Infosys Limited. Research Analyst: Initiating Coverage Note Sector: I T. Rating: STRONG BUY Target Price: `3,066 INVESTMENT THESIS

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1 Initiating Coverage Note Sector: I T Infosys Limited Rating: STRONG BUY Target Price: `3,066 Infosys Limited INVESTMENT THESIS Continued demand for offshoring Well Established Brand Strong Balance Sheet 1 Research Analyst: Nitin Prakash Daga AVP Research Microsec Capital Limited npdaga@microsec.in

2 Table of Contents: S. No. Contents Page No. 1. Investment Case Company Background Business Segments Industry Overview Investment Thesis Peer Group Key Management Personnel Valuation PE Bands Key Risks Financials Disclaimer

3 STRONG BUY INFY Strong brand at an attractive price Infosys Limited Sector- Information Technology We rate Infosys Limited (INFY) a STRONG BUY. Our rating underpins the continued demand for offshoring services by global players, INFY s strong brand image and its healthy cash reserves of over `15,000 Crores. However, the ongoing debt crisis in Europe, currency headwinds, and slowdown worries in the developed world impede our optimism a bit. Investment Case The urge to cut costs and remain flexible in different business scenarios is expected to keep driving the offshoring demand in upcoming years as well. INFY being one of the largest players in the Indian software industry is expected to benefit through this trend. Based on generic brand-earnings-multiple model, the company s brand value stood at $8.87 Bn at the end of the year. This is ~1.47 times of INFY s FY2011 revenues and more than 25% of its market capitalization. The company s strong brand is expected to help it retaining existing customers and maintain margins in the upcoming quarters. In addition, INFY s management continues to reward shareholders with regular dividend payouts, which add on to their returns periodically. The company has a policy to distribute 30% of its earnings as dividends. Furthermore, INFY s healthy cash position is expected to support its earnings growth and keep its cost structure immune to the hawkish interest rates. Based on target P/E multiple of 20.1x on FY2013E EPS of `152.68, we arrived at a target price of `3,066 per share for the stock. This represents an annualized upside of 24.7% from CMP of `2, INFY Financials at a glance (all data in ` Crores unless specified) 3

4 Company Background With an initial capital of just $250, INFY was established in 1981 by Mr. N R Narayana Murthy and six engineers. The company, initially headquartered in Pune, also signed its first client Data Basic Corporation, during the same year. INFY relocated its headquarters to Bangalore in Since then, the company grew leaps and bounds clocking $500 Mn revenue mark in 2002 and $1 Bn milestone in From the initial capital of $250 INFY has rose to become a $6.35 Bn, TTM revenues as at Q1 FY2012, organization with a Market Capitalization of over $25 Bn. The company with a base of more than 133,000 employees at the end of Q1 FY2012 is also among the largest employers of the country. Under its strategy to follow Global Delivery Model, INFY became the first IT company from India to be listed on NASDAQ. A brief of the company s progress over last thirty years is reflected in the following exhibit: Established by Mr. N R Narayana Murthy and six engineers in Pune Signed up first client - Data Basics Corporation, New York Relocated headquarter to Bangalore, opened office in Boston - US Went Public, introduced Employee Stock Option Program Opened first European office in UK and development offices at Toronto and Manglore Assessed at CMM Level 4 in 1997 followed by CMM Level 5 certification in 1999 Started Enterprise Solutions practice Clocked $100 Mn revenue mark, got listed on NASDAQ Opened offices in France and Hong Kong, expanded existing presence Launched Finacle and Progeon Sponsored secondary ADS offering Clocked $1 Bn revenue mark 2005 Onwards Net profits crossed $1 Bn mark Employee strength passed 100,000 Was selected as a member of The Global Dow Cash reserves piled up to more than `15,000 Crores Source: Company Data, INFY has emerged as the second largest software exporter in the Indian IT industry. The company s top line touched $6.04 Bn in FY2011 while it reported Net profits of approximately $1.6 Bn during the year. INFY is present across the globe with 64 sales offices and 63 global development centers in 75 cities across 32 countries. Moreover, the company had over 620 clients and 6,500 projects at the end of the year. In ` terms the company s top line stood at `27,501 Crores whereas its bottom line remained at `6,835 Crores. INFY earned more than 90% of total revenues from the global markets during the year. Furthermore, the company has an impressive record of completing 99% of its projects on time and 96% of the same within the stipulated budgets. 4

5 Business Segments INFY divides its revenues on the basis of geographies it caters to. The company reports segmentation based on earnings from different industry verticals and Service Offerings as well. On a geographical basis, INFY primarily reports four segments North America, Europe, India, and Rest of the World (RoW). While North America continues to account for a large chunk of the company s top line, business from Europe, India, and RoW are gaining momentum. As a result, the share of these three geographies, on a y-o-y basis, increased in INFY s top line whereas contribution by North America witnessed a decline in Q1 FY2012. The company generated revenues of over $1 Bn from North American region during the quarter. The following exhibit reflects geographical revenue break up of INFY in Q1 FY2012 and Q1 FY2011. Source: Company Data, The industry verticals, which INFY caters to, are broadly divided into 5 heads, which are Financial Services, Manufacturing, Telecom, Retail and Others. Financial Services remained the most prominent industry in the company s revenue pie with a lion s share of 35% in Q1 FY2012. However, its share has declined, similar to Telecom vertical, over the last year. Nevertheless, Manufacturing and Retail, registered an enhanced revenue share, on a y-o-y basis, in Q1 FY2012. This is shown in the exhibit below: Source: Company Data, 5

6 As per Service Offering segmentation, from Q1 FY2012, INFY started reporting three broad segments of its top line Business Operation Services, Consulting and System Integration Services, and Products, Platforms and Solutions. Business Operation Services include Application development and Maintenance, Infrastructure Management, Testing Services, and Business Process Management. While Consulting and System Integration Services comprise of consulting and package implementation Products, Platforms, and Solutions represent products as well as products engineering services. Business Operations, accounting for 60% of INFY s top line, continues to remain the top revenue contributor in Q1 FY2012. The company s revenue spread across the Service Offerings is depicted below: Source: Company Data, Trend of change in geographical mix is expected to continue in the upcoming quarters as well. While share of matured economies such as Europe and North America is expected to decline gradually, India and RoW may witness incremental share in top line. Among Industry verticals, Manufacturing and Retail may continue to beat the company s average growth. On the business services front, we believe that INFY will report a significant increase in share of Consulting and System Integration services in its top line. Focusing on the same and better reveal the company as a consulting player as well, INFY recently dropped the word Technology from its name. Consequently, the name of the company became Infosys Limited from Infosys Technologies Limited, earlier. 6

7 Industry Overview Global Scenario According to National Association of Software and Services Companies (NASSCOM) estimates, global spending on technology and related products and services augmented 4.0% y-o-y to $1.6 Tn in IT Services spend increased 1.4% y-o-y to $574.0 Bn while BPO spend jumped 3.9% to $158.0 Bn during the year. Among the geographies America remained on top followed by Europe and Asia Pacific (APAC) Region. A brief overview of the same is depicted in the graph below: Global IT Services Spend Geographical Break up Source: Nasscom, Global BPO Spend Geographical Break up Source: Nasscom, The global industry trends remained positive in Although a short term imbalance can t be ruled out due to ongoing concerns in the western globe, the offshoring trends are expected to remain steady in the long run. Players in some of the favorable IT destinations such as India are expected to 7

8 significantly benefit from the same. The country s dominance is likely to continue with its expertise and ability to offer quality services in the IT and ITES domains. Indian IT Industry The Indian IT industry remained a key contributor to India s overall economic development. According to NASSCOM IT BPO sector strategic review 2011, Indian IT sector is estimated to clock revenues of $88.1 Bn in FY2011. While a major part of the same is expected to continue coming from overseas software markets, hardware and domestic markets also account for a sizable portion of industry. Indian IT Sector Software Revenues Source: Nasscom, Of total revenues of $88.1 Bn, $12 Bn came from Hardware segment while IT Software and Services accounted for the remaining $76.1 Bn. Moreover, exports contributed for ~78% of the total revenues of IT Software and Services segment. Aggregate direct employment from the IT space is estimated to reach 2.5 Mn in FY2011. In addition, the industry created ~8.3 Mn indirect jobs as per NASSCOM estimates. The sector s share in total Indian exports grew from just 4% in FY1998 to 26% in FY2011. Furthermore, the industry s revenues as a percentage of GDP increased from 1.2% to an estimated 6.4% during FY period. R evenues as a % og GDP Share in total Indian Exports 9.0% 30.0% 6.0% 20.0% 3.0% 10.0% 0.0% E 0.0% E Source: Nasscom, Among geographies, US is likely to remain the largest contributor whereas Banking Financial Services and Insurance (BFSI) is estimated to be the largest vertical in the country s export pie. Additionally, IT Services segment represented 57% of total exports followed by Business Process Outsourcing (BPO), 8

9 and Engineering Design and Products Development segments. We expect this analogy to remain intact in medium term as well. Outlook In its Strategic Review 2011, NASSCOM predicted the global IT Services spend to increase to $684.0 Bn by 2014 from current levels of $574.0 Bn. BPO spending is also expected to grow to $201.5 Bn by Furthermore, spending on both IT Offshoring and outsourcing is likely to support the growth in overall spending in IT services. The following charts show the growth predicted by NASSCOM for the IT Services and BPO spend over 2010P-2014E periods. IT Services Spend BPO Spend CAGR 4.5% CAGR 6.3% P 2014E P 2014E Source: Nasscom, Among the concerns over visa issues and adverse geopolitical environment in Europe, a short lived slow down may be witnessed in the industry. However, the industry body expects a growth of 16-18% in IT exports from India. According to NASSCOM president Mr. Som Mittal, The US private sector is doing reasonably well. So, we are not too worried. The problem is in the macro-economic scenario and unemployment. There are also concerns over the debt situation in Europe and whether tax rates will go up. But, by and large, the private business is doing well. So we will not revisit our forecast, unless there is a major economic upheaval. Our view coincides with the current view of the industry body; however, we strongly anticipate that NASSCOM may tone down its estimates for the near term sighting current developments in the developed part of the world. Slowdown worries in Europe and the US may defer the discretionary spending decisions of the companies. Nevertheless, in the long run we expect the industry to remain on the growth path with cost cutting forces driving the demand for offshoring activities. We believe that a large part of overall growth of the sector will be contributed by major Indian IT exporters. As a result, our view remains positive on the sector. Among the top four players Tata Consultancy Services (TCS), INFY, Wipro Ltd (Wipro), and HCL Technologies Ltd (HCL), TCS and INFY being the largest could capture the largest part of the growth. 9

10 Investment Thesis INFY is the country s second largest software exporter. The company s top line grew at a Compounded Annual Growth Rate (CAGR) of 18.6% over the five years ending FY2011 to `27,501 Crores. Over the same period, INFY s bottom line increased at a CAGR of 15.4% to `6,835 Crores. Considering the subprime crisis phase remaining in between this period, the company s performance stayed impressive. INFY s strong brand image, healthy balance sheet, and revived demand for its services kept driving its performance in the last five years. These factors, we believe, will remain the key levers of the company s performance in the upcoming quarters as well. A detailed analysis of the same is presented as follows in our investment arguments for the stock. Continued demand for offshoring to lift performance After a modest y-o-y revenues growth of 4.8% in FY2010, the improved business environment and continued demand for offshoring helped INFY report strong 20.9% y-o-y increase in top line during FY2011. A large part (~63%) of the incremental sales came from North America. Revenues from the geography jumped 19.9% to `17,958 Crores during the year on a large base. India and RoW also contributed to the top line growth with a y-o-y enhancement of 124.8% and 33.5%, respectively, in FY2011. However, sales from Europe, growing by just 13.0%, limited the overall increase in revenues. All the geographies reported better y-o-y growth during FY2011 compared with FY2010, which is reflected in the exhibit below. Common Sized Geographical Revenues (%) Absolute Geographical Revenues (` Crores) Source: Company Data, Among the business verticals, the growth was mainly contributed by Financial Services, Manufacturing, and Retail verticals. While Financial Services revenues increased 27.6%, top line of Manufacturing and Retail segments grew 19.7% and 28.4% in FY2011. However, a frail performance by Telecom vertical partially offset this growth. Sales from the segment declined y-o-y by 3.1% in FY2011. A glimpse of the same is depicted in the following charts. Common Sized Business Vertical Revenues (%) Absolute Business Vertical Revenues (` Crores) Source: Company Data, 10

11 With benefits of low cost ownership of IT infrastructure, flexibility, improved quality, low labor cost, and improved efficiency, offshoring is expected to remain a key factor for companies across the globe to reframe their cost structure in a better way. Indian IT industry, comprising all these features, provides a one stop solution to these companies. INFY being one of the largest players in the industry is likely to benefit from the same. Consequently, we expect the company to report top line growth 21.0% and 18.5% respectively in FY2012E and FY2013E. However, a higher effective tax rate and pricing pressures may limit the growth in bottom line growth, remaining in lower teens. Strong Brand Image bodes well Despite visa related issues in the US and its founder Chairman Mr. N R Narayana Murthy stepping down, INFY reported a 12% jump in the brand value during FY2011. Based on generic brand-earningsmultiple model, the company s brand value stood at $8.87 Bn at the end of the year. This is ~1.47 times of INFY s FY2011 revenues and more than 25% of its market capitalization. The company s brand has helped it to command high prices and margins historically. Although the sustainability of the same may not be ascertained in current competitive environment, we believe that its brand will help INFY continue to command high proportion of repeated business. The company continuously reported 95% or above repeat business in last sixteen quarters as depicted in the exhibit below. Source: Company Data, We believe that INFY s strong brand will continue help it gain repeat business from its existing clients. In addition, although the company may report margins in line with its top tier competitor TCS, its margins are expected to remain above HCL Technologies Ltd and Wipro Ltd, in our view. INFY s brand will also remain supportive in its blue ocean growth strategy. Strong balance sheet enables dividend payments and support growth in income INFY s cash and cash equivalents rose at a CAGR of 26.8% over the last five years to `15,095 Crores in FY2011. The company has utilized its cash balance to provide healthy dividends to its shareholders. In addition INFY reported a continued increase in the other income over last five years mainly led by interest on these balances. A glance of the company s cash reserves, per share dividend, and other income in last three years is depicted as follows. 11

12 Source: Company Data, As per INFY s dividend policy, it distributes 30% of its net income as dividends. This could continue to provide accretive returns to the company s shareholders. Furthermore, in current scenario, when RBI continues to hold a hawkish stance on interest rates, INFY s cash balances can generate healthy returns in the near term. Additionally, the company s cash reserves may help it easily execute the strategic inorganic moves and support its blue ocean strategies. 12

13 Peer Group INFY versus TCS The Bellwether Race Considering INFY s size, its presence across the globe, and market capitalization, we selected Tata Consultancy Services (TCS), its nearest competitor, in the peer group. These two account for more than 15% of the total Indian IT exports. Furthermore, the giants are the trendsetters for the entire industry as well. A brief overview of both the companies operations is reflected below: 16.0% Revenues Growth over the period 20.0% PAT Growth over the period 12.0% 15.0% 8.0% 10.0% 5.0% 4.0% 0.0% 0.0% 5.0% 4.0% 10.0% INFY TCS INFY TCS 200,000 Headcount over the period Attrition over the period 175, % 150, , % 100,000 75, % INFY TCS INFY TCS 30.0% 27.0% 24.0% PAT Margins over the period PE (x) over FY % % 15.0% INFY TCS INFY TCS 64.0% 50.0% 36.0% Returns over F Y2011 2, ,200.0 Market Capitalization (in ` Bn) over FY % 1, % 6.0% 1, % 1,300.0 INFY TCS INFY TCS Source: Company Data,, Bloomberg We analyzed the performance of INFY and TCS based on the following five fundamental parameters over the last twelve quarters reported numbers: 1. Sequential growth in Revenues 13

14 2. Q-o-Q increase in Net Profit 3. Total Headcount 4. Attrition Levels 5. PAT Margins We found that INFY has underperformed TCS from Q2 FY2009. However, its consolidated performance remained above other peers. While its revenues growth outpaced Wipro, the company s margins were well above both Wipro and HCL. We also analyzed both the companies stock performance over FY2011, which represents the period when TCS outperformed INFY on most of the fundamental factors. For this, we selected three parameters: 1. Price-to-Earnings (PE) Multiple 2. Stock Returns 3. Market Capitalization The gap in PE multiple, between INFY and TCS, narrowed down, to almost nil, during FY2011. Furthermore, TCS provided returns of 48.5% over FY2011 vis-à-vis INFY s 22.6%. Additionally, TCS market capitalization, 3.1% higher than that of the company at the beginning of the year, had a 24.5% premium over the same at the end of the year. Though above comparisons suggest that INFY has underperformed TCS in FY2011, we believe that new management, the company s strong brand and more than double cash reserves than that of TCS may help it maintain the growth momentum at the net margins level. Moreover, considering the attractive valuation levels and market dominant position of both the companies, INFY and TCS may outperform their peers, going forward. Peer Group Table: FY2011 Data (In ` Crores) 14

15 Key Management Personnel Transformational Wave INFY is led by well educated and highly qualified professionals and industry veterans. The company s management helped it ride through the sub-prime crisis waves successfully by implementing right strategies and frameworks at the right time. Following the retirement of Mr. N R Narayana Murthy and new management taking charge post 21 August 2011, INFY witnessed a significant transformation at top level. A glimpse of the same is depicted below: Mr. N R Narayana Murthy named as Chairman Emeritus Mr. K V Kamath became the new Chairman of the company s board taking charge from Mr. N R Narayana Murthy Mr. S Gopalakrishnan was elevated as Co-chairman of the Board Mr. S D Shibulal took over as INFY s Managing Director and Chief Operating Officer (MD & CEO) Together with Mr. Sibulal, The company s executive council now comprises of Mr. Basab Pradhan, Mr. Stephen Pratt, Mr. Ramdas Kamath, Mr. Prasad Thrikutam, Mr. U B Pravin, Mr. B G Srinivas, Mr. V Balakrishnan, Mr. Ashok Vemuri, Ms. Nandita Gurjar, and Mr. Chandra Shekar Kakal The performance of new management will remain vital in INFY s performance in the upcoming quarters. With industry veterans and people with ample experience on the company s executive council, we believe that INFY may continue report a healthy performance, going forward. 15

16 Valuation We adopted a comparable valuation method to value INFY based on Price-to-Earnings (P/E) multiples. Historically, the company traded on a five year average P/E multiple of 26.6x. This reveals a premium over the peer group average P/E of 25.4x for the same period. In the longer run, we expect the company to trade at a discount over the peer group average P/E based on its underperformance vis-àvis TCS. With this, we anticipate the P/E gap, of INFY and Industry to stand at -0.5x in subsequent years. Consequently, to arrive at a target P/E multiple for INFY we applied a 19% discount to five year average P/E of peer group. Deducting the discount, this resulted in a targeted P/E multiple of 20.1x for the company, which on FY2013E EPS of `152.68, reflects a target price of `3066, inclusive of dividend payments, for the stock. Our target price translates a 39.7% upside over INFY s current stock price. On an annualized basis, this translates into returns of 24.7%. Following table represents the sensitivity of our target price to variation of target PE multiples and EPS levels. P/E x 3, ,580 2,722 2,865 3,008 3, ,670 2,818 2,965 3,113 3,261 EPS (`) ,760 2,913 3,066 3,218 3, ,851 3,008 3,166 3,324 3, ,941 3,104 3,267 3,429 3,592 PE Bands (Price in (`)) Source:, Bloomberg 16

17 Key Risks INFY has been able to report a modest growth in top line and profits despite a dull global environment. However, there are certain internal risks and external factors, which could impact INFY s performance in the near term, which may lead to a downward revision in our share price. These factors are depicted below. Management changes at INFY happened recently. The smoothness of the functional transfer is most desirable at this moment. Considering the global slowdown worries, the task may be challenging for the incoming veterans. INFY s core competitor TCS performed well on all parameters vis-à-vis the company in FY2011. Moreover, INFY had to sacrifice some of its margins to cope up with the emerging competition. These factors, if remaining there in upcoming quarters, may affect the company s performance. Slowing economic growth momentum in Euro zone especially in Germany, may affect INFY s top line growth as Europe contributes a significant part of its top line. Germany reported a GDP growth of just 0.1% in quarter ended June 2011, over the previous quarter. Visa issues in the US could also impact INFY s performance. As the rejection rate of Visas in the US has increased significantly, it may force the company to hire local talent for servicing its customers. This factor is can elevate INFY s cost structure and subsequently thereby trim its bottom line growth. Currency movements continue to remain a key driving force of the company s performance. Appreciation of ` against other global currencies adversely affect its performance whereas depreciation of the same remains favorable. As a result, a higher than expected appreciation in the `, particularly against $, may impact INFY s overall performance adversely in our view. Although these factors may impact the performance of INFY in short to medium term, the long term prospects of the company remain intact. The need for cost cutting in a slowing business can even pose some new business opportunities for the company in upcoming quarters. Furthermore, under Enterprise Risk Management (ERM), INFY identify, assess, monitor and mitigate various risks concurred in normal business activities. In addition, we believe that INFY s large size, diversified geographical presence, and revenues spread across various industry verticals will remain supportive for the company in countering these risks. 17

18 Financial Statements Income Statement FY2009 FY2010 FY2011 FY2012E FY2013E Net Revenues 21,693 22,742 27,501 33,276 39,432 Gross Profit 9,928 10,671 12,447 14,309 16,759 Selling and Marketing Expenses 1,104 1,184 1,512 1,996 2,562 General and Administration Expens 1,629 1,626 1,967 2,496 3,155 EBITDA 7,195 7,861 8,968 9,817 11,042 Depreciation and Amortization EBIT 6,434 6,956 8,114 8,926 10,193 Other Income (Net) ,211 1,846 2,269 Provision for Taxes: 919 1,681 2,490 3,016 3,739 Net Profit after Tax 5,988 6,218 6,835 7,756 8,723 Income from Sale of Investments Net Profit after Tax & EI 5,988 6,266 6,835 7,756 8,723 Diluted EPS Balance Sheet FY2009 FY2010 FY2011 FY2012E FY2013E Total Net Worth 18,254 23,049 25,976 30,736 36,132 Deferred Tax Liabilities TOTAL SOURCES OF FUNDS 18,291 23,281 26,152 30,912 36,308 Fixed Assets 5,354 5,355 5,760 5,628 5,630 Investments - 3, Deferred Tax Assets Net Current Assets 12,774 13,792 19,751 24,643 30,037 TOTAL USES OF FUNDS 18,291 23,281 26,152 30,912 36,308 Cash Flow FY2009 FY2010 FY2011 FY2012E FY2013E Operating Cash Flow Net Profit before Tax MI and EI 6,907 7,899 9,325 10,772 12,462 Depreciation Interest and Dividend income (876) (881) (1,154) (1,846) (2,269) Changes in Debtors (375) 194 (1,159) (817) (1,012) Change in L&A (514) (438) (758) (606) (1,096) Change in CL ,361 1,341 Income taxes paid (902) (1,753) (2,846) (3,016) (3,739) TOTAL OCF 5,325 6,187 4,752 6,739 6,536 Investing Cash Flows Capital Expenditure (Net) (1,327) (658) (1,305) (759) (851) Interest and dividend income 1, ,148 1,846 2,269 TOTAL ICF (213) (3,603) 3,398 1,087 1,418 Dividends paid (2,131) (1,346) (3,140) (2,571) (2,857) Dividend taxes paid (363) (228) (524) (424) (471) TOTAL FCF (2,430) (1,485) (3,640) (2,995) (3,328) Changes in Cash 2,758 1,068 4,555 4,831 4,626 Cash Carried to BS 9,695 10,556 15,095 19,926 24,551 Source: Company Data, RoE is calculated on Closing Basis All data in ` Crores unless specified Shaded part reflects estimates 18

19 : Phone No.: Ajay Jaiswal: President, Investment Strategies, Head of Research: Fundamental Research Name Sectors Designation ID Nitin Prakash Daga IT, Telecom & Entertainment AVP-Research Naveen Vyas Midcaps,Market Strategies AVP-Research Nitesh Goenka BFSI,Metal & Mining Sr. Research Analyst Abhisek Sasmal BFSI Research Analyst Sutapa Roy Economy Research Analyst Gargi Deb Agriculture & Pharma Research Analyst Technical & Derivative Research Vinit Pagaria Derivatives & Technical VP Ranajit Saha Technical Research Sr. Manager Institutional Desk Rajiv Lilaramani Institutional Equities Sr. Manager Dhruva Mittal Institutional Equities Manager PMS Division Siddharth Sedani PMS Research AVP Sarmistha Rudra PMS Technical Research Analyst Research: Financial Planning Division Shrivardhan Kedia FPD Products Manager Research Research-Support Subhabrata Boral Research Support Executive MICROSEC RESEARCH IS ACCESSIBLE ON BLOOMBERG AT <MCLI> Rating Scale Recommendation Expected absolute returns (%) over 12 months Strong Buy >20% Buy between 10% and 20% Hold between 0% and 10% Underperform between 0% and -10% Sell < -10% 19

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21 Disclaimer The investments discussed or recommended in this report may not be suitable for all investors. Investors should use this research as one input into formulating an investment opinion. Additional inputs should include, but are not limited to, the review of other. This is not an offer (or solicitation of an offer) to buy/sell the securities/instruments mentioned or an official confirmation. Microsec Capital Limited is not responsible for any error or inaccuracy or for any losses suffered on account of information contained in this report. This report does not purport to be offer for purchase and sale of share/ units. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation discussed herein or act as 21 advisor or lender I borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. The same persons may have acted upon the information contained here. No part of this material may be duplicated in any form and/or redistributed without Microsec Capital Limited prior written consent.