gujarat state petronet07nov21

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Emkay

India Equity Research | Oil & Gas

November 7, 2021

Result Update

Gujarat State Petronet Refer to important disclosures at the end of this report

In-line operating performance

Q2FY22 standalone revenue/EBITDA/APAT stood at Rs5.89bn/3.81bn/3.30bn, up

2%/flat/up 21% yoy and up 12%/2%/42% qoq. EBITDA was largely in line. Lower interest

cost (28% below est.), higher Other Income and lower tax rate (20%) led to the PAT beat.

Gas transmission volumes rose 2%, or 0.7mmscmd, qoq to 37.5mmscmd (down 6% yoy,

in line), with CGD volumes up 2.1mmscmd offset by refinery-petchem (down 1.7mmscmd).

Fertilizer/Others rose 0.8/0.5mmscmd; Power was down by 0.3mmscmd qoq.

Tariff realization came in at Rs1.26/scm, up 2% yoy/down 2% qoq (2% below est.). Unit

opex was down 1% qoq/10% yoy to Rs0.19/scm. Other Expenditure fell 21% yoy but

remained flat qoq at Rs522mn. Outstanding debt declined 35% qoq to Rs4.82bn.

We cut FY22E EPS by 3% on weak Q3 volumes from spot LNG spike; however, we raise

FY23/24E EPS by 4% each, building in higher Other Income. Our Dec’22 TP is up 31% to

Rs430, primarily due to the revision in Gujarat Gas stake FV. Retain Buy with EW stance.

Relative price chart

Source: Bloomberg This report is solely produced by Emkay Global. The following person(s) are responsible for the production of the recommendation:

Sabri Hazarika

[email protected]

+91 22 6612 1282

Tanay Gabhawala

[email protected]

+91 22 6612 1336

-20

-6

8

22

36

50

150

195

240

285

330

375

Nov-20 Jan-21 Mar-21May-21 Jul-21 Sep-21Nov-21

%Rs

Gujarat State Petronet (LHS) Rel to Nifty (RHS)

Highlights: The adjustment in Gas Transmission Cost (up 24% yoy/61% qoq) led to reported

revenue being optically higher than our estimate. Employee cost rose by 14% yoy/13% qoq

to Rs146mn. Depreciation was up 2% qoq to Rs491mn. Interest cost declined 39% qoq to

Rs86mn. Electricity income was up by 70% yoy/22% qoq to Rs129mn. Standalone

EBITDA/scm fell 1% qoq to Rs1.1 (up 6% yoy and inline). Other Income of Rs904mn, up 76%

yoy, had Gujarat Gas dividend (6% beat to our estimate). The tax rate was 20.2%, likely due

to the dividend income adjustment. Cash-flow statement capex was Rs408mn in H1FY22.

Guidance: Current volumes are down to 32-33mmscmd, as factors such as high spot LNG

prices and festivals has affected CGD and power segment demand. Q3FY22 average

volumes could be down 10-11% qoq. There was no update on the tariff process. Only one

board member is currently there in the PNGRB and is awaiting further appointments. The

Mehsana-Bhatinda pipeline is expected to be commissioned by November 2021-end and take

12 more months to reach 10mmscmd+ volumes, as targeted. Standalone capex for FY22

would not be significant. GSPL is firming up on new capex plans.

Valuation: We value GSPL on a SOTP basis, with core business using DCF. We roll over

from Mar’23 to Dec’23 estimates. Our TP increase from Rs330 to Rs430 is primarily driven

by an increase in the value of Gujarat Gas stake (our TP increased from Rs520 to Rs630),

with a 30% holdco discount. Key risks: Adverse oil-gas prices/demand, industrial slowdown,

cost overruns and regulatory overhangs.

Please see our sector model portfolio (Emkay Alpha Portfolio): Oil & Gas (page 7)

CMP Target Price

Rs 325 Rs 430 (▲) as of (November 7, 2021) 12 months

Rating Upside

BUY (■) 32.5 %

Change in Estimates

EPS Chg FY22E/FY23E (%) (3)/4

Target Price change (%) 30.6

Target Period (Months) 12

Previous Reco BUY

Emkay vs Consensus

EPS Estimates

FY22E FY23E

Emkay 16.9 11.5

Consensus 16.6 17.3

Mean Consensus TP (12M) Rs 382

Stock Details

Bloomberg Code GUJS IN

Face Value (Rs) 10

Shares outstanding (mn) 564

52 Week H/L 383 / 184

M Cap (Rs bn/USD bn) 183 / 2.46

Daily Avg Volume (nos.) 1,107,774

Daily Avg Turnover (US$ mn) 5.0

Shareholding Pattern Sep '21

Promoters 37.6%

FIIs 17.5%

DIIs 20.0%

Public and Others 24.9%

Price Performance

(%) 1M 3M 6M 12M

Absolute 3 (6) 19 75

Rel. to Nifty 2 (15) (2) 16

Financial Snapshot (Standalone)

(Rs mn) FY20 FY21 FY22E FY23E FY24E

Revenue 23,631 20,794 20,744 15,497 16,689

EBITDA 15,766 14,733 14,122 9,837 10,549

EBITDA Margin (%) 66.7 70.9 68.1 63.5 63.2

APAT 9,591 9,325 9,546 6,483 7,165

EPS (Rs) 17.0 16.5 16.9 11.5 12.7

EPS (% chg) 20.7 (2.8) 2.3 (32.1) 10.5

ROE (%) 15.4 13.1 12.0 7.5 7.8

P/E (x) 19.1 19.7 19.2 28.3 25.6

EV/EBITDA (x) 12.6 13.1 13.2 18.4 16.6

P/BV (x) 2.7 2.4 2.2 2.1 1.9

Source: Company, Emkay Research

http://www.emkayglobal.com/

Gujarat State Petronet (GUJS IN) India Equity Research | Result Update


November 7, 2021 | 2

Exhibit 1: Actual vs. Estimates (Q2FY22)

Rs mn Actual Estimates

(Emkay)

Consensus Estimates

(Bloomberg)

Variation Comment

Emkay Consensus

Total Revenue 5,885 5,419 5,343 9% 10% Due to gas transmission cost adjustment

Adjusted EBITDA 3,806 3,836 3,803 -1% 0% Lower unit opex offset by lower tariffs

EBITDA Margin (%) 65% 71% 71% (613) (652)

Adjusted Net Profit 3,298 3,053 2,712 8% 22% Due to lower interest-ETR, higher Other Income


Exhibit 2: Quarterly summary

Rs mn Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 % yoy % qoq H1FY21 H1FY22 % yoy

Reported Net Revenue 5,747 5,800 4,650 5,272 5,885 2% 12% 10,390 11,157 7%

-Gas Transmission 5,671 5,718 4,601 5,166 5,756 1% 11% 10,213 10,922 7%

-Sale of Electricity 76 45 49 106 129 70% 22% 169 235 40%

-CGD Business/Adj. -0 37 -0 NA NA 9 NA

OPEX 1,926 1,816 1,208 1,528 2,079 8% 36% 3,107 3,608 16%

-Employee Cost 128 160 169 130 146 14% 13% 262 276 5%

-Gas Transmission 1,136 1,210 712 876 1,411 24% 61% 1,751 2,287 31%

-Others 662 447 327 523 522 -21% 0% 1,094 1,045 -4%

EBITDA 3,821 3,984 3,442 3,744 3,806 0% 2% 7,282 7,550 4%

Depreciation 547 511 497 481 491 -10% 2% 1,035 972 -6%

EBIT 3,273 3,473 2,945 3,263 3,315 1% 2% 6,247 6,578 5%

Interest Cost 247 220 174 140 86 -65% -39% 537 226 -58%

Other Income 515 74 61 38 904 76% 2286% 558 942 69%

PBT 3,541 3,328 2,833 3,161 4,133 17% 31% 6,268 7,294 16%

Exceptional Items -17 - -17 -14 -27 -17 -41

PBT After Exceptionals 3,524 3,328 2,816 3,148 4,106 17% 30% 6,251 7,254 16%

Current Tax 843 818 646 812 816 -3% 0% 1,566 1,627 4%

Deferred Tax -31 35 108 17 14 -18% -21 30

Total Tax 813 853 753 828 829 2% 0% 1,546 1,658 7%

Reported PAT 2,711 2,475 2,063 2,319 3,277 21% 41% 4,705 5,596 19%

Reported EPS (Rs.) 4.8 4.4 3.7 4.1 5.8 21% 41% 8.3 9.9 19%

Adjusted PAT 2,724 2,475 2,075 2,329 3,298 21% 42% 4,718 5,628 19%

Adjusted EPS (Rs.) 4.8 4.4 3.7 4.1 5.8 21% 42% 8.4 10.0 19%

Shares O/S (mn) 564 564 564 564 564 0% 0% 564 564 0%

EBITDA Margin 66% 69% 74% 71% 65% -3% -9% 70% 68%

NPM 47% 43% 44% 44% 56% 18% 27% 45% 50%

Effective Tax Rate 23% 26% 27% 26% 20% -12% -23% 25% 23%

Gas Volumes (mmscmd) 39.8 39.4 33.8 36.8 37.5 -6% 2% 36.5 37.1 2%

CGD Share 27% 32% 40% 30% 35% 21% 33%

Refinery/Petchem Share 25% 18% 22% 32% 27% 29% 29%

Fertilizer Share 8% 10% 9% 7% 9% 8% 8%

Power Share 23% 23% 14% 15% 14% 27% 14%

Other Segments Share 17% 17% 15% 16% 15% 15% 15%

Adjusted Tariff (Rs/scm) 1.24 1.25 1.28 1.28 1.26 2% -2% 1.27 1.27 0%

Adjusted OPEX/scm (Rs) 0.22 0.17 0.16 0.19 0.19 -10% -1% 0.20 0.19 -4%

EBITDA/scm (Rs) 1.04 1.10 1.13 1.12 1.10 6% -1% 1.09 1.11 2%






Exhibit 3: Changes in assumptions

FY22E FY23E FY24E

Previous Revised Variance Previous Revised Variance Previous Revised Variance

Adj Tariff (Rs./mscm) 1,263 1,269 1% 833 825 -1% 825 825 0%

Growth 0% 0% 50bps -34% -35% -100bps -1% 0% 100bps

Volumes (mmscmd) 38.0 35.0 -8% 41.0 40.0 -2% 44.0 43.0 -2%

Growth 4% -4% -820bps 8% 14% 639bps 7% 8% 18bps


Exhibit 4: Changes in estimates

Rs mn FY22E FY23E FY24E

Previous Revised Variance Previous Revised Variance Previous Revised Variance

Revenue 22,210 20,744 -7% 15,962 15,497 -3% 16,996 16,689 -2%

EBITDA 15,033 14,122 -6% 9,958 9,837 -1% 10,530 10,549 0%

EBITDA Margins 68% 68% 39bps 62% 63% 109bps 62% 63% 125bps

PAT 9,794 9,546 -3% 6,257 6,483 4% 6,882 7,165 4%

EPS (Rs) 17.3 16.9 -3% 11.1 11.5 4% 12.2 12.7 4%


Exhibit 5: DCF valuation of core business

DCF Assumptions Dec’23E (Rs mn) Standalone

Risk Free Rate 6.0% NPV Of FCF 39,042

Risk Premium 5.5% Terminal Value 71,818

Beta 0.8 PV Of TV 28,939

Cost Of Equity 10.3% Total Value 67,981

Cost Of Debt 9.0% Less: Net Debt (Dec’22E) (1,498)

Post Tax Cost Of Debt 6.8% Equity Value 69,479

Average Debt: Equity Ratio 30.0% No. Of Shares O/S (mn) 565

WACC 9.5% Core Business Fair Value (Rs.) 123

Terminal Growth Rate 0.0%


Exhibit 6: Value of Gujarat Gas stake

Gujarat Gas Ltd at FV (Rs mn)

FV (Rs/sh) 630

No. Of Shares O/S (m) 689

FV of GGL 434,070

At 30% HoldCo Discount 303,849

GSPL's Stake 54.2%

GSPL's Value 164,565

GSPL's Shares O/S (mn) 565

Value/share For GSPL 291


Exhibit 7: SOTP valuation

Parts (Rs) Method Value

Core Gujarat Transmission Business DCF Based 123

Gujarat Gas Stake FV Based 291

New Cross Country Pipeline DCF Based 9

SGL Stake 15x Norm. PE at 30% Disc. 7

Target Price 430






Key Financials (Standalone)

Income Statement

Y/E Mar (Rs mn) FY20 FY21 FY22E FY23E FY24E

Revenue 23,631 20,794 20,744 15,497 16,689

Expenditure 7,866 6,061 6,622 5,660 6,140

EBITDA 15,766 14,733 14,122 9,837 10,549

Depreciation 1,946 2,030 2,056 2,221 2,370

EBIT 13,820 12,703 12,066 7,616 8,179

Other Income 647 693 903 1,206 1,428

Interest expenses 1,644 929 357 155 28

PBT 12,823 12,467 12,611 8,668 9,579

Tax 3,195 3,057 3,015 2,184 2,414

Extraordinary Items (37) (85) (50) 0 0

Minority Int./Income from Assoc. 0 0 0 0 0

Reported Net Income 11,050 9,158 9,496 6,483 7,165

Adjusted PAT 9,591 9,325 9,546 6,483 7,165

Balance Sheet


Equity share capital 5,641 5,642 5,645 5,648 5,651

Reserves & surplus 61,584 69,808 77,922 83,369 89,316

Net worth 67,226 75,450 83,567 89,016 94,966

Minority Interest 0 0 0 0 0

Loan Funds 16,685 10,649 3,649 649 149

Net deferred tax liability 4,081 4,218 4,311 4,400 4,484

Total Liabilities 87,992 90,317 91,527 94,065 99,599

Net block 35,857 34,667 34,502 35,614 36,543

Investment 46,217 50,087 50,087 50,087 50,087

Current Assets 6,582 6,758 7,121 8,820 13,814

Cash & bank balance 957 877 1,151 3,478 8,203

Other Current Assets 1,015 1,540 1,571 1,602 1,635

Current liabilities & Provision 3,037 3,411 3,507 3,448 3,538

Net current assets 3,545 3,347 3,614 5,372 10,276

Misc. exp 0 0 0 0 0

Total Assets 87,992 90,317 91,527 94,065 99,599

Cash Flow


PBT (Ex-Other income) (NI+Dep) 12,175 11,774 11,709 7,462 8,151

Other Non-Cash items 26 20 (50) 0 0

Chg in working cap (1,870) 256 100 657 (95)

Operating Cashflow 13,602 12,412 11,158 8,310 8,040

Capital expenditure 94 (684) (3,000) (3,000) (3,000)

Free Cash Flow 13,696 11,728 8,158 5,310 5,040

Investments (3,414) (3,870) 0 0 0

Other Investing Cash Flow (1,259) (540) 0 0 0

Investing Cashflow (3,931) (4,401) (2,097) (1,794) (1,572)

Equity Capital Raised 1 1 3 3 3

Loans Taken / (Repaid) (7,167) (6,036) (7,000) (3,000) (500)

Dividend paid (incl tax) (1,283) (1,128) (1,432) (1,037) (1,218)

Other Financing Cash Flow (204) 2 0 0 0

Financing Cashflow (10,297) (8,091) (8,787) (4,189) (1,743)

Net chg in cash (626) (79) 274 2,327 4,725

Opening cash position 1,583 957 877 1,151 3,478

Closing cash position 957 878 1,151 3,478 8,203






Key Ratios

Profitability (%) FY20 FY21 FY22E FY23E FY24E

EBITDA Margin 66.7 70.9 68.1 63.5 63.2

EBIT Margin 58.5 61.1 58.2 49.1 49.0

Effective Tax Rate 24.9 24.5 23.9 25.2 25.2

Net Margin 40.7 45.3 46.3 41.8 42.9

ROCE 16.6 15.0 14.3 9.5 9.9

ROE 15.4 13.1 12.0 7.5 7.8

RoIC 36.2 33.6 32.6 20.5 21.5

Per Share Data (Rs) FY20 FY21 FY22E FY23E FY24E

EPS 17.0 16.5 16.9 11.5 12.7

CEPS 20.5 20.1 20.6 15.4 16.9

BVPS 119.2 133.7 148.0 157.6 168.1

DPS 2.0 2.0 2.5 1.8 2.2

Valuations (x) FY20 FY21 FY22E FY23E FY24E

PER 19.1 19.7 19.2 28.3 25.6

P/CEPS 15.9 16.1 15.8 21.1 19.3

P/BV 2.7 2.4 2.2 2.1 1.9

EV / Sales 8.4 9.3 9.0 11.7 10.5

EV / EBITDA 12.6 13.1 13.2 18.4 16.6

Dividend Yield (%) 0.6 0.6 0.8 0.6 0.7

Gearing Ratio (x) FY20 FY21 FY22E FY23E FY24E

Net Debt/ Equity 0.2 0.1 0.0 0.0 (0.1)

Net Debt/EBIDTA 1.0 0.7 0.2 (0.3) (0.8)

Working Cap Cycle (days) 25.7 13.2 13.2 13.2 13.2

Growth (%) FY20 FY21 FY22E FY23E FY24E

Revenue 25.9 (12.0) (0.2) (25.3) 7.7

EBITDA 2.2 (6.5) (4.1) (30.3) 7.2

EBIT 1.4 (8.1) (5.0) (36.9) 7.4

PAT 39.1 (17.1) 3.7 (31.7) 10.5

Quarterly (Rs mn) Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22

Revenue 5,747 5,800 4,650 5,272 5,885

EBITDA 3,821 3,984 3,442 3,744 3,806

EBITDA Margin (%) 66.5 68.7 74.0 71.0 64.7

PAT 2,711 2,475 2,063 2,319 3,277

EPS (Rs) 4.8 4.4 3.7 4.1 5.8


Shareholding Pattern (%) Sep-20 Dec-20 Mar-21 Jun-21 Sep-21

Promoters 37.6 37.6 37.6 37.6 37.6

FIIs 15.6 15.9 17.2 17.5 17.5

DIIs 20.0 20.0 19.1 19.1 20.0

Public and Others 26.8 26.4 26.2 25.9 24.9

Source: Capitaline





RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

26-Jul-21 341 330 12m Buy Sabri Hazarika

23-Jun-21 334 330 12m Buy Sabri Hazarika


29-May-21 279 290 12m Buy Sabri Hazarika

23-Apr-21 250 290 12m Buy Sabri Hazarika

23-Mar-21 260 290 12m Buy Sabri Hazarika

11-Feb-21 233 290 12m Buy Sabri Hazarika

21-Jan-21 204 270 12m Buy Sabri Hazarika

27-Nov-20 220 275 12m Buy Sabri Hazarika


28-Sep-20 197 275 12m Buy Sabri Hazarika

7-Aug-20 208 275 12m Buy Sabri Hazarika





4-Dec-19 218 250 12m Buy Sabri Hazarika


25-Oct-19 208 250 12m Buy Sabri Hazarika

23-Sep-19 216 250 12m Buy Sabri Hazarika

2-Aug-19 210 235 12m Buy Sabri Hazarika

11-Jul-19 191 235 12m Buy Sabri Hazarika









RECOMMENDATION HISTORY CHART

Source: Bloomberg, Company, Emkay Research

150

195

240

285

330

375

9-N

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BUY Hold SellAccumulate Reduce PriceTarget Price





Emkay Alpha Portfolio – Oil & Gas

EAP sector portfolio

Company Name BSE200 Weight

EAP Weight

OW/UW (%)

OW/UW (bps)

EAP Weight (Normalised)

Oil & Gas 10.09 10.06 0% -3 100.00

BPCL 0.40 0.42 4% 2 4.15

GAIL 0.26 0.29 10% 3 2.90

Gujarat Gas 0.11 0.09 -14% -1 0.90

Gujarat State Petronet 0.09 0.09 0% 0 0.88

Gulf Oil Lubricants 0.00 0.00 NA 0 0.00

HPCL 0.19 0.19 -1% 0 1.90

Indian Oil 0.33 0.35 8% 3 3.50

Indraprastha Gas 0.16 0.17 6% 1 1.70

Petronet LNG 0.17 0.18 9% 1 1.80

Oil India 0.08 0.07 -13% -1 0.65

ONGC 0.54 0.49 -8% -4 4.90

Reliance Industries 7.77 7.71 -1% -6 76.40

Cash 0.00 0.04 NA 4 0.38

Source: Emkay Research

* Not under coverage: Equal Weight

High Conviction/Strong Over Weight High Conviction/Strong Under Weight

Sector portfolio NAV

Base Latest

1-Apr-19 4-Nov-20 5-May-21 4-Aug-21 4-Oct-21 3-Nov-21

EAP - Oil & Gas 100.0 114.8 123.1 134.1 159.8 156.0

BSE200 Neutral Weighted Portfolio (ETF) 100.0 113.9 122.3 134.1 158.9 155.1*Performance measurement base date 1st April 2019


Price Performance (%)

1m 3m 6m 12m

EAP - Oil & Gas -2.4% 16.4% 26.7% 35.9%

BSE200 Neutral Weighted Portfolio (ETF) -2.4% 15.7% 26.8% 36.2%Source: Emkay Research

NAV chart


Please see our model portfolio (Emkay Alpha Portfolio): Nifty

Please see our model portfolio (Emkay Alpha Portfolio): SMID

“Emkay Alpha Portfolio – SMID and Nifty are a supporting document to the Emkay Alpha

Portfolios Report and is updated on regular intervals”

60

82

104

126

148

170

Apr-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21

NAV

EAP - Oil & Gas BSE200 Neutral Weighted Portfolio (ETF)

Analyst: Sabri Hazarika

Contact Details

[email protected]

+91 22 6612 1282

Sector

Oil & Gas

Analyst bio

Sabri Hazarika holds an MBA and comes

with 12 years of research experience. His

team currently covers 12 stocks in the

Indian Oil & Gas space.


https://web3.emkayglobal.com/ResearchAccess/Upload/Nifty_Nov21.pdf

https://web3.emkayglobal.com/ResearchAccess/Upload/SMID_Nov21.pdf

https://web3.emkayglobal.com/ResearchAccess/Upload/SMID_Nov21.pdf

mailto:[email protected]




Emkay Rating Distribution

Ratings Expected Return within the next 12-18 months.

BUY Over 15%

HOLD Between -5% to 15%

SELL Below -5%

Completed Date: 08 Nov 2021 01:32:20 (SGT) Dissemination Date: 08 Nov 2021 01:33:20 (SGT)

Sources for all charts and tables are Emkay Research unless otherwise specified.

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Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets Disclaimer for U.S. persons only: This research report is a product of Emkay Global Financial Services Limited (Emkay), which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of Financial Institutions Regulatory Authority (FINRA) or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. This report is intended for distribution to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors.






ANALYST CERTIFICATION BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL) The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible of the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer, director or employee of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant). The research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. EGFSL has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the EGFSL and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of EGFSL compensation to any specific investment banking function of the EGFSL. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interest that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at the arm’s length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL):

Disclosures by Emkay Global Financial Services Limited (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject company(s) covered in this report-: 1. EGFSL, its subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of November 7,

2021 2. EGFSL, and/or Research Analyst does not market make in equity securities of the issuer(s) or company(ies) mentioned in this Research Report Disclosure of previous investment recommendation produced: 3. EGFSL may have published other investment recommendations in respect of the same securities / instruments recommended in this research

report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by EGFSL in the preceding 12 months.

4. EGFSL , its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have any material conflict of interest in the securities recommended in this report as of November 7, 2021.

5. EGFSL, its subsidiaries and/or other affiliates and Research Analyst or his/her relative’s does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the November 7, 2021

6. EGFSL, its subsidiaries and/or other affiliates and Research Analyst have not received any compensation in whatever form including compensation for investment banking or merchant banking or brokerage services or for products or services other than investment banking or merchant banking or brokerage services from securities recommended in this report (subject company) in the past 12 months.

7. EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst have not received any compensation or other benefits from securities recommended in this report (subject company) or third party in connection with the research report.

8. Securities recommended in this report (Subject Company) has not been client of EGFSL, its subsidiaries and/or other affiliates and/or and Research Analyst during twelve months preceding the November 7, 2021




November 7, 2021| 10

RESTRICTIONS ON DISTRIBUTION

General This report is not directed to, 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 or regulation.

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This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 16800306E) or DBSVS (Company Regn. No. 1860024G) both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an agreement under Regulation 32C of the financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

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United Kingdom

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In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.

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This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608-610, 6th Floor, Gate Precinct Building 5, PO Box 506538, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United Arab Emirates

This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent.

United States

DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

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