Avenue Supermarts Ltd. REPORTNOTE SUBSCRIBE Towering Over Peers; Valuations at a Bargain View Issuer Avenue Supermarts Ltd

March 6, 2017

COMPANYIPO Avenue Supermarts Ltd. REPORTNOTE SUBSCRIBE Towering over peers; Valuations at a bargain View Issuer Avenue Supermarts Ltd. Transaction Initial public offering of up to 62.5-63.4  We are optimistic on the business fundamentals of Avenue Supermarts Ltd. mn. equity shares (face value Rs.10) (ASL), given its; 1) Consistent track record of profitable growth with significant Type opportunity to scale up; 2) Differentiated business strategy (owned real estate, cluster based positioning); 3) Cost leadership driven by exceptional in-store Issue Open and March 08, 2017 – March 10, 2017 efficiency; 4) Strong balance sheet, low W.C. needs and sustainable RoEs of Close Dates 20%+ and 5) Potential margin levers such as private labels & benefits of scale. Type of Offering Fresh Issue  Valuations inexpensive: On the surface, FY17E^ PE/EV.EBITDA multiples of Total Offer Size Rs18.7 bn 36x/17x may appear expensive. However, considering its track record of growth Price Band Rs295 – 299 per share (SSG/Revenue CAGR of 25%/40% over FY12-16, 36% in 9MFY17) and the potential for profitable store expansion (FY17^ RoEs at ~29%), valuations are Total Offer Size 10.02% at higher price band as % of Post inexpensive. EV/Sales of 1.5x further reinforce our SUBSCRIBE rating. Issue Capital About the offer Share holding pattern (%) ASL’s IPO is afresh issue of Rs18.7 bn. The company will primarily use the proceeds Pre-IPO Post-IPO to pay down debt (Rs10.8 bn) and fund store expansion (Rs3.7 bn), with the Promoter & Promoter Group 91.3% 82.2% remaining funds for general corporate purposes. Public 8.7% 17.8% Rationale Total 100.0% 100.0%  Stellar track record compared to peers: The Indian retail industry has a poor track record of profitability due to past periods of excessive expansion, leverage Offer Size available for allocation and poor execution. D-Mart’s EBIT margins (8%^ vs. peer avg. of 2%) & RoCE

Reservation No. of No. of % of profile (~30%^ vs. peer average of ~4%) rank well above peers historically as for Shares^ Shares Issue well as presently. Revenue/store has also been robust, increasing at a ~19% 31.3 31.7 50% QIB~ CAGR over FY12-16 (19% in FY17E), as compared to retailers such as Future Retail, Shoppers Stop, Spencers and Hypercity which have seen recent SSG’s at Non 9.4 9.5 15% Institutional ~12%/6%/8% and 1% respectively. 21.9 22.2 35%  Strategic edge paired with superb execution: ASL has managed to outperform Retail its retail peers by way of differentiated strategies combined with excellent 62.5 63.4 100% Total execution. Key examples include - 1) ASL’s decision to allocate capital to # All per-share metrics in report based on Upper price Band ~ Company may purchase its own real estate, as opposed to funding rapid expansion, which allocate up to 60% Shares of the QIB Portion to Anchor Investors. lowered opex. costs while restraining unfocused expansion. However, this strategy pays off primarily when location selection is done right, which in this Financial Summary case it has; 2) The company’s cluster based approach to store expansion has Year FY13 FY14 FY15 FY16 9MFY17^ also resulted in regional economies of scale, improved customer targeting and Revenue 33,409 46,865 64,394 85,881 87,840 lower distribution costs and 3) Efficient business model aimed at driving footfalls via low priced food/FMCG products combined with hyper efficient cost Growth 51.3 40.3 37.4 33.4 36.4 structure (relentless focus on space utilization, few employees/store, marginal EBITDA 2,150 3,418 4,590 6,635 7,697 ad/marketing costs). While all these strategies could be attempted by peers, it EBITDA(%) 6.4 7.3 7.1 7.7 8.8 would require enormous time/resources to implement and would be even more challenging to execute. Adj.PAT 939 1,614 2,118 3,213 3,875 EPS(Rs)# 1.5 2.6 3.4 5.1 6.2  Company Brief: Avenue Supermarts Ltd. (ASL), incorporated in 2002, is one of the largest supermarket chains (D-Mart brand) in India with 118 stores across PE(x) 198.8 115.6 88.1 58.1 36.3 45 cities. It’s operations are currently concentrated in Maharashtra (63% of EV/EBITDA(x) 88.4 55.9 42.2 29.6 19.2 sales), Gujarat (19%) and Telangana (10%), which collectively account for 88% RoE (%) 12.8 18.5 19.7 23.6 28.8 of D-Mart stores. The company sells products in 3 broad segments – Foods (53% of sales), FMCG (21%) and General Merchandie & Apparel (26%). RoCE(%) 14.8 20.6 21.5 24.5 30.4  ^ ASL’s FY17 ratios, metrics and multiples are based on annualized estimates Key Risks: 1) Disruptive forces such as E-commerce in the foods/personal care derived from 9MFY17 figures ( throughout this report) segments 2) RoEs likely to decline near term due to excess cash from IPO+CFO. 

Analyst: Pranoy Kurian, CFA+91-22-4322 1107[email protected]

IPO Note – Avenue Supermarts Ltd.

Strategy + Execution underpin D-Mart’s success

 ASL has managed to outperform its retail peers by way of differentiated strategies combined with excellent execution. Key examples include –  1) ASL’s decision to allocate capital to purchase its own real estate, as opposed to funding rapid expansion, which lowered opex. costs while restraining unfocused expansion. However, this strategy pays off primarily when location selection is done right, which in this case it has;  2) The company’s cluster based approach to store expansion has also resulted in regional economies of scale, improved customer targeting and lower distribution costs and  3) Efficient business model aimed at driving footfalls via low priced food/FMCG products combined with hyper efficient cost structure (relentless focus on space utilization, few employees/store, marginal ad/marketing costs).  While all these strategies could be attempted by peers, it would require enormous time/resources to implement and would be even more challenging to execute.

Fig: Return Ratios excellent as capital intensity Fig: Improving EBIT margins the key metric reduces, operating leverage increases 35% 140000 10% 8.8% 30.4% 9% 120000 7.7% 30% 7.3% 7.1% 8% 100000 6.2% 6.4% 7% 24.5% 28.8% 7.7% 25% 6% 21.5% 80000 6.6% 20.6% 6.1% 5.9% 5% 23.6% 60000 20% 5.1% 4% 4.6% 19.7% 3% 14.8% 18.5% 40000 15% 2% 20000 1% 12.8% 22,086 33,409 46,865 64,394 85,881 117,120 10% 0 0% FY13 FY14 FY15 FY16 FY17E FY12 FY13 FY14 FY15 FY16 FY17E RoE RoCe

Total Revenue EBITDA Margins EBIT Margin

Source: DHRP; IDBI Capital Research; FY17 figures Annualized

 Low Gross margins offset by minimal operating costs: The company’s gross margins have historically averaged ~15% due to the nature of the discount foods business. However, the company has offset that with low employee costs, the lack of rental costs (which is partly offset by higher depreciation) and minimal advertising.  Capital intensity related to real estate purchases, WC requirements low: ASL’s capex is primarily related to real estate acquisition for its stores and the renovation/design spending on a new outlet. The W.C requirements of the business are relatively low, on account of high inventory turnover of 14x (on sales).

IPO Note – Avenue Supermarts Ltd.

Fig: Low Gross margins on account of discount foods Fig: Working Capital Requirements modest and business, Employee costs extremely low stable; Capex on the back of real estate purchases

18% 9% 8% 16% 8% 14% 15.6% 15.0% 7% 7% 14.7% 14.5% 14.8% 14.9% 6% 6% 12% 6% 5% 5% 10% 5% 8% 4% 3% 3% 3% 3% 6% 3% 3% 3% 4% 2.1% 2.1% 2.1% 1.9% 1.7% 1.6% 2% 2% 1% 0% FY12 FY13 FY14 FY15 FY16 FY17E 0% Employee Cost Gross Margins FY12 FY13 FY14 FY15 FY16 FY17E

Avg. Capex to Sales Avg. Net W.C/Sales

Source: DHRP; IDBI Capital Research ; FY17 figures Annualized

Pristine Operational Track Record

 Pristine Track Record of profitable growth: ASL’s value offerings and focus on low prices have been a consistent driver of footfalls to stores. The company over time has managed to increase Bills Cut (Transaction volumes) at a CAGR of 18% over FY12-16% (26% annualized growth in FY17E). Further, on a per store basis, Bill cut have grown at a 8% CAGR over the same period (10% annualized growth in FY17E).  Value growth a key driver for SSSG: Value per transaction has increased at a 10% CAGR over FY12-16 (8% in FY17E), partly due to food inflation and partly due to a slight increase in general merchandize/apparel sales (25.2% in FY14, 27.6% in 9MFY17).

Fig: Robust growth in each year Fig: Revenue/Store seeing steady progress upwards

140 1,200 1,200 1097 1.4 1,023 1014 120 958 1,000 1,000 1.2 863 878 0.93 100 785 775 1.0 107 800 800 0.85 684 695 0.78 0.82 0.74 80 571 0.8 85 0.64 600 600 60 442 67 0.6 400 400 40 53 0.4 43 200 20 32 200 0.2 55 62 75 89 110 119 442 571 684 785 863 1,023 0 - 0 - FY12 FY13 FY14 FY15 FY16 FY17E FY12 FY13 FY14 FY15 FY16 FY17E Number of Stores (RHS) Revenue/Store p.a. (INR Mn) Bills Cut (Mn) Revenue/Bill (INR) Revenue/Store p.a. (INR Mn) Number of Bills Cut/Store(Mn) p.a.

Source: DHRP; IDBI Capital Research; FY17 figures Annualized

 Increase in Revenue/Sq. Foot a sign of improving efficiency: The company’s revenue/sq.ft measure has risen at a 19% CAGR rate over FY12-16 (18% annualized in FY17E). Besides increased ticket sizes, several measures to improve throughput in stores via layout changes and product placement have boosted store efficiency, which bodes well for return ratios.

IPO Note – Avenue Supermarts Ltd.

Fig: SSG of 25% over FY12-16, with growth driven by Fig: Consistent Progress in Revenue/Sq. foot; Newer increased ticket size and higher footfalls/store stores inching up in size

18% 1,400 15.8% 40000 35 16% 29.9 30.3 30.3 1,200 28.4 28.5 13.2% 35000 28.2 30 14% 33,801 11.6% 1,000 30000 12% 25 9.2% 28,675 10% 800 25000 26,831 20 8% 24,033 5.8% 5.8% 600 20000 5.1% 6% 20,186 15 3.9% 400 15000 4% 14,249 200 10 2% 10000 500 658 830 1,016 3.3 3.6 2.7 5 0% - 5000 1.6 1.8 2.1 FY13 FY14 FY15 FY16 Estimated Revenue/Store (open for 2Y) (INR,RHS) 0 0 FY12 FY13 FY14 FY15 FY16 FY17E Growth in No. of Bills Cut/Store p.a. INR Revenue/Sq Foot (LHS) Size of each Store ('000 sq.ft) Growth in Revenue/Bill (INR p.a.) Size of each Store ('000 sq.ft)

Source: DHRP; IDBI Capital Research; FY17 figures Annualized

Handily outperforms retail players

 Margins well above retail competitors on the back of lower operating costs Fig: Consistently high EBIT margins, which are now at Fig: Low employee costs, low real estate costs and 7.7% (V-Marts at 5.7%) high store efficiency a key reason for higher margins

5YAvg. EBIT Margins Employee Costs/Sales 10% 12%

8% 7.3% 10% D-Mart, 10% 5.6% 9% 6% 8% 8% 7% 7% 4% 1.9% 6% 2%

0% 4%

-2% -1.6% 2% D-Mart, 2% -4% 0% -6% -5.1% D-Mart Trent ABFRL

-8% -7.0% Spencers Future Retail V-Mart Shoppers Stop D-Mart Trent ABFRL Spencers V-Mart Shoppers Stop

Source: DHRP; IDBI Capital Research; FY17 figures Annualized

IPO Note – Avenue Supermarts Ltd.

 RoCEs a rare sight in the industry Fig: One of the best track records in the industry, Fig: Current RoCEs extraordinary despite period of high capex and expansion FY12-16 Average RoCEs ~FY17E RoCes (pretax,annualized/est.) 30% 26.2% 40% D-Mart, D-Mart, 30.4% 18.2% 20% 30%

10% 4.8% 20% 15.3% 13.0% 0% 10% 7.4% 3.1% -3.4% -2.9% 2.4% -10% 0%

-20% -10% -20.5% -30% -20% -16.2% D-Mart Trent ABFRL Spencers V-Mart Shoppers Stop D-Mart Trent ABFRL Spencers

Future Retail V-Mart Shoppers Stop

Source: DHRP; IDBI Capital Research; FY17 figures Annualized

 Inventory Turnover, Lower Net W.C. a key differentiator Fig: High inventory turnover on the back of robust Fig: Modest WC requirements footfalls, store utilization 16 FY16 Inventory Turnover (x) Net Working Capital as a % of sales(FY12-16) D-Mart, 14 18% 17% 14 16%

12 14% 10 12% 10 8 10% 8 8% 7 7 8% 5% 6 6% D-Mart, 4 4% 3% 4 4 2% 1% 2 0% 0 -2% 0% D-Mart Trent ABFRL D-Mart Trent ABFRL Spencers Future Retail V-Mart Spencers V-Mart Shoppers Stop

Shoppers Stop

Company, Issue Details, DRHP Details

 Company background: Avenues Supermarts Ltd (ASL) was incorporated in 2000 by Mr. Radhakishan Damani. The company operates national supermarkets under the D-Mart brand. ASL has 118 outlets (as of Jan’17) across 45 cities in 9 states+1 union territory.  Geographical Breakup: Its operations are currently concentrated in Maharashtra (63% of sales), Gujarat (19%) and Telangana (10%), which collectively account for 88% of D-Mart stores.  Segmental Contribution: The company sells products in 3 broad segments – Foods (53% of sales), FMCG (20%) and General Merchandize & Apparel (28%).

IPO Note – Avenue Supermarts Ltd.

Fig: Expansion gradually turning to newer states in Fig: Maharashtra, Karnataka the most lucrative stores, South, Central India although time needed for newer stores to catch up Revenue/Store by State (INR Mn p.a.) 100% 0 0 1 3 5 1 32 4 1,400 5 3 3 90% 5 4 7 6 7 1,170 9 1,200 1,148 80% 13 13 14 17 960 70% 22 1,000 26 60% 27 783 800 50% 40% 600 541 40 46 30% 50 58 59 400 20% 10% 200 99 0%

FY14 FY15 FY16 FY13 Maharashtra & Daman Gujarat Maharashtra Gujarat 9MFY17 AP & Telangana Karnataka Telangana^ Karnataka Andhra Pradesh Madhya Pradesh M.P. & Chhattisgarh NCR+ Rajastan Chhattisgarh, NCR, Daman, Rajastan

Source: DHRP; IDBI Capital Research

Fig: 73% of sales from high turnover, daily items; Fig: Foods and Groceries remain vastly Segmental mix broadly stable underpenetrated

60% FY14 FY15 FY16 9MFY17 45% FY16 FY20P 40% 53.3% 53.1% 52.8% 52.8% 40% 50% 35% 32.50% 32% 32.50% 30% 30% 27% 40% 25% 25% 22% 20% 27.6% 30% 26.4% 25.2% 25.9% 15% 12% 21.5% 21.2% 20.6% 19.6% 10% 20% 10% 5% 5% 3%

10% 0%

0% Foods Non Food FMCG General Merchandise/Apparel

Source: DHRP; IDBI Capital Research, Technopak Report

 Use of Proceeds – Excess cash likely to impact return ratios in near term: On study of the balance sheet, current CFOs are adequate to finance expansion and working capital needs. However, due to requirements of the IPO listing, the company will see an infusion of Rs18.7 bn.  Over FY18-20, Rs10.8 bn will be allocated towards debt repayment, while only Rs3.7 bn will be used for store expansion. ASL has a modest net debt ratio of ~0.5x and a cost of debt at ~10.5%. Based on current trends, expect the company to generate excess cash given these IPO proceeds and strong CFO inflows, which could be RoE dilutive in the short term (even though RoIC could still be strong).

IPO Note – Avenue Supermarts Ltd.

Total Amount to be Schedule of Implementation and Estimated financed from FY18 FY19 FY20 Deployment of Net Proceeds Cost Proceeds Construction Cost for Store 1,787 1,787 397 695 695 Purchase of fit outs for Stores 1,880 1,880 403 738 738 Total 3,666 3,666 800 1,433 1,433 Planned Debt Repayment Schedule 10,800 10,800 6,250 3,200 1,350 Total 14,466 14,466 7,050 4,633 2,783 Source: DHRP; IDBI Capital Research

Valuations

 Valuations inexpensive: On the surface, FY17 annualized PE/EV.EBITDA multiples of ~36x/17x may appear expensive. However, considering its track record of growth (SSG/Revenue CAGR of 25%/40% over FY12-16, 36% in 9MFY17) and the potential for profitable store expansion (FY17 annualized RoEs at ~29%), valuations are very attractive.  Further, when one evaluates the company on EV/Sales and Price to Book ratios, the valuations are far more favourable. FY17E EV/annualized Net Sales are at just 1.5x, with the cash infusion boosting EV. P/Book value is at 4.8x, which is modest given that 1) asset values are likely to be understated and 2) Peers are at similar or higher levels.  Risks: 1) Disruption of the foods/grocery market by the E-commerce segment, while unlikely, cannot be ruled out given their aggressive and fast-evolving nature. 2) It should be noted that RoEs are likely to fall temporarily on account of excess cash.

Figure: FY17E valuations EV/EBITDA vs. EV/Sales Vs. P/B – Value more apparent 3.5

3.0 Trent

2.5

ABFRL 2.0

1.5 D-Mart

Current Current EV/Sales V-Mart

1.0 Future Retail Shoppers Stop 0.5

0.0 0 5 10 15 20 25 30 35 40

Current EV/EBITDA Source: Bloomberg consensus; IDBI Capital Research, Size of sphere signifies P/B

IPO Note – Avenue Supermarts Ltd.

Financial summary

 Profit & Loss Account (Rs mn)  Cash Flow Statement (Rs mn)

Year-end: March FY13 FY14 FY15 FY16 9MFY17^ Year-end: March FY13 FY14 FY15 FY16 9MFY17 Net sales 33,409 46,865 64,394 85,881 87,840 PAT 1,044 1,698 2,227 3,288 6,066 Growth (%) 51.3 40.3 37.4 33.4 36.4 Depreciation 458 570 815 984 919 Operating expenses (31,258) (43,447) (59,804) (79,246) (106,859) Chg in working capital -653 -827 -1,520 -686 -2195

EBITDA 2,150 3,418 4,590 6,635 7,697 Other operating activities 422 540 698 885 -997 Growth (%) 55.8 59.0 34.3 44.6 54.7 CF from operations (a) 1,271 1,981 2,220 4,471 3,793 Depreciation (458) (570) (815) (984) (919) Capital expenditure -2,377 -2,706 -4,770 -6,461 -4,658 Chg in investments 69 4 31 -123 -314 EBIT 1,692 2,848 3,775 5,651 6,778 Other investing activities 0 0 0 0 0 Interest paid (426) (557) (724) (908) (907) CF from investing (b) -2,309 -2,702 -4,739 -6,583 -4,972 Other income 144 158 176 187 192 Equity raised/(repaid) 140 46 326 0 0 Pre-tax profit 1,411 2,449 3,227 4,929 6,063 Debt raised/(repaid) 1,454 1,148 2,634 2,892 2,143 Tax (472) (835) (1,109) (1,716) (2,133) Dividend (incl. tax) 3 11 5 6 0 Effective tax rate (%) 33.5 34.1 34.4 34.8 35.2 Chg in minorities 0 0 0 0 0 Net profit 939 1,614 2,117 3,213 3,933 Other financing activities -422 -552 -621 -816 -819 Adjusted net profit 939 1,614 2,118 3,213 3,875 CF from financing (c) 1,175 652 2,345 2,082 1,324 Growth (%) 55.4 71.9 31.2 51.7 59.9 Net chg in cash (a+b+c) 137 -68 -174 -30 145 Shares o/s (mn nos) 624.1 624.1 624.1 624.1 624.1  Financial Ratios

 Balance Sheet (Rs mn) Year-end: March FY13 FY14 FY15 FY16 9MFY17^ Year-end: March FY13 FY14 FY15 FY16 9MFY17^ Adj EPS (Rs) 1.5 2.6 3.4 5.1 6.2 Net fixed assets 10,428 12,605 16,262 21,752 25,352 Adj EPS growth (%) 55.4 71.9 31.2 51.7 59.9 Investments 159 152 146 275 424 EBITDA margin (%) 6.4 7.3 7.1 7.7 8.8 Other non-curr assets 0 0 2 3 7 Pre-tax margin (%) 4.2 5.2 5.0 5.7 6.9 Current assets 4,333 5,319 7,138 8,972 11,895 RoE (%) 12.8 18.5 19.7 23.6 28.8 RoCE (%) 14.7 20.5 21.3 24.3 30.4 Inventories 2,762 3,783 5,396 6,717 8,477 Turnover & Leverage ratios (x) Sundry Debtors 133 95 71 84 405 Asset turnover 2.5 2.8 3.1 3.1 2.6 Cash and Bank 616 554 380 351 494 Leverage factor 1.8 1.9 1.9 2.0 1.6 Marketable Securities 0 3 7 19 168 Net margin (%) 2.8 3.4 3.3 3.7 4.4 Loans and advances 821 881 1,283 1,798 2,344 Net Debt/Equity 0.5 0.5 0.6 0.7 0.6 Other Current Assets 1 3 2 4 7 Working Capital & Liquidity ratios Total assets 14,921 18,076 23,548 31,002 37,678 Inventory days 30 29 31 29 26 Receivable days 1 1 0 0 0 Payable days 11 10 7 9 7 Shareholders' funds 7,895 9,556 11,992 15,204 19,054 Share capital 5,441 5,468 5,615 5,615 5,615  Valuations Reserves & surplus 2,455 4,088 6,377 9,589 13,439 Minority Interest 3 - 1 1 3 Year-end: March^ FY13 FY14 FY15 FY16 9MFY17^ Total Debt 4,335 5,115 7,575 10,382 12,421 PER (x) 198.8 115.6 88.1 57.9 36.2 Secured loans 3,712 4,568 7,138 9,085 12,277 Price/Book value (x) 23.6 19.5 15.6 12.2 4.8

Unsecured loans 624 547 437 1,297 144 PCE (x) 133.6 85.4 63.6 44.4 29.3 Other liabilities 335 390 466 560 488 EV/Net sales (x) 5.7 4.1 3.0 2.3 1.5 Curr Liab & prov 2,352 3,016 3,515 4,855 5,712 EV/EBITDA (x) 88.5 55.9 42.2 29.6 17.4 Current liabilities 2,290 2,927 3,335 4,688 5,312 EV/EBIT (x) 112.5 67.1 51.3 34.7 19.8 Provisions 62 89 179 166 400 EBIT/EV Yield (%) 0.9% 1.5% 1.9% 2.9% 5.1%

Total liabilities 7,025 8,521 11,556 15,798 18,624 ^ASL’s FY17 ratios, metrics and multiples are based on annualized estimates derived from 9MFY17 figures Total equity & liabilities 14,921 18,076 23,549 31,002 37,678 Book Value (Rs) - - - - - Source: Company; IDBI Capital Research

IPO Note – Avenue Supermarts Ltd.

Notes

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IPO Note – Avenue Supermarts Ltd.

Analyst Disclosures I, Pranoy Kurian, hereby certify that the views expressed in this report accurately reflect my personal views about the subject companies and / or securities. I also certify that no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Other Disclosures IDBI Capital Markets & Securities Ltd (formerly known as “IDBI Capital Market Services Ltd.”) “IDBI Capital” was incorporated in the year 1993 under Companies Act, 1956 and is a wholly owned subsidiary of IDBI Bank Limited. IDBI Capital is one of India’s leading securities firm which offers a full suite of products and services to individual, institutional and corporate clients namely Stock broking (Institutional and Retail), Distribution of financial products, Merchant Banking, Corporate Advisory Services, Debt Arranging & Underwriting, Portfolio Manager Services and providing Depository Services. IDBI Capital registered trading and clearing member of BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE). IDBI Capital is also a SEBI registered Merchant Banker, Portfolio Manager and Research Analyst. 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Investors should assume that IDBI Capital and/or its associates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material. IDBI Capital generally prohibits its analysts, persons reporting to analysts, and their dependent family members having a financial conflict of interest in the securities or derivatives of any companies that the analysts cover. Additionally, IDBI Capital generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of IDBI Capital. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. We and our associates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. For the purpose of calculating whether IDBI Capital Markets & Securities Ltd (formerly known as “IDBI Capital Market Services Ltd.”) and its associates holds beneficially owns or controls, including the right to vote for directors, 1% of more of the equity shares of the subject issuer of a research report, the holdings does not include accounts managed by IDBI Asset Management Company/ IDBI Mutual Fund. IDBI Capital hereby declare that our activities were neither suspended nor we have materially defaulted with any Stock Exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on IDBI Capital for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. IDBI Capital, its directors or employees or associates, may from time to time, have positions in, or options on, and buy and sell securities referred to herein. IDBI Capital or its associates, during the normal course of business, from time to time, may solicit from or perform investment banking or other services for any company mentioned in this document or their connected persons or 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 their affiliate companies or act as advisor or lender / borrower to such company(ies)/associates companies or have other potential conflict of interest. This report may provide hyperlinks to other websites. Except to the extent to which the report refers to the website of IDBI Capital, IDBI Capital states that it has not reviewed the linked site and takes no responsibility for the content contained in such other websites. Accessing such websites shall be at recipient's own risk. IDBI Capital encourages the practice of giving independent opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. Accordingly, neither IDBI Capital nor Research Analysts have any material conflict of interest at the time of publication of this report. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us. The Research Analyst has not served as an officer, director or employee of Subject Company. We or our associates may have received compensation from the subject company in the past 12 months. We or our associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research Analyst or his/her relative’s may have financial interest in the subject company. IDBI Capital Markets & Securities Ltd (formerly known as “IDBI Capital Market Services Ltd.”) or its associates may have financial interest in the subject company. Research Analyst or his/her relatives does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. IDBI Capital or its associates may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. The Subject Company may have been a client during twelve months preceding the date of distribution of the research report. Price history of the daily closing price of the securities covered in this note is available at bseindia.com, nseindia.com and economictimes.indiatimes.com/markets/stocks/stock-quotes.