ITC BUY RESULTS REVIEW 1QFY19 27 JUL 2018

INDUSTRY FMCG CMP (as on 27 26 Jul 2018) 2017) Rs 287 289 Target Price Rs 353 367 Nifty 10,021 11,167 Sensex 32,383 36,985 KEY STOCK DATA Bloomberg ITC IN No. of Shares (mn) 12,161 12,218 MCap (Rs bn)/(us$ mn) 3,509/54,743 3,509/51,102 6m avg traded value (Rs mn) 4,144 3,153 STOCK PERFORMANCE 52 Week high / low Rs 368 295 / 222 250 3M 6M 12M Absolute 1.0 3.2 12.1 (2.2) 16.6 Relative (6.9) (3.3) (4.0) (0.5) (16.4) 1.1 SHAREHOLDING PATTERN Promoters 67.20 FIs & Local MFs 36.68 5.19 FPIs 13.79 18.63 Public & Others 13.82 44.69 Source : BSE Naveen Trivedi naveen.trivedi@hdfcsec.com +91-22-6171-7324 Siddhant Naveen Trivedi Chhabria siddhant.chhabria@hdfcsec.com naveen.trivedi@hdfcsec.com +91-22-6171-7336 +91-22-6171-7324 Re-rating on the cards ITC s net revenues grew by 13.5% (exp of 8.2%) beating estimates for all segments except Paper business. Cigarette value growth was at ~9% (exp. 8%) with volume growth of ~1% (exp. flat). EBITDA/ APAT grew by 7/10% vs. exp. of 12/10%. ITC has consistently improved cigarette performance after seeing steep rise in taxes in FY18. As per the management, cigarette volume trajectory is gradually improving. Therefore, we believe ITC can deliver low-mid single digit volume growth in the coming 3-4 quarters supported by favourable base (-6/-4-3% in 2Q/3Q/4QFY19) and expectation of no steep rise in taxes (healthy GST collections). FMCG revenues grew by an impressive 14% (like-to-like) on a relatively firm base (9% in 1QFY18), driven by branded packaged foods and personal care products. Hotels (up 12% YoY) continued to enjoy improved ARR and occupancy rates along with favourable F&B base (highway ban). Agri business rebounded with 14% growth, while Paper performance remained weak. ITC s cigarette biz has registered ~10/9% revenue CAGR in the last 10/5 years, despite punitive taxes. Our 9% revenue CAGR estimate over FY18-21E looks achievable owing to improving consumption dynamics and favorable RESULTS REVIEW 1QFY19 27 JUL 2018 ITC BUY value accretive, with improving franchise. We expect ~14% revenue CAGR here over FY18-21E. ITC is the market leader in cigarettes (>80% by value), notebooks, valued-added paperboards and a significant player in biscuits. Our long term positive stance on ITC derives from its status of being the cheapest consumer large-cap stock in India. At 26x FY20E EPS, ITC trades at an unfair discount of ~35% to the sector. Reiterate BUY. Our TP is Rs 367, at 32x Jun-20E EPS. Highlights for the quarter Sequential recovery in cig. volume: The worst is now behind for cigarettes after being impacting by GST rate hike (July-17). We expect ~4% vol. growth in FY19. FMCG EBITDA up 86%: FMCG EBIT margins expanded by 154bps to 1.7% driven by richer mix and oplev. EBITDA was up by 86% to Rs 1,280mn vs. Rs 680mn YoY despite product launches. APAT grew by 10%: EBITDA grew by healthy 7% to Rs 42.02bn (in-line). Lower other income (-15%), lower interest (-29%) and lower taxes (-64bps) led to 10% APAT growth to Rs 28.18bn (exp. Rs 28.48bn). Near-term outlook: With healthy GST collections, we don t anticipate a steep rise in taxes in the near-term. Cig. volumes will continue to gain momentum, driving earnings growth. We see risk reward favoring ITC. base of FY18. Non-cigarette businesses (esp. FMCG), are Financial Summary (Rs mn) 1QFY19 1QFY18 YoY 4QFY18 QoQ FY17 FY18 FY19E FY20E FY21E Net Revenue 108,746 99,547 9.2 108,132 0.6 428,036 434,489 472,762 519,974 570,187 EBITDA 42,021 37,464 12.2 41,440 1.4 154,359 164,829 180,006 200,078 220,675 APAT 28,187 25,605 10.1 29,327 (3.9) 104,772 112,201 122,785 135,457 149,823 EPS (Rs) 2.3 2.1 9.6 2.4 (3.9) 8.6 9.2 10.1 11.1 12.3 P/E (x) 33.3 31.2 28.5 25.9 23.4 EV/EBITDA (x) 21.3 19.7 17.9 15.9 14.2 Core RoCE 36.4 37.2 38.0 40.5 43.5 HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Net revenues grew by 9.2% (exp of 8.2%) Cigarette volumes grew by 1% (exp flat) FMCG business grew by 14% (like-like) driven by packaged foods and personal care products Despite several headwinds, ITC registered healthy 10% APAT growth Exceptional item in FY18 is on account of tax provision written-back (Tamil Nadu entry tax) In spite of two tax hikes (FY18 Budget and GST), the company registered 9% earnings growth during FY18 Quarterly Financials (Standalone) Year to March (Rs mn) 1QFY19 1QFY18 YoY 4QFY18 QoQ FY18 FY17 YoY Gross Revenue 181,717 160,106 13.5 179,335 1.3 670,819 641,742 4.5 Net Revenue* 108,746 99,547 9.2 108,132 0.6 406,275 400,887 1.3 Material Expenses 41,094 38,360 7.1 40,012 2.7 157,900 159,763 (1.2) Employee Expenses 7,430 6,746 10.1 6,113 21.5 24,875 24,443 1.8 Other Operating Expenses 18,201 16,976 7.2 20,568 (11.5) 68,091 70,900 (4.0) EBITDA 42,021 37,464 12.2 41,440 1.4 155,410 145,780 6.6 Depreciation 2,987 2,682 11.4 3,040 (1.7) 11,454 10,380 10.3 EBIT 39,034 34,782 12.2 38,400 1.7 143,956 135,400 6.3 Other Income 4,039 4,768 (15.3) 5,165 (21.8) 21,298 19,859 7.2 Interest Cost 73 104 (29.3) 232 (68.4) 867 230 277.6 PBT before exceptional 42,999 39,446 9.0 43,333 (0.8) 164,388 155,030 6.0 Exceptional - - na - na 4,129 - na PBT 42,999 39,446 9.0 43,333 (0.8) 168,517 155,030 8.7 Tax 14,813 13,841 7.0 14,006 5.8 56,285 53,021 6.2 RPAT 28,187 25,605 10.1 29,327 (3.9) 112,233 102,009 1 APAT 28,187 25,605 10.1 29,327 (3.9) 110,853 102,009 8.7 EPS 2.3 2.1 9.6 2.4 (3.9) 9.1 8.4 8.2 % Of Net Revenue 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ (bps) FY18 FY17 YoY (bps) Material Cost 37.8 38.5 (75) 37.0 79 38.9 39.9 (99) Employee Expenses 6.8 6.8 6 5.7 118 6.1 6.1 3 Other Expenses 16.7 17.1 (32) 19.0 (228) 16.8 17.7 (93) EBITDA 38.6 37.6 101 38.3 32 38.3 36.4 189 Tax Rate 34.4 35.1 (64) 32.3 213 33.4 34.2 (80) APAT 25.9 25.7 20 27.1 (120) 27.3 25.4 184 Note: Excise duty reversal we have included in the other expenses Page 2

Cigarette business grew by ~9% during the quarter with ~1% volume growth. We were expecting 8% cigarette growth with flat volumes FMCG biz on like-to-like basis grew by 14% (17% adjusting for input tax credit), led by healthy growth in branded packaged foods and personal care Hotel biz grew by 12% driven by improvement in ARR and growth in F&B sales Agri business rebounded with 14% growth after a painful FY18 Paper business was weak (flat growth). With recovery in FMCG volumes we expect paper business to rebound in the near-term Quarterly Segmental (Reported) Year to March (Rs mn) 1QFY19 1QFY18 YoY 4QFY18 QoQ FY18 FY17 YoY Segmental Revenues Cigarettes* 51,276 87,742 (41.6) 49,365 3.9 228,940 340,020 (32.7) FMCG 28,700 26,009 10.3 30,518 (6.0) 113,286 105,118 7.8 Hotels 3,413 3,049 11.9 4,080 (16.4) 14,175 13,417 5.6 Agribusiness 31,513 27,605 14.2 18,083 74.3 80,677 82,646 (2.4) Paperboards, Paper & Packaging 13,558 13,598 (0.3) 13,008 4.2 52,496 53,629 (2.1) Total 128,460 158,003 (18.7) 115,054 11.7 489,574 594,830 (17.7) Less: Inter-segment revenue 21,238 20,781 2.2 7,996 165.6 50,005 44,813 11.6 Total 107,222 137,222 (21.9) 107,058 0.2 439,569 550,017 (20.1) Segmental EBIT Cigarettes* 35,584 32,741 8.7 35,058 1.5 133,408 125,139 6.6 FMCG 501 54 823.0 912 (45.0) 1,641 281 483.6 Hotels 132 53 149.0 755 (82.5) 1,398 1,110 26.0 Agribusiness 1,945 2,351 (17.3) 1,240 56.9 8,486 9,058 (6.3) Paperboards, Paper & Packaging 2,957 2,573 14.9 2,424 22.0 10,422 9,658 7.9 Total 41,119 37,773 8.9 40,388 1.8 155,355 145,246 7.0 Less: (a) Interest Cost & Bank Charges 73 104 (29.3) 232 (68.4) 867 229.5 277.6 (b) Other Un-allocable Expenses (1,954) (1,777) 1 (3,177) (38.5) (14,028) -10012.9 40.1 PBT 42,999 39,446 9.0 43,333 (0.8) 168,517 155,030 8.7 Capital Employed Cigarettes 32,113 44,294 (27.5) 33,321 (3.6) 32,113 44,294 (27.5) FMCG 67,115 65,082 3.1 57,167 17.4 67,115 65,082 3.1 Hotels 50,921 48,008 6.1 49,991 1.9 50,921 48,008 6.1 Agribusiness 25,610 27,248 (6.0) 25,072 2.1 25,610 27,248 (6.0) Paperboards, Paper & Packaging 60,970 57,841 5.4 59,527 2.4 60,970 57,841 5.4 Total 236,729 242,473 (2.4) 225,078 5.2 236,729 242,473 (2.4) Unallocated corporate assets 307,725 239,740 28.4 288,923 6.5 307,725 239,740 28.4 Total capital employed 544,455 482,213 12.9 514,001 5.9 544,455 482,213 12.9 *Cigarette revenue growth is not comparable Page 3

EBIT margin expansion for FMCG business was driven by enhanced scale, product mix enrichment and cost management initiatives notwithstanding higher investments in brand building and gestation costs of new categories EBIT Margin (Reported) Year to March (Rs mn) 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ (bps) FY18 FY17 YoY (bps) Cigarettes* 69.4 37.3 3,208 71.0 (162) 58.3 36.8 2,147 FMCG 1.7 0.2 154 3.0 (124) 1.4 0.3 118 Hotels 3.9 1.7 213 18.5 (1,462) 9.9 8.3 159 Agribusiness 6.2 8.5 (234) 6.9 (68) 10.5 11.0 (44) Paperboards, Paper & Packaging 21.8 18.9 289 18.6 317 19.9 18.0 184 Total 32.0 23.9 810 35.1 (309) 31.7 24.4 731 *Cigarette EBIT margin is not comparable Hotels EBIT expansion was driven by higher room rates and operating leverage Paper EBIT expansion was driven by richer mix, higher utilisation and benign input prices Page 4

Sequentially volumes have improved. We expect positive volume growth in FY19 Cigarette Value Growth 2 15.0 1 5.0-5.0 19 14 1 3 1-1 2 6 10 6 7 2 5 7 2 5 6 Mar-14 9 Cigarette Volume Growth 5.0-5.0-1 -15.0-2 (2) (3) (4) (13) (15) (15) (17) (4) 1 3 4 (1) (1) 1 (4) (3) (6) Mar-14 1 Cigarette EBIT growth of ~9% is healthy since the business has been impacted by punitive taxes Cigarette Price Growth 25.0 22 2 18 16 15 16 16 17 15.0 10 9 1 5.0 3 4 3 5 6 8 9 9 8 Cigarette EBIT Growth 25.0 21 2 15.0 12 1 9 6 5.0 2 2 3 3 12 8 8 2 8 9 2 8 8 9 Mar-14 Mar-14 Page 5

FMCG business growth of 10% is largely driven by volume Hotel business is on a strong momentum driven by higher occupancy rates and ARR Paper business is expected to recover in the short to medium term Encouraging to see rebound in agro business FMCG Revenue Growth 18.0 15.0 12.0 9.0 6.0 3.0 12 11 11 13 12 Agri Revenue Growth 6 4 2-2 -4 7 7 5 10 13 3 6 9 10 51 16 (11) (29)(29) (29) (10) (7) 27 20 2 13 6 (1) 5 16 10 (8) (6) Mar-14 14 14 Hotel Revenue Growth 18.0 15.0 12.0 9.0 6.0 3.0-3.0 0 6 5 8 16 16 Paper Revenue Growth 12.0 11 9 8.0 4.0-4.0-8.0 11 5 5 0 3 7 6 6 Mar-14 (5) (5) 4 (2) (2) 5 3 (2) 0 (0) 4 3 1 (2) 10 6 (4) (5) Mar-14 12 (0) Page 6

Assumptions FY17 FY18 FY19E FY20E FY21E Cig. Revenue Gr 5.1 3.3 8.1 8.8 8.1 Cig. Volume Gr 0.6 (3.0) 4.0 3.0 3.0 FMCG Revenue Gr 8.2 7.1 14.6 14.8 15.4 Hotels Revenue Gr 6.1 5.9 10.4 10.3 11.5 Agri. Revenue Gr 12.6 (2.3) 13.8 12.2 11.5 Paper Revenue Gr 12.1 (2.2) 11.7 13.6 13.7 Gross Margin 62.5 63.5 64.0 64.6 65.0 Employee (% of sales) 8.5 8.7 8.4 8.5 8.6 ASP (% of sales) 1.9 1.9 2.2 2.3 2.3 Rent (% of sales) 2.1 2.1 2.1 2.1 2.0 Distribution (% of sales) 2.0 1.8 1.8 1.8 1.8 Cont. Manf. (% of sales) 0.9 0.9 0.9 0.9 0.9 EBITDA Margin 36.1 37.9 38.1 38.5 38.7 Tax Rate 34.6 34.0 34.0 34.0 34.0 Estimate change FY19E FY20E FY21E New Old Change Change Change New Old New Old Revenue 472,762 474,097 (0.3) 519,974 521,611 (0.3) 570,187 569,940 EBITDA 180,006 181,593 (0.9) 200,078 202,095 (1.0) 220,675 221,241 (0.3) APAT 122,785 123,347 (0.5) 135,457 136,113 (0.5) 149,823 149,604 0.1 EPS 10.1 10.2 (0.9) 11.1 11.2 (0.9) 12.3 12.3 (0.3) Page 7

Peer Set Comparison Company MCap (Rs bn) CMP (Rs) Reco. TP (Rs) EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E HUL 3,605 1,669 NEU 1,709 29.4 35.5 42.7 56.7 47.0 39.1 39.4 33.1 27.9 71.4 73.8 74.4 ITC 3,509 287 BUY 367 10.1 11.1 12.3 28.5 25.9 23.4 17.9 15.9 14.2 37.9 40.1 43.0 GCPL 850 1,248 NR 1,143 26.8 30.8 36.7 46.5 40.5 34.0 35.3 30.2 25.4 20.3 22.9 26.9 Britannia 774 6,450 NEU 6,307 103.2 132.4 158.6 62.5 48.7 40.7 41.9 33.2 27.8 45.7 52.4 56.0 Dabur 657 373 BUY 423 9.4 11.3 13.7 39.7 32.9 27.2 32.8 27.6 23.5 56.8 67.5 77.3 Marico 471 365 BUY 379 8.1 10.4 12.1 45.1 35.1 30.2 32.9 25.9 22.4 45.6 55.7 61.4 Colgate 295 1,084 NEU 1,185 28.7 32.8 37.8 37.7 33.0 28.7 23.1 19.7 17.0 69.6 81.9 96.1 Emami 253 555 BUY 627 14.0 16.6 19.9 39.6 33.4 27.9 29.0 24.6 20.7 27.6 34.0 43.4 Jub. Food 184 1,396 BUY 1,562 25.8 31.8 39.2 54.0 43.9 35.6 28.8 23.9 19.9 56.6 71.9 89.2 Source: HDFC sec Inst Research Page 8

High rates of tax on cigarettes provide attractive tax arbitrage opportunities to unscrupulous players, fanning the growth of illegal cigarette trade in the country The legitimate cigarette industry has declined steadily since 2010-11 at a compound annual rate of 4.8% p.a., illegal cigarette volumes in contrast have grown at about 5% p.a. India s Tobacco Consumption Tobacco consumption share Other tobacco products, 89% Legal cigarettes, 11% Tax revenue share Other tobacco products, 13% Legal cigarettes, 87% Per capita consumption of Tobacco in India Per annum (No) 3,000 2,500 2,000 1,500 1,000 500 0 2,786 Russian Federation 1,841 1,711 Japan China 1,028 USA 468 420 Pakistan Nepal 154 96 Bangladesh India Affordability (% of per capita GDP required to purchase 100 packs of 20 cigarettes of most sold brand 12 10 8 6 4 2 0 1.14 1.31 1.55 1.68 USA Russia Germany Canada 2.14 2.53 2.87 China Australia UK 3.4 3.73 Malaysia Pakistan 10.82 India Page 9

Income Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Net Revenues 428,036 434,489 472,762 519,974 570,187 Growth 9.2 1.5 8.8 1 9.7 Material Expenses 160,492 158,555 170,157 183,936 199,345 Employee Expense 36,317 37,609 39,882 44,074 48,770 ASP Expense 8,107 8,255 10,401 11,959 13,114 Distribution Expense 8,560 7,821 8,510 9,360 10,263 Other Expenses 60,201 57,420 63,806 70,568 78,020 EBITDA 154,359 164,829 180,006 200,078 220,675 EBITDA Growth 6.8 6.8 9.2 11.2 10.3 EBITDA Margin 36.1 37.9 38.1 38.5 38.7 Depreciation 11,528 12,363 12,997 14,227 15,351 EBIT 142,831 152,466 167,009 185,851 205,324 Other Income (Including EO) 17,615 18,319 19,702 20,089 22,415 Interest 243 899 805 855 909 PBT 160,204 174,015 185,905 205,086 226,829 Total Tax 55,491 59,164 63,208 69,729 77,122 RPAT 104,772 114,926 122,785 135,457 149,823 Exceptional Gain/(loss) - 2,725 - - - Adjusted PAT 104,772 112,201 122,785 135,457 149,823 APAT Growth 10.3 7.1 9.4 10.3 10.6 Adjusted EPS (Rs) 8.6 9.2 10.1 11.1 12.3 EPS Growth 9.6 6.6 9.4 10.3 10.6 Balance Sheet (Rs mn) FY17 FY18 FY19E FY20E FY21E SOURCES OF FUNDS Share Capital - Equity 12,147 12,204 12,204 12,204 12,204 Reserves 451,982 512,897 560,034 612,708 671,204 Total Shareholders' Funds 464,129 525,101 572,238 624,912 683,409 Minority Interest 2,947 3,345 3,258 3,157 3,042 Long Term Debt 184 115 115 115 115 Short Term Debt 191 174 191 210 231 Total Debt 375 289 306 325 346 Net Deferred Taxes 18,333 18,749 19,000 19,271 19,564 Other non current liabilities 2,174 2,596 2,596 2,596 2,596 TOTAL SOURCES OF FUNDS 487,959 550,080 597,398 650,262 708,957 APPLICATION OF FUNDS Net Block 157,778 163,907 186,209 198,982 217,631 CWIP 49,180 77,353 78,353 67,153 58,194 Goodwill 2,314 2,314 2,314 2,314 2,314 LT Loans & Advances 20,849 21,014 23,534 26,356 29,518 Total Non-current Assets 230,120 264,587 290,410 294,806 307,657 Inventories 81,161 74,951 78,776 85,467 92,876 Debtors 24,743 26,823 29,186 32,100 35,200 Other Expenses 17,471 26,523 27,853 29,632 31,948 Cash & Equivalents 205,488 249,525 272,801 320,123 364,416 Total Current Assets 328,863 377,821 408,616 467,322 524,440 Creditors 26,593 34,962 38,458 42,304 46,534 Other Current Liabilities & Provns 44,430 57,367 63,169 69,562 76,606 Total Current Liabilities 71,023 92,328 101,627 111,866 123,140 Net Current Assets 257,839 285,493 306,989 355,456 401,300 TOTAL APPLICATION OF FUNDS 487,960 550,080 597,398 650,262 708,957 Page 10

Cash Flow Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Reported PBT 160,263 174,091 185,905 205,086 226,829 Non-operating & EO Items (2,257) (3,379) - - - Interest Expenses (8,789) (8,748) (9,046) (9,785) (10,582) Depreciation 11,528 12,363 12,997 14,227 15,351 Working Capital Change 444 17,364 (739) (3,968) (4,712) Tax Paid (54,916) (59,996) (62,957) (69,458) (76,829) OPERATING CASH FLOW ( a ) 106,273 131,694 126,160 136,101 150,058 Capex (30,715) (27,985) (36,299) (15,801) (25,041) Free Cash Flow (FCF) 75,558 103,709 89,861 120,300 125,017 Investments (10,749) (50,814) (15,000) (15,000) (15,000) Non-operating Income 8,955 7,660 9,852 10,640 11,491 INVESTING CASH FLOW ( b ) (32,509) (71,139) (41,448) (20,161) (28,550) Debt Issuance/(Repaid) (132) 24 17 19 21 Interest Expenses (255) (486) (805) (855) (909) FCFE 75,171 103,247 89,073 119,464 124,129 Share Capital Issuance 10,670 9,128 (0) (0) - Dividend (83,330) (70,884) (75,647) (82,783) (91,327) Others 37 8 - - - FINANCING CASH FLOW ( c ) (73,010) (62,211) (76,435) (83,618) (92,214) NET CASH FLOW (a+b+c) 754 (1,656) 8,277 32,321 29,294 EO Items, Others 33,403 (978) 0 - - Closing Cash & Equivalents 29,674 28,996 37,273 69,594 98,888 Key Ratios FY17 FY18 FY19E FY20E FY21E PROFITABILITY GPM 62.5 63.5 64.0 64.6 65.0 EBITDA Margin 36.1 37.9 38.1 38.5 38.7 EBIT Margin 33.4 35.1 35.3 35.7 36.0 APAT Margin 24.5 25.8 26.0 26.1 26.3 RoE 23.5 22.7 22.4 22.6 22.9 RoIC (or Core RoCE) 36.4 37.2 37.9 40.1 43.0 RoCE 23.4 22.6 22.3 22.6 22.9 EFFICIENCY Tax Rate 34.6 34.0 34.0 34.0 34.0 Fixed Asset Turnover (x) 0.6 0.6 0.7 0.7 0.7 Inventory (days) 69.2 63.0 60.8 6 59.5 Debtors (days) 21.1 22.5 22.5 22.5 22.5 Other Current Assets (days) 14.9 22.3 21.5 20.8 20.5 Payables (days) 22.7 29.4 29.7 29.7 29.8 Other Current Liab & Provns (days) 37.9 48.2 48.8 48.8 49.0 Cash Conversion Cycle (days) 44.6 30.2 26.4 24.8 23.6 Net D/E (x) (0.4) (0.5) (0.5) (0.5) (0.5) Interest Coverage (x) 587.8 169.6 207.4 217.5 225.9 PER SHARE DATA (Rs) EPS 8.6 9.2 10.1 11.1 12.3 CEPS 9.6 10.2 11.1 12.3 13.5 Dividend 4.7 5.2 5.6 6.2 6.9 Book Value 38.2 43.0 46.9 51.2 56.0 VALUATION P/E (x) 33.3 31.2 28.5 25.9 23.4 P/BV (x) 7.5 6.7 6.1 5.6 5.1 EV/EBITDA (x) 21.3 19.7 17.9 15.9 14.2 EV/Revenues (x) 7.7 7.5 6.8 6.1 5.5 OCF/EV 3.2 4.0 3.9 4.3 4.8 FCF/EV 2.3 3.2 2.8 3.8 4.0 FCFE/Mkt Cap 2.2 2.9 2.5 3.4 3.5 Dividend Yield 1.7 1.8 2.0 2.2 2.4 Page 11

RECOMMENDATION HISTORY ITC 400 380 360 340 320 300 280 260 240 220 TP Date CMP Reco Target 28-Jul-17 289 BUY 353 10-Oct-17 268 BUY 354 30-Oct-17 269 BUY 358 13-Nov-17 266 BUY 354 27-264 BUY 358 9-Jan-18 266 BUY 358 12-Jan-18 269 BUY 358 20-Jan-18 275 BUY 358 28-Feb-18 266 BUY 358 11-Apr-18 267 BUY 363 17-May-18 286 BUY 358 9-Jul-18 272 BUY 367 27-Jul-18 287 BUY 367 200 Jul-17 Aug-17 Oct-17 Nov-17 Jan-18 Feb-18 Apr-18 May-18 Jul-18 Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period Page 12

Disclosure: We, Naveen Trivedi, MBA & Siddhant Chhabria, PGDBM, 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. HSL has no material adverse disciplinary history as on the date of publication of this report. 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. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. 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