e t eo t e N o t t e N o Varroc Engineering Ltd. t E N o e U E N N t S ...… · lighting...

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Varroc Engineering Ltd.

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Recommendation Subscribe BACKGROUND

Price Band Rs.965– Rs.967

Varroc Engineering Ltd (Varroc) is a global tier-1 automotive component company. It designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components majorly to passenger car, two-wheeler and three-wheeler OEMs directly worldwide. Varroc is the 6

th largest global Passenger Vehicle

lighting manufacturer and the 2nd

largest in Electric Vehicle lighting.

Details and Objects of the Issue

The entire public issue consists of offer for sale of Rs. 1955 Cr. Of the 15.0% being offloaded, 13.7% stake is being offered by the PE investor (Tata Capital) while the balance 1.3% is being offered by the promoter, Mr. Tarang Jain.

Investment Rationale

Being the No.2 company globally in automotive LED lighting, Varroc is well positioned to capture the industry’s migration from halogen / xenon to LED.

Although Varroc is the 6th

largest automotive lighting company globally, it is also the fastest growing company among the top 8 companies.

Manufacturing units in low cost countries provides an edge over competitors.

Strong track record of (i) long-standing customer relationships, (ii) adding new customers in lighting and (iii) expansion into newer geographies.

Deeper penetration into existing clients to drive growth in domestic 2/3 Wheeler business.

Well diversified customer base ensures reduced dependence on success of any particular customer.

Varroc could tap the domestic lighting opportunity in the long term.

Valuation and Recommendation

Varroc is the 6th

largest global automotive lighting company and the 2nd

largest in EV lighting. Thus it is ideally placed to capture the migration within the automotive lighting industry from halogen/xenon to LED. Over 2014-16, Varroc Lighting Systems has grown three times faster at 27.5% CAGR v/s an average of 8.6% for its competitors (Top 8). Domestic business will be aided by deeper penetration into existing clients by supplying more products. Varroc is being offered at a PE of 28.9x FY18 (vs. domestic peer average of 41.6x) and EV/EBITDA of 15.9x FY18 (vs. domestic peer average of 17.6x). Thus based on the business capabilities, industry growth prospects and valuations, we recommend subscribing to the issue.

(Rs Cr) Financial Snapshot FY15 FY16 FY17 FY18

Net Revenues 6,770 7,909 9,299 10,279

Growth

17% 18% 11%

EBIDTA 617 571 582 878

EBITDA Margins 9.1% 7.2% 6.3% 8.5%

PAT 17 370 303 451

Growth

2100% -18% 49%

ROCE 5.8% 14.1% 11.1% 14.8%

ROE 1.5% 20.7% 13.8% 15.8%

EV/EBIDTA

28.9

P/E

15.9

Source: Company data, NB Research

Bidding Date 26 - 28 June

BRLM Kotak, Citi,

Credit Suisse, IIFL

Registrar LINK Intime

Sector Auto Ancillary

Minimum Retail Application

Number of Shares 15

Min. Application Money Rs. 14,505

Discount to retail NIL

Payment Mode ASBA

Cons. Financials (Rs Cr) FY17 FY18

Total Income 9299 10279

EBITDA 852 878

PAT 303 451

Valuations Lower Band

Upper Band

Market Cap (Rs Cr) 13,009 13,036

EPS* 33.4 33.4

P/E Ratio* 28.9 28.9

EV/ EBITDA* 15.8 15.9

Enterprise Value (Rs Cr) 13,891 13,918

*calculated on FY18

Post Issue Shareholding Pattern

Promoters 85.0%

Institutions 7.5%

Public 7.5%

Offer structure for different categories

QIB (Including Mutual Fund) 50%

Non-Institutional Investors 15%

Retail 35%

Post Issue Equity (Rs. in Cr) 13.48

Issue Size (Rs in Cr) 1,951 – 1955

Face Value (Rs) 1

Jehan Bhadha

Assistant Vice President (+91 22 6273 8174)

[email protected]

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Company Background Varroc Engineering Ltd (Varroc) is a global tier-1 automotive component company. It designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components majorly to passenger car, commercial vehicle, two-wheeler and three-wheeler OEMs directly worldwide. Varroc is the 6

th largest global Passenger Vehicle lighting manufacturer and the 2

nd largest in Electric Vehicle lighting.

Varroc has two primary business lines:

1. Varroc Lighting Systems: Where it supplies exterior lighting systems to passenger car OEMs globally. 2. Varroc India Business: Where it supplies a diverse range of auto components primarily to 2W and 3W OEMs

domestically. Varroc has a global footprint of 36 manufacturing facilities spread across seven countries, with six facilities for Global Lighting Business, 25 for the Indian Business and five for other businesses.

Exhibit 1: Product Mix (FY18) Exhibit 2: Geographical Mix (FY18)

Source: Company data, NBRR Source: Company data, NBRR

Exhibit 3: Customer Mix (FY18) Exhibit 4: Segmental mix (FY18)

Source: Company data, NBRR Source: Company data, NBRR

Lighting (Global)

61%

Polymer (India) 16%

Electrical (India) 10%

Metallic (India)

6%

Others (India)

7%

Europe 42%

India 35%

North America

22%

Others 1%

Bajaj (India) 19%

Customer A

14%

Cust. B 11% Cust. C

9%

Cust. D 6%

Cust. E 6%

Honda 4%

Others 32%

4W (Global)

63%

2/3W (India) 34%

Others 3%

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Investment Rationale

Varroc – World No. 2 in global EV lighting, is well positioned to capture the industry’s migration from halogen/xenon to LED The global automotive lighting industry stood at $ 17.5 Bn in 2016 and is slated to grow at a CAGR of 4.3% over 2016-2022. However, there are stark dichotomies within the industry wherein older technology based lighting like Halogen and Xenon would decline at a CAGR of 5% and 10% respectively until 2022 and LED lighting would capture two-thirds of the market by 2022 from just one-third share in 2016 by growing at a CAGR of 17%. Exhibit 5: Technology wise Global Automotive Lighting Market (in $ Bn)

Source: Company, NBRR

Exhibit 6: Global automotive lighting industry mix by technology

Source: Company, NBRR

7.4

4.2 3.3

7.2

4.3 5.9

5.2

2.4

14.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Halogen Xenon LED

2012 2016 2022E

50%

28%

22%

2012

Halogen Xenon LED

41%

25%

34%

2016

Halogen Xenon LED

23%

11% 66%

2022

Halogen Xenon LED

With the advent of EVs (electric vehicles), the pace of migration to LED lighting shall increase in coming years as LEDs require 80-90% lower energy than halogen. LED lights are 5x costlier than halogen lights and thus companies like Varroc are well placed to grow in coming years with a low co-relation to the overall global vehicle sales growth.

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Varroc is the fastest growing global passenger vehicle lighting company

The global passenger vehicle lighting market is dominated by 8 players who together command over 90% of the market.

Out of these players Varroc, Valeo and Hella are the only players who are independent as opposed to others where certain OEMs have equity holdings. This allows the independent players to target any market and have their own technological roadmap without being driven by the interests of any OEM as a shareholder.

Varroc has been the fastest growing company among competitors and has increased its market share to ~4%. This represents further scope for Varroc to increase its market share from the current low levels especially upon considering the fact that although Varroc is No. 6 in the overall auto lighting industry, it is No. 2 in the Electric Vehicle market.

Exhibit 7: Market share of top global players

Source: Company

Exhibit 8: Varroc outpaces peers in top-line growth (CAGR) over 2014-16

Source: Company

Koito (Japan) 28%

Magneti Marelli (Italy) 17%

Valeo (France)

13%

Stanley (Japan)

13%

Hella (Denmark)

11%

Varroc (India)

4%

SL (Korea) 4%

ZKW (Australia)

4%

Others 6%

Overall global PV lighting

Koito (Japan) 8%

Magneti Marelli (Italy)

21%

Valeo (France)

19% Stanley (Japan)

4%

Hella (Denmark)

13%

Varroc (India) 20%

SL (Korea) 0%

ZKW (Australia)

5%

Others 10%

Global EV lighting

5% 5% 7% 8% 9% 10%

17%

28%

0%

5%

10%

15%

20%

25%

30%

Hel

la

(Den

mar

k)

Mag

net

i M.

(Ita

ly)

Ko

ito

(J

apan

)

Stan

ley

(Jap

an)

SL (

Ko

rea)

Val

eo

(Fra

nce

)

ZKW

(A

ust

ralia

)

Var

roc

(In

dia

)

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Manufacturing footprint in low cost countries to provide an edge over competitors Varroc has 36 manufacturing footprints in different geographic areas and associated markets, but particularly in countries with low labor cost like Mexico, India, China, and the Czech Republic. These manufacturing units are located in close proximity to OEMs in Europe and North America which leads to cost efficiencies and quick turnaround times. Facilities in Czech Republic cater to the demand for European OEMs while that in Mexico caters to the demand from North American OEMs. Of the 36 manufacturing facilities, 25 are for the Indian business where they are co-located alongside customers, while 11 facilities are located globally. Varroc’s extensive, low cost manufacturing footprint allows it to act as a global platform for its lighting customers. For example, it supplies goods to Ford in Europe, North America, South America and Russia. This global capability strengthens its customer relationships and makes it more likely to win key contracts, as many manufacturers look for vendors with supply chain capabilities across geographies. Varroc's strong customer relationships are reflected in the fact that between FY14-18, it increased the number of customers to whom it invoices over € 5 million per year from seven to nine. Further, Varroc is in the process of setting up a new manufacturing plant in Brazil, to serve the South American market, and Morocco, to serve the southern European and north African markets. Exhibit 9: Locations of manufacturing facilities across the world

Source: Company data

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Strong track record of – (i) long-standing customer relationships, (ii) adding new customers post acquisition of Visteon and (iii) expansion into newer geographies Varroc has strong, long-standing relationships with many of its customers. For example, in its gobal lighting business, Varroc has a relationship with JLR since 2006. In its Indian business, Varroc’s longest-standing relationship is with Bajaj, who has been its customer since 1990 and whom they supply a wide variety of components. Varroc’s relationship with seven of its top ten customers have lasted longer than 10 years. At the time of acquisition of Visteon in 2012, it had two major OEM customers – JLR and a central European car manufacturer. Post acquisition, Varroc has expanded the customer base to include new OEMs such as VW group, Renault-Nissan-Mitsubishi and Volvo. Varroc intends to expand its international footprint through the development of new plants in Brazil and Morocco, in order to open up the South American, southern European and north African markets. These markets, in addition to the Indian and Chinese markets, together accounted for more than 80% of passenger car and LCV sales by volume in 2016. This increased global footprint will not only give access to additional markets, but also deepen its customer engagement (mainly with Renault-Nissan-Mitsubishi and a large European car manufacturer) and improve its ability to service existing customers, many of whom look for single source suppliers across the globe for their product lines. Through Varroc’s China JV, it currently has two plants and two R&D centers in China. With its current footprint in China, it covers two major automotive clusters in the east and west of China.

Varroc could tap the domestic lighting opportunity in the long term Being the 6

th largest global passenger vehicle lighting player, Varroc has demonstrated its technological and product

capabilities by serving top tier global OEMs like JLR, Ford, VW, Tesla and many others. Thus, Varroc is well positioned to tap the domestic lighting opportunity as well, in the long term. As per industry reports, the overall Indian automotive lighting market stands at ~$ 2.2 Bn and the key players holding a significant market share include Phoenix Lamps, Lumax Industries, Osram Licht AG and GE Lighting.

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Deeper penetration into existing clients to drive growth in domestic 2/3 Wheeler business Varroc derives almost half of its domestic revenues from Bajaj Auto. However, in recent years, the company has gained entry into all two wheeler OEMs except for TVS. Crisil expects the 2 & 3 wheeler industry volumes to grow at 7% & 14% CAGR respectively over FY18-20E. Presence with most major OEMs would ensure that Varroc performs in-line with the industry. Varroc currently supplies 16 two wheeler components to Bajaj Auto. While it has gained entry into other large OEMs, it is yet supplying only a few products (between 3-8). Thus there exists a huge opportunity for the company to supply its entire product range to companies like Hero, HMSI, Yamaha, Suzuki and Royal Enfield. Also, Japanese companies typically have a long and slow approval process and the company has been patiently pursuing them, with an eye on the long term opportunity. Exhibit 10: Comprehensive Solution Provider to 2 Wheeler OEMs in India


Exhibit 11: Product wise industry dynamics - for domestic business of Varroc

Domestic 2 & 3 Wheeler Segment

Revenue Mix

Industry Size (Rs. Bn)

Industry Growth FY17-20E

Key Competitors

Polymer 16.0% 48 20% Lumax, Fiem, Sandhar Tech.

Electrical 10.2% 70 17% Minda, Pricol, Denso, India Nippon

Metallic/Forging 6.3% 15 18% Hi-Tech Gears, Sundaram Fasteners Source: Company data

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Well diversified customer base ensures reduced dependence on success of any particular customer While Varroc has many key customers who have been with it for a long time, it yet has a diversified customer base and continues to add new customers, such as Renault-Nissan-Mitsubishi, Volvo, a Spanish automobile manufacturer and a German automobile manufacturer. Newly added customers for FY18 and FY19 include Dell'Orto S.p.A and Tata Cummins. In FY18, Varroc had only three customers who exceeded 10% of its revenue, with its largest customer contributing 18.6% (Bajaj Auto). Moreover, both its global lighting business and India business are diversified across customers, with its top three customers for global lighting business accounting for 33.8% of total revenue and its top three customers for India Business accounting for 25.1% of total revenue. Exhibit 12: Revenue mix by customer


Concerns Pricing pressure from customers may adversely affect the company’s gross margin, profitability and ability to

increase prices, which in turn may adversely affect its business, results of operations and financial condition.

Varroc’s business is dependent on certain major customers, with whom the company does not have firm commitment agreements. The loss of such customers, a significant reduction in purchases by such customers, or a lack of commercial success of a particular vehicle model of which Varroc is a significant supplier could adversely affect its business.

Varroc is heavily dependent on the performance of the global passenger vehicle market and the two wheeler and three wheeler markets in India. Any adverse changes in the conditions affecting these markets can adversely impact its business.

Bajaj (India) 19%

Customer A (Global)

14%

Cust. B (Global)

11%

Cust. C (Global)

9%

Cust. D (Global)

6%

Cust. E (Global)

6%

Honda (India)

4%

Others 32%

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Valuation and Recommendation Varroc is the 6

th largest global automotive lighting company and the 2

nd largest in EV lighting. Thus it is ideally placed to

capture the migration within the automotive lighting industry from halogen/xenon to LED. Over 2014-16, Varroc Lighting Systems has grown three times faster at 27.5% CAGR v/s an average of 8.6% for its competitors (Top 8). Domestic business will be aided by deeper penetration into existing clients by supplying more products. Varroc is being offered at a PE of 28.9x FY18 (vs. domestic peer average of 41.6x) and EV/EBITDA of 15.9x FY18 (vs. domestic peer average of 17.6x). Thus based on the business capabilities, industry growth prospects and valuations, we recommend subscribing to the issue. Exhibit 13: Peer Comparison

Sales Sales CAGR

FY15-18 EBITDA CAGR

FY15-18 D/E Total Asset

Turns EBITDA Margins ROE PE EV/EBITDA

Indian cos. – FY18 figures in Rs. Cr.

Motherson Sumi 56086 18% 15% 0.7 2.5 8.6% 12.4% 40.4 14.8

Bharat Forge 8415 4% 6% 0.6 1.1 20.5% 16.4% 38.5 18.5

Endurance Tech. 6666 11% 15% 0.3 2.4 13.9% 18.0% 45.8 19.4

Average 11% 12% 0.5 2.0 14.3% 15.6% 41.6 17.6

Varroc Engineering 10279 15% 12% 0.4 2.5 8.5% 15.8% 28.9 15.9

International cos. – CY17 figures in USD Bn

Valeo 21.4 13% 16% 0.2 1.2 12.6% 20.8% 14.7 6.7

Koito Manufacturing 7.6 12% 22% 0.1 1.4 14.8% 18.2% 20.2 7.5

Hella 7.6 7% 11% 0.6 1.2 13.8% 16.3% 17.2 6.4

Stanley Electric 3.5 6% 7% 0.1 0.9 19.6% 9.4% 20.3 7.7

Average 10% 14% 0.3 1.2 15.2% 16.2% 18.1 7.1 Source: Company Data, Morningstar, NBRR

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Annexure – Varroc’s Journey Varroc commenced operations with the polymer business in 1990 at Aurangabad, Maharashtra under the leadership of Mr. Tarang Jain. It initially grew organically in India by adding new business lines, such as the electrical division and metallic division. Subsequently, it diversified its product offerings and expanded its capacity through various investments, joint ventures and acquisitions. Its acquisitions most notably included the 2012 acquisition of Visteon's global lighting business, now known as Varroc Lighting Systems. In 2013, Varroc expanded its global lighting business by acquiring Visteon's holding in a 50/50 joint venture with Beste Motor Co. Ltd. ("TYC") to manufacture automotive lighting in China. Exhibit 14: Geographical revenue split (Rs. Cr)

FY16 FY17 FY18

Europe 2,830 3,513 4,343

Growth 24% 24%

Mix 34% 37% 42%

North America 2,164 2,848 2,310

Growth 32% -19%

Mix 26% 30% 22%

Asia Pac 56 58 73

Growth 3% 26%

Mix 1% 1% 1%

India 3,091 3,143 3,602

Growth 2% 15%

Mix 38% 33% 35%

Others 78 46 50

Growth -41% 9%

Mix 1% 0% 0%

Total 8,219 9,609 10,378

Growth 17% 8% Source: Company Data

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Management Background Name Age Designation Background

Naresh Chandra 83 Chairman and Non-Executive Director

Holds a bachelor’s degree in economics and a master’s degree in history from the University of Delhi. Also holds a diploma in Business administration from the City of Birmingham College of Commerce, United Kingdom. Has been associated with the company since incorporation and became the Chairman of the Company in 1997.

Tarang Jain 56 Managing Director Holds a bachelor’s degree in commerce from Sydenham College of Commerce and Economics, University of Bombay and a diploma in business administration from University of Laussane, Switzerland. Has approximately 30 years of experience in the automotive industry. Has been associated with the Company since incorporation and was appointed as the Managing Director in 2001.

Ashwani Maheshwari 49 Whole-time Director and Chief Executive Officer

Holds a bachelor’s degree in engineering from the Indian Institute of Technology, Roorkee and a Master of Science degree in leadership and strategy from the London Business School, London, United Kingdom. Has also successfully completed the executive development program from the Wharton School, University of Pennsylvania, USA. Has previously worked with The Tata Iron and Steel Company Limited as a graduate trainee, as a senior vice president – India business division in ITC Infotech India Limited and as the president – Birla tyres at Kesoram Industries Limited.

Stephane Vedie 43 President and Chief Executive Officer of Varroc Lighting Systems

Holds a diploma in purchasing management function from the Academy of Grenoble, France and a degree from Amiens Business School, France. Has previously been associated with Magneti Marelli. Has 13 years of experience in automotive lighting. He joined Varroc Lighting Systems Inc. on December 12, 2016.

Arjun Jain 28 Business Head - electrical division

Holds a bachelor’s degree in arts from Vassar College, New York. Previously was associated with Bain & Company India Private Ltd and joined Varroc on October 1, 2013 as the general manager - business excellence division. Was appointed as the business head of the electrical division on May 18, 2015.

T.R. Srinivasan 52 Chief Financial Officer

Has obtained a post graduate diploma in management from Indian Institute of Management, Calcutta and is a member of the Institute of Cost and Works Accountant of India. Has previously been associated with Hindustan Lever Limited, Philips Electronics India Limited, Reliance Digital Retail Limited, Siro Clinpharm Private Limited, ATC Tires Private Limited. Has approximately 29 years of work experience and joined the Company on October 3, 2017 and was appointed as a Chief Financial Officer on February 6, 2018.


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Financials

P&L (Rs. Cr) FY15 FY16 FY17 FY18 Balance Sheet (Rs. Cr) FY15 FY16 FY17 FY18

Net Revenue 6770 7909 9299 10279 Share Capital 9.6 26.2 13.5 13.5

% Growth 17% 18% 11% Reserve & Surplus 1,094 1,757 2,192 2,835

COGS 4193 5049 6037 6383 Networth 1,104 1,783 2,206 2,849

% of Revenues 61.9% 63.8% 64.9% 62.1% Total Loans 1,651 1,595 1,508 1,193

Employee Cost 902 1040 1204 1314 Deff Tax Liab 62 47 13 51

% of Revenues 13.3% 13.1% 12.9% 12.8% Other non-curr l iab. 98 92 91 144

Other expenses 1058 1249 1477 1705 Trade payable 983 1,217 1,505 1,979

% of Revenues 15.6% 15.8% 15.9% 16.6% Other Current Liab 517 486 477 592

EBITDA 617 571 582 878 Short term provisions 14 26 60 45

EBITDA Margin 9.1% 7.2% 6.3% 8.5% Total Current Liab. 1,514 1,728 2,042 2,616

Changes in CCPS 378 (127) 4 0 Total Equity & Liab. 4,428 5,246 5,860 6,852

Depreciation 254 292 337 386 Fixed Assets & CWIP 2,036 2,441 2,688 3,148

Other Income 88 21 94 39 Investments 196 264 293 356

Interest 97 84 86 86 Deff Tax Assets - 13 13 103

Share of PAT (Invst) 36 50 79 69 Other non Curr. assets 179 168 148 184

Exceptional gain 52 Cash 11 112 305 312

PBT 63 392 327 513 Inventories 586 683 753 864

Tax 47 22 24 62 Debtors 1,071 1,185 1,138 1,403

Tax rate 73% 6% 7% 12% Other Current assets 349 379 521 482

PAT 17 370 303 451 Total Assets 4,428 5,246 5,860 6,852

% Growth 2100% -18% 49% Cash Flow (Rs. Cr) FY15 FY16 FY17 FY18

EPS (Post Issue) 1.2 27.4 22.5 33.4 EBITDA 617 571 582 878

Performance Ratios FY15 FY16 FY17 FY18 Provisions & Others 75 12 76 25

EBITDA Margin (%) 9.1% 7.2% 6.3% 8.5% Op. profit before WC 692 583 658 903

PAT Margin (%) 0.2% 4.7% 3.3% 4.4% Change in WC (506) (252) 69 296

ROE (%) 1.5% 20.7% 13.8% 15.8% Less: Tax (57) (40) (51) (124)

ROCE (%) 5.8% 14.1% 11.1% 14.8% CF from operations 128 290 677 1,075

Net D/E (x) 1.5 0.8 0.5 0.3 Addition to assets (311) (606) (629) (578)

Turnover Ratios FY15 FY16 FY17 FY18 (Purchase)/Sale of invst. 66 27 43 (48)

Debtors Days 58 55 45 50 Dividend Received - 0 20 25

Inventory Days 32 32 30 31 CF from Investing (245) (579) (565) (601)

Creditor Days 86 88 91 113 Loan from banks 172 475 184 (430)

Asset Turnover (x) 2.5 2.3 2.5 2.5 Dividend Paid (4) (4) (5) (7)

Valuation Ratios FY15 FY16 FY17 FY18 Interest paid (98) (85) (86) (86)

Price/Earnings (x) 28.9 CF from Financing 70 386 94 (523)

EV/EBITDA (x) 15.9 Net Change in cash (47) 98 205 (50)

Price/BV (x) 4.6 Cash at beginning 98 11 112 305

Mkt cap/Sales (x) 1.3 Exchange difference (40) 3 (11) 56

EV/Sales (x) 1.4 Cash at end 11 112 305 312

Source: Company Data, NBRR

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Disclosure:

This Report is published by Nirmal Bang Securities Private Limited (hereinafter referred to as “NBSPL”) for private circulation. NBSPL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 2014 having Registration no. INH000001766. NBSPL is also a registered Stock Broker with National Stock Exchange of India Limited and BSE Limited in cash and derivatives segments. It is also a registered Portfolio Manager having registration no as INP000002981. NBSPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. NBSPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. NBSPL, its associates or analyst or his relatives do not hold any financial interest in the subject company. NBSPL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. NBSPL or its associates or Analyst or his relatives hold / do not hold beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of this research report. NBSPL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. NBSPL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and NBSPL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I, Jehan Bhadha, the research analyst and author of this report, hereby certify that the views expressed in this research report accurately reflects my/our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

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Disclaimer:

This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. NBSPL is not soliciting any action based upon it. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. In preparing this research, we did not take into account the investment objectives, financial situation and particular needs of the reader. This research has been prepared for the general use of the clients of NBSPL and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intended recipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. NBSPL will not treat recipients as customers by virtue of their receiving this report. This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject NBSPL & its group companies to registration or licensing requirements within such jurisdictions. The report is based on the information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up-to-date and it should not be relied upon as such. We accept no obligation to correct or update the information or opinions in it. NBSPL or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. NBSPL or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This information is subject to change without any prior notice. NBSPL reserves its absolute discretion and right to make or refrain from making modifications and alterations to this statement from time to time. Nevertheless, NBSPL is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries. Before making an investment decision on the basis of this research, the reader needs to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. Opinions expressed are subject to change without any notice. Neither the company nor the director or the employees of NBSPL accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Here it may be noted that neither NBSPL, nor 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 profit that may arise from or in connection with the use of the information contained in this report. Copyright of this document vests exclusively with NBSPL.

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