Motilal Oswal Financial Services

UltraTech Cement

BSE SENSEX

39,593

S&P CNX

11,848

26 June 2019

Annual Report update | Sector: Cement

CMP: INR4,590

: INR 5,280 (+15

Buy

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Profitability impacted by cost pressure

Increase in leverage on account of capacity expansion

Our analysis of UTCEM’s FY19 annual report highlights healthy cement volume

growth led by expansion and acquisitions of the company. However, margins

suffered due to cost pressures. While operating cash flows remained healthy,

net debt/EBITDA increased from 2.3 in FY18 to 2.9 in FY19.

Industry sees 12mt capacity addition in FY19; utilization improves 5pp



Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

UTCEM IN



274

1261.5 / 18.2

4904 / 3264



-4/5/11

1685

38.3

2021E

495.9

98.6

44.0

152.4

36.2

1,399

11.4

9.6

30.1

3.3

14.0

186

According to UTCEM’s management, in FY19, India’s total cement capacity

stood at 480mt; of this, ~12mt was added during the year. Demand in FY19

increased 13%, the highest growth since FY10.

Demand growth from infrastructure was healthy driven by the government’s

focus on roads, metro rail projects, airports renovation, irrigation projects,

etc. While, there has been significant improvement in low-cost houses

constructed under the Pradhan Mantri Awas Yozana (PMAY) in rural areas,

the affordable housing segment in urban areas is also gaining momentum.

As a result, the industry witnessed utilization improvement of 5pp over the

previous year, reaching a utilization of 71%.

The company expects further improvement in utilizations on likely sustained

demand growth with incremental new supplies at a slower pace vis-à-vis the

increment demand.

Financials Snapshot (INR b)

Y/E Mar

2019 2020E

Net Sales

357.0 428.0

EBITDA

65.2

80.0

Net Profit

24.6

32.3

EPS (INR)

89.4 111.9

EPS Gr. (%)

4.3

31.5

BV/Sh. (INR)

1,018 1,262

RoE (%)

9.1

10.0

RoCE (%)

7.7

8.5

P/E (x)

51.3

41.0

P/BV (x)

4.5

3.6

EV/EBITDA(x)

20.9

17.7

EV/Ton(USD)

220

199

Capacity expansions resulting in healthy volume growth



Shareholding pattern (%)

As On

Mar-19 Dec-18 Mar-18

Promoter

61.7

62.0

Cost pressure due to higher raw material; fuel prices impact margins

DII

7.8

7.6

5.8



UTCEM’s raw material cost/t increased 4% from INR819/t to 854/t due to

FII

20.1

20.5

22.3

higher slag, iron ore, aluminous clay and fly-ash prices. Also, it faced

Others

10.4

10.2

9.9

additional limestone costs due to transfer of limestone mines.

FII Includes depository receipts



Power and fuel cost/t increased 12% YoY as imported pet coke prices

UTCEM’s total cement capacity reached 94.75mt in India due to the green-

field expansion at Dhar (3.5mt) and the acquisition of Binani’s assets (6.25mt).

Along with its other subsidiary, Star Cement, the company’s total capacity

stands at 98.75mt currently.

Cement production jumped 17%— from 57.23mt in the previous year to

67.20mt currently. The increase in production was on account of healthy

cement demand growth and benefits from increased utilization of the

capacities acquired (JPA) in FY18, where utilization improved from 53% in the

previous year to 72%.

Domestic sales volume registered a 20% growth, which is higher as compared

to the industry growth of ~13%.

increased 6% from USD96/t to USD102/t. Also, there was 8% currency

depreciation over the previous year.

Pradnya Ganar – Research Analyst

(Pradnya.Ganar@motilaloswal.com);+91 22 6129 1537

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.

UltraTech Cement

Stock Performance (1-year)



The increase in freight cost due to higher diesel prices was partially negated

with optimization of lead distance, realization of synergy benefits from the

acquisition and the commissioning of 3.5mt capacity in Madhya Pradesh. During

the year, company reduced the overall lead distance by ~5% over the previous

year (10% since Jun’17).

As a result of the increase in costs, the company’s consolidated EBITDA/t

decreased by 7% YoY to INR888. Consol. EBITDA grew 10% to INR68b in FY19.

Over FY13-19, while EBITDA CAGR stood at 7%, PAT remained almost stable due

to higher interest cost. Over FY17-19 too, EBITDA CAGR stood at 14% due to the

JPA acquisition, but PAT CAGR was -5%.

The company made several efforts to reduce the impact of rising costs. Total

share of renewable energy (WHRS, Solar and Wind power) was 100bp higher

over the previous year, increasing to 8.5%. During the year, the company

commissioned 26MW WHRS capacity, which is still under ramp-up; its full

benefit should be realized FY20 onwards. Also, UTCEM is setting up 46MW

WHRS capacity, which should get commissioned in FY21. This would cater to

~12% of the company’s current total power requirement.

UTCEM has also entered into agreements with third parties for procuring solar

power under the ‘Group captive scheme’, which is under implementation. The

overall capacity of such tie-ups will increase from 62.5MW to over 500MW by

end-FY21 and will cater to ~10% of the company’s total power requirement.

Work on the 4.0 MTPA Bara Grinding unit is progressing satisfactorily and is

expected to be commissioned by 2QFY20.

Further, the company has plans to spend ~INR20b in FY20, on the remaining

work at Bara, WHRS projects, development of coal blocks at Bicharpur,

packaging terminal at Mumbai, wall care putty projects and other normal

maintenance capex.

Moreover, the Century deal has received approval from the stock exchanges,

the Competition Commission of India and shareholders. The deal now awaits

approval of the National Company Law Tribunal, the Mumbai Bench and other

regulatory authorities.

At the consol level, the cash flow from operations after working capital changes

grew by 33% to INR52b. Also, working capital increased by INR9.3b in FY19 as

compared to an increase of INR12.5b in the previous year. Capex for the year

stood at INR 15b as against INR 19b in FY18. As a result, free cash flow increased

by 82% YoY to INR 36.5b.

At the standalone level, cash flow from operations grew 48% to INR 53b.

Working capital increased by INR4.6b in FY19 as compared to an increase of

INR12.6b in the previous year.

Consolidated gross debt for the company increased to INR 228b in FY19 (INR

194b in FY18). Net debt for the company as of FY19 stands at INR196b. Net

debt/EBITDA for the company increased from 2.3 to 2.9 in FY19.

At the standalone level, investments increased as the Company infused funds to

the extent of INR34b for the acquisition of UNCL.

Cost optimization measures in place



Bara expansion and Century acquisition on track…



Increase in leverage on account of various expansions



26 June 2019

UltraTech Cement

Valuation and view

The acquisition of Century’s cement asset and Binani has led to UTCEM increasing its

capacity market share and take its pan-India capacity market share to 20%. The

acquisition of Binani’s asset by UTCEM is attractive as it provides scope for further

brownfield expansion by 4-5mt. The ramp-up of Binani’s assets and the INR740/t

improvement in profitability has been attractive. The company trades at 17.7x/14x

EV on FY20/21E EBITDA. We value UTCEM at 14.5x Sept' 21 EV/EBITDA and arrive at

a TP of INR5,280 (implied EV/t of USD 215 on FY21 capacity).

Story in charts

Exhibit 1: Industry utilizations grew 5pp in FY19 to 71%

Capacity (MT)

Capacity utilization (%)

Exhibit 2: Expansion at Dhar and acquisition of Binani’s

assets boosted capacity to 98.8mt

UTCEM consolidated capacity (mt)

276

310

328

363

376

402

417

428

468

480

Source: MOFSL, Company

Exhibit 3: Utilizations improved due to better utilizations of

acquired assets and healthy demand growth

Consol Grey cement volumes (mt)

Capacity Utilisation (%)

88%

71%

85%

81%

78%

76%

74%

71%

76%

Exhibit 4: Well diversified market mix and significant market

share across regions

20.3 36.9 44.0 43.6 44.7 48.2 51.3 52.3 63.3 75.0

Source: MOFSL, Company

Exhibit 5: UTCEM’s total cost/t increased by 4% YoY, led by a rise of 4%, 12% and 2% in raw

material cost/t, power and fuel cost/t and freight cost/t, respectively

RM cost/t

Other expenses/t

3845

1132

280

633

981

819

FY18

Power & Fuel cost/t

Employee cost/t

4004

1158

269

619

1103

854

FY19

Source: Company, MOFSL

26 June 2019

UltraTech Cement

Exhibit 6: EBITDA/t declined 7% in FY19

Consol EBITDA/t (INR)

1,012

971

931

881

896

951

888

23%

19%

18%

19%

Exhibit 7: Margins impacted by cost push

Consol EBITDA (INR bn)

EBITDA margin (%)

21%

20%

18%

45.2

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY13

40.4

FY14

44.3

FY15

49.0

FY16

52.1

FY17

61.5

FY18

67.9

FY19

Source: MOFSL, Company

Exhibit 8: Interest cost as percentage of EBITDA has been on

a rise

Interest cost as a % of EBITDA

20%

13%

23%

Exhibit 9: PAT declined over FY13-19 despite an increase in

EBITDA due to higher interest costs

Consol PAT (INR bn)

12%

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Source: MOFSL, Company

Exhibit 10: Fuel Mix for Kiln

Imported coal

22%

52%

petcoke

10%

12%

Ind Coal and Others

14%

13%

Exhibit 11: Power mix

TPP

19%

16%

WHRS

Others

13%

15%

18%

26%

48%

26%

FY14

13%

70%

74%

72%

71%

81%

82%

80%

78%

74%

26%

FY15

20%

FY16

14%

FY17

14%

FY18

16%

FY19

FY14

FY15

FY16

FY17

FY18

FY19

Source: MOFSL, Company

26 June 2019

UltraTech Cement

Exhibit 12: Freight Mix

Rail

62%

67%

69%

Road

Sea

72%

74%

34%

FY14

29%

FY15

28%

FY16

25%

FY17

24%

FY18

23%

FY19

Source: MOFSL, Company

Exhibit 13: Consol. OCF in FY19 increased 30% YoY to INR52b

OCF (INR bn)

Capex (INR bn)

-14

FY17

-15

FY19

FCFF (INR bn)

Exhibit 14: Increase in leverage to fund expansions

Consol Net Debt (INR bn)

Consol Net Debt/EBITDA

2.3

1.2

2.9

0.6

FY14

FY15

0.7

0.0

-23

FY14

-27

FY15

-21

FY16

-19

FY18

FY16

-2

FY17

141

FY18

196

FY19

Source: MOFSL, Company

26 June 2019

UltraTech Cement

Financials and Valuations

Income Statement S/A

Y/E March

Net Sales

Change (%)

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income - Rec.

PBT

EO Expense/(Income)

PBT after EO expense

Tax

Tax Rate (%)

Reported PAT

Adj PAT

Change (%)

Balance Sheet

Y/E March

Equity Share Capital

Reserves

Net Worth

Deferred liabilities

Secured Loan

Loans

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Investments

Curr. Assets

Inventory

Debtors

Cash & Bank Bal

Others

Curr. Liability & Prov.

Creditors

Provisions

Net Current Assets

Appl. of Funds

E: MOFSL Estimates

2014

2,02,798

0.5

38,179

18.8

10,523

27,656

3,192

3,290

27,755

-956

28,710

7,266

25.3

21,444

20,489

-22.8

2014

2,742

1,68,233

1,70,975

22958

51,993

2,45,927

2,50,778

92,059

1,58,718

20,384

53,917

64,489

23,684

12,810

2,775

25,220

51,614

41,884

9,730

12,875

2,45,927

2015

2,29,272

13.1

41,950

18.3

11,331

30,619

5,475

3,718

28,863

8,715

30.2

20,148

-1.7

2015

2,744

1,92,659

1,95,403

27171

98,149

3,20,723

2,23,266

12,417

2,10,849

20,689

56,483

66,237

26,428

12,032

2,006

25,771

33,535

29,638

3,898

32,702

3,20,723

2016

2,37,088

3.4

46,266

19.5

12,970

33,296

5,117

4,807

32,986

9,284

28.1

23,702

17.6

2016

2,744

2,13,574

2,16,318

28100

81,698

3,26,116

2,39,127

12,241

2,26,886

14,145

57,932

83,020

22,776

14,149

22,352

23,743

55,867

51,721

4,146

27,153

3,26,116

2017

2,38,914

0.8

49,690

20.8

12,679

37,011

5,714

6,600

37,896

137

37,760

11,482

30.4

26,277

26,414

11.4

2017

2,745

2,36,665

2,39,410

27736

62,404

3,29,550

2,56,748

24,424

2,32,324

8,778

74,087

77,623

22,250

12,762

22,177

20,434

63,261

58,959

4,302

14,362

3,29,550

2018

2,93,579

22.9

58,833

20.0

17,636

41,197

11,912

4,958

34,243

1,225

33,018

10,706

32.4

22,313

23,538

-10.9

2018

2,746

2,56,484

2,59,230

31741

1,74,195

4,65,166

4,13,563

41,445

3,72,118

14,730

61,629

95,254

31,015

17,142

1,993

45,104

78,564

72,343

6,221

16,690

4,65,166

2019

3,57,035

21.6

65,203

18.3

20,103

45,100

14,192

4,715

35,623

11,066

31.1

24,557

4.3

2019

2,746

2,76,731

2,79,477

35444

1,81,181

4,96,102

4,34,540

61,548

3,72,992

10,759

70,645

1,29,969

32,736

20,976

6,240

70,017

88,262

82,515

5,747

41,707

4,96,103

(INR Million)

2020E

2021E

4,28,050 4,95,910

19.9

15.9

79,959

98,614

18.7

19.9

21,922

24,101

58,038

74,513

16,038

4,800

46,800

63,275

46,800

63,275

14,508

19,299

31.0

30.5

32,292

43,976

32,292

43,976

31.5

36.2

(INR Million)

2020E

2021E

2,886

3,61,403 4,00,981

3,64,290 4,03,867

35444

1,96,181 1,81,181

5,95,915 6,20,492

5,39,750 5,55,750

83,469 1,07,570

4,56,280 4,48,179

13,759

60,645

1,71,048 2,02,526

39,247

54,346

25,148

29,890

37,176

61,225

69,477

57,064

1,05,817 1,04,617

98,927

95,106

6,890

9,511

65,231

97,909

5,95,915 6,20,492

26 June 2019

UltraTech Cement

Financials and Valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

EV/Ton (Cap-USD)

Return Ratios (%)

RoIC

RoE

RoCE

Working Capital Ratios

Fixed Asset Turnover (x)

Debtor (Days)

Creditor (Days)

Inventory (Days)

Wkg. Capital Turnover (Days)

Leverage Ratio

Current Ratio

Interest Cover Ratio

Debt/Equity

Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

E: MOFSL Estimates

2014

74.7

113.1

623

9.0

13.5

2015

73.4

114.7

712

9.0

14.8

2016

86.4

133.6

788

9.0

12.4

2017

96.2

142.4

872

10.0

12.6

2018

85.7

149.9

944

10.5

15.6

53.6

30.6

4.9

23.2

231

13.3

12.7

10.8

1.2

8.7

0.3

2014

27,755

10,523

3,192

-6,584

689

35,574

-3,155

32,420

-22,187

10,233

1,124

-1,037

-22,100

-2,512

-4,046

-2,459

-8,972

1,348

1,427

2,775

10.1

11.0

9.3

1.0

2.0

5.6

0.5

2015

28,863

11,331

4,872

-1,486

43,671

-2,842

40,829

-25,679

15,151

6,613

135

-18,931

-14,729

-5,495

-2,460

-22,668

-769

2,775

2,006

9.7

11.5

9.3

1.0

1.5

6.5

0.4

2016

32,986

12,970

4,322

-8,355

5,211

47,134

-3,590

43,544

-20,595

22,949

2,482

739

-17,374

2,463

-5,388

-2,926

-5,824

20,346

2,006

22,352

10.8

11.6

10.1

1.1

1.2

6.5

0.3

2017

37,760

12,679

5,015

-7,307

5,013

53,160

-5,931

47,229

-12,290

34,939

-11,483

196

-23,577

-15,337

-5,470

-3,085

-23,826

-175

22,352

22,177

8.7

9.4

8.5

1.4

21.3

89.9

48.2

20.7

1.2

3.5

0.7

2018

33,018

17,636

11,912

-8,391

-12,671

41,504

-5,327

36,177

-18,296

17,881

16,140

809

-1,347

157

-40,274

-11,590

-3,307

-55,014

-20,184

22,177

1,993

2019

89.4

162.6

1,018

11.5

15.5

51.3

28.2

4.5

20.9

220

7.2

9.1

7.7

1.2

21.4

84.4

40.9

42.6

1.5

3.2

0.6

2019

35,623

20,103

14,192

-7,004

-4,632

58,281

-4,917

53,365

-14,745

38,620

26,564

-50,080

-38,261

6,284

-13,732

-3,462

-10,858

4,246

1,993

6,239

2020E

111.9

187.8

1,262

11.0

11.4

41.0

24.4

3.6

3.3

17.7

199

8.4

10.0

8.5

1.3

21.4

84.4

41.2

55.6

1.6

3.6

0.5

2021E

152.4

235.9

1,399

13.0

10.0

30.1

19.5

3.3

2.8

14.0

186

10.5

11.4

9.6

1.1

49.9

1.9

4.6

0.4

(INR Million)

2020E

2021E

46,800

63,275

21,922

24,101

16,038

-14,508

-19,299

7,413

-8,629

77,664

75,486

77,664

75,486

-1,08,210

-16,000

-30,546

59,486

10,000

-98,210

-16,000

56,210

15,000

-15,000

-16,038

-3,689

-4,399

51,483

-35,437

30,937

24,050

6,239

37,176

61,225

26 June 2019

UltraTech Cement

NOTES

26 June 2019

UltraTech Cement

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 - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a

registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and

National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National

Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance

Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Oswal Financial Services Limited are

available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

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. (b) be engaged in any other transaction involving such securities and earn brokerage or other

compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have

any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

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. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the

website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

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 Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of

research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity

to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these

securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not

located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under

applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers

Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any

brokerage and investment services provided by 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.

Specific Disclosures

1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOSL has not received any compensation or other benefits from third party in connection with the research report

10 MOSL has not engaged in market making activity for the subject company

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The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company

received compensation/other benefits from the subject company in the past 12 months

other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever

on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of

MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the

company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

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.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the

research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential 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

of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in

nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,

representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The

report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as

customers by virtue of their receiving this report.

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: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL 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 Bench.

26 June 2019