Pick of the Week 13 Jan 2017

PCG RESEARCH
MPS Ltd.
Industry CMP Recommendation Add on dips to Targets Time Horizon
BUY at CMP and add on
Printing / Stationary Rs. 703 Rs. 610 - 665 Rs. 830 - 950 12 months
Declines

HDFC Scrip Code MACIND Company Background

BSE Code 532440
MPS Limited provides publishing solutions, including typesetting and data digitization services for overseas
NSE Code MPSLTD publishers and supports international publishers through every stage of the publishing process. The
Bloomberg MPS Company provides content creation, production, transformation and technology services, such as
programming and related activities, and information services activities. Its content creation and
CMP as on 13 Jan - 17 703 development service comprises authorship and foundation of the publishing business. Its content production
Equity Capital (Rs Cr) 18.6 and transformation service comprises the businesses of journals, books and digital services. The learning
and new media solutions service includes media asset development. Company provides majority of their
Face Value (Rs) 10 products and services to large publishing houses such as Macmillan, Cengage Learning, McGraw-Hill,
Equity O/S (Cr) 1.9 Elsevier and WoltersKluwer. Its technology services include platform development and the platforms
(author to reader) customized around customer needs (translating into outright sale and/or maintenance
Market Cap (Rs cr) services). It provides end-to-end solutions for the subscription cycle and customer relations management
1313 for print and online products.
Book Value (Rs) 150
Investment Rationale
Avg. 52 Week
11,225 The company, earlier known as Macmillan Publishing, underwent restructuring, post its acquisition by ADI
Volumes BPO in 2011. Overall, MPS has the building blocks in place and is poised to capture incremental
52 Week High 800 opportunities in the publishing outsourcing space. Publishing outsourcing is quiet a large market; the global
publication industry is estimated at US $550bn with the publication outsourcing market estimated at US
52 Week Low 610
$1.5bn. Though ~US $1.1bn (80%) worth of services were sourced from India, the market is fragmented
with a large number of smaller players and fewer listed players. MPS is well entrenched in top 20 global
publishers and that client stickiness may offset vendor churn. MPS earns ~US $3-5mn from its top client,
Shareholding Pattern (%)
could be only servicing 5- 10% of its top client outsourcing spends and implies significant client mining
Promoters 67.8 potential. In conclusion, focused account mining initiatives and platform strategy could help sustain revenue
growth momentum.
Institutions 11.2
Non Institutions 21.0 MPS Ltd, headquartered in Noida, is the de-merged publishing technology and services business of
erstwhile Macmillan India. With over 40 years of experience, the company offers both print and digital
publishing services to North American (52% of revenues) and European (43%) publishers. Company
PCG Risk Rating* Yellow provides various services namely Books and Journal Publishing Services, Digital Services, MPS Technologies
* Refer to Rating explanation and MPS 360 Customer Services. MPS caters to 100+ clients as of H1 FY17, It includes Macmillan, Elsevier,
Nature Publishing group, McGraw Hill, Wiley and Cengage Learning.
Kushal Rughani
kushal.rughani@hdfcsec.com
Private Client Group - PCG RESEARCH Page |1
 PCG RESEARCH

It employs ~3,000 people (as of H1 FY17) across multiple facilities (Bengaluru, Chennai, Gurgaon, Delhi,
Dehradun, Noida and Portland, US) with marketing offices in the US and UK. 98% of the companys
employees were located in India and 1.4% across international operations (USA).

MPS underwent a restructuring under its new owner Adi BPO. Mr Arora, founder of Adi BPO. The restructuring
helped consolidate 1) business and operating locations shifting operations to tier-II cities such as Dehradun
and 2) employee base. This resulted in revenue, EBITDA and PAT growth of 23%, 300%, 400% during FY12-
14 period. Post FY14 performance has been encouraging wherein revenue, EBITDA and PAT grew 14%, 20%
and 15% respectively.

Robust balance sheet metrics; Trades at Extremely attractive ~13x FY19E Earnings

MPS has posted 16.2% revenue cagr along with 900bps margin expansion over FY13-16. In FY16, company
posted EBITDA margin of 35.4%, while in H1 FY17, margin witnessed pressure due to operating loss in
Magplus. We believe company to continue the growth momentum and expect to post 15% revenue cagr over
FY16-19E mainly driven by its US business and acquisitions. We forecast 90bps margin expansion over the
same period. Similarly, we forecast 13.5% PAT cagr over FY16-19E and will post Rs 55 EPS for FY19. Total
Cash and cash equivalents as on Sep - 2016 were at Rs 203cr, company had raised Rs 150cr through
institutional placement in Mar 2015; which would be utilized to explore attractive inorganic opportunities.
Company has maintained 50%+ dividend payout ratio in the last three years. Similarly, we have taken 50-
55% dividend payout for the next three years, which also supports the downside in the stock. Currently, MPS
trades at 13x FY19E PE and 9x FY19E EV/EBITDA. In our view, MPS is available at an inexpensive valuations.
Larger inorganic opportunity may lead to better than expected revenues and earnings growth momentum.
We recommend BUY on MPS at CMP and add on dips to Rs 665-610 with sequential targets of Rs 830 and Rs
950 over the next 12 months, which implies 35% upside potential from current levels.

End to end cloud based publishing solution provider and development of a new platform for
collaborative content processing and distribution

MPS has traditionally offered cloud-based data analytics services to publishers and libraries. This range of
services has been expanded to include MPSTrak, a cloud-based workflow management system, as well as the
MPS DigiCore platform, described above. Companys range of end-to-end services with proven quality,
efficient delivery and attractive costs has placed us in a better position in the market.
MPS has taken into in-house production tools and built a cloud-based platform called MPS DigiCore, which
includes components for editing, composition, content enrichment, conversion, and distribution. The MPS
DigiCore, which provides end-to end cloud-based publishing platform to customers and addresses the need
for an integrated workflow of publishers. Over the years, Company has transitioned from pre publishing
service vendor to strategic technology partner and MPS Digicore platform marks leapfrog progress of MPS in
technology advancement.

Private Client Group - PCG RESEARCH Page |2

 PCG RESEARCH

Company has made an application for registration of copyright under literary work for DigiEdit, DigiComp,
DigiXML and MPSTrak forming part of MPS DigiCore titled as digital publishing solutions/editorial
tools/automated composition platforms and is pending before the Registrar of Copyrights, New Delhi under
the Copyrights Act, 1957. Besides MPS DigiCore components are being deployed for internal production, the
same is also provided on selective licensing basis. MPS Digicore platform helped in automation and improving
productivity in operations and helped in improving revenue productivity per employee and operating
efficiency.

Develop and continue maintaining strong relationships with customers

Company enjoys its relationship with customers and are one of the preferred suppliers amongst various
publishing houses. The customers include global players like Macmillan, Cengage Learning, McGraw-Hill,
Elsevier and WoltersKluwer. Company is focused on deriving the maximum benefits from its existing
relationship with publishing houses. Company aims to achieve this by providing a complete range of
publishing solutions for all customers and their affiliates.

Development of new platform within the focused business segments along with increased focus
on diverse market

MPS provides majority of their products and services to large publishing houses such as Macmillan, Cengage
Learning, McGraw-Hill, Elsevier and WoltersKluwer. Company intends to expand its reach to small and
medium publishers, which forms part of traditional markets and which has not served through different
platforms. It has developed a broad range of customized products and service offerings in order to address
the varied and expanding requirements of small and medium publishers. Company is experiencing good
success/positive response in this market with MPS Trak and DigiEdit. The products and services for small and
medium publishers would help in growing its business.

Acquisitions add niche capabilities

MPS has incorporated a wholly owned subsidiary, MPS North America LLC at USA, in May 2013. MPS North
America LLC has made two acquisitions in the education publishing services space in the last two years. MPS
acquired the business of the Orlando-based Element LLC in July, 2013 which has added to range of services
for school education publishers in the USA. Element has expertise in developing turnkey solutions for print
and online products and provides full-service editorial, design and production services to the education
publishers (specialised in pre-K and K-12 markets). It has enhanced MPSs presence in US educational
publishing market.

Company has also acquired the business of Electronic Publishing Services Inc. in October, 2014, a USA based
full-service editorial, content creation, art rendering and development, design, rights and permissions, and
production service provider to the Higher Education and Professional publishing markets. It has added
content creation and other capabilities in the higher education space. It has brought us new capability and

Private Client Group - PCG RESEARCH Page |3

 PCG RESEARCH

enhanced service portfolio in the academic/ higher education publishing market. This acquisition has led to
add one of the large publishers as clientele. The acquisition has enabled company in providing new services
to customers and increase its reach.

Utilization of the fund raised through QUALIFIED INSTITUTIONAL PLACEMENT

Company had issued ~18 lakh equity shares at Rs 836 and raised Rs 150cr through QIP in Mar 2015. Post
the issue, promoters holding fell to 67.8% from 75%. The funds were raised to explore inorganic
opportunities that will in turn help company to expand its services and also enter into new geographies. The
net proceeds of the issue are primarily to augment funds for growth opportunities such as acquisitions and
strategic initiatives and for general corporate purposes and any other purposes as may be permissible under
applicable law. These funds have been temporarily invested in interest / dividend bearing liquid instruments,
including money market instrument and will be utilized as per the objects of the QIP as and when a suitable
opportunity of acquisition and strategic growth materializes.

Magplus Acquisition

Magplus was a part of Bonnier Growth Media, the venture arm of Swedish media group Bonnier AB. MPS
acquired US based Magplus, a digital platform that creates and distributes content to mobile apps, for an
undisclosed amount. The acquisition got concluded in Jul 2016. Mag+ platform is 100% in the cloud, using a
SaaS based business model. Mag+s customer base is in enterprises that are using the solution to publish
non consumer based mobile apps that are available in Google or Apple app stores, or via internal company
portals.

The acquisition of Mag+ has enhanced platform capabilities and expanded reach into newer publishing
markets including enterprises and magazine publishers. The enhanced platform capabilities will also position
to advise and support publishers in the existing markets as they define their mobile content strategies.

H1 FY17 Financial Update

In H1 FY17, MPS posted 11.4% increase in revenues led by MagPlus consolidation. Operating margin dipped
170bps yoy to 33.7%, impacted due to operating loss from MagPlus. Net profit up 16% yoy to Rs 37cr as
other income surged to Rs 12cr.

The Management maintains its target of ~Rs 400cr revenue run rate by FY18E (including inorganic
opportunities); increased scope of engagement at 3 out of top 10 clients is to support the growth trajectory.
We have taken Rs 390cr revenues and Rs 103cr PAT for FY19; 15% revenue and 13% PAT cagr over FY16-
19E.

Private Client Group - PCG RESEARCH Page |4

 PCG RESEARCH

Management remains optimistic about growth opportunities

The Management continues to be optimistic about growth prospects and maintains its target of ~Rs 400cr
revenue run rate by FY18E (including inorganic opportunities) implying CAGR of ~25% over FY16-18E (we
build in revenues of Rs 395cr in FY19; CAGR of ~15% over FY16-19E). Management indicated that three of
the top-10 clients of the company have increased scope of engagement recently which should support
revenue growth trajectory going ahead.

Company didnt share operational details of MagPlus, Management indicated that the industry for MagPlus
offerings is expected to grow at 30% CAGR over the medium term. The Management expects that its cost
optimization efforts will drive operational turnaround at MagPlus over the coming quarters, similar to the
companys experience with its earlier three acquisitions.

Description of Services

Book and Journal Publishing Services

Company performs a diverse range of prepress publishing services for educational, professional development,
STM, academic and trade publishers. Journal publishing services excel in providing end to end publishing
services for Scientific, Technical and Medical & Hospital for Special Surgery journals for customers worldwide.
Company handles journal articles right from the moment editors approve an article for publication. Company
has been catering a range of pre-production solutions for past forty-five years to book and journal publishers.
Company offers complete pre press solutions for publishers including XML and non-XML-based typesetting,
editorial services, art work creation, and full-service project management for books and journals.

Editing and Indexing

Company offers both onshore and offshore copyediting, proofreading, and indexing services, as well as a
hybrid model that combines the best of onshore capabilities with the advantages of an India-based process.
The editorial team has varied specializations and skills designed to meet the disparate needs of customers.

MPS is well equipped to create an index that meets the requirements of both the publishers and the authors
in terms of style, structure, and the formatting of items such as cross references and locators. Company also
offers a page locating service for authors who prefer to provide index keywords themselves. A
comprehensive QA checklist and QA report help to maintain a high level of quality on every single index.

Private Client Group - PCG RESEARCH Page |5

 PCG RESEARCH

MPSs Digicore Platform

- Customized templates
- Online smart editing for layout - Proof, POD,
with underlying XML and e book PDF
- Rich editorial generation
functionalities - Built in Error Reporting
- Smart Navigation

- Integration with
Publishers' CMS and
third party Systems
- Distribution to
retailers & online
platforms such as
-EPub and Mobi output Amazon, iTunes and
-Publisher XML / Kobo
Schema Output - Content Store - e
-XSL transformation book delivery and
Engine distribution platform
-Integrated validation
and QC tools - Print to Digital
transformation
- Audio, Video
editing, closed
captioning
- Native, Web and
Hybrid apps
Private Client Group - PCG RESEARCH Page |6
 PCG RESEARCH

Digital Services

This business unit deals with the transformation of content from any input to multiple digital formats to cater
customers needs. Company has built a skilled and dedicated data conversion team for books, journals,
directories, and a wide variety of other applications. Company derives ~20% revenues from the segment.

E Book Creation

Company, through e book creation, enables customers to cater its business in new markets by digitizing
and enriching their print-based content-base. Company convert their content to any e book format suitable
for various types of eBook readers, including EPUB compatible to the iPad and Android-based devices, Mobi
for the Kindle, as well as for other proprietary e Readers. It has high-quality scanners to digitize any hard-
copy content before that company takes it through eBook conversion workflow. Company also handles any
form of electronic input, from application files to PDF to XML.

Company first converts all inputs into a basic EPUB format, using an automated process assisted by
especially developed in-house tools. Company then carries out the quick and simple second step conversion
to the format of the customers choice. Company also turn the content into an interactive, multimedia
enriched flipbook. The in-house tool, Media Suite, is designed to bring a book, journal, or learning guide to
life by adding visual and audio media, Web links, and interactive elements such as quizzes and tests.

MPS 360 Customer Services

Company provides back-office customer support and subscription management services for print and online
products, order fulfilment, customer support, and subscription management. The approach encompasses
customer centric orientation focused on long term relationship and delivery of all round customer service
through end to end service portfolio. Company derives 12-14% of revenue from MPS 360 customer services.

Superior financial profile deserves premium multiples; Trades at attractive ~13x FY19E Earnings

MPS has posted 16.2% revenue cagr along with 900bps margin expansion over FY13-16. In FY16, company
posted EBITDA margin of 35.4%, while in H1 FY17, margin witnessed pressure due to operating loss in
Magplus. We believe company to continue the growth momentum and expect to post 15% revenue cagr
over FY16-19E mainly driven by its US business and acquisitions. Moreover, company plans to grow through
inorganic expansions. Thus, any big ticket acquisition by the company may provide significant upsides to
our forecast. We have factored in 90bps margin expansion over the same period. Similarly, we forecast
13.5% PAT cagr over FY16-19E and will post Rs 55 EPS for FY19. Total Cash and cash equivalents as on
Sep - 2016 were at Rs 203cr, company had raised Rs 150cr through institutional placement in Mar 2015.
Post that company had acquired Mag+ in US. Company is sitting on cash to explore attractive inorganic
opportunities. Company has maintained 50%+ dividend payout ratio in the last three years. Similarly, we
have taken 50-55% dividend payout for the next three years, which also supports our positive stance on

Private Client Group - PCG RESEARCH Page |7

 PCG RESEARCH

the stock. Currently, MPS trades at 13x FY19E PE and 9x FY19E EV/EBITDA. We believe that MPS is
available at inexpensive valuations. Larger inorganic opportunity may lead to better than expected revenues
and earnings growth momentum. Also, MPS cash generation, which is in line with the best in the Tier - I IT
services space and dividend payout at > ~50% is worth appreciating. Further MPS cost optimization
initiatives, platform play and a greater proportion of business from low cost locations could provide upsides
to our margin expansion assumptions of ~90 bps over FY16-19E. We recommend BUY on MPS at CMP and
add on dips to Rs 665-610 with sequential targets of Rs 830 and Rs 950 (based upon ~17x FY19E earnings)
over the next 12 months, which implies 35% upside potential from current levels.

Key Risks

Industry risk
MPS is dependent on overseas publishers, any downturn in client business could have an impact on MPS
business.
Client concentration risk
MPS depends on a small customer base; Top 5 clients contribute ~60% of revenues. MPS revenues are
vulnerable to any changes in these key clients.
Competition risk
Low-cost commoditization is the key feature of the outsourced publishing business. Extensive competition
may put pressure on revenue growth and which could in turn dampen financials of the company.
Currency risk
Currency fluctuations e s p e c i a l l y i n U S D a n d G B P remains risk for the company.
Liquidity risk
MPS stock attracts lower volumes, so liquidity remains concern for the investors.

Financial Summary (Rs cr)

(Rs Cr) FY14 FY15 FY16E FY17E FY18E FY19E

Sales 197 224 257 302 344 395
EBITDA 63 81 91 104 122 143
Net Profit 42 62 71 79 87 103
EPS (Rs) 22.3 33.1 38.3 42.3 47.0 55.2
P/E 31.6 21.3 18.4 16.6 15.0 12.8
EV/EBITDA 20.6 16.1 14.3 12.5 10.7 9.1
RoE 47.6 35.4 26.6 26.9 26.3 27.7
Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH Page |8

 PCG RESEARCH

Top Clients Contribution

Sep'15 Dec'15 Mar'16 Jun'16 Sep'16

Top 5 Clients (%) 70 65 63 64 61
Revenues (US $mn) 6.7 6.8 6.1 5.9 6.9
Top 10 Clients (%) 88 82 80 82 76
Revenues (US $mn) 8.5 8.6 7.7 7.6 8.5
Others (%) 12 18 20 18 24
Revenues (US $mn) 1.2 1.9 1.9 1.7 2.7
Source: Company, HDFC sec Research

Key Clients

Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH Page |9

 PCG RESEARCH

Revenues trend over FY13-19E Strong EBITDA and PAT growth

450 160
400 140
350
120
300
100
250

Rs Cr
80
200
150 60

100 40
50 20
0
0
FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Source: Company, HDFC sec Research Source: Company, HDFC sec Research

EBITDA Margin to witness improvement Robust Return Ratios (%)

40.0 70.0 64.8
35.9 35.4 35.5 36.3
34.5
35.0 31.9 60.0

30.0 50.0 47.6

26.3 43.0
25.0 40.0 35.4 35.6
32.9 33.8
%

32.3
20.0 26.6 26.9 26.3 27.7
30.0
15.0
20.0
10.0
10.0
5.0
0.0
0.0
FY14 FY15 FY16 FY17E FY18E FY19E
FY13 FY14 FY15 FY16 FY17E FY18E FY19E
RoE RoCE

Source: Company, HDFC sec Research

Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH P a g e | 10

 PCG RESEARCH

H1 FY17 Revenues Split Revenue Mix

(%) (%)
3
2 1

24

US
42
55 Europe

RoW
73

USD GBP Euro Others

Source: Company, HDFC sec Research

Source: Company, HDFC sec Research

Top Clients Contribution (%)

90
79 79
80
70 61 62
60
50
40
30
20
10
0
H1 FY16 H1 FY17

Top 5 Clients Contribution Top 10 Clients Contribution

Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH P a g e | 11

 PCG RESEARCH

Income Statement (Consolidated) Balance Sheet (Consolidated)

(Rs Cr) FY14 FY15 FY16 FY17E FY18E FY19E (Rs Cr) FY14 FY15 FY16 FY17E FY18E FY19E
Net Revenue 197 224 257 302 344 395 SOURCE OF FUNDS
Growth (%) 20.3 13.5 14.9 17.4 13.8 14.9 Share Capital 17 18.6 18.6 18.6 18.6 18.6
Operating Expenses 134 144 166 198 222 252 Reserves 75 237 261 300 338 385
EBITDA 63 81 91 104 122 143 Shareholders' Funds 92 256 280 319 356 404
Growth (%) 45.8 27.8 13.1 14.4 17.0 17.5 Net Deferred Taxes -1 1 2 4 4 4
EBITDA Margin (%) 31.9 35.9 35.4 34.5 35.5 36.3 Total Source of Funds 91 257 281 323 360 410
Depreciation 6 5 4 5 6 6 APPLICATION OF FUNDS
57 75 87 99 115 137 Net Block 18 22 24 26 27 32
EBIT
Intangibles 6 11.2 12 22 22 22
Net Operating Income 7 11 18 19 15 18
Long Term Loans & Advances 21 22 27 25 27 32
PBT 63 93 105 118 130 155
Total Non Current Assets 45 55 63 73 76 85
Tax 22 32 34 38 42 50
Trade Receivables 32 39 45 52 58 66
RPAT 42 62 71 79 87 103 Cash & Equivalents 12 17 14 56 89 112
Growth (%) 29.6 48.3 15.8 10.7 10.9 17.4 Other Current Assets 22 171 183 176 182 194
EPS 22.3 33.1 38.3 42.3 47.0 55.2 Total Current Assets 66 207 242 284 329 372
Source: Company, HDFC sec Research Trade Payables 15 11 12 13 16 18
Other Current Liab & Provisions 11 14 12 20 27 29
Total Current Liabilities 26 25 24 33 42 47
Net Current Assets 46 182 218 251 287 325
Total Application of Funds 91 257 281 323 360 410
Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH P a g e | 12

 PCG RESEARCH

Cash Flow Statement (Consolidated) Key Ratio (Consolidated)

(Rs Cr) FY14 FY15 FY16 FY17E FY18E FY19E Key Ratios (%) FY14 FY15 FY16 FY17E FY18E FY19E
Reported PBT 63 93 105 118 130 155 EBITDA Margin 31.9 35.9 35.4 34.5 35.5 36.3
Non-operating & EO items -7 -11 -18 -19 -15 -18 EBIT Margin 28.7 33.5 33.8 32.9 33.6 34.6
Interest Expenses 0 0 0 0 0 0 APAT Margin 21.0 27.5 27.7 26.1 25.4 26.0
Depreciation 6 5 4 5 6 6 RoE 47.6 35.4 26.6 26.9 26.3 27.7
Working Capital Change -5 -149 -17 11 -3 -15 RoCE 64.8 43.0 32.3 32.9 33.8 35.6
Tax Paid -22 -32 -34 -38 -42 -50 Solvency Ratio
OPERATING CASH FLOW ( a ) 37 -92 40 77 78 79 Net Debt/EBITDA (x) -0.5 -2.2 -2.0 -2.0 -2.0 -1.9
Capex 3 -2 -3 -5 -5 -8 Net D/E (x) -0.3 -0.7 -0.7 -0.7 -0.7 -0.7
Free Cash Flow 40 -94 37 72 73 71 PER SHARE DATA
Investments 0 0 0 0 0 0 EPS 22.3 33.1 38.3 42.3 47.0 55.2
Non-operating income 7 11 18 19 15 18 CEPS 28 36 40 45 50 59
INVESTING CASH FLOW ( b ) 10 9 16 14 10 10 BV 49 138 150 171 191 217
Debt Issuance / (Repaid) 0 0 0 0 0 0 Dividend 17.0 22.0 22.0 22.5 25.0 30.0
Interest Expenses 0 0 0 0 0 0 VALUATION (x)
FCFE 40 -94 37 72 73 71 P/E 31.6 21.3 18.4 16.6 15.0 12.8
Share Capital Issuance 0 2 0 0 0 0 P/BV 14.3 5.1 4.7 4.1 3.7 3.2
Dividend -33 -44 -48 -49 -54 -65 EV/EBITDA 20.6 16.1 14.3 12.5 10.7 9.1
FINANCING CASH FLOW ( c ) -33 -42 -48 -49 -54 -65 EV / Revenues 6.6 5.8 5.0 4.3 3.8 3.3
NET CASH FLOW (a+b+c) 13 -126 7 42 33 23 Dividend Yield (%) 2.4 3.1 3.1 3.2 3.5 4.3
Source: Company, HDFC sec Research Dividend Payout (%) 76.3 66.6 57.5 53.1 53.2 54.4
Source: Company, HDFC sec Research

Private Client Group - PCG RESEARCH P a g e | 13

 PCG RESEARCH

Price History
1000
900
800
700
600
500
400
300
200

Apr-16

Sep-16
May-16

Nov-16
Jan-16

Feb-16

Jul-16
Jun-16

Oct-16

Dec-16
Mar-16

Aug-16
Rating Definition:

Buy: Stock is expected to gain by 10% or more in the next 1 Year.

Sell: Stock is expected to decline by 10% or more in the next 1 Year.

Private Client Group - PCG RESEARCH P a g e | 14

 PCG RESEARCH

Rating Chart

R HIGH
E
T
MEDIUM
U
R
N LOW
LOW MEDIUM HIGH
RISK

Ratings Explanation:

RATING Risk - Return BEAR CASE BASE CASE BULL CASE

IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 15% &
LOW RISK - LOW RATIONALE FRUCTFIES
BLUE PRICE CAN FALL 20% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
20% OR MORE
PRICE CAN RISE BY 15%
IF RISKS MANIFEST
IF INVESTMENT
MEDIUM RISK - IF RISKS MANIFEST PRICE CAN FALL 20% &
RATIONALE FRUCTFIES
YELLOW HIGH RETURN PRICE CAN FALL 35% IF INVESTMENT
PRICE CAN RISE BY
STOCKS OR MORE RATIONALE FRUCTFIES
35% OR MORE
PRICE CAN RISE BY 30%
IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 30% &
HIGH RISK - HIGH RATIONALE FRUCTFIES
RED PRICE CAN FALL 50% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
50% OR MORE
PRICE CAN RISE BY 30%

Private Client Group - PCG RESEARCH P a g e | 15

 PCG RESEARCH
I, Kushal Rughani, MBA, author and the name 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.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its
Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
Research Analyst has material conflict of interest.
Any holding in stock YES

Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or
arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of
warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information
purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an
offer or solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any
locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HDFC Securities
Ltd or its affiliates to any registration or licensing requirement within such jurisdiction.
If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not
be reproduced, distributed or published for any purposes without prior written approval of HDFC Securities Ltd.
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived
from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HDFC Securities Ltd may from time to time solicit from, or perform broking, or other services for,
any company mentioned in this mail and/or its attachments.
HDFC Securities and its affiliated company(ies), 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 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) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and
other related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any
action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the
dividend or income, etc.
HDFC Securities Ltd and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or
may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
HDFC Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other
assignment in the past twelve months.
HDFC Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report
for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or
specific transaction in the normal course of business.
HDFC Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research
report. Accordingly, neither HDFC Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not
based on any specific merchant banking, investment banking or brokerage service transactions. HDFC Securities may have issued other reports that are inconsistent with and reach different
conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an
officer, director or employee of the subject company. We have not received any compensation/benefits from the Subject Company or third party in connection with the Research Report.
HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg
(East), Mumbai 400 042

HDFC securities Limited, 4th Floor, Above HDFC Bank, Astral Tower, Nr. Mithakali 6 Road, Navrangpura, Ahmedabad-380009, Gujarat.

Website: www.hdfcsec.com Email: pcg.advisory@hdfcsec.com

Private Client Group - PCG RESEARCH P a g e | 16