Bharat Electronics (BHAELE) 1300

Transcription

1 Result Update Rating matrix Rating Matrix Rating : Buy Target : 1600 Target Period : months Potential Upside : 20% What s changed? Target Changed from 1560 to 1600 EPS FY17E Changed from 57.8 to 58.7 EPS FY18E Changed from 62.4 to 63.8 Rating Unchanged Quarterly performance Q2FY17 Q2FY16 YoY (%) Q1FY17 QoQ (%) Revenue EBITDA (824.8) EBITDA (%) bps -5.4 NM* PAT EPS ( ) *NM - Not Meaningful Key financials Crore FY15 FY16 FY17E FY18E Revenue 6,843 7,295 8,666 9,887 EBITDA 1,143 1,461 1,543 1,712 EBITDA (%) Net Profit 1,167 1,358 1,409 1,530 EPS ( ) Valuation summary (x) FY15 FY16 FY17E FY18E P/E Target P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Stock Data Average Volumes (shares) Market Capitalization Crore Total Debt (FY16) 6.2 Crore Cash and Investments (FY16) 7332 crore EV (FY16) Crore 52 week H/L ( ) 1416 / 983 Equity capital 240 Crore Face value 10 MF Holding (%) 8.5 FII Holding (%) 3.9 Promoter Holding (%) 75.0 Price performance Return (%) 1M 3M 6M 12M Bharat Electronics Centum Electronics 13.1 (0.1) (4.8) (20.4) Astra Micro Wave 4.8 (4.4) (0.2) (11.0) Research Analyst Chirag J Shah chirag.shah@icicisecurities.com Sagar K Gandhi sagar.gandhi@icicisecurities.com Strong performance on all counts October 28, 2016 Bharat Electronics (BHAELE) 1300 The company reported strong Q2FY17 numbers which were above our estimates on all fronts. The company reported revenues of 1795 crore up 22.3% YoY (our estimates 1734 crore for the quarter). We believe the company reported superior top line growth due spill-over revenue from the last quarter The company reported EBITDA of crore in Q2FY17 vs crore in Q2FY16. We estimated EBITDA of 215 crore for the quarter. EBITDA margins came in 18.9% vs. 12% YoY PAT came in crore up 67.5% YoY (our estimates 240 crore for the quarter) Last quarter, the company has announced a buyback of crore equity shares, 6.93% of its equity at a price of 1,305 per share or an aggregate consideration not exceeding ~ 2171 crore Strong Q2 on account of strong execution and spill over from Q1FY17 The company had reported weak Q1FY17 numbers as there was a delay in booking 300 crore of materials of orders mostly related to hand-held thermal image cameras equipped with Laser Range Finder. The same was booked in this quarter. Order inflow for Q2FY17 remained healthy at 4127 crore. Order execution also remained strong during the quarter with company supplying 3D tactical control radar, Akash weapon system (army), L 70 Gun upgrade, weapon locating radar, etc. As highlighted in our earlier reports also, we believe order inflows in defence segment have embarked on a new growth trajectory. This is visible in order inflows of 17, 094 crore in FY16 for BEL, which is a huge 79% increase over last year (order backlog 21,617 crore in FY15). We believe this momentum will continue in FY17E and FY18E too as the company has mentioned some large orders like Akash Missile Systems and Tactical communication systems in its expected order book. Accordingly we have estimated order inflows of crore each year for the FY17E-18E. BEL has strong competency in the area of defence electronics, which is one of the most critical areas for capability building of armed forces. Historically, a large part of defence capital spends (45-60%) has been in this segment. High-end technologies in the electronics segment, long gestation periods, heavy capital requirements, specific requirements of armed forces and secrecy related to defence projects act as key entry barriers in this segment. This gives companies like BEL a strong competitive advantage over any upcoming local and foreign completion. With planned capex of over 1500 crore in FY16-18E, BEL is well placed to capitalise on the fledgling defence sector. Continued momentum in exports, healthy balance sheet to help sustain momentum With government s increasing focus on exports, BEL has set-up a dedicated business unit and marketing group to become key supply chain partners of global defence contractors. Exports for Q2FY17 stood at $10.5m. BEL also has a strong balance sheet with near nil debt and cash balance of 7332 crore. Accelerated order inflows and BEL s consistent track record in execution, gives us reasonable confidence on the robust prospects of the company. Accordingly, we expect BEL to deliver sales and PAT CAGR of 16.4% and 6.2% respectively, in FY16-18E. We value BEL at 1600 ( 1560 earlier) i.e. 25x P/E on FY18E EPS of 63.8 and retain BUY recommendation on the company. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Q2FY17 Q2FY17E Q2FY16 YoY (%) Q1FY17 QoQ (%) Comments Total Revenues 1, , , Strong Q2FY17 on account of spill-over of revenues from Q1FY17 Raw materials costs , Employees Expenses Other Expenses Total Expenditure 1, , , EBITDA Higher EBITDA on account of higher booking in the current quarter EBITDA margins (%) bps bps Interest #DIV/0! Depreciation Tax Other Income PAT Consequently, PAT increased 67.5% YoY Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 8, , , , EBITDA 1, , , , EBITDA Margin (%) bps bps Higher margins on account of better execution and operating efficiences PAT 1, , , , EPS ( ) Company Analysis ICICI Securities Ltd Retail Equity Research Page 2

3 Key takeaways for Q2FY17 Strong order book: Order book at the end of Q2FY17 stood at 34,675 crore, orders received during the quarter 4127 crore. Major orders during Q2FY17: Electronic Warfare Suite (Shakti & Nayan), Advanced Composite Communication System, Ship Data Network, Annual maintenance contract for Rohini Radar Export order book stood at USD $ 102 mn. Export turnover for Q2FY17 USD $ 10.5 mn. Major supplies during Q2FY17: 3D Tactical Radar, Akash Weapon System (Army), L 70 gun upgrade, Weapon Locating Radar, Hand held Thermal Imager with Laser Range Finder. Major orders expected in FY17 could also include orders like Akash Missile System (7 sqdn), Mobile Cellular Communication System, Commander Thermal Image (TI) Sights, Samyukta Upgrade, Long Range Surface to Air Missile, L- Band Tropo Upgrade ICICI Securities Ltd Retail Equity Research Page 3

4 Annual report takeaways FY15-16 Radars, Missile Systems, Communication and Network Centric Systems, Tank Electronics, Gun Upgrades, Electro-Optic Systems, Electronic Warfare and Avionics Systems are the key areas that will drive BEL s growth in the medium term. Defence being the mainstay of the company, has contributed 82% of sales revenue, with the balance 18% coming from the civilian sector. 86% of the turnover came from indigenous products. BEL reported 47% YoY growth in exports, an all time high export turnover of US$ million in FY16. The products exported include Naval Air Surveillance Radar, Ship Borne Electronic Warfare System, Thermal Imaging based Fire Control System, Communication Equipment, Electronic Voting Machines, etc. The total expenditure on R&D was 9.36% of sales, which is one of the highest among the defence PSUs. Foundation stone for Defence Systems Integration Complex in Anantapur district of Andhra Pradesh was laid in FY The capital expenditure planned for this complex stands at 500 crore. Once operational, this facility is likely to be largest of its kind facility in the country, covering an area of over 900 acres. This facility will enable BEL to expand its Missile systems business and will carry out manufacturing & integration for the ongoing and upcoming projects. It will have state-of-the art infrastructure such as Assembly Hangars and Hard Stands for Radars and Weapon integration, RF radiation sources for target simulation, Automatic Test Equipment, Clean Rooms for electronic assembly, Non-Explosive & Explosive Integration Buildings, Missile Storage buildings, Environmental Test Chambers, Fire Stations, Solar Power Plant, Estate and Admin buildings. In FY15-16, BEL has successfully completed supply of all systems for six Squadrons of Akash to Indian Air Force. The important projects planned for execution for the next few year are Akash Weapon System, 3D TCR, Weapon Locating Radar, Schilka Upgrade, Communication Equipment, Night Vision Devices, L70 upgrade, IACCS etc. New Strategic Initiatives The company is working on new strategic areas like Electronic Ammunition Fuzes, Homeland Security Solutions, Navigational Complex Systems and Inertial Navigation systems, etc BEL has formed a Joint Venture Company with Thales, BELTHALES Systems Limited which is presently operational and is engaged in Design, Development, Marketing, Supply and Support of Civilian and select Defence Radars for Indian and Global markets. The JVC has entered into a strategic co-operation contract with Thales to jointly develop PHAROS, a fire control radar for both gun and missile systems. ICICI Securities Ltd Retail Equity Research Page 4

5 Company Analysis Revenue growth of 16.4% CAGR in FY16-18E to be driven order inflows and strong execution We expect standalone revenues to increase from 7295 crore in FY16 to 9887 crore in FY18E at a CAGR of 16.4%, mainly on the back of strong order inflows and execution of backlog orders over the next two years. Order backlog as on H2FY17 stands at 34,675 crore. We expect order inflows of in FY17E and FY18E. Assuming, execution rate of ~23% for backlog orders and 10% execution rate for current year order inflows, we estimate BEL to post revenues of 8666 crore in FY17E and 9887 crore in FY18E. Exhibit 1: Revenue trend crore 12,000 10,000 8,000 6,000 4,000 6,276 6,843 7,295 8,666 9,887 2,000 - FY14 FY15 FY16 FY17E FY18E Order book growth to keep ticking Order backlog for BEL has historically grown at 6.3%CAGR over FY11- FY16. However, with the government s Make in India campaign gaining steam, we expect order backlog for BEL to increase at 8.5% CAGR over FY16-18E. Exhibit 2: Order backlog trend crore % FY12 FY13 FY14 FY15 FY16 FY17E FY18E Order Backlog ICICI Securities Ltd Retail Equity Research Page 5

6 Strong order inflows over the next 5-7 years BEL is expected to receive significant amount of orders over the next five to seven year. Major orders expected to be finalised in FY17 may include orders like Akash Missile (~ 4700 crore), 3D Tactical control radar, Fire control systems, Low level light weight radar, Integrated Sonar Suite, passive night vision devices etc. Apart from the above mentioned orders the company is also contender for large orders like Battle field management system(bms), the order size of which is crore. Also, With Hindustan Aeronautics Ltd (HAL) commencing production line for indigenous aircraft Tejas, BEL is expected to receive significant orders for its electronic components and systems. Thus, we expect order pipeline for BEL to remain strong over FY16-20E. For FY17E and FY18E, we have estimated order inflows of crore for the company. Exhibit 3: Order inflows to significantly over FY16-18E crore FY12 FY13 FY14 FY15 FY16 FY17E FY18E Orders Inflows EBIDTA margins to stabilize to 17.3% in FY18E BEL reported strong EBITDA margins 20% in FY16 vs. 16.7% for FY15. Sharp increase in margins was due overall reduction in material consumption mainly because of commodity correction and indigenisation initiatives of the company. However, we believe the same is not sustainable going forward. Also, BEL has transformed itself from a pure product-selling company to one that takes the contract as a system integrator. For instance, BEL used to win 25-30% of the contract for Akash missiles to supply its radars and related electronics but now BEL receives turnkey orders to supply Akash missiles. From just supplying the product, it now purchases equipment i.e. missiles from HAL and launchers from L&T, assembles the product and then supplies it to the air force. Though this has increased revenues and order inflows for the company, margins are expected come off as profitability on purchased equipment is not as high as its own product. EBITDA has grown at 8.1% CAGR in FY Going ahead, we expect EBITDA to grow at 8.2% CAGR in FY16-18E. Due to higher inflow of large orders in the coming years, we expect EBITDA margins for the company to moderate from 20%in FY16 to 17.3% in FY18E. ICICI Securities Ltd Retail Equity Research Page 6

7 Exhibit 4: EBITDA and EBITDA margin trend crore 12,000 10,000 8,000 6,000 4,000 2,000 6, , ,143 9, , , ,461 1,543 1, % - FY14 FY15 FY16 FY17E FY18E 0 Revenues EBITDA EBITDA margin (%) PAT to grow at 6.2% CAGR in FY16-18E In FY11-FY16, PAT grew at 9.5% CAGR. This was mostly due to healthy topline growth and improvement in execution in FY16. Going forward, we expect the bottomline to grow at 6.2% CAGR in FY16-18E. Exhibit 5: PAT trend crore 1,800 1,600 1,400 1,200 1, ,167 1,358 1,409 1,530 FY14 FY15 FY16 FY17E FY18E % Net Profit Margins (%) RoE, RoCE of 13.9% and 18.7% in FY18E The return ratios have exhibited a declining trend from RoCEs and RoEs of 20.4% and 14.8% in FY12 to 19.6% and 14.8% in FY15, respectively, for similar reasons of lower margins and large orders with long execution cycles. With moderate capex plans ( 1000 crore over FY17E and FY18E) and demand growth revival, capacity utilisation levels are expected to improve leading to stable return ratios. BEL has been a consistent debtfree company with a cash balance of 7332 crore in FY16. Thus, we estimate stable return ratios of RoE and RoCE of 13.9% and 18.7% in FY18E. ICICI Securities Ltd Retail Equity Research Page 7

8 Exhibit 6: RoE, RoCE trend % FY14 FY15 FY16 FY17E FY18E RoCE (%) RoE (%) ICICI Securities Ltd Retail Equity Research Page 8

9 Outlook and valuation BEL is among the few defence PSUs that has strong financials and long history of efficient capital allocation. The company has delivered a topline and bottomline CAGR of ~6% and 7.3% over the past 15 years (FY01-16), with average RoCEs and RoEs of 21% and 18.8%, respectively. The company is characterised by consistent dividend payout of 20%, clean corporate governance, efficient working capital management, adequate R&D spend, ability to absorb latest technologies, timely execution of large projects, strong cash flow generation and prudent capital allocation. BEL is among the few defence PSUs that has strong financials and long history of efficient capital allocation. The company has delivered a topline and bottomline CAGR of ~6% and 7.3% over the past 15 years (FY01-16), with average RoCEs and RoEs of 21% and 18.8%, respectively. The company is characterised by consistent dividend payout of 20%, clean corporate governance, efficient working capital management, adequate R&D spend, ability to absorb latest technologies, timely execution of large projects, strong cash flow generation and prudent capital allocation. With large participation of private sector players kicking in the defence space, there have been apprehensions about BEL s ability to bag large orders in this space. However, we believe the same is not a major threat as BEL has proactively taken major steps including technology tie-ups with foreign majors to bid for the upcoming platform-based orders. Historically, stock of the company has traded at 13x (10 year average) of two year forward earnings. We believe this is because of the nature of the business in which BEL is engaged. Lumpy orders, routine delays in decision making by armed forces, bureaucratic inertia, sensitive technologies and a variety of other factors like movement in policy reforms, corruption and capital market conditions have always led market participants to view the business of BEL with suspicion. With credible defence initiatives, a large upcoming opportunity, sound balance sheet strength and accelerated order inflows, we believe the best is yet to come. With moderate capital expenditure of 1500 crore over the next three years (FY17E-19E), we believe BEL is a quality play and is on a strong footing. Accordingly, we expect BEL to deliver sales and PAT CAGR of 16.4% and 6.2% respectively, in FY16-18E. We value BEL at 1600 ( 1560 earlier) i.e. 25x P/E on FY18E EPS of 63.8 and Retain BUY recommendation on the company. ICICI Securities Ltd Retail Equity Research Page 9

10 Financial summary (Standalone) Profit and loss statement Crore ( Crore) FY15 FY16 FY17E FY18E Net Sales 6, , , ,674.7 Other operating income Total Revenue 6, , , ,887.5 Other income Total 7, , , ,420.3 Total Raw Material Costs 3, , , ,321.1 Employee Expenses 1, , , ,838.2 other expenses ,015.8 Total Operating Expenditure 5, , , ,175.1 Operating Profit (EBITDA) 1, , , ,712.4 Interest PBDT 1, , , ,245.2 Depreciation PBT before Exceptional Items 1, , , ,037.6 Total Tax PAT before MI 1, , , ,530.2 Minority Interest PAT 1, , , ,530.2 EPS Cash flow statement Crore ( Crore) FY15 FY16 FY17E FY18E Profit after Tax 1, , , ,530.2 Depreciation Interest Cash Flow before WC changes 1, , , ,737.9 Changes in inventory (70.7) (798.5) (105.7) (602.4) Changes in debtors (1,630.1) (753.0) Changes in loans & Advances (180.8) (11.1) Changes in other current assets 12.8 (4.6) (11.2) (9.8) Net Increase in Current Assets (575.9) (1,927.9) (1,376.2) Changes in creditors (363.2) 1, , ,067.8 Changes in provisions (212.1) Net Increase in Current Liabilities (186.0) 1, , ,174.6 Net CF from Operating activities 1, , ,536.2 Changes in deferred tax assets (38.3) (34.5) - - (Purchase)/Sale of Fixed Assets (217.0) (646.2) (500.0) (500.0) Net CF from Investing activities (263.9) (964.2) (495.0) (495.0) Dividend and Dividend Tax (281.0) (489.6) (515.6) (555.5) Net CF from Financing Activities (304.3) (516.2) (740.8) Net Cash flow 1, , Opening Cash/Cash Equivalent 4, , , ,046.7 Closing Cash/ Cash Equivalent 5, , , ,347.0 Balance sheet. Crore ( Crore) FY15 FY16 FY17E FY18E Equity Capital Reserve and Surplus 7, , , ,795.0 Total Shareholders funds 7, , , ,035.0 Minority Interest Other Non Current Liabilities Total Debt Total Liabilities 7, , , ,322.0 Gross Block 2, , , ,021.1 Acc: Depreciation 1, , , ,281.3 Net Block , ,739.8 Capital WIP Total Fixed Assets , , ,989.8 Non Current Assets Inventory 3, , , ,876.0 Debtors 3, , , ,095.0 Loans and Advances Other Current Assets Cash 5, , , ,347.0 Total Current Assets 13, , , ,188.2 Current Liabilities 6, , , ,564.7 Provisions , ,056.5 Net Current Assets 6, , , ,567.0 Total Assets 7, , , ,322.1 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per Share Data EPS Cash per Share BV Dividend per share Dvidend payout ratio Operating Ratios EBITDA Margin PAT Margin Return Ratios RoE RoCE RoIC Valuation Ratios EV / EBITDA P/E EV / Net Sales Sales / Equity Market Cap / Sales Price to Book Value Turnover Ratios Asset turnover Debtors Turnover Ratio Creditors Turnover Ratio Solvency Ratios Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 10

11 Financial summary (Consolidated) Profit and loss statement Crore ( Crore) FY15 FY16 FY17E FY18E Net Sales 6, , , ,294.1 Other Operating Income Total Operating Income 7, , , ,531.3 Other Income Total Revenue 7, , , ,020.2 Total Raw Material Costs 3, , , ,211.8 Employee Expenses 1, , , ,145.9 other expenses , ,174.6 Total Operating Expenditure 5, , , ,532.3 Operating Profit (EBITDA) 1, , , ,999.1 Interest PBDT 1, , , ,477.9 Depreciation PBT before Exceptional Items 1, , , ,173.0 Total Tax PAT before MI 1, , , ,608.0 Minority Interest (0.2) (0.6) - - PAT 1, , , ,608.0 EPS Cash flow statement Crore ( Crore) FY15 FY16 FY17E FY18E Profit after Tax 1, , , ,608.0 Depreciation Interest Cash Flow before WC changes 1, , , ,922.9 Changes in inventory (84.5) (788.6) (547.7) (809.3) Changes in debtors (2,209.8) (1,011.6) Changes in loans & Advances (263.5) (34.8) Changes in other current assets 14.5 (4.8) (18.1) (13.1) Net Increase in Current Assets (571.7) (3,039.1) (1,868.7) Changes in creditors (328.3) 1, , ,686.0 Changes in provisions (186.0) Net Increase in Current Liabilities (147.6) 1, , ,854.6 Net CF from Operating activities 1, , ,908.8 Changes in deferred tax assets (36.9) (32.9) - - (Purchase)/Sale of Fixed Assets (226.5) (650.7) (500.0) (500.0) Net CF from Investing activities (263.5) (912.1) (252.8) (495.0) Dividend and Dividend Tax (281.6) (489.6) (515.6) (555.5) Net CF from Financing Activities (298.2) (544.1) (479.6) (572.6) Net Cash flow 1, ,514.9 (452.6) Opening Cash/Cash Equivalent 4, , , ,100.3 Closing Cash/ Cash Equivalent 6, , , ,941.5 Balance sheet Crore ( Crore) FY15 FY16 FY17E FY18E Equity Capital Reserve and Surplus 8, , , ,688.7 Total Shareholders funds 8, , , ,928.7 Minority Interest Other Non Current Liabilities Total Debt Total Liabilities 8, , , ,249.3 Gross Block 2, , , ,332.7 Acc: Depreciation 1, , , ,508.8 Net Block 1, , , ,823.9 Capital WIP Total Fixed Assets 1, , , ,098.9 Non Current Assets Inventory 3, , , ,569.7 Debtors 3, , , ,962.1 Loans and Advances Other Current Assets Cash 6, , , ,941.5 Total Current Assets 14, , , ,467.2 Current Liabilities 6, , , ,603.6 Provisions , ,160.4 Net Current Assets 6, , , ,703.3 Total Assets 8, , , ,249.3 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per Share Data EPS Cash per Share BV Dividend per share Dvidend payout ratio Operating Ratios EBITDA Margin PAT Margin Return Ratios RoE RoCE RoIC Valuation Ratios EV / EBITDA P/E EV / Net Sales Sales / Equity Market Cap / Sales Price to Book Value Turnover Ratios Asset turnover Debtors Turnover Ratio Creditors Turnover Ratio Solvency Ratios Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 11

12 [ Recommendation history vs. consensus chart ( ) 1,800 1,600 1,400 1,200 1, Oct-14 Dec-14 Mar-15 May-15 Jul-15 Oct-15 Dec-15 Mar-16 May-16 Aug Oct-16 (%) Series1 Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research, Initiated coverage on 27 th Jan 2016 Key events Date/Year Event Dec-12 BEL signs an MoU with Israel Aerospace Industries (IAI) for cooperation on future Long Range Surface to Air Missile (LRSAM) Ship-defence Systems Sep-14 BEL establishes a Joint Venture Company (JVC) with M/s. Thales Air Systems SA, France and M/s. Thales India Pvt. Ltd in Radar Business Area. Nov-15 BEL delivers L70 upgraded guns to Indian Army Feb-15 Ministry of Defence selects BEL - Rolta consortium as a Development Agency for the Battlefield Management System Project Mar-15 BEL issues bonus shares in the ratio of 2:1 Oct-15 BEL signs 8000 crore IACCS (Integrated Air Command and Control System) deal with Indian Air Force Mar-16 BEL, Rosoboronexport sign defence offset partnership agreement May-16 BEL and HAL sign deal to co-develop avionics May-16 BEL registers highest-ever order inflow of 17,094 for FY16. May-16 BEL inaugurates 8.4 MW wind energy power plant at Harappanahalli, Karnataka. With this wind energy plant, 90% of BEL's energy requirement will be met through renewable energy resources. Top 10 Shareholders Rank Name Latest Filing Date O/S Position Position Change 1 Government of India 30-Sep % M 0 2 Life Insurance Corporation of India 30-Sep % 12.15M -0.59M 3 HDFC Asset Management Co., Ltd. 31-Aug % 4.02M 0 4 Reliance Nippon Life Asset Management Lim 30-Sep % 2.47M -0.16M 5 SBI Funds Management Pvt. Ltd. 31-Aug % 2.07M +0.05M 6 Tata Asset Management Limited 30-Sep % 1.85M -0.00M 7 The Vanguard Group, Inc. 31-Aug % 1.72M +0.02M 8 UTI Asset Management Co. Ltd. 31-Aug % 1.72M 0 9 ICICI Prudential Asset Management Co. Ltd. 31-Aug % 1.20M +0.00M 10 DSP BlackRock Investment Managers Pvt. L 31-Aug % 1.19M 0 Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Promoter FII DII Others Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Fullerton Fund Management Company Ltd M +0.23M Life Insurance Corporation of India M -0.59M SBI Funds Management Pvt. Ltd M +0.05M Schroder Investment Management (Hong Kong) Ltd M -0.24M Mirae Asset Global Investments (Hong Kong) Limited +0.80M +0.04M Franklin Templeton Asset Management (India) Pvt. Ltd M -0.14M Kotak Mahindra Asset Management Company Ltd M +0.04M Driehaus Capital Management, LLC -2.14M -0.12M INVESCO Asset Management Deutschland GmbH +0.57M +0.03M Mirae Asset Global Investments Co., Ltd M -0.08M Source: Reuters, ICICIdirect.com Research 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 Disclaimer ANALYST CERTIFICATION We, Chirag Shah, PGDBM and Sagar Gandhi, MBA research analysts, 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 is a SEBI registered Research Analyst having registration no. INH ICICI Securities Limited (ICICI Securities) is 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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ICICI Securities has received an investment banking mandate from Government of India for disinvestment in Bharat Electronics Ltd. This report is prepared based on publicly available information. ICICI Securities Ltd Retail Equity Research Page 14