Oberoi Realty (OBEREA) 343

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1 Result Update Rating matrix Rating : Hold Target : 375 Target Period : 12 months Potential Upside : 9% What s Changed? Target Changed from 340 to 375 EPS FY17E Changed from 12.1 to 12.0 EPS FY18E Changed from 31.9 to 29.0 Rating Unchanged Quarterly Performance crore Q2FY17 Q2FY16 YoY (%) Q1FY17 QoQ (%) Revenue EBITDA EBITDA (%) bps bps PAT Key Financials Crore FY15 FY16 FY17E FY18E Net Sales , , ,879.7 EBITDA ,425.3 Net Profit EPS ( ) Valuation summary (x) FY15 FY16E FY17E FY18E P/E Target P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Particular Amount ( crore) Market Capitalization 11,255.3 Total Debt Cash EV 11, week H/L ( ) 349 / 210 Equity capital Face value ( ) 1 Price performance (%) Return % 1M 3M 6M 12M Oberoi Realty Mahindra Lifespace (2.0) (4.1) 0.2 (6.0) BSE Realty 0.9 (2.3) Research Analyst Deepak Purswani, CFA deepak.purswani@icicisecurities.com Vaibhav Shah vaibhav.shah@icicisecurities.com October 25, 2016 Oberoi Realty (OBEREA) 343 Three Sixty West boosts Q2 sales volumes Oberoi Realty's Q2FY17 sales performance was better-than-expected mainly on the back of the Three Sixty West project. On the financial front, the result was largely in line with our estimates The topline grew 33.7% YoY to crore marginally below our expectation of crore The EBITDA margin contracted 769 bps YoY to 49.9% mainly on account of a change in the project mix with topline mainly driven by the relatively lower margin Esquire project. It was in line with our expectation of 49.7% The bottomline grew 15.6% YoY to 83.7 crore largely in line with our estimate of 85.8 crore Sales volume grows 2.8x YoY to 1.77 lakh sq ft ORL s sales volume zoomed 2.8x YoY to 1.77 lakh sq ft in Q2FY17 boosted by Three Sixty West project where it manage to sell eight flats worth crore with sales volume of sq ft. Going ahead, with significant inquiries happening for the project, the company is hopeful of selling 50 flats (currently 29 flats sold) to meet revenue recognition threshold by FY17 end. Further, the Esquire project also reported strong sales with 10 flats sold worth 53.5 crore with sales volume of sq ft. The quarter also witnessed strong presales worth ~ crore. New launches to boost sales volumes, going forward Barring a couple of projects, a slowdown in sales momentum was witnessed across ORL s project portfolio with muted bookings in most projects viz. for Exquisite project. Average quarterly run rate has slowed down from ~49000 sq ft to ~16000 sq ft in the past few quarters due to weak real estate market. Going forward, launch of subsequent phases of Goregaon, Borivali and Mulund projects is expected to drive sales momentum. Consequently, we expect ORL s sales volume to grow 75% YoY to 1.4 msf in FY18E post a dip in FY17E (0.8 mn sq ft). With better sales volume & revenue recognition from newly launched projects, we expect topline, bottomline to grow at 43.4%, 49.5% CAGR to crore, crore, respectively, in FY16-18E. Occupancy doubles at Commerz II Phase I ORL currently has four operational assets under its leasing & hospitality portfolio. It includes Oberoi Mall, Commerz-I, Westin Hotel & Commerz-II Phase I. In Q2FY17, its leasing revenues grew strongly by 9.5% YoY to 46.4 crore. Further, the company struck a deal with Teva Pharmaceuticals to lease out ~1.0 lakh sq ft (four floors per sq ft per month in Commerz II Phase I. This resulted in double occupancy at Commerz II Phase I to ~27.1%. Going forward, we expect rental revenues to grow at 14.0% CAGR to crore in FY16-18E with the anticipated revival in leasing activity. Await sustainability in sales volumes; maintain HOLD We like ORL given the quality of land bank, its healthy balance sheet and management bandwidth to execute large projects. Though a pick-up in sales volumes was seen in Q2FY17 post a strong performance in a couple of projects, we would like to see a further improvement in sales volumes, going forward. Further, sales momentum has slowed down across ORL s project portfolio with muted bookings in most projects. With the stock running up ~22% in the past six months, we see limited upside at current levels despite rolling over our NAV to FY18E. Hence, we continue to maintain our HOLD rating on the stock with a revised target price of 375. ICICI Securities Ltd Retail Equity Research

2 [ Variance analysis Q2FY17 Q2FY17E Q2FY16 YoY (Chg %) Q1FY17 QoQ (Chg %) Comments Income from Operation Revenues grew 33.7% YoY to crore mainly on account of strong project execution Other Income Operating Cost Employee cost Other expenditure EBITDA EBITDA Margin (%) bps bps The EBITDA margin contracted 769 bps YoY to 49.9% mainly on account of a change in the project mix with topline mainly driven by the relatively lower margin Esquire project Depreciation Interest NM 1.4 NM PBT Taxes PAT Net income grew 15.6% YoY to 83.7 crore largely in line with our expectation of 85.8 crore Key Metrics Sales Volume (in sq ft) 177, ,350 62, , Sales volumes were mainly boosted by Three Sixty West project (sales were at sq ft) Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 1, , , EBITDA , EBITDA Margin (%) bps bps PAT , FY18E bottomline was impacted as we have deferred revenue recognition of Mulund projects to H2FY18 from H1FY18 previously EPS ( ) Assumptions Current Earlier Volume sold in msf FY14 FY15 FY16 FY17E FY18E FY17E FY18E Goregaon Andheri/Borivali Worli Mulund Pune Total We have maintained our estimates Comments ICICI Securities Ltd Retail Equity Research Page 2

3 Conference call highlights: Worli project update: The company managed to sell 14 units post the launch of the project. Significant inquiries have happened for the project. The company targets to sell 50 flats (29 sold till date) to reach the revenue recognition threshold by FY17 end with an expected pick-up in sales. Currently, the project includes ~200 apartments. The company is looking for additional FSI for the project. If it gets necessary approvals on time, number of units on offer could rise Project updates: The management expects the Mulund project to hit revenue recognition threshold probably in H2FY18E and for the Borivali project in H1FY18. Further, the company expects to launch Exquisite phase III & Maxima project in H1CY17. For both, Esquire and SkyCity, show apartments are ready and the company is seeing a good response with more inquiries Execution update: For the Mulund project, the company has finished the foundation work while for SkyCity project, excavation work is complete Commerz II new deal: The company managed to lease four additional floors with gross leasable area of ~1 lakh sq ft to Teva Pharmaceuticals resulting in occupancy of 27.1% in Q2FY17 (vs. 13% in Q1FY17) at ~ / sq ft per month ICICI Securities Ltd Retail Equity Research Page 3

4 Company Analysis Worli project boosts sales volume ORL s sales volume in this quarter was flat QoQ at 1.47 lakh sq ft. It was led by sales of 55,320 sq ft in Three Sixty West project and sq ft in its SkyCity projects. Going forward, the launch of subsequent phases of Goregaon, Borivali and Mulund projects are expected to keep sales volumes ticking. Hence, we expect the sales volume to pick up to 1.4 mn sq ft in FY18E from 0.8 mn sq ft in FY17E. Exhibit 1: Sales volume picking up Exhibit 2: Anticipate it to pick up sharply with new launches (lakh sq ft) Q2FY Q3FY Q4FY Q1FY Q2FY Q3FY Q4FY Q1FY Q2FY17 (mn sq ft) FY12 FY13 FY14 FY15 FY16 FY17E FY18E Andheri/Borivali Worli Mulund Pune Pune Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research Launches in Borivali, Mulund to impact overall realisation ORL s average realisation has been at a higher level mainly due to higher proportion of Oberoi Exquisite and Oberoi Esquire projects. However, going ahead, with higher proportion of sales volume to be derived from its Mulund and Borivali projects, we expect average realisation to come down from current levels. Exhibit 3: Quarterly average realisation trend 30,000 Exhibit 4: Annual realisation trend across projects 30,000 ( per sq ft) 25,000 20,000 15,000 10,000 23,644 23,541 19,973 21,891 Goregaon (Exquisite) 27,305 20,967 21,305 Goregaon (Escquire) 20,535 23,776 23,776 21,512 21,512 Andheri 17,438 18,766 16,715 16,856 Overall ( per sq ft) 25,000 20,000 15,000 10,000 Goregaon (Exquisite) Goregaon (Escquire) Mulund Borivali Overall Q3FY16 Q4FY16 Q1FY17 Q2FY17 FY14 FY15 FY16 FY17E FY18E Source: Company, ICICIdirect.com, Research Source: Company, ICICIdirect.com, Research ICICI Securities Ltd Retail Equity Research Page 4

5 Exhibit 5: Ongoing residential projects operational metrics Particulars Q2FY17 Q1FY17 Q4FY16 Q3FY16 Q2FY16 Q1FY16 Area Booked (sq ft) Splendor Oberoi Esquire ,035 4,390 8,865 Oberoi Exquisite ,475 38,630 49,075 Three Sixty West ,562 9,562 - Priviera , Prisma ,151 9,171 8,595 Eternia ,890 7,030 11,030 Enigma ,140 (6,140) 3,070 Sky City , Total 177, , ,007 1,023,977 62,643 80,635 Sales Value ( crore) Splendor Oberoi Esquire Oberoi Exquisite Three Sixty West Priviera Prisma Eternia Enigma (9.3) 5 Sky City Average Realization for the quarter ( /sq ft) Splendor 27, Oberoi Esquire 31,608 20,967 20,535 22,925 19,096 18,906 Oberoi Exquisite 16,230 22,003 26,105 23,644 23,256 23,899 Three Sixty West 44,024 42,916-41,832 43,027 - Priviera** ,936 71, Prisma 17,139 17,238 16,833 18,106 17,830 17,708 Eternia 15,403 16,567 16,228 16,825 15,035 15,043 Enigma 16,576 16,754 16,025 15,098 NA 16,039 Sky City 16,048 17,172 16,048 16,548 Project Completion (%) Splendor Oberoi Esquire * * Oberoi Exquisite Three Sixty West * * * * * * Priviera Prisma Eternia * * * * * * Enigma * * * * * * Sky City * * * * * * Inventory as on Date (sq ft) Splendor Oberoi Exquisite , , ,250 Three Sixty West ,640,498 1,650,060 1,659,622 Priviera ** ,700 9,400 9,400 Prisma , , ,323 Eternia# , , ,250 Enigma , , ,625 Sky City Note : * Yet to reach threshold # Basis area opened for booking ** Calculated on carpet area ICICI Securities Ltd Retail Equity Research Page 5

6 Exhibit 6: Leasing trend Rental, hospitality portfolio Icing on the cake ORL also enjoys a strong leasing and profitable hospitality portfolio wherein it has Commerz I & II (Commercial Space), Oberoi Mall (Retail Property) and The Westin Mumbai Garden City (Hospitality). In the leasing portfolio, ORL has leased out ~0.9 mn sq feet (~94% of the total available area) in Commerz I and Oberoi Mall. Beside this, ORL has also completed Commerz-II Phase I (0.7 mn sq ft). Recently, it concluded a deal with Teva Pharmaceuticals to lease out ~1 lakh sq ft. Overall, the lease revenue is expected to grow to crore in FY18E vs. 15 crore in FY16 driven by the incremental leasing in Commerz II phase I. Exhibit 7: Leasing revenue trend (mn sq ft) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E ( crore) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Commerz I Commerz II Phase I Oberoi Mall Source: Company, ICICIdirect.com, Research Commerz I Commerz II Phase I Oberoi Mall Source: Company, ICICIdirect.com, Research ORL also has The Westin Mumbai Garden City Hotel in Goregaon, which is part of the mixed development in Oberoi Garden City. It is a five star hotel with 269 rooms and is managed by the Westin Group. In FY16, it reported a revenue and EBITDA of crore and 31.9 crore, respectively. In Q2FY17, it reported revenue of 29.5 crore and EBITDA margin of 28.8% with occupancy rate of 75.0%. Going ahead, we expect it to post a topline and bottomline of crore and 42.8 crore, respectively, in FY18E. Exhibit 8: Hotel revenue trend Exhibit 9: Westin s operating profit trend ( crore) FY12 FY13 FY14 FY15 FY16 FY17E FY18E ( crore) FY12 FY13 FY14 FY15 FY16 FY17E FY18E EBITDA Margins (RHS) (%) ICICI Securities Ltd Retail Equity Research Page 6

7 Exhibit 10: Operational trend in Oberoi s rental and hospitality portfolio Particulars Q2FY17 Q1FY17 Q4FY16 Q3FY16 Q2FY16 Oberoi Mall (Retail Property) Operating Revenue ( crore) EBITDA margin (%) Occupancy (%) Realisation ( /sqft/month) Commerz I (Commercial Space) Operating Revenue ( crore) EBITDA margin(%) Occupancy (%) Realisation ( /sqft/month) Commerz II Phase I (Commercial Space) Operating Revenue ( crore) EBITDA margin(%) Occupancy (%) Realisation ( /sqft/month) The Westin Mumbai Garden City (Hospitality) Operating Revenue ( crore) EBITDA margin(%) Average Room Rate ( ) Occupancy (%) RevPAR ( ) ICICI Securities Ltd Retail Equity Research Page 7

8 Recognises revenues to grow at 43.4% CAGR in FY16-18E ORL s revenues are expected to grow at a CAGR of 43.4% CAGR in FY16-18E with Sky City and Mulund projects expected to hit revenue recognition threshold by FY18E Revenues grew 55.3% YoY to in FY16. Going forward, we expect ORL s revenues to grow robustly at 43.4% CAGR over FY16-18E with Sky City and Mulund projects expected to hit revenue recognition threshold by FY18E and more revenues expected to get recognised from completed projects such as Exquisite coupled with Worli revenues. Exhibit 11: Revenues to grow at 43.4% CAGR over FY16-18E ( crore) CAGR , , ,200.2 FY14 FY15 FY16 FY17E FY18E EBITDA margin to rise marginally ORL s EBITDA margin has dropped significantly in FY16 to 47.7% from ~56.5% in FY15. Going ahead, we expect margins to be in the range of 45-50% given the larger share of residential revenues recognition, which is more typical of lower margins than for hospitality and leasing. Exhibit 12: EBITDA margin trend (%) FY14 FY15 FY16 FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 8

9 Net profit to grow at 49.5% CAGR during FY16-18E We expect ORL s bottomline to grow at a CAGR of 49.5% during FY16-18E to crore, with Eternia & Enigma projects hitting revenue recognition during this period Overall, we anticipate ORL s bottomline will grow at a CAGR of 49.5% during FY16-18E to crore, with Eternia, Enigma & SkyCity projects hitting revenue recognition during this period. This would aid the bottomline significantly, going forward. Exhibit 13: PAT to grow at 49.5% CAGR during FY16-18E ( crore) CAGR % FY14 FY15 FY16 FY17E FY18E Return ratio to bounce back in FY18E Given the lower revenue recognition and profitability in FY15, ORL s return ratio dropped to single digit in FY15. However, with better revenues and profitability coming in FY18E, we expect ORL s return ratio to bounce to levels of 19.3% RoCE and 14.1% RoE in FY18E. Exhibit 14: Return ratio to bounce back (%) FY14 FY15 FY16 FY17E FY18E RoCE RoNW ICICI Securities Ltd Retail Equity Research Page 9

10 Exhibit 15: Valuation Outlook and Valuation We like ORL given the quality of land bank, its healthy balance sheet and management bandwidth to execute large projects. Though a pick-up in sales volumes was seen in Q2FY17 post a strong performance in a couple of projects, we would like to see a further improvement in sales volumes, going forward. Further, sales momentum has slowed down across ORL s project portfolio with muted bookings in most projects. With the stock running up ~22% in the past six months, we see limited upside at current levels despite rolling over our NAV to FY18E. Hence, we continue to maintain our HOLD rating on the stock with a revised target price of 375. Location Type Status Saleable Area ( in mn sq ft) NAV NAV Multiple Value ( cr) /share Goregaon , , Oberoi Mall Retail Completed Commerz I Commercial Completed Westin Hotel Completed 0.4 1, , Exquisite II Residential Ongoing 1.5 1, , Commerz II Phase I Commercial Ongoing Exquisite III Residential Planned Commerz II Phase II Commercial Planned 1.7 1, Oberoi International school Social Infrastructure Ongoing 0.3 Education complex Planned Hospital Planned 0.4 Andheri/Khar/Borivali 3.1 3, , Oberoi Maxima Commercial Ongoing Oberoi Prisma Residential Ongoing Oberoi Splendour IT park Commercial Planned Oberoi Splendour school Social Infrastructre Planned Priviera Residential Completed Borivali Residential 4.5 2, , Worli 2.9 2, , Oasis Residential Residential Ongoing Oasis Commercial Commercial Ongoing Oasis Mall Retail Ongoing Oasis Hospitality Hospital Ongoing I-Ventures Residential 0.5 1, Mulund 3.2 1, , Eternia Residential Ongoing Enigma Residential Ongoing Pune Sangam city - Residential Residential Planned Sangam city - Commercial Commercial Planned Sangam city - Retail Retail Planned Net cash/ (Debt) Total , , Rounded off target price 375 Exhibit 16: Valuation Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY FY FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 10

11 Recommendation History vs. Consensus ( ) Oct-14 Dec-14 Mar-15 May-15 Aug-15 Oct-15 Dec-15 Mar-16 May-16 Aug-16 Oct (%) Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Jan-15 Jun-15 Jun-15 Aug-15 Oct-15 Mar-16 Mar-16 Apr-16 May-16 Aug-16 Sep-16 Event First time launch of luxury residential projects in Mumbai suburb of Mulund. The two projects are spread across nine acres and would collectively be of 3.3 million square feet in size with ticket size starting from 2 crore (base price 12,250 per sq ft As per media sources, Oberoi Realty to buy Crompton Greaves Worli building spread over ~1 acre for over 200 crore. Oberoi Realty approves raising of 324 crore through preferential issue of shares to Aranda Investments, an indirect subsidiary of Temasek Holdings As per media sources, Oberoi Realty to buy Crompton Greaves Worli building spread over ~1 acre for over 200 crore. Oberoi Realty launches its multi-tower project Sky City at Borivali spread across 25 acres consisting of multiple towers of up to 60 storeys each. The project has a saleable area of ~4.5 million square feet (msf) and the company expects to earn revenues of ~ crore from the project The Bombay High Court stays new constructions of either residential/commercial buildings or hotels in Mumbai from March 1, 2016 because the state government and Brihanmumbai Municipal Corporation (BMC) have failed to comply with the municipal solid waste (MSW) rules at Deonar and Mulund dumping grounds,due to which Oberoi will be unable to launch projects until the ban is lifted Rajya Sabha passes the real estate regulation bill paving the way for regulation in the real estate sector. The bill would promote timely execution of projects, ensure speedy adjudication of disputes and help promote private participation, positive for Oberoi Swedish furniture retailing giant Ikea in talks with Oberoi Realty to buy a built-to-suit retail space for over 900 crore in Borivali. As per media reports, if the deal happens, this will monetise Oberoi's landbank at better prices of ~ crore per acre vs. Oberoi's acquisition price of ~ 46.2 crore per acre Oberoi allots 59,104 equity Shares of 10 each to certain option grantee(s) pursuant to exercise by them of options granted to them under Company s Employee Stock Option Scheme The exercise price for options is 260/ share. Post allotment, share capital has increased to crore. According to media sources, Oberoi Realty is in talks with US-based investor Morgan Stanley and Singapore s sovereign fund, GIC, to set up a joint venture (JV) for developing malls. The venture would have a corpus of 1,000 crore. Oberoi is expected to hold about 75%. Further, it could also initiate talks with Canada Pension Plan Investment Board, which has shown an interest in buying in malls Teva Pharmaceuticals buys ~1.0 lakh sq ft space in Oberoi Commerz II in Goregaon Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Oberoi (Vikas Ranvir) 30-Jun % R S Estate Developers Pvt. Ltd. 30-Jun % Aranda Investments (Mauritius) Pte. Ltd. 30-Jun % SSIII Indian Investments Two, Ltd. 30-Jun % APG Asset Management 30-Jun % OppenheimerFunds, Inc. 30-Jun % BlackRock Asset Management North Asia Limited 30-Jun % FIL Investment Management (Singapore) Ltd. 31-Aug % BlackRock Investment Management (UK) Ltd. 30-Jun % The Vanguard Group, Inc. 30-Sep % 2.3 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Shareholding Pattern (in %) Dec-15 Mar-16 Jun-16 Sep-16 Promoter FII DII Others Sells Investor name Value (m) Shares (m) Investor name Value (m) Shares (m) BlackRock Investment Management (UK) Ltd SSIII Indian Investments Two, Ltd APG Asset Management Third Avenue Management LLC FIL Investment Management (Singapore) Ltd Templeton Investment Counsel, L.L.C Wellington International Management Company Pte. Ltd ICON Advisers, Inc Northern Trust Global Investments Ltd Belgrave Capital Management Ltd Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 11

12 Financial summary Profit and loss statement ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Net Sales , , ,879.7 Other Operating Income Total Operating Income , , ,889.8 Growth (%) Operating Costs ,326.2 Employee Expenses Other Expenses Total Operating Expenditure ,454.4 EBITDA ,425.3 Growth (%) Depreciation Interest Other Income PBT ,365.2 Prior Period Adjustments Total Tax PAT before profit from associates Minoriy Interest Profit from associates PAT EPS ( ) Cash flow statement ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Profit after Tax Depreciation Interest Others Net Increase in Current Assets Net Increase in Current Liabilities Net cf from operating activities (Purchase)/Sale of Fixed Assets Others Net cf from Investing Activities Inc / (Dec) in Equity Capital Inc / (Dec) in Loan Funds (Payment) of Dividend & Div. Tax Interest paid Net cf from Financing Activities Net Cash flow Opening Cash/Cash Equivalent ,126.3 Closing Cash/ Cash Equivalent , ,513.0 Balance sheet ( Crore) (Year-end March) FY15 FY16 FY17E FY18E Equity Capital Preference Capital Reserve and Surplus 4, , , ,041.0 Total Shareholders funds 4, , , ,380.3 Total Debt Deferred Tax Liability Total Liabilities 5, , , ,394.7 Assets Gross Block 1, , , ,235.5 Less Accumulated Depreciation Net Block 1, Capital WIP Total Fixed Assets 1, , , Goodwill on consolidation Investments Inventory 3, , , ,694.6 Debtors Loans and Advances 1, , , ,727.8 Cash , ,513.0 Other Current Assets Total Current Assets 5, , , ,144.0 Creditors 1, , , ,080.4 Provisions Net Current Assets 4, , , ,059.3 Deferred Tax Assets Total Assets 5, , , ,394.6 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS Cash EPS BV Operating profit per share Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Net Sales PAT Margin Inventory days 1, , , Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios (x) Debt / EBITDA Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 12

13 ICICIdirect.com coverage universe (Real Estate) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) P/B (x) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Oberoi Realty (OBEREA) Hold 11, Mahindra Lifespace (GESCOR) Buy 1, ICICI Securities Ltd Retail Equity Research Page 13

14 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 14

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