6 December 2017

Market snapshot Today’s top research Idea

Equities - India Close Chg .% YTD.% : AC portfolio overhaul likely post energy rating Sensex 32,802 -0.2 23.2

Nifty-50 10,118 -0.1 23.6 norm changes

Nifty-M 100 19,756 0.0 37.7 Voltas-Beko product line to be launched in 2HCY18 Equities-Global Close Chg .% YTD.% S&P 500 2,630 -0.4 17.5 Nasdaq 6,762 -0.2 25.6 We recently met management of Voltas (VOLT). Key takeaways: FTSE 100 7,328 -0.2 2.6  New EER norms will force manufacturers to reassess their portfolios and DAX 13,049 -0.1 13.7 formulate a renewed strategy to ensure a right product mix/pricing. Inverter Hang Seng 11,485 -0.3 22.2 ACs will be rated as five stars, fixed-speed ACs will be rated four stars and Nikkei 225 22,622 -0.4 18.4 Commodities Close Chg .% YTD.% below, and window ACs will have only 2- or 3-star ratings. Brent (US$/Bbl) 63 0.4 13.0  Product launch for Arcelik-VOLT JV pushed to 2HCY18 from 2HCY17 due to: a) Gold ($/OZ) 1,276 0.2 10.0 higher no. of SKUs being launched and b) more products categories such as Cu (US$/MT) 6,513 -4.2 17.9 fridges and washing machines to be launched at the same time. Almn (US$/MT) 2,036 -0.8 19.5  Domestic electro mechanicals business seeing traction in rural electrification, Currency Close Chg .% YTD.% USD/INR 64.4 0.0 -5.1 water and government projects. Overseas, VOLT has not picked up any new USD/EUR 1.2 0.1 12.5 orders in Qatar; deteriorating political climate in Saudi may affect its prospects USD/JPY 112.6 -0.2 -3.9 in GCC. YIELD (%) Close 1MChg YTDchg  Despite competitive pressure in room ACs, VOLT gained market share without 10 Yrs G-Sec 7.1 -0.02 0.5 sacrificing margins. A successful transition (ECC norms) would make us turn 10 Yrs AAA Corp 7.8 -0.01 0.2 Flows (USD b) 5-Dec MTD YTD positive on VOLT. Meanwhile, we maintain Neutral with TP of INR580. FIIs -0.2 -0.2 8.2 DIIs 0.2 0.5 13.3 Volumes (INRb) 5-Dec MTD* YTD* Research covered Cash 297 303 307 Cos/Sector Key Highlights F&O 5,110 4,461 5,660 Voltas AC portfolio overhaul likely post energy rating norm changes Note: YTD is calendar year, *Avg Dish TV (Result Videocon merger synergies to drive earnings Update) D B Corp Focus on circulation ramp-up to continue MCX Volume triggers playing out

Chart of the Day: Economic activity weakened in October 2017; Investments stagnated and net imports widened India’s economic activity slowed to 4-month slowest …pulled by stagnant investments and high net imports growth in October 2017… (percentage point)

Please refer to our earlier report for details Shows contribution of different components to EAI’s growth

Research Team ([email protected]) Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional -Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital. In the news today

Kindly click on textbox for the detailed news link

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Govt unveils Rs8,450 crore More Chinese lenders plan to file insolvency cases against RCom package to revive exports after Two major Chinese lenders plan to support a move by China Development GST Bank to put Reliance Communications Ltd (RCom) into insolvency court as The government on Tuesday they seek to recover about $2 billion in debt, said three people with announced a series of steps to knowledge of the matter. Last month, China Development Bank began revive exports amid disruptions to insolvency proceedings against RCom, which has been trying for months to supply chains arising from the restructure its debt via a debt-for-equity swap. Now, Industrial and implementation of the goods and Commercial Bank of China (ICBC), the country’s biggest-listed lender by services tax (GST). Fresh export assets, and Export-Import Bank of China, plan to back CDB, the people incentives to labour intensive said… sectors and services that will…

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India decision-day guide: Idea-Vodafone merger likely to Watching for a turn toward close 6 months earlier, by hawkish March-April The Reserve will The Idea-Vodafone merger is likely probably hold interest rates at a to close faster, as early as next seven-year-low on Wednesday as March-April, six months before growth recovers, while investors 5 the more conservative September will focus on whether inflation has 2018 timeline recently suggested quickened decisively enough to by Vodafone Group CEO Vittorio GST impact: Car exporters signal future tightening. The Colao. “Management expects all Ford, Nissan, Volkswagen face repurchase rate will stay at 6 approvals for the merger to come Rs 1,000 cr claims hit percent,… in by March/April 2018,”… Export-oriented auto manufacturers like Ford India, Nissan and Volkswagen are suffering as the current goods and 6 7 services tax (GST) system of making payments upfront and

claiming input tax credit is not Services PMI shrinks; new Panel moots wide-ranging working properly. According to orders wane revamp to make GST less industry estimates the stuck Business activity in the services taxing amount is around Rs 1,000 crore sector contracted in November, A key committee set up by the as these manufacturers have not following two months of growth, government to simplify the goods been able to file claims since July. primarily due to the Goods and and services tax (GST) has Industry executives explained that Services Tax, according to a proposed a wide-ranging revamp for export-oriented auto firms, private sector survey. The Nikkei of the reform that was put in place there are two mechanisms to India Services Purchasing on July 1 to make compliance expunge tax content in exports… Managers’ Index fell to 48.5 in easier. A composition scheme for November from 51.7 in October… services,…

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5 December 2017 Update | Sector: Capital Goods Voltas

BSE SENSEX S&P CNX 32,870 10,128 CMP: INR610 TP: INR580(-5%) Neutral

AC portfolio overhaul likely post energy rating norm changes Voltas-Beko product line to be launched in 2HCY18

Stock Info We recently met management of Voltas (VOLT). Key takeaways:

Bloomberg VOLT IN Room Aircon: New energy ratings to result in complete portfolio overhaul Equity Shares (m) 331 52-Week Range (INR) 653/300  To comply with the new energy-efficiency rating (EER) norms (which will be 1, 6, 12 Rel. Per (%) 14/20/74 effective January 2018 onward), manufacturers will have to reassess their M.Cap. (INR b) 201.8 existing portfolios and formulate a renewed strategy to ensure a) a right M.Cap. (USD b) 3.1 product mix (inverter, fixed aircon) and b) right pricing (to pass on the impact Avg Val, INRm 722 of higher RM costs and rating changes). Under the new EER norms, inverter ACs Free float (%) 69.7 will be rated as five stars, while fixed-speed compressor ACs will be rated four Financials Snapshot (INR b) stars and below. Each manufacturer will thus have to decide on its strategy on Y/E Mar 2017 2018E 2019E how best to meet the EER norms. Net Sales 60.3 67.9 76.2  Window ACs (~20% of the industry) cannot have a 4- or 5-star rating under the EBITDA 5.8 6.7 7.5 new EER norms. As a result, this segment will have only 2- or 3-star ratings, PAT 5.1 5.8 6.5 EPS (INR) 15.5 17.5 19.6 which would reduce its share in the overall AC market. VOLT has a +24% share Gr. (%) 30.1 13.4 12.0 in window ACs; Daikin, Blue Star, Hitachi are other players present in this BV/Sh (INR) 100.0 112.9 127.4 segment. RoE (%) 18.0 16.5 16.3  VOLT is now pushing both inverter and fixed-speed AC – 18 SKUs in inverters as RoCE (%) 16.5 16.1 16.0 of 2QFY18, which will be increased further. Share of inverters as a percentage P/E (x) 39.4 34.7 31.0 P/BV (x) 6.1 5.4 4.8 of sales has increased from 6% previously to 15% in 2QFY18. However, the margin in inverters is lower than in that in fixed-speed ACs, as sharp price cuts Shareholding pattern (%) by a key competitor in invertors has forced other manufacturers to follow suit. As On Sep-17 Jun-17 Sep-16 Furthermore, margins are under pressure as old inventory is now sold out and Promoter 30.3 30.3 30.3 the company will have to raise prices to factor in higher RM costs. Also, the DII 28.6 27.8 27.2 FII 20.1 19.2 22.4 interest subvention schemes are hurting margins with a higher number of Others 21.0 22.7 20.1 consumers preferring to buy under the EMI plans. FII Includes depository receipts  VOLT took market share in 2QFY18 – companies that lost market share were Samsung and Hitachi. VOLT has taken share from these players but 2Q/3Q is Stock Performance (1-year) not very relevant as these are seasonally weak quarters. Voltas

Sensex - Rebased 700 Arcelik JV with Voltas – launch targeted in 2HCY18 600  Land acquisition for the new refrigerator plant is almost completed. With EER changed for fridge in CY17, the JV needs to customize products to (i) comply 500 with the new norms and b) ensure products are suitable for Indian conditions 400 before selling in the Indian markets. 300  Delay in launch due to: a) higher no. of SKUs being launched, and b) more products categories such as fridges and washing machines to be launched at Jun-17 Sep-17 Dec-16 Dec-17 Mar-17 the same time. Thus, product launch pushed to 2HCY18 from 2HCY17 earlier.

 Until manufacturing starts in India, VOLT will import from Arcelik. It will also

look at outsourced manufacturing.  BEKO is in the mass category – products will be competitively priced v/s the market leaders like Samsung and LG.

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 10% margin is being targeted. It intends to be no. 1 or 2 in every segment where it is present.  It will initially start with refrigerators, washing machines, microwaves and dish washers. Post five years, the company will look at new products.

Electro mechanicals project segment  The domestic business seeing traction in rural electrification, water and government projects. Metro projects are witnessing delays in Delhi and Chennai, but rural electrification projects (INR10b in order book) are doing well, as the 2019 deadline to electrify all villages is nearing. It bagged orders in Jharkhand in 2QFY18.  Water is doing well – under the Namami Gange program, it has bagged an order in Agra; seeing a good pipeline ahead as well.  Blended margins in the projects segment will remain at 5-6%.

Overseas – Qatar witnessing delays on continuing embargo  Qatar: VOLT has not picked up any new orders in Qatar. It is also seeing delays in getting material to the site due to the embargo over the last 8-9 months. It expects new opportunities from the FIFA World Cup 2022. The company is very selective in picking up orders (INR5b of order book in Qatar).  Dubai Expo, 2020: Main contractors have been awarded and it now expects orders for MEP contractors. It is also seeing a revival of previously shelved projects being bought back for ordering.  Saudi Arabia: VOLT does not have a meaningful presence in Saudi, but a deterioration in the political climate here can affect prospects for the entire GCC region.

Valuation view: Despite intense competitive pressure in the room AC segment, VOLT has been able to gain a market share without sacrificing margins. We would watch out for the company’s a) pricing/positioning on inverters, with the ratings changes from Jan’18 – a successful transition by VOLT would make us turn positive on the stock, and b) launch of washing machines and refrigerators in 2HCY18. Moreover, the projects business has also stabilized with a) margins recovering to 5- 6% and b) a revival in the domestic business. We maintain our Neutral rating on the stock with an SOTP-based target price of INR580.

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5 December 2017 2QFY18 Results Update | Sector: Media Dish TV India

BSE SENSEX S&P CNX 32,802 10,118 CMP: INR80 TP: INR106(+31%) Buy Bloomberg DITV IN Videocon merger synergies to drive earnings Equity Shares (m) 1,066  M.Cap.(INRb)/(USDb) 85.8 / 1.3 EBITDA comes in above estimates: Dish TV (DITV) delivered healthy EBITDA 52-Week Range (INR) 111 / 68 growth of 7% QoQ (-18% YoY) to INR2.2b in 2QFY18, 4% above our estimate. 1, 6, 12 Rel. Per (%) 7/-10/-31 Revenue grew 1% QoQ to INR7.5b, supported by a 2% improvement in Avg Val, INRm 481.6 subscription revenue. EBITDA margin improved 160bp QoQ, led by lower Free float (%) 35.6 SG&A costs, partly offset by higher transponder cost.

 Improving operating environment: EBITDA margin was also aided by the Financials & Valuations (INR b) Y/E Mar 2017 2018E 2019E gradually reducing churn. Net subscriber addition stood at 188,000 to reach Net Sales 30.1 31.5 34.6 15.9m (+1% QoQ), while ARPUs strengthened to INR149 v/s INR148 in the EBITDA 9.7 9.7 11.7 previous quarter. Improvement in monthly churn to ~0.8% v/s 1% in 1QFY18 PAT 1.1 0.7 2.3 helped reduce subscriber acquisition cost (to INR1,525/sub) and ad EPS (INR) 1.0 0.6 2.2 expenses. Gr. (%) -84.2 -40.0 258.1  Margin-led growth ahead: Management continued to guide for 1m annual BV/Sh (INR) 4.6 5.2 7.4 RoE (%) 25.1 12.5 34.9 subscriber adds in FY18/19 and an ARPU improvement in 2HFY18, led by a) RoCE (%) 18.0 11.4 17.9 the fading impact of discounts offered two quarters ago and b) HD P/E (x) 78.5 130.8 36.5 penetration. We believe the EBITDA margin should improve to 30.9% in FY18 P/BV (x) 17.5 15.4 10.8 v/s 28% in 1HFY18, driven by GST gains, better ARPUs and subscriber adds. Subsequently, FY18 EBITDA is expected to remain flat, while FY18-20E EBITDA CAGR should come in healthy at 18%, driven by 10% revenue growth

Estimate change and a margin improvement. Management maintained FY18/19E synergy TP change guidance of INR1.8b/INR5.1b from the Videocon merger, which could drive Rating change

steep EBITDA growth.  Maintaining our rating and TP: The stock is trading at an EV/EBITDA of 7.8x on FY19E. We maintain Buy with a TP of INR106. We have assigned 8x EV/EBITDA to the combined entity (Dish TV and Videocon d2h), factoring in INR2.4b synergy gains v/s management’s guidance of INR5.1b. We believe EBITDA growth driven by merger synergy should drive the stock price.

Quarterly Performance (Consolidated) Y/E March FY17 FY18 FY17 FY18E 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE 2QFY18E Var % Revenue 7,786 7,793 7,480 7,086 7,389 7,486 8,008 8,596 30,144 31,479 7,554 -1 YoY Change (%) 5.7 3.6 -3.0 -11.4 -5.1 -3.9 7.1 21.3 -1.5 4.4 -3.1 Operating expenses 5,139 5,151 4,985 5,180 5,377 5,325 5,396 5,662 20,415 21,760 5,467 -3 EBITDA 2,647 2,642 2,495 1,906 2,012 2,161 2,612 2,934 9,729 9,719 2,087 4 YoY Change (%) 12.3 3.6 -6.0 -26.9 -24.0 -18.7 4.7 54.0 -5.1 -0.1 -21.4 EBITDA margin (%) 34.0 33.9 33.4 26.9 27.2 28.9 32.6 34.1 32.3 30.9 27.6 124bp Depreciation 1,649 1,635 1,656 1,728 1,822 1,899 1,870 1,841 6,631 7,432 1,870 2 Interest 526 554 591 573 590 611 375 139 2,239 1,714 261 134 Other Income 115 111 181 104 98 77 76 74 475 325 87 -12 PBT 587 565 429 -291 -302 -272 443 1,029 1,334 898 44 NM Tax 189 -136 163 -7 -162 -93 151 347 241 243 15 Effective Tax Rate (%) 32.2 (24.1) 37.9 2.4 53.8 34.3 34.0 33.8 18.1 27.0 34.0 Net profit 398 701 267 -284 -139 -179 292 681 1,093 656 29 NM YoY Change (%) -25.0 -19.4 -61.1 -105.9 -135.0 -125.9 9.7 -340.0 -84.2 -40.0 -95.8 PAT margin (%) 5.1 9.0 3.6 -4.0 -1.9 -2.4 3.7 7.9 3.6 2.1 0.4 -277bp

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5 December 2017 Update | Sector: Media

D B Corp BSE SENSEX S&P CNX 32,870 10,128 CMP: INR362 TP: INR430(+19%) Buy

Focus on circulation ramp-up to continue We recently hosted DB Corp’s management at our ‘Midcap Conference’.

 Ad growth was impacted in October 2017 due to the shift in the festive season to the

Stock Info previous quarter. However, the ad growth outlook for November appears better due Bloomberg DBCL IN to a low base of last year (was impacted by demonetization). Equity Shares (m) 184  Management plans to expand to additional 27 districts of Bihar and also increase 52-Week Range (INR) 395/345 circulation across other legacy markets. Management targets to take total copies to 1, 6, 12 Rel. Per (%) -1/-7/-26 6m by March 2018 from 5.6m in October 2017. Also, yield improvement taken in the M.Cap. (INR b) 66.5 M.Cap. (USD b) 1.0 legacy markets is expected to support growth in 2HFY18 (11% CAGR over FY12-17). Avg Val, INRm 134.4  We expect ad/circulation revenue CAGR of 7%/9% over FY17-20, led by an improving Free float (%) 30.2 ad market and an increase in the number of circulation copies at healthy pricing. State elections in its legacy markets next year and the general election in 2019 should Financials Snapshot (INR b) support growth. We expect EBITDA/PAT CAGR of 9%/14% over FY17-20E. Y/E Mar 2017 2018E 2019E Net Sales 22.6 24.2 26.1 EBITDA 6.4 6.9 7.5 Ad revenue to grow at 8% in FY18 PAT 3.7 4.0 4.7 Ad growth was impacted in October 2017 due to the shift in the festive season to EPS (INR) 20.0 21.7 25.4 the previous quarter. Although November appears upbeat due to a low base, the Gr. (%) 26.0 8.6 16.8 changes in the GST rates and compliance norms should continue impacting ad BV/Sh (INR) 86.7 103.8 124.4 RoE (%) 24.6 22.8 22.2 revenue for the company. Sector-wise, the contribution from real estate (earlier 8- RoCE (%) 23.7 22.3 21.7 9% of ad revenues; now ~4%), two-wheelers and government continues to P/E (x) 18.1 16.6 14.2 disappoint; however, four-wheelers, durables, lifestyle and education are showing P/BV (x) 4.2 3.5 2.9 some recovery. Encouragingly, management expects the education sector contribution (13-14% of ad revenue) to pick up from 4QFY18. Overall, we expect Shareholding pattern (%) As On Sept-17 Jun-17 Sept-16 11%/8% growth in 3QFY18/FY18. Promoter 69.9 69.9 69.9 DII 7.4 7.1 7 Expanding reach in Bihar – a positive FII 15.6 15.8 18.6 DBCL forayed into the Bihar market in 2014 with 11 (of 38) districts at a cover price Others 7.2 7.3 4.5 of ~INR3. Currently, the market share in Bihar is very miniscule, but the company FII Includes depository receipts expects to expand its reach to the remaining 27 districts in the next few months.

Stock Performance (1-year) Out of total Bihar ad revenue market, government’s share is ~40-45%. Also, within D B Corp a period of one year, DBCL should get empanelled on the board of government Sensex - Rebased 480 advertising, earning a large pie of the ad market. Besides, national (30-35% share) and local players are also likely to increase their ad budgets with DBCL in Bihar. 430 Historically, the company has witnessed breakeven at ~25% revenue market share

380 (taking ~4 years) in circulation, and a similar trend is expected to be seen in Bihar as well. 330 Jun-17 Sep-17 Dec-16 Dec-17 Mar-17

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Circulation copies to reach 6m by March, driving 9% circulation growth in FY18 By employing a circulation expansion strategy, DBCL has managed to increase its circulation copies to 5.6m (from 5m in July-17), majorly in the dominant markets of Rajasthan, and MP, at a higher cover price. The company has managed to double its cover price from INR2.5 to ~INR5 in MP, with an increase in the number of copies from ~1m to ~1.25m. Foray in the 27 new districts of Bihar should further increase circulation copies. Management expects total copies to reach 6m by March 2018 from 5.6m currently. It also plans to continue with yield improvement in the legacy markets (11% CAGR over FY12-17). We expect circulation revenue to grow at 9% in FY18. Note that DBCL has no plans of expanding in other new markets.

Digital to see INR150-200m investment over 2-3 years The DBCL app has been downloaded 10.9m times. The company plans to invest INR150-200m in digital over the next 2-3 years, mainly toward app upgradation, video content and online website.

Revenue/EBITDA to grow at 7%/9% over FY17-20E We expect ad/circulation revenue CAGR of 7%/9% over FY17-20, led by an improving ad market and an increase in circulation copies at healthy pricing. State elections in the legacy markets of MP, Chhattisgarh and Rajasthan in 2018, and the general elections in 2019 should also support growth. The recent ~15% increase in imported newsprint price would not have any major impact on DBCL, as the contract would be valid for six more months and prices should normalize by then. Unlike peers, the company has increased its imported newsprint contribution from ~15% earlier to 40%, focusing on quality. Further, healthy revenue growth in the radio segment, coupled with EBITDA break-even at the newer stations in CY18, augurs well. We expect EBITDA/PAT CAGR of 9%/14% over FY17-20.

Maintain Buy with a TP of INR430 DBCL trades at 14.2x P/E on FY19E. We maintain our Buy rating, assigning 17x P/E on FY19E (at a 6% discount to 3-5 year average P/E of 18x), and arrive at a target price of INR430.

Exhibit 1: Valuation Summary Valuation FY19E EPS (INR) 25.4 PE multiple (x) 17.0 Target Price (INR) 430 CMP (INR) 361 Upside (%) 19%

Source: MOSL, Company

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5 December 2017 Update | Sector: Others

MCX BSE SENSEX S&P CNX 32,802 10,118 CMP: INR907 TP: INR1,300 (+43%) Buy Volume triggers playing out Reiterate Buy; increased competition remains a key risk

We hosted MCX at our recent Midcap Conference. In our discussions, we covered a range

of topics such as volumes on the exchange, potential triggers, and competitive threats. Stock Info Some notable highlights: Bloomberg MCX IN  Post demonetization, a series of problems has kept a revival in bullion at bay – gold Equity Shares (m) 51 volumes have declined 47% and silver volumes have declined 31% in the last 12 52-Week Range (INR) 1411 / 899 months. However, there has been a strong volume uptick in base metals. 1, 6, 12 Rel. Per (%) -8/-17/-49  The recently-launched options constitute 5% of total gold volumes; MCX expects M.Cap. (INR b) 46.2 ~20% contribution towards the end of FY18. A basket approval on the rest of the M.Cap. (USD b) 0.7 eligible contracts can be expected soon, as clearing and settlement on the first expiry Avg Val, INRm 417 has been seamless. MCX would begin charging on options once it has more Free float (%) 100.0 commodities covered and once participation reaches a satisfactory level. Financials Snapshot (INR b)  While there are triggers in the form of new products and higher participation, threat Y/E Mar 2017 2018E 2019E also exists from increased competitive intensity on the Universal Exchange License Net Sales 2.6 2.8 3.7 proposition. Current SEBI criteria for the launch of options protect MCX; any EBITDA 0.8 0.9 1.7 relaxation would reverse the situation and pose additional risks.

PAT 1.3 1.3 2.0 EPS (INR) 24.8 26.5 39.2 Cash deployment – may contemplate owning technology in the future Gr. (%) 6.2 6.6 48.0 MCX may consider various options for its technology agreement with Financial BV/Sh (INR) 266.4 262.0 281.9 Technologies, including buying the platform out, once the contract runs down by RoE (%) 10.2 10.0 14.4 FY22. While this could cost INR2b-2.5b, buying out would result in opex savings of RoCE (%) 10.0 9.7 14.0 up to INR500m per annum, before the cost of a few employees who will be P/E (x) 36.5 34.3 23.1 P/BV (x) 3.4 3.5 3.2 brought on-board. With its current cash balance of INR13b, MCX has the ability to weather the storm in case of predatory pricing. Of the cash balance, INR2.5b is Shareholding pattern (%) member margin. The clearing corporation subsidiary would need parking of INR3b, As On Sep-17 Jun-17 Sep-16 of which INR1b has been capitalized and INR2b would need to be put in. Promoter 0.0 0.0 0.0 DII 33.6 35.8 39.8 FII 30.9 25.8 19.6 Bullion volume still a drag Others 35.5 38.4 40.6 Post demonetization, a series of problems has kept a revival in bullion at bay – gold FII Includes depository receipts volumes have declined 47% and silver volumes have declined 31% in the last 12 months. GST-related uncertainty, low inventory and share loss of smaller players in Stock Performance (1-year) Multi Comm. Exc. the jewelry market have resulted in the share of bullion in overall volumes on MCX Sensex - Rebased coming off to 24% as at November 2017 versus 29% in the previous year. On the 1,690 other hand, base metals have been seeing a pickup in volumes across aluminum 1,490 (14% YoY LTM), copper (4%), lead (18%), nickel (18%) and zinc (33%), which 1,290 together contribute 42% of volume (versus 37% in the previous year). 1,090 890 Options pick-up reasonable so far Earlier in October, MCX introduced options on its 1kg gold contract. While with one Jun-17 Sep-17 Dec-16 Dec-17 Mar-17 expiry down, options constitute 5% of the total gold volume, the company expects

~20% contribution towards the end of FY18. A basket approval on the rest of the eligible contracts can be expected soon, as clearing and settlement on the first expiry has been seamless. MCX would begin charging on options once it has more commodities covered and once participation reaches a satisfactory level. Pricing on

6 December 2017 8

options is expected to yield 25-30% of that on futures contracts for the same underlying. Six more contracts on MCX will qualify for trading in options, and that should help drive volumes. The parallel in equities, if any cue (options volumes are ~5x futures volumes), is encouraging.

Other triggers to volumes MCX is hopeful of increased liquidity in longer duration contracts as institutional participation increases, led by permission to AIFs and mutual funds for taking exposure in the commodities market. MCX is currently in discussions with 20+ AIFs, while only one has started to trade on MCX. Another positive recent development that would further propel the level of participation is that the RBI has opened up broking subscriptions for banks, which would extend reach and make it wider compared to the current network of national distributors.

Universal license a matter of time Universal exchanges are bound to happen, thanks to Finance Ministry plans. This would enable both BSE and NSE to enter into the commodities segment, thereby intensifying competition. Predatory pricing is likely, given that the commodities space is greenfield for the new entrants. MCX may have to take price cuts to maintain its share in the market. At the same time, a small offset is that this would also open up additional opportunities for MCX, of which, it intends to tap the currencies market.

Our views on MCX  Regulator’s drive in sync with our positive thesis: Our positive thesis on MCX stems from the belief that it is a platform on its transformation journey from catering largely to speculative interests of a small set of participants to a deeper ecosystem that eventually acts as a platform for hedgers across commodities. The ideas brought forth during the event re-emphasized those endeavors of the regulator-exchanges combine, and growth in the exchange’s liquidity will be an indicator of the progress. We expect FY19 volumes to increase to INR330b/day from FY17 levels of INR235b, driving earnings CAGR of 24% during this period. Our price target of INR1,300 discounts forward earnings by 30x. Maintain Buy. The multiple will be revisited basis the volumes ramp up once options expand to all commodities.  Options criteria protect MCX’s turf: MCX’s monopolistic hold in the non- agricultural commodities was strengthened by the criteria for an exchange to launch options – INR10b+ average daily turnover for a year in the commodity of interest. We believe this criterion protects MCX’s turf amid likelihood of competition being allowed in the commodities derivatives segment.  Any policy relaxation for new exchanges is a potential risk: It is natural that the new exchanges will seek relaxation on this criterion, and any change to the prevailing regulation is a risk. It will further the competition's agenda to undercut MCX's prevailing charges, thereby eliciting a response from the leader to respond with requisite aggression. Even if it holds on to its leading market share, the interim financial performance will take a dent.

6 December 2017 9

In conversation

1. : To invest Rs700cr in domestic capex; Defence orders healthy; Baba Kalyani, CMD  Confident of not only maintaining growth rate but aim to do better than that going forward.  Company also has big expansion plans for the domestic market. Would spend Rs 500 crore expanding capacity within their facilities outside Pune and also spend Rs 200 crore to set up facility in Andhra Pradesh for light weight components.  Orderbook for oil and gas business is also pretty strong. Almost 4-5 times last year. Manufacturing more and more products in that segment in an effort to increase the share of that in the total pie. The response from customers is very encouraging.  North American economy is doing extremely well and so the company is benefiting from that. However, only 12 percent of company’s revenues comes from North American Class 8 Trucks. No longer highly dependent on that market, although market share in that market has gone up.  On defence business, order pipeline is healthy and beginning to get export orders as well. Recently test-fired two artillery guns in Pokhran and will be going for winter-trial to Sikkim. Expect defence orders to come through in the next 24 months.  Regarding BEML, pursuing it but the process has not started in the way it was expected. With regards to Amtek Auto, doing due diligence by the middle of this month.  Demand for aluminium power train products have increased multifold in Europe.

2. SHALBY HOSPITALS : To use large part of IPO proceeds to pare debt; 2 hospitals mature; Vikram Shah, Chairman and MD  Company is the largest joint preplacement center in the entire world.  Large part of the IPO proceeds will be used to pare debt and some for improvisation of facilities and buying equipment.  Once the balance sheet is free of debt, can leverage it after six months.  Return on capital employed very high compared to peers and so are also able to remain EBITDA positive at 27-28 percent occupancy. Confident of maintaining margins above 20 percent going forward.  Bed capacity is over 2000 beds and 840 beds are currently operational with two mature hospitals and four that have begun recently.  One hospital takes couple of years to breakeven.

6 December 2017 10

3. RUPA & COMPANY : Aims Rs500cr of sales from 'Fruit of the Loom' brand in next 2-3 yrs; Ramesh Agarwal, Whole Time Director  Should have significant share of the premium inner wear pie.  Aiming at 20 percent revenue share in the next two years.  Have tie-ups with 'FCUK' and 'Fruit of the Loom'. However, expect major portion of premium revenue to come from 'Fruit of the Loom' brand.  Aim to achieve sales of Rs 500 crore from 'Fruit of the Loom' in next two-three years.  Agreement with ‘Fruit of the Loom’ is for 10 years.

4. BALAJI AMINES : FY18 revenue expected at Rs800-850cr; No plans on expanding hotel biz; D Ram Reddy, Joint MD  Will release detailed report with regards to project on Solapur land in 2-3 months.  Government of has given the approval for the mega project status for about Rs 300 crore investments.  Will use Rs 120 crore from internal accruals and will raise Rs 200 crore for expansion purposes by end of 2019.  FY18 revenue expected at Rs 800-850 crore. No plans to expand the hotel business.

6 December 2017 11

From the think tank

1. Decoding the imports surge post demonetisation  Indian imports rose by 23.40% year-on-year (y-o-y) for the first eight months of the calendar year 2017, after contracting by 6.80% between April-December 2016. Many economists believe that the sharp reversal in imports could be attributed to broken domestic supply chains, as a consequence of the demonetisation exercise that was conducted in November 2016. Experts also point to low industrial production numbers, which they claim suggest that rising imports are substituting domestic production rather than satisfying increased domestic demand. Is this causal inference correct? We believe that it is not, and we present compelling evidence in this article to support our view. Even before getting into what leads to an imports surge, it is instructive to analyse the nature of India’s import bill and the drivers of imports growth. For January-August 2017, the three sectors, namely, mineral products, stone and glass, and electrical/machinery (out of 15 according to the Harmonized Classification System), accounted for 64.83% of the import bill. Some of the important commodities within these sectors include petroleum, liquefied natural gas, diamonds, gold and mechanical equipment.

2. New catalysts in Gujarat’s chemistry  A curious catalyst has surfaced in the electoral chemistry of Gujarat. In the Hindutva laboratory, Prime Minister Narendra Modi has been the dominant reactant as also the end product for the last 15 years. Nationalism, a sub- national Gujarati pride and Modi’s larger-than-life persona have come to be linked organically with a deeply religious and communally divided electorate. The other reactant, the Congress, has steadily lost its atomic weight, structural strength and political viability. The result is predictable if viewed only as a reaction between the two principal reactants. But in a week-long field experiment, I realised that the new catalyst and its strength in altering the equation cannot be undermined. A sharp rural distress, joblessness, squeeze of industry through GST and demonetisation are part of the chemical composition of this catalyst. These political economy issues hitherto eclipsed by the emotive appeal of Hindutva and Modi have now found fresh articulation through home- grown leaders like Hardik Patel, Alpesh Thakur and Jignesh Mavani.

3. Estonia has lessons for India’s Digital Economy  In the next three years, India will add more than 300 million new mobile subscribers—and, by 2025, it is highly likely that the country will be the largest mobile market in the world. Like other countries in Asia, India is developing a “mobile-first” digital culture, with smartphones fuelling a boom in e-commerce and other forms of business. It is countries like South Korea that today lead the world’s move into online entertainment, but these countries may soon be surpassed by India. With a rapidly growing middle class, and a young, tech-savvy population, online personal services are about to take a big jump and international companies are ready to radically increase their investment in India’s digital economy. Just as many Indian information technology (IT) service companies have become global leaders, there is a good chance that the next decades will see new Indian entrepreneurs shaking up the global digital economy.

6 December 2017 12

4. The sustained case for an RBI rate cut  The constellation of recent economic data has led to the consensus view that the monetary policy committee (MPC) of the Reserve Bank of India (RBI) has no room to reduce policy interest rates this week. It is a compelling argument. Inflation has climbed rapidly after hitting a low in June, and is likely to overshoot the 4% mark by the end of the current fiscal. Core inflation is sticky. Global commodity prices— especially crude oil—have hardened. Economic activity picked up in the September quarter. Many other central banks are likely to tighten monetary policy in the months ahead if the worldwide economic recovery strengthens.

International

5. The long and winding road to a haircut  Default is back. Sovereign finances weathered a wrenching global recession and a collapse in commodity prices surprisingly well over the past few years. But failed economic models cannot limp along forever, and the slow bleeding of the economies of Puerto Rico and Venezuela have now forced their leaders to say “no mas” to repaying creditors. Earlier this year, Puerto Rico declared bankruptcy. At the time, the United States commonwealth had about $70 billion in debt and another $50 billion or so in pension liabilities. This made it the largest “municipal” bankruptcy filing in US history.  The debt crisis came after more than a decade of recession (Puerto Rico’s per capita GDP peaked in 2004), declining revenues, and a steady slide in its population. The demographic trends are all the more worrisome because those fleeing Puerto Rico in search of better opportunities on the US mainland are much younger than the population staying behind.

6 December 2017 13

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CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Automobiles Amara Raja Buy 776 856 10 28.0 28.3 34.2 27.7 27.5 5.1 4.4 20.3 17.3 18.1 Ashok Ley. Buy 114 134 17 4.6 4.5 6.2 25.1 25.4 5.5 5.0 23.1 20.4 25.2 Buy 3,161 4,197 33 141.1 155.4 187.9 22.4 20.3 5.4 4.8 26.9 25.0 26.8 Bharat Forge Buy 698 844 21 13.1 19.1 26.0 53.4 36.5 7.9 6.8 16.2 20.1 23.2 Bosch Neutral 19,942 19,965 0 473.1 457.8 603.0 42.1 43.6 6.9 6.3 15.8 15.2 18.1 CEAT Buy 1,719 2,116 23 93.3 82.5 116.9 18.4 20.8 2.9 2.6 16.9 13.0 16.2 Eicher Mot. Buy 28,920 34,722 20 612.7 814.7 1,062.7 47.2 35.5 14.7 11.1 37.1 35.7 35.0 Endurance Tech. Buy 1,225 1,334 9 23.5 27.6 36.7 52.1 44.4 10.0 8.4 20.8 20.5 22.8 Escorts Sell 662 688 4 20.0 35.8 45.9 33.1 18.5 3.4 2.9 10.6 16.8 18.4 Exide Ind Buy 203 254 25 8.1 7.9 9.7 25.0 25.6 3.5 3.2 13.9 12.5 13.7 Hero Moto Neutral 3,522 3,819 8 169.1 183.1 193.9 20.8 19.2 7.0 6.1 35.7 33.7 31.1 M&M Buy 1,389 1,658 19 54.3 75.0 85.7 25.6 18.5 3.2 2.9 14.2 14.5 14.6 Mahindra CIE Not Rated 236 - 5.4 9.9 11.8 44.1 23.9 2.7 2.5 6.4 10.8 11.5 Buy 8,496 9,866 16 248.6 288.1 381.0 34.2 29.5 7.1 6.2 20.3 20.5 23.0 Buy 402 575 43 19.8 24.6 64.8 20.3 16.3 2.4 2.1 9.8 13.4 28.3 TVS Motor Neutral 737 764 4 11.7 14.9 25.8 62.8 49.4 14.5 11.9 25.6 26.5 35.6 Aggregate 29.3 24.8 5.0 4.4 17.2 17.9 22.8 Banks - Private Buy 534 680 27 15.4 18.4 30.8 34.7 29.0 2.4 2.0 6.9 7.3 10.8 DCB Bank Neutral 185 197 6 7.0 8.5 10.5 26.4 21.8 2.7 2.2 10.8 11.5 11.8 Equitas Hold. Buy 139 209 50 5.0 1.7 5.7 27.6 80.5 2.1 2.1 9.5 2.6 8.2 Buy 108 146 35 4.8 5.5 6.6 22.4 19.5 2.1 1.7 9.9 9.6 10.0 HDFC Bank Buy 1,823 2,150 18 56.8 68.7 84.7 32.1 26.5 5.4 4.8 18.3 18.8 20.4 ICICI Bank Buy 305 355 16 15.3 13.6 17.0 20.0 22.5 2.3 2.4 10.9 8.8 10.5 IDFC Bank Neutral 54 56 4 3.0 2.8 3.2 18.0 19.4 1.2 1.2 7.2 6.3 6.9 IndusInd Buy 1,665 2,000 20 48.1 60.9 78.6 34.6 27.3 4.8 4.3 15.3 16.9 19.0 J&K Bank Buy 75 100 33 -31.3 4.1 8.7 NM 18.2 0.7 0.7 -27.0 4.0 8.0 Kotak Mah. Bk Buy 1,000 1,179 18 26.8 32.1 41.6 37.3 31.2 4.8 4.3 13.8 14.8 16.5 RBL Bank Buy 510 665 30 11.9 16.4 23.0 42.9 31.2 4.5 3.2 12.3 12.4 13.7 South Indian Buy 32 36 14 2.5 1.9 3.8 12.7 17.0 1.2 1.2 9.0 6.7 12.6 Buy 309 382 24 14.6 17.8 23.3 21.1 17.3 3.3 2.8 18.9 17.3 19.5 Aggregate 30.0 25.3 3.5 3.0 11.5 11.9 13.9 Banks - PSU BOB Buy 170 201 18 6.0 17.9 22.6 28.4 9.5 1.1 1.0 4.0 6.4 9.4 BOI Neutral 184 201 9 -14.8 3.2 9.2 NM 58.0 0.8 0.9 -6.7 1.5 4.3 Canara Neutral 373 386 3 18.8 16.1 30.3 19.9 23.1 0.8 0.8 4.2 3.4 6.1 IDBI Bk Neutral 59 49 -16 1.5 6.4 8.6 38.4 9.1 0.5 0.5 1.4 5.8 7.3 Indian Bk Buy 388 438 13 29.3 36.7 44.0 13.2 10.6 1.3 1.2 10.1 11.6 12.7 OBC Neutral 124 150 21 -31.6 17.1 21.4 NM 7.3 0.3 0.3 -8.4 4.6 5.4 PNB Buy 176 250 42 6.2 8.5 13.5 28.3 20.6 1.0 0.9 3.6 4.7 7.1 SBI Buy 319 415 30 0.3 14.6 26.8 1,073.4 21.9 1.5 1.4 -0.2 7.0 11.4 Union Bk Neutral 161 175 9 8.1 -13.5 6.0 19.9 NM 0.5 0.6 2.7 -4.7 2.1 Aggregate 116.1 20.3 1.0 0.9 0.9 4.6 7.7 NBFCs Aditya Birla Cap Buy 190 231 22 0.0 3.7 5.4 NA 51.2 NA 4.9 0.0 12.5 12.3 Bajaj Fin. Buy 1,707 2,300 35 32.0 45.7 63.7 53.3 37.3 10.2 6.0 21.6 20.2 20.4 Bharat Fin. Under Review 995 - 21.0 30.3 47.2 47.4 32.8 5.6 4.6 15.1 15.3 19.3 Capital First Buy 695 925 33 24.6 32.8 43.7 28.2 21.2 3.0 2.6 12.0 13.2 15.4 Cholaman.Inv.&Fn Buy 1,303 1,500 15 46.0 59.2 70.4 28.3 22.0 4.7 4.0 18.0 19.6 19.6 Dewan Hsg. Buy 598 690 15 29.6 37.6 46.0 20.2 15.9 2.4 2.1 14.4 14.1 15.3 GRUH Fin. Neutral 505 500 -1 8.1 9.9 12.0 62.1 51.1 18.6 15.3 32.5 32.8 32.8 HDFC Buy 1,679 2,000 19 46.8 51.6 57.1 35.8 32.6 6.6 6.0 18.9 19.3 18.6 HDFC Stand. Life Buy 362 370 2 4.5 4.7 5.4 80.9 76.8 NA NA 25.5 22.7 22.2 Hsg Buy 1,188 1,550 30 68.6 83.6 105.1 17.3 14.2 4.2 3.7 25.5 27.6 30.7

6 December 2017 14

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CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E L&T Fin Holdings Buy 171 240 41 5.2 6.9 10.4 32.6 24.6 3.9 3.4 12.4 14.9 18.9 LIC Hsg Fin Neutral 573 680 19 38.2 41.0 46.5 15.0 14.0 2.6 2.3 19.1 17.4 17.2 Manappuram Not Rated 103 - 8.6 9.2 9.7 11.9 11.2 2.6 2.4 24.0 22.3 21.4 M&M Fin. Buy 442 500 13 7.1 14.2 19.1 62.3 31.2 3.9 3.6 6.4 11.9 14.8 Muthoot Fin Neutral 438 550 25 29.5 42.6 42.0 14.8 10.3 2.7 2.2 19.4 23.8 19.9 PNB Housing Buy 1,308 1,750 34 31.6 52.5 66.5 41.4 24.9 4.0 3.5 13.8 15.0 16.7 Repco Home Buy 610 800 31 29.1 36.0 41.9 20.9 17.0 3.4 2.8 17.4 18.0 17.6 Shriram City Union Buy 2,082 2,650 27 84.3 115.6 145.3 24.7 18.0 2.7 2.4 11.7 14.3 15.9 STF Buy 1,373 1,500 9 22.2 15.5 11.8 61.9 88.8 2.8 2.4 11.7 15.1 17.4 Aggregate 32.8 26.2 5.3 4.5 16.1 17.2 17.9 Capital Goods ABB Sell 1,363 1,230 -10 19.7 20.2 28.7 69.2 67.3 8.8 7.8 12.7 11.6 14.6 Bharat Elec. Buy 182 210 15 6.3 7.1 8.0 28.9 25.7 6.0 4.6 20.6 17.9 18.1 BHEL Sell 90 78 -13 1.3 2.9 3.0 67.2 30.7 1.0 1.0 1.5 3.3 3.3 Blue Star Neutral 748 685 -8 12.9 16.5 24.4 58.1 45.4 9.4 8.9 18.0 20.2 27.8 CG Cons. Elec. Buy 273 260 -5 4.7 5.2 6.5 58.3 52.6 31.7 23.3 76.4 51.0 49.8 CG Power & Indu. Neutral 85 90 7 4.1 1.4 2.3 20.6 58.6 1.3 1.2 6.2 2.1 3.3 Buy 869 1,150 32 26.5 25.3 35.0 32.8 34.3 6.4 6.0 21.2 18.1 22.2 GE T&D Neutral 409 440 8 5.7 9.4 11.2 71.3 43.4 10.1 8.8 12.4 21.8 22.6 Neutral 507 570 13 9.6 11.5 14.3 53.0 44.0 9.7 8.6 18.2 19.5 21.2 K E C Intl Neutral 313 350 12 11.9 14.3 17.6 26.4 21.9 5.1 4.3 19.2 19.5 20.2 L&T Buy 1,207 1,450 20 42.3 49.0 57.5 28.5 24.6 3.4 3.1 12.5 13.1 14.0 Neutral 1,166 1,313 13 17.8 19.8 31.0 65.4 59.0 6.1 5.4 9.3 9.1 13.1 Solar Ind Neutral 1,144 1,120 -2 20.6 26.2 31.3 55.5 43.6 10.2 8.6 19.8 21.4 21.5 Thermax Neutral 1,089 930 -15 30.8 29.9 34.4 35.3 36.5 4.8 4.4 14.3 12.6 13.2 Va Tech Wab. Buy 600 745 24 29.9 34.5 37.2 20.0 17.4 3.3 2.8 16.9 17.5 16.4 Voltas Neutral 622 550 -12 15.5 17.5 19.6 40.2 35.5 6.2 5.5 18.0 16.5 16.3 Aggregate 37.0 31.8 3.8 3.5 10.3 11.0 12.1 Cement Ambuja Cem. Neutral 260 314 21 4.9 6.9 8.4 53.2 37.5 2.7 2.6 5.1 7.0 8.0 ACC Neutral 1,689 1,797 6 36.1 52.2 70.9 46.8 32.4 3.7 3.5 7.9 11.1 14.2 Birla Corp. Buy 1,126 1,435 27 28.5 32.2 56.7 39.4 35.0 2.6 2.5 7.1 7.3 12.0 Dalmia Bharat Buy 3,059 3,517 15 38.8 60.8 83.7 78.9 50.3 5.5 5.0 7.2 10.3 12.7 Grasim Inds. Neutral 1,119 1,302 16 67.8 81.9 116.8 16.5 13.7 1.7 1.5 10.8 11.5 14.5 India Cem Neutral 168 188 12 5.6 5.8 10.5 29.8 28.7 1.0 1.0 3.4 3.5 6.0 J K Cements Buy 993 1,324 33 33.7 47.8 61.8 29.5 20.8 3.9 3.4 14.4 17.5 19.2 JK Lakshmi Ce Buy 411 512 24 7.0 12.1 19.1 59.1 33.9 3.5 3.2 6.1 9.9 13.9 Ramco Cem Buy 687 853 24 27.3 27.1 35.1 25.2 25.3 4.4 3.8 19.0 16.0 17.9 Orient Cem Buy 164 205 25 -1.6 6.3 9.1 NM 26.1 3.4 3.0 -3.2 12.3 15.6 Prism Cem Buy 112 130 16 0.3 2.7 5.0 411.9 41.0 5.9 5.3 1.4 13.7 21.3 Sagar Cements Not Rated 820 - -1.9 23.4 47.4 NM 35.1 2.2 2.1 -0.6 6.1 11.3 Shree Cem Buy 16,981 21,852 29 384.4 486.2 499.3 44.2 34.9 7.7 6.4 18.4 20.0 17.4 Ultratech Buy 4,110 4,906 19 96.1 102.2 147.1 42.8 40.2 4.7 4.2 11.6 11.1 14.2 Aggregate 37.1 29.7 3.5 3.2 9.3 10.6 12.9 Consumer Neutral 1,114 1,280 15 21.0 21.6 25.8 53.0 51.7 14.1 13.7 28.5 26.9 29.4 Britannia Buy 4,764 5,845 23 73.7 84.5 106.9 64.6 56.4 21.2 17.5 36.9 34.0 35.2 Colgate Buy 1,030 1,325 29 21.2 23.4 28.6 48.5 44.1 22.0 20.9 50.4 48.7 56.2 Buy 343 410 19 7.2 7.7 9.3 47.3 44.3 12.5 10.7 28.4 26.0 27.3 Buy 1,288 1,435 11 26.5 26.6 33.2 48.6 48.5 16.7 14.3 35.8 31.7 34.0 Godrej Cons. Neutral 978 1,015 4 18.9 21.2 24.5 51.7 46.2 12.6 9.8 24.6 23.8 22.9 GSK Cons. Neutral 6,083 5,400 -11 156.1 160.8 182.3 39.0 37.8 8.2 8.0 22.2 21.4 22.6 HUL Buy 1,261 1,500 19 19.6 22.8 27.6 64.2 55.3 42.0 41.8 66.5 75.9 88.0 ITC Neutral 254 280 10 8.4 9.1 10.0 30.3 27.9 6.8 6.8 23.5 24.4 25.6 Jyothy Lab Neutral 361 365 1 11.2 9.2 10.9 32.1 39.4 6.0 6.1 21.1 15.5 18.3

6 December 2017 15

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CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Neutral 309 340 10 6.3 6.5 7.9 49.2 47.6 17.2 15.0 36.7 33.6 37.1 Nestle Neutral 7,695 7,750 1 123.7 128.4 149.0 62.2 59.9 24.6 22.3 40.9 39.0 40.9 Page Inds Buy 21,439 25,580 19 238.7 296.6 413.1 89.8 72.3 35.9 28.8 40.0 39.8 44.4 Parag Milk Neutral 245 275 12 3.6 8.9 12.4 68.0 27.5 3.1 2.8 6.0 10.8 13.3 Pidilite Ind. Buy 833 975 17 16.7 17.2 20.8 49.8 48.4 12.9 10.7 28.2 24.1 23.9 P&G Hygiene Neutral 9,785 9,267 -5 132.9 151.5 176.7 73.6 64.6 46.1 38.3 39.3 64.8 62.9 Prabhat Dairy Not Rated 159 - 3.5 3.5 6.4 45.0 45.6 2.3 2.2 5.2 4.9 8.5 United Brew Buy 1,057 1,320 25 8.7 14.7 18.0 121.7 72.1 12.0 10.5 10.2 15.5 16.5 Neutral 3,397 2,970 -13 26.7 34.9 53.7 127.1 97.3 25.5 17.7 21.3 18.2 20.9 Aggregate 48.0 43.7 13.2 12.4 27.6 28.2 29.5 Healthcare Alembic Phar Neutral 516 540 5 21.6 21.6 24.9 23.9 23.8 5.1 4.4 23.0 19.9 19.8 Alkem Lab Buy 2,110 2,500 18 74.6 68.0 89.5 28.3 31.0 5.6 4.9 21.9 17.0 19.4 Buy 1,342 1,606 20 57.3 52.7 64.1 23.4 25.5 7.6 6.0 36.7 26.4 25.7 Aurobindo Buy 670 900 34 39.3 44.6 50.3 17.0 15.0 4.2 3.3 27.6 24.6 22.3 Neutral 513 485 -5 10.2 6.1 10.1 50.3 84.1 6.4 6.0 12.3 7.2 11.0 Cadila Buy 425 555 31 14.2 17.5 23.7 29.9 24.3 6.2 5.2 23.0 23.4 26.1 Neutral 596 600 1 15.9 21.1 27.0 37.5 28.3 3.8 3.4 10.2 12.1 13.6 Divis Lab Neutral 1,024 1,100 7 39.9 32.4 43.7 25.6 31.6 5.1 5.3 22.0 16.3 21.2 Dr Reddy’s Neutral 2,210 2,575 16 72.6 60.6 115.2 30.4 36.5 3.0 2.9 9.7 8.2 14.1 Fortis Health Buy 150 185 23 10.3 1.9 4.9 14.5 79.7 1.4 1.2 10.0 1.6 3.9 Glenmark Neutral 546 650 19 39.3 37.9 42.8 13.9 14.4 3.4 2.8 24.7 19.6 18.4 Granules Buy 125 200 60 7.2 8.0 11.0 17.3 15.7 3.2 2.2 21.1 17.7 18.8 GSK Pharma Neutral 2,468 2,500 1 34.4 44.2 54.9 71.8 55.9 10.4 12.3 14.5 22.0 31.4 IPCA Labs Neutral 530 550 4 16.1 18.6 26.5 33.0 28.5 2.7 2.5 8.6 9.2 12.0 Jubilant Life Buy 688 861 25 36.9 44.2 55.0 18.6 15.6 3.1 2.6 18.0 18.4 19.2 Lupin Buy 810 1,000 24 56.6 37.6 42.7 14.3 21.5 2.7 2.5 20.9 12.0 12.5 India Buy 4,385 5,000 14 129.1 139.0 156.2 34.0 31.5 5.8 5.4 17.1 17.1 17.6 Shilpa Medicare Buy 635 797 25 14.0 18.1 29.9 45.3 35.1 5.6 4.8 14.4 14.7 20.5 Strides Shasun Buy 815 1,214 49 32.3 41.8 69.2 25.3 19.5 2.7 2.4 10.8 12.9 18.3 Buy 524 610 16 26.1 14.4 22.9 20.0 36.5 3.4 3.3 18.1 9.2 13.7 Syngene Intl Not Rated 553 - 13.0 16.1 18.0 42.5 34.3 8.6 7.0 22.2 22.5 20.7 Torrent Pharma Neutral 1,286 1,400 9 55.2 50.0 61.4 23.3 25.7 5.0 4.4 23.8 18.3 19.9 Aggregate 23.8 27.9 4.0 3.6 16.8 12.9 15.4 Infrastructure Ashoka Buildcon Buy 248 260 5 -0.5 1.8 7.1 NM 136.9 2.8 2.5 -0.6 1.9 7.0 IRB Infra Neutral 209 240 15 20.3 22.9 23.2 10.3 9.1 1.4 1.2 14.0 14.1 12.9 KNR Constructions Buy 275 295 7 12.0 13.3 14.1 23.0 20.7 4.3 3.6 20.7 19.1 17.0 Sadbhav Engineering Buy 370 435 17 11.0 14.3 14.5 33.8 25.9 3.8 3.4 12.0 13.8 12.5 Aggregate 21.1 17.7 2.3 2.1 11.0 11.8 11.6 Logistics Allcargo Logistics Buy 177 215 22 9.8 10.9 13.3 18.0 16.2 2.4 2.2 13.7 14.1 15.4 Blue Dart Not Rated 4,113 - 102.5 129.9 163.2 40.1 31.7 17.8 13.6 50.5 48.6 46.8 Concor Neutral 1,288 1,496 16 38.0 42.7 55.2 33.9 30.2 3.5 3.4 10.8 11.5 14.1 Gateway Distriparks Buy 246 282 15 6.8 8.8 11.6 36.2 28.1 2.6 2.5 7.3 9.2 11.7 Gati Not Rated 131 - 8.4 15.9 23.9 15.7 8.3 2.2 1.9 12.4 19.4 25.4 Transport Corp. Not Rated 295 - 16.9 21.0 25.9 17.4 14.0 2.7 2.3 16.7 17.8 18.6 Aggregate 30.7 25.7 3.8 3.5 12.3 13.6 16.1 Media Dish TV Buy 80 106 32 1.0 1.0 2.4 78.5 79.3 17.5 14.3 25.1 19.9 35.2 D B Corp Buy 352 430 22 20.0 21.7 25.4 17.6 16.2 4.1 3.4 24.6 22.8 22.2 Den Net. Neutral 106 90 -15 -9.3 -2.9 0.1 NM NM 2.2 2.4 -19.1 -6.4 0.2 Ent.Network Neutral 743 910 22 11.4 11.6 20.1 65.1 64.3 4.1 3.9 6.7 6.3 10.1 Hind. Media Buy 245 302 23 25.8 25.6 30.2 9.5 9.6 1.5 1.3 18.2 15.0 15.3 HT Media Neutral 98 113 15 7.4 10.4 11.9 13.3 9.5 1.0 0.9 7.9 10.2 10.6

6 December 2017 16

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CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Jagran Prak. Buy 164 225 37 10.7 11.3 13.4 15.4 14.5 2.5 2.5 18.5 17.3 19.3 Music Broadcast Buy 385 469 22 6.4 8.7 14.1 59.9 44.5 4.0 3.7 11.2 8.6 12.6 PVR Buy 1,271 1,640 29 20.5 27.1 43.0 61.9 46.9 6.2 5.5 10.4 12.4 17.0 Prime Focus Buy 100 130 30 1.2 3.1 6.1 81.8 32.5 5.4 4.6 7.6 15.3 24.8 Siti Net. Neutral 26 27 5 -1.9 -0.8 0.1 NM NM 4.2 4.9 -29.4 -14.2 2.4 Sun TV Buy 856 1,005 17 24.9 28.1 35.7 34.4 30.5 8.4 7.7 26.0 26.4 30.7 Zee Ent. Buy 569 630 11 12.1 10.5 16.0 46.9 54.4 6.4 5.8 17.0 12.8 16.8 Aggregate 41.9 36.0 5.3 4.9 12.6 13.5 17.2 Metals Hindalco Buy 240 326 36 8.6 18.8 26.4 28.0 12.7 1.8 1.6 7.4 13.6 16.5 Hind. Zinc Neutral 295 322 9 19.7 22.7 33.5 15.0 13.0 4.0 4.3 24.4 32.3 42.5 JSPL Buy 165 209 27 -20.9 -15.1 0.5 NM NM 0.5 0.5 -7.9 -4.7 0.1 JSW Steel Buy 249 297 19 14.8 20.3 24.9 16.8 12.3 2.7 2.2 17.3 19.8 20.2 Nalco Neutral 78 87 11 3.7 4.7 5.8 21.0 16.7 1.5 1.4 7.2 8.6 10.1 NMDC Buy 132 187 42 10.0 13.2 12.7 13.3 10.0 1.9 1.7 12.8 15.6 16.2 SAIL Sell 78 43 -45 -10.1 -6.4 -4.3 NM NM 0.8 0.9 -9.9 -6.9 -4.9 Rain Industries Buy 349 492 41 9.6 25.5 38.9 36.2 13.7 3.9 3.1 10.9 25.2 29.7 Vedanta Buy 288 394 37 15.1 25.5 44.4 19.0 11.3 1.8 1.6 9.7 15.1 23.8 Neutral 676 672 -1 37.9 59.4 65.2 17.8 11.4 2.0 1.9 15.7 17.1 16.6 Aggregate 25.1 14.8 1.8 1.7 7.0 11.4 15.3 Oil & Gas BPCL Buy 499 643 29 48.3 43.1 52.1 10.3 11.6 3.2 2.7 32.4 25.2 25.8 GAIL Sell 462 378 -18 22.6 28.1 31.9 20.5 16.5 2.1 1.9 9.6 12.0 12.6 Gujarat Gas Buy 846 1,011 20 16.1 22.9 33.6 52.7 37.0 7.1 6.1 14.0 17.8 22.1 Gujarat St. Pet. Neutral 204 184 -10 8.8 12.1 13.2 23.1 16.8 2.6 2.3 11.6 14.4 14.0 HPCL Buy 412 579 41 40.7 36.4 42.8 10.1 11.3 3.1 2.6 32.4 25.1 25.0 IOC Buy 391 554 42 41.9 39.5 43.6 9.3 9.9 1.8 1.6 20.7 17.2 16.9 IGL Buy 328 404 23 8.8 10.0 11.3 37.3 32.7 7.8 6.6 21.0 22.0 21.0 Neutral 1,105 1,219 10 44.0 54.4 53.8 25.1 20.3 5.9 5.3 24.5 27.3 24.4 MRPL Sell 122 110 -10 14.8 9.2 11.5 8.3 13.2 2.1 1.9 31.4 15.1 16.7 Buy 354 418 18 19.3 29.8 40.5 18.3 11.9 1.0 0.9 5.7 8.0 10.4 ONGC Buy 178 231 29 16.4 19.0 22.8 10.9 9.4 1.0 1.0 10.1 10.8 12.5 PLNG Buy 249 312 25 11.4 15.0 16.7 21.9 16.7 4.6 3.9 23.2 25.2 23.7 Reliance Ind. Buy 912 1,077 18 48.3 56.7 62.1 18.9 16.1 2.0 1.8 11.6 12.1 12.0 Aggregate 13.9 12.9 1.8 1.7 13.1 12.9 13.5 Retail Jubilant Food Sell 1,745 1,270 -27 10.0 21.4 27.4 174.4 81.4 14.3 13.4 8.2 16.5 20.9 PC Jeweller Buy 390 490 26 10.7 15.1 18.4 36.6 25.9 4.6 4.0 14.6 16.5 17.5 Titan Co. Buy 793 850 7 9.0 12.5 15.9 87.8 63.4 16.5 13.4 20.6 23.4 25.5 Aggregate 76.3 53.3 11.7 9.9 15.3 18.5 20.9 Technology Cyient Buy 581 600 3 30.6 36.0 41.9 19.0 16.1 3.1 2.8 16.2 17.4 18.3 HCL Tech. Neutral 845 970 15 59.8 63.2 68.2 14.1 13.4 3.5 3.4 27.5 25.9 25.6 Hexaware Neutral 344 270 -22 13.7 16.3 17.0 25.1 21.1 6.1 5.2 26.5 26.4 23.4 Buy 984 1,100 12 62.8 63.8 67.8 15.7 15.4 3.3 3.5 22.0 21.8 22.5 KPIT Tech Neutral 155 160 3 11.9 11.9 14.1 13.0 13.0 2.0 1.7 14.3 14.1 14.5 L&T Infotech Buy 982 950 -3 55.5 61.6 66.0 17.7 16.0 6.5 5.0 41.6 35.2 29.6 Buy 540 600 11 24.9 28.5 35.1 21.7 18.9 3.5 3.4 16.8 17.3 21.2 Neutral 723 670 -7 38.9 42.0 46.0 18.6 17.2 2.5 2.8 13.2 14.6 17.3 NIIT Tech Neutral 637 600 -6 38.0 43.7 50.3 16.8 14.6 2.2 2.2 13.7 15.1 16.4 Persistent Sys Buy 650 780 20 37.7 43.3 52.4 17.2 15.0 2.7 2.6 17.0 17.9 20.8 Tata Elxsi Buy 935 1,004 7 28.1 33.8 40.2 33.2 27.6 10.4 8.4 37.1 33.6 32.4 TCS Neutral 2,634 2,450 -7 133.4 131.8 151.4 19.7 20.0 5.9 6.3 32.6 30.6 33.5 Tech Mah Buy 466 560 20 30.9 35.8 37.7 15.1 13.0 2.5 2.4 18.4 18.9 18.2 Neutral 283 280 -1 16.9 19.1 20.1 16.8 14.8 2.7 2.6 16.9 17.0 16.7

6 December 2017 17

Click excel icon for detailed Valuation snapshot valuation guide

CMP TP % Upside EPS (INR) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY17 FY18E FY19E FY17 FY18E FY17 FY18E FY17 FY18E FY19E Zensar Tech Buy 836 1,020 22 52.1 52.8 72.7 16.1 15.8 2.6 2.3 17.2 15.3 18.4 Aggregate 17.6 17.4 4.0 4.2 22.9 24.4 23.2 Telecom Buy 491 680 39 11.3 3.8 6.5 43.3 130.6 2.9 2.9 6.8 2.2 3.7 Bharti Infratel Neutral 378 440 16 14.9 16.8 19.2 25.5 22.4 4.5 4.5 16.2 20.2 22.8 Idea Cellular Buy 93 110 18 -1.1 -16.1 -18.0 NM NM 1.4 1.8 -1.6 -26.6 -41.4 Tata Comm Buy 670 780 16 10.0 5.4 18.2 67.2 123.4 12.0 13.0 48.4 10.1 30.0 Aggregate 44.4 -304.8 2.9 3.1 6.6 -1.0 0.2 Utiltites Buy 265 335 26 14.9 17.5 20.7 17.8 15.1 6.7 6.4 37.8 42.4 47.7 CESC Buy 989 1,360 38 51.9 89.1 102.1 19.1 11.1 1.2 1.1 6.5 10.7 11.1 JSW Energy Sell 81 49 -39 3.8 4.0 3.3 21.1 20.1 1.3 1.2 6.3 6.3 5.0 NTPC Buy 177 211 19 12.0 13.4 15.7 14.8 13.1 1.5 1.4 10.5 11.0 11.9 Power Grid Buy 200 261 30 14.0 17.4 20.4 14.3 11.5 2.1 1.8 15.6 17.0 17.4 Sell 89 72 -19 7.4 7.3 7.5 12.0 12.2 2.0 1.9 17.1 16.0 14.6 Aggregate 16.1 13.6 2.3 2.1 14.4 15.7 16.8 Others Arvind Neutral 423 425 0 12.4 10.5 16.5 34.2 40.2 3.1 2.9 10.3 7.4 10.9 Avenue Supermarts Sell 1,128 873 -23 7.7 12.0 17.5 147.0 94.1 18.3 16.1 17.9 18.2 22.9 Bata India Sell 725 578 -20 13.5 15.9 19.3 53.6 45.5 7.0 6.3 13.9 14.6 15.7 BSE Neutral 922 1,100 19 41.0 45.3 46.1 22.5 20.3 1.9 1.9 8.3 9.3 8.0 Buy 394 467 18 13.6 12.6 13.3 29.0 31.2 32.9 29.8 115.0 100.3 96.1 Coromandel Intl Buy 504 523 4 16.6 24.1 29.0 30.3 20.9 5.1 4.4 17.5 22.5 23.4 Delta Corp Buy 244 257 5 3.1 5.7 8.0 79.9 43.1 6.1 4.1 8.1 12.1 12.9 Eveready Inds. Buy 438 400 -9 12.9 14.3 17.4 34.0 30.6 11.0 8.9 37.7 32.1 31.5 Interglobe Neutral 1,152 1,291 12 43.2 63.2 75.4 26.7 18.2 11.7 6.7 51.0 46.8 43.0 Indo Count Neutral 116 128 10 13.0 8.0 10.7 9.0 14.5 2.7 2.2 34.8 17.0 18.5 Buy 1,267 1,300 3 15.7 23.6 26.2 80.8 53.6 7.8 7.0 10.2 13.7 13.7 Kaveri Seed Buy 523 738 41 19.1 34.1 41.0 27.4 15.3 3.6 3.8 13.6 23.3 27.4 Manpasand Buy 382 492 29 6.3 9.9 15.4 60.2 38.5 3.8 3.5 7.3 8.4 13.5 MCX Buy 907 1,300 43 24.8 26.5 43.4 36.5 34.3 3.4 3.5 10.2 10.0 15.9 Monsanto Buy 2,481 3,293 33 86.2 105.0 126.6 28.8 23.6 8.1 7.3 31.5 32.5 34.5 Navneet Education Buy 160 209 30 7.3 8.4 10.4 21.9 19.0 5.4 4.7 26.7 26.3 27.9 Quess Corp Buy 942 1,170 24 10.0 31.1 32.7 94.2 30.3 12.8 5.1 19.0 24.2 16.4 PI Inds. Buy 956 890 -7 33.4 29.9 35.6 28.6 32.0 8.1 6.8 32.8 23.0 22.9 Piramal Enterp. Buy 2,754 3,266 19 72.6 104.6 149.7 37.9 26.3 3.2 3.0 9.0 11.7 15.3 SRF Buy 1,832 1,992 9 85.9 76.7 104.9 21.3 23.9 3.4 3.0 16.6 13.2 16.3 S H Kelkar Buy 258 301 17 7.2 6.6 9.7 35.6 39.0 4.6 4.2 13.7 11.3 15.1 Team Lease Serv. Buy 2,064 2,300 11 38.8 43.0 66.4 53.2 48.0 9.3 7.8 19.2 17.6 22.2 Trident Buy 86 114 32 6.6 8.3 10.4 13.0 10.4 1.6 1.4 13.0 14.5 16.1 TTK Prestige Neutral 6,890 5,281 -23 132.1 137.8 176.1 52.2 50.0 9.4 8.6 19.5 18.0 20.7 V-Guard Neutral 232 167 -28 3.6 4.5 6.0 64.9 51.8 15.5 12.6 27.4 26.9 28.8

6 December 2017 18

MOSL Universe stock performance

MOSL: Stock performance Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Automobiles Muthoot Fin -0.3 -12.1 49.8 Amara Raja 1.6 12.4 -15.3 PNB Housing -1.9 -8.3 52.7 Ashok Ley. -1.9 -7.7 47.9 PFC -1.0 -16.1 -7.8 Bajaj Auto -1.2 -1.9 15.5 Repco Home -0.1 -0.5 6.0 Bharat Forge 3.4 -1.1 59.9 REC -0.1 -15.4 14.1 Bosch -0.7 -5.0 -4.4 STF 5.9 5.5 53.0 CEAT -0.7 1.1 36.3 Shriram City Union 1.9 -6.8 11.7 Eicher Mot. -1.6 -7.2 27.2 Capital Goods Endurance Tech. -3.4 2.2 116.0 ABB -1.5 -1.3 30.5 Escorts 0.3 -8.6 106.8 Bharat Elec. 1.0 -0.5 39.8 Exide Ind -0.5 -1.0 15.0 BHEL -0.5 -10.0 5.0 Hero Moto -2.3 -4.6 9.2 Blue Star 0.9 8.1 55.3 M&M -0.8 4.4 17.6 CG Cons. Elec. 0.7 25.9 88.2 Mahindra CIE -1.6 -6.3 24.8 CG Power & Inds Sol. -0.1 -0.5 22.5 Maruti Suzuki -0.2 3.4 63.3 Cummins 1.4 -3.3 12.4 Tata Motors -0.3 -10.0 -8.5 GE T&D 1.0 0.1 31.3 TVS Motor 1.6 6.1 106.4 Havells -1.1 2.7 50.4 Banks - Private K E C Intl -0.8 -0.2 126.2 Axis Bank -0.2 -1.2 15.8 L&T -0.9 -2.2 33.3 DCB Bank 0.6 2.3 70.2 Pennar Eng. -2.8 -5.8 -39.8 Equitas Hold. 1.2 -4.8 -13.5 Siemens -0.6 -7.6 6.7 Federal Bank 1.6 -6.8 58.1 Solar Ind 0.3 7.3 75.5 HDFC Bank -0.8 -0.4 52.5 Suzlon Energy -1.8 -17.6 -7.0 ICICI Bank 0.4 -3.3 28.8 Thermax 0.3 13.6 31.4 IDFC Bank -0.7 -8.3 -18.7 Va Tech Wab. 0.7 2.1 22.1 IndusInd 0.9 -0.6 53.9 Voltas 2.0 13.6 104.2 J&K Bank 0.5 -6.7 25.6 Cement Kotak Mah. Bk 0.0 -1.6 37.3 Ambuja Cem. -0.3 -7.8 24.0 RBL Bank -0.3 -1.8 45.8 ACC -0.4 -6.4 25.8 South Indian -0.3 -0.3 64.8 Birla Corp. -1.6 -2.4 71.2 Yes Bank 1.8 -5.3 30.4 Dalmia Bharat -0.8 0.2 97.3 Banks - PSU Grasim Inds. -1.9 -12.9 53.6 BOB 0.2 -1.1 4.5 India Cem -0.4 -10.2 49.3 BOI -0.5 -8.6 57.1 J K Cements 0.1 -0.7 36.8 Canara 1.7 -7.6 23.1 JK Lakshmi Ce 0.7 -6.3 10.0 IDBI Bk -1.0 -9.3 -13.7 Ramco Cem -0.7 -4.6 20.7 Indian Bk 0.9 11.6 59.8 Orient Cem 0.3 -6.4 24.0 OBC 1.0 -12.2 4.5 Prism Cem 1.9 -7.4 26.5 PNB 1.7 -15.1 29.7 Sagar Cements -3.5 -4.8 24.1 SBI 1.9 -1.8 24.4 Shree Cem 0.6 -10.3 12.7 Union Bk 1.3 -7.0 11.5 Ultratech 0.0 -5.9 14.5 NBFCs Consumer Aditya Birla Cap 0.2 -1.9 Asian Paints -0.8 -5.0 18.8 Bajaj Fin. 1.7 -7.0 89.1 Britannia 0.2 2.4 55.3 Bharat Fin. 1.2 0.1 40.5 Colgate 0.0 -0.3 11.3 Capital First 1.0 -5.5 30.8 Dabur 1.3 0.9 20.3 Cholaman.Inv.&Fn 1.0 5.1 41.1 Emami -0.8 4.0 24.8 Dewan Hsg. 1.2 -10.2 139.3 Godrej Cons. 0.4 0.7 32.8 GRUH Fin. -1.6 1.1 65.4 GSK Cons. -0.2 13.3 21.9 HDFC 0.0 -5.4 37.8 HUL -0.6 1.8 49.0 HDFC Stand. Life -0.4 ITC -0.4 -4.3 9.3 Indiabulls Hsg 1.4 -2.6 60.0 Jyothy Lab -2.2 -5.7 -2.1 L&T Fin.Holdings 3.8 -14.0 99.9 Marico -0.8 -1.0 21.6 LIC Hsg Fin 0.6 -5.9 1.3 Nestle 0.0 3.9 23.1 Manappuram 1.3 0.8 44.0 Page Inds -1.0 2.1 60.2 M&M Fin. -0.2 1.9 63.0 Parag Milk 1.4 -11.8 -9.2

6 December 2017 19

MOSL Universe stock performance

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Pidilite Ind. -0.9 8.2 31.3 Hind. Zinc -1.3 -8.4 7.2 P&G Hygiene -0.3 10.3 45.5 JSPL -2.3 -0.1 140.5 Prabhat Dairy -0.8 10.3 56.6 JSW Steel -1.3 -6.8 50.7 United Brew 0.8 -5.6 23.8 Nalco -2.2 -17.0 38.7 United Spirits 2.7 9.4 75.4 NMDC -0.6 3.2 7.8 Healthcare Rain Industries 0.4 12.8 554.7 Alembic Phar 0.6 2.1 -17.4 SAIL 0.8 -9.8 53.4 Alkem Lab 4.7 10.2 24.2 Vedanta -0.7 -14.7 27.2 Ajanta Pharma 0.4 8.2 -28.9 Tata Steel -1.7 -4.6 63.5 Aurobindo -0.6 -15.0 -7.6 Oil & Gas Biocon -0.1 26.2 67.6 BPCL 0.8 -6.6 23.7 Cadila 0.1 -14.5 6.8 GAIL -0.1 -0.2 44.4 Cipla 0.2 -6.7 4.1 Gujarat Gas -1.3 -11.9 57.1 Divis Lab -0.8 -2.6 -9.8 Gujarat St. Pet. -0.3 -3.8 36.8 Dr Reddy’s -1.4 -8.6 -30.3 HPCL 0.1 -7.4 43.3 Fortis Health 1.1 5.1 -11.5 IOC 0.2 -5.1 34.4 Glenmark 0.7 -12.8 -37.5 IGL -1.5 4.1 100.9 Granules -0.1 -10.9 11.6 Mahanagar Gas -1.0 -12.3 48.6 GSK Pharma 1.1 -7.1 -11.0 MRPL 0.6 -10.3 16.9 IPCA Labs 2.7 0.9 -4.6 Oil India -1.9 -2.0 8.5 Jubilant Life -2.4 6.3 -1.6 ONGC -1.5 -6.8 -9.4 Lupin -0.6 -22.8 -47.3 PLNG 2.9 -3.9 32.7 Sanofi India 0.0 -4.9 2.7 Reliance Ind. 1.1 -3.6 83.4 Shilpa Medicare -0.2 -4.3 -3.2 Retail Strides Shasun -0.3 -1.5 -24.5 Jubilant Food 0.7 8.4 104.7 Sun Pharma 0.5 -5.2 -26.6 PC Jeweller -0.1 10.3 115.2 Syngene Intl -1.0 9.5 -3.9 Titan Co. -1.6 20.3 143.7 Torrent Pharma -0.8 -2.2 -3.7 Technology Infrastructure Cyient 0.6 9.4 16.9 Ashoka Buildcon -0.6 7.4 71.1 HCL Tech. -0.5 -0.2 6.7 IRB Infra.Devl. -2.2 -14.3 11.2 Hexaware 2.9 9.2 69.1 KNR Construct. 1.3 0.9 75.6 Infosys -0.1 6.2 2.4 Sadbhav Engg. -1.3 20.0 34.2 KPIT Tech -1.9 1.7 18.6 Logistics L&T Infotech -2.7 20.5 52.6 Allcargo Logistics -1.8 -1.2 7.6 Mindtree -2.3 12.1 20.2 Blue Dart -0.9 -0.4 -11.1 Mphasis -0.7 2.9 38.4 Concor -0.7 -6.7 43.6 NIIT Tech 2.4 -1.9 51.8 Gateway Distriparks 0.1 -9.5 6.7 Persistent Sys -0.4 -0.4 9.4 Gati -1.4 6.4 11.2 Tata Elxsi 1.1 8.9 39.2 Transport Corp. -0.8 1.3 71.9 TCS 0.0 0.8 20.5 Media Tech Mah -1.6 0.5 0.8 Dish TV 1.6 4.8 -6.2 Wipro -2.3 -3.7 24.2 D B Corp -2.2 -5.1 -2.2 Zensar Tech 0.0 6.3 -14.9 Den Net. 10.4 14.3 67.1 Telecom Ent.Network 0.3 -9.3 6.1 Bharti Airtel 1.2 -9.4 49.8 Hind. Media -0.3 1.5 -5.7 Bharti Infratel 0.6 -8.6 -2.4 HT Media -1.9 -3.7 37.6 Idea Cellular 0.3 -11.9 28.5 Jagran Prak. -0.5 -7.3 -4.6 Tata Comm 0.2 -2.8 5.3 Music Broadcast 1.0 -0.6 Utiltites PVR -0.4 -7.1 18.9 Coal India -0.5 -7.4 -13.3 Prime Focus -0.8 -2.4 44.3 CESC 0.6 -1.3 70.4 Siti Net. -0.4 -1.0 -26.3 JSW Energy -3.5 -0.8 43.3 Sun TV 0.5 -2.9 73.5 NTPC -1.7 -3.0 9.0 Zee Ent. 0.5 5.3 28.2 Power Grid -1.4 -5.0 8.2 Metals Tata Power -1.1 5.1 21.4 Hindalco 0.0 -10.7 37.5

6 December 2017 20

MOSL Universe stock performance

Company 1 Day (%) 1M (%) 12M (%) Others Arvind -0.9 -4.0 23.5 Avenue Super. -1.8 -0.1 Bata India 1.2 -10.9 77.2 BSE -0.9 -6.4 Castrol India -0.4 -5.1 -1.1 Century Ply. -1.1 7.1 80.3 Coromandel Intl -2.1 -1.7 100.6 Delta Corp -3.5 -11.5 126.5 Dynamatic Tech -0.6 -7.7 -31.8 Eveready Inds. 0.3 25.5 104.3 Interglobe 0.8 -7.8 35.7 Indo Count 0.4 3.7 -24.2 Info Edge -1.3 6.5 44.2 Inox Leisure -2.0 5.1 24.5 Jain Irrigation 3.3 8.8 36.6 Just Dial 2.1 5.7 32.0 Kaveri Seed -1.7 -6.8 27.6 Kitex Garm. -1.2 16.3 -0.2 Manpasand 1.3 -11.3 23.4 MCX -3.2 -10.4 -24.2 Monsanto 0.3 -1.8 9.2 Navneet Educat. -1.7 -7.9 48.3 PI Inds. 1.5 16.9 15.3 Piramal Enterp. 1.1 2.3 65.1 Quess Corp 0.4 13.0 46.9 SRF 2.1 7.1 19.3 S H Kelkar -1.1 -5.4 -14.7 Symphony -0.6 1.4 35.1 Team Lease Serv. -5.1 27.7 146.9 Trident -2.5 -10.5 54.0 TTK Prestige 0.7 5.2 32.0 V-Guard 3.8 3.3 88.9 Wonderla 0.6 -5.1 6.8

6 December 2017 21

N O T E S

6 December 2017 22

THEMATIC/STRATEGY RESEARCH GALLERY

REPORT GALLERY RECENT INITIATING COVERAGE REPORTS

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DIFFERENTIATED PRODUCT GALLERY

Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice and also sought personal hearing. The matter is currently pending. MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report. MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (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.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in the past 12 months.

In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:  managed or co-managed public offering of securities from subject company of this research report,  received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,  received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.  Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.

MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

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Disclosure of Interest Statement Companies where there is interest . Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views.

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For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may 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. 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. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. 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 MOSL 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. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id: [email protected], Contact No.:022-30801085.

Registration details of group entities.: MOSL: SEBI Registration: INZ000158836; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products 13 December 2016 23