Tata Consumer Products

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Equity Research INDIA June 16, 2020 BSE Sensex: 33229 Tata Consumer Products ADD ICICI Securities Limited Maintain is the author and Annual Report Analysis Rs371 distributor of this report Story through key words = ‘The platform for better’, Regional, Digital transformation, Direct delivery to consumers and Change in consumer habits. Company Update We like TCPL’s strategy to (1) focus on regional launches to gain market shares as consumer preferences change in different states, (2) leverage Tata Sampann Consumer Staples & brand to launch food products such as nutrimixes/ chilla mix, poha, and pulses Discretionary based snacks and (3) invest in digital transformation from sourcing to distribution, (4) keep closer connect with consumers as the habits/ buying pattern Target price Rs415 are likely to change and (5) enable direct delivery of products through delivery providers and e-commerce partners. We stay believers; retain ADD rating with Earnings revision (%) FY21E FY22E SoTP based target price of Rs415. Sustained improvement in return ratios (EVA Revenues 0.0 0.0 positive) is integral for long-term value creation. EBITDA 0.0 0.0  ‘The platform for better’ strategy: The annual report speaks about ’The platform PAT ↓ 2.6 ↑ 2.1 for better’ strategy. The company wants to push boundaries in all business activities

to improve product quality, productivity and contribution to the people and planet.  Change in spotlight from National to Regional: TCPL came out with campaigns Shareholding pattern targeting each state separately in FY20. It changed the product packaging as well as Sep Dec Mar method of communication to connect with regional consumers. Key states targeted ‘19 ‘19 ‘20 Promoters 34.5 34.5 34.7 under this strategy were UP, Delhi, Punjab and Haryana. It also acquired regional Institutional brands (Kala Ghoda and Lal Ghoda) in Rajasthan. investors 40.6 40.9 38.9 MFs and others 10.7 12.2 14.9  Plans to launch food products under Tata Sampann brand: TCPL did multiple Banks/FIs 0.3 0.1 0.1 Insurance 1.8 2.4 6.1 pilots during FY20 in Foods category such as Nutrimixes/ Chilla mix, poha, pulse FIIs 27.8 26.2 17.8 based snacks, low sugar Tata Nx. It plans to do limited launch in select channels or Others 24.9 24.6 26.4 select geographies to gauge customer acceptance before national rollout. Source: BSE  Possibility of lower sales in H1FY21 due to up-stoking in Q4FY20: Even the Price chart categories which are declining structurally (e.g. black tea in UK) also reported higher 450 volume growth. TCPL expects some slowdown in H1FY21 with easing of lockdown. 400  Takeaways from Mr. Sunil D’Souza, MD & CEO’s Q&A: (1) TCPL is strengthening 350 300 its capability in digital transformation for commodity buying, enabling the entire

(Rs) 250 supply chain from demand planning to procurement and sales, (2) It has tied up with 200 delivery providers and e-commerce partners to enable direct delivery to consumers 150 100 and (3) There are many changes in consumer beliefs, habits and buying patterns. As consumer adapts to a new normal, some of the changes will stick. The key is to keep

close to the consumer and quickly adapt to changes.

Jun-19 Jun-17 Jun-18 Jun-20

Dec-18 Dec-19 Dec-17  Acquisition-led revenue growth: TCPL reported strong revenue growth of 32.9% in FY20, largely driven by acquisition of consumer products portfolio of Tata Chemicals. India beverages reported revenue growth of 6.6%. International beverages reported revenue decline of 0.4%. Revenues of non-branded business

were up 15.7%. Tata Starbucks (JV) reported revenue growth of 21%.

Market Cap Rs339bn/US$4.5bn Year to March FY19 FY20 FY21E FY22E

Bloomberg TATACONS IN Revenue (Rs mn) 72,515 96,374 98,694 108,913 Shares Outstanding (mn) 916.2 Adj. Net Profit (Rs mn) 4,382 6,870 7,034 8,527 Research Analysts: 52-week Range (Rs) 397/199 Dil. Rec. EPS (Rs) 6.9 7.5 7.6 9.3 Manoj Menon Free Float (%) 65.3 % Chg YoY (5.5) 7.4 2.4 21.2 [email protected] FII (%) 17.8 P/E (x) 53.4 49.8 48.6 40.1 +91 22 6637 7209 Aniruddha Joshi Daily Volume (US$'000) 27,230 CEPS (Rs) 8.9 10.1 10.4 12.2 [email protected] Absolute Return 3m (%) 14.1 EV/EBITDA (x) 29.0 25.7 25.0 22.4 +91 22 6637 7249 Absolute Return 12m (%) 49.8 Dividend Yield (%) 0.7 0.7 0.9 1.0 Vismaya Agarwal, CFA Sensex Return 3m (%) (2.3) RoCE (%) 7.0 7.9 5.4 5.3 [email protected] +91 22 2277 7632 Sensex Return 12m (%) (14.9) RoE (%) 6.1 6.5 4.2 4.2

Please refer to important disclosures at the end of this report

Tata Consumer Products, June 16, 2020 ICICI Securities

 EBITDA margins expanded despite gross margin decline: The gross margins declined 80bps in FY20 due to higher input prices and adverse revenue mix. However, the EBITDA margin improved 257bps in FY20 due to lower staff cost as % of net sales (194bps) and lower ad-spend as % of net sales (60bps).

 Improvement in net working capital days: The net working capital days declined from 101 in FY19 to 87 in FY20. The improvement is largely attributable to reduction in inventory days. We believe the acquisition of foods business resulted in lower inventory days.

 Core RoCE improves in FY20: The core RoCE has improved to 14.9% in FY20 from 12.9% in FY19 due to better profit margins. Core RoCE is calculated as EBIT / (Capital employed – Goodwill – Investments).

 Strong FCF generation in FY20: The FCF generation was strong at Rs8.3bn in FY20 (vs Rs(825)mn in FY19). While the OCF has increased due to acquisition of consumer business of Tata Chemicals, the stock acquisition route has not impacted the capex. TCPL continues to be net cash in FY20 (~Rs10/share).

 Maintain ADD: We model TCPL to report revenue and PAT CAGR of 6.3% and 11.4%, respectively over FY20-22E. We value the stock on SoTP basis with unchanged target price of Rs415. Key downside risk is lower-than-expected integration synergies.

Tata Consumer Products, June 16, 2020 ICICI Securities

FY20 – Annual report highlights

‘The platform for better’ strategy The company’s annual report speaks about ‘The platform for better’. We note the company’s strategy is to focus on doing better in everything it does. It wants to do better in products and services, contribution towards people, the planet and productivity across workspace. Chart 1: ‘The platform for better’ strategy

Source: Company, I-Sec research

Highlights regarding key brands

Tata Tea:  Tata Tea is market leader by volume (~19.7%) and second largest player in value terms (20%) in India.  It is the fastest growing tea brand in modern trade.  The company changed the spotlight from national to regional and came out with campaigns targeting each state separately. It changed from product packaging to method of communication to connect with regional consumers. Key states targeted under this strategy were UP, Delhi, Punjab and Haryana.  The spice based tea brands (Tata Tea Elaichi and Masala) have crossed revenues of Rs2bn in FY20.  The company launched Tata Tea Tulsi Green in Q2FY20 in Delhi and plans to roll out it nationally in FY21.  TCPL has rolled out seven stores of Tata Cha in Bengaluru. The company was forced to delay opening of four stores due to lockdown. Tetley:  Global tea industry is ~US$45bn and black tea is the biggest segment. However, black tea segment continues to decline and non-black tea (Green, Decaf,

Tata Consumer Products, June 16, 2020 ICICI Securities

Specialty, Cold infusions, Fruit and Herbal) segment is growing faster. Health and Wellness is key focus area of the industry. Tetley Super Teas and Tetley Cold Infusions also target the Health and Wellness segment.  Due to fears of coronavirus pandemic, there was up-stocking by consumers which led to higher growth in FY20. However, the growth rates are expected to decline in coming weeks due to lifting of the lockdown.  The company introduced new campaign ‘Now We’re Talking’ for Tetley Tea in UK.  The company also introduced Indian flavour tea targeting South Asian diaspora. It introduced these tea variants under its flagship brand Tata Tea.  TCPL introduced multiple non-black tea variants in Canada and now its market share has reached 3.9% in non-black tea market in Canada.  TCPL also introduced Tetley tea in three different variants in USA as Masala, Elaichi and Ginger. Eight O’clock:  The coffee market is slowing down in USA and there is growth only in (1) premium/ food service brands such as Starbucks, (2) small niche brands and (3) private labels.  The company introduced Barista Blend and Flavors of America variants in FY20. Tata Salt:  Tata Salt is market leader with 30% share of the entire salt category in India.  Tata Chemicals expanded salt manufacturing capacity from 1 million tonnes to 1.2 million tonnes in FY20 and it is expected to provide support to TCPL’s growth plans in salt business.  Tata salt launched campaign ‘Sawal kijiye apne namakse’. It was aimed at educating consumers about quality of salt.  There is growing health awareness among consumers and they are selecting better-for-you options. (E.g.- lower sodium content in Tata Salt Lite, Iron and Iodine fortification in Tata Salt Plus). Specialty salts (Rock salt and Black salt) have gained market shares in modern trade in FY20. Tata Sampann:  Tata Sampann Pulses and Besan performed well due to strengthening of sourcing, packing and supply chain to improve efficiencies.  Tata Sampann spices reported marginal revenue growth with (1) muted growth in pure spices and (2) below par performance by blended spices.  The company did multiple pilots during FY20 in Foods category such as Nutrimixes/ Chilla, poha, pulse based snacks, low sugar Tata Nx. It plans to do limited launch in select channels or select geographies to gauge customer acceptance before national rollout.  Tata Sampann did multiple campaigns to connect with the consumers such as #LautAayiDiwali (during Diwali festivals), Sampann Superchef campaign in eight

Tata Consumer Products, June 16, 2020 ICICI Securities

cities. It also undertook initiatives to communicate its superior proposition on turmeric in various channels. Three excerpts from Q&A with Mr. Sunil D’Souza, MD & CEO

 “We see digital transformation as a key driver for growth and we are strengthening our capability in this area, including a digital platform for commodity buying, enabling the entire supply chain from demand planning to procurement and embedding digital technology and decision-making at the frontline of the sales organisation’’.  “On the ground, we are innovating with new marketplace models. We have tied up with delivery providers and e-commerce partners to enable direct delivery to consumers. We are also accelerating our digital agenda to take advantage of the new world realities”.  “There have been significant changes in consumer beliefs, habits and buying patterns during the pandemic and the recent lockdowns. As the consumer emerges from this and adapts to a new normal, some of the changes will stick. The key is to keep close to the consumer and quickly adapt to the changes to make sure we stay in the relevant basket”.

Volume growth in low-mid single digits

The company reported low-mid single digit volume growth in its key segments i.e. tea, coffee and salt. Its volume growth in tea, coffee and salt segments was 5.9%, 4.6% and 2% respectively in FY20.

Table 1: Volume growth details Segment FY19 FY20 Growth (%) Tea (Mn Kg) 162 172 5.9 Coffee (Mn Kg) 15 16 4.6 Salt (Mn Kg) 1,161 1,185 2.0 Source: Company data, I-Sec research

Details of distribution reach The company reached 200mn households in India through 2.5mn retail outlets. The modern trade and E-commerce accounts for 15% of company’s revenues. Tata Starbucks has 185 stores in India and Tata Cha has seven outlets in India (all of them in Bengaluru).

Table 2: Details of distribution reach Particulars Nos. Households 200 Outlets reached 2.5 Starbucks stores 185 Tata Cha stores 7 Modern trade & E-commerce contribution 15% Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Key new product launches in FY20 Table 3: Key new product launches/ re-launches Brand Launches/ Re-launches Tata Tea Premium Re-launched with state specific marketing mix for Delhi, UP, Punjab And Haryana Tata Tea Gold Re-launched Tata Tea Gold Mixture Tata Tea Chakra Gold Re-launched region specific variant Tata Tea Kannan Devan Launched Pure & Natural campaign Re-launched Tetley tea with 'Now We're Talking' campaign Launched Cold infusions Strawberry and Watermelon variant Introduced 440s decaf pack count to drive Out-of-home consumption Launched two new variants in France (Pure & Blueberry) Tetley Launched 6 new Tetley Super Tea variants Launched Naturally sweet 'Reviving Mango' green tea in India Launched Flavours of India premium black tea in USA Introduced Tetley Cold Infusions Fruit and Herbal range in Australia Launched Kanan Devan strong variant in GCC market Eight O'Clock Launched Early Riser, Robusta blend variant in USA Tata Sampann Introduced high fibre white and red poha Source: Company data, I-Sec research

Segment-wise performance

Table 4: Segment-wise performance (Rs mn) FY19 FY20 Growth (%) Segment -wise revenues India Beverages 31,677 33,769 6.6 India Foods - 20,637 International branded business 32,384 32,260 (0.4) Total branded business 64,060 86,667 35.3 Non branded business 8,425 9,749 15.7 Others/Unallocated items 30 (42) (240.1) Total revenues 72,515 96,374 32.9

Segment-wise EBIT India Beverages 4,574 4,651 1.7 India Foods - 2,665 International branded business 2,767 3,608 30.4 Total branded business 7,342 10,924 48.8 Non branded business 666 557 (16.5) Others/Unallocated items - - Total EBIT 8,008 11,480 43.4

Segment-wise EBIT margin (%) India Beverages 14.4 13.8 India Foods 12.9 International branded business 8.5 11.2 Total branded business 11.5 12.6 Non branded business 7.9 5.7 Others/Unallocated items - - EBIT margin 11.0 11.9 Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Geographical revenue breakup

Chart 2: Geographical revenue breakup

Australia 2% USA 18%

Canada 4%

UK & Europe 14% India 62% Middle East -1%

Source: Company data, I-Sec research

Update on Tata Starbucks

Tata Starbucks reported 21% revenue growth in FY20 and also rolled out 39 new outlets. It entered three new cities of Gujarat as Ahmedabad, Surat and Vadodara. The company witnessed healthy jump in usage of loyalty programme. It accounted for 31% of revenues in FY20.

Chart 3: Starbucks outlets Chart 4: Starbucks - Number of Cities

200 12 180 10 160 140 8 120 100 6 80 4 60 40 2 20

0 0

FY17 FY18 FY12 FY13 FY14 FY15 FY16 FY19 FY20

FY16 FY17 FY18 FY19 FY13 FY14 FY15 FY20 FY12 Source: Company data, I-Sec research Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Key charts - Annual

Chart 5: Revenues and growth rates Chart 6: EBITDA margin

120000 EBITDA margin Mean +1SD -1SD 110000 18 17 100000 16 90000 15 80000 14

70000 13

(%) (Rs mn) (Rs 60000 12 11 50000 10 40000 9

30000 8

FY13 FY17 FY07 FY08 FY09 FY10 FY11 FY12 FY14 FY15 FY16 FY18 FY19 FY20

FY07 FY16 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY17 FY18 FY19 FY20

FY21E FY22E

Source: Company data, I-Sec research Source: Company data, I-Sec research

Chart 7: Net profit and growth rates Chart 8: RoE & RoCE

10,000 RoE RoCE Cost of Capital 16 8,000 14

6,000 12 10 4,000

(%) (Rs mn) (Rs 2,000 6 4 0 2

(2,000) 0

FY17 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY18 FY19 FY20

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

FY22E FY21E

FY21E FY22E

Source: Company data, I-Sec research Source: Company data, I-Sec research

Chart 9: Net working capital days Chart 10: Gross margin & ad-spend

160 Gross margin Ad-spend as % of Net Sales 140 70

120 60

100 50

80 40 (Days) 60 (%) 30

40 20

20 10

0 0

FY09 FY07 FY08 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

FY21E FY22E

FY22E FY21E

Source: Company data, I-Sec research Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Key charts – Quarterly (Consolidated)

Chart 11: Revenues and growth rates Chart 12: Net profit and growth rates

Revenues YoY Growth (%) Net profit YoY Growth (%)

30000 40 2000 700 35 1800 600 25000 1600 30 500 20000 25 1400 1200 400 20 15000 1000 300 15

800 (Rs mn) (Rs (Rs mn) (Rs 200 10000 10 600 5 100 5000 400 0 200 0

0 -5 0 -100

Jun-19 Jun-18

Jun-18 Jun-19

Mar-18 Mar-19 Mar-20

Mar-19 Mar-18 Mar-20

Sep-17 Dec-17 Sep-18 Dec-18 Sep-19 Dec-19

'Jun-17 'Jun-17

Source: Company data, I-Sec research Source: Company data, I-Sec research

Chart 13: Gross margin (%) Chart 14: PAT margin (%)

Gross margin PAT margin

47 12

46 10

45 8

44 6

43 4

42 2

41 0

Jun-17 Jun-18 Jun-19

Mar-19 Mar-20 Mar-18

Sep-19 Sep-17 Dec-17 Sep-18 Dec-18 Dec-19

Source: Company data, I-Sec research Source: Company data, I-Sec research

Chart 15: EBITDA margin (%) Chart 16: Effective tax rate (%)

EBITDA margin Effective tax rate

16 40 14 35 12 30 10 25 8 20 6 15 4 10 2 5

0 0

Jun-17 Jun-18 Jun-19 Jun-17 Jun-18 Jun-19

Mar-19 Mar-20 Mar-18 Mar-19 Mar-20 Mar-18

Sep-17 Sep-19 Dec-17 Sep-18 Dec-18 Sep-19 Dec-19 Sep-17 Dec-17 Sep-18 Dec-18 Dec-19

Source: Company data, I-Sec research Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Valuation

SoTP-based valuation We have valued Tata Consumer (TCPL) according to the SoTP methodology. At our SoTP based valuation, the stock will trade at a P/E of Rs45x on FY22E EPS. Table 5: SoTP valuation EBITDA Multiple Particulars (Rsmn) (x) EV (Rsmn) Methodology India business 8,898 32 284,744 EBITDA multiple International Tea business 2,792 16 44,666 EBITDA multiple Market cap @57.48% stake & Tata Coffee 7,034 20% Holdco discount Starbucks JV 36,249 As disclosed separately Nourishco - EV 372,693 Less: Net debt (9,426) Equity Value 382,119 Number of Shares (mn) 922 Value per share (Rs) 415 Source: Company, I-Sec research

P/E-based valuation Historically, the stock has traded at an average 1-year forward P/E of 29x. Comparing the historical and estimated future return ratios, growth rates and expansion in business moats, we expect the stock to trade at a P/E multiple of 45x on FY22E EPS. Chart 17: Mean P/E(x) and standard deviation

TCPL P/E -1 Std Dev. Mean +1 Std Dev. 60

30 (x)

Jul-17

Apr-11 Apr-15 Oct-19

Jan-13 Jun-13 Jan-17 Jun-18

Mar-16 Mar-20

Feb-12

Sep-11 Aug-12 Dec-13 Nov-14 Sep-15 Aug-16 Dec-17 Nov-18

May-14 May-19

Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

Financial summary

Table 6: Profit & loss statement Table 8: Cashflow statement (Rs mn, year ending March 31) (Rs mn, year ending March 31) FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E Net Sales 72,515 96,374 98,694 108,913 Operating Cashflow 5,981 11,643 10,446 11,390 Operating Expenses 64,656 83,453 85,369 94,046 Working Capital (3,883) (820) (273) (1,691) EBITDA 7,859 12,922 13,325 14,867 Changes % margins 10.8 13.4 13.5 13.7 Capital Commitments (2,924) (2,518) (3,000) (3,000) Depreciation & Amortisation 1,226 2,417 2,554 2,682 Free Cashflow (825) 8,305 7,173 6,699 Gross Interest 525 779 812 679 Cashflow from 733 (6,728) (1,534) (869) Other Income 1,571 1,116 1,466 2,131 Investing Activities Recurring PBT 7,680 10,842 11,425 13,638 Issue of Share Capital - - - - Less: Taxes 2,609 2,742 2,879 3,478 Inc (Dec) in Borrowings (79) (867) (5,070) (679) Less: Minority Interest (689) (1,230) (1,512) (1,633) Dividend paid (2,158) (2,216) (2,949) (3,410) Net Income (Reported) 4,788 6,937 7,034 8,527 Chg. in Cash & Bank 594 1,011 620 4,741 Extraordinaries (Net) 406 67 - - balance Recurring Net Income 4,382 6,870 7,034 8,527 Closing cash & balance 10,336 16,215 16,834 21,575 Source: Company data, I-Sec research Source: Company data, I-Sec research

Table 7: Balance sheet Table 9: Key ratios (Rs mn, year ending March 31) (Year ending March 31) FY19 FY20 FY21E FY22E FY19 FY20 FY21E FY22E Assets Per Share Data (Rs) Total Current Assets 45,996 56,821 58,193 66,447 EPS 6.9 7.5 7.6 9.3 of which cash & cash eqv. 10,336 16,215 16,834 21,575 Cash EPS 8.9 10.1 10.4 12.2 Total Current Liabilities & 11,403 15,528 15,969 17,623 Dividend per share (DPS) 2.5 2.7 3.2 3.7 Provisions Book Value per share (BV) 116.2 149.9 216.5 222.1 Net Current Assets 34,593 41,292 42,224 48,824 Investments 9,950 13,831 12,830 11,774 Growth (%) Net Fixed Assets 48,617 113,125 170,903 171,222 Net Sales 8.1 32.9 2.4 10.4 Capital Work-in-Progress 4,244 954 954 954 EBITDA (6.3) 64.4 3.1 11.6 Total Assets 97,404 169,202 226,911 232,773 PAT (0.8) 41.2 5.4 19.4 DPS - 8.0 18.5 15.6 Liabilities Borrowings 12,936 17,264 13,058 13,285 Valuation Ratios (x) Deferred Tax Liability 874 2,865 2,865 2,865 P/E 53.4 49.8 48.6 40.1 Minority Interest 10,277 10,925 11,423 11,942 P/CEPS 41.8 36.8 35.7 30.5 Equity Share Capital 631 922 922 922 P/BV 3.2 2.5 1.7 1.7 Face Value per share (Rs) 1.00 1.00 1.00 1.00 EV / EBITDA 29.0 25.7 25.0 22.4 Reserves & Surplus* 72,686 137,227 198,643 203,760 EV / Sales 3.1 3.4 3.4 3.1 Less: Misc. Exp. n.w.o. Net Worth 73,317 138,149 199,565 204,682 Operating Ratios Total Liabilities 97,404 169,202 226,911 232,773 Raw Material / Sales (%) 55.3 56.1 56.0 55.9 Source: Company data, I-Sec research Employee cost / Sales (%) 11.1 9.2 9.2 9.2 Other exps / Sales (%) 22.8 21.3 21.3 21.3 Other Income / PBT (%) 20.5 10.3 12.8 15.6 Effective Tax Rate (%) 34.0 25.3 25.2 25.5 Working Capital (days) 100.9 87.3 86.2 83.8 Inventory Turnover (days) 81.0 64.8 65.0 65.0 Receivables (days) 34.3 34.9 34.7 35.0 Payables (days) 33.5 35.8 36.0 36.0 Net D/E (x) (0.1) (0.1) (0.1) (0.1)

Profitability Ratios (%) Net Income Margins 6.0 7.1 7.1 7.8 RoACE 7.0 7.9 5.4 5.3 RoAE 6.1 6.5 4.2 4.2 Dividend Payout 43.2 36.2 41.9 40.0 Dividend Yield 0.7 0.7 0.9 1.0 EBITDA Margins 10.8 13.4 13.5 13.7 Source: Company data, I-Sec research

Tata Consumer Products, June 16, 2020 ICICI Securities

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New I-Sec investment ratings (all ratings based on absolute return) BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

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