Cadila Healthcare Ltd.

Transcription

1 Cadila Healthcare Ltd. Absolute : Short Relative : Underweight Update Note: Estimate ( ), TP ( ), Rating ( ) Regular Coverage -7% ATR in 12 months USFDA raises concern in recently approved Sez facility Pharmaceuticals 2016 Equirus All rights reserved Rating Information Price (Rs) 318 Target Price (Rs) 294 Target Date 31st Mar 17 Target Set On 11th Apr'16 Implied yrs of growth (DCF) 20 Fair Value (DCF) 291 Fair Value (DDM) 59 Ind Benchmark BSETHC Model Portfolio Position - Stock Information Market Cap (Rs Mn) 325,192 Free Float (%) % 52 Wk H/L (Rs) 454.4/295 Avg Daily Volume (1yr) 1,389,156 Avg Daily Value (Rs Mn) 507 Equity Cap (Rs Mn) 1,024 Face Value (Rs) 1 Bloomberg Code CDH IN Ownership Recent 3M 12M Promoters 74.8 % 0.0 % 0.0 % DII 7.8 % 1.8 % 1.0 % FII 6.6 % 0.0 % 0.0 % Public 10.9 % -0.7 % 0.4 % Price % 1M 3M 12M Absolute -7.8 % 0.8 % % Vs Industry -3.1 % 5.9 % 4.2 % IPCALAB -9.6 % % % TORNTPHARM 12.8 % 2.6 % 16.8 % Consolidated Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (15A) EPS (16E) Cadila s recently approved Sez facility received 3 form-483 observations from the USFDA. Our analyses of form-483 suggest that 1) Their incomplete Investigation and root cause analysis for OOS (out-of specification) is now becoming companywide issue- which was there in Moraiya observations too, 2) Indicates towards probable delay in Moraiya resolution. During Moraiya warning letter conference call, management conceded that the issues related to incomplete analysis of OOS are still pending and they have discontinued manufacturing Warfarin tablets due to which issues were raised by the USFDA. As the same issue has repeated in the new facility too, we see it as a threat to Moriaya resolution and it might delay the complete Moraiya resolution. Management is expecting 15 products to be approved from Baddi and this Sez facility in FY17. Although it is unclear whether this facility will get an OAI/warning letter or not, however, we see high risk of delay in Moraiya resolution to mid FY18. Thus we cut down PE multiple to 18x (from 19x earlier) and maintain our Short rating on the stock with the March 17 target price of Rs Please click here to view the Form-483. No Change in estimates Consolidated Financials Rs. Mn YE Mar FY15A FY16E FY17E FY18E Sales 86,513 99, , ,882 EBITDA 17,557 25,113 25,137 28,139 Depreciation 2,873 3,033 3,851 4,005 Interest Expense Other Income Reported PAT 11,506 16,135 16,648 18,989 Recurring PAT 11,589 16,178 16,696 19,037 Total Equity 42,515 55,776 69,550 85,664 Gross Debt 23,340 23,131 23,431 23,812 Cash 7,911 16,180 26,148 37,668 Rs Per Share FY15A FY16E FY17E FY18E Earnings Book Value Dividends FCFF P/E (x) P/B (x) EV/EBITDA (x) ROE (%) 30 % 33 % 27 % 25 % Core ROIC (%) 20 % 25 % 24 % 22 % EBITDA Margin (%) 20 % 25 % 23 % 23 % Net Margin (%) 13 % 16 % 15 % 15 % April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com ( / ) Page 1 of 9 Before reading this report, you must refer to the disclaimer on the last page.

2 Exhibit: 1 List of observations: Cadila Healthcare Ltd. Absolute Short Relative Underweight -7% ATR in 12 months Observation Root cause mentioned by the company Documented action mentioned by the company USFDA comments Incomplete written records of investigation into unexplained discrepancies Investigation of product that was found to contain metal particles was incomplete May be excessive compression force on the tablet punches. To discard the punches Investigation didn't continue to determine what could be done to prevent punches from damages and to prevent contamination in the future not "just for this product but other tablets made at this facility". OOS investigation for a product was reported on 6- June-2015 May be momentary malfunction of instrument - No specific cause of malfunction was fully pursed, determined and documented. No actions were taken to prevent recurrence Incomplete OOS investigation of product in pursuing root cause and determining preventive actions. New centrifuge tubes were contaminated during sample preparation. Instructed analysts to "take care during sample preparation". No report as to how these tubes could have been contaminated with related substance. Root cause was not fully pursued. In drug processes, company is using something, which fails to be fully tested to show it meets standards. Written procedures fail to include description in sufficient detail of methods, equipments and materials used and parameters relevant to cleaning operations. April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 2 of 9

3 Company Snapshot How we differ from Consensus EPS Sales PAT Key Estimates: Cadila Healthcare Ltd. Absolute Short Relative Underweight -7% ATR in 12 months - Equirus Consensus % Diff Comment FY16E % Due to Export incentives FY17E % FY16E 99,356 98,947 0 % FY17E 110, ,839 0 % FY16E 16,135 15,139 7 % FY17E 16,648 16,712 0 % Particular (Rs. Mn) FY14A FY15A FY16E FY17E FY18E Domestic formulations 24, US 21, Brazil 2, Europe and Ems 7, All JV Sales 4, Sensitivity to Key Variables % Change % Impact on EPS EBITDA Margin -1 % -5 % DCF Valuations & Assumptions Rf Beta Ke Term. Growth Debt/IC in Term. Yr 7.5 % % 3.0 % 32.4 % - FY16E FY17E FY18-20E FY21-25E FY26-30E Sales Growth 15 % 11 % 12 % 10 % 8 % NOPAT Margin 16 % 15 % 15 % 15 % 15 % IC Turnover RoIC 24.8 % 24.3 % 20.3 % 19.4 % 19.2 % Years of strong growth Valuation as on date (Rs) Valuation as of Mar Based on DCF, assuming 20 years of growth and 21.6% average ROIC, we derive current fair value of Rs. 264 and 31 st Mar 2017 fair value of Rs Risk to Our View: Upside risk Launch of some undisclosed high value products in US that can lead to better margin expansion Down side risk As the domestic business is witnessing many challenges, its margins may impact overall margins of the company in a big way. Key triggers Higher than expected domestic formulations growth Limited competition launches in nasals and injectables in US Company Description: CDH is a leading Indian pharmaceutical company with global presence. With ~3.8% market share in domestic formulations business, CDH is ranked 6th in the domestic market. It has distinct presence in US, Spain, France, Japan, Brazil and many emerging markets. In the past, CDH entered strategic collaborations with Hospira & Nycomed for formulation and API exports. With 14 manufacturing facilities (9 formulation, 5 APIs), 4 R&D centers, 4500 MRs; >1050 dedicated scientists and significant capacity expansion plans CDH is eyeing $3Bn revenues by 2015 & patent molecules of its own by Comparable valuation Mkt Cap Price Target EPS P/E BPS P/B RoE Div Yield Company Reco. CMP Rs. Mn. Target Date FY13A FY16E FY17E FY13A FY16E FY17E FY13A FY16E FY13A FY16E FY17E FY13A FY16E Cadila Healthcare Short , stMar' % 33 % 27 % 2.4 % 0.8 % IPCA Short , st Mar' % 5 % 15 % 0.8 % 1.0 % Torrent Pharma Long 1, ,035 1,779 31st Mar % 59 % 31 % 1.6 % 1.5 % April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 3 of 9

4 Consolidated Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q15A 2Q15A 3Q15A 4Q15A 1Q16A 2Q16A 3Q16A 4Q16E 1Q17E 2Q17E 3Q17E 4Q17E FY15A FY16E FY17E FY18E Revenue 20,500 21,080 21,895 22,882 25,007 24,595 24,284 25,471 26,999 27,921 27,024 28,416 86,513 99, , ,882 COGS 8,133 8,221 7,591 8,021 8,480 8,066 7,996 8,390 8,911 9,972 9,666 10,140 31,967 32,932 38,689 44,387 Employees Cost 2,901 2,873 3,170 3,141 3,230 3,340 3,175 3,200 3,715 3,841 3,651 3,680 12,085 12,945 14,887 16,822 Other Expenditure 5,706 5,777 6,661 6,762 7,281 6,976 7,326 6,783 8,327 7,987 7,593 7,739 24,905 28,366 31,646 35,534 EBITDA 3,760 4,210 4,472 4,959 6,015 6,213 5,787 7,098 6,046 6,121 6,114 6,856 17,557 25,113 25,137 28,139 Depreciation ,873 3,033 3,851 4,005 EBIT 3,083 3,477 3,765 4,203 5,278 5,480 5,017 6,304 5,083 5,158 5,151 5,894 14,685 22,080 21,287 24,134 Interest Other Income PBT 3,006 3,451 3,703 4,244 5,353 5,591 5,146 6,276 5,062 5,142 5,130 5,881 14,560 22,366 21,215 24,141 Tax ,723 1,580 1,149 1,401 1,012 1,028 1,026 1,176 2,594 5,853 4,243 4,828 PAT bef. MI & Assoc. 2,482 2,879 2,912 3,536 3,630 4,011 3,997 4,874 4,049 4,114 4,104 4,705 11,966 16,513 16,972 19,313 Minority Interest Profit from Assoc Recurring PAT 2,413 2,779 2,773 3,468 3,555 3,912 3,905 4,805 3,980 4,045 4,035 4,636 11,589 16,178 16,696 19,037 Extraordinaries Reported PAT 2,401 2,802 2,819 3,504 3,534 3,909 3,896 4,796 3,968 4,033 4,023 4,624 11,506 16,135 16,648 18,989 EPS (Rs) Key Drivers Domestic Formulation Revenues 6,749 6,808 6,418 6,797 7,416 7,513 7,130 7,613 8,356 8,465 8,036 8,576 26,772 29,672 33,432 37,620 International Revenues 10,670 11,095 12,299 13,202 13,615 13,466 13,974 13,935 14,503 15,300 15,214 15,822 47,266 54,991 60,839 70,289 Revenues from JVs 1,189 1,136 1,217 1,169 1,459 1,423 1,002 1,169 1,459 1,423 1,002 1,169 4,711 5,053 5,053 5, Sequential Growth (%) Revenue 4 % 3 % 4 % 5 % 9 % -2 % -1 % 5 % 6 % 3 % -3 % 5 % COGS 5 % 1 % -8 % 6 % 6 % -5 % -1 % 5 % 6 % 12 % -3 % 5 % EBITDA 5 % 12 % 6 % 11 % 21 % 3 % -7 % 23 % -15 % 1 % 0 % 12 % EBIT 1 % 13 % 8 % 12 % 26 % 4 % -8 % 26 % -19 % 1 % 0 % 14 % Recurring PAT -10 % 15 % 0 % 25 % 3 % 10 % 0 % 23 % -17 % 2 % 0 % 15 % EPS -4 % 15 % 0 % 25 % 3 % 10 % 0 % 23 % -17 % 2 % 0 % 15 % Yearly Growth (%) Revenue 25 % 21 % 16 % 16 % 22 % 17 % 11 % 11 % 8 % 14 % 11 % 12 % 20 % 15 % 11 % 13 % EBITDA 32 % 62 % 27 % 38 % 60 % 48 % 29 % 43 % 1 % -1 % 6 % -3 % 46 % 43 % 0 % 12 % EBIT 29 % 67 % 25 % 37 % 71 % 58 % 33 % 50 % -4 % -6 % 3 % -7 % 47 % 50 % -4 % 13 % Recurring PAT 14 % 39 % 5 % 29 % 47 % 41 % 41 % 39 % 12 % 3 % 3 % -4 % 41 % 40 % 3 % 14 % EPS 23 % 51 % 12 % 38 % 47 % 41 % 41 % 39 % 12 % 3 % 3 % -4 % 41 % 40 % 3 % 14 % Margin (%) EBITDA 18 % 20 % 20 % 22 % 24 % 25 % 24 % 28 % 22 % 22 % 23 % 24 % 20 % 25 % 23 % 23 % EBIT 15 % 16 % 17 % 18 % 21 % 22 % 21 % 25 % 19 % 18 % 19 % 21 % 17 % 22 % 19 % 19 % PBT 15 % 16 % 17 % 19 % 21 % 23 % 21 % 25 % 19 % 18 % 19 % 21 % 17 % 23 % 19 % 19 % PAT 12 % 13 % 13 % 15 % 14 % 16 % 16 % 19 % 15 % 14 % 15 % 16 % 13 % 16 % 15 % 15 % April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 4 of 9

5 Mar/08 Sep/08 Mar/09 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 Mar/08 Sep/08 Mar/09 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 Mar/08 Sep/08 Mar/09 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 Consolidated Financials Cadila Healthcare Ltd. Absolute Short Relative Underweight -7% ATR in 12 months P&L (Rs Mn) FY15A FY16E FY17E FY18E Balance Sheet (Rs Mn) FY15A FY16E FY17E FY18E Cash Flow (Rs Mn) FY15A FY16E FY17E FY18E Revenue 86,513 99, , ,882 Equity Capital 1,024 1,024 1,024 1,024 PBT 14,560 22,366 21,215 24,141 Op. Expenditure 68,956 74,244 85,222 96,743 Reserve 41,492 54,753 68,526 84,640 Depreciation 2,873 3,033 3,851 4,005 EBITDA 17,557 25,113 25,137 28,139 Networth 42,515 55,776 69,550 85,664 Others Depreciation 2,873 3,033 3,851 4,005 Long Term Debt 23,340 23,131 23,431 23,812 Taxes Paid 3,869 5,853 4,243 4,828 EBIT 14,685 22,080 21,287 24,134 Def Tax Liability 2, Change in WC -3,770-1,431-2,242-2,998 Interest Expense Minority Interest 1,689 2,024 2,300 2,576 Operating C/F 9,936 18,073 18,533 20,272 Other Income Account Payables 10,909 16,901 18,773 21,244 Capex -4,955-5,359-6,000-6,271 PBT 14,560 22,366 21,215 24,141 Other Curr Liabi 9,905 2,722 3,024 3,421 Change in Invest Tax 2,594 5,853 4,243 4,828 Total Liabilities & Equity 90, , , ,491 Others PAT bef. MI & Assoc. 11,966 16,513 16,972 19,313 Net Fixed Assets 41,501 44,650 42,999 41,283 Investing C/F -4,647-5,359-6,000-6,271 Minority Interest Capital WIP ,178 7,160 Change in Debt , Profit from Assoc Others Change in Equity Recurring PAT 11,589 16,178 16,696 19,037 Inventory 15,357 17,694 19,653 22,239 Others -3,020-16,072-2,865-2,862 Extraordinaires Account Receivables 15,884 13,610 15,118 17,107 Financing C/F -3,511-4,445-2,565-2,481 Reported PAT 11,506 16,135 16,648 18,989 Other Current Assets 9,487 9,663 10,612 11,903 Net change in cash 1,778 8,269 9,968 11,520 FDEPS (Rs) Cash 7,911 16,180 26,148 37,668 RoE (%) 30 % 33 % 27 % 25 % DPS (Rs) Total Assets 90, , , ,491 RoIC (%) 19 % 22 % 19 % 19 % CEPS (Rs) Non-cash Working Capital 19,913 21,344 23,586 26,584 Core RoIC (%) 20 % 25 % 24 % 22 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 15 % 18 % 17 % 15 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 20 % 25 % 23 % 23 % FA Turnover P/B PATM (%) 13 % 16 % 15 % 15 % Net D/E P/FCFF Tax Rate (%) 18 % 26 % 20 % 20 % Revenue/Capital Employed EV/EBITDA Sales Growth (%) 20 % 15 % 11 % 13 % Capital Employed/Equity EV/Sales FDEPS Growth (%) 41 % 40 % 3 % 14 % Dividend Yield (%) 2.4 % 0.8 % 0.8 % 0.8 % 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 60% 50% 40% 30% 20% 10% 0% -10% 34x 24x 18x 12x 6x EBITDA Growth 50% 24x 45% 20x 40% 35% 15x 30% 25% 10x 20% 15% 5x 10% 5% 0% RoE 10x 50% 7x 40% 6x 30% 5x 4x 20% 10% 0% April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 5 of 9

6 Historical Consolidated Financials P&L (Rs Mn) FY12A FY13A FY14A FY15A Balance Sheet (Rs Mn) FY12A FY13A FY14A FY15A Cash Flow (Rs Mn) FY12A FY13A FY14A FY15A Revenue 52,633 63,581 72,240 86,513 Equity Capital 1,024 1,024 1,024 1,024 PBT 7,942 8,112 9,594 14,560 Op. Expenditure 41,795 52,324 60,239 68,956 Reserve 24,836 29,379 33,366 41,492 Depreciation 1,579 1,828 2,012 2,873 EBITDA 10,839 11,257 12,001 17,557 Networth 25,860 30,403 34,390 42,515 Others 1, Depreciation 1,579 1,828 2,012 2,873 Long Term Debt 20,094 26,814 22,646 23,340 Taxes Paid 1,435 2,720 1,728 3,869 EBIT 9,260 9,429 9,989 14,685 Def Tax Liability 2,328 2,119 2,270 2,113 Change in WC -4,217-2, ,770 Interest Expense 1,827 1, Minority Interest 904 1,193 1,443 1,689 Operating C/F 5,019 6,034 8,870 9,936 Other Income Account Payables 5,455 6,558 9,108 10,909 Capex -12,273-7,133-4,576-4,955 PBT 7,942 8,112 9,594 14,560 Other Curr Liabi 9,590 7,704 10,008 9,905 Change in Invest Tax 1,130 1,195 1,060 2,594 Total Liabilities & Equity 64,230 74,791 79,865 90,471 Others PAT bef. MI & Assoc. 6,812 6,917 8,534 11,966 Net Fixed Assets 20,296 25,460 31,238 41,501 Investing C/F -11,903-6,823-4,222-4,647 Minority Interest Capital WIP 4,492 4,492 8,915 0 Change in Debt 11,978 6,285-2, Profit from Assoc Others 8,834 8, Change in Equity Recurring PAT 6,526 6,553 8,208 11,589 Inventory 10,905 12,136 13,675 15,357 Others -3,380-3,427-3,055-3,020 Extraordinaires Account Receivables 9,209 9,551 11,337 15,884 Financing C/F 8,598 2,858-5,287-3,511 Reported PAT 6,526 6,553 8,036 11,506 Other Current Assets 5,798 7,568 8,346 9,487 Net change in cash 1,714 2, ,778 EPS (Rs) Cash 4,696 6,754 6,132 7,911 RoE (%) 27 % 23 % 25 % 30 % DPS (Rs) Total Assets 64,230 74,790 79,865 90,471 RoIC (%) 19 % 15 % 15 % 19 % CEPS (Rs) Non-cash Working Capital 10,868 14,994 14,242 19,913 Core RoIC (%) 20 % 16 % 16 % 20 % FCFPS (Rs) Cash Conv Cycle Div Payout (%) 26 % 26 % 21 % 15 % BVPS (Rs) WC Turnover P/E EBITDAM (%) 21 % 18 % 17 % 20 % FA Turnover P/B PATM (%) 12 % 10 % 11 % 13 % Net D/E P/FCFF Tax Rate (%) 14 % 15 % 11 % 18 % Revenue/Capital Employed EV/EBITDA Sales growth (%) 14 % 21 % 14 % 20 % Capital Employed/Equity EV/Sales FDEPS growth (%) -8 % 0 % 25 % 41 % Dividend Yield (%) 2.4 % 2.4 % 2.4 % 2.4 % April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 6 of 9

7 Equirus Securities Pankaj Sharma Executive Director /41 Research Analysts Sector/Industry Equity Sales Anirvan Sarkar Banking & Financial Services Vishad Turakhia Ashutosh Tiwari Auto, Metals & Mining Vibhor Rastogi Devam Modi Power & Infrastructure Sweta Sheth Dhaval Dama FMCG, Mid-Caps Dealing Room Maulik Patel Oil and Gas Ashish Shah Nimish Mehta Pharma IIlesh Savla Umesh Raut Industrials Jigar Chokshi Associates Nirav Prajapati Manoj Gori Sandip Amrutiya Meet Chande Compliance Officer Parva Soni Smita Sharma Pranav Mehta Raj Kantawala Ram Varun Saylee Warade 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 >= 20% for rest of the companies SHORT: ATR <= negative 5% over investment horizon TRADE: Stocks that do not meet the criteria for either LONG or SHORT 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 Target Price and Investment Horizon Target Price is a point value for stocks with Absolute rating of LONG or SHORT and a range value for stocks rated TRADE. Investment Horizon is set at a minimum 3 months to maximum 15 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) April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 7 of 9

8 2016 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, Nimish Mehta, 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 ofmy compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclaimers 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 ). There are no disciplinary actions that have been taken by any regulatory authority. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker. ESPL/its affiliates provide investment banking services including but not limited to Private Equity, Mergers & Acquisitions, Structured Finance and Institutional Equities. ESPL/its affiliates might have, managed or co-managed public offering of securities of the subject company or have received a mandate from the subject company or might have received compensation from the subject company for investment banking or brokerage services in the past twelve months. ESPL & its affiliates, 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 or its Analyst 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. Research Analyst might have served as an employee of the subject company in the past. This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this document may come are required to inform themselves of, and to observe, such applicable restrictions. Please delete this document if you are not authorized to view the same. By reading this document you represent and warrant that you have full authority and all rights necessary to view and read this document. This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe a security. ESPL is not soliciting any action based on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to its accuracy or completeness. The information contained herein stand on date, which are subject to change or modification. Any such changes could impact our interpretation of relevant information contained herein. While we would endeavour to update the information herein on reasonable basis. ESPL, its affiliates, their directors and employees are under no obligation to update or keep the information current. Also there may be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. 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. Additional 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 website. This Report and its respective contents does 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. April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 8 of 9

9 Disclosures Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Analyst/ESPL/Associate/Relatives financial interest No Analyst/ESPL/Associate/Relatives actual/beneficial ownership of 1% or more No Analyst/ESPL/Associate/Relatives material conflict of interest No Whether ECPL managed any public offering in past 12 months No * Associate means individual who assist Analyst April 12, 2016 Produced by ResearchDelta Advisors. Analyst: Nimish Mehta nimish.researchdelta@equirus.com( / ) Page 9 of 9