INDIA DAILY October 1, 2018 India 28-Sep 1-day 1-mo 3-mo

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1 Contents Special Reports Theme Report Daily Alerts Automobiles: Storm ahead; avoid two-wheeler names Company alerts Apollo Tyres: Addressing concerns INDIA DAILY October 1, 2018 India 28-Sep 1-day 1-mo 3-mo Sensex 36,227 (0.3) (6.3) 2.3 Nifty 10,930 (0.4) (6.4) 2.0 Global/Regional indices Dow Jones 26, Nasdaq Composite 8, (0.8) 7.1 FTSE 7,510 (0.5) 1.0 (1.7) Nikkei 24, Hang Seng 27, (0.4) (4.0) KOSPI 2,334 (0.4) Value traded India Cash (NSE+BSE) Derivatives (NSE) 7,144 9,939 19,55 9 Timken: Valuations still not attractive; maintain SELL Deri. open interest 2,899 4,450 4,603 Sector alerts Economy / NBFCs: Debt markets: Lull after the storm Forex/money market Change, basis points Metals & Mining: Weak INR/US$ - positive, partially offset by weakness in other EM currencies Technology: 2QFY19E preview: Currency, deal closures tailwind Telecom: 2QFY19 preview - no respite Economy alerts Economy: Positive borrowing surprise, but risks remain 28-Sep 1-day 1-mo 3-mo Rs/US$ yr govt bond, % Net investment (US$ mn) 27-Sep MTD CYTD FIIs 86 #N/A (1,772) MFs (126) #N/A 12,983 Top movers Change, % Best performers 28-Sep 1-day 1-mo 3-mo RIL IN Equity 1, DIVI IN Equity 1,311 (4.0) WPRO IN Equity ARBP IN Equity ABB IN Equity 1,410 (1.0) Worst performers JPA IN Equity 7 (11.4) (44.8) (58.9) YES IN Equity 184 (9.6) (46.5) (45.9) UT IN Equity 3 (7.1) (34.2) (37.3) IDEA IN Equity (21.9) (35.0) RCAPT IN Equity 282 (3.7) (40.2) (27.2) For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

2 Automobiles India NEUTRAL OCTOBER 1, 2018 THEME BSE-30: 36,227 Storm ahead; avoid two-wheeler names. Over the past couple of months, twowheeler prices have increased significantly led by increase in insurance costs, which has led to slowdown in volume growth for the sector. Prices of two-wheelers are likely to increase further as ABS/CBS systems will become mandatory by April 2019 and BS-VI norms are implemented by April We expect volume growth in the two-wheeler industry to slow down significantly over the next two years. We cut our volume and earnings estimates across all two-wheeler companies in our coverage universe. Maintain SELL on Bajaj Auto, Hero Motocorp, Eicher Motors and TVS Motor. Cost of ownership levels increase sharply due to regulatory pressures and spike in oil prices Cost of ownership levels (refer to Exhibit 2) could increase by 7-12% between August 2018 and April 2019 led by (1) sharp increase in insurance costs as IRDA has made it mandatory to purchase five-year third-party insurance and proposal of IRDA to increase owner-driver insurance to `1.5 mn from `0.1 mn earlier over a period of 5 years, (2) ABS will become mandatory from April 2019 for two-wheelers with >125cc engines and CBS will become mandatory for two-wheelers with <125cc engines and (3) 7% increase in retail oil prices in past two months. Prices of two-wheelers will also increase by 7-16% between August 2018 and April 2019 if the proposal of IRDA to increase owner-driver insurance is implemented. We believe such a steep hike in prices and subsequently sharp rise in cost of ownership levels will likely lead to slowdown in two-wheeler volume growth. Two-wheeler prices are likely to increase further by `4,000-7,000 once BS-VI norms are implemented in April We have thus cut our two-wheeler industry volume assumptions sharply and now expect a 5% CAGR in volume growth over FY (refer to Exhibit 6 for details on industry projections). We believe finance penetration in two-wheelers may not increase significantly (35% of twowheelers are currently financed), as the two-wheeler financing segment is dominated by NBFCs (65% share in two-wheeler financing), which are going through a challenging time. Banks have not been comfortable in financing the bottom-end of the two-wheeler market and may concentrate on premium motorcycles. However, captive financiers like Bajaj Auto Finance and Hero Fincorp may get more aggressive in the two-wheeler financing market. Cut EPS estimates by 2-18% across two-wheeler OEMs in our coverage universe We have reduced our earnings estimates by 2-18% over FY E for Bajaj Auto, Eicher Motors, Hero Motocorp and TVS Motor led by 2-9% cut in our volume assumptions in line with our view on slowdown in two-wheeler industry growth rates and bps reduction in our EBITDA margin assumptions (refer to Exhibit 7). We have thus reduced our target prices on twowheeler OEMs by 4-14% (refer to Exhibit 8), factoring in reduction in our earnings estimates and reduction in target multiple. Hitesh Goel Nishit Jalan For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

3 Automobiles India Exhibit 1: Pricing of two-wheeler models has increased by 7-16% over the past two months due to increase in insurance cost Prices of select two-wheeler models over the past three months (`, %) Bajaj Auto Entry segment (CT 100 Alloy ES) % increase Aug-18 Sep-18 Oct-18 Aug.-Oct Ex-showroom price (Mumbai) 40,269 40,768 40,768 Insurance 1,889 5,361 9,561 Depo charges 2,700 2,700 2,700 RTO charges 5,120 5,176 5,176 Others 2,812 2,812 2,812 On-road price (Mumbai) 52,790 56,817 61, Mid segment (Discover 125 disc) Ex-showroom price (Mumbai) 58,374 58,374 58,374 Insurance 2,307 5,768 9,968 Depo charges 2,700 2,700 2,700 RTO charges 7,152 7,152 7,152 Others 2,812 2,812 2,812 On-road price (Mumbai) 73,345 76,806 81, Premium segment (Pulsar 150 Deluxe) Ex-showroom price (Mumbai) 74,573 74,573 74,573 Insurance 2,681 6,142 10,342 Depo charges 2,700 2,700 2,700 RTO charges 8,969 8,969 8,969 Others 2,612 2,612 2,612 On-road price (Mumbai) 91,535 94,996 99, Hero Deluxe i3s Ex-showroom price (Mumbai) 48,250 48,250 Insurance 4,890 9,090 RTO charges 7,908 7,908 Others 1,300 1,300 On-road price (Mumbai) 58,348 62,348 66, Hero Super splendor Ex-showroom price (Mumbai) 56,900 56,900 Insurance 1,200 5,014 9,214 RTO charges 9,248 9,248 Others 1,300 1,300 On-road price (Mumbai) 68,462 72,462 76, Hero Maestro Edge Zx Ex-showroom price (Mumbai) 51,616 51,616 Insurance 4,938 9,138 RTO charges 8,634 8,634 Others 2,900 2,900 On-road price (Mumbai) 64,088 68,088 72, Honda Activa 5G DLX Vehicle price 70,310 Accessories 3,500 On-road price (Mumbai) 69,810 73,810 78, TVS Jupiter ZX Ex-showroom price (Mumbai) 55,840 55,840 Insurance 5,309 9,509 RTO charges 7,051 7,051 Others (including accessories) 3,000 3,000 On-road price (Mumbai) 67,200 71,200 75, TVS Apache RTR 160 New Ex-showroom price (Mumbai) 76,834 76,834 Insurance 8,356 12,556 RTO charges 9,260 9,260 On-road price (Mumbai) 90,450 94,450 98, Royal Enfield Classic 350 Rear disc Ex-showroom price (Mumbai) 147, ,195 Insurance 9,466 13,666 RTO charges 18,818 18,818 Others (including accessories) On-road price (Mumbai) 168, , , Royal Enfield Classic 350 Signal ABS Ex-showroom price (Mumbai) 161, ,984 Insurance 9,699 13,899 RTO charges 20,627 20,627 Others (including accessories) On-road price (Mumbai) 185, , , Source: Dealers, Kotak Institutional Equities KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

4 India Automobiles Exhibit 2: Ownership cost of entry and mid-segment motorcycles will increase by around 7% between August 2018 and April 2019 Cost of ownership of Hero Deluxe and Hero Super Splendor models, August 2018 to April 2019 (`, %) Entry segment (Hero Deluxe i3s) - Mumbai prices Aug-18 Sep-18 Oct-18 Apr-19 Comments On-road price (Rs) (a) 58,348 62,348 66,548 68,048 Financed amount (%) Interest rate (%) Total loan tenure (years) Total interest cost (Rs) (b) 16,104 17,208 18,367 18,781 Total cost of vehicle (Rs) (a)+(b), ( c) 74,452 79,556 84,915 86,829 Petrol price (Rs/litre) Average fuel efficiency (km/liter) Annual kms run 12,000 12,000 12,000 12,000 Total years Total fuel cost (Rs) (d) 77,330 81,030 83,000 83,000 Annual maintenance cost (Rs) 1,000 1,000 1,000 1,000 Total maintenance cost (Rs) ( e) 5,000 5,000 5,000 5,000 Insurance cost for 5 years (f) 3,472 Resale value after 5 years (Rs) (g) 29,174 31,174 33,274 34,024 Total cost of ownership (Rs) (c)+(d)+(e)+(f)-(g) 131, , , ,805 Mom change (%) Increase between August 2018 to April CBS will be mandatory from April 2019 (Rs1,500) Mid-segment (Hero Super Splendor) - Mumbai prices Aug-18 Sep-18 Oct-18 Apr-19 Comments On-road price (Rs) (a) 68,462 72,462 76,662 78,162 Financed amount (%) Interest rate (%) Total loan tenure (years) Total interest cost (Rs) (b) 18,896 20,000 21,159 21,573 Total cost of vehicle (Rs) (a)+(b), ( c) 87,358 92,462 97,821 99,735 Petrol price (Rs/litre) Average fuel efficiency (km/liter) Annual kms run 12,000 12,000 12,000 12,000 Total years Total fuel cost (Rs) (d) 77,330 81,030 83,000 83,000 Annual maintenance cost (Rs) 1,000 1,000 1,000 1,000 Total maintenance cost (Rs) ( e) 5,000 5,000 5,000 5,000 Insurance cost for 5 years (f) 3,814 Resale value after 5 years (Rs) (g) 34,231 36,231 38,331 39,081 Total cost of ownership (Rs) (c)+(d)+(e)+(f)-(g) 139, , , ,654 Mom change (%) Increase between August 2018 to April CBS will be mandatory from April 2019 (Rs1,500) Source: Dealers, Company, Kotak Institutional Equities estimates 4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

5 Automobiles India Exhibit 3: Ownership cost of premium motorcycles will increase by around 10-12% between August 2018 and April 2019 Cost of ownership of Bajaj Pulsar and Classic 350, August 2018 to April 2019 (`, %) Aug-18 Sep-18 Oct-18 Apr-19 Comments Premium segment (Bajaj Pulsar 150 Deluxe) - Mumbai prices On-road price (Rs) (a) 91,535 94,996 99, ,196 ABS will be mandatory from April 2019 Financed amount (%) (Rs10,000) Interest rate (%) Total loan tenure (years) Total interest cost (Rs) (b) 33,685 34,959 36,504 40,184 Total cost of vehicle (Rs) (a)+(b), ( c) 125, , , ,380 Petrol price (Rs/litre) Average fuel efficiency (km/liter) Annual kms run 12,000 12,000 12,000 12,000 Total years Total fuel cost (Rs) (d) 115, , , ,500 Annual maintenance cost (Rs) 1,200 1,200 1,200 1,200 Total maintenance cost (Rs) ( e) 6,000 6,000 6,000 6,000 Insurance cost for 5 years (f) 3,461 Resale value after 5 years (Rs) (g) 45,768 47,498 49,598 54,598 Total cost of ownership (Rs) (c)+(d)+(e)+(f)-(g) 204, , , ,282 Mom change (%) Increase between August 2018 to April Royal Enfield Classic 350 Rear disc - Mumbai prices Jun-18 Aug-18 Sep-18 Oct-18 Apr-19 Comments On-road price (Rs) (a) 159, , , , ,579 Financed amount (%) Interest rate (%) Total loan tenure (years) Total interest cost (Rs) (b) 73,314 77,454 81,134 83,066 88,586 Total cost of vehicle (Rs) (a)+(b), ( c) 232, , , , ,165 Petrol price (Rs/litre) Average fuel efficiency (km/liter) Annual kms run 12,000 12,000 12,000 12,000 12,000 Total years Total fuel cost (Rs) (d) 131, , , , ,286 Annual maintenance cost (Rs) 1,400 1,400 1,400 1,400 1,400 Total maintenance cost (Rs) ( e) 7,000 7,000 7,000 7,000 7,000 Insurance cost for 5 years (f) 8,000 8,000 Resale value after 5 years (Rs) (g) 79,690 84,190 88,190 90,290 96,290 Total cost of ownership (Rs) (c)+(d)+(e)+(f)-(g) 299, , , , ,162 Mom change (%) Increase between June 2018 to April Disc brake was introduced in July 2018 (Rs9,000) and ABS will be mandatory from April 2019 (Rs12,000) Source: Dealers, Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

6 India Automobiles Exhibit 4: Ownership cost of scooters will increase by around 6% between August 2018 and April 2019 Cost of ownership of Honda Activa, August 2018 to April 2019 (`, %) Aug-18 Sep-18 Oct-18 Apr-19 Comments Scooter (Honda Activa 5G DLX) - Mumbai prices On-road price (Rs) (a) 69,810 73,810 78,010 78,010 CBS is already there in the model Financed amount (%) Interest rate (%) Total loan tenure (years) Total interest cost (Rs) (b) 19,268 20,372 21,531 21,531 Total cost of vehicle (Rs) (a)+(b), ( c) 89,078 94,182 99,541 99,541 Petrol price (Rs/litre) Average fuel efficiency (km/liter) Annual kms run 12,000 12,000 12,000 12,000 Total years Total fuel cost (Rs) (d) 115, , , ,500 Annual maintenance cost (Rs) 1,000 1,000 1,000 1,000 Total maintenance cost (Rs) ( e) 5,000 5,000 5,000 5,000 Insurance cost for 5 years (f) 4,000 Resale value after 5 years (Rs) (g) 34,905 36,905 39,005 39,005 Total cost of ownership (Rs) (c)+(d)+(e)+(f)-(g) 179, , , ,036 Mom change (%) Increase between August 2018 to April Source: Dealers, Company, Kotak Institutional Equities estimates 6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

7 Automobiles India Exhibit 5: We expect domestic motorcycle industry to grow at around 5% CAGR over FY E Segmental motorcycle industry volumes and growth rates, March fiscal year-ends, E (mn units, %) E 2020E 2021E Economy Executive Premium Total volumes Yoy change (%) Economy (1.0) Executive 12.3 (0.5) 6.0 (2.5) (9.3) (0.6) Premium 4.0 (3.4) Total (0.4) Playerwise volumes (mn units) Economy Hero Bajaj TVS Executive Hero Bajaj Honda TVS Others Premium Hero Bajaj Honda Yamaha Royal Enfield TVS Others Total volumes Hero Bajaj Honda TVS Segmental market shares (%) Economy Hero Bajaj TVS Executive Hero Bajaj Honda Premium Bajaj Hero Yamaha Honda Royal Enfield Domestic motorcycle market share (%) Hero Bajaj Honda TVS Source: SIAM, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

8 India Automobiles Exhibit 6: We expect domestic two-wheeler industry to grow at around 5% CAGR over FY E Two-wheeler industry volumes and growth rates, March fiscal year-ends, E (mn units, %) Domestic volumes (mn units) E 2020E 2021E Scooters Motorcycles Mopeds Total domestic volumes Scooters Honda Hero Motocorp TVS Motors Others Total scooter volumes Motorcycles Hero Motocorp Bajaj Honda TVS Motors Others Total motorcycle volumes Total two-wheelers Hero Motocorp Bajaj Honda TVS Motors Others Total two-wheeler volumes Yoy growth (%) Scooters Motorcycles (0.4) Mopeds (8.3) 4.4 (4.1) 23.0 (3.5) Domestic two wheelers Market share (%) Hero Motocorp Bajaj Honda TVS Motors Others Source: SIAM, Kotak Institutional Equities estimates 8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

9 Automobiles India Exhibit 7: We cut our FY E earnings estimates for two-wheeler companies Earnings revision table of two-wheeler companies, March fiscal year-ends, E (` mn, %) Bajaj Auto 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E Domestic two-wheelers 2,288,242 2,403,490 2,509,174 2,375,707 2,548,182 2,665,818 (3.7) (5.7) (5.9) Domestic three-wheelers 436, , , , , ,877 (4.5) (8.9) Export two-wheelers 1,673,708 1,841,079 2,025,187 1,673,708 1,841,079 2,025,187 Export three-wheelers 428, , , , , ,434 Total volumes (units) 4,826,678 5,132,722 5,445,011 4,914,143 5,298,225 5,644,317 (1.8) (3.1) (3.5) Average net realization 60,898 62,696 64,291 60,618 60,778 61, Net sales (incl. operating income) 293, , , , , ,880 (1.3) (0.1) 0.6 EBITDA 51,872 55,849 59,498 52,073 58,278 61,310 (0.4) (4.2) (3.0) EBITDA margin (%) Profit after tax 44,974 48,611 52,186 45,113 50,287 53,436 (0.3) (3.3) (2.3) EPS (Rs/share) (0.3) (3.3) (2.3) Eicher Royal Enfield volumes (units) 902, ,282 1,032, ,139 1,037,453 1,089,326 (4.3) (7.0) (5.2) Net sales 106, , , , , ,091 (1.3) (1.5) (0.2) EBITDA 33,819 37,364 41,616 34,465 39,629 43,855 (1.9) (5.7) (5.1) EBITDA margin (%) Standalone PAT 24,015 27,320 30,851 24,454 28,861 32,374 (1.8) (5.3) (4.7) Standalone EPS 882 1,004 1, ,060 1,189 (1.8) (5.3) (4.7) Share of profit from JV 3,230 3,822 3,742 3,230 3,822 3,742 Consolidated PAT 26,693 30,589 34,040 27,131 32,129 35,563 (1.6) (4.8) (4.3) Consolidated EPS 981 1,124 1, ,180 1,307 (1.6) (4.8) (4.3) Hero Volumes (units) 7,920,694 8,299,875 8,702,901 8,390,449 8,908,338 9,446,355 (5.6) (6.8) (7.9) Average net realization 42,578 43,937 45,371 42,321 43,929 45, (0.7) Net sales 337, , , , , ,644 (5.0) (6.8) (8.5) EBITDA 51,108 53,843 57,791 53,815 60,122 66,085 (5.0) (10.4) (12.6) EBITDA margin (%) Adjusted net profit 34,707 36,352 39,111 36,643 40,823 44,971 (5.3) (11.0) (13.0) EPS (5.3) (11.0) (13.0) TVS standalone New estimates Old estimates % change Volumes (units) 3,826,600 4,045,477 4,286,201 3,916,783 4,281,917 4,689,248 (2.3) (5.5) (8.6) Net sales 176, , , , , ,796 (1.4) (3.0) (4.9) EBITDA 13,829 15,608 17,499 14,361 17,086 20,518 (3.7) (8.7) (14.7) EBITDA margin (%) Adjusted net profit 7,180 8,266 9,555 7,547 9,286 11,701 (4.9) (11.0) (18.3) EPS (4.9) (11.0) (18.3) Source: SIAM, Kotak Institutional Equities estimates Exhibit 8: We cut target prices of two-wheeler companies by 4-14% Change in target prices of two-wheeler companies Target price (Rs) Company New Old % change Valuation methodology Bajaj Auto 2,600 2,700 (3.7) 14X September 2020E core EPS, cash per share of Rs640/share and Rs200/share to company's stake in KTM Eicher 21,500 24,000 (10.4) SoTP (18X September 2020EPS to Royal Enfield and 15X to VECV) Hero MotoCorp 2,600 3,000 (13.3) 13X September 2020E core EPS plus cash per share of Rs440 TVS Motor (13.6) SoTP (16X September 2020E EPS to standalone business and Rs50/share to financing business) Source: Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

10 India Automobiles Exhibit 9: We expect Bajaj Auto s volumes to grow at 11% CAGR over FY E Volume assumptions of Bajaj Auto, March fiscal year-ends, E (units, %) Sales volume (units) E 2020E 2021E Motorcycles 3,757,105 3,422,403 3,291,315 3,358,252 3,179,521 3,369,334 3,961,950 4,244,569 4,534,361 Domestic 2,463,874 2,099,230 1,770,009 1,898,957 1,960,980 1,974,577 2,288,242 2,403,490 2,509,174 Platina 484, , , , , , , , ,961 CT100 29, , , , , , ,775 Discover 1,311, , , , , , , , ,452 Pulsar/Avenger/KTM 667, , , , , , , , ,986 Export two-wheelers 1,293,231 1,323,173 1,521,306 1,459,295 1,218,541 1,394,757 1,673,708 1,841,079 2,025,187 Total two-wheelers 3,757,105 3,422,403 3,291,315 3,358,252 3,179,521 3,369,334 3,961,950 4,244,569 4,534,361 RE ,000 Domestic three-wheelers 226, , , , , , , , ,215 Passenger three-wheelers 223, , , , , , , , ,215 Goods three-wheelers 2, ,325 13,162 22,791 20,000 22,000 22,000 Export three-wheelers 253, , , , , , , , ,434 Total three-wheelers 480, , , , , , , , ,650 Total vehicles 4,237,162 3,870,077 3,811,201 3,894,906 3,625,904 4,006,791 4,826,678 5,132,722 5,445,011 Growth (yoy %) Motorcycles (2.0) (8.9) (3.8) 2.0 (5.3) Domestic (4.0) (14.8) (15.7) Platina (9.5) (4.0) 4.6 (43.4) CT100 (23.3) Discover (0.3) (24.4) (43.8) (57.3) 27.3 (19.4) (20.0) Pulsar/Avenger/KTM (6.7) (3.8) Export two-wheelers (4.1) (16.5) Total two-wheelers (2.0) (8.9) (3.8) 2.0 (5.3) Domestic three-wheelers 11.4 (17.3) (1.2) Export three-wheelers (18.7) (1.9) (31.7) Total three-wheelers (6.8) (6.7) (17.1) Total vehicles (2.6) (8.7) (1.5) 2.2 (6.9) Source: Company, Kotak Institutional Equities estimates 10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

11 Automobiles India Exhibit 10: We expect Bajaj Auto s EPS to grow at 8% CAGR over FY E Financial summary of Bajaj Auto, March fiscal year-ends, E (units, %) Profit model (Rs mn) E 2020E 2021E Net sales 204, , , , , , , , ,067 EBITDA 41,064 44,710 41,166 47,820 44,223 47,834 51,872 55,849 59,498 Other income 3,244 3,412 10,736 10,736 12,220 13,473 16,538 17,956 19,644 Interest (5) (5) (65) (11) (14) (13) Depreciation (1,640) (1,796) (2,674) (3,072) (3,073) (3,148) (3,230) (3,355) (3,510) Profit before tax 42,662 46,321 49,162 55,474 53,355 58,146 65,180 70,451 75,631 Extra-ordinary items (3,403) (320) Taxes (12,227) (13,887) (12,711) (16,177) (15,080) (17,145) (20,206) (21,840) (23,446) Net profit 30,436 32,433 33,049 39,298 38,276 40,681 44,974 48,611 52,186 Adjusted net profit 30,436 32,433 36,452 39,298 38,276 40,905 44,974 48,611 52,186 Adjusted earnings per share (Rs) Balance sheet (Rs mn) Equity 79,020 96, , , , , , , ,839 Deferred tax liability 1,151 1,432 1,416 2,028 3,136 3,234 3,234 3,234 3,234 Total borrowings 2,105 1,466 1,699 Current liabilities 42,511 48,498 45,587 30,172 34,672 43,922 32,850 35,089 37,384 Total liabilities 124, , , , , , , , ,457 Net fixed assets 20,277 20,386 20,190 21,383 20,440 19,349 19,118 20,763 22,253 Investments 64,305 85,496 91,533 90, , , , , ,477 Cash 5,589 4,955 5,862 8,595 2,937 7,780 4,651 4,771 5,871 Other current assets 33,913 35,524 36,507 43,615 49,239 47,411 47,263 51,014 54,856 Miscellaneous expenditure 703 1,115 1, Total assets 124, , , , , , , , ,457 Free cash flow (Rs mn) Operating cash flow excl. working capital 26,557 31,419 27,611 30,816 30,859 32,157 42,437 45,559 48,576 Working capital changes (5,213) 4,039 (6,138) 5,753 2,533 10,451 (10,925) (1,513) (1,547) Capital expenditure (5,082) (2,201) (2,697) (2,651) (1,994) (1,826) (3,000) (5,000) (5,000) Free cash flow 16,262 33,257 18,777 33,917 31,398 40,782 28,512 39,047 42,030 Ratios Gross margin (%) EBITDA margin (%) PAT margin (%) Book Value (Rs/share) RoAE (%) Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

12 India Automobiles Exhibit 11: We expect Royal Enfield s volumes to grow at 8% CAGR over FY E Volume assumptions for Eicher Motor, March fiscal year-ends, E (units, %) Sales volumes (units) Standalone E 2020E 2021E Two-wheelers 52,576 74, , , , , , , , ,282 1,032,852 VECV Domestic ton 4,904 6,387 5,372 5,242 5,389 8,337 8,525 11,062 12,721 14,629 15, ton 24,389 29,919 28,057 20,768 17,490 26,981 22,395 27,078 31,140 35,811 34,020 >12 ton 1,483 2,575 3,814 2,907 3,056 5,683 6,216 7,238 8,324 9,988 9,289 Buses 4,765 6,494 8,520 8,333 8,123 13,038 12,270 10,494 10,494 11,753 12,341 Exports Cargo 2,073 2,340 1,671 2,382 4,460 5,060 6,005 7,405 8,886 9,952 11,147 Buses ,364 2,452 2,030 1,596 1,436 1,609 1,802 Volvo trucks Volvo trucks domestic 1, ,499 1,164 1,055 1,055 1,182 1,123 Total 39,351 48,844 48,682 41,132 40,773 63,050 58,605 65,928 74,056 84,925 85,082 Yoy change (%) Standalone Two-wheelers VECV Domestic ton (15.9) (2.4) ton (6.2) (26.0) (15.8) 54.3 (17.0) (5.0) >12 ton (23.8) (7.0) Buses (2.2) (2.5) 60.5 (5.9) (14.5) Exports Cargo (28.6) Buses 2.4 (34.1) (17.2) (21.4) (10.0) Volvo trucks Volvo trucks domestic 21.6 (35.6) (19.3) (22.3) (9.4) 12.0 (5.0) Total (0.3) (15.5) (0.9) 54.6 (7.0) Notes: (a) FY2016 is a 15 month period as company has changed its reporting to financial year Source: Company, Kotak Institutional Equities estimates 12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

13 Automobiles India Exhibit 12: We expect Eicher s EPS to grow at 15% CAGR over FY E Standalone financial summary of Eicher Motors, March fiscal year-ends, E (units, %) Profit model (Rs mn) E 2020E 2021E Net sales 6,665 10,493 17,025 30,312 61,880 70,380 89, , , ,798 EBITDA 765 1,454 3,137 7,336 17,082 22,058 28,532 33,819 37,364 41,616 Other income ,163 2,835 2,273 3,324 4,500 6,586 8,186 Interest (20) (3) (3) (17) (21) (28) (30) Depreciaton (130) (172) (304) (502) (1,366) (1,533) (2,223) (3,003) (3,773) (4,433) Profit before tax 1,418 1,738 3,632 7,980 18,530 22,770 29,603 35,316 40,177 45,368 Current tax (178) (293) (782) (2,317) (5,247) (6,785) (9,354) (11,301) (12,857) (14,518) Deferred tax 6 3 (64) (74) (191) (384) Net profit 1,246 1,448 2,786 5,589 13,092 15,601 17,129 24,015 27,320 30,851 Adjusted net profit 1,246 1,448 2,786 5,589 13,092 15,601 17,129 24,015 27,320 30,851 Adjusted Diluted EPS (Rs) , ,133.4 Balance sheet (Rs mn) Equity Reserves and Surplus 5,131 6,021 7,943 12,066 23,093 38,954 53,450 73,643 96, ,534 Deferred tax liability ,430 1,430 1,430 1,430 Total borrowings Current liabilities 2,209 3,683 6,452 9,752 12,241 15,201 22,795 24,214 26,728 28,835 Total liabilities 7,819 10,242 14,832 22,289 36,239 55,218 77,947 99, , ,071 Net fixed assets 1,276 1,980 3,132 5,599 9,442 13,484 18,305 23,302 25,529 27,096 Investments 5,180 6,494 8,564 11,886 20,691 35,417 49,855 64,855 84, ,855 Cash ,277 2,988 8,520 Other current assets 1,276 1,671 2,879 4,297 5,795 6,190 8,894 10,126 11,882 13,600 Miscellaneous expenditure (0) (0) (0) Total assets 7,819 10,242 14,832 22,289 36,239 55,218 77,947 99, , ,071 Free cash flow (Rs mn) Operating cash flow excl. working capital 572 1,127 2,378 5,131 12,188 15,757 20,534 22,518 24,507 27,098 Working capital changes ,311 1,729 2,554 1,862 4, Capital expenditure (651) (1,073) (1,388) (3,699) (5,082) (5,448) (7,435) (8,000) (6,000) (6,000) Free cash flow ,301 3,161 9,660 12,171 17,719 14,705 19,265 21,486 Ratios Gross margin (%) EBITDA margin (%) Debt/equity (X) Net debt/equity (X) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.1) RoAE (%) Book value/share (X) ,441 1,974 2,716 3,567 4,548 Notes: (a) FY2016 is a 15-month period as company has changed its reporting to financial year Source: Company, Kotak Institutional Equities estimates Exhibit 13: We value Eicher at `21,500 SoTP valuation of Eicher Standalone Multiple September 2020 EPS Equity value (X) (Rs/share) (Rs/share) Equity value per share 18 1,069 19,234 Eicher stake in VECV Equity value per share ,831 Eicher stake in VECV (%) 54.4 Eicher equity value in VECV 2,084 Equity value 21,318 Target price 21,500 Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

14 India Automobiles Exhibit 14: We expect Hero s volumes to grow at 5% CAGR over FY E Volume assumptions of Hero, March fiscal year-ends, E (units, %) E 2020E 2021E Motorcycles 5,779,621 5,499,245 5,538,291 5,799,695 5,735,854 5,834,260 6,677,207 6,963,892 7,275,229 7,605,575 Domestic 5,651,066 5,362,730 5,425,118 5,679,634 5,603,136 5,693,681 6,499,051 6,759,013 7,029,374 7,310,549 < 125 cc 5,320,330 5,165,222 5,278,537 5,553,921 5,497,840 5,595,382 6,427,773 6,684,884 6,952,279 7,230,370 > 125 cc 330, , , , ,296 98,299 71,278 74,129 77,094 80,178 Exports 128, , , , , , , , , ,026 < 125 cc 114, ,015 99,946 95, , , , , , ,486 > 125 cc 14,247 14,500 13,227 24,697 31,679 21,047 38,370 44,126 52,951 63,541 Scooters 455, , , , , , , ,801 1,024,646 1,097,326 Domestic 418, , , , , , , , ,800 1,062,296 Exports 37,360 24,528 17,525 79,956 77,521 39,812 26,319 28,951 31,846 35,031 Total 2-wheelers 6,235,205 6,073,581 6,245,895 6,631,703 6,632,152 6,664,046 7,587,193 7,920,694 8,299,875 8,702,901 Growth (yoy %) Motorcycles 14.7 (4.9) (1.1) Domestic 14.7 (5.1) (1.3) < 125 cc 15.9 (2.9) (1.0) > 125 cc (2.0) (40.3) (25.8) (14.2) (16.2) (6.6) (27.5) Exports (17.1) < 125 cc (18.1) (4.6) > 125 cc (8.8) (33.6) Scooters (7.4) Domestic (3.5) Exports (34.3) (28.6) (3.0) (48.6) (33.9) Total 2-wheelers 15.4 (2.6) Source: Company, Kotak Institutional Equities estimates 14 KOTAK INSTITUTIONAL EQUITIES RESEARCH

15 Automobiles India Exhibit 15: We expect Hero s EPS to grow at only 2% CAGR over FY E Standalone financial summary of Hero, March fiscal year-ends, E (units, %) Profit model (Rs mn) E 2020E 2021E Net sales 235, , , , , , , , , ,855 EBITDA 27,984 24,002 27,129 33,568 44,550 46,414 52,849 51,108 53,843 57,791 Other income 3,646 3,984 4,464 4,735 4,224 5,158 5,211 5,354 5,604 6,154 Interest (213) (119) (118) (111) (49) (61) (63) (63) (63) (63) Depreciation (2,769) (2,575) (2,802) (3,354) (4,376) (4,927) (5,556) (6,100) (6,700) (7,200) Profit before tax 28,648 25,292 28,673 34,839 44,349 46,585 52,441 50,300 52,685 56,683 Current tax (5,251) (4,869) (9,966) (9,432) (9,609) (10,821) (14,470) (15,593) (16,332) (17,572) Deferred tax ,384 (3,138) (1,993) (999) Net profit 23,782 21,182 21,091 23,856 31,602 33,771 36,973 34,707 36,352 39,111 Earnings per share (Rs) Balance sheet (Rs mn) Equity 42,898 50,062 55,999 65,413 88, , , , , ,560 Deferred tax liability 2,083 1,324 (1,060) (735) 2,225 4,143 5,117 5,117 5,117 5,117 Total Borrowings Current liabilities 43,794 42,008 44,730 39,490 34,936 41,686 44,583 46,885 48,989 52,454 Total liabilities 98,889 96,417 99, , , , , , , ,130 Net fixed assets 38,244 31,331 30,974 36,252 41,898 48,606 49,729 56,129 61,930 64,730 Investments 39,643 36,238 40,888 31,541 45,810 58,899 75,252 77,252 85,252 99,252 Cash 768 1,810 1,175 1,593 1,314 1,367 1,413 3,308 2,804 1,456 Other current assets 20,235 27,037 26,877 35,096 36,484 38,070 40,993 46,822 50,106 53,693 Total assets 98,889 96,417 99, , , , , , , ,130 Free cash flow (Rs mn) Operating cash flow excl. working capital 30,504 26,777 29,089 25,859 34,719 36,287 38,208 35,515 37,511 40,220 Working capital changes (6,906) (7,872) 545 (3,359) 3,772 3,993 1,601 (3,526) (1,179) (123) Capital expenditure (5,034) (6,004) (9,328) (11,530) (14,604) (11,491) (7,992) (12,500) (12,500) (10,000) Free cash flow 18,564 12,900 20,307 10,970 23,888 28,790 31,816 19,489 23,832 30,097 Ratios Gross margin (%) EBITDA margin (%) PAT margin (%) Book Value (Rs/share) RoAE (%) Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 15

16 India Automobiles Exhibit 16: We expect TVS volumes to grow at 7% CAGR over FY E Volume assumptions for TVS, March fiscal year-ends, E (units, %) Volumes (units) Domestic volumes E 2020E 2021E Motorcycles 621, , , , , , ,811 1,009,922 1,042,222 1,076,138 Economy (Star City) 466, , , , , , , , , ,912 Executive (Victor & Phoenix) 10,185 43,475 88,357 37,660 65, , , , , ,700 Premium (Apache) 144, , , , , , , , , ,526 Scooters 496, , , , , ,291 1,099,135 1,187,066 1,270,160 1,359,072 Mopeds 776, , , , , , , , , ,820 Total domestic 2W 1,895,238 1,771,412 1,752,627 2,107,696 2,209,366 2,493,592 2,875,766 3,056,808 3,172,203 3,295,029 3 Wheelers 14,172 15,616 12,515 17,606 15,536 12,277 16,429 18,400 19,321 20,287 Total domestic 1,909,410 1,787,028 1,765,142 2,125,302 2,224,902 2,505,869 2,892,195 3,075,208 3,191,523 3,315,316 Export volumes Motorcycles 219, , , , , , , , , ,333 Scooters 32,199 17,369 18,693 22,457 38,930 44,572 35,783 44,729 49,202 54,122 Mopeds 9,076 3,308 7,252 9,679 14,780 20,152 17,412 34,824 38,306 42,137 Total exports 2W 260, , , , , , , , , ,592 3 Wheelers 25,567 33,574 68,327 90,773 95,285 56,977 82, , , ,293 Total exports 286, , , , , , , , , ,885 Total volumes 2,195,876 2,032,617 2,080,161 2,541,146 2,678,702 2,926,958 3,466,410 3,826,600 4,045,477 4,286,201 YoY growth (%) Domestic volumes Motorcycles (1.6) (10.2) Economy (Star City) 10.4 (15.8) (12.5) 25.8 (11.1) (15.5) 17.9 (5.0) Executive (Victor & Phoenix) (84.6) (57.4) (14.5) (15.0) Premium (Apache) 1.1 (15.7) Scooters 11.1 (14.6) Mopeds (8.3) 4.5 (4.2) 23.0 (3.4) Total domestic 2W 6.7 (6.5) (1.1) Wheelers (36.6) 10.2 (19.9) 40.7 (11.8) (21.0) Total domestic 6.1 (6.4) (1.2) Export volumes Motorcycles 7.1 (12.9) (1.8) Scooters 77.3 (46.1) (19.7) Mopeds 44.2 (63.6) (13.6) Total exports 2W 13.7 (18.7) Wheelers (40.2) Total exports 16.0 (14.3) (7.2) Total volumes 7.3 (7.4) Source: Company, Kotak Institutional Equities estimates 16 KOTAK INSTITUTIONAL EQUITIES RESEARCH

17 Automobiles India Exhibit 17: We expect TVS EPS to grow at 13% CAGR over FY E Standalone financial summary of TVS, March fiscal year-ends, E (units, %) Profit model (Rs mn) E 2020E 2021E Net sales 71,262 71,693 79, , , , , , , ,596 EBITDA 4,694 4,090 4,822 6,066 8,099 8,571 11,291 13,829 15,608 17,499 Other income ,039 1,734 1,448 1,177 1,387 1,487 Interest (571) (480) (254) (274) (487) (440) (566) (680) (727) (482) Depreciation (1,175) (1,304) (1,317) (1,533) (2,361) (2,878) (3,387) (3,920) (4,288) (4,656) Exceptional income (908) (28) Profit before tax 3,165 1,636 3,525 4,562 6,289 6,987 8,785 10,406 11,980 13,848 Tax expense (674) (476) (909) (1,083) (1,397) (1,406) (2,161) (3,226) (3,714) (4,293) Reported PAT 2,491 1,160 2,616 3,478 4,893 5,581 6,625 7,180 8,266 9,555 Adjusted net profit 2,491 1,804 2,637 3,478 4,893 5,581 6,625 7,180 8,266 9,555 Earnings per share (Rs) Balance sheet (Rs mn) Equity 11,693 12,247 14,153 16,454 19,583 24,083 28,804 33,399 38,689 44,805 Deferred tax liability ,247 1,528 1,437 1,257 1,482 1,482 1,482 1,482 Total Borrowings 8,311 6,345 5,276 9,705 7,585 10,851 10,370 14,370 9,870 6,194 Current liabilities 9,363 10,767 13,760 16,869 19,932 21,719 29,981 31,334 34,320 37,741 Other liabilities 1,063 1,066 1,211 1, ,137 1,158 1,158 1,158 1,158 Total liabilities 31,405 31,356 35,647 46,042 49,522 59,047 71,795 81,742 85,519 91,378 Net fixed assets 10,781 10,476 11,738 14,190 17,506 20,462 25,030 28,110 28,822 29,166 Investments 9,309 8,688 8,959 10,125 12,149 15,879 20,354 21,589 22,789 23,989 Cash , ,687 Other current assets 11,185 12,017 14,124 21,674 19,540 22,622 26,302 30,787 33,467 36,537 Total assets 31,405 31,356 35,647 46,042 49,522 59,047 71,795 81,742 85,519 91,378 Free cash flow (Rs mn) Operating cash flow excl. working capital 3,783 3,685 3,625 4,699 6,658 7,754 8,848 10,603 11,894 13,206 Working capital changes ,613 (3,851) 2,753 (514) 3,668 (3,132) Capital expenditure (1,768) (995) (2,580) (4,052) (4,872) (6,122) (7,698) (7,000) (5,000) (5,000) Free cash flow 2,640 3,333 2,658 (3,203) 4,539 1,118 4, ,200 8,556 Ratios Gross margin (%) EBITDA margin (%) PAT margin (%) Net debt/equity (X) Book Value (Rs/share) RoAE (%) RoACE (%) Source: Company, Kotak Institutional Equities estimates Exhibit 18: We value TVS Motor at `350 SoTP valuation of TVS EPS Multiple Value per share (Rs) (X) (Rs) Comments September 2020 standalone EPS TVS Motor Services 50 Valued at 2X equity invested by TVS Motor (parent entity) Total value per share 350 Target price 350 Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 17

18 Apollo Tyres (APTY) Automobiles Addressing concerns. The stock has corrected by 25% over the last two months on concerns related to cost pressures, higher capex plans, exposure to IL&FS and most recently due to rejection of re-appointment of MD by shareholders. While increase in crude prices and rupee depreciation will impact profitability, we note that there are mitigating factors such as (1) strong volume growth due to market share gain in India, (2) decline in natural rubber prices in rupee terms, (3) price increases in India business and (4) potential improvement in performance of Europe business. Valuations are attractive at 9X FY2020E EPS/1X FY2020E BPS. Reiterate BUY; TP unchanged at `340. BUY OCTOBER 01, 2018 UPDATE Coverage view: Neutral Price (`): 212 Target price (`): 340 BSE-30: 36,227 C ompany data and valuation summary Apollo Tyres Stock data Forecasts/Valuations E 2020E 52-week range (Rs) (high,low) EPS (Rs) Market Cap. (Rs bn) EPS growth (%) (38.0) Shareholding pattern (%) P/E (X) Promoters 40.4 Sales (Rs bn) FIIs 23.0 Net profits (Rs bn) MFs 19.8 EBITDA (Rs bn) Price performance (%) 1M 3M 12M EV/EBITDA (X) Absolute (16.4) (16.7) (12.7) ROE (%) Rel. to BSE-30 (10.2) (19.4) (24.6) Div. Yield (%) Decline in stock price much higher than fundamental impact of recent developments Concern 1 impact on profitability due to cost pressures: Crude prices have increased by 18% in rupee terms over the last two months, which will impact prices of crude derivatives such as synthetic rubber, carbon black, chemicals, etc. (55% of RM cost). We note that the impact on margins of standalone business will be mitigated by (1) strong volume growth due to market share gains (refer to Exhibits 1-2) leading to operating leverage benefits, (2) decline in natural rubber prices in rupee terms down 2-6% since August 2018 (refer to Exhibit 3-4) and (3) price increases of 2-4% over the last three months (expect 1-2% more price increase in next one month). For Europe business, cost pressures are much lower as the decline in natural rubber prices in Euro terms will largely offset the increase in crude prices in Euro terms. Concern 2 higher capex plans: Apollo will likely incur capex of `63 bn over FY E. We note that 85% of capex is for India business due to strong growth prospects and increase in debt levels will be limited due to strong operating cashflow cumulative FCF over FY E will be negative `6 bn (refer to Exhibits 6-7). Concern 3 exposure to IL&FS: Apollo invested `2.75 bn (a part of QIP proceeds) in intercorporate deposits of IL&FS last year. As per the company, payments from IL&FS have been as per schedule so far and outstanding amount is `2 bn, which is due in the next one month. Concern 4 rejection of reappointment of MD, Neeraj Kanwar: As per our understanding, the rejection is due to investor concerns over higher promoter salary (up 23% yoy in FY2018; accounted for 9.3% of consol. PBT refer to Exhibit 8 for details) and not due to any issues with the way the company is managed by promoters. Kanwar s current term is valid till May 2019, we believe that the company will come up with a revised compensation plan in the next 1-2 months, which would most likely be approved by shareholders and thus, his term will be extended. Nishit Jalan Hitesh Goel Cut EPS estimates by 4-6% as we factor in higher crude prices and rupee depreciation We cut our FY E EPS estimates by 4-6% as we cut our consolidated EBITDA margin assumptions by bps. Reiterate BUY with SoTP-based TP of `340; our TP remains unchanged as we roll over to September 2020E EPS from March 2020 earlier. For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

19 Apollo Tyres Automobiles Exhibit 1: We expect standalone revenues to grow at 15% CAGR over FY E aided by robust growth in truck bus radial segment Standalone revenue mix of Apollo Tyres, March fiscal year-ends, E (` mn, %) Standalone revenues (Rs mn) E 2020E 2021E CAGR (%) Truck bus bias segment (TBB) 25,015 26,856 28,876 30,066 30, Truck bus radial segment (TBR) 28,588 36,422 51,037 58,078 64, PCR 16,974 18,103 20,117 22,902 25, LCV 5,360 6,030 7,154 8,006 8, Two-wheeler 893 1,458 2,479 3,718 5, Others (Farm, Off-highway, etc) 12,507 14,128 16,753 19,270 22, Total 89, , , , , Yoy growth (%) Revenue mix (%) Truck bus bias segment (TBB) Truck bus radial segment (TBR) PCR LCV Two-wheeler Others (Farm, Off-highway, etc) Total Source: Company, Kotak Institutional Equities estimates Exhibit 2: We expect standalone business volumes to grow at 12.5% CAGR over FY E; EBITDA per kg to also improve Volumes and ratios on per kg basis of standalone business, March fiscal year-ends, E (`/kg) E 2020E 2021E Sales volumes (tons) 273, , , , , , , , , , , , ,760 Yoy growth (%) (5.7) 19.4 (7.2) Key ratios (Rs per kg) Net realizations RM cost Gross profit Employee cost Other expenses EBITDA Source: Company, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH 19

20 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Automobiles Apollo Tyres Exhibit 3: International natural rubber prices have come off further over the last one month Tokyo commodity exchange natural rubber future contract, (` per kg) Exhibit 4: Domestic natural rubber prices have remained steady despite concerns after Kerala floods Kottayam natural rubber RSS4 prices, (` per kg) 220 Tokyo commodity exchange rubber future contract (Rs/kg) 220 Kottayam natural rubber RSS4 prices (Rs/kg) Source: Bloomberg, Kotak Institutional Equities Source: Bloomberg, Kotak Institutional Equities Exhibit 5: We expect profitability in Europe business to recover in FY E once Hungary plant ramps up Key assumptions of standalone and European businesses, March fiscal year-ends, E E 2020E 2021E Standalone business Volumes (MT) 390, , , , , , , , , ,760 Yoy growth (%) Sales (Rs mn) 81,579 85,075 87,117 89,378 87,572 89, , , , ,528 Yoy growth (%) (2) EBITDA (Rs mn) 6,663 8,982 10,989 13,155 15,660 13,273 12,474 16,734 20,062 22,421 Yoy growth (%) (15) (6) EBITDA margin (%) EBITDA (Rs per kg) Europe Sales (Euro mn) Yoy growth (%) 16 (0) 8 1 (8) Netherland plant Hungary plant EBITDA (Euro mn) Yoy growth (%) (5) (30) 8 (32) EBITDA (%) Source: Company, Kotak Institutional Equities estimates 20 KOTAK INSTITUTIONAL EQUITIES RESEARCH