You are on page 1of 7

Financial Highlights

Results Review
INDIA
PHARMACEUTICALS
29 May 2014


REPORT AUTHORS
Arvind Bothra
+91 22 6766 3442
arvind.bothra@religare.com







PRICE CLOSE (29 May 14)
INR 372.95
MARKET CAP
INR 299,450 mln
USD 5,086 mln
SHARES O/S
802.9 mln
FREE FLOAT
63.2%
3M AVG DAILY VOLUME./VALUE
1.7 mln/ USD 10.9 mln
52 WK HIGH
INR 450.00
52 WK LOW
INR 364.05





SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN


Another dismal quarter; estimates slashed SELL

Ciplas Q4 PAT at Rs 2.2bn (excl. Rs 400mn fx gains) was sharpl y below
RCMLe (Rs 2.7bn) on continued weakness in margi ns (16% vs 17.5% est).
Revenues at Rs 24.3bn (+27% YoY) were slightl y ahead on strong domestic
growth (19% vs. 15% est.). But a weaker business mix (higher ARV sal es)
pressurised gross margi ns, leading to an EBITDA-level miss (7% below). We
trim our FY15-16E EPS by 4% (50bps cut) on lower margins but maintain our
TP at Rs 400 as we roll over to Mar16E EPS. Retain SELL (non-consensus).

Revenue growth led by domestic business: Domestic sales grew 19% YoY driven by
sustained improvement in field-force productivity. Exports were up 32% YoY led by
inclusion of the Medpro (South Africa) acquisition as well as currency weakness
(which aided realisations). Management expects mid-teens sales growth for FY15E,
as most long-gestation projects are likely to bear fruit after 18-24 months.
Weaker mix pressurises margins: Q4 margins at 15.7% (-423bps YoY, -229bps QoQ)
lagged expectations due to (a) a sharp decline in gross margins (-349bps impact)
and (b) higher staff costs (-293bps). R&D spends continued to increase (Rs 1.5bn vs.
Rs 900mn in Q3) and should trend further up as investments for the US pipeline are
likely to continue. Increased exposure to the ARV tender business (via Medpro)
could lead to higher margin volatility ahead. We slash our margin estimates by
50bps over FY15-FY16E to ~20.5%, leading to 4% EPS cut (implying 14% EPS CAGR).
Valuations demanding: Cipla trades at 16.7x 1-yr fwd. P/E, in line with its historic
P/E multiple, leaving little room for upsides given (a) weaker EPS growth (14% vs.
18% for peers) and (b) potential M&A integration risks. We believe potential
upsides from EU inhaler launches could be back-ended as near-term growth would
remain under pressure (FY15E EPS growth of 7%). While our EPS estimates are
already 7-8% below consensus, we expect consensus to downgrade earnings owing
to a weaker margin outlook. Lupin (LPC) remains our top, large-cap pharma pick.

Y/E 31 Mar FY12A FY13A FY14E FY15E FY16E
Revenue (INR mln) 70,207 82,794 101,004 117,362 135,408
EBITDA (INR mln) 16,589 21,979 21,331 24,150 28,560
Adjusted net profit (INR mln) 11,443 15,449 13,884 14,918 17,896
Adjusted EPS (INR) 14.3 18.7 17.3 18.6 22.3
Adjusted EPS growth (%) 15.6 31.5 (7.8) 7.4 20.0
DPS (INR) 2.3 2.3 3.0 3.5 4.0
ROIC (%) 15.4 16.6 15.3 17.6 18.7
Adjusted ROAE (%) 16.0 18.5 14.6 14.1 15.2
Adjusted P/E (x) 26.2 19.9 21.6 20.1 16.7
EV/EBITDA (x) 18.0 13.6 14.0 12.3 10.4
P/BV (x) 3.9 3.3 3.0 2.7 2.4
Source: Company, Factset, RCML Research
This report has been prepared by Religare Capital Markets Limited or one of its affiliates. Where the report is distributed by Religare Capital Markets (UK) Limited (RCMUK), the firmis an Appointed Representative
of Elevation Trading Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. For analyst certification and other important disclosures, please refer to the Disclosure and
Disclaimer section at the end of this report. Analysts employed by non-US affiliates are not registered with FINRA regulation and may not be subject to FINRA/NYSE restrictions on communications with covered
companies, public appearances, and trading securities held by a research analyst account.
0
50
100
150
200
(%) Stock Price Index Price
SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN

Results Review
INDIA
PHARMACEUTICALS



29 May 2014 Page 2 of 7

Earnings cut post Q4 disappointment
We cut our PAT forecasts by 4% to factor in lower profitability as we trim our margin
assumptions by ~50bps over FY15-FY16E. This mainly factors in accelerated R&D
investments incurred to build a future pipeline as well as weaker gross margins (with ARV
business share likely to increase). Based on our revised forecasts, we expect an EPS CAGR
of 14% (FY14-FY16E) led by a 17% revenue CAGR.
Fig 1 - Earnings revision summary
Earlier Now Change (%)
Rs mn FY15E FY16E FY15E FY16E FY15E6 FY16E
Sales 115862 133824 116643 134636 1 1
EBITDA 23893 28290 23431 27788 (2) (2)
Margin (%) 20.6 21.1 20.1 20.6 (51bps) (46bps)
PAT 15554 18578 14918 17896 (4) (4)
EPS (Rs/sh) 19.4 23.1 18.6 22.3 (4) (4)
Source: RCML Research, Company
Our forecasts are significantly below consensus
While we note that our EPS estimates are 7-8% below consensus, there would be
earnings downgrades following the Q4 miss. We also highlight that we have a
non-consensus SELL rating, as the street is largely optimistic (80% BUY/HOLD, 20% SELL)
on Ciplas turnaround prospects following the recent organizational changes. We think
that the companys medium-term earnings outlook would be muted owing to continued
investments towards long-term projects.
Fig 2 - RCML vs Consensus: Comparison
RCML Consensus Difference (%)
Rs mn FY15E FY16E FY15E FY16E FY15E FY16E
Sales 116,643 134,636 116,351 133,639 0 1
EBITDA 23,431 27,788 24,990 29,197 (6) (5)
PAT 14,918 17,896 16,166 19,252 (8) (7)
EPS-Rs/sh 18.6 22.3 20.1 24.0 (8) (7)
Source: RCML Research, Company
SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN

Results Review
INDIA
PHARMACEUTICALS



29 May 2014 Page 3 of 7

Q4FY14 result anal ysis
Fig 3 - Quarterl y Profit & Loss A/c
(Rs mn)
4QFY13 3QFY14 4QFY14 YoY % QoQ % Comments on 4Q results
Domestic sales 7,610 10,443 9,080 19 (13)
Domestic growth came in ahead of expectations despite the
impact of NLEM. Share of new launches increased to 3.5%
(vs 1.5% in 1Q)
Export Sales
11,560 15,084 15,210 32 1
This quarter also incorporates Medpro sales of US$ 50mn
(90% shipped from Cipla earlier). Favorable currency
realisation also aided growth
- Formulations
9,810 13,516 12,820 31 (5)
Growth across markets was healthy led by improved pricing
as well as favorable currency realisations
- APIs
1,750 1,568 2,390 37 52
Bulk drug sales improved due to higher participation in ARV
products
Total Revenues 19,170 25,527 24,290 27 (5)

Other operating income
229 254 750 227 195
Net revenues
19,399 25,781 25,040 29 -3
Revenues were 4% ahead of expectations, thanks to
stronger domestic growth
Raw material consumed 7,098 9,991 10,035 41 0
Higher ARV sales and lower margins post the NLEM impact
also suppressed margins
% of revenues
36.6% 38.8% 40.1% 349bps 132bps Sharp compression in gross margins hurt profitability
Staff cost
2,746 4,028 4,279 56 6
Senior management hires and Medpro consolidation led to
higher staff costs
% of revenues
14.2% 15.6% 17.1% 293bps 147bps
Other Expenses
5,685 7,116 6,788 19 (5)
Higher promotion/R&D spends pushed up overheads (Rs
1.5bn vs. Rs 900mn in Q3)
% of revenues 29.3% 27.6% 27.1% (220bps) (50bps)

Total Expenditure
15,529 21,135 21,102 36 0
EBITDA
3,871 4,646 3,938 2 (15) EBITDA was 7% below forecasts despite sales beat
EBITDA margin (%)
20.0% 18.0% 15.7% (423bps) (229bps)
Margins were 160bps below estimates largel y on weaker
gross margins
Technology licensing
income
387 27 155 (60) 468
Operating profit
4,258 4,673 4,093 (4) (12)
OPM (%) 21.5 18.1 16.2 (528bps) (186bps)

Other income
386 124 375 (3) 203 Includes higher income from liquid funds/current investments
Forex gains/(losses)
180 400 400 122 0 Included both realised as well as unrealised forex gains.
Interest (net)
(188) (333) (341) 82 3 Interest costs in line with recent quarters
Depreciation (851) (912) (1,050) 23 15
Depreciation came in higher than expectations, leading to
higher miss at the PBT level
Pre-tax profits
3,785 3,953 3,477 (8) (12)
PBT came in line with expectations due to fx gains of
Rs 400mn
Tax
(1,027) (987) (753) (27) (24)
Effective tax rate
27.1% 25.0% 21.7% (548bps) (331bps)
Tax rates to remain at 25% for full year noting higher export
profits
PAT
2,758 2,966 2,724 (1) (8)
Minority 7 (61) (117) (1680) 91

Adjusted PAT 2,765 2,905 2,607 (6) (10)
Net profit, adjusted for forex gains, was 16% below
expectations
EPS 3.4 3.6 3.2 (6) (10)

Source: RCML Research, Company

SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN

Results Review
INDIA
PHARMACEUTICALS



29 May 2014 Page 4 of 7

Quarterly trends
Fig 4 - Acquisition led revenue ramp-up Fig 5 - Domestic business on firm footing



Source: RCML Research, Company

Source: RCML Research, Company

Fig 6 - Domestic sales strong despite pricing policy impact Fig 7 - Exports include impact of Medpro consolidation



Source: RCML Research, Company

Source: RCML Research, Company

Fig 8 - Weaker mix dents profitability Fig 9 - 4Q PAT included forex gains



Source: RCML Research, Company

Source: RCML Research, Company


16
15
16
16
18 17
19
20
22
21
19
25 25
26
25
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(%) (Rs bn)
Sales growth YoY (%)
8 7
7
7
8 9
8
10 9 9
8
11 10 10
9
8
8 10 8
9 9 11
10
12
11
12
12
14
15
15
0
5
10
15
20
25
30
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(Rs bn) Domestic Exports
7.6
7.3
6.5
7.4
8.5
8.7
7.5
9.7
9.3 9.3
7.6
11.0
10.4 10.4
9.1
0
5
10
15
20
25
30
35
0
2
4
6
8
10
12
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(Rs bn) (%)
Domestic sales growth YoY (%)
8.3
7.8
9.7
8.3
9.1
8.7
10.8
9.8
12.4
11.4
11.6
12.1
14.2
15.1 15.2
0
5
10
15
20
25
30
35
40
0
2
4
6
8
10
12
14
16
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(Rs bn) (%)
Export sales growth YoY (%)
3
3
3
3
4
4
4
5
7
5
4
7
5
5
4
0
5
10
15
20
25
30
35
0
1
2
3
4
5
6
7
8
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(%) (Rs bn) EBITDA EBITDA margins (%)
3
2
2
3
3
3
3
4
5
3
3
5
4
3
3
(40)
(30)
(20)
(10)
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
M
a
r
-
1
2
J
u
n
-
1
2
S
e
p
-
1
2
D
e
c
-
1
2
M
a
r
-
1
3
J
u
n
-
1
3
S
e
p
-
1
3
D
e
c
-
1
3
M
a
r
-
1
4
(%) (Rs bn)
PAT growth YoY (%)
SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN

Results Review
INDIA
PHARMACEUTICALS



29 May 2014 Page 5 of 7

Per Share Data
Y/E 31 Mar (INR) FY12A FY13A FY14E FY15E FY16E
Reported EPS 14.3 19.2 17.3 18.6 22.3
Adjusted EPS 14.3 18.7 17.3 18.6 22.3
DPS 2.3 2.3 3.0 3.5 4.0
BVPS 95.1 112.3 125.2 138.8 155.0

Valuation Ratios
Y/E 31 Mar (x) FY12A FY13A FY14E FY15E FY16E
EV/Sales 4.3 3.6 3.0 2.5 2.2
EV/EBITDA 18.0 13.6 14.0 12.3 10.4
Adjusted P/E 26.2 19.9 21.6 20.1 16.7
P/BV 3.9 3.3 3.0 2.7 2.4

Financial Ratios
Y/E 31 Mar FY12A FY13A FY14E FY15E FY16E
Profitabilit y & Return Ratios (%)
EBITDA margin 23.6 26.5 21.1 20.6 21.1
EBIT margin 19.2 22.6 17.4 17.2 17.9
Adjusted profit margin 16.3 18.7 13.7 12.7 13.2
Adjusted ROAE 16.0 18.5 14.6 14.1 15.2
ROCE 14.3 15.7 12.5 12.9 14.1
YoY Growth (%)
Revenue 11.2 17.9 22.0 16.2 15.4
EBITDA 25.5 32.5 (2.9) 13.2 18.3
Adjusted EPS 15.6 31.5 (7.8) 7.4 20.0
Invested capital 10.5 30.3 (15.7) 16.1 9.9
Worki ng Capital & Li qui dit y Rati os
Receivables (days) 79 71 60 58 60
Inventory (days) 250 262 249 257 257
Payables (days) 74 70 58 60 61
Current ratio (x) 3.7 3.1 1.9 2.3 2.6
Quick ratio (x) 0.1 0.1 0.1 0.1 0.1
Turnover & Leverage Rati os (x)
Gross asset turnover 1.6 1.7 1.8 1.8 1.9
Total asset turnover 0.8 0.8 0.8 0.9 0.9
Net interest coverage ratio 0.0 0.0 0.0 0.0 0.0
Adjusted debt/equity 0.0 0.1 0.1 0.1 0.1

DuPont Anal ysis
Y/E 31 Mar (%) FY12A FY13A FY14E FY15E FY16E
Tax burden (Net income/PBT) 79.0 73.7 73.9 73.5 73.7
Interest burden (PBT/EBIT) 107.5 112.2 106.8 100.4 100.3
EBIT margin (EBIT/Revenue) 19.2 22.6 17.4 17.2 17.9
Asset turnover (Revenue/Avg TA) 80.1 80.8 82.7 86.2 90.7
Leverage (Avg TA/Avg equities) 122.6 123.0 128.1 128.5 126.6
Adjusted ROAE 16.0 18.5 14.6 14.1 15.2

SELL
TP: INR 400.00
7.3%
Cipla
CIPLA IN

Results Review
INDIA
PHARMACEUTICALS



29 May 2014 Page 6 of 7

Income Statement
Y/E 31 Mar (INR ml n) FY12A FY13A FY14E FY15E FY16E
Total revenue 70,207 82,794 101,004 117,362 135,408
EBITDA 16,589 21,979 21,331 24,150 28,560
EBIT 13,467 18,674 17,604 20,200 24,195
Net interest income/(expenses) 1,012 1,882 1,196 87 81
Other income/(expenses) 0 0 0 0 0
Exceptional items 0 398 0 0 0
EBT 14,478 20,556 18,801 20,287 24,276
Income taxes (3,065) (5,443) (4,634) (5,072) (6,069)
Extraordinary items 0 0 0 0 0
Min. int./Inc. from associates 29 (62) (283) (297) (311)
Reported net profit 11,443 15,449 13,884 14,918 17,896
Adjustments 0 0 0 0 0
Adj usted net profi t 11,443 15,449 13,884 14,918 17,896
Balance Sheet
Y/E 31 Mar (INR ml n) FY12A FY13A FY14E FY15E FY16E
Accounts payables 12,214 11,093 14,208 16,537 19,100
Other current liabilities 0 0 0 0 0
Provisions 2,432 2,824 3,424 2,960 3,199
Debt funds 135 9,669 12,283 11,055 9,950
Other liabilities 0 0 0 0 0
Equity capital 1,606 1,606 1,606 1,606 1,606
Reserves & surplus 74,784 88,581 98,898 109,802 122,880
Shareholders' fund 76,389 90,187 100,504 111,407 124,485
Total liabil iti es and equi ties 91,170 113,772 130,418 141,959 156,734
Cash and cash eq. 905 1,430 1,752 2,543 2,945
Accounts receivables 15,536 16,688 16,389 20,661 23,927
Inventories 18,501 23,871 28,953 33,375 38,652
Other current assets 19,409 30,554 10,442 14,666 16,723
Investments 3,283 4,157 6,619 2,713 5,193
Net fixed assets 32,158 36,203 40,033 45,001 46,636
CWIP 3,712 3,674 4,418 1,500 1,500
Intangible assets 0 0 0 0 0
Deferred tax assets, net (2,332) (2,805) (3,119) (3,430) (3,773)
Other assets 0 0 0 0 0
Total assets 91,170 113,772 130,418 141,959 156,734
Cash Flow Statement
Y/E 31 Mar (INR ml n) FY12A FY13A FY14E FY15E FY16E
Net income +Depreciation 14,565 18,754 17,611 18,869 22,261
Interest expenses (1,012) (1,882) (1,196) (87) (81)
Non-cash adjustments 0 0 0 0 0
Changes in working capital (5,001) (18,398) 19,045 (11,053) (7,799)
Other operating cash flows (275) 133 313 312 343
Cash fl ow from operati ons 8,277 (1,394) 35,772 8,041 14,724
Capital expenditures (4,716) (6,972) (33,231) (6,000) (6,000)
Change in investments 2,621 (874) (2,462) 3,907 (2,479)
Other investing cash flows 1,395 1,824 2,654 1,079 974
Cash fl ow from investi ng (700) (6,023) (33,040) (1,014) (7,506)
Equities issued 0 0 0 0 0
Debt raised/repaid (5,584) 9,535 2,614 (1,228) (1,106)
Interest expenses (383) (339) (1,457) (992) (893)
Dividends paid (2,810) (3,212) (3,613) (4,015) (4,818)
Other financing cash flows 1,096 1,958 46 0 0
Cash fl ow from fi nancing (7,682) 7,942 (2,411) (6,235) (6,816)
Changes in cash and cash eq (106) 525 321 792 403
Closing cash and cash eq 905 1,430 1,752 2,544 2,946


29 May 2014 Page 7 of 7

RESEARCH DISCLAIMER
Important Disclosures

This report was prepared, approved, published and distributed by a Religare Capital Markets
(RCM) group company located outside of the United States (a non-US Group Company). This
report is distributed in the U.S. by Enclave Capital LLC (Enclave Capital), a U.S. registered broker
dealer, on behalf of RCMonly to major U.S. institutional investors (as defined in Rule 15a-6 under the
U.S. Securities Exchange Act of 1934 (the Exchange Act)) pursuant to the exemption in Rule 15a-6
and any transaction effected by a U.S. customer in the securities described in this report must be
effected through Enclave Capital. Neither the report nor any analyst who prepared or approved the
report is subject to U.S. legal requirements or the Financial Industry Regulatory Authority, Inc.
(FINRA) or other regulatory requirements pertaining to research reports or research analysts. No
non-US Group Company is registered as a broker-dealer under the Exchange Act or is a member of
the Financial Industry Regulatory Authority, Inc. or any other U.S. self-regulatory organization.
Where the report is distributed by Religare Capital Markets (UK) Limited (RCM UK), the firmis an
Appointed Representative of Elevation Trading Limited, which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom.

Subject to any applicable laws and regulations at any given time, non-US Group Companies, their
affiliates or companies or individuals connected with RCM(together, Connected Companies) may
make investment decisions that are inconsistent with the recommendations or views expressed in this
report and may have long or short positions in, may fromtime to time purchase or sell (as principal or
agent) or have a material interest in any of the securities mentioned or related securities or may have
or have had a business or financial relationship with, or may provide or have provided investment
banking, capital markets and/or other services to, the entities referred to herein, their advisors and/or
any other connected parties. Any particular arrangements or relationships are disclosed below. As a
result, recipients of this report should be aware that Connected Companies may have a conflict of
interest that could affect the objectivity of this report.

See Special Disclosures for certain additional disclosure statements, if applicable.

This report is only for distribution to investment professionals and institutional investors.

Analyst Certification

Each of the analysts identified in this report certifies, with respect to the companies or securities that
the individual analyses, that (1) the views expressed in this report reflect his or her personal views
about all of the subject companies and securities and (2) no part of his or her compensation was, is
or will be directly or indirectly dependent on the specific recommendations or views expressed in this
report.

Analysts and strategists are paid in part by reference to the profitability of RCM which includes
investment banking revenues.

Stock Ratings aredefinedas follows

RecommendationInterpretation(Recommendation structure changed with effect fromMarch 1, 2009)

Recommendation Expectedabsolutereturns (%) over 12months
Buy More than 15%
Hold Between 15%and 5%
Sell Less than 5%

Expected absolute returns are based on the share price at market close unless otherwise stated.
Stock recommendations are based on absolute upside (downside) and have a 12-month horizon. Our
target price represents the fair value of the stock based upon the analysts discretion. We note that
future price fluctuations could lead to a temporary mismatch between upside/downside for a stock
and our recommendation.

Stock Ratings Distribution

As of 1 May 2014, out of 250 rated stocks in the RCMcoverage universe, 138 have BUY ratings
(including 7 that have been investment banking clients in the last 12 months), 71 are rated HOLD and
41 are rated SELL.

ResearchConflict Management Policy

RCM research has been published in accordance with our conflict management policy, which is
available at http://www.religarecm.com/

Disclaimers

This report is not directed to, or intended for distribution to or use by, any person or entity who is a
citizen or resident of or located in any locality, state, country or other jurisdiction where such
distribution, publication, availability or use would be contrary to law or regulation or which would
subject RCMto any registration or licensing requirement within such jurisdiction(s). This report is
strictly confidential and is being furnished to you solely for your information. All material presented in
this report, unless specifically indicated otherwise, is under copyright to RCM. None of the material,
its content, or any copy of such material or content, may be altered in any way, transmitted, copied or
reproduced (in whole or in part) or redistributed in any form to any other party, without the prior
express written permission of RCM. All trademarks, service marks and logos used in this report are
trademarks or service marks or registered trademarks or service marks of RCMor its affiliates, unless
specifically mentioned otherwise.

The information, tools and material presented in this report are provided to you for information
purposes only and are not to be used or considered as an offer or the solicitation of an offer to sell or
to buy or subscribe for securities or other financial instruments. RCMhas not taken any steps to
ensure that the securities referred to in this report are suitable for any particular investor. RCMwill
not treat recipients as its customers by virtue of their receiving the report. The investments or
services contained or referred to in this report may not be suitable for you and it is recommended that
you consult an independent investment advisor if you are in doubt about such investments or
investment services. In addition, nothing in this report constitutes investment, legal, accounting or tax
advice or a representation that any investment or strategy is suitable or appropriate to your individual
circumstances or otherwise constitutes a personal recommendation to you.

Information and opinions presented in this report were obtained or derived fromsources that RCM
believes to be reliable, but RCMmakes no representations or warranty, express or implied, as to their
accuracy or completeness or correctness. RCMaccepts no liability for loss arising fromthe use of the
material presented in this report, except that this exclusion of liability does not apply to the extent that
liability arises under specific statutes or regulations applicable to RCM. This report is not to be relied
upon in substitution for the exercise of independent judgment. RCMmay have issued, and may in the
future issue, a trading call regarding this security. Trading calls are short termtrading opportunities
based on market events and catalysts, while stock ratings reflect investment recommendations based
on expected absolute return over a 12-month period as defined in the disclosure section. Because
trading calls and stock ratings reflect different assumptions and analytical methods, trading calls may
differ directionally fromthe stock rating.

Past performance should not be taken as an indication or guarantee of future performance, and no
representation or warranty, express or implied, is made regarding future performance. Information,
opinions and estimates contained in this report reflect a judgment of its original date of publication by
RCMand are subject to change without notice. The price, value of and income fromany of the
securities or financial instruments mentioned in this report can fall as well as rise. The value of
securities and financial instruments is subject to exchange rate fluctuation that may have a positive or
adverse effect on the price or income of such securities or financial instruments. Investors in
securities such as ADRs, the values of which are influenced by currency volatility, effectively assume
this risk.

This report is distributed in India by Religare Capital Markets Limited, which is a registered
intermediary regulated by the Securities and Exchange Board of India. Where the report is
distributed by RCMUK, the firmis an Appointed Representative of Elevation Trading Limited, which
is authorised and regulated by the Financial Conduct Authority in the United Kingdom. If this research
is distributed in the European Union by RCMUK, it is directed only to non-retail clients. In Dubai, it is
being distributed by Religare Capital Markets (Europe) Limited (Dubai Branch) which is licensed and
regulated by the Dubai Financial Services Authority. In Singapore, it is being distributed (i) by
Religare Capital Markets (Singapore) Pte. Limited (RCMS) (Co. Reg. No. 200902065N) which is
a holder of a capital markets services licence and an exempt financial adviser in Singapore and (ii)
solely to persons who qualify as institutional investors or accredited investors as defined in
section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (the SFA). Pursuant to
regulations 33, 34, 35 and 36 of the Financial Advisers Regulations (the FAR), sections 25, 27 and
36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to RCMS when providing
any financial advisory service to an accredited investor, or overseas investor (as defined in
regulation 36 of the FAR). Persons in Singapore should contact RCMS in respect of any matters
arising from, or in connection with this publication/communication. In Hong Kong, it is being
distributed by Religare Capital Markets (Hong Kong) Limited (RCM HK), which is licensed and
regulated by the Securities and Futures Commission, Hong Kong. In Australia, it is being distributed
by RCMHK which is approved under ASIC Class Orders. In Sri Lanka, it is being distributed by
Bartleet Mallory Stockbrokers, which is licensed under Securities and Exchange Commission of
Sri Lanka. If you wish to enter into a transaction please contact the RCM entity in your home
jurisdiction unless governing law provides otherwise. In jurisdictions where RCMis not registered or
licensed to trade in securities, transactions will only be effected in accordance with applicable
securities legislation which may vary fromone jurisdiction to another and may require that the trade
be made in accordance with applicable exemptions from registration or licensing requirements.

Religare Capital Markets does and seeks to do business with companies covered in our research
report. As a result, investors should be aware that the firmmay have a conflict of interest that could
affect the objectivity of research produced by Religare Capital Markets. Investors should consider
our research as only a single factor in making their investment decision.

Any reference to a third party research material or any other report contained in this report represents
the respective research organization's estimates and views and does not represent the views of RCM
and RCM, its officers, employees do not accept any liability or responsibility whatsoever with respect
to its accuracy or correctness and RCMhas included such reports or made reference to such reports
in good faith. This report may provide the addresses of, or contain hyperlinks to websites. Except to
the extent to which the report refers to material on RCMs own website, RCMtakes no responsibility
whatsoever for the contents therein. Such addresses or hyperlinks (including addresses or
hyperlinks to RCMs own website material) is provided solely for your convenience and information
and the content of the linked site does not in any way form part of this report. Accessing such
website or following such link through this report or RCMs website shall be at your own risk.

Special Disclosures (if applicable)

Not Applicable

You might also like