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India Strategy

Demonetisation prognosis: Slingshot effect in the offing INDIA | Strategy

21 November 2016

The big picture for demonetisation in India is one of systemic financial inclusion and deepening juxtaposed with wealth erosion for people involved in the country’s rather large informal economy. However, this wealth erosion is a zero‐sum game. ‘Velocity of money’ and factors influencing its change provide a very useful framework for analysing the impact of demonetisation on the economy and asset allocation in the short‐, medium‐, and long‐term. The ‘informal’ loss of wealth will be a gain for the government and other participants in the exchange system, but will translate into lower money velocity in the medium term and sharp deceleration in GDP growth. However, pervasive financial deepening of the system will prove one of the biggest factors for increasing money velocity, leading to acceleration in the GDP in the long term. We believe the government’s two big ideas – demonetisation + GST – will create a ‘slingshot effect’ that will re‐launch the economy with greater acceleration. If executed well (challenges are high), it will help GDP growth (fuelled by creation of infrastructure and jobs) and translate into a higher PE multiple for equity markets. Our key ideas are as follows:

Zero‐sum game, but big liquidity jolt in the short term will lead to GDP stagnation: Indian businesses thrive on cash transactions; by some estimates, 70% of all transactions are in cash. In such circumstances, the economy is facing huge challenges because of the liquidity crunch, which we believe would dent Q3FY17 GDP numbers by around 5%. As people exchange their currency notes and as system liquidity improves, the situation will increasingly stabilise, but the economy tracking back its normal growth trajectory is more likely from Q2FY18.

Challenges in the medium term, but financial markets to start reviving: To prevent a crisis, the pace of liquidity infusion back into the system is very critical in the short‐ to medium‐term. Market estimates vary from Rs 2.5trillion to Rs 6 trillion notes will not be exchanged. Notes that are not exchanged will lead to loss of liquidity from the system and a significant impact on GDP growth in forthcoming quarters. The government will have to re‐infuse this liquidity into the economy which is likely through the banking system (multiple options here). However, both the government and banking as mediums have not proven to be efficient in redistributing money – which is why money velocity will decrease. FY18 GDP growth will be impacted significantly, with market estimating a 50‐200bps hit. However, the system’s ‘formal’ channel will be flushed with liquidity, which in most cases finds its way into financial markets. Equity market valuations are likely to rise in the medium term, even as corporate earnings see significant cuts.

Slingshot effect for the economy in the medium‐ to long‐term as money velocity gains traction: High‐level system liquidity and financial inclusion means far more access to credit for people. Deepening (assuming credit‐to‐GDP is a proxy to this) will reduce the need for money and the velocity of money will rise as GDP growth starts accelerating. This acceleration will bring in fundamental changes with a much wider formal economy and a smaller informal economy.

Higher multiples for banks, utilities, infrastructure, consumer staples, and high‐growth plays: We believe two themes – higher liquidity and risk aversion – will manifest over the next 12 months: (1) companies with earnings visibility or growth will start trading at higher multiples and (2) belief of credit growth reviving will mean banks could see higher multiples. Utilities are bond proxies and will benefit from lower cost of capital.

High operating leverage plays (mostly discretionary) likely to see a decline in allocations: Sectors impacted by lower GDP growth rate with high operating leverage will see significant decline in earnings and thus reduced allocation. Consumer discretionary plays will take much more time to revive and will see a fall in allocations. This will include sectors such as automobiles, building materials, cement, media, real estate, and medium‐ to big‐ticket consumer discretionary spending plays.

Naveen Kulkarni, CFA, FRM (+91 22 66679947) [email protected] Aashima Mutneja (+91 22 66679974) [email protected]


INDIA STRATEGY UPDATE

Decline in nominal GDP growth in the short‐ to medium‐term We are using Irving Fischer’s 1911 framework for ‘equation of exchange’ to analyse the impact of demonetisation. The equation states:

M*V = P*Q According to this equation, the right hand side can be roughly equated to India’s nominal GDP. Thus, changes in money supply would have an impact on nominal GDP and inflation. Money supply in the system will change in the short term, because execution issues involving the rate of deposition of currency and withdrawal would be different. Apart from the mismatch in deposition and withdrawal of currency notes, a significant amount that is not exchanged would result in a further liquidity squeeze for the system. This would have short‐term to long‐term impact on the GDP growth rate. Short‐term squeeze of money supply will have big impact the nominal GDP Total 500/1000 rupee notes in circulation amount to Rs 15tn; these became zero at midnight 8th November because of demonetisation. Assuming a value of zero on 9th November and Rs 11.5tn on 30th December (assuming Rs 3.5 trillion notes are not exchanged) average notes in circulation will be Rs 5.75tn. This is a decline of Rs 9.75tn from the monetary base of Rs 124tn – translating into a 8% fall in money supply in the monetary base. As the impact will last for 52 days of Q3, the negative impact on nominal GDP growth rate of Q3FY17 will be around 4.5%. We believe prices are likely to be sticky in the interim, and that the decline is likely to be in the real GDP for the quarter. Expect minimum ~4.5% negative impact on 3QFY17 GDP (Rs bn) Currency in

circulation ‐Total `Other' deposits

with RBI Bankers' deposits

with RBI Reserve

Money (Mo)Narrow

Money (M1) Broad

Money (M3)Money Multiplier

(M3/M0)Current (As of Oct 28, 2016) 17,773 160 4,463 22,396 27,685 1,24,151 5.5xRs 500/1000 Notes in Circulation 15,285 As of Nov 8, 2016 2,488 160 4,463 7,111 12,400 1,08,866 As of Dec 30, 2016 13,952 160 4,463 18,575 23,864 1,20,330 6.5x% Decline in Avg. Money Supply ‐7.69% 17%Potential Impact on 3Q17 GDP* ‐4.45%

Note: *Quarterly adjusted

Source: PhillipCapital India Research

M is the total nation’s money stock. M3 in India can be a reasonable approximation

V is the velocity of money, i.e., the number of times each unit of money is spent in a year. Conventionally assumed at constant in the short term, but changes with systemic shocks, both in the short‐ and long‐term

P is the average price of all goods and services sold during the year

Q is the quantity of goods and services sold during the year



In this case, based on convention, we have assumed the velocity of money will not change much in the short term. However, empirical evidence suggests that even in the short term, velocity of money can change depending on systemic shocks. The current situation of demonetisation is a systemic shock and it is more likely that the velocity of money could fall. This is likely to put more pressure on GDP growth. In the medium term, the velocity of money is most likely to be lower, as the impact of the system shock will be pervasive. The slingshot effect: Challenging but achievable The slingshot effect uses the motion of a planet to alter the path and speed of a spacecraft to manoeuvre it to travel to the outer planets of our solar system, which would otherwise be prohibitively expensive (if not impossible) to reach with current technologies. The current demonetisation drive will mean greater financial inclusion and deepening. This has the potential to increase velocity of money in the longer term, leading to acceleration of GDP growth rate. The demonetisation drive, if executed well, has the potential to produce a slingshot‐like effect for the Indian economy. Gravity‐assist manoeuvre or the Slingshot Effect

Demonetisation could propel long‐term growth – akin to a slingshot


‐10%

‐5%

0%

5%

10%

15%

20%

25% V M3 Nominal GDP



Big challenges in the medium term In the medium term (over the next 2‐3 quarters), liquidity in the system will be restored to a large extent, but it would have changed hands and locations significantly. On one hand, the banking system will be flushed with liquidity and the government would have greater bandwidth to manage its finances, but on the other, erosion of people’s wealth would mean lower spending power and risk appetite. In such a scenario, conventionally, it is generally assumed that the banking system or the government are not very efficient mediums for redistribution of money supply in the medium term. This will lead to a decline in the velocity of money over the medium term, and the nominal GDP growth rate is likely to see significant deceleration. Composition of overall GFCF in India over the years

Source: RBI, PhillipCapital India Research Expect overall GFCF to be sluggish FY17‐18, led by declining household and private GFCF

Source: RBI, PhillipCapital India Research Greater liquidity in the banking system would mean a much bigger banking money multiplier of the system and ability to extend greater credit. However, the extension of credit in the system will be a challenge. Before demonetisation, for FY18, we expected capacity utilisation to improve led by household capex and rise in consumer discretionary expenditure – but this will take a back seat, as the real‐estate sector, which is the biggest cash guzzler, will turn sluggish. While the system will be flushed with liquidity, at least optically, credit growth will be a greater challenge. Mortgage

‐

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000 Private GFCf Household GFCF Public GFCF

‐20%

‐10%

0%

10%

20%

30%

40%

50%

0%

10%

20%

30%

40%

50%

60%

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016E

FY2017E

FY2018E

Household GFCF as a % of Total Household GFCF yoy% (RHS)

0%

5%

10%

15%

20%

25%

30%

35%

40%

‐

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016E

FY2017E

FY2018E

GFCF Total GFCF yoy% (RHS)



credit growth will take a backseat and the state will have to drive the investment push. However, as asset prices stabilise after a correction, and the impact of lower interest rates start taking effect, volume growth should start picking up. This would lead to credit growth picking up from Q3/Q4 FY18. Velocity of money set to rise after years of sluggishness: According to a working paper by the RBI (The Velocity Crowding‐out Impact: Why high money growth is not always inflationary), the velocity of money has declined over the years because of greater monetisation and the need for money. Also, the bigger informal economy means that the velocity of money is understated. It is likely that the informal economy could have grown at a faster pace than the formal economy over the years, but the larger impact is because of greater monetisation. Financial deepening and innovation will mean lesser reliance on money supply and higher pace of transactions. Falling money velocity trend could reverse after demonetisation

Source: RBI, PhillipCapital India Research Annual rate of change of velocity, GDP, and money supply

Source: RBI, PhillipCapital India Research

0

20000

40000

60000

80000

100000

120000

140000

160000

1.01.52.02.53.03.54.04.55.05.56.0

1951

‐52

1954

‐55

1957

‐58

1960

‐61

1963

‐64

1966

‐67

1969

‐70

1972

‐73

1975

‐76

1978

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1981

‐82

1984

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1987

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1990

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1993

‐94

1996

‐97

1999

‐00

2002

‐03

2005

‐06

2008

‐09

2011

‐12

2014

‐15

Rs. B

n

Velocity of Money (GDP/M3) M3 (RHS)

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

25%

1990

‐91

1991

‐92

1992

‐93

1993

‐94

1994

‐95

1995

‐96

1996

‐97

1997

‐98

1998

‐99

1999

‐00

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‐01

2001

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2002

‐03

2003

‐04

2004

‐05

2005

‐06

2006

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2007

‐08

2008

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‐10

2010

‐11

2011

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2012

‐13

2013

‐14

2014

‐15

2015

‐16

V M3 Nominal GDP



USA: Velocity of money over the last six decades – biggest fall after financial crisis

Source: FRED, PhillipCapital India Research The demonetisation drive would mean unprecedented financial inclusion and deepening, which would result in an unmatched number of people joining the formal financial system. This unparalleled deepening of the system should revive the velocity of money, which will lead to greater acceleration in GDP growth. Demonetisation, combined with implementation of GST, will lead to greater inclusion of the informal economy into the formal economy. If the execution of this drive stays on course, the pace of economic growth revival is more likely to see a much more sustainable cycle.

1.400

1.500

1.600

1.700

1.800

1.900

2.000

2.100

2.200

2.300

Jan‐59

May‐61

Sep‐63

Jan‐66

May‐68

Sep‐70

Jan‐73

May‐75

Sep‐77

Jan‐80

May‐82

Sep‐84

Jan‐87

May‐89

Sep‐91

Jan‐94

May‐96

Sep‐98

Jan‐01

May‐03

Sep‐05

Jan‐08

May‐10

Sep‐12

Jan‐15

Velocity of M2



Financial markets’ valuation multiples to rise in the medium‐ to long‐term Predilection for liquid assets will start increasing Empirical evidence of flushing liquidity through the banking system (as has been tried in developed countries after the 2008 crisis) does not necessarily lead to an increase in money velocity – this is because nominal GDP growth rates take more time to pick up. In fact, velocity of money has been seen declining in such periods. However, as it usually happens in any economy, rising liquidity finds its way into the financial markets, leading to a rise in stock prices. In India, the period after demonetisation should be one of rising predilection for liquid assets; hence, financial assets would be more sought‐after. Equities as an asset class is very liquid and tax efficient. Higher funds in the formal financial system will mean higher allocation to equities. Other asset classes (such as real estate) are illiquid, marked by very high transaction costs, and are not very tax efficient – this leaves room for higher allocation to equities, where risks can be diversified easily. Financial savings as a % of total household savings

Source: RBI, PhillipCapital India Research Shares and debentures as a % of change in financial assets


0%

20%

40%

60%

80%

100%

1986

‐87

1987

‐88

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‐89

1989

‐90

1990

‐91

1991

‐92

1992

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1993

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2011

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2012

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2014

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Financials Savings as a % of Total Physical Savings as a % of Total

‐2%

0%

2%

4%

6%

8%

10%

12%

1970

‐71

1972

‐73

1974

‐75

1976

‐77

1978

‐79

1980

‐81

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‐83

1984

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1986

‐87

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‐89

1990

‐91

1992

‐93

1994

‐95

1996

‐97

1998

‐99

2000

‐01

2002

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2004

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2006

‐07

2008

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2010

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2012

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2014

‐15

Shares as a % of Change in Financial Assets



Tax revenues will see a jump rising significantly as a % of GDP over long term

Source: RBI, PhillipCapital India Research Financial assets will be dearer, but real assets are likely to be cheaper Real‐estate assets (after a price correction of around 10‐20%), backed by lower interest rates, would become cheaper, but the preference for financial assets will continue because of liquidity. In equities, it has been seen that companies with earnings visibility or superior growth prospects tend to get dearer in times of greater liquidity and risk aversion. Liquidity and risk aversion are the precise concoction for market favourites such as private banks, consumer companies, pharmaceuticals, and IT to become expensive. PSU banks, which have seen significant clean‐up and are likely to be infused with fresh liquidity, will start seeing improvement in valuations. Discretionary sectors with higher operating leverage are likely to be devalued in the current environment. These include automobiles, cement, household products, media, and real estate.

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0% Gross Tax Revenues as a % of GDP



Sector impact We have identified key risks and benefits in the current environment. Key themes that will play out in the period after demonetisation are as follows: Lower inflation: Lower stock of money with people will be chasing greater number of goods. Both retail inflation and wholesale inflation (barring global commodity prices) will fall driven by a concoction of lower demand and lower retail liquidity. Lower inflation traditionally benefits the discretionary sector, but in this case, subdued demand will be a dampener. Small‐ticket consumer discretionary is likely to revive faster vs. big ticket. CPI and WPI under control

Source: PhillipCapital India Research Fall in asset prices: Real estate is one of the biggest asset classes and an overall decline in asset prices will choke system liquidity for some time. We believe that the government will try to resuscitate volumes through measures such as interest cuts, as inflation will be under control. The construction sector is one of the biggest job creators – in a ‘post demonetised’ India, significant cut in interest rates would be needed to stoke demand in this sector. Lower cost of capital: Lower interest rates will translate to lower cost of capital and higher earnings multiples. As more money will enter the formal economy, the cost of capital will be lower. This would benefit all sectors, especially companies with higher leverage. Repo could see significant cuts




Higher government spending: Government spending will rise because of greater liquidity in the system and improvement in its finances. This will benefit most infrastructure companies. Overall sector impact Sectors Lower

Inflation Asset Price Decline

Counterparty Risk

Lower Cost of Capital

Higher Govt. Spending

Short Term Impact

Medium Term Impact

Consumer Staples No Impact No Impact NEGATIVE POSITIVE Consumer Discretionary No Impact NEGATIVE NEGATIVE Automobiles No Impact NEGATIVE NEGATIVE Agri Inputs POSITIVE POSITIVE IT Services No Impact No Impact POSITIVE POSITIVE Cement NEGATIVE NEGATIVE Media No Impact No Impact No Impact NO IMPACT NEGATIVE Metals NEGATIVE NEGATIVE Downstream O&G No Impact No Impact NO IMPACT NO IMPACT Upstream O&G No Impact No Impact NO IMPACT NO IMPACT Pharma No Impact No Impact No Impact NO IMPACT NO IMPACT Retail No Impact No Impact NEGATIVE NEGATIVE Telecom No Impact No Impact No Impact NEGATIVE NO IMPACT Real Estate No Impact NEGATIVE NEGATIVE Capital Goods POSITIVE POSITIVE Transportation/Logistics No Impact No Impact POSITIVE POSITIVE Infrastructure No Impact POSITIVE POSITIVE Banks POSITIVE POSITIVE NBFC No Impact NEGATIVE NEGATIVE


Changes to the model portfolio In light of the changing market scenario, here are the changes to our model portfolio. • Add weights: +1% to ICICI Bank, 1.5% to SBI • Delete: Hero Motors



Model Portfolio ________EPS (Rs)________ ______EPS Growth (%)_____ _______P/E (x)_________

Company Weight FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18EFMCG 10.0% Dabur India Ltd 2.0% 7 8 9 17% 5% 13% 39 37 33Colgate Palmolive India Ltd 2.0% 22 24 28 9% 8% 14% 41 38 33ITC 6.0% 8 9 9 2% 11% 6% 29 26 25Automobile 8.5% Maruti 3.0% 151 240 280 23% 59% 17% 33 21 18Tata motors 3.0% 34 49 72 ‐21% 42% 47% 14 10 7Bajaj Auto 2.5% 126 150 178 16% 19% 18% 20 17 14IT 5.0% Infy 5.0% 59 63 70 9% 6% 12% 16 15 13Pharmaceuticals 8.5% Sun Pharma 5.0% 24 29 34 12% 19% 20% 29 24 20Aurobindo 3.5% 35 43 51 24% 21% 19% 21 17 14Cement 4.0% Ultratech 3.0% 83 126 141 9% 51% 12% 41 27 24Dalmia Bharat 1.0% 16 22 26 ‐6% 37% 19% 23 17 14Metals & Mining 8.3% Tata Steel 3.0% 10 46 67 ‐ 383% 45% 40 8 6Hindalco 2.0% 4 14 14 ‐72% 259% 5% 44 12 12NTPC 3.3% 10 12 13 2% 14% 8% 15 13 12Industrial 4.0% L&T 2.0% 49 57 66 3% 17% 15% 28 24 21NCC 2.0% 4 5 7 112% 17% 33% 19 16 12Finance 33.3% Axis bank 4.0% 35 14 23 11% ‐60% 69% 14 34 20IndusInd bank 3.0% 39 50 64 14% 29% 29% 29 22 17SBI 4.5% 15.7 16.3 23.1 ‐31% 3% 42% 18 17 12Cholamadalam Fin 2.5% 36 48 64 20% 32% 33% 27 21 15HDFC Ltd 5.0% 45 47 51 16% 4% 10% 28 27 24LIC Housing Finance 2.0% 33 39 46 20% 18% 19% 16 13 11HDFC bank 6.0% 49 58 69 20% 19% 20% 25 21 17ICICI Bank 6.3% 17 15 12 ‐13% ‐13% ‐16% 16 18 22Oil & Gas 4.0% Reliance Industries 4.0% 92 74 101 15% ‐19% 35% 11 13 10Telecom 11.5% Bharti Infratel 2.0% 13 14 15 19% 13% 8% 28 25 23Bharti Airtel 3.0% 10 11 19 ‐35% 18% 68% 31 26 16Idea 2.0% 9 4 1 ‐4% ‐56% ‐83% 8 19 111Dish TV 2.0% 7 3 5 ‐ ‐52% 56% 14 28 18Zee Entertainment 2.5% 10 12 17 10% 31% 36% 47 36 27Others 3.0% Tata Comm 1.5% 8 5 14 105% ‐36% 177% 79 123 44Praj Industries 1.5% 4 5 8 50% 31% 50% 20 15 10

Source: PhillipCapital India Research Estimates



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Management(91 22) 2483 1919

Kinshuk Bharti Tiwari (Head – Institutional Equity) (91 22) 6667 9946(91 22) 6667 9735

Research IT Services Pharma & Speciality Chem

Dhawal Doshi (9122) 6667 9769 Vibhor Singhal (9122) 6667 9949 Surya Patra (9122) 6667 9768Nitesh Sharma, CFA (9122) 6667 9965 Shyamal Dhruve (9122) 6667 9992 Mehul Sheth (9122) 6667 9996Banking, NBFCs Infrastructure StrategyManish Agarwalla (9122) 6667 9962 Vibhor Singhal (9122) 6667 9949 Naveen Kulkarni, CFA, FRM (9122) 6667 9947Pradeep Agrawal (9122) 6667 9953 Deepak Agarwal (9122) 6667 9944 Aashima Mutneja (9122) 6667 9764Paresh Jain (9122) 6667 9948 Logistics, Transportation & Midcap TelecomConsumer & Retail Vikram Suryavanshi (9122) 6667 9951 Naveen Kulkarni, CFA, FRM (9122) 6667 9947Naveen Kulkarni, CFA, FRM (9122) 6667 9947 Media Manoj Behera (9122) 6667 9973Jubil Jain (9122) 6667 9766 Manoj Behera (9122) 6667 9973 TechnicalsPreeyam Tolia (9122) 6667 9950 Metals Subodh Gupta, CMT (9122) 6667 9762Cement Dhawal Doshi (9122) 6667 9769 Production ManagerVaibhav Agarwal (9122) 6667 9967 Yash Doshi (9122) 6667 9987 Ganesh Deorukhkar (9122) 6667 9966Economics Mid‐Caps & Database Manager EditorAnjali Verma (9122) 6667 9969 Deepak Agarwal (9122) 6667 9944 Roshan Sony 98199 72726Engineering, Capital Goods Oil & Gas Sr. Manager – Equities SupportJonas Bhutta (9122) 6667 9759 Sabri Hazarika (9122) 6667 9756 Rosie Ferns (9122) 6667 9971Vikram Rawat (9122) 6667 9986

Sales & Distribution Ashvin Patil (9122) 6667 9991 Sales Trader Zarine Damania (9122) 6667 9976Shubhangi Agrawal (9122) 6667 9964 Dilesh Doshi (9122) 6667 9747 Bharati Ponda (9122) 6667 9943Kishor Binwal (9122) 6667 9989 Suniil Pandit (9122) 6667 9745Bhavin Shah (9122) 6667 9974Ashka Mehta Gulati (9122) 6667 9934 ExecutionArchan Vyas (9122) 6667 9785 Mayur Shah (9122) 6667 9945

Corporate Communications

Vineet Bhatnagar (Managing Director)

Jignesh Shah (Head – Equity Derivatives)

Automobiles



Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives, and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may, may not match, or may be contrary at times with the views, estimates, rating, and target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd.

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Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

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any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co‐managed in the previous twelve months, a private or public offering of securities for

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connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report: Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of thecompany(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No4 PCIL or its affiliates have managed or co‐managed in the previous twelve months a private or public offering of securities for the

company(ies) covered in the Research report No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

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Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.



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