tenbaggers 5.0

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.

Strategy

THEMATIC January 05, 2016

Exhibit A: Ten baggers 5.0

Ticker Company Mcap

(US$ mn) Attractive valuations*

ITC IN ITC 39,216 IDEA IN Idea Cellular 7,328 HCLT IN HCL Tech. 17,856 TCS IN TCS 70,083 GPPV IN Gujarat Pipavav# 1,142 MRF IN MRF 2,579 TTMT IN Tata Motors 18,462 Moderate valuations**

TRP IN Torrent Pharma 3,679 Rich valuations***

LPC IN Lupin Ltd. 12,139 PSYS IN Persistent Systems+ 777 KJC IN Kajaria 1,175 BRIT IN Britannia+ 5,353 SKB IN GSKConsumer+ 4,101 PI IN PI Industries 1,350 MTCL IN Mindtree+ 1,826 PAG IN Page Industries 2,270 FNXC IN Finolex Cables 576 SI IN Supreme Inds 1,314 BRGR IN Berger Paints 2,742 EIM IN Eicher Motors+ 7,131 TVSL IN TVS Motor 2,046 SF IN Sundram Fasteners 520 AJP IN Ajanta Pharma# 1,753

HTSMF IN Hatsun Agro#

676

LOG IN La Opala# 514 HUVR IN HUL# 27,900 VO IN Vinati Organics# 360 MRCO IN Marico# 4,363 AIAE IN AIA Engg#+ 1,254 ATLP IN Atul Ltd.# 756 Source: Ambit Capital research

* Trading below five-year P/E, P/B, EV/EBITDA (on at least two of these three measures) ** Trading below either five-year P/E, five-year P/B or five-year EV/EBITDA (on one of these three measures) *** Trading above five-year P/E, P/B, EV/EBITDA # denotes new entrant to our ten baggers portfolio + Indicates that the Ambit sector lead has a bottom-up SELL on the name

Analyst Details

Gaurav Mehta, CFA +91 22 3043 3255 [email protected]

Prashant Mittal, CFA +91 22 3043 3218 [email protected]

Saurabh Mukherjea, CFA +91 22 3043 3174 [email protected]

Ten Baggers 5.0 Over the past four years we have used our ‘greatness’ framework to identify structurally strong businesses in India. These companies were identified based on their relentless improvement in financial performance over long periods (usually, six years). Using FY15 annual reports, we now refresh our annual list of ten baggers. The first four iterations (for FY11 to FY14) have cumulatively delivered ~26% CAGR returns (over the past four years) vs BSE500 CAGR return of 14%. The sub-BSE500 tenbaggers list has delivered ~55% CAGR returns over the last three years. Our relentless focus on franchises that keep improving Whilst ‘Good & Clean’ remains our preferred tactical way of playing Indian equities (click here for the 2nd September G&C portfolio), in a country like India the robustness of the economy ensures that well-managed companies that are focused on building cash-generative franchises have a high chance of doing well. Structural plays, like the ones we aim to identify in our ten-bagger portfolios, are financially strong firms (with credible management teams) that remain consistent performers on a cross-cyclical basis. Both in live portfolios and back-tests, the approach delivers impressive alpha in most years whilst investing in high-quality franchises. A back-test of the ‘greatness’ framework has yielded impressive returns

Source: Ambit Capital research. Note: The backtest is based on annual rebalancing with forward-looking returns being calculated from December 31 of year X to December 31 of year X+1; for example, for the most recent year, the framework included numbers until FY14 and returns have been calculated from 31 December 2014 to 31 December 2015.

The ‘greatness’ philosophy works…year after year Consistent improvements in corporate performance are more important than ’great leaps’—this has been the guiding philosophy of our ’greatness‘ framework, which lies at the core of our process of identifying structurally sound businesses. Not only do the great firms perform significantly better than an average firm on a variety of measures, more importantly, they show a more consistent and calibrated approach to growth over long periods. In this note, we update our ’greatness‘ framework to include FY15 numbers. As shown over the past four years, our framework uses the following attributes to measure consistent financial improvements: judicious capex, conversion of capex to sales, pricing discipline, balance sheet discipline, cash generation and net profit improvement, and return ratio improvement. This year’s portfolio We find that 80 firms from the BSE500 pass more than two-thirds of the tests in our greatness framework. Of these, the best 30 firms that clear our accounting quality and corporate governance filters make it to this year’s list. Of these 30 firms, we have bottom-up coverage with BUYs on: ITC, PI Industries, HCL Tech, Page Industries, Finolex Cables, TCS, Tata Motors, Supreme Industries, Berger Paints, TVS Motors, HUL and Marico. 70% of the stocks in this year’s portfolio also featured in last year’s portfolio implying 30% churn.

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http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_Good&Clean9_2_02Sep2015.pdf

Strategy

January 05, 2016 Ambit Capital Pvt. Ltd.

CONTENTS Philosophy and framework……………………………………………………………………. 3

Quantifying greatness…………………………………………………………………………. 5

Does this approach work?........................................................................................ 6

Ten baggers 5.0………………………………..………………………………………………. 8

Greatness framework on sub-BSE500 firms………………………………………………. 12

Performance check: Jan 2015 ten-bagger list………………………………………….... 13

Performance check: Jan 2015’s sub-BSE500 firms………………………………………. 14

Valuations - A long-term perspective!..................................................................... 15

Appendix – January 2016 ten-baggers’ business activity description………….………17

Strategy


Philosophy and framework ‘’Greatness is not in where we stand, but in what direction we are moving….’’

- Oliver Wendell Holmes

This quote appropriately captures the driving philosophy behind our ’greatness‘ framework that lies at the core of our process of identifying potential ten baggers. We had unveiled this framework on 19 January 2012 with the first iteration of the ’Tomorrow’s ten baggers‘ note. This framework studies a firm’s structural strengths by focusing not on absolutes but rather on improvements over a period of time and the consistency of those improvements.

A basic sketch of the underlying process behind the making of a great firm has been recaptured in Exhibit 1 below.

Exhibit 1: The ’greatness‘ framework

Source: Ambit Capital research

We rank the BSE500 universe of firms (excluding financial services firms and excluding firms with insufficient data) on our ’greatness‘ score, which consists of six equally weighted headings—investments, conversion to sales, pricing discipline, balance sheet discipline, cash generation and EPS improvement, and return ratio improvement. Under each of these six headings, we further look at two kinds of improvements:

Percentage improvements in performance over FY13-15 vs FY10-12; and

Consistency in performance over FY10-15 i.e. improvements adjusted for underlying volatility in financial data

A complete list of factors that are considered whilst quantifying greatness has been provided in Exhibit 2 on the next page.

b. Conversion of investment to sales (asset turnover, sales)

c. Pricing discipline (PBIT margin)

d. Balance sheet discipline (D/E, cash ratio)

a. Investment (gross block)

e. Cash generation (CFO)

The ’greatness‘ framework

The framework essentially hinges on using publicly available historical data to assess which firms have, over a sustained period of time (FY10-15), been able to relentlessly and consistently:

(a) Invest capital; (b) Turn investment into

sales; (c) Turn sales into profit; (d) Turn profit into

balance sheet strength; (e) Turn all of that into

free cash flow; and (f) Invest free cash flows

again.

Clearly, this approach will have limited value if there is a structural break in the sector or in the company, which makes past performance a meaningless guide to future performance. (For identifying structural breaks of this sort, for example in the Indian boiler-turbine-generator sector or in the Indian utilities sector, we look to our sector leads for help.)

However, to the extent that such structural breaks tend to be the exception than the rule, the greatness model helps in creating a shortlist of stocks that investors can then analyse in greater detail.

Put simply, the greatness model separates the wheat from the chaff. Yet, it does not cook the whole meal for you!

Strategy


Exhibit 2: Factors used for quantifying greatness

Head Criteria

1 Investments a. Above median gross block increase (FY13-15 over FY10-12)*

b. Above median gross block increase to standard deviation

2 Conversion to sales a. Improvement in asset turnover (FY13-15 over FY10-12)*

b. Positive improvement in asset turnover adjusted for standard deviation

c. Above median sales increase (FY13-15 over FY10-12)*

d. Above median sales increase to standard deviation

3 Pricing discipline a. Above median PBIT margin increase (FY13-15 over FY10-12)*

b. Above median PBIT margin increase to standard deviation

4 Balance sheet discipline a. Below median debt-equity decline (FY13-15 over FY10-12)*

b. Below median debt-equity decline to standard deviation

c. Above median cash ratio increase (FY13-15 over FY10-12)*

d. Above median cash ratio increase to standard deviation

5 Cash generation and PAT improvement a. Above median CFO increase (FY13-15 over FY10-12)*

b. Above median CFO increase to standard deviation

c. Above median adj. PAT increase (FY13-15 over FY10-12)*

d. Above median adj. PAT increase to standard deviation

6 Return ratio improvement a. Improvement in RoE (FY13-15 over FY10-12)*

b. Positive improvement in RoE adjusted for standard deviation

c. Improvement in RoCE (FY13-15 over FY10-12)*

d. Positive improvement in RoCE adjusted for standard deviation

Source: Ambit Capital research. Note: * Rather than comparing one annual endpoint to another annual endpoint (say, FY10 to FY15), we prefer to average the data out over FY10- 12 and compare that to the averaged data from FY13-15. This gives a more consistent picture of performance (as opposed to simply comparing FY10 to FY15).

We rank the BSE500 universe of firms (excluding financial services firms) on this score to arrive at this year’s rankings on this measure of structural strength. After removing financial services firms and firms with insufficient data, 399 firms from the BSE500 were ranked based on this measure. The highlights from the distribution of these firms on our ’greatness‘ score are displayed on the next page.

On page 6, we show a back-test of this framework over FY04-2015 and find that it works on a consistent basis. On pages 14-15, we show the real world performance of these sets of portfolios over the last year and demonstrate that the construct works in the real world as well. The lists from the BSE500 universe have cumulatively delivered ~26% CAGR returns (over the past four years) vs 14% CAGR returns for the BSE500 Index. The lists from the sub-BSE500 universe that we had published in our previous three iterations have cumulatively delivered ~55% CAGR returns (over the past three years) vs ~17% CAGR returns for the BSE Small-cap Index.

On pages 8-12, we delve into this year’s list of 30 firms that constitute our ten baggers 5.0. This is followed by a list of 10 firms from the sub-BSE500 universe that do well on the same framework.

Both improvement and the consistency of those improvements are important

Strategy


Quantifying greatness From the universe of BSE500 firms, after removing financial services firms and firms with insufficient data, 399 firms were scored on the six headings highlighted on the previous page. The cut-off for greatness was placed at 67%* and only 80 firms (20% of the total population of 399 firms) could manage a score above this cut-off.

Exhibit 3: Distribution of firms on the greatness score (total population: 399 firms)

Source: Ambit Capital research

In the next exhibit, we present key financial data on the three zones defined above: Mediocrity (232 firms), Good but not great (87 firms), and Great (80 firms).

Exhibit 4: Zones of greatness - Financial summary

Mediocre Good but not great Great

Number of firms 232 87 80

Mcap (US$ mn)* 636 852 1,148

Share price (3-year CAGR)# 9% 26% 45%

Gross block (3-year CAGR) 11% 11% 16%

Sales (3-year CAGR) 7% 15% 19%

Adj PAT (3-year CAGR) -3% 17% 29%

CFO (3-year CAGR) 4% 17% 32%

PBIT Margin (3-year average) 10% 14% 15%

RoE (3-year average) 9% 18% 24%

RoCE (3-year average) 11% 19% 25%

Net debt: equity 0.31 0.13 0.31

FY16 P/E 22.8 24.2 21.3

FY16 P/B 2.3 4.1 4.5

Source: Capitaline, Ambit Capital research; Note: All figures are based on median values of the firms analysed *Mcap as of 4 January 2016. # indicates share price performance from 04 January 2013 to 04 January 2016.

With regard to fundamentals, the superiority of the great firms compared with the other two groups is evident in Exhibit 4 above. Of these 80 great firms, we identify the ones that perform the best on our accounting and corporate governance filters, and this leads to our final list of 30 great companies. Before we move onto these 30 potential ten baggers, we shall discuss a back-test of the ‘greatness’ framework in the next section to see whether ‘great’ firms have indeed managed to deliver superior returns historically.

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Good, not Great

*The greatness score is calculated by assigning equal weightages to the six factors outlined in Exhibit 2 on page 4.

Thus, each of these six factors carries a weightage of 16.7%. The scoring on sub-criteria within each of these factors is binary, with a firm getting either 1 or 0 based on whether it has done better than the respective threshold or not.

These scores are then cumulated to arrive at a final greatness score on 100 for the firm.

Zone of greatness Zone of mediocrity

Strategy


Does this approach work? The ‘greatness’ approach has served us well in live portfolios, both in the ten-baggers format and as a tool for stock selection in the Good & Clean portfolios. That this approach works on a cross-cyclical basis is supported by a back-test of the framework.

Our back-test of the ‘greatness’ framework in India, going back to 2003 (which implies using data since 1997-98), shows that ‘great’ firms have historically delivered superior results. Using average returns as a measure to gauge the performance of ‘great’ firms, we note that they have managed to outperform the universe by 5.0% (on average returns) and the BSE500 Index by 6.5% (in CAGR terms; over a 12-year period from 2004 to 2015).

‘Great’ firms are firms that score more than 67% on our framework. We rebalance these buckets once a year (on 31 December), taking into account the preceding six years of financial data (FY10-15 in the case of ten baggers 5.0). The performance over the subsequent year is measured on a calendar year basis.

Exhibit 5: Average performance of ‘Great’ firms vs the Universe and BSE500 Index (2004-2015)

Source: Ambit Capital research; Note: The backtest is based on annual rebalancing with forward-looking returns being calculated from December 31 of year X to December 31 of year X+1; for example, for the most recent year, the framework included numbers until FY14 and returns have been calculated from 31 December 2014 to 31 December 2015.

Outperformance was also seen on a median basis. A median firm in the universe has delivered 5.0% CAGR returns (over 2004-2015). In contrast, a median ‘great’ firm has managed to deliver 9.1% CAGR returns, thus resulting in an outperformance of ~4.1% (on a CAGR basis) for ‘great’ firms vs. the universe.

Exhibit 6: Median performance of ‘Great’ firms vs the Universe (2004-2015)

Source: Ambit Capital research; Note: The backtest is based on annual rebalancing with forward-looking returns being calculated from December 31 of year X to December 31 of year X+1; for example, for the most recent year, the framework included numbers until FY14 and returns have been calculated from 31 December 2014 to 31 December 2015.

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Between 2004-15, ‘Great’ firms have outperformed the universe by 5.0% points per annum (on average returns) and the BSE500 Index by 6.5% points per annum

Outperformance was also seen on a median basis

Strategy


Note that this back-test does not consider accounting or management quality, which we believe are factors that should improve the performance of our live portfolios. That’s what the next section of this note focuses on.

Before we delve into this year’s list of 30 firms that constitute our ten baggers 5.0, the following two exhibits show the performance of the live ten-baggers portfolio since January 2012 when we first unveiled this framework. Whilst the BSE500 ten baggers have managed to outperform the BSE500 Index by ~53% points (on a cumulative basis) over the last four years, the ten baggers from the sub-BSE500 universe that we highlighted in the previous three iterations have managed to outperform the BSE Small-cap Index by a whopping 115% points (on a cumulative basis). Outperformance for all our live ten-baggers from the BSE500 and the sub-BSE500 universe demonstrates that the construct works in the real world as well.

Exhibit 7: Performance of the BSE500 ten-bagger portfolios (since 19 January 2012)

Source: Bloomberg, Ambit Capital research

Exhibit 8: Performance of the sub-BSE500 ten-bagger portfolios (since 14 January 2013)


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The live performance of our ten-bagger portfolios has been impressive too

Strategy


Ten baggers 5.0 In the latest iteration of the ten-bagger exercise, from the 80 firms that clear more than two-thirds of our cut-off, we reach a shortlist of 30 firms after following a process of elimination. This involves removing firms:

That fall in the ‘Zone of Trouble’ in our accounting model (i.e. the bottom 4 deciles on accounting quality; for a full exposition of our accounting filter, please refer to our 17th December 2015 note);

Firms with suspect corporate governance; and

Firms with structural issues around the underlying business (i.e. businesses where a great past is not likely to translate into a great future).

Note that the accounting filter mentioned in the first bullet eliminates 19 out of the 80 firms on the long list. Of remaining 61 firms, 31 are eliminated by the second and third bullets.

There are 9 changes (implying 30% churn) with respect to last year’s list (refer to our 5th January 2015 note). A summary of these changes is as follows:

Exits: Gateway Distriparks, Monsanto India, Astral Poly Technik, Ipca, VST Industries, eClerx Services, Coal India and Wabco India drop out on account of deterioration in their greatness scores. We exclude Bata India on account of our sector analyst’s negative view on its business.

Exhibit 9: Reasons behind the stocks exiting our ten-bagger portfolio

Company name Metrics in our ‘Greatness’ model no longer met by the company

Gateway Distriparks Investment in gross block, balance sheet discipline, cash flows improvement, improvement in return ratios

Monsanto India Investment in gross block, sales improvement, cash flows improvement, balance sheet discipline

Astral Poly Technik Pricing discipline, balance sheet discipline, improvement in return ratios

Ipca Laboratories Sales improvement, pricing discipline, improvement in return ratios

VST Industries Investment in gross block, sales improvement, cash flows improvement, balance sheet discipline

eClerx Services Sales improvement, pricing discipline, balance sheet discipline, improvement in return ratios

Coal India* Investment in gross block, sales improvement, pricing discipline, PAT and cash flows improvement, balance sheet discipline, improvement in return ratios

Wabco India Sales improvement, pricing discipline, PAT and cash flows improvement, improvement in return ratios

Source: Ace Equity, Capitaline, Ambit Capital research * We have a Bottom-up Buy on this stock

Entrants: AIA Engineering, Ajanta Pharma, Hatsun Agro Products, La Opala, Hindustan Unilever, Vinati Organics, Atul Ltd, Marico and Gujarat Pipavav are the 8 names that are added using FY15 data (implying that these firms’ greatness scores improved when FY15 data was added to the model and FY09 data was taken out of the model).

Having identified the 30 great firms that exhibit the ingredients required to be tomorrow’s winners, we run a valuation check to ascertain if they are currently trading at reasonable prices for outright investments. In our view, whilst valuations do matter on a tactical basis, how the underlying fundamentals evolve for the firm over long periods plays a more important role in determining returns than the beginning-of-the-period valuation itself. Further, the performance of the previous iterations of our ten-bagger portfolio corroborates our finding that beginning of the period valuations do not play a significant role in shaping subsequent investment returns. We discuss this in detail in the final section of this note. To determine whether a particular stock is cheap or not, we categorise these stocks into three buckets based on their relative attractiveness on valuations with respect to their own history. We compare these firms with respect to their five-year average valuations on three metrics—P/B, P/E and EV/EBITDA. We find seven firms to be inexpensive (on at least two of the three metrics): ITC, Idea Cellular, HCL Tech, TCS, Gujarat Pipavav, MRF and Tata Motors. However, for the long term, all 30 stocks remain candidates to be ten baggers from our perspective (as we have reiterated time and again that current period valuations do not have a significant effect on long-term returns! Please see pages 17-18 for details).

An overlay of accounting, corporate governance and subjective checks to the greatness framework is the last but critical step

For the long-term investor, beginning-of-period valuations do not have a significant impact on returns

http://reports.ambitcapital.com/reports/Ambit_Strategy_AccountingThematic_AreyouintheZoneofDarkness_17Dec2015.pdf

http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_Tenbaggers4_05Jan2015.pdf

Strategy


We have bottom-up coverage with BUYs on 12 of these names. These are: ITC, PI Industries, HCL Techn, Page Industries, Finolex Cables, TCS, Tata Motors, Supreme Industries, Berger Paints, TVS Motor, HUL and Marico.

Exhibit 10: January 2016 ten baggers - Valuation perspective

Sr. No. Ticker Company Mcap (US$ mn)

Blended FY15 and FY16 valuations Cheap w.r.t. history? Overall cheap on

how many counts? P/E P/B EV/EBITDA P/E P/B EV/EBITDA

Attractive valuations* 1 ITC IN ITC Ltd. 39,216 26.1 7.7 16.8 YES YES YES 3

2 IDEA IN Idea Cellular 7,328 15.3 2.1 5.7 YES YES YES 3

3 HCLT IN HCL Tech. 17,856 16.0 4.5 12.0 YES YES YES 3

4 TCS IN TCS 70,083 22.1 8.3 16.0 YES YES YES 3

5 GPPV IN Gujarat Pipavav 1,142 23.0 3.5 16.3 YES YES YES 3

6 MRF IN MRF 2,579 9.8 2.6 5.4 YES - YES 2

7 TTMT IN Tata Motors 18,462 10.4 2.0 4.4 - YES YES 2

Moderate valuations** 8 TRP IN Torrent Pharma 3,679 24.4 8.3 11.5 - - YES 1

Rich valuations*** 9 LPC IN Lupin Ltd. 12,139 35.3 8.5 24.7 - - - -

10 PSYS IN Persistent Systems# 777 17.4 3.5 10.3 - - - -

11 KJC IN Kajaria 1,175 38.8 9.5 19.1 - - - -

12 BRIT IN Britannia# 5,353 47.0 24.4 30.2 - - - -

13 SKB IN GSKConsumer# 4,101 42.9 11.9 30.7 - - - -

14 PI IN PI Industries Ltd. 1,350 32.1 8.6 21.0 - - - -

15 MTCL IN Mindtree# 1,826 21.4 5.6 15.0 - - - -

16 PAG IN Page Industries 2,270 66.0 32.8 38.9 - - - -

17 FNXC IN Finolex Cables 576 19.0 2.9 12.3 - - - -

18 SI IN Supreme Industries 1,314 27.3 6.6 14.5 - - - -

19 BRGR IN Berger Paints 2,742 59.1 13.4 30.3 - - - -

20 EIM IN Eicher Motors# 7,131 61.4 15.8 27.7 - - - -

21 TVSL IN TVS Motor 2,046 38.4 9.4 22.0 - - - -

22 SF IN Sundram Fasteners 520 24.2 4.0 12.1 - - - -

23 AJP IN Ajanta Pharma 1,753 34.2 12.1 22.2 - - - -

24 HTSMF IN Hatsun Agro Products 676 78.5 18.1 17.1 - - - -

25 LOG IN La Opala 514 70.3 16.5 41.2 - - - -

26 HUVR IN Hindustan Unilever 27,900 42.6 44.0 31.5 - - - -

27 VO IN Vinati Organics 360 19.7 5.0 11.2 - - - -

28 MRCO IN Marico Ltd. 4,363 46.1 14.4 28.1 - - - -

29 AIAE IN AIA Engineering# 1,254 19.9 3.8 12.3 - - - -

30 ATLP IN Atul Ltd. 756 19.5 4.4 12.4 - - - -

Source: Bloomberg, Capitaline, Ambit Capital research.

* Trading below five-year average P/E, P/B, EV/EBITDA (on at least two of these three measures)

** Trading below either five-year average P/E, five-year P/B or five-year EV/EBITDA (on one of these three measures)

*** Trading above five-year average P/E, P/B and EV/EBITDA

# denotes that the relevant Ambit sector lead has a bottom-up SELL in the name

Note: There are a few stocks that cleared both the greatness and accounting filters but did not make it to the final list of 30 stocks based on our lack of conviction on the names. These are: Dr Reddy’s, Aurobindo Pharma, P&G Hygiene, KRBL Ltd, Suven Life sciences, Kaveri Seeds, Welspun India, Relaxo Footwears, Aarti Industries, Granules India, Aarti Drugs, Arvind, Vardhman textiles, Kitex Garments, Geometric, Metalyst Forgings, Sun Pharma, BPCL, UPL Ltd, Amara Raja, Hexaware, Tata Elxi, Navneet Education, Alembic Pharma, Ceat, Marksans Pharma, DCM Shriram, Greenply, Tube Investments, Rajesh Exports, Dishman Pharma, Vakrangee, Bata India, Ratnamani Metals, Wipro

Strategy


Exhibit 11: January 2016 ten baggers’ financial snapshot

Sr. No. Ticker Company

Mcap (US$ mn)

6M ADV (US$ mn)

3-yr share price CAGR

3-yr Net Sales CAGR

3-yr adj. PAT

CAGR

3-yr CFO

CAGR

3-yr avg PBIT

margin

3-yr avg RoE

3-yr avg

RoCE

FY15 Net Debt/ Equity

FY16 P/E

FY16 P/B

Attractive valuations*

1 ITC IN ITC Ltd. 39,216 34.1 5% 14% 16% 16% 34% 34% 50% (0.5) 26.1 7.7

2 IDEA IN Idea Cellular 7,328 10.0 7% 17% 65% 40% 14% 12% 12% 0.6 15.3 2.1

3 HCLT IN HCL Tech. 17,856 24.5 39% 21% 44% 29% 21% 37% 43% 0.0 16.0 4.5

4 TCS IN TCS 70,083 45.0 22% 25% 23% 41% 27% 41% 52% (0.4) 22.1 8.3

5 GPPV IN Gujarat Pipavav 1,142 2.4 49% 21% 81% 80% 38% 14% 14% (0.2) 23.0 3.5

6 MRF IN MRF# 2,579 7.7 45% 11% 37% 39% 11% 23% 28% 0.0 9.8 2.6

7 TTMT IN Tata Motors 18,462 56.8 7% 17% 0% 24% 9% 27% 21% 0.5 10.4 2.0

Moderate valuations**

8 TRP IN Torrent Pharma 3,679 4.5 59% 20% 31% 18% 19% 36% 30% 0.8 24.4 8.3

Rich valuations***

9 LPC IN Lupin Ltd. 12,139 34.0 44% 22% 40% 70% 23% 30% 36% (0.2) 35.3 8.5

10 PSYS IN Persistent Systems 777 1.1 34% 24% 26% 22% 17% 21% 28% (0.6) 17.4 3.5

11 KJC IN Kajaria 1,175 1.5 61% 19% 30% 26% 13% 30% 32% 0.3 38.8 9.5

12 BRIT IN Britannia Industries Ltd. 5,353 9.7 80% 13% 46% 33% 8% 54% 57% (0.5) 47.0 24.4

13 SKB IN GSKConsumer Healthcare Ltd.

4,101 1.2 19% 16% 18% 16% 16% 33% 49% (1.1) 42.9 11.9

14 PI IN PI Industries Ltd. 1,350 2.8 74% 30% 46% 21% 14% 28% 33% 0.1 32.1 8.6

15 MTCL IN Mindtree Ltd. 1,826 4.6 61% 23% 33% 43% 17% 29% 37% (0.5) 21.4 5.6

16 PAG IN Page Industries 2,270 3.1 58% 30% 29% 11% 20% 59% 64% 0.4 66.0 32.8

17 FNXC IN Finolex Cables 576 0.4 62% 6% 11% -4% 8% 17% 20% (0.3) 19.0 2.9

18 SI IN Supreme Industries 1,314 0.9 32% 13% 10% 20% 13% 32% 37% 0.1 27.3 6.6

19 BRGR IN Berger Paints 2,742 1.1 50% 14% 13% 25% 9% 24% 25% 0.2 59.1 13.4

20 EIM IN Eicher Motors 7,131 20.3 84% 15% 26% 37% 9% 21% 25% (0.6) 61.4 15.8

21 TVSL IN TVS Motor 2,046 7.9 85% 12% 30% -45% 4% 19% 18% 0.5 38.4 9.4

22 SF IN Sundram Fasteners 520 0.3 48% 4% 10% -20% 7% 15% 14% 1.0 24.2 4.0

23 AJP IN Ajanta Pharma 1,753 4.4 134% 30% 60% 58% 26% 41% 50% (0.1) 34.2 12.1

24 HTSMF IN Hatsun Agro Products 676 0.1 67% 22% 13% 6% 4% 35% 19% 2.7 78.5 18.1

25 LOG IN La Opala 514 1.4 124% 25% 49% 48% 24% 34% 39% (0.4) 70.3 16.5

26 HUVR IN Hindustan Unilever 27,900 18.8 17% 11% 12% 2% 15% 103% 146% (1.4) 42.6 44.0

27 VO IN Vinati Organics 360 0.3 45% 20% 28% 79% 21% 31% 32% 0.1 19.7 5.0

28 MRCO IN Marico Ltd. 4,363 5.3 27% 13% 21% 18% 13% 29% 31% (0.0) 46.1 14.4

29 AIAE IN AIA Engineering 1,254 1.0 39% 16% 33% 48% 21% 20% 26% (0.3) 19.9 3.8

30 ATLP IN Atul Ltd. 756 1.0 60% 14% 38% 51% 12% 22% 24% 0.2 19.5 4.4

Source: Bloomberg, Ambit Capital research; # represents companies for which FY15 data is not available and FY14 data is used instead




Strategy


Exhibit 12: January 2016 ten baggers - Forward-looking data using consensus estimates


6M ADV (US$ mn)

FY15-FY18E EPS CAGR

FY15-FY18E BVPS CAGR

Attractive valuations* 1 ITC IN ITC Ltd. 39,216 33.3 11% 11%

2 IDEA IN Idea Cellular 7,328 9.8 -2% 10%

3 HCLT IN HCL Tech. 17,856 24.0 10% 18%

4 TCS IN TCS 70,083 44.4 15% 26%

5 GPPV IN Gujarat Pipavav 1,142 2.4 9% 15%

6 MRF IN MRF 2,579 7.5 0% 17%

7 TTMT IN Tata Motors 18,462 56.0 12% 25%

Moderate valuations** 8 TRP IN Torrent Pharma 3,679 4.5 24% 33%

Rich valuations*** 9 LPC IN Lupin Ltd. 12,139 33.3 19% 25%

10 PSYS IN Persistent Systems 777 1.0 12% 15%

11 KJC IN Kajaria 1,175 1.5 24% 24%

12 BRIT IN Britannia Industries Ltd. 5,353 9.6 22% 32%

13 SKB IN GSKConsumer Healthcare Ltd. 4,101 1.3 17% 16%

14 PI IN PI Industries Ltd. 1,350 2.7 25% 28%

15 MTCL IN Mindtree Ltd. 1,826 4.6 16% 20%

16 PAG IN Page Industries 2,270 3.0 27% 32%

17 FNXC IN Finolex Cables 576 0.4 14% 12%

18 SI IN# Supreme Industries 1,314 0.9 15% 16%

19 BRGR IN Berger Paints 2,742 1.1 29% 20%

20 EIM IN Eicher Motors 7,131 19.9 41% 27%

21 TVSL IN TVS Motor 2,046 7.9 32% 28%

22 SF IN# Sundram Fasteners 520 0.3 24% 13%

23 AJP IN Ajanta Pharma 1,753 4.3 25% 35%

24 HTSMF IN# Hatsun Agro Products 676 0.1 80% 25%

25 LOG IN La Opala 514 1.4 32% 28%

26 HUVR IN Hindustan Unilever 27,900 18.3 10% 10%

27 VO IN Vinati Organics 360 0.3 17% 24%

28 MRCO IN Marico Ltd. 4,363 5.3 18% 20%

29 AIAE IN AIA Engineering 1,254 0.9 6% 15%

30 ATLP IN Atul Ltd. 756 1.0 19% 23% Source: Bloomberg, Ambit Capital research; Note: # indicates FY15-17E CAGR




Strategy


Greatness framework on sub-BSE500 firms In our January 2013 ten baggers 2.0 note, based on client feedback, we had inserted a list of sub-BSE500 firms that did well on our framework primarily in the hope that given the inefficient price discovery in the smaller-cap names, running the screen on relatively lesser-known names should work even better. The results surely have been very encouraging. The sub-BSE500 list from our ten baggers 2.0 portfolio delivered 22.4% in absolute terms and 41.2% points of alpha relative to the BSE Small-cap Index from January 2013 to November 2013. Likewise, the sub-BSE500 list from our ten baggers 3.0 portfolio delivered a staggering 137.3% returns in absolute terms and 50.5% points of alpha relative to the BSE Small-cap Index. The most recent sub- BSE500 list from our last iteration – ten baggers 4.0 has again delivered 28% return on an absolute basis and 23% alpha relative to the BSE Small-cap Index (please see page 15 for performance details).

Continuing with this initiative, we present below a list of select small-caps from outside the BSE500 but above a market cap of Rs1,000mn that fare well on this year’s iteration of our greatness framework (after updating FY15 numbers). Based on client feedback, we have extended our forensic accounting model to all firms with a market cap of Rs1,000mn and above. Whilst these stocks have cleared our accounting screen, we may not have sufficient information on the quality of their corporate governance.

Exhibit 13: January 2016 greatness framework on smaller caps outside BSE500


6M ADV (US$ mn) FY16 P/E FY16 P/B

1 TCPL IN TCPL Packaging# 87 0.0 13.6 4.1

2 PLM IN Poly Medicure 259 0.1 34.0 7.2

3 ATA IN Atul Auto 181 0.6 25.3 8.0

4 AVNT IN Avanti Feeds 282 0.7 11.3 5.1

5 KPR IN K P R Mill Ltd 495 0.9 14.4 2.9

6 FIEM IN Fiem Inds. 137 0.7 16.7 3.4

7 HSS IN Himatsing. Seide 312 3.5 11.8 2.2

8 FDM IN Fluidomat 16 0.0 N/A N/A

9 MUIL IN Multibase India Ltd# 49 0.1 N/A N/A

10 NCS IN Nucleus Software# 124 1.0 N/A N/A

Source: Bloomberg, Ambit Capital research; Note: Stocks that passed the two models but were omitted are: Nandan Denim, Chamanlal Setia, Trident, Heritage Foods, Kovai Medical, Moreopen labs, RSWM, Alkyl Amines, ShirpurGold, Ruchira Papers, Guj Alkalies,SKM Egg Products, Sreeleathers, Cupid, Paushak, Premco Global, Lambodhara Textiles, Benares Hotels, KG Denim, Loyal Textile, Coromandel Engg, Mastek, APM Inds

# denotes new entrant to the portfolio

Note that unlike the ten-baggers list for the BSE500 universe (where we only consider firms that meet the greatness score cut-off of 67% whilst being in the top 6 deciles of our forensic accounting model), the criteria used to screen for ten baggers from the sub-BSE500 universe has been made much more stringent. Only firms with a greatness score above 80% that also fall in the top three deciles on accounting quality in the sub-BSE500 universe have been included in this list.

On a separate note, if you haven’t already contacted your Ambit sales representative, for a forensic check on your portfolio, you might want to do so now. Our forensic model, refined and tested over five years, is very powerful.

The framework should work better in the less-discovered sub-BSE500 universe

http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_14Jan2013.pdf

Strategy


Performance check: Jan 2015 ten-bagger list Exhibit 14: The ten-bagger list published on 05 January 2015 (click here for the 05 January 2015 note, ‘Ten baggers 4.0’)

Ticker Company Mcap (US$ mn)

Price Performance

02-Jan-2015 04-Jan-2016 Attractive valuations TCS IN TCS 70,080 2,579 2,370 -8% ITC IN ITC 39,215 368 325 -12% TTMT IN Tata Motors 18,462 506 377 -26% HCLT IN HCL Tech 17,857 803 846 5% IDEA IN Idea Cellular 7,328 160 136 -15% IPCA IN Ipca Labs. 1,386 727 732 1% ECLX IN eClerx Services 856 993 1,401 41% Average for this bucket -2% Moderate valuations COAL IN Coal India 31,304 382 351 -8% BATA IN Bata India 983 660 509 -23% Average for this bucket -15% Rich valuations LPC IN Lupin 12,138 1,432 1,795 25% EIM IN Eicher Motors 7,130 15,082 17,495 16% SKB IN GlaxoSmith CHL 4,101 5,900 6,496 10% BRIT IN Britannia Inds. 5,353 1,879 2,973 58% TRP IN Torrent Pharma. 3,679 1,193 1,448 21% MRF IN MRF 2,579 38,192 40,506 6% BRGR IN Berger Paints 2,742 226 263 16% PAG IN Page Industries 2,270 12,420 13,558 9% TVSL IN TVS Motor Co. 2,046 267 287 7% MTCL IN Mindtree 1,827 1,299 1,451 12% WIL IN WABCO India 1,737 4,661 6,101 31% SI IN Supreme Inds. 1,314 597 689 15% PI IN P I Inds. 1,350 550 656 19% PSYS IN Persistent Sys 777 937 647 -31% MCHM IN Monsanto India 571 2,926 2,205 -25% KJC IN Kajaria Ceramics 1,175 618 985 59% ASTRA IN Astral Poly 770 387 428 11% FNXC IN Finolex Cables 575 269 251 -7% SF IN Sundram Fasten. 520 195 165 -15% GDPL IN Gateway Distr. 512 350 314 -11% VST IN VST Inds. 394 1,940 1,700 -12%

Average for this bucket 10% Overall average 6% BSE500 Index -3% Outperformance 9%


In a difficult year for the Indian equity markets, last year’s iteration of ten baggers published on 05 January 2015 has clocked 6% returns in absolute terms and 9% points relative to the BSE500. This compares with cumulative absolute returns of 109% and relative returns (to BSE500) of 43% points delivered by the first three iterations (click here for the 19 January 2012 note on ten baggers 1.0 and click here for the 14 January 2013 note on ten baggers 2.0 and click here for the 26 November 2013 note on ten bagger 3.0). Moreover, the above exhibit also highlights that beginning-of-the-period valuations have not made much difference to investment returns, with the stocks categorised as attractively valued, based on initial valuations, underperforming those classified as richly valued on average. This finding also emerged from earlier ten bagger iterations. In effect, what our models have shown time and again is that once you screen rigorously for high quality, there is little value add in further screening through a demanding valuation filter.


http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_Tomorrow%E2%80%99stenbaggers_19Jan2012.pdf

http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_14Jan2013.pdf

http://reports.ambitcapital.com/reports/Ambit_Strategy_Thematic_TenBagger3_26Nov2013.pdf

Strategy


Performance check: Jan 2015’s sub-BSE500 ten baggers Exhibit 15: Superior firms on ‘greatness’ from sub-BSE500 published on 05 January 2015 (click here for the 05 January 2015, ‘Ten baggers 4.0’)

Ticker Company Mcap (US$ mn)

Price Performance

02-Jan-2015 04-Jan-16 SVLS IN Suven Life Scie. 498 212.8 260.45 22% LOG IN La Opala RG 514 446.55 617.5 38% PLM IN Poly Medicure 259 452.1 390.95 -14% MUNI IN Mayur Uniquote 326 422.75 469.65 11% GRAN IN Granules India 461 82.87 146.65 77% SEL IN Suprajit Engg. 259 138 143.75 4% ATA IN Atul Auto 181 677.95 550.9 -19% AVNT IN Avanti Feeds 282 320.94 413.9 29% KPR IN K P R Mill Ltd 495 377.3 874.9 132% HPPL IN Huhtamaki PPL 260 185.75 237.9 28% FIEM IN Fiem Inds. 137 872.2 760.75 -13% HSS IN Himatsing. Seide 312 94.25 211.2 124% WMP IN Wim Plast 180 1507.8 2000.75 33% SIYA IN Siyaram Silk 168 957.45 1191.9 24% IDR IN Indag Rubber 82 185.25 208.2 12% ADFI IN Adi Finechem 52 332.85 249.1 -25% FDM IN Fluidomat 16 210.15 215.7 3% Overall average 28%

BSE Smallcap Index 4%

Outperformance 23%


The sub-BSE500 list of firms published on 05 January 2015 has also shown strength and delivered a stellar performance over the year. These stocks are up 28% on average over the year (vs 4% for the BSE Small-cap Index), resulting in ~23% points of outperformance since publication. Absolute returns of 22% (and relative returns of 41%) for the first iteration of the sub-BSE500 ten baggers (published on 14 January 2013), a whopping 51% outperformance for the November 2013 iteration and 25% outperformance of the last iteration suggest that the framework indeed does a reasonably good job in the sub-BSE500 universe as well.


Strategy


Valuations - A long-term perspective! Over long periods, it is how the underlying fundamentals evolve for the firm that plays a more important role in determining returns rather than the beginning-period valuation itself. Put another way, over long periods how a business fundamentally performs is overwhelmingly the most important driver of investment returns (so much so that the price at the time of entering the stock becomes almost irrelevant). This point can be understood better with the following exhibits that plot ten-year returns over FY04-14 vs FY04 valuations as measured by P/B and P/E at the beginning of the period (in 2005).

Exhibit 16: Valuation impact on long-term returns - P/B

Source: Ambit Capital research; Note: FY04-14 returns here are stock returns relative to Sensex

The value of the R-squared makes the story self-explanatory. A low value for this parameter indicates that the beginning-period valuations do not play any meaningful role in explaining stock returns over the next ten years. This holds true for both P/B and P/E as measures of valuation.

Exhibit 17: Valuation impact on long-term returns - P/E

Source: Ambit Capital research; Note: FY04-14 returns here are stock returns relative to Sensex. Trailing P/E has been restricted to 100.

Further, that valuations do not play an overwhelming role in shaping investment returns is also evidenced by the performance of the latest iteration of our ten-bagger portfolio.

The following exhibits plot the returns since publication for the 30 stocks published as a part of the ten-bagger portfolio on 05 January 2015 vs their trailing valuations as measured by P/B and P/E at the beginning of the period.

R² = 0.071

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

FY0

5-F

Y15

sh

are

pri

ce C

AG

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FY05 price to book

R² = 0.0143

-50%

-40%

-30%

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-10%

0%

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- 20.0 40.0 60.0 80.0 100.0

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FY05 price to earnings

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Exhibit 18: Tenbaggers’ 4.0 - Beginning-period P/B and stock returns


Here again, a low R-squared value indicates that the beginning-period P/B does not influence stock returns in any major way. This holds true for P/E as a measure of valuation as well.

Exhibit 19: Tenbaggers’ 4.0: beginning-period P/E and stock returns


R² = 0.0635

-40%

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0%

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60%

80%

- 10.0 20.0 30.0 40.0 50.0 60.0

Sha

re p

rice

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Trailing Price to Book

R² = 0.0791

-40%

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0%

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- 20.0 40.0 60.0 80.0 100.0

Sha

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Trailing Price to Earnings

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Appendix - January 2016 ten baggers’ business activity description BSE500 ten baggers’ business description

Sr. No. Ticker Company Business description

1 TCS IN TCS

Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries.

2 ITC IN ITC ITC Limited, a member of BAT Group of UK, is a holding company, which has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG products.

3 TTMT IN Tata Motors

Tata Motors Limited manufactures cars and commercial automotive vehicles in India. The Company designs, manufactures and sells heavy commercial, medium commercial and small commercial vehicles including trucks, tankers, vans, buses, ambulances and minibuses. Tata also manufactures small cars and sports utility vehicles.

4 HCLT IN HCL Technologies

HCL Technologies Limited provides software development and related engineering services. The Group's technologies utilize a variety of technologies, including Internet and e-commerce, networking, internet telephony, embedded software, ASIC/VLSI design and testing, satellite and wireless communications, and component based object technologies, including COM, DCOM and COBRA.

5 IDEA IN Idea Cellular Idea Cellular Limited offers cellular services, SMS services, and mobile communication devices.

6 AIAE IN AIA Engg AIA Engineering specialises in the design, development, manufacture, installation and servicing of high chromium wear, corrosion and abrasion resistant castings used in the cement, mining and thermal power generation industries.

7 HTSMF IN Hatsun Agro Hatsun Agro is the largest private sector dairy company in India. It produces and markets wide range of dairy products – dairy whitener, skimmed milk powder, Agmark certified ghee, butter, cooking butter, milk, varities of curd, paneer etc. It also exports to 38 countries worldwide.

8 GPPV IN Gujarat Piapavav

Gujarat Pipavav is managed and operated by APM Terminals, the ports and terminals company of the maritime giant, the A.P. Moller-Maersk Group. APM Terminals is one of the largest container terminal operators in the world and offers the global shipping community an integrated Global Terminal Network of 56 ports and 154 inland facilities in 63 countries.

9 LPC IN Lupin

Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine.

10 EIM IN Eicher Motors Eicher Motors Ltd. manufactures light commercial vehicles which are sold domestically and are also exported to other countries. Eicher Motors also manufactures tractors, two-wheelers and automotive gears.

11 SKB IN GlaxoSmith C H L Glaxo SmithKline Consumer Healthcare Limited manufactures and sells malted milk food products. The Group's products, which include energy & protein products, cereals, baby foods, ghee & butter, are sold under the "Horlicks", "Boost", "Viva", "Brylcream", "Eno", "Maltova" and "Gopika" brand names.

12 BRIT IN Britannia Inds. Britannia Industries Limited manufactures bakery products such as biscuits, bread, cakes and rusks. The Company also manufactures and exports soybean products, cashew kernels, marine products, and general merchandise items.

13 TRP IN Torrent Pharma.

Torrent Pharmaceuticals Ltd. manufactures bulk drugs and pharmaceutical formulations. The Company's formulations include cardio-vascular, psychotropic and anti-biotic drugs while its bulk drugs include atenolol, ciprofloxacin and norfloxacin. Torrent Pharmaceuticals has wholly owned subsidiaries in several regulated and less regulated international markets.

14 MRF IN MRF MRF Limited manufactures and distributes tyres and tubes for automobiles, aircrafts, motorcycles and cycles. The Company also manufactures conveyor belts, paint and coats, and hoses. Every MRF tyre designed is the result of a special acid test on the race and rally tracks.

15 BRGR IN Berger Paints Berger Paints India Limited manufactures and distributes paints, enamels, varnishes, and synthetic resins. The Company's products are used in home, office, factory, interiors, exteriors, metal, wood, plastic, and others.

16 PAG IN Page Industries Page Industries Limited develops, produces, and distributes branded underwear for men, women, and children in India and Sri Lanka.

Strategy



17 TVSL IN TVS Motor Co.

TVS Motor Company Limited manufactures motorcycles, mopeds and scooters. The Company also manufactures spark ignition operated outboard motors, combustion spark ignition engines, critical engines and transmission parts. TVS Motor Co. also owns a subsidiary that manufactures rubber molded and plastic molded auto components, air brake hoses and molds.

18 MTCL IN Mindtree

Mindtree Limited is an international IT company. The Company delivers business and technology solutions through global software development. Mindtree develops applications to help companies enhance their enterprise operations. The Company also delivers product-development services and designs reusable building blocks for high-tech companies.

19 AJP IN Ajanta Pharma

Ajanta Pharma is a specialty pharmaceutical company engaged in development, manufacture and marketing of quality finished dosages in domestic and international markets. Its focus is on commercializing unique generic products and pioneering synergistic combination products in the therapeutic areas of anti-malarial, cardiovascular, dermatology, male erectile dysfunction, pain management, and ophthalmology.

20 SI IN Supreme Inds.

Supreme Industries Limited manufactures industrial and engineered molded products and storage and material handling crates. The Company also manufactures chemicals, multilayer sheets, multilayer films, packaging films and expanded polyethylene foam, PVC pipes and fittings, molded furniture and disposable EPS containers.

21 PI IN P I Inds. PI's business activities include 1) Agri Inputs offering plant protection products, and speciality plant nutrient products and solutions and 2) Custom Synthesis & Manufacturing for contract research and production of agro chemicals, intermediates and other niche fine chemicals for global innovators.

22 PSYS IN Persistent Sys Persistent Systems Limited offers outsourced software product development. The Company offer services that include testing, support, and professional services.

23 LOG IN La Opala La Opala is manufacturer and marketer of life style products in tableware segment. The company deals with glass and glassware and products include opalware and crystal.

24 KJC IN Kajaria Ceramics Kajaria Ceramics Limited manufactures glazed and unglazed ceramic tiles. The Company sells its products in India and it also exports them to other countries.

25 HUVR IN HUL HUL is India’s largest FMCG company with a heritage of over 80 years in India. It has over 35 brands spanning across categories like soaps, detergents, shampoos, skin care, toothpastes, detergents, packaged foods etc. It is a subsidiary of Unilever, one of the world’s largest FMCG company.

26 FNXC IN Finolex Cables

Finolex Cables Ltd. manufactures a wide range of telecommunication and electrical cables. The Company's products include flexible cables for appliances and industrial use electrification, winding wires, automobile cables, welding cables, and cables for submersible pumps. The Company also manufactures jelly filled phone cables, high frequency/radio frequency cables and PVC Sheets.

27 SF IN Sundram Fasten. Sundram Fasteners Limited manufactures a wide range of nuts, bolts and related fastener equipment. Products include high-tensile fasteners and equipment for the automotive industry, such as cold extruded parts, radiator caps and gear shifters. The Company also manufactures water pumps and fuel pumps.

28 MRCO IN Marico

Marico Limited is one of India's leading consumer products companies operating in the beauty and wellness space. Currently present in 25 countries across emerging markets of Asia and Africa, Marico has nurtured multiple brands in the categories of hair care, skin care, health foods, male grooming, and fabric care.

29 VO IN Vinati Organics Vinati Organics Ltd. is a specialty chemical company producing aromatics, monomers, polymers and other speciality products and has a sturdy market presence in over 22 countries.

30 ATLP IN Atul Ltd.

Atul Ltd is an improvement driven, integrated chemical company serving customers across the globe. With depth in science and technology, Atul manages almost all Unit Processes and Unit Operations to manufacture about 1,380 products and formulations and has state-of-the-art facilities and processes to ensure safety and treatment of gaseous, liquid and solid pollutants.

Source: Bloomberg

Strategy


Sub-BSE500 ten baggers’ business description


1 TCPL IN TCPL Packaging TCPL Packaging Ltd., (formerly known as Twenty-First Century Printers Ltd) began commercial production in April 1990. It is one of India's largest manufacturers of printed folding cartons, and one of the few listed packaging companies in India.

2 PLM IN Poly Medicure Poly Medicure Limited manufactures disposable healthcare products. The Company offers a wide range of products for infusion therapy, anesthesia, urology, gastroenterology, blood management, surgery and drainage, and catheters.

3 ATA IN Atul Auto Atul Auto Ltd. manufactures three-wheeled commercial diesel vehicles.

4 AVNT IN Avanti Feeds Avanti Feeds Ltd. manufactures and distributes shrimp feed. The Company also processes, packages, and exports shrimp throughout the world.

5 KPR IN K P R Mill Ltd KPR Mill Limited manufactures apparel products. The Company's products include carded and combed cotton and knitted fabrics.

6 FIEM IN Fiem Inds. FIEM Industries Limited manufactures automotive lighting and signaling equipment and rear view mirrors.

7 HSS IN Himatsing. Seide Himatsingka Seide Limited manufactures home textile products. The Company produces decorative fabrics, spun silk, blended fabrics, bridal wear, fashion wear and other related textile products. Himatsingka Seide offers its products to distributors across the United States and Europe.

8 FDM IN Fluidomat Fluidmat Ltd. manufactures fluid coupling, turbo couplings, flexible coupling, and mechanical power transmission equipment.

9 MUIL IN Multibase India Multi base India is a Dow corning company that manufactures silicon based thermoplastics with application in automotives, personal care, personal hygiene, telecom and engineering polymers

10 NCS IN Nucleus Software Nucleus Software provides lending and transaction banking products to the global financial services industry. Its two flagship products are FinnOne and FinnAxia

Source: Bloomberg

Strategy


Institutional Equities Team Saurabh Mukherjea, CFA CEO, Institutional Equities (022) 30433174 [email protected]

Research

Analysts Industry Sectors Desk-Phone E-mail

Nitin Bhasin - Head of Research E&C / Infra / Cement / Industrials (022) 30433241 [email protected]

Aadesh Mehta, CFA Banking / Financial Services (022) 30433239 [email protected]

Aakash Adukia Oil & Gas / Chemicals / Agri Inputs (022) 30433273 [email protected]

Abhishek Ranganathan, CFA Retail / Mid-caps (022) 30433085 [email protected]

Achint Bhagat, CFA Cement / Roads / Home Building (022) 30433178 [email protected]

Ashvin Shetty, CFA Automobile (022) 30433285 [email protected]

Bhargav Buddhadev Power Utilities / Capital Goods (022) 30433252 [email protected]

Deepesh Agarwal, CFA Power Utilities / Capital Goods (022) 30433275 [email protected] Dhiraj Mistry, CFA Consumer (022) 30433264 [email protected]

Gaurav Khandelwal, CFA Automobile (022) 30433132 [email protected] Gaurav Mehta, CFA Strategy / Derivatives Research (022) 30433255 [email protected]

Girisha Saraf Mid-caps / Small-caps (022) 30433211 [email protected]

Karan Khanna, CFA Strategy (022) 30433251 [email protected]

Kushank Poddar Technology (022) 30433203 [email protected] Pankaj Agarwal, CFA Banking / Financial Services (022) 30433206 [email protected]

Paresh Dave, CFA Healthcare (022) 30433212 [email protected]

Parita Ashar, CFA Metals & Mining (022) 30433223 [email protected]

Prashant Mittal, CFA Derivatives (022) 30433218 [email protected]

Rahil Shah Banking / Financial Services (022) 30433217 [email protected]

Rakshit Ranjan, CFA Consumer (022) 30433201 [email protected]

Ravi Singh Banking / Financial Services (022) 30433181 [email protected]

Ritesh Gupta, CFA Oil & Gas / Chemicals / Agri Inputs (022) 30433242 [email protected]

Ritesh Vaidya, CFA Consumer (022) 30433246 [email protected] Ritika Mankar Mukherjee, CFA Economy / Strategy (022) 30433175 [email protected]

Ritu Modi Automobile (022) 30433292 [email protected]

Sagar Rastogi Technology (022) 30433291 [email protected]

Sumit Shekhar Economy / Strategy (022) 30433229 [email protected]

Utsav Mehta, CFA E&C / Industrials (022) 30433209 [email protected]

Vivekanand Subbaraman, CFA Media (022) 30433261 [email protected]

Sales

Name Regions Desk-Phone E-mail

Sarojini Ramachandran - Head of Sales UK +44 (0) 20 7614 8374 [email protected]

Dharmen Shah India / Asia (022) 30433289 [email protected]

Dipti Mehta India / USA (022) 30433053 [email protected]

Hitakshi Mehra India (022) 30433204 [email protected]

Krishnan V India / Asia (022) 30433295 [email protected]

Nityam Shah, CFA USA / Europe (022) 30433259 [email protected]

Parees Purohit, CFA UK / USA (022) 30433169 [email protected]

Praveena Pattabiraman India / Asia (022) 30433268 [email protected]

Shaleen Silori India (022) 30433256 [email protected]

Singapore

Pramod Gubbi, CFA – Director Singapore +65 8606 6476 [email protected]

Shashank Abhisheik Singapore +65 6536 1935 [email protected]

USA / Canada

Ravilochan Pola - CEO Americas +1(646) 361 3107 [email protected]

Production

Sajid Merchant Production (022) 30433247 [email protected]

Sharoz G Hussain Production (022) 30433183 [email protected]

Nikhil Pillai Database (022) 30433265 [email protected]

E&C = Engineering & Construction

Strategy


ITC LTD (ITC IN, BUY)


Idea Cellular Ltd (IDEA IN, NOT RATED)


HCL Technologies Ltd (HCLT IN, BUY)


Tata Consultancy Svcs Ltd (TCS IN, BUY)


MRF Ltd (MRF IN, NOT RATED)


Gujarat Pipavav Port Ltd (GPPV IN, NOT RATED)


200250300350400450

Dec

-12

Feb-

13

Apr

-13

Jun-

13

Aug

-13

Oct

-13

Dec

-13

Feb-

14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

ITC LTD

0

50

100

150

200

250

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

IDEA CELLULAR LTD

0

200

400

600

800

1,000

1,200

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

Dec

-15

HCL TECHNOLOGIES LTD

0

500

1,000

1,500

2,000

2,500

3,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

Dec

-15

TATA CONSULTANCY SVCS LTD

0

10,000

20,000

30,000

40,000

50,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

MRF Ltd

0

50

100

150

200

250

300

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

GUJARAT PIPAVAV PORT LTD

Strategy


Tata Motors (TTMT IN, BUY)


Atul Ltd (ATLP IN, NOT RATED)


Torrent Pharma Ltd (TRP IN, NOT RATED)


Lupin Ltd (LPC IN, NOT RATED)


Persistent Systems Ltd (PSYS IN, SELL)


Kajaria Ceramics Ltd (KJC IN, NOT RATED)


0100200

300400500600

700

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

TATA MOTORS LTD

0

500

1,000

1,500

2,000

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

ATUL LTD

0200400600800

1,0001,2001,4001,6001,800

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

TORRENT PHARMACEUTICALS LTD

0

500

1,000

1,500

2,000

2,500D

ec-1

2

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

LUPIN LTD

0

200

400

600

800

1,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

Dec

-15

PERSISTENT SYSTEMS LTD

0

200

400

600

800

1,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

KAJARIA CERAMICS LTD

Strategy


Britannia Industries Ltd (BRIT IN, SELL)


Glaxosmithkline Consumer (SKB IN, SELL)


PI Industries Ltd (PI IN, BUY)


Mindtree Ltd (MTCL IN, SELL)


Page Industries Ltd (PAG IN, BUY)


Finolex Cables Ltd (FNXC IN, BUY)


0500

1,0001,5002,0002,5003,0003,5004,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

BRITANNIA INDUSTRIES LTD

01,0002,0003,0004,0005,0006,0007,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

GLAXOSMITHKLINE CONSUMER HEA

0100200300400500600700800

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

PI INDUSTRIES LTD

0200400600800

1,0001,2001,4001,6001,800

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

Dec

-15

MINDTREE LTD

02,0004,0006,0008,000

10,00012,00014,00016,00018,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

PAGE INDUSTRIES LTD

050

100150200250300350

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

FINOLEX CABLES LTD

Strategy


Supreme Industries Ltd (SI IN, BUY)


Berger Paints India Ltd (BRGR IN, BUY)


Eicher Motors Ltd (EIM IN, SELL)


TVS Motor (TVSL IN, BUY)


Sundram Fasteners (SF IN, NOT RATED)


Ajanta Pharma Ltd (AJP IN, NOT RATED)


0100200300400500600700800

Dec

-12

Mar

-13

Jun

-13

Sep-

13

Dec

-13

Mar

-14

Jun

-14

Sep-

14

Dec

-14

Mar

-15

Jun

-15

Sep-

15SUPREME INDUSTRIES LTD

0

50

100

150

200

250

300

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

BERGER PAINTS INDIA LTD

0

5,000

10,000

15,000

20,000

25,000

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

EICHER MOTORS LTD

050

100150200250300350

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

TVS MOTOR CO LTD

0

50

100

150

200

250

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

SUNDRAM FASTENERS LTD

0200400600800

1,0001,2001,4001,6001,800

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

AJANTA PHARMA LTD

Strategy


Hatsun Agro Products Ltd (HTSMF IN, NOT RATED)


La Opala Rg Ltd (LOG IN, NOT RATED)


Hindustan Unilever Ltd (HUVR IN, BUY)


Vinati Organics Ltd (VO IN, NOT RATED)


Marico Ltd (MRCO IN, BUY)


AIA Engineering Ltd (AIAE IN, SELL)


0

100

200

300

400

500

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

HATSUN AGRO PRODUCTS LTD

0100200

300400500600

700

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

LA OPALA RG LTD

0

200

400

600

800

1,000

1,200

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

HINDUSTAN UNILEVER LTD

0100200

300400500600

700Ja

n-13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

VINATI ORGANICS LTD

0

100

200

300

400

500

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

MARICO LTD

0200400600800

1,0001,2001,400

Dec

-12

Mar

-13

Jun-

13

Sep-

13

Dec

-13

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

AIA ENGINEERING LTD

Strategy


TCPL Packaging Ltd (TCPL IN, NOT RATED)


Poly Medicure Ltd (PLM IN, NOT RATED)


Atul Auto Ltd (ATA IN, NOT RATED)


Avanti Feeds Ltd (AVNT IN, NOT RATED)


KPR Mill Ltd (KPR IN, NOT RATED)


Fiem Industries Ltd (FIEM IN, NOT RATED)


0100200300400500600700800

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

TCPL PACKAGING LTD

0

100

200

300

400

500

600

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

POLY MEDICURE LTD

0100200300400500600700800

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

ATUL AUTO LTD

0100200300400500600700800

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

AVANTI FEEDS LTD

0

200

400

600

800

1,000

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

KPR MILL LTD

0

200

400

600

800

1,000

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

FIEM INDUSTRIES LTD

Strategy


Himatsingka Seide Ltd (HSS IN, NOT RATED)


Fluidomat Ltd (FDM IN, NOT RATED)


Multibase India Ltd (MUIL IN, NOT RATED)


Nucleus Software Exports Ltd (NCS IN, NOT RATED)


0

50

100

150

200

250

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

HIMATSINGKA SEIDE LTD

050

100

150200250300

350

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

FLUIDOMAT LTD

050

100150200250

300350

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

MULTIBASE INDIA LTD

050

100150200250300350400

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Oct

-15

Jan-

16

NUCLEUS SOFTWARE EXPORTS LTD

Strategy


Explanation of Investment Rating

Investment Rating Expected return (over 12-month)

BUY >10%

SELL <10%

NO STANCE We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation

UNDER REVIEW We will revisit our recommendation, valuation and estimates on the stock following recent events

NOT RATED We do not have any forward looking estimates, valuation or recommendation for the stock

Disclaimer This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Ambit Capital. AMBIT Capital Research is disseminated and available primarily electronically, and, in some cases, in printed form.

Additional information on recommended securities is available on request.

Disclaimer

1. AMBIT Capital Private Limited (“AMBIT Capital”) and its affiliates are a full service, integrated investment banking, investment advisory and brokerage group. AMBIT Capital is a Stock Broker, Portfolio Manager and Depository Participant regis tered with Securities and Exchange Board of India Limited (SEBI) and is regulated by SEBI

2. AMBIT Capital makes bes t endeavours to ensure that the research analys t(s ) use current, reliable, comprehensive information and obtain such information from sources which the analyst(s) believes to be reliable. However, such information has not been independently veri fied by AMBIT Capital and/or the analys t(s ) and no representation or warranty, express or implied, is made as to the accuracy or completeness of any information obtained from third parties . The information, opinions, views expressed in this Research Report are those of the research analyst as at the date of this Research Report which are subject to change and do not represent to be an authority on the subject. AMBIT Capital may or may not subscribe to any and/ or all the views expressed herein.

3. This Research Report should be read and relied upon at the sole discretion and risk of the recipient. If you are dissatisfied with the contents of this complimentary Research Report or with the terms of this Disclaimer, your sole and exclusive remedy is to stop using this Research Report and AMBIT Capital or its affiliates shall not be responsible and/ or liable for any direct/consequential loss howsoever directly or indirectly, from any use of this Research Report.

4. If this Research Report is received by any client of AMBIT Capital or its affiliate, the relationship of AMBIT Capital/its affiliate with such client will continue to be governed by the terms and conditions in place between AMBIT Capital/ such affiliate and the client.

5. This Research Report is issued for information only and the 'Buy', 'Sell' , or ‘Other Recommendation’ made in this Research Report such should not be construed as an inves tment advice to any recipient to acquire, subscribe, purchase, sell , dispose of, retain any securities and should not be intended or treated as a substitute for necessary review or validation or any professional advice. Recipients should consider this Research Report as only a single factor in making any investment decisions . This Research Report is not an offer to sell or the solici tation of an offer to purchase or subscribe for any investment or as an official endorsement of any investment.

6. This Research Report is being supplied to you solely for your information and may not be reproduced, redis tributed or passed on, directly or indirectly, to any other person or published, copied in whole or in part, for any purpose. Neither this Research Report nor any copy of i t may be taken or transmitted or distributed, directly or indirectly within India or into any other country including United States (to US Persons), Canada or Japan or to any resident thereof. The distribution of this Research Report in other jurisdictions may be strictly restricted and/ or prohibited by law or contract, and persons into whose possession this Research Report comes should inform themselves about such restriction and/ or prohibition, and observe any such restrictions and/ or prohibition.

7. Ambit Capital Private Limited is regis tered as a Research Enti ty under the SEBI (Research Analysts ) Regulations, 2014. SEBI Reg.No.- INH000000313. Conflict of Interests

8. In the normal course of AMBIT Capital ’s business circumstances may arise that could result in the interes ts of AMBIT Capital conflicting with the interests of clients or one client’s interests conflicting with the interest of another client. AMBIT Capital makes bes t efforts to ensure that conflicts are identi fied and managed and that clients’ interes ts are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and employees’ personal account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activi ties of staff working in areas where conflicts of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions in relation to AMBIT Capital’s services .

9. AMBIT Capital and/or its affiliates may from time to time have or solicit inves tment banking, investment advisory and other business relationships with companies covered in this Research Report and may receive compensation for the same.

Additional Disclaimer for U.S. Persons

10. The research report is solely a product of AMBIT Capital

11. AMBIT Capital is the employer of the research analyst(s) who has prepared the research report

12. Any subsequent transactions in securities discussed in the research reports should be effected through Enclave Capital LLC. (“Enclave”).

13. Enclave does not accept or receive any compensation of any kind for the dissemination of the AMBIT Capital research reports .

14. The research analyst(s) preparing the email / Research Report/ attachment is resident outside the United States and is/are not associated persons of any U.S. regulated broker-dealer and that 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 F INRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securi ties held by a research analyst account.

15. This report is prepared, approved, published and distributed by the Ambit Capital located outside of the United States (a non-US Group Company”). This report is distributed in the U.S.by Enclave Capital LLC, a U.S. regis tered broker dealer, on behalf of Ambit Capital only to major U.S. ins titutional investors (as defined in Rule 15a-6 under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”)) pursuant to the exemption in Rule 15a-6 and any transaction effected by a U.S. customer in the securi ties described in this report must be effected through Enclave Capital LLC (19 West 44th Street, suite 1700, New York, NY 10036).

16. As of the publication of this report Enclave Capital LLC, does not make a market in the subject securi ties.

17. This document does not cons titute an offer of, or an invi tation by or on behalf of Ambit Capital or its affiliates or any other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which Ambit Capital or i ts Affiliates consider to be reliable. None of Ambit Capital accepts any liability or responsibili ty whatsoever for the accuracy or completeness of any such information. All estimates , expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the poli tical and economic environment, company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.

Additional Disclaimer for Canadian Persons

18. AMBIT Capital is not registered in the Province of Ontario and /or Province of Québec to trade in securities and/or to provide advice with respect to securi ties.

19. AMBIT Capital's head office or principal place of business is located in India.

20. All or substantially all of AMBIT Capital's assets may be situated outside of Canada.

21. It may be difficult for enforcing legal rights against AMBIT Capital because of the above.

22. Name and address of AMBIT Capital's agent for service of process in the Province of Ontario is: Torys LLP, 79 Wellington St. W., 30th Floor, Box 270, TD South Tower, Toronto, Ontario M5K 1N2 Canada.

23. Name and address of AMBIT Capital's agent for service of process in the Province of Montréal is Torys Law Firm LLP, 1 Place Ville Marie, Suite 1919 Montréal, Québec H3B 2C3 Canada. Additional Disclaimer for Singapore Persons 24. This Report is prepared and distributed by Ambit Capital Private Limited and dis tributed as per the approved arrangement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph

11 of the Firs t Schedule to the Financial Advisors Act (CAP 110) provided to Ambit Singapore Pte. Limited by Monetary Authority of Singapore.

25. This Report is only available to persons in Singapore who are institutional investors (as defined in section 4A of the Securi ties and Futures Act (Cap. 289) of Singapore (the “SFA”).” Accordingly, if a Singapore Person is not or ceases to be such an ins titutional investor, such Singapore Person must immediately discontinue any use of this Report and inform Ambit Singapore Pte. Limited.

Disclosures 26. The analyst (s ) has/have not served as an officer, director or employee of the subject company. 27. There is no material disciplinary action that has been taken by any regulatory authority impacting equity research analysis activities . 28. All market data included in this report are dated as at the previous s tock market closing day from the date of this report. 29. Ambit and/or its associates have financial interest/equity shareholding in HCL Tech, TCS, Lupin, Bri tannia, Hindustan Unilever, TCPL Packaging & Fiem Industries. Analyst Certif ication Each of the analysts identified in this report certi fies , with respect to the companies or securities that the individual analyses, that (1) the views expressed in this report reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly dependent on the specific recommendations or views expressed in this report. © Copyright 2015 AMBIT Capital Private Limited. All rights reserved.

Ambit Capital Pvt. Ltd. Ambit House, 3rd Floor. 449, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India. Phone: +91-22-3043 3000 | Fax: +91-22-3043 3100 CIN: U74140MH1997PTC107598 www.ambitcapital.com

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