JSW Steel (JSWSTE) 300

Transcription

1 Result Update Rating matrix Rating : Buy Target : 335 Target Period : 12 months Potential Upside : 12% What s Changed? Target Changed from 295 to 335 EPS FY18 Changed from 19.8 to 19.9 EPS FY19E Changed from 25.0 to 24.7 EPS FY20E Introduced at 28.6 Rating Unchanged Quarterly Performance (Consolidated) Q3FY18 Q3FY YoY (%) Q2FY18 QoQ (%) Adj. Rev.,861 14, , EBITDA 3,851 2, , EBITDA (%) bps bps PAT 1, Key Financials ( Crore) FY FY18E FY19E FY20E Net Revenues 55,605 64,973 70,822 73,5 EBITDA 12,4 13,600 15,620,853 Adj Net Profit 3,467 4,810 5,976 6,910 Adj EPS ( ) Valuation summary FY FY18E FY19E FY20E PE (x) Target PE (x) EV/EBITDA (x) P/BV (x) Adj RoNW (%) Adj RoCE (%) *The ratios are calculated post the stock split of 10: Stock data Particular Amount Market Capitalisation ( Crore) 72,510 Debt-Cons. (FY) ( Crore) 43,034 Cash Cons. (FY) ( Crore) 1,485 EV ( Crore) 114, week H/L 272 / 151 Equity capital crore Face value 1 Price performance (%) Return % 1M 3M 6M 12M JSW Steel Tata Steel Research Analyst Dewang Sanghavi dewang.sanghavi@icicisecurities.com Akshay Kadam akshay.kadam@icicisecurities.com On strong footing. February 2, 2018 JSW Steel (JSWSTE) 300 JSW Steel reported a healthy Q3FY18. The performance was driven by healthy realisations and above our estimates on all fronts. Sales volume for the quarter was at 3.97 million tonnes (MT), up 10.3% YoY, 1.8% QoQ, in line with our estimate of 3.95 MT. Consolidated topline for the quarter was at 861 crore (up 27.5% YoY, 6.2% QoQ) higher than our estimate of crore Standalone operations reported a strong EBITDA/tonne of 9000/tonne, higher than our estimate of 8500/tonne (Q2FY18: 7467/tonne, Q3FY: 77/tonne) Consolidated EBITDA was at 3851 crore (up 34.3% YoY, 26.8% QoQ, notably higher than our estimate: crore). Corresponding consolidated EBITDA margin was at 21.6% (our estimate: 20.6%) The company recognised depreciation of 852 crore, interest and finance cost of 923 crore. Additionally, JSW Steel recognised an impairment provision of 264 crore (exceptional items) pertaining to the iron ore mines surrendered in Chile. The ensuing consolidated PAT was at 74 crore Model sales volume of.2 MT for FY19E and.7 MT for FY20E For FY18E, we model sales volume in line with the management s guidance of 15.5 MT. During 9MFY18, sales volumes were at ~11.4 MT, up 5% YoY. Though steel production during the cumulative period of 9MFY18 was impacted by rollout of GST (disrupting iron ore supply in Karnataka, impacting Vijaynagar plant) and water shortage in Tamil Nadu (impacting Salem facility), the management reiterated achieving the given sales volume guidance. For FY19E, FY20E, we model sales volume of.2 MT,.7 MT, respectively, implying ~5% YoY growth for both years. In pursuit of organic growth, chalks out sizable capex plan JSW Steel aims to double its capacity at its Dolvi plant from 5 MT to 10 MT and further upgrade and revamp its downstream facilities. The company has outlined capex of crore of which crore is towards expansion and upgradation of projects, 3235 crore towards other cost savings projects, 1580 crore amounts to Ind-As impact of 1.5 MTPA coke oven at Dolvi Coking Projects ( 1050 crore), mining projects ( 530 crore) and the balance 2800 crore pertains to capex carried forward from FY. The company has tapered its capex guidance to ~ 6000 crore in FY18 (from earlier 8000 crore). The balance capex of ~ 20,815 crore will be rolled over to FY To benefit from favourable steel environment domestically, maintain BUY JSW Steel s Q3FY18 performance was marked by higher sales realisations boosting the standalone EBITDA/tonne to 9000/tonne (vs. Q2FY18: 7467/tonne, Q1FY18: 6262/tonne). Going forward, we expect the company to continue to report a healthy performance given the favourable domestic steel environment marked by increasing steel realisations and a pick-up in steel demand. We model EBITDA/tonne of 8000/tonne for FY18E, 9000/tonne for FY19E and 9500/tonne for FY20E. We value the stock on a SOTP basis, assigning 6.5x FY20E EV/EBITDA for the core and factoring CWIP till FY20E in our valuations at 0.7x book and arrive at a target price of 335. We maintain BUY recommendation on the stock. ICICI Securities Ltd Retail Equity Research

2 E Variance analysis Q3FY18 Q3FY18E Q3FY YoY (%) Q2FY18 QoQ (%) Comments Adjusted Revenue (net of excise),861.0, , , The topline came in above estimates, primarily driven by higher-thananticipated reaslisations Other Income Employee Expense Raw Material Expense 10, , , , Power & Fuel Expense 1, , , , Other operating Expenses 2, , , , EBITDA 3, , , , EBITDA came in higher than our estimates EBITDA Margin (%) bps bps EBITDA margin came in higher than our estimates Depreciation Interest Exceptional Item The company recognised impairment provision pertaining to the iron ore mines surrendered in Chile PBT 1, , , , Tax Outgo PAT 1, , Minority Interest, Share of Associate &Extra Ordinary Item (14.0) (4.0) PAT for the Group 1, , PAT came in higher than our estimates Key Metrics Steel Sales (MT) Volume came in line with our estimates Standalone EBITDA/tonne ( ) EBITDA/tonne came in higher than our estimates Change in estimates FY18E FY19E FY20E ( Crore) Old New % Change Old New % Change Introduced Comments Revenue 64,973 64,973-70,822 70,822-73,5 Maintained estimates for FY18E and FY19E, introduced for FY20E EBITDA 13,600 13,600-15,620 15,620 -,853 EBITDA Margin (%) bps bps 23.0 EBITDA ( /tonne) PAT (1.2) 6910 EPS ( ) (1.2) 28.6, *-Standalone entity Assumptions Current Introduced Earlier FY FY18E FY19E FY20E FY18E FY19E Comments Total Steel Sales (MT) Maintained estimates for FY18E & FY19E, introduced for FY20E EBITDA/tonne ( /tonne)* 7,738 8,000 9,000 9,500 8,000 9,000, *-Standalone entity ICICI Securities Ltd Retail Equity Research Page 2

3 million tonne /tonne Company Analysis JSW Steel augmented its steel producing capacity from 14.3 MT to 18.0 MT during the year FY. The capacity of its Vijaynagar plant in Karnataka was increased to 12.0 MT from 10.0 MT. The plant capacity at Dolvi, Maharashtra was enhanced to 5.0 MT from earlier 3.3 MT while the plant capacity at Salem, Tamil Nadu was at 1 MT. Model sales volume of.2 MT for FY19E and.7 MT for FY20E For FY18E, we model sales volume in line with the management s guidance of 15.5 MT. During 9MFY18, the sales volume was at ~11.4 MT up 5% YoY. Though steel production during the cumulative period of 9MFY18 was impacted by rollout of GST (disrupting iron ore supply in Karnataka, impacting Vijaynagar plant) and water shortage in Tamil Nadu (impacting Salem facility), the management reiterated achieving the given sales volume guidance. For FY19E and FY20E, we model sales volumes of.2 MT and.7 MT, respectively, implying ~5% YoY growth for both years. Exhibit 1: Sales volume trend Exhibit 2:..EBITDA/tonne to firm up going forward FY FY18E FY19E FY20E 0 FY FY18E FY19E FY20E Company to operationalise two mines in Q4FY18 In the auctions held in September 20 of category C iron ore mines in Karnataka, JSW Steel bagged five mines. The estimated resources in these five mines as per tender documents is ~111 million tonnes (MT). The mineable content from these mines is estimated to be around ~93.0 MT. The annual capacity of these mines together is at ~4.7 MT. The company has signed a mine lease agreement for one mine, which will be operationalised by the first week of February while the second mine will be operationalised by March The combined capacity of the proposed two mines is at ~0.71 MT. The other three mines are likely to commence operations by September 2018 (annual capacity of ~4 MT). Exhibit 3: Mines where JSW has emerged as preferred bidder... Sr. No Name of Mine Est. Resource (MT) 1 Ram Rao Paol Tungabhadra Minerals Pvt Ltd Tungabhadra Minerals Pvt Ltd Hothur Traders V S Lad & Sons 28.6 Source: Source: Department of Mines and Geology (Government of Karnataka), ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 3

4 In pursuit of organic growth has chalked out a sizable capex plan The government of India approved Indian National Steel Policy (NSP), 20 provides a long term vision to provide thrust to the steel sector. The policy aims to enhance domestic steel consumption, ensuring high quality steel production and creating a technologically advanced and global competitive steel industry. JSW Steel has approved key new investment projects to expand overall steelmaking capacity, lower operating costs and enrich product mix, along with few other strategic projects. The company aims to double its capacity at its Dolvi from 5 MT to 10 MT and further upgrade and revamp its downstream facilities. The company has outlined capex of crore of which crore is towards expansion and upgradation of projects, 3235 crore towards other cost savings projects, 1580 crore amounts to Ind-As impact of 1.5 MTPA coke oven at DCPL and mining and the balance 2800 crore pertains to capex carried forward from FY. The company has tapered its capex guidance to ~ 6000 crore for FY18 (from earlier 8000 crore). The balance capex amounting to ~ 20,815 crore will be rolled over to FY The company is setting up projects at a competitive cost while the returns from the same are likely to be accretive. Our back of the envelope calculations indicate the per tonne cost incurred by JSW Steel for setting up a brownfield facility of 5 MT at Dolvi comes to around US$460/tonne. Exhibit 4: Capital expenditure plan over FY18-21 Key Projects Project Cost Timeline Description Dolvi: Increasing steelmaking capacity to 10 MT from current 5 MT crore Mar-20 Total capacity will be increased from 5 MT to 10 MT. Major facilities to be set up under expansion project are 4.5 MT blast furnace with 5 MT steel melt shop, 5.75 MT sinter plant, 4 MT pellet plant and 4 kilns of 600 TPD LCPs and 5 MT hot strip mill Vijaynagar: BF-3 revamp and upgradation 1000 crore 20 Months BF-3 capacity will be increased from 3 MT to 4.5 MT after the revamp and upgradation project. Overall Vijayanagar works capacity will remain at 12 MT as existing high cost operations at BF-2 will be shut down post completion of this project Vijayanagar: CRM-1 complex capacity expansion Vasind and Tarapur: Modernisation-cumcapacity enhancement 2000 crore Sep crore Apr-19 CRM1 complex capacity will be increased from 0.85 MT to 1.80 MT along with two continuous galvanising line of 0.45 MT each, a new 1.2 MT continuous pickling line for HRPO products and a new 0.80 MT HR skin pass mill for HR Black & HRSPO products The modernisation cum capacity enhancement project includes increase in cold rolling capacity from 1. MT to 2.12 MT by replacing existing CR mills with Batch Tandem CR mills, increase in GI/GL capacity by 0.63 MT & increase in colour coating capacity by 0.08 MT ICICI Securities Ltd Retail Equity Research Page 4

5 crore Cash flow likely fund capex On a consolidated basis, at the end of Q3FY18, net gearing was at 1.68x (1.87x at the end of Q2FY18) while net debt to EBITDA was at 3.32x (3.67x at the end of Q2FY18). On a standalone basis, at the end of Q3FY18, net gearing was at 1.53x (1.62x at the end of Q2FY18) while net debt to EBITDA was at 3.40x (3.66x at the end of Q2FY). We expect the company to deploy its cash flows generated towards the ongoing capex programme. Exhibit 5: Gross debt & net debt trend FY FY FY18E FY19E FY20E Gross Debt Net Debt Performance of subsidiaries JSW Steel Coated Products JSW Steel Coated Products reported sales volume of 0.51 million tonnes (MT). Volumes were impacted by the planned shutdown of two galvanising lines at Tarapur works for maintenance and revamping to enhance production capacity. The revenue from operations came in at 3034 crore with an EBITDA of 90 crore. The spreads were impacted by delayed transmission of higher substrate prices. US plate and pipe mill The US based plate and pipe mill produced net tonnes of plates and net tonnes of pipes, reporting a capacity utilisation of 24% and 11%, respectively. Sales volumes were at net tonne of plates and 044 net tonne of pipes. The subsidiary reported EBITDA of US$3.86 million. ICICI Securities Ltd Retail Equity Research Page 5

6 Key takeaway from conference call World crude steel production increased 5.3% in CY to 91 million tonne (MT) as production increased in almost all major regions During the quarter, flat steel sales volume remained flattish YoY at 2.8 MT. Long product sales volume increased 23% YoY, 5% QoQ to 0.9 MT, while sales volumes of semis were at 0.27 MT (up 125% YoY, 13% QoQ). Overall sales volume for the quarter grew 12% YoY. The overall value added and special products (VASP) and special product sales grew 8% YoY (accounting for ~57% of sales volume). Sales to automotive customers grew 30% YoY while automotive production grew % YoY during the quarter The company s export volume during 9MFY18 was at ~3.0 MT Average sales realisation increased 5% QoQ driven by higher steel prices (for both flats and longs) in domestic as well as exports market On the operating cost front, the blended coking coal prices increased by ~US$6/tonne during the quarter. The same is likely to increase by US$10-15/tonne for Q4FY18 The hike in domestic iron ore prices led to an increased in blended iron ore costs. The surge in prices of other key inputs like electrodes and refractories also led to higher conversion costs during the quarter. The management expects iron ore prices to normalise in the current quarter Borrowings during the quarter reduced by 696 crore mainly on account of favourable movement of forex and repayments Exceptional items for the quarter pertain to provision of 264 crore made for impairment towards goodwill, mining development and advances relating to surrender of one of its iron ore mine in Chile Pursuant to the enactment of Tax Cuts and Jobs Act by the US on December 22, 20, wherein the corporate Income tax rate has been reduced to 21%, the group has recognised reversal of deferred tax liabilities amounting to 572 crore in Q3FY18 for the US business. Tax credit has been recognised in the tax expense item during the quarter Of the capex of ~ 4670 crore during 9MFY18, the cash outlay was ~ 3500 crore. For FY18, the management has cut capex guidance to ~ 6000 crore (from 8000 crore earlier) Of the five assets, JSW Steel is interested in three, namely Bhushan Steel, Bhushan Power and Steel & Monnet Ispat & Energy. A bid for Monnet Ispat has already been submitted by the company. The management indicated that the company seeks to maintain its leverage ratios while looking for inorganic growth Out of the five mines bagged by the company, two mines are expected to start production by Q4FY18 (the company has signed lease agreement for one mine and is in process to sign the same for another mine). The combined capacity of the two mines to be operationalised is ~0.71 million tonne (MT) The management indicated the crude steel capacity would remain more or less same at 18 million tonnes for FY19E As per the management, steel prices further strengthened by 5-6% in Jan-18 (after increasing in December 20 as well), domestic prices, however, continue to be at a discount to the imported steel prices ICICI Securities Ltd Retail Equity Research Page 6

7 Valuation JSW Steel s Q3FY18 performance was marked by higher sales realisations boosting the standalone EBITDA/tonne to 9000/tonne (vs. Q2FY18: 7467/tonne, Q1FY18: 6262/tonne). Going forward, we expect the company to continue to report healthy performance given the favourable domestic steel environment marked by increasing steel realisations and a pick-up in steel demand. We model EBITDA/tonne of 8000/tonne for FY18E and 9000/tonne for FY19E and 9500/tonne for FY20E. We value the stock on a SOTP basis, assigning 6.5x FY20E EV/EBITDA for the core and factoring CWIP till FY20E in our valuations at 0.7x book and arrive at a target price of 335. We maintain BUY recommendation on the stock. Exhibit 6: Target price calculation Particular Unit Value EBITDA crore 853 EV/EBITDA Multiple x 6.5 Enterprise Value (EV) crore Gross Debt crore Cash & Cash Eq crore 6486 Net Debt crore FY19E CWIP (@0.7x) crore Implied Market Cap crore No of Shares crore Target Price 335 Exhibit 7: Valuation Matrix Sales ( Crore) Growth (% YoY) EPS ( ) Growth (% YoY) PE (x) EV/EBIDTA (x) P/ BV (x) RoNW RoCE (%) (%) FY15 52, FY 41, PL NM FY 55, FY18E 64, FY19E 70, FY20E 73, ICICI Securities Ltd Retail Equity Research Page 7

8 (%) ( ) Recommendation History vs. Consensus Feb- Mar- May Jun- 15 Aug- 15 Sep- 15 Nov- 15 Dec- 15 Feb- Apr- May- Jul- Aug- Oct- Nov- Jan- Mar- Price Idirect target Consensus Target Mean % Consensus with Buy Apr- Jun- Jul- Sep- Oct- Dec Jan- 18 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Apr- Apr- May- May- Jun- Jun- Event JSW Steel initiates plans to restructure and consolidate its global operations and holding structure, including operations in the US and Chile. In line with the current market dynamics, the company has implemented a reorganisation plan, which broadly entails : a. capital reduction at Netherlands company level; b. Transfer of certain assets and liabilities to another wholly-owned subsidiary company, Peruana Holding LLC in US ; and c. liquidation of JSW Steel (US) Inc. (US holding company) JSW Steel raises $500 million (~ 3,234 crore) through an issue of fixed rated senior unsecured notes. The notes will be listed on the Singapore Exchange Securities Trading As per media sources, JSW Steel is likely to set up a 10 million tonne (MT) steel plant in Odisha on the land acquired for the Posco steel project. The company is likely to invest crore on the steel plant and 900 MW power plant JSW Steel reports production numbers for April 20. The crude steel production during the month came in at 12.9 lakh tonne (LT) up 7% YoY. The production of flat rolled products stood at 9.32 LT up 5%YoY, while the production of Long (rolled products) increased 12% YoY to 2.96 LT. The board of JSW Steel approves raising of long term funds. Accordingly, the company will raise 4000 crore through issuance of non-convertible debentures with warrants or equity shares or fully/partially/optionally convertible debentures to qualified institutional buyers by way of QIP. Furthermore, the board has also approved raising US$1 billion through issue of foreign currency convertible bonds/adr/gdr/warrants or other instruments convertible into equity shares optionally or otherwise in course of an international offering, in one or more foreign markets The board of directors of JSW Steel approves setting up of a slurry pipeline to transport iron ore from coastal Karnataka to the Vijayanagar works. The construction of the pipeline is likely to take 24 months at an estimated cost of 2100 crore. The same would enable the company to transport iron ore at a competitive 15% cost of alternate means of transport. Furthermore, the pipeline will help the company source almost 50% of the current iron ore requirement at Vijayanagar works from outside Karnataka either from imports or from Odisha/eastern sector at prices lower than prevailing prices in Karnataka JSW Steel receives all statutory clearances for two out of five iron ore mines that it won in Karnataka. The company had participated in auctions of iron ore mines Sep- and won five mines in October 20, which have estimated reserves of 111 million tonnes. The forest clearance for the remaining three mines is likely to be received in the next six to nine months Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Jindal Organisation 31-Dec JFE Steel Corporation 31-Dec Vividh Consultancy & Advisory Services Pvt. Ltd. 31-Dec Sahyog Tradecorp Pvt. Ltd. 31-Dec M. M. Warburg Bank (Schweiz) AG 31-Dec Danta Enterprises Pvt. Ltd. 31-Dec Virtuous Tradecorp Pvt. Ltd. 31-Dec Gagandeep Credit Capital Pvt. Ltd. 31-Dec The Vanguard Group, Inc. 31-Dec Dimensional Fund Advisors, L.P. 31-Dec Source: Reuters, ICICIdirect.com Research Shareholding Pattern in (%) Dec- Mar- Jun- Sep- Dec- Promoters FII DII Others Recent Activity Buys Sells Investor Name Value (M) Shares(M) Investor Name Value (M) Shares(M) JSW Steel Employees Welfare Trust Columbia Threadneedle Investments (US) ICICI Prudential Asset Management Co. Ltd Dimensional Fund Advisors, L.P Aditya Birla Sun Life AMC Limited The Vanguard Group, Inc Jindal Organisation Research Affiliates, LLC AllianceBernstein L.P Morgan Stanley Investment Management (Singapore) Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 8

9 Financial summary (Cons.) Profit and loss statement ( crore) (Year-end March) FY FY18E FY19E FY20E Total operating Income 55, , , ,5.0 Growth (%) Raw Material Expenses 28, , , ,248.7 Employee Expenses 1, , , ,125.4 Power and Fuel Costs 4, , , ,550.3 Mfg and Other expenses 8, , ,3.6 9,387.8 Total Operating Expenditure 43, , , ,312.3 EBITDA 12,4.2 13, ,620.4,852.7 Growth (%) Depreciation 3, , , ,648.7 Interest 3, , , ,742.7 Other Income PBT 5, , , ,801.3 Exceptional Item Total Tax 1, , , ,915.9 Reported PAT Before MI 3, , , ,885.4 Profit/(loss) - JV/MI/Associate Reported PAT After MI 3, , , ,910.2 Growth (%) NA Adj PAT after MI 3, , , ,910.2 Adj 'EPS ( ) Balance sheet ( crore) (Year-end March) FY FY18E FY19E FY20E Liabilities Share Capital Reserve and Surplus 22, , , ,712.4 Total Shareholders funds 22, , , ,013.7 Total Debt 43, , , ,934.0 Deferred Tax Liability 3, , , ,073.6 Minority Interest / Others Total Liabilities 69, , , ,563.8 Assets Gross Block 90, , , ,538.6 Less: Acc Depreciation 31, , , ,034.4 Net Block 59, , , ,504.2 Capital WIP 4, , , ,581.4 Total Fixed Assets 63, , , ,085.6 Investments 1, , , ,467.1 Inventory 11, ,333.4,458.1,957.6 Debtors 4, , , ,819.9 Loans and Advances 2, , , ,659.7 Other Current Assets 3, , , ,131.8 Cash 1, , , ,186.0 Total Current Assets 23, , , ,755.1 Current Liabilities 18, , , ,615.5 Provisions Total Current Liabilities 18, , , ,828.3 Net Current Assets 4, , , ,926.7 Deferred tax Assets (net) Application of Funds 69, , , ,563.8 Cash flow statement ( crore) (Year-end March) FY FY18E FY19E FY20E Profit after Tax 3, , , ,910.2 Add: Depreciation 3, , , ,648.7 (Inc)/dec in Current Asset -3,5.3-6, , ,320.1 Inc/(dec) in CL&Provisions , , Others 1, CF from operating activities 4, , , ,824.1 (Inc)/dec in Investments (Inc)/dec in Fixed Assets -4, , , ,000.0 Others CF from investing activities -5, , , ,950.0 Issue/(Buy back) of Equity Inc/(dec) in loan funds 3, , , ,900.0 Dividend paid & dividend tax Inc/(dec) in Sec. premium -1, Others CF from financing activities 1, , , ,7.0 Net Cash flow , , ,041.1 Opening Cash , , ,144.9 Closing Cash 1, , , ,186.0 Key ratios (Year-end March) FY FY18E FY19E FY20E Per share data ( ) Adj EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Total Operating income Adj PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) Adj RoE Adj 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 9

10 ICICIdirect.com coverage universe (Metals & Mining) Company CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) ROCE(%) ROE(%) ( ) TP ( ) Rating ( Cr) FY FY18E FY19E FY FY18E FY19E FY FY18E FY19E FY FY18E FY19E FY FY18E FY19E Coal India Hold Hindalco Buy Hindustan Zinc Buy JSW Steel Buy Vedanta Buy ICICI Securities Ltd Retail Equity Research Page 10

11 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 11

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