RESULT UPDATE

VOLTAS Uncertainty prevails

India Equity Research| Engineering and Capital Goods

Voltas’ (VOLT) Q1FY14 numbers disappointed with flat revenue growth. EDELWEISS 4D RATINGS

Electro Mechanical Projects & Services (EMPS) business declined and Absolute Rating HOLD reported EBIT loss (last seen in Q3FY04) due to cost overruns in its Rating Relative to Sector Performer international operations. Revenue growth was also muted in Unitary Risk Rating Relative to Sector Low Cooling Product (UCP) and Engineering Products & Services (EPS) at 4% Sector Relative to Market Underweight each. EBTIDA margin dropped 200bps to 3.8% despite improvement in UCP and EPS segments. PAT dropped 48% led by weak operating MARKET DATA (R: VOLT.BO, B: VOLT IN) performance. We cut our FY14E and FY15E earnings by 13% each as we CMP : INR 70 trim margin estimate by 60bps each given the likely cost overruns in Target Price : INR 80 international projects in addition to margin pressure. VOLT has finally 52-week range (INR) : 139 / 69 seen some traction in order intake from Middle East but margins are Share in issue (mn) : 330.9 likely to remain under stress. Thus, we maintain ‘HOLD’ with revised M cap (INR bn/USD mn) : 23/ 396 target price of INR80 (INR92 earlier). Avg. Daily Vol.BSE/NSE(‘000) : 1,686.6

EMPS loss hits margins; UCP, EPS growth slow SHARE HOLDING PATTERN (%)

VOLT reported flat revenues of INR16bn. EMPS revenue declined 7%, while for UCP and Current Q4FY13 Q3FY13 EPS, growth was a mere 4% each. The growth in UCP was affected by early monsoon Promoters * 30.1 30.1 30.1 even as secondary sales growth was strong at 34%. Operating profitability was MF's, FI's & BK’s 25.6 25.4 25.7 significantly marred by cost overruns owing to delays in the ongoing international FII's 18.1 18.5 21.6 projects that led EMPS reporting EBIT loss. UCP and EPS saw margin expand due to Others 26.1 25.9 22.5 price hikes and one-offs respectively. At INR404mn, PAT declined 48% YoY led by weak * Promoters pledged shares : NIL (% of share in issue) operating performance and higher interest costs.

PRICE PERFORMANCE (%) Order backlog drops 17% as international book dip 41% EW Capital Stock Nifty Backlog declined 17% to INR38.1bn as inflows, at INR6.5bn, dropped 15%. VOLT has Goods Index been witnessing gradual decline in international orders which were down 41% even 1 month (16.9) (8.7) 6.0 though domestic backlog improved 10%. The silver lining is the recent INR 2.8bn order 3 months (20.5) (10.4) (1.6) from Qatar towards FIFA World Cup in addition to INR5.4bn orders in the pipeline. 12 months (37.4) 2.4 (3.9)

Outlook and valuations: testing times to continue; maintain ‘HOLD’ While the business environment in UCP and EPS remain stable, Middle East continues to be sluggish with delays/deferrals seen. High competitive intensity continued to multiply VOLT’s margin woes. The stock is trading at 10.8x and 9.5x FY14E and FY15E, respectively. We maintain ‘HOLD/SP’ with a revised target price of INR80. Rahul Gajare +91 22 4063 5561 Financials (Consolidated) (INR mn) [email protected] Year to March Q1FY14 Q1FY13 % change Q4FY13 % change FY13 FY14E FY15E Amit Mahawar

Net revenues 16,033 16,168 (0.8) 15,971 0.4 55,310 61,571 65,700 +91 22 4040 7451 EBITDA 614 939 (34.6) 831 (26.0) 2,452 3,039 3,563 [email protected]

Adj. net profit 404 780 (48.3) 756 (46.6) 1,957 2,148 2,444 Swarnim Maheshwari Dil. EPS (INR) 1.2 2.4 (48.3) 2.3 (46.6) 5.9 6.5 7.4 +91 22 4040 7418 Diluted P/E (x) 11.8 10.8 9.5 [email protected]

EV/EBITDA (x) 8.9 7.3 6.4 ROAE (%) 12.6 12.6 12.9 August 16, 2013 Edelweiss Research is also available on www.edelresearch.com, Bloomberg EDEL , Thomson First Call, Reuters and Factset. Edelweiss Securities Limited Engineering and Capital Goods

Segmental performance: UPC surprises positively, EPS stable • EMPS revenue declined 7% to INR6.9bn as delays, mainly from international operations continued to mar execution. It reported EBIT loss of INR265mn, i.e. negative EBIT margin of 3.8% during the quarter. The last time the company reported EBIT loss in EMPS was in Q3FY04.

• Revenue growth was muted at 4% in EPS at INR1.1bn. The company has seen strong traction in its textile machinery, mining and construction businesses in the face of uncertainties. The company saw strong pick up in profitability as EBIT margin stood at 27.8%, led by one-off gains due to certain claims received during the quarter.

• In UCP, the company grew by a mere 4% to INR7.9bn as the growth was affected due to early monsoon. The company however, highlighted strong growth in secondary sales (sales from dealers to end consumers). The company has been able to sustain its no. 1 market position with improved market share at 20.9% in June 2013 despite heightened competition and subdued consumer sentiments. Margins improved sharply by 160bps YoY to 10.0% on the back of price hikes taken earlier.

Conference call: Key highlights • The company reiterated that overall profitability would remain under pressure due weak macros and customer delays.

• In the EMPS segment, new orders are being booked at 4-5% margins with few coming in at ~7% levels. The company has bagged order for INR2.8bn from Middle East in August 2013 and is likely to bag another set of orders worth INR5.4bn, indicating some pickup in order flows from the region. Further, the company indicated that Saudi Arabian market is likely to remain tough as it is looking at higher localisation.

• In UCP, AC sales have were fairly good till May13 on the back of intense summers, however, early monsoon affected sales in the month of June 2013. The company is confident of taking on competition, which have turned more aggressive. The company doesn’t expect Q1FY14 margins (10.0%) to be remain sustainable and expects 7-8% EBIT margins in the UCP segment during FY14E. • The EPS business has seen some traction in the international operations. In textile, VOLT is looking at increasing its presence in the post-spinning market as it is close to finalise certain new partnerships.

2 Edelweiss Securities Limited Voltas

Table 1: Segmental performance Year to March Q1FY14 Q1FY13 % change Q4FY13 % change FY13 FY12 % change Revenue (INR mn) Electro mechanical projects (EMPS) 6,930 7,413 (6.5) 8,834 (21.6) 31,995 31,832 0.5 Engineering products & services (EPS) 1,112 1,066 4.3 1,039 7.0 4,311 4,121 4.6 Unitary cooling products (UCP) 7,867 7,544 4.3 5,855 34.4 18,356 15,388 19.3 Others 112 104 7.7 198.2 (43.7) 502 427 17.4 Total revenue 16,020 16,126 (0.7) 15,926 0.6 55,163 51,768 6.6

Segment revenue mix (%) Electro mechanical projects (EMPS) 43.3 46.0 55.5 58.0 61.5 Engineering products & services (EPS) 6.9 6.6 6.5 7.8 8.0 Unitary cooling products (UCP) 49.1 46.8 36.8 33.3 29.7 Others 0.7 0.6 1.2 0.9 0.8

EBIT (INR mn) Electro mechanical projects (EMPS) (265) 332 (179.6) 40 (754.7) 513 1,724 (70.2) Engineering products & services (EPS) 309 194 59.3 168 83.8 838 687 22.0 Unitary cooling products (UCP) 788 632 24.6 747 5.4 1,727 1,298 33.1 Others (3) 29 (109.0) 4 (174.3) 342(93.3) Total EBIT 829 1,187 (30.2) 959 (13.5) 3,081 3,751 (17.9)

EBIT margin (%) Electro mechanical projects (EMPS) (3.8) 4.5 0.5 1.6 5.4 Engineering products & services (EPS) 27.8 18.2 16.2 19.4 16.7 Unitary cooling products (UCP) 10.0 8.4 12.8 9.4 8.4 Others (2.3) 28.0 1.8 0.6 9.7

EBIT mix (%) Electro mechanical projects (EMPS) (31.9) 28.0 4.2 16.7 46.0 Engineering products & services (EPS) 37.2 16.3 17.5 27.2 18.3 Unitary cooling products (UCP) 95.0 53.2 77.9 56.1 34.6 Others (0.3) 2.4 0.4 0.1 1.1 Source: Company, Edelweiss research

Chart 1: EMPS segment – Execution delays and cost overruns hurt profitability 10,000 12.9

8,000 8.6

6,000 4.3 (%)

(INR mn) (INR 4,000 0.0

2,000 (4.3)

0 (8.6) Q105 Q305 Q106 Q306 Q107 Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 Q114

Revenue EBIT Margin Source: Company, Edelweiss research

3 Edelweiss Securities Limited Engineering and Capital Goods

Chart 2: UCP segment – Margin improvement on back of price hikes 9,000 16.0

7,200 8.0

5,400 0.0 (%)

(INR mn) (INR 3,600 (8.0)

1,800 (16.0)

0 (24.0) Q105 Q305 Q106 Q306 Q107 Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Revenue EBIT Margin

Chart 3: EPS segment – Margin improved due to certain one-offs 2,000 45.0

1,600 36.0

1,200 27.0 (%)

(INR mn) (INR 800 18.0

400 9.0

0 0.0 Q105 Q305 Q106 Q306 Q107 Q307 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 Q114 Revenue EBIT Margin

Chart 4: Order book break down and order inflow trend 60,000 20,000

48,000 16,000

36,000 12,000 (INR mn) (INR (INR mn) (INR 24,000 8,000

12,000 4,000

0 0 Q108 Q308 Q109 Q309 Q110 Q310 Q111 Q311 Q112 Q312 Q113 Q313 Q114 International Backlog Domestic Backlog Order Inflow (RHS)

Source: Company, Edelweiss research

4 Edelweiss Securities Limited Voltas

Financial snapshot (INR mn) Year to March Q1FY14 Q1FY13 % change Q4FY13 % change FY13 FY14E FY15E Net revenues 16,033 16,168 (0.8) 15,971 0.4 55,310 61,571 65,700 Staff costs 1,649 1,645 0.2 1,578 4.5 6,325 6,996 7,739 Direct costs 12,234 12,049 1.5 12,324 (0.7) 41,670 45,978 48,468 Other expenses 1,536 1,535 0.0 1,239 24.0 4,862 5,558 5,931 Total expenditure 15,419 15,229 1.2 15,141 1.8 52,858 58,532 62,137 EBITDA 614 939 (34.6) 831 (26.0) 2,452 3,039 3,563 Depreciation 61 73 (17.1) 60 0.8 278 296 335 EBIT 554 866 (36.0) 771 (28.1) 2,174 2,744 3,228 Other income 221 349 (36.7) 126 75.1 901 882 875 Interest 179 121 48.4 120 49.7 398 498 543 Profit before tax 595 1,106 (46.2) 144 313.3 2,798 3,128 3,560 Tax 190 316 (40.0) 54 250.9 728 970 1,104 Core profit 405 790 (48.7) 90 350.8 2,071 2,158 2,457 Extraordinary items (1) 11 NA (633) NA 121 - - Minority interest 2 2 46.7 (1) (414.3) (7) 11 12 Share in profit from associates Net profit 403 788 (48.9) 91 344.9 2,078 2,148 2,444 Adjusted net profit 404 780 (48.3) 756 (46.6) 1,957 2,148 2,444 Equity capital (FV INR 1) 331 331 331 331 331 331 No. of shares (mn) 331 331 331 331 331 331 Adj. EPS (INR) 1.2 2.4 2.3 5.9 6.5 7.4

As % of net revenues Direct costs 76.3 74.5 77.2 75.3 74.7 73.8 Employee cost 10.3 10.2 9.9 11.4 11.4 11.8 Other operating expenses 9.6 9.5 7.8 8.8 9.0 9.0 EBITDA 3.8 5.8 5.2 4.4 4.9 5.4 Adjusted net profit 2.5 4.8 4.7 3.5 3.5 3.7 Tax rate 31.9 28.6 37.5 26.0 31.0 31.0

Change in estimates FY14E FY15E New Old % change New Old % change Comments Net revenue 61,571 61,571 0.0 65,700 65,700 0.0 EBITDA 3,039 3,410 (10.9) 3,563 3,958 (10.0) We have built in lower margin as cost overruns seen in its international operations in EMPS. Reduced EBIT margin by 100bps for FY14E and FY15E each. EBITDA margin 4.9 5.5 5.4 6.0 Core profit 2,158 2,490 (13.3) 2,457 2,826 (13.1) Reduced margin estimate and increased interest cost for both FY14E and FY15E PAT margin 3.5 4.0 3.7 4.3 Capex 732 732 0.0 735 735 0.0

5 Edelweiss Securities Limited Engineering and Capital Goods

Company Description Voltas, a part of the TATA group which holds ~31% stake, is a leading air conditioning and engineering services provider. It offers engineering solutions through its four business segments in areas such as heating, ventilation and air conditioning, refrigeration, climate control, electro-mechanical projects, textile machinery, machine tools, mining and construction, material handling, water management, building management systems, pollution control and chemicals. It has a large business of EMPS coming from Middle East and Far East.

Investment Theme VOLT’s strong presence in the West-Asian region (particularly Middle East) and Far East (Hong Kong & Singapore) specialising in EMPS contracts has made it a preferred EPC-HVAC contractor. The flagship EMPS division contributes 60% plus to the topline, driven by contracts in domestic as well as international markets. We believe VOLT may gain from international experience and tap opportunities from the ongoing infrastructure boom in India. Further, with capital goods industry continuing its growth trend, we expect VOLT’ EPS division to capitalise on the opportunity, which can lead to improvement in overall margins.

Key Risks Any slowdown in capex spend in Middle East and in economic activity with respect to infrastructure creation in India is likely to dry incremental order intakes for its EMPS division.

Further, margins and lead time for delivery for its EMPS segment can come under pressure with local players strengthening their operations and entry of more global players.

The profitability of its UCP division is vulnerable to rise in input costs, increase in Chinese imports, excess capacity and increased competitive intensity.

6 Edelweiss Securities Limited Voltas

Financial Statements Key Assumptions Income statement (INR mn) Year to March FY12 FY13 FY14E FY15E Year to March FY12 FY13 FY14E FY15E Macro Income from operations 51,857 55,310 61,571 65,700 GDP (Y-o-Y %) 6.2 5.0 5.6 6.5 Direct costs 37,800 41,670 45,978 48,468 Inflation (Avg) 8.9 7.4 5.2 6.0 Employee costs 5,995 6,325 6,996 7,739 Repo rate (exit rate) 8.5 7.5 6.8 6.0 Other Expenses 4,698 4,862 5,558 5,931 USD/INR (Avg) 48.0 54.5 58.0 56.0 Total operating expenses 48,493 52,858 58,532 62,137 Company EBITDA 3,364 2,452 3,039 3,563 EMP revenue growth (%) 4.7 0.5 5.1 0.9 Depreciation & Amortization 340 278 296 335 Engineering revenue growth (%) (26.9) 4.6 12.5 10.7 EBIT 3,025 2,174 2,744 3,228 Unitary Cooling product growth (%) (1.4) 19.3 18.4 15.2 Other income 985 901 882 875 Room AC (Qnty) 640,000 723,200 809,984 915,282 Interest expenses 314 398 498 543 NSR (INR) 18,155 20,334 20,944 21,572 Profit before tax 3,696 2,678 3,128 3,560 Order inflow (INR bn) 24.0 19.5 20.0 21.5 Provision for tax 571 728 970 1,104 Cost of debt (%) 14.1 13.8 16.5 16.0 Net profit 3,125 1,950 2,158 2,457 Tax rate (%) 26.1 30.0 31.0 31.0 Extraordinary income/ (loss) (1,505) 121 - - Excise duty as a % of sales 0.6 0.6 0.6 0.6 Profit After Tax 1,620 2,071 2,158 2,457 Total no. of employees 9,994 10,244 10,792 11,369 Minority interest (9) (7) 11 12 Employee cost per head (INR mn) 599,880 617,396 648,266 680,680 Profit after minority interest 1,624 2,078 2,148 2,444 Net borrowings (INR mn) 848 663 250 500 Shares outstanding (mn) 331 331 331 331 Capex (INR mn) (232) 325 732 735 Diluted EPS (INR) 9.5 5.9 6.5 7.4 Depreciation as % of gross block 9.1 5.3 5.3 5.3 Dividend per share (INR) 1.1 1.6 1.4 1.6 Dividend payout (%) 11.2 27.0 21.5 21.5

Common size metrics (%) Year to March FY12 FY13 FY14E FY15E Operating expenses 93.5 95.6 95.1 94.6 EBITDA margins 6.5 4.4 4.9 5.4 Net profit margins 6.0 3.5 3.5 3.7

Growth ratios (%) Year to March FY12 FY13 FY14E FY15E Revenues 0.2 6.7 11.3 6.7 EBITDA (23.7) (27.1) 24.0 17.2 Net profit (1.3) (37.4) 9.7 13.8

7 Edelweiss Securities Limited Engineering and Capital Goods

Balance sheet (INR mn) Cash flow metrics (INR mn) As on 31st March FY12 FY13 FY14E FY15E Year to March FY12 FY13 FY14E FY15E Equity capital 331 331 331 331 Operating cash flow (2,064) 2,044 856 676 Reserves & surplus 14,448 15,926 17,611 19,529 Investing cash flow 747 (336) (732) (735) Shareholders funds 14,778 16,256 17,942 19,860 Financing cash flow (270) 216 (212) (26) Minority interest (BS) 170 118 129 141 Net cash flow (1,588) 1,924 (88) (85) Secured loans 2,153 2,832 3,082 3,582 Capex 232 (325) (732) (735) Unsecured loans 76 60 60 60 Dividends paid (848) (447) (462) (526) Borrowings 2,229 2,892 3,142 3,642 Sources of funds 16,935 19,045 20,991 23,421 Profitability & efficiency ratios Gross block 1,897 1,980 2,427 2,837 Year to March FY12 FY13 FY14E FY15E Depreciation 108 91 73 54 ROAE (%) 22.0 12.6 12.6 12.9 Total fixed assets 2,050 2,110 2,546 2,946 ROACE (%) 21.2 12.7 14.3 15.1 CWIP (incl. intangible) 46 39 46 56 Inventory day 80 79 82 85 Goodwill on consolidation 890 888 888 888 Debtors days 83 87 85 87 Non current investments 883 893 893 893 Payable days 215 198 197 202 Current Investments 2,233 3,180 3,180 3,180 Cash conversion cycle (days) (53) (31) (29) (29) Cash and equivalents 2,710 3,498 3,410 3,325 Current ratio (x) 1.3 1.3 1.3 1.4 Inventories 8,334 9,784 10,959 11,553 Debt/EBITDA (x) 0.7 1.2 1.0 1.0 Sundry debtors 12,871 13,618 15,228 16,249 Fixed asset turnover (x) 24.3 26.6 26.4 23.9 Loans and advances 3,246 3,159 3,633 4,178 Debt/Equity (x) 0.2 0.2 0.2 0.2 Other current assets 8,103 8,290 9,119 10,487 Adjusted debt/equity (x) 0.2 0.2 0.2 0.2 Total current assets (ex cash) 32,553 34,852 38,939 42,467 Interest coverage (x) 9.6 5.5 5.5 5.9 Sundry creditors and others 21,593 23,586 26,075 27,487 Provisions 2,790 2,792 2,792 2,792 Operating ratios Total current liabilities & 24,384 26,377 28,867 30,279 Year to March FY12 FY13 FY14E FY15E Net current assets (ex cash) 8,169 8,474 10,073 12,188 Total asset turnover (x) 3.2 3.1 3.1 3.0 Net Deferred tax (242) (222) (222) (222) Fixed asset turnover (x) 24.3 26.6 26.4 23.9 Uses of funds 16,935 19,045 20,991 23,421 Equity turnover (x) 3.7 3.6 3.6 3.5 Book value per share (INR) 44.7 49.2 54.3 60.1 Valuation parameters

Free cash flow (INR mn) Year to March FY12 FY13 FY14E FY15E Year to March FY12 FY13 FY14E FY15E Y-o-Y growth (%) (1.3) (37.4) 9.7 13.8 Net profit 1,624 2,078 2,148 2,444 Diluted PE (x) 7.4 11.8 10.8 9.5 Depreciation 340 278 296 335 Price/BV (x) 1.6 1.4 1.3 1.2 Others (1,891) (7) 11 12 EV/Sales (x) 0.4 0.4 0.4 0.3 Gross cash flow 73 2,349 2,454 2,792 EV/EBITDA (x) 6.1 7.9 6.5 5.7 Less: Changes in WC 2,137 305 1,598 2,115 Dividend yield (%) 1.5 2.3 2.0 2.3 Operating cash flow (2,064) 2,044 856 676 Less: Capex (232) 325 732 735 Free cash flow (1,833) 1,719 124 (59)

Peer comparision valuations PE (x) P/BV (x) ROE (%) Market cap Name of the companies CMP 2014E 2015E 2014E 2015E 2014E 2015E (INR bn) Blue star 143 12.8 14.7 10.1 2.9 2.5 18.5 24.4 Voltas 70 23.2 10.8 9.5 1.3 1.2 12.6 12.9 Source: Edelweiss research

8 Edelweiss Securities Limited Voltas

Additional Data Directors Data Ishaat Hussain Chairman Sanjay Johri Managing Director N. N. Tata Non Independent & Non Executive Director Vinayak Deshpande Non Independent & Non Executive Director Thomas Mathew T. Independent Non-Executive Director R. N. Mukhija Independent Non-Executive Director S. N. Menon Independent Non-Executive Director Nani Javeri Independent Non-Executive Director Nasser Munjee Independent Non-Executive Director

Auditors - Deloitte Haskins & Sells

Holding – Top 10 Perc. Holding Perc. Holding Tata Sons Ltd 26.64 Life Insurance Corp of India 23.46 Norges Bank 5.09 Govt Pension Fund Global 4.63 Tata Investment Corp 2.86 Prudential ICICI Asset Mgnt Co. 2.6 Birla Sun Life Insurance Co. 2.42 Eastspring Investments India 1.84 Vidya Inv Trading Co. 1.71 General Insurance Corp of India 1.42

*in last one year

Bulk Deals Data Acquired / Seller B/S Qty Traded Price

No Data Available

*in last one year

Insider Trades Reporting Data Acquired / Seller B/S Qty Traded

No Data Available

*in last one year

9 Edelweiss Securities Limited RATING & INTERPRETATION

Company Absolute Relative Relative Company Absolute Relative Relative reco reco risk reco reco Risk ABB India REDUCE SU L Bajaj Electricals HOLD SP M BGR Energy HOLD SU M Bharat Electronics BUY SO H Bharat Heavy Electricals REDUCE SU M Crompton Greaves HOLD SP M Cummins India BUY SO L Havells India BUY SO M Kalpataru Power BUY SO M KEC International BUY SO M Larsen & Toubro BUY SO M Siemens HOLD SP L Thermax REDUCE SP L Voltas HOLD SP L

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return

10 Edelweiss Securities Limited Voltas

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098. Board: (91-22) 4009 4400, Email: [email protected] Vikas Khemani Head Institutional Equities [email protected] +91 22 2286 4206 Nischal Maheshwari Co-Head Institutional Equities & Head Research [email protected] +91 22 4063 5476

Nirav Sheth Head Sales [email protected] +91 22 4040 7499

Coverage group(s) of stocks by primary analyst(s): Engineering and Capital Goods ABB India, BGR Energy, Bharat Electronics, Bharat Heavy Electricals, Bajaj Electricals, Crompton Greaves, Havells India, KEC International, Cummins India, Kalpataru Power, Larsen & Toubro, Siemens, Thermax, Voltas

Recent Research Date Company Title Price (INR) Recos

09-Aug-13 BGR Energy Gaining ground, slowly; 94 Hold Result Update 09-Aug-13 ABB India Power profitability rises; 495 Reduce demand stays weak; Result Update

06-Aug-13 Crompton India operations intact; 84 Hold Greaves overseas losses higher; Result Update

Distribution of Ratings / Market Cap Edelweiss Research Coverage Universe Rating Interpretation

Buy Hold Reduce Total Rating Expected to

Rating Distribution* 127 44 8 180 Buy appreciate more than 15% over a 12-month period * 1 stocks under review Hold appreciate up to 15% over a 12-month period > 50bn Between 10bn and 50 bn < 10bn

Reduce depreciate more than 5% over a 12-month period Market Cap (INR) 112 54 14

11 Edelweiss Securities Limited Engineering and Capital Goods

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Analyst holding in the stock: No.

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