13 October 2018 India | Consumer | Company Update

Avenue Supermarts Ltd. | BUY

Margin reset underway
DMart’s 2QFY19 earnings-report reflects a massive margin disappointment (8% vs 9.1% in Richard Liu
[email protected] | Tel: (91 22) 66303064
2Q LY and 8.9% for FY18) which is likely to mask the excitement that a 38.9% growth in
Vicky Punjabi
revenue would otherwise have created. The business has brought down prices across [email protected] | Tel: (91 22) 66303065
categories to further drive store-throughput; the consequent EBITDA miss of 3.7% vs our
forecast, however, means that the incremental revenue garnered through the price-cuts
(2QFY19 revenue was 8.7% ahead of our expectation) have not been able to entirely protect
the business’ profit pool – at least not just yet. We reckon it could take a few quarters before
operating leverage starts to entirely offset the margin erosion impact, but we are confident
that the same will happen sooner or later. We have adjusted our near-term operating profit
forecasts by 4-5% to reflect the short-term impact of the new pricing strategy. Our DCF-
Recommendation and Price Target
based TP remains broadly unchanged (INR1,725/share). Any sharp stock correction should be
Current Reco. BUY
used as a buying opportunity. Previous Reco. BUY
 Gross margin sacrifice helped a sharp acceleration in revenue growth momentum: DMart Current Price Target (12M) 1,725
Upside/(Downside) 22.5%
reported 38.9%, 22.6% and 17.8% growth in revenue, EBITDA and adjusted net profit
Previous Price Target 1,705
to INR48.7bn, INR3.9bn and INR2.3bn respectively. Revenue was 8.7% ahead of Change 1.2%
expectation while EBITDA trailed our estimates by 3.7%. Revenue growth witnessed a
sharp acceleration from an already healthy trajectory of 25-29% (intrinsic basis) witnessed Key Data – DMART IN
over the past 4 quarters. Management attributed the strength to its strategy to further Current Market Price INR1,411
reduce prices across consumer categories. Store-additions remained muted with just 3 Market cap (bn) INR881.0/US$12.0
new stores opened during the quarter taking the total count to 160 at Sep’18 vs 136 in Free Float 40%
Shares in issue (mn) 624.1
Sep’17 (157 at Jun’18); DMart now operates 5.1mn sq ft of retail business area (vs 4.2mn
Diluted share (mn) 624.1
at Sep’17 and 5mn at Jun’18). Interestingly, trajectory of capital expenditure remained 3-mon avg daily val (mn) INR802.8/US$10.9
quite high despite subdued store additions. As per our workings, DMart’s capex is already 52-week range 1,682/1,060
at INR5.5bn for 1HFY19 cf. INR9bn for FY18. We believe a part of these spends could be Sensex/Nifty 34,734/10,473
towards securing land/spaces for the future, given that store openings so far this year has INR/US$ 73.6

been quite muted.

Price Performance
 Margin performance was a big disappointment vs recent prints, though in-line with % 1M 6M 12M
management’s stated strategy to give preference to throughput over margin: DMart’s Absolute -7.3 -3.9 14.8
management has stated on quite a few occasions that EBITDA margin in excess of 8% is Relative* 1.7 -5.4 7.2
* To the BSE Sensex
too high and the business would look to pass on the excess to consumers in the form of
price cuts; notwithstanding that, the company still delivered 8%+ margin in 7 out of the
past 9 quarters since its listing. This quarter, though, the strategy to take down prices
across categories have indeed resulted in a rather sharp GPM compression of 181bps YoY
and 129bps QoQ (14.3% vs 16.1% LY and 15.6% in 1Q). The company’s steadfast focus
on keeping its costs-structure as low as possible, though, helped ensure that EBITDA
margin compression was of a much lower degree at 107bps, as SG&A per sq ft grew just
2.2% YoY vs c.14% growth in revenue per sq ft. Though the new pricing strategy has
successfully lifted throughput to a much higher trajectory, the delta is yet insufficient to
negate the adverse effect of GPM compression and resulted in absolute EBITDA growth
decelerating to merely 23% vs growth of >35% seen in each of the past 4 quarters. This
is likely to keep near-term earnings growth under some pressure (i.e. sub-30%) for the
company, in our view.

Financial Summary (INR mn)

Y/E March FY17A FY18A FY19E FY20E FY21E
Net Sales 118,746 149,980 197,576 248,768 312,287
Sales growth (%) 38.6% 26.3% 31.7% 25.9% 25.5%
EBITDA 9,812 13,528 16,489 21,033 26,788 JM Financial Research is also available on:
EBITDA (%) 8.3% 9.0% 8.3% 8.5% 8.6%
Adjusted net profit 4,803 7,673 9,608 12,442 16,076
Bloomberg - JMFR <GO>,
EPS (INR) 7.7 12.3 15.4 19.9 25.8 Thomson Publisher & Reuters
EPS growth (%) 34.9% 59.7% 25.2% 29.5% 29.2% S&P Capital IQ and FactSet
ROIC (%) 17.8% 19.9% 19.4% 20.6% 22.0%
ROE (%) 17.9% 18.0% 18.7% 19.9% 20.9%
PE (x) 182.9 114.5 91.5 70.6 54.7
Please see Appendix I at the end of this
Price/Book Value (x) 22.9 18.8 15.6 12.8 10.4 report for Important Disclosures and
EV/EBITDA (x) 89.1 64.8 53.2 41.6 32.6 Disclaimers and Research Analyst
Dividend Yield (%) 0.0% 0.0% 0.0% 0.0% 0.0% Certification.
Source: Company data, JM Financial. Note: Valuations as of 13/Oct/2018

JM Financial Institutional Securities Limited

Avenue Supermarts Ltd. 13 October 2018

Exhibit 1. 2Q & 1HFY19 result snapshot (standalone) (INR mn)

2QFY19 2QFY18 YoY growth 2QFY19E % Var 1HFY19 1HFY18 YoY growth
Revenue 48,725 35,069 38.9% 44,806 8.7% 94,319 71,051 32.7%
Total Revenue 48,725 35,069 38.9% 44,806 8.7% 94,319 71,051 32.7%
Gross Profit 6,983 5,660 23.4% 7,079 -1.4% 14,104 11,222 25.7%
Gross Profit Margin % 14.3% 16.1% -181 bps 15.8% -147 bps 15.0% 15.8% -84 bps
Staff Cost 842 697 20.8% 865 -2.6% 1,612 1,337 20.5%
Other Expenses 2,245 1,784 25.8% 2,170 3.4% 4,369 3,673 19.0%
EBITDA 3,896 3,179 22.6% 4,044 -3.7% 8,123 6,212 30.8%
EBITDA margin % 8.0% 9.1% -107 bps 9.0% -103 bps 8.6% 8.7% -13 bps
Depreciation 444 351 26.3% 427 3.8% 847 688 23.0%
EBIT 3,453 2,828 22.1% 3,617 -4.5% 7,276 5,523 31.7%
Interest Expense 101 109 -7.9% 112 -10.0% 201 353 -43.0%
Financial Other Income 139 212 -34.7% 179 -22.7% 281 440 -36.2%
PBT pre-exceptionals 3,491 2,931 19.1% 3,684 -5.3% 7,356 5,611 31.1%
Taxes 1,233 1,020 20.9% 1,271 -3.0% 2,593 1,953 32.8%
Reported Net Profit 2,257 1,910 18.2% 2,413 -6.5% 4,764 3,658 30.2%
Adjusted Net Profit 2,257 1,910 18.2% 2,413 -6.5% 4,764 3,658 30.2%
Source: Company, JM Financial

Exhibit 2. 2QFY19 cost breakdown

% of net sales 2QFY19 2QFY18 2QFY19E 1HFY19 1HFY18
Cost of Goods Sold 85.7% 83.9% 84.2% 85.0% 84.2%
Staff Cost 1.7% 2.0% 1.9% 1.7% 1.9%
Other Expenses 4.6% 5.1% 4.8% 4.6% 5.2%
Depreciation 0.9% 1.0% 1.0% 0.9% 1.0%
Source: Company, JM Financial

Exhibit 3. Operating margin movement - 2QFY19

10%

9.1% -181bps
9%

+48bps 8.0%
8%
+26bps

7%

Price cuts adversely impacted

GPM but was partially offset by
6% benefits from operating leverage.

5%
OPM - 2QFY18 Gross Margin Staff Costs Net Other Overheads OPM - 2QFY19

Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 2

Avenue Supermarts Ltd. 13 October 2018

Exhibit 4. Revenue growth trends Exhibit 5. SG&A growth trends

Revenue growth % YoY SG&A growth - %
50%
45%

38.9% 37.2%
40% 36%
35.7%
31.4%

30% 26.2% 26.7% 27% 24.4%

22.6% 22.5%
15.8% 16.8%
20% 18% 14.4%

10% 9%

0% 0%
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19
Source: Company, JM Financial Source: Company, JM Financial

Exhibit 6. Gross margin trends Exhibit 7. EBITDA margin trends

2QFY19 GPM compressed 2QFY19 EBITDA margin
Gross Margin - % 180bps on price cuts taken to
EBITDA Margin - %
compression lower than GPM on
drive topline 12% opertating leverage benefit
17% 16.4% 10.3%
16.1%
15.8% 15.6% 10% 9.3%
15.5% 8.9% 9.1%
15.2% 15.1% 8.4% 8.6% 8.4%
14.9% 8.0%
15% 7.7%
14.2% 14.3% 8%
6.7%

6%
13%

4%

11%
2%

9% 0%
1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19

Source: Company, JM Financial Source: Company, JM Financial

Exhibit 8. Quarterly Revenue per square feet (INR) Exhibit 9. Quarterly EBITDA per square feet (INR)
Qtrly revenue per sq ft (period-end) - INR EBITDA per sq ft (period-end) - INR
10,000 1,000 958
9,554
9,306
9,119
9,000 8,776 845
8,350
800 757 764
8,000 7,775

7,000 601
600

6,000

5,000 400
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19
Source: Company, JM Financial Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 3

Avenue Supermarts Ltd. 13 October 2018

Exhibit 10. Quarter-end retail space in operation (mn sq ft)

Qtr-end Retail Space - mn sq ft

6

5.0 5.1
4.9
5
4.4
4.1 4.1 4.2

2
4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19
Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 4

 Our DCF-based target price works out to INR 1,725
FY1 7 FY1 8 E FY1 9 E FY2 0 E FY2 1 E FY2 2 E FY2 3 E FY2 4 E FY2 5 E FY2 6 E FY2 7 E FY2 8 E FY2 9 E FY3 0 E FY3 1 E FY3 2 E FY3 3 E FY3 4 E FY3 5 E CAGR
Exp l i c i t Fo re c a s t FY18-35
EBIT 8,534 11,938 14,585 18,694 23,943 30,542 38,571 48,464 60,920 73,522 88,611 107,164 125,441 146,531 170,907 198,803 224,299 252,902 284,650 2 0 .5 %
Tax Rate 35.3% 33.5% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1% 34.1%
NO PAT 5 ,5 2 2 7 ,9 4 2 9 ,6 1 8 1 2 ,3 2 8 1 5 ,7 9 0 2 0 ,1 4 2 2 5 ,4 3 7 3 1 ,9 6 1 4 0 ,1 7 5 4 8 ,4 8 6 5 8 ,4 3 7 7 0 ,6 7 2 8 2 ,7 2 6 9 6 ,6 3 4 1 1 2 ,7 0 9 1 3 1 ,1 0 5 1 4 7 ,9 2 0 1 6 6 ,7 8 3 1 8 7 ,7 2 0 2 0 .4 %
Depreciation 1,278 1,590 1,905 2,339 2,845 3,430 4,117 4,939 5,864 6,905 8,072 9,327 10,683 12,170 13,798 15,558 17,497 19,628 21,926
Avenue Supermarts Ltd.

Change in net working capital -2,699 -2,128 -2,909 -3,376 -4,070 -4,289 -5,571 -6,842 -8,308 -8,566 -8,631 -11,334 -11,485 -12,984 -14,725 -15,032 -15,800 -17,570 -19,303
Capex -6,683 -9,014 -8,678 -9,951 -11,750 -13,282 -16,068 -19,111 -20,414 -23,983 -25,652 -27,486 -29,499 -32,674 -35,080 -37,647 -42,236 -45,255 -48,504
Fre e Ca s h Fl o w -2 ,5 8 2 -1 ,6 1 0 -6 5 1 ,3 4 0 2 ,8 1 4 6 ,0 0 1 7 ,9 1 4 1 0 ,9 4 7 1 7 ,3 1 8 2 2 ,8 4 2 3 2 ,2 2 5 4 1 ,1 7 9 5 2 ,4 2 5 6 3 ,1 4 5 7 6 ,7 0 1 9 3 ,9 8 5 1 0 7 ,3 8 2 1 2 3 ,5 8 6 1 4 1 ,8 3 9
Discount Factor 0.92 0.83 0.75 0.68 0.61 0.55 0.49 0.45 0.40 0.36 0.33 0.29 0.26 0.24 0.21 0.19
Di s c o u n te d FCFF 1 ,2 3 9 2 ,3 4 4 4 ,5 0 3 5 ,3 5 0 6 ,6 6 7 9 ,5 0 1 1 1 ,2 9 0 1 4 ,3 4 8 1 6 ,5 1 7 1 8 ,9 4 3 2 0 ,5 5 5 2 2 ,4 9 2 2 4 ,8 2 8 2 5 ,5 5 5 2 6 ,4 9 5 2 7 ,3 9 4

Fa d e Pe ri o d FY3 6 FY3 7 FY3 8 FY3 9 FY4 0 FY4 1 FY4 2 FY4 3 FY4 4 FY4 5
FCFF 161,685 183,053 205,821 229,823 254,839 280,597 306,779 333,020 358,919 384,043
% g ro wth 14.0% 13.2% 12.4% 11.7% 10.9% 10.1% 9.3% 8.6% 7.8% 7.0%

JM Financial Institutional Securities Limited

Discount factor 0.17 0.16 0.14 0.13 0.11 0.10 0.09 0.08 0.08 0.07
Di s c o u n te d FCFF 2 8 ,1 3 1 2 8 ,6 9 1 2 9 ,0 6 1 2 9 ,2 3 3 2 9 ,2 0 2 2 8 ,9 6 6 2 8 ,5 2 9 2 7 ,8 9 9 2 7 ,0 8 7 2 6 ,1 1 0

Va l u a ti o n
PV of explicit forecast 238,020
PV of Fade period 282,909
PV of terminal value 552,983
En te rp ri s e Va l u e 1 ,0 7 3 ,9 1 2
Le s s :
Net Debt -3,044
Minority interest 7
Va l u e fo r e q u i ty s h a re h o l d e rs 1 ,0 7 6 ,9 4 9
No. of shares - mn 624
Ta rg e t p ri c e - I NR /s h a re 1726

WACC 1 1 .0 %
Te rmi n a l g ro wth ra te 6 .0 %

EPS - 1 yr fwd 21.4

P/E 8 0 .7

EBITDA - 1 yr fwd 22,472

EV/EB I TDA 4 7 .8
13 October 2018

Page 5
Avenue Supermarts Ltd. 13 October 2018

Financial Tables (Consolidated)

Pro fi t & Lo s s Sta te me n t (I NR mn ) B a l a n c e Sh e e t (I NR mn )

Y/E M a rc h FY1 7 A FY1 8 A FY1 9 E FY2 0 E FY2 1 E Y/E M a rc h FY1 7 A FY1 8 A FY1 9 E FY2 0 E FY2 1 E
Sa l e s 1 1 8 ,7 4 6 1 4 9 ,9 8 0 1 9 7 ,5 7 6 2 4 8 ,7 6 8 3 1 2 ,2 8 7 Shareholders' Fund 38,418 46,691 56,298 68,741 84,817
Sales Growth 38.6% 26.3% 31.7% 25.9% 25.5% Share capital 6,241 6,241 6,241 6,241 6,241
Other Operating Income 231 352 463 584 733 Reserves & Surplus 32,177 40,450 50,057 62,500 78,576
To ta l R e ve n u e 1 1 8 ,9 7 7 1 5 0 ,3 3 2 1 9 8 ,0 3 9 2 4 9 ,3 5 2 3 1 3 ,0 2 0 Preference Share Capital
Cost of Goods Sold/Op. Exp. 100,810 126,356 168,927 212,573 266,693 Minority Interest 1 6 7 7 8
Personnel cost 1,925 2,826 3,395 4,276 5,369 Total Loans 14,973 4,393 4,393 3,734 3,174
Other expenses 6,429 7,622 9,227 11,470 14,170 Def. Tax Liab / Assets (-) 505 450 384 299 190
EB I TDA 9 ,8 1 2 1 3 ,5 2 8 1 6 ,4 8 9 2 1 ,0 3 3 2 6 ,7 8 8 To ta l - Eq u i ty & Li a b 5 3 ,8 9 8 5 1 ,5 4 0 6 1 ,0 8 2 7 2 ,7 8 1 8 8 ,1 8 8
EBITDA (%) 8.3% 9.0% 8.3% 8.5% 8.6% Net Fixed Assets 27,812 36,325 43,099 50,712 59,617
EBITDA Growth (%) 47.9% 37.9% 21.9% 27.6% 27.4% Gross Fixed Assets 28,016 37,870 46,548 56,500 68,250
Depn & Amort 1,278 1,590 1,905 2,339 2,845 Intangible Assets
EBIT 8,534 11,938 14,585 18,694 23,943 Less: Depn. & Amort. 2,238 3,870 5,775 8,114 10,958
Other Income 286 693 564 613 768 Capital WIP 2,034 2,325 2,325 2,325 2,325
Finance Cost 1,220 595 351 325 276 Investments 18,770 5,609 5,609 5,609 5,609
PBT before Excep & Forex 7,600 12,036 14,797 18,982 24,435 Current Assets 11,606 14,538 18,934 24,397 32,718
Excep & forex Inc/Loss(-) 0 385 0 0 0 Inventories 9,479 11,634 15,735 19,812 24,870
PBT 7,600 12,421 14,797 18,982 24,435 Sundry Debtors 210 335 407 512 643
Taxes 2,683 4,158 5,039 6,464 8,321 Cash & Bank Balances 329 674 415 1,169 3,657
Extraordinary Inc/Loss(-) 0 0 0 0 0 Loans & Advances 1,117 1,189 1,566 1,972 2,476
Assoc. Profit/Min. Int.(-) 130 201 151 76 38 Other Current Assets 471 705 811 932 1,072
Reported Net profit 4,788 8,063 9,608 12,442 16,076 Current Liab. & Prov. 4,291 4,933 6,560 7,937 9,756
Ad j u s te d Ne t Pro fi t 4 ,8 0 3 7 ,6 7 3 9 ,6 0 8 1 2 ,4 4 2 1 6 ,0 7 6 Current Liabilities 4,119 4,534 6,266 7,567 9,290
Net Margin (%) 4.0% 5.1% 4.9% 5.0% 5.1% Provisions & Others 172 399 295 370 466
Diluted share capital (mn) 624.1 624.1 624.1 624.1 624.1 Net Current Assets 7,315 9,605 12,374 16,460 22,962
Di l u te d EPS (R s ) 7 .7 1 2 .3 1 5 .4 1 9 .9 2 5 .8 Ap p l i c a ti o n o f Fu n d s 5 3 ,8 9 8 5 1 ,5 4 0 6 1 ,0 8 2 7 2 ,7 8 1 8 8 ,1 8 8
Diluted EPS Growth 34.9% 59.7% 25.2% 29.5% 29.2% Source: Company, J M Financial
Total Dividend + Tax 0 0 0 0 0
Dividend Per Share (Rs) 0.0 0.0 0.0 0.0 0.0
Source: Company, J M Financial
Note: FY18 revenue impacted by GST related accounting changes ex which revenue growth for the year is estimated to be 29-30% YoY. There is no material impact on absolute EBITDA.

Ca s h Fl o w s ta te me n t (I NR mn ) Du p o n t An a l ys i s
Y/E M a rc h FY1 7 A FY1 8 A FY1 9 E FY2 0 E FY2 1 E Y/E M a rc h FY1 7 A FY1 8 A FY1 9 E FY2 0 E FY2 1 E
Profit before Tax 7,600 12,036 14,797 18,982 24,435 Net Margin 4.0% 5.1% 4.9% 5.0% 5.1%
Depn. & Amort. 1,278 1,590 1,905 2,339 2,845 Asset Turnover (x) 2.9 2.8 3.5 3.7 3.9
Net Interest Exp. / Inc. (-) 934 -98 -213 -287 -492 Leverage Factor (x) 1.5 1.2 1.1 1.1 1.0
Inc (-) / Dec in WCap. -2,704 -2,427 -2,909 -3,376 -4,070 RoE 17.9% 18.0% 18.7% 19.9% 20.9%
Others 27 226 0 0 0 Ke y R a ti o s
Taxes Paid -2,582 -4,027 -5,223 -6,505 -8,374 Y/E M a rc h FY1 7 A FY1 8 A FY1 9 E FY2 0 E FY2 1 E
O p e ra ti n g Ca s h Fl o w 4 ,5 5 3 7 ,3 0 0 8 ,3 5 7 1 1 ,1 5 1 1 4 ,3 4 4 BV/Share (Rs) 61.6 74.8 90.2 110.1 135.9
Capex -6,354 -9,087 -8,678 -9,951 -11,750 ROIC (%) 17.8% 19.9% 19.4% 20.6% 22.0%
Free Cash Flow -1,801 -1,787 -322 1,200 2,594 ROE (%) 17.9% 18.0% 18.7% 19.9% 20.9%
-Inc/dec in investments -206 13,171 0 0 0 Net Debt-equity ratio (x) -0.1 0.0 0.0 0.0 -0.1
Other current assets -18,256 532 414 537 730 PER 182.9 114.5 91.5 70.6 54.7
I n ve s ti n g Ca s h Fl o w -2 4 ,8 1 6 4 ,6 1 6 -8 ,2 6 5 -9 ,4 1 4 -1 1 ,0 2 0 PBV 22.9 18.8 15.6 12.8 10.4
Inc/(dec) in capital 18,406 0 0 0 0 EV/EBITDA 89.1 64.8 53.2 41.6 32.6
Dividend+Tax Thereon 0 0 0 0 0 EV/Net Sales 7.4 5.8 4.4 3.5 2.8
Inc/dec in loans 3,050 -10,791 0 -659 -560 Debtor days 1 1 1 1 1
Other assets -1,203 -800 -351 -325 -276 Inventory days 29 28 29 29 29
Fi n a n c i n g Ca s h Fl o w 2 0 ,2 5 3 -1 1 ,5 9 1 -3 5 1 -9 8 4 -8 3 6 Creditor days 14 12 13 12 12
I n c / De c (-) i n Ca s h -11 325 -259 754 2,488 Source: Company, J M Financial
Opening cash balance 340 349 674 415 1,169
Closing cash balance 329 674 415 1,169 3,657
Source: Company, J M Financial

JM Financial Institutional Securities Limited Page 6

Avenue Supermarts Ltd. 13 October 2018

History of Earnings Estimate and Target Price Recommendation History

Date Recommendation Target Price % Chg.
Avenue Supermarts Ltd.
2-Apr-18 Buy 1,675 1800 B B
5-May-18 Buy 1,675 0.0 1600
14-Jun-18 Buy 1,705 1.8 1400
1200
1000
800
600
400
200
0
Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18

Target Price Avenue Supermarts Ltd.

JM Financial Institutional Securities Limited Page 7

 Avenue Supermarts Ltd. 13 October 2018

APPENDIX I

JM F inancial Inst itut ional Secur ities Lim ited

(formerly known as JM Financial Securities Limited)
Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd., National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst – INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: [email protected] | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: [email protected]

Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%

Research Analyst(s) Certification

The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:

All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and

No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.

Important Disclosures

This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.

JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE), National Stock Exchange of India Ltd. (NSE) and Metropolitan Stock Exchange of India Ltd. (MSEI). No material disciplinary
action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may impact the investment decision making of the
investor.

JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
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the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower to, or
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may have potential conflict of interest at the time of publication of this report on the subject company(ies).

Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.

The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report.
The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts) Regulations,
2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the company(ies) covered
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for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.

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