Astral Poly Technik Ltd Bloomberg Code: ASTRA IN

Transcription

1 Jan 4, 216 Materials - Construction Materials - Non Wood Building Materials Jan 4, 216 Bloomberg Code: ASTRA IN India Research - Stock Broking Flow of Innovation Augmenting Market Share One of the largest beneficiaries of the shift from metal to plastic pipes: Astral Poly Technik Limited (APTL) is one of the leading manufacturers of Poly Vinyl Chloride (PVC) and Chlorinated Poly Vinyl Chloride (CPVC) plumbing systems for both residential and industrial applications. It enjoys market share of more than 4% in domestic CPVC and PVC piping industry. APTL is one of the largest beneficiaries of industry shift from metal to plastic pipes owing to durability and free from corrosion. The transition from unorganized (~4% of the total) to unorganized products would also help the company to gain market share. Innovation, strong distribution and acquisition synergy to drive top line: The partnership with Lubrizol helped APTL with launches of quality plumbing products such as Corzan, FlowGuard, FlowGuard Bendable and most recently, BlazeMaster, a fire sprinkler system. APTL consolidated revenues grew at CAGR of ~31.6% over FY13-FY15 with the help of its innovative product portfolio and extensive distribution channel. This, along with synergy benefits from recent acquisitions, would drive consolidated revenues to grow at CAGR of ~24.9% over FY15-FY17E. Geared up with Hosur plant to uplift revenues from southern region: The company has four manufacturing plants producing pipes and fittings with total manufacturing capacity of 12,371 Mn tonnes per annum. APTL started producing PVC pipes from its new south-based plant at Hosur, Tamil Nadu that helped the company to expand its southern market in India. With the availability of additional power now, APTL recently started manufacturing CPVC pipes as well thereby leveraging its existing distribution. Valuation and Outlook At current price of Rs.43, the stock is trading at PE of 41.4x and 3.2x of its FY16E and FY17E earnings respectively. We recommend a BUY rating on Astral with a target price of Rs.498 having an upside potential of 16%. Key Risks ybeing significantly dependent on imports and loans in foreign currency, Astral is exposed to the risk of fluctuations in foreign exchange rate. ythe raw material prices are to some extent, linked to the international crude prices, which may affect the price of raw material. BUY Recommendation (Rs.) CMP 43 Target Price 498 Upside (%) 16 Stock Information Mkt Cap (Rs.mn/US$ mn) 51475/ wk High/Low (Rs.) 534.8/311 3M Avg. daily volume 3763 Beta (x).7 Sensex/Nifty 25765/7839 O/S Shares(mn) Face Value (Rs.) 1. Shareholding Pattern (%) Promoters 6. FIIs 11.9 DIIs 5.5 Others 22.5 Stock Performance (%) 1M 3M 6M 12M Absolute Relative to Sensex Source: Bloomberg Relative Performance* Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Astral Sensex Source: Bloomberg; *Index 1 Exhibit 1: Valuation Summary YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Net Sales EBITDA EBITDA Margin (%) Net Profit EPS (Rs.) RoE (%) PE (x) For private circulation only. For important information about Karvy s rating system and other disclosures refer to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>, Thomson Publishers & Reuters Analyst Contact Mandar Dhavle mandar.dhavle@karvy.com 1

2 Jan 4, 216 Company Financial Snapshot (Y/E Mar) Profit & Loss (Rs. Mn) Balance sheet (Rs. Mn) Exhibit 2: Shareholding Pattern (%) FY15 FY16E FY17E Total Assets Net Fixed assets Current assets Goodwill on Consolidation Total Liabilities Networth Debt CL & Provisions Balance Sheet Ratios RoE (%) RoCE (%) Net Debt/Equity Equity/Total Assets P/BV (x) FY15 FY16E FY17E Net sales Optg. Exp EBITDA Depreciation Interest Other Income PBT Tax PAT Profit & Loss Ratios EBITDA margin (%) Net margin (%) P/E (x) EV/EBITDA (x) Dividend yield (%) FIIs 11.9% Company Background Astral Poly Technik Limited (APTL) was established in 1999 to manufacture plumbing & drainage system in India. Astral today manufactures PVC and CPVC plumbing systems for both residential and industrial applications. APTL is equipped with state-of-the-art production facilities at Ahmedabad & Dholka (Gujarat), Baddi (Himachal Pradesh) and Hosur (Tamil Nadu) to manufacture plumbing systems & drainage systems with all kinds of necessary fittings. APTL is the first licensee of Lubrizol of USA (formerly known as BF Goodrich, a fortune 5 company) and has equity joint venture with Specialty Process LLC of USA (manufacturing CPVC plumbing system from last 3 years) to manufacture and market the most advanced CPVC plumbing system for the first time in India. APTL developed extensive distribution channel of more than 7 distributors and 2, dealers across India. In FY15, the company has acquired two adhesives/sealant and construction chemical businesses in India and U.K. Cash Flow (Rs. Mn) Exhibit 3: Revenue segmentation (%) FY15 FY16E FY17E PBT Depreciation Interest (net) Tax (264) (482) (654) Changes in WC (36) (89) (568) Others 27 CF from Operations Capex (854) (6) (7) Others (258) CF from Investing (3435) (6) (7) Changes in Equity Change in Debt 313 (96) (45) Interest (255) (277) (232) Dividend and tax thereon (47) (87) (115) CF from Financing 2371 (458) (797) Change in Cash PVC 44.% Promoters 6.% Others 22.5% DIIs 5.5% CPVC 55.% Others 1.% Source: BSE, Karvy Research 2

3 The Capex cycle of the piping industry to revive in next 5 years Jan 4, 216 Over last ten years, plastic piping industry has seen a very strong demand mainly from new construction. There is a huge demand for replacement of metal pipes to plastic pipes mainly due to the corrosion, rusting and scaling etc. Over last five years, the industry has grown with a CAGR of 15%. The Government of India s initiatives like Housing-for-all by 222 and Swachh Bharat Abhiyan would create huge demand for pipes for plumbing, sewage, rain water harvesting etc. Indian metal piping industry is worth ~Rs.6 Bn dominated by Galvanized Iron (GI) pipes; and plastic pipes already started substituting GI pipes in a big way. Plastic piping industry of India is worth Rs.215 Bn consisting irrigation pipes worth Rs.33 Bn, PVC pipes worth Rs.165 Bn, HDPE (High Density Polyethylene) pipes worth Rs. 15 Bn and PPR (Polypropylene) pipes worth Rs.2 Bn. Indian piping market is still unorganized to the tune of ~4% and with more brand consciousness among customers and likely implementation on GST (Goods and Service Tax), the demand would gradually move to organized players. India has irrigation potential of 14 Mn hectares, out of which only 4% is under irrigation; hence, there is a huge scope for irrigation piping systems. Exhibit 4: Industry players (%) Exhibit 5: Pipes category (Rs. Mn) HDPE pipes 7.% Organized 6.% Un-organized 4.% PVC pipes 76.7% Irrigation pipes 15.3% PPR pipes.9% Source: Industry estimates, Karvy Research Geared up to uplift revenues from southern region Exhibit 6: Capacity and Utilization FY12 FY13 FY14 FY15 Capacity (Mn tonnes) Capacity utilization (%) (RHS) The company has four manufacturing locations producing pipes and fittings including Santej and Dholka in Gujarat, Baddi in Himachal Pradesh and Hosur in Tamil Nadu with total manufacturing capacity of 12,371 Mn tonnes per annum. In FY15, APTL started producing PVC pipes and fittings from its new southbased plant at Hosur, Tamil Nadu that helped the company to expand its southern market in India. With the availability of additional power now, APTL recently started manufacturing CPVC pipes as well from its Hosur plant which would enable the company to add market share along with PVC pipes. 3

4 Innovative product portfolio to bring competitive edge: Jan 4, 216 Astral pipes are used in five main categories Plumbing systems, Drainage systems, Specialty systems, Agriculture systems and Electrical piping. CPVC pipes contribute ~55% of standalone revenue and ~24% of consolidated revenue. PVC pipes form around 44% of the total APTL standalone revenue and ~19% of the total consolidated revenue. Plumbing systems: Astral pipes and fittings are used in hot and cold water applications in homes, apartments, hotels, resorts, hospitals, buildings, corporate and commercial houses, academic institutes etc. for pure and hygienic water supply. Astral sells CPVC pipes under the brand name FlowGuard. Astral CPVC pipes are corrosion-free, unlike metal pipes and yet tougher as compared to other thermoplastic plumbing. Bacteria build up with CPVC is far lower than alternative piping materials like copper, steel and other thermoplastics. CPVC pipe has a higher pressure bearing capability. This leads to the same flow rate with a smaller pipe size. Even after years of use in the most aggressive conditions, CPVC pipes are free from corrosion, withstand low ph water, coastal salt air exposures and corrosive soils. CPVC has excellent chemical resistance to strong mineral acids and bases. Astral CPVC pipe has a lower coefficient of thermal expansion than alternative plastics, reducing the amount that the pipe expands when hot water is running. CPVC uses a simple, solvent cement joining method with simple and inexpensive tools. Astral CPVC pipe is compatible with both hot and cold water. It withstands very high temperature compared to any other thermoplastic plumbing systems. Many solar and electric water heaters have CPVC piping system for heat efficiency and lower installation cost. Astral Aquarius pipes and fittings are lead free and hence non toxic; and used in swimming pools, salt water lines, sugar and paper industries, pipes for hand pumps, dye plants, chrome, zinc plating and tanning plants, coal washing and ash handling. Drainage systems: Astral offers economical, high performance drainage systems to meet the demanding needs of today s drain and sewer market. They are cost effective, strong, resistant to impact and are easy to install. Specialty piping systems: Indian pipes market is predominantly controlled by metallic pipes for fire sprinkler system. However, post BIS certification, Astral will be the first mover in the country for CPVC polymer fire sprinkler solutions. CPVC fire sprinkler system will be free from all shortcomings that metallic pipes face such as corrosion, scaling and rusting. CPVC BlazeMaster pipe and fittings are specifically designed for fire sprinkler systems with advantages like faster and easier installation process, resistant to scale, corrosion to pipe, low flame and smoke characteristics. Agriculture systems: APTL has recently entered into agriculture piping sector which has a very good market and future potential in India. The market size for this segment is placed around Rs.7 Bn. The Astral s strong brand awareness in India would help the company to gain market share from this segment going ahead. 4

5 Merger and acquisition paving the way for synergy benefits: Jan 4, 216 The size of Adhesives, Sealants and Building Chemicals market is approximately Rs.1 Bn which is very large and is predominantly controlled by very few well established manufactures. Hence, the growth for the company in these areas is imminent. The per capita consumption of adhesives is 9.4 Kg in Germany, 9.1 Kg in US compared to 1.5 Kg in China and just.2 Kg in India. The main growth driver for this industry is wood work, packaging, construction automotive sectors which are growing in India. Indian adhesive industry is growing at 15% CAGR. With the newer innovative and faster construction techniques, the growth of the adhesive industry will go up in the future. With continuous increase in urbanization, demand for fast and modern constructions, the demand for adhesives and building construction chemicals is about to grow at a higher pace. This shows that India offers good potential for growth in the consumption of adhesives which is a positive feature of this industry. In FY15, Astral acquired 8% equity stake in Seal IT, which is in the business of manufacturing of comprehensive range of sealants, adhesives, building chemicals and allied products under the brand name Bond-it. It also acquired 76% equity stake in Resinova which is in the business of manufacturing and marketing of a highly diversified range of adhesives and sealants and allied products under the different brand name viz. Bondtite, Resibond, Bondset, Solvobond, Vetra, Brush bond and Zesta etc. These acquisitions are synergizing with Astral s existing businesses by deepening and widening its product offerings. This would further consolidate its adhesives and sealants business which is already carried out by subsidiary, Advanced Adhesives Limited (AAL). New Acquisitions 85% 76% 8% Advanced Adhesives Ltd Resinova Chemie Ltd Seal Services Ltd Revenue FY14: Rs. 1,725 Mn Enterprise value: Rs. 2,89 Mn Revenue FY14: Rs. 1,33 Mn Enterprise value: Rs. 693 Mn Advanced Adhesives Solvent Cements Seal It Services Adhesives Building Chemicals Wood Glues Silicone Aerosols Ceramic Tile Adhesives Non Silicone & Sealants Water Based Sealants Application Guns Cleaners PU* Foam Super Glues Bitumen Construction Adhesives PVA** Adhesive & Sealants Tapes Resinova Chemie Automobile Adhesives Engineering Adhesives Hardware & Sanitary Adhesives Stationary Adhesives Construction Chemicals Brush Making Industry Electrical Insulators Rust Removers ; PU: Polyurethane, ** PVA: Polyvinyl acetate 5

6 Jan 4, 216 Astral acquired 85% stake in Advanced Adhesives Limited (AAL) that signifies backward integration for cost reduction and also to tap the huge potential in cement solvents that are used to join pipes. AAL was established in 21 with a vision to provide Adhesive Solutions to various industries and its applications. It has a licensing agreement with IPS (Innovative Plumbing Solutions) Corporation, the leading manufacturer of industrial adhesives, solvent cements and primers under an established brand Weld-On. The company has new state-of-the-art production facility in Gujarat to manufacture these quality products. AAL s net sales rose at robust 6.% CAGR over FY13-FY15 period due to its low base in FY13. Considering the moderate penetration of branded products, we expect revenues to grow with a CAGR of ~15% over FY15-FY17E period with EBITDA margins hovering around 22.% over FY16E and FY17E. Exhibit 7: AAL Net Sales and Growth (%) Exhibit 8: AAL EBITDA and Margin (%) FY13 FY14 FY15 Net sales (Rs. Mn) Growth (%) (RHS) FY13 FY14 FY15 EBITDA (Rs. Mn) EBITDA margin (%) (RHS) Resinova Chemie Ltd. is one of the leading manufacturers of branded adhesives & sealant, construction chemicals and industrial maintenance products with manufacturing units located in Kanpur, UP. It has extensive distribution network of approximately 1,7 channel partners and ~4, retail counters across north and west India. Products are widely used across application areas such as domestic household, construction, furniture, engineering, automobile, insulation and sanitary applications. Resinova net sales have grown at a CAGR of ~2.4% and EBITDA grew at CAGR of ~3.2% over FY13-FY15 period. We expect net revenues of Resinova to grow with a CAGR of ~15.% over FY15-FY17E considering subdued outlook for construction sector. Backward integration to manufacture both epoxy resin & hardener would give cost advantage, thereby improving EBITDA margins to ~8.8% in FY16E and ~9.5% in FY17E. Exhibit 9: Resinova Net sales and Growth (%) FY13 FY14 FY15 Net Sales (Rs. Mn) Growth (%) (RHS) Exhibit 1: Resinova EBITDA and Margin (%) FY13 FY14 FY15 EBITDA (Rs. Mn) EBITDA margin (%) (RHS)

7 Jan 4, 216 Seal IT has a manufacturing facility, situated at Elland, UK. Operating from a modern 4, sq. feet site, Seal IT has R&D facilities at plant adhering to ISO 91 protocol. The main customers are Builders, Merchants, DIY (Do-It-Yourself), Sealant Applicators, Roofing Contractors, Roofing Distributors, Industrial Bitumen Manufacturers / Flooring Contractors, Flooring Distributors, Carpet Shops, Architects/Council Export/Wholesalers and Cash & Carry. Presently, Seal IT is exporting its products throughout Europe, Africa and Middle East. Seal IT revenues have grown with CAGR of ~13.3% over the period FY13-FY15 and we expect synergy benefits to help Seal IT revenues to grow with CAGR of ~15% during FY15-FY17E with EBITDA margins of ~8.5% in FY16E and ~9.% in FY17E. Exhibit 11: Seal IT Net Sales and Growth (%) Exhibit 12: Seal IT EBITDA and Margins (%) FY13 FY14 FY15 Net Sales (Rs. Mn) Growth (%) (RHS) FY13 FY14 FY15 EBITDA (Rs. Mn) EBITDA margin (%) (RHS) 7

8 Jan 4, 216 Exhibit 13: Business Assumptions Y/E Mar (Rs. Mn) FY14 FY15 FY16E FY17E Comments Standalone Revenue Revenue Growth (%) EBITDA EBITDA Margins (%) We expect muted revenue growth in FY16E on the back of slow demand resulting into muted volume growth. We expect a recovery in overall market conditions in FY17E with both volumes and price rises leading to robust revenue growth. We expect EBITDA margins to improve mainly due to lower distribution expenses resulting from synergy benefits and also due to lower endorsement (advertising) costs post FY16E. Consolidated Revenue We expect net sales to grow at CAGR of ~24.9% over FY15-FY17E on account of market share Revenue Growth (%) gains owing to innovation and synergy benefits. EBITDA EBITDA margins to improve mainly due to new product launches like BlazeMaster fire sprinklers EBITDA Margins (%) and synergy benefits from acquisitions reduce overall distribution cost. PAT EPS (Rs.) EPS Growth (%) 3.2 (8.7) Net CFO Capex Free Cash Flow (248) Astral does not plan for any major greenfield expansion over next two years. Exhibit 14: Karvy vs Consensus Karvy Consensus Divergence (%) Revenues (Rs. Mn) FY16E (.8) FY17E (3.7) EBITDA (Rs. Mn) FY16E (.4) FY17E (3.8) EPS (Rs.) FY16E (5.6) FY17E (1.) Source: Bloomberg, Karvy Research 8

9 Jan 4, 216 Innovation, strong distribution network and synergy benefits from acquisitions to drive top line: Astral achieved robust financial performance with the help of its innovative products. The company anticipated surge in demand for plastic pipes at the right time and expanded the overall capacity to cater to this demand. The partnership with Lubrizol, innovative product portfolio including plumbing products such as Corzan, FlowGuard, FlowGuard Bendable and most recently, BlazeMaster, a fire sprinkler system and extensive distribution channel. This, along with synergy benefits from recent acquisitions, would drive consolidated revenues to grow at CAGR of ~24.9% over FY15-FY17E and improvement in EBITDA margins from 11.7% in FY15 to 13.9% in FY17E. Exhibit 15: Net Sales and Growth (%) Exhibit 16: EBITDA and Margin (%) FY13 FY14 FY15 FY16E FY17E Net Sales (Rs. Mn) Growth (%) (RHS) FY13 FY14 FY15 FY16E FY17E EBITDA (Rs. Mn) EBITDA margin (%) (RHS) Astral has already completed its major expansion in Dholka, Gujarat and Hosur, Tamil Nadu; and there are no plans for any major green-field expansion over next two years. The focus would be to increase capacity utilization across existing plants and gradually repay the existing debt. Exhibit 17: Debt Equity Ratio (x) Exhibit 18: Asset Turnover Ratio (x) FY13 FY14 FY15 FY16E FY17E Debt equity ratio (x). FY13 FY14 FY15 FY16E FY17E Asset turnover ratio (x) Exhibit 19: Company Snapshot (Ratings) Low High Quality of Earnings 33 Domestic Sales 33 Exports 33 Net Debt/Equity 33 Working Capital Requirement 33 Quality of Management 33 Depth of Management 33 Promoter 33 Corporate Governance 33 9

10 Jan 4, 216 Valuation & Outlook At current price of Rs.43, the stock is trading at PE of 41.4x and 3.2x of its FY16E and FY17E earnings respectively. We recommend a BUY rating on Astral with a target price of Rs.498 having an upside potential of 16%. Exhibit 2: PE Band Exhibit 21: PB Band Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Astral price (Rs.) 3x 4x 5x 2x Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Astral price (Rs.) 6x 8x 9x 4x Source: Bloomberg, Karvy Research Source: Bloomberg, Karvy Research Exhibit 22 (a): Comparative Valuation Summary CMP Mcap EV/EBITDA (x) P/E (x) EPS (Rs.) (Rs.) (Rs. Mn) FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E Astral Polytechnik Supreme Industries Source: Bloomberg, Karvy Research Exhibit 22 (b): Comparative Operational Metrics Summary CAGR % (FY15-17E) RoE (%) Price Perf (%) Net Sales (Rs. Mn) Sales EBITDA EPS FY14 FY15 FY16E FY17E 3m 6m 12m FY14 FY15 FY16E FY17E Astral Polytechnik Supreme Industries (1.5) Source: Bloomberg, Karvy Research Key Risks ybeing significantly dependent on imports and loans in foreign currency, Astral is exposed to the risk of fluctuations in foreign exchange rate. ythe raw material prices are to some extent linked to the international crude prices, which may affect the price of raw material. 1

11 Jan 4, 216 Financials Exhibit 23: Income Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Revenues Growth (%) Operating Expenses EBITDA Growth (%) Depreciation & Amortization Other Income EBIT Interest Expenses PBT Tax PAT before minority interest Minority interest PAT after minority interest Growth (%) (23.2) 3.2 (3.8) Exhibit 24: Balance Sheet YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Cash & Cash Equivalents Sundry Debtors Inventory Loans & Advances Gross Block Net Block CWIP Goodwill on Consolidation Miscellaneous Total Assets CL & Provisions Debt Other Liabilities Total Liabilities Shareholders Equity Reserves & Surplus Total Networth Minority Interest Total Networth & Liabilities

12 Jan 4, 216 Exhibit 25: Cash Flow Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E PBT Depreciation Interest Tax Paid (91) (229) (264) (482) (654) Inc/dec in Net WC (44) (662) (36) (89) (568) Others 54 (8) 27 Cash flow from operating activities Inc/dec in capital expenditure (681) (923) (854) (6) (7) Others (258) Cash flow from investing activities (665) (911) (3435) (6) (7) Inc/dec in Equity Inc/dec in borrowings (48) (96) (45) Interest paid (145) (39) (255) (277) (232) Dividend paid (incl. tax thereon) (29) (36) (47) (87) (115) Cash flow from financing activities (223) (458) (797) Net change in cash (24) (16) Exhibit 26: Key Ratios YE Mar FY13 FY14 FY15 FY16E FY17E EBITDA Margin (%) EBIT Margin (%) Net Profit Margin (%) Dividend Payout Ratio (%) Net Debt/Equity (x) RoE (%) RoCE (%) Exhibit 27: Valuation Parameters YE Mar FY13 FY14 FY15 FY16E FY17E EPS (Rs.) DPS (Rs.) BV (Rs.) PE (x) P/BV (x) EV/EBITDA (x) EV/Sales (x)

13 Jan 4, 216 Stock Ratings Absolute Returns Buy : > 15% Hold : 5-15% Sell : <5% Connect & Discuss More at (Toll Free) research@karvy.com Live Chat f in You Tube Disclaimer Analyst certification: The following analyst(s), Mandar Dhavle, who is (are) primarily responsible for this report and whose name(s) is/are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report. Disclaimer: Karvy Stock Broking Limited [KSBL] is a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on information obtained from public sources, the respective corporate under coverage and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. y Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. y Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity. y KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. y Compensation of KSBL s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. y KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. y KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. y KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report. y Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report. y It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. y It is confirmed that Mandar Dhavle, Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. y KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. y Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. y We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities. Karvy Stock Broking Limited Plot No.31, 6th Floor, Karvy Millennium Towers, Financial District, Nanakramguda, Hyderabad, 5 32, India Tel: ; Fax: For More updates & Stock Research, visit 13