Maruti Suzuki India (MARUTI) 5920

Transcription

1 Result Update Rating matrix Rating : Buy Target : 6720 Target Period : 12 months Potential Upside : 14% What s Changed? Target Changed from 6765 to 6720 EPS FY17E Changed from 261 to EPS FY18E Changed from 308 to 283 EPS FY19E Introduced at Rating Unchanged Quarterly Performance ( Crore) Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%) Revenue 16, , , EBITDA 2, , , EBITDA (%) bps bps Reported PAT 1, , , Key Financials Crore FY16 FY17E FY18E FY19E Operating Income 57,746 68,636 82,759 95,495 EBITDA 8, , , ,326.6 Net Profit 4, , , ,661.7 EPS ( ) Valuation summary FY16 FY17E FY18E FY19E P/E (x) Target P/E (x) EV/EBITDA (x) P/BV (x) RoNW (%) RoCE (%) Stock data Particular Amount Market Capitalization ( Crore) Crore Total Debt (FY16) 77.4 Crore Cash and Investment (FY16) Crore EV Crore 52 week H/L ( ) 5972 / 3202 Equity capital ( crore) 151 Crore Face value ( ) 5 Price performance (%) 1M 3M 6M 12M Maruti Suzuki India Ltd M&M Ltd Tata Motors Ltd Research Analyst Nishit Zota nishit.zota@icicisecurities.com Vidrum Mehta vidrum.mehta@icicisecurities.com Near dominance across sub-segments! January 30, 2017 Maruti Suzuki India (MARUTI) 5920 Maruti Suzuki (MSIL) reported its Q3FY17 numbers, which came in below our estimates. Revenues at crore, up 12% YoY, down 5.5% QoQ came in below our estimate of crore. Topline growth was driven by 3.5% YoY volume growth & 8.8% ASP growth. Revenues came in below our estimates mainly on account of lower than estimated ASPs ( against our estimate of ) Volumes for Q3FY17 at units were up 3.5% YoY. Of this, domestic volumes grew 4% YoY to units while exports were down 1% YoY to units EBITDA was up 16% YoY, down 18% QoQ to 2489 crore, below our estimate of 2746 crore. Reported EBITDA margin was at 14.8%, up 47 bps YoY, down 226 bps QoQ, below our estimate of 16%. The disappointment on the margin front can be attributed to lower than estimated gross margins. While material cost to sales were up 60 bps YoY due to increased raw material cost, other expenses to net sales were down 150 bps YoY due to lower advertisement/sales promotion expenses & lower power & fuel expenses PAT came in at 1745 crore, up 47.5% YoY, down 27.3% QoQ below our estimates of 1,848 crore. Profit growth was aided by higher other income of 592 crore (Q3FY crore) Plenty of demand drivers to support growth MSIL has shown resilience in tough times (demonetisation) with its domestic volumes growing 4% YoY, outpacing the passenger vehicle industry growth of 1.8% YoY (supported by 20% YoY growth in UV segment).this outperformance can be attributed to strong demand for its new models like Baleno & Brezza, which have a waiting period of 24 weeks and 18 weeks, respectively. Also, growth in Q3FY17 was supported by sales to government employees, whose share increased from 16% last year to 20%. MSIL has been aggressive in terms of adding more content in car (airbags/abs in base models, launching smart hybrids variants & automatic transmission option in its models) & expanding its dealer network faster than competitors. Lastly, MSIL s strong market share gain in the premium segment (market share in cars > 8 lakh at ~25% in H1FY17 vs. ~6% in FY15) makes it a strong contender to benefit from premiumisation. We expect volumes to grow 13%, 10% for FY17E, FY18E, respectively. New plant & commodity prices impact margins in near term MSIL s margins in Q3FY17 were adversely impacted by a rise in steel prices (no major hike expected in Q4FY17). Ramp up of the Gujarat plant will also have some adverse impact on the margins in the near term. However, reduced exposure to JPY due to increased exports to Japan and royalty payment on new products in rupee, lower discounts led by better product mix, positive operating leverage led by strong demand and weaker yen will contribute positively to the margins. We estimate EBITDA margins of 15% for both FY18E, FY19E. Entering robust growth phase In the past seven years, MSIL s average one-year forward multiple was 16x with peak multiple of 27x. We believe strong earning visibility, should command premium valuation. Hence, we value at 21x FY19E EPS of 320, to arrive at a target price of 6720 with BUY rating on MSIL. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Q3FY17 Q3FY17E Q3FY16 YoY (Chg %) Q2FY17 QoQ (Chg %) Comments Total Operating Income 16,865 17,166 15, , Topline marginally below estimates due to lower-than-expected ASP Raw Material Expenses 11,674 11,609 10, , Higher input costs (mainly steel prices) & adverse impact of yen movement on indirect vendor costs Employee Expenses Higher staff expenses as it incorporated some bonus component Other expenses 2,085 2,221 2, , Operating Profit (EBITDA) 2,489 2,746 2, , EBITDA Margin (%) bps bps Lower than estimate mainly due to lower than estimated gross margin expansion Other Income Depreciation Interest Total Tax PAT 1,745 1,848 1, , Lower than estimate on account of lower revenues & margins EPS Key Metrics ASP ( ) 429, , , , Provision for Royalty( cr) 910 1, , Royalty came in lower due to reinstatement of royalty liability Discounts ( ) 19,000 20,000 21, , Change in estimates FY17E FY18E FY19E ( Crore) Old New % Change Old New % Change Introduced Comments Total Operating Income 68,861 68, ,877 82, ,495 Estimates have been raised on improved demand sentiment & newer product launches EBITDA 11,041 10, ,396 12, ,327 EBITDA Margin (%) bps bps 15.0 PAT 7,875 7, ,289 8, ,662 EPS ( ) Assumptions Current Earlier Comments FY15 FY16E FY17E FY18E FY19E FY17E FY18E Total Volumes (nos) Volume growth of ~12% CAGR in FY17-19E on expectation of strong economic recovery, demand pick-up & new product launches Average ASPs ( ) 376, , , , , , ,294 ASPs increase assumed on change in product mix with expected launches in premium hatchbacks, sedan & compact UV segment RMC/Unit ( ) 270, , , , , , ,193 Royalty rates (%) Discount ( ) 19,529 18,898 16,975 16,000 16,000 16,225 16,000 Discounts will reduce as new launches will form significant share of volumes Company, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 2

3 Key conference call takeaways The management has indicated that post demonetisation, recovery in urban & rural demand has been the same Waiting period for Baleno, Vitara Brezza & newly launched Ignis stands at 24 weeks, 18 weeks & 10 weeks respectively Average discount for Q3FY17 stood at 19,000 vs. 22,000 in Q3FY16 & in Q2FY17 While the share of diesel cars in the industry reduced from 44% to 40%, share of diesel cars in MSIL's volumes remained steady at 30% Royalty expenses for the quarter is down 60 bps QoQ to 5.5% of sales The management maintains that export volumes will be flat in FY17 The company has given a capex guidance of 3500 crore for FY17, of which 1800 crore will be towards product development, 800 crore towards maintenance & 900 crore towards marketing infrastructure The gross margins have been impacted by 110 bps YoY ( & QoQ) increase in commodity prices (mainly steel) Sales to government employees has increased from ~16% to ~20% Suzuki's Gujarat plant will start production in Q4FY17 and will take six months to ramp up The employee costs appear higher QoQ due to 100 crore write-back in employee cost in Q2FY17 ICICI Securities Ltd Retail Equity Research Page 3

4 Company Analysis Unique position of dominance in spite of competition MSIL has maintained its market leadership despite the increase in competitive intensity. Despite ~18 players being in the fray fighting for the 2.8 million large market, MSIL has managed to increase its market share from ~42% in FY14 to 47.3% in YTDFY17. The financial performance has been strong over the past years with operating margins maintained at decent levels (over 10% in the last 15 quarters). On the business levers side, all factors range from cost of car ownership to demographics to new product launches led by S-Cross, Baleno and Vitara Brezza. We have estimated volume growth of 13%, 10% for FY17E, FY18E, respectively. We expect revenue growth at ~18% CAGR in FY17-19E with revenues of ~ crore in FY19E. MSIL s margins in Q3FY17 were impacted due to a rise in steel prices (no major hike expected in Q4FY17). Ramp up of the Gujarat plant will also have some adverse impact on the margins in the near term. However, reduced exposure to JPY due to increased exports to Japan and royalty payment on new products in rupee, lower discounts led by better product mix, positive operating leverage led by strong demand and weaker yen will contribute positively to the margins. We estimate EBITDA margins of 15% for both FY18E, FY19E. We expect the bottomline of ~ 9662 crore in FY19E. Exhibit 1: Topline and bottomline trends ( crore) ( crore) 0 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Topline Bottomline 0 Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 4

5 Exhibit 2: Margins to be at healthy levels ( crore) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, , , , , , , ,326.6 FY13 FY14 FY15 FY16 FY17E FY18E FY19E (%) EBITDA Margins (%) Source: Company press release, ICICIdirect.com Research Export performance to moderate in near-term; larger growth post Suzuki s Gujarat plant! Suzuki is aiming to let MSIL grow as a low-cost brand to target markets such as Africa. MSIL already contributes ~45% to Suzuki s global profits. As such, Suzuki s strategy to make MSIL its global export hub for low priced products is logical. Currently, exports form ~9% of total sales for MSIL. Export volumes are expected to be flat in FY17E. The decline in volumes in the Sri Lankan market is expected to be offset by growth in export of Baleno. Going ahead, we have taken ~15% CAGR in FY17-19E in export volumes. Exhibit 3: Export volumes ('000s) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Domestic Exports Source: Company press release, ICICIdirect.com Research MSIL turns page as market share remains key focus With an increase in competitive intensity from FY10-11 onwards coupled with an increasing gap in petrol-diesel prices shifting customer preference for diesel cars in FY12-13, MSIL s market share had reduced from ~47% in FY09 to ~39% in FY13. The market share was further lost on account of persistent labour troubles at Manesar in both FY12 and FY13, which halted production. However, with the fuel price fall and domestic fuel price deregulation, there has been a recovery in petrol cars. MSIL has since then increased its presence in terms of products as well as capacity in both the petrol as well as diesel space. Launches of successful ICICI Securities Ltd Retail Equity Research Page 5

6 products like Ertiga, Celerio, Ciaz and more recently Baleno, Brezza aided growth in market share. MSIL has regained the lost ground in terms of market share (current market share-47.3% domestic). We expect MSIL to maintain ~45% plus market share despite the improvement in competition and growth in the utility vehicle space in the coming years. Exhibit 4: Domestic PV market share for MSIL (%) Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 YTD for Q3FY15 Domestic Market Share Exhibit 5: Passenger car market share (excluding UVs) (%) Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Source: Company press release, ICICIdirect.com Research MSIL's domestic share Discounting levels to decline with better demand sentiment, new launches In an intensely competitive industry struggling with a demand slowdown, the increase in discounting levels to gain volumes is to be expected. As the market leader, MSIL had also been forced to give incentives to ward off competition and retain market share. However, we believe the new products launches (which do not offer any discounts) and facelifts will lead to an improved product mix that will effectively reduce the discount levels. Discount on small cars (Alto, Wagon R) is broadly linked to the broad macro environment. These discounts will reduce with the improving macroeconomic conditions. We expect a reduction in average discounts from 18,898 in FY16 to 16,000 in FY19E. ICICI Securities Ltd Retail Equity Research Page 6

7 Going ahead, as the industry recovers on the back of an improvement in overall economic scenario and interest rate cuts, discounting levels are likely to taper off from FY17 onwards, albeit not too sharply, thereby aiding profitability slowly. Exhibit 6: Annual discount trends and expectations ,529 18,898 16,975 16,000 16,000 ( ) FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E ICICI Securities Ltd Retail Equity Research Page 7

8 Key takeaways from annual report MSIL s rural coverage increased from 124,620 villages in FY15 to 144,215 villages in FY16. The company increased its share in the top 10 markets of the country. Rural demand moderated following second successive year of below normal monsoon, leading to a drought-like situation in certain parts of the country. The company was able to grow sales in small towns & rural areas by 9%, largely by expanding reach to newer towns and villages MSIL s pre-owned car operation continued to support new car sales. Trade-ins grew by 9% and accounted for 30% of new car sales With 70% of the company s sales being contributed by petrol vehicles, MSIL is well positioned in this segment with 58.7% market share Fleet sales surged 60%, although on a low base, mainly on account of demand from taxi aggregators The share of vehicles financed reached 77.4%, highest in nine years Over 125 Nexa outlets were set up in FY16 & nearly 70,000 cars were sold through this channel. The company expects to double the number of Nexa outlets in FY17E. Apart from Nexa, it is also strengthening its existing network by adding >200 outlets during the year taking the total outlets to 1,820 in the existing channel Currency crisis in certain economies affected the demand adversely. In Sri Lanka, import duty was brought down for a few months helping the sales which surged during this period. The share of Sri Lanka in overall export sales increased to 32% in FY16 vs. 10% in FY15 Maruti Suzuki has sold over 5.44 lakh alternate fuel vehicles cumulatively till FY16 with yearly sales of ~60,000 units Nearly, 88% of the supplier base by value is located within 100 km radius of the company Combined output capacity of all plants in Gurgaon & Manesar is at about 1.5 million units annually. MSIL is focused on enhancing manufacturing capability through better utilisation of facilities, higher flexibility in plant-model combinations and flexible lines. This will enable it to meet market demand before SMC s Gujarat plant starts supplying cars in early 2017 The company has appointed a group of specialists and started acquiring land sites for future expansion of sales, service and spare part facilities. Acquisition of sites for MSIL s own retail space has been done from a long-term de-risking point of view. Besides the existing network of sales and services will be expanded to have more touch points with customers R&D/product developments, R&D spend in FY16 was lower than FY15 at ~1% of sales (by 10% or ~30bps) MSIL saved 42 crore by localisation (vs. 224 crore in FY15) and ~ 219 crore (vs. 247 crore in FY15) from implementation of value analysis/value engineering (VA/VE) proposals ICICI Securities Ltd Retail Equity Research Page 8

9 Outlook and Valuation We prefer the four-wheeler auto segment to the two-wheeler segment as low penetration levels still provide headroom for sustained growth. We continue to remain bullish on the longer-term growth prospects of the car segment, especially MSIL, considering its dominant market share at ~47%. Notwithstanding the short-term concerns, MSIL is improving its competitive positioning and has long term strengths. MSIL s strong product portfolio & distribution network make it best placed to capture pent-up demand in passenger vehicle segment. We ascribe a multiple of 21x to its FY19E EPS of 320 and have a BUY recommendation on the stock with a target price of Exhibit 7: Valuation Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 49, FY16 57, FY17E 68, FY18E 82, FY19E 95, ICICI Securities Ltd Retail Equity Research Page 9

10 Recommended history vs. consensus 8, ,000 6, ( ) 5,000 4,000 3, (%) 2,000 1, Jan-15 Mar-15 Jun-15 Aug-15 Nov-15 Jan-16 Mar-16 Jun-16 Aug-16 Nov Jan-17 Source: Bloomberg, Company, ICICIdirect.com Research Price Idirect target Consensus Target Mean % Consensus with BUY Key events Date Event Feb-10 Largest recall in Maruti's history for 1 lakh A-star's for faulty parts. Maruti plans to double petrol capacity and investments to ~ 2,500 crore Jul-10 Q1FY10 marks the change in royalty rates for Maruti from 3.3% to 5.9%, market disappointed Mar-11 Auto stocks rebound as Union Budget witnesses no change of excise duties. Manesar workers go on strike for first time in May for two weeks Aug-11 Labour trouble again brews up, production halted. Maruti Q2FY12 skids due to labour problems and high forex impacts as JPY unfavourable Jan-12 Maruti witnesses strong valuation based bargain hunting as management expects worst to be over Apr-12 Maruti launches the much awaited MPV product "Ertiga". Maruti announces merger with SPIL to consolidate business on the diesel side Jul-12 Maruti stock tumbles as workers in Manersar facility turn violent, causes tragic death of HR manager Awanish Kumar Dev Aug-12 Management lifts lockout post violence receding; production starts albeit slowly Apr-13 Yen moving beyond 100 vis-à-vis US$ aids Q4FY13 profits as EBIDTA margins rise to 10.4% Oct-13 Localisation and cost reduction initiatives Maruti surprise on Q2FY14 financials as margins surprise Jan-14 MSIL board approves Gujarat plant expansion by way of 100% subsidiary of Suzuki Motor Corporation; institutional investors perturbed; stock falls Mar-14 Management alleviates concerns of minority shareholders and removes uncertainty over the "mark-up" issue Oct-14 Maruti launches a new product in the sedan segment "Ciaz" Apr-15 MSIL reports bumper margins of 15.9% in Q4FY15. Announces dividend of 25 per share May-15 Maruti Suzuki 'Swift' completed 10 years of debut. The company has sold over 1.3 million car over the last 10 years Jun-15 Company launches Celerio's diesel variant at 4.65 lakh Jul-15 Maruti opens booking for premium crossover S-CROSS which is likely to to sold through its NEXA (premium) showrooms Oct-15 Maruti launches its premium hatchback Baleno to be sold through its NEXA (premium) showrooms Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Suzuki Motor Corp 30-Sep Life Insurance Corporation of India 30-Sep HDFC Asset Management Co., Ltd. 30-Sep Invest AD 30-Sep ICICI Prudential Asset Management Co. Ltd. 31-Dec The Vanguard Group, Inc. 31-Dec BlackRock Institutional Trust Company, N.A. 31-Dec Fidelity Management & Research Company 30-Nov Birla Sun Life Asset Management Company Ltd. 31-Dec J.P. Morgan Asset Management (Hong Kong) Ltd. 31-Dec Source: Reuters, ICICIdirect.com Research Recent Activity (in %) Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Promoter FII DII Others Buys Sells Investor name Value Shares Investor name Value Shares Fidelity Management & Research Company Life Insurance Corporation of India The Vanguard Group, Inc Capital World Investors Baron Capital Management, Inc Grantham Mayo Van Otterloo & Co LLC Janus Capital Management LLC HSBC Global Asset Management (Hong Kong) Limited Invest AD HDFC Asset Management Co., Ltd Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 10

11 Financial summary Profit and loss statement Crore (Year-end March) FY16 FY17E FY18E FY19E Total operating Income 57,746 68,636 82,759 95,495 Growth (%) Raw Material Expenses 38,780 46,677 56,627 65,315 Employee Expenses 1,989 2,367 2,829 3,264 Marketing Expenses Administrative Expenses Other expenses 7,999 8,875 10,911 12,590 Total Operating Expenditure 48,768 57,919 70,367 81,169 EBITDA 8,979 10,717 12,392 14,327 Growth (%) Depreciation 2,824 2,578 3,145 3,629 Interest Other Income 462 2,419 2,676 2,762 PBT 6,535 10,472 11,873 13,419 Others Total Tax 1,964 2,790 3,324 3,757 PAT 4,571 7,682 8,548 9,662 Growth (%) EPS ( ) Cash flow statement Crore (Year-end March) FY16 FY17E FY18E FY19E Profit after Tax 4,571 7,682 8,548 9,662 Add: Depreciation 2,824 2,578 3,145 3,629 (Inc)/dec in Current Assets -1, ,057-1,250 Inc/(dec) in CL and Provisions 2,427 2,144 2,575 2,452 Others CF from operating activities 8,766 11,573 13,212 14,492 (Inc)/dec in Investments 2,124-1, ,000 (Inc)/dec in Fixed Assets -2,457-3,500-4,000-4,000 Others -7,041-4,325-6,055-6,301 CF from investing activities -7,374-8,825-10,555-11,301 Issue/(Buy back) of Equity Inc/(dec) in loan funds Dividend paid & dividend tax -1,278-1,559-1,849-2,175 Inc/(dec) in Sec. premium Others CF from financing activities -1,452-1,468-1,919-2,246 Net Cash flow 21 1, Opening Cash ,405 2,192 Closing Cash 39 1,405 2,192 3,179 Balance sheet Crore (Year-end March) FY16 FY17E FY18E FY19E Liabilities Equity Capital Reserve and Surplus 26,856 33,046 39,746 47,232 Total Shareholders funds 27,007 33,197 39,897 47,383 Total Debt Deferred Tax Liability Others Liabilties Total Liabilities 27,983 34,333 41,062 48,569 Assets Gross Block 30,714 34,214 38,214 42,214 Less: Acc Depreciation 16,939 19,517 22,662 26,291 Net Block 13,775 14,697 15,552 15,923 Capital WIP Total Fixed Assets 13,775 14,697 15,552 15,923 Investments 17,786 22,786 29,286 36,286 Inventory 3,132 3,553 4,486 5,177 Debtors 1,299 1,555 1,863 2,149 Loans and Advances 1,557 1,592 1,384 1,596 Other Current Assets Cash 39 1,405 2,192 3,179 Total Current Assets 6,277 8,473 10,318 12,554 Creditors 7,013 8,401 10,059 11,607 Provisions 1,835 2,198 2,631 3,036 Other current Liabilities 2,365 2,758 3,242 3,741 Total Current Liabilities 11,213 13,357 15,932 18,384 Net Current Assets -4,936-4,884-5,614-5,830 Other Assets 1,359 1,734 1,839 2,190 Application of Funds 27,983 34,333 41,062 48,569 Key ratios (Year-end March) FY16 FY17E FY18E FY19E Per share data ( ) EPS Cash EPS BV , , ,568.6 DPS Cash Per Share Operating Ratios EBITDA Margin (%) PBIT / Net sales (%) PAT Margin (%) Inventory days 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 Debt/EBITDA Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 11

12 ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Amara Raja (AMARAJ) Hold Apollo Tyre (APOTYR) Buy Ashok Leyland (ASHLEY) Buy Bajaj Auto (BAAUTO) Buy Balkrishna Ind. (BALIND) Buy Bharat Forge (BHAFOR) Buy Bosch (MICO) Buy Eicher Motors (EICMOT) Buy Escorts (ESCORT) Hold Exide Industries (EXIIND) Buy Hero Mototcorp (HERHON) Buy JK Tyre & Ind (JKIND) Buy Mahindra CIE (MAHAUT) Buy Maruti Suzuki (MARUTI) Buy Motherson (MOTSUM) Hold Tata Motors (TELCO) Buy Wabco India (WABTVS) Buy ICICI Securities Ltd Retail Equity Research Page 12

13 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 13

14 ANALYST CERTIFICATION We /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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