INDIA DAILY

June 3, 2020 India 2-Jun 1-day 1-mo 3-mo Sensex 33,826 1.6 0.3 (12.4) Nifty 9,979 1.6 1.2 (11.7) Contents Global/Regional indices Dow Jones 25,743 1.1 8.5 (0.7) Daily Alerts Nasdaq Composite 9,608 0.6 11.7 10.6 Results FTSE 6,220 0.9 7.9 (7.4) Nestle India: ARCY19 analysis - a solid year on most fronts Nikkei 22,772 2.0 16.1 8.0 Hang Seng 23,996 1.1 (2.6) (8.7)  CY2019 P&L - a strong year but for the RM pain KOSPI 2,124 1.7 9.1 5.4

 Segmental performance - prepared dishes and chocolates remain strong Value traded – India InterGlobe Aviation: Decent 4Q print but future uncertainties galore Cash (NSE+BSE) 708 573 543 12,23 Derivatives (NSE) 11,812 26,714  Better-than-expected 4QFY20 performance aided by decent yields 4 Deri. open interest 2,646 3,484 3,195  Management focus on fixed cost reduction and neo addition

 Phased capacity increase in FY2021 will drive significant losses Forex/money market

 Demand uncertainty drives our cautious view; SELL Change, basis points Motherson Sumi Systems: Cost reduction drives EBITDA margin expansion 2-Jun 1-day 1-mo 3-mo Rs/US$ 75.1 2 (55) 169  4QFY20 consolidated EBITDA 42% above our estimates led by cost cutting 10yr govt bond, % 6.3 3 (21) (31) initiatives Net investment (US$ mn)

 Cut our FY2021E EPS estimates by 8%; maintain ADD with revised FV of 1-Jun MTD CYTD

Rs110 (from Rs80) FIIs 919 919 (3,996) S H Kelkar and Company: Steady quarter; weak outlook MFs 19 - 5,362 Top movers  4QFY20 - decent print in context of environment Change, %

 Key takeaways from earnings call Best performers 2-Jun 1-day 1-mo 3-mo  We cut estimates and fair value sharply, Maintain BUY CIPLA IN Equity 638 (0.8) 8.1 50.3 ARBP IN Equity 733 1.0 17.2 43.4

GNP IN Equity 389 5.4 15.3 37.7

CDH IN Equity 353 1.0 9.0 35.6

LPC IN Equity 871 2.5 4.3 34.1

Worst performers

IIB IN Equity 435 6.0 (7.1) (60.8)

IHFL IN Equity 127 (0.9) (4.4) (56.7)

RBK IN Equity 127 (2.1) (3.8) (56.5)

MMFS IN Equity 151 4.2 (8.7) (55.6)

BAF IN Equity 2,346 8.6 1.2 (47.3)

[email protected] Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL. REDUCE Nestle India (NEST) Consumer Staples JUNE 02, 2020 RESULT Sector view: Cautious

ARCY19 analysis – a solid year on most fronts. NEST had a strong CY2019 with CMP (`): 17,021 strong volume-led topline growth in the domestic business, decent EBITDA growth Fair Value (`): 16,000 despite an adverse RM environment and strong growth in EPS aided by lower ETR. Cash BSE-30: 33,826 flow metrics and return ratios were healthy as well. Qualitative positives – (1) successful new launches, (2) sustained strength in the noodles business, and (3) super-strong volume growth in the chocolates business. FV (RS16,000) and rating (REDUCE) stay.

Nestle India Stock data Forecasts/valuations 2020 2021E 2022E 52-week range (Rs) (high,low) 18,370-11,093 EPS (Rs) 204.3 240.8 282.5 Mcap (bn) (Rs/US$) 1,642/21.9 EPS growth (%) 22.6 17.9 17.3 ADTV-3M (mn) (Rs/US$) 3,046/41 P/E (X) 83.3 70.7 60.3 Shareholding pattern (%) P/B (X) 84.9 69.4 57.4 Promoters 62.8 EV/EBITDA (X) 57.5 47.8 41.7 FIIs 11.8 RoE (%) 70.3 108.1 104.3 MFs/BFIs 4.2/4.8 Div. yield (%) 2.0 1.2 1.4 Price performance (%) 1M 3M 12M Sales (Rs bn) 123 139 155 Absolute (5) 6 50 EBITDA (Rs bn) 28 34 38 Rel. to BSE-30 (5) 19 76 Net profits (Rs bn) 20 23 27

CY2019 P&L – a strong year but for the RM pain

Net revenues grew 9.6% yoy to Rs123 bn with domestic revenues growing faster at 11% and export revenues declining 9.9%. Export sales decreased due to lower exports of coffee to Turkey. Exports to South Asian countries registered a double-digit growth on the back of broad- based volume growth. Strong domestic performance was primarily volume-led.

RM inflation was the key pain point during the year – gross margins contracted 156 bps yoy (+260 bps expansion in the previous year) to 57.5%. Milk and SMP prices increased sharply in CY2019 but have started to come off now. EBITDA margin contraction was restricted at 80 bps yoy to 22.9%. The company delivered material overhead cost efficiencies, which was partly offset by sharp increase in employee expenses (+12.3% yoy; 10.3% of sales – much higher compared to key peers) and continued high A&P intensity (to support new launches).

PAT growth of 22.6% yoy was strong on account of ETR and lower provisions for contingencies. EPS stood at Rs204/share and the company announced total dividends of Rs342/share (including Rs180/share of special dividend).

Segmental performance – prepared dishes and chocolates remain strong

Chocolates and confectionary reported strong growth of 17.3% yoy (volume: +16% yoy) – strongest growth print in the past decade. NEST has started recouping lost market share in the category and we believe would now be very close to Ferrero (Mondelez is the category leader Rohit Chordia with ~65% market share). It is riding the premiumization trend well with new offerings of KitKat. Prepared dishes and cooking aids also saw robust growth of 12.7% yoy (volume growth Jaykumar Doshi of 9.6%). Besides new launches of Poha and Upma under the Maggi brand, NEST has increased the pace of new variant launches in the core instant noodles portfolio. These new variants have Aniket Sethi helped to sustain excitement around the brand; however, success in premiumizing this portfolio is still limited, in our view.

Milk products and nutrition’s volume growth (+1.4% yoy) was weighed down by price increases due to RM inflation; value growth came in at 8.9%. NEST launched organic and ragi variants in the cereals category. Beverages saw a volume and revenue dip of 2.3% yoy and 1.4% yoy, respectively, weak print despite some strong initial traction in the RTD segment.

[email protected] Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL. Nestle India Consumer Staples

Return ratios improve sharply; cash flow generation remains healthy

CY2019 saw Nestle’s RoE improve to 70% from 45% in the previous year. We note that NEST’s RoE used to be 100%+ pre-CY2010. RoIC (ex-cash) improved to 96% from 70%. Improvement in return ratios was largely driven by lower equity base (large special dividend payout in the year); margin and asset turnover were also higher. Cash conversion cycle days saw marginal deterioration even as it is still negative – (3) from (5) in the previous year. Increase in inventory days was partly offset by higher creditor days while receivable days remained flat.

FCF for CY2019 was Rs20.8 bn, +10% yoy as OCF (including change in NWC) increased 9% yoy (+27% before change in NWC) and capex was broadly flattish yoy at roughly Rs1.55 bn. FCF/EBITDA ratio for the year was a healthy 74% (5-year average of 69%). FCF as a % of recurring PAT stood at 106%.

NEST has commenced construction of its ninth factory at Sanand, Gujarat at an estimated investment of Rs7 bn over two years.

The two big takeaways – one on the volumes front and the other on margins

NEST’s absolute volumes in three out of its four categories still remain below the respective historical peaks –

 Milk products and nutrition – CY2019 volumes of 139K MT stood nearly 6% lower than the peak category volumes hit in CY2011. During this 8-year timeframe (CY2011-19), category revenues have grown a cumulative 69% or at 6.8% CAGR as price/MT has grown at 7.6% CAGR.

 Beverages – CY2019 volumes 5% lower than the peak hit in CY2013. Category revenues during this six-year phase have grown a cumulative 13.4%. Even 10-year revenue CAGR for this category stands at a poor 6.4%.

 Prepared dishes and cooking aids – volumes finally crossed the CY2014 peak; we note that CY2015 saw this category being impacted by the Maggi noodles issue. Noodles category as well as Maggi has since been on the recovery path. Even as Nestle’s market share in the noodles category (in the low 60s) is now well below its historical peak levels as ITC has made inroads with Yippee, the category has clearly grown well above its pre- Maggi-crisis levels.

 Chocolates and confectionery – despite the second straight year of mid-teens volume growth (15% in CY2018, 16% in CY2019), category volumes still remained 8.3% below the peak hit in CY2010. Category revenues are of course materially above CY2010 levels (value growth of 68% cumulative or 6% CAGR).

Essentially, per capita consumption of Nestle’s products (in volume terms) in CY2019 was lower than the respective historical peaks in all the categories the company plays in, including prepared dishes and cooking aids. Nestle tracks this metric (per capita consumption and spend on Nestle’s products) across countries rigorously and we believe the company sees an opportunity here. We are encouraged with NEST’s newfound balanced (volume/ pricing) growth strategy in the past few years. The onus of growing some of these categories in India is squarely on NEST in its capacity as the market share and thought leader. Low penetration levels offer massive opportunity.

On the margins front, we believe NEST has an opportunity to improve employee productivity further. At 10.3% of sales for CY2019, NEST’s staff costs as % of sales are significantly ahead of companies like HUVR (4.4%), Colgate (7.3%), Britannia (3.4%), Dabur (9.2%) and Marico (5.3%), among others.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3 Consumer Staples Nestle India

Exhibit 1: We have only marginally tweaked our estimates Key changes to estimates, Nestle India, December calendar year-ends, 2020-22E

Revised Earlier Change (%) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E Revenues (Rs mn) 139,115 155,254 172,954 137,655 153,826 171,551 1.1 0.9 0.8 EBITDA (Rs mn) 33,641 38,320 43,381 33,303 37,984 43,047 1.0 0.9 0.8 EBITDA margin (%) 24.2 24.7 25.1 24.2 24.7 25.1 Net income (Rs mn) 23,218 27,235 31,614 22,961 26,978 31,368 1.1 1.0 0.8 EPS (Rs/share) 240.8 282.5 327.9 238.1 279.8 325.3 1.1 1.0 0.8

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: Volume print healthy despite a dip Nestle India’s volume and EBITDA trend, December calendar year-ends, 2010-19

Volume growth, % (LHS) EBITDA growth, % (LHS) EBITDA Margin, % (RHS) 30 24 2523 24 21 23 18 20 17 11 23 8 10 7 7 6 10 4 11 1 2 22 - (1) 21 (10) 20 (20)

(30) (22) 19

(40) (36) 18

2010

2011

2012

2013

2014

2015

2016

2017

2018 2019

Source: Company, Kotak Institutional Equities

Exhibit 3: Nestle India’s volume print encouraging for chocolates and prepared dishes; beverages report 2.3% fall in volumes Nestle India’s category-wise performance, December calendar year-ends, 2010-19

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Gross revenue break-up (Rs mn) Milk products and nutrition 27,763 33,510 38,594 40,712 45,752 46,694 46,350 48,196 51,876 56,518 Beverages 8,994 10,684 11,227 13,241 13,398 13,360 12,861 13,870 15,226 15,018 Prepared dishes and cooking aids 17,250 21,545 24,302 26,982 29,613 13,141 23,176 27,071 31,053 34,982 Chocolate and confectionery 9,759 10,997 11,696 12,864 12,532 11,109 11,709 12,214 14,007 16,435 Total 63,766 76,736 85,819 93,799 101,295 84,304 94,096 101,351 112,162 122,953 Milk products and nutrition Gross revenue growth (%) 20.1 20.7 15.2 5.5 12.4 2.1 (0.7) 4.0 7.6 8.9 Volume growth (%) 7.6 2.5 (5.1) (1.1) (2.3) (2.7) (2.4) 1.6 4.8 1.4 Price/mix change (%) 11.6 17.8 21.4 6.7 15.0 4.9 1.8 2.4 2.7 7.5 Beverages Gross revenue growth (%) 11.8 18.8 5.1 17.9 1.2 (0.3) (3.7) 7.8 9.8 (1.4) Volume growth (%) 13.2 0.9 (5.0) 9.3 (11.0) (10.3) (0.2) 10.6 10.6 (2.3) Price/mix change (%) (1.2) 17.8 10.6 7.9 13.7 11.2 (3.6) (2.4) (0.7) 1.0 Prepared dishes and cooking aids Gross revenue growth (%) 29.2 24.9 12.8 11.0 9.7 (55.6) 76.4 16.8 14.7 12.7 Volume growth (%) 24.4 13.2 8.0 3.8 3.7 (59.5) 71.5 19.0 14.5 9.6 Price/mix change (%) 3.9 10.3 4.4 7.0 5.8 9.5 2.8 (1.8) 0.2 2.8 Chocolate and confectionery Gross revenue growth (%) 26.4 12.7 6.4 10.0 (2.6) (11.4) 5.4 4.3 14.7 17.3 Volume growth (%) 21.2 (1.5) (9.4) (2.2) (12.1) (19.5) 6.7 4.3 14.7 16.2 Price/mix change (%) 4.3 14.4 17.3 12.4 10.8 10.1 (1.2) 0.0 0.0 1.0

Source: Company, Kotak Institutional Equities

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH Nestle India Consumer Staples

Exhibit 4: Absolute volumes are still lower than historical respective peaks in all segments except prepared dishes Nestle India’s category-wise volumes, December calendar year-ends, 2011-19 (MT)

2011 2012 2013 2014 2015 2016 2017 2018 2019 Chg. 2011-2019 (%) Milk products and nutrition 147,984 140,386 138,772 135,591 131,980 128,751 130,796 137,066 138,941 (6.1) Beverages 26,692 25,353 27,717 24,673 22,130 22,092 24,423 27,013 26,380 (1.2) Prepared dishes and cooking aids 219,041 236,554 245,443 254,553 103,138 176,871 210,427 240,879 264,072 20.6 Chocolate and confectionery 52,678 47,745 46,718 41,080 33,083 35,289 36,803 42,197 49,033 (6.9) Total volumes 446,395 450,038 458,650 455,897 290,331 363,003 402,449 447,155 478,426 7.2 Total volumes (ex-prepared dishes) 227,354 213,484 213,207 201,344 187,193 186,132 192,022 206,276 214,354 (5.7)

Source: Company, Kotak Institutional Equities

Exhibit 5: Return ratios show a sharp improvement but still lower from pre-CY2010 levels Nestle India’s capex, return ratios and dividend trends, December calendar year-ends, 2010-19

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fixed Assets GFA 18,547 25,522 44,276 49,032 50,090 28,979 30,951 33,584 34,854 36,092 CWIP 3,489 13,718 3,441 2,947 2,448 2,308 1,882 942 1,052 1,433 Capex 4,459 15,552 9,768 3,449 4,146 1,508 1,973 2,633 1,270 1,238 Asset Turn (Gross rev/ GFA) 3.4 3.0 1.9 1.9 2.0 2.9 3.0 3.0 3.2 3.4 Return ratios (%) ROE 114.0 90.3 69.5 53.0 45.2 30.4 32.0 36.6 45.3 70.3 ROCE 106.8 47.7 29.5 24.4 24.3 18.3 20.4 21.5 25.4 33.0 DuPont Analysis Net Margin (%) 13.1 12.8 12.9 12.2 12.0 11.0 11.2 12.3 14.3 16.0 Asset turnover (X) 8.3 3.7 2.3 2.0 2.1 1.7 1.8 1.8 1.9 2.2 Equity Multiplier 1.0 1.9 2.3 2.2 1.8 1.6 1.6 1.7 1.7 2.0 ROE (%) 114.0 90.3 69.5 53.0 45.2 30.4 32.0 36.6 45.3 70.3

Dividend Payout (%) 66.5 56.5 50.9 49.0 60.5 100.0 73.0 81.5 83.0 201.5 Divided per share (Rs) 48.5 48.5 48.5 48.5 63.0 48.5 63.0 86.0 115.0 342.0

Source: Company, Kotak Institutional Equities

Exhibit 6: FCF for CY2019 was Rs20.8 bn, +10% yoy as OCF (including change in NWC) increased a 9% yoy; capex down marginally yoy Nestle India’s cash flow trends, December calendar year-ends, 2010-19

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cash flow from operations 9,612 11,769 14,299 14,700 14,623 7,665 12,618 14,428 16,397 20,705 Change in net working capital 756 (187) 2,635 3,264 1,818 3,316 2,040 3,750 4,128 1,632 Capex (4,459) (15,552) (9,768) (3,449) (4,146) (1,508) (2,070) (1,986) (1,660) (1,545) Free cash flow 5,909 (3,971) 7,166 14,515 12,294 9,473 12,589 16,192 18,865 20,792 Cash from from investing 526 435 (1,946) (3,582) 1,025 (3,955) (2,114) (442) (4,180) 2,375 Cash from from financing (5,438) 3,330 (5,123) (5,801) (16,353) (4,983) (6,656) (9,966) (13,174) (35,400) Net change in cash and equivalents 997 (206) 97 5,132 (3,034) 535 3,819 5,784 1,511 (12,233) Cash Balance 2,553 2,272 2,370 7,494 4,458 4,996 8,800 14,574 16,101 13,081

Growth in FCF (%) (12) (167) (280) 103 (15) (23) 33 29 17 10 FCF as % of EBITDA 47 (26) 39 73 60 59 64 75 71 74 FCF as % of Recurring PAT 72 (41) 67 132 104 106 124 132 117 106

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5 Consumer Staples Nestle India

Exhibit 7: NEST able to maintain its negative cash conversion cycle Nestle India’s working capital trends, December calendar year-ends, 2010-19

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Current assets Inventory 5,760 7,340 7,456 7,359 8,441 8,208 9,401 9,025 9,656 12,831 Receivables 633 1,154 876 843 991 784 979 890 1,246 1,243 Loans and advances 1,514 2,429 1,796 2,253 1,820 1,709 1,843 2,012 1,823 1,957 Other current assets 3 10 43 152 632 342 234 412 260 Total CA 7,907 10,927 10,138 10,498 11,404 11,333 12,565 12,160 13,137 16,291 Current liabilities Creditors 7,454 4,808 5,394 6,330 7,287 7,494 7,992 9,846 12,404 14,947 Provisions 7,674 9,571 10,558 12,663 14,571 14,331 17,591 23,791 26,222 29,924 Other current liabilities 162 5,287 5,580 5,003 4,096 4,657 5,138 4,206 4,573 5,674 Total CL 15,291 19,667 21,532 23,996 25,954 26,483 30,721 37,843 43,199 50,544 Net working capital (7,384) (8,740) (11,395) (13,498) (14,549) (15,149) (18,156) (25,683) (30,062) (34,253)

Days of sales (#) Current assets Inventory 34 36 33 30 31 37 38 33 31 38 Receivables 4 6 4 3 4 4 4 3 4 4 Loans and advances 9 12 8 9 7 8 7 7 6 6 Total CA 46 53 45 42 42 48 49 44 41 48 Current liabilities Creditors 44 23 24 25 27 34 32 36 40 44 Provisions 45 47 46 51 54 64 71 87 85 89 Other current liabilities 1 26 25 20 15 21 21 15 15 17 Total CL 89 96 95 97 97 119 124 139 141 150 Net working capital (43) (43) (50) (55) (55) (71) (74) (95) (99) (102) Cash conversion cycle (6) 18 13 8 8 7 10 0 (5) (3)

Note: (a) Provisions exclude provisions for proposed dividend and DDT on the same.

Source: Company, Kotak Institutional Equities

Exhibit 8: Nestle A&SP sees a marginal 12 bps yoy decline; absolute A&SP spends up 8% yoy Nestlé India’s A&SP trend, December calendar-year ends, 2007-19 (%)

A&SP - LHS (% of sales) Absolute increase yoy - RHS (%) 7.0 50

6.5 6.50 40 6.0 6.39 30 5.5 6.5 5.0 5.2 5.50 20 5.08 4.9 4.8 4.5 4.5 4.5 10 4.0 4.3 4.3 4.4 - 3.5

3.0 (10) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Company, Kotak Institutional Equities

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH Nestle India Consumer Staples

Exhibit 9: Employee expenses as % of sales (standalone)

12 10.3 10 9.2

8 7.3

5.8 6 5.3 4.4 4 3.4

2

0 NEST DABUR CLGT GCPL MRCO HUVR BRIT

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7 Consumer Staples Nestle India

Exhibit 10: Key assumptions for Nestle India, December calendar year-ends, 2016-22E (Rs mn)

2016 2017 2018 2019 2020E 2021E 2022E Segmental Gross Revenue (Rs mn) Milk products and nutrition 46,350 48,196 51,876 56,518 63,359 68,889 74,720 Beverages 12,861 13,870 15,226 15,018 16,049 18,271 20,733 Prepared dishes and cooking aids 23,176 27,071 31,053 34,982 42,826 48,876 55,703 Chocolate and confectionery 11,709 12,214 14,007 16,435 16,881 19,219 21,798 Total 94,096 101,351 112,162 122,953 139,115 155,254 172,954 yoy growth (%) Milk products and nutrition (0.7) 4.0 7.6 8.9 12.1 8.7 8.5 Beverages (3.7) 7.8 9.8 (1.4) 6.9 13.9 13.5 Prepared dishes and cooking aids 76.4 16.8 14.7 12.7 22.4 14.1 14.0 Chocolate and confectionery 5.4 4.3 14.7 17.3 2.7 13.9 13.4 Total 11.6 7.7 10.7 9.6 13.1 11.6 11.4 Volumes (MT) Milk products and nutrition 128,751 130,796 137,066 138,941 150,056 157,559 165,437 Beverages 22,092 24,423 27,013 26,380 27,171 29,889 32,848 Prepared dishes and cooking aids 176,871 210,427 240,879 264,072 311,605 342,765 376,528 Chocolate and confectionery 35,289 36,803 42,197 49,033 48,543 53,397 58,657 Total 363,003 402,449 447,155 478,426 537,375 583,610 633,469 yoy growth (%) Milk products and nutrition (2.4) 1.6 4.8 1.4 8.0 5.0 5.0 Beverages (0.2) 10.6 10.6 (2.3) 3.0 10.0 9.9 Prepared dishes and cooking aids 71.5 19.0 14.5 9.6 18.0 10.0 9.9 Chocolate and confectionery 6.7 4.3 14.7 16.2 (1.0) 10.0 9.9 Total 25.0 10.9 11.1 7.0 12.3 8.6 8.5 Per unit realization (Rs/unit) Milk products and nutrition 354 360 368 378 407 422 437 Beverages 604 582 568 564 569 591 611 Prepared dishes and cooking aids 127 131 129 129 132 137 143 Chocolate and confectionery 336 332 332 332 335 348 360 Total 290 259 252 251 257 259 266 yoy growth (%) Milk products and nutrition 1.8 2.4 2.7 7.5 3.8 3.6 3.3 Beverages (3.6) (2.4) (0.7) 1.0 3.8 3.5 3.3 Prepared dishes and cooking aids 2.8 (1.8) 0.2 2.8 3.8 3.8 3.8 Chocolate and confectionery (1.2) 0.0 0.0 1.0 3.8 3.5 3.3 Total (10.7) (2.8) (0.4) 2.5 0.7 2.8 2.6

Source: Company, Kotak Institutional Equities estimates

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH Nestle India Consumer Staples

Exhibit 11: Nestle India: Profit model, balance sheet and cash flow, December calendar year-ends, 2015-22E (Rs mn)

2015 2016 2017 2018 2019 2020E 2021E 2022E Profit model Net sales 81,233 90,764 99,525 112,162 122,953 139,115 155,254 172,954 EBITDA 15,946 19,652 21,643 26,564 28,156 33,641 38,320 43,381 Other income 1,621 2,159 2,340 3,350 3,205 3,139 4,029 5,010 Interest expense (33) (909) (919) (1,120) (1,198) (1,631) (1,713) (1,795) Depreciation (3,473) (3,537) (3,423) (3,357) (3,164) (3,695) (3,885) (4,097) Pretax profits 14,062 17,365 19,642 25,437 26,999 31,454 36,751 42,499 Tax (4,206) (5,440) (6,141) (8,220) (7,054) (7,864) (9,103) (10,426) Net income 9,855 11,924 13,500 17,217 19,944 23,590 27,649 32,073 Provision for contingencies/impairment losses (917) (1,803) (1,248) (1,148) (249) (372) (413) (459) Net income after contingencies/impairment 8,938 10,121 12,252 16,069 19,696 23,218 27,235 31,614 EO items (3,306) (108) — — — — — — Reported net income 5,633 10,014 12,252 16,069 19,696 23,218 27,235 31,614 Earnings per share (Rs) 92.7 105.0 127.1 166.7 204.3 240.8 282.5 327.9 Balance sheet Total equity 30,359 32,823 34,206 36,737 19,323 23,643 28,605 34,186 Total borrowings 177 332 351 351 531— — — — Deferred tax liability 1,747 1,553 1,220 588 180 180 180 180 Total liabilities and equity 32,283 34,708 35,777 37,677 20,034 23,822 28,785 34,365 Cash 4,996 8,800 14,574 16,101 13,081 23,152 34,378 46,649 Investments 13,297 17,557 19,789 26,585 17,511 17,511 17,511 17,511 Net current assets (excl cash) (17,296) (20,832) (25,689) (30,067) (34,258) (38,932) (43,639) (48,827) Net fixed assets (incl CWIP) 31,286 29,183 27,103 25,058 23,700 22,092 20,536 19,033 Total assets 32,283 34,708 35,777 37,677 20,034 23,822 28,785 34,365 Free cash flow Operating cash flow, excl. working capital 7,665 12,618 14,428 16,397 20,705 26,206 29,684 33,464 Working capital 3,316 2,040 3,750 4,128 1,632 4,674 4,708 5,188 Capital expenditure (1,508) (2,070) (1,986) (1,660) (1,545) (2,087) (2,329) (2,594) Free cash flow 9,473 12,589 16,192 18,865 20,792 28,793 32,063 36,057 Key assumptions Revenue growth (%) (17.2) 11.7 9.7 12.7 9.6 13.1 11.6 11.4 EBITDA Margin (%) 19.6 21.7 21.7 23.7 22.9 24.2 24.7 25.1 EPS Growth (%) (24.1) 13.2 21.1 31.2 22.6 17.9 17.3 16.1 RoE (%) 30.4 32.0 36.6 45.3 70.3 108.1 104.3 100.7 RoCE (%) 18.3 20.4 21.5 25.4 33.0 42.3 42.2 42.0

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9 SELL InterGlobe Aviation (INDIGO) Transportation JUNE 03, 2020 RESULT Sector view: Attractive

Decent 4Q print but future uncertainties galore. Indigo reported better-than- CMP (`): 946 expected 4QFY20 earnings driven by higher yields and volumes. 4Q results are however Fair Value (`): 925 not very relevant in the context of near-term uncertainties. We anticipate a longer BSE-30: 33,826 drawn recovery with a large loss expectation for FY2021E. Lack of clarity on demand revival drives our SELL rating. Roll forward to March 2022E drives a revised FV of Rs925 (Rs900 earlier).

Better-than-expected 4QFY20 performance aided by decent yields

Indigo reported a decent quarter with revenues beating our estimates by 13% driven by 5% higher RPKs and 7% higher yields. Overall revenues were higher by Rs9.5 bn versus forecasts. Costs however remained elevated on account of higher maintenance expense for older A320ceo aircraft, and CASK ex-fuel ex-forex increased 19% yoy, resulting in only Rs4 bn higher EBITDA. Despite good yields, loss of Rs2.8 bn (excl. forex loss) is representative of the difficult operating environment faced by Indigo 2QFY20 onwards primarily due to slow neo deliveries.

Management focus on fixed cost reduction and neo addition

Management seeks to replace A320ceo aircraft as quickly as possible, and expects most of the current fleet of 123 to be replaced in the next two years, prompting us to believe that current fleet count may not change much over FY2021-22. Interestingly, management also said that the company was not looking to negotiate terms with lessors and will continue to make timely payments as before. While surprising, this indicates that Indigo may be availing of low/nil cancellation penalties and other benefits from lessors and hence does not want to change any existing lessor-lessee arrangement.

Phased capacity increase in FY2021 will drive significant losses

Current capacity utilization is 20% of original capacity versus the permitted 33%. Capacity ramp-up will thus happen slowly with international (~25% of pre Covid capacity) to recover even more gradually. While we do bake in lower employee and other expense, we still arrive at a fairly sizeable loss estimate of Rs73 bn for FY2021. We assume some normalcy in FY2022 Garima Mishra though we expect capacity to still remain lower than FY2020.

Demand uncertainty drives our cautious view; SELL Shubhangi Nigam

Steep decline in crude prices is a positive for the airline industry. Indigo’s cash reserves of Rs89 bn of free cash and Rs115 bn of restricted cash (note restricted cash can be drawn in periods of non-utilization of leased aircraft) provide comfort. We however remain cautious given uncertainty of demand revival even once the pandemic is behind us. We roll forward to March 2022 and arrive at a new FV of Rs925 based on 14X FY2022 P/E. . [email protected] Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL. InterGlobe Aviation Transportation

Exhibit 1: Healthy capacity and yields drive revenue outperformance Results snapshot of Indigo, March fiscal year-ends (Rs mn)

Change (%) Change 4QFY20 4QFY20E 4QFY19 3QFY20 KIE est Yoy Qoq FY2020 FY2019 (%) FY2021E ASKs (mn) 23,000 21,930 22,100 25,800 5 4 (11) 96,200 81,028 19 34,251 RPKs (mn) 19,100 18,170 19,000 22,600 5 1 (15) 82,500 69,811 18 25,269 Yields (Rs/RPK) 4.3 4.0 4.1 4.4 7 5 (1) 4.3 4.1 6.2 4.2 Total income 82,991 73,452 78,833 99,317 13 5.3 (16) 357,560 284,968 25 105,528 Total expenditure (83,117) (67,511) (61,852) (81,275) 23 34 2 (312,212) (237,028) 32 (124,378) Fuel cost (29,111) (27,870) (28,168) (33,869) 4 3 (14) (126,316) (120,819) 5 (25,488) Employee expense (10,509) (10,307) (8,766) (11,645) 2 20 (10) (43,954) (31,378) 40 (32,965) Supplementary rentals and aircraft maintenance (16,808) (9,570) (16,331) 76 3 — — — Airport fees and charges (7,234) (6,693) (7,831) 8 (8) — — — Forex gain (loss) (10,142) 105 (1,250) (9,741) 711 (15,462) (4,675) — Other expenditure (9,313) (29,334) (8,760) (10,348) (68) 6 (10) (126,480) (80,156) 58 (65,925) EBITDAR (127) 5,941 16,980 18,042 45,348 47,940 (5) (18,851) EBITDAR (%) (0.2) 8.1 21.5 18.2 12.7 16.8 (17.9) Adjusted EBITDAR 10,015 5,941 16,875 19,292 69 (41) (48) 60,810 47,940 (18,851) Aircraft and engine rentals (net) (1,226) (1,154) (11,067) (1,343) 6 (89) (9) (4,967) (49,994) (5,969) EBITDA (1,353) 4,788 5,914 16,699 40,382 (2,054) (24,820) Depreciation (10,063) (10,896) (2,185) (10,377) (8) 360 (3) (39,736) (7,596) (40,319) Interest (4,877) (5,045) (1,326) (4,805) (3) 268 2 (18,759) (5,090) (20,503) Other income 3,359 3,877 3,765 3,986 (13) (11) (16) 15,362 13,249 12,961 PBT (12,934) (7,277) 6,168 5,504 78 (310) (335) (2,751) (1,490) (72,680) Exceptional items — — — — — — — Tax expense 4,200 — (272) (599) 269 3,052 — PAT (8,735) (7,277) 5,896 4,905 (2,482) 1,561 (72,680) EPS (Rs) (23) (19) 15 13 (6) 4 (190) Key ratios (as % of sales) Fuel cost 35.1 37.9 35.7 34.1 35.3 42.4 24.2 Employee expense 12.7 14.0 11.1 11.7 12.3 11.0 31.2 Supplementary rentals and aircraft maintenance 20.3 — 12.1 16.4 — Airport fees and charges 8.7 — 8.5 7.9 — Other expenditure 11.2 39.9 11.1 10.4 35.4 28.1 62.5 Aircraft and engine rentals (net) 1.5 1.6 14.0 1.4 1.4 17.5 5.7

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11 Transportation InterGlobe Aviation

Exhibit 2: Healthy yields but costs remain elevated in 4QFY20 Key operating parameters of Interglobe Aviation, March fiscal year-ends

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 Capacity and volumes Metrics ASKs (mn) 15,080 15,100 16,260 17,072 17,800 19,500 21,600 22,100 23,300 24,200 25,800 23,000 RPKs (mn) 13,270 12,680 14,390 15,182 15,900 16,400 18,400 19,000 20,700 20,200 22,600 19,100 Load factor (%) 88 84 88 89 89 84 85 86 89 83 88 83 Yoy growth (%) ASKs 19 13 13 21 18 29 27 24 19 12 11 (11) RPKs 25 15 15 25 20 29 21 19 26 10 9 (15) Load factor (bps) 476 bps 185 bps 121 bps 281 bps 133 bps 13 bps -375 bps -335 bps 474 bps -171 bps -124 bps -455 bps Operating metrics (Rs/ASK) Metrics RASK 3.8 3.5 3.8 3.4 3.7 3.2 3.7 3.6 4.0 3.3 3.8 3.6 CASK 3.2 3.1 3.3 3.5 3.8 3.8 3.7 3.5 3.6 4.0 3.8 4.3 RASK-CASK 0.6 0.4 0.5 (0.1) (0.2) (0.7) (0.1) 0.1 0.5 (0.6) 0.1 (0.71) Fuel CASK 1.2 1.1 1.2 1.4 1.5 1.6 1.6 1.3 1.3 1.3 1.3 1.24 CASK (ex-fuel) 2.0 2.0 2.0 2.1 2.3 2.3 2.1 2.2 2.2 2.7 2.5 3.1 RASK-CASK ex-fuel 1.8 1.5 1.8 1.3 1.4 0.9 1.5 1.4 1.8 0.7 1.4 0.5 CASK (ex-fuel, ex-forex) 2.0 2.0 2.1 2.1 2.1 2.1 2.2 2.2 2.2 2.5 2.4 2.6 RASK-CASK ex-fuel, ex-forex 1.8 1.5 1.7 1.3 1.5 1.1 1.5 1.4 1.8 0.9 1.4 1.0 Yoy growth (%) RASK 6 12 10 (1) (4) (9) (4) 5 11 6 5 1 CASK (105) (105) (105) (105) 19 23 13 (0) (7) 3 2 25 RASK-CASK (99) (99) (99) NM NM NM NM NM NM NM NM NM Fuel CASK 8 (6) 7 10 31 43 27 (8) (12) (17) (18) (1) CASK (ex-fuel) (176) (197) (188) (193) 12 12 5 5 (3) 17 16 40 RASK-CASK ex-fuel (72) (72) (70) (77) (23) (39) (13) 6 34 (23) (11) (61) CASK (ex-fuel, ex-forex) (176) (195) (190) (191) 5 5 5 7 4 17 12 19 RASK-CASK ex-fuel, ex-forex (72) (72) (70) (76) (15) (29) (14) 1 20 (18) (5) (28) Pricing and margins Metrics EBITDAR margins ex-fuel cost (%) 65.1 61.2 65.1 59.5 58.0 51.4 63.7 61.8 61.9 40.1 52.3 34.9 Yield (Rs per RPK) 4.3 4.2 4.3 3.8 4.1 3.8 4.3 4.1 4.6 4.0 4.4 4.3 Yoy growth (%) EBITDAR margins ex-fuel cost (bps) 109 bps -13 bps 205 bps -457 bps -704 bps -975 bps -140 bps 233 bps 385 bps -1135 bps -1145 bps -2689 bps Yield 0 10 8 (4) (6) (10) 0 9 11 6 2 5

Source: Company, Kotak Institutional Equities

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH InterGlobe Aviation Transportation

Exhibit 3: Standalone balance sheet of IndiGo, March fiscal year-ends (Rs mn)

Mar'17 Sep'17 Mar'18 Sep'18 Mar'19 Sep'19 Mar'20 Shareholder funds 37,792 61,704 70,774 61,619 69,448 62,257 58,624 Loans 23,957 23,301 22,414 24,000 21,937 6,222 3,466 RoU Liability 192,195 220,335 Deferred tax liability 1,618 2,823 3,695 389 644 625 — Deferred incentives 21,838 22,954 26,017 37,908 51,883 2,920 2,682 Other long term liabilities 22,760 27,570 32,602 42,636 36,961 32,274 36,292 Total sources of funds 107,965 138,351 155,502 166,552 180,872 296,495 321,400 Fixed assets 38,190 37,537 46,113 57,845 56,857 24,924 26,723 RoU asset 0 132,823 142,461 Other long term assets 14,003 14,903 18,865 17,459 12,228 15,995 27,186 Current assets, loans and advances 99,904 142,089 146,315 150,859 181,033 212,066 224,115 Inventories 1,632 2,438 1,832 3,335 2,114 2,178 2,861 Sundry debtors 1,587 1,984 2,263 2,320 3,625 4,012 2,596 Cash and bank balance 87,560 124,306 129,245 127,022 151,229 187,009 203,286 Other current assets 3,645 5,546 6,479 9,194 13,556 8,020 10,820 Loans and advances 5,480 7,814 6,495 8,989 10,509 10,846 4,551 Less: Current liabilities and provisions 44,132 56,179 55,791 59,611 69,245 89,314 99,085 Liabilities 42,241 53,704 52,790 55,732 64,874 79,181 79,601 Provisions 1,891 2,475 3,001 3,878 4,371 10,133 19,484 Total uses of funds 107,965 138,351 155,502 166,552 180,872 296,495 321,400 Free cash 44,326 76,018 70,587 44,175 60,796 87,063 89,281 Restricted cash 49,106 53,238 66,496 87,462 92,285 100,299 114,488 Debt 25,962 25,368 24,527 26,411 24,292 — 227,192 Net free cash 49,106 53,238 66,496 87,462 92,285 100,299 114,488

Source: Company, Kotak Institutional Equities

Exhibit 4: Indigo’s restricted cash has increased in line with increase in fleet size Restricted cash and fleet size details

Yoy growth Mar'17 Sep'17 Mar'18 Sep'18 Mar'19 Sep'19 Mar'20 (%) Restricted Cash (Rs mn) 49,106 53,238 66,496 87,462 92,285 100,299 114,488 24 Fleet size (#) 131 141 159 189 217 245 262 21 -Owned/finance lease 17 17 23 29 29 29 29 — -Operating lease 114 124 136 160 188 216 233 24

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13 Transportation InterGlobe Aviation

Exhibit 5: Steep fall in ATF prices over the past three months Trend in monthly ex-Delhi ATF price (Rs per litre)

70

60

50

40

30

20 23 10

0

1-Jul-19

1-Jan-20

1-Jun-19

1-Oct-19

1-Feb-20

1-Apr-19

1-Sep-19

1-Apr-20

1-Dec-19

1-Nov-19

1-Mar-19

1-Mar-20

1-Aug-19

1-May-19 1-May-20

Source: IOCL, Kotak Institutional Equities

4QFY20 results call: key highlights

 Performance highlights. Higher forex losses due to weakening of rupee, primarily comprising of MTM loss on capitalized operating leases. MTM is an accounting loss and no cash flow impact. However, the company came at breakeven for FY2020, with net loss of Rs2.3bn and PAT margin of 0.7%. At end of February, Indigo was still profitable for the year, unit revenues up 2.6% yoy in Jan-Feb. Unit revenues declined sharply in March with operating loss of Rs3.8 bn for the month excluding forex losses. International operations were gradually reduced starting January and completely halted on March 22, 2020. Balance sheet stands strong at the end of the fiscal year with Rs204 bn of cash, of which Rs89 bn is free cash.

 Business focus. With most planes grounded, the company wants to focus on reducing unit costs further; making the fleet more efficient, ensuring capacity according to the demand and trying to test new network and revenue models. Shift from profitability and growth to cash and liquidity management in these unprecedented times is a must according to the management. The company plans to give no dividends this year to conserve cash. No plans of buying any airline. Planning horizon is now reduced to two months due to increased uncertainty. The company wants to retire 120 CEO aircraft in the next two years and replace a large of part of its fleet with efficient NEO planes, the pace of which is dependent on the revenue scenario. Also, there is no penalty for returning older CEO aircraft. Indigo currently cannot use 40 aircraft, where one of the engines is still not modified.

 Combating Covid. A new set of operating procedures are in place, disinfecting aircrafts before every departure, deep cleaning aircraft, providing safety kits to passengers, mandatory masks for crew and passengers on board, providing hand sanitizers at multiple touchpoints, discontinuance of meal services, ensuring social distancing norms and operating airport coaches at maximum of 50% load. Indigo wanted to operate at 33% capacity as directed by the central government. However, due to state government restrictions, it’s operating at 20% capacity; to gradually ramp up to 30%. A lot of pent up demand and strong load factor seen in the past 10 days though this trend cannot be extrapolated. International business was doing better than domestic, but the latter will be the first to recover. International might take six months to recover.

14 KOTAK INSTITUTIONAL EQUITIES RESEARCH InterGlobe Aviation Transportation

 Cost control measures. Salary cut of 5-25% for all except for certain lower pay-grade employees, merit based salary increment is deferred, all discretionary expenses on hold, renegotiating terms with partners and rapidly substituting higher maintenance cost, older ceo aircraft with newer ceo aircraft. Neo are prioritized due to lower maintenance costs and cost efficiency. Expecting deliveries to resume 2QFY21 onwards. Majority of the aircraft financed with operating lessors. The company is trying to freeze favorable supplemental rentals for better utilization rates for 9MFY21, as one quarter has been washed out. Unencumbered assets of Indigo will also be considered for liquidity raise. 25% savings on full year basis to be expected in employee cost. On all other costs, excluding lease rentals, the company is working with suppliers and partners. Supplementary rentals are driven by the amount of flying done by the airline, renegotiating for waiver and 50% relief of total supplementary rentals has already been achieved. Almost Rs30-40 bn of liquidity savings in supplementary rentals over the next nine months.

 Cargo business. This segment was performing very well before the lockdown. Even during the lockdown, its capacity was utilized to carry essential supply. The company has now understood the demand and scope of cargo operations. International expansion helped cargo business expansion. Typically in the belly of an aircraft, 6-9T cargo can be carried; the 10 aircraft which were converted to all cargo aircraft were able to take ~20T.

 Others. 40% of company costs are fixed. 10-15% more people needed for ground staff procedures, but this is a temporary cost. Fuel cost is cash contributory, due to sharp decline on oil. Fuel hedging not a good idea. Demand is leisure category should pick-up, though corporate demand will be slow to recover. Advance ticket sales have picked up in the last eight days of resumption of operations. EPS changes: large loss forecast in FY2021, unchanged for FY2022

We anticipate a weak demand build-up for FY2021 driven by perceived risk of flying by both corporate and leisure travelers.

We adjust FY2021 assumptions to reflect much slower capacity ramp-up through FY2021. We see more normal operations in FY2022 (90% of FY2020 capacity), though our capacity is much lower than earlier envisaged (we were baking in a yoy capacity growth earlier).

Despite cut to FY2022 capacity, EPS remains relatively unaffected on account of savings made on supplementary rentals and crude prices. We also bake in higher yields with the premise that under low utilizations airlines would provide each other more pricing leeway in order for the industry to return to profitability.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 15 Transportation InterGlobe Aviation

Exhibit 6: Change in estimates for IndiGo, March fiscal year-ends

New estimates Old estimates Change (%) 2021E 2022E 2021E 2022E 2021E 2022E Financials Revenues (Rs mn) 105,528 285,931 303,751 433,756 (65) (34) EBITDAR (Rs mn) (18,851) 79,293 45,365 90,644 NM (13) EBITDA (Rs mn) (24,820) 73,308 39,076 83,158 NM (12) PAT (Rs mn) (72,680) 25,419 (6,285) 25,408 NM 0 EPS (Rs) (189.9) 66.4 (16.4) 66.4 NM 0 Operating metrics ASKs (mn) 34,251 86,580 115,539 131,329 (70) (34) Yield (Rs/RPK) 4.2 4.1 3.8 3.9 10.5 7.1 Load factor (%) 73.8 80.0 69.6 85.7 6.1 (6.6) Fuel CASK 0.7 0.9 0.9 1.1 (22) (14) RASK-CASK (Rs/ASK) (2.50) 0.13 (0.23) 0.10 NM 34 Other assumptions Exchange rate (US$/INR) 75 75 72 74 4 2 Brent crude price (US$/bbl) 35 45 45 50 (22) (10)

Source: Company, Kotak Institutional Equities

Exhibit 7: Key assumptions for IndiGo, March fiscal year-ends

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E USD/INR rate 48 54 61 61 66 67 65 70 71 75 75 75 Crude price, Dated Brent (US$/bbl) 114 111 108 86 47 49 57 70 61 35 45 45 Indigo's fleet size 55 66 77 94 107 131 159 218 262 262 262 262 Indigo's ASKs (mn units) 18,006 24,977 29,968 35,327 42,826 54,583 63,510 81,028 96,200 34,251 86,580 96,200 Yoy growth (%) 44 39 20 18 21 27 16 28 19 (64) 153 11 Indigo RPKs (mn units) 14,826 20,260 23,135 28,177 35,968 46,288 55,524 69,811 82,500 25,269 69,264 81,770 Yoy growth (%) 39 37 14 22 28 29 20 26 18 (69) 174 18 Load factor (%) 82 81 77 80 84 85 87 86 86 74 80 85 Average ticket price (Rs) 3,911 4,895 5,071 4,882 4,248 3,721 3,825 3,886 4,208 4,073 4,043 3,982 Yoy growth (%) 9 25 4 (4) (13) (12) 3 2 8 (3) (1) (2) Yield (Rs per RPK) 3.8 4.5 4.8 4.9 4.5 4.0 4.1 4.1 4.3 4.2 4.1 4.1 Yoy growth (%) 4 21 6 3 (9) (11) 3 (2) 6 (4) (1) (2) Ancilliary revenues (as % of ticket revenues) 11.6 11.3 12.0 13.3 14.8 14.7 15.4 13.3 13.7 13.7 13.7 13.7 RASK-CASK (Rs) (0.0) 0.3 0.1 0.4 0.5 0.2 0.3 (0.1) (0.0) (2.5) 0.1 0.1 EBITDAR margins ex-fuel cost (%) 66.9 71.3 69.2 68.7 64.5 62.5 62.2 58.7 47.5 5.8 54.8 49.1

Source: Company, Kotak Institutional Equities estimates

16 KOTAK INSTITUTIONAL EQUITIES RESEARCH InterGlobe Aviation Transportation

Exhibit 8: Summary financials of Indigo Profit and loss model, balance sheet and cash flow statement for Indigo, March fiscal year-ends (Rs mn)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E Profit model (Rs mn) Sales 55,647 92,031 111,166 139,253 161,399 185,805 230,209 284,968 357,560 105,528 285,931 332,494 EBITDAR 8,496 22,498 21,769 38,219 56,247 52,687 65,667 52,615 60,810 (18,851) 79,293 81,632 EBITDA 489 8,936 5,066 18,697 30,125 21,432 29,565 2,665 71,135 (24,820) 73,308 75,647 Other income 1,440 2,371 3,155 3,838 5,151 7,891 9,469 13,249 15,362 12,961 16,549 19,404 Interest (514) (578) (1,226) (1,155) (3,041) (3,308) (3,398) (5,090) (18,759) (20,503) (20,764) (21,031) Depreciation (665) (856) (2,260) (3,022) (5,055) (4,573) (4,369) (7,596) (39,736) (40,319) (40,916) (41,522) Profit before tax 749 9,873 4,736 18,357 27,181 21,443 31,267 3,229 28,002 (72,680) 28,178 32,498 Tax expense 657 (2,040) 9 (5,402) (8,373) (4,852) (8,843) 3,052 269 — (2,759) (3,181) Extraordinary items — — — — — — — — — — — — PAT 1,406 7,834 4,744 12,956 18,807 16,591 22,424 6,281 28,271 (72,680) 25,419 29,317 Year-end number of shares 307 307 307 307 360 360 383 383 383 383 383 383 Fully diluted number of shares 344 344 344 344 351 360 383 383 383 383 383 383 EPS-fully diluted (Rs) 4 23 14 38 54 46 59 16 74 (190) 66 77 Balance sheet (Rs mn) Equity 2,433 3,890 4,076 4,207 27,232 37,792 70,774 69,448 58,624 (2,673) 22,747 52,063 Total borrowings 10,156 18,004 33,462 39,262 30,071 23,957 22,414 21,937 3,466 3,466 3,466 3,466 Deferred incentives 11,804 15,304 17,533 17,516 15,832 21,838 26,017 51,883 2,682 77,083 77,083 77,083 Other long term liabilities 2,952 8,004 13,869 24,784 20,302 25,602 36,297 37,605 256,627 259,476 262,383 265,347 Current liabilities and provisions 9,126 13,322 22,075 21,914 32,750 42,908 55,791 69,245 99,085 28,803 76,853 87,521 Total liabilities 36,471 58,525 91,015 107,682 126,187 152,098 211,293 250,117 420,485 366,156 442,530 485,479 Net fixed assets 8,860 17,713 39,560 48,765 47,794 38,190 46,113 56,857 169,184 169,746 170,308 170,870 Investments 4,523 10,105 22,309 27,237 22,318 19,443 18,865 12,228 27,186 27,186 27,186 27,186 Cash & cash equivalent 18,322 24,789 23,730 25,161 47,048 83,459 129,245 151,229 203,286 162,377 226,485 265,851 Loans and advances/other current assets 4,765 5,917 5,417 6,519 9,027 11,005 17,070 29,804 20,829 6,847 18,551 21,573 Total assets 36,471 58,525 91,015 107,682 126,187 152,098 211,293 250,117 420,485 366,156 442,530 485,479 Free cash flow (Rs mn) Operating cash flow 422 7,717 4,604 15,966 19,730 16,582 20,722 997 40,651 (69,125) 25,499 26,653 Working capital changes 8,535 9,696 11,309 7,765 7,082 22,361 22,269 34,532 (26,657) 18,101 36,344 7,647 Capital expenditure (331) (9,153) (23,237) (10,170) (4,084) 5,031 (12,291) (18,340) (9,602) (13,813) (13,869) (13,923) Free cash flow 8,626 8,260 (7,324) 13,561 22,728 43,974 30,700 17,189 4,392 (64,837) 47,975 20,377 Ratios (%) EBITDAR 15.3 24.4 19.6 27.4 34.8 28.4 28.5 18.5 17.0 -17.9 27.7 24.6 EBITDA margin 0.9 9.7 4.6 13.4 18.7 11.5 12.8 0.9 19.9 -23.5 25.6 22.8 Net debt/equity (X) (0.0) 0.8 4.1 6.6 0.3 (0.5) (0.7) (1.0) (2.4) 36.7 (7.1) (3.9) Book value (R/share) 7.1 11.3 11.9 12.2 77.7 104.9 184.9 181.5 153.2 (7.0) 59.4 136.0 ROAE 57.8 201.4 116.4 308.0 72.9 43.9 31.7 2.2 -4.2 2719.4 111.7 56.3 ROACE 20.7 85.6 13.4 32.3 51.4 NM NM NM NM NM NM NM

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 17 ADD Motherson Sumi Systems (MSS) Automobiles & Components JUNE 02, 2020 RESULT Sector view: Neutral

Cost reduction drives EBITDA margin expansion. Motherson consolidated 4QFY20 CMP (`): 102 EBITDA increased by 12% yoy led by (1) stronger-than-expected performance in SMR Fair Value (`): 110 and standalone operations and (2) Rs1.3 bn positive impact due to Ind-AS 116. We BSE-30: 33,826 expect MSSL to generate robust free cash flow in FY2021 despite the impact of Covid- 19, driven by prudent cost management. The company is well placed to capitalize on the recovery in auto demand once the pandemic starts to wane. Maintain ADD rating with a revised fair value of Rs110 (from Rs80 earlier).

Motherson Sumi Systems Stock data Forecasts/valuations 2020 2021E 2022E 52-week range (Rs) (high,low) 151-49 EPS (Rs) 3.7 1.9 6.0 Mcap (bn) (Rs/US$) 322/4.3 EPS growth (%) (27.5) (47.6) 211.3 ADTV-3M (mn) (Rs/US$) 2,072/28 P/E (X) 27.5 52.5 16.9 Shareholding pattern (%) P/B (X) 2.9 2.8 2.4 Promoters 61.7 EV/EBITDA (X) 7.5 9.3 4.9 FIIs 15.5 RoE (%) 10.5 5.4 15.2 MFs/BFIs 11.3/2.2 Div. yield (%) 1.5 1.3 1.7 Price performance (%) 1M 3M 12M Sales (Rs bn) 635 575 706 Absolute 16 1 (12) EBITDA (Rs bn) 52 42 72 Rel. to BSE-30 16 14 4 Net profits (Rs bn) 12 6 19

4QFY20 consolidated EBITDA 42% above estimates led by cost-cutting initiatives

Motherson Sumi reported 4QFY20 consolidated EBITDA of Rs13.9 bn (+12% yoy), which was 42% above our estimates led by (1) stronger-than-expected performance in standalone operations, (2) operationally strong performance of SMR operations and (3) impact of Ind-AS 116 (Rs1.3 bn impact). Reported consolidated revenues declined by 12% yoy driven by (1) 12% yoy decline in SMR business (in Euro terms), (2) 18% yoy decline in PKC business (in Euro terms) and (3) 6% yoy decline in standalone revenues in 4QFY20. Consolidated EBITDA margin came in at 9.2% (+200 bps yoy and +130 bps qoq), which was 130 bps above our estimates due to cost-cutting initiatives and RM benefits. Standalone EBITDA margin came in at 16.9% (down 125 bps yoy) due to negative operating leverage whereas reported EBITDA margin in SMP business was 4.2% (down 60 bps qoq) led by continued losses in the greenfield plant of Tuscaloosa. Reported consolidated PAT came in at Rs1.8 bn (-55% yoy), which was 36% above our estimates due to outperformance at EBTIDA level and higher-than-expected other income (dividend received from subsidiaries) partly offset by higher tax rate.

Cut FY2021E EPS estimates by 8%; maintain ADD with revised FV of Rs110 (from Rs80)

We have cut our FY2021E consolidated EPS estimates by 8% on higher depreciation and interest cost assumptions. We have increased our FY2022E consolidated EPS estimates by 11% led by 50 bps increase in our EBITDA margin assumptions on improved operating performance of Greenfield plants (Hungary plant had reached EBITDA breakeven in 4QFY20). We believe auto demand will likely recover in 2HCY20 as customers would prefer personal cars over public or shared transport, due to hygiene and health related concerns. We expect the company to Hitesh Goel generate positive FCF in FY2021E despite subdued demand environment led by (1) cut-down in capex spends and (2) cost-cutting initiatives with focus on further reducing the fixed costs. We Rishi Vora expect the company to generate Rs70 bn of FCF over the next three years. As a result, we expect net debt to reduce to Rs14 bn in FY2023E from ~Rs69 bn in FY2020 (assuming no major acquisitions by the company). ADD stays with a revised SoTP-based fair value of Rs110 (from Rs80). We value the standalone business at 22X June 2022E EPS (from 20X March 2022E EPS earlier) and other subsidiaries at 12X June 2022E EPS (from 10X March 2022E EPS earlier).

[email protected] Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL. Motherson Sumi Systems Automobiles & Components

Other key quarterly/annual highlights

 Standalone revenues declined by 6% yoy to Rs17.4 bn due to decline in passenger vehicle industry production and possibly due to lower realizations owing to 6% yoy decline in copper prices, partly offset by increase in content per vehicle due to BS-VI transition. EBITDA declined by 13% yoy to Rs2.9 bn (includes positive impact of Rs60 mn due to Ind- AS 116). EBITDA margin came in at 16.9% (down 125 bps yoy) in 4QFY20 due to negative operating leverage offset by 390 bps expansion in gross margin because of lower commodity prices. Standalone net profit increased by 83% yoy to Rs3.9 bn due to higher-than-expected other income and lower-than-expected interest expense in 4QFY20. Tax rate for the quarter stood at 20.7%. For FY2020, net sales declined by 9% yoy mainly due to decline in production of passenger car volumes and lower realizations. EBITDA declined by 13% yoy due to negative operating leverage partly offset by (1) lower RM cost and (2) Rs120 mn positive impact due to Ind-AS 116. Adjusted PAT increased by 11% yoy due to lower tax rate in FY2020.

 SMR revenues were down 12% yoy in Euro terms to EUR371 mn (KIE: EUR321 mn), while reported EBITDA margin (includes EUR2 mn positive impact due to Ind-AS 116) increased by 300 bps yoy to 14.6% (KIE: 9.8%) mainly led by cost-cutting initiatives in 4QFY20. For FY2020, SMR revenues declined by 4% yoy due to weak global passenger vehicles production volumes resulting in 1% yoy decline in EBITDA (includes EUR5 mn impact of Ind-AS 116). Reported EBITDA margin came in at 11.7% in FY2020 versus 11.3% in FY2019.

 SMP revenues (includes consolidation of Reydel and Greenfields) declined by 12% yoy in Euro terms to EUR931 mn (KIE: EUR864 mn). Reported EBITDA margin of SMP business (includes EUR11 mn positive impact due to Ind-AS 116) came in at 4.2% (KIE: 4.4%), which was up by 230 bps yoy in 4QFY20. For FY2020, revenues increased by 10% to EUR4 bn, while EBITDA remained flattish (includes EUR28 mn positive impact due to Ind- AS 116). EBITDA margin declined by 40 bps to 3.9% partly due to higher ramp-up cost related to Greenfield plants. The company has fired 500 employees for the Tuscaloosa plant and labor productivity is inching up. The company also highlighted that Hungary plant had reached EBITDA breakeven before the pandemic led to plant shutdown. We expect SMP revenues to increase by 7% CAGR over FY2020-23E led by (1) Greenfield plants reaching peak revenue potential of EUR1 bn by FY2022E and (2) 4% revenue CAGR from SMP old plants.

 PKC Group revenues declined by 18% in Euro terms to EUR259 mn (KIE: EUR241 mn) while reported EBITDA margin (includes EUR3 mn positive impact due to Ind-AS 116) was 8.1% (KIE: 8.5%), down 50 bps yoy in 4QFY20. For FY2020, revenues remained flattish yoy and EBITDA margin increased by 110 bps (includes EUR11 mn positive impact due to Ind-AS 116) to 10.0%.

 Consolidated net debt of the company declined to Rs69.2 bn as of March 2020 as compared to Rs85.9 bn as of December 2019 (Rs79.9 bn as of March 2019). Sequential decline in debt levels can be attributed to (1) control in capital expenditure and (2) prudent working capital. Order book for SMRPBV stood at EUR13.6 bn as of March 2020. During the year, the company won new orders worth EUR5.5 bn and executed order worth EUR10.1 bn. The company has liquidity of Rs105.3 bn, which includes (1) Rs48.7 bn of cash and cash equivalents and (2) Rs56.6 bn of undrawn revolving credit line. The company has no major principal repayment during CY2020.

 Plant update. Currently majority of the company’s manufacturing facilities are working. Around 39% of the plants are operating with >75% capacity utilization, 22% of the plants are operating with 50-75% capacity utilization, 27% of the plants are operating with 25-50% capacity utilization and remaining plants are operating with <25% capacity utilization. The company expects all plants to be operational by June-end.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 19 Automobiles & Components Motherson Sumi Systems

Exhibit 1: 4QFY20 EBIT was 57% above our estimates due to higher-than-expected revenues and better-than-expected GM MSSL standalone 4QFY20 results, March fiscal year-ends (Rs mn)

(%chg.) 4QFY20 4QFY20E 4QFY19 3QFY20 4QFY20E 4QFY19 3QFY20 FY2020 FY2019 Yoy (%) FY2021E FY2020 Yoy (%) Net sales from operations 16,713 13,459 18,054 15,834 24.2 (7.4) 5.6 66,321 73,959 66,321 Other operating income 639 596 460 596 7.2 38.8 7.2 2,417 1,854 2,417 Net sales 17,352 14,055 18,514 16,430 23.5 (6.3) 5.6 68,738 75,813 (9.3) 58,965 68,738 (14.2) Raw materials (9,079) (7,590) (10,406) (8,933) 19.6 (12.8) 1.6 (37,164) (42,100) (30,808) (37,164) Staff costs (3,154) (2,721) (2,916) (3,023) 15.9 8.2 4.3 (12,176) (11,785) (11,568) (12,176) Other expenses (2,188) (1,812) (1,833) (2,013) 20.8 19.3 8.7 (8,379) (9,200) (7,582) (8,379) Total expenses (14,420) (12,122) (15,155) (13,968) 19.0 (4.8) 3.2 (57,718) (63,085) (49,958) (57,718) EBITDA 2,932 1,933 3,359 2,462 51.7 (12.7) 19.1 11,020 12,728 (13.4) 9,007 11,020 (18.3) Depreciation (925) (656) (550) (656) 41.1 68.2 41.1 (2,883) (2,193) (2,954) (2,883) EBIT 2,007 1,277 2,810 1,806 57.1 (28.6) 11.1 8,137 10,535 (22.8) 6,053 8,137 (25.6) Other income 2,811 400 309 404 3,784 1,865 3,494 3,784 Interest expense 52 (140) 81 (140) (306) (177) (396) (306) Profit before tax 4,871 1,538 3,200 2,070 216.7 52.2 135.2 11,615 12,224 (5.0) 9,151 11,615 (21.2) Tax expense (1,010) (308) (1,092) (405) 228.5 (7.5) 149.4 (2,626) (4,086) (2,343) (2,626) Profit after tax 3,860 1,230 2,108 1,665 213.8 83.1 131.8 8,988 8,138 10.5 6,808 8,988 (24.3) Adj PAT 3,860 1,230 2,108 1,665 213.8 83.1 131.8 8,988 8,138 10.5 6,808 8,988 (24.3) # of shares 3,158 3,158 3,158 3,158 3,158 3,158 3,158 3,158 EPS (Rs/share) 1.2 0.4 0.7 0.5 213.8 83.1 131.8 2.8 2.6 10.5 2.2 2.8 (24.3) Tax rate (%) 20.7 20.0 34.1 19.6 22.6 33.4 25.6 22.6 As a % of revenues Raw material 52.3 54.0 56.2 54.4 54.1 55.5 52.2 54.1 Staff costs 18.2 19.4 15.7 18.4 17.7 15.5 19.6 17.7 Other expenses 12.6 12.9 9.9 12.3 12.2 12.1 12.9 12.2 Gross margin (%) 47.7 46.0 43.8 45.6 45.9 44.5 47.8 45.9 EBITDA margin (%) 16.9 13.8 18.1 15.0 16.0 16.8 15.3 16.0 EBITDA margin (ex forex) 16.9 13.8 18.1 15.0 16.0 16.8 15.3 16.0 EBIT Margin 11.6 9.1 15.2 11.0 11.8 13.9 10.3 11.8

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: Standalone net sales declined by 6% yoy in 4QFY20 Motherson Sumi's standalone net sales growth, March fiscal year-ends 2011-20 (%)

80 Yoy growth (%) 67 70 70 58 60 55 50 41 41 40 34 27 30 23 24 21 21 21 17 16 18 17 19 17 20 14 14 13 15 14 9 12 10 10 2 2 4 1 3 1 2 1 0 -6 -10 -8 -5 -6 -20 -17 -30 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

Source: Company, Kotak Institutional Equities

20 KOTAK INSTITUTIONAL EQUITIES RESEARCH Motherson Sumi Systems Automobiles & Components

Exhibit 3: Standalone EBITDA margin declined by 125 bps on a yoy basis in 4QFY20 Standalone quarterly ex-forex EBITDA margin trend, March fiscal year-ends, 2011-20 (%)

24.0 Ex forex EBITDA margin (%) 22.0

20.0

18.0

16.0

14.0

12.0

10.0 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

Source: Company, Kotak Institutional Equities

Exhibit 4: Consolidated EBIT was significantly above our estimates on better-than-expected margins in SMRPBV and standalone business MSSL consolidated 4QFY20 results, March fiscal year-ends (Rs mn)

(%chg.) 4QFY20 4QFY20E 4QFY19 3QFY20 4QFY20E 4QFY19 3QFY20 FY2020 FY2019 Yoy (%) FY2021E FY2020 Yoy (%) Net sales from operations 148,703 169,214 154,365 (12.1) (3.7) 625,731 625,716 625,731 Other operating income 2,887 2,481 2,246 16.4 28.5 9,638 9,513 9,638 Net sales 151,591 134,354 171,695 156,611 12.8 (11.7) (3.2) 635,369 635,229 0.0 574,731 635,369 (9.5) Raw materials (84,411) (76,119) (99,740) (90,417) (15.4) (6.6) (362,715) (367,383) (316,463) (362,715) Staff costs (38,028) (33,533) (39,552) (37,259) (3.9) 2.1 (150,769) (141,694) (147,753) (150,769) Other expenses (15,235) (14,919) (19,975) (16,577) (23.7) (8.1) (69,872) (72,668) (68,561) (69,872) Total expenses (137,675) (124,572) (159,267) (144,253) (13.6) (4.6) (583,355) (581,745) (532,777) (583,355) EBITDA 13,916 9,782 12,428 12,358 42.3 12.0 12.6 52,014 53,484 (2.7) 41,954 52,014 (19.3) Depreciation (7,927) (6,938) (5,518) (6,938) 14.3 43.7 14.3 (27,780) (20,582) (30,147) (27,780) EBIT 5,989 2,845 6,910 5,420 110.5 (13.3) 10.5 24,234 32,902 (26.3) 11,808 24,234 (51.3) Other income 151 700 682 783 (78.4) (77.8) (80.7) 2,307 2,202 2,509 2,307 Interest expense (1,382) (1,850) (1,030) (1,791) (25.3) 34.2 (22.9) (5,986) (4,232) (6,068) (5,986) Profit before tax 4,759 1,695 6,562 4,412 180.8 (27.5) 7.9 20,554 30,872 (33.4) 8,248 20,554 (59.9) Exceptional item — ——— —— —— Tax expense (3,315) (475) (2,479) (1,227) 598.4 33.7 170.2 (8,184) (11,022) (2,936) (8,184) Share of profit from associates (87) 185 211 218 575 1,131 517 575 Minority interest (477) 61 194 698 1,244 4,850 (298) 1,244 Profit after tax 1,834 1,345 4,100 2,705 36.4 (55.3) (32.2) 11,700 16,132 (27.5) 6,128 11,700 (47.6) Adj PAT 1,834 1,345 4,100 2,705 36.4 (55.3) (32.2) 11,700 16,132 (27.5) 6,128 11,700 (47.6) # of shares 3,158 3,158 3,158 3,158 3,158 3,158 3,158 3,158 EPS (Rs/share) 0.6 0.4 1.3 0.9 3.7 5.1 1.9 3.7 Tax rate (%) 69.7 28.0 37.8 27.8 39.8 35.7 35.6 39.8 As a % of revenues Raw material 55.7 56.7 58.1 57.7 57.1 57.8 55.1 57.1 Staff costs 25.1 25.0 23.0 23.8 23.7 22.3 25.7 23.7 Other expenses 10.1 11.1 11.6 10.6 11.0 11.4 11.9 11.0 Gross margin (%) 44.3 43.3 41.9 42.3 42.9 42.2 44.9 42.9 EBITDA margin (%) 9.2 7.3 7.2 7.9 8.2 8.4 7.3 8.2 EBITDA margin (ex forex) 9.2 7.3 7.2 7.9 8.2 8.4 7.3 8.2 EBIT Margin 4.0 2.1 4.0 3.5 3.8 5.2 2.1 3.8

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 21 Automobiles & Components Motherson Sumi Systems

Exhibit 5: SMRPBV performance was better than our expectations in 4QFY20 SMRPBV quarterly financials, March fiscal year-ends, 2019-20 (EUR mn)

(%chg.) 4QFY20 4QFY20E 4QFY19 4QFY20E 4QFY19 SMRPBV financials Revenue 1,302 1,185 1,474 9.9 (11.7) EBITDA 90 70 66 28.6 36.4 EBITDA margin 6.9 5.9 4.5 SMRPBV financials (excluding IND-AS 116) Revenue 1,302 1,474 (11.7) EBITDA 78 66 18.2 EBITDA margin 6.0 4.5

Source: Company, Kotak Institutional Equities estimates

Exhibit 6: The company has incurred around EUR100 mn loss in Greenfield plants in FY2020 SMP quarterly and annual financials, March fiscal year-ends, 2019-20 (EUR mn)

4QFY20 4QFY19 Yoy chg (%) FY2020 FY2019 Yoy chg (%) SMP financials (including greenfields, IND-AS 116 and SMRC) Revenue 938 1,060 (11.5) 4,057 3,704 9.5 EBITDA 42 20 110.0 163 159 2.5 EBITDA margin 4.5 1.9 4.0 4.3 SMP financials (excluding greenfields, IND-AS 116 and SMRC) Revenue 581 683 (14.9) 2,613 2,764 (5.5) EBITDA 43 71 (39.4) 237 264 (10.2) EBITDA margin 7.4 10.4 9.1 9.6 SMRC financials and new greenfield plants Revenue 357 377 (5.3) 1,444 940 53.6 EBITDA (1) (51) (74) (105) EBITDA margin (0.3) (13.5) (5.1) (11.2)

Source: Company, Kotak Institutional Equities estimates

Exhibit 7: Net debt declined to Rs69.2 bn in 4QFY20 from Rs85.9 bn in 3QFY20 MSSL consolidated net debt position, March fiscal year-ends, 2012-20 (Rs bn)

120

100

80

60

40

20

0 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20

Source: Company, Kotak Institutional Equities

22 KOTAK INSTITUTIONAL EQUITIES RESEARCH Motherson Sumi Systems Automobiles & Components

Exhibit 8: Daimler revenues grew by 12% yoy in FY2020; US revenues grew by 27% yoy in FY2020 SMRPBV geographic and customer mix, March fiscal year-end, 2020 (EUR mn)

FY2020 FY2019 Yoy (%) Revenues by region (EUR mn) Europe 3,361 3,347 0.4 Brazil 168 159 5.5 US 672 531 26.6 China 392 425 (7.7) Mexico 336 372 (9.6) Others 672 478 40.6 Total SMRPBV revenues 5,602 5,312 5.5 Revenues by OEMs (EUR mn) Audi 1,008 1,009 (0.1) VW 672 691 (2.6) Seat 112 106 5.5 BMW 336 372 (9.6) Daimler 952 850 12.1 Hyundai 224 212 5.5 Porsche 280 266 5.5 Renault/Nissan 504 425 18.6 Ford 224 212 5.5 GM 168 212 (20.9) PSA 504 372 35.6 Others 616 584 5.5 Total SMRPBV revenues 5,602 5,312 5.5

Source: Company, Kotak Institutional Equities

Exhibit 9: We expect PKC Group’s revenues to grow at 5% CAGR over FY2019-22E; expect EBITDA margin to remain around 9.5-10% Income statement of PKC Group, March fiscal year-ends, 2012-23E (EUR mn)

CY2012 CY2013 CY2014 CY2015 CY2016 FY2018 FY2019 FY2020 FY2021E FY2022E FY2023E Income statement (EUR mn) Revenues 928 884 830 908 846 1,052 1,176 1,177 942 1,083 1,191 Other operating income 2 2 4 4 6 — — — — — — Net sales 931 886 834 912 852 1,052 1,176 1,177 942 1,083 1,191 RM cost 565 536 504 539 503 638 729 718 574 650 715 Staff costs 203 201 222 233 212 244 244 244 207 238 250 Other operating expenses 86 86 81 84 78 99 98 98 83 96 103 EBITDA 76 63 26 56 59 72 105 118 77 99 123 Depreciation 33 33 33 33 33 34 33 45 47 49 51 EBIT 43 30 (7) 23 27 38 72 73 30 50 72 Interest expense 6 7 4 5 4 3 2 1 — — — Foreign currency exchange differences (3) (2) 1 1 (2) — — — — — — Profit before tax 35 22 (11) 18 21 35 70 72 30 50 72 Income tax 11 8 19 11 8 7 18 18 10 17 24 Profit after tax 24 14 (29) 7 12 28 52 54 20 34 48 Ratios (%) EBITDA Margin 8.2 7.1 3.2 6.1 7.0 6.8 9.0 10.0 8.2 9.2 10.3 EBIT Margin 4.7 3.4 (0.8) 2.5 3.1 3.6 6.2 6.2 3.2 4.6 6.0 Raw materials as % of sales 60.7 60.5 60.5 59.1 59.1 60.6 62.0 61.0 61.0 60.0 60.0 Employee costs as % of sales 21.8 22.7 26.6 25.6 24.9 23.1 20.7 20.7 22.0 22.0 21.0 Other expenses as % of sales 9.2 9.7 9.8 9.2 9.1 9.4 8.3 8.3 8.8 8.8 8.7 Effective tax rate 31.3 35.3 (174.9) 60.0 40.2 20.0 25.6 25.2 33.0 33.0 33.0 Yoy growth (%) Revenue (4.8) (5.9) 9.4 (6.6) 23.5 11.8 0.1 (20.0) 15.0 10.0 EBITDA (16.7) (58.2) 110.6 6.6 21.4 46.4 11.5 (34.5) 29.1 23.9 Net profit (41.9) (309.0) (125.1) 70.4 125.0 87.1 2.2 (62.5) 68.1 43.2

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 23 Automobiles & Components Motherson Sumi Systems

Exhibit 10: We have cut our FY2021E EPS estimates by 8% on higher depreciation and interest cost assumptions Earnings revision table, March fiscal year-ends, 2020-22E (Rs mn, %) New estimates Old estimates % change 2020 2021E 2022E 2021E 2022E 2021E 2022E Standalone Net sales 68,738 58,965 70,517 63,866 73,276 (7.7) (3.8) EBITDA 11,020 9,007 11,744 9,354 11,818 (3.7) (0.6) Margin (%) 16.0 15.3 16.7 14.6 16.1 Adj net profit 8,988 6,808 9,020 5,721 7,473 19.0 20.7 Standalone EPS 2.8 2.2 2.9 1.8 2.4 19.0 20.7 Consolidated Net sales 635,369 574,731 705,681 581,912 713,515 (1.2) (1.1) EBITDA 52,014 41,954 72,140 40,181 69,558 4.4 3.7 Margin (%) 8.2 7.3 10.2 6.9 9.7 Adj net profit 11,700 6,128 19,074 6,630 17,159 (7.6) 11.2 Consolidated EPS (Rs) 3.7 1.9 6.0 2.1 5.4 (7.6) 11.2

Source: Company, Kotak Institutional Equities estimates

Exhibit 11: We value MSSL at Rs110 on SoTP basis Motherson Sumi sum-of-the-parts valuation methodology (Rs)

EPS Multiple Value (Rs) (X) (Rs/share) June 2022 standalone EPS 3.0 22.0 65 June 2022 EPS of other subs (concern share) 3.6 12.0 43 Equity value 108 Fair value 110

Source: Company, Kotak Institutional Equities estimates

Exhibit 12: We expect EBITDA mix of SMRPBV business to increase in FY2020-23E as we build in improvement in SMP’s EBITDA margin Breakdown of key consolidated financials by different entities, March fiscal year-ends. 2016-23E (Rs mn, %)

2016 2017 2018 2019 2020 2021E 2022E 2023E Revenues Standalone 52,930 62,867 74,561 75,813 68,738 58,965 70,517 78,939 SMRPBV 293,736 339,702 379,344 429,753 441,306 406,779 508,191 564,294 PKC — — 79,431 95,138 92,712 77,211 90,569 101,618 Stoneridge and others 25,497 21,187 29,597 34,525 32,612 31,776 36,404 40,075 Consolidated Net Revenues 372,163 423,756 562,933 635,229 635,369 574,731 705,681 784,926 EBITDA Standalone 9,637 12,149 13,318 12,728 11,020 9,007 11,744 13,341 SMRPBV 21,362 26,932 28,556 28,072 26,474 21,985 46,017 56,693 PKC — — 5,435 8,523 9,256 6,308 8,305 10,497 Stoneridge and others 4,177 2,587 3,917 4,160 5,264 4,654 6,074 6,991 Consolidated EBITDA 35,177 41,668 51,226 53,484 52,014 41,954 72,140 87,522 EBITDA margin (%) Standalone 18.2 19.3 17.9 16.8 16.0 15.3 16.7 16.9 SMRPBV 7.3 7.9 7.5 6.5 6.0 5.4 9.1 10.0 PKC — — 6.8 9.0 10.0 8.2 9.2 10.3 Stoneridge and others 16.4 12.2 13.2 12.0 16.1 14.6 16.7 17.4 Revenue Mix (%) Standalone 14.2 14.8 13.2 11.9 10.8 9.3 11.1 12.4 SMRPBV 78.9 80.2 67.4 67.7 69.5 64.0 80.0 88.8 PKC — — 14.1 15.0 14.6 12.2 14.3 16.0 Stoneridge and others 6.9 5.0 5.3 5.4 5.1 5.0 5.7 6.3 EBITDA mix (%) Standalone 27.4 29.2 26.0 23.8 21.2 21.5 16.3 15.2 SMRPBV 60.7 64.6 55.7 52.5 50.9 52.4 63.8 64.8 PKC — — 10.6 15.9 17.8 15.0 11.5 12.0 Stoneridge and others 11.9 6.2 7.6 7.8 10.1 11.1 8.4 8.0

Source: Company, Kotak Institutional Equities estimates

24 KOTAK INSTITUTIONAL EQUITIES RESEARCH Motherson Sumi Systems Automobiles & Components

Exhibit 13: We expect standalone earnings to grow at 5% CAGR during FY2020-23E Motherson Sumi standalone profit model, balance sheet and cash model, March fiscal year-ends, 2012-23E (Rs mn)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E Profit model (Rs mn) Net sales 35,718 43,041 45,245 49,850 52,930 62,867 74,561 75,813 68,738 58,965 70,517 78,939 EBITDA 5,184 7,570 8,448 8,754 9,637 12,149 13,318 12,728 11,020 9,007 11,744 13,341 Other income 881 865 990 763 1,708 1,680 1,404 1,865 3,784 3,494 3,798 4,132 Interest 548 485 324 208 474 124 433 177 306 396 214 164 Depreciation 1,172 1,453 1,530 2,071 2,008 1,977 2,183 2,193 2,883 2,954 3,204 3,454 Profit before tax 4,345 6,497 7,584 7,238 8,863 11,728 12,106 12,225 11,615 9,151 12,124 13,855 Current tax 1,188 1,801 2,295 2,348 2,515 3,556 3,316 4,086 2,626 2,343 3,104 3,547 Deferred tax (15) - (62) (259) (169) (100) —————— Net profit 3,172 4,696 5,351 5,149 6,887 8,273 8,790 8,138 8,988 6,808 9,020 10,308 Earnings per share (Rs) 1.1 1.6 1.8 1.7 2.3 2.6 2.8 2.6 2.8 2.2 2.9 3.3 Balance sheet (Rs mn) Equity 12,855 16,240 19,056 21,021 24,539 58,027 61,802 64,382 62,443 65,166 68,774 72,898 Deferred tax liability 214 177 115 ————————— Total Borrowings 9,552 9,273 7,578 5,336 4,852 12,935 11,531 11,356 14,193 12,193 9,193 7,193 Current liabilities 7,649 8,714 9,895 11,032 9,549 11,818 14,764 14,694 15,392 15,457 15,091 16,747 Total liabilities 30,270 34,404 36,644 37,389 38,940 82,780 88,096 90,432 92,029 92,816 93,058 96,838 Net fixed assets 13,432 15,057 14,863 15,017 14,741 14,363 16,397 18,867 17,469 16,515 15,811 14,856 Investments 3,704 5,132 5,821 7,320 7,230 44,772 46,529 45,845 46,637 46,637 46,637 46,637 Cash 202 658 191 1,461 185 1,891 1,054 1,382 2,366 4,555 6,070 7,035 Other current assets 12,912 13,547 15,769 13,591 16,783 21,755 24,117 24,339 25,556 25,109 24,540 28,309 Miscellaneous expenditure 19 10 —————————— Total assets 30,270 34,404 36,644 37,389 38,940 82,780 88,096 90,432 92,029 92,816 93,058 96,838 Free cash flow (Rs mn) Operating cash flow excl. working capital 5,364 6,488 7,044 7,093 7,568 9,057 9,316 9,381 8,904 7,158 9,138 10,296 Working capital changes (1,073) (488) (351) 1,115 (785) (1,926) (923) 44 1,459 512 203 (2,112) Capital expenditure (3,673) (3,182) (1,526) (2,113) (1,731) (2,522) (3,070) (3,999) (3,519) (2,000) (2,500) (2,500) Free cash flow 79 2,377 4,818 5,883 4,939 4,532 5,054 5,107 6,522 5,274 6,627 5,520 Ratios Gross margin (%) 39.8 41.2 44.4 43.9 44.8 46.2 45.0 44.5 45.9 47.8 47.1 46.7 EBITDA margin (%) 14.5 17.6 18.7 17.6 18.2 19.3 17.9 16.8 16.0 15.3 16.7 16.9 PAT margin (%) 8.9 10.9 11.8 10.3 12.3 13.2 11.8 10.7 13.1 11.5 12.8 13.1 Net debt/equity (X) 0.7 0.5 0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.0 0.0 Book value (Rs/share) 4.3 5.5 6.4 7.1 8.2 18.4 19.6 20.4 19.8 20.6 21.8 23.1 RoAE (%) 27.6 32.3 30.3 25.7 28.6 20.0 14.7 12.9 14.2 10.7 13.5 14.6 RoACE (%) 21.5 25.8 27.1 26.6 33.3 34.6 34.4 29.1 30.8 23.4 29.6 32.2

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 25 Automobiles & Components Motherson Sumi Systems

Exhibit 14: We expect consolidated earnings to grow at 30% CAGR during FY2020-23E Motherson Sumi consolidated profit model, balance sheet and cash model, March fiscal year-ends, 2012-23E (Rs mn)

2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E Profit model (Rs mn) Net sales 147,141 256,170 307,210 350,319 372,163 423,756 562,933 635,229 635,369 574,731 705,681 784,926 EBITDA 8,301 17,778 26,873 32,027 35,177 41,668 51,226 53,484 52,014 41,954 72,140 87,522 Other income 2,070 170 176 177 392 2,642 1,701 2,202 2,307 2,509 3,940 4,098 Interest 1,649 2,495 2,944 3,178 3,450 3,749 4,108 4,232 5,986 6,068 5,548 4,508 Depreciation 3,796 7,145 8,172 9,206 10,872 10,591 15,752 20,582 27,780 30,147 32,017 34,052 Profit before tax 4,926 8,308 15,934 19,819 21,246 29,970 33,067 30,872 20,554 8,248 38,516 53,061 Current tax 2,060 3,805 5,169 5,218 5,193 9,103 10,072 11,022 8,184 2,936 11,231 15,548 Deferred tax 93 31 (174) (846) (1,287) 476 55 (838) (859) ——— Minority interest 631 (70) (3,316) (4,294) (4,814) (6,180) (6,629) (4,850) (1,244) 298 (8,780) (12,377) Adj Net profit 2,596 4,411 7,622 9,866 12,617 16,225 17,214 16,132 11,700 6,128 19,074 25,761 Earnings per share (Rs) 1.0 1.5 2.6 3.3 4.2 5.1 5.5 5.1 3.7 1.9 6.0 8.2 Balance sheet (Rs mn) Equity 18,717 22,890 29,593 33,238 43,971 82,727 98,841 109,628 112,609 114,354 136,796 168,749 Deferred tax liability 1,506 1,441 1,680 1,457 2,394 4,260 5,236 5,762 4,628 4,628 4,628 4,628 Total Borrowings 46,023 48,556 47,758 51,979 60,688 103,493 103,736 115,342 116,691 116,691 96,691 76,691 Current liabilities 49,289 52,175 66,696 78,892 76,863 110,895 137,564 167,772 185,380 196,489 195,704 219,684 Minority interest 5,027 4,025 7,896 10,142 15,123 22,322 29,600 34,797 35,650 35,650 35,650 35,650 Total liabilities 120,562 129,088 153,623 175,708 199,038 323,697 374,977 433,302 454,958 467,812 469,468 505,402 Net fixed assets 51,380 56,629 65,660 70,847 83,089 121,900 150,329 172,777 175,999 162,853 147,836 133,785 Investments 938 716 749 649 5,317 4,737 7,917 8,503 7,960 7,960 7,960 7,960 Cash 4,557 5,944 9,061 18,919 17,717 48,866 27,816 35,469 48,789 46,364 65,715 62,703 Other current assets 63,687 65,798 78,153 85,293 89,987 128,818 166,273 194,435 198,149 226,574 223,896 276,893 Goodwill ———— 2,928 19,376 22,643 22,118 24,060 24,060 24,060 24,060 Total assets 120,562 129,088 153,623 175,708 199,038 323,697 374,977 433,302 454,958 467,812 469,468 505,402 Free cash flow (Rs mn) Operating cash flow excl. working capital 9,244 15,879 24,547 21,247 30,875 31,353 45,128 44,081 47,319 42,044 65,418 76,698 Working capital changes (3,357) (1,019) 2,403 12,650 (8,991) 6,644 (12,488) (958) 16,202 (17,316) 1,893 (29,017) Capital expenditure (10,758) (11,389) (14,120) (19,443) (20,388) (28,086) (30,621) (27,627) (22,741) (17,000) (17,000) (20,000) Free cash flow (5,921) 1,428 10,552 12,514 (872) 6,737 (1,612) 12,111 35,911 1,660 44,763 23,173 Ratios Gross margin (%) 35.1 35.7 37.0 38.3 39.8 39.2 39.0 42.2 42.9 44.9 44.0 43.9 EBITDA margin (%) 5.6 6.9 8.7 9.1 9.5 9.8 9.1 8.4 8.2 7.3 10.2 11.2 PAT margin (%) 1.8 1.7 2.5 2.5 3.4 3.7 2.8 2.5 1.8 1.1 2.7 3.3 Net debt/equity (X) 2.2 1.9 1.3 1.0 1.0 0.7 0.8 0.7 0.6 0.6 0.2 0.1 Book value (Rs/share) 6.3 7.7 9.9 11.2 14.8 26.2 31.3 34.7 35.7 36.2 43.3 53.4 RoAE (%) 17.5 21.2 29.0 31.4 32.7 25.6 19.0 15.5 10.5 5.4 15.2 16.9 RoACE (%) 5.5 8.5 17.8 19.8 19.6 16.4 14.8 12.4 7.9 3.9 12.7 16.4

Source: Company, Kotak Institutional Equities estimates

26 KOTAK INSTITUTIONAL EQUITIES RESEARCH BUY S H Kelkar and Company (SHKL) Speciality Chemicals JUNE 03, 2020 RESULT Sector view: Neutral

Steady quarter; weak outlook. SHKL’s 4Q print was decent in context of a weak CMP (`): 59 macro and lockdown. While the company’s operating performance was steadying over Fair Value (`): 95 the past two quarters, Covid could disrupt the momentum given SHKL’s fragmented BSE-30: 33,826 sales and weak client portfolio as compared to global F&F players. We bake in Covid impact and cut FY2021E/22E earnings by 35%/24% and DCF-based FV to Rs95 (implies 15X FY2022E PE) from Rs140. Maintain BUY on account of inexpensive valuations.

S H Kelkar and Company Stock data Forecasts/valuations 2020 2021E 2022E 52-week range (Rs) (high,low) 156-48 EPS (Rs) 4.6 4.6 6.2 Mcap (bn) (Rs/US$) 9/0.2 EPS growth (%) (24.3) (1.0) 35.8 ADTV-3M (mn) (Rs/US$) 32/0 P/E (X) 12.8 12.9 9.5 Shareholding pattern (%) P/B (X) 1.0 1.0 0.9 Promoters 57.5 EV/EBITDA (X) 7.0 6.6 5.1 FIIs 17.3 RoE (%) 7.8 7.6 9.8 MFs/BFIs 6.8/0.1 Div. yield (%) 3.4 1.7 3.0 Price performance (%) 1M 3M 12M Sales (Rs bn) 11 10 12 Absolute (9) (41) (61) EBITDA (Rs bn) 2 1 2 Rel. to BSE-30 (10) (34) (54) Net profits (Rs bn) 1 1 1

4QFY20— decent print in context of environment

Consolidated revenues were flat yoy at Rs2.7 bn, 7% above our estimate. Per management, revenue loss due to lockdown in March was about Rs300 mn. Adjusted for the same, revenues were tracking in line with management guidance of double-digit revenue growth. Gross margin expanded 235 bps yoy and 150 bps qoq to 44.4%. EBITDA was up 15% yoy (like-for-like adjusted for Ind-AS 116) led by 130 bps expansion in EBITDA margin. A provision of Rs30 mn pertaining to Covid impacted margins by 110 bps. Recurring EPS declined 34% yoy.

Segmental growth— (1) Fragrance revenues (89% of revenues) were flat yoy (+8% domestic offset by -15% overseas), (2) Flavour revenues (11% of revenues) grew 12% yoy (+35% overseas, -11% domestic). FY2020 round up— revenues up 6% yoy, EBITDA adjusted for Ind- AS 116 up 8% yoy led by 15 bps expansion in margin and recurring net profit down 27% to Rs645 mn (EPS stood at Rs4.5). Per management, cash profit at Rs1.2 bn was up 3% yoy. OCF of Rs2 bn was led by improvement in w-cap cycle. Net debt reduced to Rs3 bn from Rs4 bn in 2H (it was sequentially flat in 4Q). FCF for the year was about Rs1.5 bn.

Key takeaways from earnings call

(1) SHKL resumed India operations gradually starting last week of April. The company clocked sales of Rs500 mn from 1-Apr-20 through 22-May-20, (2) SHKL witnessed increase in fragrance sales to personal wash, fabric wash and cleaning products whereas that to fine fragrance and air care products was muted. For the full year, the company expects 10-12% growth in the Rohit Chordia former and flat revenues for the rest of the fragrance portfolio, (3) SHKL is looking to cut costs across line items included R&D spends; the company expects Rs50-100 mn savings from cut in Jaykumar Doshi non-essential R&D spends, (4) FY2021 organic capex would be modest at Rs200 mn. In addition, SHKL plans to acquire residual stake in CFF sometime during the year, (5) SHKL is eyeing FCF of Rs1-1.2 bn and further reduction in net debt during the year. Aniket Sethi

We cut estimates and fair value sharply, Maintain BUY

We factor in Covid impact and cut FY2021/22E EPS by 35%/24%. While F&F is a steady industry (proxy to FMCG), we expect a degree of volatility in case of SHKL due to its sub-scale operations and high-dependence on small-to-mid sized accounts (fragmented sales with top-10 customers contributing a modest 20-25% to sales). [email protected] Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL. Speciality Chemicals S H Kelkar and Company

Exhibit 1: Interim consolidated results of SH Kelkar, March fiscal year-ends (Rs mn)

% Chg. 4QFY20 4QFY20E 4QFY19 3QFY20 KIE yoy qoq FY2020 FY2019 % chg. Net operating revenues 2,712 2,525 2,697 2,900 7 1 (7) 11,142 10,471 6 Material cost (1,509) (1,439) (1,565) (1,657) 5 (4) (9) (6,310) (5,908) 7 Gross Profit 1,203 1,086 1,133 1,243 11 6 (3) 4,833 4,564 6 Gross margin (%) 44.4 43.0 42.0 42.9 133 bps 235 bps 150 bps 43.4 43.6 -21 bps Employee cost (306) (353) (301) (359) (13) 1 (15) (1,377) (1,281) 7 Other expenditure (580) (472) (582) (452) 23 (0) 28 (1,874) (1,927) (3) Total expenditure (2,394) (2,264) (2,448) (2,469) 6 (2) (3) (9,561) (9,115) 5 EBITDA 318 261 249 431 22 27 (26) 1,582 1,356 17 EBITDA margin (%) 11.7 10.3 9.2 14.9 138 bps 247 bps -316 bps 14.2 12.9 124 bps Other income 24 50 111 21 (52) (79) 11 78 244 (68) Interest (35) (73) (61) (71) (52) (42) (50) (247) (140) — Depreciation (125) (131) (79) (137) (5) 58 (8) (515) (312) 65 Pretax profits 181 107 220 245 70 (18) (26) 898 1,149 (22) Tax (61) (56) (19) (60) 8 226 1 (253) (270) (6) PAT 120 51 202 185 138 (40) (35) 645 878 (27) MI/share of profit from associates 7 1 (6) 3 7 7 Extraordinary items — —— (298) (298) (1) Net profit (reported) 127 52 196 (109) 146 (35) (216) 354 884 (60) Recurring EPS 0.90 0.37 1.35 1.34 146 (34) (33) 4.6 6.1 (24) Income tax rate (%) 33.5 52.5 8.5 24.5 -1902 bps 2506 bps 905 bps 28.2 23.5 465 bps Costs as a % of net operating revenues Material cost 55.6 57.0 58.0 57.1 -134 bps -236 bps -151 bps 56.6 56.4 20 bps Employee cost 11.3 14.0 11.2 12.4 -272 bps 9 bps -113 bps 12.4 12.2 12 bps Other expenditure 21.4 18.7 21.6 15.6 267 bps -22 bps 577 bps 16.8 18.4 -158 bps

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: Key changes to estimates, S H Kelkar, FY2021-22E

Revised Earlier Change (%) 2021E 2022E 2021E 2022E 2021E 2022E Net revenues (Rs mn) 10,451 11,562 12,452 13,814 (16.1) (16.3) Revenue growth (%) (6) 11 9 11 EBITDA (Rs mn) 1,494 1,813 2,042 2,314 (26.8) (21.7) EBITDA margin (%) 14.3 15.7 16.4 16.8 Recurring net income (Rs mn) 648 880 1,001 1,151 (35.2) (23.5) Recurring EPS (Rs/share) 4.6 6.2 7.1 8.1 (35.2) (23.5)

Source: Company, Kotak Institutional Equities estimates

Exhibit 3: SHKL- consolidated segmental performance

4QFY20 4QFY19 3QFY20 yoy (%) qoq (%) Segmental revenues (Rs mn) Fragrance 2,401 2,420 2,595 (1) (7) Flavors 297 266 281 12 6 Total 2,698 2,686 2,876 0 (6) Segment PBIT (Rs mn) Fragrance 247 274 317 (10) (22) Flavors 43 50 44 (14) (2) Total 290 323 361 (10) (20) Margins (%) Fragrance 10.3 11.3 12.2 -103 bps -195 bps Flavors 14.5 18.8 15.6 -431 bps -110 bps Blended 10.7 12.0 12.6 -130 bps -182 bps

Source: Company, Kotak Institutional Equities

28 KOTAK INSTITUTIONAL EQUITIES RESEARCH S H Kelkar and Company Speciality Chemicals

Exhibit 4: S H Kelkar: Consolidated profit & loss, balance sheet and cash flow, March fiscal year-ends, 2014-23E

IGAAP Ind-AS 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E Profit model (Rs mn) Net operating revenues 7,614 8,355 9,249 9,805 10,210 10,436 11,142 10,451 11,562 12,552 EBITDA 1,370 1,178 1,498 1,658 1,581 1,321 1,582 1,494 1,813 2,015 Other income 78 246 105 116 257 279 78 124 128 143 Interest expense (175) (185) (202) (52) (40) (140) (247) (230) (202) (176) Depreciation (188) (293) (297) (194) (238) (312) (515) (520) (549) (573) Pretax profits 1,085 945 1,103 1,528 1,560 1,149 898 868 1,189 1,408 Tax (294) (241) (372) (480) (506) (270) (253) (244) (335) (403) Minority Interest/share of profit from associates ———— 16 6 10 25 26 28 Recurring PAT 791 704 731 1,048 1,070 885 655 648 880 1,033 Extraordinary items ———— (129) — (298) ——— Reported net income 791 704 731 1,048 942 885 357 648 880 1,033 Wtd average no. of shares - FD (mn) 132 132 138 145 145 145 141 141 141 141 Fully diluted EPS (Rs) 6.0 5.3 5.3 7.2 7.4 6.1 4.6 4.6 6.2 7.3 Balance sheet (Rs mn) Total shareholder's equity 4,801 5,005 7,161 8,118 8,569 8,634 8,240 8,718 9,300 9,908 Preference share capital/ CCPS 9 92 ———————— Total borrowings 2,096 2,417 846 734 1,933 3,611 3,425 2,675 1,925 1,825 Deferred tax liability (18) (50) 10 33 82 179 236 236 236 236 Minority interest ————— 108 106 106 106 106 Total liabilities and equity 6,887 7,464 8,016 8,884 10,584 12,531 12,007 11,735 11,567 12,075 Net fixed assets incl CWIP 3,016 2,842 2,454 3,038 3,978 4,858 4,308 4,306 3,958 3,894 Investments 2 — 354 497 1,105 1,112 1,104 1,104 1,104 1,104 Cash 415 759 822 555 239 409 656 1,114 961 1,275 Net current assets 3,454 3,864 4,386 4,795 5,263 6,153 5,940 5,211 5,544 5,802 Total assets 6,887 7,464 8,016 8,884 10,584 12,531 12,007 11,735 11,567 12,075 Free cash flow (Rs mn) Operating cash flow (excl working capital) 1,030 993 1,126 1,260 1,246 1,388 1,579 1,149 1,367 1,497 Working capital (725) (375) (275) (248) (212) (616) 473 728 (333) (258) Capital expenditure (641) (218) (238) (1,008) (1,310) (1,424) (447) (363) (30) (323) Free cash flow (336) 400 613 4 (276) (651) 1,605 1,514 1,004 916 Key ratios (%) Sales growth 14.3 9.7 10.6 5.9 4.5 2.1 6.1 (6.5) 10.6 8.5 EBITDA growth 16.1 (14.1) 27.2 10.7 (4.6) (16.5) 19.7 (5.5) 21.3 11.2 PAT growth 23.9 (11.0) 3.8 43.5 2.1 (17.3) (26.0) (1.0) 35.8 17.4 EBITDA margin 18.0 14.1 16.2 16.9 15.5 12.7 14.2 14.3 15.7 16.1 Gross margin 47.6 44.9 44.5 45.4 44.9 43.5 43.7 43.4 43.7 43.9

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 29 March 2020: Results calendar India Daily Summary Daily Summary India Mon Tue Wed Thu Fri Sat Sun

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK 1-Jun 2-Jun 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun Britannia Industries Aurobindo Pharma DLF Aditya Birla Capital Carborundum Universal Interglobe Aviation BPCL PI Industries Alkem Laboratories Divi's Laboratories Motherson Sumi Systems Cholamandalam SRF Exide Industries Gatew ay Distriparks Gujarat Gas Jyothy Labs L&T State Bank of India Timken -

8-Jun 9-Jun 10-Jun 11-Jun 12-Jun 13-Jun 14-Jun June 3, 3, 2020 June GSPL Gujarat Pipavav Port Dhanuka Agritech Shriram City Union Finance Castrol India PVR Hero Motocorp Mahanagar Gas Eicher Motors

Titan Company MRPL Hindalco Industries TeamLease Services 15-Jun 16-Jun 17-Jun 18-Jun 19-Jun 20-Jun 21-Jun Tata Motors Cummins India Thermax The Ramco Cement

22-Jun 23-Jun 24-Jun 25-Jun 26-Jun 27-Jun 28-Jun Apollo Hospitals

Source: NSE, Kotak Institutional Equities

30 KOTAK INSTITUTIONAL EQUITIES RESEARCH 30

Kotak Institutional Equities: Valuation summary of KIE Universe stocks 31 Fair O/S ADVT

Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Automobiles & Components Amara Raja Batteries REDUCE 665 620 (7) 114 1.5 171 39 33 41 36.7 (14.8) 25.4 17 20.2 16.1 10.3 10.7 8.6 3.1 2.8 2.5 18.9 14.6 16.3 1.7 1.2 1.6 9.7 Apollo Tyres BUY 104 110 6 59 0.8 572 8.3 2.3 8.7 (41.9) (72.0) 273.3 12.5 44.7 12.0 6.1 6.4 4.6 0.6 0.6 0.6 4.8 1.4 4.9 2.9 1.3 2.6 9.7 Ashok Leyland BUY 48 90 89 140 1.9 2,936 1.0 1.2 5.1 (86.2) 29.3 309.3 49.6 38.3 9.4 13.5 11.4 4.7 1.7 1.6 1.4 3.4 4.3 16.2 0.7 0.8 3.2 27 Bajaj Auto BUY 2,796 3,000 7 809 11 289 176 158 190 15.0 (10.1) 20.0 15.9 17.7 14.7 12.8 13.5 10.6 4.1 3.7 3.4 24 22 24 4.3 3.4 4.1 31 Balkrishna Industries SELL 1,152 1,030 (11) 223 3.0 193 50 53 59 25.6 6.0 11.4 23.1 21.8 19.6 15.3 12.6 10.8 4.3 3.9 3.5 19.6 18.7 18.7 1.7 1.9 2.1 11.3 Bharat Forge SELL 334 365 9 155 2.1 466 13 16 22 (41.6) 21.6 40.4 25.8 21.2 15.1 13.7 12.0 9.4 2.7 2.5 2.3 10.9 12.4 15.8 1.6 1.8 1.8 13.3 CEAT BUY 888 940 6 36 0.5 40 63 60 78 1.9 (4.6) 30.7 14.2 14.9 11.4 7.5 7.6 6.6 1.2 1.2 1.1 8.9 8.0 9.8 1.4 1.4 1.4 1.8 Eicher Motors ADD 17,396 19,500 12 475 6.3 27 770 747 979 (5.6) (2.9) 31.0 22.6 23.3 17.8 17.5 16.7 13.3 5.4 4.6 3.8 26 21 23 0.2 —— 51 Endurance Technologies BUY 762 850 12 107 1.4 141 40 40 50 11.1 (1.6) 26.3 19 19.2 15.2 9.2 8.6 6.9 3.5 3.1 2.6 18.6 15.9 17.2 0.8 0.9 1.1 2.4 Escorts BUY 960 1,000 4 85 1.6 89 55 51 65 0.4 (5.9) 27.1 17.6 18.7 14.7 12.2 11.1 8.3 2.5 2.0 1.8 14.0 10.5 12.0 0.3 0.8 1.0 37 Exide Industries BUY 171 165 (3) 145 1.9 850 9.6 8.2 10.2 6.6 (14.6) 23.5 17.7 20.7 16.8 10.2 11.1 9.3 2.3 2.1 2.0 13.2 10.6 12.3 2.1 2.3 2.3 6.2 Hero Motocorp ADD 2,318 2,150 (7) 463 6.2 200 167 141 166 (1.2) (15.7) 17.4 13.8 16.4 14.0 8.9 10.3 8.5 3.2 3.0 2.8 25 18.9 21 4.0 4.0 4.3 47 Mahindra CIE Automotive BUY 103 100 (3) 39 0.5 378 9.4 5.9 9.6 (34.9) (37.7) 63.3 10.9 17.5 10.7 5.3 7.2 4.9 0.8 0.8 0.7 8.0 4.7 7.2 ——— 0.2 Mahindra & Mahindra BUY 463 625 35 575 7.7 1,138 32 32 41 (32.5) (1.1) 27.9 14.4 14.6 11.4 9.0 8.8 7.0 1.4 1.3 1.2 9.9 9.0 10.7 1.4 1.4 1.8 38 Maruti Suzuki SELL 5,690 4,300 (24) 1,719 22.9 302 187 133 226 (24.7) (28.8) 69.8 30 43 25 18.6 21.2 12.4 3.5 3.4 3.1 11.9 8.1 12.7 1.1 0.8 1.0 128 Motherson Sumi Systems ADD 102 110 8 322 4.3 3,158 3.7 1.9 6.0 (27.5) (47.6) 211.3 27.5 52.5 16.9 7.5 9.3 4.9 2.9 2.8 2.4 10.5 5.4 15.2 1.5 1.3 1.7 28 MRF SELL 62,692 62,000 (1) 266 3.5 4 2,523 2,915 3,674 (5.4) 15.5 26.0 25 21.5 17.1 10.1 9.3 7.4 2.2 2.0 1.8 9.4 9.9 11.2 0.1 0.1 0.1 10.3 Schaeffler India SELL 3,250 3,200 (2) 102 1.4 31 118 109 142 (18.3) (7.7) 31.0 28 30 23 14.7 15.5 12.0 3.4 3.1 2.8 13.0 10.9 12.8 ——— 0.5 SKF ADD 1,451 1,550 7 72 1.0 49 58 52 65 (10.7) (10.8) 25.6 25 28 22 18.8 21.4 16.4 3.8 4.7 4.0 15.2 16.9 18.2 0.8 7.5 0.8 0.8 Tata Motors BUY 97 130 35 347 4.3 3,598 (7.9) (19.7) 6.4 (46.3) (149.9) 132.4 NM NM 15.1 4.5 5.7 3.5 0.6 0.7 0.6 NM NM 4.3 ——— 82 Timken SELL 885 825 (7) 67 0.9 75 31 32 39 57.4 3.8 20.9 28 27 23 17.9 15.6 12.7 4.2 3.7 3.2 16.1 14.4 15.1 0.1 0.1 0.1 0.6 TVS Motor SELL 364 220 (40) 173 2.3 475 13.0 9.1 15.0 (7.9) (30.1) 65.6 28 40 24 14.0 15.9 11.6 4.8 4.5 4.0 17.7 11.6 17.5 1.0 1.0 1.0 15.6 Varroc Engineering BUY 142 540 279 19 0.3 135 15 29 46 (54.0) 88.2 58.7 9.3 4.9 3.1 4.1 2.9 1.9 0.6 0.5 0.5 6.4 10.9 15.0 ——— 0.6 Automobiles & Components Neutral 6,512 86.7 (21.4) (31.5) 115.9 24.6 36.0 16.7 9.4 10.1 6.8 2.3 2.2 2.0 9.4 6.2 12.1 1.6 1.5 1.7 553 Banks AU Small Finance Bank SELL 430 515 20 131 1.7 304 22.2 16.3 23.5 69.9 (26.4) 44.0 19 26 18 ——— 3.1 2.9 2.5 17.9 10.7 13.7 0.0 —— 8.7 Axis Bank BUY 410 600 46 1,157 15.4 2,822 5.8 36 42 (68.3) 523.2 16.3 71 11.4 9.8 ——— 1.5 1.4 1.3 2.1 11.4 12.0 0.0 1.3 1.5 218 Bandhan Bank ADD 241 270 12 388 5.2 1,610 18.1 18.4 19.3 10.9 1.6 4.7 13.3 13.1 12.5 ——— 2.6 2.2 1.8 22.1 17.8 15.8 0.0 0.0 0.0 45 Bank of Baroda ADD 42 105 149 195 2.6 4,582 0.8 23.4 27 (50.0) 2,763.0 13.9 51 1.8 1.6 ——— 0.4 0.4 0.3 0.7 15.5 15.6 0.4 11.1 12.7 21 City Union Bank ADD 140 240 72 103 1.4 735 10.0 11.8 13.5 8.1 17.3 14.3 14 11.8 10.4 ——— 2.1 1.8 1.6 14.4 15.0 15.2 1.3 1.5 1.7 3.2 DCB Bank BUY 66 150 128 20 0.3 310 10.9 10.7 11.6 3.6 (1.9) 9.0 6.0 6.2 5.6 ——— 0.7 0.6 0.6 11.2 10.0 9.9 0.0 1.6 1.8 2.3 Equitas Holdings BUY 48 100 108 16 0.2 342 6.1 6.0 9.7 (4.3) (1.1) 61.6 7.9 8.0 5.0 ——— 0.6 0.6 0.5 7.8 7.1 10.5 ——— 10.0 Federal Bank BUY 48 80 68 95 1.3 1,993 7.7 6.1 6.9 23.6 (21.1) 13.0 6.2 7.8 6.9 ——— 0.7 0.7 0.6 10.9 8.1 8.6 0.0 2.9 3.2 17.3 HDFC Bank BUY 1,001 1,050 5 5,492 73.1 5,483 48 48 52 23.7 0.1 8.4 21 21 19 ——— 3.2 2.9 2.6 16.4 14.5 14.1 0.0 0.9 1.0 279 India Daily Summary Daily Summary India ICICI Bank BUY 348 470 35 2,256 30.0 6,474 12.3 25 28 134.9 105.3 13.0 28 13.9 12.3 ——— 2.1 1.9 1.7 7.1 13.3 13.5 0.0 1.4 1.6 242 IndusInd Bank ADD 435 600 38 301 4.0 694 64 27 73 16.3 (57.1) 167.0 7 15.9 6.0 ——— 0.9 0.9 0.8 14.9 5.4 13.3 0.0 0.9 2.5 169 Karur Vysya Bank BUY 25 80 226 20 0.3 799 3.4 7 13 27.2 104.1 95.1 7 3.6 1.8 ——— 0.4 0.3 0.3 4.1 8.0 14.5 3.4 7.3 14.1 0.4 Punjab National Bank NR 29 —— 275 3.7 4,604 2 6 10 110.2 149.0 80.1 13 5.3 3.0 ——— 0.6 0.5 0.3 2.4 7.0 10.2 0.0 0.0 0.0 11.9 RBL Bank BUY 127 270 112 65 0.9 509 9.9 11 20 (51.1) 8.2 84.0 13 11.8 6.4 ——— 0.7 0.6 0.6 5.6 5.1 8.8 0.0 1.1 2.1 59 State Bank of India BUY 170 420 147 1,519 20.2 8,925 24 45 55 2,356.7 87.9 23.3 7 3.8 3.1 ——— 0.8 0.7 0.6 9.2 15.2 16.0 0.1 0.1 0.1 204 Ujjivan Financial Services BUY 190 490 159 23 0.3 121 26.9 34 44 117.0 24.9 31.6 7 5.6 4.3 ——— 1.0 0.9 0.8 15.7 17.0 19.3 1.6 2.2 3.1 11.0 Ujjivan Small Finance Bank BUY 28 37 31 49 0.6 1,728 2 2 2 38.5 (5.6) (1.9) 15 15.6 15.9 ——— 1.6 1.6 1.5 14.0 10.0 9.2 1.4 1.3 1.3 0.0

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK Union Bank RS 26 —— 164 2.2 3,423 0 11 15 101.2 5,126.7 36.8 125 2.4 1.8 ——— 0.4 0.3 0.2 0.2 13.2 13.2 0.0 6.3 8.6 1.7 Banks Attractive 12,744 169.6 95.6 120.4 29.0 22 10.2 7.9 1.4 1.1 1.0 6.1 11.1 12.7 0.0 1.1 1.3 1,371

Source: Company, Bloomberg, Kotak Institutional Equities estimates -

June 3, 3, 2020 June

KOTAK INSTITUTIONAL EQUITIES RESEARCH 31 Kotak Institutional Equities: Valuation summary of KIE Universe stocks India Daily Summary Daily Summary India Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Building Products Astral Poly Technik SELL 946 765 (19) 143 1.9 151 16.4 18 25 25.6 11.7 37.7 58 52 37 32.2 28.4 21.2 9.5 8.1 6.8 17.8 17.0 19.8 0.1 0.2 0.3 1.4 Building Products Cautious 143 1.9 26.6 11.7 37.7 57 51 37 32.2 28.4 21.2 9.5 8.1 6.8 16.5 15.8 18.2 0.1 0.2 0.3 1.4 Capital goods ABB SELL 825 795 (4) 175 2.3 212 18 14 21 46.3 (19.1) 46.5 47 58 40 29.9 36.6 24.0 5.0 4.8 4.5 9.9 8.4 11.6 0.6 0.8 0.9 1.5 Ashoka Buildcon BUY 54 155 189 15 0.2 281 12.9 11.9 13.2 8.6 (7.9) 11.2 4.2 4.5 4.1 4.1 3.8 3.3 0.6 0.5 0.5 15.3 12.6 12.7 3.8 3.5 3.9 0.5 Bharat Electronics BUY 70 113 62 170 2.3 2,437 6.2 7.5 7.0 (20.2) 20.9 (6.9) 11.3 9.3 10.0 6.6 5.7 5.3 1.7 1.6 1.5 15.7 17.6 15.2 3.9 4.7 4.4 15.1 BHEL REDUCE 28 41 48 97 1.3 3,482 2.7 2.6 3.8 (24.0) (2.6) 48.7 10.5 10.8 7.3 2.9 3.0 2.4 0.3 0.3 0.3 2.9 2.8 4.1 4.6 4.1 5.5 16.3 Carborundum Universal ADD 230 345 50 44 0.6 189 13.7 16.3 19.0 4.7 19.2 16.1 16.8 14.1 12.1 10.3 8.2 6.9 2.3 2.1 1.9 14.4 15.6 16.3 1.8 2.1 2.5 0.3 Cochin Shipyard BUY 230 615 168 30 0.4 132 48 56 50 30.6 17.6 (10.8) 4.8 4.1 4.6 (1.2) (0.3) 1.1 0.8 0.7 0.6 17.7 18.3 14.6 5.2 6.1 5.9 1.1 Cummins India BUY 379 520 37 105 1.4 277 26 26 29 (0.2) (2.6) 12.2 14.4 14.8 13.2 13.8 13.8 12.2 2.4 2.3 2.2 17.2 15.8 16.8 3.5 3.4 3.8 8.6 Dilip Buildcon BUY 287 495 73 39 0.5 137 30 27 45 (45.3) (10.8) 64.8 9.4 10.6 6.4 4.5 5.1 3.1 1.1 1.0 0.8 12.2 9.8 14.2 0.2 0.2 0.3 1.1

IRB Infrastructure BUY 66 154 134 23 0.3 351 22 16 16 (7.1) (29.8) 3.8 2.9 4.2 4.0 5.5 6.5 6.4 0.3 0.3 0.3 11.9 7.7 7.5 4.2 3.8 2.3 1.2 -

Kalpataru Power Transmission BUY 208 470 126 32 0.4 153 25 25 39 (16.4) 0.1 53.3 8.2 8.2 5.3 3.8 3.7 3.1 1.0 0.9 0.8 12.0 11.1 15.2 1.6 1.5 2.2 1.2 3, 2020 June KEC International BUY 217 342 57 56 0.7 257 22.0 25 31 16.3 13.4 24.4 9.9 8.7 7.0 6.1 5.5 4.5 2.0 1.7 1.4 22 21 22 1.6 1.2 1.5 1.5 L&T BUY 945 1,220 29 1,327 17.7 1,403 66 42 75 8.0 (36.2) 76.9 14.3 22 12.6 15.6 17.0 12.5 2.2 1.8 1.7 16.1 9.0 13.9 1.1 1.7 2.5 76 Sadbhav Engineering BUY 41 137 235 7 0.1 172 7.2 11.7 13.6 (33.4) 61.1 16.3 5.6 3.5 3.0 4.6 2.5 2.1 0.3 0.3 0.3 5.9 9.0 9.6 ——— 0.3

Siemens SELL 1,110 1,000 (10) 395 5.3 356 26 33 38 (14.9) 28.2 14.7 43 33 29 28.3 21.9 19.3 4.1 3.8 3.5 9.9 11.8 12.5 0.7 0.8 1.0 28 Thermax BUY 755 870 15 90 1.2 113 24 29 36 (33.9) 18.5 24.8 31 26 21 18.9 20.6 16.4 18.9 20.6 16.4 8.8 9.9 11.5 1.0 1.1 1.4 1.8 Capital goods Neutral 2,605 34.7 (2.5) (16.2) 40.9 14.8 17.7 12.6 1.7 1.6 1.4 11.7 8.8 11.5 1.5 1.9 2.4 1,371 Commercial & Professional Services SIS REDUCE 402 405 1 59 0.8 149 15 16 20 5.0 3.8 25.7 27 26 20 12.2 12.3 10.7 4.3 3.7 3.2 17.1 15.6 16.8 0.9 0.2 0.2 0.4

TeamLease Services SELL 1,594 2,300 44 27 0.4 17 68 89 112 18.6 29.8 26.9 23 18.0 14.2 19.9 14.7 10.8 4.2 3.4 2.7 19.5 21 21 ——— 0.5 Commercial & Professional Services Cautious 86 1.1 9.3 12.7 26.2 25 22 17.7 13.7 12.9 10.7 4.2 3.6 3.0 16.7 15.9 16.8 0.6 0.1 0.2 0.8 Commodity Chemicals Asian Paints REDUCE 1,709 1,825 7 1,640 21.8 959 28.9 34.2 40.5 28.5 18.2 18.3 59 50 42 37.5 32.6 28.1 15.4 13.7 12.2 27 29 31 0.8 1.0 1.2 68 Berger Paints SELL 503 430 (14) 488 6.5 971 7.5 8.6 10.2 46.6 14.6 19.1 67 58 49 43.2 36.9 31.2 17.0 14.6 12.6 27 27 28 0.6 0.6 0.8 10.9 Kansai Nerolac BUY 381 450 18 205 2.7 539 9.9 5.7 12.5 14.6 (42.6) 120.1 38 67 30 25.7 39.8 19.9 5.4 5.3 4.8 14.8 8.0 16.5 0.8 0.8 1.2 1.9 Tata Chemicals ADD 316 320 1 80 1.1 255 31.7 31.0 37.5 (26.2) (2.1) 21.0 10.0 10.2 8.4 4.8 4.7 3.9 0.6 0.6 0.6 6.4 6.0 7.0 3.5 3.4 4.2 8.4 Commodity Chemicals Neutral 2,414 32.1 14.9 7.6 24.8 50 46 37 29.3 27.4 22.5 8.0 7.4 6.8 16.0 16.0 18.3 0.9 1.0 1.2 89 Construction Materials ACC BUY 1,288 1,400 9 242 3.2 188 72.3 52.3 72.7 35.8 (27.7) 39.2 17.8 25 17.7 8.2 10.5 7.8 2.1 2.0 1.9 12.3 8.3 11.1 1.1 2.0 2.8 24 Ambuja Cements BUY 191 190 (1) 380 5.1 1,986 10.6 7.5 10.7 49.1 (29.5) 43.3 18.1 26 17.9 6.2 8.3 5.8 1.6 1.5 1.4 9.0 6.0 8.1 0.8 0.8 0.8 13.7 Dalmia Bharat BUY 565 1,000 77 108 1.4 192 17.2 11.4 30.2 8.6 (34.0) 165.0 33 50 18.8 6.0 6.0 4.4 1.0 1.0 0.9 3.1 2.0 5.1 ——— 2.2 Grasim Industries BUY 596 865 45 392 5.2 657 74.4 71.4 90.1 18.9 (4.0) 26.1 8.0 8.4 6.6 4.9 4.2 3.3 0.7 0.6 0.6 8.4 7.5 8.8 1.2 1.2 1.2 22 J K Cement BUY 1,199 1,500 25 93 1.2 77 82.3 78.6 115.5 141.3 (4.5) 46.9 14.6 15.2 10.4 8.9 8.4 6.6 2.9 2.5 2.0 21 17.3 21 0.8 0.8 0.8 1.5 JK Lakshmi Cement BUY 241 275 14 28 0.4 118 23.5 10.7 23.3 478.2 (54.5) 118.0 10.3 23 10.3 4.8 6.3 4.4 1.7 1.6 1.4 17.4 7.2 14.3 1.0 0.7 1.5 1.1 Orient Cement BUY 57 55 (4) 12 0.2 205 4.2 2.5 5.4 82.1 (41.2) 117.3 13.5 23 10.6 6.1 7.0 5.2 1.0 1.0 1.0 8.0 4.5 9.5 1.3 3.5 3.5 0.5 Shree Cement REDUCE 21,201 15,500 (27) 765 10.2 36 435.2 355.3 633.7 34.6 (18.3) 78.3 49 60 33 20.6 23.5 16.1 5.9 5.5 4.9 13.9 9.6 15.5 0.5 0.5 0.5 19.2 UltraTech Cement BUY 3,834 4,000 4 1,107 14.7 289 132.9 115.8 202.7 45.2 (12.8) 75.0 29 33 18.9 13.7 14.3 9.4 2.8 2.6 2.3 10.5 8.2 13.1 0.3 0.4 0.5 36 Construction Materials Cautious 3,126 41.6 39.3 (15.3) 51.8 21 24 16.1 8.5 8.4 6.2 1.9 1.8 1.6 9.2 7.3 10.1 0.6 0.7 0.8 120

Source: Company, Bloomberg, Kotak Institutional Equities estimates

32 KOTAK INSTITUTIONAL EQUITIES RESEARCH 32

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

33 Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Consumer Durables & Apparel Crompton Greaves Consumer SELL 241 185 (23) 151 2.0 627 7.9 5.7 7.9 33.1 (28.2) 38.5 30 42 31 26 32 23 10.3 8.2 6.8 39 21 24 0.0 0.0 1.0 3.4 Havells India SELL 549 475 (14) 344 4.6 626 11.8 8.7 13.8 (6.6) (26.1) 58.5 47 63 40 32 41 27 8.0 7.4 6.7 17.3 12.2 17.7 1.9 0.6 0.9 17.8 Page Industries REDUCE 20,398 15,250 (25) 228 3.0 11 327 273 389 (7.4) (16.5) 42.3 62 75 52 40 47 35 26.2 22.6 18.4 44 32 39 0.8 0.7 1.0 10.4 Polycab ADD 749 725 (3) 112 1.5 149 52 40 51 53.2 (21.7) 27.0 14.5 18.6 14.6 10 12 10 2.9 2.6 2.2 23 14.6 16.2 0.7 0.5 0.7 2.4 TCNS Clothing Co. ADD 381 380 (0) 23 0.3 65 11 10 16 (47.7) (7.0) 62.8 35 38 23 12 12 8.9 3.8 3.6 3.2 11.0 9.7 14.6 - - - 0.2 Vardhman Textiles ADD 710 1,000 41 41 0.5 56 92 120 130 (28.9) 30.0 8.5 7.7 5.9 5.5 5.9 4.6 4.0 0.7 0.6 0.6 9.0 11.0 11.0 4.2 4.2 4.2 0.3 Voltas SELL 558 440 (21) 185 2.5 331 16.2 10.3 17.8 3.4 (36.5) 73.0 34 54 31 28 52 26 4.3 4.1 3.7 12.8 7.7 12.5 0.7 0.5 0.8 18.2 Whirlpool SELL 2,041 1,540 (25) 259 3.4 127 40 26 47 24.8 (34.0) 78.5 51 77 43 35 53 31 10.2 9.4 8.5 22 12.7 21 0.4 0.4 0.9 2.3 Consumer Durables & Apparel Cautious 1,342 17.9 4.7 (19.4) 34 42 29 22 27 19 5.6 5.1 16.8 12.3 15.6 1.0 0.6 55 Consumer Staples Bajaj Consumer Care BUY 146 280 92 22 0.3 148 15.3 15.8 17.7 1.6 3.3 12.1 9.6 9.3 8.3 7.3 7.0 6.1 4.2 3.7 3.2 46 42 42 6.8 7.5 8.2 0.7 Britannia Industries REDUCE 3,451 2,900 (16) 830 11.0 240 59 68 79 22.7 14.3 16.2 58 51 44 43 38 33 18.3 14.9 12.2 32 32 30 0.6 0.8 1.0 37 Colgate-Palmolive (India) ADD 1,367 1,450 6 372 4.9 272 28 30 36 5.9 7.4 19.7 48 45 38 30.6 28.6 24.5 23.3 23.2 22.0 51 52 60 2.0 2.1 2.5 21 Dabur India REDUCE 461 400 (13) 814 10.8 1,767 8.6 9.3 10.6 6.1 7.6 13.9 53 50 44 44 40 34 12.3 11.4 10.5 25 24 25 0.7 1.3 1.5 24 Godrej Consumer Products BUY 640 615 (4) 654 8.7 1,022 13.8 14.8 18.6 (4.8) 7.7 25.2 46 43 34 31 29 24 8.3 7.4 6.6 18.6 18.1 20 0.9 1.1 1.5 18.1 Hindustan Unilever ADD 2,107 2,300 9 4,948 65.8 2,160 31 35 44 10.9 12.8 25.7 68 60 48 51 42 34 56.7 11.4 10.9 86 32 23 1.2 1.5 1.9 242 ITC BUY 197 255 29 2,425 32.3 12,300 11.5 11.3 12.5 12.8 (1.8) 10.8 17.2 17.5 15.8 11.7 12.4 11.1 3.8 3.7 3.7 22 21 23 3.3 5.0 5.7 80 Jyothy Laboratories ADD 109 170 55 40 0.5 367 5.8 6.5 7.4 4.7 11.9 13.0 18.7 16.7 14.8 13.1 11.8 10.4 2.9 2.7 2.5 15.8 16.7 17.8 3.2 3.7 4.1 0.5 Marico BUY 331 350 6 427 5.7 1,290 8.1 8.2 9.4 12.4 1.5 13.7 41 40 35 29 28 24 14.1 13.4 12.7 35 34 37 2.0 2.1 2.4 16.7 Nestle India REDUCE 17,021 16,000 (6) 1,641 21.8 96 204 241 282 22.6 17.9 17.3 83 71 60 57 48 42 84.9 69.4 57.4 70 108 104 2.0 1.2 1.4 41 Tata Consumer Products ADD 368 385 5 337 4.5 922 8.0 8.2 10.9 13.9 2.9 33.2 46 45 34 25 23 19 2.5 2.4 2.3 6.9 5.4 6.9 0.7 1.0 1.2 26 United Breweries ADD 966 1,430 48 255 3.4 264 17.9 25.5 32.6 (15.8) 42.2 27.8 54 38 30 27 20 17 7.1 6.1 5.2 14.0 17.4 18.9 0.2 0.3 0.5 9.9 United Spirits ADD 573 620 8 417 5.5 727 11.5 9.3 14.8 21.7 (19.4) 59.9 50 62 39 29 34 24 10.4 8.9 7.2 23 15.5 21 0.0 0.0 0.0 32 Varun Beverages BUY 605 800 32 175 2.3 289 16.2 14.4 29.1 51.9 (11.3) 102.1 37 42 21 14 14 10 5.3 4.6 3.8 17.6 11.7 20 0.1 0.2 0.3 2.5 Consumer Staples Cautious 13,356 177.7 12.7 6.8 19.2 42 39 33 29 27 23 10.8 8.1 7.6 26 21 23 1.5 2.0 2.3 550 Diversified Financials Bajaj Finance BUY 2,346 2,600 11 1,412 18.8 600 104 66 126 50 (37) 92 23 36 18.7 ——— 4.4 3.9 3.3 20 11.5 19.3 0.4 0.3 0.5 267 Bajaj Finserv BUY 5,185 7,000 35 825 11.0 159 212 238 392 5 12 65 24 22 13.2 ——— 2.6 2.4 2.1 12.2 11.6 16.9 0.3 0.3 0.3 64 Cholamandalam BUY 158 265 68 129 1.7 820 16.4 14.5 18.0 8 (11.4) 23.5 9.6 10.9 8.8 ——— 1.5 1.4 1.2 18.3 13.1 14.4 1.1 1.0 1.3 20 HDFC BUY 1,814 2,150 19 3,141 41.8 1,732 103 65 74 80.1 (37) 14.6 17.7 28 24 ——— 3.6 3.4 3.1 22 12.5 13.2 1.2 1.3 1.4 191 IIFL Wealth REDUCE 900 1,200 33 78 1.0 85 34.0 35.9 58.2 (25) 5.8 62.1 27 25 15.5 ——— 2.6 2.5 2.4 9.9 10.3 16.2 2.8 2.6 4.2 0.4 L&T Finance Holdings ADD 61 85 40 121 1.6 2,005 8 5 9 (24.1) (38) 72.6 7.1 11.5 6.6 ——— 0.8 0.8 0.7 14.7 7.0 11.3 3.1 2.4 2.7 15.5 LIC Housing Finance ADD 254 475 87 128 1.7 505 53.2 72.1 83.1 16 35.6 15.2 4.8 3.5 3.1 ——— 0.8 0.7 0.6 15.4 18.2 18.1 3.5 4.7 5.4 20 Muthoot Finance ADD 901 900 (0) 361 4.8 401 72 66 77 46.9 (8) 16.9 12.5 13.6 11.6 ——— 3.0 2.6 2.3 27 21 21 1.9 1.8 2.1 25 PNB Housing Finance NR 186 —— 31 0.4 169 66.9 77.6 88.6 (6) 16.0 14.2 2.8 2.4 2.1 ——— 0.4 0.3 0.3 14.1 14.6 14.8 4.0 4.6 5.3 1.8 India Daily Summary Daily Summary India Shriram City Union Finance BUY 643 1,975 207 42 0.6 66 171 182 204 13.9 6 12.3 3.8 3.5 3.2 ——— 0.6 0.5 0.5 16.4 15.2 15.0 3.4 3.6 4.0 0.2 Shriram Transport BUY 586 1,100 88 133 1.8 227 132.2 93.2 130.7 17 (29.5) 40.2 4.4 6.3 4.5 ——— 0.8 0.7 0.6 17.6 11.0 13.9 3.2 2.4 3.3 49 Diversified Financials Neutral 6,496 86.4 36.0 (21.4) 35.0 15.4 19.6 14.5 2.4 2.3 2.1 15.5 11.9 14.3 1.1 1.1 1.4 675

Source: Company, Bloomberg, Kotak Institutional Equities estimates KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK -

June 3, 3, 2020 June

KOTAK INSTITUTIONAL EQUITIES RESEARCH 33 Kotak Institutional Equities: Valuation summary of KIE Universe stocks India Daily Summary Daily Summary India Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Electric Utilities CESC BUY 615 820 33 82 1.1 133 84 101 114 (7) 19.9 12.3 7.3 6.1 5.4 5.7 5.1 4.6 0.6 0.6 0.5 8.9 9.9 10.3 1.9 2.0 2.1 6.1 JSW Energy BUY 45 65 44 74 1.0 1,640 6.3 5.3 5.2 49 (17) (1.8) 7.1 8.5 8.7 4.6 4.3 3.7 0.6 0.6 0.6 8.9 7.2 6.6 ——— 1.0 NHPC ADD 20 27 35 200 2.7 10,045 3.4 3.4 3.7 34.3 2 6.8 5.9 5.8 5.4 5.5 5.9 5.4 0.6 0.6 0.6 10.8 10.5 10.6 8.5 7.7 8.3 2.4 NTPC BUY 97 150 55 957 12.7 9,895 12.3 14.4 15.5 9.4 16.9 7.9 7.9 6.7 6.2 9.1 7.6 6.1 0.8 0.8 0.7 10.9 11.8 11.7 3.8 4.5 4.8 28 Power Grid BUY 165 235 42 863 11.5 5,232 20.2 23 25 6 13.5 11.1 8.2 7.2 6.5 6.8 6.3 5.9 1.3 1.2 1.1 17.0 17.4 17.5 4.3 4.9 5.4 37 Tata Power BUY 43 55 29 115 1.5 2,705 4.4 4.9 6.5 110 11 31.8 9.6 8.6 6.5 7.1 6.3 5.7 0.6 0.6 0.5 6.9 7.1 8.7 ——— 11.4 Electric Utilities Attractive 2,292 30.5 13.0 12.6 9.9 7.8 6.9 6.3 0.9 0.8 0.8 11.5 12.0 12.1 4.0 4.4 4.8 85 Fertilizers & Agricultural Chemicals Bayer Cropscience SELL 5,065 3,400 (33) 228 3.0 45 129.3 134.2 149.9 64.7 3.8 11.7 39 38 34 30 27 24 8.8 7.4 6.3 24 21 20 0.5 0.5 0.6 1.8 Dhanuka Agritech SELL 580 470 (19) 28 0.4 48 28.0 30.3 33.4 18.1 8.5 10.1 20.8 19.1 17.4 16.4 14.6 12.8 3.7 3.2 2.8 19.1 17.9 17.1 1.0 1.0 1.2 0.3 Godrej Agrovet SELL 375 375 (0) 72 1.0 192 11.5 12.9 17.0 0.8 11.8 32 33 29 22 19 15 12 3.2 3.0 2.7 10.4 10.7 12.9 1.5 1.2 1.6 0.9

Rallis India ADD 226 230 2 44 0.6 195 9.0 10.6 14.2 7.4 17.1 33.7 24.9 21.3 15.9 17.1 14.6 11.2 3.1 2.8 2.5 13.1 13.9 16.5 1.1 1.2 1.3 1.8 -

UPL SELL 425 350 (18) 324 4.3 765 23.2 30.3 35.7 22.7 30.4 17.8 18 14.0 11.9 8.5 7.5 6.6 2.0 1.8 1.6 11.5 13.5 14.3 1.4 1.8 2.2 37 3, 2020 June Fertilizers & Agricultural Chemicals Attractive 911 12.1 26.4 22.2 18.9 27 22 18.4 12.7 11.1 9.6 3.5 3.1 2.8 13.1 14.3 15.0 0.9 1.1 1.3 46 Gas Utilities GAIL (India) BUY 97 150 55 435 5.8 4,510 11.5 9.8 11.4 (17.9) (14.5) 16.7 8.4 9.9 8.4 6.1 7.0 6.0 1.0 0.9 0.8 11.5 9.4 10.4 6.7 4.1 4.7 21

GSPL SELL 212 225 6 120 1.6 564 17.0 14.2 13.1 20.4 (16.1) (7.9) 12.5 14.9 16.1 5.6 6.2 6.3 1.8 1.6 1.5 15.4 11.5 9.7 1.2 1.0 1.2 1.8 Indraprastha Gas SELL 473 380 (20) 331 4.4 700 16.7 17.4 20.7 39.2 4.2 18.5 28.2 27.1 22.9 21.4 20.1 16.7 6.7 5.7 5.0 26 23 23 0.8 0.9 1.1 22 Mahanagar Gas ADD 966 1,300 35 95 1.3 99 76.8 84.0 89.4 36.7 9.4 6.5 12.6 11.5 10.8 8.0 7.0 6.3 3.4 2.9 2.6 29 27 25 3.4 3.9 4.6 9.4 Petronet LNG BUY 244 300 23 366 4.9 1,500 16.8 17.8 22.3 11.7 6.1 25.3 14.5 13.7 10.9 8.3 7.8 6.3 3.3 3.0 2.8 24 23 27 4.1 4.7 6.4 11.5 Gas Utilities Attractive 1,347 17.9 (1.5) (5.9) 16.4 12.7 13.5 11.6 8.2 8.5 7.3 1.9 1.8 1.6 14.9 13.0 14.0 3.8 3.2 4.0 65

Health Care Services Apollo Hospitals BUY 1,361 1,820 34 189 2.5 139 23.6 23 49 39 (2) 112 57.6 58.7 27.7 14.4 16.3 11.9 5.4 5.1 4.6 9.6 8.9 17.4 0.6 0.7 1.4 23 Aster DM Healthcare NR 97 —— 48 0.6 505 6.9 8.8 10.6 4 27.5 21 14.1 11.0 9.1 5.9 5.0 4.3 1.8 1.6 1.4 13.3 15.0 15.8 ——— 0.4 Dr Lal Pathlabs SELL 1,517 1,180 (22) 126 1.7 83 27.1 26.1 37.7 13.4 (3.5) 44.5 56.1 58.1 40.2 34.7 35.7 25.0 12.3 10.7 9.0 23 19.6 24 0.5 0.5 0.7 4.2 HCG BUY 115 140 21 10 0.1 89 (7.7) (6.4) (1.8) (128) 16 72 NM NM NM 9.4 7.8 5.2 2.1 1.7 1.8 NM NM NM ——— 0.5 Metropolis Healthcare SELL 1,438 1,240 (14) 73 1.0 50 29.2 28.9 40.0 22.0 (1.2) 39 49.2 49.8 35.9 30.3 29.5 21.7 13.8 11.8 9.7 31 26 30 0.5 0.6 0.8 6.1 Narayana Hrudayalaya BUY 296 380 29 60 0.8 204 4.0 3.0 10.6 37.6 (24) 250 74.2 97.8 27.9 18.9 19.8 11.7 5.2 4.9 4.2 7.3 5.2 16.2 ——— 1.9 Health Care Services Attractive 508 6.8 15 4 75 47.8 46.2 26.3 14.5 14.4 10.9 5.3 4.7 4.1 11.2 10.1 15.7 0.4 0.5 0.8 36 Hotels & Restaurants Jubilant Foodworks ADD 1,701 1,750 3 224 3.0 132 24 9 30 (2) (62.3) 240 72.1 191.3 56.2 24.8 32.4 19.6 19.9 19.6 15.0 26 10.3 30 0.4 0.2 0.6 37 Lemon Tree Hotels BUY 20 38 93 16 0.2 790 -0.1 -0.9 0.6 (118) (655) 161 NM NM 35.6 12.7 26.1 10.0 1.9 2.1 2.0 NM NM 5.7 — 0.0 1.1 0.7 Hotels & Restaurants Attractive 240 3.2 (18) (85) 868 79.3 519.4 53.6 22.2 31.4 17.5 12.3 12.6 10.5 15.5 2.4 19.6 0.3 0.2 0.6 38 Insurance HDFC Life Insurance ADD 500 530 6 1,009 13.4 2,009 6.4 3.7 5.6 1.4 (42.4) 50.5 77.5 134.5 89 ——— 14.4 13.7 12.8 20 10.4 14.8 0.0 0.2 0.3 39 ICICI Lombard SELL 1,295 875 (32) 588 7.8 454 26.3 30.8 35.7 14 17 16 49.3 42.0 36 ——— 9.6 8.0 6.8 21 21 20 0.3 0.2 0.6 12.2 ICICI Prudential Life BUY 380 475 25 546 7.3 1,436 7.4 9.7 12.2 (6) 30.8 25.5 51.2 39.1 31 ——— 7.2 6.3 5.4 14.8 17.2 18.7 0.2 0.4 0.0 18.3 Max Financial Services ADD 462 550 19 125 1.7 270 10.1 10.3 28.1 452 2 173 45.7 44.8 16.4 —————— 12.7 14.5 40 0.0 0.2 1.4 15.4 SBI Life Insurance BUY 780 1,000 28 780 10.4 1,000 14.2 14.9 15.6 7.2 4.9 4.5 54.8 52.3 50 ——— 9.8 8.4 7.4 18.4 17.3 15.8 0.0 0.3 0.3 15.6 Insurance Attractive 3,048 40.6 8.4 2.7 32.3 58.1 56.5 43 9.9 8.7 7.1 17.0 15.3 16.6 0.0 0.2 0.2 101

Source: Company, Bloomberg, Kotak Institutional Equities estimates

34 KOTAK INSTITUTIONAL EQUITIES RESEARCH 34

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

35 Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Internet Software & Services Info Edge SELL 2,603 2,470 (5) 319 4.2 122.0 31.0 39.7 48.7 20.0 28.0 22.7 84.0 65.6 53.5 71.4 53.8 43.4 12.1 10.7 9.4 15.3 17.3 18.7 0.3 0.4 0.5 13.7 Just Dial BUY 410 420 2 27 0.4 64.9 42.0 24.3 33.0 31.4 (42.2) 35.9 9.8 16.9 12.4 4.1 9.7 5.7 2.1 2.2 1.8 24 12.2 16.1 0.0 0.0 0.0 17.4 Internet Software & Services Attractive 345 4.6 24.6 (2.6) 25.8 53.1 54.5 43.3 45.1 44.9 35.1 8.8 8.3 7.3 16.6 15.3 16.8 0.3 0.4 0.4 31 IT Services HCL Technologies ADD 560 570 2 1,520 20.2 2,710 40.8 38.1 42.9 11.4 (6.6) 12.5 13.7 14.7 13.1 8.5 8.6 7.4 3.1 2.6 2.3 24 19.5 19.0 0.9 1.8 2.4 42 Hexaware Technologies REDUCE 267 260 (3) 80 1.1 302 21.2 18.8 21.1 9.9 (11.2) 12.2 12.6 14.2 12.6 9.1 9.2 7.8 2.9 2.6 2.3 25 19.2 19.2 3.2 2.2 3.7 2.3 Infosys BUY 708 700 (1) 3,016 40.1 4,256 38.9 36.2 40.5 10.0 (7.1) 12.0 18.2 19.6 17.5 12.7 12.8 11.3 4.6 4.3 4.0 25 23 24 2.5 3.7 4.2 108 L&T Infotech ADD 1,859 1,850 (0) 324 4.3 175 86.6 83.5 101.0 0 (3.6) 21.0 21.5 22.3 18.4 15.2 14.6 12.8 6.0 5.3 4.5 30 25 26 1.4 1.7 1.9 3.3 Mindtree REDUCE 920 760 (17) 151 2.0 165 38.3 46.9 55.3 (16) 22 18 24.0 19.6 16.6 12.6 11.0 9.3 4.8 4.2 3.5 19.5 23 23 3.3 1.5 1.8 12.1 Mphasis REDUCE 877 750 (14) 164 2.2 187 63.5 56.2 62.2 13 (11.5) 10.6 13.8 15.6 14.1 9.2 9.7 8.6 2.8 2.6 2.4 21 17.4 17.9 4.0 4.0 4.0 4.6 TCS REDUCE 2,047 1,705 (17) 7,682 102.2 3,752 86.2 82.6 92.0 4 (4.2) 11.3 23.8 24.8 22.3 17.2 17.7 15.8 8.9 8.3 7.7 36 35 36 3.3 3.2 3.6 118 Tech Mahindra BUY 548 630 15 477 6.3 880 45.9 35.4 48.0 (3.9) (22.8) 35.6 11.9 15.5 11.4 7.2 7.6 5.8 2.2 2.1 1.9 19.2 13.8 17.2 2.8 2.8 3.1 35 Wipro REDUCE 216 195 (10) 1,233 16.4 5,848 16.6 15.8 17.1 11.1 (5.0) 8.3 13.0 13.7 12.6 7.8 7.8 7.0 2.3 1.9 1.8 17.3 15.1 14.9 0.7 0.9 3.9 18.8 IT Services Cautious 14,646 194.9 4.3 (6.5) 12.6 18.8 20.2 17.9 12.9 13.2 11.6 5.0 4.5 4.1 26 22 23 2.6 2.9 3.6 344 Media DB Corp. REDUCE 65 135 108 11 0.2 175 18.0 18.7 18.6 14.6 4.1 (0.5) 3.6 3.5 3.5 1.6 1.4 1.4 0.6 0.6 0.6 16.9 17.4 17.4 19.3 23.1 26.2 0.1 Jagran Prakashan REDUCE 40 35 (11) 11 0.1 281 7.0 3.3 7.0 (20.9) (52) NA 5.7 11.8 NA 1.7 2.2 NA 0.6 0.6 NA 10.3 4.9 9.9 11.4 5.1 12.7 0.1 PVR BUY 971 1,625 67 50 0.7 51 32.7 -32.7 59.3 (24) (200) 281 29.7 NM 16.4 9.4 30.9 7.0 2.6 2.9 2.5 10.7 NM 16.2 0.3 (0.3) 0.6 31 Sun TV Network REDUCE 415 525 27 163 2.2 394 37.8 41.4 43.8 4 9.5 5.7 11.0 10.0 9.5 7.6 6.8 6.2 2.7 2.5 2.3 26 26 25 4.8 5.4 5.9 13.3 Zee Entertainment Enterprises REDUCE 199 145 (27) 191 2.5 960 17.9 13.1 16.2 8.6 (27.1) 24.4 11.1 15.2 12.2 7.5 9.4 7.3 2.0 1.9 1.7 18.5 12.6 14.6 2.3 2.8 2.8 47 Media Attractive 427 5.7 3.6 (19.2) 30.9 11.0 13.6 10.4 6.8 7.9 6.0 2.0 1.9 1.8 18.3 14.1 17.1 3.7 4.0 4.6 92 Metals & Mining Hindalco Industries BUY 141 225 59 317 4.2 2,224 21.3 10.3 19.8 (13.6) (51.6) 92 6.6 13.7 7.1 4.9 6.4 4.7 0.5 0.5 0.5 7.9 3.6 6.7 0.9 0.9 0.9 29 Hindustan Zinc BUY 173 215 24 730 9.7 4,225 16.1 11.5 15.3 (14.5) (28.4) 32.7 10.7 15.0 11.3 5.8 7.6 5.7 1.8 2.2 2.2 18.4 13.2 19.4 9.5 6.7 8.9 2.0 Jindal Steel and Power BUY 129 200 55 132 1.8 1,020 (7.7) (9.0) 14.6 (343) (18) 262 NM NM 8.8 6.3 7.3 4.8 0.4 0.4 0.4 NM NM 4.7 — — — 34 JSW Steel ADD 192 180 (6) 464 6.2 2,402 10.1 (0.4) 14.8 (68.3) (104) 4,298.7 19.0 NM 12.9 9.0 11.4 6.9 1.3 1.3 1.2 6.8 NM 9.5 1.1 1.1 1.1 29 National Aluminium Co. SELL 31 24 (22) 58 0.8 1,866 0.4 0.3 1.8 (95) (23) 430.1 72.0 93.5 17.6 6.7 9.3 6.7 0.6 0.6 0.6 0.8 0.6 3.1 2.6 1.1 5.7 4.6 NMDC ADD 85 105 23 261 3.5 3,062 15.5 11.7 10.6 5.2 (24.7) (9) 5.5 7.3 8.0 3.6 4.8 5.4 0.9 0.9 0.8 17.7 12.5 10.7 9.1 6.8 6.2 7.9 Tata Steel BUY 319 430 35 362 4.8 1,146 (8.9) 6.0 71.4 (110) 167 1,088 NM 53.1 4.5 8.2 8.3 4.7 0.6 0.6 0.5 NM 1.1 12.4 3.1 3.1 3.1 66 Vedanta BUY 97 110 14 360 4.8 3,717 9.3 5.3 13.1 (39) (43) 150.0 10.4 18.4 7.4 5.2 6.5 4.8 0.5 0.6 0.6 5.4 3.0 7.5 10.3 10.3 10.3 42 Metals & Mining Attractive 2,685 35.7 (52.5) (39.0) 165.4 13.1 21.5 8.1 6.3 7.6 5.2 0.8 0.8 0.8 6.0 3.7 9.3 5.6 4.6 5.3 36

Source: Company, Bloomberg, Kotak Institutional Equities estimates

Daily Summary India

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK

-

June 3, 3, 2020 June

KOTAK INSTITUTIONAL EQUITIES RESEARCH 35

Kotak Institutional Equities: Valuation summary of KIE Universe stocks India Daily Summary Daily Summary India Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Oil, Gas & Consumable Fuels BPCL BUY 342 490 43 741 9.9 1,967 23 34 36 (35.6) 45.0 4.9 14.6 10.1 9.6 9.1 7.4 7.0 1.7 1.6 1.5 12.2 16.5 16.0 4.2 5.2 5.4 46.9 Coal India BUY 143 230 60 884 11.8 6,163 26 23 24 (8) (12.1) 3.9 5.5 6.3 6.1 4.8 5.5 4.7 2.8 2.6 2.5 55.1 43.2 42.3 10.5 13.9 13.9 25.4 HPCL BUY 194 250 29 295 3.9 1,524 23 26 26 (43.2) 16.9 0.2 8.6 7.4 7.3 8.4 8.5 8.6 1.0 0.9 0.8 11.8 12.9 12.0 4.7 5.4 5.5 21.0 IOCL BUY 86 130 52 807 10.7 9,181 9.5 15.2 15.5 (46.9) 59.7 2.0 9.0 5.6 5.5 4.9 4.2 4.1 0.7 0.7 0.6 7.9 12.1 11.8 6.0 8.9 9.0 19.9 Oil India SELL 87 70 (20) 95 1.3 1,084 21 1 7 (32) (93.9) 418.0 4.2 69.2 13.4 2.1 6.4 4.5 0.3 0.3 0.3 7.9 0.5 2.4 10.3 0.6 3.0 3.8 ONGC SELL 84 60 (29) 1,061 14.1 12,580 15 0 7 (35) (99.2) 5,537.4 5.5 663.5 11.8 3.0 6.4 4.2 0.4 0.4 0.4 8.0 0.1 3.6 8.3 0.9 3.6 35.7 Oil, Gas & Consumable Fuels Attractive 12,984 172.8 (21.5) (14.2) 32.3 13.8 16.1 12.2 8.3 9.2 7.1 1.4 1.3 1.2 10.0 8.1 10.0 2.4 2.3 2.5 629.5 Pharmaceuticals Aurobindo Pharma ADD 733 690 (6) 430 5.7 584 47 49 53 15.3 5 8.8 15.7 15.0 13.8 9.9 9.2 8.1 2.6 2.3 2.0 16.8 15.3 14.6 0.8 1.0 1.2 62.4 Biocon SELL 383 210 (45) 459 6.1 1,202 6.2 7.9 9.5 2 27 20.3 62 49 40 28.6 21.6 17.7 6.2 5.7 5.1 10.6 11.7 12.7 0.2 0.7 0.9 37.6 Cipla BUY 638 650 2 514 6.8 806 19.2 27 32 1.1 39 20 33 24.0 19.9 16.3 13.5 11.2 3.2 2.9 2.6 9.9 12.2 13.2 1.2 0.8 1.0 68.9

Dr Reddy's Laboratories SELL 3,895 3,100 (20) 647 8.6 166 176 147 188 76 (16) 27.5 22 26.4 20.7 12.8 14.7 11.4 4.2 3.7 3.2 13.9 13.9 15.5 0.6 0.6 0.8 64.2 -

Laurus Labs ADD 467 540 16 50 0.7 107 23.9 34.7 38 117.9 45 10 20 13.5 12.3 10.7 8.6 7.3 2.8 2.3 2.0 15.3 17.3 16.0 (1—) — — 8.5 3, 2020 June Lupin ADD 871 900 3 395 5.3 450 22 32 46 3.6 46 44 40 27 19.0 15.5 12.1 8.8 3.1 2.8 2.5 7.4 10.4 13.3 0.7 0.5 0.8 43.4 Sun Pharmaceuticals ADD 473 480 1 1,135 15.1 2,406 16.7 19.2 24 3.8 15 25 28 25 19.7 14.9 12.9 10.5 2.5 2.3 2.1 9.3 9.4 11.2 1.5 0.8 1.0 85.1 Torrent Pharmaceuticals REDUCE 2,369 2,350 (1) 401 5.3 169 57 70 86 22.6 22 22 41 34 28 19.7 17.0 14.5 8.3 7.2 6.1 20.1 21.2 22.2 1.8 1.0 1.3 27.7

Pharmaceuticals Neutral 4,031 53.6 18.0 13 23 28 25 20.5 15.0 13.4 10.9 3.4 3.0 2.7 11.8 12.0 13.2 1.0 0.8 1.0 397.7 Real Estate Brigade Enterprises BUY 113 280 149 23 0.3 204 8.3 10 18 (29) 17 82 13.5 11.5 6.4 11.0 7.4 4.5 1.0 1.0 0.8 7.7 8.5 14.1 2.2 2.2 2.2 0.5 DLF BUY 157 230 46 390 5.2 2,475 4.5 6.9 10.6 (24) 51 54 35 22.9 14.9 32.4 36.8 21.6 1.1 1.0 1.0 3.2 4.6 6.8 1.3 1.3 1.3 20.9 Embassy Office Parks REIT ADD 345 400 16 266 3.5 772 9.9 12.3 14.1 110 24 15 35 28 24 16.9 15.9 14.6 1.2 1.3 1.4 3.4 4.4 5.4 7.1 7.7 8.6 3.3

Godrej Properties SELL 767 610 (20) 193 2.6 252 10.7 10.9 17.7 (2.7) 2 62.2 71 70 43 60.4 113.0 102.6 4.0 3.8 3.5 7.4 5.6 8.4 — — — 4.8 Oberoi Realty ADD 352 575 64 128 1.7 364 22 34 38 (4.0) 55.5 12 16.3 10.5 9.3 15.2 9.2 7.9 1.5 1.3 1.1 9.4 13.1 13.1 0.6 0.6 0.6 3.3 Prestige Estates Projects ADD 165 410 148 66 0.9 378 13.9 13.9 14 59.9 (0) 2 12 12 11.6 6.2 5.9 5.5 1.2 1.1 1.1 11.3 10.1 9.5 0.9 0.9 0.9 1.7 Sobha BUY 211 465 121 20 0.3 95 30 35 44 (5) 19.4 22.9 7.1 5.9 4.8 4.9 3.8 3.5 0.8 0.7 0.7 12.1 13.1 14.4 3.3 3.3 3.3 1.3 Sunteck Realty BUY 163 320 97 24 0.3 140 12.2 11.3 25 (24.6) (7) 118 13 14.3 6.6 11.9 13.0 5.2 0.8 0.7 0.7 5.9 5.2 10.5 0.6 0.6 0.6 0.7 Real Estate Neutral 1,110 14.8 6.7 31.3 33.9 27 21 15.4 15.6 13.8 11.1 1.3 1.3 1.2 4.8 6.2 7.9 2.4 2.5 2.7 36.4 Retailing Aditya Birla Fashion and Retail BUY 131 150 15 101 1.3 773 (2.1) (4.2) 2.7 (151.4) (96.4) 165.1 NM NM 48 10.4 13.6 8.1 9.3 13.2 10.4 NM NM 24.3 — — — 3.4 Avenue Supermarts SELL 2,382 1,480 (38) 1,543 20.5 628 21.0 22 39 45.1 5.8 74.1 113 107 62 71 71 41 13.5 12.3 10.3 15.8 12.2 18.2 — — — 15.5 Titan Company BUY 976 1,260 29 867 11.5 888 16.1 16 26 (4.3) (3.7) 67.8 61 63 37 36 38 24 12.6 11.5 9.7 22.1 19.1 28.1 0.6 0.8 1.1 51.5 Retailing Cautious 2,511 33.4 (5.0) (3.5) 101.8 97 101 50 44 48 29 13.2 12.1 10.1 13.6 12.0 20.2 0.2 0.3 0.4 70.4 Speciality Chemicals Castrol India BUY 124 180 45 123 1.6 989 8.4 9.4 10.1 16.8 12.0 8.2 14.9 13.3 12.3 9.9 8.8 8.1 9.0 7.9 7.1 65.3 63.5 60.9 4.4 6.0 6.6 2.5 Pidilite Industries REDUCE 1,491 1,425 (4) 758 10.1 508 24.8 28 33 40.1 14.0 17.2 60 53 45 44 39 33 15.4 13.1 11.2 27.9 26.9 26.9 0.6 0.6 0.8 21.1 S H Kelkar and Company BUY 59 95 61 8 0.1 141 4.6 4.6 6.2 (24.3) (1.0) 35.8 12.8 12.9 9.5 7.0 6.6 5.1 1.0 1.0 0.9 7.8 7.6 9.8 3.4 1.7 3.0 0.4 SRF ADD 3,680 3,900 6 212 2.8 57 144 174 207 28.6 21.2 18.8 25.6 21.1 17.8 15.8 12.8 10.8 4.2 3.6 3.1 18.1 18.4 18.6 0.4 0.5 0.5 13.6 Speciality Chemicals Neutral 1,100 14.6 27.4 15.1 15.5 37 32 27.8 24.5 21.1 18.2 9.1 7.8 6.7 24.7 24.4 24.2 1.0 1.2 1.4 37.7

Source: Company, Bloomberg, Kotak Institutional Equities estimates

36 KOTAK INSTITUTIONAL EQUITIES RESEARCH

36

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

37 Fair O/S ADVT Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo

Company Rating 2-Jun-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E (US$ mn) Telecommunication Services Bharti Airtel BUY 558 690 24 3,045 40.5 5,455 (6.7) 5.7 14.5 NM NM NM NM 98.6 38.6 10.7 8.4 6.8 3.9 4.0 3.8 NM 4.0 10.0 0.4 1.1 1.1 164.4 Bharti Infratel BUY 223 185 (17) 413 5.5 1,850 16.5 16.5 17.7 25.7 0.2 6.9 13.5 13.5 12.6 5.6 5.4 5.1 3.1 3.0 3.0 21.7 22.5 23.9 4.8 7.2 7.6 24.0 Vodafone Idea RS 8 —— 222 3.0 28,736 (22.3) (4.0) (6.2) NM NM NM NM NM NM 20.8 10.2 9.3 1.0 1.9 (3.6) NM NM NM ——— 33 Tata Communications BUY 476 425 (11) 136 1.8 285 10.0 7.9 15.1 47.3 (21.2) 90.1 47.3 60.0 31.6 7.5 7.7 6.5 562.6 56.6 20.7 NM 171 96.1 1.6 1.6 1.6 1.3 Telecommunication Services Cautious 3,815 50.8 NM 65.2 51.6 NM NM NM 11.1 8.4 7.1 3.4 3.7 4.3 NM NM NM 0.8 1.6 1.7 222.6 Transportation Adani Ports and SEZ BUY 340 385 13 691 9.2 2,032 23.9 18.8 22.8 19.7 (21.4) 21.2 14.2 18.1 14.9 12.1 11.9 10.2 2.7 2.4 2.1 19.4 14.1 15.1 3.8 1.1 1.0 22.7 Container Corp. BUY 392 400 2 239 3.2 609 16.6 19.3 24.3 1.5 16.5 26.0 24 20 16 12.6 11.2 8.8 2.3 2.1 2.0 9.7 10.9 12.9 0.6 2.1 2.7 9.5 Gateway Distriparks BUY 84 162 93 9 0.1 109 3.9 6.0 9.2 (42.8) 55.9 51.7 21.7 13.9 9.2 5.7 4.7 3.8 0.6 0.6 0.5 2.9 4.1 6.0 3.6 3.6 3.6 0.1 GMR Infrastructure BUY 20 26 31 120 1.6 6,036 (3.1) (1.8) (0.8) (25.4) 40.9 55.9 NM NM NM 15.8 18.4 16.5 (4.4) (7.1) (5.5) 106.6 55.8 25.2 ——— 4.6 Gujarat Pipavav Port BUY 63 117 84 31 0.4 483 6.2 5.7 7.2 44.9 (8.2) 26.7 10.3 11.2 8.8 5.6 4.9 4.3 1.5 1.5 1.5 14.7 13.4 16.9 8.4 7.8 9.9 0.4 InterGlobe Aviation SELL 946 925 (2) 364 4.8 383 (6.5) (189.9) 66.4 (258.9) ####### 135.0 NM NM 14.2 4.1 (8.3) 1.9 6.2 ##### 1.9 NM NM 253.3 (0.0) 0.0 0.0 41 Mahindra Logistics ADD 269 275 2 19 0.3 71 8.9 5.9 10.3 (29.0) (34.2) 75.8 30 46 26 12.5 14.2 10.0 3.5 3.3 3.0 12.2 7.5 12.2 ——— 0.3 Transportation Attractive 1,472 19.6 1.6 (177.1) 368.5 35 NM 17.1 10.4 17.8 7.8 3.4 3.5 3.0 9.6 NM 17.8 2.1 1.0 1.2 78 KIE universe 102,296 1361.3 (4.2) 10.2 38.1 23 21.2 15.4 11.2 11.4 9.0 2.3 2.1 2.0 10.0 10.1 12.7 1.6 1.8 2.1

Notes: (a) We have used adjusted book values for banking companies. (b) 2020 means calendar year 2019, similarly for 2021 and 2022 for these particular companies. (c) Exchange rate (Rs/US$)= 75.15

Source: Company, Bloomberg, Kotak Institutional Equities estimates India Daily Summary Daily Summary India KOTAK INSTITUTIONAL EQUITIES RESEARCH EQUITIES INSTITUTIONAL KOTAK -

June 3, 3, 2020 June

KOTAK INSTITUTIONAL EQUITIES RESEARCH 37 Disclosures of of the following trategic transaction As of March 31, 2020 n a merger or s any, noare longer in effect for this stock , if, fair value , any, if for this stock,because is there notsufficient a

fair valuefair

.

Percentage of companies covered by Kotak Institutional Equities, the specifiedwithin category. Percentage of companies each within category for which Kotak Institutional Equities and or its affiliates has provided investment banking services the previouswithin months.12 * The above categories are defined as follows: Buy = We expect this stock to deliver more returns than 15% over the next months;12 Add = We expect this stock to deliverreturns 5-15% over the next months;12 Reduce = We expect this stock to deliver returns over -5-+5% the next months;12 Sell = We expect this stock to deliver less returns overthan -5% the next months.12 Our target prices are also on a horizon 12-month basis. These ratings are used illustratively to comply with applicable regulations. As of 31/03/2020 Kotak Institutional Equities Investment Research had investment ratings on 204 equity securities. luded

r r display is not or applicable. months. . The previous investment and rating

SELL 1.5%

17.2% fair valuefair

term volatility in stock prices related to movements in the market.Hence, a particular Ratingmay not , if, any,have been suspended temporarily.Such suspension is in compliance with applicable regulation(s) - 0.0% 12.7% fair valuefair +5% returns over the next 12 months.

- REDUCE month horizon basis. 5 - - 15% returns over the next 12 5% returns over the next months.12 The information is not available fo - -

ake into account short ADD 23.0% 2.0% Kotak SecuritiesKotak has suspended coverage of this company.

are also on12 a Kotak SecuritiesKotak Research has suspended theinvestment and rating

The information is not meaningful and is therefore exc

Kotak SecuritiesKotak does not cover this company.

The investment and rating

The coverage view represents each analyst’s fundamental overall outlook on the Sector.The coverage viewwill consist of one

Attractive, Neutral, Cautious. BUY 3.9% 47.1% We expect this stock to deliver

We this expect stock to deliver 5 We expect this to stock deliver < We expect this to stock deliver more than 15% returns over the next months.12

Fair Value estimates 0% 40% 30% 20% 10% 70% 60% 50% Source: Kotak Institutional Equities Kotak Institutional Equities Research coverage universe coverage Research Equities Institutional Kotak Distribution of ratings/investment banking relationships NA = NA AvailableNot or Applicable.Not = NM Meaningful.Not involving this company and in certain other circumstances. CS = Coverage Suspended. = NC Covered.Not = RatingRS Suspended. fundamental basis for determining an investment rating or and shouldnot be relied upon. Other definitions Other Coverage view. designations: ratings/identifiers Other NR = Rated.Not and/or Kotak Securities policies in circumstances when Securities Kotak or its affiliates is acting in an advisory capacity i SELL. Our Our Ratings System notdoes t strictly be in accordance with the Rating System all at times. Ratings other and definitions/identifiers ratings of Definitions BUY. ADD. REDUCE. Disclosures

Corporate Office Overseas Affiliates Kotak Securities Ltd. Kotak Mahindra (UK) Ltd Kotak Mahindra Inc 27 BKC, Plot No. C-27, “G Block” 8th Floor, Portsoken House 369 Lexington Avenue Bandra Kurla Complex, Bandra (E) 155-157 Minories 28th Floor, New York Mumbai 400 051, India London EC3N 1LS NY 10017, USA Tel: +91-22-43360000 Tel: +44-20-7977-6900 Tel:+1 212 600 8856

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