NEUTRAL Near term recovery priced-in - 4QFY18 - HDFC sec...Colgate Sensitive and Colgate Total, was...

RESULTS REVIEW 4QFY18 21 MAY 2018

Colgate-Palmolive (India) NEUTRAL

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Near term recovery priced-in Colgate registered 5/4% revenue/volume growth vs. expectation of 11/6%. Soft commodity inflation, favorable base & cost control initiatives drove healthy EBITDA/PAT growth of 26/26% (expectation 16/20%). Toothpaste industry has delivered 7% (Colgate 2.5%) volume growth in FY18 vs. 2% CAGR (Colgate 1%) during FY16-FY17. Consumers’ renewed affluence towards the natural segment (25% mix for industry) has benefited Dabur and Patanjali (80% combined share). While Colgate, with limited natural products was caught on the back-foot. Additionally, higher wholesale dependence (~50%) has led to decline in market share in FY18 by 170bps to 53.4% (7 year low). Colgate’s premium segment (revenue mix at 4% vs. 8% earlier) i.e. Colgate Sensitive and Colgate Total, was impacted the most by naturals segment. Colgate has launched Cibaca Vedshakti (North) and Swarna Vedshakti (South) to enjoy the growth in naturals. Both these products have received positive response. The strategy going forward is to take Swarna Vedshakti (1% market share) national (launched in South earlier) with wider SKUs. We believe market share will start bottoming out. We model 12% revenue CAGR

during FY18-20E, which factors in pass through of higher inflation and recovery in rural demand. Owing to stiff competition, we expect Colgate to continue to spend abundantly on marketing (~13%). We foresee low-margin expansion of ~160bps over FY18-20E vs. ~600bps in the past three years. We downgrade to neutral (stock is up ~16% since our upgrade in Mar-18), as we believe near term recovery is priced-in. We value Colgate based on P/E of 35x on Mar-20 EPS to arrive at a TP of 1,203.

Highlights of the quarter 26% EBITDA growth: GM expanded by 302bps to 65.7%

owing to soft commodity inflation. A&P grew by -1% YoY (24% in 4QFY17). Employee/Other expenses increased by -1/3%. EBITDA margin expanded by 462bps to 28% (exp. of 25%).

APAT grew by 26%: Other income grew by 6% YoY, however slower tax growth (-1% YoY) resulted in APAT (Rs 117mn of severance pay) growing by 26% to Rs 1.79bn vs. expectation of Rs 1.71bn.

Near-term outlook: With most of the near-term recovery priced-in (stock is up 16% in the last 2 months), we advise investors to look at other mid-cap’s (Marico and Dabur) to play consumption recovery.

Financial Summary (Rs mn) 4QFY18 4QFY17 YoY (%) 3QFY18 QoQ (%) FY16 FY17 FY18P FY19E FY20E Net Sales 10,917 10,375 5.2 10,333 5.6 38,682 39,818 41,880 46,703 52,693 EBITDA 3,075 2,443 25.9 2,824 8.9 9,382 9,444 11,124 12,761 14,833 APAT 1,888 1,426 32.4 1,707 10.6 6,031 5,774 6,637 7,922 9,353 Diluted EPS (Rs) 6.6 5.2 25.6 6.3 4.9 22.2 21.2 24.4 29.1 34.4 P/E (x) 54.5 56.9 49.5 41.5 35.1 EV / EBITDA (x) 34.7 34.5 29.0 25.3 21.5 Core RoCE (%) 82.2 58.3 60.4 68.4 83.0 Source: Company, HDFC sec Inst Research

INDUSTRY FMCG

CMP (as on 21 May 18) Rs 1,208

Target Price Rs 1,203

Nifty 10,517 Sensex 34,616

KEY STOCK DATA Bloomberg CLGT IN

No. of Shares (mn) 272 MCap (Rs bn)/(US$ mn) 328/4,824 6 m avg traded value (Rs mn) 349

STOCK PERFORMANCE (%) 52 Week high / low Rs 1,285/975 3M 6M 12M Absolute (%) 11.7 15.6 18.8 Relative (%) 9.4 12.2 5.2

SHAREHOLDING PATTERN (%) Promoters 51.00 FIs & Local MFs 12.61 FPIs 13.92 Public & Others 22.47 Source : BSE Naveen Trivedi [email protected] +91-22-6171-7324

Siddhant Chhabria [email protected] +91-22-6171-7336

mailto:[email protected]

COLGATE-PALMOLIVE : RESULTS REVIEW 4QFY18

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Quarterly Financials Particulars (Rs mn) 4QFY18 4QFY17 YoY (%) 3QFY18 QoQ (%) FY18 FY17 YoY (%) Net Revenue 10,917 10,375 5.2 10,333 5.6 41,880 39,818 5.2 Material Expenses 3,750 3,877 (3.3) 3,598 4.2 14,901 14,763 0.9 Employee Expenses 758 763 (0.6) 750 1.1 3,059 2,885 6.0 ASP Expenses 1,436 1,443 (0.5) 1,207 18.9 5,268 5,117 3.0 Other Operating Expenses 1,898 1,849 2.7 1,954 (2.9) 7,528 7,617 (1.2) EBITDA 3,075 2,443 25.9 2,824 8.9 11,124 9,436 17.9 Depreciation 405 341 18.6 396 2.3 1,565 1,332 17.5 EBIT 2,670 2,102 27.0 2,429 10.0 9,559 8,103 18.0 Other Income 85 80 5.9 90 (6.2) 388 411 (5.6) PBT 2,755 2,182 26.3 2,519 9.4 9,947 8,514 16.8 Exceptional (117) - na - na (117) - PBT after exceptional 2,639 2,182 20.9 2,519 4.8 9,830 8,514 15.5 Tax 751 756 (0.7) 812 (7.6) 3,097 2,740 13.0 RPAT 1,888 1,426 32.4 1,707 10.6 6,734 5,774 16.6 APAT 1,791 1,426 25.6 1,707 4.9 6,637 5,774 14.9 EPS (adjusted) 6.6 5.2 25.6 6.3 4.9 24.4 21.2 14.9 Source: Company, HDFC sec Inst Research

Margin Analysis Particulars 4QFY18 4QFY17 YoY (bps) 3QFY18 QoQ (bps) FY18 FY17 YoY (bps) Material Expenses % Net Sales 34.3 37.4 (302) 34.8 (47) 35.6 37.1 (150) Employee Expenses % Net Sales 6.9 7.4 (41) 7.3 (32) 7.3 7.2 6 ASP Expenses % Net Sales 13.1 13.9 (75) 11.7 147 12.6 12.9 (27) Other Operating Expenses % Net Sales 17.4 17.8 (43) 18.9 (152) 18.0 19.1 (116) EBITDA Margin (%) 28.2 23.5 462 27.3 84 26.6 23.7 286 Tax Rate (%) 28.5 34.7 (619) 32.3 (379) 31.5 32.2 (68) APAT Margin (%) 17.3 13.7 355 16.5 78 16.1 14.5 158 Source: Company, HDFC sec Inst Research

We were expecting revival in revenue growth owing to a favourable base (-3% YoY), stability in distribution channel, moderating competitive intensity (Patanjali) and traction from new launches like Colgate Swarna Vedshakti The management is guiding for 5-6% volume growth in the near-term We expect advertising spend to increase in the near term with pan-India launch of Swarna Vedshakti EBITDA margin expansion was driven by soft commodity inflation, favourable base and cost control initiatives


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Net Revenue Volume Growth

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 growth is based on old AS

Source: Company, HDFC sec Inst Research

Gross Margin Change EBITDA Margin Change

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Volume growth challenges have persisted for the past several quarters driven by slower category growth and market share losses Soft commodity inflation leading to gross margin expansion Favourable base and cost control initiatives led to EBITDA margin expansion

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

-

3,000

6,000

9,000

12,000

4QFY

151Q

FY16

2QFY

163Q

FY16

4QFY

161Q

FY17

2QFY

173Q

FY17

4QFY

171Q

FY18

2QFY

183Q

FY18

4QFY

18

Net Sales YoY Growth - RHS

(Rs mn) (%)

5.0 3.0 3.0

1.0

6.0 6.0 4.0

(12.0)

(3.0)(5.0)

(0.9)

12.0

4.0

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(%)

312

86

137 120

34

139

91 76

142 108

41

130

302

-

110

220

330

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(bps)

229

(26)

591

326

(211)(105)

(35) (47)(21)

183 171

286

462

(300)

(50)

200

450

700

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(bps)


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Employee Expense Advertising Expense



Gross Margin EBITDA Margin

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

We expect advertising spend would increase in the coming quarters. Colgate will spend more aggressively to support new launches

53

12

(16)

9 13 16 26

(1)

2

(2)

13 15

(1)

4.0

5.0

6.0

7.0

8.0

(25)

-

25

50

75

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

Employee Gr. (%) Employee (% of sales) - RHS(%)

(7)

11

(17)(11)

28 24

28

(21)

24

(8) (7)

44

(0)

-

5

10

15

20

25

(30)

-

30

60

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

Advertising Gr. (%) Advertising (% of sales) - RHS(%)

63.7

60.9

62.1 63.1

61.2 62.3

63.0 63.9

62.6 63.4 63.4

65.2 65.7

57.0

59.0

61.0

63.0

65.0

67.0

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(%)

24.1 21.9

26.4 24.9

23.8

20.9

26.0 24.5

23.5 22.7

27.7 27.3 28.2

10.0

15.0

20.0

25.0

30.0

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(%)


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Colgate’s Toothpaste Market Share Colgate’s Toothbrush Market Share

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Market share declines for Colgate in toothpaste have come from its premium segment (Colgate Sensitive and Colgate Total). The premium segment revenue contribution now is at ~4% vs. ~8% earlier Colgate continued to face intense competition in the naturals segment (25% mix for industry) which is dominated by Dabur and Patanjali (80% combined share)

56.7

57.8

57.9

57.6

57.3

55.3

55.9

55.7

55.4

55.1

54.3

54.0

53.7

53.4

51.0

52.0

53.0

54.0

55.0

56.0

57.0

58.0

59.0

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(%)

42.1

42.7

43.3

43.8

45

.8 46

.8

46.6

47.0

47.4

45

.0 45.5

45.1

44.8

39.0

40.0

41.0

42.0

43.0

44.0

45.0

46.0

47.0

48.0

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

(%)


Page | 6

Toothpaste Market Performance (Quarterly) Toothpaste Market Performance (Yearly)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Toothpaste Market Share


Toothpaste volume market growth has also slowed down~6% during the last 3 quarters Higher competitive intensity from Dabur and Patanjali has been impacting Colgate’s market share

0.1% 2.1%

7.4%6.1%

5.9%

6.5%

0.0%

4.0%

8.0%

12.0%

16.0%

CY15

CY16

CY17

Volume Growth Price Growth

48.8 48.452.2 53.3 52.7 54.5 56.1 57.0 57.4 55.6 53.7

25.1 24.6 22.8 22.6 23.3 23.5 22.8 21.3 19.6 19.1 17.6

11.9 12.2 12.9 13.7 14.8 14.0 13.4 13.4 13.9 15.3 15.5

0.0 0.1 0.4 0.6 1.3 2.86.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

Colgate Competitor 1 Competitor 2 Competitor 3(%)

-5%

0%

5%

10%

15%

20%

25%

1QCY

15

2QCY

15

3QCY

15

4QCY

15

1QCY

16

2QCY

16

3QCY

16

4QCY

16

1QCY

17

2QCY

17

3QCY

17

4QCY

17

1QCY

18



Page | 7

Toothbrush Market Performance (Quarterly) Toothbrush Market Performance (Yearly)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Toothbrush Market Share


Toothbrush volume market growth has been steady at ~10% while price growth has declined to 2% in last 3 quarters vs. 8-9% average during FY16-FY17 Higher competitive intensity from P&G (Oral-B) and unorganized players in toothbrush led to 260bps decline in vol. market share to 44.8%

-16.0%

-8.0%

0.0%

8.0%

16.0%

24.0%

32.0%

1QCY

15

2QCY

15

3QCY

15

4QCY

15

1QCY

16

2QCY

16

3QCY

16

4QCY

16

1QCY

17

2QCY

17

3QCY

17

4QCY

17

1QCY

18


9.3%

-4.1%

12.0%

10.3%

11.0%

3.1%

-7.0%

1.0%

9.0%

17.0%

25.0%

CY15

CY16

CY17


33.438.4 38.0 35.9

39.842.3 42.8 44.4

47.3 45.1

11.4 11.914.8

17.8 18.8 18.4 18.2 17.414.6 14.2

5.9 6.4 7.2 7.2 6.7 7.5 7.9 9.3 10.7 11.00.0

10.0

20.0

30.0

40.0

50.0

60.0

CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

Colgate Competitor 1 Competitor 2(%)


Page | 8

Per Capita Consumption

Source: Company, HDFC sec Inst Research Assumptions

FY16 FY17 FY18P FY19E FY20E Toothpaste revenue growth (2.6) 2.7 5.8 12.0 13.4 Toothpaste volume growth 5.0 (2.0) 2.5 6.6 8.0 GM (%) 61.8 62.9 64.4 64.9 65.4 Employee (% of sales) 6.8 7.2 7.3 7.1 6.8 ASP (% of sales) 11.6 12.9 12.6 12.6 12.6 Distribution (% of sales) 3.6 3.2 3.1 3.0 3.2 Royalty (% of sales) 5.7 5.2 5.2 5.2 5.2 Other expenses (% of sales) 9.9 10.7 9.7 9.8 9.5 EBITDA Margin (%) 24.3 23.7 26.6 27.3 28.2 Tax Rate (%) 30.4 32.2 31.5 32.0 32.0 Source: Company, HDFC sec Inst Research

603

458

312

212158

0

100

200

300

400

500

600

700

Brazil USA Philipines China India

With stiff competition, we expect Colgate to continue to spend abundantly on marketing (13%). We foresee low-margin expansion of ~160bps over FY18-20E vs. ~600bps in the past three years


Page | 9

Income Statement (Rs mn) FY16 FY17 FY18P FY19E FY20E Net Revenues 38,682 39,818 41,880 46,703 52,693 Growth (%) 4.5 2.9 5.2 11.5 12.8 Material Expenses 14,766 14,768 14,901 16,389 18,198 Employee Expense 2,624 2,885 3,059 3,304 3,751 ASP Expense 4,476 5,118 5,268 5,866 6,618 Distribution Expense 1,390 1,274 1,298 1,401 1,686 Other Expenses 6,044 6,330 6,229 6,983 7,608 EBITDA 9,382 9,444 11,124 12,761 14,833 EBITDA Growth (%) 14.1 0.7 17.8 14.7 16.2 EBITDA Margin (%) 24.3 23.7 26.6 27.3 28.2 Depreciation 1,114 1,332 1,565 1,726 1,872 EBIT 8,268 8,112 9,559 11,034 12,961 Other Income (Inc. EO Items) 86 403 272 616 793 Interest - - - - - PBT 8,354 8,514 9,830 11,650 13,754 Total Tax 2,541 2,740 3,097 3,728 4,401 RPAT 5,812 5,774 6,734 7,922 9,353 Exceptional Gain/(loss) (218) - (97) - - Adjusted PAT 6,031 5,774 6,637 7,922 9,353 APAT Growth (%) 7.9 (4.2) 14.9 19.4 18.1 Adjusted EPS (Rs) 22.2 21.2 24.4 29.1 34.4 EPS Growth (%) 7.8 (4.2) 14.9 19.4 18.1


Balance Sheet (Rs mn) FY16 FY17 FY18P FY19E FY20E SOURCES OF FUNDS Share Capital - Equity 272 272 272 272 272 Reserves 10,038 12,466 15,836 15,897 19,529 Total Shareholders’ Funds 10,311 12,738 16,109 16,169 19,801 Long Term Debt - - - - - Short Term Debt - - - - - Total Debt - - - - - Net Deferred Taxes 400 275 355 355 355 Other Non-current Liabilities & Provns 1,235 1,004 683 701 729

TOTAL SOURCES OF FUNDS 11,945 14,017 17,147 17,225 20,886 APPLICATION OF FUNDS Net Block 10,081 11,081 11,460 11,833 11,962 CWIP 784 1,666 1,586 1,269 1,015 Other Non-current Assets 1,191 1,157 1,313 1,444 1,585 Total Non-current Assets 12,056 13,904 14,358 14,546 14,561 Inventories 2,915 2,926 2,267 2,526 2,845 Debtors 1,015 1,299 2,010 1,868 2,108 Other Current Assets 951 1,630 2,022 2,224 2,446 Cash & Equivalents 3,198 3,207 5,635 6,088 10,064 Total Current Assets 8,080 9,062 11,934 12,706 17,463 Creditors 7,902 8,653 8,751 9,633 10,744 Other Current Liabilities & Provns 290 296 394 394 394 Total Current Liabilities 8,191 8,949 9,145 10,027 11,138 Net Current Assets (111) 114 2,789 2,679 6,324 TOTAL APPLICATION OF FUNDS 11,945 14,017 17,147 17,225 20,886



Page | 10

Cash Flow Statement (Rs mn) FY16 FY17 FY18P FY19E FY20E Reported PBT 8,595 8,514 9,830 11,650 13,754 Non-operating & EO Items (52) - - - - Interest Expenses (246) - - - - Depreciation 1,114 1,332 1,565 1,726 1,872 Working Capital Change 155 (412) (721) 453 218 Tax Paid (2,836) (2,740) (3,097) (3,728) (4,401) OPERATING CASH FLOW ( a ) 6,729 6,694 7,578 10,101 11,443 Capex (2,713) (3,214) (1,864) (1,783) (1,746) Free Cash Flow (FCF) 4,017 3,480 5,714 8,318 9,696 Investments 70 - - - - Non-operating Income 42 125 (80) - - INVESTING CASH FLOW ( b ) (2,601) (3,089) (1,944) (1,783) (1,746) Debt Issuance/(Repaid) - - - - - FCFE 4,128 3,605 5,634 8,318 9,696 Share Capital Issuance - - - - - Dividend (2,987) (3,266) (7,862) (7,862) (5,720) Others (800) 250 - (3) - FINANCING CASH FLOW ( c ) (3,786) (3,017) (7,862) (7,865) (5,720) NET CASH FLOW (a+b+c) 342 588 (2,228) 453 3,976 EO Items, Others 0 579 (4,656) (0) - Closing Cash & Equivalents 2,887 2,896 5,323 5,776 9,752


Key Ratios FY16 FY17 FY18P FY19E FY20E PROFITABILITY (%) GPM 61.8 62.9 64.4 64.9 65.5 EBITDA Margin 24.3 23.7 26.6 27.3 28.2 EBIT Margin 21.4 20.4 22.8 23.6 24.6 APAT Margin 15.6 14.5 15.8 17.0 17.7 RoE 67.0 50.1 46.0 49.1 52.0 RoIC (or Core RoCE) 82.2 58.3 60.4 68.4 83.0 RoCE 60.0 45.7 43.5 47.1 50.0 EFFICIENCY Tax Rate (%) 30.4 32.2 31.5 32.0 32.0 Fixed Asset Turnover (x) 2.5 2.2 2.1 2.1 2.2 Inventory (days) 27.5 26.8 19.8 19.7 19.7 Debtors (days) 9.6 11.9 17.5 14.6 14.6 Other Current Assets (days) 9.0 14.9 17.6 17.4 16.9 Payables (days) 74.6 79.3 76.3 75.3 74.4 Other Current Liab & Provns (days) 2.7 2.7 3.4 3.1 2.7 Cash Conversion Cycle (days) (31.2) (28.4) (24.8) (26.6) (25.9) Net D/E (x) (0.3) (0.3) (0.3) (0.4) (0.5) Interest Coverage (x) - - - - - PER SHARE DATA (Rs) EPS 22.2 21.2 24.4 29.1 34.4 CEPS 26.2 26.1 30.1 35.4 41.2 Dividend 10.0 10.0 24.0 17.5 22.3 Book Value 37.9 46.8 59.2 59.4 72.7 VALUATION P/E (x) 54.5 56.9 49.5 41.5 35.1 P/BV (x) 31.9 25.8 20.4 20.3 16.6 EV/EBITDA (x) 34.7 34.5 29.0 25.3 21.5 EV/Revenues (x) 8.4 8.2 7.7 6.9 6.0 OCF/EV (%) 2.1 2.1 2.3 3.1 3.6 FCF/EV (%) 1.3 1.1 1.7 2.6 3.0 FCFE/Mkt Cap (%) 1.3 1.1 1.7 2.5 3.0 Dividend Yield (%) 0.8 0.8 2.0 1.4 1.9



Page | 11

RECOMMENDATION HISTORY

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

Date CMP Reco Target 16-May-17 994 NEU 992 4-Aug-17 1,083 NEU 1,062 10-Oct-17 1,090 NEU 1,112 13-Nov-17 1,063 NEU 1,110 27-Dec-17 1,082 NEU 1,118 12-Jan-18 1,125 NEU 1,139 6-Feb-18 1,121 NEU 1,163

12-Mar-18 1,038 BUY 1,204 11-Apr-18 1,091 BUY 1,204 21-May-18 1,208 NEU 1,203

800850900950

1,0001,0501,1001,1501,2001,2501,300

May

-17

Jun-

17

Jul-1

7

Aug-

17

Sep-

17

Oct

-17

Nov-

17

Dec-

17

Jan-

18

Feb-

18

Mar

-18

Apr-

18

May

-18

Colgate TP


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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. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. Any holding in stock –No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purposes without prior written approval of HSL. Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail and/or its attachments. HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report. HSL 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. HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t 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 in the normal course of business. HSL 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 HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE-INB/F/E 231109431, BSE-INB/F 011109437, AMFI Reg. No. ARN: 13549, PFRDA Reg. No. POP: 04102015, IRDA Corporate Agent License No.: HDF 2806925/HDF C000222657, SEBI Research Analyst Reg. No.: INH000002475, CIN - U67120MH2000PLC152193 Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.

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