) 36.7 35.5 38.1 39.8 RoCE (%) 31.5 30.3 32.7 34.2 Payout (%) 47.7 46.1 65.4 56.1

Valuations P/E (x) 51.3 46.4 38.3 32.9 P/BV (x) 17.9 15.3 14.0 12.3

EV/EBITDA (x) 36.2 32.7 27.3 23.5 Div. Yield (%) 0.9 1.0 1.7 1.7

1 August 2017 27

Quarterly Performance INR million Y/E March FY17 FY18 FY17 FY18E 1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE Sales 60,691 62,296 65,010 67,120 72,558 75,006 77,500 81,276 257,165 306,340 Change (%) 29.4 28.5 22.1 16.9 19.6 20.4 19.2 21.1 24.4 19.1 EBITDA 53,675 55,788 58,220 57,015 64,600 67,633 69,914 70,108 226,715 272,255 Change (%) 29.8 30.3 22.8 12.9 20.4 21.2 20.1 23.0 24.0 20.1 As of % Sales 88.4 89.6 89.6 84.9 89.0 90.2 90.2 86.3 88.2 88.9 Depreciation 17,573 18,769 19,653 20,633 20,808 22,224 23,271 24,432 76,628 90,734 Interest 15,178 15,876 16,426 15,558 17,711 18,526 19,168 18,155 63,038 73,560 Other Income 1,902 2,507 2,866 3,424 1,542 2,032 2,323 1,114 8,649 7,011 PBT 22,827 23,650 25,006 24,247 27,623 28,915 29,798 28,635 95,698 114,971 Tax 4,819 4,888 5,706 5,083 5,801 6,072 6,258 6,013 20,496 24,144 Effective Tax Rate (%) 21.1 20.7 22.8 21.0 21.0 21.0 21.0 21.0 21.4 21.0 Reported PAT 18,008 18,762 19,300 19,164 21,822 22,843 23,540 22,622 75,202 90,827 Adjusted PAT 18,008 18,762 19,300 20,131 21,822 22,843 23,540 22,622 76,169 90,827 Change (%) 32.8 33.2 20.2 28.3 21.2 21.8 22.0 12.4 28.0 19.2 E: MOSL Estimates

June 2017 Results Preview | Utilities

Power Grid Corporation

CMP: INR210 TP: INR242 (+15%) Buy n We estimate regulated equity base to increase to 21% YoY to

INR479b. We expect capitalization of INR70b in 1QFY18, driven by Champa-Kuruskshetra and Wardha-Nizamabad.

n We expect PAT to grow 21% YoY to INR21.8b on regulated equity growth.

Key issues to watch for Ø Capitalization/capex guidance for FY18. Ø Details on competitively bid projects. Ø Development on green energy projects, state JVs, etc.

Bloomberg PWGR IN Equity Shares (m) 5231.6 M. Cap. (INR b)/(USD b) 1100 / 17

52-Week Range (INR) 215 / 160 1,6,12 Rel Perf. (%) 2 / -4 / 13 Financial Snapshot (INR Million) Y/E March 2017 2018E 2019E 2020E

Sales 257.0 322.1 368.1 397.3 EBITDA 226.6 285.4 327.1 352.3 NP 74.5 92.2 107.5 112.4

EPS (INR) 14.2 17.6 20.6 21.5 EPS Gr. (%) 23.9 23.8 16.6 4.6 BV/Sh. (INR ) 93.7 107.6 123.7 140.2

RoE (%) 16.2 17.5 17.8 16.3 RoCE (%) 7.3 8.3 8.9 8.7 Payout (%) 20.9 21.4 21.7 23.7 VALUATION

P/E (x) 14.7 11.9 10.2 9.8 P/BV (x) 2.2 2.0 1.7 1.5

EV/EBITDA (x) 10.0 8.2 7.4 6.9 Div. Yield (%) 1.2 1.5 1.8 2.0

1 August 2017 28

Quarterly Performance INR m Y/E MARCH FY17 FY18E FY17 FY18E 1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE Interest Income 10,535 11,153 11,557 11,071 11,957 12,495 13,120 13,069 43,796 50,640 Interest expenses 3,672 3,802 3,933 3,937 4,036 4,116 4,219 4,476 15,344 16,847 Net Interest Income 6,863 7,351 7,624 7,134 7,921 8,379 8,900 8,593 28,452 33,793 Y-o-Y Growth (%) 19.7 22.1 17.7 14.6 15.4 14.0 16.7 20.5 19.1 18.8 Fees and Other Income 15 3 6 5 60 60 60 70 76 250 Net Operating Income 6,878 7,354 7,630 7,139 7,981 8,439 8,960 8,663 28,528 34,043 Y-o-Y Growth (%) 19.2 22.1 17.8 11.8 16.0 14.7 17.4 21.4 18.2 19.3 Operating Expenses 2,739 2,829 2,977 2,815 3,012 3,117 3,243 3,389 11,359 12,761 Operating Profit 4,139 4,525 4,653 4,324 4,969 5,321 5,717 5,275 17,168 21,282 Y-o-Y Growth (%) 21.3 29.3 19.5 26.2 20.1 17.6 22.9 22.0 25.8 24.0 Provisions 1,356 1,390 2,242 4,118 1,700 1,734 1,769 2,642 8,632 7,845 Profit before Tax 2,784 3,135 2,412 206 3,269 3,587 3,948 2,632 8,536 13,437 Tax Provisions 966 1,090 835 86 1,144 1,255 1,382 903 2,976 4,684 Net Profit 1,818 2,045 1,577 120 2,125 2,332 2,566 1,730 5,561 8,753 Y-o-Y Growth (%) 23.1 34.3 -9.5 -78.4 16.9 14.0 62.7 1,340.2 5.0 57.4 Int Exp/ Int Earned (%) 34.9 34.1 34.0 35.6 33.8 32.9 32.2 34.2 35.0 33.3 Cost to Income Ratio (%) 39.8 38.5 39.0 39.4 37.7 36.9 36.2 39.1 39.8 37.5 Tax Rate (%) 34.7 34.8 34.6 41.6 35.0 35.0 35.0 34.3 34.9 34.9 E: MOSL Estimates; * Quaterly nos and full year nos will not tally due to different way of reporting financial nos

June 2017 Results Preview | Sector: Financials

Shriram City Union Finance

CMP: INR2,520 TP: INR2,900 (+15%) Buy n 1QFY18 was a good quarter in terms of growth. SCUF’s AUM is

expected to grow 4.4% QoQ and 18% YoY to INR242b, driven by 16% YoY growth in disbursements.

n Margins are expected to remain largely stable. Hence, NII growth is expected to be 15% YoY.

n Slower growth in operating expenses (10% YoY) is expected to drive 20% YoY PPoP growth.

n We expect asset quality to remain largely stable. We factor in provisions of INR1.7b, as against INR4.1b in 4QFY17 and INR1.4b in 1QFY17.

n The stock trades at 2.9x FY18E and 2.5x FY19E BVPS. Maintain Buy.

Key issues to watch for Ø Trends in asset quality in each segment. Ø Business growth and momentum, and management

commentary on the same. Ø Movement in borrowing costs and margins. Ø Performance of the housing finance subsidiary. Ø Management commentary on impact of GST.

Bloomberg SCUF IN Equity Shares (m) 65.9 M. Cap. (INR b)/(USD b) 148 / 2.2

52-Week Range (INR) 2650 / 1648 1,6,12 Rel Perf. (%) 9/18/31

Financial Snapshot (INR b) Y/E March 2017 2018E 2019E 2020E NII 28.5 33.8 40.0 47.2 PPP 17.2 21.3 25.4 30.1 PAT 5.6 8.8 11.3 13.3 EPS (INR) 84 133 171 202 EPS Gr. (%) 5 57 29 18 BV/Sh. (INR) 763 874 1019 1193 RoA (%) 2.7 3.6 4.0 4.0 RoE (%) 11.7 16.2 18.1 18.3 Payout (%) 7 16 15 14 Valuations P/E (x) 29.9 19.0 14.7 12.4 P/BV (x) 3.3 2.9 2.5 2.1 Div. Yield (%) 0.6 0.7 0.9 1.0

1 August 2017 29

1. Will try to get IPO out as soon as possible, says HDFC Life; Amitabh Chaudhry, MD & CEO n Not supposed to discuss the timeline but our intention is to get the initial public

offering (IPO) out as soon as possible n Had started work on HDFC Life's IPO last year itself n Lot of the general insurance companies have been filing for IPOs lately. n Chairmen of both HDFC Life and Max Life mentioned that merger is off the

table.

2. Expect improvement in ROA due to healthy profile of new products: Equitas; PN Vasudevan, MD & CEO n 60% of the non MFI book grew by 36 percent in Q1 n GNPA of the non-MFI book has remained steady at 4.5-4.6 percent. n On farm loan front, MFI loans don’t form part of the farm loan waiver

announced in Maharashtra. n Branch expansion has led to increase in operational expense. However, do not

expect significant branch expansion over next 12-18 months n Lending rates in new products are lower. n Expects improvement in ROA due to healthy profile of new products. n Made extra provisions in Q1 of worth Rs 23 crore.

3. Expect to beat industry revenue growth rate: Escorts; Bharat Madan, CFO n Expecting 12-15 percent revenue growth for the industry going forward and

hoping to beat the industry growth rate n Q1 was slightly slow because of the goods and services tax (GST)

implementation n Expects Q2 to be very strong, 18-20 percent growth is expected in Q2 n Company has got a strong order book from railways.

4. Expects better revenue this year: Sharda Cropchem; RV Bubna, CMD n There is a pressure on the margins. n The prices in China increased and demand in Europe and Latin America got

subdued n Speaking about overseas business, weather issues in Europe are short-term

problems and a few of registrations in Europe got expired. n Expects revenue to be better than last year.

In conversation

1 August 2017 30

1. Pluralism in monetary policy framework n For a long time, India’s central bank and its monetary policy framework were a

mystery. A year ago, that changed, with India formally adopting “flexible-inflation targeting” (FIT) in June 2016. A key feature of FIT is that monetary policy has an explicit inflation target in the long-term but medium-term inflation “projections” become the intermediate target. Thus, the success of FIT depends heavily on the accuracy of medium-term inflation forecasts. Working towards a reliable inflation-forecasting system, the Reserve Bank of India (RBI) introduced a suite of models called the forecasting and policy analysis system (FPAS). Central to the FPAS is the quarterly projection model (QPM), a forward-looking model to assess the medium-term path of the economy. It relies on dynamic stochastic general equilibrium (DSGE), a model based on the principles of New-Keynesian (NK) economics. NK economics has become popular with most central banks around the world

2. The economics of Aadhaar n When it was first launched in 2009, Aadhaar signalled a promise to repair the

corroded plumbing of India’s leaky public delivery systems. The unique biometric identity would help reduce duplicate and ghost entries in the list of beneficiaries of government schemes, and pave the way for direct benefit transfers to them eventually, the then government headed by the Congress party told us. The elimination of false claimants and a chain of government officials who administer public delivery systems would help cut down on corruption and enable the state to do more with fewer resources, we were told. Eight years after its launch, and more than a billion Aadhaar registrations later, much of that promise remains unmet even as the project remains mired in a number of controversies. The Aadhaar project has survived a change in government but has met with a rising tide of questions from the Supreme Court, the national auditor, and from the civil society at large.

3. The economy’s not a steam engine n “Woh toh sirf history baat karta hai, economics bolega kya?,” or “Isn’t his

approach to economics totally different?” — These were some common responses when Sanjeev Sanyal was appointed Principal Economic Advisor to the ministry of finance in February. “Yes, my economics is very different from that of conventional economists as I do not believe in equilibriums. My idea of the economy is of an evolving ecosystem — a complex, adaptive system where there is no predetermined path or perfect end-state. For me, economic management is all about feedback-loops and adaptation,” says the author of The Indian Renaissance: India’s Rise After a Thousand Years of Decline. Basically throwing a fish in the pond and allowing it to swim? “First make sure it is a fish, and then you throw it in the pond. Then you observe how it swims and react,” says Sanyal.

From the think tank

1 August 2017 31

4. It is now time for an RBI rate cut n There is a compelling case for the monetary policy committee to cut interest

rates when it meets this week. This newspaper has generally been conservative on these matters because of the inflation bias hardwired into Indian macroeconomic policy. The best indication of inflation bias is the rapid increase in prices since 2008, despite the fact that most large economies have flirted with deflation. India has been a global outlier. Monetary policy has had to be asymmetrical to quell the persistent inflationary fire. The recent decline in inflation appears to be structural in nature, as is evident from the trend in headline inflation, core inflation and inflation expectations.

International 5. All the money in the world n The New York Times reported on 25 July that SoftBank Group Corp. is

considering a “multi-billion dollar investment” in ride-hailing service Uber Technologies Inc. The report said talks between the two companies were still at a preliminary stage. SoftBank already has a stake in several Uber rivals, including Ola (ANI Technologies Pvt. Ltd) in India and Grab (GrabTaxi Holdings Pte Ltd) in Singapore. The Indian company already has an investment from China’s Didi Chuxing, which also has a stake in Uber (made after Uber exited China after selling its Chinese operations to Didi). SoftBank itself has a huge investment ($5 billion) in Didi. What this means is that SoftBank wins, no matter who does in the market.

1 August 2017 32

CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Automobiles Amara Raja Buy 835 1,095 31 28.0 35.3 42.1 29.8 23.6 5.5 4.6 20.3 21.2 21.3 Ashok Ley. Buy 110 118 8 4.6 5.2 7.0 24.1 21.2 5.2 4.6 23.1 23.2 27.0 Bajaj Auto Buy 2,808 3,281 17 132.3 137.2 163.6 21.2 20.5 4.8 4.3 25.3 22.2 24.0 Bharat Forge Buy 1,147 1,330 16 26.2 37.7 49.7 43.9 30.5 6.5 5.6 16.2 19.8 22.3 Bosch Neutral 24,033 23,738 -1 473.1 649.9 766.2 50.8 37.0 8.3 7.4 15.8 21.1 21.9 CEAT Buy 1,875 2,100 12 93.3 96.2 131.3 20.1 19.5 3.1 2.8 16.9 15.1 17.8 Eicher Mot. Buy 30,041 31,326 4 613.8 861.2 1,102.9 48.9 34.9 17.0 12.2 40.3 40.8 38.0 Endurance Tech. Buy 903 1,025 14 23.5 30.5 38.8 38.5 29.6 7.3 6.1 20.8 22.4 23.6 Escorts Neutral 669 732 9 20.0 37.1 45.8 33.5 18.0 3.4 2.9 10.6 17.3 18.3 Exide Ind Buy 217 269 24 8.1 9.2 11.0 26.7 23.6 3.7 3.3 13.9 14.1 15.0 Hero Moto Neutral 3,654 3,818 4 169.1 189.3 199.1 21.6 19.3 7.2 6.2 35.7 34.6 31.5 M&M Buy 1,402 1,625 16 54.3 66.7 79.9 25.8 21.0 3.2 2.9 14.2 14.1 14.6 Mahindra CIE Not Rated 251 - 5.4 9.9 11.8 46.9 25.5 2.9 2.6 6.4 10.8 11.5 Maruti Suzuki Buy 7,708 8,863 15 248.6 281.0 375.3 31.0 27.4 6.4 5.6 20.3 20.1 22.8 Tata Motors Buy 445 666 50 19.8 30.9 64.3 22.4 14.4 2.6 2.2 9.8 16.5 27.3 TVS Motor Buy 582 606 4 11.7 16.3 25.9 49.6 35.7 11.5 9.2 25.6 28.6 35.2 Aggregate 28.7 22.7 4.9 4.3 17.1 18.7 22.6 Banks - Private Axis Bank Neutral 519 545 5 15.4 21.8 38.1 33.8 23.8 2.3 2.1 6.9 9.3 14.7 DCB Bank Neutral 195 192 -2 7.0 8.4 10.4 27.9 23.3 2.9 2.3 10.8 11.4 11.8 Equitas Hold. Buy 167 201 20 4.7 5.1 7.6 35.4 33.0 2.5 2.4 8.9 7.4 10.2 Federal Bank Buy 115 139 21 4.8 5.4 6.8 23.9 21.4 2.3 1.9 9.9 10.0 10.5 HDFC Bank Buy 1,783 2,000 12 56.8 68.2 82.1 31.4 26.1 5.3 4.6 18.3 18.8 19.6 ICICI Bank Buy 302 366 21 15.3 14.9 17.0 19.7 20.3 2.2 2.1 10.2 8.9 9.5 IDFC Bank Neutral 60 62 4 2.3 2.8 3.2 25.5 21.4 1.4 1.3 5.6 6.3 6.9 IndusInd Buy 1,642 1,800 10 47.9 61.9 76.8 34.2 26.5 4.9 4.3 15.4 17.3 18.5 J&K Bank Neutral 84 91 9 -31.3 3.8 8.2 NM 21.9 0.8 0.7 -27.0 3.5 7.2 Kotak Mah. Bk Buy 1,020 1,153 13 26.8 32.4 41.0 38.0 31.4 4.9 4.4 13.8 15.0 16.3

RBL Bank Under Review 535 - 11.9 18.0 23.7 45.0 29.7 4.7 3.3 12.3 13.6 13.9

South Indian Buy 30 34 13 2.2 2.9 3.7 13.9 10.6 1.2 1.1 9.5 10.8 12.7 Yes Bank Buy 1,810 2,133 18 73.0 92.3 114.5 24.8 19.6 3.9 3.3 18.9 18.3 19.5 Aggregate 30.1 24.2 3.5 3.0 11.5 12.6 14.2 Banks - PSU BOB Buy 166 212 28 6.0 18.4 22.5 27.7 9.0 1.1 1.0 4.1 11.9 13.2 BOI Neutral 166 147 -11 -14.8 13.7 22.0 NM 12.1 0.8 0.7 -6.7 6.1 9.0 Canara Neutral 368 360 -2 18.8 30.1 47.0 19.6 12.2 0.8 0.7 4.2 6.2 9.1 IDBI Bk Neutral 59 49 -17 1.5 6.4 8.6 38.7 9.2 0.5 0.5 1.4 5.8 7.3 Indian Bk Buy 313 382 22 29.3 34.4 38.3 10.7 9.1 1.0 1.0 10.1 10.9 11.2 OBC Neutral 148 150 1 -31.6 17.1 21.4 NM 8.7 0.4 0.4 -8.4 4.6 5.4 PNB Buy 162 184 13 6.2 10.3 14.5 26.1 15.8 0.9 0.9 3.6 5.6 7.5 SBI Buy 313 362 16 0.3 17.9 23.3 1,050.8 17.4 1.5 1.4 -0.2 8.7 10.0 Union Bk Neutral 158 162 3 7.6 24.6 34.5 20.7 6.4 0.5 0.5 2.7 8.1 10.5 Aggregate 110.0 13.3 1.0 0.9 0.9 6.7 8.3 NBFCs Bajaj Fin. Buy 1,702 1,800 6 33.6 47.6 62.9 50.7 35.7 9.7 7.9 21.7 24.3 25.9 Bharat Fin. Neutral 846 820 -3 21.0 31.8 68.7 40.3 26.6 4.8 3.9 15.1 16.1 28.0 Capital First Buy 776 925 19 24.6 33.0 43.3 31.5 23.5 3.3 2.9 12.0 13.2 15.3 Cholaman.Inv.&Fn Buy 1,198 1,400 17 46.0 56.0 67.3 26.1 21.4 4.3 3.7 18.0 18.6 19.0

Dewan Hsg. Buy 457 630 38 29.6 37.7 47.1 15.4 12.1 1.8 1.6 14.4 14.1 15.6 GRUH Fin. Neutral 490 450 -8 8.1 9.9 12.1 60.2 49.2 18.0 14.8 32.5 33.0 32.8 HDFC Buy 1,786 1,900 6 46.8 52.9 59.0 38.1 33.8 7.1 6.4 18.9 19.3 18.4 Indiabulls Hsg Buy 1,175 1,350 15 69.0 86.3 108.4 17.0 13.6 4.1 3.6 25.5 28.2 31.3

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1 August 2017 33

CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E L&T Fin Holdings Buy 175 200 14 5.2 7.3 10.6 33.4 23.9 3.9 3.4 12.4 15.6 19.1 LIC Hsg Fin Neutral 692 750 8 38.2 55.8 53.8 18.1 12.4 3.2 2.6 19.1 23.1 18.8 Manappuram Not Rated 107 - 8.6 10.8 12.5 12.4 9.9 2.7 2.4 24.0 25.9 26.9 M&M Fin. Buy 401 459 14 7.1 13.9 17.8 56.6 28.9 3.6 3.3 6.5 12.0 14.2 Muthoot Fin Buy 473 550 16 29.5 41.0 43.3 16.0 11.6 2.9 2.5 19.4 23.2 21.4 PFC Neutral 124 117 -6 25.7 27.2 30.2 4.8 4.6 0.8 0.7 17.9 17.0 16.8 Repco Home Buy 742 936 26 29.1 35.8 42.5 25.5 20.7 4.1 3.5 17.4 18.1 18.2 REC Neutral 175 134 -23 31.4 35.0 40.4 5.6 5.0 1.0 0.9 19.9 19.1 19.1 Shriram City Union Buy 2,298 2,900 26 84.3 132.8 171.2 27.2 17.3 3.0 2.6 11.7 16.2 18.1

STF Buy 1,018 1,340 32 55.6 78.5 98.5 18.3 13.0 2.0 1.8 11.7 14.7 16.3 Aggregate 20.7 17.1 3.5 3.1 16.8 17.9 18.1 Capital Goods ABB Sell 1,428 1,200 -16 19.7 22.4 31.6 72.5 63.7 9.2 8.1 12.7 12.6 15.8 Bharat Elec. Buy 179 200 12 6.9 7.2 8.1 25.8 25.0 5.3 4.1 20.6 16.5 16.8 BHEL Sell 145 100 -31 2.1 3.6 4.7 67.4 40.7 1.1 1.1 1.6 2.7 3.4 Blue Star Neutral 698 610 -13 12.9 17.8 26.6 54.2 39.2 8.8 8.3 18.0 21.7 30.1 CG Cons. Elec. Buy 219 240 10 4.7 5.0 6.4 46.8 43.5 25.4 18.8 76.4 49.7 49.7 CG Power & Indu. Sell 85 65 -23 4.1 2.3 4.5 20.6 37.1 1.3 1.2 6.2 3.4 4.2 Cummins Buy 987 1,200 22 26.5 29.2 36.0 37.2 33.8 7.3 6.7 21.2 20.7 23.5 GE T&D Neutral 395 320 -19 5.7 7.2 8.5 68.9 55.2 9.8 8.8 12.4 16.8 18.0 Havells Neutral 472 455 -4 9.6 10.9 13.8 49.4 43.2 9.0 8.0 18.2 18.6 20.7 K E C Intl Neutral 304 250 -18 11.9 12.8 16.4 25.6 23.7 4.9 4.2 21.2 19.2 20.9 L&T Buy 1,192 1,345 13 42.3 44.8 51.7 28.2 26.6 3.3 3.1 12.2 12.1 12.9 Pennar Eng. Not Rated 120 - 7.1 9.1 11.2 17.0 13.2 1.7 1.5 10.2 11.6 12.6 Siemens Neutral 1,452 1,355 -7 17.8 24.3 33.3 81.5 59.8 7.6 6.6 9.3 11.0 13.7 Solar Ind Neutral 894 825 -8 20.6 22.6 28.2 43.4 39.5 8.0 6.9 19.8 18.6 19.9 Suzlon Energy Not Rated 19 - 0.6 0.9 1.0 29.9 21.5 -1.7 -1.9 NM -8.8 -11.0 Thermax Sell 873 850 -3 30.8 32.7 34.0 28.3 26.7 3.9 3.5 14.3 13.7 12.9 Va Tech Wab. Buy 610 800 31 28.9 34.9 39.8 21.1 17.5 3.4 2.9 16.3 17.7 17.5 Voltas Sell 504 400 -21 15.5 15.6 17.6 32.6 32.3 5.0 4.5 18.0 14.7 14.9 Aggregate 35.7 32.2 4.0 3.7 11.2 11.4 12.6 Cement Ambuja Cem. Buy 263 308 17 4.9 7.0 8.2 53.9 37.9 2.7 2.6 5.1 7.0 7.9 ACC Neutral 1,733 1,622 -6 36.1 49.8 65.0 48.0 34.8 3.8 3.6 7.9 10.6 13.1 Birla Corp. Buy 946 1,205 27 29.4 40.9 58.9 32.2 23.1 2.2 2.1 7.5 9.2 12.2 Dalmia Bharat Buy 2,661 3,162 19 38.8 66.7 87.1 68.7 39.9 4.8 4.3 7.2 11.3 13.1 Grasim Inds. Neutral 1,069 1,384 29 67.9 71.2 102.6 15.8 15.0 1.7 1.6 11.5 10.9 13.9 India Cem Neutral 203 201 -1 5.6 8.0 11.8 36.2 25.4 1.2 1.2 3.4 4.7 6.6 J K Cements Buy 1,019 1,287 26 33.7 40.4 53.5 30.2 25.2 4.0 3.5 14.4 15.0 17.2 JK Lakshmi Ce Buy 458 553 21 7.0 11.4 19.2 65.9 40.2 3.8 3.5 6.0 9.2 13.8 Ramco Cem Buy 680 823 21 27.3 31.1 37.5 24.9 21.9 4.4 3.8 19.2 18.6 19.1 Orient Cem Buy 156 185 19 -1.6 4.4 7.1 NM 35.3 3.2 3.0 -3.2 8.8 12.8 Prism Cem Buy 120 145 21 0.3 3.7 5.6 344.2 32.3 6.0 5.2 1.8 17.2 22.0 Shree Cem Buy 18,639 21,052 13 384.4 454.7 575.2 48.5 41.0 9.2 7.7 20.2 20.4 21.3 Ultratech Buy 4,060 4,936 22 96.1 91.5 138.8 42.3 44.3 4.7 4.3 11.6 10.1 14.0 Aggregate 36.3 30.9 3.5 3.2 9.7 10.4 12.9 Consumer Asian Paints Neutral 1,159 1,200 3 21.0 22.2 26.5 55.2 52.2 14.6 13.3 28.5 26.7 28.1 Britannia Buy 3,922 4,450 13 73.7 85.4 105.5 53.2 45.9 17.5 14.4 36.9 34.4 34.7 Colgate Buy 1,079 1,335 24 21.2 25.7 31.1 50.8 42.1 23.0 21.7 50.4 53.2 60.3 Dabur Neutral 310 315 2 7.2 7.7 9.1 42.8 40.1 11.3 9.7 28.4 26.0 26.3 Emami Buy 1,106 1,265 14 26.5 28.3 33.9 41.7 39.1 14.3 12.0 35.8 33.4 34.1 Godrej Cons. Neutral 1,035 930 -10 18.9 21.8 25.0 54.7 47.5 13.3 10.3 24.6 24.5 23.0 GSK Cons. Sell 5,452 4,500 -17 156.1 166.3 181.9 34.9 32.8 7.3 7.2 22.2 22.1 22.4

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CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E HUL Buy 1,153 1,285 11 19.6 22.9 27.3 58.7 50.3 37.4 36.1 65.6 73.1 82.8 ITC Neutral 285 280 -2 8.4 9.3 10.3 34.0 30.8 7.7 7.6 23.5 24.8 26.3 Jyothy Lab Neutral 372 405 9 11.2 8.9 11.0 33.1 41.5 6.2 6.3 21.1 15.1 18.4 Marico Neutral 334 360 8 6.3 6.9 8.4 53.1 48.0 18.5 15.8 36.7 35.5 38.1 Nestle Sell 6,750 5,740 -15 118.0 115.1 133.6 57.2 58.7 21.6 20.1 39.0 35.5 38.1 Page Inds Buy 16,384 20,195 23 238.7 317.0 400.0 68.6 51.7 27.4 21.7 40.0 42.0 42.8 Parag Milk Neutral 247 240 -3 3.6 7.4 12.3 68.6 33.2 3.2 2.9 5.9 9.1 13.4 Pidilite Ind. Neutral 795 810 2 16.7 18.1 20.6 47.5 44.0 12.3 10.1 28.2 25.2 23.5 P&G Hygiene Buy 8,065 9,082 13 144.9 155.8 181.6 55.7 51.8 46.0 36.7 45.3 78.9 74.0 Prabhat Dairy Not Rated 134 - 3.5 3.5 6.4 37.9 38.5 1.9 1.8 5.2 4.9 8.5 United Brew Neutral 820 850 4 8.7 9.7 14.7 94.3 84.5 9.4 8.6 10.4 10.7 14.6 United Spirits Neutral 2,539 2,525 -1 26.7 34.5 51.5 95.0 73.6 19.0 13.3 21.3 18.0 20.3 Aggregate 46.9 42.2 12.9 11.9 27.6 28.3 29.4 Healthcare Alembic Phar Neutral 529 510 -4 21.6 20.5 25.5 24.5 25.9 5.2 4.6 23.0 19.0 20.4 Alkem Lab Neutral 1,823 1,900 4 75.7 79.7 95.0 24.1 22.9 5.2 4.4 23.4 20.7 21.0 Ajanta Pharma Buy 1,396 2,028 45 58.4 66.1 79.6 23.9 21.1 7.9 6.0 37.7 32.2 29.9 Aurobindo Buy 719 850 18 39.3 45.7 50.0 18.3 15.7 4.6 3.6 28.3 25.5 22.3 Biocon Sell 384 330 -14 10.2 9.7 14.2 37.7 39.6 4.8 4.4 12.3 11.1 14.5 Cadila Buy 543 510 -6 14.2 17.8 23.2 38.2 30.5 8.7 7.2 24.8 25.7 27.2 Cipla Neutral 559 500 -10 15.9 20.0 25.0 35.1 28.0 3.6 3.2 10.2 11.5 12.8 Divis Lab Neutral 672 680 1 39.7 33.6 40.0 16.9 20.0 3.8 3.4 23.5 18.1 19.4 Dr Reddy’s Neutral 2,386 2,500 5 72.6 85.1 125.2 32.9 28.0 3.2 3.0 9.6 11.3 14.8 Fortis Health Buy 156 240 54 10.3 2.1 6.1 15.1 73.8 1.6 1.4 11.3 2.0 5.3 Glenmark Neutral 697 775 11 39.3 42.9 51.7 17.7 16.2 4.4 3.5 24.7 21.6 20.9 Granules Buy 136 200 47 7.2 8.2 11.5 18.8 16.6 3.4 2.4 21.1 17.7 18.8 GSK Pharma Neutral 2,396 2,500 4 34.4 46.8 54.9 69.7 51.2 10.1 11.8 14.5 23.0 30.9 IPCA Labs Neutral 479 480 0 16.1 21.3 28.5 29.8 22.4 2.5 2.3 8.6 10.5 12.7 Jubilant Life Buy 714 905 27 37.0 47.1 56.7 19.3 15.2 3.2 2.7 18.1 19.5 19.6 Lupin Buy 1,032 1,475 43 59.2 57.9 72.0 17.4 17.8 3.5 3.0 22.0 18.2 19.4 Sanofi India Buy 4,290 4,820 12 129.1 133.6 160.6 33.2 32.1 5.7 5.3 17.1 16.6 18.1 Shilpa Medicare Buy 660 805 22 14.0 21.1 30.4 47.1 31.3 5.8 4.9 14.4 17.0 20.4 Sun Pharma Buy 532 650 22 26.1 25.2 30.8 20.3 21.1 3.5 3.3 18.5 16.1 17.9 Syngene Intl Not Rated 476 - 13.0 16.1 18.0 36.6 29.5 7.4 6.0 22.2 22.5 20.7 Torrent Pharma Buy 1,317 1,450 10 55.2 56.8 71.4 23.9 23.2 5.6 4.8 25.3 22.4 24.2 Aggregate 24.5 23.3 4.3 3.8 17.3 16.2 17.4 Logistics Allcargo Logistics Buy 172 228 33 9.8 12.2 14.3 17.5 14.1 2.6 2.3 12.6 17.2 17.8 Blue Dart Not Rated 4,278 - 102.5 129.9 163.2 41.7 32.9 18.5 14.1 50.5 48.6 46.8 Concor Neutral 1,147 1,236 8 38.0 39.2 45.8 30.2 29.2 3.2 3.0 10.8 10.6 11.8 Gateway Distriparks Buy 274 313 14 6.8 10.7 13.6 40.2 25.5 2.4 2.3 5.9 9.1 11.1

Gati Not Rated 121 - 8.4 15.9 23.9 14.5 7.6 2.0 1.8 12.4 19.4 25.4 Transport Corp. Not Rated 314 - 16.9 21.0 25.9 18.5 14.9 2.9 2.5 16.7 17.8 18.6 Aggregate 28.8 24.5 3.5 3.3 12.2 13.4 15.0 Media Dish TV Buy 83 105 27 1.0 1.4 4.0 84.0 58.4 18.0 13.8 24.1 26.8 327.5 D B Corp Buy 374 450 20 20.4 23.7 27.6 18.3 15.7 4.3 3.8 25.5 25.8 26.6 Den Net. Neutral 85 90 6 -8.6 -2.7 0.3 NM NM 1.6 1.7 -12.0 -5.3 0.7 Ent.Network Neutral 904 928 3 11.4 13.8 21.2 79.1 65.5 5.0 4.7 6.7 7.4 10.5 Hind. Media Buy 276 350 27 25.9 28.3 33.6 10.7 9.8 1.9 1.6 19.0 17.3 17.3 HT Media Neutral 92 90 -2 7.4 7.9 8.1 12.4 11.6 0.8 0.8 7.1 6.9 6.4 Jagran Prak. Buy 177 225 27 10.8 12.3 14.0 16.4 14.4 2.4 2.4 17.6 16.4 17.2 Music Broadcast Buy 359 469 31 6.4 10.0 14.3 55.8 35.8 3.7 3.4 11.2 9.9 12.6 PVR Buy 1,343 1,628 21 20.5 30.9 46.9 65.4 43.5 6.5 5.7 10.4 14.0 18.2

1 August 2017 35

CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Siti Net. Neutral 26 32 24 -1.8 -0.1 0.5 NM NM 3.6 3.7 -23.5 -2.0 6.9 Sun TV Neutral 783 860 10 24.9 28.5 35.9 31.5 27.5 7.9 7.2 25.0 26.3 30.2 Zee Ent. Buy 542 630 16 23.1 14.7 18.9 23.4 36.7 9.0 7.7 24.7 22.6 24.5 Aggregate 40.7 30.9 5.8 5.3 14.2 17.0 22.2 Metals Hindalco Buy 219 308 40 16.2 21.8 26.1 13.6 10.1 1.7 1.4 14.0 15.2 15.4 Hind. Zinc Sell 282 246 -13 19.7 22.6 26.9 14.3 12.5 3.9 4.1 24.4 32.0 35.1 JSPL Buy 154 190 24 -20.9 -17.2 2.4 NM NM 0.5 0.5 -7.9 -5.4 0.8 JSW Steel Buy 221 281 27 14.8 19.0 22.6 14.9 11.7 2.4 2.0 17.3 18.7 19.0 Nalco Neutral 70 70 0 3.7 3.8 4.2 19.0 18.6 1.3 1.3 7.2 7.0 7.5 NMDC Buy 127 180 42 10.0 12.1 12.2 12.7 10.4 1.8 1.7 12.4 15.0 15.5 SAIL Sell 63 37 -42 -6.2 -10.6 -4.2 NM NM 0.7 0.8 -6.7 -12.6 -5.5 Vedanta Buy 280 316 13 15.1 24.8 33.1 18.5 11.3 1.7 1.6 9.7 14.8 18.4 Tata Steel Neutral 568 583 3 37.9 49.6 65.6 15.0 11.4 1.7 1.6 15.7 14.3 16.8 Aggregate 19.2 14.7 1.6 1.5 8.2 10.4 13.3 Oil & Gas BPCL Neutral 471 511 9 48.3 36.7 43.5 9.7 12.8 3.0 2.6 32.4 21.7 22.3 GAIL Sell 377 340 -10 22.6 26.3 29.8 16.7 14.3 1.7 1.6 9.6 11.3 11.8 Gujarat Gas Sell 759 697 -8 20.4 33.7 46.5 37.1 22.5 6.4 5.2 17.8 25.3 28.0 Gujarat St. Pet. Neutral 194 168 -13 8.8 11.0 13.1 22.0 17.6 2.4 2.2 11.6 13.1 14.0 HPCL Buy 383 427 11 40.7 29.5 32.6 9.4 13.0 2.9 2.5 32.4 20.6 20.0 IOC Neutral 367 459 25 43.0 36.0 40.0 8.5 10.2 1.7 1.5 21.2 15.8 15.8 IGL Neutral 1,181 1,070 -9 42.5 46.8 51.9 27.8 25.2 5.6 4.8 21.0 20.6 19.6 MRPL Sell 124 113 -9 14.8 9.4 11.7 8.4 13.2 2.2 1.9 31.4 15.5 17.0 Oil India Buy 289 305 5 19.3 27.9 30.1 15.0 10.4 0.8 0.8 5.7 7.5 7.8 ONGC Buy 169 195 15 16.4 16.5 19.7 10.3 10.3 1.0 1.0 10.1 9.4 10.9 PLNG Buy 204 259 27 11.4 8.6 17.6 17.9 23.8 3.8 3.4 23.2 15.1 26.4 Reliance Ind. Neutral 1,614 1,499 -7 96.7 115.5 128.1 16.7 14.0 1.7 1.5 11.6 12.3 12.3 Aggregate 12.3 12.5 1.6 1.5 13.3 12.0 12.7 Retail Jubilant Food Sell 1,317 850 -35 10.0 14.8 20.7 131.6 88.9 10.8 9.9 8.2 11.1 14.0 Titan Co. Neutral 543 545 0 9.0 10.3 12.1 60.2 52.9 11.4 10.4 20.6 20.6 21.6 Aggregate 64.5 55.4 11.1 10.2 17.2 18.4 19.2 Technology Cyient Buy 525 600 14 30.6 35.4 41.9 17.1 14.8 2.8 2.5 16.2 16.6 17.3 HCL Tech. Neutral 889 950 7 59.8 61.8 65.9 14.9 14.4 3.7 3.3 27.5 24.9 23.8 Hexaware Neutral 262 235 -10 13.7 15.4 16.7 19.1 17.0 4.7 4.1 26.5 25.3 23.5 Infosys Buy 1,011 1,200 19 62.9 63.7 69.5 16.1 15.9 3.4 3.0 22.0 20.0 19.8 KPIT Tech Neutral 128 140 10 11.9 10.6 13.1 10.7 12.1 1.6 1.5 14.3 13.0 14.2 L&T Infotech Buy 764 880 15 55.5 60.2 68.0 13.8 12.7 4.8 3.7 40.4 33.0 29.4 Mindtree Sell 477 450 -6 24.9 28.7 32.9 19.2 16.6 3.1 3.1 16.8 17.3 20.1 Mphasis Neutral 605 610 1 38.9 40.3 43.0 15.6 15.0 2.1 2.2 13.2 14.5 16.2 NIIT Tech Neutral 514 540 5 38.0 42.3 48.7 13.5 12.2 1.8 1.7 13.7 14.4 15.4 Persistent Sys Buy 645 750 16 37.7 43.3 52.0 17.1 14.9 2.6 2.5 17.0 17.9 20.7 Tata Elxsi Buy 1,749 1,848 6 56.3 68.0 80.4 31.1 25.7 9.7 7.8 37.1 33.7 32.3 TCS Neutral 2,494 2,350 -6 133.4 133.6 147.7 18.7 18.7 5.6 6.0 32.6 31.1 33.5 Tech Mah Buy 385 465 21 30.9 31.0 36.2 12.5 12.4 2.1 1.9 18.4 16.0 16.9 Wipro Neutral 289 270 -7 16.9 18.1 19.1 17.1 16.0 2.7 2.6 16.9 16.1 16.1 Zensar Tech Buy 803 950 18 52.1 51.9 70.0 15.4 15.5 2.5 2.2 17.2 15.0 17.9 Aggregate 16.9 16.8 3.9 3.8 22.9 22.8 22.1 Telecom Bharti Airtel Buy 418 490 17 11.1 4.3 6.6 37.6 96.3 2.5 2.4 6.7 2.5 3.8 Bharti Infratel Buy 402 480 19 14.9 17.9 20.4 27.0 22.4 4.8 4.1 16.2 19.8 19.4 Idea Cellular Buy 93 110 19 -1.1 -10.9 -11.3 NM NM 1.3 1.6 -1.6 -17.3 -21.7 Tata Comm Buy 670 775 16 27.2 8.7 26.1 24.6 76.9 12.0 10.4 132.2 14.5 33.6

1 August 2017 36

CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Aggregate 39.0 216.4 2.7 2.7 6.9 1.2 2.8 Utiltites Coal India Buy 249 315 26 14.9 17.6 18.6 16.7 14.2 6.3 6.3 37.8 44.5 47.0 CESC Buy 943 1,360 44 51.9 88.9 99.3 18.2 10.6 1.2 1.1 6.5 10.6 10.8 JSW Energy Buy 71 85 21 3.9 3.2 3.1 18.2 22.4 1.1 1.1 6.3 4.9 4.8 NTPC Buy 164 198 21 13.0 13.4 16.2 12.6 12.3 1.4 1.3 11.5 10.9 12.3 Power Grid Buy 223 242 8 14.2 17.6 20.6 15.7 12.7 2.4 2.1 16.2 17.5 17.8 Tata Power Sell 82 68 -17 5.2 6.4 6.7 15.8 12.8 1.9 1.7 11.2 13.9 12.1 Aggregate 14.9 13.0 2.2 2.1 14.9 15.9 16.6 Others Arvind Neutral 366 359 -2 12.4 12.5 18.1 29.5 29.2 2.6 2.5 10.3 8.8 11.8 Avenue Supermarts Neutral 918 882 -4 7.7 12.7 17.6 119.6 72.2 14.9 13.0 17.9 19.3 23.0

Bata India Under Review 588 - 13.5 15.7 19.4 43.5 37.4 5.7 5.1 13.9 14.4 15.8

Castrol India Buy 401 527 32 13.6 14.4 15.0 29.3 27.7 33.2 29.8 115.2 113.3 106.1 Century Ply. Neutral 295 323 9 8.7 9.8 12.9 33.9 30.0 9.2 7.6 31.1 27.7 29.6

Coromandel Intl Under Review 449 - 16.6 21.8 26.1 27.0 20.6 4.5 4.0 17.5 20.6 21.6

Delta Corp Buy 171 237 39 3.1 5.8 7.9 55.9 29.5 4.3 2.9 8.1 12.3 12.6 Dynamatic Tech Buy 2,400 3,334 39 67.6 112.9 166.7 35.5 21.3 4.9 4.0 15.1 20.7 24.3 Eveready Inds. Buy 305 368 21 12.9 14.4 17.5 23.7 21.2 7.7 6.2 37.7 32.3 31.6 Interglobe Neutral 1,291 1,283 -1 46.0 57.9 91.6 28.0 22.3 23.1 20.7 86.2 98.0 136.2 Indo Count Buy 149 200 35 13.0 13.2 15.4 11.4 11.3 3.5 2.6 34.8 26.4 23.5 Info Edge Buy 991 1,130 14 15.7 21.8 24.7 63.3 45.6 6.1 5.5 10.2 12.7 13.1 Inox Leisure Sell 254 240 -6 3.3 8.0 12.0 76.3 31.7 4.4 3.9 5.9 12.5 16.2

Jain Irrigation Under Review 106 - 5.5 7.6 10.0 19.2 14.0 1.6 1.6 8.6 11.7 14.8

Just Dial Neutral 378 465 23 17.5 18.5 21.1 21.7 20.5 2.9 2.6 14.8 13.4 13.7 Kaveri Seed Buy 692 755 9 19.1 31.3 37.7 36.3 22.1 4.7 5.1 13.6 21.6 26.0 Kitex Garm. Buy 259 394 52 18.6 22.1 26.2 13.9 11.7 3.7 3.0 29.8 28.6 27.6 Manpasand Buy 797 927 16 12.7 20.3 30.9 62.8 39.3 4.0 3.7 7.3 8.5 13.5 MCX Buy 1,125 1,300 16 24.8 28.0 42.2 45.3 40.2 4.2 4.0 10.2 10.2 14.5 Monsanto Buy 2,741 3,295 20 86.2 105.1 126.7 31.8 26.1 8.9 8.1 31.6 32.5 34.5 Navneet Education Buy 164 226 37 7.8 9.4 11.3 21.2 17.4 5.3 4.5 26.8 27.8 28.2

PI Inds. Buy 765 952 24 33.4 33.4 38.1 22.9 22.9 6.5 5.3 32.8 25.4 23.8 Piramal Enterp. Buy 2,949 3,044 3 72.6 104.1 144.6 40.6 28.3 3.8 3.5 9.8 13.0 16.4 SRF Buy 1,522 1,816 19 85.9 86.3 109.2 17.7 17.6 2.8 2.5 16.6 14.7 16.7 S H Kelkar Buy 265 287 8 7.2 8.6 10.3 36.6 30.9 4.7 4.3 13.7 14.5 15.6 Symphony Sell 1,451 1,288 -11 23.7 35.1 42.9 61.3 41.3 22.8 20.0 43.3 51.6 54.5 TTK Prestige Neutral 6,399 5,281 -17 132.1 137.8 176.1 48.5 46.4 8.7 8.0 19.5 18.0 20.7 V-Guard Neutral 178 167 -6 3.6 4.5 6.0 49.7 39.6 11.8 9.7 27.4 26.9 28.8 Wonderla Buy 352 393 12 7.0 11.9 16.0 50.3 29.5 4.6 4.1 9.5 14.8 17.5

1 August 2017 37

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Automobiles Capital Goods Amara Raja -0.5 -0.4 -10.9 ABB 0.2 -1.6 13.3 Ashok Ley. 0.4 16.8 14.9 Bharat Elec. 0.7 10.9 44.8 Bajaj Auto -0.5 0.6 3.9 BHEL 0.8 7.0 -0.7 Bharat Forge -0.4 5.1 51.1 Blue Star -0.2 16.2 43.3 Bosch 1.1 3.1 -3.8 CG Cons. Elec. 5.0 -2.9 39.4 CEAT 1.3 4.6 117.3 CG Power & Inds Sol. 0.2 3.7 8.2 Eicher Mot. 2.4 11.2 33.7 Cummins -0.5 8.1 13.5 Endurance Tech. -1.1 2.9 GE T&D -0.3 15.2 14.3 Escorts -0.1 3.7 154.1 Havells -1.3 2.7 21.6 Exide Ind 0.3 -1.3 21.4 K E C Intl 0.3 18.3 111.9 Hero Moto 0.6 -1.2 14.0 L&T 2.8 5.9 14.8 M&M 0.6 4.0 -4.4 Pennar Eng. -1.5 -7.9 -33.9 Mahindra CIE -0.1 3.0 36.1 Siemens 0.4 8.8 9.9 Maruti Suzuki 1.1 6.8 62.1 Solar Ind -1.0 9.0 35.1 Tata Motors -0.4 2.8 -11.6 Suzlon Energy -1.3 1.1 8.6 TVS Motor -0.1 6.0 99.8 Thermax -1.9 -7.1 -1.1 Banks - Private Va Tech Wab. -0.3 -11.2 5.4 Axis Bank 0.7 0.5 -5.0 Voltas -1.3 10.0 44.0 DCB Bank 0.5 -1.8 75.7 Cement Equitas Hold. -0.4 11.5 -14.9 Ambuja Cem. 0.2 7.1 -2.9 Federal Bank 1.3 2.2 78.1 ACC 0.3 10.5 2.6 HDFC Bank 0.3 7.9 43.1 Birla Corp. 0.4 9.0 68.4 ICICI Bank 2.0 4.1 26.4 Dalmia Bharat 0.6 7.9 85.0 IDFC Bank -1.6 8.9 15.2 Grasim Inds. 0.0 3.3 31.1 IndusInd 0.9 10.9 39.4 India Cem 0.4 3.1 63.6 J&K Bank -1.8 -2.5 24.6 J K Cements 0.9 8.4 43.8 Kotak Mah. Bk 1.6 6.7 33.9 JK Lakshmi Ce 2.7 -5.2 7.7 RBL Bank 0.0 5.8 Ramco Cem 1.0 -1.9 24.3 South Indian -0.5 8.6 56.6 Orient Cem -1.0 9.9 -8.7 Yes Bank -1.9 23.8 48.7 Prism Cem -0.2 -1.1 10.5 Banks - PSU Shree Cem 6.6 10.0 15.7 BOB 2.5 2.8 8.8 Ultratech 0.9 2.4 9.6 BOI 2.4 19.2 49.3 Consumer Canara 1.1 11.9 50.7 Asian Paints 0.6 5.0 4.0 IDBI Bk 0.3 11.1 -15.0 Britannia 0.3 6.1 33.9 Indian Bk 1.4 11.3 97.4 Colgate 0.9 -2.9 15.6 OBC 1.2 4.8 26.9 Dabur 0.0 6.1 2.1 PNB 2.0 18.3 31.4 Emami 0.1 3.1 -2.9 SBI 4.5 14.2 36.5 Godrej Cons. -2.0 7.2 30.0 Union Bk 0.5 7.2 23.9 GSK Cons. -1.8 1.9 -13.9 NBFCs HUL -0.1 6.6 25.2 Bajaj Fin. 0.0 23.9 64.3 ITC -2.1 -11.9 13.0 Bharat Fin. 0.0 17.4 -7.0 Jyothy Lab 0.1 4.4 29.3 Capital First 1.3 16.2 5.7 Marico 0.3 6.2 17.4 Cholaman.Inv.&Fn 1.6 7.1 9.7 Nestle -0.4 0.4 -5.8 Dewan Hsg. -0.8 4.2 104.7 Page Inds -0.7 -1.8 14.4 GRUH Fin. 3.1 10.5 66.9 Parag Milk 0.0 14.6 -23.3 HDFC 0.1 10.5 30.0 Pidilite Ind. 1.0 -1.0 8.6 Indiabulls Hsg 0.0 9.2 53.8 P&G Hygiene 1.0 0.2 23.1 L&T Fin.Holdings 2.6 21.2 103.2 Prabhat Dairy -1.6 2.9 45.4 LIC Hsg Fin -4.1 -7.0 33.2 United Brew 0.5 5.1 0.9 Manappuram 1.6 9.0 30.3 United Spirits -0.7 6.0 3.5 M&M Fin. -0.2 16.2 21.1 Healthcare Muthoot Fin 1.4 4.1 43.5 Alembic Phar -2.7 5.3 -15.6 PFC 1.1 1.6 13.8 Alkem Lab 0.6 -1.4 16.8 Repco Home -2.3 -10.0 -12.2 Ajanta Pharma -1.6 -9.7 -21.5 REC -0.2 2.2 65.1 Aurobindo -0.6 5.3 -9.2 STF 5.0 1.9 -20.5 Biocon -1.5 15.9 39.2 Shriram City Union 2.1 -3.6 16.6 Cadila -0.4 3.3 48.3

MOSL Universe stock performance

1 August 2017 38

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Cipla -1.2 0.8 5.8 Technology Divis Lab -0.2 3.9 -44.0 Cyient 0.2 3.4 7.4 Dr Reddy’s -3.1 -11.1 -18.8 HCL Tech. -0.2 4.5 18.1 Fortis Health -2.1 -3.9 -9.1 Hexaware 0.7 8.1 18.7 Glenmark -2.8 10.3 -18.9 Infosys 1.3 8.1 -5.8 Granules -1.7 2.0 -4.4 KPIT Tech 0.7 4.2 -2.8 GSK Pharma -1.5 -4.1 -27.7 L&T Infotech 0.1 -3.4 10.5 IPCA Labs -1.1 -2.5 -7.0 Mindtree -0.4 -9.8 -17.4 Jubilant Life -1.4 4.4 113.0 Mphasis 1.5 1.0 12.1 Lupin -2.9 -2.7 -40.7 NIIT Tech -0.8 -10.9 14.1 Sanofi India 0.5 3.1 -6.0 Persistent Sys 0.1 -5.0 -6.1 Shilpa Medicare 2.2 1.4 13.0 Tata Elxsi 0.1 10.3 6.0 Sun Pharma -3.5 -4.1 -35.9 TCS 0.5 5.5 -4.8 Syngene Intl 0.0 1.1 13.9 Tech Mah 1.4 1.0 -20.8 Torrent Pharma 5.6 8.6 -8.7 Wipro 0.0 11.7 6.0 Logistics Zensar Tech 0.4 -1.6 -23.4 Allcargo Logistics 0.4 0.5 -18.5 Telecom Blue Dart -0.5 -9.2 -26.7 Bharti Airtel 1.1 10.2 15.4 Concor -0.2 0.1 -4.4 Bharti Infratel -0.5 7.3 1.6 Gateway Distriparks -0.4 5.6 4.0 Idea Cellular -3.2 8.8 -11.5 Gati -0.5 -9.9 -34.0 Tata Comm -0.6 -7.2 52.1 Transport Corp. 0.6 -4.9 37.8 Utiltites Media Coal India -1.0 2.0 -24.0 Dish TV 1.7 3.9 -19.4 CESC 1.4 8.3 54.1 D B Corp -0.7 -1.7 -6.8 JSW Energy -2.2 10.1 -14.7 Den Net. 1.9 8.0 -2.9 NTPC 0.2 3.6 3.6 Ent.Network 0.7 1.6 27.4 Power Grid 4.2 5.9 26.8 Hind. Media -2.7 2.4 0.6 Tata Power 0.1 1.6 13.7 HT Media 4.8 14.0 8.7 Others Jagran Prak. 0.0 -3.3 -1.5 Arvind 1.1 1.5 19.5 Music Broadcast 0.0 2.7 Avenue Super. 2.3 12.7 PVR 0.3 -4.6 17.3 Bata India 2.1 9.5 -2.8 Siti Net. -0.4 -6.5 -33.3 Castrol India -0.7 -0.8 -9.3 Sun TV -1.7 -3.7 74.4 Century Ply. -1.7 0.3 25.5 Zee Ent. 0.4 10.1 9.0 Coromandel Intl 2.7 7.3 76.0 Metals Delta Corp -1.1 10.2 77.9 Hindalco 1.7 15.2 64.4 Dynamatic Tech 1.4 -5.4 -8.8 Hind. Zinc 1.5 7.2 38.3 Eveready Inds. -3.1 -10.5 22.5 JSPL 2.6 24.7 83.8 Interglobe 0.3 10.8 30.5 JSW Steel 2.7 8.9 32.3 Indo Count -5.2 -10.8 -17.4 Nalco 0.4 7.8 50.2 Info Edge -0.1 -3.6 21.0 NMDC 3.3 17.0 26.5 Inox Leisure 0.7 -7.0 3.4 SAIL 1.0 8.4 34.7 Jain Irrigation -1.3 3.3 49.8 Vedanta 1.8 12.3 69.9 Just Dial 1.4 1.9 -31.9 Tata Steel 2.9 4.3 60.0 Kaveri Seed 1.3 5.8 77.0 Oil & Gas Kitex Garm. -8.1 -6.0 -26.6 BPCL -0.9 10.5 19.2 Manpasand -1.3 1.0 17.8 GAIL -0.8 4.3 31.4 MCX 1.8 3.5 7.0 Gujarat Gas 0.2 2.3 28.8 Monsanto 0.7 0.1 16.5 Gujarat St. Pet. 0.4 9.8 45.7 Navneet Educat. -3.2 -8.0 68.2 HPCL 2.4 12.8 36.8 PI Inds. 0.2 -8.3 1.7 IOC 0.0 -4.6 35.2 Piramal Enterp. 0.5 5.4 84.0 IGL -0.7 11.4 82.8 SRF -1.7 -1.0 4.2 MRPL 0.2 5.2 53.3 S H Kelkar -1.5 0.5 4.2 Oil India 2.7 10.9 5.2 Symphony -0.6 6.9 20.8 ONGC 2.8 7.7 15.5 TTK Prestige 0.2 -3.2 24.4 PLNG 0.8 -5.4 37.1 V-Guard -8.1 3.0 56.2 Reliance Ind. 1.2 16.9 58.9 Wonderla -1.0 -0.4 -14.2 Retail Jubilant Food 0.3 39.3 7.8 Titan Co. 2.0 3.7 29.6

MOSL Universe stock performance

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India Strategy | Index Reconstitution

26 July 2017 10

Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice and also sought personal hearing. The matter is currently pending. MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report. MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (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 company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in the past 12 months.

In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have: a) managed or co-managed public offering of securities from subject company of this research report, b) received compensation for investment banking or merchant banking or brokerage services from subject company of this research report, c) received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report. d) Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.

MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

Terms & Conditions: This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by virtue of their receiving this report. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Disclosure of Interest Statement Companies where there is interest Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views.

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major 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") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

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Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231; MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products