INDIA DAILY November 8, 2012 India 7-Nov 1-day1-mo 3-mo

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1 INDIA DAILY November 8, 2012 India 7-Nov 1-day1-mo 3-mo Contents Daily Alerts Results Bharti Airtel: 2QFY13 - operationally sound; sharp ETR jump drives PAT miss Tata Motors: JLR remains unperturbed by competition Oil India: So far, so good Cadila Healthcare: Margin disappointment led by currency Reliance Capital: Clearing up Jubilant Foodworks: Not much to nitpick in the results, except valuations Tata Communications: 2QFY13 results disappoint; stock remains a surplus real estate play GSPL: Lower volumes offset by higher tariffs Company Crompton Greaves: The quest continues Sector Technology: Strong performance but with reduced element of surprise Strategy Strategy: Strong ETF inflows across the EM region in October Sensex 18, (0.2) 7.4 Nifty 5, Global/Regional indices Dow Jones 13, (2.7) 0.6 Nasdaq Composite 3, (4.0) (0.1) FTSE 5, Nikkie 8,973 (0.0) Hang Seng 22, KOSPI 1, (2.9) 2.7 Value traded India Cash (NSE+BSE) Derivatives (NSE) 882 1, Deri. open interest 1,389 1,407 1,262 Forex/money market Change, basis points 7-Nov 1-day 1-mo 3-mo Rs/US$ 54.1 (34) 146 (88) 10yr govt bond, % 8.3 (1) (6) (8) Net investment (US$mn) 5-Nov MTD CYTD FIIs ,400 MFs (17) (1) (282) Top movers -3mo basis Change, % Best performers 7-Nov 1-day 1-mo 3-mo UNSP IN Equity UNBK IN Equity FTECH IN Equity MM IN Equity MSIL IN Equity Worst performers BHFC IN Equity (0.4) (14.0) (15.0) NACL IN Equity 45.9 (1.1) (10.1) (14.4) SUEL IN Equity (10.8) (12.6) ABB IN Equity (0.5) (8.3) (8.3) IVRC IN Equity (3.0) (7.8) For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

2 Bharti Airtel (BHARTI) Telecom 2QFY13 operationally sound; sharp ETR jump drives PAT miss. Bharti delivered a solid quarter, in our view. More importantly, we are enthused by early signs of return of focus and financial discipline in the company. Whether this will sustain and how soon will it lead to return of consistent net profit growth are the two questions that will determine the ex-regulations fate of the stock. We keep the faith. We broadly retain our FY2013/14E revenue/ebitda estimates. Reiterate ADD with a target price of Rs300/share our operational fair value estimate is up a tad, but we have increased the regulatory impact in our TP to add increased dose of conservatism. ADD NOVEMBER 07, 2012 RESULT Coverage view: Cautious Price (Rs): 271 Target price (Rs): 300 BSE-30: 18,902 Company data and valuation summary Bharti Airtel Stock data Forecasts/Valuations E 2014E 52-week range (Rs) (high,low) EPS (Rs) Market Cap. (Rs bn) 1,029.5 EPS growth (%) (29.6) (27.8) 59.7 Shareholding pattern (%) P/E (X) Promoters 68.5 Sales (Rs bn) FIIs 16.9 Net profits (Rs bn) MFs 4.0 EBITDA (Rs bn) Price performance (%) 1M 3M 12M EV/EBITDA (X) Absolute 2.0 (7.7) (31.8) ROE (%) Rel. to BSE (14.1) (36.6) Div. Yield (%) Operational focus and financial discipline are back Bharti reported a robust quarter with adjusted financials beating our revenue, EBITDA, EBIT and PBT estimates. Sharp jump in ETR prevented a net income beat. More than the quantitative extent of the operational beat, we are enthused with (1) the quality of the beat, and (2) management commentary in the earnings call at the risk of sounding controversial, the company appeared to us a lot more in control than it has, for the past many quarters. Improved operational focus was visible in (1) volume market share gains in the India wireless business without a profitability compromise, (2) sustained strong data volume growth, likely ahead of the industry, in our view, (3) strong volume/revenue/opm performance and good improvement in quality of minutes in Africa, and (4) robust performance in South Asia business. Improved financial discipline was visible in a few individually small, but collectively meaningful (at least qualitatively) aspects (1) taking leadership in rationalizing subscriber acquisition costs, a material drag on industry profitability, (2) good cost control in corporate overheads, and (3) this does not pertain to 2QFY13 results, but we have been positively surprised with the restraint Bharti has shown in its strategy for the upcoming 1800 MHz auctions. net profit growth and mojo? Not yet Even as the qualitative signs, as discussed above, are encouraging, we emphasize that these need to sustain to drive a sustained reversal in the net profit trajectory of the company. Bharti has reported a consistent decline in PAT for the past several quarters, driven by both execution slippage (RMS loss in India, volatile and somewhat disappointing performance in Africa, sustained weakness in most non-wireless businesses) and some aggressive investment bets (3G, BWA, Africa). Early to say, but the 2QFY13 earnings report, other moves, and channel checks indicate good initial signs of the company addressing both. For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

3 Bharti Airtel Telecom We keep the faith; reiterate ADD We expect sustained (albeit, gradual) improvement in Bharti s operational performance going forward. This is of course contingent on (1) the company sustaining the renewed execution rigor, and (2) no negative surprises as far as competitive intensity in the market is concerned here again, recent signs (smaller operators shutting down operations selectively, industry discipline on SAC) are positive but need to sustain for the Street (and us) to gain more confidence. Regulations remain a wild card indeed; however, (1) we bake in some impact from regulations in our target price, and (2) Bharti is better positioned than most other players in the market to absorb (partially, if not completely) the likely regulatory hit. We broadly retain our revenue and EBITDA estimates for FY2013/14E. Reiterate ADD rating with an unchanged target price of Rs300/share. Our target price bakes in a probabilistic Rs40/share impact of regulatory headwinds. Key risk to our call is sustained irrationality in the market. We have often articulated our struggles in building a DCF-based business case for any of the challengers in the Indian wireless market. However, and this is important, management decisions do not always reflect a DCF-approach; they often reflect an implicit or explicit real-options approach to investment decisions. Our DCF-based outlook on industry structure improvement faces risk on this front. 2QFY13 results detailed analysis Consolidated results operationally robust; sharp ETR jump prevents a PAT beat Before we get into a discussion of Bharti s 2QFY13 results, we note that the company had a one-off impact on various line items (revenues, interconnect costs, other income and tax) from a net favorable TDSAT judgment. We discuss the one-off and its impact on various line items in detail towards the end of the note. Our discussion on results is based on adjusted numbers. Bharti s reported consolidated revenues of Rs196.9 bn (+1.7% qoq, +14% yoy) came in 1.4% ahead of our estimates. EBITDA of Rs61 bn (+4.3% qoq, +4.9% yoy) was 5% ahead, while PBT of Rs11.3 bn was 26% higher than expectations. Net income of Rs4.83 bn (down 37% qoq, down 53% yoy) did miss our estimate of Rs5.1 bn by around 6%, largely driven by a sharp increase in effective tax rate to 59% from 38% in the previous quarter. Consolidated revenue beat was driven by better-than-expected performance across segments except India wireless and Telemedia. Africa, passive infra and Enterprise segment stood out in terms of revenue outperformance. EBITDA beat was again across segments, including a modest beat at the India/SA wireless level as well. We discuss the segment-wise performance below. India/South Asia wireless India/SA wireless revenues declined 1.4% qoq Rs105.3 bn, largely in line with our estimate of Rs104.9 bn. Revenue growth was led by Sri Lanka and Bangladesh businesses, which together grew 16.3% qoq (partly currency translation led); strong growth in South Asia business is on the back of a double-digit sequential growth in the June quarter impressive, in our view. Pure India wireless revenues declined 2.3% qoq to Rs99.8 bn, marginally lower than our estimated Rs100.1 bn. Revenue decline was on account of sequential traffic decline, even as RPM was flat qoq. India/SA wireless EBITDA was down 1.3% qoq and 3% yoy to Rs31.9 bn, beating our estimate by around 2%. EBITDA margin for the quarter was 30.3%, flat qoq but down 340 bps yoy. SG&A savings (of a little over 100 bps) on account of lower subs acquisition costs were mitigated by negative operating leverage on some of fixed costs as volumes declined. KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

4 Telecom Bharti Airtel India wireless total minutes declined 2.1% qoq to bn minutes, largely on account of expected seasonality. Volume performance for the quarter tracked ahead of Idea (which reported 4% decline); however, yoy comp for Idea (+18.3%) remains ahead of Bharti (+7.7%). We believe Bharti may have gained volume market share in the Indian market after several quarters of decline. India wireless ARPU for the quarter was Rs177/sub/month (down 4.1% qoq, down 3.5% yoy), while MOU was 417 min/sub/month (down 3.7% qoq, down 1.6% yoy). India wireless RPM for the quarter was 42.6 paise/min, flat qoq and down1.5% yoy. All the gains from tariff increases in July 2012 and RMS accretion from 3G ICR, data revenue growth, and SMS interconnect charge hike have been given away by aggressive voice tariff discounting. Non-voice revenues formed 16.8% of India wireless revenues for the quarter. Non-voice revenue growth was a modest 0.7% qoq, driven by sustained weakness in messaging and VAS revenues. Messaging and VAS revenues were down 8.7% qoq and 12.5% yoy and now contribute 10.1% of overall revenues. Even as part of the decline was probably on account of the company s push to clean its VAS delivery, we believe there is also a structural element to messaging revenue decline. Data usage growth has the potential to cannibalize messaging revenues as over-the-top messaging applications take away some SMS usage. Pure data revenue contribution increased to 5.2% from 4.3% in the previous quarter. Pure India wireless data revenues for the quarter were Rs5.1 bn, a healthy growth of 16% qoq and 76% yoy (of course, off a still low base). Data revenue growth was driven by a solid 26% data volume growth even as per MB realization fell 8.3% qoq. Bharti reported a total of 40.6 mn data subs, an increase of 1.95 mn over end-june 2012 number. The company also indicated a total of 4 mn active 3G data subs. This is a modest 0.3 mn increased from the end-june base. This was probably the only major disappointment of the quarter. Blended (2G + 3G) data revenue per user was Rs43/month (an uptick from Rs40 in the June quarter) while blended data usage per customer was 133 MB/month, a sharp jump from the 112 MB/month reported for the Jun 2012 quarter. Capex in the India/SA wireless segment was Rs17.4 bn (16.5% of revenues). The company added 3,401 2G cell sites to take the period-end count to 129,411; it also upgraded an additional 2,321 cell sites to 3G, taking the 3G cell site count to 20,333. Bharti s indicated qoq savings on subs acquisition costs of Rs1.1 bn, lower than the Rs1.5 bn indicated by Idea. This is counter-intuitive given the difference in the two company s subs base, even adjusted for Bharti s better churn rate. Bharti highlighted that this could have been on account of higher proportion of post-paid and data dongles as % of gross adds for Bharti as compared to Idea (channel commission on post-paid and dongle sales has not come down). We believe that this could also have been on account of different starting points as far as channel commission per add is concerned. Bharti s commissions could have been lower than Idea earlier and hence, the savings after moving to similar (lower) levels may not be as much. Africa wireless Revenue for the quarter was US$1,097 mn, up 2.8% in functional currency (US$); constant currency growth was 3.7% qoq. Revenues in Re terms were Rs60.5 bn, +5.1% qoq and +29% yoy (KIE estimate was Rs59 bn). EBITDA for the quarter was US$298 mn (up 8.3% qoq, 10.2% yoy) or Rs16.4 bn (+10% qoq, +32% yoy). Our estimate was Rs15.8 bn. 4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

5 Bharti Airtel Telecom EBITDA margin expanded 120 bps qoq to 27.1% versus our estimated 26.7%. Margin improvement was primarily driven by (1) solid 20% qoq volume growth, driving some operational leverage, and (2) sharp improvement in quality of minutes; decline in interconnect costs qoq suggests a traffic-mix move in favor of on-net traffic this was the key highlight of the company s 2QFY13 operational performance in Africa, in our view. Minutes growth was a solid 20% qoq and 32% yoy to 23.6 bn minutes. The company reported strong volume traction in Africa after many quarters. ARPU declined 2.4% qoq to US$6.38/sub/month, while MOU improved to 138 min/sub/month from 120 in the previous quarter. RPM declined 14.6% qoq to US cents 4.6/min tariff reduction and mix change in favor of on-net both impacted this metric. Capex for the quarter was US$210 mn, taking the 1HFY13 capex to US$325 mn. The company retained its FY2013E capex guidance at US$900 mn. Details of the one-off reported in the quarter As highlighted earlier in the note, the company had a one-off impact on various line items (revenues, interconnect costs, other income and tax) from a net favorable TDSAT judgment. We discuss the one-off and its impact on various line items in detail below Consol revenues positive impact of Rs5.86 bn; adjusted revenues of Rs196.9 bn (+1.7% qoq, +14% yoy), 1.4% ahead of expectations. Operating costs negative impact of Rs3.36 bn. Consol EBITDA positive impact of Rs2.5 bn; adjusted consol EBITDA of Rs61 bn (+4.3% qoq, +4.9% yoy) was 5% ahead of our expectation. Consol adjusted EBITDA margin expanded 80 bps qoq to 31%, led by margin expansion in Africa, return to positive EBITDA in DTH, and lower corporate overheads. From a cost perspective, SG&A rationalization was the key driver. D&A no impact of the one-off. Net interest income/(cost) positive impact of Rs946 mn; on account of penalty and interest charges on the prior-period inter-connect settlement. PBT positive impact of Rs3.45 bn (sum of positive impact on EBITDA and penalty/interest income below EBITDA). Adjusted PBT of Rs11.3 bn was down 11% qoq, but came in substantially ahead of our estimate. Beat was also aided by lower-thanexpected forex losses. Tax provisions negative impact of Rs1.06 bn. PAT positive impact of Rs2.38 bn; adjusted PAT was Rs4.83 bn (down 37% qoq, down 53% yoy), 6% lower than our estimate of Rs5.1 bn and a larger miss versus higher consensus estimates. Miss primarily on account of substantially higher-than-expected effective tax rate. India/SA wireless revenues adjusted revenues of Rs105.3 bn versus Rs111.2 bn reported. Down 1.4% qoq, +7.6% yoy, marginally ahead of our expectation. India/SA wireless EBITDA adjusted EBITDA was Rs31.9 bn (down 1.3% qoq, down 3% yoy), 2.2% ahead of our estimate. Adjusted EBITDA margin was flattish qoq at 30.3%; our estimate was a 50 bps decline. Exhibit 1 gives Bharti s interim results as reported, while Exhibit 2 gives adjusted results. KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

6 Telecom Bharti Airtel Exhibit 1: Bharti - 2QFY13E review - reported financials, IFRS, March fiscal year-ends (Rs mn) Change (%) 2QFY12 1QFY13 2QFY13A qoq yoy 2QFY13E Deviation (%) Consolidated results Revenues 172, , , , Operating costs (114,547) (135,014) (139,224) (136,035) EBITDA 58,151 58,487 63, , EBITDA margin (%) Depreciation and Amortization (31,839) (37,571) (38,560) (38,829) EBIT 26,312 20,916 24, (5.2) 19, EBIT margin (%) Net finance (cost)/income (11,186) (8,211) (10,219) (10,257) Other non-financial income/(expense) PBT 15,126 12,705 14, (2.6) 8, Tax provision (4,900) (4,878) (7,714) (3,307) PAT before minority interest 10,226 7,827 7,015 5,631 Minority interest 44 (129) Equity in earnings of affiliates (76) (600) Reported net income 10,270 7,622 7,212 (5.4) (29.8) 5, Reported EPS (5.4) (29.8) 1.3 Segmental performance Wireless - India and SA Revenues 97, , , , EBITDA 32,926 32,350 34, , OPM (%) ARPU (Rs/sub/month) (4.1) (3.5) 178 (0.5) MOU (min/sub/month) (3.7) (1.6) 417 (0.0) RPM (Rs/min) (0.1) (1.5) (0.1) EPM (Rs/min) (2.9) Total minutes (bn) (2.1) (0.1) India wireless revenues 94, ,092 99,779 (2.3) ,050 (0.3) Bharti Africa Revenues (b) 47,032 57,586 60, , EBITDA 12,403 14,924 16, , EBITDA margin (%) Telemedia services Revenues 9,528 9,442 9, ,565 (0.4) EBITDA 4,213 3,809 4, (4.1) 3, OPM (%) Long distance + Enterprise Revenues 11,042 11,906 13, , EBITDA 2,371 1,963 2, (9.4) 1, OPM (%) Capex Others Revenues 3,994 4,475 4, , EBITDA (1,853) (2,518) (2,216) (12.0) 19.6 (2,579) (14.1) OPM (%) (46.4) (56.3) (45.4) (55.0) Source: Company, Kotak Institutional Equities estimates 6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

7 Bharti Airtel Telecom Exhibit 2: Bharti - 2QFY13E review - adjusted financials, IFRS, March fiscal year-ends (Rs mn) Change (%) 2QFY12 1QFY13 2QFY13 Adj qoq yoy 2QFY13E Deviation (%) Consolidated results Revenues 172, , , , Operating costs (114,547) (135,014) (135,863) (136,035) EBITDA 58,151 58,487 61, , Pre re-branding EBITDA 58,151 58,487 61, , EBITDA margin (%) Pre re-branding EBITDA margin (%) Depreciation and Amortization (31,839) (37,571) (38,560) (38,829) EBIT 26,312 20,916 22, (14.7) 19, EBIT margin (%) Net finance (cost)/income (11,186) (8,211) (11,167) (10,257) Other non-financial income/(expense) PBT 15,126 12,705 11,281 (11.2) (25.4) 8, Tax provision (4,900) (4,878) (6,652) (3,307) PAT before minority interest 10,226 7,827 4,629 5,631 Minority interest 44 (129) Equity in earnings of affiliates (76) (600) Reported net income 10,270 7,622 4,826 (36.7) (53.0) 5,126 (5.9) Reported EPS (36.7) (53.0) 1.3 Segmental performance Wireless - India and SA Revenues 97, , ,309 (1.4) , EBITDA 32,926 32,350 31,937 (1.3) (3.0) 31, OPM (%) ARPU (Rs/sub/month) (4.1) (3.5) 178 (0.5) MOU (min/sub/month) (3.7) (1.6) 417 (0.0) RPM (Rs/min) (0.1) (1.5) (0.1) EPM (Rs/min) (10.0) Total minutes (bn) (2.1) (0.1) India wireless revenues 94, ,092 99,779 (2.3) ,050 (0.3) BL/SL wireless revenues 3,771 4,756 5, , Source: Company, Kotak Institutional Equities estimates Exhibit 3: Key changes to Bharti earnings model, March fiscal year-ends, E Revised Earlier Change (%) FY2013E FY2013E adj (a) FY2014E FY2013E FY2014E FY2013E FY2013E adj (a) FY2014E Consolidated Revenues (Rs mn) 813, , , , , EBITDA (Rs mn) 255, , , , , EBIT (Rs mn) 98,040 95, ,836 93, , EPS (Rs/share) (5.4) (12.7) 0.6 EBITDA margin (%) bps 10 bps 13 bps India/SA wireless Revenues (Rs mn) 443, , , , , (0.4) (1.7) EBITDA margin (%) bps 30 bps 55 bps EBITDA (Rs mn) 137, , , , , Subs (mn) (2.4) (4.5) Volumes (bn min) 968 1, ,063 (0.9) (2.1) RPM (paise/min) ARPU (Rs/sub/month) MOU (min/sub/month) Capex (Rs mn) 66,188 49,803 69,104 52,658 (4.2) (5.4) Africa wireless Revenues (US$ mn) 4,524 4,967 4,550 4,971 (0.6) (0.1) EBITDA (US$ mn) 1,241 1,457 1,248 1,458 (0.6) (0.1) EBITDA margin (%) bps 0 bps Capex (US$ mn) (0.6) (0.1) KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

8 Telecom Bharti Airtel Source: Kotak Institutional Equities estimates Exhibit 4: Bharti - target price derivation Mar 2013 NPV impact (Rs mn) Per share impact (Rs/share) Negatives One-time excess (82,379) (22) Spectrum renewal No refarming (328,656) (87) Full refarming (293,052) (77) Partial refarming (306,180) (81) Spectrum refarming impact No refarming Full refarming (192,310) (51) Partial refarming (91,441) (24) Others Change in roaming regulations (94,113) (25) 5 paise/min reduction in termination rate (74,766) (20) 8% license fees on towercos (37,848) (10) Positives Reduction in license fees 16,806 4 Lower USO on meeting rural rollout 117, Net worst-case impact No refarming (483,315) (127) Full refarming (640,020) (169) Partial refarming (552,280) (145) Core business DCF (Rs/share) 340 % of partial refarming case taken 28 Regulatory impact (Rs/share) (41) Target price (Rs/share) 299 Source: Kotak Institutional Equities estimates Exhibit 5: Our 12-month forward DCF-based fair value of core business for Bharti Airtel is Rs340/share E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E EBITDA 199, , , , , , , , , , ,911 Depreciation (102,066) (133,681) (157,082) (170,814) (183,408) (195,698) (207,513) (218,873) (229,881) (240,726) (251,444) EBIT 97, ,441 98, , , , , , , , ,467 Capex (142,190) (135,386) (149,202) (134,447) (138,905) (138,914) (140,389) (140,905) (144,467) (148,996) (153,748) Taxes (17,790) (22,602) (25,599) (27,827) (38,261) (48,896) (58,403) (66,496) (74,674) (82,508) (90,153) Change in working capital 97,624 (25,286) (9,522) (14,465) (8,763) (3,584) (5,912) (8,133) (9,736) (11,195) (12,657) Free cash flow 137,308 53,848 70, , , , , , , , ,353 FCF growth (%) (60.8) Discounted FCF 53,848 70, , , , , , , ,564 95,471 Terminal growth (%) 3.5 WACC (%) 13.0 Exit FCF multiple (X) 10.9 Exit EBITDA multiple (X) 5.3 End-FY2013E DCF PV of explicit cash flows 879,313 46% PV of terminal value 1,040,133 54% EV 1,919,446 Net debt 628,017 Equity value 1,291,429 # of shares outstanding 3,798 Equity value per share (Rs/share) 340 Key assumptions (%) Revenue growth EBITDA growth EBITDA margin Capex/sales KOTAK INSTITUTIONAL EQUITIES RESEARCH

9 Bharti Airtel Telecom Source: Kotak Institutional Equities estimates Exhibit 6: Bharti - India/SA wireless business performance Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Revenues (Rs mn) 83,174 88,237 88,045 91,459 94,948 98,404 97, , , , ,309 Growth qoq (%) (0.2) (0.6) (1.4) EBITDA (Rs mn) 30,237 31,710 30,964 31,954 31,620 33,614 32,926 34,431 35,719 32,350 31,937 Growth qoq (%) (0.5) 4.9 (2.4) 3.2 (1.0) 6.3 (2.0) (9.4) (1.3) EBITDA margin (%) Change qoq (bps) (122) (42) (77) (23) (164) 86 (50) (371) 5 Minutes - India (mn) 172, , , , , , , , , , ,224 Growth qoq (%) (1.9) (2.1) RPM - India (Rs/min) Growth qoq (%) (9.1) (4.6) (0.9) (0.6) (2.4) (0.9) (1.7) (2.6) (0.2) Source: Company, Kotak Institutional Equities Exhibit 7: Bharti - voice and non-voice RPM trends over the past few quarters Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 India wireless revenues (Rs mn) 81,174 85,356 84,786 88,003 91,364 94,735 94,056 97, , ,092 99,760 Voice (Rs mn) 71,628 75,474 74,007 75,872 77,660 79,990 78,957 82,179 84,585 85,446 82,995 Non-voice (Rs mn) 9,546 9,881 10,779 12,131 13,704 14,746 15,099 15,478 16,313 16,646 16,765 Total minutes (mn) 172, , , , , , , , , , ,224 RPM (Rs/min) Voice RPM (Rs/min) Change qoq (%) (9.9) (4.4) (2.1) (1.8) (3.8) (1.5) (2.1) (2.8) (0.7) Non-voice RPM (Rs/min) Change qoq (%) (3.1) (6.1) (1.8) 2.9 Source: Company, Kotak Institutional Equities Exhibit 8: India wireless RPM by segment Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 RPM (Rs/min) India wireless Voice Non-voice SMS and VAS Data Others Contribution (%) India wireless Voice Non-voice SMS and VAS Data Others Growth (%) India wireless (1.7) (2.6) (0.2) Voice (2.1) (2.8) (0.7) Non-voice (1.8) 2.9 SMS and VAS 2.2 (4.6) (4.9) (4.0) (6.7) Data (3.4) Others (1.7) 34.1 KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

10 Telecom Bharti Airtel Source: Company, Kotak Institutional Equities Exhibit 9: Key quarterly operational metrics for Bharti Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 India and South Asia wireless Revenues (Rs mn) 88,045 91,459 94,948 98,404 97, , , , ,170 EBITDA (Rs mn) 30,964 31,689 31,620 33,614 32,926 34,431 35,719 32,350 34,437 EBITDA margin (%) Operational metrics - India wireless Subscribers ('000) 143, , , , , , , , ,922 ARPU (Rs/sub/month) MOU (min/sub/month) RPM (Rs/min) Monthly churn (%) Non-voice revenues as % of total Total minutes carried (mn) 190, , , , , , , , ,224 Network sites (#) 110, , , , , , , , ,411 Wireless segment - Africa Revenues (Rs mn) 38,906 40,347 41,815 43,784 47,032 53,577 53,874 57,586 60,512 EBITDA (Rs mn) 9,311 8,415 10,998 11,053 12,403 14,351 14,983 14,924 16,413 EBITDA margin (%) Subscribers ('000) 40,082 42,124 44,206 46,306 48,437 50,949 53,140 55,855 58,667 ARPU (US$/sub/month) RPM (US$ cents/month) MOU (min/sub/month) Monthly Churn (%) Non Voice Revenue (%) Total min (mn min) 12,782 14,904 14,915 16,337 17,950 18,496 19,131 19,651 23,646 Network Sites (#) 10,998 11,338 11,912 12,703 13,628 14,112 14,831 15,439 15,979 Telemedia services Revenues (Rs mn) 9,118 9,068 9,178 9,457 9,528 9,128 9,159 9,442 9,529 EBITDA (Rs mn) 4,200 4,045 4,147 4,304 4,213 3,542 3,754 3,809 4,039 EBITDA margin (%) Subscribers ('000) 3,216 3,257 3,296 3,322 3,328 3,317 3,270 3,272 3,275 ARPU (Rs/sub/month) Minutes carried (mn) 4,791 4,598 4,535 4,570 4,598 4,186 4,145 4,162 4,156 Enterprise services Revenues (Rs mn) 10,424 10,503 10,179 10,410 11,042 11,881 11,209 11,906 13,934 EBITDA (Rs mn) 2,571 2,260 2,619 2,303 2,371 2,008 1,631 1,963 2,148 EBITDA margin (%) NLD services (mn min) 17,689 18,063 19,542 19,878 20,305 20,551 21,588 22,241 22,997 ILD services (mn min) 3,034 3,192 3,047 3,119 3,519 3,529 3,518 3,362 4,340 Passive Infrastructure Revenues (Rs mn) 21,161 21,972 22,010 22,767 23,766 24,393 24,183 24,048 25,567 EBITDA (Rs mn) 7,858 8,486 8,153 8,585 8,902 9,110 9,346 8,788 9,577 EBITDA margin (%) Bharti Infratel Total Towers (#) 31,831 32,424 32,792 32,942 33,056 33,203 33,326 33,660 34,220 Rentals (per slot per month) 38,041 37,859 36,599 36,203 37,117 37,623 37,277 36,170 36,839 Sharing Factor (X) Indus Towers Total Towers (#) 106, , , , , , , , ,561 Rentals (per slot per month) 31,389 30,847 30,501 31,963 31,112 32,272 32,563 30,139 31,711 Sharing Factor (X) Source: Company, Kotak Institutional Equities 10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

11 Bharti Airtel Telecom Exhibit 10: EBITDA/EPS and fair value estimates under various RPM and volume scenarios RPM sensitivity -1 paise -0.5 paise Base case +0.5 paise +1 paise FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E RPM (Rs/min) Volumes (bn min) 968 1, , , , ,041 Wireless revenues (Rs bn) Consol Revenues (Rs bn) EBITDA (Rs bn) EBITDA margin (%) EPS (Rs/share) Fair value (Rs/share) Change from base case (%) RPM (2.3) (2.3) (1.2) (1.1) Revenues (1.2) (1.2) (0.6) (0.6) EBITDA (3.3) (3.1) (1.6) (1.5) EBITDA margin (bps) (65) (63) (32) (31) EPS (23.4) (14.5) (11.7) (7.3) Fair value (3.9) (2.0) Volume sensitivity -5% -2.5% Base case +2.5% +5% FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E FY2013E FY2014E RPM (Rs/min) Volumes (bn min) , , ,067 1,017 1,093 Wireless revenues (Rs bn) Consol Revenues (Rs bn) EBITDA (Rs bn) EBITDA margin (%) EPS (Rs/share) Fair value (Rs/share) Change from base case (%) RPM Revenues (2.6) (2.6) (1.3) (1.3) EBITDA (5.8) (5.6) (2.9) (2.8) EBITDA margin (bps) (102) (100) (50) (49) EPS (41.3) (26.3) (20.7) (13.1) Fair value (6.9) (3.5) Source: Kotak Institutional Equities estimates Exhibit 11: Bharti - key assumptions driving our model, IFRS, March fiscal year-ends (Rs mn) E 2014E 2015E 2016E 2017E India wireless End-period subs ('000) 127, , , , , , , ,799 Total traffic (bn min) ,041 1,104 1,153 1,194 RPM (Rs/min) ARPU (Rs/sub/month) MOU (Rs/sub/month) EBITDA margin (%) Africa wireless End-period subs ('000) 36,000 44,206 53,140 64,540 75,340 85,540 95, ,140 ARPU (US$/sub/month) MOU (min/sub/month) RPM (US$ cents/min) EBITDA margin (%) Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

12 Telecom Bharti Airtel Exhibit 12: Bharti - segmental financials, IFRS, March fiscal year-ends (Rs mn) E 2014E 2015E 2016E 2017E Revenues Wireless - India and South Asia 331, , , , , , , ,810 Telemedia services 34,154 36,324 37,272 38,326 39,747 41,311 42,934 44,617 Enterprise 44,798 41,292 44,542 53,450 57,726 62,345 67,332 72,719 Passive Infra 70,852 85,555 95, , , , , ,773 Others 5,825 10,317 15,990 19,828 23,397 26,906 30,404 33,748 Wireless - Africa 130, , , , , , ,360 Gross revenues 486, , , , ,140 1,066,210 1,143,334 1,214,027 Intersegment eliminations (68,432) (72,156) (79,684) (90,413) (97,714) (106,621) (114,333) (121,403) Net revenues 418, , , , , ,589 1,029,001 1,092,624 EBITDA Wireless - India and South Asia 128, , , , , , , ,538 Telemedia services 14,729 16,330 15,813 15,905 16,495 17,144 17,818 18,516 Enterprise 12,578 9,947 8,313 8,552 9,381 10,287 11,278 12,362 Passive Infra 24,523 31,737 35,943 38,336 41,242 43,849 45,897 47,787 Others (9,754) (10,316) (9,215) (9,215) (8,715) (8,415) (8,115) (7,815) Wireless - Africa 31,359 52,790 67,621 77,206 90, , ,268 Intersegment eliminations (2,496) (5,376) (3,212) (3,554) (3,743) (3,978) (4,151) (4,287) Total EBITDA 167, , , , , , , ,369 EBITDA margin (%) Wireless - India and South Asia Telemedia services Enterprise Passive Infra Others (167.5) (100.0) (57.6) (46.5) (37.2) (31.3) (26.7) (23.2) Wireless - Africa Total EBITDA margin Source: Company, Kotak Institutional Equities estimates 12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

13 Bharti Airtel Telecom Exhibit 13: Bharti - condensed financials, IFRS, March fiscal year-ends (Rs mn) E 2014E 2015E 2016E 2017E Profit and loss statement Revenues 418, , , , , ,589 1,029,001 1,092,624 EBITDA 167, , , , , , , ,369 EBIT 104,798 97, ,441 98, , , , ,856 PBT 105,136 76,839 65,256 56,886 78, , , ,773 Recurring PAT 89,765 60,467 42,593 30,762 49,141 72,198 92, ,545 Recurring EPS (Rs/share) Balance sheet Total Equity 447, , , , , , , ,800 Borrowings 101, , , , , , , ,007 Other liabilities 161, , , , , , , ,244 Total equity and liabilities 710,940 1,465,064 1,570,616 1,591,074 1,574,389 1,547,025 1,506,469 1,525,051 Net fixed assets 482, , , , , , , ,273 Net intangibles 59, , , , , , , ,890 Cash and equivalents 25,323 9,575 20,300 13,281 14,992 13,110 15,631 88,480 Other assets 143, , , , , , , ,408 Total assets 710,940 1,465,064 1,570,616 1,591,074 1,574,389 1,547,025 1,506,469 1,525,051 Net debt 49, , , , , , , ,815 Cash flow statement Operating cash flow 283, , , , , , ,054 Capex (142,190) (135,386) (149,202) (134,447) (138,905) (138,914) (140,389) Free cash flow 141,283 56,959 70, , , , ,666 Acquisitions (706,100) (45,373) Borrowings 514,810 73,524 (30,000) (65,000) (95,000) (113,225) (50,000) Others 34,259 (74,385) (47,819) (43,200) (47,845) (55,534) (66,816) Total change in cash balances (15,748) 10,725 (7,019) 1,712 (1,883) 2,521 72,850 Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

14 Tata Motors (TTMT) Automobiles JLR remains unperturbed by competition. We highlight that despite tough pricing environment faced by the industry, JLR profitability remains strong driven by strong demand for Land Rover models. We believe JLR s profitability will continue to improve further with new model launches over the next months. We expect standalone operations to revive as MHCV cycle downturn bottoms out over the next 3-6 months. We maintain our BUY rating and target price of Rs320. BUY NOVEMBER 07, 2012 RESULT Coverage view: Neutral Price (Rs): 269 Target price (Rs): 320 BSE-30: 18,902 Company data and valuation summary Tata Motors Stock data Forecasts/Valuations E 2014E 52-week range (Rs) (high,low) EPS (Rs) Market Cap. (Rs bn) EPS growth (%) 58.7 (2.0) 17.8 Shareholding pattern (%) P/E (X) Promoters 34.7 Sales (Rs bn) 1, , ,279.1 FIIs 44.4 Net profits (Rs bn) MFs 1.6 EBITDA (Rs bn) Price performance (%) 1M 3M 12M EV/EBITDA (X) Absolute (4.0) ROE (%) Rel. to BSE-30 (3.8) Div. Yield (%) Customer preference towards SUV continues to aid Land Rover We maintain our BUY call on Tata Motors which is based on (1) we expect SUV share to continue to inch up in overall luxury car volumes as growth will be driven by developing/emerging economies and (2) JLR will improve its market share driven by aggressive model launches over the next months. JLR has remained unperturbed by pricing pressure in the luxury car space. JLR s EBIT grew by 20% yoy in 2QFY13 despite having weak product mix while BMW s automotive EBIT declined by 9% yoy in the same period. We believe JLR s small footprint and fast-growing presence in China is insulating the company from pressures of growing its volumes at the expense of operating margins. We believe 2HFY13 will decide the course of this stock as success of new Range Rover, XF sportsback and ramp-up in Evoque volumes will be keenly watched by investors. Management highlighted on the conference call that pricing remains stable for JLR and new Range Rover has got good initial response from customers, which are key positive triggers for the stock. CV cycle should bottom out over the next 3-6 months We expect standalone business performance to improve as commercial vehicle cycle bottoms out over the next 3-6 months driven by improvement in agricultural demand, stable consumption and replacement demand (domestic truck volumes are likely to be flat over FY period). Standalone business performance has been impacted by significant decline in MHCV volumes and deterioration in passenger car business profitability in 1HFY13. We expect standalone profitability to revive in FY2014E on the back of revival in CV cycle. We maintain our BUY rating and unchanged target price of Rs320 We have maintained our target price at Rs320 and earnings estimates for FY2014. We have increased our consolidated earnings estimates by 14% in FY2013 as we believe risk to deterioration in pricing in JLR operations has reduced significantly and EBITDA margins are unlikely to fall below 15% which drives our earnings changes. For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

15 Tata Motors Automobiles JLR beats estimates due to better operating performance JLR reported net sales of GBP3.3 bn (+13% yoy, -10% qoq) which were in line with our estimates. JLR s average selling price declined by 3% qoq driven by lower share of Range Rover in the product mix. Gross margins improved by 170 bps qoq driven by positive currency impact in the quarter. EBITDA margins increased by 30 bps qoq which were 60 bps above our estimates driven by 170 bps qoq improvement in gross margins. Other expenses declined by 9% sequentially in line with decline in sales while staff costs increased by 4% qoq due to addition of new employees in the Solihull and Halewood plants. JLR reported an EBITDA of GBP486 mn (+16% yoy, -8% qoq) which was 3% above our estimates. Tax rate in JLR increased to 34.6% in 2QFY13 due to deferred tax asset recognized during the quarter. JLR also reported a forex gain of GBP67 mn attributed to the forward hedges taken by the company which had no cash flow impact. JLR also reported a free cash flow of GBP106 mn in 2QFY13 and has reduced gross debt by GBP235 mn since March 2012 despite high capex requirements in the business. Evoque continues to drive volume growth but new Range Rover will be key to operating margins JLR reported a volume growth of 14% yoy supported by 24% yoy growth in Land Rover volumes. Addition of Evoque volumes and 22% yoy growth in Range Rover Sports boosted volume growth while all other models were under pressure. Freelander volumes have been impacted by capacity constraints (Evoque and Freelander are made at the same plant and company has given priority to Evoque). Freelander volume growth is likely to improve from 2HFY13E onwards as company has added a third shift in Halewood plant to increase Freelander capacity. Management indicated that customer response to the new Range Rover has been good. We are bullish on JLR s volume growth due to exciting new launches in 2HFY13E. Company has launched XF Sportbrake, new Range Rover and will launch a 2-liter petrol engine in Jaguar XF/XJ for the China market and all-wheel-drive XF/XJ for the US market over the next few months. We forecast JLR volumes to grow by 14% yoy in FY2013E and by 13% yoy in FY2014E driven by new model launches and increase in dealership presence in China. KOTAK INSTITUTIONAL EQUITIES RESEARCH 15

16 Automobiles Tata Motors JLR surprised positively with 16% increase in EBITDA yoy driven by 220 bps yoy improvement in gross margins JLR interim financial results, March fiscal year-ends (GBP mn) % change 2QFY13 2QFY13E 2QFY12 1QFY13 2QFY13E 2QFY12 1QFY13 1HFY13 1HFY12 % chg Volumes (units) 77,442 77,442 68,000 83, (7.2) 160, , Average realization 42,458 42,832 42,868 43,594 (0.9) (1.0) (2.6) 43,053 43,185 (0.3) Sales 3,288 3,317 2,915 3,638 (0.9) 12.8 (9.6) 6,927 5, Raw materials 2,072 2,067 1,902 2, (12.0) 4,425 3, Staff costs (4.8) Other expenses (7.6) 16.2 (8.8) Total expenses 2,802 2,847 2,495 3,111 (1.6) 12.3 (9.9) 5,914 4, EBITDA (7.8) 1, Interest expense (net) (50.0) (90.3) (50.0) 9 52 (82.7) Depreciation expense (8.5) 5.3 (1.7) Profit before tax (9.0) Tax expense Forex gains/(losses) 67 (50) (60) (67) (1) (57) (99.1) Profit after tax JLR volume mix (units) Jaguar 9,832 13,306 11,774 (26.1) (16.5) 21,606 24,649 (12.3) Land Rover 67,610 54,694 71, (5.7) 139, , Product Mix (%) Jaguar Land Rover Geographical Mix - Wholesale Volumes (units) Asia Pacific 3,947 2,952 3, ,668 6, China 16,374 11,117 18, (11.8) 34,938 20, Europe 14,659 15,549 18,090 (5.7) (19.0) 32,749 28, North America 13,157 11,728 14, (11.2) 27,967 24, United Kingdom 15,361 15,080 12, ,301 27, Rest of World 13,944 11,574 15, (9.0) 29,271 22, Modelwise wholesale volumes (units) XF 6,671 8,567 7,388 (22.1) (9.7) 14,059 15,016 (6.4) XJ 2,090 3,441 3,585 (39.3) (41.7) 5,675 7,167 (20.8) XK 1,071 1, (17.5) ,872 2,466 (24.1) Jaguar 9,832 13,306 11,774 (26.1) (16.5) 21,606 24,649 (12.3) Defender 3,601 5,116 3,389 (29.6) 6.3 6,990 9,799 (28.7) Discovery 10,869 10,679 10, ,916 22,119 (5.4) Freelander 10,401 12,296 11,243 (15.4) (7.5) 21,644 24,616 (12.1) Range Rover 4,436 6,558 7,378 (32.4) (39.9) 11,814 14,493 (18.5) Range Rover Evoque 23,340 7,772 27, (14.2) 50,547 7, Range Rover Sport 14,963 12,273 12, ,377 26, Land Rover 67,610 54,694 71, (5.7) 139, , Currency Movement (average) GBPUSD (1.7) 0.0 GBPEUR GBPINR Ratios (%) EBITDA margin (%) Raw material exp to sales Staff cost to sales Other expenses to sales Tax rate (%) Source: Company, Kotak Institutional Equities estimates 16 KOTAK INSTITUTIONAL EQUITIES RESEARCH

17 Tata Motors Automobiles JLR capitalization rate of R&D expense declined qoq and yoy Break-up of JLR R&D and capex spend, March fiscal year-ends (GBP mn) 2QFY13 1QFY13 4QFY12 3QFY12 2QFY12 1QFY12 R&D expense Capitalized Expensed Total R&D expense Investment in tangible and other intangible assets Total product and other investment Of which capitalized R&D capitalized as % of total R&D Source: Company, Kotak Institutional Equities JLR generated a free cash of GBP212 mn in 1HFY13 JLR's cash flow summary statement, March fiscal year-ends (GBP mn) 2QFY13 1QFY13 4QFY12 3QFY12 2QFY12 1QFY12 Cash from operating activities Working capital changes and tax paid 52 (39) Cash flow from operations Investment in tangible and intangible assets (444) (377) (405) (316) (347) (374) Other (including finance income) 26 (3) (82) (15) (9) (23) Free cash flow Investment in financial deposits (200) (175) Changes in debt (91) (144) (155) 280 Finance expenses and fees paid (21) (60) (20) (62) (7) (39) Net change in cash and cash equivalents (356) (273) (43) 355 Cash and cash equivalents at beginning of period 2,157 2,430 1,687 1,340 1,383 1,028 Cash and cash equivalents at end of period 1,801 2,157 2,430 1,687 1,340 1,383 Source: Company, Kotak Institutional Equities Except Evoque volume growth of other models continues to remain under pressure JLR modelwise volume mix, March fiscal year-ends (units) Models 2QFY13 2QFY12 1QFY13 YoY chg (%) QoQ chg (%) XF 6,671 8,567 7,388 (22.1) (9.7) XJ 2,090 3,441 3,585 (39.3) (41.7) XK 1,071 1, (17.5) 33.7 Jaguar 9,832 13,306 11,774 (26.1) (16.5) Defender 3,601 5,116 3,389 (29.6) 6.3 Discovery 10,869 10,679 10, Freelander 10,401 12,296 11,243 (15.4) (7.5) Range Rover 4,436 6,558 7,378 (32.4) (39.9) Range Rover Evoque 23,340 7,772 27, (14.2) Range Rover Sport 14,963 12,273 12, Land Rover 67,610 54,694 71, (5.7) Source: Company, Kotak Institutional Equities KOTAK INSTITUTIONAL EQUITIES RESEARCH 17

18 Automobiles Tata Motors We expect China contribution to increase in overall volumes over the next few years Geography-wise volume mix, March fiscal year-ends, E (units, %) Geography E 2014E 2015E N.A 52,618 58,327 64,160 71,859 77,608 UK 58,464 61,796 61,796 69,212 74,748 Europe (excl Russia and UK) 54,566 71,580 80,170 89,790 96,973 Russia 11,693 15,201 16,721 20,065 21,671 China 26,796 54,532 79,071 94, ,374 Asia Pac (excl China) 13,000 14,467 16,637 18,633 20,124 Rest of World 26,463 38,530 39,461 40,670 42,303 Total volumes 243, , , , ,801 Yoy growth (%) Geographical mix (%) N.A UK Europe (excl Russia and UK) Russia China Asia Pac (excl China) Rest of World Source: Company, Kotak Institutional Equities estimates We expect Evoque to contribute ~30% of JLR's volumes over the next few years JLR modelwise volume mix assumptions, March fiscal year-ends, E (units, %) E 2014E 2015E XF 33,651 42,000 50,100 52,605 XJ 15,843 15,000 16,500 17,325 XK 4,545 3,800 3,990 4,190 Jaguar 54,039 60,800 70,590 74,120 Defender 19,290 16,397 16,397 18,036 Discovery 46,466 41,819 39,728 43,701 Freelander 46,977 50,000 60,000 64,800 Range Rover 31,209 30,000 36,000 37,800 RRSport 56,235 54,000 64,800 69,984 Evoque 60, , , ,360 Land Rover 260, , , ,681 Total volumes 314, , , ,801 Modelwise mix (%) XF XJ XK Defender Discovery Freelander Range Rover RRSport Evoque Source: Company, Kotak Institutional Equities estimates 18 KOTAK INSTITUTIONAL EQUITIES RESEARCH

19 Tata Motors Automobiles Standalone operations impacted by adverse pricing in MHCV/passenger car business Company reported a standalone adjusted profit of Rs255 mn in 2QFY13 which was significantly below our estimates. Standalone net revenues of Rs125 bn (-4% yoy, 18% qoq) was 3% below our estimates due to higher than expected deterioration in pricing in MHCV/passenger car segment. Gross margins declined by 410 bps qoq but company controlled other expenses to limit the impact on EBITDA margins. EBITDA margins declined by 140 bps qoq in 2QFY13. We believe MHCV volumes should start recovering from 4QFY13 which should aid improvement in profitability of standalone business. Other income was boosted by Rs13 bn dividend income from JLR to standalone operations. Company also took a write-off of Rs1,750 mn in the Tata Hispano (subsidiary in Spain). Inventory turnover (days) increased to 60 days in Sep 2012 from 43 days in March 2012 while debtor days increased to 23 days in Sep 2012 from 18 days in March Total gross debt increased to Rs156 bn in Sep 2012 versus Rs110 bn in March 2012 due to increase in working capital loans and capex funding. Standalone operations were significantly below estimates driven by adverse pricing in MHCV and passenger car business Tata Motors standalone interim financial results, March fiscal year-ends (Rs mn) % change 2QFY13 2QFY13E 2QFY12 1QFY13 2QFY13E 2QFY12 1QFY13 1HFY13 1HFY12 % chg Volumes (units) 223, , , , , , Average realization 616, , , ,995 (3.6) (7.5) , ,674 (7.0) Gross sales 137, , , ,575 (3.6) (2.1) , ,220 (5.8) Excise duty 13,179 14,887 11,429 10,711 (11.5) ,890 21, Net sales 124, , , ,864 (2.7) (3.6) , ,517 (7.2) Raw materials 92,749 92,000 95,761 74, (3.1) , ,073 (6.2) Staff costs 7,492 7,100 6,829 7, ,561 13, Other expenses 18,038 20,090 18,219 17,469 (10.2) (1.0) ,507 39,609 (10.4) Total expenses 118, , ,809 98,866 (0.8) (2.1) , ,722 (5.9) EBITDA 6,536 9,069 8,729 6,998 (27.9) (25.1) (6.6) 13,534 17,795 (23.9) Other income 14,393 14, , , ,864 1,723 Interest expense 3,668 3,100 2,121 3, ,860 4, Depreciation expense 4,472 4,400 3,869 4, ,765 6, Profit before tax before exceptional 12,790 15,769 3,307 3,983 (18.9) ,773 7, Extraordinary income (725) 24 Extraordinary exp 2,549 2,942 1,610 4,158 2, Profit before tax 10,241 15, ,373 (31.9) 2, ,615 5, Tax expense 1,570 2,342 (655) 320 (33.0) (339.6) ,890 (5) Profit after tax 8,671 12,701 1,020 2,053 (31.7) ,725 5, Adj PAT 255 1,736 3,080 3,180 (85.3) (91.7) (92.0) 4,683 7,076 (33.8) Segmental volume breakdown (units) MHCV 45,488 45,488 54,438 37,151 (16.4) , ,554 (20.2) LCV 103, ,179 90,044 89, , , Passenger cars 60,442 60,442 54,915 52, , ,745 (2.3) Utility vehicles 14,556 14,556 12,003 11, ,724 22, Product Mix (%) MHCV LCV Passenger cars Utility vehicles Ratios (%) Excise duty as a % of gross sales Raw material cost as % of net sales Staff cost as % of net sales Other expenses as % of net sales EBITDA margin (%) Diluted no of shares 3,218 3,218 3,218 3,218 3,218 3,218 EPS Tax rate (%) (179.5) (0.1) Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 19