Wipro Ltd (WIPRO) 539

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1 Result Update Rating matrix Rating : Hold Target : 560 Target Period : 12 months Potential Upside : 4% What s Changed? Target Changed from 680 to 560 EPS FY17E Changed from 37.5 to 33.7 EPS FY18E Changed from 42 to 37.5 Rating Changed from Buy to Hold Quarterly Performance FY17 FY16 YoY (%) Q4FY16 QoQ (%) Revenue 13,698 12, ,742 (0.3) EBIT 2,285 2,402 (4.9) 2,484 (8.0) EBIT (%) bps bps PAT 2,064 2,188 (5.6) 2,235 (7.6) Key Financials Crore FY15E FY16E FY17E FY18E Net Sales 47,318 51,631 55,245 60,295 EBITDA 10,825 11,187 10,643 11,888 Net Profit 8,653 8,892 8,311 9,231 EPS ( ) Valuation summary FY15E FY16E FY17E FY18E P/E Target P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Particular Amount Market Capitalization ( Crore) 132,837.1 Total Debt ( Crore) 6,891.3 Cash and Investments ( Crore) 22,966.1 EV ( Crore) 121, week H/L 613 / 509 Equity capital Face value 2 Price performance (%) 1M 3M 6M 12M TCS (8.2) (0.4) 7.1 (4.2) Infosys (10.8) (13.3) (0.5) 9.6 Wipro (1.3) (8.5) 0.6 (4.8) HCL Tech (5.6) (13.5) (11.9) (23.3) Research Analysts Deepak Purswani deepak.purswani@icicisecurities.com Tushar Wavhal tushar.wavhal@icicisecurities.com July 21, 2016 Wipro Ltd (WIPRO) 539 Weak quarter followed by subdued guidance.. IT services US$ revenues grew 2.6% QoQ to $1,931 million, above our 1.8% growth and $1,916 million estimate. In constant currency (CC) revenues grew 2.0% QoQ vs. 1% to 3% guidance Consolidated revenues declined 0.3% QoQ to crore led by sharp de-growth of 38.3% in IT products business to 593 crore, which is lumpy in nature. In IT services, the revenues grew 2.4% sequentially to 13,109.2 crore At 17.8%, IT services EBIT margins declined ~230 bps QoQ largely on account of wage hike (100 bps), and impact of HPS acquisition (50 bps) Reported PAT of 2,058 crore was below our 2,158 crore mainly on account of lower than expected IT service EBIT margin Wipro expects Q2FY17E IT services revenues growth to be muted at flattish to 1%QoQ growth Subdued revenue guidance for Q2FY17E After reporting 2.6% sequential growth in $ terms and 2.0% in constant currency, Wipro guided for revenues of $1,931-1,950 million which translates to muted growth of flattish to 1%QoQ growth as the management is restructuring India and Middle East business. Furthermore, Wipro s revenues from the top client continue to remain under pressure. Revenues from top, top 5 & 10 client declined 5%, 3.9% & 0.8% sequentially in FY17. Going ahead, we anticipate $ revenues to grow 6.6%/8.8% in FY17E/FY18E respectively. Margins disappoint IT services EBIT margins declined 230 bps QoQ to 17.8% in FY17 and were below our estimate of 19% largely on account one month impact of wage hike impact (-100 bps), full quarter impact of HPS (Health Plan Services) acquisition (-50 bps) and strategic investments made for specific clients for increasing wallet share. Going ahead, we anticipate Wipro s Q2FY17E margin to remain under pressure due to two month impact of wage hike announced in June, The wage hike impact is going to be partially offset by margin layers such as utilisation rate, pyramid correction, better offshore mix & improvement in margin profile of acquisition entities. Overall, we anticipate IT Service EBIT margin to remain at 18.2% in FY17E and 18.5% in FY18E. Earnings to remain under pressure, Downgrade to Hold At current CMP, Wipro is trading at modest valuation of 14.1x FY18E EPS. However, due to its dismal revenue growth coupled with margin pressure, we anticipate Wipro s earnings to remain under pressure, going forward. Even, key operating metrics such as top accounts and energy vertical (~15% of revenues) continue to remain soft. Consequently, we cut our earning estimates by ~10-11% in FY17E/18E respectively and estimate it to report slower rupee revenue and PAT CAGR of 8.1% and 2.3% during FY16-18E (vs. 11% each reported in FY11-16), respectively. Hence, we recommend Hold on the stock with revised price target of 560/share (15x FY18E). ICICI Securities Ltd Retail Equity Research

2 Variance analysis FY17 FY17E FY16 YoY (%) Q4FY16 QoQ (%) Comments Revenue 13, , , , Revenue decline was led by sharp de-growth of 38.3% in IT products business to 593 crore, which is lumpy in nature Employee expenses 9, , , , Gross Margin 4, , , , Gross margin (%) bps bps Selling & marketing costs 1, G&A expenses EBITDA 2, , , , EBITDA Margin (%) bps bps Margins declined largely on account one month impact of wage hike impact and full quarter impact of HPS acquisition Depreciation EBIT 2, , , , EBIT Margin (%) bps bps Other income PBT 2, , , , Tax paid PAT 2, , , , PAT de-grew mainly on account of lower than expected IT service EBIT margin. Key Metrics Closing employees 173, , , , TTM voluntary Attrition (%) bps bps Utilisation ex support (%) bps bps Average $/ Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 56,029 55, ,033 60, EBITDA 11,883 10, ,375 11, EBITDA Margin (%) bps bps We have revised our margin assumptions to reflect poor FY17 margin profile PAT 9,250 8, ,340 9, EPS ( ) Assumptions Current Earlier FY15 FY16 FY17E FY18E FY17E FY18E Closing employees 158, , , , , ,917 TTM voluntary Attrition (% Utilisation ex support (%) Average $/ ICICI Securities Ltd Retail Equity Research Page 2

3 Company Analysis Sets six themes to help achieve ambitious 2020 goal Wipro has outlined six themes, which could help achieve its ambitious 2020 goal of $15 billion in revenue with 23% operating margin. Broadly the incoming CEO articulated six broad themes viz. 1) Digital, 2) Client mining, 3) Focus on major markets 4) Non-linear growth 5) Hyperautomation and 6) Partner ecosystem. Though the strategy seems well articulated, flawless execution could be arduous. Digital: Wipro would align consulting services with the digital unit to enable consulting led approach. Wipro has trained 10,000 people in FY16 and intends to train incremental 20,000 people in digital related technologies in FY17E. DesignIT integration is on schedule and has helped Wipro win seven deals. Client mining: Wipro has set up an integrated services unit to focus on integration of delivery and sales, thus creating cross-selling opportunities. Further, it has launched a leadership transformation programme to cover 1000 delivery managers that will strengthen its execution capabilities. Focus on major markets: Wipro will be focussing on major growth markets like Latin America, Canada, Africa and continental Europe and has strengthened the team. A case in point being 800+ German speaking IT professionals added through Cellent acquisition. In the US, Wipro plans to set up local delivery centres and will be hiring technology and engineering skills that could help deliver product engineering services and digital service. Non-linear revenue growth: Wipro continues to invest in products, platforms, framework and solutions to drive non-linear revenue growth going forward. Wipro s HOLMES (AI) platform continues to see traction and is now being adopted by 18 clients while 24 new patents on HOMES were filed in Q4FY16 alone. Hyper-automation: Initiative to drive productivity leveraging cognitive and robotic process automation which could drastically change the traditional IT delivery model. Wipro aims to release 4,500 employees on its managed services engagement through increasing usage of automation. Partner ecosystem: Wipro aims to build an eco-system consisting of startups, alliances, academic relationships and strategic partnerships, which could help build capability and scale in digital business. Subdued guidance amid challenging environment Wipro has guided for a subdued revenue guidance of $1,931-1,950 million for Q2FY17 following a weak FY17. For the quarter gone by, it reported 2.6% sequential growth in $ terms and 2.0% in constant currency. Further, for the past 4 years, Wipro has not been able to grow at or above NASSCOM guidance and going forward we expect it grow at 6.6% in FY17E much below the NASSCOM guidance of 10-12%. ICICI Securities Ltd Retail Equity Research Page 3

4 Exhibit 1: Dollar revenues may grow at 7.7% CAGR in FY16-18E vs. 7.1% during FY $ million FY10 FY11 FY12 FY13 % FY14 FY15 Q2 Q3 Q4 FY16E FY17E FY18E Dollar revenue Growth, YoY Exhibit 2: Wipro growth vs. NASSCOM guidance Unlikely to beat NASSCOM average in FY17E % FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Growth, YoY NASSCOM guidance Clients contributing > $1 million grew to 565 Clients contributing >$100 million remained flat at nine while $ million increased by one. Further, clients contributing $50-75 million remained flat while $20-50 million customers increased by two. The $10-20 million bucket saw addition of ten clients while $3-5 million saw addition of five clients. Overall, clients contributing >$1 million increased by 15. Recall, Wipro added 159 customers to the $1 million bucket since FY10. Furthermore, Wipro s revenues from the top client continue to remain under pressure. Revenues from top, top 5 & top 10 clients declined 5%, 3.9% & 0.8% sequentially in FY17. ICICI Securities Ltd Retail Equity Research Page 4

5 [ Exhibit 3: Sequentially, clients contributing >$1 million in revenues increased by x FY10 FY11 FY12 FY13 FY14 FY15 Q2 Q3 Q4 FY16E $1 million+ clients Margins to remain under pressure Wipro s IT services EBIT margins have contracted 230 bps QoQ to 17.8% in FY17 mainly on account of :- (a) one month impact of wage hike impact (-100 bps) (b) full quarter impact of HPS acquisition (-50 bps) and (c) some strategic investments made for specific clients to gain some large ticket orders for increasing wallet share. Going ahead, we anticipate Wipro s Q2FY17E margin to remain under pressure due to two month impact of wage hike announced in June, The wage hike impact is going to be partially offset by margin layers such as utilisation rate, pyramid correction, better offshore mix & improvement in margin profile of acquisition entities. Overall, we anticipate IT Service EBIT margin to remain at 18.2% in FY17E and 18.5% in FY18E. Exhibit 4: IT services margin trend % FY10 FY11 FY12 FY13 FY14 FY15 Q2 Q3 EBIT margin (IT services) Q4 FY16E FY17E FY18E Utilisation on rise for consecutive quarters Utilisation (ex-support) continued to increase for two consecutive quarters. It increased 270 bps QoQ to 78.8% in after increasing 230 bps QoQ to 76.1% in Q4 on top of 340 bps QoQ decline in Q3 to 73.8%. Further, at 16.5%, LTM voluntary attrition increased 40 bps QoQ vs in Q4FY16. ICICI Securities Ltd Retail Equity Research Page 5

6 Exhibit 5: At 16.5%, attrition though stable continues to be at elevated levels % FY10 FY11 FY12 FY13 FY14 FY15 Q2 Q3 Q4 FY16E FY17E FY18E TTM voluntary Attrition Exhibit 6: Uneven utilisation trend continues 85 % FY10 FY11 FY12 FY13 FY14 FY15 Q2 Q3 Q4 Utilisation ex support (%) FY16E FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 6

7 Conference call highlights: Management guidance: The management has given a subdued revenue guidance of $ 1,931 million to $ 1,950 million in IT Services business ( 0% to 1% in the constant currency) and also expects the impact of 2 month salary hike to be visible in the Q2FY17 Disappointing margins: IT services EBIT margins have contracted 230 bps QoQ to 17.8% in FY17 mainly on account of :- (a) one month impact of wage hike impact (-100 bps) (b) full quarter impact of HPS acquisition (-50 bps) and (c) some strategic investments made for specific clients to gain some large ticket orders for increasing wallet share Deals: The company won 5 large deals during FY17. Further, in the digital space, company signed seven deals across sectors and geographies and are foreseeing a pickup in the size of the digital deals with clients moving from relatively smaller projects Future Outlook: The management is of the view that demand environment is uncertain with delay in discretionary spend of its clients. However, the management expects a better H2FY17 on the grounds of a pickup in demand and growth with relatively large size deals in digital space and execution of existing projects and winning of new projects Employee details: The company has an employee base of in IT Services. The attrition rate at 16.5% has increased 40 bps QoQ. The company has given an average hike of 9-10% to offshore employees while 2% to onshore employees ICICI Securities Ltd Retail Equity Research Page 7

8 Outlook and valuation At current CMP, Wipro is trading at attractive valuation of in expensive valuation of 14.1x FY18E EPS. However, dismal revenues growth coupled with margin pressure, we anticipate Wipro s earnings to remain under pressure. Even, key operating metrics such as top accounts and energy vertical (~15% of revenues) continues to remain soft. Consequently, we cut our earning estimates by ~10-11% in FY17E/18E respectively and estimate it to report slower rupee revenue and PAT CAGR of 8.1% and 2.3% during FY16-18E vs. 11% each reported in FY11-16), respectively. Hence, we recommend Hold on the stock with price target of 560/share (15x FY18E). Exhibit 7: One year forward rolling PE Jul-06 Mar-07 Nov-07 Jul-08 Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13 Jul-14 Mar-15 Nov-15 Jul-16 Price Exhibit 8: Valuation Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 47, FY16E 51, FY17E 55, (6.5) FY18E 60, ICICI Securities Ltd Retail Equity Research Page 8

9 Company snapshot ( ) (%) Jun-14 Sep-14 Dec-14 Feb-15 Apr-15 Jul-15 Sep-15 Dec-15 Feb-16 May-16 Jul-16 Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Jun-11 Acquires the commercial business services business unit of Science Applications International Corporation (SAIC) Nov-12 Approves demerger of consumer care, infrastructure engineering and medical business into a separate unlisted company, Wipro Enterprises Dec-12 Announces acquisition of LD Waxsons group with skincare brands Bio-essence and Ginvera for $ 144 million. Apr-13 Demerges Wipro Enterprises and Wipro IT business; possible dilution of shareholder stake expected May-13 Acquires minority stake in Opera Solutions, an enterprise software service provider, for $30 million Jul-13 Reports higher-than-expected dollar revenue guidance for Q2FY14 Dec-13 Announces acquisition of Opus Capital Markets Consultants, a mortgage due diligence and risk management services provider, for $75 million. Apr-14 Delivers yet another below-industry average dollar revenue growth for FY14 and guides for 0-2% growth for FY15E Jul-14 Signs 10-year, $1.2 billion outsourcing deal with ATCO, a Canada-based utilities firm. Wipro to also acquire ATCO's subsidiary, I-Tek for $195 million Jul-14 Reports in line quarter (1.2% dollar revenue growth) but below industry average. Guides for 0.7-4% growth during Q2FY15E Jan-15 Signs multi-year, $400 million deal with Swiss engineering company, ABB for application maintenance and infrastructure services as per media sources Apr-15 Delivers mixed set of Q4FY15 earnings. Revenue growth was below our estimates while margins surprised positively Jul-15 Delivers steady FY16. Constant currency revenues were in line with estimates while dollar revenues were higher led by a favourable cross currency Oct-15 Reports in line Q2FY16 quarter while guidance was okay. IT services $ revenues grew 2.1% QoQ to $1,831.9 million, inline our growth estimate Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Premji (Azim Hasham) 31-Mar % 1, Azim Premji Trust 11-Jul % J.P. Morgan Asset Management (Hong Kong) Ltd. 31-Mar % ICICI Prudential Asset Management Co. Ltd. 30-Jun % BlackRock Institutional Trust Company, N.A. 30-Jun % The Vanguard Group, Inc. 31-May % Azim Premji Philanthropic Initiatives Pvt. Ltd. 7-Jul % HSBC Global Asset Management (Hong Kong) Limited 30-Nov % APG Asset Management 31-Dec % Investec Asset Management Ltd. 31-May % Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Jun-15 Sep-15 Dec-15 Mar-16 Promoter Public Others Total Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Azim Premji Trust 253.2m 30.6m BlackRock Asset Management North Asia Limited -9.3m -1.1m Azim Premji Philanthropic Initiatives Pvt. Ltd. 96.0m 11.6m Reliance Nippon Life Asset Management Limited -6.8m -0.8m HDFC Asset Management Co., Ltd. 6.8m 0.8m Deutsche Asset Management International GmbH -3.8m -0.5m BlackRock Institutional Trust Company, N.A. 1.3m 0.2m Goldman Sachs Asset Management (US) -3.1m -0.4m The Vanguard Group, Inc. 1.0m 0.1m Kotak Mahindra Asset Management Company Ltd. -2.6m -0.3m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 9

10 Financial summary Profit and loss statement Crore FY15 FY16E FY17E FY18E Total Revenues 47,318 51,631 55,245 60,295 Growth (%) COGS 32,128 35,672 38,942 42,466 Other Expenditure 1,760 4,771 5,360 5,687 EBITDA 10,825 11,187 10,643 11,888 Growth (%) (4.9) 11.7 Depreciation 1,282 1,485 1,492 1,628 Other Income 1,986 2,328 2,130 2,250 Exchange difference F.income (360) (558) (400) (450) Pft. from associates PBT 11,168 11,472 10,881 12,060 Growth (%) (5.1) 10.8 Tax 2,462 2,531 2,500 2,769 PAT before Minority int, 8,706 8,941 8,381 9,291 Minority int PAT 8,653 8,892 8,311 9,231 EPS EPS (Growth %) (6.5) 11.1 Cash flow statement Crore FY15 FY16E FY17E FY18E PAT before minority int. 8,706 8,941 8,381 9,291 Depreciation 1,282 1,485 1,492 1,628 (inc)/dec in Current Assets (1,523) (1,795) (1,185) (2,499) (inc)/dec in current Liabilities ,554 Taxes paid (2,427) (2,531) (2,500) (2,769) CF from operations 7,826 7,702 7,059 8,173 Other Investments (1,454) 2,328 2,130 2,250 (Purchase)/Sale of Fixed Assets (1,127) (1,400) (1,600) (1,800) CF from investing Activities (2,582) Inc / (Dec) in Equity Capital Inc / (Dec) in sec.loan Funds 2,088 (1,000) (1,000) (1,000) Dividend & Divendend tax (3,041) (558) (4,453) (450) CF from Financial Activities (852) (1,558) (5,453) (1,450) Exchange rate differences Opening cash balance 11,420 15,894 22,966 25,103 Closing cash 15,871 22,966 25,103 32,276 Balance sheet Crore FY15 FY16E FY17E FY18E Liabilities Equity Reserves & Surplus 40,305 49,197 53,456 62,686 Networth 40,798 49,690 53,949 63,180 Minority Interest Debt - long term 1,271 1,271 1,271 1,271 Debt - short term 6,621 5,621 4,621 3,621 Non-current liabilities 1,367 1,367 1,367 1,367 Trade payables 5,875 6,440 6,363 7,599 Current liabilities & provisions 3,908 4,184 4,361 4,680 Source of funds 60,003 68,786 72,216 82,060 Assets Goodwill 6,808 6,808 6,808 6,808 Intangible Assets PPE 5,421 5,342 5,443 5,603 O.non current assets 2,946 2,946 2,946 2,946 Investments Debtors 9,153 10,085 10,500 11,966 Cash & Cash equivalents 15,894 22,966 25,103 32,276 Investments - short term 5,899 5,899 5,899 5,899 O.current assets 12,704 13,568 14,337 15,370 Application of funds 60,003 68,786 72,216 82,060 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS BV DPS Operating Ratios EBIT Margin PAT Margin Debtor days Creditor days Return Ratios (%) RoE 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 10

11 ICICIdirect.com coverage universe (IT) 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 Cyient (INFENT) Hold 5, Eclerx (ECLSER) 1,463 1,250 Sell 5, Firstsource (FIRSOU) Buy 3, HCL Tech* (HCLTEC) Buy 105, Infosys (INFTEC) 1,073 1,290 Buy 245, KPIT Tech (KPISYS) Hold 3, Mindtree (MINCON) Hold 9, NIIT Technologies (NIITEC) Hold 3, Persistent (PSYS) Hold 5, TCS (TCS) 2,445 2,700 Buy 491, Tech Mahindra (TECMAH) Buy 50, Wipro (WIPRO) Hold 132, * June year end, ICICI Securities Ltd Retail Equity Research Page 11

12 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 12

13 ANALYST CERTIFICATION We /I, Deepak Purswani, CFA MBA (Finance), Tushar Wavhal, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH ICICI Securities Limited (ICICI Securities) is full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities 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. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. 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 ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. 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. ICICI Securities 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. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates 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. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities 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. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Deepak Purswani, CFA MBA (Finance), Tushar Wavhal, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries 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. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Deepak Purswani, CFA MBA (Finance), Tushar Wavhal, MBA Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. ICICI Securities Ltd Retail Equity Research Page 13

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