Bharat Petroleum Corp (BHAPET) 468

Result Update Rating matrix Rating : Hold Target : 500 Target Period : 12 months Potential Upside : 7% What s changed? Target Changed from 520 to 500 EPS FY18E Changed from 36.9 to 37.4 EPS FY19E Changed from 42.5 to 44.5 EPS FY20E Introduced at 45.7 Rating Unchanged Quarterly performance Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%) Revenue 70,195.2 64,095.7 9.5 64,127.3 9.5 EBITDA 3,188.2 3,316.5-3.9 3,527.6-9.6 EBITDA (%) 4.5 5.2-63 bps 5.5-96 bps PAT 2,143.7 2,271.9-5.6 2,357.4-9.1 Key financials Crore FY17 FY18E FY19E FY20E Revenues 242,047.8 274,006.4 320,295.4 329,989.0 EBITDA 10,829.3 11,411.6 14,448.4 15,154.6 Net Profit 8,039.3 7,355.1 8,753.8 8,984.3 EPS ( ) 40.9 37.4 44.5 45.7 Valuation summary FY17 FY18E FY19E FY20E P/E 11.4 12.5 10.5 10.2 Target P/E 12.2 13.4 11.2 10.9 EV / EBITDA 10.6 10.0 8.2 7.9 P/BV 3.1 3.1 3.0 2.9 RoNW (%) 27.1 24.6 28.9 28.6 RoCE (%) 16.9 16.3 19.2 19.4 Stock data Particular Amount Market Capitalization ( Crore) 101,520.4 Total Debt (FY17) ( Crore) 23,159.2 Cash and Investments (FY17) ( Crore) 64.7 EV ( Crore) 124,615.0 52 week H/L 550/400 Equity capital ( Crore) 1,446.2 Face value ( ) 10.0 Price performance Return % 1M 3M 6M 12M HPCL (5.2) (8.3) (7.9) 2.9 BPCL (4.2) (9.0) (4.1) 0.5 IOCL (3.5) (4.0) (8.5) (2.3) ONGC (4.9) (1.2) 13.1 (2.9) Research Analyst Mayur Matani mayur.matani@icicisecurities.com Akshay Gavankar akshay.gavankar@icicisecurities.com Lower core GRMs impact performance... February 13, 2018 Bharat Petroleum Corp (BHAPET) 468 Bharat Petroleum Corporation (BPCL) reported Q3FY18 results that were below our estimates on the operational front. Revenues increased 9.5% QoQ to 70195.2 crore, below our estimate of 75543.1 crore GRMs were at US$7.9/bbl below our estimate of US$8.2 /bbl mainly due to a lower-than-expected operational performance on the refining front. Inventory gains were at US$3/bbl. Subsequently, EBITDA at 3188.2 crore was below our estimate of 3400.5 crore The quarter witnessed higher other income of 727.4 crore above our estimate of 508.8 crore. This led to the upside in profitability, which was at 2143.7 crore vs. our estimate of 2028.4 crore Benefits from Kochi refinery expansion still awaited GRMs during the quarter were at US$7.9/barrel below our estimate of US$8.2/bbl mainly on account of lower core GRMs at US$4.9/bbl. The quarter witnessed higher inventory gains of US$3/bbl. The operational performance at the Kochi refinery deteriorated QoQ with core GRMs at US$4.1/bbl vs. US$6.1//bbl in Q2FY18. The capacity utilisation at the Kochi refinery reported an improvement and was at ~93% in Q3FY18 vs. 86% in Q2FY18 and is expected to achieve 100% utilisation by Q1FY19 post its stabilisation. We believe the higher capability of the Kochi refinery to process heavy crude with better product slate will benefit GRMs fully from Q1FY19. Benchmark Singapore GRMs witnessed a decline in the ongoing quarter (Q4FY18) to US$6.4/bbl) with product spreads on a decline. Hence, we believe a recovery in operational efficiencies will remain a key in deciding BPCL s performance in coming quarters. We estimate reported GRMs of US$7.1bbl, US$6.5/bbl and US$6.7/bbl for FY18E, FY19E and FY20E, respectively. Crude throughput on right track Crude throughput during the quarter increased 4% QoQ to 7.3 MMT vs our estimates at 7 MMT. Going forward, we estimate throughput of 27.9 MMT, 29.4 MMT, and 29.6 MMT for FY18E, FY19E, and FY20E respectively, with full capacity utilisation of Kochi refinery post its stabilisation. On the marketing front, sales during the quarter increased 8.3% YoY to 11.2 MMT and came in above our estimate of 11 MMT. Going forward, we expect marketing sales volumes to grow at 4-5% CAGR over the next two years with stable marketing margins. However, the increased competition from private players and challenge of passing higher crude oil prices to the customers in the near term will play a vital role in the performance of marketing segment. We assume nil subsidy for oil companies in future. All eyes on Kochi refinery, progress on GST We believe BPCL will benefit from Kochi refinery s expansion from FY19, which would lead to ~US$2/barrel improvement in Kochi refinery GRMs. On the GST front, the decisions on inclusion of petroleum products under the new tax regime is still pending. This will continue to have a negative impact on profitability of OMCs. We have a HOLD recommendation on the stock with a target price of 500 (based on average of P/BV multiple: 437/share and P/E multiple: 562/share). ICICI Securities Ltd Retail Equity Research

Variance analysis Q3FY18 Q3FY18E Q3FY17 YoY (%) Q2FY18 QoQ (%) Comments Total Revenues 70,195.2 75,543.1 64,095.7 9.5 64,127.3 9.5 Raw materials costs 21,449.9 19,551.4 18,224.3 17.7 17,428.5 23.1 Employees Cost 776.6 800.0 681.9 13.9 888.7-12.6 Other Expenses 44780.5 51791.22 41873 6.94339 42282.6 5.90764 Total Expenditure 67,006.9 72,142.6 60,779.2 10.2 60,599.7 10.6 GRMs during the quarter were at US$7.9/bbl below our estimate of US$8.2/bbl.On 3,188.2 3,400.5 3,316.5-3.9 3,527.6-9.6 EBITDA account of the same, EBITDA came in lower than our estimates EBITDA margins (%) 4.5 4.5 5.2-63 bps 5.5-96 bps Depreciation 677.4 632.8 483.6 40.1 640.6 5.7 EBIT 2,510.8 2,767.7 2,832.9-11.4 2,887.0-13.0 Interest 200.2 249.1 134.9 48.5 234.8-14.7 Other Income 727.4 508.8 551.1 32.0 800.4-9.1 Extra Ordinary Item 0.0 0.0 0.0 NA 0.0 NA PBT 3,038.0 3,027.4 3,249.1-6.5 3,452.6-12.0 Total Tax 894.3 999.0 977.1-8.5 1,095.2-18.3 PAT 2,143.7 2,028.4 2,271.9-5.6 2,357.4-9.1 Higher-than-estimated other income mainly contributed to higher profitability Key Metrics Exchange rate ( /$) 64.7 64.7 66.9-3.3 64.4 0.5 Under-recoveries ( cr) 7892.2 8,492.8 4297.4 83.7 3238.9 143.7 Downstream share (%) 0.0 0.0 0.0 NA 0.0 NA Net Under-recovery ( cr) 0.0 0.0 0.0 NA 0.0 NA Throughput (mmt) 7.3 7.0 6.8 7.2 7.0 3.9 Higher-than-estimated on account of higher throughput in Mumbai refinery Sales (mmt) 11.2 11.0 10.5 6.9 10.4 8.3 GRM ($/barrel) 7.9 8.2 5.9 33.1 8.0-1.5 The inventory gain was at US$ 3/bbl. Core GRMs came in lower at US$ 4.9/bbl Change in estimates FY18E FY19E ( Crore) Old New % Change Old New % Change Revenue 274,690.4 274,006.4-0.2 284,973.5 320,295.4 12.4 Upward revision in crude oil estimates led to revised revenue estimates EBITDA 11,557.3 11,411.6-1.3 14,079.8 14,448.4 2.6 Higher other expenses to limit the upside in EBITDA EBITDA Margin (%) 4.2 4.2-4 bps 4.9 4.5-43 bps PAT 7,167.8 7,355.1 2.6 8,367.4 8,753.8 4.6 Upward revision in other income estimates will also contribute to the profitability in FY19E EPS ( ) 36.4 37.4 2.6 42.5 44.5 4.6 Assumptions Current FY16 FY17 FY18E FY19E FY18E FY19E Comments Exchange rate ( /$) 65.5 67.1 64.5 64.5 64.5 64.5 Under-recoveries ( cr) 27,570.2 19,728.0 28,154.6 43,091.1 24412.7 22121.2 Downstream share (%) 0.1 0.0 0.0 0.0 0.0 0.0 Net Under-recovery ( cr) 0.0 0.0 0.0 0.0 0.0 0.0 Throughput (mmt) 24.1 25.4 27.9 29.4 27.6 29.2 Sales (mmt) 38.4 40.2 42.7 44.8 42.4 44.5 Sales estimates revised upwards marginally GRM ($/barrel) 6.6 5.3 7.0 7.2 7.1 7.3 Earlier ICICI Securities Ltd Retail Equity Research Page 2

Company Analysis Crude throughput on a right track Crude throughput during the quarter increased 4% QoQ to 7.3 MMT vs our estimate at 7 MMT. Going forward, we expect throughput of 27.9 MMT, 29.4 MMT and 29.6 MMT for FY18E, FY19E and FY20E, respectively, with full capacity utilisation of Kochi refinery post its stabilisation. On the marketing front, sales during the quarter increased 8.3% YoY to 11.2 MMT and came in above our estimates of 11 MMT. Going forward, we expect marketing sales volumes to grow at 4-5% CAGR over the next two years with stable marketing margins. However, increased competition from private players and challenge of passing higher crude oil prices to customers in the near term will play a vital role in the performance of marketing segment. We assume nil subsidy for oil companies in future. Exhibit 1: Crude oil throughput trend 30 25 24.1 25.4 27.9 29.4 29.6 20 mmt 15 10 5 0 FY16 FY17 FY18E FY19E FY20E ICICI Securities Ltd Retail Equity Research Page 3

Benefits from Kochi refinery expansion still awaited GRMs during the quarter were at US$7.9/barrel, below our estimate of US$8.2/bbl mainly on account of lower core GRMs at US$4.9/bbl. The quarter witnessed higher inventory gains of US$3/bbl. The operational performance at Kochi refinery declined QoQ with core GRMs at US$4.1/bbl vs. US$6.1//bbl in Q2FY18. The capacity utilisation at Kochi refinery reported an improvement and was at ~93% in Q3FY18 vs. 86% in Q2FY18 and is expected to achieve 100% utilisation by Q1FY19 post its stabilisation. We believe the higher capability of the Kochi refinery to process heavy crude with better product slate will benefit GRMs fully from Q1FY19. Benchmark Singapore GRMs have witnessed a decline in ongoing quarter (Q4FY18) to US$6.4/bbl with product spreads on the decline. Hence, we believe a recovery in operational efficiencies will remain a key in deciding BPCL s performance in coming quarters. We estimate reported GRMs of US$7.1bbl, US$6.5/bbl, and US$6.7/bbl for FY18E, FY19E and FY20E, respectively. Exhibit 2: Refining margin trend 9.0 7.5 6.0 6.6 7.0 7.2 7.4 US$ / bbl 4.5 5.3 3.0 1.5 0.0 FY16 FY17 FY18E FY19E FY20E Exhibit 3: Retail sales trend 56 49 42 38.4 40.2 42.7 44.8 47.1 35 mmt 28 21 14 7 0 FY16 FY17 FY18E FY19E FY20E ICICI Securities Ltd Retail Equity Research Page 4

Exhibit 4: RoE and RoCE trend 30 25 27.2 27.1 24.6 28.9 28.6 % 20 15 21.3 16.9 16.3 19.2 19.4 10 5 0 FY16 FY17 FY18E FY19E FY20E ROCE ROE ICICI Securities Ltd Retail Equity Research Page 5

Outlook & Valuation We believe BPCL will benefit from the Kochi refinery expansion from FY19, which would lead to ~US$2/barrel improvement in Kochi refinery GRMs. On the GST front, decisions on inclusion of petroleum products under the new tax regime are still pending, which will continue to have a negative impact on the profitability of OMCs. We have a HOLD recommendation on the stock with a target price of 500 (based on average of P/BV multiple: 437/share and P/E multiple: 562/share). Exhibit 5: Valuation Valuation based on Price / BV Multiple Book Value for FY20E ( Crore) 30676.4 Number of shares (Crore) 196.7 Book Value per share ( ) 156.0 Add: Listed investments (25% discount to CMP) 38.3 Book Value of core business ( per share) 194.3 Multiple 2.2 Fair value per share without investments ( ) 420 Add: E&P value 17.0 Fair Value per share ( ) 437 Valuation based on P / E multiple Profit after tax for FY20E ( Crore) 8984.3 Less: Other Income adjusted for tax ( Crore) 1891.0 Adjusted profit after tax for FY20E ( Crore) 7093.3 Number of shares (Crore) 196.7 Adjusted EPS for FY20E ( ) 36.1 Multiple 13.0 Fair value per share without investments ( ) 467 Add: Value of Investments ( per share) Listed investments (25% discount to CMP) 38.3 Bharat Oman Refinery Ltd 13.6 Numaligarh Refinery 23.1 E&P value (BPRL) 17.0 Other Investments 3.1 Fair value per share ( ) 562 Weighted Target Price ( per share) 500 Source: ICICIdirect.com Research Exhibit 6: Valuations Year Sales Sales Gr. EPS EPS Gr. PE ( Crore) (%) ( ) (%) (x) EV/EBITDA (x) RoNW (%) RoCE (%) FY17 242047.8 27.9 40.9 8.2 11.7 10.8 27.1 16.9 FY18E 274006.4 13.2 37.4-8.5 12.5 10.0 24.6 16.3 FY19E 320295.4 16.9 44.5 19.0 10.5 8.2 28.9 19.2 FY20E 329989.0 3.0 45.7 2.6 10.2 7.9 28.6 19.4 ICICI Securities Ltd Retail Equity Research Page 6

Recommendation history vs. consensus estimate ( ) 700 600 500 400 300 200 100 0 Feb-15 Jul-15 Nov-15 Apr-16 Aug-16 Jan-17 May-17 Sep-17 Feb-18 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 (%) Source: Bloomberg, Company, ICICIdirect.com Research Price Idirect target Consensus Target Mean % Consensus with Buy Key events Jun-11 Indian government announced increase in petroleum product prices, eliminated custom duty on crude oil and reduced in excise duties on petrol and diesel Nov-11 Under recoveries on diesel remain high due to depreciation of Indian rupee. Gross under recovery on petroleum products likely to increase sharply QoQ Feb-12 Shell bids to buy Cove Energy stake in Mozambique at a valuation higher than market expectations Jan-13 The government took a brave and bold decision and asked the oil marketing companies (OMCs) to periodically hike diesel prices by 50 paise/month May-13 Finance ministry plans to implement Export Parity Pricing (EPP) for pricing of petroleum products for refiners from the current trade parity pricing model. The move if implemented would have a huge negative impact on profitability of companies Aug-13 Sharp rupee depreciation, thereby likely higher under recoveries led to decline in the stock price Oct-14 Government announces diesel deregulation Dec-14 Crude oil prices declines by nearly 50% from the 2014 high's Aug-15 Government of India caps kerosene subsidy at 12/litre, LPG at 18/kg Top 10 Shareholders Rank Name Latest Filing Date %OS Position (m) Change (m) 1 Government of India 30-Sep-17 54.93 1,191.6 0.0 2 Life Insurance Corporation of India 30-Sep-17 9.33 52.8 10.0 3 The Vanguard Group, Inc. 31-Dec-17 1.97 34.1-0.3 4 BlackRock Asset Management North Asia Limited 30-Nov-17 1.48 25.4 0.2 5 Fidelity Management & Research Company 30-Nov-17 1.15 24.7 0.6 6 BlackRock Institutional Trust Company, N.A. 31-Dec-17 1.15 22.6 0.0 7 Franklin Templeton Asset Management (India) Pvt. Ltd. 30-Jun-17 1.03 15.2 1.7 8 Morgan Stanley Investment Management Inc. (US) 30-Nov-17 0.70 14.8 1.2 9 APG Asset Management 31-Mar-17 0.65 13.9 2.0 10 Motilal Oswal Asset Management Company Ltd. 31-Dec-17 0.64 13.0 0.0 Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Promoter 54.9 54.9 54.9 54.9 54.3 FII 22.7 22.5 22.5 22.4 22.1 DII 7.5 7.6 7.6 8.0 8.5 Others 14.9 14.9 14.9 14.6 15.2 Recent Activity Investor name Investor name Investor name Value (m) Shares (m) Investor name Value (m) Shares (m) Life Insurance Corporation of India 72.39 10.03 Invesco Hong Kong Limited -16.35-2.27 Franklin Templeton Asset Management (India) Pvt. Ltd. 10.96 1.66 FIL Investment Management (Singapore) Ltd. -5.63-0.85 HDFC Asset Management Co., Ltd. 10.88 1.34 Baillie Gifford & Co. -5.96-0.83 Morgan Stanley Investment Management Inc. (US) 9.43 1.21 SEB Investment Management AB -5.56-0.77 Nomura Asset Management Co., Ltd. 8.13 1.11 Principal Asset Management Company (Asia) Ltd. -3.36-0.51 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

Financial summary Profit and loss statement Crore (Year-end March) FY17 FY18E FY19E FY20E Revenue 242,047.8 274,006.4 320,295.4 329,989.0 Growth (%) 27.9 13.2 16.9 3.0 (Inc.)/(Dec.) in stock in trade -5577.6 1587.9 0.0 0.0 Raw material Costs 67710.7 80276.8 98977.4 99650.7 Purchase of Products 114220.1 123955.6 150442.2 157964.3 Employee Costs 3429.5 3273.9 3372.1 3473.3 Other Expenditure 51435.9 53500.6 53055.3 53746.0 Op. Expenditure 231218.5 262594.8 305847.0 314834.4 EBITDA 10,829.3 11,411.6 14,448.4 15,154.6 Growth (%) -2.1 5.4 26.6 4.9 Depreciation 1891.3 2517.3 3017.8 3498.0 EBIT 8938.0 8894.4 11430.6 11656.6 Interest 495.9 835.0 995.6 1069.6 Other Income 2600.7 2693.2 2630.4 2822.4 PBT 11042.8 10752.5 13065.4 13409.4 Growth (%) 3.7-2.6 21.5 2.6 Tax 3003.5 3397.4 4311.6 4425.1 Reported PAT 8,039.3 7,355.1 8,753.8 8,984.3 Growth (%) 8.2-8.5 19.0 2.6 EPS 40.9 37.4 44.5 45.7 Cash flow statement Crore (Year-end March) FY17 FY18E FY19E FY20E Profit after Tax 8,039.3 7,355.1 8,753.8 8,984.3 Less: Dividend Paid 5,499.0 5,753.1 5,753.1 5,753.1 Add: Depreciation 1,891.3 2,517.3 3,017.8 3,498.0 Add: Others 879.8 50.0 50.0 50.0 Cash Profit 5,311.4 4,169.2 6,068.5 6,779.2 Increase/(Decrease) in CL 6,105.6 7,365.1 6,889.4 1,396.0 (Increase)/Decrease in CA -9,656.7 69.4-5,146.4-2,038.3 CF from Operating Activities 1760.3 11603.8 7811.5 6136.9 Purchase of Fixed Assets 9,079.1 10,077.1 10,500.0 5,000.0 (Inc)/Dec in Investments -1,790.5 447.4 1,000.0 500.0 Others 0.0 0.0 0.0 1.0 CF from Investing Activities -10,869.5-9,629.8-9,500.0-4,500.0 Inc/(Dec) in Loan Funds 7,301.7 1,500.0 4,500.0-500.0 Inc/(Dec) in Sh. Cap. & Res. -194.9-1,411.8-2,596.7-2,125.3 Others 2.0 2.0 2.0 3.0 CF from financing activities 7,106.8 88.2 1,903.3-2,625.3 Change in cash Eq. -2,002.4 2,062.2 214.8-988.4 Op. Cash and cash Eq. 2,067.1 64.7 2,126.9 2,341.7 Cl. Cash and cash Eq. 64.7 2,126.9 2,341.7 1,353.3 Balance sheet Crore (Year-end March) FY17 FY18E FY19E FY20E Source of Funds Equity Capital 1,311.3 1,966.9 1,966.9 1,966.9 Preference capital 0.0 0.0 0.0 0.0 Reserves & Surplus 28,357.1 27,891.6 28,295.6 29,401.5 Shareholder's Fund 29,668.3 29,858.5 30,262.5 31,368.4 Loan Funds 23,159.2 24,659.2 29,159.2 28,659.2 Deferred Tax Liability 3,501.7 3,551.7 3,601.7 3,651.7 Minority Interest 0.0 0.0 0.0 0.0 Source of Funds 56,329.3 58,069.4 63,023.4 63,679.3 Application of Funds Gross Block 35,544.1 43,544.1 53,544.1 58,544.1 Less: Acc. Depreciation 3,701.0 6,141.1 9,158.9 12,656.9 Net Block 31,843.1 37,402.9 44,385.2 45,887.1 Capital WIP 11,216.7 13,216.7 13,716.7 13,716.7 Total Fixed Assets 43,059.8 50,619.7 58,101.9 59,603.9 Investments 14,601.5 14,154.1 13,154.1 12,654.1 Inventories 19,798.0 19,518.3 22,815.6 23,506.1 Debtor 4,758.2 3,753.5 4,387.6 4,520.4 Cash 64.7 2,126.9 2,341.7 1,353.3 Loan & Advance, Other CA 9,707.5 10,922.5 12,137.5 13,352.5 Total Current assets 34,328.3 36,321.1 41,682.3 42,732.2 Current Liabilities 33,288.6 37,535.1 43,876.1 45,204.0 Provisions 2,371.7 5,490.3 6,038.8 6,106.9 Total CL and Provisions 35,660.3 43,025.4 49,914.9 51,310.9 Net Working Capital -1,332.0-6,704.3-8,232.5-8,578.7 Miscellaneous expense 0.0 0.0 0.0 0.0 Application of Funds 56,329.3 58,069.4 63,023.4 63,679.3 Key ratios (Year-end March) FY17 FY18E FY19E FY20E Per share data ( ) Book Value 150.8 151.8 153.9 159.5 Cash per share 0.3 10.8 11.9 6.9 EPS 40.9 37.4 44.5 45.7 Cash EPS 50.5 50.2 59.8 63.5 DPS 23.9 25.0 25.0 25.0 Profitability & Operating Ratios EBITDA Margin (%) 4.5 4.2 4.5 4.6 PAT Margin (%) 3.3 2.7 2.7 2.7 Fixed Asset Turnover (x) 5.6 5.4 5.5 5.5 Inventory Turnover (Days) 29.9 26.0 26.0 26.0 Debtor (Days) 7.2 5.0 5.0 5.0 Current Liabilities (Days) 50.2 50.0 50.0 50.0 Return Ratios (%) RoE 27.1 24.6 28.9 28.6 RoCE 16.9 16.3 19.2 19.4 RoIC 18.6 18.4 21.4 21.0 Valuation Ratios (x) PE 11.4 12.5 10.5 10.2 Price to Book Value 3.1 3.1 3.0 2.9 EV/EBITDA 10.6 10.0 8.2 7.9 EV/Sales 0.5 0.4 0.4 0.4 Leverage & Solvency Ratios Debt to equity (x) 0.8 0.8 1.0 0.9 Interest Coverage (x) 18.0 10.7 11.5 10.9 Debt to EBITDA (x) 2.1 2.2 2.0 1.9 Current Ratio 1.0 0.8 0.8 0.8 Quick ratio 0.4 0.4 0.4 0.4. ICICI Securities Ltd Retail Equity Research Page 8

ICICIdirect.com coverage universe (Oil & Gas) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E Bharat Petroleum (BHAPET) 468 500 Hold 50,760 37.8 40.9 37.4 12.4 11.4 12.5 9.6 10.6 10.0 21.3 16.9 16.3 27.2 27.1 24.6 Castrol India (CASIND) 187 200 Hold 19,782 6.2 6.8 7.0 30.1 27.4 26.7 19.9 17.6 17.3 148.7 161.1 199.3 106.9 113.3 139.6 GAIL (India) (GAIL) 461 510 Buy 77,967 15.5 28.9 28.4 29.7 15.9 16.2 16.8 9.8 10.3 11.7 14.6 12.8 9.2 11.8 10.8 Gujarat Gas (GUJGA) 850 1,000 Buy 2,351 13.0 16.2 23.2 65.5 52.5 20.7 19.3 18.7 12.2 12.4 12.3 15.8 11.8 13.6 22.4 Gujarat State Petronet (GSPL) 208 220 Hold 11,717 7.9 8.8 12.2 26.4 23.6 17.1 14.8 13.9 10.4 13.3 13.8 18.1 10.9 11.0 13.6 Gulf Oil Lubricants (GULO) 965 1,000 Hold 4,784 20.2 24.4 31.3 47.7 39.6 30.8 29.8 25.9 20.3 34.5 32.5 42.0 40.4 34.2 36.3 Hindustan Petroleum (HINPET) 391 420 Hold 59,649 8.4 13.6 13.0 15.4 9.6 10.0 10.2 7.6 8.4 13.4 19.3 15.7 21.5 30.5 27.4 Indraprastha Gas (INDGAS) 295 315 Hold 20,650 29.7 8.2 9.3 9.9 36.2 31.9 4.8 20.8 18.3 24.4 27.2 26.4 16.5 19.5 19.0 Mahanagar Gas Ltd (MAHGAS) 1,023 1,200 Buy 10,105 34.6 39.8 50.1 29.6 25.7 20.4 17.5 15.5 12.0 24.8 29.8 33.6 17.9 21.4 23.8 Mangalore Refinery (MRPL) 118 140 Buy 20,681 6.6 20.8 12.4 18.0 5.7 9.5 1.0 5.3 4.3 7.4 21.6 19.2 17.9 36.2 16.7 Petronet LNG (PETLNG) 206 310 Buy 36,450 5.9 6.1 13.8 39.9 21.4 17.6 67.9 NA NA 13.7 21.4 28.5 13.8 21.1 23.3 ICICI Securities Ltd Retail Equity Research Page 9

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 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 10

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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 associates 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 and their relatives have any material conflict of interest at the time of publication of this report. It is confirmed that Mayur Matani, MBA and Akshay Gavankar, PGDM 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 or their relatives 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 Mayur Matani, MBA and Akshay Gavankar, PGDM. 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. 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