Paints: Spark Shade-Card

Transcription

1 Executive Summary Spark Shade-Card: 3QFY15 Flying colors In our endeavor to keep pace with the ever evolving Indian paints sector, we publish our 3QFY15 edition of our quarterly update on the sector - Spark Shade-Card. As almost all the key listed participants in the sector maintain utmost secrecy on the vital business details, we have to rely heavily on our channel checks aka Scuttlebutt notes and media inputs to keep abreast with the key developments in the sector. Hence, we believe that a structured effort like Spark Shade-Card could not only help us paint a coherent picture on the paint industry but also update the investor community on the current trends and emerging long term themes. Our Key thoughts on the sector post interaction with Industry participants - (1) Decorative Driven by improving consumer confidence and burgeoning repainting demand, volume growth expected to be robust for all paint players. We believe lower commodity cost has enabled several players to roll out lucrative offers to distributors, we decipher that majority of promotional activities have been below the line this quarter. We understand that the premiumization trend gained further momentum across product categories in 3QFY15. Offtakes across Tier 1/2/3 towns witnessed good traction. (2) Industrial Though business sentiment has improved, growth in industrial paints seems to be a mixed bag. Passenger car and white goods volumes are expected to increase in high single digits; however infrastructure activity remains largely subdued. Pricing power continues to be feeble, better economies of scale to lead margin expansion in medium to long term. Online is just for marketing Though several paint players initiated tie-ups with online commerce participants, we understand that it was primarily for marketing purposes rather than establishing online as a long term distribution channel partner. Our interactions with industry participants and understanding on the sector leads us to believe that the distribution moat of decorative paints cos. would remain untouched by the online retailing wave in the same way as it survived the modern retail wave India witnessed in the last decade. We however continue to closely monitor trends on this front. How do we see the current quarter revenue momentum shaping up for the coverage paint companies? Akzo Nobel India (AKZO): ~8-9% volume growth in the decorative paint segment along with recovery in the industrial paints to lead to ~12% yoy revenue growth. Operating margins to expand despite higher royalty payment on account of higher gross margins. PAT to be impacted by other income vagaries. Watch out: Trends in decorative paints, margin expansion initiatives. Asian (APNT): Decorative segment to report double digit volume growth-~14% growth on the back of improved revenue momentum and a high base effect. Margins to expand backed by higher gross margin. Watch out: Comments/ guidance on - demand outlook, raw material prices (TiO2 in particular), new acquisitions (home decor) and their performance. Berger (BRGR): ~14% increase in deco paints volume offtakes coupled with ~4-5% favourable price mix in decorative paints in addition to robust growth in subsidiaries to lead to good revenue growth. Expanded revenue base to drive margin expansion. Watch out: Hindupur plant production status, product-mix changes, rural-urban offtakes and raw material scenario. Kansai Nerolac (KNPL): Driven by improved auto volumes and signs of revival in Industrial cycle, KNPL revenues are expected to grow at ~21% yoy. We also understand from our channel checks that KNPL has rolled out several initiatives in the decorative paints segment, which should lead to the company recording robust growth in decorative paints too. Subdued base quarter performance coupled with lower raw material cost to lead to operating margin expansion. Watch out: Comments/ guidance on demand outlook across business verticals, pricing power in the automotive paints business Stock Calls: AKZO - Add, APNT Add, BRGR - Add, KNPL Buy Date Jan 9, 215 Market data BSE SENSEX 27,274 Nifty 8,235 Stock Performance (%) Company 1m 3m 12m Asian 2.1% 27.1% 64.9% Berger Akzo Nobel India Kansai Nerolac 13.8% 17.6% 19.1% 3.4% 14.4% 65.2% 4.6% 8.8% 79.5% Sensex -4.1% 1.8% 34.9% Tejash Shah tejash@sparkcapital.in Gnanasundaram S gnanasundar@sparkcapital.in Madhav PVR madhav@sparkcapital.in TEJASH SHAH tejash@sparkcapital.in GNANASUNDARAM S gnanasundar@sparkcapital.in MADHAV PVR madhav@sparkcapital.in Find Spark Research on Bloomberg (SPAK <go>), Thomson First Call, Reuters Knowledge and Factset Page 1

2 Spark Quarterly Estimates All numbers in Rs. mn except per share data Quarter Change Dec-14E Sep-14 Dec-13 YoY QoQ Akzo Nobel India (Standalone) Net sales 7,345 6,67 6,563 12% 21% EBITDA % 29% EBITDA Margin 9% 9% 6% 294bps 57bps PAT % 22% EPS % 22% Asian (Consolidated) Net sales 41,267 36,33 34,519 2% 14% EBITDA 7,39 5,362 5,373 31% 31% EBITDA Margin 17% 15% 16% 149bps 23bps PAT 4,564 3,473 3,294 39% 31% EPS % 31% Berger India (Consolidated) Net sales 12,454 11,42 1,298 21% 13% EBITDA 1,681 1,259 1,315 28% 33% EBITDA Margin 13.5% 11.4% 12.8% 73bps 29bps PAT 1, % 51% EPS % 51% Kansai Nerolac (Standalone) Net sales 9,936 9,232 8,241 21% 8% EBITDA 1,353 1, % 12% EBITDA Margin 14% 13% 11% 34bps 58bps PAT % 1% EPS % 1% Source: Company and Spark Capital estimates Page 2

3 Interior offerings and digital promotions were prominent this quarter Exterior Ad s emerged during fag end of the quarter, while promotions as Wallfie and Har Ghar Kuch Kehta Hai were prominent Berger easy clean grabbed good eye balls in the festive season, while silk Ad s were visible across several campaign mediums Exterior Ultima Protek Royale Play Wallfie campaign Easy Clean Interior Emulsion while Silk ad s continued in select channels Source: Company, Youtube, Spark Capital AKZO leveraging its celebrity Farhan Akthar, attempted to connect to consumers using #1tensecstory campaign Source: Company, Youtube, Spark Capital while Kansai Nerolac promoted its Interior Impressions HD paints involving brand ambassador Shahrukh Khan Economy Super Clean Emulsion Dulux #tensecstory campaign Season greetings from SRK Interior HD technology explained Source: Company, Youtube, Spark Capital Source: Company, Youtube, Spark Capital Page 3

4 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Sep-8 Dec-8 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-9 Jun-9 Sep-9 Dec-9 Mar-1 Jun-1 Sep-1 Dec-1 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 : Spark Shade-Card Macro Indicators Though far-away from historical peaks, GDP certainly on uptrend real estate activities though fairly subdued GDP on the recovery path, expected to grow ~5.3% in 3QFY Real Estate activity especially in the residential sector stuttering as demand continues to be elusive Source: GOI, Spark Capital YoY GDP growth Quarterly New Launches Source: FICCI real estate sentiment research, Spark Capital Absorption Rate Pent Up demand to drive passenger car offtakes while decorative paints continue to enjoy unabated pricing power. 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Passenger car production Source: SIAM, Company, Spark Capital Source: Bloomberg, Company, Spark Capital Page 4

5 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 USD/Barrel INR/Barrel : Spark Shade-Card Raw Material Basket Painting a Pleasant Picture TIO2 prices on a downtrend Source: Bloomberg, Spark Capital TiO2 (INR/Kg) Sequentially lower domestic diesel prices TIO2 prices lower by ~14% yoy and ~3% qoq basis on account of lower crude prices and subdued demand crude oil prices also show a similar trend Source: Bloomberg, Spark Capital Crude prices down ~23% on a $ and INR terms led by excess supply in the global markets Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 USD/Barrel INR/Barrel coupled with stable currency expected to offer cushion to margins Diesel (INR/Lit) 65 6 INR/USD Rupee Vs USD Flat on a YOY basis Domestic diesel prices are sequentially lower by ~7% 5 45 Source: Bloomberg, Spark Capital Source: Bloomberg, Spark Capital Page 5

6 Key Filings this Quarter Major filings by the paint companies on the exchanges Date Category Announcement Asian 22 Dec 214 Update on Statutory Auditor 22 Oct 214 Acquisition completion Asian Ltd has informed BSE that the Board of Directors of the Company, at its meeting held on December 2, 214, on the recommendations of the Audit Committee, have decided that M/s. B S R & Co., LLP, Chartered Accountants, remaining Statutory Auditor of the Company shall continue to act as a sole Statutory Auditor till the conclusion of the next Annual General Meeting. Signed a Share Purchase Agreement and other definitive agreements and documents to acquire 51% stake in Kadisco (the Acquisition"). The Acquisition is subject to approval of the regulatory authorities in Ethiopia. The consideration for the Acquisition will be disclosed on closing and completion of the Acquisition. This Acquisition will enable the Company to expand its international footprint. Berger 31 Dec 214 Fixes Record Date for Stock Split Berger India Ltd has informed BSE that the Company has fixed January 9, 215 as the Record Date for the purpose of sub-division of Equity Shares of face value of Rs. 2/- into Equity Shares of face value of Re 1/- fully paid up. 4 Nov 214 Change in Directorate 4 Nov 214 Stock Split Berger has informed that the Board of Directors have appointed Mrs. Rishma Kaur and Mr. Kanwardip Singh Dhingra as Directors in wholetime employment with effect from December 1, 214 as a part of succession plans. Mrs. Rishma Kaur would be designated as National Business Development Director - Retail and her appointment would fulfill the requirement to have at least one Lady Director on the Board. Mr. Kanwardip Singh Dhingra would be designated as National Business Development Director - Industrial. Berger India Ltd have finalised and approved the sub-division of the Company s Equity Shares of nominal value of Rs. 2 each into Equity Shares of nominal value of Re. 1/- each, fully paid up and consequently, alter the Memorandum and Articles of Association of the Company and for that purpose, take steps to obtain approval of the shareholders by means of Postal Ballot / E- Voting. Akzo Nobel India 8 Oct 214 Resignation Akzo Nobel India Limited has informed the Exchange that Mr Robert Molenaar, Non-Executive Director, has resigned from the Board of the Company, w.e.f. September 9, 214. Kansai Nerolac 14 Oct Oct 214 Reply to clarification sought by the exchange Clarification sought from Kansai Nerolac Ltd Kansai Nerolac Ltd. (KNP) is associated with Flipkart in an endeavor to engage the consumer with its range of products online. We have also offered a discount for the festive season on booking the painting service. Given the sensorial nature of the category, which is predominantly Do It For Me, KNP does not envisage this move as material change in the company's nature of business. Association with Flipcart is mere marketing association to promote our brand. The Exchange has sought clarification from Kansai Nerolac Ltd with respect to news article appearing in Business Standard & ZEE News on October 13, 214 titled "Kansai Nerolac ties up with Flipkart for festive season." Source: Exchange filings, Company, Spark Capital Page 6

7 Key Developments Asian Connecting with the consumers Berger Swachh Bharat campaign & Painter workshops Ezy Color initiative attempting to enforce people to walk into retail outlet Partnered with Google and promoted its wallpaper offerings at GOSF Inspired by the Swach bharat Abhiyan, Berger launched the "Easy Clean India Campaign" in Kolkata Academy to be opened in Vijaywada to assist painters adapting to Express Painting techniques Source: Company, Spark Capital Source: Company, Spark Capital Akzo Nobel India Staying relevant to changing consumer needs Kansai Nerolac Resorted to going GREEN and ONLINE to fuel growth Dulux Visualizer which allows to virtually decorate room with colour of choice using augmented reality. Akzo Nobel declares Copper Orange to be the colour of FY215. Hues and patterns based on this colour to follow Earth Matters convention series was launched by Kansai Nerolac, inspiring think-tank on green endeavours. Kansai Nerolac initiated a tie-up with Online giant FlipKart as a partner in their Big billion Dollar sales. Source: Company, Spark Capital Source: Company, Spark Capital Page 7

8 ROE - 1 YR FWD FY EPS CAGR (%) : Spark Shade-Card Valuations Quarterly revenue and PAT growth trends Company 3QFY15E (YoY) 2QFY15 (YoY) 1QFY15 (YoY) Revenue Growth PAT Growth Revenue Growth PAT Growth Revenue Growth Indian paint companies trading at higher PE despite average returns PAT Growth Asian 2% 39% 17% 6% 18% 3% Berger 21% 23% 14% 7% 17% 17% Akzo Nobel India 12% 62% 5% 6% 12% 59% Kansai Nerolac 21% 62% 17% 41% 17% 2% Source: Bloomberg, Company, Spark Capital Stock performance (%) Whole of portfolio significantly outperforms the market Company 1 month 3 months 6 months 12 months Asian 2.1% 27.1% 37.% 64.9% Berger 13.8% 17.6% 54.2% 19.1% Akzo Nobel India 3.4% 14.4% 31.7% 65.2% Kansai Nerolac 4.6% 8.8% 3.6% 79.5% Sensex -4.1% 1.8% 6.9% 34.9% Nifty -2.5% 4.9% 7.9% 33.2% Source: Bloomberg, Company, Spark Capital potential of EPS growth though justifies their premium valuation 4% 35% 3% 25% 2% 15% 1% 5% % Kansai PPG industries Nippon Akzo Nobel Akzo Nobel India Kansai Nerolac Berger Asian YR FWD PE 35% 3% 25% 2% 15% 1% 5% Akzo Nobel Nippon Kansai PPG industries Akzo Nobel India Sherwin Williams Kansai Nerolac Berger Asian % YR FWD PE Source: Bloomberg, Company, Spark Capital Source: Bloomberg, Company, Spark Capital Page 8

9 Global Paint Companies Valuation Summary Company Parent Country Markt Cap (USD Mn) EV (USD Mn) PE PB EV/EBITDA ROE (%) OCF Yield Dividend Yield CY14E CY15E CY16E CY14E CY15E CY16E CY14E CY15E CY16E CY14E CY15E CY16E Ppg Industries Inc US 3,594 3, %.3% Sherwin-Williams Co/The US 25,43 26, %.2% Akzo Nobel NE 1,44 12, %.6% Koninklijke Dsm Nv US 11,631 8, % 1.2% Clariant Ag-Reg US 4,868 7, % 2.2% Valspar Corp JN 6,94 8, %.4% Rpm International Inc JN 6,551 8, %.5% Nippon Paint Co Ltd SZ 1,412 1, %.3% Kansai Paint Co Ltd Japan 4,63 4, %.4% Source: Bloomberg, Company, Spark Capital Page 9

10 Valuation Summary Sales (Rs. mn) EBITDA (Rs. mn) PAT (Rs. mn) EPS (Rs.) Company FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E Asian 1,9,386 1,27,148 1,5,31 1,79,741 17,32 19,979 24,271 29,561 11,139 12,257 15,261 18, Berger 33,346 38,697 45,432 53,858 3,712 4,314 5,468 6,267 2,184 2,494 3,24 3, Akzo Nobel India 22,32 24,179 26,688 31,25 1,885 1,919 2,717 3,171 2,188 1,52 2,76 2, Kansai Nerolac 28,395 31,361 37,255 45,185 3,361 3,621 4,834 6,133 1,995 2,66 2,96 3, P/E (x) EV/EBITDA (x) EV/Sales (x) Mkt Cap Rating CMP (Rs) Company FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E FY13 FY14 FY15E FY16E (Rs. mn) Absolute Asian ,77,334 Add Berger ,62,153 Add Akzo Nobel India ,42 66,258 Add Kansai Nerolac ,96 1,12,958 Buy Company Per Share FY15E Dividend Yield Working Capital Days ROE (%) ROCE (%) Yield FCF OCF FY13 FY14 FY15E FY16E FY15E FY16E FY15E FY16E Asian 6.6.8% 1.% 1.7% % 34.8% 3.6% 31.4% Berger % 1.6% 1.8% % 25.3% 19.5% 19.7% Akzo Nobel India % 2.% 2.4% % 22.8% 21.1% 2.9% Kansai Nerolac 12..6% 1.2% 2.5% % 18.8% 17.4% 17.6% Source: Bloomberg, Company, Spark Capital Page 1

11 Recommendation History (1/2) 1 Asian Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 Historical Target Report Date CMP (Rs.) TP (Rs.) Recommendation 27/Oct/ Add 23/Jul/ Buy 19/May/ Add 21/Jan/ Add 17/Jan/ Add 22/Oct/ Add 11/Oct/ Reduce 3/Jul/ Reduce 13/May/ Reduce 24/Jan/ Reduce 29/Oct/ Add 5/Sep/ Add 15 Akzo Nobel India Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 Historical Target Report Date CMP (Rs.) TP (Rs.) Recommendation 13/Aug/14 1,4 1,112 Add 23/May/ Add 6/Feb/ Add 17/Jan/ Add 23/Oct/ Add 11/Oct/ Add 16/Aug/ Add 27/May/13 1,135 1,212 Add 19/Feb/ ,95 Add 12/Nov/ Add 5/Sep/ Add 25 Berger Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 Historical Target Report Date CMP (Rs.) TP (Rs.) Recommendation 8/Aug/ Add 9/Jun/ Add 6/Feb/ Add 17/Jan/ Reduce 6/Nov/ Reduce 11/Oct/ Reduce 13/Aug/ Reduce 6/Jun/ Reduce 7/Feb/ Add 9/Nov/ Add 5/Sep/ Add Page 11

12 Recommendation History (2/2) Kansai Nerolac India Report Date CMP (Rs.) TP (Rs.) Recommendation 1/Dec/14 2, 2,315 Buy 27/Oct/14 1,937 2,224 Buy 24/Jul/14 1,63 1,73 Add 14/May/14 1,248 1,327 Add 6/Feb/14 1,175 1,124 Reduce 17/Jan/14 1,137 1,88 Reduce 11/Nov/13 1,175 1,88 Reduce 11/Oct/13 1,152 1,44 Reduce 1-Jan-11 1-Jul-11 1-Jan-12 1-Jul-12 1-Jan-13 1-Jul-13 1-Jan-14 1-Jul-14 Historical Target 3/Jul/13 1,175 1,44 Reduce 6/Jun/13 1,288 1,49 Sell 24/Jan/13 1,9 896 Sell 31/Oct/ Reduce 5/Sep/ Reduce Page 12

13 Disclaimer Spark Disclaimer Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities and infrastructure advisory services. Spark Capital is registered with SEBI as a Stock Broker and Category 1 Merchant Banker. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in the last five years. We have not been debarred from doing business by any Stock Exchange/SEBI or any other authorities, nor has our certificate of registration been cancelled by SEBI at any point of time. Spark Capital has a subsidiary Spark Investment Advisors (India) Private Limited which is engaged in the services of providing investment advisory services and is registered with SEBI as Investment Advisor. Spark Capital has also an associate company Spark Infra Advisors (India) Private Limited which is engaged in providing infrastructure advisory services. This document does not constitute or form part of any offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. 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), and should consult its own advisors to determine the merits and risks of such an investment. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report 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 Spark Capital and/or its 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. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this document. Spark Capital, its affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by Spark Capital. While we would endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information. Also, there may be regulatory, compliance or other reasons that prevent Spark Capital and its affiliates from doing so. Neither Spark Capital nor its affiliates or their respective directors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contents or any errors or discrepancies herein or for any decisions or actions taken in reliance on the report or the inability to use or access our service in this report or for any loss or damages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use of or reliance on this report. Page 13

14 Cont d Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report: Disclosure of interest statement APNT AKZO BRGR KNPL Analyst financial interest in the company No No No No Group/directors ownership of the subject company covered No No No No Investment banking relationship with the company covered No No No No Spark Capital s ownership/any other financial interest in the company covered No No No No Associates of Spark Capital s ownership more than 1% in the company covered No No No No Any other material conflict of interest at the time of publishing the research report No No No No Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months: Managing/co-managing public offering of securities Investment banking/merchant banking/brokerage services products or services other than those above in connection with research report No No No No Whether Research Analyst has served as an officer, director or employee of the subject company covered No No No No Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No No No No Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst s personal views about any and all of the subject securities or issuers; and no part of the research analyst s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report. Additional Disclaimer for US Institutional Investors This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Decker and Co, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange Act of 1934, as amended). Decker and Co accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities discussed in the research material may do so through Decker and Co. All responsibility for the distribution of this report by Decker and Co, LLC in the US shall be borne by Decker and Co, LLC. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if Spark Capital Advisors (India) Private Limited or Decker and Co, LLC is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Decker and Co, LLC and Spark Capital Advisors (India) Private Limited are permitted to provide research material concerning investment to you under relevant legislation and regulations; Page 14