Quant Havells Initiating Coverage

8/2/2019 Quant Havells Initiating Coverage

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Havells India: gravitating towards consumer business; E-FMCG in the making

January 27, 2011 2

Table of Contents

Investment summary

Business Summary ..

Macro scenario sustainable for long term growth

Strong branding to assist in market share expansion

Revenue and Profitability of Various Divisions

Aggressive future growth strategies

Sylvania turnaround to drive further re-rating

Financial Analysis .

Valuation & Peer comparison .

Key Risks .

Company Background

Financials .


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January 27, 2011 3

Investment summary

Pan-India reach + strong international brand = HAVL to shine bright

Havells India (HAVL) is a strong play on construction and consumer spending owning leading bra

across the consumer electrical space in India. After gaining leadership positions (among Top 4) i

its 4 product segments (Switchgears, Cables & Wires, Consumer durables and Lighting equipme

HAVL has gained a strong foothold in Europe and Latin America as well, after the acquisition of

lighting business of Sylvania, the No. 4 lighting brand in the world. A strong distribution marketing nework in addition to aggressive brand building and portfolio addition initiatives

transformed HAVL into a electrical FMCG company, showing consistent q/q growth over the las

quarters. HAVLs industry-leading growth, demonstrated ability to continuously gain market shar

addition to margin expansion, a strong turnaround in Sylvania operations and a strong pipelin

new product launches make us bullish on the stock.

We believe HAVL is in a position to aggressively ramp up its India business given the wide distribu

network and a pan-India presence. It now has 4300 wholesalers/dealers and 35,000 retailers ac

India covering the length and breadth of the country. It is now leveraged to a strong consump

economy like India and other emerging economies in Asia and Latin America through Sylva

Although there were concerns over HAVLs ability initially to successfully turn around a ai

multinational bigger than itself, the management has demonstrated its capabilities by implemen

a rigorous restructuring exercise which has started yielding results starting Q1FY11. HAVL has demonstrated its ability to launch innovative new products and rapidly gain market share and to

holds a Top 4 position in all its product segments.

HAVL has recently launched a water heater product line which is currently a Rs8bn market in In

and has plans to introduce new products like electric irons and ACs in the near future. Ligh

products is another focus area for the company which the company is planning to expand

launching Sylvania products in India. On the international front, the company is targeting L

America and Asia as key growth markets and has able been able to grow topline there consiste

for the last 3 quarters.

Our target price is based on 12x FY12E EV/EBITDA for the domestic business and 7.5x FY

EV/EBITDA for Sylvania, which we believe is reasonable given the expected growth trajectory (

CAGR growth of 129% over FY10-FY12E) and recovery in return ratios, with ROCE expected to re

to 27% and ROE to 48% after falling off significantly in FY09 and FY10 due to the loss making Sylv

operations.

Exhibit 2: Sylvania recovery bringing consol nos back on trackFY09 FY10 FY11E FY12E

Domestic

Reve nue s (Rs mn) 21984 24734 29114 33784

EBITDA (Rs mn) 2033 3053 3490 3994

Ma rgi ns (%) 9.2% 12.3% 12.0% 11.8%

Sylvania

Reve nue s (Rs mn) 27765 24243 25576 27250

EBITDA (Rs mn) 763 -59 1535 1771Ma rgi ns (%) 2.7% -0.2% 6.0% 6.5%

Consol

Reve nue s (Rs mn) 54775 54315 55690 62183

EBITDA (Rs mn) 2886 3222 5225 5995

Margins (%) 5.3% 5.9% 9.4% 9.6%

Source: Company, Quant Global Research estimates

A strong distribution and

marketing nework in addition to

ggressive brand building and

portfolio addition initiatives has

ransformed HAVL into a electricalMCG company, showing

onsistent q/q growth over the last

6 quarters.


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HavellsIndia:gravitatingtowardsconsumerbusiness;EFMCGinthemaking

January27,2011 4

BusinessSummaryxhibit3: MarketsharegainshasputHAVLinaleadershippositionacrossproductsegments

DomesticSwitchgears MCB Peers HAVLRank Luminaries Peers HAVLRank

MarketSize Rs 12bn Legra ndMDS #1 MarketSize Rs 20bn Phi l i ps #4

MarketShare 15%(FY06)to20% (F Y10) S cheneider MarketShare 3%(FY06)to10% (FY10) Crom pton

ModularSwitches Crabtree Peers HAVLRank Fans Peers HAVLRank

MarketSize Rs 10bn Ma ts us hita #2 MarketSize Rs 30bn Crompton #3

MarketShare 5%(FY06)to15%(FY10) AnchorRoma MarketShare 6%(FY06)to13% (F Y10) Ori e nt

ndustrialswitchgears Peers HAVLRank ElectricalWaterHeater Peers HAVLRank

MarketSize Rs 20bn L&T #4 MarketSize Rs 8bn Ba ja j New

MarketShare 7%(FY06)to8%(FY10) Siemens Recold

HAVLRank

Cable&Wire Peers HAVLRank World's No.4 64% Europe revenues #4

MarketSize Rs 120bn Pol yca b #2 LightingBra nd 31% LatinAmerica

MarketShare 6%(FY06)to9%( FY10) Fi no le x

CompactFluorscent Lamps Peers HAVLRank

MarketSize Rs 12bn Phi l i ps #2

MarketShare 10%(FY06)to10%( FY10) Os ra m

Sylvania InternationalLighting

ource:Industrydata,QuantGlobalResearch

Exhibit4: Strongmarketsharegainsacrossproductsegments

15%

5%

7%6%

10%

3%

6%

20%

15%

8%9% 10% 10%

13%

0%

5%

10%

15%

20%

25%

DomesticSwitchgears

MCB

ModularSwitches

Crabtree

Industrialswitchgears

Cable&Wire

CompactFluorscent

Lamps

Luminaries

Fans

MarketshareinF Y0 6 Mark etshareinFY10

Source:Company,QuantGlobalResearch


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January 27, 2011 5

Macro scenario sustainable for long term growth

Recovery in housing construction and huge power spend to dr

demand

On the industrial side, cables & wires segment which contributes about 42 % to HAVLs standa

revenues and switchgears, which contribute another 28% will benefit from the expected spendin

the power sector. HAVL has been a major beneficiary of Indias industrial capex, including po

capacity additions and augmentation of Transmission and Distribution infrastructure.

xhibit 5: India still has lowest per capital electricity consumption(in kwh per annum)

Exhibit 6: Huge power spending expected in 2011 and 2012

ource: IEA, Quant Global Research Source: Planning Commsission, Quant Global Research

On the retail side, the lighting and consumer durable divisions which contribute around 30%

revenues will benefit from a requirement of residential units in addition to the replacement dem

for consumer goods and increase in brand awareness of domestic consumers. In a country like In

the opportunity for a Pan-India player with strong brand recognition is expected to gradually incre

with the increase is consumer awareness, especially in the Tier 2 and Tier 3 cities.

Gradual shift in consumer preference towards branded products

After the delicensing of manufacture of electrical products, organised players are able to add capa

much faster than the unorganized players. They are also able to provide a much better quality

diversified product portfolio at the same price which is continuously taking market share away fr

the unorganised sector, especially in the consumer durables and lighting space. For example, as

HVEL, the unorganised sectors share of the fan market has declined from 50% in 2006 to 30%

2010. Within the segments as well, we are witnessing a trend of moving towards higher-

premium products.

Awareness towards good quality brands and penetration of organized retailers is fuelling the dem

of electrical consumer goods. We believe that HAVL has captured a larger mind as well as mar

share in the electrical consumer space.

543

2752

8477

23461895

4128

10102

6080

0

2000

4000

6000

8000

10000

12000

India

World

OECD

China

2007 2030E

344 433 546

1569

2892

0

500

1000

1500

2000

2500

3000

3500

FY08

FY09

FY10

FY11+FY12E

11t

hP

lan

Targeted Power T&D expenditure (Rs bn)

We believe that HAVL has captured

larger mind as well as market

hare in the electrical consumer

pace.

per capita e lectricity consumption (KWh)


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January 27, 2011 6

xhibit 7: Share of organized sector in home appliances gaining rapidly Exhibit 8: Organised fans segment growing faster than unorganised

ource: Media reports, Quant Global Research Source: IFMA, Quant Global Research

Key beneficiary of rising income levels and increasing retail space, especially in Tier 2 and Tie

cities

A direct impact of rising income levels of consumers is seen in increasing housing activity whshould benfit pan-India players like HAVL. In addition to new demand being created, the replacem

demand from exisiting households (10-15% of HAVL sales) is also expected to remain strong.

robust distribution network spread across Tier 2 and Tier 3 cities in India place HAVL in a str

position to capture a major share of the booming consumer electrical industry.

According to a report titled 'India Organised Retail Market 2010', published by Knight Frank Ind

May 2010 during 2010-12, around 55 mn sq ft of retail space will be ready in Mumbai, natio

capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010

2012, the organised retail real estate stock will grow from the existing 41mn sq ft to 95 mn sq ft.

can potentially fuel the demand for HAVLs consumer products.

50%

35%

50%

65%

0%

10%

20%

30%

40%

50%

60%

70%

FY06

FY10

Unorganised home appliances market (%) Organised home appliances market share (%)

8

10

13

24

0

5

10

15

20

25

30

FY07

FY10

Unorganised Fans market (Rs bn) Organised Fans market (Rs mn)

23% CAGR for organised

n addition to new demand being

reated, the replacement demand

rom exisiting households (10-15%

f HAVL sales) is also expected to

emain strong.


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January 27, 2011 7

Strong branding to assist in market share expansionA recovery in the housing market and improvement in industrial activity is expected to aid str

industry growth in FY12, while brand awareness among consumers is likely to increase the ma

share of branded palyers like HAVL. We expect HAVL to continue its leadership position across

product segments, with significant market share increases in consumer durables and lighting.

Significant branding investments paying off for the company

Exhibit 9: Strong S&D investments paying off for the company

887.1

1578.1

2251.9

6872.5

7656.78239.5

84878741

12%

13%

14%

15%

16%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

FY05

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

S&D expenses (Rs mn) as % of sale s


HAVL has always spent 2-4% of its annual revenues on advertising (in line with other consum

durable companies) and building up its brand image, especially in Tier 2 and Tier 3 cities. The ove

selling & Distribution expenses have risen to around 15% of sales, especially since the Sylv

acquisition as the company had to invest heavily in improving its branding and distribution netwo

Latin America and Asia. This has helped create a strong visibility for HAVL s brands across prod

segments. HAVL also has 60 dealer-run retail galleries in the name of Havells Galaxy., w

augment the companys brand popularity initiatives. The company has a target of adding about 30

galleries every year with a aim of reaching as many consumers directly as possible. Apart f

innovative media campaigns, the company is also trying innovative packaging techniques to crea

strong brand image for its products.

Exhibit 10: Gravitatiting toward becoming an Electrical FMCG playerSuccessfully implementing the 7 P's of Marketing

Product Minimal outsourcing, in-house manufacturing and raw material procurement

from primary vendors ha s e nhanced product qual ity

Price Abili ty to charge price premi um due to better product quali ty and complete

product portfolio h elp s i n protecting margins

Place Pan-India presence wi th 35000 retaile rs and 4300 dea lers h as brought HAVL

products nea r the consum er in every region in I ndia

Promotion Significant amounts spent on advertising and brand building have created a

strong brand recall for HAVL products

People Motivated and well trained sales force, product design team encouraged

for continuous i nnovation, libe ral incentive programs

Packaging Innovative and colourful packagi ng and a ttractive product presen tation in retail

gal ler ies has made a strong impress ion of HAVL products i n the retai l s pace

Positioning HAVL has the ima ge of being one of the premium pla yers in cons umer ele ctricals

spa ce with qual ity products, which makes it ea sy to garner market sha re for new products

Source: Company, Quant Global Research

AVL has always spent 2-4% of its

nnual revenues on advertising (in

ne with other consumer durable

ompanies) and building up its

rand image, especially in Tier 2

nd Tier 3 cities.


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January 27, 2011 8

Revenue and Profitability of Various Divisions

xhibit 11: Cables & Wires and switchgears were dominant segments Exhibit 12: Lighting and durables contributing more to revenues

28%

45%

13 %

13%

2%

FY09 Revenue Break-up

Switchgears Cables & W ires Lighting Durables Others

28%

41%

15%

15%

1%

FY10 Revenue Break-up

Switchgears Cables & Wires Lighting Durables Others

ource: Company, Quant Global Research Source: Company, Quant Global Research

xhibit 13: Switchgears contributed more than half gross margins Exhibit 14: Durables also start adding significantly to margins

52.6%

16.3%

13.5%

15.3%

2.3%

FY09 Contribution margin break-up

Swi tchge ars Cal es & Wi re s Lighting Durabl es Othe rs

49.3%

16.8%

13.2%

19.3%

1.3%

FY10 Contribution margin break-up

Switchgears Cales & Wires Lighting Durables Others

ource: Company, Quant Global Research Source: Company, Quant Global Research


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January 27, 2011 9

1. SwitchgearsSwitchgears is the most profitable segment for HAVL and also the most competitive one with

presence of a number of multinationals. This segment accounts for 28% of HAVL revenues but 50%

its contribution profit. HAVL has become a leading name in the industry by virtue of being the lar

manufacturer of MCBs (miniature circuit breakers) in India and among the Top 10 in the world.

company has a diversified portfolio in this segment with products like MCBs, mini MCBs, R

(residual current circuit breaker), switches, regulators and MCCBs (moulded case circuit breake

with manufacturing facilities at Baddi, Himachal Pradesh and Faridabad, Haryana.

xhibit 15: Strong growth in switchgears industry Exhibit 16: HAVL growing faster than industry despite high competitio

ource: Capitaline, Quant Global Research Source: Company, Quant Global Research estimates

HAVL owns the marketing rights for the #2 brand in modular switches, Crabtree which contrib

about Rs1.5bn to its annual revenues. The company has grown its market share quite aggressiv

from 5% in 2006 to 15% in FY10. Another important category in this segment is indus

switchgears, a premium category dominated by players like L&T, Siemens and Schneider, where H

commands a 8% market share.

Exhibit 17: Swithgears to remain highest margin segment (36-37%)

1277

1779

2062

2611

2990

3363

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

0

500

1000

1500

2000

2500

3000

3500

4000

FY07

FY08

FY09

FY10

FY11E

FY12E

Contri buti on profi t (Rs mn) contri buti on (%)


35

45

60

76.480.1

95.8

0

20

40

60

80

100

120

CY05

CY06

CY07

CY08

CY09

CY10

22.3% CAGRRsbn

6686

92409911 10105

11741

13503

0

2000

4000

6000

8000

10000

12000

14000

16000

FY07

FY08

FY09

FY10

FY11E

FY12E

25.1% CAGRsmn


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January 27, 2011 10

2. Cables & WiresCables & wires is high volume, low margin business for the company. From its manufacturing fac

in Alwar, Rajasthan, HAVL manufactures a complete range of low and high voltage PVC/XLPE cab

FR/FRLS wires, co-axial TV and telephone cables upto a maximum voltage of 66KV. This segm

accounts for 43% of HAVL revnues but only 17% of its contribution profit, as the value addition is

significant and profitability is dependent on copper prices. The major competitors include Poly

Finolex and KEI industries. HAVL has about 9% market share currently, but does not see this segm

as a future growth driver. All marketing efforts in this segment are aimed at brand building for company and focused towards the consumer end of the cables & wires industry.

xhibit 18: Cables & Wires benefitting from increasing powerexpenditure

Exhibit 19: Not a big growth driver for HAVL , low margin high volume


Exhibit 20: Margins in cables & wires to remain stable around 8%

909969

671

887939

1107

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

200

400

600

800

1000

1200

FY07

FY08

FY09

FY10

FY11E

FY12E

Contribution profit (Rs mn) contribution (%)


73

103

142

177

195

224

0

50

10 0

15 0

20 0

25 0

30 0

CY05

CY06

CY07

CY08

CY09

CY10

25.1% CAGR

Rsbn

6686

9240

9911 10105

11741

13503

0

2000

4000

6000

8000

10000

12000

14000

16000

FY07

FY08

FY09

FY10

FY11E

FY12E

17% CAGRsmn


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January 27, 2011 11

3. Electrical consumer durables (Fans)Till date, the companys presence in the consumer durables space has been limited to fans for w

the company has the largest domestic integrated facility in Haridwar, Uttar Pradesh. With h

Chinese domination in table-top and portable fans, and significant domestic competition in the lo

end domestic fans, HAVL has decided to compete only in the premium segment with Rs1000

price category, which has helped it maintain strong margins. HAVL has rapidly grown its market sh

from 6% in 2006 to 18% in 2010 taking away market share from peers like Crompton Greaves, Ori

and Bajaj Electricals. This segment accounts for 16% of HAVL revenues and 20% of its contribuprofit.

xhibit 21: Slow growth in fans, but shift towards organized industry Exhibit 22: Established premium fan brand, moving into new product

10

11

12 12 12

14

0

2

4

6

8

10

12

14

16

CY05

CY06

CY07

CY08

CY09

CY10

7% CAGRRsbn

1723

2399

2770

3594

4399

5279

0

1000

2000

3000

4000

5000

6000

FY07

FY08

FY09

FY10

FY11E

FY12E

15.1% CAGRRsmn

ource: ELCOMA India, Quant Global Research Source: Company, Quant Global Research estimates

Exhibit 23: Aggressive growth in fans with 30-32% margins

251

517613

1019

1408

1637

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0

200

400

600

800

1000

1200

1400

1600

1800

FY07

FY08

FY09

FY10

FY11E

FY12E

C ontr ibuti on profi t (Rs m n) c ontr ibuti on (% )



12/26


January 27, 2011 12

4. Lighting & FixturesHAVL has again positioned itself as a premium CFL and luminaries player to stay away fr

competition and maintain high profitability. The lower end of the market is dominated by Chin

products. HAVL is the second largest player after Philips with a 10% market share. This segm

accounts for 16% of HAVL revnues and 13% of its contribution profit.

xhibit 24: Strong growth in industry led by CFLs Exhibit 25: Growing fast on strong & innovative product portfolio

45

50.3

58.1

65.7

71.7

-5

5

15

25

35

45

55

65

75

85

CY05

CY06

CY07

CY08

CY09

12.4% CAGRRsbn

2239

2844

2768

3667

4532

5392

-500

500

1500

2500

3500

4500

5500

6500

FY07

FY08

FY09

FY10

FY11E

FY12E

19.2% CAGRRsmn


Exhibit 26: Lighting segment margins of around 18-19%

252

37 2

53 3

705

816

998

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1000

1200

FY07

FY08

FY09

FY10

FY11E

FY12E

C on tr ib uti on p rofi t (R s m n) c on tr ib uti on (% )



13/26


January 27, 2011 13

Aggressive future growth strategiesAddition of new domestic appliances to drive consumer durable segment growth

HAVLs strong historical growth has been on the back of successful introduction and quick scale-u

new product lines across its product categories. With the cables & wires and switchgear segm

stabilising, HAVL aims to maintain steady growth in these segments near to the market growth r

HAVL has identified the consumer durables segment as the next area where it can generate ab

industry growth given its strong brand image and pan-India distribution network. HAVL has receentered the electric water heater segment, an estimated Rs8bn market where it believes it

generate a turnover of Rs300mn in FY11 and Rs600mn in FY12. HAVL also has plans to enter

electric iron and the AC segments, but has not finalised plans for the same. HAVL plans to leverag

strong distribution network and brand image without committing too much capital as it plan

outsource the product manufacturing.

Launch of Sylvania products in India to drive lighting segment growth

HAVL has plans to launch Sylvania lighting products in India to capitalise on its marketing capabil

and the premium image of Sylvania products in India. These products are expected to be place

the premium category of the lighting segment and should fetch higher margins and also aid

accelerating revenues.

Further leveraging of a well entrenched distribution network

HAVL, since inception has focused on developing strong relations with its distributors and in

process, built up a wide network of dealers across India, particularly strong in North and East In

The company has made it a point to indulge in dealer friendly practices in the past that has b

loyalty among its dealer network. When copper prices crashed during Q3FY09 leading to signific

inventory losses for the dealers, the management decided to share those losses. Another pro

making opportunity it gave to its dealers was deciding not to engage in installation of the cable

wires, and leaving that to the companys dealers.

The company is known for its distributor-friendly practices and a superior field staff who h

received in-house training. As a result of this dominant position in distribution, it has reached the

position in selling consumer electrical goods below Rs5000.

Focus on quality and innovation

HAVL management lays a lot of emphasis on excellent product quality standards which has impro

the quality of its distributor relations. To provide a consistent quality, HAVL tries to manufac

most of its products in-house rather than outsourcing production. The company has been able

achieve continuous product innovation as a result of its captive manufacturing capabilities

expertise in product designing. This has enabled the company fill in any available gaps in the prod

lines of its product segments, like energy saving fans and lamps. The strong distribution netw

enables product launch in a short span of six to nine months.

Acquisition of Standard Electricals to add further to bottomline

Incorporated in the year 1958, Standard Electricals is a well established brand and amongst the

five brands in domestic switchgear market in India. The rationale for acquisition is to cater all

price segments in the domestic switchgear market with multi brand approach. The acquisitio

further value creation for the shareholders of HAVL and is EPS accretive. We believe Standard Elemerger was at a reasonable valuation, at 1.2x EV/Sales and 12x PE multiples. We have val

Standard Electricals at 10x FY12E EBITDA of Rs 230mn.

We believe Standard Electric

merger was at a reasonable

aluation, at 1.2x EV/Sales and 12x

E multiples. We have valued

tandard Electricals at 10x FY12E

BITDA of Rs 230mn


14/26


January 27, 2011 14

Sylvania turnaround to drive further re-rating

xhibit 27: Successful restructuring efforts have started bearing fruitsSylvania Restructuring Phase 1 - Phoenix

Start Date Jan-09

Proje ct cos t (Euros mn) 12

Annua l i s ed s a vi ngs (Euros mn) 17.5

End Da te Dec-09Ta rge ts Cl os i ng 3 pla nts , 8 wa rehous e s , l a yi ng off 1200 e mpl oye es a nd re ducing worki ng ca pi ta l

Sta tus Annua l i s e d s a vi ngs a chie ved by Septembe r 2010. Worki ng ca pi ta l reducti on a chie ved by obta ini ng be tter

credi t terms from vendors from l ow cost countries , and inventory reduction

Sylvania Restructuring Phase 2 - Parakram

Start Date Sep-09

Proje ct cos t (Euros mn) 23.0

Annua l i s ed s a vi ngs 22

End Da te Dec-10

Acta ul cos t (Euros mn) 18

Actua l s a vings (Euros mn) 17

Ta rge ts Cl os i ng pl a nt in Hol la nd a nd re duci ng ca pa ci ty i n UK, Fra nce, Gera mny a nd Spa in. He a dcount re duction

of 400 and procurement from low cost countries

Sta tus Achi eve d pla nt cl os ure , ca pa ci ty re duction a nd la yoffs by Se pte mber 2010. Euro 17mn a nnua l i s e d s a vi ngs

to be achieved by Q4FY11.

ource: Company, Quant Global Research

After the substantial derating of HAVLs stock on account of concerns related to Sylvania (world

4 player in lighting and fixtures) acquisition, HAVL put in place a comprehensive restructuring pla

turnaround Sylvania operations. There were concerns related to Sylvanias operating performan

debt service ability and future growth, which have now subsided to a large extent after Sylvan

recent break-even at the net profit level with further improvement expected in operating margins

Exhibit 28: Sylvania margins demonstrate successful turnaround

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Q4FY08

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Sylvania revenues (Rs mn) % EBITDA


HAVL had acquired Sylvanias global business (except for brand rights in North Amercia, Mex

Australia and New Zealand) in 2007 from various private equity players for an EV of 227m Euros.

key rationale behind the acquisition was to acquire Sylanias operations and distribution networ

Europe and leverage Sylvanias brand to enter other emerging markets. After HAVL paid an imp

valuation of 7.5x EV/EBITDA for Sylvania, its operations deteriorated owing to the global econo

slowdown, and HAVL had to carry out a two-stage restructuring program to turn Sylvania around.


15/26


January 27, 2011 15

Exhibit 29: HAVLs exposure to Sylvania to reduce from FY12 with debt repayment/refinancingHAVL exposure to Sylvania

in millions of Euros Mar-10 Sep-1

Ini tia l Equi ty i nves tme nt (1) 50 5

Sylvania debt with recourse to HAVL (2)

a ) recours e de bt repa i d 13 1

b) recours e de bt to be rea pi d ove r 2009-2012 17 1c) e s ti ma ted i nteres t pa ya bl e on re cours e debt 10 1

d) a ddi ti ona l worki ng ca pi ta l debt gua ra ntee d by HAVL 14

Tota l ini tia l e xpos ure 104 9

Addi ti ona l equi ty i nve s ted (3) 12 2

Total exposure of HAVL into Sylvania 116 12

Debt position (Sylvania)

in millions of Euros Mar-10 Sep-1

With recourse to Havell s Ind ia (1)

a ) a cqui s i ti on de bt 16.67 13.3

b) other debt

Wi thout recours e to Ha vel l s India (2) 141 161.6

Les s : Ca s h (3) 12.58 13

Total Net Debt 145.09 161


Increased outsourcing to help in margin expansion

After the successful achievement of annualised savings from its restructuring programme, HAV

now expecting to run Sylvania operations at a low cost base. We belive that Europe revenues are

likely to remain at current levels with the company not looking at that region as a growth area.

management has also indicated that there will not be any significant capex in Sylvania. After clo

down its high cost plants in Europe, Sylvania has increased outsourcing to cheaper locations China and India for CFL and other lighting products. We are also not factoring in any revenue gro

from Sylvanias Europe operations.

Sylvania growth to be driven by LATAM and Asia regions

A major chunk of the growth for Sylvania has come from emerging markets in Latin America and A

The management expects emerging markets to contribute about half of Sylvaniss earnings by F

from about 30% currently. This change in growth markets has helped Sylvania break even earlier t

expected as emerging markets tend to have higher operating margins. The growth has been due

focus on distribution and new product launches in Latin America. HAVL plans to grow aggressivel

emerging markets by launching innovative products and empowering its local management team

formulate appropriate marketing startegies. High margins will be ensured on account of more t

70% outsourcing from China. HAVL is also planning to lauch Sylvania products in India to leverage

Sylvanias brand recall backed by HAVLs strong distribution presence.

A major chunk of the growth for

ylvania has come from emerging

markets in Latin America and Asia.

he management expects

merging markets to contribute

bout half of Sylvaniss earnings by

Y13 from about 30% currently.


16/26


January 27, 2011 16

Exhibit 30: Sylvania to grow aggressively in Latin Amercia and Asia

70.8% 70.9%60.5% 56.8%

24.5% 25.9%

33.4% 36.1%

4.7% 3.1% 5.4% 6.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY09

FY10

FY11E

FY12E

Europe Latin America Asia Others



17/26


January 27, 2011 17

Financial AnalysisWe expect sales CAGR of 7% over FY10-FY12E on consolidated basis

We expect HAVL to post a sales CAGR of 7% over FY10-FY12E with domestic sales to grow at a CA

of 17% and Sylvania revenues to grow modestly at a 6% CAGR over the same period. The dome

sales growth will be driven by strong growth mainly in the lighting and the Consumer dura

products. On the Sylvania front, with Europe revenues remaining flat, we expect strong growth f

emerging markets in Asia and Latin America.

xhibit 31: HAVL standalone performance remains strong Exhibit 32: Focus on consolidation for now, not aggressive growth

ource: Bloomberg, Quant Global Research Source: Quant Global Research estimates

EBITDA CAGR of 36.4% over the same period led by 370bps margin expansion

We forecast EBITDA margins to expand by 370bps from 5.9% in FY10 to 9.6% in FY12E as Ind

margins remain stable due to continuous operational efficiencies and Sylvania margins reach

optimum level after the turnaround. We expect India business margins to be in the range of 11.8-

and Sylvania margins to reach 6.5% over the next two years.

Exhibit 33: Consol margins to expand further led by Sylvania turnaround

976.0

1458.0

3486.0

2886.0

3222.3

5224.55995.1

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

Consol EBITDA (Rs mn) margins (%)


PAT CAGR of 126% over the same period led significant debt repayment

We estimate consolidated earnings CAGR of 126% over FY10-FY12E driven by significant ma

growth, lower interest payments on account of debt repayment and no new extraordinary expen

realted to the Sylvania restructuring.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

1000

2000

3000

4000

5000

6000

7000

8000

Q4FY08

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

H AVL St an dal on e r even ue s (Rs m n) % EB ITD A

11151.315472.2

50029.354774.9 54315.3 55689.7

62183.

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

Consol Revenues (Rs mn)

33.2% CAGR

We expect ROCE to improve to

7.3% in FY12E from 14.3% in FY10

nd ROE to improve to 48.8% in

Y12E from 13.7% in FY10.


18/26


January 27, 2011 18

Exhibit 34: PAT growth to show robust growth on completion of restructuring

628.3

1021.2

1609.6

384.4

695.6

2896.6

3550.6

0

500

1000

1500

2000

2500

3000

3500

4000

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

Consol PAT (Rs mn)

33.5% CAGR


Capital efficiency levels to gradually return to pre Sylvania acquisition levels

We expect return ratios to improve going forward led by Sylvania turnaround and return to le

that HAVL generated before the Sylvania acquisition. We expect ROCE to improve to 27.3% in FY

from 14.3% in FY10 and ROE to improve to 48.8% in FY12E from 13.7% in FY10.

Exhibit 35: Capital efficiency levels seen gradually returning to pre acquisition levels

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

ROACE ROAE


Margins remain sensitive to copper and aluminium prices

The key raw materials for the company are copper and aluminium, which have displayed signific

volatility in the past. But despite that, HAVL has been able to maintain its margins by passing on

price hikes in input prices. In FY10, copper accounted for 26% of total domestic raw material cand aluminium accounted for 17% of of the domestic raw material costs. Going forward, we exp

the company to have a lower impact of rising commodity prices than the past as the quality of HA

products places it in a stronger position than peers to pass on raw material price increases.


19/26


January 27, 2011 19

xhibit 36: Copper prices in the middle of strong uptrend Exhibit 37: Aluminium prices also showing strength


Strong free cash flows to deleverage consol balance sheet

We expect HAVL to incur a capex of around Rs3bn over FY10-FY12E mainly on domestic capa

expansions. The investments in Sylvania will not be huge except some increase in working caplimits and maintenance capex of Euro2-2.5m annually. As per our calculations, HAVL should be

to generate about Rs7.8bn of operating cash flows to take care of this capex and utilise the res

reducing its debt levels to about Rs10bn in FY12E from Rs12bn currently. As a result, D/E ratio

expected to fall from 2.7x in FY10 to1.2x in FY12E.

Exhibit 38: Strong cash generation to help bring down leverage

1528.0

3935.9

3528.7

4316.3

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

3500.0

4000.0

4500.0

5000.0

FY09

FY10

FY11E

FY12E

CFO (Rs mn) Gross de bt to e quity (x)


Exhibit 39:

Strong working capital management leads to robust cash flowsDays FY06 FY07 FY08 FY09 FY10 FY11E FY1

Inventory days 62 56 76 53 55 60

Receiva bl e da ys 42 7 60 50 47 45

Payable days 69 59 107 93 105 105 1

Working ca pi ta l da ys 35 5 29 11 -2 0


0

2000

4000

6000

8000

10000

12000

Jan-0

6

Apr-0

6

Ju

l-06

Oct-0

6

Jan-0

7

Apr-07

Ju

l-07

Oct-0

7

Jan-0

8

Apr-08

Ju

l-08

Oct-0

8

Jan-0

9

Apr-0

9

Ju

l-09

Oct-0

9

Jan-1

0

Apr-10

Ju

l-10

Oct-1

0

LME Copper Spot (US$/tonne)

0

500

1000

1500

2000

2500

3000

3500

Jan-0

6

Apr-06

Ju

l-06

Oct-0

6

Jan-0

7

Apr-07

Ju

l-07

Oct-0

7

Jan-0

8

Apr-08

Ju

l-08

Oct-0

8

Jan-0

9

Apr-09

Ju

l-09

Oct-0

9

Jan-1

0

Apr-10

Ju

l-10

O c t 1

0

LME Aluminium Spot (US$/tonne )


20/26


January 27, 2011 20

Valuation & Peer comparisonWe initiate HAVL with a BUY rating and a 12-month PT of Rs455 based on our SOTP valuation.

have valued the domestic businesses of HAVL and Standard Electricals at 12x and 10x FY

EV/EBITDA respectively and the Sylvania business at 7.5x FY12E EV/EBITDA. Based on histo

trends before the Sylvania acquisition, HAVL used to trade at a mean forward EV/EBITDA of ab

12x against a mean ROCE of about 25-30%. Going forward, we expect the domestic business to tr

again at those multiples given that core ROCE will be moving higher as domestic business keeps

doing well.

Although there is no exact comparable for HAVLs standalone business in India, we still compare

Indian consumer durable manufacturers, who address similar markets. We have also compared H

to international consumer durable manufacturers catering to different geographies.The dome

peers for HAVL like Crompton Greaces and Bajaj Electricals are trading between 6-13x FY

EV/EBITDA. The international peers for HAVL like Schneider and Philips are trading between 6-

FY12E EV/EBITDA.

We belive that HAVL deserves a premium to Indian peers on account of its strong presence in

higher margin consumer electrical space and its strong brand image. On the international fron

deserves to trade at a premium on account of its presence in high growth emerging markets like I

and Latin America.

International peers for Sylvania are Philips, Fagerhult and Acuity which are trading between 6FY12E EV/EBITDA. Hence, given our estimated operating margin of Sylvania of around 6-7% alongw

the business transforming into a free cash flow generating entity, we believe a target multiple of

FY12E EBITDA is fair and reasonable.

We have also tried to value HAVL using the DCF methodology which gives us a value of Rs480/sh

but we are being a bit conservative and taking the lower of the two valuation methodologies to ar

at our target price.

xhibit 40: HAVL deserves a premium on account of presence in growth markets and retail productsMkt Cap

(US$ mn) 2011E 2012E 2011E 2012E 2011E 2012E 2011E 20

V-Guard Industries Ltd VGRD IN Equity 112 25.0 28.6 8.2 6.2 13.2 9.4 3.0 2

Crompton Greaves Ltd CRG IN EQUITY 3,923 31.4 28.3 13.0 11.2 19.9 17.0 5.6 4Bajaj Electricals Ltd BJE IN EQUITY 477 25.7 26.9 9.5 7.5 14.6 11.3 3.6 2

Voltas Ltd VOLT IN EQUITY 1,544 32.1 31.8 12.7 9.9 17.5 13.8 5.0 3

Blue Star Ltd BLSTR IN EQUITY 782 29.8 38.4 14.0 9.0 21.7 13.3 6.7 5

Havells India Ltd HAVL IN EQUITY 960 57.7 48.8 10.0 8.3 15.1 12.3 7.3 5

Schneider Electric SA SU FP EQUITY 43,194 15.4 15.7 8.8 7.9 13.9 12.7 2.1 2

Leoni AG LEO GY Equity 1,333 20.6 21.4 5.3 4.6 10.5 8.4 2.0 1

Legrand SA LR FP Equity 10,943 18.3 18.0 8.8 8.2 15.4 14.4 2.7 2

Everlight Electronics Co Ltd 2393 TT Equity 1,259 17.2 18.2 7.8 7.0 13.3 12.4 2.3 2

Koninklijke Philips Electronics NV PHIA NA Equity 31,751 11.2 11.7 5.9 5.2 12.4 11.2 1.4 1

Acuity Brands Inc AYI US Equity 2,398 14.7 17.0 10.7 8.3 21.7 17.2 3.0 2

Fagerhult AB FAG SS Equity 348 21.0 21.3 8.3 7.1 12.5 10.5 2.4 2

Hubbell Inc HUB/B US Equity 3,592 16.7 17.3 7.9 6.7 14.6 12.9 2.4 2

Zumtobel AG ZAG AV Equity 1,254 14.3 15.9 8.7 7.3 17.7 13.7 2.3 2

Company nameReturn on Equity (%) EV to EBITDA (X) Price to earnings (X) Price to book (X)

Ticker

ource: Bloomberg consensus estimates, Quant Global Research Estimates ; Note: Pricing data as of 27 January 2010

We have valued the domestic

usinesses of HAVL and Standard

lectricals at 12x and 10x FY12E

V/EBITDA respectively and the

ylvania business at 7.5x FY12E

V/EBITDA.


21/26


January 27, 2011 21

xhibit 41: Expect trading multiples to move back to pre acquisition level Exhibit 42: Our SOTP target gives 30% upside from current levels

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Jan-06

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Rol. EV/EBITDA Me an EV/EBITDA

(Rs mn)

FY12EEBITDA

Target EV/

EBITDA (x)

Target

EV

Sta nda lone EBITDA 3994 12.0 47926

Syl va nia EBITDA 1771 7.5 13284

Sta nda rd EBITDA 230 10.0 2300

Cumul ati ve EV 63510

Consol Net Debt 6800

Consol Equi ty Va l ue 56710

Di l uted equi ty sha res (mn) 125

Price target per share (Rs) 455


xhibit 43: Our DCF calculations come out with a better valuation Rs 480 compared to our EV/EBITDA valuation of Rs 455

ource: Company, Quant Global Research Estimates


22/26


January 27, 2011 22

Key Risks Raw material price volatility, especially on copper and aluminium prices remains a key risk

HAVL. Although it tries to pass on any increase in input prices to customers, significant volat

in prices can sometimes lead to inventory losses or margin erosion. But this impact would ma

be felt in the cables & wires segment which contributes about 40% to HAVLs domestic busine

Although we have not assumed any growth in Sylvanias revenues from Europe, we do factostability. A higher than anticipated weakness in European operations can significantly impactprojections on Sylvania as Europe contributes more than 60% of Sylvania revenues curre

which in turn contributes about 31% of consolidated revenues.

Increasing competition, especially in the institutional/commercial space can bring down HAexpected growth both in india and outside. HAVL faces competition in India from aggres

players like L&T, Crompton, Bajaj Electricals and Schneider. Sylvania also competes with Ph

Lighting, Siemens-Osram and GE Lighting in the global space. Although HAVL is expected to

well in the consumer space which is its stronghold, some margin erosion can be there on

commercial side due to high competition.

HAVLs has consistently followed a policy of launching new products to aggressively gain mashare. With its plans to launch new consumer durable products in India and Sylvanias plan

launch new products in India and Latin America, a slower than expected scaling up of th

products due to intense competition can have an impact on our earning estimates.

Adverse currency movements can also affect our margin estimates has HAVL has increasedoutsourcing for Sylvania from China and India. An appreciation of these currencies against

euro can impact Sylvania margins. On the other hand, an appreciation in euro can impact

strong growth expected from Latin America.

A higher than anticipated

weakness in European operations

an significantly impact our

projections on Sylvania as Europe

ontributes more than 60% of

ylvania revenues currently, which

n turn contributes about 31% of

onsolidated revenues.


23/26


January 27, 2011 23

Company BackgroundHavells India Ltd.(HAVL) is a billion-dollar-plus organization, and is one of the largest & India's fas

growing electrical and power distribution equipment manufacturer with products ranging fr

Industrial & Domestic Circuit Protection Switchgear, Cables & Wires, Motors, Fans, Power Capacit

CFL Lamps, Luminaires for Domestic, Commercial & Industrial applications, Modular Switches,

entire gamut of household, commercial and industrial electrical needs. The company was founde

Mr Qimat Rai Gupta, who is the current chairman of the company. The promoter group is know

QRG Industries, and is owned my Qimat Rai Gupta and family.

Havells owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Luminan

Linolite, & SLI Lighting. With 91 branches / representative offices and over 8000 professionals in o

50 countries across the globe, the group has achieved rapid success in the past few years. Its

state-of-the-art manufacturing plants in India located at Haridwar, Baddi, Noida, Sahibab

Faridabad, Alwar, Neemrana, and 8 state-of-the-art manufacturing plants located across Euro

Latin America & Africa churn out globally acclaimed products. Havells is a name synonymous w

excellence and expertise in the electrical industry. Its 20000 strong global distribution networ

prompt to service customers.

The company acquired global lighting fixtures major Sylvania in April 2007 for an EV consideratio

227m, funded through debt of 200m. Of this amount, 120m was with recourse to Havells,

there was a residual pension liability of 27m.

The company has acquired a number of International certifications, like BASEC, CSA, KEMA, CB,

ASTA, CPA, SEMKO, SIRIUM (Malaysia), SPRING (Singapore), TSE (Turkey), SNI (Indonesia) and

(Bahrain) for various products. In an attempt to transform itself from an industrial product comp

to a consumer products company, Havells launched consumer electrical products such as CFLs, F

Modular Switches & Luminaires. The company has also taken the initiative to reach directly to

consumers through "Havells Galaxy" a one stop shop for all electrical and lighting needs.

Exhibit 44: On track to become an electrical FMCG player

Source: Company presentation

Plant Locations

Exhibit 45: Major facilities in North-West IndiaLocation Product

HAVL

Ha ridwa r, UP Fa ns , CFL

B a dd i, H im ach a l Pra d es h MCB , S wi tch es

Sa mi pur Ba dl i , De l hi MCB, DB

Noi da , UP Ca pa ci tors

Alwa r, Ra ja s tha n Ca bl es & Wires

Fa rida ba d, Ha rya na CFL, Indus tri al products

Ne e mra na , Ra ja stha n Motors , CFL

Bhiwa ndi , Ra ja s tha n Acce s s orie s

Sylvania

Europe - 4 pla nts 4 l i ghts & l umi na rie s ma nufa cturing uni ts

La tin America 2 l i ghts & l umi na rie s ma nufa cturing uni ts

Source: Industry data, Quant Global Research Estimates


24/26


January 27, 2011 24

Financials

xhibit 46: HAVL deserves a premium on account of presence in growth markets and retail productsncome Statement FY09 FY10 FY11E FY12E Balance sheet FY09 FY10 FY11E FY

Net revenues 54,775 54,315 55,690 62,183 Equity capital 301 312 624 6

Expenditure Reserves and surplus 5,847 3,692 5,408 7,8

Raw materials 30,070 29,180 27,185 31,123 Deferred tax liability (97) 266 330 3

Selling, General & Admin expenses 10,676 11,019 11,544 12,104 Total Equity 6,050 4,271 6,362 8,8

Employee expenses 8,452 7,602 8,362 9,198 Secured loans 10,624 9,963 11,463 9,4

Other expenditure 2,691 3,292 3,375 3,763 Unsecured loans 1,654 700 700 5

EBITDA 2,886 3,222 5,225 5,995 Total borrowings 12,278 10,664 12,164 9,9

Non-operating income 86 222 350 400 Total capital 18,328 14,934 18,525 18,8

Depreciation 905 837 869 899 Cash 2,473 1,481 3,840 3,8

EBIT 2,067 2,607 4,706 5,496 Inventory 7,947 8,246 9,154 10,2

nterest expense 1,253 979 791 697 Debtors 7,573 6,982 6,866 7,6

Adjusted pre-tax profits 814 1,628 3,915 4,799 Other current assets 2,221 1,679 1,637 1,8

Unusual or infrequent items (1,987) (0) - - Total current assets 20,215 18,389 21,498 23,6

Reported pre-tax profits (1,172) 1,628 3,915 4,799 Current liabilities 14,308 15,876 16,390 18,3

Taxes 429 932 1,018 1,248 Net Current Assets 5,907 2,512 5,108 5,2

Reported net income (1,601) 696 2,897 3,551 Gross block 28,961 26,963 28,963 29,9

Adjusted net income 384 696 2,897 3,551 Less: cumulative depreciation 20,427 18,089 18,958 19,8

Capital WIP 308 336 200 2EPS (Rs), Fully diluted 3.1 5.6 23.2 28.5 Net block 8,842 9,210 10,205 10,3

Year-end shares outstanding (mn) 124.8 124.8 124.8 124.8 Liquid investments - - -

Year-end Fully Diluted shares (mn) 124.8 124.8 124.8 124.8 Misc Exp. 1 0 0

Goodwill 3,579 3,212 3,212 3,2

Growth numbers (%) Total assets 18,328 14,934 18,525 18,8

Yoy growth in revenues 9.5 (0.8) 2.5 11.7 - - -

Yoy growth in ebitda (17.2) 11.7 62.1 14.7 Cash flow statement FY09 FY10 FY11E FY

Yoy growth in net income (76.1) 81.0 316.4 22.6 Cash flow from operating activity

PBT (1,172) 1,628 3,915 4,7

Ratios (%) FY09 FY10 FY11E FY12E Add: Depreciation 905 837 869 8

Effective tax rate (36.6) 57.2 26.0 26.0 Add: net interest - - -

EBITDA margin 5.3 5.9 9.4 9.6 Less: taxes paid (429) (932) (1,018) (1,2

PAT margin 0.7 1.3 5.2 5.7 Add: other adjustments - - -

ROACE 10.4 14.3 26.0 27.3 Less: working capital changes 2,224 2,403 (237) (1ROAE 5.9 13.7 57.7 48.8 Total operating cash flows 1,528 3,936 3,529 4,3

Gross debt to equity (x) 2.0 2.7 2.0 1.2 Cash flow from investing activity

Total asset turnover ratio 3.0 3.6 3.0 3.3 Capital expenditure (1,002) 1,970 (2,000) (1,0

nventory turnover ratio (x) 6.9 6.6 6.1 6.1 Change in investments 32 - -

Debtors turnover ratio (x) 7.2 7.8 8.1 8.1 Investment in companies - - -

PE Ratio (x) 113.9 63.0 15.1 12.3 Flows in others (147) 589 -

Total investing cash flow (1,117) 2,559 (2,000) (1,0

Per share numbers (Rs)

Reported earnings 3.1 5.6 23.2 28.5 Cash flow from financing activity

Cash earnings 10.3 12.3 30.2 35.7 Share issuances (142) (13) 312

Free cash 4.2 47.3 12.3 26.6 Change in borrowings (684) (1,615) 1,500 (2,2

Book Value 48.5 34.2 51.0 70.9 Changes in others 657 (6,027) (176)

Dividend paid (176) (195) (869) (1,0

Valuations (x) Interest payment (22) 364 64

Price to diluted earningas 113.9 63.0 15.1 12.3 Total financing cash flow (367) (7,486) 831 (3,2

EV / EBITDA 18.6 16.4 10.0 8.3 Net change in cash 44 (992) 2,359

Price to book 7.1 10.9 7.3 5.1 Opening cash & CE 2,429 2,473 1,481 3,8

Closing cash & CE 2,473 1,481 3,840 3,8

ote: We have assumed an average EURINR rate of 58.7 for our calculations for Sylvania

ource: Company data, Quant Global research est imates


25/26


January 27, 2011 25

Ratings and other definitions

Stock rating system

BUY. We expect the stock to deliver >15% absolute returns.

ACCUMULATE. We expect the stock to deliver 6-15% absolute returns.

REDUCE. We expect the stock to deliver +5% to -5% absolute returns.

SELL. We expect the stock to deliver negative absolute returns of >5%.

Not Rated (NR). We have no investment opinion on the stock.

Sector rating system

Overweight. We expect the sector to relatively outperform the Sense.

Underweight. We expect the sector to relatively underperform the Sense.

Neutral. We expect the sector to relatively perform in line with the Sense.

I, Himanshu Nayyar, hereby certify that all of the views expressed in this report accurately reflect my personal vie

about the subject company or companies and its or their securities. I also certify that no part of my compensation wa

or will be, directly or indirectly, related to the specific recommendations or views expressed in this report."

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