Jagran Prakashan Ltd. 2017EquirusAll rights reserved Rating Information Price (Rs) 173 Target Price (Rs) 200 Target Date

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1 Jagran Prakashan Ltd Absolute : LONG Relative : Overweight 3QFY18 Result: Estimate (), TP (), Rating () Regular Coverage 15% ATR in 14 Months Weak quarter but green shoots of recovery emerging - maintain LONG Media & Entertainment 2017EquirusAll rights reserved Rating Information Price (Rs) 173 Target Price (Rs) 200 Target Date 31st Mar'19 Target Set On 31st Jan'18 Implied yrs of growth (DCF) 15 Fair Value (DCF) 246 Fair Value (DDM) 91 Ind Benchmark SPBSMIP Model Portfolio Position NA Stock Information Market Cap (Rs Mn) 53,999 Free Float (%) % 52 Wk H/L (Rs) 208.9/160 Avg Daily Volume (1yr) 2,44,849 Avg Daily Value (Rs Mn) 44 Equity Cap (Rs Mn) 623 Face Value (Rs) 2 Bloomberg Code JAGP IN Ownership Recent 3M 12M Promoters 60.9 % 0.0 % 0.1 % DII 15.3 % 1.3 % 2.8 % FII 9.2 % -1.3 % -6.1 % Public 14.6 % 0.0 % 3.2 % Price % 1M 3M 12M Absolute -2.5 % -2.4 % -5.0 % Vs Industry 0.1 % -7.1 % % DBCORP -6.6 % -9.9 % % HTMEDIA 0.0 % 6.7 % -6.6 % Consolidated Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (17A) EPS (18E) Jagran Prakashan s (JPL) 3QFY18 consolidated revenues were at Rs 5981mn (-1% yoy), while print advertising revenues slid ~4% yoy (vs. -6% yoy for DB Corp, and +5% yoy for HMVL). Circulation revenues remained flattish (vs. 1.5% growth in 1QFY18 and ~1% in 2QFY18) as increased competition in UP and Bihar continued to put pressure on cover prices. JPL s radio advertising (MBL) volumes grew by 5% yoy, outperforming industry growth (2% yoy). The months of November and December have shown encouraging trends and we expect the recovery to continue in 4QFY18, partly helped by soft comps. We however cut our FY18/FY19 EPS estimates by 3%/6% to factor in a weak 3Q and rising newsprint costs; maintain LONG with a rolled over Mar 19 TP of Rs 200 (from a Dec 18 TP of Rs 200). Advertising was weak due to split of festive season into two quarters: Advertising growth for print media companies continued to be hit by GST disruption, a festive season split into two quarters and lower government advertisements. This led to a ~2% decline in print advertisement revenues for JPL on standalone basis. However, as per management, revival has been seen in discretionary, BFSI, real estate and education related advertisements. Circulation revenues remained under pressure (flattish yoy) as competition in key markets of UP and Bihar remained intense at the onset of IRS Management believes that cover prices have bottomed out and they would be improving realizations in coming quarters. Also, according to the recently released IRS survey, Jagran has maintained its leadership position (see our Indian Readership Survey 2017 Note for survey results). According to management, this survey may help the company to negotiate better ad-rates. Radio continued to outperform peers but Mid-Day disappointed: JPL s radio subsidiary, Music Broadcast Limited (MBL), posted a ~5% yoy growth in 3QFY18 (vs. 7% decline for DB Corp and 5% growth for HT Media). EBITDA margins disappointed at 31% (-229bps vs. EE and -596bps yoy) (See our Result update note on MBL). For Mid-Day, advertising revenues fell by 15% yoy (vs. +3% yoy last quarter) and EBITDA margins contracted to 12% (vs. 2 in 3QFY17 and 13% in 2QFY18). Revenues for all other publications (Nai Dunia, I-Next, Punjabi Jagran and Sakhi) grew ~3% yoy during 3QFY18. Maintain LONG with a rolled over Mar 19 TP of Rs 200: We remain hopeful of recovery in advertisements from 4Q onwards and also IRS survey results shall remain supportive of the print media story in India. We have updated our numbers post 3Q results and revised our FY18/FY19 EPS estimates by -3%/-6%. We continue to value JPL on SOTP basis (Exhibit 5) and roll over to a Mar 19 TP of Rs 200 (from a Dec 18 TP of Rs 200). Maintain LONG. Change in Estimates Rs. Mn FY18E Chg (%) FY19E Chg (%) Sales 23,607-2% 25,682-2% EBITDA 6,310-2% 7,092-4% EPS % % Consolidated Financials Rs. Mn YE Mar FY17A FY18E FY19E FY20E Sales 22,830 23,607 25,682 27,942 EBITDA 6,396 6,310 7,092 7,929 Depreciation 1,289 1,350 1,424 1,464 Interest Expense Other Income Reported PAT 3,475 3,283 3,792 4,368 Recurring PAT 3,475 3,283 3,792 4,368 Total Equity 21,549 20,624 23,047 25,838 Gross Debt 4,865 3,865 3,865 3,363 Cash 3,783 2,520 5,338 8,156 Rs Per Share FY17A FY18E FY19E FY20E Earnings Book Value Dividends FCFF P/E (x) P/B (x) EV/EBITDA (x) ROE (%) 18 % 16 % 17 % 18 % Core ROIC (%) 18 % 17 % 19 % 22 % EBITDA Margin (%) 28 % 27 % 28 % 28 % Net Margin (%) 15 % 14 % 15 % 16 % January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 1 of 12 Before reading this report, you must refer to the disclaimer on the last page.

2 Quarterly trends in charts Exhibit 1: Print advertising growth was weak this quarter Exhibit 3: EBITDA margins recovered post a dismal show in last quarter , % Advertisement revenues (Rs mn) Ad growth (y-o-y %)(RHS) 11.8% 3,474 3,521 3,465 3,334 3,435 3,122 3,127 3,229 3,206 3,256 3,053 2, % 9.1% 6.8% 8.4% % 3.1% 3.3% 1.4% 0.8% -2.4% 14% 12% 8% 6% 4% 2% -2% % % % 1034 EBITDA ( Rs mn) 3 28% 29% % % 1307 EBITDA margins(%) % 31% 26% % 24% % % 25% 2 15% 5% 0 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318-4% 0 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Source: Company, Equirus Securities Source: Company, Equirus Securities Exhibit 2: Circulation growth was flattish due to a drop in cover prices Exhibit 4: Other publications (excl. Dainik Jagran) had better profitability Circulation revenues ( Rs mn) Circulation growth (y-o-y %) 9.4% 8.4% 1,034 1,025 1,030 1, % 1, % % % 5.8% % % 1.4% 1.7% 0.3% 0.5% Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 9% 8% 7% 6% 5% 4% 3% 2% 1% Operating profit ( Rs mn) Operating margin(%) (RHS) % 9.8% 10.3% 10.1% 8.2% 8.7% 8.8% 8.6% 5.5% 5.8% 2.5% -1.7% Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 14% 12% 8% 6% 4% 2% -2% -4% Source: Company, Equirus Securities Source: Company, Equirus Securities January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 2 of 12

3 Conference call highlights Business Overview Management believes that IRS 2017 has provided reliable measurement to the advertisers. Investment in growing circulation has paid up for Dainik Jagran as it has maintained its no 1 position which augurs well for future revenues. Dainik Jagran has become no 1 in Haryana and Patna for the first time while maintained its no 1 position in UP and NCR. Also, Nai Dunia has become one of top10 dailies of the country. Average Issue Readership for Dainik Jagran has increased to ~22mn from ~16.4mn five years ago. AIR growth potential is not seen across the market; it depends on the existing penetration levels in a particular market. In UP overall AIR growth should have been ~20-25%. Share of Gov advertisement for the company is ~2. IRS numbers will make a big impact on ad rates as all leading national advertising agencies rely on it; big local clients are also looking into numbers (however impact won t be as much as for national advertisers). ~40-5 of advertising revenues come from advertisers who will take this data seriously Standalone Print advertising revenue has declined by ~2% in 3QFY18. Main reasons for the same would be loss of revenues from political parties/government (to the tune of ~Rs. 150mn) which was there last year and split of festive season. Ad yields were better on yoy basis whereas volumes have declined by ~5-6% in 3QFY18. Circulation revenues remained flattish (vs. growth of ~1.5% in 1QFY18 and ~1% in 2QFY18). However, company saw improvement in per copy realization for all newspaper brands in 3QFY18. Management believes that the era of dropping cover prices seems to be over and they would be improving realizations in coming quarters. Dainik Jagran s standalone circulation is ~4.1mn and all other brands put together circulation is ~ mn. Real estate sector is doing well in the geographies that company operates in. FMCG category has started to do better however Pharma has not shown much growth after the demonetization. Government advertisement should improve in FY19 due to central elections related advertisements. Other publications (Midday, Naidunia, I-Next, Punjabi Jagran, Sakhi) and Radio Other publications registered a revenue decline of ~2% yoy in 3Q18 (vs. growth of ~5% in 2QFY18). Operating margins also shrunk to ~8.6% (-442bps/+278bps on yoy/qoq basis). Management expects Mid-day and Nai Dunia to do better going ahead. Company has been formulating strategy to grow circulation of Nai Dunia in MP; they are getting good traction in Bhopal and Indore. Sharp decline in Mid-day advertising revenues (-15%) was due to two reasons: (a) festive season was broken up, (b) last October was an exceptionally good month for Mid-day (its highest ever ad revenues). Advertising growth in Nov-Dec was ~18-2. Radio business in 3QFY18 outperformed the industry to grow by ~5% in 3QFY18. Newsprint Prices Domestic newsprint prices would increase by ~6-7% in FY19 whereas imported newsprint prices would increase ~25-3. On a blended level newsprint cost should increase by ~10-12% in FY19. Company will suffer more as they had tied up quantities for nearly one and a half year therefore they were not impacted recently. January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 3 of 12

4 Valuation and risks JPL is currently trading at a PE multiple of 14x and an EV/EBITDA multiple of 7x on our FY19E estimates. We continue to prefer sum-of-the-parts (SOTP) methodology to value the company, and value the standalone and radio business separately. JPL has always traded in the EV/EBITDA range of 8x-12x. To the print business, we have ascribed a TTM EV/EBITDA multiple of 9x to our TTM Mar 19 EBITDA estimate of Rs 5,801m to derive the equity value of Rs 52,079mn. We have applied a 4 holding value discount to our Music Broadcast Ltd s valuation. Exhibit 5 below illustrates the step-by-step process followed to derive our Mar 19 TP of Rs 200. Key downside risks Another economic slowdown to lead to below-expected growth in advertising revenue: A slowdown in the economy can result in lower than expected media spends by corporate, which can negatively impact advertising revenue. Higher than expected increase in newsprint costs to hurt operating margins: Newsprint prices account for 30-4 of total sales and 40-5 of total costs. Newsprint prices are strongly correlated to crude oil prices, which have been rising of late. Rising RM costs may put some stress on operating margins. Rising competition: JPL operates in a highly competitive environment, with two or three players present in most of the states. The company would come under stress if competitors cut cover prices or reduce advertisement rates to gain market share. Exhibit 1: Target price derivation through SOTP valuation Jagran (Rs mn) EBITDA (TTM Mar 19) Multiple Valuation Standalone 5,801 9x 49,877 (-) Total debt 1,400 (+) Total Cash 3,592 Equity value(1) 52,079 Radio City Valuation 23,282 JPL holding 70.58% Equity value(2) 16,433 Holding company discount 4 Net equity value 9,860 Equity value 61,938 Outstanding shares (mn) Target price(rs) (rounded) 200 Source: Company, Equirus Securities January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 4 of 12

5 Quarterly performance, consolidated % Change Rs Mn 3QFY18 3QFY18E 2QFY18 3QFY17 3QFY18E 2QFY18 3QFY17 Net Sales 5,981 6,392 5,665 6,016-6% 6% -1% Comments Consumption of raw materials 1,691 1,761 1,652 1,664-4% 2% 2% Employees cost 990 1, % -1% 3% Other expenditure 1,617 1,831 1,574 1,479-12% 3% 9% License fees % Total Expenditures % 2% 5% EBITDA % 17% -13% Depreciation % 1% 4% EBIT 1,286 1,465 1,046 1,537-12% 23% -16% Interest % 2% -15% Other Income % -14% 38% PBT 1,318 1,516 1,098 1,526-13% 2-14% Tax % 19% -18% PAT before MI & Associates % 21% -11% Minority Interest % -9% 268% Profit from Assoc % -112% Recurring PAT % 22% -13% Extraordinaries Reported PAT % 22% -13% EPS (Rs) % 21% -7% EBITDA Margin 27.2% 28.1% 24.5% bps 277 bps -378 bps EBIT Margin 22% 23% 18% 26% -143 bps 303 bps -404 bps PBT Margin 22% 24% 19% 25% -168 bps 266 bps -332 bps PAT Margin 14% 15% 12% 16% -117 bps 190 bps -202 bps Tax Rate 34% 33% 34% 36% 34 bps -37 bps -196 bps January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 5 of 12

6 Company Snapshot How we differ from Consensus EPS Sales PAT - Equirus Consensus % Diff Comment FY18E % Consensus numbers have not been updated yet. FY19E % FY18E 23,607 24,120-2 % FY19E 25,682 26,337-2 % FY18E 3,283 3,615-9 % FY19E 3,792 4, % Key Estimates (Standalone): Particulars FY11 FY12 FY13 FY14E FY15E FY16E Particulars ADHO Revenue (Rs Mn) 3,432 4,443 5,771 FY17 FY18E 6,381 FY19E 7,270 FY20E 8,397 Ad Nomark revenue (Rs Mn) (in Rs mn) ,291-13, , , EBITDA (Rs Mn) 1,089 1,166 1,729 1,848 2,102 2,460 Circulation revenue(in Rs mn) 4,055 4,093 4,217 4,344 EBITDA Margin (%) 30.3% 24.6% 28.5% 27.2% 26.2% 26.3% Revenue PAT (Rs Mn) from digital excl. ads(in 1,031 Rs mn) 1,201 1, , , , OOH PAT and Margin event (%) mgmt business(in 28.7% Rs mn) 25.4% 27.6% 1,242 1, % 1, % 1,681 Risk to Our View: 1. Slowdown in economy 2. Newsprint prices rising more than expected Rf Beta Ke Term. Growth Debt/IC in Term. Yr 6.8 % % 2.5 % 10.0 % - FY18E FY19E FY20-22E FY23-27E FY28-32E Sales Growth 3 % 9 % 8 % 7 % 7 % NOPAT Margin 14 % 15 % 15 % 15 % 15 % IC Turnover RoIC 16.9 % 19.2 % 24.3 % 25.0 % 25.0 % Years of strong growth Valuation as on date (Rs) Valuation as of 31st Mar' Based on DCF, we derive 31 st Mar 19 fair value of Rs 244. Company Description: Jagran Prakashan Ltd (JPL) is a media conglomerate with interests spanning across Print, FM Radio, OOH, Activation & Digital covers all of India as its footprint and is amongst one of the largest media conglomerates in the country. Jagran group publishes 12 print titles in 5 different languages spread across 15 states with over 100 editions and these include some veritable titles as the World's largest read daily, India's No.1 compact daily, India's No.1 Afternoon daily, and India's No.1 Urdu daily. Key Triggers Revival in advertisement growth Declaration of dividends or some strategic acquisition DCF Valuations & Assumptions Comparable valuation Mkt Cap Price Target EPS P/E BPS P/B RoE Div Yield Company Reco. CMP Rs. Mn. Target Date FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E Jagran Prakashan LONG , st Mar' % 16 % 17 % 1.7 % 1.8 % DBCL LONG , st Mar' % 21 % 23 % 1.5 % 3.5 % HMVL LONG , st Mar' % 14 % 15 % 0.5 % 0.5 % January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 6 of 12

7 Consolidated Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18A 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E Revenue 5,644 5,548 6,016 5,620 5,913 5,665 5,981 6,048 6,398 6,163 6,602 6,519 22,830 23,607 25,682 27,942 Consumption of raw materials 1,693 1,612 1,664 1,555 1,698 1,652 1,691 1,680 1,795 1,711 1,814 1,968 6,525 6,720 7,288 7,774 Employees cost ,006 1,050 1,076 1,059 1,081 3,740 3,987 4,266 4,614 Other expenditure 1,495 1,476 1,479 1,670 1,611 1,574 1,617 1,626 1,693 1,638 1,750 1,722 5,977 6,376 6,803 7,359 EBITDA 1,558 1,531 1,866 1,441 1,613 1,386 1,629 1,683 1,801 1,679 1,920 1,692 6,396 6,310 7,092 7,929 Depreciation ,289 1,350 1,424 1,464 EBIT 1,257 1,223 1,537 1,090 1,285 1,046 1,286 1,344 1,445 1,323 1,564 1,336 5,107 4,961 5,668 6,465 Interest Other Income PBT 1,248 1,257 1,526 1,138 1,333 1,098 1,318 1,381 1,516 1,394 1,634 1,406 5,168 5,129 5,949 6,910 Tax ,675 1,744 2,023 2,349 PAT bef. MI & Assoc , , ,493 3,385 3,926 4,561 Minority Interest Profit from Assoc Recurring PAT , ,475 3,283 3,792 4,368 Extraordinaries Reported PAT , ,475 3,283 3,792 4,368 EPS (Rs) Key Drivers Sequential Growth (%) Revenue 7 % -2 % 8 % -7 % 5 % -4 % 6 % 1 % 6 % -4 % 7 % -1 % Consumption of raw materials 8 % -5 % 3 % -7 % 9 % -3 % 2 % -1 % 7 % -5 % 6 % 8 % EBITDA 15 % -2 % 22 % -23 % 12 % -14 % 17 % 3 % 7 % -7 % 14 % -12 % EBIT 13 % -3 % 26 % -29 % 18 % -19 % 23 % 5 % 8 % -8 % 18 % -15 % Recurring PAT 5 % 2 % 14 % -17 % 7 % -20 % 22 % 3 % 11 % -8 % 18 % -14 % EPS 4 % 2 % 14 % -17 % 14 % -18 % 21 % 0 % 11 % -8 % 18 % -14 % Yearly Growth (%) Revenue 17 % 7 % 4 % 6 % 5 % 2 % -1 % 8 % 8 % 9 % 10 % 8 % 10 % 3 % 9 % 9 % EBITDA 16 % 4 % 8 % 6 % 3 % -9 % -13 % 17 % 12 % 21 % 18 % 1 % 8 % -1 % 12 % 12 % EBIT 13 % 3 % 7 % -2 % 2 % -14 % -16 % 23 % 12 % 26 % 22 % -1 % 9 % -3 % 14 % 14 % Recurring PAT 7 % 11 % 4 % 1 % 3 % -19 % -13 % 8 % 12 % 27 % 23 % 2 % 14 % -6 % 15 % 15 % EPS -54 % -7 % 4 % 0 % 10 % -12 % -7 % 13 % 10 % 23 % 20 % 2 % 13 % -1 % 15 % 15 % Margin (%) EBITDA 28 % 28 % 31 % 26 % 27 % 24 % 27 % 28 % 28 % 27 % 29 % 26 % 28 % 27 % 28 % 28 % EBIT 22 % 22 % 26 % 19 % 22 % 18 % 22 % 22 % 23 % 21 % 24 % 20 % 22 % 21 % 22 % 23 % PBT 22 % 23 % 25 % 20 % 23 % 19 % 22 % 23 % 24 % 23 % 25 % 22 % 23 % 22 % 23 % 25 % PAT 15 % 15 % 16 % 14 % 15 % 12 % 14 % 14 % 15 % 14 % 16 % 14 % 15 % 14 % 15 % 16 % January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 7 of 12

8 Sep/09 Mar/10 Sep/10 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Sep/17 Mar/18 Sep/18 Mar/19 Sep/09 Mar/10 Sep/10 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Sep/17 Mar/18 Sep/18 Mar/19 Sep/09 Mar/10 Sep/10 Mar/11 Sep/11 Mar/12 Sep/12 Mar/13 Sep/13 Mar/14 Sep/14 Mar/15 Sep/15 Mar/16 Sep/16 Mar/17 Sep/17 Mar/18 Sep/18 Mar/19 Consolidated Financials P&L (Rs Mn) FY17A FY18E FY19E FY20E Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E Revenue 22,830 23,607 25,682 27,942 Equity Capital PBT 5,169 5,129 5,949 6,910 Op. Expenditure 16,434 17,297 18,590 20,013 Reserve 20,895 20,001 22,424 25,215 Depreciation 1,289 1,350 1,424 1,464 EBITDA 6,396 6,310 7,092 7,929 Networth 21,549 20,624 23,047 25,838 Others Depreciation 1,289 1,350 1,424 1,464 Long Term Debt 1,334 1,334 1, Taxes Paid -1,388-1,744-2,023-2,349 EBIT 5,107 4,961 5,668 6,465 Def Tax Liability 2,141 2,141 2,141 2,141 Change in WC Interest Expense Minority Interest 2,363 2,465 2,600 2,793 Operating C/F 4,774 4,625 4,586 5,123 Other Income Account Payables 1,467 1,436 1,478 1,576 Capex -1, PBT 5,168 5,129 5,949 6,910 Other Curr Liabi 3,531 2,531 2,531 2,531 Change in Invest -3, Tax 1,675 1,744 2,023 2,349 Total Liabilities & Equity 32,386 30,532 33,131 35,711 Others PAT bef. MI & Assoc. 3,493 3,385 3,926 4,561 Net Fixed Assets 14,919 14,419 13,675 12,882 Investing C/F -4, Minority Interest Capital WIP Change in Debt -2,212-1, Profit from Assoc Others 5,864 5,864 5,864 5,864 Change in Equity 4,000-3, Recurring PAT 3,475 3,283 3,792 4,368 Inventory Others -1,157-1,487-1,601-1,809 Extraordinaires Account Receivables 5,158 5,174 5,629 6,124 Financing C/F 631-5,510-1,601-2,311 Reported PAT 3,475 3,283 3,792 4,368 Other Current Assets Net change in cash 1,212-1,264 2,818 2,818 FDEPS (Rs) Cash 3,783 2,520 5,338 8,156 RoE (%) 18 % 16 % 17 % 18 % DPS (Rs) Total Assets 32,386 30,532 33,131 35,711 RoIC (%) 14 % 12 % 14 % 15 % CEPS (Rs) Non-cash Working Capital 2,062 3,003 3,486 3,943 Core RoIC (%) 18 % 17 % 19 % 22 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 34 % 36 % 36 % 36 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 28 % 27 % 28 % 28 % FA Turnover P/B PATM (%) 15 % 14 % 15 % 16 % Net D/E P/FCFF Tax Rate (%) 32 % 34 % 34 % 34 % Revenue/Capital Employed EV/EBITDA Sales Growth (%) 10 % 3 % 9 % 9 % Capital Employed/Equity EV/Sales FDEPS Growth (%) 13 % -1 % 15 % 15 % Dividend Yield (%) 1.7 % 1.8 % 2.1 % 2.4 % TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE EPS Growth x 20x 15x 10x 5x EBITDA Growth x 12x 10x 8x 5x RoE 4 35% 3 25% 2 15% 5% 5x 4x 3x 2x 1x January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 8 of 12

9 Historical Consolidated Financials P&L (Rs Mn) FY14A FY15A FY16A FY17A Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A Revenue 17,027 17,698 20,792 22,830 Equity Capital PBT 3,057 4,183 4,640 5,169 Op. Expenditure 13,201 13,192 14,888 16,434 Reserve 8,994 10,708 15,656 20,895 Depreciation 890 1,035 1,290 1,289 EBITDA 3,826 4,506 5,905 6,396 Networth 9,616 11,342 16,309 21,549 Others Depreciation 789 1,035 1,219 1,289 Long Term Debt 4,658 5,479 5,148 1,334 Taxes Paid ,358-1,388 EBIT 3,037 3,470 4,686 5,107 Def Tax Liability 1,085 1,039 1,942 2,141 Change in WC Interest Expense Minority Interest ,363 Operating C/F 3,305 4,385 4,245 4,774 Other Income Account Payables 1,275 1, ,467 Capex ,567-1,145 PBT 3,158 3,380 4,639 5,168 Other Curr Liabi 2,613 3,546 2,420 3,531 Change in Invest -1,249-4,093 3,889-3,109 Tax 795 1,102 1,572 1,675 Total Liabilities & Equity 19,256 22,551 26,986 32,386 Others , PAT bef. MI & Assoc. 2,363 2,278 3,068 3,493 Net Fixed Assets 7,911 7,731 14,223 14,919 Investing C/F -1,698-4,407 1,555-4,193 Minority Interest Capital WIP 1, , Change in Debt , ,212 Profit from Assoc Others 1,907 3,847 1,247 5,864 Change in Equity ,000 Recurring PAT 2,362 2,276 3,058 3,475 Inventory Others -1,400-1,388-4,902-1,157 Extraordinaires Account Receivables 3,426 3,636 4,480 5,158 Financing C/F -1, , Reported PAT 2,262 3,079 3,498 3,475 Other Current Assets 1, Net change in cash ,212 EPS (Rs) Cash 2,363 5,327 3,992 3,783 RoE (%) 23 % 22 % 22 % 18 % DPS (Rs) Total Assets 19,256 22,551 26,986 32,386 RoIC (%) 17 % 15 % 16 % 14 % CEPS (Rs) Non-cash Working Capital 2, ,821 2,062 Core RoIC (%) 19 % 21 % 21 % 18 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 65 % 42 % 0 % 34 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 22 % 25 % 28 % 28 % FA Turnover P/B PATM (%) 14 % 13 % 15 % 15 % Net D/E P/FCFF Tax Rate (%) 25 % 33 % 34 % 32 % Revenue/Capital Employed EV/EBITDA Sales growth (%) 12 % 4 % 17 % 10 % Capital Employed/Equity EV/Sales FDEPS growth (%) -8 % -3 % 29 % 13 % Dividend Yield (%) 2.3 % 2.0 % 0.0 % 1.7 % January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 9 of 12

10 Equirus Securities Research Analysts Sector/Industry Equity Sales Abhishek Shindadkar IT Services VishadTurakhia AshutoshTiwari Auto, Metals & Mining SubhamSinha Depesh Kashyap Mid-Caps SwetaSheth DevamModi Power & Infrastructure Viral Desai DhavalDama FMCG, Mid-Caps Rushabh Shah Manoj Gori Consumer Durables Dealing Room Maulik Patel Oil and Gas Ashish Shah PrafulBohra Pharmaceuticals IleshSavla Rohan Mandora Banking & Financial Services Manoj Kejriwal Associates Dharmesh Mehta Ankit Choudhary SandipAmrutiya Bharat Celly Compliance Officer Harshit Patel Jay Soni Meet Chande Corporate Communications Nishant Bagrecha MahdokhtBharda ParvaSoni Pranav Mehta RonakSoni Samkit Shah ShreepalDoshi VarunBaxi Vikas Jain Rating & Coverage Definitions: Absolute Rating LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR>= 2 for rest of the companies ADD: ATR >= 5% but less than Ke over investment horizon REDUCE: ATR >= negative but <5% over investment horizon SHORT: ATR < negative over investment horizon Relative Rating OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon BENCHMARK: likely to perform in line with the benchmark UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion. Registered Office: Equirus Securities Private Limited Unit No. 1201, 12th Floor, C Wing, Marathon Futurex, N M Joshi Marg, Lower Parel, Mumbai Tel. No: +91 (0) Fax No:+91-(0) Corporate Office: 3rd floor, House No. 9, Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge, S.G. Highway Ahmedabad Gujarat Tel. No: +91 (0) Fax No:+91 (0) January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 10 of 12

11 2017 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited Analyst Certification I, Depesh Kashyap/Harshit Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclosures Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital Market (Reg. No. INB ), Futures & Options Segment (Reg. No.INF ) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB ) of Bombay Stock Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH ), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993 (Reg. No.INP ) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP ). There are no disciplinary actions taken by any regulatory authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private equity, mergers & acquisitions and structured finance. As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in their proprietary position) 1% or more of the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or Associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ESPL has not been engaged in market making activity for the subject company. The Research Analyst engaged in preparation of this Report:- (a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c) has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company. 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This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. 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. This document is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its research report. Thus, investors should be aware that the firm may have conflict of interest. January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 11 of 12

12 A graph of daily closing prices of securities is available at and (Choose a company from the list on the browser and select the three years period in the price chart). Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Research Analyst or Relatives financial interest Research Analyst or Relatives actual/beneficial ownership of 1% or more Research Analyst or Relatives material conflict of interest No No No Disclaimer for U.S. Persons ESPL/its affiliates are 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 Equirus 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 Equirus, including the products and services described herein are not available to or intended for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition on soliciting the securities business in that jurisdiction without going through the registration requirements and/ or prohibit the use of any information contained in this report. This Report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under certain rules. January 31, 2018 Analysts: Depesh Kashyap, CFA ( )/ Harshit Patel ( ) Page 12 of 12