Bajaj Auto (BAAUTO) 2825

Transcription

1 Result Update Rating matrix Rating : Buy Target : 3300 Target Period : 12 months Potential Upside : 17% What s Changed? Target Changed from 2950 to 3300 EPS FY16E Changed from to 153 EPS FY18E Changed from to Rating Unchanged Quarterly Performance Q2FY17 Q2FY16 YoY (%) Q1FY17 QoQ (%) Revenue 6, , , EBITDA 1, , , EBITDA (%) bps bps PAT 1, Key Financials Crore FY15 FY16 FY17E FY18E Net Sales 21,612 22,688 24,970 29,938 EBITDA 4,117 4,780 5,372 6,474 Net Profit 2,814 3,652 4,428 5,420 EPS ( ) Valuation summary FY15 FY16 FY17E FY18E Core P/E (x) Tgt Core P/E (x) EV/EBITDA(x) P/BV (x) RoNW (%) RoCE (%) Stock data Particular Amount Market Capitalization ( crore) 81,747.0 Total Debt (FY16) ( crore) Cash & Liquid Invests (FY16) ( crore) 2,077.8 EV ( crore) 79, week H/L ( ) 3120 / 2171 Equity capital ( ) Face value ( ) 10 Price performance (%) 1M 3M 6M 12M Bajaj Auto Ltd Hero MotoCorp Ltd TVS Motor Company Ltd Research Analyst Nishit Zota nishit.zota@icicisecurities.com Vidrum Mehta vidrum.mehta@icicisecurities.com Strong performance... November 2, 2016 Bajaj Auto (BAAUTO) 2825 Bajaj Auto reported its Q2FY17 results that were above our estimates on all parameters. Net revenues were at 6055 crore (down 0.4% YoY, up 5.3% QoQ) in line with our estimate of 6049 crore Domestic revenues came in at 4218 crore (up 22% YoY, 7% QoQ) higher than our estimate of 4198 crore while export revenues came in at 2109 crore (down 26% YoY, up 3% QoQ) against our expectation of 2098 crore Total volumes for Q2FY17 were at units (down 2% YoY, up 4% QoQ). Domestic volumes grew 22% YoY, 5% QoQ to units (2Wup 23% YoY, up 6% QoQ; 3W up 11%YoY, down 1% QoQ). Export volumes fell 27% YoY, up 2% QoQ to units (2 W down 27% YoY, 2% QoQ; 3Wdown 31% YoY, up 28% QoQ). Gross blended realisations increased 1.9% QoQ to ~ Reported EBITDA margins were at 21.4% (down 25 bps YoY, up 94 bps QoQ) against our estimate of 20%. The beat is mainly attributable to lower than estimated other expense to sales Reported PAT grew 6.7% YoY, 14.8% QoQ to 1123 crore vs. our estimate of 966 crore, mainly due to higher margins & other income New launches to drive domestic growth & margin expansion BAL s strategy to squeeze competitors by strengthening dominance in the premium segment, expanding the economy segment and scaling its presence in the executive segment has worked for the company. Successful launches last year resulted in an increase in market share in domestic motorcycle market by over 300 bps to ~19%. Upcoming launches like a refresh of the entire Pulsar family, new motorcycle on the V15 platform (to be launched in Q3 end) and a premium bike VS400 (that will directly compete with Royal Enfield motorcycles) are expected to drive growth for BAL s domestic 2W segment. We expect BAL s domestic 2Ws to grow at a CAGR of 17% in FY1618E. Secondly, these models belong to the highly profitable premium segment. Hence, the product mix will ensure that EBITDA margins remain in excess of 21%. Based on the product mix and managements guidance on raw material in the next two quarters, we estimate margins at 21.5%, 21.6% for FY17E, FY18E, respectively. Export a short term hiccup Export volumes continue to be under pressure mainly due to lower availability of dollar and a local depreciating currency in its largest exporting countries. Although BAL has started exporting to new geographies in FY17, it will be unable to offset the export decline to Nigeria. It has maintained its guidance of ~ mn units for FY17E. We expect export volumes to decline 10% in FY17E and grow 13% in FY18E. Indian global manufacturing OEM BAL is following the right strategy by launching new products in the higher margin segment. On the financials front, ~81% of the business operates at ~20%+ EBITDA margin. We value BAL on an SOTP basis, valuing the core business at 17x FY18E EPS and investment in KTM to arrive at a target price of We have a BUY recommendation on the stock. ICICI Securities Ltd Retail Equity Research

2 Variance analysis Standalone Q2FY17 Q2FY17E Q2FY16 YoY (%) Q1FY17 QoQ (%) Comments Total Operating Income 6,055 6,049 6, , Raw Material Expenses 4,057 4,107 4, , Gross margins slightly above estimates Employee Expenses Other Expenses Other expenses to sales lower than estimated EBITDA 1, , , , EBITDA Margin (%) bps bps Beat on margins on account of better product mix and higher spare part revenues Other Income Other income higher than estimates as drop in rates by RBI resulted in higher return from FMP Depreciation Interest Total Tax Reported PAT PAT higher than estimates due to higher than estimated margins & other income EPS ( ) Key Metrics Revneue ( crore) Domestic 4,218 4,198 3, , Exports 2,109 2,098 2, , Blended ASP ( / unit) Domestic 64,504 64,189 64, , Higher than estimates on account of sequential growth in Pulsar volumes Exports 55,791 55,497 54, , Higher than estimates due to sequential growth in 3W exports Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 25,320 24, ,899 29, We revise downwards FY17 volume estimates post H1FY17 volume numbers EBITDA 5,316 5, ,292 6, EBITDA Margin (%) bps bps We revise upwards margin levels due to upcoming launches in higher profitability segment PAT 4,291 4, ,075 5, Estimates revised upwards due to higher margin estimates EPS ( ) Assumptions Current Earlier Comments Units (mn) FY14 FY15 FY16E FY17E FY18E FY17E FY18E Motorcycle volumes ThreeWheeler volumes Quadricycle volumes Export volumes Domestic revenues ( crore) 12,527 12,255 13,774 17,098 20,421 17,301 20,472 Export revenues ($ mn) 1,380 1,582 1,480 1,324 1,581 1,340 1,567 US$INR Realisation rate Export ASP ($/unit) Blended ASP ( /unit) 53,557 57,759 60,475 62,373 66,250 62,953 65,989 ASP estimates revised upwards due to upcoming models in the premium category RM/Vehicle ( /unit) 35,465 36,928 33,442 35,061 36,765 35,061 36,745 EBIDTA/Vehicle ( /unit) 10,609 10,801 12,276 12,930 13,900 12,759 13,473 ICICI Securities Ltd Retail Equity Research Page 2

3 Key conference call takeaways The company said the domestic motorcycle industry has had an average performance (single digit growth YoY) in the festive season BAL reported motorcycle volumes of ~1.1 million in H1FY17. The company expects to exceed the H1FY17 performance in H2FY17 on the back of new launches Upcoming launches include Pulsar refresh, new motorcycle on the V15 platform (to be launched in Q3 end) and a premium bike VS400 (that will directly compete with Royal Enfield). The management expects this premium bike to generate monthly volumes of ~ units The company expects raw material prices to be benign in Q3FY17 vs. Q2FY17 BAL was able to report high margins in Q2FY17 on account of a) product mix in favour of Platina in overall Platina/CT 100 volumes, b) sequential growth in Pulsar volumes, c) sequential growth in 3W exports and d) sequential growth in the high margin spare parts business. Given the incremental volumes in Q4FY17 are expected to be generated by the Pulsar family, the management expects margins to sustain above 21% The export revenue for Q2FY17 was at ~ 2109 crore against 2057 crore in Q1FY17. The spare part revenue was at ~ 745 crore with domestic spare part revenue at 550 crore and export spare part revenue at 195 crore The company has maintained its export volume guidance of ~ million In the cargo 3W segment, the company expects to do volumes of ~17,000 for FY17E The company took a price hike of ~ 500 in 2Ws and ~ 1,000 in 3Ws in the beginning of Q2FY17 The company has retained its target for quadricycle exports at 5000 units for FY17E ICICI Securities Ltd Retail Equity Research Page 3

4 Company Analysis Domestic volume growth to drive revenue growth The revenue growth of BAL in coming years is expected to be driven by volume growth in the domestic market. We expect revenues to grow at ~15% CAGR (FY1618E), driven by domestic revenues, which are expected to grow at 22% CAGR. Export revenues are expected to grow ~4% CAGR to 10,593 crore in FY18E. We expect the domestic motorcycle market share to increase to ~2324% in coming years from the current share of ~19%. The domestic 3W volumes are expected to grow at ~14% CAGR in FY1618E. Exhibit 1: Revenue growth at 15% CAGR in FY1618E 35, ,000 25, ( crore) 20,000 15,000 10,000 5,000 19,529 19,997 20,150 21,612 22,688 24,970 29, FY12 FY13 FY14 FY15 FY16 FY17E FY18E (%) Revenue % increase Share of exports has increased from ~33% in FY12, FY13 to ~44% in FY15 due to weakness in the domestic business and rapid growth in the global business. In the near term, it is expected to reduce due to lower availability of dollar in its exporting countries like Nigeria & Colombia. Exhibit 2: Revenue mix trend 25,000 20,000 15,000 10,000 5, ,905 6,713 12,527 8,200 12,255 9,758 13,774 9,772 17,098 8,877 20,421 10,593 FY13 FY14 FY15 FY16 FY17E FY18E Domestic Exports % share of exports ICICI Securities Ltd Retail Equity Research Page 4

5 EBITDA margin to largely remain stable! Looking at BAL s financial performance, we can clearly see that strong consistency is almost synonymous with the company. Currently, BAL faces a margin challenge in the Discover family, which we believe would improve with increased share of Avenger, Pulsar, V15 and VS400. However, it will be partly offset by reduced share of exports in the overall volume. We have estimated EBITDA margin at 21.5% for FY17E, FY18E. Exhibit 3: EBITDA margins to remain steady! ( crore) 7,000 6,000 5,000 4,000 3,000 2,000 1, ,720 3,635 4,106 4,117 4, ,372 6,474 FY12 FY13 FY14 FY15 FY16 FY17E FY18E Exhibit 4: Per vehicle metrics and estimates 67,000 62,000 57,000 52,000 47,000 42,000 37,000 32,000 27,000 22,000 53,972 37,233 57,355 38,936 66,250 62,373 36,765 35,061 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15E Q2FY15E FY15E FY16E FY17E FY18E (%) EBITDA EBITDA margin ( ) Avg RM Cost Avg realisation Source: Company press release, ICICIdirect.com Research Return ratios to remain strong as company continues its profit growth! BAL remains a cash generating franchise, which has an annual CFO of ~ 3198 crore and CFO/EBITDA ratios of ~90% (five year average). The company has extremely tight control on working capital and has already worked towards reducing the system inventory. We believe the cash accumulated in BAL s balance sheet could be better utilised via higher dividend payout as capex requirements are just ~8% of CFO generated annually. ICICI Securities Ltd Retail Equity Research Page 5

6 Exhibit 5: CFO continues to remain strong 7,000 6, , ( crore) 4,000 3,000 2,000 1,000 3,567 3,876 2, ,115 2, , ,281 5, (%) FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E CFO CFO/EBITDA BAL is expected to continue to witness strong profit growth in the coming years with FY17E, FY18E expected to see PAT margins of ~18% on the back of an improving EBITDA performance. We expect profits to gallop to ~ 5420 crore in FY18E at a CAGR of ~22% in FY1618E. Exhibit 6: Profit to start getting pumped up as operational improvement kicks in! ( crore) 6,000 5,000 4,000 3,000 2,000 1, ,004 3, , , , , , (%) FY12 FY13 FY14 FY15 FY16 FY17E FY18E PAT PAT margin Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 6

7 Key takeaways from annual report After three consecutive years of de growth in the motorcycle segment, BAL s domestic sale of motorcycles grew 7.2% to 1.9 million units. The company also posted best margins among its peers and has posted highest ever operating profit of 5,147 crore for FY16 BAL has captured major market shares in three segments: the supersports, the sports and the entrylevel. 1) The KTM and the Pulsar RS 200 in the niche supersports segment has helped BAL to increase its market share from 35% in FY15 to 60% in FY16. 2) The Pulsar and the Avenger in the sports segment helped BAL maintain its leadership position in the segment, with market share up from 41% in Q4FY15 to 49% in Q4FY16. 3) BAL through the combination of pricing and aggressive marketing boosted sales volumes of CT and the Platina in the entry or utility segment thereby improving its share to 35% in FY16 Bajaj Auto continues to be the world s largest threewheeler manufacturer. Total 3W sales of the company, (domestic + exports), was highest ever, at 534,995 units in FY2016 (up 3.1% YoY). In the domestic 3W passenger vehicle industry, BAL expanded its market share by ~330bps, from 54.2% in FY15 to 57.5% in FY16. BAL s geographical spread of exports: Africa accounts for 43% of total vehicles while South East/Middle East and Latin America account for 31% & 20%, respectively. The Asean pack accounts for remaining 6% of vehicles New 3W permits were released during FY16 in Maharashtra, Delhi, Chandigarh, Hyderabad, Jaipur and Kota, which supported growth for BAL. Its growth performance has been better than the industry in all categories. It has maintained a strong performance in the petrol and large diesel segment with dominant market share of 90% & 65%, respectively. While it has a relatively lower presence in the large diesel category where its market share is at 20% in FY16 (vs. 18% in FY15). The drop in exports was due to external factors like economic and political crises as well as financial and foreign currency constraints in some countries like Egypt and Nigeria, which are key markets where the company sells its threewheelers. The overall R&D expenditure stood at 330 crore (1.5% of sales) vs. ~ 361 crore (1.7% of sales). BAL has witnessed a significant improvement in performance in FY16 by mainly focusing on higher quality, cost reduction, tight supply chains, introduction of new products and processes etc. Over the last eight years: 1) The number of motorcycles produced per person per annum has increased from 507 in FY09 to 804 in FY16 (productivity up 58.5%), 2) the number of 3W produced per person per annum has risen from 245 units to 452 units (growth of 84.5%), 3) the value of fixed assets utilised per vehicle produced has reduced from 2,833 to 1,810 (down 36.1%). Productivity improvements in FY16 alone have saved investments over 40 crore Further, during FY1316, turnover per employee has increased 17.3% while the asset turnover ratio has improved 11% over the same period. BAL s warranty cost per vehicle has steadily reduced from 26 in FY12 to 18.7 in FY16 As of FY16, BAL has an overall capacity of 6.06 million vehicles divided across three plants namely Waluj (3.06 million), Chakan (1.2 million) and Pantnagar (1.8 million). The Chakan and Pantnagar plants produces only motorcycles while Waluj plant has the capacity to ICICI Securities Ltd Retail Equity Research Page 7

8 produce motorcycle (2.4 million), 3W (0.6 million) and Quadricycle (60,000 units). Further company plans to increase the installed capacity to ~6.24 million units per annum by FY17. Bajaj Auto International Holdings (BAIH) BV is a 100% Netherlands based subsidiary of BAL. Over the years, through this subsidiary, BAL has invested a total of million ( 1,219 crore) and has ~48% stake in KTM AG of Austria (KTM), the fastest growing motorcycle brand in the world. CY15 has been a record year for KTM, with highest sales in units and highest turnover of 183,170 motorcycles, (up 15% YoY) & 1.02 billion (up 18% YoY) respectively. Its PAT grew 12% YoY to 63.9 million ( 461crore). The proportionate profit to BAL is million ( 221crore), which has been accounted for in the consolidated results. During FY16, BAL manufactured 69,532 units of KTM Duke at its Chakan plant of which 30,362 units were sold through the ProBiking network in India & 38,926 were exported to KTM/KTM distributors ICICI Securities Ltd Retail Equity Research Page 8

9 Outlook and valuation With a strong global outlook, BAL s profile strongly resembles an MNC player, with low dependence on a single market. There is an upside potential in the form of improvement in the domestic demand scenario coupled with the launch of the RE60. Despite its absence in the fast growing scooter segment, we believe BAL s focus remains on the global motorcycle space, which differentiates it from others. We feel it has some aces up its sleeve in the 150 cc+ category in the form of new Pulsar/Avenger (in competition to Royal Enfield). Both of these could, in any case, provide volume surprises in FY17E and FY18E. Though the market constantly looks at revenue growth possibilities for BAL and cringes today, we feel strategies to chase revenues (e.g. possible scooter entry) while sacrificing profits are not beneficial to shareholders. The company has one of the lowest fixed cost structures (~7%) in the industry. BAL is following the right strategy by launching new products in higher growth segments (economy & premium). On the financials front, ~81% of the business operates at ~20% EBITDA margin. We value BAL on an SOTP basis, valuing the core business at 17x FY18E EPS and investment in KTM to arrive at a target price of We have a BUY recommendation on the stock. Exhibit 7: SOTP valuation SOTP Valuation Estimated value Per share ( ) Remark Core Business FY18E EPS ( ) Multiple (x) 17 Longterm average valuation multiple Value per share ( ) 3,176 Stake in KTM (48%) Total valuation ( crore) 9487 Market Cap of KTM, listed on Vienna Stock Exchange Value towards BAL % stake via Bajaj Auto International Holdings Value per share post 20% holdco disc % holding company discount Total Value per Share ( ) 3,300 Exhibit 8: Valuation Revenues Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 21, (6.3) FY16 22, FY17E 24, FY18E 29, ICICI Securities Ltd Retail Equity Research Page 9

10 Recommended history vs. consensus ( ) 3,500 3,000 2,500 2,000 1,500 1, (%) 0 Nov14 Jan15 Feb15 Apr15 Jun15 Aug15 Oct15 Dec15 Feb16 Apr16 Jun16 Aug Oct16 Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Apr09 Unveils going global strategy aided by KTM (stake raised to 30% from 14.5% initially in 2007) May09 Unveils all new 150/180 cc Pulsar DTSI to enhance market leadership position in premium segment Nov09 Bajaj Auto's export strategy bears strong fruit as volumes rise 46% YoY to ~98,000 odd units (35% of overall share) Jan10 Takes historic decision to exit scooter business completely and become a pure play motorcycle manufacturer Jul10 Bajaj Auto shuns JV with Nissan for small car venture to continue alone with RE60 Dec10 Auto stocks slide as oil firms hike petrol prices steeply by ~ 3/ litre Feb11 Bajaj Auto crosses 1 million units in the exports markets May11 Rising input cost pressures cause automakers to raise prices; Bajaj hikes prices further as DEPB tax benefits reduced by government Oct11 US$INR skids touching 50 causing market preference towards exporters; Bajaj stands out in the same Mar12 Bajaj Auto raises stake in KTM to ~48%, first product launch KTM Duke 200 cc receives strong response Mar13 Bajaj Auto reports lowest March volumes since FY10 on account of weak domestic motorcycle sales as scooter sales shares rise Oct13 Exceptionally strong Q2FY14 margin performance makes it stand head and shoulders above any domestic & global OEM May14 Bajaj Auto reports lowest overall market share drop in the 2W space to below 15% Mar15 Bajaj Auto reports a market share of 18% in Q4FY15 Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Bajaj Group of Industries 30Sep LIC Mutual Fund Asset Management Company Ltd. 30Sep Firodia Group of Industries 30Sep Norges Bank Investment Management (NBIM) 31Mar Lazard Asset Management, L.L.C. 30Sep Bajaj (Niraj) 30Sep Bajaj (Rahulkumar) 30Sep BlackRock Institutional Trust Company, N.A. 30Sep The Vanguard Group, Inc. 30Sep Bajaj (Madhur) 17Mar Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Sep15 Dec15 Mar16 Jun16 Sep16 Promoter FII DII Others Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares British Columbia Investment Management Corp M +0.36M LIC Mutual Fund Asset Management Company Ltd M 1.78M J.P. Morgan Asset Management (Hong Kong) Ltd M +0.11M Aberdeen Asset Management (Asia) Ltd. 6.17M 0.16M HDFC Asset Management Co., Ltd M +0.07M Stewart Investors 4.40M 0.11M Dimensional Fund Advisors, L.P M +0.05M Handelsbanken Asset Management 1.61M 0.04M Mirae Asset Global Investments (India) Pvt. Ltd M +0.04M Amundi Asset Management Singapore Ltd. 1.61M 0.04M Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 10

11 Financial summary Profit and loss statement Crore (Yearend March) FY15 FY16 FY17E FY18E Total operating Income Growth (%) Raw Material Expenses 14, , , ,950.4 Employee Expenses , ,169.8 Other expenses 1, , , ,441.4 Total Operating Expenditure 17, , , ,464.5 EBITDA Growth (%) Depreciation Interest Other Income , ,392.2 PBT 4, , , ,528.1 Total Tax 1, , , ,107.9 PAT Growth (%) EPS ( ) Cash flow statement Crore (Yearend March) FY15 FY16 FY17E FY18E Profit after Tax 2, , , ,420.2 Add: Depreciation (Inc)/dec in Current Assets Inc/(dec) in CL and Provisions , CF from operating activities (Inc)/dec in Investments 3, , , ,000.0 (Inc)/dec in Fixed Assets Others 3, , CF from investing activities Inc/(dec) in loan funds Dividend paid & dividend tax 1, , , ,539.2 Inc/(dec) in Sec. premium CF from financing activities Net Cash flow Opening Cash ,610.1 Closing Cash Balance sheet Crore (Yearend March) FY15 FY16 FY17E FY18E Liabilities Equity Capital Reserve and Surplus 10, , , ,110.9 Total Shareholders funds 10, , , ,400.3 Total Debt Deferred Tax Liability Other noncurrent liabilities Total Liabilities Assets Gross Block 4, , , ,877.9 Less: Acc Depreciation 2, , , ,015.2 Net Block 1, , , ,862.6 Capital WIP Total Fixed Assets 2, , , ,962.6 Investments 9, , , ,512.7 Inventory , ,072.9 Debtors Loans and Advances 1, ,119.8 Other current assets Cash , ,516.3 Total Current Assets 3, , , ,076.5 Creditors 1, , , ,460.7 Provisions 1, , ,254.5 Other current liabilities Total Current Liabilities 4, , , ,580.3 Net Current Assets 1, Deferred Tax asset Application of Funds Key ratios (Yearend March) FY15 FY16 FY17E FY18E Per share data ( ) EPS Cash EPS BV DPS Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Net sales PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) Core P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 11

12 ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Amara Raja (AMARAJ) Hold Apollo Tyre (APOTYR) Hold Ashok Leyland (ASHLEY) Buy Bajaj Auto (BAAUTO) Buy Balkrishna Ind. (BALIND) Hold Bharat Forge (BHAFOR) Hold Bosch (MICO) Hold Eicher Motors (EICMOT) Buy Exide Industries (EXIIND) Buy Hero Mototcorp (HERHON) Buy JK Tyre & Ind (JKIND) Hold M&M (MAHMAH) Buy Mahindra CIE (MAHAUT) Buy Maruti Suzuki (MARUTI) Buy Motherson (MOTSUM) Hold Tata Motors (TELCO) Buy Wabco India (WABTVS) Buy ICICI Securities Ltd Retail Equity Research Page 12

13 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/10%; Sell: 10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1 st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 13

14 ANALYST CERTIFICATION We /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH ICICI Securities Limited (ICICI Securities) is a fullservice, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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