24 July 2020

Market snapshot Today’s top research idea

Motilal Oswal values your support in the Trent: Best-in-class apparel retailer Asiamoney Brokers Poll 2020 for India Research,  Trent’s consolidated revenue/EBITDA reported stellar growth of 33%/139% Sales and Trading team. We request your ballot. to INR34.9b/INR5.4b in FY20, led by strong performances from Westside (+16%) and Zudio (+2.5x).  RoE/RoCE/RoIC stood at 8.3%/8%/11.9% in FY20 on pre-Ind AS 116. Although Westside garnered healthy RoIC of 20% in FY20, this was offset by loss- Equities - India Close Chg .% CYTD.% making Zudio/Star with RoIC of -31%/-39%. Furthermore, RoE was dragged Sensex 38,140 0.7 -7.5 Nifty-50 11,215 0.7 -7.8 down by a low asset turnover ratio (0.9x) in the range of 0.5-1x over the past Nifty-M 100 15,572 1.0 -9.0 five years. Equities-Global Close Chg .% CYTD.%  Trent’s relative balance sheet strength has resulted in sharp stock S&P 500 3,236 -1.2 0.2 outperformance despite near-term earnings headwinds. The company has a Nasdaq 10,461 -2.3 16.6 FTSE 100 6,211 0.1 -17.6 net cash position with net cash of INR5.4b and leverage of -1x in FY20. DAX 13,103 0.0 -1.1  Trent’s superior execution and healthy balance sheet warrant premium Hang Seng 10,325 0.8 -7.5 valuations. However, the current challenging environment could lead to Nikkei 225 22,752 0.0 -3.8 Commodities Close Chg .% CYTD.% prolonged recovery and growth should set in over FY22. We value Westside Brent (US$/Bbl) 43 -1.9 -35.5 and Zara at 35x EV/EBITDA and Star at 1x EV/Sales on FY22E to arrive at TP of Gold ($/OZ) 1,887 0.9 24.4 INR620. Subsequently, we downgrade Trent to Neutral from Buy. Cu (US$/MT) 6,570 1.0 6.8 Almn (US$/MT) 1,664 0.6 -6.6 Currency Close Chg .% CYTD.% Research covered USD/INR 74.8 0.0 4.7 USD/EUR 1.2 0.2 3.4 Cos/Sector Key Highlights USD/JPY 106.9 -0.3 -1.6 Trent Best-in-class apparel retailer YIELD (%) Close 1MChg CYTDchg Larsen & Toubro Good show given challenging times; focus on cash flows welcome 10 Yrs G-Sec 5.8 -0.01 -0.7 Biosimilars/Generics boosts revenue growth 10 Yrs AAA Corp 6.5 -0.01 -1.1 Flows (USD b) 23-Jul MTD CYTD AU Small Fin. Bank Moratorium book declines FIIs 0.23 0.29 -2.38 ABB India Surprises with positive PAT, against expected loss DIIs -0.12 -0.88 11.10 Largely in-line revenue and margins Volumes (INRb) 23-Jul MTD* CYTD* Jindal Steel & Power On the path to deleveraging Cash 600 612 523 F&O 34,716 18,894 15,175 Aegis Logistics Reality check on LPG demand v/s imports – favors AGIS Note: *Average Other Notes PNB Housing | Zensar Tech | EcoScope

Chart of the Day: Trent (Best-in-class apparel retailer) Comparative return analysis under all formats Standalone Westside Zudio Star Zara Investments Consolidated

Revenue 31,777 27,152 5,070 12,289 15,705 1,518 34,860 EBITDA 2,901 2,987 (737) (1,291) 1,865 1,518 2,404 EBITDA margin 9.1% 11.0% -14.5% -10.5% 11.9% NA 6.9% Depreciation 671 543 128 655 396 NA 531 EBIT 2,230 2,444 (865) (1,946) 1,469 1,518 1,873 EBIT Margin 7% 9% -17% -16% 9% NA 5% PAT 1,704 NA NA (1,710) 1,041 1,518 1,671 PAT margin 5% NA NA -14% 7% NA 5% Capital Employed 26,918 24,118 2,800 6,116 5,514 NA 26,576 Share Capital 24,990 22,190 2,800 5,616 5,514 6,629 23,880 Invested Capital 10,409 7,609 2,800 4,984 3,780 6,629 10,814 ROCE (pre tax) 9% 10% NA -32% 27% NA 7.9% ROE 8.1% NA NA -30% 19% 23% 8.3% ROIC (post tax) 13.2% 20% -31% -39% 26% 14% 11.9%

*Capital Employed includes Investments both financial and in JVs/subsidiaries Source: MOFSL, Company Research Team ([email protected]) Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital. In the news today

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Essential item demand surges Govt imposes curbs on public procurement from certain with Unlock 1.0 as their countries bordering India shipment volume goes The Ministry of Finance today amended the General Financial Rules higher: Report 2017 to enable imposition of restrictions on bidders from countries Demand for essential which share a land border with India on grounds of defence of India, commodities surged after Unlock or matters that directly or indirectly relate to the national security of 1.0 as their shipment volume the country, said and official release. The Department of Expenditure was nearly three times higher has issued a detailed order on public procurement to strengthen the after the relaxations as defence of India and national security. "As per the Order any bidder compared to the lockdown from such countries sharing a land border with India will be eligible to period, according to a report by bid in any procurement whether of goods, services (including e-commerce logistics… consultancy services and non-consultancy services)…

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Wipro to acquire Salesforce implementation partner 4C India’s SaaS revenue set to for 68 million euros jump 6X to $13-15 billion by will acquire Salesforce 2025: Nasscom report Despite the market disruption implementation partner 4C for 68 5 million euros, the Bengaluru- caused by the covid-19 based software services exporter pandemic, software-as-a-service Make in India: Govt to offer said on Thursday. This is the (SaaS) has emerged as a bright production linked incentives company’s second acquisition spot, seeing both growth and in more sectors since Thierry Delaporte took over investment opportunities. The The government is working on as chief executive officer earlier Indian SaaS landscape has grown offering production linked this month. On July 14, Wipro said 1.5X faster than the global SaaS incentives for up to five sectors to it would acquire Brazil-based IVIA market due to acceleration in boost domestic manufacturing, a Servicos for $22.4 million… digital consumption caused… top finance ministry official said on Thursday, bolstering efforts to attract new investments in the 6 7 coronavirus-stricken economy. Asia’s third-largest economy is

Petronet plans to cancel 10- all set to launch Favipiravir expected to contract by as much as 10% in the current fiscal year year LNG import tender: drug for treatment of COVID beginning April, some private patients: CSIR Sources economists’ estimate, after the Pharmaceutical firm Cipla is all set India's top gas importer Petronet outbreak crippled business and to launch Favipiravir, developed LNG is set to cancel its offer to consumer activity… buy an annual 1 million tonnes of by the Council of Scientific and liquefied natural gas (LNG) for 10 Industrial Research (CSIR) in a years, two sources said, as cost-effective process, for the signing long-term contracts are treatment of COVID-19 patients, not attractive in the current according to an official statement scenario. India is scouting for on Thursday. An off-patent anti- cheap gas for price-sensitive… viral drug, Favipiravir,…

24 July 2020 2

23 July 2020 Annual Report Update | Sector:

Trent BSE SENSEX S&P CNX 38,140 11,215 CMP: INR590 TP: INR620 (+5%) Downgrade to Neutral

Best -in-class apparel retailer We pored over Trent’s Annual Report to capture key details of the company’s performance over the past year. Here are the key takeaways: Capturing India’s Fashion Retail story Trent’s consolidated revenue/PAT grew 33%/9.2% to INR34.9b/INR1.1b in FY20. Standalone revenue growth of 26% was led by strong performances from Westside (+16%) and Zudio – its freshly established Value Fashion Retail brand (+2.5x, 16% contribution). The brands were supported by strong same-store sales growth (SSSG) and store adds. While the current COVID-19 situation has impacted store adds, the management’s comments have eased some concerns. A) India’s Retail industry ranks among the top 5 retail markets globally

Motilal Oswal values your support in (consumer category targeted by Westside). B) Value Fashion accounts for ~75% the Asiamoney Brokers Poll 2020 for of the market (consumer category targeted by Zudio). C) The industry focus is on India Research, Sales and Trading supporting in-house brands in achieving margin accretion and better control team. We request your ballot. over the product life cycle (100% private labels). These three factors underscore

TRENT’s growth levers. The company revealed that 70 stores had resumed operations on the easing of the COVID-19-led lockdown, but our channel check

suggests >200 stores (~80%) are now operational. Key management changes

Stock Info include: a) Stephen Rayfield’s appointment as CEO (ex-M&S; he replaced Philip Bloomberg TRENT IN Auld who has led Trent for the last 10 years), and b) Venu Nair’s appointment as Equity Shares (m) 332 Westside CEO (formerly served as Chief Commercial Officer). M.Cap.(INRb)/(USDb) 209.6 / 2.9 52-Week Range (INR) 804 / 368 Westside’s EBITDA grows on higher volumes; Zudio’s growth on track 1, 6, 12 Rel. Per (%) -18/8/41 Westside reported 16% YoY revenue growth in FY20, driven by a 15% rise in the 12M Avg Val (INR M) 228 no. of bills. This was on account of new store adds and improved conversions Free float (%) 63.0 (following the last two years of reduction). Westside’s gross margin (GM) reduced 180bps, potentially due to sharpening product pricing; nevertheless, Financials Snapshot (INR b) Y/E March FY20 FY21E FY22E operating leverage aided in maintaining an 11% EBITDA margin with 16% YoY Sales 34.9 31.2 46.9 growth. Zudio fell short of its ambitious target of 100 store adds, yet doubled EBITDA 5.4 4.1 7.8 the standalone count to 80 stores, with 2.5x revenue growth. This accelerated Adj. PAT 1.1 0.2 3.0 EBITDA loss to an estimated INR700m in FY20 from ~INR200m in FY19; although, EBITDA Margin. % 15.6 13.1 16.7 like-to-like (LTL) store productivity stood at a stellar INR15k/sq. ft. With such Adj. EPS (INR) 3.0 0.4 8.5 strong productivity, our channel checks suggest the brand has already achieved EPS Gr. (%) 2.1 -85.0 1,802.2 breakeven in LTL EBITDA in most stores and could well achieve healthy 6–7% BV/Sh. (INR) 71.9 72.3 81.4 EBITDA margins as it continues on its path to establishing 200–250 stores once Ratios the COVID-19 situation improves. Net D:E -0.2 -0.3 -0.3 RoE (%) 5.3 0.7 11.8 Zara achieves healthy profitability, but lags behind peers in growth RoCE (%) 13.0 7.5 17.1 Zara’s revenue grew 10% in FY20 on account of improvement in sales/store as Payout (%) 33.5 0.0 0.0 store count remained unmoved at 22. Gross profit / EBITDA also grew by

Valuations 11%/56% to INR5.5b/INR2.4b. EBITDA (pre-Ind-AS 116) is estimated to have P/E (x) 197.9 1,321.2 69.5 EV/EBITDA (x) 39.0 51.8 26.8 grown 22% YoY to INR1.9b; 120bp margin improvement to 11.9% was led by EV/Sales (X) 6.1 6.8 4.5 40bp GM gains and operating leverage from SSSG. PAT jumped 46% YoY to Div. Yield (%) 0.2 0.0 0.0 INR1b. Despite the low base, ROCE has been healthy at >25%, but expansion has FCF Yield (%) 1.2 0.4 1.4 been lower v/s peers. This is because the brand has added merely six stores in the last five years compared with H&M, which launched its India operations in

2015 and has already opened up 49 stores in the country.

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Shareholding pattern (%) Star turning competitive, but needs scale to achieve profitability As On Jun-20 Mar-20 Jun-19 Promoter 37.0 37.0 32.6 Star reported 23% revenue growth to INR12.3b, with SSSG of 9.9% and 13 store DII 15.9 15.6 17.1 adds. Nonetheless, it remains a fraction of the size of its large peers such as DMart FII 20.9 21.2 22.1 and Reliance (Grocery business), and accounts for a small share of the overall Others 26.2 26.2 28.1 opportunity in the market. The brand’s GM shrank 270bp to 19.3% in FY20 due to FII Includes depository receipts the company’s focus on sharp pricing to drive SSSG. Subsequently, gross profit

Stock Performance (1-year) increased 8% YoY to INR2.4b. The company’s EBITDA losses reduced to INR745m with a margin of -6.1% (v/s INR802m and -8% in FY19). Contraction in gross margin dragged EBITDA loss (pre-Ind-AS 116) to an estimated INR1,291m (-10.5% margin) v/s INR802m reported in FY19. The brand is undertaking various strategic initiatives. It is progressively building a reputation of having a compelling price proposition, focusing on internal brands, developing the platform Starquik (an omni-channel convenience targeting micro-markets), and expanding stores in a clustered manner. Nevertheless, with the current operating metrics, we think the brand needs to add over 150 stores to its current base of just 57 stores to achieve scale of ~INR50b. As a result, this could provide sustainable profitability.

Strong balance sheet, ROCE profile diluted by Star and Zudio Trent’s INR9.5b preferential allotment to aided in building a strong net cash position of INR5.4b in FY20. ROCE for the consolidated business stood at mere 8%, while ROIC was at 12%. This was attributable to loss witnessed in Star and Zudio. On the contrary, Westside and Zara recorded healthy 20% and 26% ROIC, respectively. The cash conversion cycle reduced by 3 days to 34 days despite aggressive store additions owing to stable inventory days at 64 days. FCF generation improved to -INR101m in FY20 (v/s -INR1,970m in FY19), providing strong leeway for growth.

Valuation premium – does not factor current challenging environment Trent’s relative balance sheet strength has resulted in sharp stock outperformance despite near-term earnings headwinds. While its superior execution and healthy balance sheet do warrant premium valuations, the current challenging environment and weak disposable incomes could impact discretionary spend, leading to prolonged earnings recovery. We estimate FY21 revenue/EBITDA decline of 10%/25% (despite the recent strong footprint addition) before recovery would set in over FY22. We value Westside and Zara at 35x EV/EBITDA (five-year average multiple and 25% premium to our retail universe given its better execution and balance sheet) and Star at 1x EV/sales on FY22E. Thus, we arrive at TP of INR620, leaving limited upside. Subsequently, we downgrade to Neutral from a Buy rating.

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23 July 2020 1QFY21 Results Update | Sector: Capital Goods Larsen & Toubro

Estimate change CMP: INR916 TP: INR1,080 (+18%) Buy TP change Good show given challenging times; focus on cash flows welcome Rating change Core E&C surprises against muted expectation Motilal Oswal values your support in  1QFY21 core operating performance was a welcome surprise as E&C EBITDA the Asiamoney Brokers Poll 2020 for came in 49% above our expectation, despite the low value. Losses in L&T India Research, Sales and Trading team. We request your ballot. Finance Holdings offset the strong show in the IT business, limiting consolidated adj. PAT to INR0.7b.  Labor availability has improved and is now adequate given the monsoon season. Despite the current crisis, L&T has impressed with its liquidity management, keeping its working capital and net cash position intact, and Bloomberg LT IN taking advantage of the low interest rate scenario. Equity Shares (m) 1,402  While challenges related to order inflows, execution, and working capital M.Cap.(INRb)/(USDb) 1286.3 / 17.3 cannot be completely ruled out yet, L&T has demonstrated a good show in 52-Week Range (INR) 1554 / 661 mitigating such risks thus far. Building in further conservatism, we cut our 1, 6, 12 Rel. Per (%) -13/-23/-35 EPS estimates by 4–5% over FY21/FY22E and TP to INR1,080 (prior: 12M Avg Val (INR M) 4964 INR1,120). Adj. for the valuations of subsidiaries (we apply 20% holding company discount to market cap of 4-listed entities), the core business has Financials & Valuations (INR b) underperformed Nifty by ~20% since the 4QFY20 results (June first week). In Y/E Mar 2020 2021E 2022E Sales 1,455 1,419 1,631 our view, current valuations provide limited downside risks from hereon. EBITDA 163 156 189 Maintain Buy.

PAT 89 68 91 Impressive performance mitigating the odds; path to normalization to EBITDA (%) 11.2 11.0 11.6 EPS (INR) 63.4 48.7 64.7 be gradual EPS Gr. (%) 10.5 -23.1 32.8  E&C business PAT-positive – a key surprise: The miss in core E&C revenue BV/Sh. (INR) 475 507 557 (INR114b, -46% YoY) was more than offset by the margin surprise, thereby Ratios resulting in a 49% beat on our EBITDA estimates. Thus, core E&C EBITDA Net D/E 1.9 2.0 1.9 came in at INR4.4b (-71% YoY), with a core EBITDA margin of 3.9% v/s the RoE (%) 13.3 9.6 11.6 RoCE (%) 5.7 4.7 5.2 expectation of 2.4%. The surprise may be attributable to higher design Payout (%) 26.5 30.0 30.0 content during the quarter. Thus, core E&C PAT came in at INR1.6b (-75%

Valuations YoY) v/s anticipated loss / the company barely achieving breakeven. P/E (x) 14.5 18.8 14.2  Losses from L&T Finance Holdings hamper consol. earnings: Consol. P/BV (x) 1.9 1.8 1.6 revenue/EBITDA declined 28%/51% YoY to INR213b/INR16.2b. Adj. PAT EV/EBITDA (x) 18.9 20.8 17.6 Div Yield (%) 1.4 1.2 1.6 came in at INR0.7b v/s our expectation of INR2.8b. While the IT business FCF Yield (%) 0.8 -6.4 -3.5 reported PAT of INR4.9b, losses were reported in L&T Finance Holdings (INR1.3b) and development projects (INR4.5b). Shareholding pattern (%)  Order inflow weak (as expected); OB provides comfort: On expected lines, As On Jun-20 Mar-20 Jun-19 order inflows fell 39% YoY to INR236b, with core E&C order inflows declining Promoter 0.0 0.0 0.0 55% to INR137b. Overall, the order pipeline stands at INR6.3t, of which the DII 36.0 37.9 37.3 domestic pipeline stands at INR5.07t and international prospects at INR1.2t. FII 19.9 17.9 21.3 The order book (OB) stood at >INR3.0t, providing comfort against weak Others 44.0 44.2 41.4 order inflows in the near term. We believe execution stabilization should be FII Includes depository receipts the priority in the current scenario over just order inflows.

24 July 2020 5

 Working capital stable at ~INR250b: L&T managed to keep its working capital stable at INR254b, an increase of INR4b on a QoQ basis. As a percentage of sales, the working capital cycle looks optically high at 26.8% v/s 23.7% at FY20- end. The stable working capital (at an absolute level) is welcome, although not a complete relief as the real test would begin once execution has normalized. We expect L&T to continue to prioritize working capital management over

execution.  Labor availability normalizes: While labor availability was a concern during the lockdown, it has started to return to normal. L&T has been adding 1.5k laborers/day, with the total availability of the laborforce now at 190k. While this is lower than the peak of 220,000, it is sufficient for the current monsoon quarter. Labor availability may no longer be a cause for concern; however,

challenges related to execution amid social distancing may not be over yet.

Valuation and view  Despite a weak outlook on revenue and margins in FY21E, we do not see FCF for the core E&C business turning negative from hereon. This is because we expect the company to choose working capital management over revenue growth.  L&T’s results suggest a tough macro environment for the Construction industry and likely survival challenges for debt-ridden companies. We expect L&T to emerge stronger in the post-COVID-19 era and further consolidate its market share in the Indian Construction industry.  While challenges related to order inflows, execution, and working capital cannot be completely ruled out yet, L&T has demonstrated a good show in mitigating such risks thus far. Building in further conservatism, we cut our EPS estimates by 4–5% over FY21/FY22 and TP to INR1,080 (prior: INR1,120). Adj. for valuations of subsidiaries (we apply 20% holding company discount to market cap of 4- listed entities), the core business has underperformed Nifty by ~20% since the 4QFY20 results (June first week). In our view, current valuations provide limited downside risks from hereon. Maintain Buy.

Quarterly performance (INR b)

Y/E March FY20 FY21E MOSL

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY20 FY21E 1QE % Var

Sales 296 353 362 442 213 333 386 487 1,455 1,419 207 2.5% Change (%) 9.7 15.2 5.9 2.2 -28.3 -5.6 6.4 10.2 7.6 -2.4 -30.0

EBITDA 33.2 37.7 41.2 51.2 16.2 33.3 42.4 63.7 163.3 155.6 18.4 -11.8% Change (%) 20.4 6.5 9.8 -3.0 -51.2 -11.6 3.0 24.3 6.5 -4.7 -44.6

Margin (%) 11.2 10.7 11.4 11.6 7.6 10.0 11.0 13.1 11.2 11.0 8.9

Depreciation 4.6 6.3 6.6 7.1 6.7 6.0 6.5 6.4 24.6 25.6 5.5 22.2% Interest 5.9 6.9 7.0 8.2 10.6 9.0 9.0 10.3 28.0 38.8 9.0 17.3% Other Income 3.8 8.5 4.7 6.6 7.8 5.0 5.5 6.0 23.6 24.3 4.5 72.8% PBT 26.6 33.0 32.2 42.5 6.7 23.3 32.4 53.1 134.3 115.5 8.4 -20.0% Tax 7.9 7.9 7.1 9.7 2.6 6.3 8.8 14.7 32.6 32.3 2.3 13.4% Effective Tax Rate (%) 29.9 24.0 22.1 22.7 38.3 27.0 27.0 27.7 24.3 28.0 27.0

Adjusted PAT (Before MI & AI) 18.6 25.1 25.1 32.8 4.1 17.0 23.7 38.4 101.7 83.2 6.1 -32.4% Reported PAT 14.7 25.3 23.5 32.0 3.0 14.2 20.6 36.7 95.5 74.5 3.3 -8.5% Change (%) 21.2 13.3 15.2 -6.5 -79.4 -43.7 -12.6 14.8 7.2 -21.9 -77.5

Extraordinary Inc/(Exp) - incl. 1.1 2.2 1.9 1.3 2.3 1.0 1.2 1.7 6.5 6.2 0.5 discontinued operations Adjusted PAT 13.6 23.1 21.6 30.6 0.7 13.2 19.4 35.0 88.9 68.4 2.8 -74.6% Change (%) 20.5 28.4 13.8 -4.7 -94.8 -42.7 -10.4 14.4 10.6 -23.1 -79.3

24 July 2020 6

RESULTS 23 July 2020 FLASH Results Flash | Sector: Healthcare Biocon

BSE SENSEX S&P CNX 38,140 11,215 CMP: INR430 Neutral

Conference Call Details Biosimilars/Generics boosts revenue growth Date: 23th July 2020  Biocon reported 14.6% YoY revenue growth to INR16.7b (in-line) for 1QFY21. Time: 9:00am IST This was primarily led by: a) growth in Generics (36% of sales) by 16% YoY and Dial-in details: b) an increase in Biosimilars (41% of sales) by 19% YoY to INR7b. Growth was +91-22-6280 1151 dragged down by Research Services (23% of sales), which was flat at INR4.2b.  The gross margin (GM) contracted 290bp YoY at 63.9% during the quarter. Financials & Valuations (INR b)  The EBITDA margin contracted at higher rate of 530bp YoY at 24.7% during the Y/E MARCH 2020 2021E 2022E quarter (our est.: in-line). Sales 63.7 76.5 96.0  EBITDA margins were affected on account of lower GM and increased other EBITDA 16.0 21.9 28.1 Adj. PAT 7.6 11.0 15.6 expenses / R&D cost / employee cost (+120bp/+100bp/+30bp YoY as EBIT Margin (%) 16.5 20.1 22.3 percentage of sales). Cons. Adj. EPS (INR) 6.3 9.2 13.0  Accordingly, EBITDA declined 5.6% YoY to INR4.1b (our est.: in-line) for the EPS Gr. (%) 2.0 44.9 41.5 quarter. BV/Sh. (INR) 55.9 62.4 71.5  PAT declined at a higher rate of 27.8% YoY to INR1.5b (our est.: INR1.9b), Ratios weighed by higher depreciation and tax rate. Net D:E 0.3 0.2 0.2 Key highlights for the quarter RoE (%) 12.0 15.5 19.4  RoCE (%) 9.1 11.4 14.6 The USFDA approved the biosimilar insulin Glargine (Semglee). Payout (%) 29.3 29.3 29.3  It received EIR with a VAI status from the USFDA for a pre-approval/GMP Valuations inspection at the Generic API facility. P/E (x) 68.3 47.1 33.3  The Mylan-BIOS team has maintained steady market share in biosimilar EV/EBITDA (x) 32.3 23.6 18.0 Pegfilgrastim. Div. Yield (%) 0.4 0.5 0.8  The Mylan-BIOS team witnessed a positive trend in market share in the US for FCF Yield (%) 0.6 1.6 3.1 biosimilar Trastuzumab. EV/Sales (x) 8.1 6.7 5.3  Biosimilar Bevacizumab is under review by the USFDA and EMA.

Quarterly performance (Consolidated) (INR m) Y/E March FY20 FY21E FY20 FY21E FY21E 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE vs Est Net Sales 14,589 15,720 17,480 15,575 16,713 18,689 20,952 20,102 63,672 76,455 16,799 -0.5% YoY Change (%) 29.8 19.0 13.4 1.9 14.6 18.9 19.9 29.1 15.5 20.1 14.6 EBITDA 4,369 4,030 4,450 3,185 4,123 5,046 6,307 6,390 16,031 21,866 4,166 -1.0% YoY Change (%) 83.7 18.9 9.5 -22.3 -5.6 25.2 41.7 100.6 15.1 36.4 -5 Depreciation 1,242 1,320 1,440 1,524 1,668 1,570 1,650 1,631 5,522 6,519 1,540 EBIT 3,127 2,710 3,010 1,661 2,455 3,476 4,657 4,760 10,509 15,347 2,626 YoY Change (%) 125.5 19.4 4.0 -42.8 -21.5 28.3 54.7 186.5 11.1 46.0 -16 Interest 166 140 180 168 125 130 125 141 649 521 170 Other Income 241 380 360 631 183 250 280 537 1,614 1,250 450 PBT 3,202 3,540 3,190 2,124 2,513 3,596 4,812 5,156 12,149 16,076 2,906 -13.5% Tax 852 1,000 850 450 809 899 1,203 947 3,151 3,858 727 Rate (%) 26.6 28.2 26.6 21.2 32.2 25.0 25.0 18.4 25.9 24.0 25.0 Minority Interest 210 380 310 360 180 280 320 434 1,345 1,214 250 PAT 2,061 2,160 2,030 1,230 1,488 2,417 3,289 3,774 7,651 11,004 1,930 -22.9% Adj PAT 2,061 1,737 2,250 1,230 1,488 2,417 3,509 3,774 7,278 6,705 1,930 -22.9% YoY Change (%) 72.7 -5.1 -0.9 -42.7 -27.8 39.2 55.9 206.8 -2.2 -7.9 -9.0 Margins (%) 14.1 13.7 11.6 7.9 8.9 12.9 15.7 18.8 12.0 14.4 11.5 *There is re-statement in 1Q and 4Q financials of FY20 and hence they do not sum up to FY20 numbers

24 July 2020 7

RESULTS 24 July 2020 FLASH Results Flash | Sector: Financials-Banks

AU Small Finance Bank

BSE SENSEX S&P CNX 38,140 11,215 CMP: INR757 Buy Moratorium book declines; Treasury gains, Aavas stake sale Conference Call Details support earnings th Date: 24 July, 2020  AUBANK reported PAT of INR2.0b (5.5% YoY / 64% QoQ) above estimates (40% Time: 10:00am IST beat). This was led by higher treasury gains of ~INR1.6b, the Aavas stake sale Dial-in details: (INR272.5m), and opex decline – aided by headcount reduction (~1k decline) +91-22-7115 8042 and moderation in business growth.  Furthermore, the bank increased provisions to INR1.8b (20% QoQ increase), Financials & Valuations (INR b) including provisions of INR1.4b toward COVID-19; thus, the total contingent Y/E March FY20 FY21E FY22E provisions toward COVID-19 increased to INR2.8b (~10% of the total NII 19.1 23.3 27.7 moratorium portfolio; 1% of advances). PPoP 12.0 14.2 16.6  PAT 6.7 6.4 8.7 NII grew 30% YoY (7% QoQ decline) to INR5.2b (8% miss), affected by muted NIM (%) 5.1 5.1 5.2 loan growth and 50bp QoQ decline in margins to 5.0%. Opex declined 6% YoY (- EPS (INR) 22.6 21.2 28.7 30% QoQ) to ~INR3.0b. Therefore, the C/I ratio improved to 39.9% v/s 57.2% in EPS Gr. (%) 71.3 -6.4 35.3 4QFY20. Overall, PPoP grew at 53% YoY to INR4.5b. BV/Sh. (INR) 142.2 163.4 192.0  Gross AUM grew 17% YoY (3% QoQ decline) to INR300b. Retail AUM increased ABV/Sh. (INR) 138.9 155.4 183.5 25% YoY (3% QoQ drop), while small and mid-corporate assets declined 12% Ratios YoY (8% QoQ decline). Thus, the share of retail AUM stood stable at 84%. The RoE (%) 18.0 13.9 16.1 bank disbursed nearly INR11.8b (including TLTRO, 70% YoY decline) at lower RoA (%) 1.8 1.4 1.6 yield of 11.2% (v/s 15.6% in 1QFY20). Valuations  Deposits grew at ~35% YoY / 2% QoQ to INR267.3b. The CASA ratio stood P/E(X) 33.4 35.7 26.4 stable at 16%. Furthermore, retail term deposits grew at 69% YoY. Overall, P/BV (X) 5.3 4.6 3.9 P/ABV (X) 5.4 4.9 4.1 retail deposits formed 45% of the total deposits (v/s 43% in FY20).

 Absolute GNPA/NNPA declined 2.3%/~25% QoQ; thus, the GNPA ratio stood stable at 1.7%, while NNPA improved 19bp to 0.6%. Thus, PCR improved to 64% (v/s 53% in FY20).  Moratorium update: In terms of value, complete moratorium availed stood at 11% of total advances (INR28–29b); the SMA pool, which was INR27.7b as of 29th Feb’20, has now reduced to INR11.3b (~4.3% of loans) as of June’20.  Collection trends: Overall, collection efficiency improved to 90% in the month of Jun’20 v/s 54% in Apr’20. Furthermore, in terms of EMI paid by borrowers, the full EMI recovery rate improved to 67% in Jun’20 v/s 53% in Apr’20. Under normal trends, around 80% customers pay full EMIs, while 5% customers pay partial dues.  Other highlights: (1) The Tier 1 ratio stands at 18.5% (CAR at 21.7%). (2) Cost of funds in 1QFY20 declined to 7.2% v/s 7.5% in 4QFY20; incremental cost of funds for 1QFY21 was at 6.0% v/s 7.2% for 4QFY20 (7.3% for FY20). (3) Disbursement yield moderated sharply to 11.2% v/s 15.2% in 4QFY20.  Valuation and view: AUBANK reported strong earnings, led by robust treasury performance and controlled opex, even as it prudently made additional COVID- 19 provisions and improved PCR to 64%. Also, sharp decline in the moratorium book, decline in SMA numbers, and improving collection trends eased concerns around asset quality. However, we remain watchful of recovery trends over the near term. On the business front, deposit growth has held strong, which, along with other measures, has enabled the bank to maintain strong surplus liquidity and LCR of 150%. We would review our estimates and TP post the earnings call scheduled tomorrow.

24 July 2020 8

Exhibit 1: Quarterly Performance (INR m) FY20 FY21E 1QE FY20 FY21E v/s Est 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE FY21E Net Interest Income 3,956 4,516 5,068 5,549 5,159 5,741 5,862 6,624 19,089 23,282 5,616 -8.1 % Change (Y-o-Y) 38.1 40.7 45.7 43.4 30.4 27.1 15.7 19.4 42.2 22.0 42.0 Other Income 2,109 1,508 1,612 1,831 2,258 1,875 2,154 1,692 7,061 7,979 1,676 34.8 Total Income 6,065 6,024 6,681 7,381 7,416 7,616 8,017 8,315 26,150 31,261 7,291 1.7 Operating Expenses 3,157 3,247 3,552 4,223 2,961 4,184 4,269 5,664 14,179 17,078 4,099 -27.8 Operating Profit 2,908 2,777 3,128 3,158 4,456 3,432 3,747 2,652 11,972 14,183 3,193 39.6 % Change (Y-o-Y) 90.7 58.5 75.1 46.4 53.2 23.6 19.8 -16.0 65.8 18.5 9.8 Provisions 315 610 401 1,506 1,813 1,392 1,559 805 2,832 5,570 1,281 41.5 Profit before Tax 2,593 2,167 2,727 1,652 2,643 2,040 2,188 1,846 9,140 8,613 1,911 38.3 Tax Provisions 690 447 825 429 635 514 551 470 2,392 2,171 482 31.9 Net Profit 1,903 1,719 1,902 1,223 2,008 1,526 1,636 1,376 6,748 6,443 1,430 40.4 % Change (Y-o-Y) 147.3 88.1 99.5 3.5 5.5 -11.3 -14.0 12.5 76.7 -4.5 -24.9 Operating Parameters Deposit (INR b) 198.5 221.5 238.7 261.6 267.3 268.3 286.1 306.1 261.6 306.1 264 1 Loan (INR b) 231.0 248.1 265.7 269.9 262.5 280.5 289.3 305.2 269.9 305.2 273 -4 Deposit Growth (%) 98.5 72.1 62.5 34.7 34.7 21.1 19.9 17.0 34.7 17.0 32.9 175 Loan Growth (%) 51.3 36.9 32.9 18.3 13.6 13.1 8.9 13.1 18.3 13.1 18.4 -474 Asset Quality GNPA (%) 2.1 2.0 1.9 1.7 1.7 1.7 2.3 3.2 1.7 3.2 1.7 -3 NNPA (%) 1.3 1.1 1.0 0.8 0.6 0.7 1.0 1.4 0.8 1.4 0.8 -16 PCR (%) 40.5 43.9 46.8 52.5 63.5 57.6 55.4 56.4 52.5 56.4 55.0 850 Source: MOSL, Company

Overall AUM decline 3% QoQ (17% YoY increase) Mix of on-book advances at ~87% On book Adv Off book Adv On book Adv (INRb) Off book Adv (INRb)

39 8.1% 5.9% 9.8% 33.1% 29.7% 25.2% 17.0% 14.0% 10.4% 33 38 11.0% 11.0% 12.6% 12.6% 31 14 25 21 18 25 27 266 270 34 228 231 248 263 36 36 181 200 133 153 72 85 100 66.9% 70.3% 74.8% 83.0% 86.0% 89.6% 91.9% 94.1% 90.2% 89.0% 89.0% 87.4% 87.4% 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Source: Company, MOFSL Source: Company, MOFSL

Strong traction in deposit mobilization (~35% YoY); CASA ratio PCR improves to ~64% stands at ~16%

GNPA (%) NNPA (%) PCR (%) Deposits (INRb) CASA (RHS, %) 64

28 53

26

47

24 44

40 21

38 38 37 37

19 16 17 16 16

0.6 0.8 1.0 1.1 1.3 1.3 1.3 1.3 1.4 1.7 1.7 1.9 2.0 2.1 2.0 2.1 2.0 2.2

100 129 147 194 198 221 239 262 267 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21

Source: Company, MOFSL Source: Company, MOFSL

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RESULTS

23 July 2020 FLASH Results Flash | Sector: Capital Goods ABB India

BSE SENSEX S&P CNX 38,140 11,215 CMP:INR937 Buy Surprises with positive PAT, against expected loss Conference Call Details 2QCY20 earnings snapshot: Date: 24th July 2020  Revenue declined 43% to INR9.9b and was 33% ahead of expectation, Time: 4:00 pm IST commendable given the short-duration nature of the business. Dial-in details:  EBITDA declined 81% to INR234m v/s expected loss of INR1.0b. +91-22-6280 1376  The EBITDA margin came in at 2.4% v/s 7.2% last year.  Financials & Valuations (INR b) Adj. PAT declined 78% to INR152m and was ahead of expected loss of Y/E Dec 2019 2020E 2021E INR890m. Sales 73.2 57.6 76.0  Order inflow declined 40% to INR12b, while the order book was flat YoY EBITDA 5.3 1.9 5.7 at INR46.7b. PAT 3.5 1.4 4.3  For 1HCY20, OCF was negative at INR5.2b (1HCY19: +INR2.1b) on EBITDA (%) 7.3 3.2 7.6 account of an INR5.9b net increase in working capital, a negative EPS (INR) 16.6 6.4 20.3 EPS Gr. (%) 38.1 (61.3) 216.4 outcome. BV/Sh. (INR) 166.1 171.6 187.0 Ratios Segmental highlights:

Net D/E (0.5) (0.6) (0.6)  Robotics & Motion revenue was down 38% to INR4.2b. The EBIT margin RoE (%) 10.0 3.7 10.8 came in at 7.9% (-200bps YoY). RoCE (%) 10.7 4.4 11.6  Electrification Products revenue was down 51% to INR3.6b. The EBIT Payout (%) 29.1 20.0 20.0 margin came in at 4.8% (-400bps YoY). Valuations  P/E (x) 56.5 146.3 46.2 Industrial Automation revenue declined 37% to INR2.4b and was barely at P/BV (x) 5.6 5.5 5.0 breakeven. EV/EBITDA (x) 34.4 95.3 30.3 Div Yield (%) 0.5 0.1 0.4 FCF Yield (%) 2.9 2.9 2.3

Quarterly Performance (INR m)

Y/E December CY19 CY20E CY19 CY20E MOSL Var. 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE 2QE (%)

Sales 18,503 17,258 17,456 19,533 15,222 9,858 16,200 16,283 73,151 57,563 7,400 33.2 Change (%) 18.1 3.6 17.0 (0.7) (17.7) (42.9) (7.2) (16.6) 9.3 (21.3) (57.1)

EBITDA 1,455 1,239 1,234 1,384 495 234 1,030 100 5,312 1,859 -1,030

Change (%) 62.6 41.5 88.7 -35.8 -66.0 -81.1 -16.5 -92.8 16.0 -65.0 -183.2

As % of Sales 7.9 7.2 7.1 7.1 3.3 2.4 6.4 0.6 7.3 3.2 (13.9)

Depreciation 233 220 227 224 271 249 260 214 904 994 260 (4) Interest 26 96 44 47 34 38 50 129 214 250 100 (63) Other Income 191 204 164 384 458 266 200 274 943 1,198 200 33 Extra-ordinary Income 272 - - (748) 139 16 - - (476) 155 -

PBT (Before Exceptionals) 1,387 1,127 1,127 1,497 648 214 920 31 5,137 1,813 -1,190

Tax 497 429 339 362 141 62 232 21 1,627 456 -300

Effective Tax Rate (%) 35.8 38.1 30.1 24.2 21.8 29.1 25.2 69.0 31.7 25.2 25.2

Reported PAT 1,162 697 788 387 646 168 688 10 3,034 1,511 -890

Adj. PAT 890 697 788 1,135 507 152 688 10 3,510 1,357 -890

Change (%) 95.2 58.9 118.6 -11.8 -43.0 -78.2 -12.7 -99.2 38.1 -61.3 -227.6

24 July 2020 10

RESULTS

24 July 2020 FLASH Results Flash | Sector: Technology Mphasis

BSE SENSEX S&P CNX 38,140 11,215 CMP: INR980 Neutral Largely in-line revenue and margins Conference Call Details Mphasis reported revenue (USD) / EBIT / PAT growth of 3%/12%/4% v/s our 24th Jul 2020 Date: expectation of 2%/8%/7%. Time: 09:00 IST Dial-in details: Revenue largely in-line +91-22 6280 1165  Overall revenue declined ~4.6% QoQ (CC), largely in line with our expectations. Excluding the non-strategic ATM business, revenue decreased ~4% QoQ (CC). Financials & Valuations (INR b)  Revenue in Direct International remained largely stable on a sequential basis. Y/E Mar 2020 2021E 2022E Direct Core, which constitutes 81% of Direct International, declined ~2% QoQ (CC). Sales 88.4 85.9 91.8 EBIT Margin (%) 16.0 14.6 14.1 Revenue in DXC witnessed a sharper-than-expected decline of ~16% QoQ (CC). PAT 11.8 10.4 11.3  Barring Banking and Capital Markets, all other verticals reported sharp EPS (INR) 61.5 55.5 60.2 sequential revenue decline. EPS Gr. (%) 9.6 -9.7 8.4 Margin contraction largely due to fall in utilizations BV/Sh. (INR) 312.6 334.5 360.8  Ratios The EBIT margin contracted ~60bp QoQ and came in ~50bp ahead of our RoE (%) 21.4 17.3 17.8 estimates. EBIT margin contraction was largely due to a drop in the gross RoCE (%) 18.3 14.3 15.1 margin (~200bp QoQ). This was in turn led by a sharp fall in utilizations (~300– Payout (%) 56.9 54.1 66.5 400bp QoQ). Valuations P/E (x) 15.9 17.6 16.3  While S&M expenses remained stable (as a percentage of revenue), some of P/BV (x) 3.1 2.9 2.7 the pressure at the gross margin level was offset by the rationalization of G&A EV/EBITDA (x) 10.3 11.2 10.2 expenses (~150bp QoQ). Div yld (%) 3.6 3.1 4.1  Adjusting for net loan repayments, net operating cash generated during the

quarter (USD42m) was the highest in the past 15 quarters.

Valuation and view: The company announced new TCV wins of USD259m in 1QFY21 in Direct International. This is the highest ever TCV win for a quarter for Mphasis and comprises one large deal win of over USD100m TCV. ~79% of the deal wins during the quarter are into new gen services. We await further clarity on the outlook on DXC and margins in the earnings call tomorrow. Maintain Neutral.

Quarterly Performance (INR m) Y/E March FY20 FY21E FY20 FY21E Est. Var. Jun 19 Sep 19 Dec 19 Mar 20 Jun 20 Sep 20E Dec 20E Mar 21E Jun 20 (% / bp) Revenue (USD m) 297 305 318 320 305 279 276 281 1,239 1,142 303 0.7 QoQ (%) 1.8 2.6 4.3 0.6 -4.5 -8.6 -1.2 1.7 10.8 -7.9 -5.1 65bp Revenue (INR m) 20,626 21,581 22,767 23,462 22,882 21,058 20,812 21,180 88,436 85,932 22,886 0.0 YoY (%) 13.3 12.7 15.5 15.9 10.9 -2.4 -8.6 -9.7 14.4 -2.8 11.0 -2bp GPM (%) 28.4 28.8 28.7 29.3 28.9 26.9 25.5 27.2 28.8 27.2 28.6 34bp SGA (%) 10.2 10.0 10.0 10.4 10.7 9.8 9.7 9.8 10.2 10.0 10.9 -20bp EBITDA 3,743 4,052 4,269 4,441 4,178 3,608 3,300 3,690 16,505 14,776 4,054 3.1 EBITDA Margin (%) 18.1 18.8 18.8 18.9 18.3 17.1 15.9 17.4 18.7 17.2 17.7 55bp EBIT 3,193 3,470 3,694 3,831 3,583 3,064 2,767 3,152 14,188 12,565 3,459 3.6 EBIT Margin (%) 15.5 16.1 16.2 16.3 15.7 14.6 13.3 14.9 16.0 14.6 15.1 54bp Other income 541 351 362 526 377 368 452 487 1,780 1,684 364 3.7 ETR (%) 25.1 24.2 24.0 14.9 27.0 24.5 24.5 24.5 21.8 25.2 24.5 246bp PAT 2,647 2,733 2,937 3,532 2,750 2,555 2,395 2,713 11,849 10,413 2,844 -3.3 QoQ (%) -0.5 3.3 7.5 20.3 -22.1 -7.1 -6.3 13.3 -19.5 YoY (%) 2.5 0.9 5.7 32.7 3.9 -6.5 -18.5 -23.2 10.4 -12.1 7.5 EPS (INR) 14.2 14.2 15.2 18.8 14.7 13.6 12.8 14.5 62.4 55.5 15.2 -3.3

24 July 2020 11

23 July 2020 1QFY21 Results Update | Sector: Metals

Estimate change CMP: INR172 TP: INR226 (+32%) Buy

TP change On the path to deleveraging Rating change Strong show amid challenging times

Motilal Oswal values your support in  Jindal Steel and Power (JSP)’s 1QFY21 result highlights the benefit of cost the Asiamoney Brokers Poll 2020 for India Research, Sales and Trading reduction in its steel operations. 1QFY21 consolidated adj. EBITDA was up team. We request your ballot. 2% QoQ to INR22.6b (est.: INR18.9b).  We raise JSP’s FY21/FY22 EBITDA estimates by 6%/5% to factor cost reduction demonstrated by the company. We expect JSP to reduce its net debt by INR83b (INR81/sh) to INR296b over FY20–22E. The Oman

divestment would reduce debt by an additional ~INR60b. Reiterate Buy. Bloomberg JSP IN Equity Shares (m) 1,020 Higher volumes and cost reduction boost EBITDA  M.Cap.(INRb)/(USDb) 175.1 / 2.4 Consolidated: JSP’s 1QFY21 consolidated adj. EBITDA (adj. of insurance claim 52-Week Range (INR) 202 / 62 of INR1.2b) of INR22.6b (est.: INR18.9b) was up 2% QoQ (4% YoY), led by 1, 6, 12 Rel. Per (%) 10/3/17 higher volumes and cost reduction in standalone operations. The beat on 12M Avg Val (INR M) 3046 estimates was led by lower-than-expected costs in standalone operations. Adj. PAT stood at INR1.0b (v/s est. loss of INR1.1b).

Financials & Valuations (INR b) Standalone: Cost reduction and higher volumes drive 9% QoQ EBITDA growth Y/E March 2020 2021E 2022E  Revenue / adj. EBITDA / adj. PAT came in at INR61.6b/INR17.1b/INR4.1b, Sales 370.0 374.4 418.1 +4%/+9%/+47% QoQ and +2%/+20%/+158% v/s our est. The company EBITDA 78.5 94.2 95.7 received an insurance claim of INR1.2b during the quarter, which we have Adj. PAT -3.7 7.9 15.2 considered as an exceptional gain. Adj. EPS (INR) -3.6 7.7 14.9  EPS Gr(%) -210 -315 93 Steel sales (excl. pig iron) grew 4% YoY / 11% QoQ to 1.48mt, driven by BV/Sh. (INR) 315 324 339 exports (58% of total volumes), as domestic sales declined ~40% YoY. RoE (%) -1.1 2.4 4.5  Steel NSR declined ~INR4,600/t QoQ due to higher exports and lower value- RoCE (%) 4.8 7.0 7.5 added sales. However, decline in derived blended realization was lower at Payout (%) 0.0 0.0 0.0 INR3,020/t (7%) QoQ to INR41,569/t (our est.: INR40,705/t) due to higher Valuations sales of traded goods (~+INR1,100 QoQ). P/E (x) -47.7 22.2 11.5  Unitary cost declined 9% QoQ to INR30,044/t (-9% QoQ) (est.: INR31,129/t), P/BV 0.5 0.5 0.5 largely due to lower cost of iron ore and thermal coal. EV/EBITDA (x) 7.1 5.4 4.9  Div. Yield (%) 0.0 0.0 0.0 With lower cost nearly offsetting lower realization, EBITDA/t declined only 2% QoQ to INR11,525/t (est.: INR9,576/t). Shareholding pattern (%)  Adj. PAT increased 47% QoQ to INR4.1b (est.: INR1.6b).

As On Jun-20 Mar-20 Jun-19 JPL: Lower coal cost drives EBITDA growth, but volumes weaken further Promoter 60.5 60.5 60.5  EBITDA increased 11% QoQ to INR3.7b (est.: INR2.9b) on lower coal cost, DII 14.0 12.4 9.2 FII 12.0 13.4 15.1 implying EBITDA/unit of INR1.9 (+23% QoQ). Others 13.5 13.8 15.1  Gross volumes, however, declined to 2,179 MUs (-10% QoQ; -27% YoY), FII Includes depository receipts implying only 29% PLF.

Oman: Lower spreads impact EBITDA  EBITDA declined 58% QoQ to INR1.9b (est.: INR2.3b) due to lower spreads; EBITDA/t stood at USD51/t v/s USD120/t QoQ.  Sales volumes declined 6% QoQ to 500kt (+22% YoY).  Consolidated net debt declined by INR13.0b QoQ to INR346b at 1QFY21- end.

24 July 2020 12

Management confident on volume growth, deleveraging in FY21  The company guided for sales volumes of 1.8mt in 2QFY21 and expects exports of 0.6mt. It guided for sales of 3.9mt in 2HFY21, thereby guiding for sales (incl. pig iron) of ~7.4mt in FY21.  With lower exports and higher value-added product sales, the company expects Steel NSR to improve in 2QFY21.  The company expects to repay debt of INR55b in FY21 through cashflow generation. The Oman divestment deal, if approved, would lead to an additional debt reduction of another INR60b. The company has scheduled the repayment of INR50b over the balance 9MFY21.

Deleveraging to continue, driven by strong FCF generation  With JSP booking significant exports in 1HFY21 and an expected improvement in domestic demand in 2HFY21, we expect the company to achieve ~10% volume growth in FY21. We expect JSP to achieve ~10% EBITDA CAGR over FY20–22E to INR95.6b, driven by an expected 8% volume CAGR.  We expect JSP to reduce its net debt by INR83b (INR81/share) over FY20–22E to INR296b (incl. acceptances) through strong FCF generation, led by higher EBITDA and lower capex. We expect JSP to refinance its overseas debt maturities (~USD800m). This would elongate the debt repayment schedule, thereby reducing the strain on standalone cash flows.  The Oman divestment deal, if approved, with equity consideration of ~USD50m (net of inter-company loans of USD200m), would lead to an additional net debt reduction of ~INR60b (INR59/sh). We have not factored the deal in our estimates. The divestment of the Oman business would lead to improved focus on domestic operations.  Reiterate Buy, with an SOTP-based TP of INR226, based on 5.0x FY22E EBITDA for the Steel business and DCF valuation for the Power business. At CMP, the stock trades attractively at 4.5x FY22E EV/EBITDA for the Steel business.

Quarterly Performance (Consolidated) - (INR m) Y/E March FY20 FY21 FY20 FY21E vs Est 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QE (%) Net Sales 99,456 89,395 92,998 88,107 91,585 92,326 96,003 99,698 3,69,955 3,74,384 85,234 7 Change (YoY %) 2.9 -10.4 -2.8 -13.3 -7.9 3.3 3.2 13.2 -6.0 1.2 -14.3 EBITDA 21,731 16,415 18,195 22,198 22,638 23,620 23,863 24,605 78,539 94,248 18,881 20 Change (YoY %) -4.5 -25.6 -12.4 20.3 4.2 43.9 31.1 10.8 -6.6 20.0 -13.1 Interest 11,090 10,301 10,024 10,078 10,041 9,981 9,921 9,876 41,493 39,819 10,078 0 Depreciation 10,536 10,390 10,179 10,500 9,818 9,769 9,720 12,282 41,604 41,589 10,476 -6 Other Income 8 8 0 246 31 0 0 0 262 31 0 PBT (before EO item) 113 -4,266 -2,008 1,865 2,809 3,871 4,222 2,447 -4,296 12,871 -1,673 NA Extra-ordinary Income 0 0 0 1,838 1,203 0 0 0 1,838 1,203 0 PBT (after EO item) 113 -4,266 -2,008 3,704 4,012 3,871 4,222 2,447 -2,458 14,074 -1,673 NA Total Tax 987 -273 178 647 1,336 1,084 1,182 1,013 1,539 4,615 -497 Reported PAT -874 -3,993 -2,186 3,056 2,676 2,787 3,040 1,434 -3,997 9,459 -1,176 NA MI - Loss/(Profit) -968 -988 57 -1,006 845 -30 -30 -30 -2,150 755 -30 Adjusted PAT 95 -3,005 -2,243 2,224 1,029 2,817 3,070 1,464 -3,684 7,902 -1,146 NA Change (YoY %) -94.8 -440.7 767.6 198.0 987.7 -193.7 -236.9 -34.2 -215.9 -314.5 -1310.9 Cash profit (pre tax and MI) 10,649 6,123 8,171 12,365 12,628 13,640 13,942 14,729 37,308 54,460 8,803 43 E: MOFSL Estimates

24 July 2020 13

23 July 2020 Update | Sector: Oil & Gas

Aegis Logistics BSE SENSEX S&P CNX 38,140 11,215 CMP: INR192 TP: INR250 (+30%) Buy

Reality check on LPG demand v/s imports – favors AGIS  LPG has been in ever-increasing use as the need for cooking gas increased amid the lockdown and owing to various government schemes. For this reason, LPG

consumption growth came in strong at 12–16% YoY over Apr–June, while demand for

Stock Info other fuels tanked to 30–60% of normal during this period. This led to a huge jump in Bloomberg AGIS IN LPG imports at ~65% of total LPG consumption as refineries trimmed their operating Equity Shares (m) 334 rates due to the lack of demand. M.Cap.(INRb)/(USDb) 65.1 / 0.9  The story for the last three months is similar to that for the last three years – in 2016, 52-Week Range (INR) 267 / 108 the government introduced the Pradhan Mantri Ujjwala Yojana (PMUY), which led to 1, 6, 12 Rel. Per (%) -11/-1/-5 a huge spike in LPG consumption. Although, for AGIS, investors have been wary of 12M Avg Val (INR M) 47 Free float (%) 40.3 capacity utilization amid increasing competition.  In light of the same, we highlight the potential for increase in LPG imports (by ~2.7x Motilal Oswal values your support in to 36.5mmtpa) despite a rise expected in domestic refining capacity (by ~1.5x to the Asiamoney Brokers Poll 2020 for India Research, Sales and Trading 367mmtpa) by FY31. Moreover, there is huge gap in the per connection consumption team. We request your ballot. of gas by domestic consumers (with expected demand jump of 6.7mmtpa).  Factoring the above-mentioned fundamentals in favor of the company, we reiterate Buy on AGIS, with target price of INR250.

Longing for LPG imports and…  Coming decade will mark the period of domestic refineries expansion. Refining Financials Snapshot (INR b) Y/E March 2020 2021E 202E capacity, which stands at 250mmtpa in FY20, is expected to grow at a CAGR of Sales 71.8 81.7 96.2 4% and reach 367mmtpa in FY31. Projects of ~117mmtpa (i.e. ~2x FY11–20) are EBITDA 2.8 5.9 6.9 lined up to be commissioned by FY31; however, just one-fourth the capacity Adj. PAT 1.0 3.5 4.2 has a clear timeline / has seen work commence. Adj. EPS (INR) 3.0 10.4 12.5  LPG yield from refineries has been in the range of 4.5–4.9% over the last 10 EPS Gr.% -55.0 249.6 19.7 years, and may decline with increasing focus of refiners on producing BV/Sh.INR 49.5 57.6 67.3 petrochemicals. Ratios Net D:E 0.0 -0.2 -0.3  LPG consumption in India saw a CAGR of ~7% over FY11–20 (with FY16–20 RoE (%) 6.5 19.5 20.0 registering CAGR of 8% owing to the introduction of PMUY in 2016). RoCE (%) 9.0 20.3 20.6  Assuming LPG yield of 5% and a demand CAGR of 7% over the next decade, Payout (%) 65.6 22.3 22.3 our calculation suggests imports could see a CAGR of 10% over FY21–31. Valuation  LPG production is expected to increase ~1.5x (to 18.5mmtpa) by FY31, P/E (x) 64.2 18.4 15.4 while imports could see an increase of ~2.7x (to 36.5mmtpa) over this P/BV (x) 3.9 3.3 2.8 EV/EBITDA (x) 23.0 10.3 8.2 period. Div. Yld (%) 0.9 1.1 1.3  The above scenario assumes that all of the refinery expansion projects FCF Yld (%) -4.3 6.3 8.3 would get commissioned by FY31; although, considering only those projects where work has already commenced, the estimated imports CAGR Shareholding pattern (%) over FY21–31 could be ~12%. As On Jun-20 Mar-20 Jun-19  Reflecting over FY11-20, despite a ~34% increase witnessed in domestic Promoter 59.7 59.6 60.6 DII 2.8 2.7 2.4 refining capacity, the percentage import of LPG increased to ~56% in FY20 from FII 12.8 12.5 12.7 ~21% in FY10 (clocking double the CAGR of demand at ~14%). Our calculation Others 24.8 25.3 24.4 highlights a similar story going into the next decade as well. FII Includes depository receipts  This should benefit AGIS the most as it is very well placed to cater to the huge potential of imports from its various terminals facilitated through pipelines or railway gantry v/s traditional off-lift via trucks (in smaller quantities).

24 July 2020 14

Stock Performance (1-year) …huge gap in per connection consumption…  Since the introduction of PMUY in 2016, LPG coverage in India is said to have reached ~98% currently (from just ~56% in FY15). However, the quick development of the scheme has somewhere failed to address the challenges related to LPG adoption faced by poor households.  The per connection consumption of gas fell ~22% to 6 cylinders (of 14.2 kg) per year in FY20 from 7.7 cylinders per year in FY15 (despite a ~47% jump in total LPG consumption over the same period). Assuming an increase in the per connection usage of LPG to 7.7 cylinders per year, we could easily see a demand jump of ~6.7mmtpa (which is ~25% of FY20 demand).

 To put the aforementioned factor in perspective, AGIS handled 3mmtpa of LPG imports at the end of FY20 (~20% of total imports). Post the completion of the current expansion at Kandla, the company’s LPG throughput capacity is expected to reach 9.2mmtpa. Thus, AGIS could achieve optimum utilization at its four LPG terminals with increase in per connection consumption to FY15 levels (3 + 6.7 = 9.7mmtpa). This would also help the company achieve its target market share of 30–33% in the near-to-medium term.

…while competition remains at bay…  As presented above, despite massive additions to domestic refining capacity, the proposed new LPG terminals are too few to meet the major requirement of LPG imports in the country.  BPCL’s Haldia LPG terminal (with capacity of 30,000mt) is running behind schedule and has a very huge capex of INR12b (v/s AGIS’ capex of INR2.5b for 25,000mt for its LPG terminal at Haldia).  As per our channel checks, Adani Mundra, which was commissioned recently, is operating at just ~20% of its 5mmtpa capacity. We believe volume throughput would see a very slow ramp-up as the company moves volumes only via trucks.  Nevertheless, AGIS enjoys a long-standing legacy relationship with OMCs, while concurrently enjoying the strategic positioning of its terminals.  Also, the LPG bottling capacity is expected to increase by 54% over the next two years to 25.8mmtpa, and AGIS’ terminals are well-placed with enhanced connectivity through pipelines ( and Kandla) or railways (Pipavav).

…to favor AGIS the most – Reiterate Buy  AGIS has been a key beneficiary of the government’s initiative to boost the penetration of LPG in the country.  We expect logistics volumes to record a CAGR of 16% over FY20-FY22 (on a conservative basis), with logistics EBITDA CAGR of ~18% over the same period.  The company plans to fund capex through internal accruals. We expect strong free cash flow generation of ~INR9.4b in FY21-FY22 combined (FCF yield of ~15%). Return ratios are likely to hover above 20% over the same period.  Also, the non-cash expense overhang of ESOPs at ~INR3.35b is behind, with ~INR2.4b recognized in FY20; only INR0.93b and INR0.17b would be realized in FY21 and 1QFY22, respectively.  AGIS trades at 15.4x FY22E EPS of INR12.5 and 8.2x FY21E EV/EBITDA. We expect a CAGR (FY19–22) of 23% in EBITDA and EPS. We value AGIS using the DCF methodology to arrive at a fair value of INR250/share. Maintain Buy.

24 July 2020 15

23 July 2020 1QFY21 Results Update | Sector: Financials PNB Housing Finance

Estimate change CMP: INR210 TP: INR210 Neutral TP change Stable quarter; Moratorium rate declining Rating change  PNBHOUSI reported 1QFY21 PAT of INR2.6b (v/s est. of INR600m). The beat Motilal Oswal values your support in was driven by stronger PPoP and significantly lower credit cost. the Asiamoney Brokers Poll 2020 for India Research, Sales and Trading  Moratorium rate on the loan book declined to 39% in Phase 2 from 56% in team. We request your ballot. Phase 1. AUM remained sequentially stable at INR835b. Given the high leverage, we expect the company to continue to run down its balance sheet until it raises fresh equity capital. Maintain Neutral, with TP of INR210.

AUM stable; NIMs improve sequentially

 Bloomberg PNBHOUSI IN As disbursements were negligible, AUM remained sequentially unchanged Equity Shares (m) 167 at INR835b. The company did not sell down any loans in the quarter; hence, M.Cap.(INRb)/(USDb) 35.4 / 0.5 upfront assignment income was nil v/s INR1.2b YoY. 52-Week Range (INR) 748 / 146  While yield on loans was stable at 10.6%, cost of funds declined 30bp YoY, 1, 6, 12 Rel. Per (%) -15/-53/-71 leading to a similar improvement in spreads to 2.6%. Cost of funds is likely 12M Avg Val (INR M) 302 Free float (%) 67.4 to further decline due to recent MCLR cuts by banks. Gross Stage 3 stable; Moratorium rate declines Financials & Valuations (INR b)  The GS3 ratio remained stable QoQ at 2.76%. While the company kept Stage Y/E March 2020 2021E 2022E 1 and 2 ECL provisions stable, it increased Stage 3 PCR from 36% to 40% NII 18.1 17.5 19.3 QoQ. PPP 20.6 16.9 19.8  The share of moratorium granted to retail customers declined from 49% to PAT 6.5 7.5 10.2 29% QoQ, while that for the overall book declined from 56% to 39% QoQ. EPS (INR) 38.4 44.7 60.4  Collection efficiency stood at 96–97% during the quarter and was largely EPS Gr. (%) -46 16 35 stable each month. This comprises non-moratorium customers only. BV/Sh. (INR) 476 509 559 Ratios INR59b liquidity on the balance sheet; Opex declines sharply NIM (%) 2.6 2.6 2.8  Liquidity on the balance sheet stood at INR71b, i.e., 11% of borrowings. C/I ratio (%) 21.1 23.4 22.5  The share of capital market borrowings (NCDs + CPs) declined to 22% from RoAA (%) 0.8 1.0 1.3 RoE (%) 8.3 9.1 11.3 32%. The company raised INR22.5b from NHB, the share of which now Valuations stands at 10% of total borrowings.

P/E (x) 5.5 4.7 3.5  Opex declined ~25% both QoQ and YoY. Management guided to 5–10% P/BV (x) 0.4 0.4 0.4 YoY reduction in FY21. Div. Yield (%) 4.3 4.3 4.3 Highlights from management commentary  Shareholding pattern (%) Target INR130b retail lending disbursements in FY21. No fresh corporate As On Jun-20 Mar-20 Jun-19 sanctions would be granted in FY21. Promoter 32.7 32.7 32.7  For its stressed IPL, the company sold one parcel of land and received DII 4.9 6.3 7.8 INR250m earnest money. The developer paid an additional INR250m in July FII 21.9 21.8 21.4 2020. The principal outstanding is now at INR690m from INR1.01b QoQ. Others 40.6 39.2 38.1 FII Includes depository receipts Valuation and view Over the past year, the key challenge for the company has been its high leverage. This has resulted in the running down of the balance sheet. In the current environment, this makes PNBHOUSI even more vulnerable to asset quality shocks. While the recent improvement in NIM and reduction in opex is encouraging, we wait and see the sustainability of the same. Maintain Neutral, with TP of INR210 (0.4x FY22E BVPS).

24 July 2020 16

Quarterly performance (INR m) FY20 FY21 FY20 FY21 4QFY20 v/s Est. 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Interest Income 19,794 20,159 18,904 18,026 18,015 17,835 17,657 17,093 76,882 70,600 17,665 2 Interest Expenses 15,127 15,213 14,610 13,800 13,635 13,499 13,296 12,689 58,750 53,120 13,524 1 Net Interest Income 4,667 4,946 4,293 4,226 4,380 4,336 4,360 4,404 18,133 17,480 4,141 6 YoY Growth (%) 10.1 29.1 21.3 -9.2 -6.2 -12.3 1.6 4.2 11.5 -3.6 -11.3 Other income 2,532 2,145 1,844 1,493 708 965 1,315 1,620 8,013 4,608 1,012 -30 Total Income 7,199 7,091 6,138 5,719 5,088 5,301 5,675 6,024 26,146 22,088 5,153 -1 YoY Growth (%) 31.2 22.4 -8.1 -20.6 -29.3 -25.2 -7.5 5.3 3.9 -15.5 -28.4 Operating Expenses 1,417 1,315 1,347 1,443 1,042 1,249 1,347 1,536 5,522 5,175 1,389 -25 YoY Growth (%) 9.6 -7.5 -13.9 -12.8 -26.4 -5 0 6.5 -7 -6.3 -2 Operating Profits 5,782 5,776 4,790 4,276 4,046 4,052 4,328 4,488 20,624 16,913 3,765 7 YoY Growth (%) 37.9 32.1 -6.4 -23 -30 -29.8 -9.7 5 7.2 -18 -34.9 Provisions 1,642 1,516 1,808 7,548 751 2,000 2,250 2,280 12,514 7,281 3,000 -75 Profit before Tax 4,140 4,260 2,983 -3,272 3,295 2,052 2,078 2,208 8,110 9,632 765 331 Tax Provisions 1,296 592 612 -852 723 451 457 488 1,648 2,119 161 350 Profit after tax 2,845 3,668 2,370 -2,421 2,572 1,600 1,621 1,720 6,462 7,513 604 326 YoY Growth (%) 11.2 45 -21.8 -163.7 -9.6 -56.4 -31.6 -171.1 -45.8 16.3 -78.8 Key Operating Parameters (%) Rep. Yield on loans 10.84 10.95 10.74 10.26 10.32 Rep. Cost of funds 8.31 8.34 8.21 8.03 8.13 Spreads 2.53 2.61 2.53 2.23 2.19 Net Interest Margins 3.14 3.19 2.98 2.61 2.66 Cost to Income Ratio 19.7 18.5 21.9 25.2 20.5 21.1 23.4 26.9 -500 BPS Credit Cost 0.88 0.81 1.01 4.42 0.44 1.78 1.1 0.65 35.93 Tax Rate 31.3 13.9 20.5 26 21.9 20.3 22 21.5 -97 BPS Balance Sheet Parameters Loans (INR B) 759 744 691 676 680 666 657 736 -6.12 Change YoY (%) 18.8 11.3 -2.2 -8.7 -10.4 -10.3 -1.3 4.1 AUM (INR B) 883 895 863 833 835 833 832 904 -4.5 Change YoY (%) 28.8 21.8 8.2 -1.6 -5.5 -1.6 -0.1 13.3 Borrowings (Ex Assign.) (INR B) 722 715 706 682 673 677 664 707 -0.2 Change YoY (%) 19.5 12.3 2 -5.7 -6.8 -5.7 -2 2.2 Loans /Borrowings (%) 105.1 104.1 98 99.1 101.1 98.4 99 104.2 Off BS loans/AUM (%) 14 16.9 19.9 18.9 18.5 20.1 21 18.5 Debt/Equity (x) 9.2 8.9 8.5 8.5 8.4 8.5 7.7 8.7 Asset Quality Parameters (%) GS 3 (INR Mn) 6,454 6,246 12,099 18,582 18,770 18,582 18,582 Gross Stage 3 (% on loans) 0.85 0.84 1.75 2.75 2.76 2.75 2.75 NS 3 (INR Mn) 5,088 4,833 9,956 11,825 11,358 11,825 11,825 Net Stage 3 (% on loans) 0.67 0.65 1.44 1.75 1.67 1.75 1.75 PCR (%) 21.2 22.6 17.7 36.4 39.5 36.4 36.4

E: MOFSL Estimates

24 July 2020 17

RESULTS

23 July 2020 FLASH Results Flash | Sector: Technology Zensar

BSE SENSEX S&P CNX 38,140 11,215 CMP: INR141 Neutral Strong beat on margins; Deal pipeline healthy Conference Call Details Date: 24th Jul 2020 Zensar’s reported revenue (USD) / EBIT (INR) / PAT decreased by 15%/13%/7% Time: 16:00 IST YoY v/s our estimate of 17%/32%/30% YoY. Dial-in details: +91-22 6280 1458 Revenue better than expected  Revenue decline of 4.8% QoQ (CC) was lower than our expectation. This beat Financials & Valuations (INR b) was led by a stronger-than-expected performance from the Hi-Tech vertical Y/E Mar 2020 2021E 2022E (+3.5% QoQ, CC). Sales 41.8 38.8 40.7  EBIT Margin (%) 8.5 9.4 9.6 While Manufacturing declined (4.3% QoQ, CC), in line with overall company PAT 2.7 2.9 2.8 decline, other verticals reported sharp revenue declines. EPS (INR) 11.9 12.6 12.3  Across geographies, Africa remained resilient with near flattish revenues as EPS Gr. (%) -17.2 6.1 -2.6 US/Europe declined ~5%/8% QoQ (CC). BV/Sh. (INR) 92.7 103.0 112.8  Ratios Among the service lines, Cloud and Infrastructure Services delivered strong RoE (%) 13.3 12.9 11.4 growth (+8.5% QoQ, CC), led by work-from-home enablement, etc. RoCE (%) 15.1 13.6 13.5  Top-5 (+0.9% QoQ, USD) and Top 6-10 accounts (+5.4% QoQ, USD) remained Payout (%) 23.6 15.9 17.2 highly resilient. Valuations P/E (x) 11.9 11.2 11.5 P/BV (x) 1.5 1.4 1.3 Direct cost optimization key factor for margin beat EV/EBITDA (x) 5.2 4.4 3.6  The company’s margin resilience is a big surprise. The optimization of direct Div yld (%) 2.0 1.4 1.5 costs (+240bp impact) and SG&A expenses (+20bp impact), and INR depreciation (+40bp impact) were the key margin tailwinds. Volume and

utilization decline (-190bp impact) were the key headwinds during the quarter. Overall, the EBIT margin expanded 20bp QoQ v/s our expectation of a 180bp contraction.  The company managed the utilization drop (only 130bp QoQ) quite well.  Cash conversion improved, with DSO reducing by 12 days sequentially. The company’s debt had also come down by ~USD15m.

Valuation and view: The Total Contract Value of deals signed during the quarter was ~USD150m – just ~10% lower v/s the last six-quarter average run-rate. Management indicated that the current deal pipeline is USD1.5b. We would revisit our estimates post the earnings call. Based on current estimates, it trades at 11x FY21E/FY22E EPS. Maintain Neutral.

24 July 2020 18

Quarterly Performance (INR m) Y/E March FY20 FY21E FY20 FY21E Est. Var. 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1QFY21 (% / bp) Revenue (USD m) 153 152 143 141 131 122 126 132 590 511 127 3.3 QoQ (%) 3.1 -0.7 -5.9 -1.9 -7.0 -6.7 3.5 4.2 5.8 -13.3 -10.0 298bp Revenue (INR m) 10,661 10,723 10,206 10,178 9,912 9,279 9,605 10,008 41,768 38,805 9,622 3.0 YoY (%) 20.8 13.3 -0.1 -2.8 -7.0 -13.5 -5.9 -1.7 7.1 -7.1 -9.7 272bp GPM (%) 29.4 29.1 23.6 28.9 28.8 28.1 29.1 29.0 27.8 28.7 27.8 102bp SGA (%) 15.2 15.1 16.8 15.0 14.4 15.8 15.8 15.5 15.5 15.4 16.0 -163bp EBITDA 1,515 1,500 696 1,416 1,430 1,143 1,273 1,347 5,127 5,193 1,133 26.2 EBITDA Margin (%) 14.2 14.0 6.8 13.9 14.4 12.3 13.3 13.5 12.3 13.4 11.8 265bp EBIT 1,136 1,115 284 1,001 986 791 908 966 3,536 3,651 767 28.5 EBIT Margin (%) 10.7 10.4 2.8 9.8 9.9 8.5 9.5 9.7 8.5 9.4 8.0 197bp Other income 146 181 397 161 179 200 183 251 885 813 205 -12.6 ETR (%) 28.4 28.5 25.5 27.3 26.2 26.2 26.2 26.2 27.7 26.2 27.3 PAT 787 799 397 695 732 617 722 785 2,678 2,855 549 33.3 QoQ (%) -9.6 1.5 -50.3 75.1 5.3 -15.7 17.0 8.7 -21.0 YoY (%) -5.8 -16.0 -32.3 -20.1 -7.0 -22.7 81.8 12.9 -17.5 6.6 -30.2 EPS (INR) 3.5 3.5 1.8 3.1 3.2 2.7 3.2 3.5 11.9 12.6 2.4 33.3

24 July 2020 19

23 July 2020

ECOSCOPE The Economy Observer

A Primer on RBI’s Balance Sheet Expounding its divergence vis-à-vis money supply measures

 The Reserve (RBI) has injected large liquidity into the financial system during the past five months through various measures. It has cut policy interest rates, (temporarily) reduced the cash reserve ratio (CRR) and announced long-term refinance operations (LTROs) – targeted or not. Consequently, the banking system’s net surplus has increased from INR3t (or 2.2% of NDTL) in early 2020s to INR4.3t (or ~3% of NDTL) currently. In this note, we discuss the impact of these liquidity-enhancing measures on the RBI’s balance sheet and money supply.  Since mid-Feb’20 (when the first LTRO was conducted), the RBI’s balance sheet has increased by about INR9.5t to INR54t as at 10th Jul’20. This has led the annual growth rate to more than double – from 14% in early 2020 to >30% currently. Almost half of the expansion in the RBI’s balance sheet is attributed to foreign currency assets (including gold coins and bullion), another 30% by LTROs and the remaining 20% by purchase of domestic securities.  However, it is interesting to note that for the second time in the past two decades, the RBI’s balance sheet has diverged substantially from the reserve money (or the ‘M0’), which has increased by INR2t since mid-Feb’20 (~14% YoY) – only about a fifth of the former. Although this may seem perplexing, an understanding of the components of the RBI’s balance sheet and M0 helps explain this spurious puzzle.  Further, the annual growth in broad money supply (or the ‘M3’) also picked up to 12.4% YoY – the highest in the past six years – supported almost entirely by the high fiscal deficit. Still, we do not believe it to be inflationary because (a) the credit-deposit ratio (wherein the numerator includes net credit of the RBI and the banking sector to the government and the private/commercial sector) is currently at ~111%, similar to the levels in the past two years, and (b) the government has resisted massive fiscal stimulus, which implies that unless commercial lending picks up quickly (which is not our base case), broad money supply will taper off in coming months.  Finally, while it is hoped that the RBI will intervene in the treasury market to support bond yields, it is an extremely difficult task to accomplish, especially if foreign capital inflows remain strong.

RBI’s balance sheet has expanded massively in 2020…: Since mid-Feb’20 – when the RBI announced its first LTRO – its balance sheet has expanded by record INR9.5t up to the week ended 10th Jul’20. This surge in the past five months is higher than the cumulative rise in the RBI’s balance sheet during the previous two years (Exhibit 1). It has grown at an annual rate of 30% during the past four months, marking the highest growth since the pre-GFC period in 2007-08 (Exhibit 2).

Exhibit 1: RBI’s balance sheet has increased by INR9.5t Exhibit 2: …and has grown at an average of ~30% in the since the first LTRO was conducted in mid-Feb’20… past four months Change in RBI's balance sheet RBI balance sheet 12,000 70 (INR b) (% YoY) 8,000 40

4,000 10

(20) 0

(50) (4,000) Jul-20 FY05 FY07 FY09 FY11 FY13 FY15 FY17 FY19 Jan-08 Jun-18 Oct-01 Apr-14 Sep-99 Feb-10 Dec-05 Nov-03 Mar-12 FY21* May-16 * FY20 is up to mid-Feb’20/FY21 starts from mid-Feb’20 Source: RBI, CEIC, MOFSL

24 July 2020 20

In conversation

HDFC LIFE: SAILED THROUGH JUNE AND THINGS ARE GETTING DEFINITELY BETTER; Vibha Padalkar, CEO  April and May were definitely tough but when you look at June versus the industry, overall for the quarter our market share increased by 100 bps and for June specifically we degrew only 3%. The reason I say only 3% degrowth is because when you look at the base effect, last year we grew by 87% in June. So, against the base of 87% we degrew 3%. So even without Covid, June would have been a bit of a tall ask but we sailed through it and so things are getting definitely better. We are not out of the woods yet but we are definitely seeing green shoots and people willing to engage through non-face to face modes of communication.  Have been fairly nimble in terms of reducing our costs. So from an expense base of 13.4% in the first quarter of last year, we brought it down to 11.5% and that also contributed quite significantly and this is without having to take tough calls on mass layoffs and things. We were able to do that and be fairly nimble on our cost.  Third, some of our segments like protection, grew from about 5% of our business in Q1 of last year to 11% in Q1 of this year and i it doubled versus the rupee value of protection that we wrote last year.  Telling our customers to pay their premiums because during the pandemic, we are witnessing that it is even more important for people to be well covered for both themselves as well as their family. But yes, renewal growth is also a function of persistency and it has grown by 24% in quarter one of this year.  Protection comes in various forms. Credit life is one but equally important is retail protection and that is very much under our control. That is why we have ramped up on our retail protection focus and that has grown year on year by 50%.

24 July 2020 21

From the think tank

FMCG FIRMS AWAIT RECOVERY IN THE HOSPITALITY SECTOR  The latest report on consumer behaviour by market researcher Nielsen explains how cooking at home is now almost embedded in Indian minds, thanks to being cooped up indoors for months during the pandemic-induced lockdown. The discovery of the kitchen, it said, is driven by critical needs to be healthy, safe and economical given the uncertainties around covid-19. Even though they find cooking time-consuming, people have shed their inhibitions about rustling up meals as they look for quick, authentic recipes online. The same report talks of a bearish consumer attitude towards expenditure on dining out and travel. Such a mindset, which stems both from the fear of contracting the infection and job insecurity, has dealt a body blow to the hotels, restaurants and cafes (HoReCa) business of fast-moving consumer goods companies. Arvind Mediratta, MD and CEO, METRO Cash and Carry India, said HoReCa was the first sector to shut its doors to customers, even before the lockdown started. The wholesaler, whose primary customers are kiranas and the hospitality sector, admitted that its sales started declining in early March. Hotels and restaurants stopped entertaining customers as gatherings were restricted. Even caterers serving weddings and institutions lost business as schools, colleges and offices shut down. Even though the Worldpanel division of market research firm Kantar tracks only household consumption, its managing director K. Ramakrishnan said the complete closure of HoReCa will definitely affect FMCG firms as food comprises 70% of the total volume for the industry. “Atta is a big component for snacks and biscuits, so is dairy. HoReCa is a subset of out-of-home consumption, which is down too," he said. Consequently, companies in the food segment, such as Ltd (HUL), Adani Wilmar, Nestle India Ltd, ITC Ltd, Gujarat Co-operative Milk Marketing Federation (GCMMF), the owner of dairy brand Amul, and numerous other big and small firms that feed HoReCa, saw their businesses contract. In its June-quarter earnings, HUL said its ice-creams, food solutions and vending businesses, which are driven primarily by out-of-home consumption, were massively impacted by the lockdown and closure of restaurants and eateries.

24 July 2020 22

Click excel icon for detailed Valuation snapshot valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY20 FY21E FY22E FY20 FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E Automobiles Amara Raja Neutral 698 697 0 38.7 32.7 37.8 36.7 -15.6 15.7 21.4 18.5 3.0 2.7 14.5 15.2 Ashok Ley. Buy 52 60 16 1.2 -0.3 2.0 -83.1 PL LP NM 26.0 2.1 2.0 -1.3 8.0 Neutral 2985 2960 -1 187.4 168.3 183.2 13.3 -10.1 8.8 17.7 16.3 3.9 3.6 23.2 22.9 Buy 387 444 15 9.2 2.9 15.1 -58.4 -68.8 423.0 134.5 25.7 3.4 3.0 2.5 12.4 Bosch Neutral 13270 13287 0 418.8 323.4 429.4 -22.5 -22.8 32.8 41.0 30.9 3.9 3.6 9.9 12.1 CEAT Buy 859 1107 29 57.1 63.5 80.5 -14.7 11.3 26.7 13.5 10.7 1.1 1.0 8.5 10.0 Eicher Mot. Buy 19879 22200 12 669.4 483.8 776.7 -17.8 -27.7 60.6 41.1 25.6 5.0 4.3 12.7 18.1 Endurance Tech. Buy 875 1106 26 38.0 30.0 46.1 5.1 -21.0 53.5 29.1 19.0 3.7 3.3 13.4 18.4 Escorts Neutral 1204 1144 -5 54.0 57.2 67.1 1.4 5.9 17.2 21.1 18.0 2.6 2.3 14.8 13.5 Exide Ind Buy 159 206 30 9.9 9.3 11.2 9.4 -6.2 20.4 17.0 14.2 2.0 1.8 11.7 12.9 Hero Moto Neutral 2769 2933 6 153.0 139.8 171.3 -9.7 -8.6 22.5 19.8 16.2 3.8 3.6 19.4 22.7 M&M Buy 592 695 17 17.6 31.9 44.3 -58.8 81.4 38.8 18.5 13.3 1.9 1.8 8.2 10.1 Mahindra CIE Buy 110 141 28 9.4 1.9 9.7 -33.2 -80.3 419.9 59.2 11.4 0.9 0.8 1.5 7.5 Buy 6006 6903 15 188.0 135.1 231.3 -25.8 -28.1 71.2 44.5 26.0 3.7 3.5 7.9 13.0 Motherson Sumi Buy 96 126 32 3.7 1.2 5.5 -27.5 -67.5 354.6 79.5 17.5 2.6 2.4 3.3 14.3 Buy 105 126 20 -25.3 -32.0 2.2 480.5 Loss LP NM 48.5 0.7 0.7 -20.1 1.6 TVS Motor Neutral 398 354 -11 11.9 10.1 16.7 -15.4 -15.3 65.2 39.4 23.8 4.8 4.2 12.8 19.0 Aggregate -50.9 -36.2 229.5 67.7 20.6 2.7 2.5 4.0 12.1 Banks - Private AU Small Finance Buy 722 - 22.6 21.2 28.7 71.3 -6 35.3 34.1 25.2 4.4 3.8 13.9 16.1 Buy 479 600 25 6.0 21.8 39.0 -66.9 262 78.7 22.0 12.3 1.5 1.3 7.0 11.5 Buy 344 425 24 21.6 22.0 28.4 31.9 2 29.0 15.7 12.1 2.9 2.5 20.8 22.1 DCB Bank Neutral 81 85 4 10.9 7.7 10.6 3.6 -29.6 38.4 10.6 7.7 0.7 0.7 7.2 9.2 Equitas Hold. Buy 57 65 14 7.1 4.0 7.5 15.5 -43.6 85.7 14.2 7.6 0.7 0.6 4.9 8.7 Buy 57 65 15 7.8 6.5 8.5 23.4 -16.7 31.0 8.8 6.7 0.7 0.7 8.5 10.3 HDFC Bank Buy 1126 1280 14 48.0 55.0 65.2 21.2 14.4 18.5 20.5 17.3 3.2 2.7 16.4 16.9 ICICI Bank Buy 381 475 25 12.3 17.4 24.0 135.0 41.6 37.9 21.9 15.9 2.0 1.8 9.5 11.9 IndusInd Buy 513 700 36 68.8 65.2 89.4 25.3 -5.1 37.1 7.9 5.7 0.9 0.8 12.3 14.8 Kotak Mah. Bk Neutral 1342 1350 1 44.9 45.8 57.6 19.0 1.9 25.8 29.3 23.3 3.4 3.0 11.7 13.5 RBL Bank Buy 174 230 32 9.9 10.7 16.2 -51.1 7.2 51.9 16.3 10.8 0.8 0.8 5.0 7.2 Aggregate 23.7 21.9 31.0 20.6 15.8 2.5 2.2 11.9 13.8 Banks - PSU BOB Buy 49 65 33 1.5 4.3 9.8 -8.2 187.1 128.2 11.3 5.0 0.3 0.3 2.7 6.1 SBI Buy 192 280 46 22.1 22.5 30.5 759.6 1 35.8 8.5 6.3 0.7 0.6 6.6 8.9 Aggregate 643.2 9 44 9 6.1 0.6 0.6 6.9 9.3 NBFCs Aditya Birla Cap Buy 59 84 42 3.8 3.8 4.4 -3.5 0.1 16.7 15.6 13.4 1.1 1.0 7.0 7.6 Bajaj Fin. Neutral 3253 3000 -8 87.7 73.9 120.7 26.7 -15.8 63.3 44.0 27.0 5.4 4.5 12.9 18.3 Cholaman.Inv.&F Buy 220 245 11 12.8 12.4 16.1 -15.4 -3.1 29.4 17.7 13.7 2.0 1.8 12.1 13.9 n HDFC Buy 1883 2150 14 49.2 53.8 58.1 10.8 9.4 7.9 35.0 32.4 3.2 3.0 12.4 12.1 HDFC Life Insur. Neutral 610 600 -2 6.4 6.9 7.9 1.3 8.2 14.3 87.7 76.8 4.9 4.1 22.4 17.9 ICICI Pru Life Buy 442 510 15 7.4 8.0 8.6 -6.3 7.6 7.9 55.2 51.2 2.4 2.1 14.5 14.6 IIFL Wealth Mgt Buy 983 1225 25 23.1 37.2 48.9 -47.8 61.1 31.5 26.4 20.1 2.8 2.7 10.7 13.5 L&T Fin Holdings Buy 62 85 36 10.9 4.9 9.5 -2.7 -54.6 93.1 12.6 6.5 0.8 0.7 6.7 12.0 LIC Hsg Fin Buy 271 340 26 47.6 42.5 48.0 -1.2 -10.5 12.8 6.4 5.6 0.7 0.6 11.5 11.8 MAS Financial Buy 672 815 21 32.6 30.8 36.9 17.2 -5.4 19.8 21.8 18.2 3.3 2.9 16.0 16.9 M&M Fin. Buy 154 320 108 14.7 7.4 8.9 -41.8 -49.9 21.3 20.9 17.2 1.2 1.2 6.8 7.0 Muthoot Fin Neutral 1315 1105 -16 75.3 89.8 102.4 52.9 19.3 14.0 14.7 12.8 3.7 3.0 27.7 25.6 PNB Housing Neutral 200 210 5 38.4 44.7 60.4 -46.0 16.3 35.1 4.7 3.5 0.4 0.4 9.1 11.3 Shriram City Buy 695 910 31 151.6 109.5 115.2 1.2 -27.8 5.3 6.4 6.0 0.6 0.5 9.6 9.2 Union Shriram Trans. Buy 695 935 35 110.3 67.4 114.4 -2.4 -38.9 69.6 10.3 6.1 0.8 0.7 8.7 13.0 Aggregate 6.0 -3.6 27.6 23.6 18.5 2.6 2.4 11.2 12.9

24 July 2020 23

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CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY20 FY21E FY22E FY20 FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E Capital Goods ABB Buy 926 - 16.6 6.4 20.3 38.1 -61.3 216.4 144.6 45.7 5.4 5.0 3.7 10.8 Bharat Elec. Buy 98 108 10 7.4 6.8 8.3 -6.9 -8.0 22.7 14.5 11.8 2.2 2.1 15.5 17.5 BHEL Sell 38 22 -42 -4.2 1.0 1.8 -221.9 LP 75.0 36.4 20.8 0.4 0.4 1.2 2.1 Blue Star Neutral 492 460 -6 15.3 6.6 18.7 -21.4 -56.7 181.8 74.2 26.3 5.9 5.4 7.9 20.4 CG Cons. Elec. Buy 246 285 16 7.0 6.0 8.9 16.9 -13.6 47.4 40.8 27.7 9.1 7.7 22.4 27.7 Cummins Sell 393 330 -16 23.3 15.4 22.1 -10.8 -33.6 43.1 25.5 17.8 2.5 2.4 9.8 13.6 Engineers India Buy 71 93 31 6.8 6.6 8.3 16.3 -2.6 24.8 10.7 8.6 2.0 1.9 17.5 21.2 Neutral 585 515 -12 11.7 7.7 12.9 -6.9 -34.2 66.9 75.9 45.5 7.9 7.1 10.5 15.7 K E C Intl Buy 268 230 -14 22.0 21.2 23.0 16.3 -3.6 8.4 12.6 11.7 2.1 1.8 16.7 15.7 L&T Buy 921 1080 17 68.0 53.1 69.6 7.1 -21.9 31.1 18.8 14.2 1.8 1.6 9.6 11.6 Neutral 1174 1235 5 30.5 19.8 31.4 21.6 -35.3 59.0 59.4 37.4 4.4 4.0 7.4 10.8 Thermax Neutral 750 757 1 18.9 20.9 34.4 -30.6 10.6 64.8 35.9 21.8 2.7 2.5 7.4 11.3 Buy 596 600 1 16.7 10.7 19.9 6.5 -36.3 86.5 55.9 30.0 4.4 4.0 7.8 13.2 Aggregate -10.6 -10.3 40.4 26.0 18.5 2.2 2.1 8.6 11.2 Cement Ambuja Cem. Neutral 201 201 0 7.7 6.4 7.1 26.4 -16.3 10.0 31.2 28.4 1.7 1.6 5.6 5.9 ACC Buy 1372 1570 14 72.3 64.0 72.3 35.1 -11.5 13.0 21.4 19.0 2.1 1.9 10.1 10.5 Birla Corp. Buy 560 750 34 65.6 62.6 66.6 97.6 -4.6 6.4 8.9 8.4 0.8 0.8 9.6 9.4 Dalmia Bhar. Buy 726 845 16 11.5 6.8 15.2 -27.3 -40.4 121.7 106.0 47.8 1.3 1.3 1.3 2.7 Grasim Inds. Neutral 602 640 6 67.3 43.9 68.6 1.8 -34.8 56.4 13.7 8.8 1.0 1.0 1.1 2.5 India Cem Neutral 119 118 -1 0.7 1.4 4.2 -69.5 109.1 194.8 82.9 28.1 0.7 0.7 0.8 2.4 J K Cements Buy 1496 1695 13 62.6 45.8 85.1 83.4 -26.8 85.7 32.7 17.6 3.5 3.1 11.2 18.6 JK Lakshmi Ce Buy 285 360 27 22.6 17.8 24.1 233.6 -21.1 35.2 16.0 11.8 1.8 1.5 11.6 13.8 Ramco Cem Neutral 687 620 -10 25.5 25.0 28.9 18.1 -1.9 15.3 27.5 23.8 3.0 2.7 11.4 11.9 Shree Cem Neutral 21981 20730 -6 435.2 416.7 595.5 34.3 -4.2 42.9 52.7 36.9 5.6 4.9 11.1 14.1 Ultratech Buy 3863 4650 20 147.3 111.5 176.6 62.9 -24.3 58.4 34.6 21.9 2.5 2.3 7.9 11.5 Aggregate 30.7 -21.9 43.5 28.2 19.7 2.1 2.0 7.4 9.9 Consumer Sell 1697 1315 -23 29.0 18.1 28.4 25.5 -37.7 57.1 94.0 59.8 14.5 13.6 16.2 23.5 Britannia Neutral 3805 3700 -3 58.6 81.3 79.7 21.8 38.6 -1.9 46.8 47.8 21.8 21.1 45.4 44.9 Colgate Buy 1393 1575 13 30.0 30.3 36.1 8.1 0.9 19.3 46.0 38.5 25.9 30.9 53.9 73.1 Buy 481 540 12 8.6 8.9 10.3 1.4 3.7 14.9 53.8 46.8 12.0 11.2 23.1 24.7 Buy 241 265 10 12.4 11.3 12.9 2.0 -9.0 14.1 21.4 18.7 4.9 5.0 25.3 26.6 Godrej Cons. Neutral 693 660 -5 14.2 14.9 16.6 -2.8 4.8 11.8 46.7 41.8 9.6 9.8 19.8 23.1 HUL Buy 2248 2550 13 31.2 34.3 44.2 11.1 10.0 28.6 65.5 50.9 10.7 10.6 28.2 21.0 ITC Neutral 197 185 -6 12.4 11.2 12.7 22.2 -9.9 13.6 17.6 15.5 3.6 3.4 20.9 22.5 Jyothy Lab Neutral 122 122 0 4.5 4.3 5.1 -15.8 -6.1 20.0 28.7 23.9 3.8 3.8 12.9 15.7 Buy 351 395 12 8.1 8.2 9.3 13.4 0.2 14.4 43.1 37.6 11.6 11.4 30.4 30.5 Nestle Neutral 17146 17110 0 206.8 220.6 261.0 15.8 6.7 18.3 77.7 65.7 82.4 87.4 108.0 129.1 Page Inds Neutral 19163 17905 -7 307.7 240.5 378.9 -12.9 -21.8 57.5 79.7 50.6 23.8 21.4 29.9 42.3 Pidilite Ind. Neutral 1385 1400 1 23.1 13.5 24.5 24.5 -41.5 81.0 102.4 56.6 15.0 12.9 15.0 24.5 P&G Hygiene Neutral 10731 10520 -2 131.4 159.4 191.3 4.0 21.3 20.0 67.3 56.1 29.1 25.0 46.3 48.0 Tata Consumer Buy 407 494 21 8.0 7.8 9.9 66.4 -2.1 26.8 52.1 41.1 2.6 2.5 5.1 6.3 United Brew Sell 990 700 -29 16.2 4.9 13.3 -24.0 -70.0 173.1 204.0 74.7 7.2 6.8 3.6 9.4 Neutral 596 580 -3 10.9 6.9 13.2 16.9 -37.0 92.4 86.8 45.1 10.2 8.3 11.8 18.5 Aggregate 15.9 -4.2 22.2 46.1 37.7 8.9 8.6 19.4 22.7 Healthcare Alembic Phar Neutral 999 1100 10 45.9 51.7 53.1 47.7 12.8 2.7 19.3 18.8 4.7 4.0 27.8 23.8 Alkem Lab Buy 2455 2875 17 95.4 101.3 126.8 49.5 6.2 25.1 24.2 19.4 4.1 3.5 18.3 19.7 Buy 1462 1728 18 51.1 56.3 70.6 15.1 10.0 25.5 26.0 20.7 4.3 3.7 17.8 19.3 Aurobindo Buy 825 940 14 49.2 52.3 57.1 13.9 6.4 9.2 15.8 14.4 2.4 2.1 16.8 15.7 Biocon Neutral 431 - 6.3 9.2 13.0 2.0 44.9 41.5 47.0 33.2 6.9 6.0 15.5 19.4 Cadila Buy 367 420 15 14.7 18.2 19.6 -20.0 23.7 7.9 20.2 18.7 3.0 2.7 16.2 15.1 Cipla Neutral 662 585 -12 19.6 24.0 28.5 4.8 22.5 18.7 27.5 23.2 2.9 2.6 10.5 11.2

24 July 2020 24

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CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY20 FY21E FY22E FY20 FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E Divis Lab Neutral 2262 2245 -1 48.9 60.2 76.3 -2.3 23.0 26.8 37.6 29.7 6.6 5.6 19.5 20.4 Dr Reddy’s Neutral 4062 3775 -7 121.3 149.0 166.2 15.4 22.8 11.6 27.3 24.4 3.8 3.3 14.8 14.6 Glenmark Neutral 414 395 -5 24.6 26.0 29.5 -5.1 5.7 13.6 15.9 14.0 1.7 1.6 11.5 11.8 GSK Pharma Neutral 1468 1300 -11 28.2 33.1 36.5 14.6 17.4 10.3 44.4 40.2 12.5 11.2 28.2 27.9 Granules India Buy 270 315 17 13.0 16.7 19.8 41.3 28.4 18.3 16.1 13.6 3.2 2.7 21.4 21.5 IPCA Labs Buy 1746 1900 9 51.5 65.6 76.9 42.0 27.2 17.2 26.6 22.7 5.1 4.3 20.8 20.4 Jubilant Life Buy 749 835 11 59.8 56.6 66.4 5.0 -5.4 17.4 13.2 11.3 1.8 1.6 14.7 15.1 Laurus Labs Buy 676 660 -2 24.1 29.3 36.1 132.6 21.6 23.0 23.1 18.7 3.4 2.9 15.8 16.8 Lupin Buy 851 1035 22 19.8 29.6 42.0 47.7 49.5 41.9 28.8 20.3 2.9 2.6 10.3 13.4 Strides Pharma Buy 410 485 18 15.3 28.9 39.4 73.3 88.9 36.4 14.2 10.4 1.4 1.4 10.1 13.5 Buy 474 555 17 16.4 17.3 22.7 8.7 5.6 31.2 27.4 20.9 2.4 2.2 9.0 10.9 Torrent Pharma Neutral 2338 2320 -1 55.9 69.1 92.6 30.8 23.6 34.1 33.8 25.3 6.8 5.8 21.9 24.6 Aggregate 12.8 16.2 21.2 26.0 21.4 3.4 3.0 13.2 14.2 Infrastructure Ashoka Buildcon Buy 57 98 72 13.8 7.9 10.5 20.2 -42.4 32.4 7.2 5.4 0.6 0.5 8.3 10.1 IRB Infra Neutral 113 66 -42 18.9 6.9 7.7 -21.9 -63.6 11.9 16.5 14.7 0.6 0.6 3.6 3.9 KNR Buy 207 280 35 14.5 11.8 20.2 -18.3 -18.4 70.7 17.5 10.3 1.6 1.4 9.8 14.9 Constructions Aggregate 13.4 10.0 0.7 0.7 5.5 7.0 Media PVR Buy 1108 1350 22 32.2 -69.4 23.1 -15.1 PL LP NM 48.0 5.1 4.7 -27.5 10.2 Sun TV Buy 379 500 32 34.8 30.1 36.6 -1.7 -13.5 21.4 12.6 10.4 2.6 2.5 21.0 24.7 Zee Ent. Neutral 157 165 5 16.9 6.7 8.2 2.9 -60.3 22.6 23.4 19.1 1.4 1.4 6.2 7.4 Aggregate 3.6 -54.9 59.3 23.9 15.0 2.0 1.9 8.5 12.9 Metals Hindalco Buy 160 198 24 17.5 11.6 18.3 -29.2 -33.8 58.1 13.8 8.7 1.0 0.9 6.9 10.6 Hind. Zinc Neutral 197 208 5 16.1 15.1 18.9 -14.5 -6.3 25.3 13.1 10.4 2.1 2.1 15.9 20.0 JSPL Buy 173 226 30 -3.6 7.7 14.9 -210.0 LP 93.5 22.2 11.5 0.5 0.5 2.4 4.5 JSW Steel Buy 207 242 17 9.0 8.2 21.8 -71.6 -9.2 165.2 25.2 9.5 1.3 1.2 5.3 12.9 Nalco Buy 34 43 27 0.7 0.8 2.5 -92.2 10.7 212.7 42.7 13.7 0.7 0.7 1.6 5.0 NMDC Buy 85 115 35 15.3 9.7 11.6 -1.9 -36.4 18.9 8.7 7.3 0.9 0.8 10.6 11.9 SAIL Neutral 35 34 -3 -0.5 -2.6 3.6 -107.5 Loss LP NM 9.7 0.4 0.3 -2.6 3.7 Vedanta Neutral 112 123 10 8.8 7.4 13.8 -52.7 -16.1 88.1 15.2 8.1 0.8 0.8 5.1 10.0 Neutral 350 324 -7 9.1 -11.1 44.1 -89.8 PL LP NM 7.9 0.6 0.6 -1.9 7.6 Aggregate -55.0 -31.2 130.8 21.4 9.3 0.9 0.8 4.0 8.8 Oil & Gas Aegis Logistics Buy 200 250 25 3.0 10.4 12.5 -55.0 249.6 19.7 19.2 16.0 3.5 3.0 19.5 20.0 BPCL Neutral 450 421 -6 25.3 32.4 42.8 -41.6 27.9 31.9 13.9 10.5 2.2 1.9 16.5 19.4 Buy 115 175 52 8.4 7.0 8.7 16.8 -16.0 24.4 16.4 13.2 7.7 7.0 48.8 55.7 GAIL Buy 102 150 47 16.5 12.9 15.4 17.3 -21.7 19.4 7.9 6.6 0.9 0.8 12.7 13.9 Buy 300 350 17 17.3 10.7 15.9 177.8 -38.4 49.2 28.1 18.8 5.3 4.4 20.5 25.5 Gujarat St. Pet. Buy 215 300 39 19.7 16.7 19.9 39.5 -14.8 18.9 12.9 10.8 1.6 1.4 13.3 14.0 HPCL Buy 229 305 33 23.9 51.2 46.2 -45.6 114.2 -9.6 4.5 4.9 1.0 1.0 24.2 20.3 IOC Buy 92 142 54 10.3 11.1 19.4 -45.4 8.1 75.0 8.3 4.7 0.8 0.8 10.4 17.1 IGL Neutral 406 485 19 16.2 10.4 17.9 44.5 -35.7 71.3 38.9 22.7 5.0 4.3 13.7 20.4 Buy 1003 1200 20 80.3 50.5 75.0 45.2 -37.1 48.4 19.8 13.4 3.1 2.8 16.3 22.0 MRPL Neutral 37 40 9 -15.4 2.3 8.1 -895.4 LP 246.7 15.7 4.5 0.8 0.7 5.2 16.5 Buy 95 115 21 22.9 11.7 17.7 -28.6 -48.7 51.3 8.1 5.4 0.4 0.4 5.4 7.8 ONGC Buy 83 105 27 13.1 12.7 19.5 -51.8 -3.5 54.3 6.5 4.2 0.5 0.4 7.6 11.0 PLNG Buy 255 336 32 18.5 19.2 21.3 28.5 3.7 11.0 13.3 12.0 3.2 3.0 25.2 26.0 Reliance Ind. Buy 2004 2020 1 68.1 73.4 106.3 8.4 7.8 44.8 27.3 18.8 2.6 2.3 9.8 12.8 Aggregate -24.5 9.1 42.7 17.5 12.3 1.8 1.6 10.0 13.0 Retail Avenue Sell 2109 2000 -5 20.1 19.4 29.6 38.9 -3.6 52.8 108.9 71.3 10.7 9.2 10.7 14.4 Supermarts

24 July 2020 25

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CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY20 FY21E FY22E FY20 FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E Aditya Birla Buy 120 175 45 -0.2 -7.0 -1.2 -111.1 Loss Loss NM NM 17.1 20.6 -66.2 -18.6 Fashion Jubilant Food. Neutral 1700 1560 -8 22.5 16.3 26.1 -6.5 -27.5 59.7 104.0 65.1 19.7 18.1 18.9 27.9 Shoppers Stop Neutral 158 190 20 -14.7 -35.9 -14.5 -289.1 Loss Loss NM NM -5.7 -3.7 359.8 41.2 Neutral 1058 965 -9 17.1 11.3 19.7 8.9 -33.5 74.1 93.3 53.6 14.2 12.6 15.2 24.9 Trent Neutral 604 620 3 3.0 0.4 8.5 2.1 -86.6 2,021.7 1,321.2 69.5 8.2 8.2 0.7 11.8 V-Mart Retail Buy 1788 2361 32 27.3 -27.6 14.6 -31.0 PL LP NM 122.4 7.9 7.4 -11.5 6.3 Aggregate 5.4 -48.8 157.4 175.8 68.3 12.2 10.8 6.9 15.8 Technology Cyient Neutral 299 320 7 33.8 30.3 34.9 -22.2 -10.3 15.2 9.9 8.6 1.1 1.1 11.4 12.3 HCL Tech. Buy 651 765 18 40.7 44.4 51.0 11.1 9.0 14.8 14.7 12.8 2.8 2.4 21.7 20.2 Hexaware Neutral 356 298 -16 21.8 18.0 22.2 12.6 -17.1 22.8 19.7 16.1 3.4 3.1 18.5 20.3 Buy 919 1050 14 38.9 41.6 48.2 5.1 6.9 15.8 22.1 19.1 5.6 4.8 25.2 25.4 L & T Infotech Buy 2330 2645 14 86.7 95.2 113.8 0.4 9.7 19.6 24.5 20.5 6.2 5.1 28.1 27.7 Buy 1014 1160 14 38.3 57.4 68.0 -16.4 49.8 18.3 17.7 14.9 4.3 3.6 24.6 24.4 Mphasis Neutral 994 - 61.5 59.9 72.5 9.6 -2.5 21.0 16.6 13.7 2.8 2.5 18.6 20.9 NIIT Tech Neutral 1647 1461 -11 61.5 55.5 60.2 -7.1 -9.8 8.5 17.6 16.3 2.9 2.7 17.3 17.8 Persistent Sys Buy 717 745 4 44.4 44.4 59.5 0.9 0.0 34.0 16.1 12.0 2.1 1.9 12.8 15.1 TCS Neutral 2190 2300 5 86.2 83.9 99.1 3.7 -2.7 18.2 26.1 22.1 9.6 9.6 36.6 43.5 Tech Mah Neutral 618 583 -6 45.9 36.3 44.7 -5.9 -20.8 23.0 17.0 13.8 2.3 2.1 13.3 14.9 Wipro Neutral 266 257 -3 16.6 17.3 18.7 8.5 3.8 8.5 15.4 14.2 2.3 2.1 16.1 15.2 Zensar Tech Neutral 140 - 11.8 12.6 12.3 -17.6 6.6 -2.4 11.2 11.5 1.4 1.3 12.9 11.4 Aggregate 3.0 1.2 16.2 21.6 18.6 5.1 4.6 23.8 24.9 Telecom Buy 570 690 21 -7.5 1.5 5.7 -14.6 LP 279.4 378.6 99.8 4.0 3.8 1.1 3.9 Bharti Infratel Neutral 200 187 -7 17.0 15.6 16.8 25.0 -8.4 7.8 12.9 11.9 2.6 2.6 20.2 22.1 9 -7.6 -9.2 -8.9 -59.1 Loss Loss NM NM -1.2 -0.5 365.7 77.2 Tata Comm Neutral 668 590 -12 10.6 24.8 38.3 -582.2 134.8 54.6 26.9 17.4 -33.3 36.5 -76 - Aggregate Loss Loss Loss -18 -21.4 5.5 7.9 -30.9 -37.0 Utiltites Buy 134 189 41 27.1 16.1 28.8 -4.4 -40.6 78.9 8.3 4.7 2.3 1.8 27.9 39.4 CESC Buy 573 793 38 97.7 88.1 104.4 10.0 -9.8 18.5 6.5 5.5 0.7 0.7 11.7 12.7 JSW Energy Buy 46 64 40 5.1 4.3 5.2 20.0 -15.5 22.1 10.7 8.7 0.6 0.6 6.0 7.1 NHPC Neutral 20 22 9 2.9 2.7 2.9 10.7 -6.7 8.3 7.5 7.0 0.6 0.6 8.4 8.6 NTPC Buy 90 148 64 13.8 13.3 16.6 19.2 -3.4 24.2 6.8 5.5 0.7 0.7 10.8 12.7 Power Grid Buy 180 223 24 21.1 20.5 24.2 10.2 -2.8 17.7 8.7 7.4 1.4 1.3 16.1 17.8 Buy 319 351 10 28.0 24.0 29.2 49.7 -14.4 21.7 13.3 10.9 1.5 1.4 12.0 13.3 Neutral 50 55 10 3.8 3.3 4.3 78.2 -13.1 30.8 15.3 11.7 0.7 0.7 4.9 6.3 Aggregate 6.9 -17.2 35.2 7.9 5.8 1.1 1.0 13.5 16.7 Others Brigade Enterpr. Buy 142 192 35 7.1 5.0 7.6 -39.1 -30.4 53.5 28.6 18.6 1.2 1.2 4.4 6.5 BSE Buy 507 630 24 24.9 16.0 23.9 -32.5 -35.8 49.6 31.7 21.2 1.1 1.2 3.5 5.5 Concor Buy 452 516 14 16.6 13.5 18.6 -16.7 -18.4 37.4 33.3 24.3 2.6 2.4 8.0 10.4 Coromandel Intl Buy 814 887 9 36.3 45.8 49.3 42.8 26.0 7.7 17.8 16.5 4.6 3.9 28.3 25.8 Essel Propack Buy 191 225 18 6.9 7.7 10.2 14.3 12.1 32.9 24.8 18.6 3.7 3.3 15.3 18.7 Indian Hotels Buy 80 112 40 2.7 -4.8 1.2 14.8 PL LP NM 68.2 2.6 2.6 -14.2 3.8 Interglobe Neutral 966 1100 14 -6.5 -51.0 68.8 -259.1 Loss LP NM 14.0 9.5 6.0 -40.2 52.2 Neutral 3187 2650 -17 16.7 17.2 28.9 -27.1 2.8 68.0 185.4 110.3 15.5 14.4 8.6 13.7 Buy 457 536 17 13.2 13.6 18.2 5.7 3.0 33.2 33.5 25.2 4.5 4.0 13.7 16.7 Kaveri Seed Buy 610 680 11 43.1 43.8 48.6 19.5 1.8 10.8 13.9 12.6 3.5 3.2 26.3 26.6 Lemon Tree Hotel Buy 24 33 37 -0.1 -3.2 0.0 -118.0 Loss LP NM - 3.3 3.3 -35.6 0.3 MCX Buy 1503 1510 0 46.4 44.3 59.6 61.9 -4.5 34.5 33.9 25.2 5.2 4.7 16.0 19.6 Buy 381 444 17 19.0 10.4 16.6 -15.6 -45.0 59.1 36.5 23.0 1.5 1.4 4.3 6.5 Phoenix Mills Buy 580 756 30 21.5 10.4 23.1 -13.7 -51.7 121.9 55.8 25.2 2.3 2.2 4.2 9.0 Quess Corp BUY 333 400 20 18.3 15.5 25.1 4.3 -15.2 62.1 21.5 13.3 1.5 1.3 9.3 13.4

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Click excel icon for detailed Valuation snapshot valuation guide

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY20 FY21E FY22E FY20 FY21E FY22E FY21E FY22E FY21E FY22E FY21E FY22E PI Inds. Buy 1695 1864 10 33.1 45.4 62.1 11.3 37.0 37.0 37.4 27.3 7.5 6.0 21.7 24.4 SRF Buy 3812 4525 19 157.2 127.9 197.6 49.4 -18.6 54.4 29.8 19.3 3.9 3.3 14.0 18.8 S H Kelkar Buy 75 86 15 4.2 4.7 7.1 -31.3 11.4 52.2 16.0 10.5 1.2 1.2 7.9 11.4 Buy 304 416 37 31.7 30.5 39.7 -6.4 -3.8 30.3 10.0 7.6 0.6 0.6 5.9 7.4 Team Lease Serv. Buy 1850 2500 35 48.9 64.6 79.0 -14.7 32.2 22.3 28.6 23.4 4.6 3.9 17.6 18.0 Trident Buy 6 8 21 0.6 0.4 0.7 -26.9 -35.8 80.7 15.0 8.3 1.0 0.9 6.6 11.0 UPL Neutral 461 465 1 37.7 40.4 46.5 17.0 7.1 15.2 11.4 9.9 1.9 1.1 17.6 17.6

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Index and MOFSL Universe stock performance

Index 1 Day (%) 1M (%) 12M (%) Index 1 Day (%) 1M (%) 12M (%) Sensex 0.7 7.6 0.4 Nifty 500 0.7 5.7 -1.3 Nifty-50 0.7 7.1 -1.0 Nifty Midcap 100 1.0 3.7 -4.1 Nifty Next 50 0.8 1.7 0.3 Nifty Smallcap 100 1.0 4.7 -14.0 Nifty 100 0.8 6.3 -0.9 Nifty Midcap 150 0.7 2.8 0.1 Nifty 200 0.8 6.0 -1.2 Nifty Smallcap 250 0.7 3.6 -10.0 Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Automobiles 1.3 7.5 1.7 Capital Goods 0.1 -2.8 -28.2 Amara Raja Batt. 2.0 7.7 13.5 ABB 1.1 9.5 -24.3 0.7 -7.5 -30.7 Bharat Elec. 4.8 23.0 3.7 Bajaj Auto 1.5 5.9 20.0 BHEL -0.7 8.2 -40.9 Bharat Forge 0.6 5.6 -10.1 Blue Star -0.5 -3.7 -34.6 Bosch 0.5 17.5 -11.2 CG Cons. Elec. 2.5 9.5 10.3 CEAT -0.2 -8.8 -1.4 Cummins -0.1 -1.7 -45.8 5.1 16.7 22.2 Engineers India -0.7 -2.6 -33.8 Endurance Tech. 1.2 -1.1 -7.6 Havells 3.5 5.0 -15.2 Escorts -3.1 20.2 132.6 K E C Intl 1.5 9.0 -14.1 Exide Inds. 0.4 3.1 -15.9 L&T -0.5 -5.3 -35.0 Hero Motocorp 0.2 14.8 12.4 Siemens -0.6 5.9 -3.1 M & M 2.0 16.9 7.5 Thermax 0.1 1.2 -31.8 Mahindra CIE 0.1 -6.7 -43.6 Voltas 0.1 8.9 1.1 Maruti Suzuki 1.0 3.0 3.2 Cement 0.3 2.2 -9.3 Motherson Sumi 1.0 -3.3 -14.4 Ambuja Cem. -1.6 2.4 -9.0 Tata Motors 0.9 1.6 -32.1 ACC -0.9 4.5 -14.1 TVS Motor Co. 2.1 6.4 9.7 Birla Corp. -1.8 -12.9 -9.6 Banks-Private 0.6 3.4 -21.2 Dalmia Bhar. -0.8 8.4 -26.2 AU Small Fin. Bank 4.8 41.3 15.1 Grasim Inds. -0.6 -4.0 -32.3 Axis Bank -3.8 3.9 -36.6 India Cem 0.6 -8.9 26.0 Bandhan Bank 1.8 -0.3 -25.5 J K Cements 2.7 10.1 59.0 DCB Bank 0.2 -5.3 -58.2 JK Lakshmi Ce -1.7 7.0 -19.2 Equitas Holdings 1.7 6.8 -50.2 Ramco Cem 0.8 7.4 -9.0 Federal Bank 0.7 1.1 -39.4 Shree Cem -1.9 -5.2 3.7 HDFC Bank 0.4 8.6 -0.1 Ultratech -0.7 -2.6 -15.5 ICICI Bank 2.9 4.3 -4.8 Consumer 0.2 6.0 7.3 IndusInd Bank 0.1 -1.3 -63.7 Asian Paints 1.8 2.6 20.9 Kotak Mah. Bank 2.4 -1.1 -8.0 Britannia 0.6 10.4 40.2 RBL Bank 1.7 -5.3 -62.1 Colgate -0.3 -1.3 19.3 Banks-PSU 1.2 -3.7 -49.6 Dabur -0.3 4.5 13.0 BOB 1.0 -2.5 -56.3 Emami 1.3 8.7 -23.7 SBI 3.3 3.0 -42.0 Godrej Cons. -1.6 2.6 10.2 Company 1 Day (%) 1M (%) 12M (%) HUL -1.6 2.7 30.7 NBFCs 0.8 4.6 -11.1 ITC 2.1 7.9 -25.9 Aditya Birla Cap -0.2 -6.5 -31.6 Jyothy Lab 1.0 -1.2 -23.5 Bajaj Fin. 1.4 8.9 0.7 Marico -0.4 3.6 -3.3 Cholaman.Inv.&Fn 0.9 8.9 -10.7 Nestle 0.7 4.3 50.5 HDFC -0.4 1.9 -12.3 Page Inds 2.4 2.3 1.2 HDFC Life Insur. 2.1 15.9 22.4 Pidilite Ind. -0.3 -1.9 14.6 L&T Fin.Holdings -0.7 -11.9 -42.4 P&G Hygiene -0.1 8.1 2.0 LIC Hsg Fin 1.2 0.3 -47.4 Tata Consumer -0.6 3.5 61.4 M&M Fin. -3.5 37.0 -28.3 United Brew 1.2 -3.9 -27.6 Muthoot Fin -0.7 15.8 114.2 United Spirits 2.6 -1.8 3.7 MAS Financial Serv. 0.5 1.0 18.3 Healthcare 1.4 -0.4 28.0 ICICI Pru Life 2.0 5.5 17.5 Alembic Phar -3.8 4.0 81.5 ICICI Sec 2.4 13.5 139.5 Alkem Lab 1.8 4.9 42.0 IIFL Wealth Mgt 0.5 -1.7 Ajanta Pharma 3.5 3.5 67.3 PNB Housing 5.0 -7.8 -70.3 Aurobindo -0.6 2.0 46.0 Shriram City Union 0.5 3.8 -51.7 Biocon -0.2 8.5 78.1 Shriram Trans. 1.1 5.4 -26.4 Cadila 0.9 0.8 56.9 Note: Sectoral performance are of NSE/BSE Indices

24 July 2020 28

Index and MOFSL Universe stock performance

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Cipla 1.5 1.8 27.0 HCL Tech. 0.3 12.3 29.0 Divis Lab 6.0 0.4 47.9 Hexaware 0.1 11.5 0.9 Dr Reddy’s 1.6 0.5 58.9 Infosys -1.1 26.2 15.1 Glenmark 1.9 -13.1 0.1 L&T Infotech -2.9 20.3 53.9 GSK Pharma 0.1 -2.7 21.9 Mindtree -0.3 9.0 46.0 Granules 3.8 33.0 225.7 Mphasis -1.4 14.5 6.9 IPCA Labs 2.3 6.8 91.3 NIIT Tech -0.7 19.6 20.8 Jubilant Life -0.4 10.6 68.9 Persistent Sys 1.7 18.3 26.3 Laurus Labs 6.2 28.6 110.3 TCS -0.9 6.6 2.8 Lupin 1.4 -8.0 14.1 Tech Mah 2.3 13.1 -5.8 Strides Pharma 1.8 -6.2 22.0 Wipro 0.3 20.8 0.8 Sun Pharma 0.4 -4.9 10.7 Zensar Tech 0.2 3.4 -37.4 Torrent Pharma 0.5 -8.9 60.0 Telecom -0.3 -3.0 35.2 Infrastructure 0.8 2.4 -0.4 Bharti Airtel -0.4 -2.0 65.0 Ashoka Buildcon -0.1 -14.8 -52.2 Bharti Infra. 0.1 -13.6 -23.3 IRB Infra.Devl. 6.1 31.5 30.4 Idea Cellular 0.7 -16.1 -18.0 KNR Construct. 0.7 -4.0 -24.9 Tata Comm -2.4 11.0 123.0 Media 0.3 -5.4 -33.5 Utiltites 0.1 -5.5 -22.9 PVR 0.1 6.0 -36.6 Coal India -0.4 -7.2 -38.8 Sun TV -0.5 -6.9 -19.9 CESC 1.8 -4.3 -22.1 Zee Ent. 1.2 -12.6 -55.9 JSW Energy 1.7 -9.3 -34.0 Metals 0.8 2.2 -23.3 NHPC Ltd -0.2 -2.0 -13.0 Hindalco 1.3 2.3 -20.2 NTPC 0.3 -10.0 -31.9 Hind. Zinc 5.1 10.3 -7.0 Power Grid 1.3 -3.1 -13.6 JSPL -0.9 17.5 17.0 Tata Power 0.0 12.0 -24.5 JSW Steel 1.2 3.9 -20.5 Torrent Power 0.1 -0.1 3.7 Nalco 0.1 0.7 -26.4 Others NMDC 1.6 -0.9 -24.3 Brigade Enterpr. -0.1 -3.7 -23.8 SAIL 0.0 8.2 -23.6 BSE -0.7 9.4 -9.4 Vedanta 1.6 3.5 -32.2 Coromandel Intl -1.8 9.3 109.1 Tata Steel 0.5 6.1 -23.5 Concor -0.1 7.2 -16.2 Oil & Gas 1.3 5.6 -1.9 Essel Propack 5.9 6.9 52.3 Aegis Logistics -4.2 -3.5 -4.9 Godrej Agrovet 1.4 3.2 -2.0 BPCL 1.5 16.6 27.3 Indian Hotels 1.8 -2.9 -43.3 Castrol India 0.6 -8.7 -8.7 Interglobe -0.2 -10.1 -36.7 GAIL 0.2 3.0 -26.3 Info Edge 2.8 10.7 51.4 Gujarat Gas 0.0 3.3 86.7 Kaveri Seed -1.7 4.5 27.0 Gujarat St. Pet. -2.0 -2.5 0.9 Lemon Tree Hotel 0.6 -7.4 -62.1 HPCL 1.5 -2.3 -20.2 MCX -3.4 17.3 69.9 IOC 2.4 5.5 -36.0 Oberoi Realty 6.7 4.9 -28.2 IGL 2.0 -8.7 27.5 Phoenix Mills 1.3 -2.5 -12.4 Mahanagar Gas 2.5 -2.8 32.8 PI Inds. 5.6 16.5 61.3 MRPL -0.7 3.8 -35.2 Quess Corp 1.1 -3.8 -26.2 Oil India 1.4 -5.1 -38.7 SRF 0.8 3.6 43.1 ONGC 0.0 -3.6 -42.8 S H Kelkar 5.3 11.7 -37.6 PLNG -1.1 -3.0 4.7 Tata Chemicals 1.2 -1.4 17.1 Reliance Ind. 2.8 19.8 63.4 Team Lease Serv. 1.9 9.4 -34.3 Aditya Bir. Fas. 5.1 -6.7 -36.4 Trident 10.0 -1.6 22.0 Retail UPL 0.3 -0.1 -28.4 Avenue Super. -0.4 -11.0 49.7 Jubilant Food 2.6 -0.6 42.0 Shoppers St. 1.2 -12.6 -62.7 Titan Co. 1.2 7.2 -2.6 Trent -2.3 -10.6 41.6 V-Mart Retail -0.4 1.8 -6.5 Technology -0.2 16.1 10.0 Cyient 6.8 24.5 -33.1

24 July 2020 29

Explanation of Investment Rating Investment Rating Expected return (over 12-month) BUY >=15% SELL < - 10% NEUTRAL > - 10 % to 15% UNDER REVIEW Rating may undergo a change NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation *In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend. Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations). Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. 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Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject company in the past 12 months. MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. 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MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. 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Disclosure of Interest Statement Companies where there is interest Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views. Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions. For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. 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Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore: In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore, as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL. Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com. CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected], Contact No.:022-71881085.* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Ben

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