22 April 2020

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.

Research Team (Gautam.Duggad@MotilalOswal.com)

Equities - India Close Chg .% CYTD.%

Sensex 30,637 -3.2 -25.7

Nifty-50 8,981 -3.0 -26.2

Nifty-M 100 12,709 -3.1 -25.7

Equities-Global Close Chg .% CYTD.%

S&P 500 2,737 -3.1 -15.3

Nasdaq 8,263 -3.5 -7.9

FTSE 100 5,641 -3.0 -25.2

DAX 10,250 -4.0 -22.6

Hang Seng 9,615 -2.1 -13.9

Nikkei 225 19,281 -2.0 -18.5

Commodities Close Chg .% CYTD.%

Brent (US$/Bbl) 17 -24.1 -73.9

Gold ($/OZ) 1,686 -0.6 11.1

Cu (US$/MT) 5,001 -3.1 -18.7

Almn (US$/MT) 1,451 -0.9 -18.6

Currency Close Chg .% CYTD.%

USD/INR 76.8 0.4 7.6

USD/EUR 1.1 0.0 -3.2

USD/JPY 107.8 0.2 -0.7

YIELD (%) Close 1MChg CYTDchg

10 Yrs G-Sec 6.2 0.00 -0.3

10 Yrs AAA Corp 7.5 -0.03 -0.1

Flows (USD b) 21-Apr MTD CYTD

FIIs -0.27 -0.40 -6.73

DIIs -0.01 -0.28 9.88

Volumes (INRb) 21-Apr MTD* CYTD*

Cash 493 520 451

F&O 7,772 10,329 14,596

Note: *Average

Today’s top research idea Market snapshot

Chart of the Day: ACC (Volumes decline 13% YoY due to COVID-19 shutdown)

ACC: Volumes decline 13% YoY due to COVID-19 shutdown

ACC's 1QCY20 results reflect the adverse impact of COVID-19. While volumes

declined 13% YoY, EBITDA still grew 10% YoY on lower costs.

We have cut our CY20 volume estimate by a further 8% (to 23.1mt, down

20% YoY) due to the COVID-19 impact but have kept CY21 estimates (volume

assumed same as CY19) unchanged

ACC trades at 6.3x CY21 EV/EBITDA which is a 35-55% discount to peers such

as Shree Cement, UltraTech and Ramco. We believe that such a large

valuation discount is excessive as (a) ACC has arrested its market share losses

since CY17 and should continue to grow in line with the market for at least

next five years, (b) its net cash balance sheet (22% of market cap) places it

well to withstand any extended disruption from COVID-19, and (c) with its

planned capacity expansions in CY22, the proportion of inefficient assets

would decline and improve profitability.

Cos/Sector Key Highlights

ACC Volumes decline 13% YoY due to COVID-19 shutdown

Aurobindo Pharma Unit 4: Reduced regulatory headwinds with VAI in place

Federal Bank Business growth modest; CASA mix declines sequentially

Hotels Reeling under severe first-order impact of COVID-19

Expert Speak CONSUMER: Alcohol industry seeing volume decline after decades due to lockdown

Utilizations to normalize in CY21 post dip in CY20

Source: MOFSL, Company

Margin to weaken in CY20 and normalize in CY21

Source: MOFSL, Company

Research covered

22 April 2020 2

Facebook to invest ₹43,574 crore in Jio platforms Reliance Industries Limited, Jio Platforms Limited and Facebook, Inc. today announced the signing of binding agreements for an investment of ₹ 43,574 crore by Facebook into Jio Platforms…

Sebi eases fund raising norms for share sales, rights issues India’s markets regulator on Tuesday said it has granted a one-time relaxation in its primary market fund-raising norms to make it easier for companies to raise capital amid the covid-19 pandemic. The Securities and Exchange Board of India (Sebi) has extended its period of approval for initial public offerings (IPOs) and rights issues by six months. This will be applicable to companies where Sebi’s approvals have expired or are due to expire between 1 March and 30 September…

IOC, BPCL resume work on select projects, gear up to ramp up operations post-lockdown Indian Oil Corp and Bharat Petroleum Corp Ltd are among the state-owned oil PSUs which on Tuesday resumed work on select projects after the government allowed partial relaxation in the nationwide lockdown…

City Union Bank gets RBI nod for reappointing MD&CEO Private sector lender City Union Bank on Tuesday said it has got RBI nod for reappointment of MD&CEO N Kamakodi. The Reserve Bank of India has given its approval vide e-mail dated April 20, 2020, for the reappointment of N Kamakodi as the MD&CEO of the bank, City Union Bank said in a regulatory filing…

RBI's EMI moratorium could give Rs 2.1 trn liquidity to companies The Reserve Bank of India’s three-month suspension of EMIs could provide a liquidity breather of Rs 2.1 trillion if all corporate houses avail it, says a report. The findings by Crisil Ratings are based on assessment of 9,300 of rated non-financial sector companies across 100 sectors…

Maharashtra govt withdraws Covid-19 lockdown relaxations for Mumbai, Pune The Maharashtra government on Tuesday withdrew its lockdown relaxation norms for Mumbai and Pune regions, both coronavirus hotspots, and revised its last week’s guidelines prohibiting door-to-door delivery of newspapers and magazines in the state…

India to boost drug ingredient output to pare China reliance India plans to ramp up production of pharmaceutical ingredients and become an alternative supplier for global drugmakers hit by factory shutdowns in China due to the coronavirus outbreak…

Kindly click on textbox for the detailed news link

In the news today

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22 April 2020 3

Estimate change TP change Rating change Bloomberg ACC IN

Equity Shares (m) 188

M.Cap.(INRb)/(USDb) 213.4 / 2.9

52-Week Range (INR) 1768 / 896

1, 6, 12 Rel. Per (%) -2/-5/-11

12M Avg Val (INR M) 1290

Financial Snapshot (INR b) Y/E Dec 2019 2020E 2021E

Sales 157 124 157 EBITDA 24 16 23

Adj. PAT 14 8 12

EBITDA Margin (%) 15 13 15

Adj. EPS (INR) 72 41 64

EPS Gr. (%) 35 -44 58

BV/Sh. (INR) 613 643 690

Ratios

Net D:E -0.4 -0.3 -0.3 RoE (%) 12.3 6.5 9.6

RoCE (%) 12.1 6.4 9.5

Payout (%) 19.3 22.2 21.8

Valuations

P/E (x) 15.7 28.0 17.7

P/BV (x) 1.9 1.8 1.6

EV/EBITDA(x) 6.8 10.0 6.3 EV/ton (USD) 69.0 68.4 60.4

Div. Yield (%) 1.2 0.8 1.2

FCF Yield (%) 8.2 -3.3 2.5

Shareholding pattern (%)

As On Mar-20 Dec-19 Mar-19

Promoter 54.5 54.5 54.5

DII 21.2 21.3 21.6

FII 7.8 8.6 8.9

Others 16.5 15.5 15.0

FII Includes depository receipts

CMP: INR 1,136 TP: INR1370 (+21%) Buy

Volumes decline 13% YoY due to COVID-19 shutdown Balance sheet remains strong, valuations attractive ACC’s 1QCY20 results reflect the adverse impact of COVID-19. While

volumes declined 13% YoY, EBITDA still grew 10% YoY on lower costs.

We have cut our CY20 volume estimate by a further 8% (to 23.1mt, down

20% YoY) due to the COVID-19 impact but have kept CY21 estimates

(volume assumed same as CY19) unchanged. Reiterate Buy on strong

balance sheet (net cash at 22% of market cap) and attractive valuations

Lower costs and higher realizations drive EBITDA growth Volumes were down 13% YoY to 6.56mt due to the shutdown of operations

from 24th Mar’20 under the government’s directives. This led to 11% YoY

decline in revenue to INR35.0b.

Unitary cost declined 1.6% YoY (-2% QoQ) to INR4,445/t (v/s our estimate of

INR4,588/t), supported by lower raw material cost.

Cement realization improved ~1% QoQ to INR4,639/t but was below our

estimate due to weaker geographical sales mix.

Led by cost reduction and improvement in realization, EBITDA/t improved

28% QoQ (+26% YoY) to INR893 (v/s our estimate of INR881).

EBITDA of INR5.9b (+10% YoY) was in line with our estimate; margin

expanded 3.42pp QoQ to 16.7% (+3.18pp YoY).

Reported PAT at INR3.2b was in line with estimate, but declined 5.5% YoY

due to higher other income last year on account of tax refunds.

Highlights from management commentary After shutdown of operations for nearly four weeks, ACC plans to resume

operations in a phased manner.

Management expects cement demand to contract sharply in CY20 due to

the impact of COVID-19. It expects rural housing demand to recover faster

than urban housing while infrastructure and construction should revive at a

moderate pace. Demand should recover from the year-end.

ACC has adopted Ind-AS 116 from 1st Jan’20. It has accordingly recognized

lease liabilities and right-of-use assets of INR1.32b. Adoption of Ind-AS 116

has led to (a) lowering of other expenses in 1QCY20 by INR88.5m, and (b)

increase in depreciation expenses by INR72m and finance costs by INR26m,

all of which are marginal in nature.

Valuation and view ACC trades at 35-55% discount to peers such as Shree Cement, UltraTech

and Ramco. We believe that such a large valuation discount is excessive as

(a) ACC has arrested its market share losses since CY17 and should continue

to grow in line with the market, (b) its net cash balance sheet (22% of

market cap) places it well to withstand any extended disruption from

COVID-19, and (c) with its planned capacity expansions in CY22, the

proportion of inefficient assets would decline and improve profitability. We

value ACC at 8.5x CY21E EV/EBITDA (~35% discount to the past 5-year

average of 12.7x) to arrive at a target price of INR1,370, which implies a

target EV/t of USD80 and target P/E of 20x on CY21. Reiterate Buy.

21 April 2020

1QCY20 Results Update | Sector: Cement

ACC

22 April 2020 4

Quarterly Performance (Standalone)

(INR Million)

Y/E December CY19 CY20E CY19 CY20E MOFSL

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QE Var (%)

Cement Sales (m ton) 7.50 7.20 6.44 7.76 6.56 2.88 5.92 7.75 28.89 23.11 6.75 -3 YoY Change (%) 5.5 -0.6 -1.5 3.9 -12.5 -60.0 -8.0 -0.2 1.8 -20.0 -10

Cement Realization 4,609 5,130 4,860 4,615 4,639 4,739 4,714 4,729 4,801 4,701 4,815 -4 YoY Change (%) 1.6 7.7 3.8 0.5 0.7 -7.6 -3.0 2.5 3.4 -2.1 4

QoQ Change (%) 0.4 11.3 -5.3 -5.0 0.5 2.2 -0.5 0.3 4.3

Net Sales 39,191 41,497 35,276 40,603 35,017 15,508 31,731 41,259 1,56,567 1,23,514 36,914 -5 YoY Change (%) 8.1 7.8 2.7 4.2 -10.6 -62.6 -10.0 1.6 5.8 -21.1 -5.8 Total Expenditure 33,882 33,680 29,713 35,197 29,159 15,272 27,252 35,638 1,32,472 1,07,321 30,966

EBITDA 5,309 7,817 5,563 5,406 5,859 235 4,479 5,621 24,095 16,193 5,947 -1 Margins (%) 13.5 18.8 15.8 13.3 16.7 1.5 14.1 13.6 15.4 13.1 16.1

Depreciation 1,467 1,460 1,504 1,600 1,571 1,550 1,580 1,633 6,030 6,334 1,610 Interest 209 199 163 292 106 100 150 194 862 550 200 Other Income 1,525 519 508 560 547 520 520 514 3,112 2,100 520

PBT before EO Item 5,159 6,677 4,405 4,074 4,728 -895 3,269 4,307 20,315 11,409 4,657 2 EO Income/(Expense) 0 0 0 0 0 0 0 0 0 0 0

PBT after EO Item 5,159 6,677 4,405 4,074 4,728 -895 3,269 4,307 20,315 11,409 4,657 2 Tax 1,774 2,164 1,406 1,381 1,529 -295 1,079 1,465 6,726 3,777 1,490 Rate (%) 34.4 32.4 31.9 33.9 32.3 33.0 33.0 34.0 33.1 33.1 32.0

Reported PAT 3,384 4,513 3,000 2,692 3,199 -600 2,190 2,842 13,589 7,632 3,167 1 Adjusted PAT 3,384 4,513 3,000 2,692 3,199 -600 2,190 2,842 13,589 7,632 3,167 1 Margins (%) 8.6 10.9 8.5 6.6 9.1 -3.9 6.9 6.9 8.7 6.2 8.6 YoY Change (%) 38.1 38.6 45.9 17.1 -5.5 -113.3 -27.0 5.6 35.1 -43.8 -6

E: MOFSL Estimates

Income Statement (INR/Ton) - incl RMC

Net Realizations 5,225 5,764 5,478 5,225 5,338 5,385 5,356 5,326 5,419 5,344 5,469 -2

YoY Change (%) 2.5 8.4 4.3 2.5 2.2 -6.6 -2.2 1.8 3.9 -1.4 4.7

Raw Material 13 -30 -329 13 -251 0 0 0 35 0 0

Staff Cost 936 945 948 936 976 882 915 1,117 907 925 935 4

Power Purchased & fuel for power 266 282 356 266 318 635 352 274 299 351 319 0 Outward Freight 1,055 1,133 1,217 1,055 1,119 1,023 1,003 1,074 1,084 1,062 1,070 5

Purchase of cement & Other products 1,415 1,451 1,483 1,415 1,442 1,394 1,374 1,351 1,402 1,388 1,390 4

Other expenditure 832 897 939 832 842 1,368 956 784 859 917 874 -4

Total Expenditure 4,518 4,678 4,614 4,518 4,445 5,303 4,600 4,600 4,585 4,644 4,588 -3

EBITDA 708 1,086 864 708 893 82 756 726 834 701 881 1

22 April 2020 5

BSE SENSEX S&P CNX CMP: INR644 TP: INR745 (+16%) Buy 30,637 8,981

Stock info

Bloomberg ARBP IN

Equity Shares (m) 586

M.Cap.(INRb)/(USDb) 377.6 / 4.1

52-Week Range (INR) 838 / 281

1, 6, 12 Rel. Per (%) 83/57/4 12M Avg Val (INR M) 2288

Free float (%) 48.1

Financials snapshot (INR b) Y/E MARCH 2020E 2021E 2022E

Sales 227.6 235.9 251.8

EBITDA 47.1 50.2 52.9

Adj. PAT 27.1 29.9 31.2

EBIT Margin (%) 16.4 16.8 16.4

Cons. Adj. EPS (INR) 46.3 51.0 53.2

EPS Gr. (%) 7.3 10.0 4.5

BV/Sh. (INR) 280.2 328.7 378.5

Ratios

Net D:E 0.3 0.2 0.1

RoE (%) 17.9 16.7 15.1

RoCE (%) 12.2 11.5 10.9

Payout (%) 5.5 4.9 6.6

Valuations

P/E (x) 14.0 12.7 12.2

EV/EBITDA (x) 9.3 8.3 7.7

Div. Yield (%) 0.4 0.4 0.5 FCF Yield (%) -1.2 5.3 4.5

EV/Sales (x) 1.9 1.8 1.6

Shareholding pattern (%)

As On Dec-19 Sep-19 Dec-18

Promoter 51.9 51.9 51.9

DII 13.2 13.0 14.4

FII 21.4 22.0 20.1

Others 13.5 13.2 13.6

FII Includes depository receipts

Stock performance (1-year)

Unit 4: Reduced regulatory headwinds with VAI in place The Voluntary Action Indicated (VAI) status is expected to benefit Aurobindo Pharma

(ARBP)’s injectables business. Here are the highlights:

The USFDA granted the VAI status to ARBP’s Unit 4 inspection that was conducted

over 4–13th Nov’19.

This increases the visibility on abbreviated new drug application (ANDA)

approvals (47 pending approval) from Unit 4, one of the company’s injectables

manufacturing sites.

Accordingly, we have revised our PE multiple to 12x (from 10x earlier) to factor in

reduced regulatory headwinds and raised our price target to INR745. We remain

positive on ARBP and expect a 7% earnings CAGR over FY19–22, led by a robust

ANDA pipeline for US generics, improving profitability in the EU owing to its foray

into newer markets, and a shift in product manufacturing to India. Maintain Buy.

Sigh of relief for Unit 4 after USFDA grants VAI status

The USFDA inspected Unit 4 over 4–13th Nov’19, thereafter issuing Form 483

with 14 observations. The observations highlighted deficiencies in assuring

aseptic processes in the manufacturing of sterile products. Subsequently on 19th

Feb, the USFDA cleared the site by issuing an establishment inspection report

(EIR) with the VAI status; however, immediately after, on 21st Feb, the

administration revoked the VAI status. This action, by way of rescindment of the

90-day VAl letter, implied the inspection conducted was still open and under

review. Unit 4 was finally re-granted the VAI status recently. This clears the site

for further ANDA approvals.

Site has maximum ANDA approvals pending Unit 4 is a sterile plant (of lyophilized and powder injections and prefilled

syringes) of ARBP, along with other injectables manufacturing sites, such as Unit

12, Unit 16, Eugia, and Auronext. These accounted for 25% of US sales at the

end of 3QFY20. Unit 4 is likely to form 7–8% of USD1.5b worth of US annual

sales. ARBP has received 63 ANDA approvals to date in total from the Unit 4 site,

while final approval is awaited for 47. This approval clears the plant from

regulatory actions and presents the opportunity for pending products to be

approved.

Regulatory risk moderated In the past year, the USFDA has inspected 10 sites. Units 5 and 8 were inspected

in Oct’19 and classified as VAI. The revocation of inspection classification at Unit

4 in Feb’20 put regulatory pressure on ARBP. However, the company managed

to bounce back from this, with the VAI status being re-granted to Unit 4 after

just two months of it being rescinded. Units 1, 11, and 7 have been classified as

Official Action Indicated (OAI) and Unit 9 has been issued a warning letter.

350

500

650

800

950

Feb

-19

May

-19

Aug

-19

No

v-19

Feb

-20

Aurobindo Pharma

Sensex - Rebased

21 April 2020

Update | Sector: Healthcare

Aurobindo Pharma

22 April 2020 6

Valuation and view We remain positive on ARBP and expect a 7% earnings CAGR over FY19–22, led by its robust ANDA pipeline and continued momentum in US generics. With the regulatory risk reduced at one of its key sites, we raise our PE multiple for ARBP to 12x (from 10x earlier) and revise our price target to INR745 (from INR595 earlier). Maintain Buy.

Inspection history and unit-wise ANDA filings Site API/Formulation FA TA UR Total Remarks

Unit XII Penicillin Oral & Injectables 20

20 Inspected in Feb’20; received Form 483 with six

observations

Unit IV Injectables & Ophthalmics 63

47 110 Inspected in Nov’19; inspection classified as VAI

in Apr’20

Unit VIII API

Inspected in Oct’19; EIR in place

Unit V API

Received Form 483 with four obs. in Oct’19; inspection classified as VAI

Unit VII (SEZ) Oral Formulations 137 14 18 169 Received Form 483 with seven observations in

Sep’19; inspection classified as OAI

Unit III Oral Formulations 115 10 2 127 Received Form 483 with 10 observations in

Jun’19

Unit I API

Inspected in Feb’19; inspection classified as OAI

Unit IX API

Inspected in Feb’19; issued warning letter

Unit XI Intermediate Facility

Inspected in Feb’19; inspection classified as OAI APL Healthcare Oral Formulations

12 12 Inspected in Dec’18; EIR in place

Aurolife & Aurolife - I

Oral Formulations 21

12 33 Inspection closed with VAI classification in Jun’18

Eugia Oral & Injectable Formulations 8 1 19 26 Inspected in Jun’18; EIR in place

Silicon API

Inspected in Mar’18; EIR in place

AuroNext Penem Injectables 2

2 Inspected in Feb’18; EIR in place

Unit VIB Cephalosphorins Oral 11

1 12 Inspected in Sep’17; EIR in place Unit X Oral Formulations 8 2 42 50 Inspected in Apr’17; zero 483

Auropeptide API

Inspected in Aug’16; EIR in place

Total 393 27 154 570

Source: Company, USFDA, MOFSL

Unit 4’s inspection history Plant Time of inspection Remarks

Unit IV

Apr-20 VAI classification confirmed

Feb-20 Inspection open and under review, by way of rescindment of 90-day (VAl letter was

issued by on February 18, 2020 stands revoked as of that date)

Nov-19 Issued form 483 with 14 observations

Dec-18 Was issued form 483 with 2 observations. Inspection closed with VAI classification

Feb-18 Was issued form 483 with 9 observations. Inspection closed with VAI classification

Sep-16 Was issued form 483 with 4 observations. Inspection closed with VAI classification

Sep-14 Was issued form 483 with 7 observations. Inspection closed with VAI classification

Sep-12 Was issued form 483 with 7 observations. Inspection closed with NAI classification

Plant Time of inspection Remarks

Unit 4

Apr’20 VAI classification confirmed

Feb’20 Inspection re-open and under review, by way of rescindment of 90-day (VAl letter was

issued by USFDA on February 18 and stands revoked)

Nov’19 Issued Form 483 with 14 observations

Dec’18 Issued Form 483 with two observations; inspection closed with VAI classification

Feb’18 Issued Form 483 with nine observations; inspection closed with VAI classification

Sep’16 Issued Form 483 with four observations; inspection closed with VAI classification

Sep’14 Issued Form 483 with seven observations; inspection closed with VAI classification

Sep’12 Issued Form 483 with seven observations; inspection closed with NAI classification

Source: MOFSL, Company, Industry

22 April 2020 7

BSE SENSEX S&P CNX CMP: INR43 TP: INR75(+73%) Buy 30,637 8,981

Bloomberg FB IN

Equity Shares (m) 1,992

M.Cap.(INRb)/(USDb) 86.4 / 1.2

52-Week Range (INR) 110 / 36

1, 6, 12 Rel. Per (%) -20/-26/-34

12M Avg Val (INR M) 1179

Free float (%) 100.0

Financials Snapshot (INR b)

Y/E Mar FY19 FY20E FY21E FY22E

NII 41.8 46.0 51.8 58.1

OP 27.6 29.6 33.2 37.9

NP 12.4 16.4 14.1 17.8

NIM (%) 3.1 3.0 3.0 3.0

EPS (INR) 6.3 8.2 7.1 9.0

EPS Gr. (%) 32.2 31.0 -13.7 26.2

BV/Sh. (INR) 66.9 73.2 77.9 83.9

ABV/Sh. (INR) 59.1 62.9 64.5 70.2

Ratios

ROE (%) 9.8 11.8 9.4 11.1

ROA (%) 0.8 1.0 0.8 0.9

Payout (%) 19.1 23.4 33.9 32.2

Valuations

P/E(X) 6.9 5.3 6.1 4.8

P/BV (X) 0.6 0.6 0.6 0.5

P/ABV (X) 0.7 0.7 0.7 0.6

Div. Yield (%) 2.8 4.4 5.6 6.7

Business growth modest; CASA mix declines sequentially Federal Bank (FB) has released its quarterly update highlighting key business numbers for

4QFY20. Below are the key highlights:

Business growth was modest with gross advances growing 11%/2.7% YoY/QoQ to

INR1.24t, affected by the COVID-19 outbreak, which impacted few days in Mar’20.

Deposit base for the bank increased to INR1.52t, registering a growth of 12.8%

YoY/5.3% QoQ (v/s 17.1% YoY/3.6% QoQ in 3QFY20).

CASA ratio declined ~100bp QoQ (-160bp YoY) to 30.5%. This implies a modest 7.1%

YoY (+2.1% QoQ) growth in CASA deposits while TD grew ~15.6% YoY (+6.8% QoQ).

Certificate of deposits declined 26% YoY (+4.7% QoQ) to INR44.5b while interbank

deposits grew 26% YoY (+15.9% QoQ) to INR21.9b.

Other highlights: (1) LCR ratio increased to 195.0% (v/s 181.3% in 3QFY20), (2) In a

separate filing, FB’s board has decided to purchase an additional stake of up to 4% in

IDBI Federal Life Insurance, subject to regulatory approvals. If approved, the

additional 4% would increase FB’s stake in the life insurance company to 30%.

Valuation and view: FB has reported moderation in loan growth, reflecting a

challenging economic environment impacted by the COVID-19 outbreak. We

expect overall loan growth over FY21 to get affected due to the ongoing

lockdown. The bank has NIL corporate watch-list and lower quantum of other

stressed assets. However, we expect credit cost to stay elevated due to COVID-

19 related provisioning even as the coverage ratio at 66.4% (including TWO)

remains healthy. FB is taking a cautious approach in building the loan mix

toward high-rated corporate and retail loans. The bank’s liability franchise

remains strong with CASA + Retail TD of 91% and one of the highest LCR

amongst banks. Maintain Buy with TP of INR75 (1x Sep’21E ABV).

Quarterly Performance (INR b) FY19 FY20E

FY19 FY20E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE

Net Interest Income 9,801 10,225 10,773 10,965 11,542 11,238 11,549 11,664 41,763 45,993 % Change (YoY) 22.4 13.7 13.4 17.5 17.8 9.9 7.2 6.4 16.6 10.1

Other Income 2,709 3,229 3,456 4,117 3,915 4,209 4,079 3,739 13,510 15,942

Total Income 12,509 13,454 14,228 15,083 15,457 15,447 15,628 15,403 55,274 61,935 Operating Expenses 6,480 6,478 7,150 7,535 7,629 8,259 8,190 8,295 27,643 32,373

Operating Profit 6,029 6,976 7,078 7,548 7,828 7,188 7,438 7,109 27,631 29,562 % Change (YoY) 8.1 19.6 26.1 28.2 29.8 3.0 5.1 -5.8 20.6 7.0 Provisions 1,992 2,888 1,901 1,778 1,920 2,518 1,609 2,034 8,559 8,081

Profit before Tax 4,038 4,088 5,177 5,770 5,907 4,670 5,830 5,075 19,073 21,482 Tax 1,411 1,427 1,841 1,955 2,065 503 1,423 1,136 6,634 5,128

Net Profit 2,627 2,660 3,336 3,815 3,842 4,167 4,406 3,938 12,439 16,354 % Change (YoY) 25.0 0.9 28.3 163.1 46.2 56.6 32.1 3.2 41.5 31.5

Operating Parameters Deposit (INR b) 1,112 1,182 1,235 1,350 1,325 1,395 1,446 1,523 1,350 1,523 Loan (INR b) 943 1,009 1,056 1,102 1,120 1,159 1,192 1,241 1,102 1,241 Deposit Growth (%) 16.1 21.6 22.8 20.5 19.1 18.1 17.1 12.8 20.5 12.8 Loan Growth (%) 23.6 25.2 24.2 19.9 18.8 14.8 13.0 11.0 19.9 11.0

Asset Quality Gross NPA (%) 3.0 3.1 3.1 2.9 3.0 3.1 3.0 3.2 2.9 3.2 Net NPA (%) 1.7 1.8 1.7 1.5 1.5 1.6 1.6 1.8 1.5 1.8 PCR (%) 43.5 43.6 45.9 50.1 50.7 49.0 46.4 44.4 50.1 44.4

21 April 2020

Update | Sector: Financials - Bank

Federal Bank

22 April 2020 8

Deposits growth stood at 12.8% YoY (+5.3% QoQ)

Source: MOFSL, Company

Loan growth was modest at 11% YoY (+2.7% QoQ)

Source: MOFSL, Company

CASA ratio declined 96bp QoQ to 30.5%; CASA deposits grew

2.1% QoQ

Source: MOFSL, Company

GNPA ratio moderates; PCR declines sequentially

Source: MOFSL, Company

Shareholding pattern of IDBI Life Insurance – Federal Bank at

present holds 26% stake

Shareholding pattern % Stake

IDBI Bank 48%

Federal Bank 26%

Ageas Insurance International N.V. 26%

Source: MOFSL, Company

A snapshot of business performance of IDBI Life Insurance

over the past few years

INRm FY17 FY18 FY19 9MFY20

New Business Premium (Unwtd) 7,936 8,330 8,066 3,918

Growth YoY (%) 34.9% 5.0% -3.2% -24.2%

Renewal Premium 7,716 9,502 11,259 8,308

Growth YoY (%) 18.5% 23.1% 18.5% 17.5%

Source: MOFSL, Company

81

1

863

92

2

97

7 95

8

972

10

05

1120

11

12

1182

12

35

1350

13

25

1395

14

46

1523

12

17

23 23

18

13 9

15 16

22 23

21 19 18 17

13

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

Deposits (INR b) YoY Gr. (%)

59

1

64

7

696

733

76

3

80

6

85

0

92

0

94

3

1,0

09

1,0

56

1,1

02

1,1

20

1,1

59

1,1

92

1,2

41

19 27

32 26 29

25 22 25 24 25 24 20 19 15 13 11

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

Loans (INR b)

32.8

31.0

34.7

32.6

33.4

32.9

33.0

33.3

33.5

33.4

33.4

32.2

31.4

31.6

31.5

30.5

18 14

33

24 20 19

4

17 16

23

24

16 12 12 10

7

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

3QFY

20

4QFY

20CASA Ratio (%) CASA growth YoY (%)

2.9

2.8

2.8

2.3

2.4

2.4

2.5 3.

0

3.0

3.1

3.1

2.9

3.0

3.1

3.0

1.7

1.6

1.6

1.3

1.4

1.3

1.4 1.

7

1.7

1.8

1.7

1.5

1.5

1.6

1.6

43 43 44 46 43 45 46 44 44 44 46 50 51 49 46

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

3QFY

20

GNPA (%) NNPA (%) PCR (%)

22 April 2020 9

Reeling under severe first-order impact of COVID-19 However, to recover with a lag

With India in midst of a lockdown owing to the Coronavirus (COVID-19) spread, we

interacted with hotel players and experts to get an understanding of the demand scenario

and measures deployed to reduce fixed cost. We have also performed scenario analysis in

this note. Key insights highlighted below:

Severe first-order impact of COVID-19 Given the various travel restrictions imposed by the Indian Government as well

as countries globally, the most visible and immediate impact of COVID-19 is seen

in the hospitality and tourism sector. Almost all segments/verticals – inbound,

outbound and domestic/leisure, adventure, heritage, MICE, cruise and

corporate – have been impacted.

Forward bookings for various conferences and leisure travel bookings to foreign

destinations have already been cancelled.

However, on a positive note, the 1H of the financial year is typically a lean

season (40-45% revenue contribution) for the hospitality industry. Thus, hotel

players would get ample time to prepare for the peak season and minimize

business loss by reducing fixed costs.

Even if the lockdown is lifted on 3rd May’20, the recovery in the hospitality

sector is expected to lag as corporate travel would pick up at a slow pace and

leisure travel would also get postponed until the situation normalizes. Note that

domestic travel demand would recover faster vis-à-vis foreign travel.

Additionally, lower Foreign Tourist Arrivals (FTAs) in India would weigh on

occupancies as well as on the average room rate (ARR). Typically, foreign

customer mix for IHIN stands at 35-40% and for LEMONTRE at 10%.

According to our interaction with a hotel expert, travel demand would be under

pressure until a vaccine for COVID-19 is out and made available at affordable

rates.

Impact on 1QFY21 to be severe in comparison to 4QFY20 Performance in 4QFY20 was mixed. While Jan-Feb’20 recorded RevPAR growth,

Mar’20 witnessed an escalation in the spread of COVID-19.

Thus, March witnessed severe occupancy decline, which has dragged overall

4QFY20 performance across hotel players.

Assuming the lockdown continues into May’20, hotels would have had negligible

revenues for two consecutive months (Apr-May’20). RevPAR for Jun’20 too is

expected to decline significantly, which should lead to overall revenue decline of

>75% for 1QFY21. Further, fixed costs are also likely to lead to EBITDA losses

across major hotel players. Should the lockdown extend beyond May’20, hotel

players would be further impacted.

Large conferences and exhibitions generate demand for hotel rooms. These

would also be affected as large gatherings would be avoided for 4-6 months. As

a result, food and beverages (F&B) income would also get impacted.

Management contract income for brand owners would also remain under

pressure. This is because a major part of the management contract income is

linked to the operating profit of a hotel. Also, asset owners are high net worth

individuals/real estate developers; hence, the segment would be under pressure

due to the liquidity crisis.

Sector Update | 21 April 2020

Hotels Indian Hotels: Financials snapshot

Y/E MAR (INR b) 2019 2020E 2021E 2022E

Sales 45.1 44.2 27.6 43.5

EBITDA 8.3 9.6 0.7 9.4

Adj. PAT 2.8 3.1 -4.0 2.0

EBITDA Mar.% 18.4 21.7 2.6 21.7

Adj. EPS (INR) 2.4 2.6 (3.3) 1.7

BV/Sh. (INR) 36.6 38.4 34.3 34.9

Ratios

Net D:E 0.4 0.4 0.5 0.5

RoE (%) 6.6 7.0 (9.1) 4.8

RoCE (%) 5.9 6.8 (2.8) 5.9

Payout (%) 25.3 28.0 (25.7) 59.1

Valuations

P/E (x) 34.8 31.4 (24.7) 49.7

EV/EBITDA (x) 15.0 12.7 172.3 13.2

Div. Yield (%) 0.6 0.7 0.9 1.0

FCF Yield (%) (0.5) 5.5 (0.5) 4.5

Lemon Tree: Financials snapshot

Y/E MAR (INRb) 2019 2020E 2021E 2022E

Sales 5.5 6.8 4.9 7.8

EBITDA 1.7 2.3 1.1 2.9

Adj. PAT 0.5 0.0 -1.6 -0.3

EBITDA Mar.% 30.7 33.9 21.9 37.4

Adj. EPS (INR) 0.7 0.0 (2.0) (0.4)

BV/Sh. (INR) 11.2 16.6 14.6 14.2

Ratios

Net D:E 1.3 1.2 1.6 1.8

RoE (%) 6.3 0.1 (12.8) (2.9)

RoCE (%) 4.4 4.1 (0.3) 3.6

Valuations

P/E (x) 28.1 2,315.4 (9.5) (46.3)

EV/EBITDA (x) 18.1 15.4 35.0 13.5

FCF Yield (%) (6.0) (48.6) (1.6) (0.6)

22 April 2020 10

Fixed cost rationalization need of the hour

Fixed cost accounts for 60-70% of the total costs for hotel players. With

occupancy severely impacted due to the current crisis, players have started

pruning fixed costs.

First-hand cost saving measures deployed by hotel players include termination

of contractual labor (accounting for 20-30% of the total employee mix),

requesting permanent employees to avail balance paid leave, pay cuts for

employees at senior levels, requesting 3-month waivers for annual maintenance

contracts (AMCs)/fees/charges for activities that are fixed in nature, postponing

negotiations for AMCs (usually due in March) and several other initiatives.

Hotel players are consolidating guests (in the same city) into one property,

which would aid in cost savings as only one hotel would be in operation.

Additionally, hotel players are trying to save on the lease rent cost by

negotiating with owners, invoking force majeure for hotel properties and

deferred partial lease rental (e.g. 50% in 2QFY21 and rest in 3QFY21).

Note that few fixed costs would be eliminated as significant portion of the hotel

property would not be under operation; for instance, complete shutdown of

hotel would save on power costs.

Thus, all of above would provide partial relief to hotel players.

Availability of credit lines in such trying times is of utmost importance for

survival in the near term.

Scenario analysis for IHIN and LEMONTRE

We have analyzed four scenarios, factoring in occupancy recovery for different

time periods (refer exhibit 1 & 2). Also, revenue, EBITDA, net debt, debt to

equity and target price have been shown under each case separately. We have

factored in base case assumption into our numbers for IHIN and LEMONTRE for

now. Estimates would be revised based on further clarity.

In the bull case, we have factored in occupancy recovery from 3QFY21 and

have shifted recovery by one quarter in our base, bear 1 and bear 2 scenarios.

Base case for IHIN: Modeled 15% occupancy for 1QFY21 and increased it to 40%

for 2QFY21; for subsequent quarters, it has been increased to 50% and 55%.

Thus, occupancy for FY21/FY22 stands at 42.5%/62%. Also, ARR decline of 10.5%

for FY21 and growth of 5% for FY22 has been factored in.

Base case for LEMONTRE: Recovery in occupancy is likely to be faster for

LEMONTRE as it operates in the mid-market segment. Thus, we have built in

45.5%/65% occupancy for FY21/FY22. Change in room inventory mix should

drive ARR growth of 9.5% for the LTP brand in FY21.

Additionally, hotel players are likely to defer their capex plan.

Valuation and view

The impact of COVID-19 would not be restricted to just 4QFY20/1QFY21; it

would have implications for the major part of FY21. Resumption in business

travel may take longer as corporates may cut down on travel spends, MICE

business would moderate as large gatherings would be avoided and leisure

travel would be deferred/canceled as a precautionary measure.

22 April 2020 11

Additionally, some business travel demand would also be lost as people

accustomed to video conferencing would now travel only when of utmost need.

However, in the current scenario, hotels are likely to witness demand for rooms

emerging from new segments like (a) hospitals tying up with hotel players to

keep its staff safe during a pandemic, (b) employees of IT companies residing at

hotels for running operations efficiently (markets like Hyderabad, Bangalore and

Pune are likely to benefit), (c) employees working in industrial area would prefer

hotels in the vicinity, (d) foreigners stuck in India due to the lockdown, and (e)

rooms being provided for quarantine purpose (according to the government’s

fixed rate).

We have adjusted our models factoring in the impact of COVID-19 into our

numbers. Accordingly, we have cut our revenue estimates by 47%/22% and

EBITDA estimates by 95%/40% for FY21/22E for IHIN. We have a Buy rating on

IHIN with SOTP-based TP of INR106.

We have cut our revenue estimates for LEMONTRE by 50%/32% and EBITDA

estimates by 73%/39% for FY21/22E. In our view, high debt remains a key

overhang for the stock. However, note that capex for all LEMONTRE’s own

hotels has already been completed, barring the Mumbai Airport hotel. We have

a Buy rating on the stock with TP of INR23.

22 April 2020 12

Alcohol industry seeing volume decline after decades due to lockdown Regulatory challenges may add to sector’s woes

To understand the impact of the COVID-19 related lockdown on the alcohol industry, we hosted a conference call with Mr.

Deepak Roy, Executive Vice Chairman of Allied Blenders and Distillers (ABD). Key insights of our interaction with Mr. Roy

highlighted below:

In his view, industry volumes declined 3-4% in FY20 and are likely to decline 12-15% in FY21 due to the lockdown,

1QFY21 will be a near-complete washout due to the lockdown and supply chain challenges,

In case of cash liquidity, Indian players are worst-off vis-à-vis MNCs and some may find it difficult to survive,

Industry is exploring innovative solutions to resume business while maintaining social distancing but challenges exist,

and

Regulatory scenario may further stiffen for the sector as states may look for means to plug their revenue deficits.

Alcohol industry In FY19, liquor industry grew 6%. FY20 is the first year in three decades to see a volume decline. YTD Feb’20,

growth was ~2-3% led by the Premium segment, even as the bottom-end declined. However, overall volumes

have declined ~3-4% in FY20 due to the lockdown. Mar’20 accounted for 8% salience.

1QFY21 is expected to be a near-complete washout. April was a disaster and improvement in May looks highly

unlikely.

Supply chain is badly impacted with glass factories and other raw material manufacturers shut. This is the key

reason the situation is not expected to normalize in May. Industry should start normalizing by June-end.

Expect 12-15% volume decline in FY21. The period between October-March constitutes ~53-54% of annual

sales; this period is likely to be normal in FY21.

Some states are keen to restart liquor sales as they contribute significantly to state revenues.

The COVID-19 led social distancing would remain for the next 12-18 months. Therefore, innovative ways and

supplies are necessary in such tough times. The industry has recommended some measures to government,

such as (a) home deliveries – the logistics are yet to be worked out; to set up delivery would not be easy and

could take a few months, and (b) time adjustment at wine shops to ensure social distancing

State governments might increase duties on alcohol.

Cash flow is the biggest challenge, especially for Indian companies. Some companies might be unable to

survive due to the cash crunch.

Institutional (on-trade) segment contributes 18-20% of sales and was on the rise since the last 4-5 years.

However, it would be hit in the current scenario. No material sales are expected in the next 6-8 months due to

restaurants and pubs opening much later as compared to other businesses due to social distancing.

Weddings over the next few months would also be impacted.

Duty-free channel would be impacted globally as the travel industry is severely hit.

Premiumization

We do not expect any down-trading as the premium-end consumer is unlikely to be affected by the lockdown.

The Premium market is growing by 8% and the Scotch market grew 12% last year.

Deluxe and Regular (lower to middle-income consumers, including daily-wage earners) segments would be

seriously impacted.

Premium and Semi-Premium segments are largely dominated by Pernod, Diageo and ABD.

21 April 2020 Consumer

Expert Speak

22 April 2020 13

Regulatory environment

We are not optimistic on the regulatory environment.

Every year excise duty is increased by an average 8-10%. If increase is more, especially in key states, volumes

could get impacted more than current expectations.

Expect regulatory environment in the medium-term to stiffen as states would want to control alcohol revenues

even more due to their deficits increasing amid the lockdown led economic slowdown.

Alcohol duties have been a key lever of revenue management for states.

Three states have already announced increase in duty.

States haven’t explored the possibility of shoring up their revenues by lowering taxes.

Due to alcohol being a politically sensitive subject, states are unable to scale down taxes due to the backlash

even if it leads to higher revenues.

Governments need to make timely payments as alcohol companies need cash to keep their supplies going. This

is necessary for continued tax generation for states also. Delay in payments is the biggest risk in the current

year.

Apparently, Andhra Pradesh government has not paid for ~5-6 months.

~75% of the industry across India is under government control. States where the control is relatively weaker are

also expected to see increased controls in the future.

Uttar Pradesh (UP) has seen revenues increase 3x in three years. UP has shown the way in managing the alcohol

industry to increase revenues but other states have not followed suit.

West Bengal has also done well. Haryana has shown decent amount of pragmatism. Punjab and Delhi are also

doing fine.

Maharashtra has the highest taxes, and hence, liquor industry is not growing as expected.

Telengana has managed the alcohol industry very well. However, there is a higher need for funds due to the

upcoming elections and for infrastructure spending. This could lead to higher duties on the alcohol sector as the

government might look to plug the deficit.

Allied Blenders ABD has some cash crunch and was planning to raise money in the next eight weeks. However, this has been

delayed due to the lockdown.

The company has seen strong success in ‘Sterling Reserve’, which is not yet launched across all markets.

EBITDA per case for Premium/Semi-Premium/Deluxe segments currently stands at INR600-800/INR500/INR300.

Competition Pernod is the market leader in the Prestige & Above (P&A) segment with Diageo trying to catch up, followed by

ABD. Same order is likely to continue over the next 3-4 years.

Radico Khaitan has done extremely well in the last 2 years. It is a cash positive company.

Some small players in North India are also doing well. If they manage their finances well, they can sail through.

Pernod and Diageo are well placed with liquidity. Smaller players would be significantly impacted due to cash

crunch.

Country liquor uses market bottles, and therefore, is unlikely to be as affected on the supply chain front.

However, country liquor segment would be severely affected on the demand side as consumers are daily-wage

earners.

Other points Consumer Behavior: When duty is increased, consumers do not stop consuming alcohol. However, they are

likely to down-trade, which continues for 3-6 months post the duty increase.

Beer industry: In FY21, the beer industry would be more impacted than spirits due to 40-45% salience of 1Q. RM inflation: Expected to be benign (ENA and glass). Glass availability is a problem but once that is sorted post

lockdown, costs are likely to decline. Fuel cost is a huge component of glass manufacturingand that is currently

down.

22 April 2020 14

\

TCS: SOME RECOVERY CAN BE EXPECTED BY END CY20; Rajesh Gopinathan, MD and CEO One cannot operate in a world of 100 percent uncertainty. The reasonable

assumption is that while the peak impact will happen in this period [Q1 of the

current fiscal], believe that some amount of stability and recovery will be back

to where we left off in Q3 of FY20.

Company was at Rs 39,000 crore in December 2019 and we can get back to Rs

39,000 crore in December 2020 that could be the model that we are working

with.

There is a demand side impact that is coming because of a general lockdown of

economic activity, but the fact that there is no structural impact is something

that company believe is one of the positives in this current scenario which is

challenging itself.

So there will be cascading impacts from financial unwinding that is going on, but

governments and central banks have moved very fast and with massive stimulus

to try and backstop that financial impact.

In conversation

22 April 2020 15

LET’S MAKE THE MOST OF DIRT CHEAP OIL In a dramatic and unprecedented turn of events on Monday, crude oil began

trading in negative territory for the first time since records began. The price on a

futures contract for West Texas crude that was due to expire on 21 April crashed

to minus $37.63 a barrel. This is a direct result of the market mayhem caused by

covid-19, which has resulted in lockdowns around the world, brought

economies to a screeching halt, and crushed demand for transport fuel. Reports

say there is so much unused oil in the US that there is no space left to store

fresh supplies. Storage costs money. Thus, oil producers had to pay to offload

their stock. How did we get here? Thanks to the covid-19 pandemic, multiple

demand and supply shocks are wrecking economies across the globe and

bringing economic activity to a standstill. Assembly lines have halted, supply

chains have snapped, commodity prices have fallen, the services sector has

ground to a halt, financial markets are in panic, and the Great Lockdown has

depressed various other economic variables and pushed the world into a deep

recession. The sudden fall in oil prices is tied not just to a demand crunch, but

also tensions among the world’s major suppliers. Relatively high prices over

2019 had allowed non-traditional players like US shale oil companies to thrive.

Meanwhile, Saudi Arabia and Russia, the most influential members of OPEC+,

the Organization of Petroleum Exporting Countries that has allied with Russia on

and off since 2016, had been in competition to expand their market share.

From the think tank

22 April 2020 16

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.

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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. 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.* 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