Avenue Supermarts (DMART IN)

Rating: REDUCE | CMP: Rs1,572 | TP: Rs1,270

January 14, 2019 5-10% EPS Cut; Retain Reduce

Q3FY19 Result Update Key Points

☑ Change in Estimates | ☑ Target |  Reco  Gross margin declined by 170bps on conscious strategy to reduce prices

Change in Estimates  Operation expenses increased 30bps as D’Mart invested in creating

Current Previous
capabilities for future in terms of infrastructure, people and longer operating
FY20E FY21E FY20E FY21E
Rating REDUCE REDUCE hours during festival season.
Target Price 1,270 1,286
Sales (Rs. m)
% Chng.
256,636 329,396 252,408 323,969
1.7 1.7
 EBIDTA margins declined 200bps as Cost of retail increased by 30bps YoY to
EBITDA (Rs. m) 23,221 32,098 24,186 32,090 6.4%
% Chng. (4.0) -
EPS (Rs.) 21.6 30.4 22.7 30.5
% Chng. (5.0) (0.4)  Added 4 new stores, pending capex of Rs841mn out of IPO proceeds for
construction of stores and purchase of fit outs
Key Financials
We cut FY19 and FY20 EPS estimates of D’Mart by 10.7% and 5% following
FY18 FY19E FY20E FY21E
Sales (Rs. m) 150,332 198,095 256,636 329,396
200bps margin decline and just 2% PAT growth in 3Q19. D’Mart continues to
EBITDA (Rs. m) 13,528 16,620 23,221 32,098 focus on strong sales led by “Everyday Low price” strategy. Margins have
Margin (%) 9.0 8.4 9.0 9.7
been impacted by higher spends behind new store infrastructure, people and
PAT (Rs. m) 7,678 9,416 13,459 18,995
EPS (Rs.) 12.3 15.1 21.6 30.4 expenses to manage festive demand through higher operating hours. D’Mart
Gr. (%) 60.4 22.6 42.9 41.1 has lowered prices across categories led by benefits from higher economies
DPS (Rs.) - 1.5 2.0 3.0
Yield (%) - 0.1 0.1 0.2
of scale which reinforces its pole position of a value retailer.
RoE (%) 18.0 18.6 22.3 25.4
RoCE (%) 22.9 26.6 32.3 37.5 D’Mart has growth strategy is place led by 1) gradual acceleration in store
EV/Sales (x) 6.5 5.0 3.8 3.0
openings (added 21 stores in FY16 and FY17 and 24 stores in FY18) 2) ramp
EV/EBITDA (x) 72.4 59.1 42.3 30.4
PE (x) 127.8 104.2 72.9 51.6 up of D’Mart ready model from 58 locations in 4Q 3) ramp up in young clusters
P/BV (x) 21.0 18.0 14.8 11.8 like Punjab, Tamilnadu, Rajasthan, NCR and MP and 4) higher sales share of
general merchandise and apparel from 28.4% (up 200 bps in FY18)
Key Data AVEU.BO | DMART IN
52-W High / Low Rs.1,699 / Rs.1,060
We expect profit growth to bounce back from 4Q as low base will come into
Sensex / Nifty 36,010 / 10,795 play, although number of store openings in 4Q will be a key factor to watch
Market Cap Rs.981bn/ $ 13,907m
Shares Outstanding 624m out for. We remain positive on D’Mart given strong cluster based strategy,
3M Avg. Daily Value Rs.1872.39m Everyday low prices model and strong balance sheet. We estimate 34.5% PAT
CAGR over FY18-21. However, valuations at 72.8xFY20 EPS of Rs21.6 and
Shareholding Pattern (%) 51.6xFY21 EPS of Rs30.4 factors in the expected growth. Retain reduce with
Promoter’s 82.20 a target price of Rs1270 (45xDec20 EPS).
Foreign 5.45
Domestic Institution 3.01
Public & Others 9.34
Adj. PAT up only 2.1% to R.2.57bn: Net Sales increased 33.1% to Rs54.51bn.
Promoter Pledge (Rs bn) -
Gross Margins declined by 170bps to 14.7% due to conscious strategy to reduce
prices across consumer categories. EBIDTA increased by 7.5% YoY to Rs4.53bn
Stock Performance (%)
1M 6M 12M
on 200bps margin decline. Cost of retail increased by 30bps led by 40bps higher
Absolute 1.6 (1.5) 26.2 overheads despite 10bps lower employee cost. Operating costs increased due to
Relative (0.8) (0.8) 20.9
spends on new store infrastructure and employees. During the festive season, store
operated for longer hours which also resulted in operating costs increasing. Adj.
Amnish Aggarwal PAT grew only 2.1% Rs2.57bn due to increase in finance costs by 36%,
[email protected] | 91-22-66322233
depreciation by 33% and tax rate by 25bps and decline in other income by 36.7%.
Nishita Doshi D’Mart added 4 stores during the quarter (9 stores in 9MFY19) taking the total
[email protected] | 91-22-66322381
stores to 164.

January 14, 2019 1

 Avenue Supermarts

Net Sales up 33.4%; Ad. PAT up 2.1% on 200bps decline in margins

Y/E March Q3FY19 Q3FY19 YoY gr. (%) Q2FY19 9MFY19 9MFY18 YoY gr. (%)
Net Sales 54,509 40,939 33.1 48,725 148,829 111,989 32.9
Gross Profit 8,009 6,711 19.3 6,983 22,113 17,932 23.3
% of NS 14.7 16.4 (1.7) 14.3 14.9 16.0 (1.2)
Other Expenses 3,476 2,493 39.4 3,087 9,456 7,504 26.0
% of NS 6.4 6.1 0.3 6.3 6.4 6.7 (0.3)
EBITDA 4,533 4,217 7.5 3,896 12,657 10,429 21.4
Margins (%) 8.3 10.3 (2.0) 8.0 8.5 9.3 (0.8)
Depreciation 522 393 32.8 444 1,369 1,081 26.6
Interest 149 110 35.9 101 350 462 (24.3)
Other Income 86 137 (36.7) 139 368 577 (36.3)
PBT 3,949 3,851 2.5 3,491 11,306 9,462 19.5
Tax 1,378 1,334 3.3 1,109 3,971 3,235 22.8
Tax rate (%) 34.9 34.6 0.3 31.8 35.1 34.2 0.9
Adjusted PAT 2,571 2,518 2.1 2,382 7,335 6,228 17.8
Source: Company, PL

Added 4 stores in 3QFY19; Cost of retail up 10bps QoQ and 30bps YoY
2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
No of Stores 136 141 155 157 160 164
Area (mn Sq.ft.) 4.2 4.4 4.9 5.0 5.1 5.2
Sales/Ft 8,353 9,304 7775 9181 9637 10531
Gross Profit/Ft 1,348 1,525 1157 1434 1381 1547
EBIDTA/FT 757 958 601 851 771 876
Cost of retail % 7.1 6.1 7.1 6.3 6.3 6.4
Source: Company, PL

EBIDTA/Ft and Cost of retail likely to improve on healthy SSG

FY16 FY17 FY18 FY19E FY20E FY21E
Sales/Ft 28,136 31,120 32,719 35,848 39,408 43,104
Gross Profit/Ft 3,845 4,475 5,145 4,934 5,583 6,345
EBIDTA/FT 1,993 2,417 2,915 2,784 3,264 3,847
Capex/Ft 9,632 8,925 10,103 10,599 9,664 9,710
Cost of retail % 7.2% 7.0% 6.9% 6.5% 6.4% 6.3%
Working Cap/Ft 1,263 1,631 1,723 1,921 2,076 2,250
Source: Company, PL

January 14, 2019 2

 Avenue Supermarts

Bill Cuts increased by 23.9% to 134.4mn in FY18 LTL growth at 14.2% in FY18

Bill Cuts Growth % Av Bill value Growth % (RHS) LFL growth

12.0 9.2 10.0 30.0
8.2 26.1
10.0 25.0 22.4 21.5
10.9 8.0 21.2
8.0 5.7 5.5 20.0
5.0 4.8 6.0 14.2
6.0 6.0 15.0
4.0
5.8

4.0 10.0
5.1

5.0
1.8

4.8
3.9

2.0 2.0 5.0

0.0 0.0 0.0

FY15 FY16 FY17 FY18 FY19E FY20E FY21E FY14 FY15 FY16 FY17 FY18

Source: Company, PL Source: Company, PL

Sales/Sq. ft. increased to Rs 43,104 Foods continue to remain the highest contributor

Sales/ sq.ft Growth (RHS) Foods Non Foods General merchandise & Apparel
11.1
50000 10.6 10.2 12 100.0
9.4 25.9 26.4 26.4 28.4
40000 10 80.0
6.6 8 21.2 20.6 20.0
30000 60.0 20.0
5.1
6
20000 40.0
4
52.8 53.1 53.7
28136

31120

32719

36361

43826
40068

51.6
10000 2 20.0

0 0 0.0
FY16 FY17 FY18 FY19E FY20E FY21E FY15 FY16 FY17 FY18

Source: Company, PL Source: Company, PL

January 14, 2019 3

 Avenue Supermarts

ITO has stabilized, FA turnover to increase further Return ratios to improve sharply

Inventory Turnover Fixed Asset Turnover ROE ROCE

38.0
40.0
16.0 14.3 14.0 14.2 14.7
14.4 14.3 14.4 14.4 32.6
35.0
14.0 27.6 27.3
30.0 23.8 23.2
12.0 25.0 20.2 21.0 25.4
10.0 22.3
20.0 15.9
12.7 23.5 27.7
8.0 15.0 19.7
5.5 18.4 18.5 18.6
6.0 4.4 4.7 5.1 10.0
3.7 3.9 3.9 4.3
4.0 5.0
2.0 0.0

FY13

FY14

FY15

FY16

FY17

FY18

FY21E
FY19E

FY20E
0.0
FY14 FY15 FY16 FY17 FY18 FY19E FY20E FY21E

Source: Company, PL Source: Company, PL

Net cash positive from FY17 CFO to increase at 15.9% CAGR between FY18-21

15.0 Net Debt (Rs bn) Cash flow From Operations (Rs m)
11.6
8.6 16,000 14,526
10.0
14,000 12,538
5.0 12,000 10,821
9,340
0.5 10,000
0.0 8,000 6,200
-1.2 -1.0
6,000 4,598
-5.0
-3.9 -5.3 4,000
1,816
-10.0 2,000
FY15

FY17

FY18
FY16

FY20E

FY21E
FY19E

0
FY15 FY16 FY17 FY18 FY19E FY20E FY21E

Source: Company, PL Source: Company, PL

January 14, 2019 4

 Avenue Supermarts

Financials
Income Statement (Rs m) Balance Sheet Abstract (Rs m)
Y/e Mar FY18 FY19E FY20E FY21E Y/e Mar FY18 FY19E FY20E FY21E
Net Revenues 150,332 198,095 256,636 329,396 Non-Current Assets
YoY gr. (%) 26.4 31.8 29.6 28.4
Cost of Goods Sold 126,356 168,777 217,114 276,693 Gross Block 40,307 50,132 60,773 72,474
Gross Profit 23,976 29,318 39,522 52,703 Tangibles 39,800 49,549 60,103 71,704
Margin (%) 15.9 14.8 15.4 16.0 Intangibles 507 583 670 770
Employee Cost 2,826 3,685 4,876 6,259
Other Expenses 7,622 9,013 11,425 14,346 Acc: Dep / Amortization 7,089 9,156 11,691 14,674
Tangibles 6,877 8,909 11,363 14,254
EBITDA 13,528 16,620 23,221 32,098 Intangibles 212 247 328 420
YoY gr. (%) 37.9 22.9 39.7 38.2
Margin (%) 9.0 8.4 9.0 9.7 Net fixed assets 33,218 40,975 49,082 57,801
Tangibles 32,923 40,640 48,740 57,450
Depreciation and Amortization 1,590 2,060 2,527 2,976 Intangibles 294 335 342 350

EBIT 11,938 14,560 20,694 29,123 Capital Work In Progress 1,471 1,544 1,622 1,703
Margin (%) 7.9 7.3 8.1 8.8 Goodwill 783 783 783 783
Non-Current Investments 414 414 414 414
Net Interest 595 448 354 247 Net Deferred tax assets (450) (705) (918) (1,225)
Other Income 693 397 218 348 Other Non-Current Assets 876 912 997 1,091

Profit Before Tax 12,036 14,508 20,558 29,223 Current Assets

Margin (%) 8.0 7.3 8.0 8.9 Investments 682 750 825 907
Inventories 11,634 15,476 19,894 25,338
Total Tax 4,158 5,092 7,098 10,228 Trade receivables 335 434 562 722
Effective tax rate (%) 34.5 35.1 34.5 35.0 Cash & Bank Balance 5,602 2,488 2,218 5,544
Other Current Assets 694 792 1,027 1,318
Profit after tax 7,878 9,416 13,459 18,995 Total Assets 56,483 65,476 78,595 97,121
Minority interest 0 - - -
Share Profit from Associate (200) - - - Equity
Equity Share Capital 6,241 6,241 6,241 6,241
Adjusted PAT 7,678 9,416 13,459 18,995 Other Equity 40,450 48,154 60,112 76,853
YoY gr. (%) 60.4 22.6 42.9 41.1 Total Networth 46,691 54,395 66,353 83,094
Margin (%) 5.1 4.8 5.2 5.8
Extra Ord. Income / (Exp) 380 3 3 3 Non-Current Liabilities
Long Term borrowings 2,460 1,640 820 -
Reported PAT 8,058 9,419 13,462 18,998 Provisions 7 17 40 90
YoY gr. (%) 68.0 16.9 42.9 41.1 Other non current liabilities - - - -
Margin (%) 5.4 4.8 5.2 5.8
Current Liabilities
Other Comprehensive Income - - - - ST Debt / Current of LT Debt 1,933 2,500 2,500 2,500
Total Comprehensive Income 8,058 9,419 13,462 18,998 Trade payables 3,173 4,330 5,518 7,076
Equity Shares O/s (m) 624 624 624 624 Other current liabilities 1,754 1,875 2,432 3,121
EPS (Rs) 12.3 15.1 21.6 30.4 Total Equity & Liabilities 56,482 65,476 78,595 97,121
Source: Company Data, PL Research Source: Company Data, PL Research

January 14, 2019 5

 Avenue Supermarts

Cash Flow (Rs m) Key Financial Metrics

Y/e Mar FY18 FY19E FY20E FY21E Y/e Mar
Year FY18 FY19E FY20E FY21E
PBT 12,036 14,508 20,558 29,223 Per Share(Rs)
Add. Depreciation 1,590 2,060 2,527 2,976 EPS 12.3 15.1 21.6 30.4
Add. Interest 595 448 354 247 CEPS 14.9 18.4 25.6 35.2
Less Financial Other Income 693 397 218 348 BVPS 74.8 87.2 106.3 133.1
Add. Other (201) - - - FCF (2.5) (1.4) 3.7 10.4
Op. profit before WC changes 14,021 17,017 23,439 32,446 DPS - 1.5 2.0 3.0
Net Changes-WC (1,890) (2,893) (3,300) (3,976) Return Ratio(%)
Direct tax (4,158) (5,092) (7,098) (10,228) RoCE 22.9 26.6 32.3 37.5
Net cash from Op. activities 7,973 9,031 13,041 18,243 ROIC 23.8 23.4 27.4 32.1
Capital expenditures (9,539) (9,892) (10,711) (11,776) RoE 18.0 18.6 22.3 25.4
Interest / Dividend Income - - - - Balance Sheet
Others (260) (65) (72) (80) Net Debt : Equity (x) 0.0 0.0 - 0.0
Net Cash from Invt. activities (9,799) (9,957) (10,783) (11,855) Net Working Capital (Days) 21 21 21 21
Issue of share cap. / premium 220 (586) - - Valuation(x)
Debt changes (10,580) (253) (820) (820) PER 127.8 104.2 72.9 51.6
Dividend paid - (1,128) (1,504) (2,256) P/B 21.0 18.0 14.8 11.8
Interest paid (595) (448) (354) (247) P/CEPS 105.8 85.5 61.4 44.6
Others - - - - EV/EBITDA 72.4 59.1 42.3 30.4
Net cash from Fin. activities (10,956) (2,415) (2,678) (3,323) EV/Sales 6.5 5.0 3.8 3.0
Net change in cash (12,782) (3,342) (421) 3,064 Dividend Yield (%) - 0.1 0.1 0.2
Free Cash Flow (1,566) (861) 2,330 6,467 Source: Company Data, PL Research
Source: Company Data, PL Research

Quarterly Financials (Rs m)

Y/e Mar Q4FY18 Q1FY19 Q2FY19 Q3FY19
Net Revenue 38,100 45,594 48,725 54,509
YoY gr. (%) 22.5 26.7 38.9 33.1
Raw Material Expenses 32,432 38,474 41,742 46,501
Gross Profit 5,668 7,121 6,983 8,009
Margin (%) 14.9 15.6 14.3 14.7
EBITDA 2,945 4,227 3,896 4,533
YoY gr. (%) (30.2) 43.5 (7.8) 16.3
Margin (%) 7.7 9.3 8.0 8.3
Depreciation / Depletion 465 403 444 522
EBIT 2,480 3,824 3,453 4,012
Margin (%) 6.5 8.4 7.1 7.4
Net Interest 132 100 101 149
Other Income 149 143 139 86
Profit before Tax 2,497 3,866 3,491 3,949
Margin (%) 6.6 8.5 7.2 7.2
Total Tax 826 1,360 1,233 1,378
Effective tax rate (%) 33.1 35.2 35.3 34.9
Profit after Tax 1,671 2,506 2,258 2,571
Minority interest - - - -
Share Profit from Associates - - - -
Adjusted PAT 1,671 2,506 2,258 2,571
YoY gr. (%) 72.9 43.4 18.2 2.1
Margin (%) 4.4 5.5 4.6 4.7
Extra Ord. Income / (Exp) - - - -
Reported PAT 1,671 2,506 2,258 2,571
YoY gr. (%) 72.9 43.4 18.2 2.1
Margin (%) 4.4 5.5 4.6 4.7
Other Comprehensive Income 3 (2) (1) (1)
Total Comprehensive Income 1,674 2,505 2,256 2,570
Avg. Shares O/s (m) 624 624 624 624
EPS (Rs) 2.7 4.0 3.6 4.1
Source: Company Data, PL Research

January 14, 2019 6

 Avenue Supermarts

Recommendation History

No. Date Rating TP (Rs.) Share Price (Rs.)

1 25-Jan-18 Reduce 900 1,157
2 13-Apr-18 Reduce 900 1,469
3 6-May-18 Reduce 1,003 1,490
4 15-Jun-18 Reduce 1,197 1,569
5 10-Jul-18 Reduce 1,197 1,522
6 30-Jul-18 Reduce 1,285 1,595
7 5-Oct-18 Reduce 1,301 1,346
8 14-Oct-18 Reduce 1,286 1,412
9 7-Jan-19 Reduce 1,286 1,571

Analyst Coverage Universe

Sr. No. CompanyName Rating TP (Rs) Share Price (Rs)
1 Asian Paints Accumulate 1,300 1,396
2 Avenue Supermarts Reduce 1,286 1,571
3 Britannia Industries Accumulate 3,231 3,144
4 Colgate Palmolive Hold 1,157 1,303
5 Crompton Greaves Consumer Electricals BUY 276 227
6 Dabur India Hold 427 420
7 Emami Accumulate 521 419
8 Future Retail BUY 604 459
9 GlaxoSmithKline Consumer Healthcare Hold 8,520 7,488
10 Hindustan Unilever Hold 1,880 1,785
11 ITC BUY 364 282
12 Jubilant FoodWorks Accumulate 1,395 1,217
13 Kansai Nerolac Paints Accumulate 474 467
14 Marico BUY 387 387
15 Nestle India Accumulate 11,129 10,786
16 Pidilite Industries Accumulate 1,121 1,103
17 Titan Company BUY 1,115 944
18 Tribhovandas Bhimji Zaveri Accumulate 78 71
19 Voltas Accumulate 658 542

PL’s Recommendation Nomenclature (Absolute Performance)

Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly

January 14, 2019 7

 Avenue Supermarts

ANALYST CERTIFICATION
(Indian Clients)
We/I, Mr. Amnish Aggarwal- MBA, CFA, Ms. Nishita Doshi- CA, B.Com Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views
expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or
indirectly related to the specific recommendation(s) or view(s) in this report.

(US Clients)
The research analysts, 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 related to the specific
recommendation or views expressed in this research report.

DISCLAIMER
Indian Clients
Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for
third party financial products. PL is a subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various subsidiaries engaged in business of commodity broking,
investment banking, financial services (margin funding) and distribution of third party financial/other products, details in respect of which are available at www.plindia.com.
This document has been prepared by the Research Division of PL and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported
or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security.
The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness
of the same. Neither PL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made
available or expressed herein or for any omission therein.
Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or
otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.
Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions
of securities of companies referred to in this report and they may have used the research material prior to publication.
PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document.
PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014
PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities.
PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company.
PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month
immediately preceding the date of publication of the research report.
PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report.
PL or its associates might have received compensation from the subject company in the past twelve months.
PL or its associates might have managed or co-managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any
other assignment in the past twelve months.
PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
PL or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject
company in the past twelve months
PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report.
PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or
other benefits from the subject Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest
at the time of publication of this report.
It is confirmed that Mr. Amnish Aggarwal- MBA, CFA, Ms. Nishita Doshi- CA, B.Com Research Analysts of this report have not received any compensation from the companies
mentioned in the report in the preceding twelve months
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its
or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analysts have not engaged in market making activity
for the subject company
Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary
to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed
herein. In reviewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest.
PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company 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 subject company or act as an
advisor or lender/borrower to the subject company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.

US Clients
This research report is a product of Prabhudas Lilladher Pvt. Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s)
preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are
not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or
regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act,
1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major
Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted
onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major
Institutional Investors, Prabhudas Lilladher Pvt. Ltd. has entered into an agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").
Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

Prabhudas Lilladher Pvt. Ltd.

3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India | Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
www.plindia.com | Bloomberg Research Page: PRLD <GO>

January 14, 2019 AMNISH

Digitally signed by AMNISH AGGARWAL
DN: c=IN, o=Prabhudas Lilladher Private Limited, ou=organisation,
cn=AMNISH AGGARWAL,
serialNumber=7a6f13691881d5a8af6353865a61b48b7040e72f4a1bf5318
8
AGGARWAL
2e368b3ca14a5e4, postalCode=400015,
2.5.4.20=c9b37ca6a8c78a11d6c42a4b6014e984fdf135dc1449611df0dc68
2d08443fc6, st=Maharashtra
Date: 2019.01.13 21:44:46 +05'30'