You are on page 1of 8

Zensar Technologies (ZENT IN)

Rating: BUY | CMP: Rs222 | TP: Rs278

January 22, 2019 Weak margin outlook a drag


Q3FY19 Result Update Led by Q3 revenue beat, we upgrade Zensar USD revenue growth assumption
to 16.9/12.4/13.1% for FY19/20/21E (vs 16.2/11.8/13.1% modeled earlier). Our
☑ Change in Estimates | ☑ Target |  Reco USD/INR assumption are at 70/70.5/72.5 for FY19/FY20/FY21E. With tepid
Change in Estimates margin performance during the quarter, we now model EBITDA margins at
Current Previous 11.9/13.1/14.6% for FY19/20/21E. (vs 13.1/14.5/14.8%). With lower margins and
FY20E FY21E FY20E FY21E lower PAT led by forex losses in Q3, we now model our EPS estimates to
Rating BUY BUY
Target Price 278 290 Rs12.7/15.9/21.1 for FY19/20/21E (Earlier Rs14.5/17.7/20.5). Zensar currently
Sales (Rs. m) 45,587 51,923 45,037 49,528 trades at 14x FY20E EPS and 12x Sep20E EPS. We trim our TP by 4% to Rs278
% Chng. 1.2 4.8
EBITDA (Rs. m) 5,991 7,598 6,530 7,312 (Earlier Rs290/share). Retain Buy.
% Chng. (8.2) 3.9
EPS (Rs.) 15.9 21.2 17.7 20.6
% Chng. (10.0) 3.0 Strong Revenue growth momentum: Revenue for the quarter came at
USD143.7mn up 4.1% QoQ and beat our estimates (USD142mn). Constant
Key Financials currency revenue growth for Q3FY19 came at 4.5% QoQ and 17.6% YoY.
FY18 FY19E FY20E FY21E However, we note that Q3FY19 has USD6.4mn revenues from acquisition of Indigo
Sales (Rs. m) 31,140 39,350 45,587 51,923 Slate. Hence, organic USD revenues came at USD137.3mn and grew by 2.3%
EBITDA (Rs. m) 3,710 4,677 5,991 7,598
QoQ. Among geographies, US and Europe continue to show steady growth grew
Margin (%) 11.9 11.9 13.1 14.6
PAT (Rs. m) 2,426 2,869 3,577 4,763 by 6.6% and 5.7% in cc terms. South Africa down 3.6% QoQ remains tepid during
EPS (Rs.) 10.8 12.8 15.9 21.2 the quarter. Among Verticals, Banking (up 22.3% QoQ) and Insurance (up 6.5%
Gr. (%) 3.0 18.3 24.7 33.2
QoQ) led the strong growth momentum which was partially negated by weak
DPS (Rs.) 2.4 2.6 3.0 4.0
Yield (%) 1.1 1.2 1.4 1.8 performance in Manufacturing vertical (down 5.7% QoQ) in cc terms. Digital
RoE (%) 15.4 16.1 17.7 20.3 accounts to 44.9% of total revenues grew by 6.3% QoQ in cc terms primarily driven
RoCE (%) 13.0 14.3 16.1 18.1
by CX, UX, front-end development capabilities and cloud infrastructure services and
EV/Sales (x) 1.5 1.3 1.1 0.9
EV/EBITDA (x) 12.6 10.5 8.2 6.2 remain the key growth driver.
PE (x) 20.6 17.4 14.0 10.5
P/BV (x) 3.0 2.6 2.3 2.0
Transition of large deals impacted margins: EBIDTA margin for Q3FY19 came
at 10.8% down 210bps QoQ and below our estimates (Ple: 13.2%). Headwind from
Key Data ZENT.BO | ZENT IN transition and ramp up of large deals (-93bps), furloughs (-50bps), lower utilisation
52-W High / Low Rs.352 / Rs.146
Sensex / Nifty 36,445 / 10,923
(-50bps), RoW and MVS business impact (-41bps) and System Integration tools (-
Market Cap Rs.50bn/ $ 700m 34bps) were partially offset by tailwind from INR depreciation (+42bps).
Shares Outstanding 225m
3M Avg. Daily Value Rs.56.06m Subcontracting expenses stood at 17% of total revenues up 30bps QoQ. PAT for
Q3FY19 came at Rs555mn was 27% below our estimates (PLe: Rs762mn) led by
Shareholding Pattern (%) margin miss and forex loss. Management cited that some transition impact and sub-
Promoter’s 48.86 contractor cost will continue to impact on margins in Q4 as well. However, once
Foreign 16.84 these large deals get into steady state, transition impact and sub-contractor cost
Domestic Institution 2.57
Public & Others 31.73 will start to reduce.
Promoter Pledge (Rs bn) -

Focus on Top clients: Management cited that demand environment looks good.
Stock Performance (%)
Revenue from Top 20 accounts grew by 8.7% QoQ/ 26% YoY and accounts to
1M 6M 12M
Absolute (4.0) (10.0) 18.6 86.5% of total revenues. However, revenue from Non top 20 account de-grew by
Relative (5.8) (9.8) 16.5 2.3% QoQ. As per management commentary, strategy is to focus on few high
growth accounts with integration of multiple services. TCV deal of ~USD200mn won
Rajat Gandhi during the quarter, taking the total TCV deal wins to ~USD500mn YTD.
rajatgandhi@plindia.com | 91-22-66322246

January 22, 2019 1


Zensar Technologies

Q3FY19: Beat on Revenues; Miss on Margins and PAT


Y/e March 3QFY19 2QFY18 QoQ 3QFY18 YoY Ple Variance
Revenues (USD mn) 143.7 138.1 4.1% 122.6 17.2% 142.0 1.2%
Revenues (INR mn) 10,376 9,708 6.9% 7,952 30.5% 10,108 2.6%
EBITDA 1126 1,249.00 -9.9% 1069 5.3% 1334 -15.6%
EBITDA Margins 10.8% 12.9% (210bps) 13.4% (260bps) 13.2% -
PAT 555 933.00 -40.6% 589 -5.9% 762 -27.2%
EPS (Rs) 2.5 4.2 -40.3% 13.4 -81.1% 3.5 -27.3%
Source: Company, PL

Sustained revenue growth momentum Tepid margin performance

15.4%

15.7%
15.5%
143.7

15.2%

15.0%
150.0 17.0%
138.1

14.7%
135.0

14.2%
145.0

14.0%
16.0%

13.9%
13.6%

13.5%
13.4%
140.0

12.9%
15.0%
126.6

12.9%
135.0
122.6

12.2%
(US$ m n)

14.0%

11.6%
130.0
118.6
117.5
116.4

116.0
115.9

114.8

13.0%
114.3

10.8%
114.0

125.0
111.8
110.7

10.3%
110.3

120.0 12.0%
106.9

105.3

115.0

9.4%
11.0%
101.3

110.0
10.0%
105.0
100.0 9.0%
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18

2QFY19
3QFY19
1QFY19
1QFY15
2QFY15
3QFY15

1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
4QFY15

3QFY19

Source: Company, PL Source: Company, PL

 Headcount stood at 9,813 employees which represents a net addition of 331


employees. DSO including unbilled stood at 106 days.

 Utilization rates stood at 81.7% down 90bps QoQ.

Strong growth in US and European Geography


Geography Revenues (USD mn) 3QFY19 2QFY18 QoQ 3QFY18 YoY
USA 109.2 102.6 6.4% 89.8 21.5%
Europe 20.5 19.7 4.1% 16.6 23.7%
Africa 11.9 12.6 -5.1% 11.8 1.5%
Rest of the World 1.9 3.2 -41.2% 4.4 -57.4%
Total Revenues 143.6 138.1 4.0% 122.6 17.1%
Source: Company, PL

Broad based growth baring manufacturing vertical


Vertical Revenues (USD mn) 3QFY19 2QFY18 QoQ 3QFY18 YoY
Manufacturing 73 73 1.1% 63 16.1%
-Hi Tech 54 52 3.7% 41 30.4%
-Mfg 19 20 -6.3% 22 -11.9%
Retail and Consumer Services 30 30 0.9% 33 -8.8%
Financial Services 35 32 8.8% 25 37.1%
-Insurance 27 25 5.6% 19 45.2%
-Banking 8 6 21.8% 7 17.2%
Emerging 6 4 49.7% 1 368.8%
Total Revenues 144 138 4.2% 123 17.2%
Source: Company, PL

January 22, 2019 2


Zensar Technologies

Digital and Cloud Services sustained growth momentum


Revenue By Service Offering (USD Mn) 3QFY19 2QFY18 QoQ 3QFY18 YoY
Digital & Application Services (DAS) 119 117 1.7% 102 17.2%
-Digital Services 57 54 5.4% 43 32.6%
-Core Application Services 62 63 -1.5% 59 5.9%
Cloud and Infrastructure Services (CIS) 25 21 17.2% 21 17.2%
-Cloud, Digital Led next gen CIS 7 7 9.0% 4 69.3%
-Core Infrastructure Services 11 7 55.1% 10 7.1%
-Third Party Maintenance 6 7 -11.5% 7 -2.3%
Total revenues 144 138 4.0% 123 17.2%
Total Digital Services 65 61 5.7% 47 36.0%
Source: Company, PL

Key Metrics:

Geography Mix of Revenues (%)


Revenue by geographical 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
USA 77.7 74.9 75.1 74.4 73.8 74.4 72.0 73.3 72.2 74.1 74.3 76.0
Europe 10.5 10.5 9.9 12.0 13.8 13.8 14.2 13.5 14.2 13.7 14.3 14.3
Africa 7.2 8.0 8.6 9.3 9.0 9.5 9.9 9.6 10.4 9.8 9.1 8.3
Rest of the World 4.7 6.6 6.4 4.3 3.5 2.4 3.9 3.6 3.2 2.4 2.3 1.3
Total 100 100 100 100 100 100 100 100 100 100 100 100
Source: Company, PL

Client Concentration
Client Details 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Top 5 Clients (% of total revenues) 36.6 38.9 37.5 38.4 34.9 35.3 36.2 38.6 37.6 38.2 39.1
Top 10 Clients (% of total revenues) 45.7 48.6 45.0 46.1 43.1 43.6 44.8 47.7 45.7 46.7 49.5
Top 20 Clients (% of total revenues) 55.7 59.1 55.6 56.2 54.5 56.1 56.0 59.3 57.1 57.6 60.2
Source: Company, PL

Strong net addition in consecutive five quarters


4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19
Technical - Onsite 1522 1529 1540 1619 1691 1810 1806 1847 1866 2019 2274 2360
Technical - Offshore 5657 5596 5699 5761 5739 5779 5674 5713 5868 6077 6044 6259
Technical - BPO/others 361 362 311 333 286 259 247 243 248 253 284 283
Marketing 113 92 82 103 102 91 78 70 68 64 80 76
Support 603 659 684 748 706 628 609 724 855 709 800 835

Total Headcount 8256 8238 8316 8564 8524 8567 8414 8597 8905 9122 9482 9813
Net Additions 64 -18 78 248 -40 43 -153 183 308 217 360 331
Source: Company, PL

January 22, 2019 3


Zensar Technologies

Consolidated Model Sheet of Zensar


FY15 FY16 FY17 FY18 FY19E FY20E FY21E
USD revenues (USD mn) 430 452 459 482 563 633 716
Growth (%) 12.3% 5.2% 1.5% 5.0% 16.9% 12.4% 13.1%
Organic Growth 4.2% 1.5% 0.0% -1.0% 8.0% 12.4% 13.1%

Average Rate (USD vs INR) 61 66 67 64 70 72 73

Revenues (INR mn) 26,558 29,519 30,604 31,140 39,350 45,587 51,923
Growth (%) 13.7% 11.1% 3.7% 1.8% 26.4% 15.8% 13.9%

EBIDTA 3,917 4,388 3,867 3,710 4,677 5,991 7,598


EBIT 3,501 3,737 3,381 3,059 3,809 5,069 6,625
PAT 2,646 2,897 2,349 2,426 2,869 3,577 4,763

EBIDTA Margin (%) 14.7% 14.9% 12.6% 11.9% 11.9% 13.1% 14.6%
EBIT Margin (%) 13.2% 12.7% 11.0% 9.8% 9.7% 11.1% 12.8%
PAT margin (%) 10.0% 9.8% 7.7% 7.8% 7.3% 7.8% 9.2%

Diluted EPS 11.9 12.8 10.4 10.7 12.7 15.8 21.1


EPS growth 11.1% 8.2% -19.3% 3.8% 18.3% 24.7% 33.2%

Dividend Payout Ratio ( Including Tax) 21.9% 20.8% 27.2% 26.6% 24.4% 23.0% 23.0%
DPS 2 2 2 2 3 3 4
Dividend Yield(%) 0.9% 1.0% 1.0% 1.0% 1.1% 1.3% 1.7%
ROE(%) 25.2 25.0 17.2 15.4 16.1 17.7 20.3
ROCE(%) 23.2 20.4 15.3 13.0 14.3 16.1 18.1
EPS 11.9 12.8 10.4 10.7 12.7 15.8 21.1
EPS growth (%) 11.1% 8.2% -19.3% 3.8% 18.3% 24.7% 33.2%

P/E 19.5 18.0 22.4 21.8 18.5 14.9 11.2


EV/EBIDTA 12.7 11.3 12.4 13.0 10.9 8.4 6.5

Consolidated Balance sheet


Net Cash 1,925 2,630 4,412 4,756 2,062 2,541 3,956
Net cash per share 9 12 20 21 9 11 18
Net cash as a % of mcap 3.1% 4.2% 7.0% 7.5% 3.3% 4.0% 6.3%

Cash flow from Operations 3,206 2,549 3,044 2,059 1,703 2,881 4,009
Capex+ Acquisition (2,451) (427) (958) (1,455) (3,650) (1,500) (1,500)
Free cash Flow 755 2,122 2,086 605 (1,947) 1,381 2,509
FCF/EBIDTA 19.3% 48.3% 53.9% 16.3% -41.6% 23.0% 33.0%
Source: Company, PL

January 22, 2019 4


Zensar Technologies

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 31,140 39,350 45,587 51,923 Non-Current Assets
YoY gr. (%) 1.8 26.4 15.8 13.9
Employee Cost 22,069 28,111 32,131 35,893 Gross Block 3,639 7,289 8,789 10,289
Gross Profit 9,071 11,238 13,455 16,030 Tangibles 1,992 3,817 4,567 5,317
Margin (%) 29.1 28.6 29.5 30.9 Intangibles 1,647 3,472 4,222 4,972
SG&A Expenses 5,361 6,561 7,464 8,433
Other Expenses - - - - Acc: Dep / Amortization 1,946 2,814 3,737 4,709
Tangibles 989 1,414 1,865 2,341
EBITDA 3,710 4,677 5,991 7,598 Intangibles 956 1,400 1,872 2,369
YoY gr. (%) (4.1) 26.1 28.1 26.8
Margin (%) 11.9 11.9 13.1 14.6 Net fixed assets 1,693 4,475 5,052 5,580
Tangibles 1,003 2,403 2,702 2,977
Depreciation and Amortization 651 869 923 972 Intangibles 690 2,071 2,350 2,603

EBIT 3,059 3,809 5,069 6,625 Capital Work In Progress 59 59 59 59


Margin (%) 9.8 9.7 11.1 12.8 Goodwill 4,223 4,223 4,223 4,223
Non-Current Investments 1,677 1,677 1,677 1,677
Net Interest 228 343 320 280 Net Deferred tax assets 310 310 310 310
Other Income 665 635 240 280 Other Non-Current Assets 369 369 369 369

Profit Before Tax 3,496 4,101 4,989 6,625 Current Assets


Margin (%) 11.2 10.4 10.9 12.8 Investments 1,302 1,402 1,502 1,602
Inventories 1,060 1,509 1,749 1,992
Total Tax 1,052 1,176 1,372 1,822 Trade receivables 6,423 8,086 9,367 10,669
Effective tax rate (%) 30.1 28.7 27.5 27.5 Cash & Bank Balance 2,069 1,420 2,299 4,114
Other Current Assets 711 711 711 711
Profit after tax 2,444 2,924 3,617 4,803 Total Assets 22,964 27,604 31,211 35,737
Minority interest 18 56 40 40
Share Profit from Associate - - - - Equity
Equity Share Capital 450 450 450 450
Adjusted PAT 2,426 2,869 3,577 4,763 Other Equity 16,239 18,407 21,162 24,831
YoY gr. (%) 3.3 18.3 24.7 33.2 Total Networth 16,689 18,857 21,612 25,281
Margin (%) 7.8 7.3 7.8 9.2
Extra Ord. Income / (Exp) - - - - Non-Current Liabilities
Long Term borrowings 60 60 60 60
Reported PAT 2,426 2,869 3,577 4,763 Provisions 9 9 9 9
YoY gr. (%) 3.3 18.3 24.7 33.2 Other non current liabilities 620 630 640 650
Margin (%) 7.8 7.3 7.8 9.2
Current Liabilities
Other Comprehensive Income - - - - ST Debt / Current of LT Debt - 2,145 2,645 3,145
Total Comprehensive Income 2,426 2,869 3,577 4,763 Trade payables 1,839 2,156 2,498 2,845
Equity Shares O/s (m) 225 225 225 225 Other current liabilities 3,461 3,481 3,501 3,521
EPS (Rs) 10.8 12.8 15.9 21.2 Total Equity & Liabilities 22,964 27,604 31,211 35,737
Source: Company Data, PL Research Source: Company Data, PL Research

January 22, 2019 5


Zensar Technologies

Cash Flow (Rs m) Key Financial Metrics


Y/e Mar FY18 FY19E FY20E FY21E Y/e Mar
Year FY18 FY19E FY20E FY21E
PBT 3,516 4,045 4,949 6,585 Per Share(Rs)
Add. Depreciation 651 869 923 972 EPS 10.8 12.8 15.9 21.2
Add. Interest 227 343 320 280 CEPS 13.7 16.6 20.0 25.5
Less Financial Other Income 665 635 240 280 BVPS 74.2 83.8 96.1 112.4
Add. Other 86 (297) (240) (280) FCF 2.7 (8.7) 6.1 11.2
Op. profit before WC changes 4,479 4,960 5,951 7,558 DPS 2.4 2.6 3.0 4.0
Net Changes-WC (1,385) (2,081) (1,699) (1,726) Return Ratio(%)
Direct tax (1,035) (1,176) (1,372) (1,822) RoCE 13.0 14.3 16.1 18.1
Net cash from Op. activities 2,059 1,703 2,881 4,009 ROIC 19.1 18.7 20.3 23.6
Capital expenditures (1,445) (3,650) (1,500) (1,500) RoE 15.4 16.1 17.7 20.3
Interest / Dividend Income 62 297 240 280 Balance Sheet
Others (182) (100) (100) (100) Net Debt : Equity (x) (0.2) 0.0 (0.1) (0.1)
Net Cash from Invt. activities (1,565) (3,453) (1,360) (1,320) Debtor (Days) 75 75 75 75
Issue of share cap. / premium 26 - - - Valuation(x)
Debt changes (1,337) 2,145 500 500 PER 20.6 17.4 14.0 10.5
Dividend paid (626) (701) (822) (1,094) P/B 3.0 2.6 2.3 2.0
Interest paid (104) (343) (320) (280) P/CEPS 13.7 16.6 20.0 25.5
Others - - - - EV/EBITDA 12.6 10.5 8.2 6.2
Net cash from Fin. activities (2,040) 1,101 (642) (874) EV/Sales 1.5 1.3 1.1 0.9
Net change in cash (1,546) (649) 879 1,815 Dividend Yield (%) 1.1 1.2 1.4 1.8
Free Cash Flow 605 (1,947) 1,381 2,509 Source: Company Data, PL Research
Source: Company Data, PL Research

Quarterly Financials (Rs m)


Y/e Mar Q4FY18 Q1FY19 Q2FY19 Q3FY19
Net Revenue 8,185 9,116 9,708 10,376
YoY gr. (%) 9.2 23.6 27.3 30.5
Raw Material Expenses 5,755 6,264 6,880 7,580
Gross Profit 2,430 2,852 2,828 2,796
Margin (%) 29.7 31.3 29.1 26.9
EBITDA 999 1,233 1,249 1,126
YoY gr. (%) (6.5) 23.4 1.3 (9.9)
Margin (%) 12.2 13.5 12.9 10.8
Depreciation / Depletion 139 182 224 237
EBIT 860 1,051 1,025 889
Margin (%) 10.5 11.5 10.6 8.6
Net Interest 50 59 95 109
Other Income 230 169 391 5
Profit before Tax 1,040 1,161 1,321 785
Margin (%) 12.7 12.7 13.6 7.6
Total Tax 300 322 372 218
Effective tax rate (%) 28.8 27.7 28.2 27.8
Profit after Tax 740 839 949 567
Minority interest 14 18 16 12
Share Profit from Associates - - - -
Adjusted PAT 726 822 933 555
YoY gr. (%) 234.6 74.4 45.9 (5.9)
Margin (%) 8.9 9.0 9.6 5.3
Extra Ord. Income / (Exp) - - - -
Reported PAT 726 822 933 555
YoY gr. (%) 234.6 74.4 45.9 (5.9)
Margin (%) 8.9 9.0 9.6 5.3
Other Comprehensive Income - - - -
Total Comprehensive Income 726 822 933 555
Avg. Shares O/s (m) 210 210 210 210
EPS (Rs) 3.3 3.73 4.22 2.52
Source: Company Data, PL Research

January 22, 2019 6


Zensar Technologies

Price Chart Recommendation History

(Rs)
No. Date Rating TP (Rs.) Share Price (Rs.)
350
1 26-Apr-18 BUY 1,280 1,208
299 2 10-Jul-18 BUY 1,280 1,276
249 3 10-Aug-18 BUY 1,410 1,240
4 5-Oct-18 BUY 330 297
198
5 25-Oct-18 BUY 290 235
148 6 7-Jan-19 BUY 290 229
Jan-17

Jan-18
Jan-16

Jan-19
Jul-16

Jul-17

Analyst Coverage Universe Jul-18

Sr. No. CompanyName Rating TP (Rs) Share Price (Rs)


1 Cyient BUY 810 669
2 HCL Technologies Accumulate 1,100 962
3 Hexaware Technologies Accumulate 430 351
4 Infosys BUY 790 695
5 L&T Technology Services Accumulate 1,780 1,455
6 Mindtree BUY 1,140 978
7 Mphasis Accumulate 1,220 1,068
8 NIIT Technologies BUY 1,460 1,192
9 Persistent Systems Accumulate 725 560
10 Redington (India) BUY 140 92
11 Sonata Software BUY 410 313
12 Tata Consultancy Services Accumulate 2,300 1,980
13 TeamLease Services Hold 2,740 2,219
14 Tech Mahindra BUY 885 688
15 Wipro Accumulate 350 309
16 Zensar Technologies BUY 290 235

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 22, 2019 7


Zensar Technologies

ANALYST CERTIFICATION
(Indian Clients)
We/I, Mr. Rajat Gandhi- MBA 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. Rajat Gandhi- MBA 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 22, 2019 AMNISH


Digitally signed by AMNISH AGGARWAL
DN: c=IN, o=Prabhudas Lilladher Private Limited, ou=organisation, cn=AMNISH
AGGARWAL,
serialNumber=7a6f13691881d5a8af6353865a61b48b7040e72f4a1bf53182e368b3c
8
AGGARWAL
a14a5e4, postalCode=400015,
2.5.4.20=c9b37ca6a8c78a11d6c42a4b6014e984fdf135dc1449611df0dc682d08443f
c6, st=Maharashtra
Date: 2019.01.22 22:20:21 +05'30'