India | Capital Goods 3 October 2019

Company Update

BEML
Focus on new products; better WC Rating: Buy
R&M bolsters sales while M&C and defense sales drops in FY19 Target Price: INR 1,180

BEML (BEML IN) revenue rose by 7% YoY to an all-time high of INR Upside: 25%
34.8bn in FY19 as rail & metro (R&M) revenue jumped 45% YoY to INR CMP: INR 946 (as on 1 October 2019)
Global Markets Research

14.8bn and constituted 43% of total FY19 revenue (vs 31% in FY18).
Key data*
While mining & construction (M&C) revenue fell by 6% YoY to INR
Bloomberg /Reuters Code BEML IN/BEML.BO
16.5bn as equipment was down 6%, spares was slightly lower by 3%
Current /Dil. Shares O/S (mn) 42/42
and services declined by 12%. Defense revenue plunged 36% YoY to
Mkt Cap (INR bn/USD mn) 39/555
INR 32bn, the lowest in the past four years, as equipment sales declined
Daily Vol. (3M NSE Avg.) 876,929
by 55%. About 87% of product revenue was from orders through
Face Value (INR) 10
competitive bidding in FY19 vs 83% in FY18.
1 USD = INR 71.1
In-house developed product share jumps 1,200bp in FY19 Note: *as on 1 October 2019; Source: Bloomberg
Revenue from in-house developed products increased by 1,200bp YoY
to 68% in FY19. R&D spend stood at INR 710mn, down 31% YoY, and Price & Volume
contributed 2% of total FY19 revenue. In FY19, the company developed 1,200 15

new products, such as diesel electric tower cars, main line electrical 1,000
10
multiple units (MEMU), and track width mine plough. Indigenization
800
level in mainline M&C products and rail coaches & EMU was at 90%, 5
600
high mobility vehicle at 80% and metro cars at 60%+.
400 0
Working capital cycle improves with quality of receivables Oct-18 Jan-19 Apr-19 Jul-19 Oct-19

The working capital cycle has improved by 60 days YoY to 268 in FY19. Vol. in mn (RHS) BEML (LHS)
Inventory days declined by 24 to an all-time low of 178 and receivables Source: Bloomberg
fell by 16 days to a three-year low of 169, as receivables of more than Share holding (%) Q2FY19 Q3FY19 Q4FY19 Q1FY20
six months fell by 31% and constituted 36% of total receivables (vs 52% Promoter 54.0 54.0 54.0 54.0
in FY18). Payables increased by 20 days to 80 in FY19. Institutional Investors 26.6 28.4 29.0 29.5

Cashflow from operations doubles in FY19 Other Investors 6.6 5.6 5.6 5.6
General Public 12.7 11.9 11.3 10.8
Despite lower profitability in FY19, a sharp improvement in the working
Source: BSE
capital cycle led to a two-fold rise in cashflow from operations to INR
2.6bn in FY19. While higher dividend (INR 8 per share in FY18 vs INR 4 Price performance (%) 3M 6M 12M

per share in FY17) and the rise in interest cost due to higher interest rate Sensex (3.5) (1.5) 4.9

led to a 28% rise in cashflow from finances to INR 1.3bn in FY19. Free BEML 3.5 (6.2) 61.7

cashflow yield stood at 4.8% in FY19. Source: Bloomberg

Valuation: reiterate Buy with a TP at INR 1,180

We retain our earnings estimates with a TP of INR 1,180 on 27x June
2021E P/E as there is minimal impact of reduction in the corporate tax
rate. We retain our positive view on the infrastructure & defense
industries and reiterate our Buy rating on BEML, owing to high
orderbook and huge opportunity in the metros & defense segments.
We expect an earnings CAGR of 46% over FY19-22E (vs nil over FY16-
19) and a ROE of 7% & a ROCE of 8% over FY20-22E (vs ROE at 4% and
ROCE at 5% over FY16-19).

Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) growth (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY19 34,811 7.2 2,368 (5.7) 635 (50.9) 15.2 2.9 3.7 66.5 19.4
FY20E 39,415 13.2 2,957 24.9 1,445 127.6 34.6 6.5 7.3 27.3 15.0
FY21E 44,539 13.0 3,438 16.3 1,774 22.8 42.5 7.6 8.1 22.3 12.7
FY22E 48,162 8.1 3,722 8.3 1,969 11.0 47.1 8.1 8.5 20.1 11.6
Note: pricing as on 1 October 2019; Source: Company, Elara Securities Research

Harshit Kapadia • harshit.kapadia@elaracapital.com • +91 22 6164 8542

Elara Securities (India) Private Limited

 BEML

Financials (YE March)

Income Statement (INR mn) FY19 FY20E FY21E FY22E
Revenue & margin growth trend
Net Sales 34,811 39,415 44,539 48,162
EBITDA 2,368 2,957 3,438 3,722 50,000 7.7 7.7 8.0
Margin (%) 6.8 7.5 7.7 7.7 7.5
45,000
Add:- Non operating Income 231 254 275 288 7.5

(INR mn)
Extra-ordinary Items (net) - - - - 40,000
6.8

(%)
7.0
Depreciation 696 739 771 803
35,000
EBIT 1,904 2,472 2,941 3,207
6.5
Less:- Interest Expenses 594 595 638 650 30,000
PBT 1,310 1,877 2,304 2,558
25,000 6.0
Less :- Taxes 675 432 530 588 FY19 FY20E FY21E FY22E
PAT 635 1,445 1,774 1,969 Net Sales EBITDA margin
Adjusted PAT 635 1,445 1,774 1,969
Balance Sheet (INR mn) FY19 FY20E FY21E FY22E Source: Company, Elara Securities Estimate
Share Capital 418 418 418 418
Reserves 21,455 22,293 23,385 24,596
Net Worth 21,873 22,711 23,802 25,014 Adjusted profit growth trend
Loans 4,020 6,005 5,475 5,975
3,000 127.6 150
Net Deffered Tax Liability (1,175) (1,175) (1,175) (1,175)
Capital Employed 24,717 27,541 28,103 29,814 2,000 100

(INR mn)
Gross Block 8,590 8,843 9,243 9,643 22.8
1,000 11.0 50
Less:- Accumulated Depreciation 2,391 3,131 3,902 4,706

(%)
Add:- Capital work in progress 253 400 400 400 0 0
Net Fixed Assets 6,452 6,112 5,741 5,337
(1,000) (50)
Investments 26 26 26 26 (50.9)
Net Working Capital 17,926 20,271 21,049 22,243 (2,000) (100)
Cash & Bank Balance 314 1,132 1,287 2,208 FY19 FY20E FY21E FY22E
Application of Funds 24,717 27,541 28,103 29,814 Adjusted PAT PAT growth
Cash Flow Statement (INR mn) FY19 FY20E FY21E FY22E
Source: Company, Elara Securities Estimate
Cash Profit adjusted for non cash items 2,678 3,211 3,713 4,011
Add/Less : Working Capital Changes 137 (2,345) (778) (1,194)
Operating Cash Flow before Tax 2,815 866 2,935 2,817
Tax (247) (432) (530) (588) Return ratios
Operating Cash Flow 2,567 434 2,405 2,229 10 8.5
8.1
Less:- Capex (638) (400) (400) (400) 7.3
8
Free Cash Flow 1,929 34 2,005 1,829
8.1
Investing Cash Flow 25 - - - 6 7.6
CF from Fin. Activity (1,288) 783 (1,850) (908) 3.7 6.5
4
Net Change in Cash 666 818 155 921
Ratio Analysis FY19 FY20E FY21E FY22E 2
2.9
Income Statement Ratios (%)
0
Revenue growth 7.2 13.2 13.0 8.1 FY19 FY20E FY21E FY22E
EBITDA growth (5.7) 24.9 16.3 8.3
ROE (%) ROCE (%)
PAT growth (50.9) 127.6 22.8 11.0
EBITDA margin 6.8 7.5 7.7 7.7 Source: Company, Elara Securities Estimate
Net margin 1.8 3.7 4.0 4.1
Per Share data (INR/Share)
Diluted EPS 15.2 34.6 42.5 47.1
DPS 7.0 8.0 9.0 10.0
Book value per share 523.6 543.7 569.8 598.8
Payout (incl. Div.Tax) (%) 46.1 23.1 21.2 21.2
Dividend yield (%) 0.7 0.8 1.0 1.1
Valuation (x)
P/E 66.5 27.3 22.3 20.1
EV/EBITDA 19.4 15.0 12.7 11.6
EV/Sales 1.3 1.1 1.0 0.9
Price/Book value 1.9 1.7 1.7 1.6
Return and Liquidity Ratios
Net debt/Equity (x) 0.2 0.2 0.2 0.2
ROE (%) 2.9 6.5 7.6 8.1
ROCE (%) 3.7 7.3 8.1 8.5
Note: pricing as on 1 October 2019; Source: Company, Elara Securities Research

2 Elara Securities (India) Private Limited

 BEML

Indigenization becomes key focal point Exhibit 3: R&D as a % of total sales at 2% in FY19
Import substitution is a major drive of the Government of 1,200 4
India (GoI). As part of its zero import policy, the company 1,000
intends to enter into joint ventures for local production of 3

(INR mn)
800
defense spares, aggregates, cabins and high value metro

(%)
car aggregates with renowned MNC. Accordingly, it has 600 2
launched for the first time an indigenous design and 400
manufactured large-size electric dump trucks. 1
200
Exhibit 1: Indigenization level in key products 0 0
Indigenization FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

Capital Goods
Mainline M&C 90 90 90 90 90 R&D expenses as % of sales

Rail coaches & EMU 90 90 90 90 90 Source: Company, Elara Securities Research

Metro cars NA NA 60
High mobility vehicles 80 80 80
Source: Company, Elara Securities Research
Procurement from MSE declines in FY19
According to the government notification to promote
micro and small enterprises (MSE), PSU companies have to
procure 25% from MSE (vs earlier 20%) and payment
timeframe should not exceed 45 days. During FY17-18,
BEML procurement (as a percentage of local
procurement) from MSE stood at 29% and 26%,
respectively. However, procurement from MSE fell to 21%
in FY19, due to higher revenue share of rail & metro
businesses as vendor approvals are required from
customers. While the company payment was within the
timeframe of 45 days.
Exhibit 2: MSE procurement falls to 21% in FY19
35
30
25
(%)
60 60
Appointees for the strategic sale of BEML
80 80
The Cabinet Committee on Economic Affairs had given in-
principle approval for strategic divestment of 26% equity
stake in BEML on December 01, 2016. This would lead to
the government’s stake to fall to 28%. The Department of
Investment and Public Asset Management (DIPAM) has
appointed intermediaries, such as transactional advisor,
legal advisor and asset valuer. The due diligence process
is completed and the matter is pending for consideration
of DIPAM and Ministry of Defense.
Exhibit 4: DIPAM appoints advisors and valuer
Transactional Advisor SBI Capital Markets
Legal Advisor Crawford Bayley
Asset Valuer RBSA Valuation advisers LLP, Ahmedabad
Source: Company, Elara Securities Research
ICRA positive outlook on mining equipment industry
As per a recent ICRA report on the construction & mining
industry, “the outlook for mining equipment industry from

late CY19 is expected to be positive, but this will be largely

20 contingent on Coal India’s huge equipment ordering
15 plans. Coal India has already floated tenders and is
10 factoring in a 9-12-month period for delivery of these
5 large capacity equipment, demand for mining equipment
0 should increase in CY20. This demand spike also includes
FY15 FY16 FY17 FY18 FY19 pent-up demand of the past 3-4 years, when Coal India’s
Procurement from MSEs as % of indigenous procurement ordering was delayed due to some procurement hurdles.”

Source: Company, Elara Securities Research Downside risks

R&D as a % of sales declines by 100bp to 2% in FY19 A sharp rise in raw material cost may drag margin as
import content in rail & metro, the fastest-growing
Research & development (R&D) expenses declined by
segment, stands at 40%. A slowdown in execution may
30% YoY to INR 710mn in FY19. R&D costs as a percentage
lead to lower revenue and a delay in order inflows due to
of total revenue stood at 2% in FY19 vs 3% in FY18. The
approvals may drag revenue.
company developed two new products in railways —
diesel electric tower cars and electric multiple units — and
one in defense, ie, track width mine plough. It also
upgraded 22 products across all verticals.

Elara Securities (India) Private Limited 3

 BEML

Exhibit 5: Revenue split in product, spares & services Exhibit 6: In-house product sales up 1,200bp YoY
40,000 80

30,000
60

(%)
(INR mn)

20,000
40
10,000
20
0
FY15 FY16 FY17 FY18 FY19
Earth Moving Equipment Spare Parts 0
FY15 FY16 FY17 FY18 FY19
Equipment Servicing Rail & Metro Products
Defence Products Wind Energy Sales from in-house R&D developed products

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 7: Rise in value of production per employee Exhibit 8: Employee count declines every year
36,000 6 12,000 0

5 10,000 (2)
34,000

(nos)
(INR mn)

8,000
(INR/employee)

(%)
32,000 (4)
3 6,000
(6)
30,000 4,000
2
2,000 (8)
28,000 1
0 (10)
26,000 0 FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
Value of production VoP/employee No. of employees Employee growth

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 9: Interest costs rises on higher WC debt Exhibit 10: Cashflow from operations doubles in FY19
800 30 6,000
700 20 4,000
600 10
(INR mn)

(INR mn)

2,000
500
(%)

0
400 0
(10)
300 (2,000)
200 (20)
(30) (4,000)
100
0 (40) (6,000)
FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

Interest costs YoY CFO CFI CFF

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 11: Sharp decline in > six months receivables Exhibit 12: WC cycle improves YoY
18,000 325
16,000
14,000 275
12,000
(INR mn)

225
10,000
(days)

8,000 175
6,000
4,000 125
2,000
75
0
FY15 FY16 FY17 FY18 FY19 25
More than six months receivables FY15 FY16 FY17 FY18 FY19

Less than six months receivables Debtors Inventory Creditors

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

4 Elara Securities (India) Private Limited

 BEML

Exhibit 13: BEML’s off balance sheet items

(INR mn) FY18 FY19

Contingent liability

Disputed statutory demands (customs duty,

6,590 4,638
central excise, service tax, sales tax/VAT

Other claims - legal cases 2,079 1,726

Corporate guarantee issued to bankers on behalf

191 191
of M/s BEML Midwest

Commitments

Capital Goods
Estimated amount of contracts remaining to be
525 153
executed on capital account and not provided
Source: Company, Elara Securities Research

Exhibit 14: BEML anticipated inflow opportunity and new developments in FY19
Inflows opportunity New developments may lead to inflows

mounted gun systems, combat vehicles, bullet proof

High mobility vehicles for missile launcher, 20T trailers, mine
vehicles, mine protected vehicles, prime mover for towing
ploughs, overhauling of ARV, ARRV
trailer, infra-red signature suppression system for navy
High mobility vehicles export to Bangladesh, Thailand and
Aims NADCAP certification for global opportunities
Armenia
Defence
To establish infrastructure at SEZ Aerospace Park,
Supply of light armoured personnel carrier to Mauritius
Bengaluru

Annual maintenance contracts for spares and services to Army

Expansions of networks in Tier I cities and creation of new metro

Metro
networks in Tier II cities
Strategic impetus to the regional rapid transport systems
Supply of LHB coach shells and bogies
and suburban railways
Railway High speed rail market seeing a huge upward trend with
Mumbai Ahmedabad High Speed Rail Project. It looks to
garner through technical tie-ups
Orders for high end equipment - 15 of 150tn dumpers and five of Design & development of rope shovel, walking dragline
190tn excavators and 240tn dumper under progress
Mining Scouting for technology partners of international repute
for continuous miners, surface miners, longwall mining
and telematics & autonomous mining towards business
expansion
Source: Company, Elara Securities Research

Elara Securities (India) Private Limited 5

 BEML

Exhibit 15: BEML R&D facilities engagement in three business verticals in FY19
Defence Rail & Metro Mining and construction

Development of recovery & repair vehicles for

battle tanks, mounted gun systems, mine
protected vehicles, futuristic infantry combat
vehicles, mine clearing systems and
indigenization of aggregates & components
Development of 20tn trailer with anti-lock
braking system
Developed and supplied 12x12 chassis in
collaboration with Tatra to VRDE for Agni-1
Launcher
Development of metro & railway rolling
stock products, indigenization of Development of high-end mining equipment,
imported aggregates, designed and rope shovels and walking draglines
developed diesel electric tower car
Design & development of 100T class
Kolkata Metro (E-W): The depot tests and
hydraulic excavator model:
main line tests of the prototype train set
BE1000-1with 650 HP BEML engine and new
has been completed. Oscillation trials of
power take off assembly was developed and
the prototype train set completed
successfully deployed at MCL, Sambalpur
Bangalore Metro (intermediate cars): Design & development of rear axle with wet
Integration of the prototype intermediate multiple disc brakes, in-board parking brake
cars with the existing three car unit line to and independent wheel mounting on 60tn
form 6 car train set completed in BMRCL dump truck

Engineering mine plough and track width mine

Depot and Mainline test of the 6-car train Design & development of front axle with wet
plough attachments for T-90 tanks, developed in
set completed successfully and is under multiple disc brakes and independent wheel
collaboration with Pearson Engineering Ltd, UK,
revenue service. mounting on 60tn dump truck
underwent all user trials

BEL Swathi – 6x6: Modified chassis developed to

Design & development of proportional
meet shorter TCD, undergoing user trials at
steering control valve for 860HP bull dozer
North-Sikkim.
Re-engineered BEML Tatra 8x8 Chassis was
developed for the 10 meters Short Span Bridge Indigenization of towing winch for 90HP bull
System against order and first chassis was dozer
delivered to customer
Design & development of brake oil cooler
pump for dump truck

Source: Company, Elara Securities Estimate Research

6 Elara Securities (India) Private Limited

 BEML

Coverage History
2,500

2,000

1
1,500 2

3 4
1,000

Capital Goods
5
500

0
Jun-17

Jun-18

Jun-19
Apr-19
May-19
Aug-16

Dec-16

Apr-17
May-17

Dec-17
Aug-17

Apr-18
May-18

Aug-18

Dec-18

Aug-19
Sep-16

Nov-16

Sep-17

Sep-19
Feb-17

Nov-17

Sep-18

Nov-18

Feb-19
Oct-16

Jul-17

Feb-18

Jul-18

Jul-19
Jan-17

Mar-17

Oct-17

Jan-18

Mar-18

Oct-18

Jan-19

Mar-19

Oct-19
Not Covered Covered

Date Rating Target Price Closing Price

1 23-Aug-2017 Accumulate INR 2,000 INR 1,804

2 8-Feb-2018 Buy INR 2,000 INR 1,243
3 8-Jun-2018 Buy INR 1,600 INR 904
4 6-Jun-2019 Buy INR 1,150 INR 960
5 16-Aug-2019 Buy INR 1,180 INR 767

Guide to Research Rating

BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

Elara Securities (India) Private Limited 7

 Elara Securities (India) Private Limited

Disclosures & Confidentiality for non U.S. Investors

The Note is based on our estimates and is being provided to you (herein referred to as the “Recipient”) only for information purposes. The sole purpose of this Note
is to provide preliminary information on the business activities of the company and the projected financial statements in order to assist the recipient in understanding
/ evaluating the Proposal. Nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred
to in this document. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment
in the securities of companies referred to in this document (including the merits and risks involved) and should consult its own advisors to determine the merits and
risks of such an investment. Nevertheless, Elara Securities (India) Private Limited or any of its affiliates is committed to provide independent and transparent
recommendation to its client and would be happy to provide any information in response to specific client queries. Elara Securities (India) Private Limited or any of
its affiliates have not independently verified all the information given in this Note and expressly disclaim all liability for any errors and/or omissions, representations
or warranties, expressed or implied as contained in this Note. The user assumes the entire risk of any use made of this information. Elara Securities (India) Private
Limited or any of its affiliates, their directors and the employees may from time to time, effect or have effected an own account transaction in or deal as principal or
agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for or solicit investment banking
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within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes,
should inform themselves about and observe, any such restrictions. Upon request, the Recipient will promptly return all material received from the company and/or
the Advisors without retaining any copies thereof. The Information given in this document is as of the date of this report and there can be no assurance that future
results or events will be consistent with this information. This Information is subject to change without any prior notice. Elara Securities (India) Private Limited or any
of its affiliates reserves the right to make modifications and alterations to this statement as may be required from time to time. However, Elara Securities (India) Private
Limited is under no obligation to update or keep the information current. Neither Elara Securities (India) Private Limited nor any of its affiliates, group companies,
directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits
that may arise from or in connection with the use of the information. This Note should not be deemed an indication of the state of affairs of the company nor shall
it constitute an indication that there has been no change in the business or state of affairs of the company since the date of publication of this Note. The disclosures
of interest statements incorporated in this document are provided solely to enhance the transparency and should not be treated as endorsement of the views
expressed in the report. Elara Securities (India) Private Limited generally prohibits its analysts, persons reporting to analysts and their family members from
maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The analyst 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.

Any clarifications / queries on the proposal as well as any future communication regarding the proposal should be addressed to Elara Securities (India) Private
Limited.

Elara Securities (India) Private Limited was incorporated in July 2007 as a subsidiary of Elara Capital (India) Private Limited.

Elara Securities (India) Private Limited is a SEBI registered Stock Broker in the Capital Market and Futures & Options Segments of National Stock Exchange of India
Limited [NSE], in the Capital Market Segment of BSE Limited [BSE] and a Depository Participant registered with Central Depository Services (India) Limited [CDSL].

Elara Securities (India) Private Limited’s business, amongst other things, is to undertake all associated activities relating to its broking business.

The activities of Elara Securities (India) Private Limited were neither suspended nor has it defaulted with any stock exchange authority with whom it is registered in
last five years. However, during the routine course of inspection and based on observations, the exchanges have issued advise letters or levied minor penalties on
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business by any Stock Exchange / SEBI or any other authorities; nor has the certificate of registration been cancelled by SEBI at any point of time.

Elara Securities (India) Private Limited offers research services primarily to institutional investors and their employees, directors, fund managers, advisors who are
registered or proposed to be registered.

Details of Associates of Elara Securities (India) Private Limited are available on group company website www.elaracapital.com

Elara Securities (India) Private Limited is maintaining arms-length relationship with its associate entities.

Research Analyst or his/her relative(s) may have financial interest in the subject company. Elara Securities (India) Private Limited does not have any financial interest
in the subject company, whereas its associate entities may have financial interest. Research Analyst or his/her relative does not have actual/beneficial ownership of
1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. Elara Securities (India)
Private Limited does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date
of publication of Research Report. Associate entities of Elara Securities (India) Private Limited may have actual/beneficial ownership of 1% or more securities of the
subject company at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or his/her relative or Elara Securities
(India) Private Limited or its associate entities does not have any other material conflict of interest at the time of publication of the Research Report.

Research Analyst or his/her relative(s) has not served as an officer, director or employee of the subject company.

Research analyst or Elara Securities (India) Private Limited have not received any compensation from the subject company in the past twelve months. Associate
entities of Elara Securities (India) Private Limited may have received compensation from the subject company in the past twelve months. Research analyst or Elara
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or brokerage services from the subject company in the past twelve months. Research analyst or Elara Securities (India) Private Limited or its associate entities may
have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company or
third party in connection with the Research Report in the past twelve months.

8
 Elara Securities (India) Private Limited

Disclaimer for non U.S. Investors

The information contained in this note is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we
endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will
continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the
particular situation.

Global Markets Research

Disclosures for U.S. Investors
The research analyst did not receive compensation from BEML Limited.

Elara Capital Inc.’s affiliate did not manage an offering for BEML Limited.

Elara Capital Inc.’s affiliate did not receive compensation from BEML Limited in the last 12 months.

Elara Capital Inc.’s affiliate does not expect to receive compensation from BEML Limited in the next 3 months.

Disclaimer for U.S. Investors

This material is based upon information that we consider to be reliable, but Elara Capital Inc. does not warrant its completeness, accuracy or adequacy and it
should not be relied upon as such.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or
strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice,
and are only correct as of the stated date of their issue. Prices, values or income from any securities or investments mentioned in this report may fall against the
interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please
note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a
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decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of
particular securities, financial instruments or strategies to you. Before acting on any recommendation in this material, you should consider whether it is suitable
for your particular circumstances and, if necessary, seek professional advice.

Certain statements in this report, including any financial projections, may constitute “forward-looking statements.” These “forward-looking statements” are not
guarantees of future performance and are based on numerous current assumptions that are subject to significant uncertainties and contingencies. Actual future
performance could differ materially from these “forward-looking statements” and financial information.

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