Digital Renaissance of India

ASHW AMEDH
// INDIAN RENAISSANCE //
POST CONFERENCE NOTES
ELARA
IN DIA
DIALOGUE
2021 31 Aug -15 Sep 2021
Foreword
Ashwamedh – Elara India Dialogue 2021 was a powerful display of potent opportunities as also
enabling challenges, necessitated by COVID-bred Year II and thus, a virtual conference. Revealingly
and surprisingly, the conference pre-eminently brought to the fore the colossal transpose in the entire
ecosystem as it ably morphed to not only keep pace with the new reality, but also adeptly capitalised
on challenges-led opportunities. Thanks to Ashwamedh – Virtual Conference, held through 31 August-
15 September, 2021, we deftly showcased experts from every part of the globe, ranging from Australia
to the US. Thanks to digital adoption, Ashwamedh front-lined 26 expert sessions and 113 meetings
with corporates over an enriching 16 days, encapsulating topical, ongoing issues as also advancing
trends that should rightly be at the core of investor attention.
Honourable Minister of Road Transport & Highways, Shri Nitin Gadkari, initiated Ashwamedh’s keynote
inaugural address, adroitly showcasing public policy perspective and the ministry’s vision to expedite
a manifold increase in India’s physical infrastructure. As impressive was the inauguration as was the
consummation, with Honourable Minister of Jal Shakti, Shri Gajendra Singh Shekhawat, accenting the
ministry’s mission to enable potable tap water in every home in India. Interspersed was Shri Rajeev
Chandrashekhar’s, Honourable Minister of State, Electronics and IT, dynamic and erudite address on
India’s commitment to building a formidable digital infrastructure, led by open architecture system
equipoised with heightened cybersecurity infrastructure. Adding to this kinetic mix, Honourable
Former Minister of Law & Justice, Electronics and IT Communications, Shri Ravi Shankar Prasad,
outlined the need for counterpoising strong CyberLaw architecture without conceding private players’
competitiveness.
The Ashwamedh churn ensued an overarching theme centred on ‘Digital First’ adoption by public
policy and corporate strategy. Mr Nandan Nilekani, in his address, resolutely highlighted the trend of
India building a peerless digital capability in the financial stack via UPI and Aadhar-based KYCs – The
developed world is now replicating it in an exciting role reversal. Mr Mohandas Pai and Mr Sanjeev
Bhikchandani further underscored this trend, led by information democratisation enabling different
business models for many start-ups in Bengaluru, India’s Silicon Valley. Importantly, Dr. Viral Acharya,
Former Deputy Governor, RBI, showcased future pathways to leveraging formidable financial stack to
bring unbanked MSMEs into formal credit; thus, increasing the banks’ addressable market.
Future technologies at the vanguard of change were highlighted – Pursue Hydrogen’s promising
viability as potential green fuel. Intriguingly, the debate between Electric Vehicles (EVs) and IC Engine
vehicles evolved to a contemplation between EVs and Hydrogen fuel cell vehicles, which was the
keynote of ‘Potential for Hydrogen in India’s Economy’ session. Adjacently, Dr. Dolf Gielen, Director of
Innovation & Technology, IRENA, detailed interesting leanings on investment implications of fossil fuels
replacing green hydrogen in Indian steel plants. To round it all, Dr. Anant Sudarshan, Executive
Director (South Asia), EPIC, entailed conduits to effecting India’s comprehensive energy transition.
Further, the global geo-political schema was unfolded by a power-house array of strategy doyens,
pivoting focus on a gamut of wide-ranging imperatives from Indo-China relations and the Jammu &
Kashmir narrative to India’s Afghanistan conundrum. Mr Vijay Gokhale, Former Foreign Secretary
elaborated on the need to widen China politics discourse in India. Concurrently, Mr Manoj Sinha,
Lieutenant Governor of Jammu & Kashmir, earnestly invited India Inc.’s investments into the
beleaguered state, showcasing recently-signed, enabling MoUs and enhanced industrial policy, thus
aiding employment. Dr Christine Fair, an acute mind in International Security and Strategy, elucidated
the changing power dynamics post Taliban’s Afghan take-over and India’s recalibrated options.
On behalf of Elara Capital and with the hope that Ashwamedh – Elara India Dialogue 2021 leaves you rich
and inspired into actionable direction and in partnering India to an epochal era of inclusive development, I
present to you key gleanings and learnings from Ashwamedh.
Shiv Chanani
Head of Research
Elara Capital (India)
2
Table of content
Panel Discussion
Politics & Policy
Nitin Gadkari - Vision for New India: Role of Gati & Shakti 6
India's Water Economy Compulsions and Conundrums 10
Jammu & Kashmir -New Beginning 14
Ravi Shankar Prasad - Electronic Manufacturing Renaissance on PLI Wings 18
India's Power Elite 20
Economy & Markets
Sanjeev Sanyal - India 2030: From Soft to Super Clout -Strategy Gradation & Graduation 25
Dr Duvvuri Subbarao - Modern Monetary Theory: Is it an Option for India? 29
Dr Viral Acharya - Future of India's Banking 33
Dr Eswar Prasad - Old Money New Money 37
Surjit Bhalla - Markers for India's Productivity Leap 43
Sergi Lanau - Inflation Red Herring 47
Preparing to Decouple from China 50
Big Tech
Defining and Regulating India's Emerging Data Ecosystem 56
Tech Enablers Rekindle Productivity 57
Evolution of Big Tech 58
E-Businesses Reboot in an AI Spring 59
Green Energy
Dr Dolf Gielen - Steel, Hydrogen And Renewables: Curious Symphony? 63
Dr Anant Sudarshan - India's Energy Transition 66
Potential of Hydrogen in India's Economy 70
Metals & Minerals
Paul Bartholomew - Mine the Metals: Global Perspective 74
Mine the Metals: China Angle 77
Mine the Metals: Domestic Narrative 80
Rohan Baid - Mine the Metals: Changing Dynamics 83
Geopolitics
Long View from China 87
Turmoil in South Asia: India's Options 91
Young Corporate Honchos
Reimagining Business for the New Era 95
3
Participating Companies
Communication Services Industrials
DB Corp 100 Adani Enterprise 201
Inox Leisure 102 Adani Ports 202
Nazara Technologies 104 Allcargo and GATI 203
Sun TV Network 106 Ashoka Buildcon 204
Consumer Discretionary Blue Dart Express 205
Apollo Tyres 109 Cera Sanitaryware 206
CEAT 111 Escorts 208
Crompton Greaves Consumer Electrical 113 Greaves Cotton 210
Dixon Technologies 114 Greenlam Industries 212
Dollar Industries 116 Havells India 213
Filatex India 118 Jindal Steel & Power 215
Hero Motocorp 120 KEC International 216
La Opala RG 122 KEI Industries 218
Mahindra & Mahindra 124 KNR Constructions 219
Mahindra CIE Automotive 126 Larsen Toubro 220
Minda Corporation 128 Mahindra Logistics 221
Westlife Development 130 NCC 222
Consumer Staples PSP Projects 223
CCL Products 133 Rail Vikas Nigam 224
Dwarikesh Sugar 134 RITES 225
Globus Spirits 135 Shakti Pumps 227
Heritage Foods 137 TCI Express 229
Hindustan Foods 139 Transport Corporation of India 230
ITC 141 Voltas 231
United Breweries 143 Information Technology
Energy Infosys 234
Chennai Petroleum Corporation 146 Mindtree 235
Petronet LNG 147 Mphasis 236
Financials NIIT 237
Andromeda 149 Persistent Systems 238
Angel Broking 151 Tata Consultancy Services 239
Axis Bank 153 Tata Elxsi 240
HDFC AMC 155 Tech Mahindra 241
HDFC Life Insurance 157 Wipro 242
HDFC 159 Zensar Technologies 243
ICICI Bank 161 Materials
ICICI Prudential Life Insurance 163 Anupam Rasayan 245
ICICI Securities 165 APL Apollo Tubes 246
IIFL Securities 167 DCM Shriram 247
IIFL Wealth 169 Dhanuka Agritech 248
IndusInd Bank 171 HeidelbergCement India 249
Mahindra & Mahindra Financial Services 173 JSW Steel 250
Max Financials Services 175 Moldtek Packaging 251
Motilal Oswal Financial Services 177 Prism Johnson 253
Nippon Life India AMC 179 Ratnamani Metals and Tubes 254
Shriram Transport Finance 181 TCPL Packaging 255
State Bank of India 183 Real Estate
Union Bank of India 185 Brigade Enterprises 258
UTI AMC 187 DLF 259
Zerodha Broking 189 Sobha 260
Health Care Utilities
Ajanta Pharma 192 Adani Green Energy 262
Alkem Laboratories 193 Adani Total Gas 263
Apollo Hospital Enterprises 194 Adani Transmission 264
Aster DM Healthcare 195 CESC 265
Cipla 196 India Energy Exchange 266
Indoco Remedies 197 Tata Power 267
JB Chemicals Pharmaceuticals 198 Torrent Power 268
Sun Pharmaceuticals 199
4
Politics & Policy
5
ELARA INDIA DIALOGUE 2021
Dialogue #1: Vision for New India

Role of Gati & Shakti
Less reliance on government budget for development of roads and highways
 The ministry’s reliance on Central government funds to develop roads and highway
infrastructure has declined
 It is tapping new sources of funds, such as EPC contracts, cess, monetization of existing
infrastructure and long-term debt
Nitin Gadkari  The National Highway Authority of India has AAA rating; it is easy to raise debt in the
Honorable Union domestic markets, bank loans are available at 6.35% interest rates
Minister of Road
Transport & Highways
 There is 100% FDI in the road sector and a huge increase in participation of institutional
investors in India’s infrastructure sector
 The present toll income of NHAI is around INR 400bn per year; within five years, the NHAI
will cross INR 1.4tn per year
 The Ministry has no crunch of funds and plans to develop Smart Cities, building logistics
parks and 26 green expressways
AK Bhattacharya
Editorial Director  Around 65-70% of work on the Delhi-Mumbai expressway has been completed. It will
Business Standard
reduce Delhi to Mumbai travel time to 12 hours. Currently, it takes 48 hours for a truck to
cover the distance, which will be reduced to 18-20 hours
National Monetisation Pipeline: road sector contribution is the highest
 The road sector accounts for 26.7% of the National Monetization Pipeline (NMP), road
assets worth INR 1.6tn are to be monetized in the next four years (around 26,700km of
road)
Lord Meghnad
Desai  Toll operate transfer (ToT) and Infrastructure Investment Fund (InvIT) models will be used
House of Lords, UK
 The government has already monetized INR 400bn worth of assets
 We have reduced the minimum size monetization bundle to INR 50bn, INR 40bn, INR 30bn,
and even INR 5bn to increase participation of small investors
 InvIT is at an advanced stage, and it will be launched and target institutional investors
 India’s bankers are interested in the 15-year monetization plan while FII shows interest in
Raj Bhatt the longer duration (20-30 years) monetization plan
Chairman
 There is no crunch of funds, and NMP will begin a virtuous cycle
Elara Capital PLC,
London Biofuels: dramatic changes are happening; “Waste to wealth and waste to energy”
 The GoI has advanced the target for 20% ethanol blending in petrol (also called E20) to
2025 from 2030. The government has released the report of the Expert Committee on the
road map for ethanol blending in India by 2025, which discusses gradual rollout of 20%
ethanol blending in petrol by 2025
 The change in policy is taken from the view of reducing import dependency and pollution
control
6
 450 new plants are being set up for production of bioethanol. Current production capacity
is 4,650mn liter, which will increase to 10bn liter
 Petroleum companies are ready to make the contract for 10 years
 Government companies are permitted to open ethanol filling stations
 The farmer community will benefit from the revised policy direction. Besides sugarcane,
rice, corn, and other food grains use in ethanol production is allowed. The government is
working toward diversifying agriculture toward bioethanol production
 Ethanol will also provide a cheaper alternative to petrol, and the government will allow
ethanol-based “Flex Engines” like in Brazil within six months. It is committed to delivering
vehicles with flex engines that give users an option to run a vehicle on either 100% petrol
or 100% bio-ethanol
 Ethanol blending cost will be around INR 65 with less pollution compared to petrol
 A SpiceJet turboprop aircraft became India’s first plane carrying passengers to operate on
biofuel during a successful pilot flight in 2018
Alternate fuel ecosystem in the country: India’s road to decarbonization
 According to Mr Gadkari, there will be a flood of electric vehicles in the country in the next
year
 LNG as a fuel is also economically viable for long-distance trucks and buses. A diesel truck
can be converted to an LNG truck with cost of only INR 1.0mn, which can be recovered
with 95 days
 Methanol that is being generally produced with low-grade coal cost only INR 20-24 per lit.
The Ministry is exploring the use of methanol in India
 The government is working on generating hydrogen from seawater and sewage using
renewable energy sources
 1000 LNG are being set up in the country. LNG-operated trucks can cover a distance up to
1,000km compared to only 200km using CNG in one filling
 450 new ethanol plants are being set up in the country
 The Ministry is promoting production of green hydrogen from seawater and sewage water.
 India’s import bill is INR 8tn and after five years, it will go up to INR 25tn. The government is
working toward reducing it through promotion of biofuels, EV, hydrogen, methanol and
LNG
Automobile industry: Make for World
 The industry is going through a wave of disruption from electric vehicles to ethanol
blending, hydrogen fuel, CNG & LNG penetration and scrappage policy
 There are huge opportunities for India’s automobile sector. The two-wheeler sector already
exports 50% of production. EV two-wheelers will generate new opportunities
 The government is working toward promoting production of eBicycles intended to increase
exports to INR 2tn from INR 250bn
 Mr Gadkari is confident that within five years, India’s automobile sector will become No 1 in
the world
7
 The government also is developing ports with 18-meter draft

Scrappage policy is taking shape
 The government has started with the voluntary scrappage policy, and it is looking toward
increasing the scope of the policy
 Scrappage will ensure availability of aluminum, copper, rubber, steel and plastic
 The Minister envisaged opening one scrappage center per district, 4-5 in megacities.
Similarly, infrastructure for fitness testing center will be developed
 One 15-year-old truck pollutes equivalent to 15 new trucks. A win-win situation for both
automakers and consumers
 The government is looking at the European experience and incorporating learning in
India’s scrappage policy framework
 The Ministry has received a good response from all stakeholders
Construction sector: huge multiplier effect
 The construction sector is at the core of PM Modi’s vision of the USD 5tn economy by 2025
 It has a huge multiplier effect: every INR 1 spend on construction increases GDP by INR 2.5
 The government is committed to building world-class infrastructure in the country; capital
spending in the budget has increased by 34.5% to INR 5.54tn in FY22
 It is soon going to launch the National Master Plan of Prime Minister: Gati Shakti. This
scheme of more than INR 100tn for holistic and integrated infrastructure development will
create huge employment opportunities
 The road construction pace has increased from just 3km per day to 38km per day. The
Ministry is working with a target of 50km per day this year
 The Delhi-Mumbai Expressway construction is moving at record speed. Road travel that
currently takes almost 25 hours to complete will be cut short to just 12 hours
 Around 86% of goods traffic is via road; the government aims to reduce logistics cost to
12% from 18 % currently
 It has set a target of building road of INR 15tn in two years
 A total number of 4,760 man-days are required to construct 1km of highways
 Around 5,730km of highways have been constructed in Phase 1 of Bharatmala Yojana,
generating employment of 23mn man-days. Bharatmala Phase 1 & 2 will generate more
than 100mn man-days of work and will provide additional employment opportunities
Knowledge is power: conversion of knowledge to wealth is future
 The government is open to adopting new technology if it improves efficiency without
compromising quality
 It has recently acquired technology from Malaysia, reduced cost of making bridges by 30%
Safety on road: aim is to reduce accidents by 50% by 2025
 Every year, we have 500K accidents and 150K deaths in road accidents in India
 The government aims to reduce road accidents and fatalities by 50% by 2025. It aims to
reduce fatalities to zero by 2030
8
 The Ministry is working to fix problems in the "black spots" of highways where repeated
accidents take place
 With the help of the World Bank, Tamil Nadu Government has implemented a program
and successfully reduced road accidents by 50%
 4Es of road safety
 Road engineering
 Automobile engineering
 Education
 Emergency care services
 The government has initiated the landmark Motor Vehicle Amendment Act 2019, which
has led to steeper penalties for violation of road safety norms and creation of the National
Road Safety Board to oversee issues related to road safety
 Railway crossings are being replaced by ROB; several initiatives are being undertaken to
develop road safety infrastructure, including placing signboards
 MIS portal for black spots: improvement, monitoring work for post rectification and
feedback have been developed
 Mandated road safety audit for each DPR -- engineering design, construction and
operational stage
 The Ministry has implemented the system of the national highway rating where road safety
takes center-stage
 An integrated road safety database is being developed with the help of the World Bank
and IIT Madras
 An INR 70bn fund is allocated to states and UT, in which INR 35bn is contributed by the
Asian Development Bank and the rest is from the Central government to carry out road
safety intervention
 The intelligence transport system, artificial intelligence, IoT, electronic surveillance and other
technology are being used for efficient traffic operations
Click here for the video link
9
Dialogue #2: India's Water Economy - Compulsions

and Conundrums
Jal Jeevan Mission
 Inspired by the success of the sanitation mission, the government has started the National
Jal Jeevan Mission
 When the government started Jal Jeevan Mission, out of 190mn households, only 32.3mn
had piped drinking water facilities
Gajendra Singh  PM Modi announced the Jal Jeevan Mission on 15 August 2019 from the ramparts of the
Shekhawat Red Fort and after consultations with all State governments, the final guidelines were
Honorable Minister of released on 25 December 2019
Jal Shakti
 Despite the COVID-19 pandemic, the government has provided 49.2mn connections to
date since the beginning of the scheme in December 2019
 The coverage of piped drinking water has increased from 16-17% to 43%. More than 25%
of households in the country have access to piped drinking water connections, owing to
the Jal Jeevan Mission
Aditi Phadnis  The benefits and impact of access to piped water supply on the lifestyles of households is
Mehta
simply amazing
Political Editor
Business Standard  By 2024, the government aims to increase coverage to 100%. This will provide a huge
boost to India’s GDP
 There will be significant social-political implications in the country in the upcoming years
 The path to prosperity begins with “water prosperity in every household“ (Jal Samriddhi)
Benefits of the sanitation mission for the society, for the nation
 INR 50,000 per family out of pocket health expenditure will be reduced due to improved
hygiene and sanitation conditions
 If we calculate the return of the sanitation mission by simply multiplying reduction in out-of-
pocket health expenditure of 190mn households, it will be around 400% every year on
government expenditure in this sector. This is much higher than any other investment
Agriculture irrigation project: 100+ priority projects
 There were many irrigation and drinking water projects pending for more than four
decades
 The government has identified 100+ priority projects and started working on them on a
mission mode. Out of 100+ projects, 70% are almost complete.
 More than 3mn hectare of land have come under irrigation due to completion of such
pending projects. This will change the lives of more than 5mn households
10
Many challenge of water security

 Water availability has declined from 5,000 cubic meters per capita to 1,540 per capita in the
past 4-5 decades
 There has been no change in total quantum of water available, but India’s population has
increased 3x in the past four decades
 65% of water consumed in India comes from groundwater sources
 We are becoming more vulnerable to climate change, rising population and
overdependence on groundwater
 India will have to work on demand side of the problem as well
 Atal Bhujal Yojana: The government started a pilot project with INR 60bn assistance from
the World Bank for demand-side management of water
 The government has identified 79 districts in seven vulnerable states. It is working with
people participation on groundwater recharge projects
 The government is working on creating a repository of information on water bodies,
including groundwater aquifers using the latest technologies, such as Heliborne and
satellite imaging
 Of total quantum of water utilized, only 5% is used for domestic purposes, ~6% by industry
and the remaining by the agriculture sector
 India will have to start a debate around how to rationalize demand for water for agriculture
 India is the biggest exporter of rice. 1kg of rice requires 5,600 liters of water compared to
only 350 liters in China
 Even if we save only 10% of water required in the agriculture sector, India will not face any
water scarcity in the years
 India has no other path but to work on water demand management in the agriculture
sector
 Social participation is needed to make Jal Jeevan Mission a mass movement
100% tap water coverage by 2024
 The government has already provided 49.2mn connections to date since the beginning of
the scheme in December 2019
 The government is much ahead in terms of timeline it set at the inception of the program
despite COVID-19
Water quality issues: testing to real-time monitoring
 There are more than 27,000 habitats in the country that have water quality issues,
including the presence of arsenic, fluorides, iron, or other forms of contamination. The
government has initiated a national-level program that is working on this issue
 Most households in India use water purifiers without testing the water. The major reason
behind this trend is the trust deficit in the system. It is also hard to find water testing
laboratories in India
11
 Not only every district center but in the upcoming days every block will have a NABL-
accredited laboratory for water testing. Work on 2,000 such laboratories has already been
completed and 4,000 more will be functional in the upcoming years
 The government has formed a Committee of five women and provided requisite testing kit
and training to conduct water quality test at the village level
 Using just 10ml of water, the testing kit can identify water quality based on 12 parameters
 The report of such tests will be automatically updated in the national repository
 The government has organized a hackathon to develop IoT based low-cost equipment to
monitor real-time quality and quantity of water
 A pilot project is underway in 100 villages, and the government can monitor real-time
quality and quantity of water in every village
 In the next few years, the government will be able to monitor quality and quantity of water
supply across the country
Jal Jeevan Mission: epitome of transparency
 Jal Jeevan Mission -- Har Ghar Jal dashboard – the dashboard provides relevant
information of the Jal Jeevan Mission. An individual can even track last-mile status of the
project on the dashboard
Government philosophy behind cost of water: there is no free lunch
 Water is a State subject. The Central government cannot do anything to decide cost of
water
 However, the government has requested State governments to charge minimal amount to
households. They are charging in the range of INR 30-300
 In the Jal Jeevan Mission, to ensure participation and ownership of villagers, 10% of funds
required for creating tapwater infrastructure are sourced from villages
 Around 10% of the money collected from the villages is deposited with the Village Water-
Sanitation Committee. This corpus can be used for operational maintenance
 Goa has the most efficient water infrastructure in the country with 100% of households
with access to tapwater
Namami Gange: integrated conservation and rejuvenation program
 There is significant difference in the quality of water in the Ganga (Ganges). The Ganga is
among the top 10 cleanest rivers compared to the river of a comparable size
 The Ganga water is drinkable between Gangotri and Rishikesh. Barring 1-2 stretches, the
Ganga water quality is better than the international standards
 The government mission is now trying to make it sustainable and further refine its quality
 The government also has started to work on tributaries. The first-order tributaries like Kali
and Yamuna are in focus of the next stage of the program. It will create a similar
infrastructure on these rivers
 To maintain uninterrupted flow of the Ganga, the government has started several initiatives
like catchment area treatment and organic agriculture on its banks
12
 Kanpur-Sisa mau drain was once used to drain 130mn of untreated sewage into the
Ganga. The situation has changed, owing to the Namami Gange program. It has now
become a selfie point. Aquatic life in the Ganga has rejuvenated. The water near Kanpur is
so clean that Ganges dolphin and even Hilsa fish can be spotted in the Ganga near Kanpur
Interlinking of rivers: new era begins
 Around 18% of area in the country faces drought-like situation while a similar proportion of
area faces floods every year
 According to the minister, India can give national sustainable water future by transferring
surplus water basin to deficit basin
 Since water is a State subject unless the States resolve issues, no solution can be found
 UP-MP have shown the way. The Ken-Betwa Link project, which was pending for the past
15 years, has taken off. A Triparty agreement has been signed. Soon, an era of river inter-
linking will begin
Inter-state river dispute reforms in the tribunal system
 The tribunal set up by the Inter-State River Water Dispute Act has not been functioning
 The government has brought the bill that has been passed by Lok Sabha and is pending in
the Rajya Sabha. The bill proposed to merge all tribunals, ensure day-to-day hearings like
the regular court so that time-bound (within 3.5 years) resolution of disputes, can happen
Water has become subject of sentiment and politics
 Water management that was supposed to be the job of a geologist and a hydrologist has
become a subject of sentiments and politics
 There were many standing committees formed to study the issue of bringing water under
the concurrent list. However, the minister believes it is not the right time
Successful initiatives by State governments to change agriculture subsidy regime
 Haryana has started an incentive scheme for farmers to grow maize instead of paddy. The
government ensures 100% of produce will be procured by the State. The government will
also pay INR 10,000 per acre to compensate farmers for losses. The 100,000 hectares have
shifted to maize in Haryana from paddy, due to this program
 Punjab initiative, Pani Bachao, Paisa Kamao (Save water, Earn Money) scheme provides
farmers incentives to conserve groundwater
13
Dialogue #3: Jammu & Kashmir - New Beginning
Industrial holiday of the union territory is over; J&K is open for business
 India’s territory is in need of transformation. Infrastructure has started to function since
2014 to regenerate the J&K economy
 J&K has 25,000 MSME which contribute around 60% of total investment and 90% of total
employment in the industrial sector
Manoj Sinha  Shri Manoj Sinha aims to transform UT into an industrialized territory by unlocking its
Honorable Lieutenant potential by enabling ease of doing business
Governor, Jammu &
Kashmir
 J&K industrial department works cohesively with its directorate
 Various departments of government, such as J&K Handloom, J&K Small Industry and J&K
IT, are striving to create a vibrant ecosystem for J&K ministries
Major steps undertaken for the economy
 Shri Sinha says the government has launched more than 160 new initiatives and reforms
Aditi Phadnis for the industrial sector in J&K
Mehta
 The government has taken input from various stakeholders about the regulatory
Political Editor
Business Standard environment and incentives structure in the union territory
 The government has prepared a blueprint for its industrial development
J&K Industrial development blueprint
 On 7 January 2021, the government launched the INR 284bn industrial development
scheme
 The scheme includes four initiatives:
 Capital investment incentive
 Capital interest subvention
 GST-linked incentives
 Working capital interest subvention
 The new schemes are made more attractive for the MSME and large-scale industries
Major incentive under the new industrial policy
 The government is trying to take industrial development at the block level in the J&K
 Some incentives like interest subvention of working capital are also available to existing
industries
 GST-linked incentive will ensure less compliance burden with improved transparency
 GST-linked incentives are provided up to 3x initial capital investment met in plant and
machinery in addition to other incentives
 For eg, INR 150mn in plant and machinery investment, firms can avail of more than INR
500mn in the category and more than INR 525mn in the B category
14
 According to Shri Sinha, this is the highest incentive provided in the county
 Under the capital interest subvention, interest subvention for an amount for a maximum
INR 5bn investment in plant and machinery is being provided
 The firms are eligible for 100% subsidy on installation of diesel set, 50% on installation of
pollution control devices and subsidy on rainwater harvesting
 A 6,000-acre land bank for industries is being developed across the union, under which
3,000 acres have already been identified
 The sector-specific parks are promoted in a focused manner by the government
 J&K Single-Window Act 2018 has been made operational and more than 54 services are
being integrated. 20 will be embedded this month
 Udhampur industrial corridor will be developed exclusively for women entrepreneurs
Why must one invest in J&K
 It offers abundant raw materials for agro and food processing; it is strategically located with
rich culture & nature and is at the top of handloom and handicrafts. It offers single-window
clearance, rapidly developing industrial infrastructure, and responsive governance with
minimum government
 J&K has the lowest crime and utility rates in the country
 The security situation is rapidly improving
 J&K has a demographic dividend at its advantage. More than 65% of the population is
under the age of 35 there
 The youth are being trained for Industry 4.0. The J&K government has partnered with Tata
Technology
 J&K has world-class AIMS, IIT and IIM
 The government aims to deepen trust with business conglomerates, build the industrial
base for the economy and strengthen social stability
 Within two months of the announcement of the new industrial policy, the government has
received an investment proposal of INR 250bn. It is hoping to get INR 500bn investment
proposal by March 2022
 No transformation in the history of J&K is so swift
 J&K budget provides adequate resources for infrastructure development. The J&K budget
for FY22 is INR 1.08tn, which is roughly 7% more than the FY21
 The three-tier Panchayati Raj system has been institutionalized
 By December 2022 or March 2023, an all-weather train will reach Srinagar
 The J&K has taken a big leap in the horticulture sector. It has reported record production of
apples, almonds and saffron
 Shri Sinha assures the government will be facilitator, partner, provider, collaborator and
promoter at every step to ensure the sustainable and competitive business environment
15
Unemployment situation in the J&K

 There was a trend. The youth were more interested in government jobs
 There are 400,000 employed in permanent jobs and 90,000 are daily wage earners
 In the back-to-village program and under Mission Youth, the government has started
several schemes for self-employment
 Approximately 20,000 youth have already received some financial support to start their
entrepreneurship journey
 The government is committed to providing financial support to 50,000 youth for self-
employment
 There is no dearth of money, and the scheme can be extended to 100,000 youth easily
 Mumkin, Tejaswinini, Parvaaz, are some new schemes launched to increase employment
Land: the big hurdle for investors in J&K
 The J&K government has a land bank of 6,000 acres for industrial development
 An additional 6,000-acre land acre was given to the industrial department for development
 Policy initiative for the development of industrial estate by the private sector
Security situation is better
 In July, more than 1mn tourists came to J&K, which has increased to 1.1mn in August
 J&K had phone and interest connectivity first time in the past 30 years
 The crime rate is one of the lowest in the country
Issues related to electricity supply in J&K
 The electricity rate is the lowest in the country at INR 3.85 per unit
 J&K power generation capacity is still only 3,500MW. The government has signed several
MOU and aims to increase power generation capacity by 3,300-3,400MW in 3-5 years
 The transmission and distribution system must be modernized. The government has already
completed several initiatives
Human capital in J&K
 There is no dearth of talent in J&K.
 The government has opened many centers for skills development. The BSE has started
training 5,000 youth
 There are 15 universities, 316 colleges, more than 100 ITI, 26 polytechnics and 14 Centers
for Innovation
16
Terrorism is over in J&K

 According to Shri Sinha, the issue of terrorism is over in J&K
 There is coordination among the army, paramilitary, and government. All decisions are
being taken in Srinagar. There are no other centres of power in J&K
 The infiltration has come off significantly
Real estate
 The government is going to hold two big events – one in Jammu and one in Srinagar -- for
real estate firms
Rehabilitation of Kashmiri Pandits
 The government recently launched the portal for Kashmiri migrants
 Any person can register to complain and the district administration must take a field visit
and take necessary legal recourse
 People in the valley are supporting the initiative
 The portal has started and in a time-bound manner government will complete the
rehabilitation process
 The government has already received more than 750 applications
Tourism industry in J&K
 The J&K government has given tourism industry status
 All incentive schemes will apply to the tourism sector
 The 50-60 new destinations are being developed
Pace of infrastructure development
 More than 80% of projects in a district will be completed within one year
 Only 20% will be completed in two years
 Major projects like metro, expressway and others will take time. Most projects will be
completed in the stipulated timeframe
Life is limping back to normal
 Life in J&K has returned to normal. The recent local elections recently were completed
peacefully. Internet has been restored
17
Dialogue #4: Electronic Manufacturing

Renaissanceon PLI Wings
Overview of current situation
 Post COVID-19, as the world seeks an alternative destination for manufacturing, India’s
attractiveness rises
 FDI increased 27% in 2020 compared to 2019. India received USD 81.7bn FDI in 2021
 This implies India is recognized as a sound investment destination and its credibility has
Ravi Shankar been risen among global manufacturers and global supply chain.
Prasad
Member of Parliament,  Pro-investment policies, ease of doing business are behind this performance.
Former Union Minister
of Law and Justice, Digital India
Electronics and IT &
Communications  Digital payment & delivery of services and Aadhaar-enabled apps helped deliver money to
remote parts via post offices
 Electronic manufacturing on the rise
 India’s share in global electronics increased from 1.3% in 2012 to 3.5% in 2019. Total value
of electronics produced increased to USD 76bn in 2020 compared to USD 29bn in 2014
 JAM Trinity: Jan Dhan-Aadhaar-Mobile trinity is helping to democratize payment systems, as
more than INR 2tn has been transferred to the poor
 Objective is to bridge the digital divide and encourage inclusion
PLI and its attractiveness
 In the next five years, it is expected to bring in investment worth USD1.43bn, which will
lead to production of USD 141bn of which 60% will be exports
 Global electronics giants have set up a base in India, generating ~50K jobs
 During COVID-19, Apple shifted its line of production from China to India for
manufacturing mobile phones
 PLI in mobile has increased attractiveness of PLI in other sectors, such as telecom and
textiles
Final take
 The government wants to make India an USD 1tn digital economy
 Data protection law is being created to keep in mind privacy and other issues
 Data-related processes, if integrated, are the new area of growth.
 While respecting privacy, the government wants to focus on innovation
Can we use AI and digital tech to speed up delivery of justice?
 During COVID-19, nearly 7mn cases were heard by various courts of India online. Today,
virtual hearing is order of the day. Yes AI should be used. National Judicial Data Grid has
been set up where it has 130mn case records – pending as well as finished. But, judiciaries’
dependence is important – the government will not intervene
18
Can AI replace routine judgement and judiciary work?

 It is a promising area, but not free from disruption. Human mind cannot be replaced. To
what extent AI can help is a point of discussion and some work is happening there
Telecom sector: duopoly prevention
 Fair competition is wanted by the government. All stakeholders should ensure consumer
satisfaction and good services. Telecom companies have a good market in India, especially
under the Digital India push
Roadmap for India’s companies to become global ones
 Several small IT firms have become globally recognized, especially eCommerce and
consumer
Semiconductor shortage
 Lot of responses have come for investing in India (manufacturing semi-conductors) and will
be done under the ambit of PLI schemes
 China is a factor since a lot of chip manufacturers are concentrated there. But, India has a
huge market that can draw chip manufacturers. India has big potential for chip designing
 Chip manufacturing is capital-intensive
Regulation of social media
 The government wants to protect citizens and is bringing regulations, keeping in mind
Freedom of speech and the right to dissent
 Minimum regulatory intervention should be there to prevent misuse of social media
 India remains committed to retain balance between regulation and free interaction and
privacy of its citizens
19
Dialogue #5: India's Power Elite
The Cultural Revolution

 Indian Cultural Revolution is used in a specific context on what happened in Mao’s China.
Similar changes in different forms are happening in India
 However, China’s Cultural Revolution was bloody while India’s is more subtle
 Mao’s Cultural Revolution was a combination of anti-elite, anti-urbanism and anti-
Dr Sanjaya Baru intellectual. India’s Cultural Revolution has similar characteristics
Former Media Advisor
to PM Manmohan  While Mao used the people’s movement to purge his party of the “Old elite”, Modi has used
Singh and Director for
Geo-Economics and disruptive and transformative politics to purge the influence of the Old elite outside his
Strategy party
International Institute of
Strategic Studies, 2014 political change was different
London
 During the early change of power in New Delhi, the political regimes changed, but there
was a little change in the power elite; one set of friends was being replaced by another.
There was little change in the corridors of power
 However, Modi-Shah altered the fundamental dynamics of the power elite in Lutyens Delhi
 Modi-Shah’s BJP is different from the BJP of Vajpayee-Advani
Tanvi Shukla
 In the world of business, change began in the 1990s
Senior Editor
Mirror Now End of the First Republic and beginning of the Second Republic
 Dr Sanjaya Baru terms the transformative changes happening in Delhi as the end of the old
First Republic of India that was based on the principles of Socialistic-Democratic Secular
Republic
 The fabric of India’s republic values have changed. It has been transformed from a
socialistic secular democratic republic to Hindu majority nationalism
Principal characteristics of the power elite of the old era
 Ram Manohar Lohia defined the power elite of the old era as
 English educated
 Inherited wealth
 Upper caste
 This is no longer the case. The new class of power elite is
 Increasingly articulating in vernacular languages
 Large number of billionaire are first-generation businessman
 Belong to the middle caste
20
Changes in bureaucracy, business, and the entertainment sector

 India’s bureaucracy was largely dominated by Brahmin and Kayastha castes. The caste
composition has changed. More people from the lower and middle classes are joining the
government
 The class composition has also changed. People from backward states are joining the
bureaucracy
 Those who are coming into government are not at the top of the pile. The quality of
bureaucracy has declined
 Bureaucracy is increasingly engaging in vernacular languages. Most officials operate in
vernacular languages
 The same is true for business. There were hardly any changes in the social composition of
India’s business elite
 First changes began after the Green Revolution with emergence of the business class in
Punjab, Haryana, Andhra Pradesh and Maharashtra. Mr Baru refers to the book written by
Harish Damodrana that discusses changes in the caste composition of India’s business class
 People from all segments of society are joining the entertainment industry unlike in the past
when it was dominated by a particular set
Leader of an aspiring New India
 PM Modi has positioned himself as the leader of a new emerging class: Aspiring New India
 The kind of changes Modi-Shah want depend on their success in governance. If they fail to
take the economy forward and if they fail to address different challenges of society, then
this transition that Modi-Shah has engineered won’t work. Their project will only succeed
only when the basics (economy, foreign policy & national security) are in place. Their
record is not encouraging in all these fields
Mixed picture
 In 2014, many people saw it as a normal political transition. There was not much resistance
to change
 2019 was a turning point. The elections of 2019 were fought in a much more narrower
political program unlike the development program of 2014
 In 2014, Modi was seen as a man who rescued Ratan Tata. Modi was the darling of the
business community. But today, there is greater resistance
 India’s business class is divided. The entertainment world is highly divided as is the media
 Backlash is visible in all spectrums of society
 The real problem is that the economy is not picking up. That is creating restlessness in the
emerging classes
Power elite in the business segment
 Real transition in India’s business class took place in the 1990s and 2000s. Many ike IT and
pharmaceuticals emerged
 Guys who matter are the ones who call the shots. Guys who call the shot have changed
 The guy with proximity to power benefits. They are the power elite
21
Fusion of economic-political power

 The composition of India’s Parliament has changed. Earlier, the wealthiest were in Mumbai
and the political power was in Delhi. This is no longer the case
 Today, the wealthy are politically powerful and political power has become the wealthy
 The rich are becoming richer due to access to political power
 Fusion is when businessmen become politicians and politicians become businessmen. This
fusion is becoming more prominent
PM’s popularity has declined
 The business community was largely behind the Modi government, but expectations have
not been met
 In the latest poll by India Today, approval rating of Modi has declined from 66% to 22%
 Business and media’s ability to influence political direction is limited, but they do shape
public opinion
 West Bengal is a classic example. Electorates threw a surprise that few expected
Regional parties and power elite
 Hindi vs non-Hindi is the major fault line. BJP is still seen as a Hindi party. Modi-Shah,
despite being Gujarati, projected themselves as Hindi leaders
 Most non-Hindi states have a non-BJP government. The regional party can come together
but who will play the role of bringing the regional party in one front is still not clear
Credit game
 Mr Baru admits not everything is bad. The Modi government has made revolutionary
changes: for eg, the LPG connections and Nal se Jal. But. normally these things are the
responsibility of the State government
 The State should have financial resources to carry out the development agenda
 Centralization of finances and administration does not allow the States to carry out the
development program. PM Modi is taking credit for things that are the responsibility of
states governments
 This is also leading to weakening of the federal structure
How the decision like agriculture reforms fits in the BJP ideology
 Only rich people, Kulaks, of Punjab and Haryana are opposing it. Opposition is limited
 The way they are implemented is not consensual. The type of style of Modi-Shah is my way
or the highway
Current regime is empowering the Middle caste
 The current political regime is certainly empowering the Middle class, according to Mr.
Baru. The BJP was used to be considered as the Brahmin-Banyia party
 The first Cabinet was dominated by the Brahmins. But in the recent Cabinet reshuffle,
Middle caste leaders were promoted
 There is a lot of anger among Dalits. The lower caste is not empowered on a shift from
upper caste to the middle
22
Talent deficit in the government

 Compared to the earlier government, there is a huge talent deficit in the current
government
 The quality of people who are shaping economic policies has declined
Meritocracy nature of India’s bureaucracy
 Mr Baru does not accuse PM for weakening India’s bureaucracy
 Former PM Indira Gandhi was looking for a committed bureaucracy
 Mr Baru says he is not against lateral entry if the process is transparent. The entry in the
bureaucracy should be merit-based
Brain drain – migration of talent at the top of the pyramid
 There is huge migration of talented people.
 We are preparing India’s children to migrate
 Businessman children who went abroad used to come back. But today they sit in London &
Paris and run their business from there
 Every 100 students coming out of IIT, 90 go abroad and 10 stay back
Future of judiciary reforms
 The problem of the judiciary is complex. Faults lie with both judiciary and the government
 The real problem is consistent politicization of the judiciary and increasing corruption
within it. Both institutes are weakening each other
 Our system is built on balance of power. That has been distorted. That is creating problems
in society
Digital divide
 The basic problem is employment. Mr Baru has his doubts about the impact of digitization
on employment
 Digitization has improved the life of the rich and those who have access to it
 For eg, during COVID-19, those who have access to good WiFi and smart devices have
access to education those who don’t were left behind
23
Economy & Markets
24
Dialogue #1: India 2030: From Soft to Super Clout -

Strategy Gradation & Graduation
Complex adoptive system
 The first principle of PEA Sanjeev Sanyal’s economic thinking is that economics systems are
complex, and it is very hard to predict the future
 He believes experts have no idea what will happen, and it is a futile exercise
 Extrapolating the current trend is a complete waste of time as who would have predicted
Sanjeev Sanyal the COVID-19 pandemic. This is not the first time the world had a pandemic like COVID-19
Principal Economic
Adviser, Government of When we cannot predict then what is the way out
India
 According to Sanyal, when we don’t have any idea about the future, we should plan for all
eventualities
 For eg, nobody knows how the post-COVID-19 world will look like. But, surely, it won’t be
the same. World economies are inflating economies without a good understanding of the
long-term impact
Two pillars of India’s policymaking: resilience against shock and the ability to adapt
 Resilience against the shock and ability to adapt according to the emerging situations have
been the two pillars of PM Narendra Modi’s government policymaking
 The ability to forecast becomes irrelevant when you can adapt according to the situation
 This thinking also reflects in the government response to COVID-19. It didn’t do any Big
Bang demand-side stimulus as the problem was with the supply-side
Huge demand for exports
 According to Sanyal, there is huge demand for India’s products in the foreign markets
 However, suppliers are unable to meet demand due to container shortages
 However, this is only a short-term constraint
Government focus on factor market reforms
 The government focus has been doing supply-side reforms
 It has implemented long-pending labor market reforms
 The banking sector has been almost cleaned up. Despite the large shock, NBFC and banks
are doing well. The impact of COVID-19 on India’s financial sector has been much lower
than earlier feared
 The government has created the Insolvency and Bankruptcy Code (IBC) framework and
made the necessary amendment- flexibility is key to government thinking
Resilience: accumulated huge pile of forex
 The government has accumulated huge forex reserves to face situations like the Taper
Tantrum
 India is net creditor: foreign exchange reserves exceed India’s debt liabilities
25
 The Taper Tantrum or any action by the global rating agency becomes irrelevant in this
situation
Atmanirbhar Bharat is different from earlier inward-looking thinking
 The government is not interested in going back to the old regime of inward-looking
 Atmanirbharta means building domestic capabilities to play a role in the global supply
chain
 India’s pharmaceuticals sector is globally competitive but depends largely on China and the
US for key ingredients
 The government’s active pharmaceutical ingredient (API)-production linked scheme is a
practical approach to creating resilience in the sector
Role of PLI schemes
 The government started production-linked initiative (PLI) schemes to support companies so
that they can play a role in the global supply chain
 PLI is not import substitution: the government has an outward-looking thinking
 In the past, India’s companies were penalized for their size. But through PLI schemes, the
government is incentivizing the firms to grow
 There is a good take-off of PLI
Opening up of the economy
 There are some sectors, especially contact-heavy services like tourism, under restriction
 Demand is strong but the problem is how to open up
 The government has rolled out the world’s largest vaccination program; vaccination is the
way forward
 Cases are rising in some states, and the government is monitoring the situation closely
Most major reforms are done
 The government has opened up sectors, i.e. geospatial & mapping and the liberalized
drone policy, etc
 Many micro-reforms like allowing factoring, several initiatives to develop the bond markets
are being undertaken by the government
 All major reforms are done: the last big remaining reform is simplifying direct taxes
 The government is quite unapologetic about privatization
 It has been working to streamline the privatization and monetization processes
Bureaucracy and judicial reforms: two big reforms in the second phase
 The first phase of reforms was aimed at getting out Indian state from where they should be.
The next phase of reforms will be targeted toward things that the Indian state should do
 Bureaucracy and judicial reforms are two sectors where the next phase of reforms will take
place. The steps are being taken. For eg, the government recently passed the bill to abolish
nine tribunals
 The big push is toward quality infrastructure. This will be the major driver of demand in the
near term
26
Capital expenditure as the only demand-side stimulus

 The government does not believe in helicopter money. All demand-side stimuli are in form
of capital expenditure
 Unorganized and informal sectors mostly operate in contact-heavy services sector.
 There is no point in pumping up demand when demand cannot be met
 The government has adequate financial resources to act if there is a Third Wave. Tax
revenue collection is good. The government has maintained fiscal space. It will spend it to
build infrastructure
 The government has provided safety net in form of liquidity and credit support
 The biggest way to help the unorganized and informal sector is to ensure there is no Third
Wave. The government’s focus is on vaccination
Dichotomy in climate change action? Crop burning and renewable push
 The government will adhere to the Paris Climate Agreement
 India will shift to 100% renewables, and small thermal capacity will be maintained.
However, the mix will shift toward renewables
 Crop residual burning is a result of an unsustainable agriculture policy. The government has
undertaken agriculture reforms to dismantle the old agriculture policy architect
 There is a lot of political pushback, but the government has not backed down
Contract enforcement: the biggest hurdle to India’s economic growth
 Contract enforcement has been the biggest drag to Indian business
 The most thing will need to be done by the judiciary. We need to take it head on
 We need a large public debate for this
Intellectual and political will is there to complete the National Monetisation Plan
 There exists intellectual and political will to privatize and monetize
 There are many hurdles, but the government will finish what it has started
 Its focus is on doing a few things right at the start; scaling up is not a challenge in India
27
COVID-19 will change dynamics of urbanization

 Pandemics have happened many times in the past, but there was no impact on cities
 One possible outcome will be degree of decentralization in favour of medium-size cities
 COVID-19 will not affect pace of India’s urbanization but may tilt it toward decentralized
development. There is good evidence India will become urbanized
Smart City program: some successes and failure
 The Smart City program is different from the earlier city development program
 Its focus is on decentralized planning of the development project
 We allowed cities to decide for themselves
 Meaning of Smart cities: decentralization work smartly than centralization
28
Dialogue #2 : Modern Monetary Theory: Is it an

Option for India?
Should a government think and behave like a household?
 Dr Duvvuri Subbarao used to argue that a government should think and behave like a like
household. However, he has changed his view recently
 When the government borrows, it should spend that money on productive assets (asset
creation) like households so that returns from those assets can be used to service debt
Dr Duvvuri  However, the government is different from a household. The fundamental difference is the
Subbarao
government can print money while households cannot
Former RBI Governor
& Distinguished  The government’s ability to print & spend is the basic premise of Modern Monetary Theory
Visiting Faculty at
National University of
Singapore What is the Modern Monetary Theory (MMT)?
 A government that issues its currency and collects taxes & borrows in its currency should
print and spend until there is full employment in the economy
 The goal of MMT is full employment
 Once the economy reaches full employment, and if there is inflation, the government can
raise taxes and cut spending
 MMT allows the government to raise taxes only to control the inflation dynamic
Exhibit 1: Key difference between convention economics and MMT

Conventional economics MMT
Fiscal deficit matters Fiscal deficit does not matter
When borrowing, government should worry, ‘can Perish the thought. Government should print and spend
we repay? until there is full employment
Forget it. Fiscal austerity when there is unemployment is
Fiscal austerity is a virtue.
morally wrong
Threat of runaway inflation if ‘print and spend’ That is a useless worry. Potential for inflation before full
pursued recklessly? employment is an exaggerated concern
If inflation arises, there is not much a central bank can
If inflation arises, the central bank should choke
do. It is the government that should choke demand by
demand by raising interest rates.
taxing and through spending cuts
There is no such thing as fiscal dominance. Fiscal is
Fiscal dominance is a threat to central bank
everything. The only job of the central bank is to
independence and its ability to control inflation.
maintain a low interest rate
Source: Elara Securities Research
29
Why is there so much talk about MMT suddenly?

 Of course, because it is free lunch. It is alluring and music to a politician's ears
 It is not inequality. There is a difference between champion of inequality and champion of
MMT. The champion of inequality believes the government should tax the rich and
redistribute while the proponents of MMT are against raising taxes
 The pressure of unemployment is partially driving demand for MMT. But the MMT
proponents began to gain popularity when the US economy was at full employment in
2019. So, unemployment is not the main trigger of MMT
 Central banks are increasingly unable to manage the business cycle. After GFC, it has been
unable to ramp up the economy. There is a growing view the Central bank should not be
left alone to manage the business cycle. The government has played its role
 2020 US elections: Stephanie Kelton, a leading proponent of the MMT, was an advisor to
Bernie Sanders
 The MMT caught up not because of one factor but due to a combination of factors
described above
Why hasn’t MMT caught on despite its seductive allure?
 Law of gravity has not been repealed. This is not the case that inflation could not rise until
there is full employment in the economy
 There is fear for some time that nothing may happen but there are possibilities of sudden
and unstoppable disaster in the economy due to MMT
Is it just a jazzed-up version of Keynesian deficit financing?
 Keynesian deficit financing suggests if there is a slump in the economy, the government
should borrow and spend to create employment and a stimulus economy
 Some argue the MMT is just a jazzed-up version of Keynesian deficit financing, but MMT
proponents dismiss this argument. Keynesian financing was meant for a specific
circumstance when there is a slump in the economy, and the purpose is not full
employment. The MMT is printing money and spending, even in normal times, until there is
full employment
Is MMT an option for India?
 During the middle of the lockdown, there was a huge debate about lives vs livelihood.
There was huge pressure on the government to spend, but it did not print and spend
 India does not meet the necessary conditions for MMT
 The government borrows largely in INR. However, the government may not borrow in
foreign currency but the economy does. We run a huge current account deficit. So,
India does not meet the necessary pre-conditions of MMT
 The pre-requisite condition for MMT is the Central bank should have a degree of
freedom to set the interest rate at the level to make any government borrowings
sustainable. But the RBI monetary policy is constrained by what the US Fed or ECB is
doing (impossible trinity). The US Central bank can do that, not the RBI
30
What if India goes the MMT way?

 We will have a huge risk of inflation
 If the government spends on people they will demand resources. However, the domestic
supply cannot meet growing demand in the economy. The economy will likely run a huge
current account deficit which may lead to sharp depreciation in the currency
 Even before inflation and currency risk, India will have to go through the credibility risk.
Adverse market perception can itself create a crisis
 As long as India wants to use global capital, India will have to play by the global rules and
will have to worry about market perception
If not MMT, then what?
 Is deficit monetization an option? Dr Subbarao thinks deficit monetization is not an option
for India. India will run a huge credibility risk. There would have been an adverse market
reaction if the government had chosen deficit monetization last year. The government was
able to borrow at a historical low interest rate
 Is quantitative easing an option? QE is not MMT. It is the Central bank injecting liquidity into
the market and not giving money to the government. The RBI has shown already that QE is
an option for India. The RBI has already injected a lot of liquidity into the system
 There are two objectives of QE: 1) financial stability, and 2) stimulating the economy.
According to Dr Subbarao, the QE has largely been useful in achieving the first objective
but failed in the second
 Is helicopter money an option? No economy has done it. Biden came close to it but it is not
helicopter money. The US government borrowed in the market. Helicopter money is close
to MMT, but not MMT
The government was responsible and kept fiscal stimulus low
 Dr Subbarao does not support the idea the government should have had a large fiscal
stimulus last year. The government was quite responsible and provided support to the
weaker section of society through free food and higher allocation to MGNREGA
 According to Dr Subbarao, there were supply constraints and any stimulus ultimately
would have laid to buildup in private saving only
 This year's situation is different. The government tax collection is quite robust. The Central
government has collected ~35% of BE of tax targets compared to an average of 20% in the
first four months. It may spend more than what it budgeted in the upcoming months.
Ramping up spending is not easy and it takes time
Orderly exit from extraordinary monetary policy
 Entering into easy monetary conditions is easy. It is done in a time of crisis. But the exit is
different. There is a lot of debate about it. Any deviation from expectations can lead to a
difficult situation and a misguided response
 Former US fed Chairman Ben Bernanke and Dr Subbarao faced several for not navigating
the exit adequately
 The RBI is facing similar challenges today. The RBI will have to balance rising inflation and
growth concerns
31
 The RBI will first have to start with normalizing liquidity conditions and then raise the
reverse repo and repo rates. But the RBI will also have to take into account the government
borrowing program
 Once the Central bank sets the normalization process, it will not be easy to reverse the
policy direction. Jean-Claude Trichet, President of ECB, raised the interest rate prematurely
and received sharp criticism for it
Is CRR hike optimal policy option to reduce liquidity?
 It is but it is one of the last instruments the RBI would want to use
 CRR and SLR are meant for financial stability. The RBI will be circumspect to use CRR
Shift from inflation to flexible inflation targeting
 Globally, there is only flexible inflation targeting. The fixed inflation targeting is gone. Even
British Economist Marvyn King disowned fixed inflation targeting. It was not never as fixed
as the market believed
 The global inflation targeting is as flexible as RBI inflation targeting
 Until six months ago, general perception was the RBI targeted 4% inflation and it delivered
4%. But the over the past six months, the RBI view is 5.6-5.8% inflation is quite within the
objective. Its greater commitment is to support the recovery
 The MPC has the accountability to deliver on inflation with only one tool. All other tools are
with the Reserve Bank
The Central bank “put”: moral hazard problem
 There is certainly the moral hazard. If the market believes the Central bank will intervene in
any difficult situation, the market will transfer risk management to the Central bank
 Dr Subbarao says he did not intervene in the forex markets in 2010 QE easing period. if
there is intervention every time in the forex market whenever there is volatility, the market
participants will outsource exchange rate risk to the RBI
Central Bank Digital Currency (CBDC)
 India depends on the Bank to channelize financial resources. We do not want to do
anything that will lead to disintermediation of any sort
 The cost-benefit calculation of CBDC is different from Emerging Markets like India from the
Developed world
 CBDC will allow advanced economies to lower the interest to below zero
Does MMT imply big government?
 MMT does not mean the government will substitute the private sector. The government will
only play a role at the margin whenever there is structural unemployment
Interest rate policy trajectory of India
 It depends on the RBI perception of the potential growth rate of the country
32
Dialogue #3: Future of India's Banking
Embedded Finance – Concept

 Traditionally, the bankers are outside the enterprise ecosystem (suppliers, customers and
marketers) and it becomes challenging to finance enterprises as the banks are much removed
from understanding the borrower’s quality first-hand. Perhaps, going forward, banks may
want to enter the ecosystem and may aid enterprises that are directly involved in the
borrowers’ business. Hence, finance may be embedded in this ecosystem.
Dr Viral Acharya  Normally, NPAs in India arise from extensive lending to select borrowers and not due to
Former Deputy widespread lending. Currently, only 16% of MSMEs’ credit demand is met by the formal credit
Governor, RBI
CV Starr Professor of industry as only 0.6mn MSMEs fit the criteria (>INR 300mn turnover) set by the banks for
Economics, NYU-Stern lending given the current product design. The traditional way of finance alone cannot fill this
gap – Digital lending and fintech are needed to bridge it. A gap of ~INR 25tn exists in the
MSME credit space in India.
Embedded Finance – Three-step model to meet deficit
 Identify the class of agents who will be called as Agents of Borrowers or Loan service
Providers (LSP) –This class should be very close to the enterprisers’ business.
 To illustrate, in the restaurants space, this class could be Swiggy. For small suppliers
selling goods on Amazon and Flipkart, the latter could be LSPs as they are more aware
of the enterprises’ transactions and cashflow position.
 Shift from direct selling agents (DSA) to LSPs may emerge. The LSPs should be working
for the borrowers and not just the banks.
 The banks should collaborate with such e-commerce websites rather than giving
commissions to DSAs as the e-commerce websites earn commission from the MSMEs and
have a vested interest in the success of such MSMEs.
 Values information collateral: Assessing information collateral rather than physical collateral
is crucial as MSMEs do not have large capital to own physical collateral. Information about
the MSMEs’ cashflows, sales etc. should be their collateral.
 Structured high-trust data ecosystem: Data verification is crucial, keeping in mind the privacy
and borrower consent. This has been happening in India parallelly in the past decade by way
of Aadhar, UPI etc. Trust, consent, privacy, security and data verification are important for the
successful implementation of the process.
Model enablers
 All the systems can be AI driven in a data-rich ecosystem.
 Open Credit Enablement Network (OCEN), a set of open standards, may be leveraged to
enable embedded finance. OCEN is a frame of networks and protocols that may be
capitalized on by lenders, MSMEs and LSPs. PineLabs, Swiggy, Amazon, Khatabook etc. may
act as LSPs. OCEN will collect information on balance sheet, cashflows etc. from MSMEs with
their consent. It will also carry out other verification related functions such as owner identity
verification etc.
33
 When it comes to collections, LSPs may also act as collection agents. Thus, defaults may be
unviable for the MSMEs as loans will be via LSP conduit – MSMEs may lose LSP-propped
businesses in case of defaults. This way, minimum defaults will be ensured.
LSP-MSME Model – Illustrations
 An MSME is selling products on the government e-marketplace (GeM) to different
government departments. The payment is due after a few months and the MSME would like
a loan against a GeM invoice. In this case, the GeM becomes the LSP.
 A SAHAY GeM app is created to assist financing. The seller is directed to install the app and
link the GeM account. All the information is digitally uploaded on to the SAHAY application
and is available to the lender. All the bank offers are now digitally available. The borrower
can select among the different bank offerings and the loan agreement can be signed
digitally, post which the repayment method may be set up.
 The payment to be received from the GeM can be directly rerouted to repay the bank’s loan
amount. Thus, the need for agents to recover the amount is circumvented. The amount will
be digitally recovered.
 Loan applications can be processed through OCEN. The RBI’s public credit registry can share
borrower details. Document signing and verifications may be enabled via Aadhar digital
signing. Loan repayments/monitoring can be via UPI and may be directly transferred to the
bank for repayment before going to the borrower. OCEN may enable a competitive business
model for both lenders and LSPs so that the cost of credit to MSMEs is low.
 All this is possible given that the digital ecosystem is in place now. KYC and UPI are the two
building blocks of the digital lending ecosystem. Shift from asset-based lending to cashflow
based lending is the future of the Indian lending space. This will help reduce the time to avail
credit and the cost of credit for MSMEs.
Can LSPs evolve into loan providers themselves?
 In principle, this is possible, but they may have to get low cost credit on their own to achieve
this, while the banks and NBFCs already have access to credit.
 Some discussion is ongoing on FAANG turning into a lender as it has ample cash on hand.
Ideally, credit is desirable from third-party given the due diligence process.
 Separating the provision of business provider and loan provider is a better model in order to
avoid the problem of hiding bad loans.
Repayment risk
 The ‘ability to repay risk’ will remain as there will be a cashflow risk associated with the
business.
 However, if the cost of credit comes down for MSMEs, this may improve the MSMEs’
investment cycle. It has been observed that high capital cost hinders MSMEs from incurring
long-term investments.
 Hence, the ability to repay may improve for MSMEs if the availability of predictable, cost-
efficient credit is improved
34
Regulators’ role
 Dr. Acharya is not an advocate of directing banks to decide on their lender profile as the
historical precedence has not been favorable. Thus, he is of the firm view that the regulator
should not issue targets in terms of lending in this space to the banks.
 Verification through UPI and Aadhar linked signs are easily available. If the credit regulators
can improve the verification of the information collateral and of assets and liabilities of the
borrowers, that could be the best push which they may provide to boost this system, rather
than directly issuing targets.
 OCEN is just a framework/protocol based aggregator for UPI and other enablers. It is not a
data repository. The RBI’s public credit registry can act as the data repository as also the most
trustable way to maintaining data.
Why would MSMEs avoid high delinquencies?
 A range of high-quality, service-based MSMEs are not in the formal system because of the
physical need of collateral.
 The focus is to shift more borrowers from the informal system to formal as 70mn untapped
borrowers exist versus less than 1mn borrowers in the system. Many high credit quality
borrowers may be tapped into thus, which should improve the banks’ overall credit quality.
Embedded Finance – Other key takeaways
 Unlike asset-based lending, embedded finance follows an information based lending model,
propped by a digital ecosystem with easy credit scoring checks. Physical verifications are
expensive and time consuming, while online data verifications easier and faster.
 In India, the embedded finance model may manifest through small enterprises rather than a
few conglomerates, as is the case for China.
 Margins will be lower for traditional banks in embedded finance, which may trigger large
volumes as at present, the banks are operating on high margins, but low volumes. Once the
transaction costs trim, it will automatically reflect into the banks’ bottom-line profitability.
Taper tantrum
 Inflation seems high and persistent, and is likely to stay here. The stimulus is more than 40%
of the GDP, which is huge and has led to immense pent-up demand. In Dr. Acharya’s view,
the Monetary Policy is behind the curve. The Fed will have to take action soon to retain its
inflation policy. Whenever this happens, the shock may be huge and swift.
 Some nascent conditions in India are similar to that during 2013 taper tantrum and hence, is
a cause of concern. If the RBI tightens the Monetary Policy in India and foreign money is
withdrawn, the situation may turn worrisome.
35
Retail asset quality in India

 Retail quality deterioration has been a concern for some time now. Watch for associated
developments in the next couple of quarters.
 Retail creditors will be more averse to defaulting versus corporate lenders.
 If retail defaults coincide with consumption concerns, then it may a concern for India because
when the corporates defaulted, the consumption was still there to prop the economy.
 China cannot be trusted to support global growth now. It may be a normalizing US that may
prop growth now.
 Challenging times are ahead. Taper is a temporary risk, while real wages, household income
and consumption patterns are more persistent concerns that have to be addressed in India.
36
Dialogue #4: Old Money New Money
Future of money
 Dr Eswar Prasad has written a book, The Future of Money: How the Digital Revolution Is
Transforming Currencies and Finance, which will be published by the Harvard University
Press soon
 Discussion on cryptocurrencies is incomplete without understanding basic technological
Dr Eswar Prasad transformation happening in the financial sector
Senior Fellow at  These technological transformations not only have implications of the way monetary policy
Brookings Institute
Tolani Senior Professor works but the very structure of the financial markets and institutions
of Trade Policy, Cornell
University Basic function of finance
 Intermediating between savings & investment and making sure finance is directed toward
more productive use
 The banking system reduces information asymmetry and it is effective in maturity
transformation
 The banks and direct channels of finance (bonds & equities) manage volatility and risks
both at the corporate and national levels. The broad financial market provides opportunity
for risk-sharing within the group and even across countries
 International financial integration provides an avenue to diversify risk across countries
 The well-functioning financial market will provide credit to entrepreneurship activities and
bolster long-term growth
 From an individual perspective, a well-functioning financial market also provides
consumption smoothing
 More effective payment system: retail, wholesale and cross-border payments
Transformative changes in the fintech intermediation sector
 The current wave of innovation-fintech is different from past innovations
 Dis-intermediation of savings is taking place from different channels. Online banks can
provide traditional services at a low cost
 In Emerging Market economies where banks are not effective in channeling credit to the
productive part of the economy, especially MSME, these emerging fintech start-ups will
change this
 There is an extensive use of big data, machine learning and AI in risk management
 Fintech has gone beyond basic advantage to new areas. Fintech companies like Mybank-
quick and automated loans with zero human intervention
 Alibaba has been efficient in using transaction information from its Alipay platform to
determine credit quality of its users. The efficiency of the system is still unclear
37
 There are several concerns related to this platform. Many new fintech companies charge
high rates. There are questions about privacy
 There are unanswered questions about implications to financial stability of the system
Emerging new aspects of fintech
 Insurtech: The technology has made it easy to slice down insurance services to even a
minute and specific needs. Micro insurance products are available in China for small
transactions like online shipping
 Wealth management has beginning to shift to Roboadvisor
 Mobile money is becoming pervasive in the developing world
 Retail payment: we are going through a revolution. The use of physical currency has been
declining consistently. Emerging Markets like India and China have developed low-cost
digital payment infrastructure. Digital payments in the US is still much less efficient and
more costly than some emerging markets
 There are huge impediments in cross-border payments, due to regulatory requirements and
several exchange rate
 The ripple protocol is already showing on how we can do low cost, low risk and quick
settlements
 Fintech platforms are making it easier for students from India, China and other
Emerging Market countries to make easy payments
Driving force of fintech revolution
 There has been foundational innovation in finance in recent years. Digital platforms have
much less cost of entry and it is easy to scale up
 Emerging Markets are leapfrogging Advanced Economies, driven by rising demand and
low interest from existing firms to block innovation
 In the US and the EU, it is difficult to break political and financial power of incumbents
Implications of fintech
 More efficient gateway to connect end-users and variety of savers & borrowers
 More efficient financial intermediation and greater financial inclusion
 There are several risks. Innovations are not accompanied by more equality of digital access
and financial literacy
 There are concerns about fintech implications to inequality
 Financial innovation poses a threat to traditional financial intermediaries
 Decentralization may lead to fragmentation of the existing financial systems
 The network effect could come and bite with a vengeance. One advantage of fintech is it
levels the playing field. But like China where two firms dominate the payment system, there
are concerns related to concentration of financial power
38
The Bitcoin revolution

 Cryptocurrencies, such as Bitcoin, have set off a revolution but the basic purpose of Bitcoin
was meant to be a trust-less medium of exchange; Bitcoin has not worked well as a
medium of exchange
 Bitcoin is volatile and has high transaction cost. It has become the “store of value”
 Dr Prasad doubts reliability of Bitcoin as a “store of value”. It has no intrinsic value. The
Bitcoin adherent believes key value proposition underlines that it is technology and scarcity-
that fact there are only going to be 22mn Bitcoins of which around 18.5mn have already
been mined
Blockchain technology can be revolutionary
 According to Dr Prasad, blockchain technology have huge potential. It has been already
creating significant innovation in terms of decentralization of finance
 Using blockchain, a variety of financial transactions can be intermediated without a trusted
intermediary like a central bank
 It has lit a fire under central banks to respond to these change and issue their version of
digital currency
Central Bank Digital Currency (CBDC)
 There is already some form of digital currency that is used in interbank settlements and
wholesale money
 Retail CBDC is where revolutionary changes are happening
 The retail CBDC can take various forms
 There is already some experiments done in Latin America using simple app-based forms
of CBDC. One can download the balance in an app that can be used for the
transaction. It is not an exciting form of CBDC
 An exciting form of CBDC is one where an individual can open an account with the
central banks. Many central banks are undertaking these trials
Basic motivation for CBDC
 CBDC premise is to promote financial inclusion. But there is already a low-cost financial
inclusion system, but even in Advanced Economies like the US, the CBDC can provide more
system access to digital payment
 CBDC can offer an additional payment system. The central bank can bridge the gap not
filled by the private sector
 In Advanced Economies like Sweden, which has introduced eKrona, the use of cash is
virtually low; it views the CBDC as a backstop to privately managed payment infrastructure
 The notion of monetary sovereignty and maintaining relevance of central bank currency in
retail transactions are additional motives for issuing the CBDC
39
Different technical approaches of CBDC

 There are two broad approaches
 Value-based retail CBDC: it seems to work well and is not difficult to implement
 Account-based CBDC: the balance is stored in digital wallets and recorded in the
central database; it seems to be more difficult to implement
Potential benefits of CBDC
 The CBDC relative to cash provides more efficiency, lower cost and greater finality of
settlement. Cash also involves security risks and other problems all of which can be
eliminated by digital payments
 The central bank can go around constraints of negative interest rates using CBDC
 The CBDC can lead to an increase in the tax base. The use of a central bank for illegitimate
transactions such as money laundering can be limited using CBDC
CBDC risks
 The CBDC can lead to disintermediation of the banking system if people prefer to keep
money in a CBDC account instead of a private bank account
 It can also hamper private sector innovation in the payment system
 There are vulnerabilities related to technology and privacy
 There are ways to get around some risks – dual-layer approach
 The central bank issues digital tokens but they are distributed much like cash through
banks
 The central bank can manage CDBC account side-by-side with the bank’s normal
money account
 It creates technological neutrality. A consumer can use different banks and platform
providers
 The platform providers can innovate on top of the central bank infrastructure
 This dual-layer will also provide a marginal amount of anonymity to users
 The Bahamas has issued the first CBDC – the Sand Dollar manages the risk of moving too
much money from banks to the central bank account by putting cap on the CBDC amount
Status of retail CBDC: things are moving fast
 There were some early experiments in Latin America in Ecuador and Uruguay
 Trails in progress
 China – DCEP
 Sweden – eKrona
 Japan
 Trials planned and under consideration
 Advanced Economies: Canada, the EU, the UK
 Emerging Markets: India, Nigeria, Russia
40
Wholesale CBDC
 It can allow more efficient payment and settlement across commercial banks and other
financial institutions. It can allow them to save liquidity, providing more efficient netting of
transactions
 It can allow for more efficient cross-border payments
 Many countries are undertaking the whole CBDC experiment: Monetary Authority of
Singapore, Bank of Canada and Bank of England
 Saudi Central Bank and Central Bank of the United Arab Emirates have concluded a whole
CBDC project that is going to be expanded in the near term to other central banks
CBDC implications for the international monetary system
 The new technologies are going to reduce friction in the international payments system.
This is going to benefit people who remit huge amounts of money
 There will be less need for vehicle currencies like the US dollar for intermediation of
transactions
 There are more pathways to finance MSME by foreign investors and more effective portfolio
diversification opportunities for households
 High profit margin in international financial transactions may not last longer
 Challenges for EMDE
 A stable coin like the Facebook coin may lead to the phenomena like dollarization
 CBDC may lead to greater exposure to capital flows and exchange rate volatility
 The dollar status as reserve currency is unlikely to change because of CBDC. Foreign
institutions need trust that comes from institutions, the rule of law and central bank's
independence
Meta issues
 The government's role is not oblivious to whether it should step in areas of retail
transaction, although regulation is still essential
 Regulators need to facilitate innovation but should be nimble to identify and control
systemic risks
 There will be a problem of moral hazard for the government while regulating the forms in
which these backstops are setup whether an alternative payment system in the form of
CBDC. How the government handles these challenges is not clear
 There are challenges at the societal level if every form of retail payment is going to become
digital. Privacy and confidentiality will be big issues
 There are crude benefits that can be accrued by democratizing finance, but there are
concerns many of these benefits could be appropriated by those who already have the
economic privilege. The government will need to level the playing field
Real-time information and monetary policy
 The real-time information collated through CBDC may affect monetary policy at the margin
 M0 is the modest and shrinking fraction of the economy. Most money creation in the
modern economy is through the banking system
41
 The monetary policy feeds through banks to the real economy. The role played by the non-
traditional financial intermediaries in monetary policy transmission is still not fully
understood by the economist
 Some anecdotal evidence from China and India suggests shadow banking system works
more pro-cyclically
 According to Dr Prasad, in terms of monetary policy implementation, changes will not be
drastic but in terms of monetary policy transmission world is entering into uncharted
territory
Digital currency backed by financial assets
 Many digital currencies, including Facebook, proposed digital currencies are backed by
financial assets, especially short-term commercial papers. According to Dr Prasad, there is
an active debate in the US about financial instability threat posed by such digital currency
 The seemingly liquid assets may become illiquid when there are large redemptions
 Facebook is saying its digital currency will be over-collateralized. There is no regulation in
this field; hence, seemingly stable currency may destabilize the financial system
 If CBDC are available at latency and high throughput -- meaning transaction can be
processed quickly and by large volume -- it may be over though the current regimes of
private payment systems
China’s digital currency and the geopolitical impact
 PBOC made it clear the digital currency will be available only for domestic transaction
 Most cross-border payments are already digital. What is far more important is cross-border
payment messaging systems: the SWIFT. The US holds a lot of sway over SWIFT. Anything
that goes through SWIFT can be subjected to US influence
 China has developed its cross-border payment system that also has a messaging system. It
may happen in the future that in both -- payment transactions and payment messaging --
the US may lose its influence
 However, this might reduce the dollar value for payment currency, but according to Dr
Prasad, it will not affect the dollar value in terms of “store of value”
42
Dialogue #5: Markers for India's Productivity Leap
The Indian Economy journey

 According to Dr. Surjit Bhalla, India is poised to emerge not only as the fastest growing
economy, but also as equipped to fulfill its population’s desires-aspirations.
Female education – Revolution ongoing
 Education is the single important factor that affects development.
Surjit Bhalla
 Female education attainment, especially in the 15-24 years age bracket, is the same as for the
Former Member of
PM's Economic male counterpart, evincing a major milestone in India’s growth story.
Advisory Council
Economic Adviser to
 Female education attainment will have huge implications for labor force productivity, thus
15th Finance empowering 2020s to emerge as India’s decade.
Commission
 No miracle growth society can manifest without increased and balanced education mix, for
both men and women.
 Some intellectuals do argue that educated women are not commensurately ensuing into a
participating labor force, contrary to Dr. Bhalla’s argument.
 As per Dr. Bhalla, some statistics show female labor force participation ratio below 10%.
However, he attributes this to an erroneous definition of labor, analysis and survey design.
 Dr. Bhalla believes that post accounting for recalibrated labor force definition and survey
design bias, female labor force participation is in mid-30s, well above survey statistics levels.
 With increased prosperity and education, large numbers of women are opting to stay at
home and raising the next generation. These women may not be a part of the labor force,
but their contribution to India’s productivity leap cannot be underestimated.
Cost of capital in India
 Dr. Bhalla emphasizes the importance of real interest rate in accounting of growth and
growth possibility.
 During 2015-19, India had the highest real policy rate globally, which significantly slowed
down the Indian economy.
 The real interest rates are not competitive and around -1 to -1.5% range. As long as they stay
range-bound, Dr. Bhalla believes India is in for effecting miracle growth.
Never waste a good crisis
 India was fortunate enough to bring about a large set of structural reforms during the
pandemic.
 Agriculture and labor reforms are significant reforms in the Indian economy’s journey.
43
Inflation, not around the corner

 A section of economists believe that inflation is just around the corner and the 1970s era of
inflation may return.
 Dr. Bhalla argues that the return of inflation is not possible in a globalized world.
 According to him, wage inflation is unlikely to come back. In the 1960s, the number of total
college graduates in the US stood at 56mn versus 56mn in the rest of the world. Today, the
total number of new graduates in the US is 60-64mn versus 200mn for the rest of the world.
 Dr. Bhalla believes that wage inflation is the real determinate of inflation. And, wages are not
rising around the world.
 Dr. Bhalla believes inflation will be transitory. There are no expectations that growth in
advanced economies will exceed 1-2%.
 The transaction cost of hiring has come down to almost zero.
China will slow down
 China has been reporting an average GDP growth of ~10% for the past 30 years. No country
has ever come close to this miracle.
 China is now a very advanced economy in its labor market. Therefore, productivity growth is
unlikely to be significant. Dr. Bhalla believes China will not grow more than 3-4% annually.
Missed opportunity
 Unlike Bangladesh and Vietnam, India’s export growth stagnates.
 India did not take advantage of its size and capabilities. However, the country may not repeat
its past mistakes.
 India's export growth is a genuine success story. Export growth will drive India’s growth.
Investment slowly creeping up
 According to Dr. Bhalla, investment is slowly creeping up in India despite consumption
slowdown.
 The share of investment in GDP is also rising and it is back to mid-30s range.
Taxation and revenue collection, emerging success story
 The GST is a big success story. It was one of the major reforms that India has undertaken. It
will have positive productivity impact.
 Direct tax compliance is also increasing.
 Tax reforms will further boost India’s productivity growth.
US-China trade war
 The world needs a large productive labor force to compete with China and to provide global
growth impetus. China provided that impetus for the past 30 years. Now India can play this
role. India will be the fastest-growing economy on a structural basis.
44
Many deltas operating in India

 According to Dr. Bhalla, to understand the change, we may have to look at the delta and not
the absolute levels.
 India is vastly over-regulated. But Dr. Bhalla sees much conversation in this context amidst all
sections of society.
 The IT sector in India performed very well. The major reason for the success of India’s IT sector
was the absence of regulation.
 According to him, India has taken the path of deregulation and in the next 5-6 years, the
country may reach a state where over-regulation may not be a relevant conversation
anymore.
India’s growth story, the story of political economy
 India has a stable government now after 20-30 years, with full majority.
 IBC, GST, labor and agriculture reforms, etc., are some of the major reforms that were not
possible earlier.
 The top leadership recognized that there is the problem of trust and bureaucratic control.
This may not end soon, but will surely fade progressively.
Managing bureaucratic control
 As per Dr. Bhalla, managing bureaucratic control is a process, and not an on-off condition.
 Bureaucracy in India is dominated by the IAS cadre. However, of late, many appointments at
the joint secretary level are from outside the bureaucracy.
 There is a constant inflow of meritocracy that believes in effecting change for the better.
 India was the most controlled economy globally, with many defending such a model.
 The change may not precipitate overnight. But similar to the unicorn trend, India may have
to recognize and encourage the change.
Government response to COVID-19 slowdown
 The first major response by the government was to provide free food grain to more than
800mn. For the poor, the food account for 60% of their consumption basket.
 The way consumer surveys estimate the price paid by the poor for food is PDS price, which
led to significant underestimation of the consumption expenditure of poor.
 As per Dr. Bhalla, free food grain has led to a 15-20% increase in the effective income of poor.
Is India ready for universal basic income?
 Dr. Bhalla believes India already has many components of universal basic income in the form
of PDS, MGNREGA, etc.
 India has a very effective Direct Benefit Transfer program. The leakage in benefits transfer has
declined dramatically.
 Dr. Bhalla does not believe in the universal nature of income support programs. According
to him, in India, we may have a more targeted income support program for the bottom 50%
population.
45
Bureaucrats and consultant nexus

 India does not subscribe to the consultant model largely, given the underlying belief that
they may not be the best of the lot.
 India’s growth may be led by people under 40s, especially young women.
Lack of skills and new education policy
 Lack of skills in labour force is related to the quality of education.
 India witnessed an unprecedented, large expansion in higher education. Whenever such a
large expansion precipitates in a short span, the quality of education is compromised. Expect
the quality to improve with time.
 Women are more productive and were held back for many years. They will emerge strong,
led by determination to win. The women will lead the India growth story.
 Women were held back on discriminated education access. At present, India ranks fourth
among total female STEM graduates – 42% of college graduates are women in India.
Modi government’s policy priority
Drinking water/toilet challenges were rampant in India, but policy direction of the
previous governments were not pivoted on such issues.
 The Modi government has achieved phenomenal success in this regard as the priority at the
top level has changed.
 Earlier, child nutrition concern was thought to be emanating from meagre food access.
However, of late, the realisation has set in that not food access but retaining received
nutrition and low nutrient quality are responsible for child nutrition concerns.
46
Dialogue #6: Inflation Red Herring
Supply chain and inflation

 The US supply chain disruption reflects strong demand. There is a very high correlation
between supply delays and output prices in surveys
 When we move beyond energy and automobile prices (volatile components of inflation),
we will see more long-lasting effects
Sergi Lanau
Deputy Chief Economist,
 The current disruption in supply chains and inflation dynamics were last seen in Japan after
Institute of International the Tsunami
Finance
 The story of the US is different from what is going in other countries due to very generous
fiscal support by the government
Hot housing market is still not reflecting in inflation numbers
 The US housing market is doing well. Housing prices are rising
 Due to the nature of the calculation of housing inflation, the rise in house prices is still not
reflecting in inflation numbers
 However, the homeowner will pass on house prices in rents, which will lead to a jump in
inflation. This will be more lasting than the volatile component of inflation like automobiles
Fed is very dovish – ignoring high inflation
 The Fed forecast 3% core inflation by end of the year. However, it is a very dovish view
 Core inflation is likely to stay at 4% by the end of 2021
 There may be more persistent inflationary surprises that may lead to an increase in yield,
especially longer horizon
One-off rise in treasury cash and fall in yield
 Cash balances in the hands of the treasury increased in excess of USD 1.8tn and that is
what was leading to the decline in supply of treasury bills
 However, the Fed is continuing to buy USD 120bn of securities per month; due to this,
there is a limited supply of securities in the market, resulting in the fall in treasury yield
 We expect excess cash balance in hands of the treasury to return to normal, which may
further push up yield
Similarities and dissimilarities with the Taper Tantrum
 During 2013, the Fed initially welcomed rising long-term yield
 But long-term yield overshot during the Taper Tantrum, beyond the Fed’s comfort zone,
which led to the September 2013 no Taper surprise. However, the Fed has not been vocal
about the rates this time around
47
Data tantrum
 To date, high frequency data has been mixed. Mr Lanau expects some positive surprise
from the labor market
 The labor market is still 5mn jobs short of the pre-COVID levels
 Correlation of payroll data with 10-year yield is high
 Strong recovery in the labor market can push 10-year yield higher
Fed lift off and EM
 What matters for Emerging Markets is that the US long-term yield and not just the lift off in
the policy interest rate
 EM will be in a mixed position in terms of how much money they can attract
 EM currencies appreciated post-Jackson Hole
 Lower EM vulnerability than in 2013
 Mr Lanau expects the first US rate hike in September 2023
 What matters more for EM is the rise in long-term yields rather than the announcement;
hence, the commencement of taper. If yield rises due to any other reason too, it will not be
good for EM
Inflation trajectory
 A 3% inflation forecast by the Fed is not possible by end-2021.The US will have inflation of
around 4% and a bit above 2% in the next two years
 The Fed policy of average inflation may have some impact on long-term inflation dynamics
 In the history of US inflation, it has proven hard to bring down high inflation. So, inflation
could remain stickier than what the Fed anticipates
 However, during the earlier episodes, high inflation was a policy choice
The Fed is Dovish – the possibility of de-anchoring inflation expectations
 The risk of inflation expectations becoming de-anchored lies in the Fed having to adjust
inflation as the Fed core team talks, not the way they think
Low probability of Powell being replaced
 Fed Chair Jerome Powell is dovish. It is hard to find any Central bank more dovish than
Powell
 He laid down the formula to allow inflation to move beyond 2%
 Before Donald Trump's presidency, every Central bank was re-appointed. However, Trump
broke the norm. Mr Lanau expects things to return to normal
US dollar outlook
 Interest rate differential is likely to determine trajectory of the dollar index. It is hard to think
of a scenario where the Eurozone grows so to make an interest rate hike possible
 US fiscal deficit is likely to shrink from record levels
 Every circumstance points to policy tightening in the US. Trajectory of the USD is up
48
Look at the US treasury supply

 According to Mr Lanau, the rise in cash balance with the US treasury was a one-off event.
He expects cash balance to return to a normal by the end of 2021. This will also drive long-
term yield higher
 He expects the Fed to begin taper in January 2022 and reduce it to zero by the end of
2022
China is not as focused on growth as it was
 China’s government has set an ambitious target of reducing net carbon emissions to zero
by the end of 2060
 Credit expansion of post-GFC will not repeat itself. There is realization in Chinese society
that they cannot keep growing at a record pace forever
 China was the major importer of raw materials and everything else from the emerging
world. The new green policy may tilt it in favour of commodities for green transition like
copper and lithium. There is a risk it may lead to price rise of some commodities
 The kind of huge response China implemented in 2015 was not replicated during the trade
war. There wasn’t a massive policy response either in case of a trade war or COVID-19
 China is concluding it doesn’t need to support the economy by widening its fiscal deficit
Growth is not a concern for India; RBI may hike rates by the end of FY22
 High frequency indicators suggest recovery is strong in the Indian economy. However,
returning to 7% growth in the medium term will not be easy
 The government’s fiscal stimulus was low compared to other emerging markets, such as
Brazil and South Africa. Debt sustainability is not a worry when compared to peers
 Inflation is a major concern. Core inflation is very high
 The RBI may reduce liquidity in the system by October. A repo rate hike is possible by the
end of the current financial year
49
Dialogue #7 : Preparing to Decouple from China
Decoupling from the US perspective: Bonnie Glick

 US intellectuals are increasing becoming comfortable discussing decoupling from China
 COVID-19 has provided a new perspective on how intertwined global economies have
become and how the dependent the world has become on China
 Decoupling means becoming less reliant on China for the key components supply
Bonnie Glick
 It is critical for global economies to look at the on-shore, near-shore, and allied shore for all
Former Deputy Chief
US Agency for of the components of their supply
International
Development (USAID)  Decoupling is required so that the world does not rely for key components supply on China
like what has happened since the start of COVID-19. First, it was PPE, then ventilators and
vaccine raw materials
Subsidizing companies for onshoring: Parikshit Luthra
 Onshoring operations, what President Joe Biden and even Japan, has been trying to do,
through subsiding companies, within Japan and the US
Dr Roy Chun Lee
Decoupling from EU perspective: Claude Smadja
Deputy Executive
Director, Taiwan WTO
and RTA Centre
 Decoupling is not a walk in the park: Decoupling is not easy. It is an extremely challenging.
It will cost a tremendous amount of money, time, efforts, technology and relationships to
build
 It is not happening currently
 Last year, China’s trade surplus increased 27% with the rest of the world. With the US it
declined by 7% last year, but this year to date, it has increased 22% compared to the
Claude Smadja past year
Former Chief, WEF,
Geneva
 What we are talking about is just political rhetoric
 Two contradictory things are happening in the US. There is decoupling from the
technological domain but in the financial domain, the relationship has never been more
intertwined. Last year, US financial houses invested USD 212bn in China; this year, US
investment in China is estimated to cross USD 330bn
 There is tremendous schizophrenia between the political and business classes between the
Parikshit Luthra US, the EU and Japan. On the business side, there is no impulse to decouple. The statement
Associate Editor, CNBC made by the US Chamber of Commerce and EU Chamber of Commerce is eminent proof of
TV18, Moderator this. The allure of China’s markets is inescapable
 Decoupling is an alien concept for ASEAN countries. China is the No 1 trading partner of
ASEAN and vice versa. ASEAN is 665mn people. As on June 2021, total investment
between ASEAN and China was USD 310bn. ASEAN trade with China is at USD 732bn
compared to only USD 292bn with the US
50
Decoupling is already taking place: Dr Roy Chun Lee

 Ever since the trade war started in late 2018, Taiwan’s companies are moving back to
Taiwan from China
 At least USD 10-25bn of return of investment concentrated in the IT sector
 Dell and HP laptops that were used to be manufactured in China are back in Taiwan
 Taiwan’s government has set up a single-window clearance and other mechanisms to
provide incentives to returning companies
 Taiwan is well aware of the security risk of deep integration with China. But the most
decoupling decisions are also motivated by economic reasons
 Decoupling is happening but not across the board. The first wave of decoupling has
become in some sectors
Decoupling is a global security priority: Bonnie Glick
 Most Americans recognize they are in a new kind of super power rivalry. However, the US
has not mobilized the nations as they did during the Cold War
 When the US was engaged with the Soviet Union, all parts of society, including the
financial sector, were engaged
 However, the financial institutions have not fully understood the ramifications of making
the US capital market available to the PRC
 The US financial institutions are funding IPOs of entirely non-transparent companies based
in China
 The recent crackdown by President Xi Jinping has highlighted the fragility of China’s tech
companies
 President Donald Trump had banned China’s technology companies like Huawei & ZTE
and cracked down on intellectual technology theft. President Biden is continuing this
process
 China does not want to be in the US limelight
 China’s companies stole intellectual properties around the world. This was part of the PRC
plan of global economic dominance through manufacturing and global supply of China
 While the world was sleeping, China mobilized the resources through its signature Belt and
Road initiative, starting from South Asia and then moving rapidly to Africa
 Decoupling is not the government’s job only. The financial markets will have to follow suit
 Decoupling is a step-wise process. Technology is the first step, but financial institutions will
have to withdraw from China
Everyone is on their own: Claude Smadja
 The US sees China as a threat to its world economic and political dominance. This is not like
the challenge that the Soviet Union posed at the time of the Cold War. The US cannot bear
the idea that a country will be equal to the US
 The geopolitical dimension of Europe is quite different from the US. The EU sees China from
a lens of partners and challengers
 There are many issues as they are two different systems operating with different modalities
51
 The EU recognizes if it is going to do World War III, it will have to live with China equally to
the US
 The key question in front of the EU is how to make two different systems coexist but
interact in a mutually beneficial way
 The US and the EU have many similar interests. They both have different interests in the IT
sector. The standards that the EU has taken toward tech giants are similar to the steps that
China is taking to some extent
 We will not have a united front of the US, the EU and Japan
 The interests of Japan are different. Japan plans to provide USD 22bn support to
companies for reallocation, but it is finding few takers. It does not make economic sense for
companies to shift to Japan due to the cost differential
 US companies that reduced dependency on China are going to Vietnam or Mexico, not to
the US
Redefining decoupling: Dr Roy Chun Lee
 Vietnam has become the next China for the manufacturing sector
 Decoupling is not the departure but redefining the relationship by reducing risks and also
by enhancing diversity in a balanced way
 Japan has a much more balanced supply chain than China. Every USD 1 Japan invests, one-
third goes to China, one-third to Southeast Asia, and one-third to the US. When Japan
suffered the economic heat of the Chinese protest to the island issue in 2012, Japan
realized the economic risks of concentration
 Around 80% of Taiwan’s investment used to go to China, which has declined to 45%
 We do a lot of business with China, but not only with China, is the key difference
 Advanced technology decoupling is happening. TSMC, the largest contract manufacturer
of chips, has decided to relocate; it has moved to the US
 According to the US critical supply chain report, production cost in the US is 40-70% higher,
so it is not possible to supply the complete supply chain to the US
 The US does not want the whole supply chain but the most advanced technological parts
Gateway house study
 The major countries –- the US, India, Japan and Australia -- will have some advantage over
China when it comes to semi-conductors, undersea data cable, pharma and fintech: for
report link, https://www.gatewayhouse.in/quad-economy-technology-task-force-report/
QUAD role in decoupling: Bonnie Glick
 We need to ensure there are incentives to collaborate. We all have much to lose
 We have to look at how Australia was punished when it asked for inquiry into the origin of
Coronavirus
 The Quad countries and other allies like Taiwan have to find a way to push back
 There are some areas where China has an edge. For eg, in critical minerals, the key
ingredient for battery manufacturing
52
 The US does not want to have all supply chains located in the US. There are economic
forces that are playing their roles. It is not looking for low-cost manufacturing to go back to
the US, but looking at near our shore or at allied countries
 The process used by China to extract rare earth materials for clean energy technologies is
devastating the environment. China’s extraction efforts in DRC and Pakistan have led to
toxic waste near human settlements and in water bodies. China is using slave labor at the
Uyghur labor camps for manufacturing. The US has recognized China is practicing a
campaign of genocide against the Uyghurs. The world is turning a blind eye
 China is acting like a bully on the international stage
How to deal with China on equal footing: Claude Smadja
 The first critical question is whether China is looking to dominate as the US did for the past
75 years or China wants to position itself as equal to the US. At the moment, it looks like
that China wants to do is the latter
 The risk mitigation strategy of the EU companies is to do more joint ventures with China’s
companies or increase the share of their Chinese counterparts
 Microsoft and Apple are two most compliant US companies in China, and similarly, BASF
 The way to mitigate risk is to delink Chinese operations from the rest of the world
 Armin Laschet, who is among the top three contenders to succeed German Chancellor
Angela Markel, said “give me the reason why Germany should stop dealing with China due
to the Uyghur problem”
Is there any country that can replace China? Dr Roy Chun Lee
 Vietnam is the forerunner
 All iPhones sold in the US were manufactured in China by Taiwan’s companies with
components from all over the world, including TSMC. The 11mn iPhones sold are trade
deficit to the US. But this value comes back to the US rather than stay in China. If the trade
is measured in direction of value, then it is all made in the US
Take environment and other costs into account: Bonnie Glick
 The critical metals, produced in China, required to generate infrastructure for green energy
have a huge environmental impact. We will need to take into account these issues when
we talk about green energy
 Decoupling is not an overnight exercise. Bonnie Glick does not agree with the concept that
the US is in great power conflict with China. The power game is when both parties are
playing the same game with the same rules. That is not happening in the current situation
 When it comes to decoupling there are moral and values-based considerations
53
Open strategic autonomy: Dr Roy Chun Lee

 The EU is pursuing an open strategic autonomy policy with China. The same strategy is
being pursued by China
 China is a planned socialist economy with Chinese characteristics and the heart of planning
is the strategic autonomy, which is removing technology bottlenecks from rivals and
competitors, namely the US, the EU and Taiwan
 China was not successful in achieving strategic autonomy in the semi-conductor sector but
it has been successful in electric vehicles and AI
Can economic power be isolated from political power?
 No, one cannot isolate economic power from military and geopolitical power
 Military and geopolitical power follows economic power
 All powers are bullies. It is only the power that sees themselves as benign but the rest of the
world see them as bullies
 The US has intervened militarily in many countries. So far, China has not done it
 The US exercises economic coercion all the time even with Switzerland. China has started to
exercise economic coercion
 It is the reality of real politics. A great power has no friends, it only has interests
54
Big Tech
55
Dialogue #1 : Defining and Regulating India's

Emerging Data Ecosystem
Technology vision
 The government’s fundamental vision for technology and internet is centered on: (1)
Openness, (2) Safety and trust and (3) Accountability. No legislation will disrupt the basic
dynamics of innovation in India.
 Covid has increased the digitisation pace tremendously and immense room exists for the tech
Rajeev sector to grow – Concurrently, the companies should raise their growth ambitions.
Chandrashekhar
 IT intermediary guidelines: IT intermediary rules are aimed at platforms being accountable to
Honorable Minister of
State, Electronics and their users and for grievance redressal. Australia has been at the forefront and passed its
IT intermediary law – Other countries may likely follow.
 Account aggregators will lead to credit democratization.
 India is the second largest manufacturer of mobile phones globally, also supported by state
government clusters. Cybersecurity is an ongoing challenge and the government is
collaborating with cross-border players to augment cybersecurity.
Manjeet Kripalani Data Protection Bill and data localisation

Executive Director & Co-  About 800mn Indians are online, which should likely escalate to 1bn connected Indians.
Founder Gateway House,
Indian Council on Global
Relations  In December, the Parliament will legislate the Data Protection Law. The bill has been under
Moderator JPC’s consideration for over 1.5 years. The last-mile deliberation is expected to be completed
and sent to the Parliament for debate and passing. Jurisprudence around data will become
obvious and evident after the Data Protection Bill is passed by the Parliament.
 Data localisation may spawn tremendous opportunities for creating public cloud
infrastructure and data centers in India. States are competing with each other to attract data
centers and public cloud investments. Many states have developed physical infrastructure to
support this growth – Infrastructure, is no more a challenge.
Skill development
 The government seeks to play the role of a force multiplier to prop skill development. As part
of its skill development initiatives, MeitY has developed a roadmap to train 9mn Indians over
three years on IT and electronics manufacturing, 3x the earlier targets.
Digital India has breached inter-ministry silos (such as Telecom, IT, Science & Technology) in
synergizing and building last-mile solutions through improved collaborations.
56
Dialogue #2 : Tech Enablers Rekindle Productivity
Digital-led economic recovery

 COVID-19 pandemic has shown that the country’s digital infrastructure is as vital as its
physical infrastructure as the economy has kept running based on digital payments and
contactless transactions
 It has yet to factor in global demand for India’s digital services (creating direct & indirect
employment at 1:4 tech:indirect jobs) is going to lead to recovery in the domestic economy
Nandan Nilekani
Chairman and  India’s post pandemic recovery will be driven by digital and aggregation of three factors: 1)
Cofounder, Infosys
the government’s digital platforms, 2) India’s global software & services of ~USD 200bn
Founding Chairman,
UIDAI (Aadhaar)
growing in the double digits after a long time, creating large-scale employment, and 3) a
thriving startup ecosystem
 India’s smartphone will jump sharply after Jio launches low-cost smartphone with Google
Public platforms creating the foundation
 Advanced & inclusive public digital architecture: Open and interoperable public platforms,
such as Aadhaar (largest digital identity) has been a big productivity boost, enabling 1)
Manjeet Kripalani authenticating ID & KYC, 2) direct benefit transfer, and 3) banking & payment system. India
has the most advanced and inclusive digital public infrastructure, and it is acknowledged
Executive Director & Co-
Founder Gateway House, globally. The National Payments Corporation of India (NPCI) has set up NPCI Global to take
Indian Council on Global
Relations, Moderator the UPI system and framework international
 Every country has chosen a different approach to technology globally. In China, there was
massive unregulated explosion of major companies and now the government is imposing
constraints on these companies. The EU has been at the center of tech regulations with the
General Data Protection Regulation 2016/679 (GDPR) and other data governance norms.
India has chosen the path of creating digital public goods or infrastructure and technology
development in alignment with regulations (Aadhaar, UPI, the FASTag and GSTN)
 Technology usually moves rapidly and can move faster than the government and
regulations, creating challenges as seen with the social media. Laws and regulations are
needed to empower and protect data – the Data Protection Bill is in the Parliament with
the Standing Committee
Fintech disruption
 In fintech, domestic as well as global companies will be competing for this market. It is
expected to be competitive (similar to multiple firms in UPI), and not like China’s “winner-
takes-all” market
 Account aggregator: Account Aggregator (AA) introduced recently by the RBI can be a
game-changing innovation, with democratization of lending. It will create neutral financial
intermediaries to orchestrate data from different providers for varied users. Competition
between lenders will increase, which will also be good for banks. Eight banks have already
joined the AA network.
57
Dialogue #3: Evolution of Big Tech
Startups to dominate: upward & onward

 From 2021 until 2025, we can expect 100,000 startups to create 3.5mn jobs, 200 startups
becoming unicorns and cumulative capital inflows of USD 150-200bn. YTD until August
2021, USD 20bn capital has come in with another USD 15bn expected during the rest of
the year. By 2025, startups are expected to be valued at USD 1tn; currently, there are
valued at USD 350bn
Sanjeev
Bikhchandani  In 2019, the world spent USD 2tn on digitization; post-COVID, digitization spend has gone
Cofounder, Info Edge up, resulting in India’s software services sector growing in the double digits and expected
to continuing that growth next year. Large corporate (including Reliance & Tata) are
investing in the startup ecosystem, which gives an added boost
 From 2014 to date, USD 70bn has been invested in venture and startups, with only 10%
contribution from India capital. Around 90% of capital inflows is foreign and reflects the
confidence in India’s startup ecosystem. Smart capital tends to back the disruptors and
moves away from incumbents
Mohandas Pai
Padma Shri Awardee Talent supply
Chairman of Manipal
Global Education,
 India’s tech talent pool will grow to ~10mn by 2030 from ~5mn currently. India’s talent
Former CFO of Infosys supply pool serving the largest economy is large. Out of 6mn technology people in the US,
mn are Indians; out of 5mn in India, 2.5mn are serving US corporations
 India has a huge supply of talent but the need for training is high; demand for tech skills is
in IT as well as non-IT fields while non-tech skills are not a supply challenge. Visa issues and
work restrictions has supported India’s talent pool find jobs and work opportunities in the
country; remote working has made the talent market more fluid
Manisha Girotra Business models
CEO, Moelis India
 Global vs domestic: The B2B business segments can compete globally despite being sub-
Moderator
scale; for B2C businesses, scale is more critical to go global. Startups in India also have
regulatory moat, just as other regions globally
 Value concentration: Some markets are natural monopolies with a network effect. In the
digital business, many are “winner takes all”, but in some markets, only capital is causing
consolidation.
 Profitability: Path to profitability is driven and determined by investor demand apart from
business dynamics. Spend on marketing, technology and network is advanced due to the
rapid pace of growth and market potential. These spend reflect as revenue expenditure
from an accounting standpoint, but should be assessed as capital expenditure
58
Dialogue #4 : e-Businesses Reboot in an AI Spring
Digital-driven businesses and platforms explode amid COVID-19

 Video and gaming have exploded during COVID-19; with internet penetration growing, it
is a natural tailwind for these categories for supernormal growth
 Over the top (OTT) has become the largest digital prepaid subscription model, which is not
Uday Sodhi
present in any other category, with growth rates of 20-30% pa. The OTT vertical is just shy
of 100mn subscribers, of which 80-90mn are paid subscribers
Senior Partner
Kurate Digital  Headroom persists for growth across digital verticals to reach from 200-250mn to 350mn
on online shopping. Digital penetration vs the eCommerce gap is high, which will be
bridged as it did in China a few years ago. Beyond Tier I cities, COVID-19 has changed
purchasing patterns, wherein online purchasing has gained traction with behavioral
changes
Praseed Prasad  People are researching online, which was not the case earlier whereby consumers research
Head of Search and offline and buy online. Value-wise journey in eCommerce remains an opportunity
Shopping, Google
 With powerful smartphones at affordable price points, computing power is strong with
RAM and storage, providing a fluid experience for users. This along with widespread
internet access with the cheapest data globally, a logistics network on point and
demographics of below 27-30 years of age remain key enablers for the digital era
 Shipments pre-COVID were a mere 60mn per month, which have surged to 100mn during
Tapan Acharya
the pandemic; they now stand at 150mn (incremental 50mn shipments/month are entirely
Chief Revenue Officer
Arvind Internet from Tier II and III cities)
Changing consumer behavior as well as newer ways of acquiring & retaining customers
 The customer journey map has changed wherein post an iPhone launch, retail units are
ready for sale in a mere 3-4 hours. Even home delivery as well as specified time home
deliveries have taken shape and brands identify customer map based on data to
Gaurav Nabh understand their needs and then decide whether to start niche and diversify or vice versa
Founder & CEO  Good brands manage to convey their story well, wherein 2-minute Maggi is marketed,
Korra
which in reality requires 15-20 minutes; however, consumer mindset is set to believe the 2-
minute story
 Digital payments have been the revolutionary step wherein selling products online is simple
using the Shopify site, Instagram handle with low investment and manageable
 Dynamics of marketing have changed, and with social media being the epicenter, many
Vivek Bhargava
brands have realized influencers’ posts have deep value in the minds of fans; hence, brands
C0-founder, ProfitWheel
Ex-CEO, DAN (Dentsu) not only give products and money to influencers, but also ask them to promote and push
Performance Group
followers to buy. The recommendation engine has become smart, with products being
pushed based on influencers you follow
 In case of digital platforms, retaining users remains key, as that determines the next growth
driver. Retention is the next big thing: 1) reduce churn by returning, and 2) building loyalty.
Gaming and OTT platforms have been fighting over capturing the most free time of the
Jasmeet Singh user. Retention can be done via tools, such as the net promoter score (NPS). Companies will
Gandhi
Head Global BD
try to retain users and invest alongside acquiring new users
CleverTap
59
Global insights and emerging new trends in technology

 Amazon has earned ~USD 28bn of advertisement revenue currently, which indicates
significant growth in eCommerce. The company has become a search engine for
eCommerce and eShopping like Google is for general searches. The industry is expected to
be 10x over the next 10 years
 Digital mediums have the primary measurements via clicks, transactions and views, but
relatively they have detailed metrics vs traditional mediums, such as TV, radio and
newspapers. Digital being the dominant medium today is a measurement that is proved to
be much better than other mediums
 User experience vs global apps: Top 6 categories include messaging, video, gaming and
music streaming. Although templates are used, key is to remove any friction in user
experience where gaana has done a good job
 Established and new apps: They will operate in their own way. High-powered tech is used
for stack
 AI is enabling technology, which uses data to create actionable insights. Digital adoption
has become fast over the past 1.0-1.5 years. Companies born during the COVID-19 era
have to deal with a lot of user & customer data wherein every app based on its own
analytical framework should process data and create actionable insights by understanding
1) customer actions & repetitive nature, and 2) ways in which people use tech. With AI,
apps can reach customers which can act upon the prompt
 Online buying is 2.0-2.5x more than offline buying. Predicting the next best action via AI is
the big thing for brands
 Like Paytm, Zomato too has millions of users; hence, based on data and needs, Zomato too
can do apps inside apps based on stack adding features across the customer journey.
India’s apps are doing a good job in this space
Optimizing lifetime value (LTV) to customer acquisition cost (CAC) equation
 Each category has its way of optimizing CAC wherein in niche products CAC might be
lower while those having competitors tend to have higher CAC. Companies need to look
for product margin and favorable positive unit economics with minimal impact by CAC
 Key monitorables for optimum CAC are 1) product margin, 2) type of category, 3)
competition, and 4) a fragmented market
 On the LTV front, key monitorables include: 1) marketing funnel, 2) how many people can
be reached, and 3) frequency of ordering. Usually, higher the use, higher is LTV and vice
versa
 LTV of customer will always be higher than CAC. Customer data needs to be looked from a
longer-time horizon and repeat value of customer. AI is being used unnoticeably by a
majority; hence, data-driven experiments to attract newer audience is necessary for every
brand and platform
 Accounting systems have changed wherein Amazon’s conversion rates for prime
customers is 90%, ie, many subscribers have been buying a product. Hence, in any loss-
making companies, if topline growth is halted, all start-ups will turn profitable with
avoidance of CAC; as a result, growth comes along with losses
60
 Expenses are majorly in the form of digital infrastructure, ie, operating expenses; hence,
accounting needs to be changed for capital cos and profit calculation for internet
companies with new definitions. Digital companies, if they were to invest in CAC and
marketing, all would be capital cost
 Companies, which are loss-making for years, once start turning profitable, tend to make
huge profit as they are disruptors and creating a new world. These companies cannot be
compared to traditional oil & gas and tyre companies, given the completely different mode
of operations as they are creating a market for themselves by disrupting existing business
models
Scaling up strategies for platforms
 As digital penetration goes up, the first type of content consumed is entertainment-related;
hence, an amalgamation of content alongside commerce will create huge value. Super
apps are already present with Flipkart & Amazon, and all big business houses willing to
enter the space
 In Tier II & III cities, search via voice, vernacular language-based search, social & video
commerce will drive eCommerce. Tier II & III cities have becomes far more important as
eCommerce scales up given that shopping is entertainment in India; hence, they will grow
much faster
61
Green Energy
62
Dialogue #1 : Steel, Hydrogen And Renewables:

Curious Symphony?
Iron & steel industry
 To reduce CO2 emissions, renewable energy can be used in the iron & steel industry
 Iron & steel industry is one of the largest worldwide; China accounts for 53% of the
production and India accounts for 6%
 After much brainstorming among different sectors like iron & steel, aluminium and cement
Dr Dolf Gielen it was concluded there is significant potential to deploy renewables in the iron & steel
Director of Innovation industry
and Technology
International
Renewable Energy  Currently, the bulk of the energy use is accounted by coking coal and coke (70%) and other
Agency coal products. The use of renewables is modest in the industry as on now
 The iron & steel industry is a major industry emitting CO2; hence, there is high need to
reduce emissions in this sector
Reduce CO2 emissions
 Carbon capture and sequestration (CCS) can play an important role, but the uptake today is
not great. For eg, CCS for blast furnace
 CCS for smelt reduction process is working in HISARNA TATA Steel Netherlands for
sometime
 One option is to use CCS for direct reduced iron (DRI). Eg: A plant in the UAE is doing it
 Another option is to use hydrogen for DRI
 Electro steelmaking is also an option (SIDERWIN – labscale)
 However, all these approaches do not lead to much reduction in CO2 emissions
Hydrogen DRI
 Hydrogen DRI is relatively new development
 Many projects around the world are being undertaken to use hydrogen
 In Sweden, there is an ongoing hybrid project and there also are a number of projects in
China, Germany, Austria and Australia
Green hydrogen for DRI production
 We need low-cost, large volume and clean hydrogen to make this technology successfully
produce from renewable energy through water electrolysis
 Cost of renewable electricity and cost of electrolyser are two key factors for clean hydrogen
 Some electrolyser manufacturers have said cost may fall to USD 200/kW in 2050
 Electrolyser efficiency may improve to 45 kWh/kg
 There is still a long way to go for this strategy
63
India’s role
 India has an important steel industry with 110mn tonne of steel production
 Also, it has the largest DRI production, which is largely coal-based
 It is different from other countries where DRI is produced from natural gas
Options for decarbonizing steel in India
 There is potential to reduce 90% emissions in India by using hydrogen-based DRI
 Low-cost hydrogen is critical to make this transition to work out
 People all over the world are optimistic hydrogen cost will fall in a meaningful way in the
future
 In case of India, the impact of moving to hydrogen-based production will be significant
 Around 240-720GW additional solar & wind power generation needed, which is a sizeable
capacity
 The question is whether such high capacity can be added to already high electricity
demand in India
Alternative option to import DRI
 One idea is to trade hydrogen, but hydrogen shipping is costly. It doubles production cost.
So, it does not make sense to import hydrogen
 Today, half of global iron ore is mined in Australia
 There is an option to use potential renewable energy expansion in Australia to make DRI
and then import it in India
 Implications: There will be a need for 10-fold increase in power generation capacity in
Australia
 Also 10,000sqkm needed for solar & wind, which is 0.1% of total Australia land area
Incentivize green steel manufacturing
 There is a large number of customers are asking for green steel
 The first shipment of green steel from Swedish facility went out two weeks ago
 Customers are willing to pay the premium price
 For time being, the green steel is more expensive than normal
 The question is whether how many customers are willing to pay the premium price
 We need standardization and certificate system to certify green steel for global expansion
 We might need targeted support system until prices climb down
Cost of green steel vs normal
 The most expensive cost factor for green steel is hydrogen and cost of hydrogen depends
on renewable energy
 In Sweden, it has cheap hydro power so that it is playing out well there, and it is a unique
situation
64
 Hydrogen price is expected to be USD 1.5/kg in a few years and 8kg of hydrogen is
required for 1 gigajoule (GJ) which takes the price to USD 12/GJ while cost from natural
gas is in the range of USD 5-10/GJ
 Hydrogen is still expensive than natural gas while natural gas is a premium fuel than coal
Trade value chain
 Carbon border adjustment mechanism discussions are underway in Europe
 Europe’s steel producers will face the same CO2 price as steel importers
 It is still under development and it is controversial
Battery manufacturing – role of green hydrogen
 Cost of a number of battery materials are going up because of high demand
 Iron phosphate batteries are gaining traction as iron is a cheaper material
China adoption of green steel
 There is increased queries to produce green hydrogen in China, which is a new
development in the past 1-2 years
 There is even one hydrogen DRI project in China
 China is also looking at it as huge potential for manufacturing
Green hydrogen Mission announced by India
 It is encouraging
 Main challenge will be huge need of renewable energy
Other key highlights
 In the long term, the shift to green energy is inevitable and the only question is how quickly
will it happen
 There has been widespread increase in renewable energy
 There is positive response from Australia to bolster renewable energy
 The use of fossil fuels like gas and coal are expected to decline significantly, owing to
increased use of hydrogen
 The inflection price of hydrogen of USD 1.5/kg can reached by 2025 as stated by OEM
 There is a pipeline of 200GW of electrolyzing capacity currently; the world needs thousands
of GW of capacity. So, to put it positively, there is huge market potential
 There are a lot of MOU and bilateral trade agreements being signed
 A number of emerging markets see this as an opportunity
 Ammonia projects are being developed
65
Dialogue #2 : India's Energy Transition
Three Challenges in India’s green energy transition

 Energy access: India is a deeply energy-poor country. There is far less electricity per capita
consumption than the US and China
 Air pollution: Local environment externality
 Climate change: Green energy in large part is motivated by an attempt to solve the
Dr Anant problem of climate change
Sudarshan
Executive Director Energy access challenge
(South Asia)
Energy Policy Institute  No country in history has grown richer without using energy
at the University of
Chicago  The relationship between GDP per capita and energy consumption is high
 India has achieved something extraordinary. It has connected 300mn to grid electricity in
the past 10 years and achieved almost 100% electricity access
 But the quality of electricity is poor. In 2018, an energy access survey found that most
states, especially in North India, had low-quality power (defined as approximate eight
hours)
 Power surplus, projected by the government as success, is a sign of deep failure
 Capacity utilization of the power plan is no way near 100%. Coal power plants are unable
to find buyers of electricity. We do not need to build power plants to supply more power
 India continues to invest in fossil fuel-based power plants
Air pollution challenge
 There is no environment growth trade-off when it comes to air pollution whether that be
an additional mandate on fossil fuel or air purifier equipment
 Cost of energy pollution is quite high. We just do not count the health and productivity cost
of air pollution
 Around 40% of India’s population is exposed to pollution levels not seen in history. About
30% of school children in Delhi have found to suffer from asthma
 Air pollution is linked to lower cognitive performance
Climate change challenge
 Historically, India has the view that there should be a notion of common and differentiated
responsibility. Most of the heavy lifting should be done by the historical emitter and rich
nations. This view has changed somewhat during the current government
 India is the third-largest emitter today. It is one of the countries most affected by climate
change
 If we do not do enough, we as a country will suffer the most
66
Cost of climate change in India

 Productivity and crops will be affected.
 Heat-related deaths will rise exponentially
Incorporating externalities into the price of coal
 Back-of-the-envelope calculations suggest the natural gas marginal cost of electricity is far
less than coal when we include cost of air pollution and climate change
 The 2020 Gujarat Solar auction price for electricity was INR 2 per KwH, well below the true
cost of fossil fuel-based electricity when we take into account externalities cost
Are high renewable scenarios technically possible? The answer is Yes
 India can generate much more renewable power than the official target
 The difference under various scenarios will come from renewables and energy efficient
technology
Structural weakness holding India’s green energy transition
 Although India’s green energy transition is necessary and technically feasible, the following
structural weaknesses are holding it back
 Dysfunctional distribution sector
 Significant grid integration cost
 Weak structural incentives
The power distribution market in India is broken
 Distribution companies are running incredible losses year after year in every state. In
December 2020, dues were estimated at INR 1.27tn by ICRA
 Despite several bailout schemes by Central and State governments, the sector continues to
lose money
 India remains crippled by unreliable power and low capacity utilization – being “power
surplus” is not a sign of success in a country with 2019 per capita electricity utilization of
1,181 KWh/capita vs 5,161 KWH/capita in China
 Limited use of demand managed policy, time of day pricing, smart metering, theft
reduction – all critical to developing a flexible grid
 Distribution utilities lose money for every unit of power supplied
 Grid flexibility is key for successful renewable energy sector
Institutional weakness
 There are many legacy coal power purchase agreements, which means the distribution
sector is less flexible than ideal
 Hold-up problem: States are inclined to renegotiate the contract. According to 2021
estimates, the counterparty risk of states is estimated to raise prices by 10% and reduce
investment. The auctions intermediate by the Center have low counterparty risk
 India needs meaningful structural economic incentives designed to achieve political
promises and international commitments
67
Grid integration is a huge challenge

 Significant transmission grid constraints prevent the movement of electricity in India,
especially from energy surplus South India to North
 Relatively flat load response curve is poorly suited to accommodate large renewable
generation. For solar, we require peaks in the daytime, seen in many developing countries.
However, power outage is the norm and India can manage it to some extent. Agriculture
use can be tuned, accordingly
 Reaching targets of 175GW capacity (100GW of solar & 60GW of wind) may be feasible.
Going beyond will require significant reform and investment
Market-based framework to enable green energy transition
 India’s energy transition to date is completely dependent on political will. This increases risk.
The growth case for renewable is strong, however, we do not have structural incentives
 India is remarkably well placed to use a market-based framework to guide clean energy. A
cap-and-trade market with just 693 participants – thermal power plants and designated
consumers – would produce a market about as large as the EU-ETS
 China has announced a specific market to achieve its targets
 India’s carbon market will look significantly different from the EU and the US. India is going
to be generating and emitting more carbon with greenhouse gas intensity declining over
time. So, we need a market that allows for growing emissions to accommodate entrants –
but setting caps along a defined trajectory can ensure there is a continuous incentive for RE
generators and the government
 Important for the private sector to see a transition to structural incentives instead of relying
on (variable) political will
Electricity subsidy as lumpsum transfer in the agriculture sector
 The lumpsum transfer to farmers is equivalent to the power subsidy. It is likely to be quite
popular among farmers as well as politicians. Farmers can use cash to buy other things.
However, there is huge resistance from distribution companies
 The pilot project in Rajasthan has been successful. A much larger project is currently
underway in Punjab
Role of natural gas in India’s green energy transition
 Dr Sudarshan is not too optimistic about cost of energy storage coming off significantly any
time soon
 There will be huge reduction in natural gas cost due to significant investment in ports and
other infrastructure. There is no case for continuation of coal
 Dr Sudarshan believes the share of gas will increase. India needs gas and renewables.
Hydro should replace coal. It is disappointing to see any new coal capacity coming up in
the country
68
Privatization is not the solution

 Privatization of utilities is not the solution. There is a selection bias when we compare
private and public utilities. Private companies want utilities that are well managed
Developing vs developed market challenge
 In the developing world, grid integration will require huge investment. The distribution
sector is not up to mark in the developing countries for the green energy transition
 These are not problems in the developed world
 Is green metal supply a constraint for green transition?
 The world will find a solution to scarcity. Demand will drive the solution
69
Dialogue #3: Potential of Hydrogen in India's

Economy
Why hydrogen has taken investment world by storm?
 Clean energy
 Addresses a big gap we already have – the intermittency of renewable energy, EV do not
address the whole transport fuel transition
What options does hydrogen give to auto industry?
Hormazd  Zero carbon emissions option

Sorabjee
 Battery electric vehicles (BEV) are addressing zero carbon emissions, but there are
Editor, AutoCar India
questions regarding their range and battery cost, especially for commercial vehicles
 Hydrogen is the new fuel compared to petrol & diesel and when cost comes off we can see
hydrogen filling stations
Primary challenges
 Range of the vehicle
Jennifer Gnana  Infrastructure not yet developed
Energy Editor, The
National, Abu Dhabi  Green hydrogen is expensive and should come off to USD 1-2/kg for it to be commercially
viable
Potential of green hydrogen in carbonized sectors
 Probability of replacing fossil fuel in petro refining, fertilizer and steel industries
 Chances of stranded capacity are much less since producers of green hydrogen will be
producing a product that is in high demand
Amit Bhandari
Fellow, Energy &  Green hydrogen will be costlier than methane depending on what is the push – is there a
Environment price for carbon, regulatory push to reduce carbon footprints?
Gateway House
Thoughts on when we can reach economies of scale

 Hydrogen-powered vehicle is cheaper. Batteries are expensive. Huge cost of infrastructure
should come off for popularity of hydrogen vehicles.
Thoughts on consumers
 In cost-sensitive markets like India, consumers are focused on cost, not on the environment.
If hydrogen is viable from the cost side in the long run, they will take it
 The same is happening with EV currently as cost of running EV is less than petrol and diesel
vehicles
 Overall hydrogen vehicles can be popular with consumers if overall cost comes off in the
short to long term, and accommodative regulatory policies are undertaken (for eg, tax
exemption)
70
Global scenario and India

 We can see ~5x jump in hydrogen production in the EU after 2022
 In India there will be lag as technologies are modified to suit markets here
 Hydrogen will not replace coal in India in the near to medium term unless there is a sharp
shift in production technology or regulatory change
 In the near term, the most impact on India’s auto sector since hydrogen is an alternative to
diesel and petrol as fuel – not batteries
Hydrogen for public transport
 There has to be strong cost efficiency, regulatory policies and incentives to shift toward
hydrogen.
 Attractive for commercial vehicular operators as maintenance cost will be low
Government and hydrogen policies
 Groundwork is to be done by introducing technology to the public
 Pilot projects are planned and guess is first green hydrogen project can come up in
Mathura, Uttar Pradesh
 But we are still few years away from hydrogen on the road
Hydrogen for domestic use or exports
 Better India produces hydrogen for domestic use to partially lower dependence on oil
imports
 Alternative to EV, which have some technological issues
Charging infra for CV
 Easy to charge at home. Otherwise charging infra is a big issue
 But problems remain with distant charging stations over long distances
What opportunities does hydrogen present to investors?
 Over longer distances where commercial vehicles are used, utility of battery diminishes due
to its weight. Hydrogen can be a good substitute there
 In urban conditions, smaller vehicles have an advantage in using battery
How much investment needed for hydrogen infra and can existing infra be upgraded?
 Existing infra cannot handle hydrogen production apart from some exemptions like
fertilizers and steel sectors that currently produce ~6mn tonne of hydrogen produced from
crude products
 CNG networks can be used for producing hydrogen for 15-20% of consumption without
the performance deteriorating
 Beyond this, new investments are needed
Norway lowers hydrogen price to USD1.5/kg by 2025: how does it change the dynamics?
 It can outcompete petrol & diesel if there is infrastructure
71
What should government do to manufacture green hydrogen?

 Good start would be to not force the industry to make suboptimal choices
 It is important not to get locked in big investment. Pilot projects are the way to go
 Understand safety measures, build infra and take queue from EU’s application of green
hydrogen
Necessary & adequate conditions for green hydrogen to hit inflexion point in India & EM
 To produce 1kg of hydrogen 50 units of electricity is required
 The EU will take at least 4-5 years for this technology to be adapted and add a few more
years on top of that for India
Success stories
 Norway economy is influenced by hydrogen power, including trucks as well as ships
 Three hydrogen manufacturing plants were commissioned in France, Netherlands and
Germany at 10-20MW
 Siemens has developed a train that runs on hydrogen
 Hyundai and Toyota have built trucks that run on hydrogen
Final thoughts
 India lags Developed countries, and there is cost issue in adopting hydrogen vehicles. It will
take time due to huge switching cost for customers
 India lags but can have the second-mover advantage to see what other Developed
countries are doing with this technology and its applications. It is good to wait-and-watch
mode
72
Metals & Minerals
73
Dialogue #1 : Mine the Metals: Global Perspective
Global steel industry outlook

 Post COVID-19 pandemic, steelmakers across world cut production due to sharp
contraction in demand. However, gradual recovery in demand with the start of opening of
economies amid lower production led to supply shortage, thereby leading to a rise in prices
 In recent times, end-user industries of steel have shown resistance toward continuous rise
Paul in steel prices during the past year; accordingly, steel prices are likely to remain range-
Bartholomew bound in the near term
Senior Managing editor,
S&P Global Platts  Supply chain issues across the globe are now getting resolved, downstream manufacturing
as well as construction activities also are picking up
 Steel prices in Europe have dipped marginally in the past few weeks, affected by soft
demand due to the Summer season, holidays and muted demand from the auto industry
on semi-conductors shortage. However, S&P Global Platts expects steel demand to revive in
Q4CY21, which should lead to improvement in prices in Europe. Anyone buying steel
today is unlikely to get delivery of the same prior to Q4CY21
 Weak domestic demand and favorable exports prospects with healthy demand and higher
prices prompted India’s steelmakers to push more exports volume during the past year.
Further, robust global steel prices and supply shortage in domestic market led to sharp
price rise in past one year. S&P Global Platts believes India occupies a favorable position
when it comes to exports of steel and its products
 India’s steelmakers are likely to ramp up production this year, which should improve supply.
Therefore, rising supply along with the recent correction in China’s steel prices are likely to
keep India’s steel prices flat until Q4CY21. On the other hand, the upcoming festival season
is likely to support domestic steel demand
 In the US, steel production is gradually improving and the current utilization levels are
~85%. As several steelmakers are likely to go for maintenance in the upcoming weeks, near-
term supply is likely to come off. Crude steel capacity addition is unlikely to occur and most
steelmakers are expected to focus on downstream products
 The US government’s robust impetus on infra projects is likely to drive steel demand. The
American Iron and Steel Institute envisages incremental demand of ~17mn tonne may
come from the highway projects itself. Apart from infrastructure, strong demand from the
auto industry is also expected to boost steel demand in the US
 Currently, US steel prices are around all-time high and higher than other regional prices,
due to supply-side issues. Given the significant rise in steel prices, end-user industries of steel
in the US are lobbying with the government to remove Section 232 to improve imports. As
on mid-August, the price difference between US domestic and South Asia HRC prices was
USD 1,075/tonne. Accordingly, exports from Vietnam have improved as despite paying
import tariffs these companies are able to make good money
74
 Supply of steel in the US market is tight. Getting normal HRC in the US is taking more time
of at least eight weeks and for high value products about 12 weeks
 S&P Global Plates believes pent-up demand and firm prices are likely to continue in the US
and Europe in CY22
 Although August is a weak month in China, steel demand has contracted higher than
expected. Some key reasons are: 1) the recent rise in COVID-19 cases, 2) slowdown in infra
projects, 3) contraction in manufacturing activities, and 4) softness in the housing segment
 With China government’s strong impetus on achieving carbon emissions norms and
renewed focus on quality rather on quantity, cut in steel production is visible; accordingly,
S&P Global Platts has revised CY21 production growth to ~2% vs earlier estimates of ~8%.
This is the first year of current Five-Year Plans in China; so, the situation is likely to improve.
The Geo Circulation Policy in China states steel production should be reserved to meet
demand of domestic customers similar to India’s Make in India policy
 As per S&P Global Platts estimates, for Q3CY21, China market’s crude steel output should
be 260mn tonne, iron ore imports at 290mn tonne, domestic rebar prices at USD 804-
850/tonne and HRC at USD 878-924/tonne. Iron ore imports for Q4CY21 are likely to be at
278mn tonne
 Steel prices in Japan depend primarily on auto demand, and, given current softness in the
auto industry, prices are likely to remain weak in the near term. Apart from this,
construction activities have fallen with COVID-19 induced challenges and lower labor
availability, resulting in soft steel demand
 There is a lot of excitement around green steel, but it is still in the early stages. S&P Platts
believes acceptance of green steel will gain momentum gradually over the next 5-10 years.
Currently, EU countries are serious on decarbonization, and they are setting tough targets.
As a result, EU steelmakers complain about not getting a level-playing field vs other
countries’ firms. S&P Global Platts believes to improve green steel use some incentives will
be offered by the governments so that cost does not blow out of the proportion
Iron ore and coal outlook
 China’s announcement of production cut led to speculation of steel supply shortage; as a
result, prices of steel as well as iron ore surged sharply. Beside this, lower production by
major global iron ore producers has triggered supply constraints and pushed iron prices up
 Iron ore prices after breaching USD 200/tonne have corrected in recent times and S&P
Global Platts believes fundamentals do not support prices over USD 200/tonne. The reason
why prices fell is that China’s economy is weaker than expected and the seasonal lull is
worse than expected
 S&P Global Platts believes the focus on ESG is to keep a check on new capacity addition;
thus, iron ore supply is set to remain tight for at least the next five years. While it is being
anticipated that in China scrap will start replacing iron ore and construction of electric arc
furnace (EAF) will gain pace, S&P Global Platts says this should be gradual and any
meaningful progress is unlikely in the near term
 Last year, Rio Tinto, a leading iron ore producer, had destroyed sacred indigenous site in
Western Australia, which created huge uproar. Thus, Rio Tinto has become more conscious
their blasting and mining activities. There is a lot more dialogues between the miner and
the local community. This is expected to slow projects
75
 Vale, other leading iron ore producer, is also expected to struggle to reach its production
targets this year. Apart from this, there are lot of big mine replacement ongoing projects in
Australia, but there is likely to be a gap between supply coming on stream and being taken
off. New iron ore supply will be modest in CY22 and depend on whether Vale will be able
to bring back production. In the best case scenario, Vale could add ~30mn tonne of supply.
Other major iron ore producers are unlikely to see major production increase in CY22. Thus,
supply is expected to remain tight in the medium term, which is expected to support prices
 China’s ban on imports of Australian coal as well as supply constraints from Mongolia,
which is another major supplier, are key reasons for the sharp rise in coal prices in China.
With China is focusing on its own domestic coking coal production, it is unlikely to lift the
ban on Australian coal imports in the near term. As a result, Australia is targeting US and
Canadian end-users for its coking coal
 In the past two years, investors have become reluctant to invest in coal projects to fulfill
their ESG compliance. Many large firms, such as BHP Billiton and Rio Tinto, are moving
away from thermal coal business. Accordingly, coking coal supply is likely to tighten in the
upcoming years and this may pose challenges for countries like India, which rely heavily on
imported coal. Overall, with limited supply, coal prices are likely to remain elevated
76
Dialogue #2 : Mine the Metals: China Angle
What is happening in China’s steel industry?

 China’s steel prices have moved up meaningfully during the first five months of CY21 and
peaked in early May. After that, prices have fallen slightly but rebounded in July amid weak
demand and strong expectations of supply shortage on a likely cut in steel production by
China. However, prices in August remain volatile, owing to soft demand and reduction in
cost of production
Tina Tong
Manager, International
 China has witnessed a fall in production of crude steel, pig iron and other steel during May-
Market, SteelHome July 2021 after the government’s efforts to curb production. Further, in July 2021,
operating rates of blast furnaces and electric arc furnaces have fallen to ~90.8% and 84.4%,
respectively, registering a fall of ~2% MoM each. During August 2021, the operating rate of
blast furnaces declined further to ~90.3% while for electric arc furnaces to ~83.6%
 China’s steel demand has moderated in recent times. As per SteelHome, the key reason
behind weak demand has been the decline in all major economic indicators, ranging from
infrastructure to manufacturing, property, excavator sales, cement production, auto
Chen Yan
production, house appliance products, and exports of mechanical and electrical products,
Deputy General
Manager, SteelHome in the past few months
 Sales of excavators, a lead indicator of construction activities, has seen a decline over May-
July 2021 (domestic sales of excavators has declined YoY during April-July 2021). Cement,
which is closely related to infrastructure construction and property sector, also has seen a
YoY production decline during April-July 2021. Similarly, production of automobiles and
refrigerators in China also has decreased during the same period. The production growth
rate of other appliances, such as washing machines and air conditioners, also has fallen
 On the exports front, new exports order index in PMI in July was 47.7 below 50 for three
months in a row. It reflected heavy pressure in export shipments
 Due to weaker-than-expected demand, HRC inventory in August was at the highest levels
compared to inventory levels in the same month of the past six years. In case of rebar while
August 2021 inventory levels are lower than that prevailing in August 2020, it was higher
than inventory prevailing in August during 2016-20
 In recent times, the price gap between iron ore and coking coal has widened where iron
ore prices have fallen vs the sharp rise in coking coal prices. As a result, cost of steel
production has fallen. However, elevated coking coal prices and the likely rise in iron ore
prices with receding expectations of production cuts, cost of steel production may increase
 About 46 China ports have 130mn tonne of imported iron ore and based on the July run
rate of production inventory is expected to last for a month
77
Key measures being taken by authorities

 On 30 July 2021, China’s Central Politburo held a meeting to analyze the economic
situation and allocate work to respective authorities in H2CY21. In the meeting, the
Politburo requested authorities to take steps related to four key concerns:
 Economic pressure: Conduct cross-circle adjustment in macro policy, to sustain
continuity, stability & sustainability in macro policy, and keep connection of macro
policy in 2021 as well as 2022, and to enhance efficiency of fiscal policy. SteelHome
believes stability will be the key focus of the government over 2021-22
 Weakening expectations toward reduction in crude steel production: Enact carbon
peaking and carbon neutrality in an orderly fashion and work on a carbon emissions
reduction action plan before 2030, instead of blindly cutting carbon emissions. Curb
irrational development in energy-intensive and highly polluting projects
 Interference from macro policy: Control against commodities will be balanced between
crude steel production reduction and securing supply & stabilizing prices in the second
half of the year
 Weakening demand for property: As house is not for speculation but for living, focus
on stabilizing prices of house and land to introduce a steadily healthy development in
the property market. With slower investment growth in property development,
demand for steel will weaken. However, there will be no possibility for dive-in demand,
as STABILITY remains priority of the macro policy
 Currently, China is focused on rising imports and reducing exports. Accordingly, on 1
August 2021, the authorities cancelled steel exports rebates for steel products. As per
SteelHome, exports in H1CY21 stood at ~37.4mn tonne, which is likely to fall to 26mn
tonne in H2CY21. Steel mills are asked not to increase exports vs last year
 On 5 August 2021, China Iron and Steel Association (CISA) held a meeting and directed the
steel industry to focus on self-discipline. With an intend to restrain irrational price hikes in
raw materials and maintain normal order and industry chain, CISA asked to monitor 1) steel
products demand, 2) import or exports, 3) prices of steel as well as raw materials, and 4)
inventory movement
 In another meeting on 19 August 2021, CISA issued several directives on exports and asked
steelmakers should 1) control exports to secure domestic supply and reduce energy
consumption, 2) optimize structure for reducing exports of common products, 3) advance
efficiency by exporting high-edge products, 4) strengthen management via constraining
exports, and 5) take action to keep exports market order
 In recent times, China has faced several challenges, such as extreme weather conditions,
serious floods, new cases of COVID-19, commodity price fluctuations and complex
international economic situation. Therefore, on 16 August 2021, the State Council of China
has asked regional governments and concerned departments to implement Central policies
to maintain healthy movement of economic activities
78
Outlook
 Major economic indicators are headed down, lower than market expectations. Steel user
industries are also witnessing a slowdown. Production in auto, machinery and house
appliances reported a YoY decline reduction in production. Macro policy was stricter
against the property sector. Thus, the steel market reported sluggish trading and slow
destocking pace. Expectations on steel demand revival in September 2021 will not be
realized
 This year marks 100th anniversary of the founding of China’s Communist Party, so there is a
rush for project construction activities before July. After mid-year, there has been a
slowdown in project construction. SteelHome believes at the end of the year there is
increased likelihood of an acceleration in project activities
 China has added new debt of ~RMB 1.3tn over January-July 2021, which is lower than
January-July 2020 at ~RMB 2.3tn and January-July 2019 at ~RMB 1.7tn. SteelHome expects
demand revival through this newly added debt will be limited in the short term, but it
should bolster infra projects in Q4CY21 and Q1CY22. Further, it can be utilized in advance
during CY22 if economic growth remains under pressure
 Iron ore price downfall has reduced cost of production of steel. However, with weakening
expectations toward steel production cuts, iron ore price are expected to rebound
 Steel mills in China were issued orders if they do not curb exports, then they would be
levied with high tariff. Thus, exports are likely to fall due to removal of exports benefits,
recovery in production in the rest of the world and threat of levy of exports tax
 China’s coking coal supply is tight at the moment due to Australian supply ban, distance of
coal supply from Mongolia and lower domestic coal production due to stringent mine
safety checks across the country. Coking coal inventory in China is adequate for another 10-
12 days. Coking coal and coke price are expected to remain firm, due to limited inventory in
China and supply disturbance
 CISA’s attempts to reduce steel exports may bring in supply in the domestic market, but it
will be unfavorable for domestic steel prices in the short run
79
Dialogue #3: Mine the Metals: Domestic Narrative
India’s steel industry outlook

 India’s steel industry witnessed a contraction in production and demand by ~6% YoY each
during FY21 due to COVID-19 induced disruptions. On the other hand, muted domestic
demand and better exports prospects encouraged domestic steelmakers to tap global
markets, thereby resulting in a surge in exports by ~62% YoY in FY21. However, imports fell
~31% YoY in FY21 on weak domestic demand
Dhruv Goel
CEO, SteelMint  Steel production in FY22 is likely to be healthy on the back of 1) expected recovery in
domestic demand, 2) rising production from large steelmakers, and 3) revival in production
of small mills
 Over the past year, small mills have faced challenges in operating plants, owing to weak
demand and a sharp rise in iron ore prices. However, the recent correction in iron ore prices
is favorable and is likely to support the rise in production
Nishtha  Weakness in domestic demand caused by the Second Wave led to higher exports during
Mukherjee Q1FY22. India exported more than 2mn tonne per month of steel over June-July due to
GM Pricing & Index, higher exports to the EU. Nevertheless, exports is expected to weaken in the upcoming
(Iron Ore & Scrap),
SteelMint months, due to 1) gradual recovery in domestic demand, 2) exceeding exports quota limit to
the EU, 3) fall in demand from some other traditional exports markets like Vietnam, and 4)
logistical constraints with the sharp surge in freight rates, stringent quarantine norms and
lower availability of containers. Therefore, exports in FY22 may fall slightly by 1mn tonne YoY
to 18mn tonne. Imports is likely to remain at the FY21 level
 Freight rates have increased sharply. Billets exports from India to China 5-6 months ago was
done at a freight rate of USD 15-20 but now it is at ~USD 80. Availability of containers and
bulk vessels is another issue faced by exporters and importers. Freight rates are likely to
remain high for the next 3-4 months
 The slowdown in construction activities in the domestic markets during Q1FY22 resulted in
softening of long products prices; however, flat products prices remain higher during the
same period backed by strong exports prices
 Price spread between hot rolled coil (HRC) and cold rolled coil (CRC) in a normal course
should not be more than INR 5,000-5,500, but it moved up sharply to INR 16,500 in June
2021, due to demand-supply imbalance, and EU customers were willing to pay higher prices
because of quota restrictions. With easing COVID-19 restrictions in the EU, demand for
consumer durables had increased, which, in turn, bolstered CRC demand. However, in the
past 1-2 months, the price spread between HRC and CRC has narrowed
 SteelMint expects Q2FY22 steel production to be ~31mn tonne for the industry vs ~27mn
tonne in Q1FY22. In Q3FY22, steel production is expected to rise further, led by improvement
in construction activities
80
 Domestic long products prices in the near term are likely to get support from post-Monsoon
revival in infra projects; thus, any major fall from current levels may not take place. However,
prices of flat products, primarily CRC, may witness some correction in October. Further, the
recent correction in iron ore and pellet prices has turned favorable for small mills; hence,
uptick in production is expected from these mills to keep prices under check
India iron ore industry outlook

 Iron ore production fell ~17% YoY to 203mn tonne in FY21, primarily due to lower production
from Odisha as auctioned mines took time to start operations due to COVID-19 and other
issues. However, iron ore exports jumped ~60% YoY to ~60mn tonne, aided by improved
exports from Odisha, led by higher global prices and selling by auctioned mining leases to
clear inventory
 Iron ore production is likely to revive and should be in the range of 245-255mn tonne in FY22
on the back of 1) improved steel demand, 2) NMDC’s plan to increase its iron ore production
to 40-45mn tonne vs ~33amn tonne in FY21, 3) an expected rise in production from Odisha
Mining Corporation to 30mn tonne from 13mn tonne in FY21, and 4) increasing production
from large steelmakers, such as Tata Steel, JSW Steel, Steel Authority of India (SAIL) and AM-
NS India. Apart from Odisha, production also is likely to move up in Chhattisgarh, Karnataka
and Jharkhand
 FY22 iron ore exports is likely be lower YoY at 50-55mn tonne vs 60mn tonne in FY21, due to
the recent slowdown in exports bookings on account of production cuts from China along
with continued stringent quarantine norms and container availability issues. Simultaneously,
the decline in realization with correction in global iron ore prices as well as nil exports by
NMDC are likely to drag exports
 Lower exports booking and the sharp fall in pellet export prices recently have prompted
several pellet firms to divert volume to the domestic market, leading to higher supply and
correction in domestic pellet prices. India had nearly 1mn tonne per month of pellet exports
 Lower pellet prices in the domestic market coupled with the decline in exports realization for
iron ore as well as pellet have led to the dip in iron ore prices in the past two months. A major
price decline has been witnessed in Odisha
 SteelMint believes fall in iron ore prices is to be partly cushioned by reduced supply due to
surrender of some iron ore mines
 Market sources say some previously auctioned mines in Odisha are being surrendered due to
1) access to lower grade of iron ore despite paying sharp premium for mines, 2) average sales
price declared by the Indian Bureau of Mines, which is used as a base to calculate royalty
includes royalty, and 3) option to participate for other mines
 The Odisha mines auction is ongoing and submission of technical bids has taken place. To
date, 123 bids have been received by 35-40 companies, but it seems bids might not be that
aggressive. The recent auction largely contains virgin mines vs working mines in the last
auction; hence, these mines are likely to sustain in the long term
 As per latest updates, for implementing the National Mineral Index, a Special Committee is
being set up particularly for determining iron ore prices. The challenge the Committee faces
is different price mechanism prevails in varied states. In Karnataka, iron ore is provided by the
eAuction route, for NMDC’s Chhattisgarh iron ore is secured via long-term contracts and
some parts through auction while in Odisha it is primarily through merchant miners
81
Other deployments
 China is expected to remain focused on curbing exports but increase imports of scraps and
semi-finished products, primarily pig iron and billets. This is likely to benefit India’s steelmakers
to tap new markets, such as Latin America, which were earlier being served by China
 With major steel-producing global markets, such as South Korea, Japan, the EU and the US,
are holding up steel prices at higher levels, any sharp fall in India’s steel prices is unlikely to
come in the near term. Currently, domestic prices are at a discount of INR 9,000/tonne to
landed price from Free Trade Agreements (FTA) countries. As a result, EBITDA/tonne for
domestic steelmakers is likely to remain higher in the short term
 Rashtriya Ispat Nigam (RINL) is likely to attract more bids as it is a ports-based plant with a
capacity of 7.3mn tonne and equipped with fairly good technology and large land bank.
Neelanchal Ispat Nigam’s (NINL) plant has been shut for some time, and it is outdated so
anybody bidding for NINL will be more interested for its iron ore mines
 Currently, steel mills do not have much inventory. Steel inventory levels will depend upon
exports bookings by domestic steelmakers. While currently steelmakers’ inventory levels are
low, they are expected to move up with the fall in exports
 Russia had imposed a 15% exports tax, but it has not affected volume. Exporters are absorbing
exports duty and retaining volume in the international markets. This has only hit
EBITDA/tonne
 In India, smaller companies are still unaware about carbon emissions, but bigger companies
are taking steps. Tata Steel’s Jamshedpur plant has increased scrap consumption to control
carbon emissions in the center of the city
 With vehicular scrappage policy coming into place, availability of scrap in the domestic market
is expected to increase by ~65-70mn tonne in the next 10-15 years
82
Dialogue #4 : Mine the Metals: Changing Dynamics
Domestic coal market overview

 Domestic coal demand has improved in the past few months, led by 1) increased electricity
consumption with post COVID-19 revival in economic activities, 2) lower hydro power
generation, and 3) rising preference for domestic coal after surge in imported coal prices.
However, coal supply has declined and non-power sectors are facing constraints, due to 1)
muted participation by coal users in previous eAuctions, and 2) diversion of coal supply to
Rohan Baid power plants as these were maintaining minimum coal inventory earlier
COO, CoalMint
 Coal inventory at power plants has plunged to a multi-month low of 12.76mn tonne at the
end of August 2021, adequate for a mere seven days of power generation. To ensure
uninterrupted coal supply to power plants, a Committee has been constituted. Some
suggestions of the Committee are 1) prioritizing coal supply to power plants, which have
super critical and critical stock levels, 2) focus on restocking by power plants, which have
adequate inventory levels, 3) measures to increase coal dispatch from captive mines & other
coal resources, and 4) exploring import markets
 Aluminium firms are scrambling for supplies as they do not have adequate inventory.
Recently, the Aluminium Association of India (AAI) had objected to CIL’s decision to reduce
coal supplies, resulting in coal crunch for the industry. There has been supply tightness and
some coal traders are charging premium to these buyers
 As per CoalMint, the recent eAuctions have witnessed improved participation after supply
tightness and higher imported coal prices. As a result, total coal auction in August was the
highest in FY22 to date and recent auctions have received bid premium of 46% highest since
December 2019
 Despite several reforms being introduced for commercial coal mining, participation for coal
block sales has been muted. In the second tranche of auction only eight blocks were sold out
of 67 while in the first tranche 20 were sold out of 38. CoalMint believes the government
should take measures to save time and efforts of stakeholders participating in the sales
process and provide swift clearances for opening of mines
 As on end-August 2021, Coal India had excess stock of 49.65mn tonne. CoalMint believes
power plants will continue to have higher access to coal supply. In the short term, the supply
crunch is expected to persist for the non-power sectors. Thus, imports from the non-power
sectors would increase in the upcoming months
Imported non-coking coal overview
 During January-July 2021, India’s non-coking coal imports rose ~7% YoY. Imports from
Australia and the US have risen YoY while they have declined YoY from Indonesia and South
Africa. Poor weather conditions and rising COVID-19 cases have led to weak supply from
Indonesia whereas locomotive unavailability, coal line shutdown, derailments and civil unrest
disturbed supply from South Africa
83
 Imported coal prices of major exporting nations have moved up sharply during the past few
months, led by supply disruptions amid strong demand recovery. Further, domestic coal
prices also have risen as price difference between domestic and imported coal has shrunk to
INR 1,000/tonne vs INR 2,500-3,000/tonne a month ago
 Post COVID-19 revival in economic activities across the world primarily from China has
resulted in shortage of vessels and a sharp surge in freight rates, which have posed
challenges for imports as well as exports. During January-July 2021, the cape-size vessels
freight from Richards Bay Coal Terminal (RBCT), South Africa rose by ~63% YoY to USD
18/tonne, Panamax freight from Newcastle, Australia to India rose by ~81% YoY to USD
28/tonne and Indonesian Supramax vessel freight to India surged by more than 200% YoY
to USD 25/tonne
 Among major coal exporting countries barring Russia, all countries’ exports volume has
declined YoY in H1CY21 with the sharpest fall being witnessed by South Africa of ~13% YoY,
due to locomotive unavailability, coal line shutdown, derailments, vandalism and political
unrest. Indonesian coal exports fell 5% YoY due to poor weather conditions and the Second
Wave. Australian coal exports fell only 3% despite China’s ban due to an increase in exports
to India and Pakistan. Russia’s thermal coal exports rose ~6% YoY on a sharp surge in exports
to China.
 In five months of CY21, Australian coal prices remain at lower levels than peers. However,
amid increased Summer procurement, especially from Taiwan, Japan, and South Korea, it
saw a rise in June. As per CoalMint, India buyers are not preferring to buy Australian coal
currently due to higher cost
 CoalMint expects India’s demand for imported non-coking coal should improve in Q4CY21,
aided by domestic coal shortage and rising economic activities
 On the price front, it expects imported coal prices to remain strong, led by restricted supply
because of 1) sanctions placed by Indonesian government on exports of 32 coal firms to meet
domestic market obligations, 2) muted supply from South Africa with continued rail
disruption from Transnet, and 3) likely decline in supply from Australia with the start of Rainy
season
Imported coking coal overview
 During January-July 2021, coking coal imports to India jumped ~20% YoY. Further, July
witnessed a sharp MoM rise in imports from Australia, Mozambique and Russia whereas
imports from the US, Indonesia and Canada declined MoM
 As per CoalMint, Australia has witnessed disruptions in coking coal supply, due to 1)
maintenance shutdown by BHP, 2) lower supply from South32 after it shifted to longwall
mining, 3) force majeure declared by Anglo American for 7-8 months and 4) advance
bookings done by a major miner prior to closing of its books
 After China’s ban of Australian coal, imports from other countries, such as India, Japan and
South Korea, have gone up. Further, strong restocking demand has been observed from end-
users, as the Australian premium grades of coking coals were competitively priced relative to
the US and Canada. As a result, Australian coking coal prices have moved up considerably
since May 2021
84
 As per CoalMint, China has been able to manage its coal requirement despite the ban on
import of Australian coal. It has strong mining capabilities with good reserves unlike India.
Further, it has access to coal from other countries. Accordingly, any progress toward lifting
of the ban is unlikely in the near term
 CoalMint believes a likely rise in spot availability of Australian premium hard coking coal from
the next month may result in some price moderation, which should drive participation by
India buyers. Further, India’s steel mills are likely to honor their quarterly contracts irrespective
of surge in prices since steel production is likely to be at optimum level, led by post-Monsoon
revival in demand
Met coke overview
 During January-July 2021, India imported 1.56mn tonne of metallurgical coke (met coke), up
24.8% YoY. India's metallurgical coke import prices rose persistently amid continued tightness
in global supply, driven by continued high demand in China
 Nevertheless, India’s domestic steel demand have declined due to Monsoon and COVID-19
led restrictions. India’s coke buyers are largely expected to stay out of the seaborne market
as domestic prices are lower than global prices, which has driven India’s coke exports lately
 Historically, India exported met coke to countries, such as Nepal, Bhutan, Vietnam, Japan,
Italy and Brazil. India’s met coke producers were able to procure coking coal at competitive
prices, which reduced production cost. During January-August 2021, India’s total met coke
exports stood 0.59mn tonne. India-bound seaborne met coke prices are likely to stay at
elevated levels in view of supply tightness, resulting from China's absence from Asia’s exports
markets
85
Geopolitics
86
Dialogue #1 : Long View from China
End of the American unipolar world and other trends

 Many fundamental changes were going on in the world order even before COVID-19
 According to Ambassador Vijay Gokhale, the dramatic rise of China, not just economically
but all across the spectrum, after the Global Financial Crisis led to the end of the American
Unipolar world order
Vijay Gokhale  The world is shifting from the age of manufacturing to the age of technology and the
Former Foreign pandemic has accelerated these changes
Secretary, Nonresident
Senior Fellow at
Carnegie India  China’s ability to manage COVID-19 and its return to growth has strengthened the Chinese
belief in its system
 China sees itself coming out of the crisis even stronger than before 2020
Rise of China: a few rights and a few wrongs
 After the Tiananmen Square incident of 1989, the China’s political focus shifted on
economic growth. It crafted policies to allow Western capital inflow
Mark Clifford
 Chinese diplomatic policies were based on the Deng Xiaoping strategy of “hide your
Former Editor-in-chief,
South China Morning capabilities and buy your time”
Post
Moderator  China was able to convince the West that its growth will be benign and China is no threat
to the Western world order
 Since 2013, China appeared to be determinate that the US is the adversary that will restrict
its further rise
 Since 2013-14, China has become more assertive not just on land but also on sea, outer
space and cyber domain
 “The coming struggle”, “The need for loyalty”, “The need of the party to manage unity” are
similar to 1960s aggressive sloganeering
 The aggression, bullying, and the use of economic sanctions are signs of an increasingly
assertive China. This has gone down badly in China’s neighborhood
 China’s “wolf warrior” diplomacy in case of Japan, Vietnam, the Philippines and India is
seeing quite a pushback. Human history tells the rise of superpower is much more difficult if
it fails to pacify the neighboring States. There is a need for recalibration of China’s policy
direction toward its neighbors
87
2013: the turning point of China’s rise

 Xi Jinping became the president of the People's Republic of China in 2013. He held many
diplomatic conferences
 The one such conference was on the neighborhood foreign policy and its outcome was
what we call the “Belt and Road” initiative
 Xi Jinping talked about China assuming a much greater position of importance in global
affairs
 The US is still talking the Cold War language, which was used for the Soviet Union and is
now being used against China
Does China risk overplaying its hand?
 China’s aggressiveness is partly because of its feelings that it is not getting the place it
deserves, given the size of the economy and military
 The US is keeping China out of the high tables of the global affairs, the G7
 China is not going to be what Paul Wolfowitz characterize as “responsible stakeholder” that
Washington wanted
Domestic compulsion
 After the Tiananmen Square incident of 1989, the Communist philosophy and ideology
diluted inversely to the economic rise of China
 President Xi Jinping felt this may lead to the collapse of the Chinese Communist Party
 A section of the Chinese Communist Party turned ultra-leftist in response to the
philosophical and ideological dilution
 Due to rising increasing economic and military power, there is a sense among the Chinese
that their time has come
How the world is engaging with China
 The rise of China is the most consequential development of the 21st Century
 Even if India becomes the second- or third-largest economy by 2050, India will still have
China at its doorstep. This is different from the US. It does not have a superpower in close
proximity that India does
 Inspiration from Kennedy's speech -- take action if necessary but a mad rush of competition
can result in the final war of mankind -- policymakers need to realize and find a modus
operandi
 The modus operandi that India had established by Rajiv Gandhi has been irretrievably
broken. China has to share most of the responsibility for it
 Identity misperception: the government of India has always given China an appropriate
place in its foreign policy and acted accordingly. This is not the case with China. China
considers itself in the league of the US. The Chinese leadership never attached the
importance that India gives to China. China only take India seriously when India aligns with
the US or the Soviet Union
88
How should India respond?

 India hopes for a better relationship, but it is clear it cannot separate core issues of the
boundary from peripheral issues
 India is not non-aligned like the Nehruvian era, but it will be an issue-based alignment.
There will be multi-alignment. This is a critical element of India’s foreign policy
 India is going to strengthen its ties with the US. China’s veto on India-US foreign policy is
not acceptable
 India needs to develop economically and reduce its dependency on China
 India needs to develop new capabilities in cyberspace technology, outer space, maritime,
and underwater domain. The next conflict will be the hybrid contactless conflict
New template of India China-relationship
 The territorial conflict is back in the center in the India-China relationship
 The disengagement and de-escalation need to be done by both the side as quickly as
possible. But China is not on the same page.
 India's trade deficit with China is not only economically but also politically infeasible. China
will have to open up IT, pharmaceuticals, and agriculture & vegetable exports sectors.
China’s industrial policies are quite restrictive
 The maritime domain is important. India realizes the Belt and Road imitative is important for
China, but India has objections to CPEC. But China considers India’s focus on Indo-Pacific as
an American plot
 India believes if China wants to talk about the multipolar world, it will have to start first with
multipolar Asia
China and the West are engaged in the zero-sum game
 China sees the West gain as China loses and similarly the western capital sees China’s gain
as the West loses. But India is not in the same game. India is a growing nation, and it too is
taking the share of the Western pie
 China does not want to give India space to grow
 A complete alignment is never going to be so strategic in which India takes the same
position identical to the West. India cannot be seen as a satellite state
 Europeans do not have any skin in the game in the India-China conflict while the US has an
interest only in the maritime domain. The West can be only a bystander when it comes to
land issues
89
Rise of the Taliban and India-China strategic interest

 The return of the Taliban is a victory for Pakistan, and, therefore, China, as being the
principal benefactor of Pakistan tends to benefit
 But Ambassador Gokhale provides a counterintuitive argument. He believes the Chinese
engage not because they want to but they have to. They sometimes treat the enemy better
than friends
 China cannot allow fundamentalism -- what the Chinese called splitism -- in their backyard
due to fears of it spreading in Chinese territory
 China’s action will be motivated by containing Taliban in the Afghan borders and greater
stability in the region for the Belt and Road initiative
 China and Pakistan goals do not align in Afghanistan. The greater the instability in the
region the weaker will be the Taliban government and Pakistan’s ability to control the
region
Lost territory of Taiwan
 China gave a signal when it laid down the two centenary goals. The second contrary goal
was to be a fully developed nation and moving close to the center of the world stage.
China cannot aspire to become the center of the world stage when one of the provinces is
still defying China’s sovereignty
 China has set the goalpost at 2049. China is moving from managing Taiwan to starting the
process of reunification. We will gradually see it unfold in public discourse
 It will become untenable to contain China’s naval power. China will have the capability to
do blockade or directly attach Taiwan. Ambassador Gokhale doubts the US capability to
deter the conflict without having the feet on the ground
 The West does not understand the visceral feeling of not just Chinese but many other
colonized countries on “territorial sovereignty”
 Ambassador Gokhale thinks China will proceed with a model similar to Hong Kong
The China-US decoupling
 The China-US decoupling will dominate the next decade
 If the US-China relationship becomes adversarial then the world will have to choose a side,
not just politically or militarily but on a variety of issues related to technology, the status of
world reserve currencies etc
 According to Ambassador Gokhale, there will be a lot of posturing but the probability of a
direct conflict is low
90
Dialogue #2 : Turmoil in South Asia: India's Options
Turmoil in Afghanistan
 China and Russia have veto power within the UN Security Council; hence, Pakistan may
give them the most support to take Afghanistan by force
 China does not have to capture the whole of Afghanistan. It only needs to mobilize
Afghanistan’s rich mineral resources
Christine Fair  But there is a big issue with Afghanistan. It is like a giant rock and a lot of infrastructure is
American Political needed to move natural resources outside
Scientist, Professor in the
Peace and Security
Studies Program,  Afghanistan does not have railways or any other meaningful infrastructure
Georgetown University
 China does not care about human rights in Afghanistan
 The relationship between China and Taliban goes back to Taliban 1.0 wherein they had
signed a memorandum in 2001 before 9/11
 It is possible to have a theocratic rule in Afghanistan by Pakistan
What it means for Pakistan?
Manjeet Kripalani  Afghanistan is a seven-decade-long project for Pakistan. However, it does not mean
ED & CoFounder Pakistan is going to be a leader in South Asia
Gateway House, Indian
Council on Global
Relations, Moderator  India is perhaps the biggest loser as Afghanistan becomes a breeding ground for terrorism
against it
 All this puts Pakistan in a position to create trouble
 If Pakistan weren’t a dangerous state and a normal country, no one would care about it
 Terrorism and violence is a ransom-seeking strategy of Pakistan
 Nuclear power, continued perseverance in cultivating regional terror is its only strategy.
It has no other strategy
 There is no making peace with Pakistan because peace is bad for business for Pakistan’s
military
 The Pakistan army is first to understand that peace is bad for business
 Citizens of Pakistan are clinging to the life boat of the Titanic
 The military in Pakistan is the largest landowner and owns 40% of the economy
 The Fauji” foundation owned by the Pakistan military controls most businesses there
 There are some other foundations as well like the Bahria and the Fazaia
o The Bahria folks take the land and give to their officers. It is one of the ways to
transfer public wealth to individual military pockets
 Cabinet formation of Taliban is largely influenced by Pakistan
91
 ISI KP suicide attack was suspicious as no Taliban was killed in it. And, if we look at who
benefits from this attack, then it is both the Taliban and Pakistan
 Pakistan benefits the most from this suicide attack as it will go to the UN and ask for
intelligence help
 It will be like as Pakistan create terrorists, then the US & the UN pay them to destroy
terrorism
UK-US equation with Pakistan
 The UK fears Pakistan as it has seen the consequences of Pakistani extremism on their land
since the UK has a high proportion of Pakistan’s population
 The US has a different problem
 US congressman do not serve people they are elected to serve
 Pakistan has an effective lobby to influence US Congressmen
 In contrast, Indians are protocol bound and do not engage in lobbying, which has
been a strategic disaster
 Pakistan understands the importance of Congressional delegations and is not protocol
driven
 Pakistan is good at military tourism; they take people on helicopters and people love
that
 They are good at influencing operations and control many think tanks
 A good example of Pakistan’s influence over US Congressmen is when Senator Lindsey
Graham applauded in his tweet about Pakistan’s cooperation with the US
India, Russia and China alliance for peace in Afghanistan
 The India, Russia and China alliance is a joke as India’s needs from Afghanistan are different
from what Russia and China needs
 China does not care about stability and only cares about minerals
 It is farcical to think China would want a stable government in Afghanistan
 What Russia wants is to block US interests. It co-vetoes with China only to oppose the US
 Also, Afghanistan does not like Russia. Russia has not done any reconstruction efforts in
Afghanistan in the past 20 years
 Russia has only been active in the past five years, only to defeat the US
 China has been aggressively revising boundaries with India, and it has no intention to make
peace with India
 China does not want to make India partner on any agenda
92
What should India do?

 India-Iran relationship: Iranians still have an embassy open in Kabul, meaning they
want to have a low key relationship with the Taliban
 Tajikistan and Uzbekistan are being bullied by Russia
 There are things India should have done a long time ago, but is reluctant to do so now
 India needs internal security reforms, police reforms but politicians do not want to do
engage in it
 Different artillery systems used in India are wasteful because of the logistics behind it
 India’s own defense production is abysmal
Why no sanctions on Pakistan?
 Pakistan coerces the West to not impose sanctions using its nuclear arsenal as a threat
 The risk averse policymaker will not opt for a policy to disturb peace; they also want to
protect their seat
Threat to Kashmir
 Pakistan has no illusion they are going to get Kashmir
 It just keeping poking Kashmir and use India’s Muslims dissatisfaction
 There could be other threats as well like cyber threats and India needs to be prepared for it
 Fortifying important information systems should be India’s priority
Why would the US give up huge lithium reserves?
 The US could not tap reserves in the past 20 years, and it feels China also will not be able to
do it. It did not make sense for the US monetarily to hang on to the reserves
 However, China may succeed as China does not care about how the Taliban governs. It
only cares about extracting resources
 Afghanistan is not Saudi Arabia. It is difficult to get stuff out of the ground to the markets
93
Young Corporate Honchos
94
Dialogue #1 : Reimagining Business for the New Era
Metropolis – Planned response to Covid

 Covid has been challenging for many businesses, mostly financially as also on supply chain
concerns.
 Metropolis has been on constant alert since the onset of Covid – The employees have been
working continuously.
Ameera Shah  Metropolis believes that the employees form the business core and tries to focus on building
Managing Director safety net for its employees via empowerment funds, family insurances, preventing infections
Metropolis Healthcare
among employees and providing adequate infrastructure support such as hiring hotels and
buses to keep employees safe.
 Second, Metropolis has tried to be available and accessible to its investors to ensure that they
are in constant communication with the company as regards on-ground developments.
 Third, Metropolis has been monitoring the changing consumer behaviour and trying to
Anant Goenka assimilate all pertinent observations to make the business more dynamic and omni-channel
as also provide a seamless experience to consumers.
Executive Director, The
Indian Express Group
and Head of New Indian Express – Effecting a digital revolution
Media, The Indian
Express  When the Indian Express embarked on its digital journey, astrology, Bollywood, cricket and
devotion genres-based news was believed to be the formula to success. It was definitely
challenging to morph a policy-driven, analysis-led newspaper such as the Indian Express to
suit the digital space.
 Most readers normally have the mindset of relegating youth-appealing content to lower
footing, which is not the case in reality.
Nyrika Holkar  The newspaper has just reinvented the writing style and tone to push intelligent content,
Executive Director and found that there is huge appetite in India for it, be it the youth or the middle-aged
Godrej & Boyce
 The digital medium has spiked the audience base manifold for news publishers as also
intensified competition.
 The Indian Express just focused on its core ideology of being an intelligent, credible and
trustworthy source of news/content.
 Today, consumption of journalism has spiked and the paper has been able to leverage it.
Sourav Majumdar
Godrej & Boyce (G&B) – New generation transformation
Editor, Business Today
Moderator  Since Godrej & Boyce (G&B) is 125 years old and has participated in so many economic and
business transformations since 1897, adapting to change in terms of technology products
and customer preferences is a path that has been walked before.
 G&B has accumulated many legacy systems. Thus, it is difficult/expensive to build and
modernize the architecture, so as to ensure its efficiency/scalability, which remains a top
priority for the company.
95
 G&B also focuses on hiring younger talent with newer capabilities so as to build new revenue
streams and increase rotations across businesses to cross-pollinate new ideas and solutions.
 G&B has had a very product-driven mindset and always focused on building solutions to
address customer problems.
Legacy challenges
 At Metropolis, Ameera Shah, Managing Director, never faced any issue on this front as her
father retired early, handing over the company’s complete responsibility.
 At the Indian Express, Anant Goenka, Executive Director, faced some resistance from the old
management rather than the family during the digitization process.
 At G&B, Nyrika Holkar, Executive Director, views an open communication channel at all levels
of the organization as most crucial to help iron out differences – Whether it is the board, the
senior/middle management or shop floor operator.
Digital Media – Challenges
 The Indian Express has viewed digital media more as an opportunity to market its
differentiated content and expand reach via all the various platforms to connect with newer
audience and eventually funnel/convert them into loyal/dedicated direct readers with an
established relationship.
Healthcare – Policy interventions
 Healthcare policies have been lacking so far – Ayushmaan Bharat is probably the first major
initiative in the healthcare industry espoused by the current government.
 With Covid onset, government involvement has spiked, but more on the tactical side than
strategic.
 The government has effected some policy work on digital infrastructure such as UPI and
Aadhar.
 It remains to be seen whether the policy will be mandatory or optional as the healthcare
industry is very fragmented, and with 90% unorganized players – They may find it difficult to
comply with the digital framework.
 In the next five years, the healthcare industry may undergo a transformation.
 In the healthcare industry, the most important asset is trust – Metropolis has spent time on
building consumer trust – It may be difficult for new players to replicate this.
Start-up collaborations
 Collaboration with start-ups and building inclusive ecosystems are core to G&B. The company
has collaborated with start-ups to launch its security business and actively tap the start-up
market for opportunities, ideas and talent.
G&B – Digital strategy
 Currently, digital strategy is a small percentage of sub-10%, but G&B is focusing on
modernizing the architecture to scale. Second, it is working on smart manufacturing,
leveraging automation and IoT etc.
 G&B is also focusing on upskilling by hiring fresh talent and training existing employees.
96
Leadership and planning

 Rather than making a five-year strategy, shift to 2-3 year plans with in-built flexibility, agility
and adaptability.
 Being emotionally balance as a leader is crucial in handling changes that occur in businesses
continuously.
 Understanding/identifying the business is important and developing it based on strengths
crucial.
 Planning periods have actually become shorter owing to Covid – From five to 2-3 years.
 Monitoring and incorporating government policies into businesses planning are also very
important for a manufacturing company.
Family office versus traditional businesses
 Both models can be complimentary as the family office can invest in businesses that assist the
traditional businesses.
97
Company Section
98
Communication Services
99
Represented by:
Prasoon Pandey, Head DB Corp (Not Rated)
of Investor Relations
Bloomberg Code: DBCL IN, Market Cap: INR 16bn, CMP: INR 93 (as on 15 Sept 2021)
Executive digest: DB Corp (DBCL IN) is among India’s leading print media companies, publishing seven
newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and
English) in 11 Indian states. Its flagship newspapers, Dainik Bhaskar, Divya Bhaskar and Saurashtra
Samachar have a combined average daily readership of 15.5mn, making it one of the most widely
read newspaper groups in India.
Investor insight:  Advertisers have undergone a behavioral change – Generally during June-July, advertisers
conserved ad budgets to prepare for the imminent festive period, but now they commence
their ad spends 10-15 June onwards.
 Due to COVID, the entire comparative year (FY21) has been a wash-out year. National
advertising, especially in Auto & BFSI, has gradually started catching up from August. Local
advertising in real estate, education (from exam results season), FMCG, Health and BFSI has
also gained traction – 60-65% contribution was from local and 30-35% from national.
 As circulation recovery started post COVID Wave I, market share gains were visible.
 Past two months have been better – MoM recovery was seen as local advertising picked pace,
with double-digit growth versus FY20 levels. In July 2021, many categories witnessed ad
spends, which was unexpected and a positive surprise. Also, engagements with advertisers
have been strong – September 2021 started on a good note; expect traction till Diwali.
 DBCL touched an overall 90% circulation in most markets – In Madhya Pradesh and
Rajasthan, the company touched 93-95%. A 7-10% circulation shortfall was largely logistics
led – Less sale at bus stands, train stations etc. This should recoup once travel resumes fully.
DBCL has not lost any readers as such during COVID.
 Within regional markets, Jhansi, Jamshedpur etc. are well positioned – Circulation resumed
in full swing and with overall market recovery, DBCL could gain market share.
 Promoter pledge has ebbed to 11% now, with principal component down to INR 850mn.
Further, the management seems keen on decreasing the pledge to zero.
 Q1 policy is focused on keeping the balance sheet cash-light and distributing it as much as
possible by way of dividend or any other mode to reward stakeholders.
 DBCL-Google agreement, Australia: DBCL, among 2-3 big players within print, has not yet
inked any definitive agreement with Google. Discussions are ongoing for sizeable revenue
share. More clarity is likely to emerge in the coming quarters.
 DBCL has been focusing on the digital medium – The Dainik Bhaskar propriety app has
received positive reviews and is witnessing strong app-traffic growth, enabling monthly active
user (MAU) surge to 15mn. The management is confident of achieving 20mn+ MAUs i.e., 7.5x
growth by FY22.
 The management is planning to launch subscription-based platform soon. DBCL’s digital
content strategy remains focused on clean and best content.
 In the past 1-1.5 years, on the ad pricing front, no major discounts were offered. This is
excluding some large national deals – Discounts are offered to Honda that placed continuous
ads in the past few months. Yet, COVID impact led to 10-12% lower pricing versus Q3FY20
levels (pre-COVID).
 News print cost has spiked 16-17% already, on the back of shortage in recycled newspaper.
In Q2, 1-2% QoQ growth seen so far has now largely stabilized.
 DBCL has exceeded its cost savings target of INR 1,250mn, as annual savings stood at INR
1,950mn, of which ~INR 800-900mn is expected to be sustainable, going forward.
100
 DBCL’s capital allocation policy veers towards investments in new digital medium, which will
be funded via generated cash.
 On DBCL’s digital platform, 60-65% content is Hindi-based, with a mix of Gujarati and Marathi
too – DBCL is the biggest player in the Hindi genre with size 5-6x its Gujarati readership
(second largest player). The company is the leader in the Marathi genre.
 No cannibalization was witnessed throughout the shift from physical mode to digital during
COVID. Some trends were visible only in the metros. Tier II/III cities remain strong as readers
and circulation have been at the same levels as pre-COVID.
Analyst annotations: DBCL, the market leader in the print vertical, has demonstrated strong bounce-back post COVID-
led disruption, regaining 90-93% of its pre-COVID circulation. However, ad volume recovery for
traditional media such as print and radio may lag other verticals given high exposure to local and
SME ad segments, as also the loss to digital media.
The management seems confident of regaining pre-COVID ad volumes by end-FY22E on positive
surprises in the forthcoming festive season. Yet, price discounts may mar realizations, pushing the
full recovery beyond FY23E for print and radio. This is assuming the absence of Wave III impact.
Further, we believe, COVID has triggered a behavioral change, especially for news readers in
metro cities. Online news consumption via apps is becoming the preferred pick over traditional
physical mode. Key monitorable for DBCL, going ahead, include: 1) transition to the digital mode,
led by scaling up of DBCL platform. The platform offers wide-ranging, innovative content across
genres. Also, DBCL seeks to move to subscription-based service and 2) expansion into tier II/III
markets, wherein traditional newspaper still remains the preferred pick. DBCL’s leadership
position poises it well for market share gains.
Key Financials: YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS ROE ROCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) Margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY18 23,112 2.4 5,638 24.4 3240 (13.6) 17.6 18.4 18.1 17.7 9.2
FY19 24,627 6.6 5,043 20.5 2738 (15.5) 15.6 14.6 14.5 12.2 6.3
FY20 22,238 (9.7) 4,815 21.6 2,750 0.4 15.7 15.7 15.0 5.06 3.3
FY21 15,077 (32.2) 3,048 20.2 1,282 (53.4) 8.1 8.1 7.7 11.1 5.0
Source: Company, Elara Securities Research
Analyst: Karan Taurani, karan.taurani@elaracapital.com, +91 22 6164 8513

Viren Deshpande, viren.deshpande@elaracapital.com, +91 226164 8565
101
Represented by:
Kailash Gupta, CFO Inox Leisure
Balesh Talapady, AVP –
Investor Relations & Bloomberg Code: INOL IN, Market Cap: INR 37bn, CMP: INR 305 (as on 15 Sept 2021)
Business Analysis
Executive digest: INOX Leisure (INOL IN) is among India’s largest multiplex chains, with 147 multiplexes and 626
screens in 68 cities. The company is known for redefining movie experiences in India. Each INOX
property is unique with its own distinct architecture and aesthetics. INOL was awarded the
'Technology Adopter of the Year' Award by Big Cine Expo 2016.
Investor insight:  Cinemas have largely opened up completely, except in three states of Maharashtra, Kerala
and Assam. Telangana and Orissa opened up at 100%, while Gujarat at 60% occupancy cap.
The remaining states have opened at 50% occupancy cap. For INOX, 450 screens have been
operating, of its total capacity of 650.
 Week-over-week footfalls have started reviving gradually with the spread of awareness
around cinema reopening. Bell Bottom took some time to attract footfalls as the audience
was unaware of theatres reopening post the initial release week. INOX has a 20% share in
Bell Bottom collections.
 Alternate seating was arranged in cinemas. Thus, the family could not be seated together,
marring Bell Bottom’s footfall. However, many campaigns were launched to attract footfalls
for Bell Bottom i.e. popcorn free pan-India.
 The regional film, Sanchi and Hollywood’s much-awaited release, Fast & Furious witnessed
close to full presence in most of India, in the last weekend. In Central India, generally, slow
revival has been witnessed. However, this time around, the footfalls were decent.
 Hindi content may not be released as Maharashtra remains closed and given Bell Bottom’s
dismal performance in cinemas. Telugu and Tamil films may be released, starting 10
September and Punjabi films are performing well.
 Hindi film producers are in the ‘wait and watch’ mode, with 83 and Sooryavanshi ready for
release, yet awaiting unlock in Maharashtra. Till then, English and regional language releases
may enjoy 10-15% occupancy. The upcoming James Bond film in December 2021 is expected
to be a big release. The Tamil and Telugu regions, post 10 September, may have regular week
over week release at an average of 2-3 films/week.
 Hollywood films have propped the market, but Maharashtra unlock has had a big impact.
 Cinemas have been struggling on footfalls as occupancy is at only 10-12% currently coupled
with ATP at 10% discount versus pre-COVID levels, which is not enough to break even (break-
even at 17-18% of occupancy levels). F&B’s SPH has exceeded pre-COVID levels, which
remains a ray of hope. SPH crossing pre-COVID levels may sustain going ahead, even without
Maharashtra. Thus, once Maharashtra opens, 80%+ levels may be easily achievable.
 Ad revenues have been in the ‘wait and watch’ mode, witnessing negotiating and
bargaining. A minimum of two quarters with decent occupancy levels of 27-30% and footfalls
may be required for ad revenues to revive. At least 5-6 months are required for ad revenues
to stabilize once occupancy returns to 27-30% levels – Expect phased and gradual recovery.
 On the distributor share front, only two movies received special terms with higher share.
However, all the others have been settled near pre-COVID levels. Pre-COVID, the share stood
at 40-45%, which may rise 200bp to 47-48%, though transient in nature. Windowing too will
be a temporary phenomenon.
 Landlords have propped the dynamics well – Amidst incurring losses, exhibitors received 60-
70% waiver. Only common area maintenance (CAM) fee was paid off for some properties.
Also, some opted for revenue share-based rental model.
102
 Maharashtra shut-down may significantly affect BO collections, but Assam and Kerala impact
may be negligible as the number of screens remains low for the latter. No information is
available on Maharashtra theatre reopening, as of now. Maharashtra’s revenue contribution
stands at 22-25% and Hindi contribution is at 30% of total BO collections. If Maharashtra were
to be allowed to open during Navratri, a big film may definitely be released by Diwali.
 In case of Wave III materializing, India may again be shut down for 2-3 months. The
vaccination drive has gained currency, thus chances of Wave III materializing seems low.
 INOX has been fully funded for FY22 as of now to survive the cash-burn. The cash-burn run-
rate is expected to be at INR 250mn/month in Q2, which may continue for 4-5 months at
least.
 Much of the newsflow is centred on an imminent Wave III, thus affecting the perception on
cinema.
 Single screens are planning to screen Thalaivi. However, this may not add to Hindi BO
collections much, even assuming a windowing of beyond four weeks (film life cycle in Hindi
speaking markets is a mere 2-3 weeks). Thalaivi has requested for a four-week window in the
South and two-week in other regions (Hindi dubbed version).
 Advertisers seek stable occupancy, which is unlikely at present, thus they are in the wait
mode. Off-screen advertising, i.e. cinema lobby advertising, is a mere 5%. Cost for these is just
2-3% with no major separate costs.
 Kolkata and Delhi are Hindi dominated markets, with just Bengaluru being a cosmopolitan
city. The West Bengal industry is very small and collections come only during puja time. Even
this year, 5-6 films are being releasing during puja. The balance is mainly Hindi dominated.
Analyst annotations: We believe, most states may allow 100% occupancy by end-CY21 without any restrictions, as a
large section is vaccinated, in line with global trends. Currently, uncertainty looms large on
Maharashtra reopening, an overhang for Hindi producers as they continue to withhold big-ticket
releases such as 83 and Sooryavanshi. Maharashtra constitutes ~30% of BO collections for Hindi
movies. In the interim, we believe, recovery in cinema halls may precipitate in a phased manner,
led by Hollywood releases such as the James Bond movie and Fast & Furious as also some regional
films from Tamil and Telugu genres. We expect content overflow as cinema halls have not
witnessed full capacity since 18 months. With a pipeline of 300-350 Hindi films, only 31 have taken
the direct OTT route since the pandemic. We expect overall revenues to revert to 80% of pre-
COVID (FY20) levels in FY23, with recovery in FY24, when revenues may rise to 110-120% versus
pre-COVID (FY20) levels. We expect ad revenues to take the longest time to recover due to high
exposure to local advertising. Other revenue metrics (F&B & convenience fee) may follow footfall
recovery trends.
FY21 1,059 (94.4) (3,876) (365.9) (5,530) (3,784.4) (49.2) (85.9) (29.1) N/A N/A
FY22E 5,099 (51.7) (1,874) (36.8) (3,478) (37.1) (28.5) (57.1) (22.7) N/A N/A
FY23E 15,495 203.9 3,622 23.4 726 (120.9) 5.9 11.7 (4.9) 51.3 17.2
FY24E 22,702 46.5 7,464 32.9 3,562 390.6 29.2 42.6 6.0 10.5 8.0
Source: Company, Elara Securities Estimate

103
Represented by:
Manish Agarwal, CEO Nazara Technologies (Not Rated)
Bloomberg Code: NAZARA IN, Market Cap: INR 66bn, CMP: INR 2,180 (as on 15 Sept 2021)
Executive digest: Nazara Technologies is a leading India-based diversified gaming and sports media platform, with
presence in India and global markets such as Africa and North America, encompassing offerings
across interactive gaming, eSports and gamified early learning ecosystems. The company owns
some of the most recognizable IPs, including WCC and CarromClash in mobile games, Kiddopia
in gamified early learning, Nodwin and Sportskeeda in eSports and eSports media, as also
Halaplay Technologies Private Limited (Halaplay) and Qunami in skill-based, fantasy and trivia
games. Nazara was among the first entrants in India market in eSports (through Nodwin) and
cricket simulation (through Nextwave) genres.
Investor insight:  E-sports and gamified learning have scaled up, showcasing growth. The freemium mobile
gaming segment is yet to scale-up. Skill-based real money gaming (RMG) vertical is a ~INR
130bn market in India (Dream 11, Winzo etc.). With huge investments coming into the sector,
the potential is immense, but many statutory issues also exist.
 In case of Nazara, other verticals i.e., Gamified Learning and E-sports had been growing well.
Thus, the RMG vertical has so far not focused on the areas of statutory issues. Now that other
verticals have stabilized led by steady growth, RMG is the next focus area.
 Halaplay and RMG currently contribute a mere 2-3% to Nazara – It plans to scale up
immensely in this category.
 The RMG space requires skills such as poker, rummy etc. Key requirements to scale-up in this
vertical are: 1) concurrent users, thereby ensuring easier match making and 2) liquidity pool
to attract new players. Concurrent scale of users may now be facilitated via M&As, influencers
and social commerce so as to leverage fan following.
 Any segment below INR 1bn is still small. Thus, Nazara is commencing with RMG, post which
it may focus on freemium for scaling up. WCC is a freemium model with in-app purchases,
while RMG features players’ money with Nazara platform charging platform fees.
 Regulatory issues are rife for the fantasy and rummy genres that form 80% of RMG, while
poker and other categories are not under purview. From Nazara’s perspective, market size,
precedence and state versus centre opinion conflict are largely non-issues.
 The US may be a priority market for Kiddopia and brand campaigns may be launched to prop
the current 4-5% market share – 340k subscribers may be escalated to 1-1.5mn soon. The
German market is not as big, and in the other new markets, the experimentation cost is low.
Nazara is testing waters in such markets and may expand upon favorable response.
 Apple has stopped disclosing device identifiers, which marred performance-led marketing.
Thus, optimization and cost per trial rose to USD 26-28. Google and Facebook are working to
resolve this – Nazara is an early partner with INR 0.6mn marketing spend versus the usual INR
1-1.2mn and has been witnessing gradual normalization.
 Earlier, Nazara depended on just Google, Facebook and Apple, but now its partners have
increased.
 Recently, Open Play was fully acquired by Nazara at INR 1,860mn (via INR 440mn cash; the
balance in Nazara Equity as preferential allotment).
 Gaming advertisers are mostly gaming companies, globally. Brand advertising is dependent
on Sportskeeda and World Cricket Championship (WCC) platforms. For Sportskeeda, most
revenues are generated from the US and have surged sharply as inter-play between ad
companies and game publishers has become strong in the US.
104
 E-sports viewership continues to grow – The Battlegrounds Mobile India (BGMI) event
gleaned higher viewership than the Wimbledon Final, same day, indicating strong traction
for the vertical. In India, the concurrent viewership is at 1mn+, which stood a mere 0.2-0.25mn
a few years back. YouTube games have seen strong growth.
 Nazara focusses on creating/acquiring new IPs as also crafting eco-systems of streamers,
influencers and gamers given their immense value. Nodwin has own cash reserves to perform
R&D for IPs, so as to build capabilities/capacities.
 About 100%+ growth in eyeballs for e-sports was achieved, but conversion to advertising is
slower. OTT platforms may be the first to book their slots, with Nazara placed in the content
space (exclusive content to be sold to platforms). Once 200-250mn viewership is achieved,
Nazara may see bidding for content.
 BGMI garnered higher views – Average concurrent views are at 1mn now, which should
spike to 250mn in the next 2-3 years, post which only monetization will be impending. In
China, 950mn+ evolved gaming audience exists, while in India, this is just 75-80mn. Scalability
of cost per impression may take 7-8 years to catch-up to current China levels.
 In WCC, in-app purchases stood at 0.12% during IPL, but have now waned to 0.06%. About
INR 3-4mn may be invested to improve CAC. The in-app purchases have to be placed
correctly, thus the business is still to mature. In-app purchases are increasing gradually. Nazara
has been collaborating with Activision Blizzard and global game publishers to drive growth.
About 700-800mn in-app purchases were registered within the 3 Patti app in India, the
highest so far.
 In the RMG space, multi-game offerings help reduce CAC and improve ARPUs. These also
boost LTV-to-CAC ratio. Consumers play on multiple platforms, thus plans are ongoing to
create a common backend, whereby players may create their own network.
Analyst annotations: Nazara is a compelling play in the digital space with end-to-end offerings from eSports to casual
and fantasy gaming. Further, the EduTech play is a silver lining and may have immense scale
potential versus gaming. We believe, the digital vertical may grow 25%, primarily on big
eyeball/consumption shift due to: 1) rising smartphone penetration, 2) higher youth population,
and 3) inexpensive data prices. The management is confident of scaling up its RMG business
despite regulatory issues. This is given its huge potential with INR 130bn market size and WCC
(freemium) that tied up with global game publishers to push in-app purchases. Even the E-sports
vertical, post BGMI-led spike to 1mn+ concurrent viewers, is still low versus China’s 950mn evolved
gaming audience, indicating promising growth. Nazara aims to achieve 250mn viewers in the
next 2-3 years. Kiddopia remains a resilient model in the US. The management has been
expanding into newer geographies, led by favorable LTV/CAC ratios.
FY18 1,705 (10) 446 26.1 12 (98.0) 1.1 N/A N/A 1,982 N/A
FY19 1,698 0 104 6.1 44 261.0 5.5 4.6 1.6 396 N/A
FY20 2,475 46 -56 (2.3) (249) (669.3) 0.2 (0.5) (5.2) 10,900 N/A
FY21 4,542 84 452 10.0 136 (154.7) 4.8 1.6 2.01 454 168.0

105
Represented by:
SL Narayanan, CFO Sun TV Network
Bloomberg Code: SUNTV IN, Market Cap: INR 203bn, CMP: INR 510 (as on 15 Sept 2021)
Executive digest: Sun TV Network (SUNTV IN), a media conglomerate, has packed 32 TV channels within reach of
95mn households in India. The company's channels have a presence across 27 countries,
including the US, Canada, the EU, Singapore, Malaysia, Sri Lanka, South Africa, Australia and New
Zealand. With 32 channels in four languages and 48 FM radio stations, SUNTV is able to connect
the South India diaspora, erasing geographical distances.
Investor insight:  SUNTV is coming off poor performance in Q1FY22. The current quarter is shaping up well for
a good festival season
 The company is witnessing a revival among local advertisers with improving macro
conditions, such as GST collection and exports growth, as a large number of advertisers
consist of regional SME firms. It is however too early to say if it will be able to beat FY20
 Subscription revenue has been doing well. For SUNNXT, most revenue is from the
subscription business and most subscription comes from other aggregators, offering bundled
services as they have better customer reach and acquisition capabilities. The company gets a
fixed amount each year from these aggregators for subscription they offer. While lumpiness
was caused due to the new tariff order, the company has reason to believe no major adverse
implications arise due to it in the long term. The OTT platform has ~24.5mn subscribers. There
is a spike in OTT subscribers each time a new movie is uploaded
 The current investment in the OTT platform is restricted only to hardware components
required for it, whereby the company is providing a library of old movies and Live TV. Its
primary focus will be to complete movies, which are underway and then focus on creating
exclusive content for OTT. Starting from April 2022, significant investments worth ~INR
2,500mn will be made on SUNNXT for producing original content
 Currently, the company has five movies in the pipeline in various stages of production. One
movie starring, Actor Rajnikant, has been completed and will be showcased during Diwali.
The rest starring, actors Surya, Vijay, Dhanush and Vijay Setupati are expected to premier
between the first week of November 2021 and April 2022
 SUNTV plans to spend ~INR 7,500mn over the next 3-4 years on movie production
 The second half of IPL tournament is resuming in the UAE. The company had benefitted from
strong revenue of ~INR 1,990mn in the first year of the contract in FY19. This has declined in
FY21 and the company expects subdued performance in FY22 as well with PBT guidance of
~INR 900-1,000mn
 SUNTV has aligned its depreciation policy for movies in line with global best practices.
Accordingly, the company will amortize movies over a four-year period in the ratio of
30:30:20:20 instead of completely amortizing it in the quarter the movie is aired on television.
Due to the policy change, the company’s bottom line will be better as INR~4,000-4,500mn
paid for satellite rights will be understated on account of deferment. The policy change is
effective from 1 April 2021
 Following the trend, the company has done a lot of new invention on new realty shows and
reduce dependence on traditional fiction content. Also, for newer content, SUNTV is signing
IPR with specialty show owners like Endemol for KBC Telugu, MasterChef Worldwide for
MasterChef Telugu and IPL
 The company aims to reach back to its earlier market share of 45+% from 39-40%. There is
adequate number of activities on the production side in all languages. There are plans in the
106
pipeline to launch Marathi content & a team has been recruited and the company is in talks
with producers and production houses
 No plans to start a business news channel as there is no market to exploit
 As per management, advertising will cease to be growth driver in the medium to long term.
Subscription revenue will be a major growth driver by attracting new subscribers at premium
prices through high quality content. As India does not have high internet penetration
currently, this is expected to play in the medium to long term
 SUNTV does not intend to keep high cash on balance sheet.
Analyst annotations: We believe ad revenue recovery to pre-COVID levels may be delayed to FY23 for SUNTV, due to:
1) higher share in local advertising, which remains severely affected on uncertainty over Third
COVID Wave, and 2) poor recall for fiction shows. This is despite launching new initiatives in the
non-fiction space in Tamil and Telugu genres, which created a buzz and may lead to near-term
viewership share gains. However, sustaining this may be a challenge, given increased competition
in the segment. SUNTV continues to postpone investments for SUNNXT in the high growth OTT
market, with an industry average growth of ~50% in the next three years. The platform has made
a mark due to the release of new film content, but, we believe, web series remains an important
part of the overall content strategy if an OTT were to win a large customer base on its own (rather
than relying on telcos and other partners). Pricing in the ad segment may see some growth due
to large non-fiction properties that may not be enough to offset the negative impact of higher
investments in these shows.
FY21 31,166 (8.5) 20,674 66.3 15,204 10.8 38.6 23.8 20.7 13.2 9.2
FY22E 33,330 6.9 20,498 61.5 12,934 (14.9) 32.8 16.8 9.4 15.5 8.9
FY23E 38,525 15.6 23,313 60.5 14,563 12.6 37.0 16.7 9.5 13.8 7.6
FY24E 40,048 4.0 24,034 60.0 14,414 (1.0) 36.6 15.1 7.2 7.0 7.0

107
Consumer Discretionary
108
Represented by:
Himanshu Sharma, IR Apollo Tyres
Bloomberg Code: APTY IN, Market Cap: INR 141bn, CMP: INR 222 (as on 15 Sept 2021)
Executive digest: Apollo Tyres (APTY IN) is engaged in manufacturing and the sale of automotive tires. The
company's operational geographies include India and Europe among others. The domestic
segment includes manufacturing and sales operations via India. The Europe segment includes
manufacturing and sales operations via its Netherlands-based plant as also through its
subsidiaries. The others segment includes the subsidiary in the UAE, South Africa, Thailand and
other operating subsidiaries – It manufactures tires, tubes and flaps. The company markets its
products under two brands – Apollo and Vredestein.
Investor insight:  Outlook: Demand recovery is favorable across geographies, led by relaxation in lock-downs
and muted Covid cases with steady pricing environment across regions. Demand for PCR
tyres is better compared to 2W and T&B segment. Seasonally, this is a weak time due to
postponement of tyre replacement during monsoons.
 Commodity costs: Expect intensity of RM cost inflation to reduce going ahead. For Q2, RM
cost basket is expected to rise 4-5% QoQ as opposed to a 10% rise in the earlier two quarters
– Cumulative RM cost spike of 25% in three quarters.
 Price hikes: To offset the entire RM cost rise, APTY requires a cumulative price hike of ~13%.
The company has hiked prices 9-11% cumulatively across product categories in the
replacement market. For OEMs, the RM cost is passed on with a lag. Latest pricing action was
taken in August.
 Growth drivers: Preference for personal mobility and premiumization trend in consumers’
behavior may drive the PCR segment’s sales. APTY is focused on the SUV and premium
segments – Hyundai Alcazar, Tata Safari and Skoda Kushaq.
 Competitive scenario: The TBR market is more consolidated driven by APTY, MRF, JK and
CEAT, while PCR is more competitive with presence of all the global players. APTY has 21%
market share in the PCR segment – the company benefited from restrictions on imports.
 Capex plans: No major greenfield expansions are on the anvil post completion of the Andhra
Pradesh plant with capex reduction, going ahead. Any further expansion may be brownfield
in nature as APTY has adequate land.
 US market: The US is the largest tyre market and APTY possesses the requisite technology to
establish its footprint in the geography. APTY soft-launched its Vredestein brand and received
encouraging response. For distribution, the company is partnering with large players –
Expect more announcements soon.
 Labeling norms: APTY is well versed with the labeling system as it is prevalent in EU markets.
This is a welcome move and may help effect specifications transparency. Further concrete
guidelines are awaited.
Analyst annotations: In Europe, APTY is steadily gaining market share in the UHP/UUHP PCR and TBR segments,
establishing itself as a credible player. It is also gaining traction with premium OEMs. We estimate
APTY’s standalone EBITDA margin to contract 450bp YoY to 12.8% in FY22E and 15.5% in FY23E
on operating leverage benefits and price rise. Europe EBIT margins should improve in FY23E from
the current levels, given the completion of restructuring in EU facilities.
109
FY20 1,63,270 (7.0) 19,155 11.7 4,764 (45.9) 8.3 4.8 4.7 26.7 9.7
FY21 1,73,970 6.6 27,975 16.1 9,579 101.1 15.1 9.0 9.0 14.7 6.1
FY22E 2,02,384 16.3 27,021 13.4 7,665 (20.0) 12.1 6.6 6.9 18.4 6.6
FY23E 2,25,424 11.4 35,353 15.7 14,290 86.4 22.5 11.4 10.5 9.9 4.7
Analyst: Jay Kale, CFA, jay.kale@elaracapital.com, +91 22 6164 8507

Ketul Dalal, ketul.dalal@elaracapital.com, +91 22 6164 8500
110
Represented by:
Kumar Subbiah, CFO CEAT
Bloomberg Code: CEAT IN, Market Cap: INR 54bn, CMP: INR 1,345 (as on 15 Sept 2021)
Executive digest: CEAT (CEAT IN) is an India-based company engaged in manufacturing automotive tyres, tubes &
flaps and was established in 1958. In 1982, the RPG Group acquired CEAT Tyres of India as well
as the rights to use the CEAT brand in some Asian countries. The company caters to domestic as
also international markets. CEAT is today among the top four tyre manufacturers in India with a
~12% market share, and is currently focusing on the passenger vehicle segment. It dominates the
domestic market in Sri Lanka, with more than 50% market share and looks to replicate its success
in Bangladesh as well.
Investor insight:  Outlook: Demand scenario is improving, with Q2 expected to revive to normalcy. While
replacement demand across segments (except CVs) is decent, OEMs’ demand has taken a hit,
impacted by the semi-conductor shortage. 2W are less impacted on lower content of chips.
 Inventory: Dealer inventory is at normal levels. CEAT does not push volumes to dealers. Thus,
there is less mismatch between dealer and factory inventory. Inventory build-up at dealers’
end during the festival season is likely. Production was normal in April, while some production
cuts were effected in May. July and August have been normal across segments (except for
T&B and Farm Tyres – lower demand). Sales in September will determine the inventory level
for T&B and Farm segments.
 Capacity utilization: Currently, CEAT is operating at 80-85% utilization across segments,
depending on capacity availability. For newer capacities such as Chennai Phase 1 and Nagpur
Phase 2, utilization is lower for TBB and Farm tyres due to waning demand, even as PCR and
TBR are at optimal levels. Ambernath OTR plant is fully utilized.
 Price hikes: CEAT has hiked prices 0.5-0.7% in beginning-August. It is mulling further price
hikes in end-September, depending on the market scenario.
 Commodity costs: Commodity prices continue to remain high, thus straining margins. RM cost
may spike 5% QoQ in Q2. NR rubber prices have risen to INR 180/kg due to the gap in
demand-supply and unavailability of imported content.
 Capital allocation strategy: CEAT has invested in expanding capacity of PCR and 2W tyres and
it may take a while to achieve the full potential. It has added 28,000 TPD (including 20,000 in
Phase 1) for PCR, which may be adequate for two years. For 2Ws, at Nagpur Phase 2 facility,
CEAT has added 1.5mn tyres per month and is ramping up capacities. New investments of
INR 12bn at the Chennai plant may be implemented in two phases (INR 7bn in phase 1).
Further de-bottlenecking will help achieve higher capacities.
 Competitive scenario: CEAT is not a big player in the TBR space yet. With radialisation trend
and ADD imposition on imports, market share improved to 8% from 4-5% for TBR tyres. Scope
for improvement exists in market share for the TBB segment (~15% currently). Also, there is
scope for expanding footprint in the international markets for TBR in Europe and the US.
 Margin: CEAT has maintained margin in the range of 12% (+/-1.5%) in the past two years. Its
margin may be comparable in normal commodity price scenario. In a continuously increasing
price scenario, price hikes take some time to reflect in margins for the replacement segment.
 Two-wheeler market: Market share is in the range of 27-30% in the 2W segment, at par with
the market leader. Incremental market share beyond this is more difficult to gain. Higher
capacity is not a determining factor for market share. More traction exists in scooters than
motorcycles currently.
111
 EV 2W segment: CEAT is one of the two approved tyre suppliers for Ola Electric. EV tyres
differ on the specifications front – They are less noisy with better roll resistance. The
manufacturing technology does not differ.
 Premium PCR tyres: The Chennai plant has the capability to cater to the premium PV segment
at 16-17” inches specification, which is also exported to Europe – Approved by one OEM.
 TBR and OTR exports: CEAT is making inroads for TBR in European markets and increasing
interest from US-based OEMs. Countries are now exploring alternatives for China – India
stands to benefit. CEAT has successfully penetrated in the US and EU markets for OTR/Farm
radial tyres.
 IPL expenses: Expenses are absorbed commensurately as and when IPL
matches/tournaments take place.
Analyst annotations: CEAT is geared to capitalize on growth in the tyres segment by raising capacity ~67%, 26% and
56% for PCR, two-wheelers and TBR segment, respectively in FY21-23E. It expects to utilize these
capacities by way of market share gains and via harnessing pent-up, medium-term industry
demand, both in OEM and replacement segments. While RM cost is expected to intensify, we are
positively surprised by the ~7% price hike effected by CEAT in YTDFY22. Further hikes are
expected in the coming quarter despite lower volumes on COVID-led lock-downs.
FY20 67,479 (1.2) 7,177 10.6 2,545 (23.6) 62.9 9.2 10.3 21.4 10.1
FY21 75,728 12.2 9,738 12.9 4,477 75.9 110.7 15.1 13.9 12.2 6.9
FY22E 90,557 19.6 8,296 9.2 2,182 (51.3) 54.0 6.7 8.8 24.9 9.3
FY23E 1,00,891 11.4 12,245 12.1 4,823 121.0 119.2 13.6 13.6 11.3 6.4

112
Represented by:
Sandeep Batra, CFO Crompton Greaves Consumer Electrical
Yeshwant Rege, Vice
President – Strategy & Bloomberg Code: CROMPTON IN, Market Cap: INR 307bn, CMP: INR 490 (as on 15 Sept 2021)
financial planning
Crompton Greaves Consumer Electricals (CG Consumer) is the demerged entity of Crompton
Executive digest:
Greaves, a leading capital goods company in India. Crompton is one of the oldest and leading
brands in the consumer electricals space in India. CG Consumer was demerged in October 2015
and was listed in May 2016. The company has split its product portfolio under two business heads:
1) lighting & luminaries, and 2) electrical consumer durables, which covers fans, pumps and
household appliances, such as geysers, mixer grinders, toasters and irons. Over the past two
decades, it has become a market leader in fans, domestic residential pumps and street lighting
segments. The company has six manufacturing units across four states – Goa, Gujarat,
Maharashtra and Himachal Pradesh.
Investor insight:  In FY21, CG Consumer witnessed a ‘V’ shaped recovery, but this year, in the absence of a
nation-wide lockdown, disruption was also insignificant. This year, stable gradual growth is
being seen.
 CG Consumer has increased prices in July (4-6%), which should suffice, due to the commodity
price inflation. At least, pricing is flat now, with softening in copper prices as also prices of
steel and aluminium plateauing in the past 1.5 months. Historically, 3-4% material cost savings
were seen every year. Going forward, with softening prices/flat trend, margins may revive.
 In the ECD segment, fans space’s current focus is to switch to BEE ratings system, which starts
January 2022 onwards. Within the lighting segment, the company is building a portfolio of
ceiling lights, wherein it has low market share – It has introduced a wide range of products.
Water Heater and Mixer Grinder portfolio have seen improvements over existing versions.
 At present, fans’ growth is 1x GDP + inflation that is in double digits. CG Consumer, being the
market leader, seeks to achieve 1.5x of industry growth, at least.
 New categories may not be white goods-based. Most such categories may cater to kitchen &
small appliances space. CG Consumer expects additional INR 10bn revenues from new
products alongside the current product categories, in the next 2-3 years.
 CG Consumer’s market share across products is as follows:
 Fans – 25-26%,
 Residential pumps – 28% with market leadership,
 Bulbs – 10%, ceiling lights – Focus area with 6% share,
 Water heaters – low teens 12-13%,
 Coolers –Some seasonality-based sales lost; share 5-6%,
 Mixers – Small business; share miniscule.
Analyst annotations: CG Consumer is a market leader in fans and residential pumps in India. Higher spend towards
R&D in existing and new products (mainly kitchen appliances), steady go-to-market strategy with
higher inroads into rural markets, significant emphasis on cost reduction and strong brand recall
are likely to be key triggers, catalyzing sustained higher profit growth over revenue growth in the
medium term.
FY21 48,035 6.3 7,205 15.0 6,167 24.2 9.8 36.3 30.9 49.9 42.5
FY22E 52,360 9.0 7,734 14.8 6,228 1.0 9.9 29.3 25.4 49.4 39.3
FY23E 59,540 13.7 9,109 15.3 7,474 20.0 11.9 29.2 26.3 41.2 33.0
FY23E 67,081 12.7 10,368 15.5 8,607 15.2 13.7 27.7 26.5 35.7 28.6
Analyst: Harshit Kapadia, harshit.kapadia@elaracapital.com, +91 22 6164 8542
113
Represented by:
Saurabh Gupta, CFO Dixon Technologies
Bloomberg Code: DIXON IN, Market Cap: INR 250bn, CMP: INR 4,270 (as on 15 Sept 2021)
Executive digest: Dixon Technologies (DTL) was founded in 1993. In 1994, the company commenced
manufacturing of colour televisions. At present, DTL’s six business segments include: 1) consumer
electronics (mainly TVs), 2) lighting solutions (LED lights), 3) home appliances (washing
machines), 4) mobile & EMS, 5) security devices (CCTV, DVR) and 6) reverse logistics. The company
mainly operates through two business models: 1) original equipment manufacturer (OEM) and
2) original design manufacturer (ODM). Marquee clients include global MNCs such as Samsung,
Xiaomi, Motorola, Panasonic, Phillips, etc. and domestic majors such as Voltas-Beko, Havells-Lloyd,
Godrej, Bajaj Electricals, Crompton Greaves, etc.
Investor insight:  DTL expects INR 170-200bn revenues in FY22, driven by mobile PLI, lighting and consumer
electronics segments, and new revenues from PLI in Telecom and IT hardware.
 Supply constraints continue, with freight rates having risen 10-15x in the past six months.
Also, delayed shipments caused by diverted containers, non-availability and price volatility of
components are key concerns. Consequently, DTL expects a hit of 8-10%, led by supply-side
constraints.
 DTL is better poised to handle semi-conductor shortage. The company was able to source
semiconductors from its suppliers in advance. Currently, DTL has adequate supply for lighting
semi-conductors for the next four months. Thus, working capital has increased.
 Festive season demand seems favorable across verticals.
 IT hardware: An MoU has been signed, factories audited and qualified by a large brand for
laptops, tablets and personal computers production, which is expected to start by Q4FY22.
Margin is likely to be in 2.4-2.5% range, in line with that for televisions. This may be a negative
working capital business with higher RoE. In order to benefit from PLI, INR 200mn investment
is required to be made over the next four years to leverage investment-to-capex ratio benefit
of 5x.
 DTL has filled for PLI scheme in the Telecom and IT hardware space. Approvals are expected
to be received within 7-10 days.
 White Goods PLI: In the next 3-4 days, DTL may file an application to enter into a JV (40%
share) with Rexxam (supplier of Daikin) for manufacturing lighting – AC control boards.
Approval is expected to be received within two months. Revenues from the JV are expected
at INR 1,300-1,350mn, with the potential of scaling it up to INR 1.5bn in the next five years.
The JV will seek to shift supply chains from global markets to India.
 Mobile PLI: The mobile PLI market seems favorable. The scheme benefits were delayed by a
quarter on Wave II impact and component shortage. The scenario is improving on MoM basis.
Order book is strong with all the customers – About 65-70% of Motorola’s requirement is
export oriented. Expect increased revenues from September 2021. While the ceiling revenue
in PLI is INR 2bn, the company expects to end the year at INR 3.5bn. DTL is in advanced stages
of discussion with two more brands.
 DTL will commence production of fully-automated washing machines for small customers
September onwards. Production may start for its anchor customer, Bosch next month
onwards. This year, the company expects to manufacture ~0.15-0.2mn units. This is expected
to increase to ~0.5mn units from FY23. Revenues expected to be generated from the segment
are ~INR 0.4-0.5bn with margins at ~9.5-10%.
114
 Semi-conductor PLI: The government has initiated the Expression of Interest for open cell and
semi-conductor manufacturing in India and has announced an incentive of INR 1bn. DTL
does not plan to enter the manufacturing space for open cell semi-conductors given huge
capex commitment. However, it may benefit if manufacturing is India-based.
Analyst annotations: Short-terms supply issues – Ship availability and semi-conductor shortage – may persist in H2FY22.
DTL has an inventory of up to four months and may face challenges in Q4FY22. However, long-
term demand scenario remains positive as outsourcing continue to be the growing trend, with
penetration remaining low in the electrical and durable industry. DTL remains a key beneficiary
of the policy push, duty arbitrage and PLI scheme.
FY21 64,482 46.5 2,866 4.4 1,598 32.6 27.3 25.0 28.7 156.5 87.8
FY22E 126,834 96.7 4,693 3.7 3,075 92.4 52.5 35.0 36.6 81.3 53.7
FY23E 158,021 24.6 6,242 4.0 4,277 39.1 73.1 35.1 38.4 58.5 40.3
FY24E 201,411 27.5 8,258 4.1 5,813 35.9 99.3 34.3 43.7 43.0 30.4
115
Represented by:
Ankit Gupta, Promoter Dollar Industries
Ajay Kumar Patodia,
CFO Bloomberg Code: DOLLAR IN, Market Cap: INR 22bn, CMP: INR 382 (as on 15 Sept 2021)
Executive digest: Dollar Industries has become one of the leading brands in the hosiery sector with an enviable
15% market share and a significant percentage in textile exports of the total production in the
Indian hosiery market. The company enjoys a production capacity of 13.5 tons a day. Its inner
wear brands include Dollar, Force, Force NXT, Missy and Club.
Investor insight: Demand scenario

 Demand has remained encouraging since beginning-Q2FY21 and picked pace significantly
in H2FY21, before sales were marred by COVID Wave II in Q1FY22.
 The management expects sales to grow at 15-16% in FY22 and margins to improve 100-
150bps to 14.5-15%.
 The management expects the company’s brands Missy (women wear) and Force NXT
athleisure to grow at 30-35% and 40%, respectively.
 The Athleisure segment is performing well for the company since its launch 1-1.5 years ago.
 Dollar is foraying into the women lingerie segment in the next 2-3 months with 10-12
products in 2-3 states.
 Dollar is about to open an Exclusive Branded Outlet (EBO) by this Diwali, which may ramp
up to 7-8 EBOs by end-FY22.
RM scenario
 Dollar witnessed significant increase in cotton and yarn prices last year.
 Dollar has hiked prices six times in the past three quarters of FY21 – Total hikes stand at 18-
20%.
 Further, the company effected another price hike in April 2021 of 1-1.5%.
 Raw material prices have now been stable since the past 3-4 months. However, the monsoon
deficit may trigger further RM price hikes by Diwali.
 Dollar has offset all the RM cost rise via price hikes (completely absorbed by the markets).
Capex guidance
 Dollar has planned a total capex of INR1000mn over next two years.
 The company will be expanding its spindle capacity and setting up an integrated warehouse
facility in Kolkata (INR 450-500mn).
 Dollar currently has 6-7 warehouses set up, spread across Kolkata and hence, is consolidating
them into a single unit. Also, this warehouse may have automation, with loading and
unloading of cargo.
 An integrated warehouse will lead to savings – INR 25-30mn annual rental savings and some
savings on compliance cost and labour cost.
 Dollar is also adding 1MW of solar power capacity, taking the total solar power capacity to
5MW. The company generates 4MW windmill power – Captive power meets Dollar’s 75% of
power consumption requirement.
 Dollar has spent INR 80-100mn annual capex as part of its maintenance capex. Last year, the
company spent INR 230mn in capex, which included INR 100mn of investment in integrated
warehouse.
116
Ad spends
 In FY20, Dollar spent INR 500mn in branding rejig and a total of INR 790mn on sales and
promotions – The Company launched TV commercials with Indian actors, Akshay Kumar and
Chitranganda Singh.
 Expect ad spends to moderate in FY22 given that the brand rejig is over.
Improved working capital cycle
 Dollar is implement project Lakshya to improve working capital cycle across the value chain.
 Expect 15 days of reduction in FY22; significant improvement may be seen only in H2FY22.
 Dollar has on-boarded 62-63 distributors under project Lakshya – Total distributors are at
1,000 and retail touch points at 100,000.
 Dollar may take three years to complete the project.
 So far, the project has been implemented in Karnataka, Gujarat, Rajasthan, Maharashtra and
Telangana. It may now be implemented in Andhra Pradesh, Tamil Nadu, the North East, Bihar
and Odisha in FY22.
 Implementation progress has been slower due to the ongoing pandemic.
 Dollar expects to on-board 130-135 distributors to project Lakshya in FY22.
Project Lakshya – Key challenges
 The DMS system will be installed at the distributor level, which may provide Dollar with live
pictures of distributors’ invoices.
 This DMS system will be connected to the Auto Replenishment System (ARS) installed at the
company level.
 It is difficult to on board distributors to the Distributor Management System (DMS).
 Under this project, Dollar will spike servicing to retailers manifold and service them within 24
hours.
 Billing will happen through DMS with no cash transactions.
 Distributors are expected to service retailers even if they ask for four pieces of a particular SKU
(distributors not a part of this project usually try to sell the entire box, 8-10 pieces, to the
retailer).
The management believes FY22 sales may grow to 14-15%, led by strong growth in 2–3 brands
Analyst annotations: and product launches. The company’s initiation of Project Lakshya with the object to improving
working capital cycle is ongoing and completion is likely in the next three years.
FY18 9,903 13.0 1,264 12.8 640 47.1 11.3 23.7 24.2 33.8 18.6
FY19 10,720 8.25 1,386 12.9 753 17.7 13.3 19.5 21.6 28.8 17.3
FY20 9,500 (11.4) 1,104 11.6 594 (21.1) 10.5 13.5 14.5 36.5 21.5
FY21 10,370 9.1 1,380 13.3 870 46.5 15.4 18.7 19.0 24.8 16.6
Analyst: Akhil Parekh, akhil.parekh@elaracapital.com, +91 22 6164 8519

Rajesh Mudaliar, rajesh.mudaliar@elaracapital.com, +91 22 6164 8500
117
Represented by:
Stuti Bhageria, Promoter,
Sr VP Corporate Strategy
Filatex India (Not Rated)
Rahul Menon Bloomberg Code: FLTX IN, Market Cap: INR 25bn, CMP: INR 112 (as on 15 Sept 2021)
VP Corporate Strategy
Executive digest: Filatex India (FTLX IN) is one of India’s Top 5 manufacturers of polyester filament yarn. The
company makes polyester and polypropylene multifilament yarn and polyester chips. It has two
manufacturing facilities: one at Dadra & Nagar Haveli and the second at Dahej, equipped with
state-of-the-art modern German machines.
Investor insight:  Recovery post the first lockdown in June 2020 improved significantly. The recovery was not
just for synthetic yarn but also for cotton & other blends. Increase in duty rates on cheap
imports had a curbing effect, which also contributed to firmness in the market
 Exports market opportunities were plentiful but could not materialize fully, due to an erratic
shipping schedule and sharp shipping cost
 The economic fallout of the Second COVID Wave at worse is likely to remain restricted to the
first half of this financial year
 India’s polyester industry after the removal of anti-dumping duty on key raw material, which
is Purified Terephtalic Acid (PTA), has improved competitiveness, and as a result, capacity
utilization has improved
 Inverted GST structure is hampering growth. The polyester industry continues to suffer on
account of it, higher rate of 18% on raw materials and 12% on fished products, such as yarn,
and in the value chain, 5% on fabrics & garments. A uniform GST rate across the whole chain
will ease working capital needs and spur growth across the industry
 The government has taken effective steps to plug loopholes by imposing value addition
norms on garments that have curbed duty-free imports from FTA countries. Custom duty rates
have been increased from 10% to 20% on imports of around 300 textile products
 The government has extended rebate of State & Central taxes and levy, Rebate of State and
Central Taxes and Levies (RoSCTL) for exports of apparels and garments that are made until
March 2024
 Textile products, which are not covered under RoSCTL, would be eligible to avail benefits
under Remission of Duties and Taxes on Exported Products (RoDTEP)
 Another boost is inclusion of manmade fabric (MMF) garments in apparels under the PLI
scheme. Anti-China sentiments are gaining ground in global trade, and these schemes are
likely to boost exports, which are currently hampered due to high shipping rates
 Load trial of 30MW captive power plant at Dahej is ongoing for the past two weeks in August.
The company is aiming to achieve commercial operations of the power plant in the near term.
Total energy savings would be INR 400mn per year
 The company has identified opportunities to increase please Continuous Polycondenstaion
(CP) melt capacity by around 50 tonne per day. This additional melt along with surplus chips
volume will be utilized to produce 120 tonne of please expand (POY)
 The company is engaged in R&D activities and developing process parameters for recycling
of polyesters. Importance of sustainable and reduced environmental impact in textiles and
apparels industry is gaining importance worldwide
 India’s MMF-based textile manufacturing is focused on low value-added and commodity
products. Demand for high value-added products like sportswear and performance wear is
growing rapidly worldwide
118
 Countries like Taiwan, South Korea, and China are already manufacturing high-end MMF
based textiles. To keep pace with the current trends and needs, India needs to invest and
develop capabilities in MMF textiles and apparels products to tap into the higher value-added
segments
 Demand has picked up in Q2FY22 like it did in Q3FY21. Margin will improve once demand
increases
 PTA is a key RM for the company, followed by Monoethylene Glycol (MEG). Prices for both
have gone up. Management expects to completely pass on increased RM prices to end-
consumers. Hence, margin should not be affected from Q2FY22
 There has been a structural change, which has led to doubling of EBITDA margin in the past
1.5 years. The antidumping duty has been removed on FTLX’s raw material has helped it
improve margin. Also, demand also has grown locally
 There has been no capacity addition in the industry for the past 1.5 years. Rather, there was
a fire in February 2020, which destroyed 6-7% of capacity; also, the government has put some
curbs on imports, which were coming at zero or a lower duty
 Q3FY22 demand should reach levels of Q3FY21. Management expects to clock in volume of
84,000tn
 Inventory levels increased in Q1FY22, largely because production levels remain unchanged
despite the Second COVID Wave. Also, since RM prices were firming up, the company has
kept additional stock. Management expects inventory to be liquidated in Q2FY22
Analyst annotations: Healthy double-digit growth in textiles and apparels should continue over FY22-23. Filatex is
expected to post a sales CAGR of 12-15% over FY21-23. Margin on a sustainable basis should be
at 15-16% for FY22
FY18 19,330 24.7 1,570 8.1 600 51.2 2.8 15.5 14.0 40.7 20.5
FY19 28,740 48.6 2,170 7.5 850 41.6 3.9 18.0 17.0 28.7 14.3
FY20 27,820 (0.03) 2,220 7.9 1,210 42.3 5.5 20.4 15.0 20.4 14.5
FY21 22,270 (20.0) 3,470 15.6 1,660 37.2 7.5 21.8 22.0 14.9 8.9

119
Represented by:
Umang Khurana, Head- IR Hero MotoCorp
Saloni Agarwal – Deputy
IR Bloomberg Code: HMCL IN, Market Cap: INR 579bn, CMP: INR 2,851 (as on 15 Sept 2021)
Executive digest: Hero MotoCorp (HMCL IN) is the market leader in the 2W industry with a market share of 36%.
The company is present in both motorcycles and the scooter segments, with a market share of
~51% and 11%, respectively. Motorcycles form a major chunk of revenues, contributing ~90% to
volumes, while scooters contribute 10% to volumes. HMCL is a domestically-focused company,
deriving ~97% of its volumes from India. Entry-level motorcycles (75cc to 110cc) form a major
chunk of ~70% of overall volumes.
Investor insight:  Performance and outlook: All dealerships are now functional. Volumes from urban regions
have picked pace compared with rural areas and demand is at 80-90% of normal levels. While
sales were decent during small festivals such as Raksha Bandhan, the take-off has not been in
line. Expect second half to be better with improved sentiment and better festival season
versus that during last year.
 Long-term vision: HMCL is launching about two models every year in 150-400cc (Entry and
Deluxe) segments. In three years, expect a larger motorcycle from Harley Davidson. The
management’s focus is on improving on weak segments.
 Inventory: Seven weeks of inventory exists, with 550k units monthly production. HMCL may
not ramp up inventory substantially.
 RM costs: Commodity costs have peaked for now. HMCL may require some minor price hikes
to offset the entire cost inflation.
 Cost savings: Cost deferment may script a return, with rise in the total cost.
 Semiconductor shortage: Competitors have indicated shortage of chips. The BS6 commuter
bike segment has been marred by chip shortage due to increased censors. All models were
not impacted at much due to different chip requirement across models. HMCL has ably
managed the situation via alternate sources and select models.
 Scooter segment: HMCL has gained market share in the scooter segment and is expected to
perform better in the coming year. Electrification in scooters may be in HMCL’s favor and
strengthen its presence with Ather, an HMCL product and a swappable battery product in
partnership with Gogoro. Scooter demand in urban regions is at 60% and as a percentage of
overall industry at 30%. With one-third of scooters becoming EVs, demand is at 10% of the
overall market size. Despite FAME-II, the demand is muted.
 Margin profile: Considering the current price of vehicle, every EV is sold at 30-40% loss
(without considering FAME-II). No EV player has broken even yet, while ICE vehicle is sold at
double-digit EBITDA margin.
 e2W customer profile: Expect two customer categories: 1) B2B and 2) Premium buyers. The
B2B segment will cater to the mass volume customer (e-commerce, last mile delivery). For
demand to take off, the requisite product fit is to be leveraged, which is not yet established.
B2B is expected to be the volume driver with range anxiety as the key factor. Premium
customers are buyers who can afford the vehicle and may ensue limited demand.
Infrastructure development is crucial.
 Brand dispute: Hero Electric brand cannot be used by HMCL. The company can launch the
Hero model, but not use the same name as Hero Electric models. No ongoing current
litigations exist regarding dispute between Hero Moto and Hero Electric as both the parties
have a mutual agreement.
120
 Pricing parity: The entry level base for motorcycles is high for HMCL, as is visible in HF Deluxe’s
case. Rural segments faced more challenges, thus affecting the entry segment.
 Harley Davidson: 14 HD dealerships exist pan-India, with more expected in the upcoming
quarters. It is crucial to understand the market and customers. Harley is expected to launch in
the mid-market segment. HMCL’s product may cater to the mid-market segment – Expected
launch in three years.
 Flex-fuels and ethanol blending are awaiting government guidance on key focus areas – EVs
or flex fuels – as the endeavor requires substantial investments. Currently, 10% flex fuel is
already permitted, which could be improved to 20% via minimal increase in investments.
Analyst annotations: Despite challenging times, HMCL could improve its market share 200bp QoQ in Q1FY22. HMCL
is developing a swappable battery product in partnership with Gogoro, the developer of the
world’s largest battery-swapping network, and is expected to launch its first flagship EV scooter
by March 2022. The disruption threat in EVs is likely to be led by scooters first, which contributes
~8% to HMCL’s volumes. With the launch of Ola Electric now, the threat of share loss due to start-
ups has heightened the most for HMCL in our view, as the company is relatively a late-entrant in
the market.
FY20 2,88,361 (14.3) 39,579 13.7 29,559 (12.7) 148.0 21.9 29.0 19.3 12.5
FY21 3,08,006 6.8 40,192 13.0 29,642 0.3 148.4 20.2 26.7 19.2 11.7
FY22E 3,68,630 19.7 49,682 13.5 36,137 21.9 181.0 22.3 29.9 15.8 9.2
FY23E 4,13,710 12.2 60,093 14.5 43,940 21.6 220.0 23.6 34.3 13.0 7.3

121
Represented by:
Ajit Jhunjhunwala,
Managing Director
La Opala RG
Bloomberg Code: LOG IN, Market Cap: INR 33bn, CMP: INR 295 (as on 15 Sept 2021)
Executive digest: La Opala (LOG) was the first company in India to introduce opal glass in 1987. The company has
total of 25,000tonnes annual capacity, with two plants at Madhupur, Jharkhand and the other at
Sitarganj, Uttarakhand. Rapid capacity expansion has allowed LOG to capture 50% of the
organized market share in opal glass. The company currently exports to 40 countries, with
presence in 600 towns in India (population of more than 0.1mn) and in 12,000 retail outlets. The
company’s opalware portfolio includes plates, bowls, dinner sets, cup-saucer sets, coffee mugs,
tea sets, and its crystalware portfolio barware, vases, bowls and stemware. LOG markets its
opalware products under the brands, La Opala and Diva and glass products under Solitaire.
 Business normalcy has largely returned – Expect positive developments the short-to-medium
Investor Insight: term.
 Sales recovery has been good from July – Expect Q2 to be healthy. LOG highlighted that an
absence of Wave III disruption may lead to robust FY22.
 LOG’s new plant is progressing as scheduled – 80-85% of the work is complete, with
machinery being installed. The company expects commercial production from Q4.
 Advertisement campaign is ready to be launched. By October, the ad spent should kick in.
 LOG has started stocking for the Diwali festive season September onwards.
 Kerala has returned to normalcy.
 Tea and coffee is an important segment for the company. About 25% of the installed capacity,
including new facility capacity, is for this segment. LOG mentioned that 100% of its
production is sold.
 LOG has restructured its top sales management. The company has on-boarded its new sales
Head from Bajaj Electricals, having segregated general trade and alternative channels. These
initiatives have already started showing results.
 Prior to COVID, gifting and catering were important revenue generating segments, which
were impacted by COVID. However, during COVID, other segments, mainly retail, have
significantly picked pace.
 LOG is supplying its products to the Future Group, albeit via Reliance.
 Borosil is looking to double its capacity in the next 18-24 months. LOG enjoys 50% of the
industry capacity and propped by the new facility, this should increase further.
 LOG shortlisted a few product categories in the glassware segment, wherein it plans to foray.
LOG is also planning to actively venture into the tiffin segment wherein Borosil is present.
 Opal products have significantly grown in the past few years as they are available at
reasonable and affordable prices. This has been possible due to production scale-up that in
turn contained costs.
 LOG highlighted that demand from exports has been healthy, but logistics challenges galore.
Container shortage and sharp freight cost spikes are rampant. LOG expects exports to revive
to pre-COVID levels in FY22, contributing 20% to sales.
 LOG is increasing its focus on e-commerce and expects major changes in the next 2-3 months.
Analyst annotations: LOG’s new capacity of 11,000tonnes was delayed due to the ongoing pandemic. The capacity is
expected to start commercial sales by Q4FY22. However, full impact on sales may reflect only by
FY23. The new capacity may emerge as a big growth lever for LOG in the next three years.
122
FY21 2,113 (21.8) 684 32.4 496 (41.2) 4.4 8.2 7.2 68.6 49.7
FY22E 2,821 33.5 1,138 40.4 870 75.6 7.7 12.3 10.1 39.1 29.7
FY23E 3,197 13.3 1,312 41.0 1,010 16.0 8.9 12.7 10.3 33.7 25.1
FY24E 3,762 17.6 1,553 41.3 1,221 21.0 10.8 13.8 11.2 27.9 20.5

Rajesh Mudaliar, rajesh.mudliar@elaracapital.com, +91 22 6164 8500
123
Represented by:
Sandesh Naik, DGM
corporate Finance & IR
Mahindra & Mahindra
Sriram Ramachandran, Bloomberg Code: MM IN, Market Cap: INR 940bn, CMP: INR 755 (as on 15 Sept 2021)
Senior VP, Corporate
Finance
- Head, Investor Mahindra and Mahindra (MM IN) is engaged in manufacturing passenger cars, commercial
Executive
Relations & digest:
vehicles and tractors. The company's operations are spread across segments: 1) automotive
Special Project
engaged in the sale of automobiles, spare parts and related services, 2) farm equipment involved
in the sale of tractors, spare parts and related services, 3) IT services active in business consulting
and related support activities, 4) financial services in services relating to financing, leasing and hire
purchase of automobiles & tractors, 5) steel trading and processing in trading and processing of
steel, 6) infrastructure includes operations of commercial complexes, project management and
development and 7) two wheelers, which consist of the sale of two wheelers, spare parts and
related services, and others (includes logistics, after-market and investment).
Investor insight:  Performance: Significant headwinds impacted Q1 demand due to Covid Wave II. MM has
showcased robust performance in the farm segment, with market share improving 2.6% to
~42%. All its international subsidiaries were profitable in Q1. Good recovery was seen in the
auto segment, with improved market share. Product launches such as Bolero Neo enjoyed
strong bookings – Expect the upcoming XUV 700 to perform well.
 Outlook: Commodity price inflation and high freight costs continue to strain margins.
Stringent fiscal discipline continues and MM is effecting many cost saving measures. Expect
losses in farm and international segments to trim to INR 3bn in FY22 and turn break-even or
profitable post that. We anticipate strong demand subject to a likely Wave III. Commodity
pricing pressure and shortage of semi-conductors continue to be the key risks.
 Tractor demand: Retail tractor demand is expected to revive in a couple of months. MM is
prepping its channels ahead of the festive season, with wholesale inventory expected to
reduce post season, in line with retail. With improved supply chain, MM is well positioned to
capture demand. The current inventory stands at 30 days at the dealers’ end (at safe level).
 Tractor outlook: MM is awaiting clarity on the monsoons and is maintaining its growth
guidance of low-to-single digit for tractors in FY22 due to high FY21 base. MM may revise its
guidance post the festive season.
 Capex and investments: MM may incur an overall capex of INR 90bn over FY22-24 (INR 60bn
towards ICE business; INR 30bn for EVs). Farm capex should be INR 30bn over the same
period. Investments in Auto and Farm subsidiaries should likely be INR 15bn, of which INR
11.5bn may be incurred in the current year. Further investments in group companies will be
based on milestone achievements.
 Commodity costs: Pressure on commodity price continues. MM has not made any
announcements currently regarding price hikes.
 Semi-conductor shortage: Semi-conductor concerns continue to mar the supply chain and
hinder production in the industry. The situation is dynamic and unpredictable, thus resulting
in uncertain Q3 outlook. However, MM is better placed now and hopeful of stabilisation by
Q4. MM’s launches were not affected – XUV 700. Increase in chip prices will not affect the
vehicle cost materially.
 Content of semi-conductors: Content per vehicle of ECUs is higher for diesel engines of SUVs
compared with petrol variants. Further, ADAS, airbags, infotainment and incremental safety
features increase ECU requirement. ECUs for engines (supplied by Bosch) are fungible and
can be prioritised across the models.
124
 EV infrastructure: MM is not investing in EV infrastructure at the moment, with focus on
developing pure EV products. MM has strong technology and capability on the BMS front
currently. However, it is agnostic on the cell technology. MM is primarily focusing on: 1) last-
mile mobility (E3W – passenger and goods segment), 2) PV-SUV range of EVs by converting
ICE engines to BEVs and 3) full BEV models post 2025. Going ahead, MM will build
partnerships for EVs.
 Waiting period: Bolero and Scorpio have a wait period of 1.5-3 months. XUV300 has 6,000
pending bookings with a two-month wait – It gleaned 6,000 wholesales in the past month.
Thar has a 10-month wait for some models with 39,000+ pending bookings and incremental
bookings of ~4,000 per month despite the existing wait period. Bolero Neo has crossed 7,000
bookings since July. Most of the wait period is on account of semi-conductor shortage.
 CAFÉ norms: BS4 implementation for the tractor industry (50hp and above) has been
postponed to 1 April 2022, from the earlier deadline of 1 Oct 2021. The deadline is for
production and not vehicle sale. Currently, 50hp and above constitutes only ~10% of the
market. The tractor market is dominated by 30-50hp (~80% of the market share), which is
unaffected by the new norms.
 E3W segment: Expect demand pick-up with improving macro conditions. MM is collaborating
with various financiers to help brew conviction for EV 3W, it being a new segment.
Behavioural change in customers is required, which may take some time.
 Road tax deferment: Currently, reduced road tax is only applicable for the government sector
and those with transferable jobs. It is unclear if this may affect the private sector. However, it
may take some time to gauge the impact on demand.
 Madras High Court ruling: It is too early to comment on the ruling, but it is surely a dampener.
The ruling may not largely impact the SUV segment, considering the ticket size.
 Investments in Mahindra CIE: MM’s current stake is at 11% and all options are being
evaluated. Forward looking statements on strategic investments are unlikely.
Analyst annotations: We expect the tractor industry to report flat growth (MM to post flat growth in line with industry) in
FY22E, on Covid-19 impact in rural areas as also a high base. The automotive segment though is
expected to post a strong volume CAGR of 22% in FY21-23E, given the cyclical recovery and successful
launch of Thar. While international subsidiary losses are expected to reduce in FY22E, we remain
concerned over higher-than-expected capex+ investment in FY22-24E – INR 170bn versus an
estimated INR 150bn. Higher subsidiary investment would result in close to nil FCF (including capex+
investment) in FY22E.
FY20 4,48,655 (15.1) 63,506 14.2 35,509 (34.5) 30.0 2.1 10.6 25.1 13.5
FY21 4,45,744 (0.6) 69,766 15.7 40,974 15.4 34.6 2.6 11.5 21.8 12.3
FY22E 5,30,754 19.1 75,367 14.2 43,746 6.8 37.0 11.8 11.0 20.4 12.0
FY23E 5,91,548 11.5 90,507 15.3 54,252 24.0 45.9 13.2 12.6 16.5 9.6

125
Represented by:
Vikas Sinha, SVP,
Strategy, M&A and IR
Mahindra CIE Automotive (Not Rated)
Bloomberg Code: MACA IN, Market Cap: INR 88bn, CMP: INR 231 (as on 15 Sept 2021)
Executive digest: Mahindra CIE Automotive (MACA IN) is an auto components supplier with presence in several
technologies, including forgings, castings, stampings, aluminium products, magnetic products
and composites. The company is focused on the automotive market, comprising cars, utility
vehicles, commercial vehicles, two-wheelers and tractors. Its forgings business offers crankshafts,
stub axles, forged & machined parts, front axle beams and steel pistons & forged steel parts. The
stampings business deals in sheet metal stampings, components and assemblies. The castings
business is involved in turbocharger housings, axle and transmission parts. Further, the magnetic
products business is engaged in soft & hard magnets, and magnetic induction lighting. MACA’s
composites business offers compounds, components and products, and the gears business
engine gears, timing gears, transmission gears, transmission drive shafts and crown wheel pinion.
MACA operates in India, Italy, Spain, Lithuania, Germany and the UK. In Europe, the company is
focused on truck forgings, passenger cars forgings and high precision gears & shafts.
Investor insight:  Performance and outlook: MACA has added new customers and is growing faster than the
market, with focus on new orders and exports. The PV market is impacted by the semi-
conductor shortage. The two-wheeler market is less affected by the chip shortage. However,
2W segment is underperforming due to cost increase on account of commodity costs. The
tractor market has performed very well due to government initiatives. The truck segment is
seeing substantially slower and delayed growth. Overall, the Indian markets are expected to
be neutral or post medium growth.
 EU outlook: EU markets have outperformed the Indian markets, especially in the PV and Truck
segments. The 12% growth forecast has waned to 9% due to semiconductor shortage. H2
may be weaker than H1 due to seasonality and semi-conductor concerns.
 Electrification: Expect 3W and 2W segments to lead electrification in India, with 10-15%
penetration in about three years in the urban markets and narrowing of gap of the TCO. Fleet
vehicles and busses will follow this trend. Currently, MACA is focusing on composite products
(suspension, gears and forks), which is required in the EV vehicles.
 Strategy: The medium-term strategy will be based on expanding RONA and ROE ratios to
15%. MACA is targeting to achieve 18% EBITDA margin. The idea is to increase the share of
business in crankshafts, driveline and aluminum forging segments in Europe to hedge the
anticipated loss of business due to electrification over three years.
 Risks: The short-term risk is the market performance, going forward, climate changes and
semiconductor shortage. Long-term risks are electrification timelines in India. The ICE engine
exposure is nearing 20% in India and 30% in Europe. In Europe, vehicle electrification is
rapidly increasing versus that in India. MACA will be implementing three strategies: 1) to
increase the share on investment, 2) to invest in plants so as to increase capacity, 3) increase
aluminum inventories.
 Localization – Gears and Magnets: Given the China+ narrative, MACA enjoys two advantages
– Gears and magnetic products. The company is the largest player in magnetic products in
domestic markets, providing motors and other activities, for both 2W and 4W segments. The
biggest competition is Chinese imports, thus, immense market opportunity exists. As
electrification of cars/bikes depends on magnets, it is a great opportunity for MACA. The
foundry area also offers opportunity, but many plastics, etc. are used, with meagre
opportunity in that area. In other sectors, MACA does not compete with China.
126
 Aluminum forging: Expect aluminum forging business to do well with electrification. Margins
and returns may be determined by the economies of scale and EV adoption, which is hard to
envisage currently.
 Semi-conductor shortage: The earlier forecasted growth stood at 25-30%, but has now
slipped 5-10% due to chip shortage. In Europe as well, MACA was expecting 15% growth,
which has trimmed to 9-10%. The 2W segment has been impacted as well.
 Capex: Mahindra CIE is augmenting foundry and machining capacities and has invested in
Indian facilities – Expansion at the Aurangabad facility for electricals.
 Balance sheet: MACA’s debt has reduced since last quarters. Inventory purchase has spiked,
but may not affect valuations.
 New businesses: Bajaj Auto is the largest customer for Mahindra CIE generating 20% of the
latter’s overall revenues. The company is supplying components to Mahindra for e-3Ws and
is currently in talks with Bajaj Auto, Ola Electric for the e-2W segment
Analyst annotations: MACA is targeting to achieve 18% long-term EBITDA margin, with the view to increasing the
share of business in crankshafts, driveline and aluminum forging segments in Europe so as to
hedge the anticipated business loss due to electrification over three years. However, shortage of
semiconductors continue to pose a threat in the near term.
CY17 64,279 20.8 7,992 12.4 3,632 112.7 9.5 10.4 11.1 24.4 12.3
CY18 80,315 24.9 10,510 13.1 5,485 51.0 14.5 13.7 14.1 16.0 9.1
CY19 79,078 (1.5) 9,678 12.2 3,538 (35.5) 9.5 7.9 10.9 24.4 10.3
CY20 60,501 (23.5) 5,016 8.3 1,064 (69.9) 2.8 2.2 3.1 82.1 19.8

127
Represented by:
Aakash Minda, CEO Minda Corporation (Not Rated)
Bikash Dugar, Lead IR
Bloomberg Code: MDA IN, Market Cap: INR 34bn, CMP: INR 130 (as on 15 Sept 2021)
Executive digest: Minda Corporation (MDA IN) manufactures auto components and accessories in India. The
company's principal products and services include lock kits, spares, locks and ignition switches. It
offers a diversified product portfolio that encompasses safety, security & restraint systems, driver
information & telematics systems, and interior systems for auto original equipment manufacturers.
Its products cater to two- and three-wheelers, passenger vehicles, commercial vehicles and after-
market. It has manufacturing facilities in India, South East Asia, Europe and North America.
Investor insight:  Industry outlook: The industry witnessed a V-shaped recovery in most segments. However,
OEMs are closing plants globally as also in India, due to chip shortage – GM and Ford have
halted production for two weeks. Expect the situation to improve by CY22. Covid-led
uncertainty continues to persist – 2W demand sentiment remains muted, with inventory
build-up. CV recovery continues to be a concern. We are cautiously optimistic on the auto
industry’s overall outlook.
 Spark Minda Green Mobility incorporated WOS in Q2FY21, with primary focus on the EV
mobility space.
 Strategic partnerships: MDA has entered into: 1) Strategic and operational partnerships with
Phi Capital; 2) TLA with Ride Vision, Israel for 2W collision avoidance systems; 3) JV with
INFAC, Korea – orders worth INR 1.4bn won for antenna solutions from Tata Motors, MSIL,
KIA Motors and Hyundai and 4) Partnership with EVQ Point, Bengaluru for charging
solutions.
 EV focus: MDA’s product portfolio comprises DC-DC convertors, battery chargers, connected
clusters, telematics, sensors and wiring harness. Smart key products are gaining traction. MDA
enjoys secured orders from Ampere, Ola Electric, Revolt, Polarity, Bajaj Auto and TVS Motors.
More than 95% products are EV agnostic. MDA has won a lifetime award worth INR 2,379mn
in Q1FY22.
 Margin: MDA endeavors to aim for double-digit margins at Q4FY21 levels. The intrinsic focus
is on cost rationalization and new product additions to ride the premiumization wave. The
long-term target is to achieve 12% EBITDA margin and 20% ROCE.
 New order wins: MDA is focusing on exports, aftermarket and increasing wallet share with
customers. The overall order book stood at INR 68bn in FY21 and INR 12.8bn in Q1FY22,
mainly bolstered by incumbent players (domestic and exports), to be fulfilled in 4-5years.
 Kit value: Approximately 60% of the components are pure EV products such as BMS, battery
chargers, motors and controllers, while the balance 40% comprises tyres, seats and other
parts. For 40% of its products, MDA’s kit value ranges from INR 2,500-3,000 to INR 7000-
10000 per kit value (includes electronics, clusters, sensors, smart keys, etc.). For the remaining
60% (VCUs, chargers, DC-DC convertors), the kit value is INR 8,000-10,000. Overall, the kit
value ranges within INR 18-20,000 for EV 2Ws (a spike from INR 4,000 for ICE 2Ws), leading
to exponential revenue growth for MDA with EV penetration.
 EV products: MDA is already producing DC-DC (10-30amps) for 2Ws such as Bajaj Auto and
Polarity, and is the sole supplier for TVS iQube (costing INR 800-1,000). Chargers portfolio
(350W-3kW) consists of orders from incumbent players and start-ups (costing INR 3,000-
4,000). Motor controllers and BMS are under development. MDA may explore manufacturing
of motors in the future.
128
 Localization: Many EV components are currently imported from China or overseas. Going
ahead, with the localization theme gaining currency, expect domestic players such as MDA
to benefit. However, margin and profitability dynamics are challenging for domestic players
as OEMs have the option to import from established players.
 Wiring harness: Increase in the number of components has led to higher topline growth, with
transition to BS6. The focus is on localizing sourcing components, and improving manpower
productivity and RM cost to boost margins.
 4W segment: Gradually, MDA is gaining ground in the 4W segment as well. The MDA-Vaz JV
(vehicle access systems) caters to 4W products. MDA’s interior plastics division has won orders
from the largest 4W manufacturer in India, with improved kit value. Further, the new Israel
JV for antenna systems for 4Ws will add to product portfolio. However, the primary focus is
on the 2w segment.
 Light weighting: Aluminum casting will increase for EVs and MDA has the technical know-
how to leverage it. OEMs are relying on MDA to deliver on this front. The current kit value is
5-7kgs per car, which should increase.
 R&D spend at 2%: MDA enjoys a strong R&D team, with +170 patents in the past five years.
Analyst annotations: MDA is a key beneficiaries of the LaCE effect, the four overarching sectoral megatrends. The
company has a diversified product base and strong clientele. The management has taken
necessary steps towards improvement via cost rationalization measures and optimizing business
mix, with focus on high-yielding products. We expect MDA to outperform the industry, led by: 1)
organic and inorganic expansion, 2) strong relationships with OEMs, 3) opportunities in sensors,
ABS and wiring harness on the back of BSVI implementation, 4) exports focus and 5) electrification
theme. Execution capability on margin delivery will be the key monitorable.
FY18 25,935 25.9 2,756 10.6 1,427 39.8 6.9 20.9 15.3 19.6 13.7
FY19 30,920 19.2 2,941 9.5 1,692 18.6 7.5 17.5 12.3 18.0 11.4
FY20 28,130 (9.0) 2,499 8.9 810 (52.1) 3.6 9.8 8.0 37.5 12.7
FY21 23,679 (15.8) 2,170 9.2 935 15.4 3.9 8.8 11.3 34.6 14.0

129
Represented by:
Pankaj Roongta, CFO &
Devanshi Dhruva, IR
Westlife Development
Bloomberg Code: WLDL IN, Market Cap: INR 83bn, CMP: INR 536 (as on 15 Sept 2021)
Executive digest: Westlife Development Limited (WDL) is among India’s fastest growing players in the quick service
restaurant (QSR) sector. It focuses on establishing and operating McDonald’s restaurants across
West and South India, through its wholly-owned subsidiary Hardcastle Restaurants Pvt. Ltd.
(HRPL). McDonald’s (McD) operates through various formats including standalone restaurants,
drive-thrus, mall food courts, McDelivery and dessert kiosks. It also has three thriving brand
extensions – McDelivery, McCafe and McBreakfast.
Investor insight:  Dine-in has started reviving June onwards, but has not yet fully opened due to mall stores
remaining closed. Maharashtra is also recovering, led by convenience levers and dine-in
recovery. Q1 was strong, with gross margin improvement and positive EBITDA.
 Outlook seems clement with careful adherence to regulatory restrictions and monitoring
likely growth/expansion avenues. The management is confident of expanding to 20-25
stores, from current levels.
 McSpicy Fried chicken was launched and has stood out as an interesting category – The
product is being popularized in India now, led by huge opportunity. The company has
positioned itself to glean significant chunk of the fried chicken space.
 McD stores differ in so much as they invest in capacity, while Dominos’ invests in distribution
rather than capacity. Capacity along with drive-thru, on the go, take-away, and Café is
available with McD stores, which is not the case for other QSR chains.
 WDL may retain its 2,500 sqft store size and no shrinkages are expected for delivery-focused
stores. McD revenues stood at INR 50mn pre-COVID, based on sales per store, 2x that for
Burger King (BK).
 For some stores that have been opened for both delivery and dine-in for the past 5-6 months,
no cannibalization trend was seen on delivery and dine-in. Going forward, expect WDL to
post higher same store sales growth (SSSG). Even the shift from unorganized to organized
sector may continue to benefit large players such as McD.
 Positive trends in delivery and convenience channels may enable much higher growth once
dine-in revives to normalcy.
 India macros indicators remain positive, with new opportunities emerging in the QSR space
– Devyani and BK are listed. Also recovery was better for drive-thru. High street stores
witnessed strong absorption. Thus, store expansion is likely to touch at least 25 stores per
year, going ahead, which may prop to 30 stores annually on encouraging response.
 Expect McD to grow 10-12% along with the industry. Outperformance focus may be aided
via: 1) channel growth i.e. convenience channels and 2) vegetarian and non-vegetarian
brands equally (chicken market share robust in South India).
 Expect tier II/III market expansion, thus slightly changing the store mix. In the second and
third years, stores may largely turn profitable. However, even the cost structure for tier II/III
cities differs versus that for metros.
 For most of McD properties, rent is escalated only once in five years. Also, temporary
disruption may be seen in real estate, but good real estate location is critical for QSR.
 WDL is collaborating with third-party aggregators and its long-term business plans are
aligned with them. McD fully values such long term associations – Grab and Shadowfax may
be leveraged to deliver orders received via own MDS app. WDL is thus leveraging both third
party aggregators such as Zomato and Swiggy as also the MDS propriety app.
 McD is piloting its own fleet, but growing profitability/reach via third-party aggregators is also
a focus area.
130
 Unique customer data is received from Zomato/Swiggy. Data analytics are received for
omnichannel strategy, thus necessary data is accessible.
 Comprehensive data on order timing, delivery pick-up time, exact delivery time, preparation
time and consumer feedback is available. McD can leverage its own fleet, but third-party
aggregators are performing well.
 McD as a brand is not known for heavy discounting, promotional offers etc. The discounts on
Swiggy/Zomato are the aggregators’ own investments. On McD app, some promotional
offers are available, but consumers are free to make their own ordering choice.
 Packaging innovation KPIs have been developed to track order freshness. Also, when a store
network is developed in a city, the distance between two stores and dedicated area coverage
are carefully calibrated to ensure maximum area covered with minimum delivery time. New
packaging was launched for ‘coffee to travel’ and the differently abled (burgers and price
packing).
 Inflation was witnessed for some oil and chicken products, in line with other QSR companies.
WDL may mitigate some part via price hikes and most of it through operational efficiencies.
 WDL’s gross margin guidance, pre-COVID, stood at 65%. Q4 margin stood at 66%. Thus, 65-
66% seems to be the minimum margin notwithstanding cost inflation inching up 50-100bp
every year, going ahead, led by cost rationalization and supply chain efficiencies.
 McD Gourmet has been currently launched in eight cities – Nine premium burgers were
launched in vegetarian and non-vegetarian categories. Good feedback and taste profiling
have been received till now, post which WDL may implement feedback-led corrections.
 Own app – delivery charges have been constant since the past few years – Currently, the
charges are constant at ~INR 30-35.
Analyst annotations: WDL has executed well on delivery/take-away and convenience channel model, which has
limited Wave II impact. With dine-in opening up, SSSG should be robust from both channels
combined. Relaxations in various states in the coming months should drive dine-in footfalls in
large numbers aided by: 1) big-ticket film releases, 2) revenge consumption and 3) as a larger
customer base (middle and upper middle class) may be inoculated with two vaccine doses. WDL
may outperform, near term i.e., over 9-12months on SSSG growth due to its heavy exposure to
dine-in and children segment (a key target group). However, structurally, in the medium-to-long
term, we maintain our view that delivery SSSG is estimated to grow ~2.5-3x of dine-in SSSG.
FY21 9,856 (36.3) 465 4.7 (1,036) 1,091.0 (6.4) (18.8) (3.5) N/A 200.1
FY22E 13,574 37.7 1,110 8.2 (600) (39.7) (3.8) (13.3) 0.2 N/A 83.8
FY23E 16,811 23.8 2,620 15.6 562 (193.7) 3.6 12.5 11.8 148.7 35.2
FY24E 19,286 14.7 3,028 15.7 825 47.0 5.3 15.9 13.6 101.2 30.6

131
Consumer Staples
132
Represented by:
KVLN Sarma, COO CCL Products
Bloomberg Code: CCLP IN, Market Cap: INR 54bn, CMP: INR 408 (as on 15 Sept 2021)
Executive digest: CCL Products, founded in 1994, is the largest private label instant coffee manufacturer in the
world. CCL has two plants in India and Vietnam, with capacity of 25,000tn and 10,000tn
respectively. CCL creates 1,000+ custom blends for its customers and 95% of sales for the company
comes from the export market.
Investor insight:  Vietnam operations impacted by rise in COVID cases: Vietnam is under restrictions currently,
with parts of Ho Chi Minh City under military control. Production has proven robust though,
with the hopes that it may reach the expected level in Q2. Capacity has increased in the
Vietnam facility from 10,000tn to 13,500tn. Pilot sales have begun, while commercial sales
are expected to commence, starting Q4FY22.
 Capacity expansion on cards: In Vietnam, trial runs for certain products are ongoing in the
newly added 3,500tn capacity. Once the pilot run is complete, the company will start
commercial sales in Q4FY22. Sales volumes should reach 10,000tn this year. CCL is expected
to increase the capacity further to 25,000tons in its Vietnam facility by Q3FY23. Currently,
there are no plans to increase capacity in India.
 CCL’s branded coffee business robust: Approximately two-thirds of the domestic sales come
from CCL’s Continental brand, while one-third is from private labels and institutional sales.
Last year, ~INR 1000mn sales came in from the branded segment and the remaining INR
500mn from private/institutional sales. This year, CCL seeks to post INR 2,000mn sales from
its domestic business at the same mix, as mentioned above. The domestic business may post
break-even this year. For the next three years, the company may reinvest into brand building.
 Profitability unaffected by coffee bean price rise: Green coffee bean prices are on the rise,
since beginning-FY22. CCL expects to be able to pass on the coffee price rise. The company is
able to maintain margins in absolute terms.
 Container availability, still a concern: Container availability was never a challenge till last year.
In the past year, a price rise has been witnessed. CCL is trying to address this efficiently.
Amending production plans depends on container availability and not vice versa. Rise in
logistics cost is usually passed on to the consumers.
 Focus on spiking small packs sales: Currently, less than 10% of sales come from small packs
for CCL. About 12,000tons of small-packs capacity is being installed that can be scaled up to
25,000tons (INR 1,200mn project size). Also, CCL has built a 0.2mn sqft granulation
warehouse. This year, CCL expects to reach small-pack production volumes of 6500-7000tn
and 10,000-12,000tn in the next 2-3 years.
 Healthy traction in US markets: CCL has been establishing a new business model in the US
since the past few years. 2021 quantity growth projection stands at 20% versus past year’s
levels. CCL is developing a few projects for some large brands. About 10% of sales come in
from the US market, which is expected to increase further in the next 2-3 years.
Analyst annotations: We expect CCL’s sales to grow at 15%+ in the next three years. Capacity expansion, rising
contribution from small packs and scaling up of branded business are some key growth drivers
for the company through FY21-24.
FY21 12,428 9.1 2,981 24.0 1,826 10.0 13.7 18.1 13.6 29.4 19.2
FY22E 14,548 17.1 3,569 24.5 2,247 23.0 16.9 19.1 15.1 23.9 15.2
FY23E 16,289 12.0 4,148 25.5 2,673 19.0 20.1 19.5 16.8 20.1 12.5
FY24E 17,695 8.6 4,533 25.6 2,948 10.3 22.2 18.4 16.4 18.2 10.9
133
Represented by:
VS Banka, MD Dwarikesh Sugar
Bloomberg Code: DSIL IN, Market Cap: INR 13bn, CMP: INR 71 (as on 15 Sept 2021)
Dwarikesh Sugar (DSIL IN), is Uttar Pradesh-based diversified sugar company, with a combined
Executive digest:
cane crushing capacity of 21.5K tonne crushed per day (TCD). The company was an early mover
in the Bijnor command area to plant Co-0238 cane variety (high-yielding, disease resistant variety).
Additionally, its portfolio includes 163 kilo liters per day (KLPD) distillery capacity and 86MW of
cogeneration capacity (37% utilized in-house and the rest exported to the grid).
Investor insight: Sugar segment

 India’s sugar sector is entering an exciting phase where a paradigm shift in business model is
taking place, driven by higher demand for ethanol
 Increased enthusiasm is being witnessed among sugar millers to set up new distillery capacity
for ethanol. The mantra is to sacrifice sugar production and use surplus cane to produce
ethanol so that overhang of sugar inventory gets addressed
 Sugar prices in the last fortnight have increased to INR 35/kg from INR 33/kg in July. Increase
in prices has been led by two factors: 1) international prices are on the rise due to expectations
of a deficit of 4.0mn tonne, and 2) pent-up demand has come up due to relaxation in
lockdown and the upcoming festival season
 Good demand and higher realization would ensure improved profitability in the sugar
segment. Management expects the entire sugar inventory is likely to get exhausted by
December-January, which is a significant improvement compared to last year when it was
exhausted by March
Ethanol segment
 DSIL’s new 175 KLPD distiller is expected to be commissioned by H2FY23. In FY21, the
company sold 31.7mn liters, and in FY22 it expects to sell ~50mn liters of ethanol. In FY23,
ethanol sales volume will increase to110mn liters
 With continued increase in ethanol volume, overall revenue contribution from this segment
is likely to increase to 30% by FY23 from 8% in FY21
 Since sugarcane prices have increased INR 5/quintal this year, management expects a
commensurate rise in ethanol prices
 World over food is in surplus and there is a trend to convert food into energy. India is also
moving in that direction. Millers are sacrificing sugar for ethanol and fulfilling energy needs
of the country. The government expects mills to use excess food grains as well for production
of ethanol.
Analyst annotations: DSIL’s distillery segment profit is likely to double by FY24 on the back of the new 175KLPD ethanol
distillery. The company is well poised for growth, driven by strong demand for ethanol coupled
with higher realizations in the distillery segment. Increase in sugar prices will also support
profitability in the sugar division
FY20 13,361 23.2 1,361 10.2 734 (22.8) 3.9 15.5 8.9 6.7 8.4
FY21 18,388 37.6 2,013 10.9 915 24.7 4.9 17.2 14.1 5.5 5.3
FY22E 18,618 1.2 2,428 13.0 1,368 49.5 7.3 21.9 19.2 9.8 6.5
FY23E 19,638 5.5 3,359 17.1 2,031 48.4 10.8 27.1 30.6 6.6 4.3
Analyst: Pratik Tholiya, pratik.tholiya@elaracapital.com, +91 22 6164 8518
134
Represented by:
Shekhar Swaroop, Joint
MD & Dr. Bhaskar Roy,
Globus Spirits (Not Rated)
COO Bloomberg Code: GBSL IN, Market Cap: INR 37bn, CMP: INR 1,340 (as on 15 Sept 2021)
Executive digest: Globus Spirits (GBSL) is an India-based alcoholic beverages company, engaged in manufacturing,
marketing and selling Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), Bulk
Alcohol and contract bottling for established IMFL brands.
Investor insight:  The management expects the manufacturing business to grow faster, at 2x the premium
brand business.
 The biggest advantage enjoyed by GBSL versus peers is that it offers highest yields and lowest
conversion costs, thus facilitating INR 7-8mn per KL capacity capex, which is the lowest versus
a minimum average of INR 10mn per KL capacity capex for peers.
 GBSL’s chosen states are based on its growth strategy – Liquor/alcohol deficit states are
preferred over surplus states due to the former’s pricing power.
 Bulk alcohol pricing is not controlled by the government. Ethanol pricing is government
driven. GBSL’s 75-80% capacity is used for ethanol, while the balance is for its consumer
business or for other liquor manufacturer brands.
 In the past 1-1.5 years, raw material prices have remained stable with no spikes. Broken rice,
the key raw material, has been supportive in bulk alcohol business. Steady-state margins have
been seen after a spike in the past 1-1.5 years. For the past nine quarters, margin expansion,
due to structural changes in the alco-bev industry, ethanol demand and available pricing
power have been witnessed.
 Intention for the value segment is to ensure double-digit growth. For this, necessary steps are:
1) improving geographical reach, 2) ensuring better offerings in the value segment and 3)
further enhancing the route to the markets, even in the value segment.
 The management is keen on expanding to newer geographies that may allow framework
and expansion beyond the value segment, thus propping margins. In alignment with its
expansion vision, the required investment also has to be the right fit.
 The manufacturing business is expected to spike 2x in the next 2-3 years. GBSL enjoys high
market share in Rajasthan, but scope for market share improvement exists in Haryana and
West Bengal.
 Over many years, GBSL has perfected its model of setting up capacities and producing grain
alcohol and ethanol. Thus, immense experience in setting up plants at low capex at the right
quality point has aided growth. Demand for grain-based alcohol, due to the new Biofuel
Policy in 2018, has enabled margin control.
 GBSL’s growth from 70mn litres to 400mn litres has been via existing capacity. Thus, 2018
surplus capacity was used in the past 1.5-2 years.
 GBSL is planning to expand its capacity from 500kl to 900kl in the next 24 months, at a capex
of INR 3,500mn. Its first project was commissioned within weeks – Expect new capacity to
commence every 5-6 months. The capacity built will be flexible and may produce any type of
ethanol. In line with its strategy, the plants are being set up in deficit states.
 The ideal contribution mix between consumer and manufacturing businesses stands at 50%
each, but this level may only be achievable over 24 months. In the manufacturing business,
capacity build-up takes time, unlike the consumer business, wherein build-up is linear initially
and achieves momentum in specific geographies.
 GBSL may focus on consumers with smart affordability versus those moving between various
price points. Value consumers are just mildly distinct from premium, as most value consumers
can afford premium products, but are unable to justify the higher price paid, thus opting for
value over premium.
135
 Debt reduction has been significant and interest costs have been refinanced via new schemes
for distilleries. New debt stands at a mere 3.5% borrowing cost. Free cash after debt
repayment may be returned to shareholders via dividends/suitable modes.
 GBSL is investing INR 100mn per year in its consumer business in building capabilities, at
present. Once a certain scale is achieved, it may increase capital allocation.
 GBSL’s ENA realization stands at ~INR 60 as by-product revenues should be higher, over and
above INR 53 levels.
 Working capital is well managed with most bulk alcohol payments received in advance,
enabling 10 receivable days average – Ethanol receivable days’ average at 35-40 and grain
at 45-60. Inventory levels are meagre, generally at seven days for raw material and five for
finished goods.
 GBSL’s biggest challenge is ramping up capabilities on the consumer side, wherein the
company has no presence or low market share. At present, the focus is on scaling up from
the 25% market share in all the current states (Rajasthan’s share is above this, but
improvement scope exists in Haryana, West Bengal and new states towards high-teen share).
 No disruption or innovation seems likely in the industry as such. Thus, the need exists to use
old strategies given the competitive intensity. GBSL should perform better than regional
players in the states rather than competing with big players such as UNSP, Radico, Pernod
etc. This should aid GBSL in acquiring enough market share from small regional players.
 Watch for: 1) brands at higher price points; consumer upgrades surprised positively and 2)
wide range of offerings, short term – This may play a significant role in offering consumer
experience and aiding the shift to premium from value segment. Other players enjoy loyalty
in a specific segment, but GBSL has a wider segment loyalty.
 Deduction tax benefits under 80 IA may continue for another 1-2 years, post which the tax
rate may bounce back to 25% levels.
Analyst annotations: GBSL is well placed to capitalize on the changing dynamics of the liquor industry, including
manufacturing extra neutral alcohol (ENA), contract bottling of Indian made foreign liquor (IMFL),
marketing and selling IMIL as also using many by-products. Further, the company’s JV, Unibev
launched three IMFL liquor brands in the P&A category in a few states and is gradually ramping
up its presence in more states. On the IMIL front, GBSL expects more premium price points in the
value segment, led by higher strength in the IMIL space. In ENA, the management continues to
expand capacities in deficit states (to gain pricing power and aid higher realization), benefiting
from the government’s ethanol blending policy.
FY18 8,552 (57.1) 682 7.97 57 (60.9) 1.98 1.5 3.36 677.3 67.5
FY19 9,859 15.3 882 8.95 237 319.8 8.26 6.3 6.8 162.3 68.8
FY20 11,688 18.6 1,247 10.67 497 109.5 17.33 11.8 10.55 77.4 50.8
FY21 12,307 5.3 2,547 20.70 1,408 183.3 48.9 27.3 21.9 27.4 17.3

136
Represented by:
Sambasiva Rao,
President
Heritage Foods (Not Rated)
Bloomberg Code: HTFL IN, Market Cap: INR 21bn, CMP: INR 450 (as on 15 Sept 2021)
Executive digest: Heritage Foods (HTFL IN) was founded by Nara Chandrababu Naidu in 1992, with two business
divisions -- dairy and renewable energy. Annual turnover stood at INR 24bn in FY21. It is one of
the leading private dairy firms in India with chilling capacity of 1.95MLPD, processing capacity of
2.57MLPD and packaging capacity of 1.71MLPD. HTFL processes and markets a full line of dairy
products, including fresh milk, curd, buttermilk, lassi, ice cream, paneer, ghee, table butter,
cooking butter, milk powder, flavored milk, UHT milk and dairy whitener. Headquartered in
Hyderabad, it has significant presence in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil
Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Rajasthan, Uttarakhand and Uttar Pradesh.
Investor insight:  Demand recovery post the Second Wave is visible on account of 1) relaxation in restrictions,
2) rural workforce coming back to urban areas, and 3) reopening of educational institutes.
The company expects to move back to pre-COVID demand levels if the Third Wave does not
take place
 The company has posted improved sales in August, which was near normal for the economy
post the Second Wave
 HTFL benefitted from low procurement prices in FY21, which led to gross margin expansion.
Those gains were temporary due to COVID-led scenario and since July 2021 there has been
an upward trend in milk procurement prices. It has yet to take action on the MRP front as
demand is recovering and the company is trying to absorb cost increases
 HTFL believes gross margin will continue to rise, led by 1) a QoQ increase in value-added
products (VAP) contribution to overall sales, 2) recasting strategy for its fat products ( ghee
and butter) in favor of consumer packs (500gm, 1kg & 2kg) instead of bulk packs (20kg),
which will increase sales realization by 5-8%, and 3) the onset of flush season would normalize
availability of milk
 The company aims at INR 60bn in revenue in the next five years with VAP contribution at 40-
45% from the current 25%, and for that it will approach a larger number of dairy farmers and
double them from the current 0.3mn base. It will double handling capacity from 1.4MLPD to
2.8-2.9MLPD. The company will continue to operate in 11 states and go deeper into existing
states for its milk and VAP products. For its fat-based products – ghee, milk powder and cream
it will expand beyond those 11 states like Madhya Pradesh and Rajasthan where there are no
issues, such as temperature management and logistics cost
 VAP contribution has gone up from 3% in FY07 to 29% by FY20. It fell to 24-25% due to
COVID-10. The company expects it to revert to 29-30% by Q4FY22. In five years, the company
wants to take the contribution to 40-45% and for that it has on-boarded CEO Srideep Nair
Kesavan, who has held two decades of leadership positions at Coca-Cola. With his experience,
HTFL will focus more on VAP products and their marketing
 The company will hike advertising spend to 1%+ of sales, which currently stands at ~0.5% to
increase visibility and awareness for its VAP portfolio
137
 HTFL expects one-third of growth to come from markets like Mumbai and the NCR region. To
cater to demand from the Mumbai area, it has set up 1.0LLPD facility (which can be expanded
to 1.5LLPD) near the Mumbai-Surat region for milk, curd and buttermilk. To cater to the NCR
region, it has upgraded the Haryana plant from 0.75LLPD to 2.0LLPD, including 50.0MTPD
for curd, 5.0MTPD for butter and 5.0MTPD for ghee. The current sales run-rate in Mumbai
and the NCR region is 40,000L per day each for both markets, which will be increased to
100,000L per day each for both. In its existing markets, the company has added two new
50MTPD curd facilities in Hyderabad and Vizag. Overall, it has added 2.0-2.5LLPD capacity
recently, which will be a big growth driver
 There are structural challenges, which the company faces for being in the dairy business: 1)
seasonal challenge as there is high fluctuation of milk availability, which leads to capacity
remaining idle during the lean season, 2) new firms coming in and setting up a chilling plant
and disrupting the procurement market with competitive pricing where HTFL is already
present and following unfair practices which cannibalize milk procurement in that area, and
3) cooperatives which enjoy high government subsidy competes with low pricing strategy
 To address this challenge, HTFL is setting up a small chilling unit in a rented space
 In the cattle feed business, turnover is INR 1.2bn pa, with monthly volume of 5,000 tonne.
The business was started to provide farmers with good quality feed at reasonable prices. It
gets delivered free of cost and there is no additional logistics cost for the company as it uses
the empty van which goes for milk collection for cattle feed delivery. HTFL provides the feed
on credit as well
 The cattle feed business has installed capacity of 12,000 tonne per month across two factories
in Andhra Pradesh. In Maharashtra, the company has tied up with third party for co-packing.
It intends to grow further and tie-up with more farmers and reach 10,000 tonne volume,
which will take revenue to INR 2.5bn. The company is approached by other brands for co-
packing because of its unutilized capacity, which it is evaluating. HTFL is also into
supplements and vitamins through third-party packing delivering INR 2-3mn per month in
revenue
Analyst annotations: With things normalizing, urban demand is likely to pick up, which will benefit HTFL. Under new
management, the company will focus on the VAP portfolio to drive revenue growth and
profitability. It will look to achieve INR 60bn revenue target in the next five years by expanding its
reach in tier 1 & 2 cities in states it is currently operating, and by doubling its farmer base and milk
handling capacity from the current levels.
FY18 23,734 27.8 1,304 5.5 627 (24.4) 13.5 9.0 14.2 33.2 17.6
FY19 25,148 6.0 1,887 7.5 828 32.2 17.9 10.3 16.8 25.1 12.2
FY20 27,259 8.4 1,293 4.7 568 (31.4) 12.2 8.9 11.5 36.6 18.0
FY21 24,731 (9.3) 2,712 11.0 1,539 170.9 33.2 29.1 27.0 13.5 7.8
Analyst: Amit Purohit, amit.purohit@elaracapital.com, +91 22 6164 8500

Rohit Harlikar, rohit.harlikar@elaracapital.com, +91 22 6164 8562
138
Represented by:
Sameer Kothari
MD & CEO
Hindustan Foods (Not Rated)
Mayank Samdani, CFO Bloomberg Code: HFD IN, Market Cap: INR 42.6bn, CMP: INR 2,012 (as on 15 Sept 2021)
Executive digest: Hindustan Foods (HFD IN) has diversified across FMCG categories with manufacturing
competency in food and non-food, extending to personal care, home care, food & beverages and
leather shoes & accessories.
Investor insight:
Business models
 Dedicated factories
 Dedicated for one customer for a contract period of 7-10 years
 Fixed ROE, and not demand sensitive
 ROE is in the range of 18-22%
 Clients prefer this type of setup for products that is in the matured stage, such as soaps,
detergents and hair oil
Shared manufacturing client and other smaller clients will be served through this facility
 In this business model, there is one anchor
 There are no long-term contracts
 ROE is higher than for the dedicated one, but it is demand sensitive
Private label manufacturing
 It is in a nascent stage
 Expected to have huge tailwind as the share of private labels and D2C brands increases
Different industry segments with varied pros and cons
 For the food segment, assets are not fungible; cannot manufacture multiple products
 Underpenetrated industry can be more profitable
 For personal care, assets are fungible, and the same machinery can do multiple things
 Therefore, It is easier to scale up
80-85% turnover from dedicated factories
 The company expects 85:15 split between dedicated and shared manufacturing
 Built for specific customers & products and it is for a long-term contract
Closed last year with turnover of INR 14bn
 Management expects to reach INR 20bn this year; in Q1FY22, it generated revenue of
INR 4.5bn
 Further, the company expects revenue to double to INR 40bn by FY25
Expansion
 New factory at Lucknow for the ice cream division, and one more factory at Hyderabad is
expected to be completed by Q4FY22
 Current year’s capex is around INR 2bn
Looking to grow turnover to INR 40bn by FY25
 From new expansion (INR 2bn capex), the company should reach a run rate of INR 25-28bn
once it ramps up
139
Another INR 3bn of investment required to reach INR 40bn topline target
 Planning to take 75% debt (INR 2.25bn) over three years to reach FY25 sales target
 Given cashflow, management is confident it can service this debt
 This is true for new projects if it built from scratch; for acquisition, management may have to
raise capital from the equity markets
Looking at health and wellness as another revenue stream
 It will B2B, working with large pharmaceuticals
 Products will be similar to FMCG, but with health and wellness focus
 For regulated pharma products
 Exports ROE will be higher
 For unregulated pharma products
 Over the counter products in India, ROE will be similar to the current FMCG business
Industry
 Current industry does not have headroom in capacity to grow at 5% pa. This will accentuated
if the EU and the US will extend China +1 to FMCG
 All changes in RM-CM cost are checked monthly and passed onto the customer
 Moat for this company is through scale and the biggest risk is execution
Business risk for labor heavy manufacturing
 India’s labor laws are more encompassing than other countries like Bangladesh and Vietnam
 Large multinational brands prefer those countries to India
Market size
 FMCG industry size is INR 8tn; 25% of FMCG industry is manufacturing
 Of INR 2tn manufacturing, ~30-40% is private label manufacturing where HFD operates
 Hence, the potential industry size for HFD is INR 0.5-1tn
Shoe business
 First COVID wave affected the shoe business, but not so in the Second Wave
 The company has started knitted shoes manufacturing; it is already in formalwear shoes
Analyst annotations: Management is focused on bolstering revenue and targets a revenue of INR 40bn by FY25. For
this target, the company is going to invest INR 3-5bn in the next two years. Management remains
bullish on the future opportunity size.
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS ROE ROCE P/E EV/EBITDA
Key Financials: March (INR mn) (%) (INR mn) Margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY18 1,390 265.8 100 7.2 60 500.0 4.8 15.8 19.0 416.6 429.7
FY19 4,920 253.96 330 6.7 120 100.00 8.8 19.7 22.0 227.9 132.2
FY20 7,720 56.91 560 7.3 230 91.67 10.7 12.2 18.0 187.7 79.1
FY21 13,860 79.53 830 6.0 360 56.52 17.2 16.0 17.0 117.0 54.0

Rajesh Mudaliar, rajesh.mudaliar@elaracapital.com, +91 9833867189
140
Represented by:
Karthik Bhanu, Head -
Corporate Planning and
ITC (Not Rated)
IR Bloomberg Code: ITC IN, Market Cap: INR 2661bn, CMP: INR 216 (as on 15 Sept 2021)
Executive digest: ITC (ITC IN) enjoys a diversified presence in FMCG, hotels, packaging, paperboards & specialty
papers and agri businesses. The FMCG segment includes cigarettes (43% of sales and 83% of
profit) and other categories – Branded packaged foods businesses, apparel, education &
stationery products, personal care products, safety matches and incense sticks comprising 28% of
sales and 5% of profit. The annual turnover of ITC stood at INR 493bn in FY21.
Investor insight:  During COVID Wave II, the cigarettes industry was affected by severe restrictions on store
operating hours and reduced mobility; hence, May was much affected. Post the first week of
June, week-on-week demand has improved and the recovery rate is faster than that during
last year.
 ITC’s capsule cigarettes are present across all segments of DSFT, RSFT, Longs and KSFT. ITC
believes that this category has high growth potential and hence, has heavily invested to effect
100% indigenization. This should act as an added lever to aid introduction of new flavours
and exploration of small batch sizes, going forward. Premiumization is possible through
differential pricing in the capsule segment once this segment becomes large in size – at
present, the segment is priced at the same level as non-capsule. The capsule industry accounts
for 13-14% of the total cigarettes market versus 2-3% 4-5 years back.
 Indie Mint cigarette was launched in the capsule segment and is performing well. The new
flavor has been added to the portfolio and response has been favorable.
 ITC’s market share in overall cigarette industry stands at ~80% and within capsules, it has
spiked its market share from 30-35% to over 60% in the past few years. ITC may not push for
higher market share in the capsule segment as margins are dilutive due to higher costs
involved in making capsules.
 Input price inflation in cigarettes is not high, unlike that in FMCG. ITC typically maintains an
inventory of 1-1.5 years to protect from price volatility of agri crops. Cigarettes margins are
not impacted majorly, unlike FMCG. ITC seeks to sustain its gross margin at same levels of ~73-
73.5%.
 The illicit cigarette industry accounts for ~25% of the total industry, of which more than 50%
comes from smuggled cigarettes. Large tax increases have led to high growth of the illicit
market given huge price arbitrage opportunity. In the past three years, the government has
made significant efforts to curb illicit market by way of increased seizure/confiscation.
 Cigarettes account for 10% of total tobacco consumption in India. Key structural factors such
as increased urbanization, young demographic, higher disposable income, etc. still exist, thus
propping the industry. However, inequitable taxation regime has increased the barriers to
trials, thus marring cigarette consumption and its growth. For the legitimate industry to grow,
the key is to have stable and moderate taxation policy.
 FMCG saw growth deceleration due to demand moderation versus that during last year
when significant demand surge led by pantry loading was seen. However, hygiene product
continued to perform well led by COVID tailwinds.
 Savlon’s hygiene segment may likely see some growth deceleration post COVID, but demand
will settle at elevated levels versus pre-COVID as consumers may continue to embrace good
hygiene practices.
141
 Spices is a large category that may benefit from consumption conversion from loose to
branded products. With Sunrise acquisition (strong player in East India), ITC may benefit from
its high equity and can take this product to pan-India level in due course given its distribution
strength. Sunrise’s presence in both basic and blended spices will help ITC cater to a larger
customer base.
 ITC’s entry into new FMCG category will depend on good growth potential and better margin
profile. Also, its institutional strengths such as distribution infrastructure, agriculture linkages
and life science and technology centre should come into play while entering new categories.
 ITC Master Chef is a premium product and is meant for food-safe markets and high-end
consumers. India is not yet ready for premium offerings and hence, this segment may
continue to remain niche.
 ITC has been expanding its reach in rural via direct and stockist routes. In the past year, given
pandemic impact, ITC expanded into rural areas for both cigarettes and FMCG via the stockist
channel. Hence, rural growth seems to be significantly higher for ITC versus the industry.
 In Q1, some moderation in rural growth due to Wave II was seen, but in Q2, strong pick-up
is visible. Rural now contributes ~30% to ITC’s FMCG business.
 ITC’s hotels business is still below pre-COVID levels as business travel confidence is still low.
However, compared with last year, occupancy and average room revenue are healthier due
to increased leisure travel that revived strongly post COVID Wave II.
 In the agri business, last year, ITC benefitted from trading opportunities in certain
commodities such as wheat and rice, which it leverages from time to time. But, ITC’s endeavor
is to focus on valued-added segments such as spices and processed food for food-safe markets
such as the US and Europe. These products have higher value addition potential.
Analyst annotations: Progressive normalization of demand and economy across segments, share gain possibilities in
the core cigarette business due to innovative products/format launches and faster growth in
FMCG sales versus peers should support earnings trajectory, going ahead. However, given the
ongoing COVID pandemic, near-term uncertainty remains. Any further lockdowns may pose an
operational challenge.
FY18 4,34,489 1.6 1,64,830 37.9 1,12,712 9.5 9.2 22.8 22.1 23.6 14.6
FY19 4,83,527 11.3 1,84,064 38.1 1,25,923 11.7 10.2 22.6 22.1 21.1 12.8
FY20 4,94,041 2.2 1,92,602 39.0 1,53,062 21.6 12.5 24.6 23.4 17.3 11.9
FY21 4,92,728 (0.3) 1,70,027 34.5 1,31,684 (14.0) 10.7 21.0 20.7 20.2 13.9
Analyst: Amit Purohit, amit.purohit@elaracapital.com, +91 22 6164 8500

Rohit Harlikar, rohit.harlikar@elaracapital.com, +91 22 6164 8562
142
Represented by:
Berend Odink, CFO United Breweries
Bloomberg Code: UBBL IN, Market Cap: INR 421bn, CMP: INR 1,592 (as on 15 Sept 2021)
Executive digest: United Breweries (UBBL) is an unrivalled market leader in the India beer market, with 52% share,
almost 3x the nearest competitor. The company enjoys an extensive production footprint with 21
own breweries and 10 contract units providing pan-India coverage. The company sells beer
under its flagship brand, Kingfisher. Kingfisher Strong is India's largest-selling beer. International
beer brands such as Heineken/Amstel and its imports portfolio complement UBBL’s Kingfisher
franchise.
Investor insight:  COVID-19 severely affected the industry. However, led by localized lockdowns in Wave II
versus nation-wide lockdown during Wave I, recovery has been better with faster unlock. In
June, volumes revived to 50% of pre-COVID levels and MoM recovery is gradually unfurling
in July-August 2021.
 Beer consumption has not been witnessed any structural changes on consumer behaviour.
However, some changes such as liquor home delivery offer an exciting opportunity in the
long term – This trend emerged for the first time during COVID.
 Beer penetration stands at a mere 2 litres per capita in India versus the Asian/global average
of 25/40 litres per capita, respectively. However, as UBBL is the market leader, it has taken
many initiatives to grow the category and sustain market share.
 Consumers are willing to spend more on new flavors/premium products. Thus, innovation is
ongoing in the category led by experimental launches.
 UBBL is continuing with cost rationalization, which was further emphasized on during
COVID, enabling some permanent cost savings. This should aid higher margins, going ahead.
 On-premise recovery post Wave II versus that after Wave I seems decent. The industry has
recovered well as the need to go out is still dominant. Expect more families to venture out
with vaccination drive achieving scale, thus boosting confidence. The full reopening of the
economy may take some time as restrictions (10-10.30 PM night curfews; restrictions on night
clubs, bars etc.) still continue. However, confidence seems higher during Wave II versus that
during Wave I.
 Globally, lock-down restrictions in the UK and Europe have been mostly lifted (just nightlife,
festive halls restrictions in place). However, with 70%+ now inoculated, expect the economies
to open fully, soon.
 Beer has different alcohol percentage as also target audience. Thus, ideally, a differential
excise for beer is necessary versus spirits. Even globally, the approach differs by country.
However, globally, beer differs versus spirits. Steep duty increases were seen last year, thus
impacting realizations.
 In the past 5-10 years, UBBL’s number of outlets has remained stable with some additions.
Beer-specific outlets is a relevant demand made by the industry, but alcohol perception
should change and gain more acceptance. Premiumization trend will continue in India.
 Amstel commenced distribution in South India and is witnessing good traction. Now, it is
being expanded to North India. Strong beer enjoys good potential in India, led by
encouraging response from launched markets. The management plans on a pan-India roll-
out in the upcoming quarters along with economy unlocking.
 On input cost front, glass prices have surged as bottle recycling forms a big chunk (highly
dependent on on-premise volumes). Last year, post unlock, normalcy was seen in bottle
recycling, while during Wave II, supply chain disruption has been low, thus containing glass
and other input costs such as Barley and Malt.
143
 2020 was focused on volume recovery, led by affordability and accessibility. Thus, price hikes
were modest and not a focus area. State-wise, some effect price hikes every year, while some
hold back hikes for many years.
 Internally, UBBL has focused on volume recovery as beer is a volumes-led business – Expect
17-18% margins to be regained. Global brewers are at 20-25% margins, but some markets
have different taxation levels where margins are at 30%+, with regulatory environment
different from India’s. For UBBL, 20%+ margins is possible in the long term.
Analyst annotations: On-premise recovery remains the key to scripting a revival in the beer segment as it is a social
drink. Also, home delivery economics do not support it given the lesser ticket price versus spirits.
The consequent higher delivery fees, as a percentage of AOV, makes it less attractive for outlets
to promote beer over spirits. On-premise recovery may be delayed to October/November during
Wave II despite current unlocking measures as late night and gathering restrictions may persist
for a few more months. UBBL’s volumes had recovered sharply (80% of pre-COVID levels) in
Q4FY21. However, with Wave II onset from April-Week II and complete shutdown of on-premise
(contributing ~25-30% to beer volumes), we believe, recovery will be further postponed to end-
FY23 as FY22 levels may be 20% lower than pre-COVID levels. Margin tailwinds exist as used bottle
recycling will revive with on-premise re-opening. We believe, with ongoing restrictions, spirits
outperformance may continue versus beer.
FY21 42,431 (34.8) 3,811 9.0 1,139 (34.1) 4.3 3.2 (2.4) 369.8 109.6
FY22E 58,481 37.8 8,187 14.0 4,369 28.1 16.5 11.2 8.7 96.4 51.2
FY23E 79,856 36.5 13,592 17.0 8,052 10.1 30.5 17.7 17.1 52.3 30.7
FY24E 91,373 14.4 15,625 17.1 9,438 10.3 35.7 17.7 17.6 44.6 26.5

144
Energy
145
Represented by:
Rajeev Ailawadi
Director of Finance
Chennai Petroleum Corporation
Bloomberg Code: MRL IN, Market Cap: INR 17bn, CMP: INR 114 (as on 15 Sept 2021)
Executive digest: Chennai Petroleum (MRL IN) is one of the leading group companies of Indian Oil Corporation
(IOCL IN) and refines crude to produce fuels and lubes base stock. MRL started its Manali refinery
in North Chennai with 2.5mmtpa in 1960; it has expanded capacity to 10.5mmtpa. The company
currently has 6% refining slate for petchem, which it targets to reach to 25-30% in the next few
years. Its major promoter is Indian Oil Corporation (IOCL IN) which holds 51.9% of total shares
outstanding.
Investor insight:  Capex plan: 1) INR 35-40bn of capex is expected in FY22 on account of the last cycle for BS-
VI and conversion of hydrogen-generating unit along with maintenance capex, 2) the
company does not expect any major capital expenditure apart from maintenance from FY23
in the range of INR 5-10bn, 3) major capex to be incurred would be on new Cauvery Basin
Refinery (CBR) with capacity of 9 MTPA; however, this capex is to be done under the JV
arrangement with IOCL
 Current operations: MRL is looking into addition of value-added products in its refining
product slate, which would lead to incremental GRM and not transformational. Product
improvement as on now is focused on producing lubricating oil base stocks. Crude sourcing
is 60% from the Middle East, 12-15% African crude and the remaining sourced from domestic
 Debt management: The company currently has INR 900bn of debt. Its working capital is fully
funded by debt. The higher net debt-EBITDA ratio is cause for concern, but it expects
improvement hereafter as FY21 refining margin was at the bottom of refining cycle. MRL is
working toward normalizing its debt levels. It may look forward to raise equity or preference
shares depending upon the market situation and refining margin environment
 Spot LNG prices: MRL needs 1.4-1.5 mmscmd of LNG for internal purposes and with
modification, it will require up to 2mmscmd. Higher LNG prices are not cause for concern as
on now for the company’s major LNG procurement is linked to Qatar Rasgas prices
Current GRM situation is at bottom of the pyramid. The company’s refining capacity with
Analyst annotations:
improvement in demand is likely to go to 100%, which would improve efficiency by reduction in
fuel and loss. MRL’s core GRM in FY21 was USD 2/bbl, which has seen improvement to USD
2.5/bbl in Q1FY22. This trend is likely to continue.
FY20 3,71,728 (10.1) (21,043) (5.7) (20,776) NM (139.5) (76.4) (18.6) NM NM
FY21 2,24,448 (39.6) 20,121 9.0 2,376 NM 16.0 18.2 2.9 7.1 4.2
FY22E 4,16,147 85.4 17,527 4.2 6,574 176.7 44.1 40.5 9.0 2.5 4.8
FY23E 4,67,311 12.3 16,383 3.5 5,613 (14.6) 37.7 28.1 8.9 2.6 5.1
Analyst: Gagan Dixit, gagan.dixit@elaracapital.com, +91 22 6164 8504

Reena Shah, reena.shah@elaracapital.com, +91 22 6164 8500
146
Represented by:
VK Mishra
Director of Finance
Petronet LNG
Bloomberg Code: PLNG IN, Market Cap: INR 349bn, CMP: INR 233 (as on 15 Sept 2021)
Executive digest: Petronet LNG (PLNG IN) has set up the country's first LNG receiving and regasification terminal
at Dahej, Gujarat, and another terminal at Kochi, Kerala. While the Dahej terminal was
expanded to a nominal capacity of 17.5 MTPA from 15.0 MTPA, the Kochi terminal has a
capacity of 5.0 MTPA. The company is a joint venture among Oil & Gas PSU to import LNG and
set up LNG terminals in the country; it involves India's leading oil and natural gas industry firms.
Its promoters are GAIL (India) (GAIL IN), Oil & Natural Gas Corporation (ONGC IN), Indian Oil
Corporation (IOCL IN) and Bharat Petroleum Corporation (BPCL IN).
Investor insight:  Capex plan: 1) INR 12bn on two tanks at Dahej; work to start in 2-3 months and would be
completed in 36 months, 2) INR 17bn on a new jetty at Dahej; plans are to order next year
and would be ready by 2025, 3) INR 8.2-9.2bn on Dahej terminal expansion from 17.5mn
tonne to 22.5mn tonne in two phases, comprising INR 2.2bn in the first phase in 2.5 years
and INR 6-7bn in the next phase to be completed by 2025, 4) INR 15-20bn in Greenfield
East Coast LNG terminal, and 5) build 20-25 direct LNG sales stations for trucks that would
cost INR 80-100mn per station where 4-5 stations are owned by PLNG and the rest by OMC
 Proposed Arctic LNG stake purchase: There are ongoing discussions with a Russian firm but
nothing has been finalized with no binding MOU in place. It is evaluating viability of the
project based on IRR (Benchmark IRR of 16%) and other technical feasibility parameters
 Petrochemical plans: The Dahej site has land available so it is mulling investments in a small
petrochemical plant, but detailed financial study is required. However, if planned, then plant
capacity would be of 5,000 MTPA capacity. PLNG is also considering ethane & propane
storage facilities, but here too a detailed study needs to be done
 Kochi-Bengaluru pipeline: The pipeline is set to be completed in three years where 256km
has land issues. Kochi terminal utilization will reach 35% from the current 20-25% post
pipeline completion. Key advantage would be connection to national grid and benefits of
selling to customers via swap in the grid, irrespective of the direction of flow as per CST Act
 Spot LNG prices: Long-term LNG contracts are priced at USD 10/MMBtu while spot prices
are at USD 19/MMBtu. If prices are high, it adversely affects demand from customers. The
industry is shifting to alternate fuels due to high spot LNG prices
Analyst annotations: Given ~60% of volume at Dahej is coming through long-term LNG purchase contracts and
more than 80% capacity at Dahej has been contracted under the long-term use-or-pay
agreement by various entities, Petronet LNG earnings are mostly hedged against the recent run-
up in spot LNG prices to +USD 15/MMBtu. The regasification tariff at Dahej is competitive
among peers, which would help PLNG to grow with gas demand growth in India
FY20 3,54,520 (7.7) 39,895 11.3 27,697 28.5 18.5 26.4 21.6 12.6 8.5
FY21 2,60,229 (26.6) 46,995 18.1 29,494 6.5 19.7 25.3 20.5 11.8 7.2
FY22E 3,83,114 47.2 47,272 12.3 28,904 -2.0 19.3 22.8 18.4 12.1 7.2
FY23E 4,08,806 6.7 50,341 12.3 31,169 7.8 20.8 22.4 18.5 11.2 6.7

147
Financials
148
Represented by:
Vishal Kshatriya, VP -
Sales of Banking &
Andromeda (Not Listed)
Financial Products
Executive digest: Andromeda is a loan distributor and the company disbursed INR 25bn in July 2021.
Investor insight: Initial commentary

 Banks are turning aggressive on loan growth.
 There are offers available both on secured and unsecured loans.
 The LTVs for professionals such as doctors and CAs have increased.
 Digital funding has become popular in the unsecured segment.
Behaviour of different players
 Many players have extended facilities to professionals such as doctors and CAs, and they are
being offered low rates of interest of 10.5%.
 Banks are looking for quality customers at lower rate of interest.
 Bajaj Finance has the lowest turnaround time of two days and in some cases, this has been
as low as one day. The company has also lowered its interest rates from 16-17% to 15.5%.
Segmental break-up
 Secured loans form 60% of Andromeda’s portfolio.
 Earlier the proportion of unsecured loans was high.
Competition from Paisa Bazaar and Bank Bazaar
 CIBIL data shows that the total loan disbursement in March 2021 was INR 850bn, which
implies there is plenty of opportunity for every player.
 Paisa Bazaar and Bank Bazaar are in a digital model, while Andromeda has more of physical
presence.
 The company is expanding city-wise and is now available in 900 cities.
 About INR 13bn disbursement per month is the ideal break-even level for players in this
industry.
 Andromeda can provide many other advisory services to the customers that cannot be
provided through the digital mode.
Home loan segment
 The current rate of interest for home loans is 6.5-6.6%.
 Balance transfers
 Aditya Birla Capital has seen high balance transfers due to high interest rate. Axis Bank
witnessed customers of 2016-17 batch do balance transfers as the bank did not give them
the rate benefit.
 Bajaj has high retention.
 Market share
 LIC Housing has been aggressive in the home loan segment, with 80-85% LTV and low
rate of interest at 6.8-6.9%. It is also not charging processing fee for balance transfers and
charging only INR 5,000 as one-time fee.
149
Success of Andromeda
 Andromeda has an expertise in reading the customers’ financials.
 The company provides all the options available with all the banks to the customers.
 Andromeda’s commission on secured loans is 1-1.75% and for unsecured 2.5-3.5%.
 Andromeda digitally sources 30-35% of unsecured loans.
 The company’s biggest cost is fixed cost of salaries and rentals.
Analyst annotations: Despite competition from digital distributors, Andromeda is likely to see strong growth as the
economy recovers from Covid Wave II.
Analyst: Mahrukh Adajania, mahrukh.adajania@elaracapital.com, +91 22 6164 8500

Anushka Chhajed, anushka.chhajed@elaracapital.com, +91 22 6164 8536
150
Represented by:
Dinesh Thakkar, MD Angel Broking (Not Rated)
Vineet Agrawal, CFO
Hitul Gutka
Bloomberg Code: ANGELBRK IN, Market Cap: INR 105bn, CMP: INR 1,269 (as on 15 Sept 2021)
Head – Investor Relations
Executive digest: Angel Broking (ANGELBRK IN) is a technology-led financial services company providing broking
and advisory services, margin funding, loans against shares and distribution of third-party
financial products to clients under the brand, Angel Broking. Recently, The Board of Directors has
decided to transition the business under a new brand, Angel One, to appeal to new-age
customers and support new businesses other than broking. The broking and allied services are
offered through 1) online & digital platforms, and 2) network of 15,000 authorized persons (as
on March 2021). The company extensively uses artificial intelligence and machine learning to
create a superior digital experience. It has built digital properties like Angel Broking Mobile App,
Angel BEE Mobile App, ARQ Prime, a rules-based investment engine, SmartAPI, a free-to integrate
API platform, Smart Money, an investor education platform, Smart Store, a marketplace for fintech
products, learning platform and social forums for 5mn clients. The customer outreach spans
across 98% or 18,874 pin codes in India as on June 2021.
Investor insight:  Surge in volume: The recent surge in trading and settlement volume is attributable to a
fundamental change in customer behavior and led by low interest rates, availability of newer
tools, and ease of learning & access to markets for new generation of young customers, who
are now even beyond Tier II & III cities. Management believes customer acquisition can
continue at this pace until penetration increases to ~12-13%
 Business cyclicality: The business is cyclical but even when volume reduces, this is only for a
short time. Trends suggest volume increases over time. The markets historically have been
down only for 2-3 quarters but after that recovery is swift. Over cycles, management believes
ANGELBRK can still deliver an 11-14% earnings CAGR over the next decade
 AMC aspirations: The company plans to primarily focus on low-cost passive and smart beta
products. Management believes these products will give investors more stable returns rather
than focusing on alpha and paying higher fees
 Data analysis and understanding customer behavior: Management says understanding
customer behavior through data analysis and creating customer journeys is key to building a
successful business in the long run. It believes technology can be copied by competitors but
deep understanding of customer behavior is key to retaining leadership. The company plans
to offer products and services-based customer demography, characteristics and behavior
identified on the basis of 250+ machine learning parameters that it monitors
 Digital customer parameters: ANGELBRK witnessed significant drop in customer acquisition
costs when it moved from physical to the digital model. The company does not disclose
acquisition cost and, according to management, ARPU for digital customers will breakeven in
5-6 months. It is in market share growth mode and believes profitability will follow over the
next decade. The activation rate is low, as a result
 Cost: The company is spending on building technology. Its digital team has grown from ~450
to ~600 over the past year. It also has recently hired a new CTO. Major spending is towards
technology and talent acquisition.
 Angel One: ANGELBRK is in the process of developing a super app. This application will offer
all digital journeys to clients, such as equities, mutual funds, life insurance etc. The application
will be developed over the next 2-3 quarters
151
Analyst annotations: Growth in volume and business coupled with technology has attracted a large number of
customers into the equity markets. ANGELBRK has been at the forefront of this change. The
company has been able to grow customers at an industry leading rate and with an active
customer base of 2.3mn, the company is currently ranked No 3 (from 7th in March 2019). An
activation rate of a mere ~35-40% remains key monitorable as this will determine profitability of
the current customer acquisition spree.
FY18 6,897 38.4 1,732 25.1 1,079 248 15 25.0 36.7 85.4 52.5
FY19 7,170 4.0 1,490 20.8 834 (22.7) 11.6 16.6 25.5 110.5 59.0
FY20 7,096 (1.0) 1,445 20.4 898 7.7 12.5 16.0 21.7 102.6 59.6
FY21 12,613 77.7 4,308 34.2 3,017 236 38.6 35.0 47.8 30.5 20.0
Analyst: Madhukar Ladha, madhukar.ladha@elaracapital.com, +91 22 6164 8500

Jenish Karia, jenish.karia@elaracapital.com, +91 22 6164 8500
152
Represented by:
Puneet Sharma -
President & CFO
Axis Bank
Abhijit Majumder - SVP - Bloomberg Code: AXSB IN, Market Cap: INR 2,430bn, CMP: INR793 (as on 15 Sept 2021)
Head IR
Executive digest: Axis Bank is India’s third largest private bank, with total assets of INR 1trn, loans of INR 6trn and
deposits of INR 7trn. Retail loans account for 55% of total loans.
Investor insight: On slippages

 The management expects retail slippages to moderate in the second half of FY22. For Axis
Bank, secured slippages have been higher than unsecured slippages as the bank has stricter
norms for unsecured loans.
Provisioning
 Axis Bank has moved to rule-based provisioning. Of the total standard provisions, INR 50bn
is Covid-based and INR 74bn is rule-based. As the asset quality improves, there would be write
backs. The bank will continue to hold the INR 50bn Covid provision till the pandemic threat
is over, which will most likely be early FY23E.
 As regards Covid provisioning, the bank has a risk model, wherein it determines the risk and
if the actual situation is worse than the risk outcome, then it utilizes the provision. If the risk is
not breached, the bank will carry forward the provision. Axis Bank does not expect the
provision to be utilized as of now; thus, the provision will get carried forward.
Margins
 Enough levers exist for margins to improve in the medium-to-long term, including repayments
in priority sector bonds and change in loan mix.
Digitization
 Digital banking has been one of the focus areas for the bank if one monitors Axis Bank’s
recent product launches.
 The digital expenses for the bank are also on the rise. It is going to be an ongoing expense
from now on. Axis Bank has initiated many endeavors on the cloud side. It is saving costs in
some areas and investing it in digital infrastructure. Cost to assets will remain at 2% even with
higher IT spends.
Other highlights
 On the BNPL front, Axis Bank plans to tie-up with fintechs.
 On loan growth, the bank has been benchmarking itself with the sector.
 The large industries right now are borrowing outside the banking sector.
 Axis Bank’s focus segments continue to grow. As the industry cycle improves, its growth rate
will also improve.
 The bank’s retail product portfolio is very diversified.
 Attrition rates have stabilized.
Analyst annotations: With a tight provisioning policy and normalization of slippage and recoveries in H2FY22E, we
maintain BUY.
153
YE Mar PPoP YoY NP YoY EPS YoY P/PPOP RoAE RoAA P/E P/BV
Key Financials: (INR bn) (INR bn) (%) (INR bn) (%) (INR) (%) (x) (%) (%) (x) (x)
FY20 234 23.3 16 (65.2) 6.0 (67.1) 9.9 2.1 0.2 132.3 2.4
FY21 257 9.7 66 304.9 21.5 259.1 9.0 7.1 0.7 36.2 2.3
FY22E 294 14.6 141 114.0 46.0 114.0 7.9 13.1 1.3 16.8 2.0
FY23E 327 11.2 169 19.5 55.0 19.5 7.1 14.0 1.4 14.1 1.8

154
Represented by:
Piyush Surana, CFO HDFC AMC
Simal Kanuga, SVP Head
of Sales Client Funds Bloomberg Code: HDFCAMC IN, Market Cap: INR 694bn, CMP: INR 3,255 (as on 15 Sept 2021)
and Chief IRO
Executive digest: HDFC Asset Management (HDFCAMC IN) is fund manager of HDFC Mutual Fund. The company
manages equity, fixed income, liquid and ETF & index funds. It has a countrywide network of
branches along with a diversified distribution, comprising banks, mutual fund distributor (MFD),
and national distributors. As on June 2021, HDFCAMC had a total AUM of INR 4.2tn and an equity
AUM of INR 1.9tn. The company is the third-largest in total AUM and the largest in terms of equity
AUM. For FY21, it delivered a revenue of INR 18.5bn and a PAT of INR 13.3bn. HDFCAMC is a
joint venture between HDFC (HDFC IN) and Standard Life Investments (SLI), one of the world’s
largest investment companies. HDFC and SLI own 52.7% and 21.2% of HDFCAMC, respectively.
Investor insight:  NFO seeing strong inflows: The recent inflows in NFO have been encouraging but have come
at a higher cost in terms of payouts to distributors. Some bank partners may have negotiated
fees as high as 90% of distributable total expense ratio (TER). Management believes these
flows have low incremental yields
 HDFCAMC more selective in launching NFO: Management says some recent successful
launches in the recent past continue to attract inflows from customers. These include
dividend yield offering, banking and financial services fund (raised ~INR 18-19bn in NFO).
While the recently launched NIFTY 50 Equalweight Fund received limited interest from the
distributor channel, registered investment advisor (RIA) and direct channel flows have been
promising
 New schemes planned: HDFCAMC plans to launch a multi-cap fund by end-FY22 depending
on the demand scenario. The company is about to launch the first of its kind passive MSCI
World Index Fund. It is also planning to launch index funds and ETF over the next12 months
 SIP: SIP cancellation rates have declined from what had been seen in FY21. A large number
of SIP additions have come from fintech companies, such as Groww and Kuvera. According
to management, a large number of cancellations also have been from these platforms
 Plans strong passives presence: The company aspires to be the “last man standing” of active
management while also building a formidable passives business. It continues to invest in
process, technology and people to cement its position in active management. HDFCAMC
aims to develop a formidable portfolio of passive products. Management says it is already one
of the largest managers in ~INR 250bn index funds market where it has an AUM of ~INR
5.8bn as on June 2021. HDFCAMC cited the example of Blackrock schemes, which continue
to charge higher than other passive schemes but were still the largest. It believes customer
experience, distribution, brand and low tracking error will be more important than just fees
 Pricing on passives: HDFCAMC increased pricing on its passive offerings as net yield for it was
just about 3-4bp. Other firms in the industry are not making money at TER of a mere 6-7bp
 Margin at near peak levels: Management says margin would most likely reduce, as 1) the
legacy book sees redemptions, and 2) the share of passives increase. Extent of the decline in
margin will depend on how well the company manages cost and how the mix shapes up
 Technology investments: HDFCAMC has hired a CTO to enhance its service offerings across
platforms
 Channels: AUM of Top 20 fintech RIA as on June 2021 is ~INR 380bn (including equity AUM
of INR 250bn), cross-selling on these platform does not happen as it is not allowed to
incentivize these new platforms. Some bank channels have been more focused on sales of
insurance and AIF, but several others continue to do large volume in mutual funds
155
Analyst annotations: HDFCAMC commands a market leadership position in equity at 12.1% as on June 2021 and an
operating profit at 36bp of AAAUM for FY21. The company also has a commanding market share
of 13% as on March 2021 in individual investments in MF. The company has one of the strongest
brands in the industry, a strong multi-channel distribution network and boasts of one of the
lowest operating cost. We believe it to be best positioned among legacy asset managers in an
environment where disruption from fintech is just getting started.
Key Financials: YE Revenue YoY NOPLAT NOPLAT Adj PAT YoY Fully DEPS ROE ROCE P/E EV/NOPLAT
FY21 18,525 -7.5 10,610 57.3 13,258 4.9 62.1 30.1 29.1 52.3 61.0
FY22E 21,592 16.6 12,089 56 14,344 8.2 67.2 28 26.9 48.3 53.0
FY23E 23,602 9.3 13,601 57.6 16,184 12.8 75.8 27.5 26.6 42.8 46.5
FY24E 26,258 11.8 15,726 51.8 19,048 17.7 89.2 28.5 27.7 32.0 39.7

156
Represented by:
Kunal Jain
VP – IR & Business
HDFC Life Insurance Company
Planning Bloomberg Code: HDFCLIFE IN, Market Cap: INR 1,509bn, CMP: INR 746 (as on 15 Sept 2021)
Manish Chheda
AVP – Investor Relations
Executive digest: HDFC Life Insurance (HDFCLIFE IN) is a joint venture between HDFC, India’s leading housing
finance institution and Standard Life Aberdeen, a global investment company. HDFCLIFE offers a
range of individual and group insurance solutions that meet customer needs, such as protection,
pension, savings, investment, annuity and health. As on June 2021, the company had 37
individual and 13 group products in its portfolio, along with seven optional rider benefits.
HDFCLIFE continues to benefit from increased presence pan India having a wide reach with 390
branches and additional distribution touch points through several new tie-ups and partnerships.
With around 300 partnerships, comprising traditional partners, such as NBFC, MFI and SFB, and
including new ecosystem partners. The company has a strong base of financial consultants.
Investor insight:  Easing business conditions: With opening up of the economy and increased movement
across the country following the easing of lockdown measures, the on-the-ground situation
for the company looks positive. Business activity is improving MoM. The credit protect
business is witnessing growth on the back of increased disbursements. HDFC Group forms
less than 30% of the credit protect business. In the non-HDFC Group segment, no single entity
accounts for more than 5% in the product mix
 Exide Life adds to agency channel: Over the years, Exide Life Insurance (Not Listed) has built
a strong agency franchise, which compliments that of HDFCLIFE in terms of geographical
presence. The acquisition reduces the time to go to market with an increased agency force
by about 2-3 years. The company wants to reduce dependence on bank partners and
increase share of proprietary business. Exide Life will add ~41% to the agency base of
HDFCLIFE despite being only 8% of HDFCLIFE’s annualized premium equivalent (APE) as on
FY21. The company aims to increase agency share from 7% of new business premium (NBP)
Q1FY22 to ~20% of NBP over three years. Overlap of agents between HDFCLIFE and Exide
Life will be ~10-15%. Acquisition of Exide Life is expected to be completed within the next 4-
6 months post which the subsidiary will be merged over FY23
 Exide Life adds to customer base for cross-sell opportunities: The acquisition opens doors to
cross sell opportunities to ~0.8-1.0mn customers in a segment that was earlier not in
HDFCLIFE’s priority list
 Adds to HDFCLIFE’s EV: Exide Life will add ~ INR ~2.7bn (~1% of HDFCLIFE’s FY21 EV). The
company is comfortable with quality of the value in force (VIF) and believes the adjustment
will be only of 3-5%
 Exide Life’s protection business: A major portion of ~11% protection business of Exide Life
constitutes individual protection with return of premium (RoP). Exide Life has adopted a risk
averse strategy and kept pricing on the higher side. Additionally, risk retention also has been
lower
 Exide Life profitability: Management says variable cost of Exide Life is in line with that of
HDFCLIFE while fixed cost can be rationalized. HDFCLIFE expects company-level margin from
Exide Life over ~18 months from completion of the acquisition, ie, ~January 2022
 Current trends: ULIP continues to be in the range of 25-30%. Traction has picked up in some
pockets, but the company does not see significant movement in the category in the near
term. HDFCLIFE continues to see demand for NPAR products. Additionally with adequate
supply of FRA, the supply of NPAR products remains unconstrained. Competitive pressures
arise from time to time but are managed well as the company focuses on spread
157
 COVID provisioning: Individual mortality claims continue to be in line with expectations. For
the group business, the company has witnessed moderate delay in claim filings. HDFCLIFE
will be able to comment on adequacy of provisions only at end of September 2021
 Reinsurance rate hikes: HDFCLIFE has yet to receive any intimation from reinsurers on rate
hikes; however, the company believes rates will be hiked in the near term, given the
increasing protection base and widening demographics
 Protection growth to remain subdued: Given tightening reinsurance standards, reluctance of
customers to carry out medical tests as well as increased rates of protection business growth
is expected to remain subdued. The company expects protection business to pick up more in
Q4FY22
Analyst annotations: HDFCLIFE represents a lifecycle manager with a diversified product mix. We are concerned about
individual protection growth hitting a plateau and lower VNB growth, given impending
reinsurance price hikes. In addition, the NPAR savings business (~30% of APE) continues to see
increased competition and would witness dampening of demand if interest rates were to rise.
Despite these headwinds and given strong innovation track record, portfolio-driven approach to
investment & risk management and good distribution partnerships, we are not overly negative.
We believe while the recent Exide Life acquisition is expensive (~2.5x Jun-21 EV), but given ~89%
of the payment is in stock acquisition will be mildly EV/share neutral to positive. Exide Life also
adds to the company’s agency network and reduces the go to market time in rural South India.
Key Financials: YE APE YoY VNB AUM YoY Op. RoEV

VNB
EV P/EV P/Adj. VNB
YoY (%) Margin
March (INR mn) (%) (INR mn) (INR mn) (%) (%) (INR mn) (x) (x)
(%)
FY21 83,720 13.0 21,900 14.1 1,738,210 36.6 18.5 26.2 266,200 5.6 59.1
FY22E 100,038 19.5 25,410 16.0 2,023,273 16.4 16.0 25.4 304,671 4.9 48.6
FY23E 117,044 17.0 29,495 16.1 2,360,776 16.7 18.2 25.2 355,508 4.2 40.6
FY24E 136,841 16.9 35,168 19.2 2,746,333 16.3 18.4 25.7 416,289 3.6 32.6

158
Represented by:
Conrad D’Souza,Member
of Executive Management
HDFC
and Chief Investor Bloomberg Code: HDFC IN, Market Cap: INR 4,953bn, CMP: INR 2,815 (as on 15 Sept 2021)
Relations officer
Executive digest: HDFC is India’s largest housing finance company with AUM of INR 4.7trn. The company has non-
lending subsidiaries in life insurance, general insurance and asset management.

 The momentum in disbursals seen in July has continued in August.
 The wholesale book witnessed negative growth in June quarter, which may continue in
September quarter as well.
 Much of the lease rental discounting was prepaid last year due to new funds coming in.
On write-offs and recovery
 HDFC has been very stringent in terms of write-offs, hence, the high amount of write-offs.
However, some of them are recovered, some were partial write-offs and some are in
resolutions; thus recovery hopes exist. Also, in IND AS, write-offs include interest.
 The recovery from write-offs takes time as the assets are not very liquid – Some take 3-6
months, while a few can also take up to five years to get a reasonable value. Hence, it is
difficult to put a specific number to the recoveries.
On non-individual book/construction finance book
 The proposals have started coming in, but the company does not want to sanction in a hurry.
 The pipeline is built up and many projects are getting announced and registered.
 Good developers are seeing good pick-up.
 The demand is largely for affordable housing, while it is lower in the premium/luxury
segment.
 The momentum can be seen across the country.
Lease rental discounting
 The competition in this segment is most intense when the construction is 100% complete and
many players rush to finance at cheaper rates.
 A gradual pick-up in this segment is expected.
 Slowdown in LRD for HDFC was largely due to REITs. But there are no new REITs being
launched now; so, incremental growth will come to NBFCs and banks only.
 There have been examples of malls getting converted in office spaces, implying there is
enough demand for office spaces.
On asset quality and credit cost
 Credit cost is expected to come down to 25-35bps gradually. Last quarter only it was 37bps
but because of the second wave, extra provision of 13bps was provided.
 There could be some retail restructuring, but there is no restructuring in the wholesale
segment now.
 Credit cost will definitely reduce from here on.
On margins and spreads
 NIM of 3.7% in Q1FY22 was high because of low short-term rates, high liquidity. Longer term
NIM will stabilize at 3.3-3.4%.
159
Developer book stress
 Broadly, most of the stress has slipped.
 In February 2020, there was stress in the developer book. But with moratorium, lower rates,
clearing of inventory and supportive government measures, stress has eased post Covid.
 Relative to February 2020, the situation is much better.
Balance transfers
 The balance transfer in has been much more than the balance transfer out.
 People shift mostly because of better rates. It was bound to happen last year due to fall in
rates. People generally move for 25-30bps gain, and not for 10-15 bps.
 Many lenders give top-ups, so people move for that as well.
 We are at the bottom of the rate cycle. Thus, balance transfers will be less now.
Other key takeaways
 HDFC Ergo is next in line in terms of IPO but the time is not confirmed.
Analyst annotations: With resilient asset quality, healthy growth in retail and management guidance of a likely pick-up
in non-retail loans, we reiterate BUY.
PPoP YoY NP YoY EPS RoAE RoAA P/E P/BV

Key Financials: YE Mar
(INR bn) (%) (INR bn) (%) (INR) (%) (%) (x) (x)
FY20 263 86.9 178 84.5 103 21.7 3.6 24.3 5.0
FY21P 178 (32.4) 120 (32.3) 67 12.3 2.2 37.5 4.1
FY22E 188 5.7 136 13.3 76 12.0 2.3 33.1 3.8
FY23E 217 15.4 160 17.1 88 12.9 2.4 28.2 3.8

160
Represented by:
Anindya Banerjee, Head
Investor Relations &
ICICI Bank
Strategy Bloomberg Code: ICICIBC IN, Market Cap: INR 4,942bn, CMP: INR 714 (as on 15 Sept 2021)
Executive digest: ICICI Bank is the largest private sector bank with total assets of INR 12trn and total loans of INR
7trn. The bank’s 62% of total loans are retail loans.

 The bank plans to maintain a healthy provision coverage ratio close to 80%, which has been
stable in the past several quarters.
 ICICI Bank will continue to tighten provisioning policy.
 The bank is very comfortable with the current CET ratio of 17%.
 The management expects moderation in NPA formation in the second quarter.
Buy Now Pay Later (BNPL)
 ICICI Bank is currently offering BNPL in two forms:
 First is on imobile app – Paylater product which is pre-approved and given to customers
who can use that to purchase or make any payment.
 Second is cardless EMI – The customer can go to a store or pay via net banking, and if
he/she is an ICICI Bank customer and has a pre-approved limit, he/she can convert the
purchase into EMI.
 The book sizes are not that large as these are nascent products.
 On the cardless EMI side, ICICI Bank has tied up with Pine labs.
 ICICI Bank also has multiple fintech tie-ups with the likes of Amazon, Paytm.
 The bank pursues its own strategy as also through tie-ups.
Asset quality
 The secured bad loan portfolio has a higher share of self-employed customers.
 New gross stress loan formation will decline QoQ from Q2FY22E. However, it will still remain
elevated compared with pre-Covid levels. Net stress loans will decline faster than gross stress
loans with strong recoveries.
 Recoveries in the jewel loan portfolio have been strong.
M&A
 ICICI Bank is not focused on inorganic growth as there is more to do organically given its
customer franchise in the bank.
 However, if any unique opportunity presents, ICICI Bank may consider it.
 The bank is also looking at minority investments in a range of entities such as lenders, fintechs.
Corporate loan growth
 ICICI Bank is not fixated to deliver high growth in corporate loan book.
 On the corporate side, the bank’s approach is to cater to corporates on a holistic basis,
wherein lending is just one element.
 The management does not see a potential fit that may accelerate corporate loan growth from
the current levels. The impact of PLI and other efforts will be seen much ahead in the future.
161
Retail loan growth
 As the consumption and economic activity normalize, the bank expects growth in credit cards
and personal loans to resume.
 On the mortgage side, there is continuing interest among home buyers.
Margins
 The management is confident that margins will remain stable in the medium term even on
the current high base as the proportion of unsecured loans increases.
Telecom
 The size of the account is known and is published. It is a non-fund based exposure. The bank
is monitoring it closely. The size of the account in relation to provision and profits is very small.
Analyst annotations: With strong operating performance, tighter provisioning policy and guidance that slippage has
peaked, we reiterate Buy.
YE PPoP YoY NP YoY EPS YoY RoAE RoAA P/E P/ core BV

Key Financials: March (INR bn) (%) (INR bn) (%) (INR) (%) (%) (%) (x) (x)
FY20 281 19.9 79 135.8 12 134.8 7.1 0.8 55 3.2
FY21 364 29.5 162 104.2 23 91.1 12.3 1.4 29 2.7
FY22E 371 2.1 210 29.5 30 29.5 13.3 1.6 22 2.3
FY23E 432 16.2 259 23.4 37 23.4 14.3 1.8 18 2.0

162
Represented by:
Mukesh Boobana
SVP – Finance
ICICI Prudential Life Insurance
Dhiren Salian Bloomberg Code: IPRU IN, Market Cap: INR 999bn, CMP: INR 696 (as on 15 Sept 2021)
EVP - Finance
Executive digest: ICICI Prudential Life Insurance (IPRU IN) is promoted by ICICI Bank and Prudential Corporation
Holdings. It began its operations in FY01, and currently it is the largest private life insurer in terms
of sum assured. The wholly-owned subsidiary, ICICI Prudential Pension Funds Management
Company, is a registered pension fund manager. The company has forged over 100 tie-ups in
FY21. These ranged from bancassurance partnerships that included IndusInd Bank, AU Small
Finance Bank, IDFC First Bank, RBL Bank and NSDL Payments Bank, to tie-ups with distributors
such as PhonePe Private Limited and Wealth India Financial Services. The 23 bancassurance
partnerships have expanded the reach to 162 mn bank customers with a footprint of about
12,000 branches. The company’s AUM stood at INR 2.2tn as on 30 June 2021.
Investor insight:  Growth trajectory continues for M4FY21: Total APE for M4FY22 grew 41.5% YoY to INR
17.9bn while new business sum assured grew 74.8% YoY to INR 2.27tn. IPRU expects product
mix to be ULIP at 45-55%, traditional including annuity (PAR + NPAR at 25-30%) and
protection at 15-20%. Persistency has broadly been improving
 Trends look positive post impact of Second COVID Wave in Q1FY22: During Q1FY22, the
company paid higher death claims than peers as it has also become a market leader in sum
assured. Management says post the peak of the Second Wave during Q1FY22, death claims
have moderates. It, however, believes it is too early to comment on adequacy of reserves and
expects a better understanding of the metric toward end-Q2FY22. Management expects
increased vaccination to reduce deaths
 Group term and credit protection prices hiked; individual protection price hike not taken:
Management says reinsurance rates have increased for the shorter duration group term and
credit protect products. Prices for these products have been hiked in line with increases in
reinsurance rates. Reinsurance rates for longer duration contracts of individual protection and
long duration credit protect have not been raised as COVID is still expected to be a 1-2 year
phenomenon
 Individual protection remains subdued, as 1) underwriting standards increased with
companies requiring additional medical tests, 2) reluctance of individuals to undergo medical
tests at test centers as COVID continues, and 3) reinsurance-led rate hikes in FY21.
Management sees no problems on the demand side
 Group protection picking up: The group term business continues to grow well as corporate
increased cover in a COVID-hit year while improving credit growth is driving credit protect
higher
 Distribution channel remains diversified: Management says distributors have their respective
target customers it works with distributors to narrow on most suitable products for various
customer segments. For eg, ICICI Bank has greater focus on protection, annuity and ULIP
products while some other banks have a clear focus on non-linked products. Management
believes the current channel configuration will result in delivery of optimal product mix. IPRU
has added ~6,000 agents in M5FY22; the contribution from the agency channel, which stood
at 23%, is expected to improve
Analyst annotations: We are encouraged by IPRU’s re-engineered business model with a more complete product
bouquet. Given that both ICICI Bank and other channels are firing, we expect 21.1% CAGR APE
over FY21-24E and a 20.4% CAGR VNB. We believe the company will deliver ROEV in the range
of 12-15.2% over FY22-24E.
163
Key Financials: YE APE YoY VNB YoY AUM YoY Op. ROEV
VNB
EV P/EV P/Adj. VNB
Margin
March (INR mn) (%) (INR mn) (%) (INR mn) (%) (%) (INR mn) (x) (x)
(%)
FY21 64,620 (12.5) 16,210 1.0 2,122,024 40.3 15.2 25.1 291,070 3.0 39.5
FY22E 81,333 25.9 20,333 25.4 2,447,628 15.3 12.0 25.0 324,167 2.7 28.5
FY23E 97,433 19.8 23,969 17.9 2,836,951 15.9 14.6 24.6 367,063 2.4 22.8
FY24E 114,643 17.7 28,317 18.1 3,275,317 15.5 15.2 24.7 413,689 2.1 17.8

164
Represented by:
Harvinder Jaspal, CFO ICICI Securities
Kartik Parekh
AVP - Investor Relations Bloomberg Code: ISEC IN, Market Cap: INR 243bn, CMP: INR 754 (as on 15 Sept 2021)
Executive digest: ICICI Securities (ISEC IN) is a subsidiary of ICICI Bank. ISEC is a technology-based firm offering a
wide range of financial services, including investment banking, institutional & retail broking,
private wealth management and financial product distribution. The company has seen a strong
addition in customers of 0.9mn over the past 15 months as on June 2021. ISEC also enjoys strong
cash equity market share of 8.9% as on Q1FY22. The company delivered PAT growth of 90% in
FY21 to end the year at INR 10.68bn.
Investor insight:  Customer additions continue: ISEC has adopted the open architecture model and does not
require customers to have a bank account with ICICI Bank for broking account opening.
Currently, about two-thirds of new client additions are from the non-ICICI Bank channel.
Client sourcing from ICICI Bank reduced from more than 80% to less than 30% currently
 Improving processes: Turnaround time (TAT) for account opening has reduced to 10 minutes
from ~2.0-2.5 days. The monthly client acquisition run-rate has improved by more than 3x
 Digital customer economics: ISEC continues to source customers using digital channel- social
media, influencers, websites and email. The company continues to experiment with different
channels and investing in more successful channels. Cost of acquisition is high for these
customers currently, but over time as ISEC fine tunes its strategies, it expects cost to decline.
The current breakeven period for new digital client acquisitions is about a year
 New bank tie-ups: While the share of digital channel is growing in the customer acquisition
pie, the company is also tying up with newer banks for sourcing of customers. The most
recent tie up is with Federal Bank
 Pricing: Under the NEO plan, pricing has come in line with that being offered by discount
brokers; in fact for equity futures, the charge is lower than that being charged by discount
brokers. Adoption of NEO has now increased to 5% (0.1mn customers) of active customer
base. Most active derivative traders are already using NEO. The Prime offering contributes to
60-70% of volume while NEO offering contributes 35-40% of volume. ISEC expects volume
growth and ancillary charges to offset impact of lower brokerage. Float income on balances
maintained for futures trading will also bolster income
 MTF and ESOP funding: ISEC’s funding book is at ~INR 50bn and has grown 95% since March
2021. Strong cash market activity and increased margin requirements have led to higher
borrowing
 Distribution: ISEC continues to focus on building strong partnerships with customers offering
these solutions, primarily for insurance and mutual funds. The company also distributes fixed
income products and other investment options. Its loan platform is scaling up well with
addition of 12 different products through eight partners. The company is also increasing
protection distribution by partnering with six insurers
 Headcount and tech investments: ISEC continues to invest in technology. It believes overall
headcount will be stable and does not expect an increase in headcount. Management
expects tech spend to increase
165
Analyst annotations: We are believers in ISEC’s strong customer franchise. Additionally, we are impressed by
management’s ability to make dynamic changes in an extremely competitive and fast changing
broking industry. Recent pricing interventions, customer acquisition initiatives, technology
upgrades continue to demonstrate management is agile and responsive to the business’
changing needs. We expect ISEC to be one of the dominant companies in broking retail as well
as institutional, distribution and investment banking.
FY21 24,304 50.8 14,364 59.1 10,677 89.9 33.1 70.4 22.7 22.7 19.6
FY22E 25,627 5.4 15,707 61.3 11,333 6.1 35.2 56.9 17.4 21.4 18.4
FY23E 26,055 1.7 15,784 60.6 11,347 0.1 35.2 48.1 15.6 21.4 18.2
FY24E 28,206 8.3 17,564 62.3 12,358 8.9 38.4 44.5 15.7 19.6 16.4

166
Represented by:
R. Venkataraman,
Chairman and MD
IIFL Securities (Not Rated)
Ronak Gandhi, CFO Bloomberg Code: IIFLSEC IN, Market Cap: INR 29bn, CMP: INR 94 (as on 15 Sept 2021)
Anup Varghese, Investor
Relations
Executive digest: IIFL Securities (IIFLSEC IN) is one of the largest, independent, full service, retail and institutional
broking houses along with being a leading investment advisory firm in India. The firm had an
overall equity volume market share of 1.5% during FY21 and its active client base stood at 0.29mn
making it the 13th largest on this metric. For Q1FY22, the company delivered 65.8% YoY growth
in RPAT to INR 688mn. DP AUM stood at INR 420bn while its financial products distribution AUM
was INR 131bn.
 Strong growth continues: With improvement in digital infrastructure and literacy, the industry
Investor insight:
has witnessed strong growth in retail traders. Low interest rates and a pandemic, which have
forced people to work from home, have been additional drivers
 Research edge: IIFLSEC believes customers need hand-holding, and this upmove in the
markets has been without correction. It believes need for research will become more evident
in stable markets; it has a strong research edge which will enable it to retain customers
 Presence: With a solid digital platform coupled with effective research capabilities and strong
physical presence in more than 700 towns and cities, management says it offers a wholesome
broking service experience for types of customers, ranging from DIY to affluent RM-
dependent customers
 Customer acquisition: The customer acquisition pace has improved significantly over the past
year as the company has aggressively focused across channels: sub-brokers, RM and digital
(DIY customers). Average customer acquisition pace has improved from less than 0.05mn per
quarter until Q4FY20 to 0.15mn customers in Q1FY21. The company is heavily investing in
technology to increase DIY customer acquisition and also digital on-boarding of customers
from sub-brokers and RM channels. Management says CAC continues to be high at ~INR
1,600-1,800. The activation rate is low at a mere 25%. IIFLSEC is working toward improving
both metrics. The break-even period is less than a year
 Pricing to decline: There will be downward pressure on yield as customers continue to opt
for flat fee structures
 Karvy demat account acquisition: Early indicators of onboarding Karvy demat customers seem
to be encouraging. IIFLSEC plans to give more details in its Q2FY22 earnings presentation.
 Peak margin norms: Management is surprised that despite successive increases in margin
requirements, volume has not been hit. MD R Venkataraman attributes it to huge influx of
new trading customers, resulting in large spurt in options volume and a strong bull market
 Investment banking deal pipeline: The investment banking division catering to the mid-
corporate segment continues to do well. The company does not have a presence in PSU
mandates as fees are significantly lower.
 Real estate portfolio monetization: Offices at Prabhadevi and Andheri have been monetized.
The company has ~0.6mn sqft at book value of ~INR 2.24bn across different cities. IIFLSEC
estimates the value of this real estate at ~INR 6.0bn. It plans to sell most of the real estate
except for the few, which it intends to use as office space
Analyst annotations: We expect the company to deliver strong performance over the next few quarters as the market
remains buoyant. Having said that, IIFLSEC has been a late entrant in the retail broking boom
being currently witnessed and in this regard it is expected to lag some bank-owned brokers and
new-age discount brokers.
167
FY18 6,943 NA 1,943 28.0 1,873 - 5.9 30.0 9.1 16.0 18.3
FY19 7,200 3.7 2,562 35.6 1,703 (9.1) 5.3 25.1 14.3 17.6 12.2
FY20 6,218 (13.6) 1,890 30.4 1,467 (13.8) 4.6 18.2 10.0 20.5 15.7
FY21 7,412 19.2 2,537 34.2 2,203 50.1 7.3 23.9 16.5 12.9 11.3

168
Represented by:
Anshuman Maheshwary
COO
IIFL Wealth Management (Not Rated)
Pavan Manghnani Bloomberg Code: IIFLWAM IN, Market Cap: INR 147bn, CMP: INR 1,660 (as on 15 Sept 2021)
Head Strategy & IR
Mohit Hemrajani
SVP, Strategy & IR
Executive digest: IIFL Wealth Management (IIFLWAM IN) is one of the fastest-growing, private wealth management
firms in India with an AUM of ~ USD 38bn as on June 2021. It serves highly specialized and
sophisticated needs of high net worth (HNI) and ultra-high net worth individuals (UHNI), affluent
families, family offices and institutional clients through a range of tailored wealth management
solutions. IIFL Wealth helps more than 6,700 influential families in India. The 12-year-old company
was separately listed three years ago in September 2019 as part of a demerger of IIFL Group
entities. The company operates in two business segments: wealth and assets management. The
company started wealth management activities in 2008 and subsequently acquired AMC license
in 2015. It has INR 1.9tn of wealth management AUM and INR 44bn of AMC AUM as on June
2021. The AMC business is primarily focused on alternative offerings.
Investor insight:  Strong Q1FY22: IIFLWAM reported its strongest quarterly results in Q1FY22 with a PAT of INR
1.2bn. Total assets (including custody) increased 38.3% YoY and 14.8% QoQ to INR 2.8tn.
Management expects positive sentiments to continue and drive assets growth higher. There
has been a pickup in new client acquisition and fund deployment
 IIFL One: It was launched in 2019 and is the company’s flagship advisory product where
clients directly pay advisory charges to IIFLWAM in addition to management fees and fund
expenses payable to the fund manager. It is a transparent model whereby fees clients pay is
as a percentage of their AUM and there are no additional hidden charges. On a blended
basis, IIFL One generated a fee of ~30bp. The charge to corporate clients which mainly invest
in short-term surpluses in liquid and overnight categories is ~5-10bp, non-discretionary
individual assets yield at ~30-40bp while yield on discretionary assets is at ~50bp. With an
AUM of INR 500bn, the IIFL One model should become self-sustaining. Currently, AUM is at
INR 305bn
 Passives impact on yield: IIFLWAM does not expect 50bp of yield to compress because of
rising passive allocation of HNI & UNHI, because: 1) of total client AUM, only 20-25% of the
client portfolio is actually attracted toward pure alternates. The balance 75-80% of client
portfolio is invested in stocks, bonds and vanilla mutual funds, and 2) most platforms offering
these services to clients are DIY platforms and HNI & UHNI require advise and hand-holding
 Focus on recurring revenue: Over the past two years, IIFLWAM has been focused on growing
recurring assets and revenue. The company targets 70-75% of revenue from ARR over the
next three years from 67% in Q1FY22. ARR net flows over the past five quarters have been
strong at ~INR 36bn. The company plans to grow ARR assets by 15% YoY. IIFL One may grow
at a rapid pace assisted by new external funds as well as internal migration of funds
 Lending business: The Loan book is primarily loan against securities (LAS) and MF-backed
credit lines to existing clients to enable them to manage temporary liquidity mismatches. All
loans have been given to existing wealth clients. Spread remains in the range of ~2% and no
distribution cost is involved. Loans are usually sanctioned for a 3-4 month period with an
option to roll over and are collateralized with at least 2x cover of the client’s portfolio. The
average duration of the loanbook is six months. According to the management, the company
has not suffered any losses in this segment over the past 10 years
169
 Productivity: The company has 60+ teams in the wealth management business with 2-3
people in each team. On an average, the number of families managed by each team has
increased from 50 per team five years ago to ~110 currently. Productivity gains have
materialized by adding back-office staff, technology and improving systems. IIFLWAM expects
productivity to improve hereafter
Analyst annotations: IIFLWAM provides investors with a unique opportunity to invest in the growing wealth of the HNI
and UHNI. The launch of low-cost models such as IIFL One has further enhanced the value
proposition for customers. We believe the company has strong relationships with most wealthy
families putting it in a unique position to cement its leadership position and grow at a faster pace
than its competitors.
FY18 16,586 59.4 10,062 60.7 3,802 51.8 47.7 22.5 10.2 34.8 21.4
FY19 15,490 (6.6) 9,583 61.9 3,745 (1.5) 44.3 15.7 7.5 37.4 21.6
FY20 14,700 (5.1) 8,046 54.7 2,011 (46.3) 23.7 7.0 5.4 70.1 29.1
FY21 16,116 9.6 8,941 55.5 3,692 83.6 42.0 12.7 7.1 39.5 21.6

170
Represented by:
Indrajit Yadav IndusInd Bank
SVP, Strategy and
Investor Relations Bloomberg Code: IIB IN, Market Cap: INR 755bn, CMP: INR 1054 (as on 15 Sept 2021)
IndusInd Bank is a mid-sized bank with traditional expertise in CV lending. Following its
Executive digest:
acquisition of Bharat Financials, it has become a significant player in the MFI segment.

 Balance sheet-wise, the bank is at the best level, in terms of capital adequacy, CASA deposits.
 Disbursements in retail are normalizing, while growth-wise, it may take some time.
 This quarter will see sequential improvement.
 The collection efficiency has reached 96% in July 2021
 The bank has created INR 20.5bn additional provision, including the telecom account.
On Telecom account
 IndusInd Bank will make decent provision on both funded and non-funded exposure for the
telecom sector. There is INR 34bn exposure for the telecom company.
On growth
 The corporate segment is growing. The bank had sold INR 90bn of corporate book last year;
thus, the book looked small but there was good demand.
 All the vehicles outside MHCV have seen good growth levels like before 2019. PVs, small CVs,
LCVs, have all resumed pre-Covid level growth. MHCV may take 2-3 more months to recover.
In the MHCV segment, quality customers are being picked – As it is a good time to pick quality
customers during the down cycle since this customer bracket has good visibility, going
forward.
 IndusInd Bank expects to reach normal level of disbursement soon.
 In the MFI segment, the bank is cautious – It is disbursing where collections are good. The
bank has also dropped the ticket size where collection levels are below normal. IndusInd Bank
will remain cautious on MFI and wait for collections to normalize.
 LAP and business loans were slow before Covid only; thus, picking and choosing customers
is getting better. The secured side of business loans will show good pick-up soon.
Slippages and credit cost
 Gross slippages will improve QoQ. However, it will remain at a higher level than pre-Covid,
but the bank also anticipates recoveries. Both will be higher than pre-Covid levels.
 March 2020 and June 2020, both saw sharp slippages on the corporate side. In the past three
quarters of last year and the first quarter of this year, the slippages have improved and have
normalized now. The range of slippages has been INR 2-4bn, which is back to pre-2018
slippage run rate. The bank is comfortable on corporate asset quality.
 Credit cost could turn out to be higher than earlier guidance as the bank makes additional
provision on the telecom exposure. The earlier guidance was 160-190bp, which could rise by
50bp due to telecom provisioning.
Other highlights
 There is no need for equity capital for the bank. It will only raise debt.
 The bank keeps exploring new opportunities in insurance, fintech partnerships, adding
another domain in bank, credit cards etc., but nothing is in concrete stage, as of now.
171
 The bank is comfortable on the margin front. It is going to invest in corporate franchise and
grow despite the cost of funds scenario. Banking credit has been a little weak off late, but it is
expected to return as the rate cycle reverses.
Analyst annotations: With a low base, peaking of credit cost and pick-up in loan growth in retail and corporate, risk
reward for IndusInd Bank looks better than other mid-sized banks.
YE PPoP YoY NP YoY EPS YoY P/PPOP RoAE RoAA P/E P/BV
Key Financials: March (INR bn) (%) (INR bn) (%) (INR) (%) (x) (%) (%) (x) (x)
FY20 108 33.2 44 33.8 64 16.6 7.0 14.4 1.5 15.4 1.9
FY21 119 10.2 29 (33.7) 38 (40.4) 6.4 7.5 0.9 25.8 1.7
FY22E 123 3.8 53 81.7 69 81.7 6.1 11.6 1.4 14.2 1.6
FY23E 138 12.4 71 32.7 91 32.7 5.5 13.7 1.6 10.7 1.4

172
Represented by:
Dinesh Prajapati, Senior
VP – Group Treasury &
Mahindra & Mahindra Financial Services
Corporate Affairs Bloomberg Code: MMFS IN, Market Cap: INR 214bn, CMP: INR 173 (as on 15 Sept 2021)
Vishal Agarwal, General
Manager, Treasury and
Investor Relations
Executive digest: Mahindra & Mahindra Financial Services (MMFS) is a vehicle financing NBFC. The company’s AUM
stood at INR 693bn as at end-June 2020.

 The collection efficiency improved to 95% in July and stood more than 97% in August 2021.
 Chip shortage for OEMs remains an issue, which may result in supply shortage – This may, in
turn, affect the company’s disbursements. Cash flows in the rural marketplace have improved
and farmer sentiment is good on the back of good monsoons.
 A few geographies remain challenging due to Covid restrictions such as Kerala.
 Cost of funds for the company continues to remain low.
 MMFS has created a digital platform, which will be launched in the next 6-12 months.
 In terms of restructuring, most of it was done in July and August 2021, and incrementally,
there may not be much restructuring in September 2021.
 In terms of assets quality, the company is witnessing improvement.
On growth
 Disbursements are still 20-25% lower than pre-Covid levels.
 Growth continues to be improving in the auto, tractor and refinancing segment, while CVs
continue to be witnessing low growth.
 MMFS expects the AUM growth in the range of 5-10% by end of FY22.
 The management is of the view that long-term AUM growth from FY23 will be in the range
of 15-20% and the company has enough capital to support that growth.
Collection
 MMFS will not make incremental provisions and rather 80-90% reversal in provisions is
expected in the next three quarters. There is reduction in Stage 3 level, which will result in
write-back of provisions.
 Stage 3 will decline faster than Stage 2 and Stage 2 will look elevated because restructured
loans are part of Stage 2.
Credit losses
 Historically, the credit losses have been in the range of 1-1.5%.
 Real credit loss should not exceed 2%, as per management expectations.
 Used vehicle demand and prices have improved due to shortage of new vehicles.
Other highlights
 The management expects ROA to be more than 2% in the medium term.
 On margins: MMFS expects margins to expand as liquidity on the balance sheet declines and
recoveries pick up.
173
With recoveries gathering steam post unlocks, we expect a decline in NPLs starting Q2. The
management has guided for a decline of 10% in Stage 2+3 from 35% to 25% by end-year. We are
building in a decline of 7%. Even in the worst case, MMFS will likely have write backs of credit cost
of INR 5bn for the rest of the year and in the best case, it could be INR 10-12bn. We build in write-
back of INR 5bn, resulting in credit cost of INR 23bn for FY22E versus INR 28bn for Q1FY22. We
expect PAT of INR 10bn in FY22E versus a loss of INR 15bn in Q1FY22. While loss will turn to profit,
RoA and RoE will remain significantly below normalized levels at 1.3% and 6.3%. For FY23E, we
expect RoE of 9%. From here on, we will see net write backs of provisions, given the weak RoE
profile and repeated earnings disappointment. We maintain Sell.
YE NII YoY PPOP Adj PAT YoY EPS ROE ROA P/E P/BV
Key Financials: March (INR mn) (%) (INR mn) (INR mn) (%) (INR) (%) (%) (x) (x)
FY20 52,692 10.3 33,983 9,064 (41.8) 14.7 8.2 1.3 11.7 0.9
FY21P 56,620 7.5 41,511 3,351 (63.0) 2.7 2.6 0.5 63.2 1.4
FY22E 54,215 (4.2) 36,480 9,777 191.7 7.9 6.3 1.3 21.2 1.3
FY23E 58,239 7.4 37,902 15,498 58.5 12.5 9.3 2.0 13.8 1.3

174
Represented by:
Amrit Singh, CFO & EVP Max Financials Services
Bloomberg Code: MAXF IN, Market Cap: INR 1,130bn, CMP: INR 390 (as on 15 Sept 2021)
Executive digest: Max Life is the sole operating subsidiary of Max Financial Services and it is India’s largest non-bank
& financial institution-owned private life insurer and the fourth largest private life insurer. In FY21,
Max Life reported an embedded value (EV) of INR 11.8bn, after allowing for shareholder
dividends led by 39% growth in value of new business. Operating return on EV (RoEV) stood at
18.5% while value of new business grew 39% YoY to INR 1.25bn.
Investor insight:  Strong growth continues: The company has delivered robust APE and VNB CAGR over the
past three and five years periods, and performance for M4FY22 period also has been in line
with market growth. New sales has grown 27% YoY on high base
 Transaction with Axis Bank completed; MSI leg awaiting IRDAI permissions: During Q1FY22,
Axis Bank and its two subsidiaries — Axis Capital and Axis Securities — became co-promoters
of Max Life. Axis entities now collectively own 13% stake in Max Life. MAXF has filed an
application with the IRDAI for acquiring a residual stake of 5.17% from MSI in Max Life at INR
85 per share. Management expects to complete this during Q2FY22. It also expects Axis
entities to exercise option to buy additional 7% by FY23
 Axis in control: Post completion of the first leg of transaction tranche, Axis Bank has become
a JV partner with three board seats
 Lower mortality claims likely following high vaccination rate: COVID claims have been in line
with the market and peaked in July 2021 with August 2021 coming in at similar levels. A
random sample calling done by the company to 8,500 customers indicates ~90-92% of
customers have taken at least one dose of COVID vaccine and ~30-40% of customers were
fully vaccinated. Max Life expects mortality to moderate even in the event of a Third Wave
 Individual protection remains subdued, as 1) underwriting standards increased with
companies requiring additional medical tests and tele-medicals becoming inadmissible, 2)
reluctance of individuals to undergo medical tests at test centers as COVID continues, and 3)
reinsurance-led rate hikes in FY21. Management sees no issues on demand. According to
management, even other insurers will need to raise rates in due course as it expects rate hikes
to come through across the industry
 Looking to augment digital sourcing capability over medium to long term: Max Life stated it
has ~26% market share in the digital protection segment. Also, 16% of its customers are digital
natives. The company is in partnerships with web-aggregators and brokers. This segment has
posted a CAGR of 50% over the past 4-5 years on low base. The company believes this pace
can continue for several years. Protection products are more easily comparable and movable
to online channels. The company remains focused on the digital space and tap new
ecosystems in addition to the likes of PhonePay, Paytm & policybaazar and targets to enter
into the digital savings space soon
 Maintain margin during the year: As reporting is done on an actual cost basis, the company
reported a low VNB margin of 19.7% in Q1FY22, down 550bp vs FY21, and it expects margin
to rise during the course of the year. For FY22, it targets to achieve margin closer to 25%. Max
Life believes it can maintain the current business mix of NPAR at ~30-35%, PAR at ~15-20%,
protection at ~10-15% and ULIP at ~25-35%. Higher interest rates may hurt NPAR product
growth, but the company is confident this will not happen in FY22. Additionally, the company
has levers within the NPAR product suite to increase margin
 Applied for PFM license: The retirement segment remains area of focus. The company has
filed an application for pension fund manager license with the PFRDA
175
 Group credit: The company is more focused on the individual protection business. It uses the
group credit life business tactically. With Axis Bank now becoming a JV partner, the focus is
to leverage its strength more on the individual business
 M&A: Max Life is open to any potential M&A opportunity, especially if any comes with a bank
partner. Other potential targets could be strong technology companies in the life insurance
digital infrastructure
Analyst annotations: We like Max Life’s diversified business mix with lower dependence on ULIP. We believe the
company can deliver a 15.2% APE CAGR over FY21-24E. We expect a 13.7% VNB CAGR over
FY21-24E and an ROEV of 19.4% in FY24E.
Key Financials: YE APE YoY VNB Adj PAT YoY Op. ROEV
VNB
EV P/EV P/Adj. VNB
YoY (%) margin
March (INR mn) (%) (INR mn) (INR mn) (%) (%) (INR) (x) (x)
(%)
FY21 49,570 19.5 12,490 39.2 7,117 31.9 18.6 25.2 118,340 4.1 30.9
FY22E 56,765 14.5 13,340 6.8 7,962 11.9 18.9 23.5 137,655 3.5 27.5
FY23E 65,891 16.1 15,682 17.6 9,017 13.3 19.2 23.8 160,787 3.0 22.2
FY24E 75,851 15.1 18,356 17.1 12,820 42.2 19.4 24.2 188,326 2.6 17.7
Source: Company, Elara Securities Estimates

176
Represented by:
Shalibhadra Shah, CFO Motilal Oswal Financial Services
Rakesh Shinde
VP - Investor Relations Bloomberg Code: MOFS IN, Market Cap: INR 114bn, CMP: INR 777 (as on 15 Sept 2021)
Executive digest: Motilal Oswal Financial Services (MOFS IN) offers financial products and services, including stock
broking, asset management (public, private and real estate), private wealth management,
investment banking and home finance. The group also has a treasury of ~INR 310bn as on March
2021, most of which has been invested in its own assets. The company has a unique and
diversified client base that includes, mostly HNI and urban customers. Bolstered by treasury gains,
MOFS (consolidated) reported the highest-ever revenue of INR 39.2bn and a PAT of INR 12.5bn
in FY21. The promoters own ~70.7% of the company.
Investor insight: Capital market segment

 Customer acquisition: Digital customer acquisitions continue to grow on a MoM basis. The
company added ~0.22mn customers in Q1FY22 vs ~0.6mn in FY21. It added a 500-seater
facility to add customers digitally. Customer acquisition cost is high at ~INR 7,000-8,000 while
activation rates are also higher at ~45%. MOFS assigns relationship managers to clients to
nudge them into trading. MOFS is working to reduce acquisition cost
 Consolidation in broking: MOFS benefited from consolidation in the industry as it acquired
15 small standalone brokers in FY21. The company also gained by adding employees of Karvy,
which with it bought in clients. It believes these opportunities continue to come its way and
will be growth drivers for its business
 Distribution and funding: Strong equity markets have resulted in demand for financial
products. MOFS is now focusing on insurance distribution, which is a high yielding product.
Demand for funding for IPO has also witnessed growth as the markets remain heated
Asset and wealth management segment
 AUM growth continues: MTM gains and inflows have resulted in MOAMC’s assets to grow to
~INR 463bn (Q1FY22, +32.3% YoY). According to management, the company has witnessed
inflows in Q2FY22 and AUM at ~INR 500bn
 AIF driving inflows: AIF is attracting strong inflows as upfront commissions are still permitted
for this asset class. Upfront commissions have been banned for mutual funds and PMS
products. Aim is to remain an equity-focused firm with higher yielding assets in the
alternatives business
 AIF economics lower: Net fee on AIF at ~60-70bp is lower than that being earned on PMS’,
which yield ~110-120bp. However, MOFS has the opportunity to earn performance fees on
AIF, which can be a kicker to earnings
 Traction in wealth management: The business continues to witness strong net sales of ~INR
10bn in Q1FY22 and AUM crossed ~INR 250bn. The company will continue to invest in
relationship managers in this business and expects productivity gains to kick in
 Private equity and real estate funds: During the year, the company launched its fifth real
estate fund with ~INR 8bn worth of assets and target fund size of INR 12bn. It also launched
its fourth equity growth fund (IPV IV), one of the largest funds in India at INR 40bn. The
company has closed its first fund with last investment exit in GR Infra and an IRR of 28%
177
Housing finance
 GNPA and NNPA rise: The Second Wave of COVID-19 had a sharper impact and GNPA &
NNPA rose to 4.7% & 3.3%, respectively, at the end of Q1FY22. According to management,
collection efficiency stands at 98% and its GNPA is likely to decline to ~3% by September
2021. About 10% of overdue book is being rolled back every month currently
 Disbursements to pick up: MOHFL has a sales force of ~500 employees and targets to increase
to ~800 over the next three months with the target of increasing disbursements to ~INR
1bn/month. It expects H1FY22 disbursement to be at par with that for FY21
 Cost of funds: Average cost of funds have declined ~200bp over the past 1.5 years to 8.5%.
It expects this to decline further to 8.0% in the next two quarters as incremental borrowing
cost is at ~7.25-7.50%. Improvement in ratings by ratings agency will aid in further reduction
in borrowing cost. It maintains spread at 5.0% and NIM at 6.5%
Analyst annotations: MOFS has a differentiated HNI-urban client base, and we believe it will benefit from
financialization of savings. The company’s legacy broking business is being challenged by the
growth of discount brokers and continues to face pressures on volume market share and pricing.
MOAMC is a late entrant in the investment management and housing finance lines of business.
The company continues to focus on alternatives but is significantly smaller in comparison to other
pure play asset managers. The housing finance business is in repair mode after excessive reckless
lending to the subprime segment. We have faith in management’s execution abilities and believe
the company can generate strong investment returns over the medium to long term.
Key Financials: YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS ROE ROCE P/E P/B
FY21 29,890 114.4 16,200 54.2 12,719 1,014.1 85.7 35.3 35.4 8.5 2.5
FY22E 23,690 (20.7) 8,292 35.0 6,720 (47.2) (45.3) 14.5 14.5 16.0 2.2
FY23E 26,309 11.1 9,479 36.0 7,747 15.3 52.2 14.9 15.0 13.9 2.0
FY24E 29,161 10.8 11,143 38.2 9,122 17.7 61.5 15.7 15.7 11.8 1.7

178
Represented by:
Saugata Chatterjee
CoChief Business Officer
Nippon Life India AMC
Arpan Saha Bloomberg Code: NAM IN, Market Cap: INR 273bn, CMP: INR 441 (as on 15 Sept 2021)
Chief Digital Officer
Abhishek Nalwaya,
Head, Investor Relations
Nippon Life India Asset Management (NAM IN) is the asset manager of Nippon India Mutual
Executive digest:
Fund. Nippon Life Insurance (NLI), which is Japan’s leading private life insurer, is the promoter of
NAM and currently holds ~74.5% in the company. With total AUM of INR 2.5tn, NAM is the sixth-
largest mutual fund manager in the country. In terms of equity AUM, the company ranks sixth
with total equity AUM of INR 1.0tn as on June 2021.
Investor insight:  Retail focus continues: NAM has added ~1.4mn unique customers over the past 15 months.
Folio accumulation has been encouraging on the passives side as well. Around 50% of
customers transacting with the company are millennials. Large retail base makes AUM
granular and sticky. The distribution channel hit a new high in August 2021 as there were
more than 18,000 distributors selling the product at 500 locations and 4,000 pin codes
 Gaining lost HNI & institutional market share: Following improved quality of risk management
and returns, mandates from HNI and larger treasuries have increased. More than 800
corporate have restarted investing with the company. It aims to gain its lost market share in
the HNI segment by: 1) continuing to attract HNI to its ETF offerings, 2) getting NAM funds
approved with wealth managers, and 3) NAM has a specialized team to cater to HNI, UHNI,
family offices and wealth managers to create an impact and maintain touch with this high
contribution category
 NAM ETF – a product of choice for HNI: HNI share in NAM ETF is significantly higher at 18%
vs industry average of 2%. NAM is expected to benefit as investors preference is moving
toward ETF and passives
 Leveraging the diversified distribution channel to attract new funds: The recently concluded
Flexicap NFO saw the firm collect money from ~0.3mn individuals. While the digital channel
was a major contributor, the company leveraged its large distributor base to tap the B-30
locations. NAM says the new fund has been raised at almost 3x better net yield than funds
raised recently by competitors
 Strong flows expected to continue: Incremental flows that the industry is witnessing is a
combination of high liquidity in global markets, strong price action, which is also causing
some “fear of missing out” in retail investors, low interest rates, a large number of people
being drawn to equity markets as seen by the high number of demat account openings,
promoter exits at high valuations scale up in the equity market activities with high retail demat
openings, and large cash investable surpluses available to HNI which have exited businesses
 Retail participation in passive starting to improve; active and passive to grow hand in hand:
Currently, the passive segment is flooded with funds from institutions and HNI. While retail
participation in passives is currently low, it is has started to pick up in pockets and expected
to continue increasing
Analyst annotations: We appreciate NAM’s strong retail franchise and are believers the company will be able to
replicate this success in the HNI and institutional segments. We believe improving performance
will drive inflows. Additionally, NAM is expected to grow its assets through Nippon Life’s global
reach. We like the business but are wary on current valuations, especially given the impending
yield reduction which will be brought about by passives.
179
YE Revenue YoY NOPLAT NOPLAT Adj PAT YoY Fully DEPS ROE ROCE P/E EV/NOPLAT
FY21 10,621 (11.7) 4,027 37.9 6,804 63.8 10.9 23.9 23.9 40.0 61.3
FY22E 11,957 12.6 4,694 39.3 6,161 (9.4) 9.8 19.5 19.5 44.2 52.3
FY23E 13,063 9.2 5,382 41.2 6,978 13.3 11.1 20.7 20.7 39.0 45.1
FY24E 14,375 10.0 6,177 43.0 8,126 16.5 13.0 22.0 22.0 33.3 38.7

180
Represented by:
Sanjay Mundra,
President, Investor and
Shriram Transport Finance
Media Relations Bloomberg Code: SHTF IN, Market Cap: INR 365bn, CMP: INR 1,367 (as on 15 Sept 2021)
Executive digest: Shriram Transport Finance (SHTF) finances used vehicles. The company has AUM of INR 1trn, with
used vehicle financing accounting for 85%.

 The only concern among the truckers community was the supply chain disruption, which has
improved now.
 Utilization rates have improved 5-6% in the past one month and the truckers are roughly
working for 22 days.
 The rise in fuel cost has been passed on. Freight rates have improved and are up 24-25% since
March 2020, while fuel rates have increased 18-20%.
 The only concern for truckers now is getting the return load as they have to wait for a few
days to get the return load.
 Collection efficiency has improved to normal run rate.
Asset quality and credit cost
 Credit cost will be lower YoY in FY22E.
 FY23 credit cost will be around 2%.
 In the first phase, SHTF carried out 45-50bps of total portfolio restructuring. This time also, it
may be in the same range.
 SHTF preferred to take a hit on Stage 2 and 3, rather than actual restructuring.
 Restructuring is mostly for school buses.
 SHTF increased the loss given default (LGD) 10% on school buses.
Growth guidance
 The management still maintains double-digit growth guidance for the full year.
 New vehicle prices will be increased in September or October, owing to rise in commodity
prices by close to 8-10%. Used vehicle prices will also increase, which may beneficially impact
LTV and resale value.
On merger of City Union and Transport
 Shriram Life Insurance will not be part of the merger.
 A formal merger announcement may happen by December.
On margins
 In Q4FY22, NIMs may revive to 7%.
Refinancing of used vehicles
 Repricing of the product is common and also depends on product acceptability in the market.
 A product changes hands minimum 3-4 times in its life of 10 years.
On digitization
 SHTF is working on digitization and in the next 10-12 months, all offerings will feature under
one digital platform. It will help SHTF get some fee-based income and retain customers.
181
Analyst annotations: Through the pandemic, the company’s performance has been better than peers. The
management expects strong recovery in loan growth and credit cost from Q2FY22, and
restructuring remains low at 0.5%. The group merger is a key risk. We have an Accumulate rating
on the stock.
YE NII YoY PPOP Adj PAT YoY EPS ROE ROA P/E P/BV
Key Financials: March (INR mn) (%) (INR mn) (INR mn) (%) (INR) (%) (%) (x) (x)
FY20 81,070 3.8 62,336 25,019 (2.4) 110.3 14.8 2.3 12.6 1.8
FY21P 81,671 0.7 63,964 24,873 (0.6) 98.3 12.6 2.0 14.1 1.6
FY22E 90,509 10.8 71,071 26,404 6.2 98.9 11.7 1.9 14.1 1.6
FY23E 102,107 12.8 79,598 37,537 42.2 140.6 14.8 2.5 9.9 1.4

182
Represented by:
Pawan Kedia, General
Manager- Performance
State Bank of India
Planning and Review Bloomberg Code: SBIN IN, Market Cap: INR 3,953bn, CMP: INR 443.85 (as on 15 Sept 2021)
Misal Singh, Vice
President- Investor
Relations
Executive digest: State Bank of India (SBI) is India's largest bank with total loans of INR 24trn. The bank has
subsidiaries in life insurance, general insurance, asset management and cards.
Investor insight: Business environment

 SBI has rolled back slippages of INR 47bn till July 2021.
 The bank is seeing good growth in the steel sector and HAM projects. The pipeline of
sanctions is strong, but offtake is weak.
 Recovery has improved to pre-Covid levels now as restrictions have been much lowered. SBI
cannot peg an estimate to it – But, expect decent recoveries. As per the management, it is too
early to ascertain whether slippages will be less than recovery.
 Retail growth has improved, while corporate growth remains weak.
SME quality
 SMEs will take some time to recover, though the government and the RBI have supported
them through various schemes.
 SBI is making use of tech to finance MSMEs.
Bad Bank
 SBI will transfer bad loans of INR 200bn to the bad bank.
 The amount is largely fully written off.
 SBI’s equity contribution along with debt in not very large in the bad bank.
Fintech tie-ups
 Around INR 300bn worth of loans are done via YONO, SBI’s digital platform.
 SBI does not have any fintech tie-ups currently, but it is in talks with multiple fintechs.
Cost reduction measures
 SBI is also looking to outsource routine work to reduce costs.
 The bank will comment on the impact of new pension norms only after it receives a detailed
calculation from the actuary.
Capital adequacy
 SBI does not need to hold as much capital as private banks because it is a state-owned bank.
 If the bank raises capital at current low RoA, it will be dilutive.
On ECLGS
 SBI is quite hopeful that these loans will help SMEs.
 SBI has offered it to everyone who is eligible for it. Many of its customers have not taken the
loan, with the view that it may impact their credit score.
183
Analyst annotations: With resilient asset quality through the pandemic and declining specific credit cost, we reiterate
Buy. Our TP of INR 535 is based on 1.3x PBV FY22E and INR 165 for subsidiaries. We expect RoA
of 0.6% In FY22E and 0.8% in FY23E versus 0.5% in FY21.
PPoP NP YoY EPS YoY RoAE RoAA P/E P/BV

Key Financials: YE Mar
(INR bn) (INR bn) (%) (INR) (%) (%) (%) (x) (x)
FY20 681 145 NM 16 NM 6.4 0.4 28.2 1.2
FY21 716 204 40.9 23 40.9 8.4 0.5 20.0 1.1
FY22E 770 289 41.6 32 41.6 10.8 0.6 14.1 1.0
FY23E 837 394 36.4 44 36.4 13.3 0.8 10.3 0.9

184
Represented by:
Shri Rajkiran Rai, MD &
CEO
Union Bank of India
Bloomberg Code: UNBK IN, Market Cap: INR 239bn, CMP: INR 34.85 (as on 15 Sept 2021)
Union Bank of India (UNBK) is a state-owned bank with total loans of INR 5.9trn. Corporation
Executive digest:
Bank and Andhra Bank were merged with UNBK, effective FY21.
Investor insight: Sectors of growth

 The current working capital utilization is below 60%.
 UNBK has some good sanctions on hand, but draw-downs are yet to happen. The bank is
witnessing loan demand from commercial real estate, HAM projects and textiles.
 There are no greenfield projects as of now, but brownfield expansions are there.
On restructuring
 Last quarter, UNBK carried out restructuring of INR 160bn. Another INR 20bn restructuring
might happen in the current quarter.
 The slippage guidance for the year is 2.8-2.9%.
 There was INR 70bn of slippage in Q1FY22.
 UNBK has 30% provisioning on a stressed loan to the NBFC sector.
Margin
 Margins are expected to remain above 3% in the medium term (reported NIM stood at 3.08%
for Q1FY22).
Credit cost
 Credit cost is not expected to go beyond 2% for FY22E.
On pension provisioning
 UNBK will incur a one-time actuarial expense, spread over five years. The bank is waiting for
the actual liability workings from the actuary.
 The wage bill is expected to go up 8-10% on a recurring basis in addition to one-time expense.
 NPS – Around 50k out of 78k employees are under New Pension Scheme (NPS)
DHFL and SREI
 UNBK will get an upfront cash, which is close to 44-45% of the principal value. Total recovery
will be INR 15bn, of which INR 6bn is cash and the rest NCDs.
 SREI has slipped in Q2FY22.
Fintech
 The bank is taking the help of fintechs in generating Mudra, personal and vehicle loans.
 They are like technology partners, rather than competition.
Vehicle segment
 The growth has been good for UNBK owing to pricing and quick response. The bank
sanctions loans in 24 hours and has some tie-ups as well
185
Analyst annotations: UNBK’s CEO has guided for loan growth of 8%, slippage of 2.5%, recoveries of INR 130bn (INR
40bn from NCLT), credit cost of 2%, NIM of 2.9-3% and RoA of 0.4-0.5% for FY22E. We expect loan
growth to improve from 0% to 8% by year-end, and credit cost to fall from 2.4% currently to 2%,
with reducing ageing provisions (legacy NPLs are well provided for) and strong recoveries Q2
onwards. With slippage having peaked and a strong pipeline of recoveries, we maintain
Accumulate.
YE PPoP YoY NP YoY EPS YoY RoAE RoAA P/E P/BV

Key Financials: March (INR bn) (%) (INR bn) (%) (INR) (%) (%) (%) (x) (x)
FY20 181 140.3 (66) NM (10.3) NM (15.3) (0.9) NM 0.4
FY21 193 6.5 29 NM 4.5 NM 4.0 0.3 8.4 0.6
FY22E 212 10.0 52 77.4 7.5 66.3 6.3 0.5 5.0 0.5
FY23E 220 3.8 86 67.0 12.6 67.0 10.3 0.7 3.0 0.5

186
Represented by:
Surojit Saha, CFO UTI AMC
Vinay Lakhotia
Head of Operations Bloomberg Code: UTIAM IN, Market Cap: INR 150bn, CMP: INR 1186 (as on 15 Sept 2021)
Sandeep Samsi, Head of
Investor Relations
Executive digest: UTI Asset Management (UTIAM IN) caters to a diverse group of individual and institutional
investors through a variety of funds and services. It manages domestic mutual funds, provides
portfolio management services and manages retirement, offshore & alternative investment funds.
The company was established as Unit Trust of India in 1963 and was the first mutual fund in India.
With total AUM of INR 1.94tn as on 1QFY22, UTIAM is the eighth largest mutual fund. It is ranked
at No 9 on equity AUM at INR 725bn. For FY21, it delivered a revenue of INR 8.1bn and a PAT of
INR 4.9bn.
The primary shareholders of the company are State Bank of India at 10%, Life Insurance
Corporation of India at 10%, Bank of Baroda at 10%, Punjab National Bank at 15.2% and T Rowe
Price (TRP) at 23%.
Investor insight:  Strengthening fund management team: Effective August 1, UTIAM elevated Vetri
Subramaniam to become as its first chief investment officer (CIO). Subramaniam has delivered
excellent results as CIO (Equity) and will now oversee the entire equity, fixed income, research
and dealing functions of the company. The AMC also appointed Ajay Tyagi as Head of Equity
for its mutual fund operations. This is expected to further strengthen fixed income investing,
which has been troubled due to some undesired exposures. This also has resulted in the
company losing market share in debt schemes by 380bp to 3.8% since FY18
 Strong collaboration with T-Rowe Price (TRP): While TRP is the largest shareholder and has
two directors on UTIAM Board, the company is run independently and has no full-time
employees from TRP. UTIAM and TRP do collaborate through active discussions on macro-
economics and investment environment
 B30 distribution channel: UTIAM has a business associate network in B30 locations. For a
nominal retainer, this network promotes UTIAM schemes, recruits MFD. Management
believes this to be a large differentiator in its B30 strategy. Over time, as these individuals
become larger in size, the company is expected to add offices in smaller towns
 Banca channel contribution likely to improve: Due to the company’s underdeveloped banca
channel, its share in industry HNI AUM is low. As several of its schemes achieve a three-year
track record, management expects the company to be empaneled with several banks. This is
expected to drive up HNI market share
 Passives portfolio dominated by EPFO and corporate: Currently, the company has a bunch of
ETF offerings and is looking to launch more offerings in the category. The ETF portfolio is
dominated by EPFO and institutions; however, retail participation is increasing with
millennials investing through direct investing platforms, such as Groww and Kuvera. The
share of passives is higher in direct investing customers
 Growing alternate offerings: Following the success in the Alternate Debt Opportunity Funds
1 & 2, the company plans to launch two more alternate funds in the debt category and some
alternate funds in the equity category. Management sees investor interest and value in debt
category. It believes wider product offering and stronger investment focus should result in
better performance and help regain market-share in the debt segment
 Employee cost reduction: UTIAM expects employee cost to remain below current levels as
well as over the next 3-4 years. Around 250 employees are expected to retire. This will be a
key driver of operating leverage
187
 Profitability of international funds to improve as AUM rises: Profitability in the international
funds is subdued, owing to the heavy trail commission in the international business. With
upcoming launches and increasing international AUM, management expects economies of
scale to improve profitability
Analyst annotations: UTIAM is one of the largest non-bank controlled MF asset managers. With strong focus on
performance and distribution along with cost reduction levers, we expect an AUM CAGR of 15.1%
over FY21-24E to INR 2.4tn and stable cost to drive operating profit of 14.9bp of AAAUM (vs
HDFCAMC’s 36.4bp and NAM’s 25.3bp in FY21) to ~25.7bp of AAAUM by FY24E. We expect an
operating profit CAGR of 37.8% over FY21-24E.
Key Financials: YE Revenue YoY NOPLAT NOPLAT Adj PAT YoY Fully DEPS ROE ROCE P/E EV/NOPLAT
FY21 8,066 2.4 1,951 24.2 4,941 81.0 39.0 16.5 16.5 30.4 62.0
FY22E 10,484 30.0 3,613 34.5 5,373 8.7 42.4 16.0 16.0 28.0 32.7
FY23E 11,283 7.6 4,100 36.3 5,827 8.4 45.9 16.0 16.0 25.8 28.1
FY24E 12,548 11.2 4,920 39.2 6,884 18.2 54.3 17.4 17.4 21.8 22.7

188
Represented by:
Somnath Mukherjee,
AVP - Business
Zerodha Broking (Not listed)
Executive digest: Mr Nithin Kamath bootstrapped and founded Zerodha in 2010 to overcome the hurdles he faced
during his decade-long stint as a trader. The company kick-started operations on 15 August, 2010
with the goal of breaking all barriers – cost, support and technology related – faced by traders
and investors in India. The disruptive pricing models and in-house technology have made the
company the biggest stock broker in India in terms of active retail clients (4.5mn as at end-July
2021). Zerodha has a client base of ~ 6.5mn and the company’s market share in derivatives is
~18%. The company is in the process of launching its NBFC to lend against financial assets and
has also obtained an asset management licence.
Investor insight:  Metrics: Zerodha reported ~INR 11bn revenues and ~INR 4.6bn PAT in FY20. In FY21,
revenues and PAT rose 136% and 150% YoY to ~INR 26bn and ~INR 11.5bn, respectively.
Zerodha currently has ~1,100 employees, and DP AUM of ~INR 170bn in mutual funds and
~INR1.3tn in equity shares.
 Revenue split: Broking comprises ~60-65% of revenues, interest of float is at ~10%, and other
charges (account opening charges, AMC, demat charges etc.) at ~30%. Increased cash
trading and account opening has raised the share of other charges in revenue mix.
 Customers: With the introduction of e-KYC in 2017, the client count increased rapidly to ~2mn
in January 2020 and 6.5mn accounts, at present. Zerodha is the market leader in active clients
– 4.5mn as at July-end (+113.7% YoY).
 Customer behavior: The average client age has reduced from ~32 years pre COVID to ~26,
currently. The average ticket sizes have also halved. The average activation period has
reduced from ~28 days earlier to 7-12 currently. While the stickiness of newer customers is
difficult to gauge, Zerodha plans to convert and retain some long-term investors to the newer
upcoming NBFC and AMC business.
 Pricing: Zerodha expects some pricing pressure reduction in the cash markets, wherein some
discount brokers have increased rates back to INR 20/order. Derivatives pricing remains
aggressive. In the near term, the company does not see itself charging for cash business, but
believes it may revise pricing on derivatives.
 Industry structure: Zerodha expects consolidation in the industry in the next five years and
believes that the number of brokers will reduce to ~50 large brokers. The company sees room
for: 1) large platform-based flat fee brokers, and 2) advice-based brokers.
 Coin: Zerodha’s coin application (direct mutual fund platform) was launched in 2016 and
currently is one of the largest online direct mutual fund platforms in India with ~INR 170bn
of AUM.
 Fintech investing: The Rainmatter initiative (fintech fund and incubator) was also started in
2016 and has since then, invested in several fintech start-ups (currently invested in 12-14,
including Smallcase and Sensibull), with the goal of growing the Indian capital markets.
 Zerodha Capital Private Limited (lending platform): Zerodha received an NBFC licence about
two years ago and plans to start a loan against financial assets product. Zerodha will invest
its own capital (~INR 3-4bn) initially. Zerodha’s strategy will be a combination of: 1) flat
interest rate model, 2) publicize the availability of loan at a lower interest rate against shares
(LAS) and mutual fund units and 3) reduce the average ticket size for LAS from INR 0.05-
0.10mn to INR 0.025mn.
189
 AMC aspirations: Zerodha has recently obtained an in-principle AMC licence approval from
SEBI. The company is looking to partner with a Rainmaker start-up for product development
and will focus on the passives space. Zerodha plans to simplify investing by offering it at lower
costs, digitally and by offering more easily-understandable products.
Analyst annotations: Zerodha continues to retain its market dominance. We believe, its leadership is more a result of
its superior product offering than just low pricing. The company continues to display thought
leadership in the way it approaches this business. It continues to focus on providing transparent
direct access to potential investors of financial assets, both direct equity and mutual funds. It has
plans to expand into fixed income and international equity in addition to setting up its own
mutual fund.
Analyst: Madhukar Ladha , madhukar.ladha@elaracapital.com, +91 22 6164 8500

190
Health Care
191
Represented by:
Arvind Agarwal, CFO Ajanta Pharma (Not Rated)
Rajiv Agarwal, VP
Bloomberg Code: AJP IN, Market Cap: INR 192bn, CMP: INR 2,218 (as on 15 Sept 2021)
Executive digest: Established in 1973, Ajanta Pharma (AJP IN) is primarily into exports as well as domestic
formulations. As on FY20, the exports-domestic formulations ratio was at 70:30. The company
owns eight manufacturing facilities, four in Aurangabad, Maharashtra, one each in Dahej in
Gujarat & Guwahati in Assam, the newly operationalized Pithampur in Madhya Pradesh and
Mauritius. Of these facilities, only one in Aurangabad is an API facility. The rest are all
formulations. The company reported a consolidated revenue CAGR of 11%, an EBITDA CAGR of
5% and a PAT CAGR of 4% over FY16-20.
Investor insight:  AJP expects low-to-mid teens growth in the domestic business in FY22 and 100-300bp
higher-than-industry growth on a sustainable basis for the next 3-4 years
 The company has rationalized its field force (across therapies by ~10% ie ~200 MR), which
has led to improvement in MR productivity and expects further improvement in the
upcoming quarters
 AJP is facing challenges in a few Asian countries, due to COVID-19, which is leading to
issues in supply chain and logistics. On a blended basis, the company expects high single
digit to low teen growth in the Asia and African continent business for the next 2-3 years,
aided by new launches
 The company has guided for fewer launches in the US vs 6-7 launches previously indicated
as in FY21, due to COVID-19. It has filed only two ANDA. On account of this, APJ also has
lowered growth guidance to 10-12% from 15-18%
 With no major capex planned for the next three years apart from INR 1.25-1.5bn toward
maintenance, the company will generate strong cashflow. AJP will use cash 1) toward
dividend, and 2) look for acquisitions of brands in the domestic market in its existing
therapies or new therapies with a sizable portfolio
 On a blended basis, current capacity utilization is at 60-70%, and there is adequate
headroom to improve, which will be able to carter to demand in the next 2-3 years
Analyst annotations: AJP, a ~75% branded generics play, boasts of one of the best margin profiles in India pharma.
Its derisked business model with front-end presence across branded markets of India, the
African continent & Asia, and presence in the US generics market, limits concentration risk. We
believe healthy growth in the domestic business and new launches in the US market will offset
AJP’s Africa tender business.
FY18 21,309 6.5 6,584 30.9 4,686 (7.5) 53.0 26.0 32.4 41.9 29.7
FY19 20,554 (3.5) 5,665 27.6 3,870 (17.4) 44.1 18.1 22.6 50.3 34.2
FY20 25,879 25.9 6,984 27.0 4,717 21.9 53.8 19.5 24.5 41.2 27.6
FY21 28,897 11.7 9,986 34.6 6,539 38.6 75.2 23.4 29.7 29.5 19.1
Analyst: Param Desai, param.desai@elaracapital.com, +91 22 6164 8528

Ankeet Pandya, ankeet.pandya@elaracapital.com, +91 226164 8535
192
Represented by:
Gagan Borana, Head
Investor Relations
Alkem Laboratories (Not Rated)
Bloomberg Code: ALKEM IN, Market Cap: INR 460bn, CMP: INR 3,852 (as on 15 Sept 2021)
Executive digest: Alkem Laboratories (ALKEM IN) is one of the leading pharmaceuticals companies in India with a
strong product portfolio and brand equity. The company ranks No 5 in India in terms of market
share and it has a strong presence in the acute segment. Apart from India, ALKEM produces
branded & trade generics and active pharmaceutical ingredients (API) for 50 countries globally,
with the US being its key overseas market. It was formed in 1973 and it has a portfolio of 800
brands, with 14 brands featuring in Top 300 in India.
Investor insight:  The US business has seen higher price erosion in the high single to double digits vs 3-5% on
a normalized level as there has been a decline in prescriptions. Some portfolios like the flu has
not done well. ALKEM has seen a few good launches in the US market in Q2, such as
Mesalamine, buprofen & famotidine (USD 100mn market size and ALKEM is the only generics
firm currently). It expects a 10-15% sales CAGR over the next three years
 The acute segment has grown ~50% in the past two years. Growth was partly led by COVID1-
9 in the second lockdown where there were higher incidences of infection. The company
expects India business to grow by 15-20% in FY22
 The trade generics segment, which is ~20% of India sales, is also witnessing healthy growth
YTD despite high base. Productivity in chronic therapy is ~INR 0.25mn with 2,700 MR and in
acute it is ~INR 0.55mn. The company expects 20% annual growth in chronic therapy and
will be launching several day one launches
 From a net debt company two years ago, ALKEM has turned net cash of INR 10bn. It has
guided for INR 3.5-4.0bn of capex for the next 2-3 years; however, FY22 capex might be ~INR
5bn due to spill over of the past year capex
 EBITDA margin is likely to be 20-21% in FY22. However, the company may revise guidance
depending on how India business performs in H2 and competition in ibuprofen & famotidine
 In the biosimilar space, ALKEM has invested INR 6.5bn in R&D and fixed assets. It will start
launches in the US by 2025. Its enzyme subsidiary is likely to break-even in three years
Analyst annotations: ALKEM is one of the leading firms in the acute segment in India’s Pharmaceutical Market (IPM)
with increased focus on the fast-growing chronic segment. In the past 2-3 years, the company‘s
US business has seen strong growth, which is expected to continue, as it is poised to launch 8-10
new products every year.
FY18 64,012 9.4 10,090 15.8 6,310 (29.3) 52.8 13.5 15.4 73.0 46.1
FY19 73,571 14.9 11,147 15.2 7,604 20.5 63.6 14.8 14.7 60.6 41.6
FY20 83,443 13.4 14,733 17.7 11,270 48.2 94.3 19.4 16.8 40.9 31.7
FY21 88,650 6.2 19,424 21.9 15,850 40.6 132.6 23.4 19.4 29.1 23.5

193
Represented by:
Suneeta Reddy, MD Apollo Hospital Enterprises
Krishnan Akhileswaran
CFO Bloomberg Code: APHS IN, Market Cap: INR 690bn, CMP: INR 4,796 (as on 15 Sept 2021)
Executive digest: Apollo Hospitals (APHS IN) was established in 1983 by Dr Prathap C Reddy, renowned as the
architect of modern healthcare in India. As the nation’s first corporate hospital, APHS is
acclaimed for pioneering the private healthcare revolution in the country. It has emerged as
Asia’s foremost integrated healthcare services provider and has a robust presence across the
healthcare ecosystem, including hospitals, pharmacies, primary care & diagnostic clinics and
several retail health models.
Investor insight:  Management says it is has adequate headroom to expand capacity at its existing hospitals.
Currently, it is at 67% occupancy, and with the commissioning of new beds, it can grow at
15%. Part of growth will come from average revenue per operating bed (ARPOB), which is
scaling up and the rest from volume
 In the hospitals segment, the company will focus on centers of excellence. As a benchmark,
APHS has done significant work in the area of oncology, which has led to healthy growth of
18% with revenue of INR 9bn vs INR 6bn when it was started. This enables the company to
invest in the right technology and attract the best clinical talent. APHS will follow this
strategy for cardiac, neurology, transplant, orthopedics, robotics and mother & child
 Management says it is looking at acquisitions and Brownfield opportunities at Kolkata,
Mumbai, Bengaluru and the Delhi region. The Mumbai market size is INR 300bn and will
look at Brownfield acquisition or work with a trust; decision will be made in the next six
months. Delhi has spending power and opportunities to carter to the neighboring states of
Haryana and Uttar Pradesh
 On capex funding, APHS has INR 5-6bn of mutual fund investments, annual free cashflow
generation and additionally Apollo back-end pharmacy will move into Apollo Health,
(Apollo 24/7), which will see cash inflow of INR 12bn. Overall, APHS will have INR 20bn of
cash by end-FY22, which will be used for some Brownfield expansion and acquisition
 Currently, the company has limited presence in the diagnostic space vs peers and 24/7 will
enable it to bridge this gap faster. Management says it can gain market share in the
southern region in the next two years. In East India, it has a strong brand presence and has
started ramping up. The northern market continues to be fragmented
Analyst annotations: The digital health space foray will help APHS cross-sell its services to a larger population. APHS
has headroom to achieve accelerated growth, without further large capital investments. We
expect an EBITDA CAGR of 23% over FY20-23E, adjusted for IND AS-116.
FY20 112,468 16.9 15,871 14.1 2,565 8.7 18.4 7.4 13.0 260.1 44.1
FY21 105,600 (6.1) 11,374 10.8 1,504 (41.4) 6.2 2.2 7.3 768.6 62.7
FY22E 146,897 39.1 21,059 14.3 10,674 N/A 53.8 14.8 18.1 89.2 33.4
FY23E 160,513 9.3 25,455 15.9 10,481 (1.8) 72.9 17.2 21.7 65.8 27.3
Param Desai, param.desai@elaracapital.com, +91 22 6164 8528

Analyst:
194
Represented by:
Sreenath Reddy, CFO Aster DM Healthcare
Nikhil Murthy, IR
Bloomberg Code: ASTERDM IN, Market Cap: INR 115bn, CMP: INR 231 (as on 15 Sept 2021)
Executive digest: Aster DM Healthcare (ASTERDM IN) started operations as a single doctor clinic by Dr Azad
Moopen in 1987 in Dubai and was incorporated in 2008 at Kochi. It has three business divisions:
hospitals, pharmacies and clinics, providing healthcare services across the GCC region and in
India. In the GCC region, the company has a presence across three segments while in India it
primarily operates the hospital business and is expanding into the clinic business. Currently, it
operates 27 hospitals with 13 hospitals in the GCC region and 14 in India. It has 115 clinics of
which 106 are in the GCC region and nine in India & 224 pharmacies in the GCC region.
Investor insight:  Hospitals in India were in the ramp-up stage due to which margin was lower and is now
getting into the mature stage. A few established hospitals’ margin is in the ~20% levels.
Now, with most hospitals getting matured, management expects margin to improve
hereafter. However, in the next 15-18 months, on a blended basis, the company expects
margin to reach 15-16% as losses from new hospitals will drag EBITDA
 On capacity expansion, ASTERDM will add 411 beds in India in the next 18 months and 225
beds in GCC in FY22. In India, it will set up 130 franchise pharmacies and 21 Aster Labs by
end-FY22
 Management is actively expanding Aster Labs and the pharmacy distribution network in
India. Its plan is to establish 130 franchisee pharmacies (30 already set up) by FY22-end. On
the diagnostics side, the company plans to create a network of 21 Aster Labs and 200
patient experience (franchisee) centers
 Although ASTEMDM has restructured its Sanad hospital in Saudi Arabia, it is not progressing
as per expectations. Also, with only one hospital in Saudi Arabia, which is largely an
insurance-driven market, negotiating prices is a challenge. The company is considering the
option of exiting this geography, as turnaround time has been higher than what it had
expected
Analyst annotations: ASTERDM has a unique business model with its presence in India’s growing healthcare industry
and an established business with strong returns in GCC. In the near term, its pharmacy and
clinics businesses in GCC may remain soft due to COVID-led disruptions. However, its hospital
business across India and GCC remains stable.
FY20 86,520 6.4 12,577 14.5 2,767 (44.8) 6.7 10.3 10.0 34.3 11.3
FY21 86,080 (0.5) 10,624 12.3 1,473 (46.8) 3.5 5.2 6.8 66.0 12.7
FY22E 99,534 15.6 13,582 13.6 3,537 140.1 7.9 11.2 10.6 29.2 10.0
FY23E 109,612 10.1 16,861 15.4 5,782 63.5 12.4 15.9 14.1 18.6 7.8

195
Represented by:
Kedar Upadhye, CFO Cipla
Naveen Bansal, IR
Bloomberg Code: CIPLA IN, Market Cap: INR 770bn, CMP: INR 954 (as on 15 Sept 2021)
Executive digest: Cipla (CIPLA IN) is a leading pharmaceuticals company in India with a presence across 80+
countries providing over 1,500 products across various therapeutic categories in 50+ dosage
forms. To make healthcare more affordable globally, CIPLA is deepening its presence in the key
markets of India, South Africa, and the US. The company’s business is divided into three strategic
units: API, respiratory and Cipla Global Access. Its largest market is India, followed by South
Africa and North America.
Investor insight:  The domestic business, which has seen super normal growth in Q1 for most firms in the
industry, is not sustainable as it is on low base and will moderate hereafter. The company
expects growth in the base business ex-COVID portfolio to accelerate once the impact of
COVID-19 normalizes
 The company has recently started a JV in the respiratory biosimilars segment. The partner,
Kemwell, is known through one of CIPLA’s alliance. It is building capabilities in the
biosimilars space. It has India as well as EM expertise, which it will try to replicate in the US
and the EU markets. Kemwell will help in developing manufacturing and CIPLA will market
the products and support in the regulatory process. The investment will depend on the
number of products the JV chooses to work on
 CIPLA has made efforts to reduce its dependency on the Goa facility. The derisking process,
which the company started three years ago, is ongoing. The respiratory product will be
launched from the Indore facility
 The company has organic launches in the respiratory segment and biosimilars in some
markets. In the past few years it has partnered with a few companies to create a basket of
biosimilars in markets where CIPLA has its own presence on the ground, and these products
will be launched over the next 12-15 months; the company will receive milestone payments
from each of these markets. These are some growth drivers for the RoW markets for the
next few years
 R&D spend will remain less than 7% of sales, which will also include spend on biosimilars
Analyst annotations: We expect FY21 profitability to sustain, led by a better product mix, COVID-related
opportunities, lower opex and prudent capital over FY21-23. Given resilient earnings, improving
visibility in the US and strong free cash flow generation, CIPLA remains our preferred pick.
FY20 171,310 4.7 32,050 18.7 15,456 1.2 19.2 10.0 9.9 49.6 24.1
FY21 191,596 11.8 42,524 22.2 24,045 55.6 29.9 14.1 15.3 31.9 17.5
FY22E 210,686 10.0 48,028 22.8 28,140 17.0 35.0 14.4 16.2 27.3 15.3
FY23E 227,862 8.2 53,642 23.5 32,629 16.0 40.6 14.8 16.5 23.5 13.4

196
Represented by:
Sundeep Bambolkar
Joint MD
Indoco Remedies (Not Rated)
Vilas Nagare Bloomberg Code: INDR IN, Market Cap: INR 43bn, CMP: INR 472 (as on 15 Sept 2021)
Corporate Affairs
Executive digest: Indoco Remedies (INDR IN) is a fully integrated, research-oriented pharma company engaged in
manufacturing and marketing of formulations (finished dosage forms) and active
pharmaceutical ingredients (API). It has seven decades of presence in India’s pharma market
and a strong foothold in the international market across 55 countries. INDR has nine
manufacturing facilities, out of which six are for finished dosages and three for API, supported
by a state-of-the-art R&D center at Rabale, Navi Mumbai, and a clinical research organization at
Hyderabad. The manufacturing facilities are of the highest regulatory standards, complying with
WHO-cGMP guidelines and have been approved by regulatory authorities, such as the US FDA,
UK-MHRA, Cofepris – Mexico, TGA-Australia, MCC-South Africa, SBD-Yemen, MOH-Ukraine and
FDA-Ghana.
Investor insight:  INDR is focused on improving execution in the northern and eastern markets in India as
medical representatives’ (MR) productivity remains low in these areas. Besides focusing on
improving productivity, the company also will continue to add new launches that would
leverage on the company’s doctor relationships built out of its legacy portfolio
 For the domestic segment to outperform the Indian Pharmaceutical Market (IPM), smaller
therapies, such as gynecology, ophthalmology, anti-diabetes and cardiac need to growth at
a faster pace. INDR is confident of growing faster than the IPM for the next four years. In
Stomatologicals, the company has a high market share, and with the entry of new firms,
there might be some contraction in MS. However, most growth is coming from OTX
products, which the company will look to focus on
 INDR expects 15-20% market share in brinzolamide in FY22 and can scale up to ~30% by
FY23. The company has adequate capacity for the products along with API
 Allopurinol tender in the EU started in January 2021 for 24 months. The company is also
trying for one more product, which is bigger than Allopurinol. Its strategy is to have own
front-end and appoint a distribution company and pay it fixed expenses
 Guidance: 1) US: INR 2.5bn sales, 2) EU: INR 3bn sales, 3) Semi-regulated markets: INR 1.2bn
sales, 4) API: 20% growth, and 6) Capex: INR 800mn for the next 1-2 years
Analyst annotations: With the domestic market business providing a strong anchor, INDR is targeting exports and
contract manufacturing to drive future growth. With concerns over regulatory issues behind it,
the exports segment is expected to gain momentum, led by new product launches.
FY18 10,419 (5.0) 1,349 12.9 412 (46.6) 4.5 6.2 7.7 105.7 33.9
FY19 9,684 (7.1) 766 7.9 (29) (107.1) (0.3) (0.4) 0.6 N/A 59.4
FY20 11,066 14.3 1,232 11.1 241 (930.6) 2.6 3.6 6.1 180.3 36.6
FY21 12,415 12.2 2,243 18.1 930 285.8 10.1 12.8 16.7 46.7 20.3

197
Represented by:
Nikhil Chopra, CEO JB Chemicals Pharmaceuticals (Not Rated)
Bloomberg Code: JBCP IN, Market Cap: INR 133bn, CMP: INR 1726 (as on 15 Sept 2021)
Executive digest: JB Chemicals (JBCP IN) is a 40-year-old company, with several well-established brands in the
domestic market and a wide geographical presence in the exports markets. Focused strategy
around brand building has led to the company consistently outperforming IPM growth in the
past few years. Cardiac and gastro are major therapies accounting for ~80% of its India revenue.
Its key exports markets include Russia & CIS, South Africa and the US. It also has a presence in
the contrast media segment where it is among the Top 3 firms in India.
Investor insight:  JBCP has undertaken a few initiatives in the India business, such as the go-to-market
strategy, realigned its field force, entered into new therapies, such as nephrology, pediatrics
& respiratory and launched 8-10 new products. These new offerings have seen healthy
traction in Q1
 Management says 60% of domestic growth will come from metro and Tier I cities
 MR productivity in India stands at INR 0.5mn and it expects it to grow by 12-14%. This is on
account of strengthening processes and systems in salesforce excellence, salesforce
automation, digital marketing and conducting virtual conferences. The company will not
add MR for the next 18-24 months
 JBCP will take price hikes in Rantac by end-Q3 in three SKU: Rantac 150mg, Syrup and
injection. Currently, the company has stock in the market to retain continuity of supply in
key brands
 It has shifted less than 5% prescription of products in India to the trade generics segment
and launched ~10 products in the past three months. The company expects trade generics
to contribute 8-10% of overall business and will gradually grow this business
 JBCP is working with 6-7 firms in the contract manufacturing (CMO) segment and is
engaged in the initial stage of new offerings. The company has a healthy pipeline in the
lozenges segment, which is likely to double the CMO business in the next 3-5 years
 In the API business, the company has three focus areas: 1) how the API setup feeds the
domestic formulations business, 2) 3-4 big products in the US and how the company is
backwardly integrated, and 3) few partners to which the company supplies API products
Analyst annotations: JBCP has four mega brand groups: Cilacar, Nicardia, Metrogyl and Rantac, which contribute
>85% of sales. With new strategy and leadership team in place, the domestic business is
expected to grow much faster on the back of new therapies and higher productivity. JBCP's
new initiatives in Contract manufacturing and manufacturing (CRMA), the US business and
exports to start to show an improvement in numbers from H2FY22
FY18 14,135 3.3 2,173 15.7 1,383 (24.8) 16.5 9.9 8.8 18.8 10.2
FY19 16,068 13.7 3,058 19.0 1,935 39.8 23.5 13.2 13.5 15.4 8.3
FY20 17,406 8.3 3,776 21.7 2,720 40.6 34.2 18.7 18.9 14.9 9.6
FY21 20,021 15.0 5,604 28.0 4,480 64.7 58.0 27.6 26.0 21.7 16.2

198
Represented by:
Nimish Desai, IR Sun Pharmaceuticals
Bloomberg Code: SUNP IN, Market Cap: INR 1,870bn, CMP: INR 780 (as on 15 Sept 2021)
Executive digest: Sun Pharmaceuticals (SUNP IN) is the largest pharmaceuticals company from India and the fifth
largest specialty generics company in the world. It has capabilities across dosage forms like
injectables, sprays, ointments, creams, liquids, tablets and capsules. Its businesses include
producing generics, branded generics, specialty, over the counter (OTC) products, active
pharmaceutical ingredients (API) and intermediates in a full range of dosage forms. It also
produces specialty API.
Investor insight:  SUNP’s Halol facility (under OAI status) has responded to the US FDA and is awaiting
reinspection. Growth in the US business in the past 5-6 quarters is despite no approvals from
Halol. The company does not have any significant dependence on the facility. Of 94
pending ANDA, 19 are from Halol. It expects 15-20 ANDA approvals annually and
depending on the economic viability of the product, the company may or may not launch
the product
 In the US specialty, SUNP expects the current portfolio to drive growth where market share
is currently low, with addition of launch of Winlevi in the short term. In the medium to long
term, approval for Ilumya (we do not expect it for a few more quarters), new indication for
psoriatic arthritis is like to expand the Ilumya market. In the long run, the company has two
products in Phase II clinical trials: SCD-044 in derma and MM – II for osteoarthritis
 SUNP does not expect any new launches in the specialty segment for 12-18 months except
for any in-licensing opportunities
 The company already has salesforce in place to market Winlevi, which also promote
Absorica and Absorica LD. It will have to work on formulary coverage for the product and
establishing brand equity with doctors
Analyst annotations: SUNP has undergone the phase of high upfront investment in specialty, the benefits of which
are currently visible as revenue scales up. The momentum in specialty should likely sustain,
which would prop up operating leverage. Domestic formulations (32% of total revenue) was
healthy and the recent MR expansion should enhance the domestic franchise.
FY20 328,375 13.0 69,741 21.2 40,099 0.9 16.7 8.5 8.7 46.7 26.1
FY21 334,982 2.0 84,677 25.3 71,863 79.2 30.0 14.6 11.4 26.0 21.0
FY22E 376,151 12.3 99,754 26.5 71,291 (0.8) 29.7 13.7 13.7 26.3 17.5
FY23E 408,567 8.6 112,949 27.6 78,852 10.6 32.9 13.6 14.3 23.7 14.9

199
Industrials
200
Represented by:
D Balasubramanyam,
Group Head IR Adani Enterprise (Not Rated)
Saurabh Shah Bloomberg Code: ADE IN, Market Cap: INR 1,668bn, CMP: INR 1,517 (as on 15 Sept 2021)
Finance Controller
Akshay Ramani, IR
Executive digest: Incorporated in 1988, Adani Enterprise (ADE IN) is one of the flagship companies of the Adani
Group. It is a special incubator of businesses that are conceived, grown, matured and
demerged. Currently, ADE 10 business segments across natural resources, transport & logistics,
utility and strategy segments. These relate to airports, roads, water, data centers, solar
manufacturing, defense & aerospace, edible oils & foods, mining, integrated resource solutions
and integrated agri supply chain.
Investor insight:  Airports: ADE has won bids for six airports from the Airports Authority of India (AAI) for a
period of 50 years. It is currently operating Mangaluru, Lucknow & Ahmedabad airports and
will start operating Jaipur, Guwahati and Thiruvananthapuram from Q3FY22. If we include
the recently acquired Navi Mumbai and Mumbai airports, this takes the total to eight airport
assets. Construction of the Navi Mumbai airport is expected to be completed by FY24.
Planned capex of INR 300bn over the next 3-4 years is INR 150bn for the Navi Mumbai
airport and the rest is for existing operational airports for terminal development and the
creation of ecosystem for passengers & non-passengers. Capacity utilization was at 70% in
Q4FY21, which should improve to 100% as COVID cases recede and travel picks up.
Management seems keen to acquire assets in Southeast Asia and bid for airports under
government privatization plans, if it helps augment the existing network
 Roads: Currently, there is a portfolio of 10 projects with eight hybrid annuity mode (HAM),
and one build-operate-transfer (BOT) & one toll-operate-transfer (TOT) projects. ADE is
building highways on BOT mode (higher IRR) and plans to acquire (and stay invested) in
road assets for the long term. In fact, it plans to increase the share of BOT + TOT model from
20% currently to 60% in the next 3-4 years. For this, it will acquire assets either from the
government through the National Monetization Plan or from individual contractors.
Recently, it acquired a 49% stake in Maharashtra Border Check Post from Sadbhav
Engineering (EV of INR 16.8bn) and it plans to increase it to 100% subject to approvals
 Data Center: ADE has partnered with EdgeconneX to develop data centers at Chennai,
Mumbai, Noida, Hyderabad and Vizag. Currently, it is developing a 17MW data center at
Chennai, which will be ready by June 2022 and it has bought land at Mumbai and Noida.
The company will develop the center whereas EdgeConneX will operate it. The JV has set a
target of 1GW data center platform by 2030
 Solar manufacturing: Management has decided to increase solar manufacturing capacity
from 1.5GW to 3.0-3.5GW by December 2022
 Wilmar IPO: ADE is expected to get approvals by the next quarter to go ahead with the IPO
ADE has retained its investment grade rating, which helps raise foreign funds at a cheaper rate
at an average of 9% and invest it in businesses with potential to generate IRR of 14-15%,
thereby creating value. Management hopes to sustain a debt-EBITDA ratio at 5-6x from 4.7x,
and it will continue to explore long-term equity strategic partnership for business growth.
FY18 357,534 37,478 10.5 7,573 6.9 5.2 9.6 24.2 9.1
FY19 402,104 12.5 33,161 8.2 7,171 (5.3) 6.5 4.8 10.8 25.8 8.0
FY20 432,971 7.7 34,206 7.9 11,382 58.7 10.4 7.2 12.7 13.3 7.7
FY21 394,430 (8.9) 38,170 9.7 9,226 (18.9) 8.4 5.4 13.5 122.9 34.1
Analyst: Ankita Shah, ankita.shah@elaracapital.com, +91 22 6164 8516

Ash Shah, ash.shah@elaracapital.com, +91 22 6164 8500
201
Represented by:
D. Balasubramanyam,
Group Head IR
Adani Ports & Special Economic Zone
Satya Prakash Mishra, IR Bloomberg Code: ADSEZ IN, Market Cap: INR 1610bn, CMP: INR 766 (as on 15 Sept 2021)
Executive digest: Founded in 1998, Adani Ports & Special Economic Zone (ADSEZ) operates across three verticals
– Ports, Logistics and SEZs. It is the largest commercial ports operator in India, accounting for
nearly one-fourth of the cargo movement in the country, with 12 domestic ports across seven
states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha. ADSEZ,
through its subsidiary Adani Logistics, operates logistics parks at Patli in Haryana, Kilaraipur and
Kanech in Punjab, Kishangarh in Rajasthan and Malur in Karnataka with 4,00,000 sqft of
warehousing space. The company has the largest notified SEZ in India, based on 12,000 hectares
at Mundra, Dhamra, Krishnapatnam and Kattupalli.
Investor insight:  Gangavaram Port acquisition: The Andhra Pradesh government has given its approval to sell
its 10.4% stake in the port for INR 120/share. With this, ADSEZ will complete 100% acquisition
by Q3FY22. The merger with the parent (for tax purposes) would be effective 1 April 2021.
 DFC, A Game Changer: DFC will benefit Mundra and Hazira ports in the near term. In the
medium term, road volumes may shift to the railways, which may result in better efficiency.
In order to take advantage of this ADSEZ has started the process of creating Inland Freight
Terminals near the DFC.
 Vision 2025: The ADSEZ management ADSEZ has set an ambitious target of handling
500MMT by 2025, increasing ROCE from 12% to 20%+, doubling EBITDA and FCF, and
increase the market share of cargo operations to 40%. The management is confident of
achieving these goals.
 Future acquisitions: ADSEZ may acquire a small-ticket play if the port synergizes well with its
network. Currently, the company is analyzing the viability of acquiring a few ports, but
nothing has been finalized yet. On the international front, ADSEZ is exploring container
terminal in Bangladesh, Sri Lanka and Indonesia. The ADSEZ management is keen to acquire
Concor due to possible synergies in the logistics business.
Analyst annotations: For FY22, the management has maintained its guidance of handling 350-360mmt cargo
(YTDFY22, ADSEZ has handled 123mmt cargo, excluding the Gangavaram port). The
consolidated revenue and EBITDA target stands at INR 190-200bn and INR 115-120bn,
respectively, with capex at INR 30bn and FCF of INR 71-76bn.
FY20 118,731 8.7 74,771 63.0 53,534 16.4 26.3 21.3 13.9 40.9 23.8
FY21 125,496 5.7 79,834 63.6 45,141 (15.7) 22.2 16.0 12.3 30.5 22.9
FY22E 175,787 40.1 113,116 64.3 77,139 70.9 36.7 22.6 16.0 22.0 16.4
FY23E 205,076 16.7 133,284 65.0 91,695 18.9 43.6 22.0 16.5 17.6 13.7

202
Represented by:
Ravi Jakhar, Chief
Strategy Officer
Allcargo and GATI (Not Rated)
Bloomberg Code: AGLL IN, Market Cap: INR 59bn, CMP: INR 240 (as on 15 Sept 2021)
Bloomberg Code: GTIC IN, Market Cap: INR 17bn, CMP: INR 140 (as on 15 Sept 2021)
Executive digest: Incorporated in 1989, Gati offers express distribution, air freight, e-commerce logistics and supply
chain solutions. On the other hand, Allcargo Logistics is an integrated multinational logistics
company in India, with a wide CFS/ICD network, LCL consolidation, contract logistics and project
& engineering business. Allcargo strategically acquired a 47% stake in Gati in 2020, which helped
the latter get an access to Allcargo’s global network operating in 180 countries.
Investor insight:  GATI 2.0 in the making: Post the acquisition, the new management has taken initiatives such
as hiring Alvarez and Marsal for transformation, redesigning network optimization, reducing
the number of employees (from 5,000 to 3,500), improving service levels, signing up new
franchisees, becoming asset light, optimizing vendors, and improving utilization, etc. These
measures helped regain market share in B2B business and reduce debt from INR 4bn in FY20
to INR 2-2.5bn. By H1FY23, the management further expects to realize INR 1.5-1.7bn by
selling real estate assets and fuel stations. No major capex plans are on the anvil.
 Divestments at parent level: Allcargo has been divesting its various non-core businesses to
reduce debt and become asset light. For the warehousing business, it entered into an
agreement with the Blackstone Group to sell 90% stake in various SPVs (equity consideration
of INR 3.8bn) in January 2020. However, the deal was delayed due to Covid – It is targeted
to be concluded in the next 1-2 months, which should help reduce debt by INR 4.1bn. For
projects and engineering business, reducing capital employed by disposing old assets and
equipment and looking for strategic partner for monetization.
 Container shortage – Short-term pain: Container shortage concern has led to a spike in freight
rates, thereby increasing the working capital requirement. However, the issue is short term in
nature and should resolve in the next 6-8 months. The government’s focus on manufacturing
and exports, new container capacity addition, increase in domestic consumption (leading to
higher import), etc. should aid the company in the medium-to-long term.
Analyst annotations: The management expects both the companies to focus on core segments, with high growth
potential surpassing industry growth rates and continue de-leveraging via asset monetization.
Allcargo has dropped its de-listing plans as shareholders voted against it. Hence, the company
would continue to remain listed. GATI is targeting a margin expansion of 8-10% in the short term
and 10-12% in the medium term and to gain market share in the B2B segment.
Key Financials: Allcargo Logistics

FY18 60,335 3,771 6.3 1,714 7.0 9.1 12.5 21.1 10.0
FY19 68,814 14.1 4,485 6.5 2,420 41.2 9.9 12.2 16.4 11.7 6.9
FY20 73,387 6.6 5,035 6.9 2,230 (7.8) 9.1 10.8 13.6 6.4 5.2
FY21 104,885 42.9 7,690 7.3 1,729 (22.5) 7.0 7.8 11.0 17.5 6.1
GATI
FY18 17,330 771 4.4 342 3.3 5.0 10.5 26.3 18.0
FY19 18,557 7.1 943 5.1 183 (46.4) 1.7 2.5 9.9 51.5 14.7
FY20 17,049 (8.1) 356 2.1 (783) (526.7) (7.0) (10.7) NA NA 29.5
FY21 13,111 (23.1) 272 2.1 (2,279) 191.1 (18.7) (35.9) NA NA 60.0

203
Represented by:
Paresh Mehta, CFO Ashoka Buildcon
Bloomberg Code: ASBL, Market Cap: INR 29bn, CMP: INR 102 (as on 15 Sept 2021)
Executive digest: Founded in 1993, Ashoka Buildcon (ASBL IN) is an integrated infrastructure company which is
present across roads & bridges, power T&D, railways, buildings and CGD. Roads form 65% of
orderbook, power T&D & buildings form 30% and the rest by others. It has 61% holding in
Ashoka Concessions (BOT holdco) with a portfolio of seven operational BOT and 10 HAM
projects under various stages of development.
Investor insight:  Strong orderbook amplifies revenue visibility: Including FY22 YTD order inflow of INR 28bn,
orderbook stands at a record high of INR 123bn, providing book-to-bill visibility of ~3x. With
average project execution cycle of 2.0-2.5 (except hospital project from DY Patil worth INR
6bn to be executed over the next five years) and most projects with requisite approvals in
place (except two HAM projects – Tumkur Shivamogga III & IV worth INR 24bn to receive
appointed date by Oct 2021), management is confident of completing 70% of current
orderbook by FY23. It retains guidance of 20-25% revenue growth and EBITDA margin of
12.5-13.0% for FY22
 Measured diversification: With a view to strengthen the core EPC business, apart from roads,
power T&D, railways & CGD, management is diversifying into other EPC segment like solar,
smart eHealth & eEducation infrastructure and buildings. However, the road sector will
continue as the mainstay with contribution of 60-65% to total revenue. Pipeline of new
projects is healthy and management is confident of total order addition of INR 50bn in FY22
 Asset monetization -- around the corner: Management is in talks with several investors to
monetize stake in various BOT & HAM SPV (the current portfolio of seven operational BOT,
four HAM to be operational in the current fiscal and four are under construction). Due
diligence is underway and documentation & signing of share purchase agreement is
expected by October 2021. Total equity invested of INR 31.5bn as on date (INR 8bn by SBI-
Macquarie, INR 11bn initial capital by ASBL, INR 10bn of loan & accrued interest and INR
2.5bn of NCDs). The company is liable to pay INR15.3bn to SBI Macquarie (IRR of 12% pa)
from monetization proceeds without any out-of-pocket payment by ASBL in case of lower
valuation. Despite the government’s mega National Monetisation Plan, advanced stage of
negotiations make management confident of concluding the deal. Total debt on SPV is INR
53bn and pending equity requirement of INR 3.2bn for under-construction projects
Analyst annotations: Strong orderbook, healthy pipeline of new projects and renewed focus on the core business
would help scale up execution over the next 2-3 years. Advanced stage of discussions on asset
monetization will help unlock value from PPP assets. Near-term focus remains on creating an
asset-light portfolio of projects.
FY20 39,370 3.0 5,852 14.9 3,867 16.1 13.8 16.1 18.4 5.5 5.1
FY21 38,175 (3.0) 5,195 13.6 4,041 4.5 14.4 14.4 18.1 4.6 5.9
FY22E 40,966 7.3 5,121 12.5 3,753 (7.1) 13.4 11.7 14.6 4.3 5.9
FY23E 44,923 9.7 5,728 12.8 4,317 15.0 15.4 12.0 14.5 4.0 4.9

204
Represented by:
Aneel Gambhir, CFO Blue Dart Express
Bloomberg Code: BDE IN, Market Cap: INR 153bn, CMP: INR 6,438 (as on 15 Sept 2021)
Executive digest: Incorporated in 1983, Blue Dart Express (BDE IN) is an express air and integrated transportation
and distribution company. In 2005, DHL Express (Singapore) acquired an 81% stake, which is
currently at 75%. BDE’s subsidiary, Blue Dart Aviation, operates six Boeing 757-200 freighters
across seven metro cities with a capacity of 500 tonne per night. Out of six freighters, two are
owned and four are on lease. As on FY20, BDE has a 49% market share in air express and 16%
in surface express. Nearly 75% of revenue is from B2B clients with BFSI being the largest client
and 20% from B2C with eCommerce platforms being the largest client. In terms of services,
three-quarters of revenue is from air and one-fourth from ground express.
Investor insight:  Cost optimization, an ongoing exercise: Domestic network operating cost is the single-
largest cost component for the company, which declined from INR 9.4bn in FY19 (30% of
sales) to INR 9bn in FY21 (28% of sales), primarily led by rationalizing pin codes and facilities,
hubs & offices. This partly helped improvement in EBITDA margin. With consolidation of the
network largely done, percentage to sales is expected to largely sustain at 28% with scope
available for further optimizing capacity utilization and efficiency. Additionally, the network
depends on dynamic demand environment and economic viability. Fixed cost is 65% of total
cost, which has 5-10% scope to further convert into variable cost components
 Next GPI to be finalized this month: The company has implemented a general price increase
BDE PI) mechanism every 1 January for the past two years. For the next GPI, discussions are
underway on the quantum and expected to be finalized later this month as customers need
to be notified three months in advance about any tariff revision
 Business on course: With airline operations restarting, belly cargo capacity is returning and it
is not a threat to volume as 95-97% of BDE cargo is express door-to-door while belly cargo is
only airport-to-airport. New customer additions across segments continue, and the
company is working on improving customer experience. Planned debt repayment has been
completed
 Increasing competition in B2B, not a threat: Recently, Delhivery acquired 100% stake in
Spoton Logistics at ~USD 200mn to strengthen the former’s B2B business. Despite increased
competition, management remains confident of the business model and service quality,
which gives BDE an edge over peers
Analyst annotations: After slowing instances of COVID-19 cases, business is back to usual from June, with utilization
rate of >85% on vehicles and aircraft. Q2FY22 YTD handled healthy volume, in line with Q4FY21
performance. The B2C industry size is currently only 3.5-4% of total retail sales in India, which is
10-12% in the Developed countries. This provides strong growth potential. The B2B industry is
likely to get a push from GDP growth and PLI Scheme.
FY20 31,664 0.0 1,878 5.9 258 (70.5) 10.9 4.1 5.7 591.6 81.3
FY21 32,797 3.6 3,766 11.5 1,222 373.1 51.5 19.3 19.7 125.0 39.7
FY22E 37,382 14.0 4,673 12.5 1,967 61.1 82.9 26.5 28.3 77.6 32.2
FY23E 43,346 16.0 5,852 13.5 3,064 55.7 129.1 34.0 37.3 49.9 25.4

205
Represented by:
Ayush Bagla, Director Cera Sanitaryware (Not Rated)
Bloomberg Code: CRS IN, Market Cap: INR 57bn, CMP: INR 4,394 (as on 15 Sept 2021)
Executive digest: Cera Sanitaryware (CERA) is one of the leading building material companies in India, established
in 1980 by Mr. Vikram Somany. Its plants are strategically located in order to cater to customers
across India as well as to give intense competition to other players with cost efficiency. Its
sanitaryware and faucetware unit is located at Kadi (Gujarat), while its JV tiles units are located at
Nellore (Andhra Pradesh) and Morbi (Gujarat). It has a strong distribution network, which
comprises of 19 own warehouses, >1,450 dealers and >12,000 retail touch-points.
Current demand scenario extremely robust
Investor insight:
 Q1FY22 was impacted on account of COVID Wave II – Manufacturing was operational only
for 45 days during the quarter.
 CERA posted its best-ever sales in July, while August and September too remained very
encouraging. Expect Q2FY22 to be one of the best quarters, given the current sales trend.
 Management expects sales to reach ~INR 15bn in FY22 and ~INR 22bn-23bn in the next
three years. Margin guidance for FY22 stands at ~14% versus 12.6% in FY21.
 The Faucetware segment, which clocked ~INR 3.3bn in sales in FY21, may touch INR 10bn
sales in the next 3-4 years.
Competitive scenario slightly subdued
 In the past few years, Jaquar and Kohler in the premium segment have remained strong
players. Even HSIL restructured itself to generate value.
 Container availability is still an issue – Container costs have moved to USD 600. Despite higher
container costs, the companies have been unable to secure enough containers.
 An 11% import duty on imported sanitaryware has been levied, which too has marred
imports-dependent companies.
Constant price hikes in the past year
 Prices for sanitaryware’s key RM, Feldspar have remained fairly stable in the past year.
However, logistics cost has increased.
 CERA has hiked prices ~12-16% in Sanitaryware – August 2021 +4%, February 2021: +5-7%
and August 2020: +3-5%.
 For faucetware, brass is the key RM. Brass prices have been on the rise since past year. CERA
has hiked prices ~30% in the past year – August 2021 +10%, February 2021 8-10% and
September 2020 8-10%. Apart from brass, ABS and plastic prices too have gone up. But SKUs
using these two RM, as a percentage of the total, are miniscule for CERA.
Sanitaryware – Strongest moat
 CERA’s key strength lies in strong manufacturing background complemented by superior
after-sales service.
 Hence, sanitaryware, an INR 40bn—50bn industry in India, has undergone consolidation
among a few organised players. The shift from unorganized to organised space has largely
played out, as per the management.
 Faucetware, ~INR 70bn-8,0bn industry, enjoys 60% of the organised market share, with
enough penetration scope.
 Tiles, the largest of three categories in which CERA operates with INR 350bn market size, has
the lowest entry barriers, especially from the manufacturing perspective (evident in the
thriving Morbi-based companies).
206
Focused tier III player
 CERA’s ~60% of sales come from tier III towns and 24-27% from tier I, while the rest is
generated from tier II.
 Key advantages of operating in tier III towns reflect in the company’s pricing power, unlike
for players that deal with just big national real estate clients.
 CERA’s dependence on national developers is a mere 3-4% of total sales. Most of the sales for
the company comes from the individual buildings.
Strong vendor set-up
 CERA’s ~55% of SKUs are outsourced to its contracted vendors. The company manufactures
most of its complex products in-house, while the rest are outsourced.
 These vendors operate on non-exclusivity basis, but CERA has ensured IP protection for all its
designs.
Tiles – Business update
 CERA procures 30-35% of its tile requirement from its JV partners, while the rest 65% is from
trading partners.
 CERA acquired an equity stake in ATL (Rasi Cement’s promoters) that also supplied to Kajaria,
a few years ago. The company was able to save on freight costs given its presence in South.
 CERA has parted ways from ATL JV now, but the company has complete access to its tiles.
 CERA has a 26% stake in Milo Tiles, which it bought at INR 82mn. Milo Tiles’ 100% offtake
goes to CERA.
Management change
 CERA has appointed Mr. Anupam Gupta from Grasim as ED, Technical as a replacement to
Mr. Atul Sanghvi (who resigned from his role as ED and CEO, effective 14 October 2021).
 Mr. R B Shah, who is currently working as COO and CFO, will be promoted as the CEO.
Balance sheet strong
 CERA has remained focus on improving its working capital cycle.
 The current cash conversion cycle stands at 70 days. The tiles business is cash and carry for
the company.
Analyst annotations: Expect Q2FY22 and H2FY22 to be favorable, led by strong demand. Further, CERA may continue
with its focus on tier III towns in India.
FY18 11,850 17.4 1,770 14.9 1,030 1.0 79.3 16.5 24 55.4 32.7
FY19 13,520 14.1 1,990 14.7 1,150 11.6 88.5 16.0 25 49.6 29.1
FY20 12,240 (9.5) 1,670 13.6 1,130 (1.7) 87.1 14.3 17 50.4 34.8
FY21 12,240 0.0 1,580 12.9 1,010 (10.6) 77.5 11.3 15 56.7 36.7

207
Represented by:
Prateek Singhal, DGM
Corporate Finance
Escorts (Not Rated)
Bloomberg Code: ESC IN, Market Cap: INR 198bn, CMP: INR 1,465 (as on 15 Sept 2021)
Executive digest: Escorts is India’s fourth largest tractor manufacturer, with a market share of ~11.3% in FY21. The
company’s manufacturing plant at Faridabad has capacity to manufacture 120,000units per
annum. The company makes tractors under the brands Powertrac and Farmtrac. Escorts also
exports tractors to regions such as Africa and South East Asia. Apart from tractors, the company
is engaged in construction equipment business (manufacturing cranes, backhoe loaders,
excavators) and railways (suspension and braking systems). Tractors is the largest segment,
contributing ~75-80% to revenues. Construction equipment and railways contribute ~11-17%
and 4-8% to revenues respectively.
Investor insight:  Domestic outlook: For August, the industry decelerated 17%, while YTD August, it grew 19%.
Escorts’ YTD August stands at 21%, thereby indicating market share gains. Monsoons are
gaining momentum, leading to high water reservoir levels and strong Kharif sowing. Due to
high FY21 base, Escorts has guided for low single-digit growth in FY22.
 Exports: Good traction was witnessed on the exports front, with target at 8-10,000 units in 2-
3 years and 15,000+ in the long term, in partnership with Kubota.
 Industry outlook: Emission norms will change in FY24 for 25hp and above segments, which
may lead to pre-buying, thus improving buying sentiment. Expect long-term tractor industry
CAGR at 7-8%. Going forward, expect some cyclical correction in FY23.
 Kubota: Escorts’ manufacturing plant has started producing the Kubota product series and
may eventually shift to production for Escorts, as and when required. Escorts has already
started exporting the eKubota brand via Kubota network. Currently, less than 5% of Escorts’
tractors are exported via the Kubota channel.
 Price hikes: Escorts hiked prices thrice – 6-7% (in November 2020, April 2021 and July 2021)
in the past 12 months. Discounting has not been resorted to due to the inflationary scenario.
Expect further price hikes post the festival season.
 Inventory: Retail growth is broadly in line with wholesale, with build-up for the festival season.
At the factory level, Escorts is building inventory – Dealership inventory at 100-200 tractors.
Industry inventory levels may be higher.
 Capacity/capex plans: Escorts is spiking capacity from 120,000 units to 150,000 by October
2021 at an outlay of INR 1bn. Additional capacity of 50,000 units with Kubota JV is not
utilized, at present. In FY22, the company may incur INR 3.5-4bn capex (including +INR 1bn).
 Emission norms: Change in emission norms from 1 April, 2024 for greater than 25hp tractors
will trigger pre-buying. For 50hp and above, the emission norms change from 1 April, 2022.
Expect 12.5-15% price hike.
 Electrification trend: Major challenges on the cost and infrastructure front exist. The hybrid
model may develop first in the medium term and pure EV tractors may follow suit over a
decade. Escorts sells an electric product offering in the 21-30hp segment, in the EU markets.
 Financing has never an issue as farming comes under priority sector and farmers have
adequate liquidity. Escorts has tied up with 35 banks/NBFCs.
 Subsidy accounts for 4-5% of overall industry volumes, allocated by the central government
and disbursed by the state government. Major subsidy programs have been implemented by
Assam and Gujarat. The quantum of subsidy ranges within 10-70%, varying as per state.
208
 Railways segment faced some setback due to Covid. Escorts is operating in the passenger
trains segment. Order book stands at INR 3bn – inflows are less, but execution has picked
pace. Expect more trains to start functioning post Dussehra and low double-digit growth in
FY22, with margin maintained at the current levels.
 Construction Equipment segment: Expect construction activity to revive to pre-Covid levels,
post September with mid-teen growth expected in the next 2-3 years. Margins are improving
with cost rationalization activities.
 Construction Equipment – Competitive scenario: About 35 players exist across all categories.
 Earthmoving can be bifurcated into two categories – Backhoe loader (JCB is the leader, with
80% MS, Escorts has 2% share) and Excavators (Escorts is sole the supplier of Busan excavators
and enjoys a strategic partnership with Kubota).
 Metal handling can be divided into three categories– Hydra cranes (via Escorts’ Challenger
brand with 33% share), Rails (Escorts has 70% share; product launches) and Rough terrain
cranes (49:51 JV with Terrano; may soon launch truck trains).
 Road compaction: Escorts enjoys an 8-10% share.
 Agriculture segment: Escorts is the number four player in the market. Mahindra is the leader,
with 44% market share, followed by Tafe and Sonalika Tractors.
Analyst annotations: We expect the tractor industry to remain flat in FY22E, on Covid-19 impact in rural areas as also a
high base. Construction equipment and Railway division are also under stress given current
circumstances – Expect a bounce-back from H2FY22. The company may effect another price hike
post the festive season to mitigate RM cost inflation. Increasing channel inventory, input cost
pressure, deteriorating revenue mix and high base are key near-term concerns.
FY18 49,948 22.0 5,570 11.2 3,512 63.3 40.6 15.5 15.2 36.1 22.9
FY19 61,964 24.1 7,333 11.8 4,728 34.6 54.6 17.0 16.1 26.8 17.8
FY20 57,610 (7.0) 6,758 11.7 4,948 4.6 53.6 15.2 14.5 27.3 18.9
FY21 66,245 15.0 10,666 16.1 7,985 61.4 79.0 18.1 17.7 18.5 12.4

209
Represented by:
Nagesh Basavanhalli,
MD & CEO
Greaves Cotton (Not Rated)
Dalpat Jain, Group CFO Bloomberg Code: GRV IN, Market Cap: INR 349bn, CMP: INR 146 (as on 15 Sept 2021)
Arun Srivastava, Head of
Group Strategy
Executive digest: Greaves Cotton (GCL) is one of the largest manufacturers of single cylinder (diesel, gasoline
engines) and dual-cylinder engines primarily. These find application in 3-W vehicles and 4-W small
commercial vehicles (SCVs). The company offers products/solutions across business units –
Engines, power, farm equipment, mobility and aftermarket. In FY19, GCL augmented its Clean
Technology portfolio, entering the last-mile affordable 2W personal Mobility segment via Ampere
Electric Vehicles and e-rickshaws in last-mile people transportation segment. Group companies
are Ampere Electric (E-2W), Bestway (E-Rick), DeeGreaves (Tech Services), Greaves Fintech.
Investor insight: GCL has pivoted from being a traditional B2B to a B2B plus B2C player, four years ago and
extracting the lifecycle value via a fuel-agnostic strategy of diesel, CNG and electric. New divisions
started four years ago and are contributing 30% to revenues. New businesses are based out of
Bengaluru, while the legacy business is managed from Mumbai and Aurangabad.
Three major businesses
 Core Greaves Cotton, GCL’s core business, operates in the engine manufacturing segment (7-
700Hp) – Auto plus Non-Auto. They have now been merged into one vertical and single
management team. The non-auto segment caters to marine, defense and machining. GCL
has a fuel-agnostic strategy and is present in CNG, diesel and petrol engines.
 GCL’s retail solution, Greaves Retail, is its traditional aftermarket combined with Greaves Care
and Greaves Retail. The company is catering to selling spares for all 3W brands across India,
via a network of 7,000 retailers, both exclusive and non-exclusive, and 12,000 mechanics. Pre-
Covid, 15-20,000 customers per month had enquired after 2W and 3W offerings.
 E-Mobility solution, GCL’s Ampere suite of products. GCL has entered into the electric market
via Ampere acquisition for e-2Ws and Ele as also MLR for e-3Ws.
Two newer (enabler) businesses
 Greaves Fintech (Greaves Finance) acts as an enabler to kick start financing for GCL’s e-
mobility business.
 Greaves Technology provides engineering services across the globe.
 Revenue mix: Core Greaves Cotton contributes 60% to revenues, Greaves Retail 30% and E-
mobility solutions 10-15% (growing at a faster clip).
 Outlook and guidance: GCL’s traditional legacy business may likely grow at a slower pace,
but with higher profitability, while newer businesses in sunrise areas may be in a hyper
growth phase, but with lower profitability. Thus, at the blended level, expect revenues to
grow in double digits with +12% EBITDA margin.
 Plants and facilities: GCL’s six plants have been converted into one mega plant, located at
Aurangabad to improve efficiencies. The engine manufacturing plant at Ranipet will be used
for e-mobility services, with a capacity of 1mn units, ready by end-FY22. GCL announced an
MoU for its Pune plant for a sale consideration of INR 3.2bn. The proceeds will be used to fuel
new businesses. Business restructuring exercise may help trim fixed cost 10% by the next year.
 EV 2W industry: Last year, the industry size stood at 150,000 units. Expect e2W to be 10-15%
(3-5mn units) of overall 2Ws in five years, on a conservative basis. Expect the market to be big
enough to accommodate many players.
 Ampere: Around 60% of revenues are coming from high-speed products versus 100% from low
speed in 2018. The average ASP continues to increase. In August, the company sold 4,000 units
– 2W & 3W combined. Demand continues to be strong, and improving on MoM basis. However,
210
major constraints are on the supply front, and not demand. Ampere is operating at a monthly
run rate of INR 300mn, up from INR 20mn in 2018. It aims to remain one of the top three players
in the EV space.
 Distribution network: New players are commanding sizable share and positioning in the
market, which is encouraging. Inherent service requirements for EVs are far less compared
with ICE vehicles. Currently, requirement for digital channels and virtual dealerships is large.
GCL may expand its dealership from 600 currently to establish closer reach, but it is not
mulling an extensive network, much like the incumbents. GCL is collaborating closely with
customers to provide customized service solutions.
 Gross margin: Ampere enjoys gross margins of 20%. Margin pressure exists due to commodity
cost inflation. Last year, the company delivered break-even EBITDA margin performance.
Profitability should be lower as compared with the retail business. However, going forward,
the company may be able to bridge this gap. Expect prices of imported cells to go down with
economies of scale, leading to profitability improvement.
 Customer profile: Customers are classified in three categories: 1) Office and business use (range of
30-40km/day) catered to by the Magnus range, 2) B2B e-commerce, ride share (range of 100-
120km/day) catered to by the Zeel platform and 3) Slow speed segment in tier 3 & 4 (range of 5-
10km/day). Most of the demand is emanating from the youth and first-time buyers. High speed has
received better traction in the urban markets, while low speed in tier 3 & 4 cities.
 Semiconductor shortage: Production has not been affected by semiconductor shortage so far
due to efficient supply chain management.
 Localization and import content: For high speed scooters, content is entirely localized. Only
battery cells are imported – Battery packs and BMS are localized. Slow speed offerings have
higher import content and the management is effecting its localization via collaborations with
large local players. GCL is considering in-house manufacturing of battery packs, controllers,
BMS and connectivity features, over time.
 Investments: GCL is planning to investment at its Ranipet facility to drive e-mobility. Expansion
at the Ranipet facility and localized supply chain are the key focus areas. It may take some
time to stabilize the supply chain. Cash and cash equivalents stood at INR 2bn as at Q1-end.
 Retail finance: GCL’s enabler business for financing 2W is in the initial stages of buyer
incentivization with fewer financing options. With increased e2W acceptability by the
financial institutions, the residual value is being established towards a more comfortable zone.
Greaves Finance is an incubation business, with book size of INR 20mn as a tie-up with fintech
companies. NPAs are less than 2%. GCL has no plans to raise exposure and start its NBFC
division.
Analyst annotations: Expect the restructuring exercise undertaken four years ago to fructify, with gaining traction in e-
mobility division and higher SOB of non-auto business. Improving sales for Ampere are likely to
continue due to government support in the form of subsidies. However, challenges persist in the
form of semiconductor shortage and RM cost inflation.
FY18 16,340 1.1 2,556 15.6 2,021 11.7 8.3 16.7 24.5 16.2 10.8
FY19 20,153 12.5 2,718 13.5 1,648 (18.5) 6.7 15.6 22.7 14.1 11.9
FY20 19,111 (5.2) 2,102 11.0 1,292 (21.6) 5.6 16.6 18.9 21.2 13.6
FY21 15,003 (21.5) 804 5.4 (192) (114.9) (0.8 1.1 5.2 NA 31.0
Analyst: Jay Kale, CFA, jay.kale@elaracapital.com, +91 22 6164 8507 (Dir)

Ketul Dalal, ketul.dalal@elaracapital.com, +91 22 6164 8500 (Dir)
211
Represented by:
Ashok Sharma, CFO Greenlam Industries (Not Rated)
Samarth Agarwal, AVP
Bloomberg Code: GRLM IN, Market Cap: INR 34bn, CMP: INR 1,406 (as on 15 Sept 2021)
Greenlam Industries is one of the world’s top three and India’s number one surfacing solutions
Executive digest:
brand, with production capacity of 15.62mn sheets every year. With presence in +100 countries,
Greenlam has a team of +14,000 distributors and dealers along with more than 3,750 employees.
It offers end-to-end surfacing solutions, spread across laminates, compacts, veneers, engineered
wooden floors and engineered wooden doors and frames.
Investor insight:  Wave I lockdown impact on demand was far more severe versus Wave II. This time,
manufacturing set-ups were allowed to function, unlike during Wave I lockdown.
 Retail shops were open starting June. Demand recovery in July, August and first week of
September was strong. The management expects Q2FY22 to be much better than Q1FY22.
 The laminates segment saw a quick recovery. Further, laminates enjoy lower freight costs;
thus, they may be produced and shipped anywhere. The wood segment may witness slower
recovery – Revival may take another quarter.
 Greenlam witnessed a spike in raw-material cost. However, the management was able to pass
on partial cost to the customers. The company also faced supply issues on container shortage.
 Greenlam is setting up a new plant in South India. The company is awaiting government
approval and expects to start construction, next quarter. Expect plant commissioning by FY23.
This may lead to 20% capacity addition apart from existing capacity.
 Most other players are running at 70% capacity, while Greenlam’s capacity utilization is 100%.
 Greenlam hiked prices 10-12% in the domestic market and a cumulative 5% in exports in
Q3FY21 and Q1FY22. Depending on the demand scenario, the management may embark
on further price hikes.
 The management expects to maintain Q4FY21 margins for entire FY22 on robust volumes
and better product mix.
 Laminates market size stands at ~INR 60-65bn, while exports is around INR 20bn.
 The organized market share is at 65-70% in value terms.
 Greenlam has 14,000 touch points, the highest in the industry.
Analyst annotations: Recovery in the laminates segment has been faster – It has now revived to pre-COVID levels. Sales
in door and veneer segment is expect to reach pre-COVID sales by end-Q2FY22. The
management expects 10-12% sales growth over the year and may be able to maintain margins,
led by robust volume growth and better product mix.
Margin
March (INR mn) (%) (INR mn) (INR mn) (%) (INR) (%) (%) (x) (x)
(%)
FY18 11,450 6.4 1,490 13.0 650 30.0 26.7 18.3 19.0 52.4 24.6
FY19 12,810 11.88 1,590 12.4 770 18.46 31.9 18.0 19.0 43.9 23.2
FY20 13,210 3.12 1,790 13.6 870 12.99 35.9 17.4 18.0 39.0 20.7
FY21 12,000 -9.16 1,740 14.5 740 -14.94 30.5 12.9 16.0 45.9 21.1

212
Represented by:
Manish Kaushik, CFO Havells India
Bloomberg Code: HAVL IN, Market Cap: INR 913bn, CMP: INR 1,459 (as on 15 Sept 2021)
Executive digest: In the past three decades, Havells India has transformed from an industrial switchgears company
into a consumer electricals play. The company’s late founder chairman, Qimat Rai Gupta started
as a dealer in switchgears in 1958 and acquired a switchgear company, Havells, in 1971.
Subsequently, the company through Greenfield expansions (switchgears, cables, fans, lights &
fixtures, electric water heaters & air coolers), acquisitions (electric control & switchboards, electric
meters and lighting) and joint ventures (MCB & motors) added many consumer-based products
to its offerings. Its products portfolio comprises industrial & domestic switchgears (switches),
industrial & residential cables, pumps & motors, fans, lighting & fixtures, water heaters, air coolers
and other domestic appliances (air purifiers, kettles, coffee makers and personal grooming).
Havells forayed into white goods B2C business though Lloyd’s acquisition of AC, TV (with
assembling units), washing machines and other household appliances. The company has six
manufacturing facilities in India across four states of Himachal Pradesh, Uttar Pradesh, Rajasthan
and Uttarakhand. Around 90% of its revenues is from in-house production. The company has a
network of 11,500 direct dealers, 165,000 retailers and owns 450 exclusive stores under the
brand Galaxy across India.
Investor insight:  In South India, HAVL is facing challenges as COVID cases are high. However, with the
forthcoming festive season, momentum should turn favourable and likely to benefit the
company, on stocking-up by dealers.
 Component imports from China are being impacted and affecting the company at large.
However, HAVL is taking necessary measures such as six months planning (versus 3-4 months
earlier) and keeping its inventory high.
 Pent-up demand may not be seen in FY22, but growth will be led by expansion into rural
markets and rise in product portfolio.
 HAVL is setting up a semi-automatic washing machine facility with 0.3mn units capacity at
INR 500-600mn capex. It is likely to get commissioned in the Q3FY22. The plant is located at
Ghiloth, Rajasthan where it is operating room air-conditioners.
 HAVL had planned an ad campaign for IPL this season, but with delayed IPL, this was not
fully reflected in Q1FY22. The ad and promotion spending policy remains as was – HAVL may
incur ad spends, similar to that done previously.
 Lloyd, post in-house manufacturing, is delivering good-quality products, which was a key
customer concern when HAVL acquired it. The former will continue with distribution
expansion (8,000-10,000 dealers), brand building, deeper entry into modern retail chains and
online presence to increase market share.
 REO, a HAVL brand, is part of affordable housing segment, wherein the company has
introduced new products such as fans, switchgears and wires – It is planning to add more
products in the category.
 HAVL had effected most price hikes in June 2021 – Do not expect major price movement.
Short-term external supply issues persist due to ship availability and semi-conductor shortage in
the industry. HAVL with its largest product portfolio in the consumer electrical industry has raised
its inventory planning period, which should moderate such concerns. With no pent-up demand
in FY22, the industry is likely to witness revenue growth of pre-COVID levels. A diversified
portfolio, strong premium brand and ongoing efforts to spike distribution may continue to prop
HAVL towards long term growth.
213
FY21 104,279 10.6 15,660 15.0 10,305 44.3 16.5 21.8 20.6 88.6 57.5
FY22E 119,587 14.7 16,553 13.8 11,382 10.4 18.2 20.7 18.8 80.2 54.0
FY23E 139,283 16.5 19,978 14.3 14,169 24.5 22.6 22.6 20.7 64.5 44.5
FY24E 158,912 14.1 23,099 14.5 16,709 17.9 26.7 23.0 21.4 54.7 38.1
214
Represented by:
Rajesh Lachhani
GM, Investor Relations
Jindal Steel and Power
Gourav Sancheti Bloomberg Code: JSP IN, Market Cap: INR 410bn, CMP: INR 402 (as on 15 Sept 2021)
DM, Investor Relations
Executive digest: Jindal Steel and Power (JSP IN), promoted as Orbit Steel by the late OP Jindal in 1979, is a leading
steelmaker in India. It has a steel capacity of 8.6mn tonne and a 9mn-tonne pellet plant. Apart
from these, JSPL has a captive power capacity of 1,634MW.
 Divestment process of Jindal Power (JPL) is on track and the deal is expected to be completed
by December. Management expects to receive ~INR 30bn in the near term after closure of
Investor insight:
the deal, which will enable JSPL to reduce debt further
 Currently, JSPL’s product mix is skewed toward long products with >65% contribution,
followed by ~25% flat products and the rest are semi-finished. However, management
believes post completion of the ongoing steelmaking capacity expansion from the current
8.6mn tonne to 15.9mn tonne flat products will constitute ~65%
 JSPL is likely to incur a capex of ~INR 35bn for 12mn tonne pellet capacity expansion and
18mn tonne slurry pipeline. These projects to come on stream over the next three years and
will lead to margin expansion. Management believes slurry pipeline itself can provide savings
of ~INR 800-900/tonne on freight and incremental pellet export opportunity of 5mn tonne
 Management says despite huge capex, JSPL’s deleveraging efforts will continue. Recently, it
has prepaid ~INR 7.8bn for an overseas debt and expects overall debt should reduce to INR
80bn by end-FY22 vs ~INR 152bn as on Q1FY22
 JSPL consumes ~3.5mn tonne iron ore quarterly out of which ~0.7mn tonne is captive
sourcing, 1.5mn tonne was sourced from Sarda Mines, which was exhausted in Q1FY22 and
the rest was purchased. But barring captive sourcing, for the rest of the iron ore, JSPL has to
rely on open market purchase, which is likely to push cost upward. However, management
believes the recent sharp correction in iron ore prices primarily in Odisha bodes well and
should help JSPL to manage cost to some extent
 JSPL’s realization has moved up significantly in the past few quarters, led by robust steel prices.
Management believes Q2FY22 realization for JSPL is likely to be up INR 1,500-2,000/tonne
QoQ
 JSPL consumes ~3.5mn tonne of coking coal annually out of which 1.2mn tonne is sourced
from Mozambique. JSPL targets to source another 1.2mn tonne from its Australia mine and
accordingly, production from Australia is expected to start by end-December or early January
Analyst annotations: While JSPL’s near-term volume is expected to remain healthy, led by the waning impact of the
Second Wave and post-Monsoon revival in domestic demand, phase-wise completion of
announced capacity expansion projects should support long-term volume growth. While higher
coking coal prices and end of low-cost iron ore inventory are likely to be key drags on margin, recent
Key Financials: softening in iron prices, access to captive coal and firm steel prices will limit margin contraction.
FY20 304,646 (22.6) 68,147 22.4 -2,066 - (2.0) (0.6) 4.5 (198.5) 11.3
FY21 345,405 13.4 130,913 37.9 62,946 - 61.7 19.7 15.7 6.5 4.8
FY22E 467,512 35.4 137,902 29.5 75,648 20.2 74.2 19.3 18.2 5.4 3.6
FY23E 483,406 3.4 120,739 25.0 69,980 (7.5) 68.6 13.9 15.4 5.9 4.1
Ravi Sodah, ravi.sodah@elaracapital.com, +91 22 6164 8517

Analyst: Saurabh Mitra, saurabh.mitra@elaracapital.com, +91 22 6164 8546
215
Represented by:
Rajeev Aggarwal, CFO KEC International
Abhishek Sen, Head of
Investor Relations Bloomberg Code: KECI IN, Market Cap: INR 111bn, CMP: INR 433 (as on 15 Sept 2021)
Executive digest: KEC International (KECI IN), the flagship company of the RPG Group, is a global engineering,
procurement and construction (EPC) company in India. The company operates in multiple
business verticals, such as power transmission & distribution, cables, railways & metro, civil, and
solar EPC and smart infrastructure. It is one of largest power transmission EPC firms, building
overhead lines of up to 1,200kV, substations of AIS up to 1,150kV and GIS up to 765kV. Its
manufacturing capacity in towers stands at 312,200 MTPA, railway structures 30,000 MTPA and
solar structures 12,000 MTPA. KECI operates in 63 countries in the regions of SAARC, the Middle
East, East-Asia Pacific, the African continent and Americas.
Investor insight:  KECI: Afghanistan projects’ status
 KECI has five live projects ongoing that are 70-80% complete.
 Order book balance – INR 4-5bn work in value terms is pending
 No communication from funding agencies – Two projects funded by World Bank, two by
ADB, one by the US. The lone project by the US will be completed as it is critical in nature
and passes via Central Asia (others are local lines).
 Funding agencies have not requested halting work, as yet. All projects are funded by
multinational agencies.
 For the next 2-3 months, the need to write-off not there. Against INR 5bn receivables,
local liabilities exist. Thus, on net basis, exposure will be low.
 Brazil implements fixed labor model rather than subcontractor based EPC model. The local
government did not acknowledge COVID as force majeure. Wave II was very severe and
given the fixed cost model, margins were under pressure. Wave II led to delay in project by
three months and the cost was booked, which was completely unexpected. The
management expects to deliver these projects by Q3-end.
 Revenue growth should be strong in FY22 (most likely double-digit), but the situation in Brazil
may mar margins in Q2 as well. Q3 and Q4 onwards, expect break-even and turn-around in
the Brazil business.
 Order pipeline stands robust with INR 300bn submitted and INR 350bn under tendering.
Thus, order intake should be strong with management expectations of INR 150-160bn in
FY22.
 Commodity prices have surged, especially steel – Hedging is not possible as LME is
unavailable. Steel prices spiked 40% and hit hard given fixed price contracts. About 50%+ of
open steel exposure will be supplied by Q2FY22, and steel supply will be largely complete in
Q3FY22. Currently, softening in steel prices is being seen gradually. In Q4, 10% margins will
be achieved in standalone numbers.
 Many EPC players did not fall under the required cap for large tenders earlier, but the
government initiative to reduce 10% cap to 3% due to COVID-19 has led to increased
eligibility for players. Thus, competitive intensity has surged.
Strong capex in power transmission market in India and overseas (especially the Middle East),
revival in industrial activities, and robust capital allocation to infrastructure sector, mainly railways
and urban transport are likely to drive order inflows for many years to come and prop long-term
growth opportunity. KECI’s focus on driving inflows and revenues in non-T&D segment will aid
its transformation into a complete EPC company and just T&D EPC company. Near-term prospects
look challenging due to execution issues, losses in Brazil and possible write-off from Afghanistan
region.
216
FY21 132,355 8.8 12,625 9.5 6,740 (12.0) 26.2 21.7 16.7 15.7 9.7
FY22E 145,844 10.2 13,028 8.9 6,650 (1.3) 25.9 18.3 14.7 16.7 10.1
FY23E 163,836 12.3 16,308 10.0 9,088 36.7 35.3 21.2 16.4 12.2 7.9
FY24E 179,959 9.8 18,567 10.3 10,762 18.4 41.9 21.0 16.8 10.3 6.6
217
Represented by:
Rajeev Gupta, CFO KEI Industries
Bloomberg Code: KEII IN, Market Cap: INR 74bn, CMP: INR 818 (as on 15 Sept 2021)
Executive digest: Established in 1968, KEI Industries (KEII IN) is involved in cable manufacturing and EPC businesses.
The company has a well-diversified product basket (EHV, MV & LV power cables) and business
model across retail (domestic and exports) and institutional customers in sectors, such as power,
refineries, railways and fertilizers. It undertakes contracts from government schemes, such as IPDS,
Saubhagya and DDUGJY. KEI has three manufacturing facilities in Rajasthan at Bhiwadi, Chopanki
and Silvassa (D&H).
Investor insight:  KEII is ranked among the top three wire and cable companies in India.
 Demand: Demand has been very strong after Q1FY22. The government is focusing on various
projects such as underground cabling that requires high voltage and extra high voltage
cables. It is also planning various solar and wind power projects, setting up new airports in B
class cities and expanding infrastructure in the entire nation. KEII is witnessing demand
flowing in from bullet train projects as well.
 FY22-23 revenues: KEII expects INR 50-51bn revenues or 20%+ growth in FY22, driven by
25% volume growth and capacity utilization at 67-68%. In FY23, it envisages INR 60bn
revenues. In the long term, KEII expects revenue CAGR of 18-20% with revenue target of INR
100bn by FY26. Of this INR 100bn, retail share should likely be 50%+ and exports 10-12%.
 Margin: KEII’s EBITDA margins should remain at 11.5% in FY22.
 Retail: In retail category, KEII’s market share is at 8%, and that of peers such as Havells India
and Polycab India 12%. However, the company expects this share to rise from 37% in FY21
to 40% in FY22 – In the next 2-3 years, the target should be 50%.
 Debt: KEII’s debt will further reduce from INR 1.3bn to INR 570mn in FY22 as the recourse
limit has reduced; thus, debt may also reduce. At present, debt operations are less than INR
1bn. KEII plans to become a debt-free company by FY23.
 Capex: KEII has bought 10 acres land for a Greenfield project in West India (mainly Gujarat),
the facility on which is expected to get commissioned by FY23 at an investment of INR 8bn,
spread over a span of four years – 18-20% growth likely in the next 4-5 years. The expansion
may be funded via internal accruals, of which 50% will be towards capital expenditure and
50% for working capital.
 New products in FMEG: Post the retail contribution touching 40% in FY22, KEII expects to
foray into consumer electrical products such as fans, lighting, switchgear, etc. New products
will be launched in CY22.
Analyst annotations: KEII is at the cusp of stable revenue CAGR of 20% in the next 10 years, led by infra and industrial
capex, rise in dealer network and foray into the FMEG segment. Margins are expects to rise, driven
by favorable revenue mix and accelerated profitability owing to lower interest costs.
FY21 41,815 (14.4) 4,605 11.0 2,733 7.1 30.4 16.6 15.8 17.2 10.3
FY22E 50,744 21.4 5,710 11.3 3,547 29.8 39.5 18.2 17.3 20.7 13.0
FY23E 59,048 16.4 6,822 11.6 4,216 18.9 46.9 18.2 17.4 17.4 10.7
FY24E 71,002 20.2 8,153 11.5 5,119 21.4 57.0 18.5 17.9 14.4 8.7
218
Represented by:
S. Vaikuntanathan
VP of Finance
KNR Constructions
K Venkatram Rao, GM Bloomberg Code: KNRCL IN, Market Cap: INR 88bn, CMP: INR 313 (as on 15 Sept 2021)
(Finance & Accounts)
Executive digest: KNR Constructions (KNRCL IN) was incorporated in 1995 after taking over assets and liabilities of
K Narasimha Reddy & Co. With 25+ years of experience, KNRCL has primary expertise of
constructing roads, highways, bridges and flyovers on EPC, BOT and HAM basis. It also has
expertise of constructing irrigation and urban water infrastructure projects. As on 30 June 2021,
orderbook stands at INR 117bn (including L1), providing book-to-bill visibility of 3.9x. Road
forms 54% while irrigation forms 46% of the orderbook.
Investor insight:  Asset monetization to further strengthen balance sheet: The company has signed share
purchase agreement with Cube Highways to monetize three HAM projects. Management
expects to receive the first tranche (on sale of 49% stake) post COD and NOC from NHAI &
lenders and the second tranche (on sale of balance 51% stake) after six months of COD. For
the Tirumala project, COD has been received. It expects to receive INR 2.1bn (INR 1.5bn first
tranche and INR 0.6bn after six months post approvals). For the Shankarampet project,
management expects COD worth INR 1.4bn in the near term (INR 1bn in first tranche and
INR 0.4bn in the second tranche). For the Srirangam project, COD is expected in 2-3
months, worth INR 1.1bn (INR 0.7bn in first tranche and INR 0.4bn in the second tranche).
Out of INR 4.6bn, the first tranche of INR 3.2bn is expected to be received in FY22.
Management plans to utilize this for pending equity infusion of INR 4.3bn in two new HAM
projects in Kerala (50% to be infused in FY22 and the rest in FY23) and for capex.
Discussions are ongoing with Cube Highways to monetize incremental one HAM project
under construction.
 Three new projects to scale up execution: Out of orderbook of INR 117bn, there are
pending approvals on three HAM and one EPC project worth INR 50bn. Two HAM projects
are set to get appointed date by Q3FY22 and one in Q1FY23, which will aid in execution
post completion of existing projects
 Irrigation project receivables, a temporary problem: As on 30 June 2021, receivables from
irrigation projects are at INR 7bn. The company expects INR 1bn within a week and the rest
within the next 2-3 months. It is selective on bidding for irrigation projects with good
margin and funding in place
 Promoter holding dips for personal reasons: On a QoQ basis, the promoter holding reduced
by 1.78% to 53.25% to fund family settlement and for personal investment purposes.
Management says promoter holding will not go below 51%
Analyst annotations: With a strong balance sheet (debt-free on a standalone basis), healthy & diversified orderbook
and professional management, we expect consistent growth. Focus remains on core strength in
roads & irrigation and refrain from unrelated diversification. Management guides for top-line
and orderbook growth of 15-20% and 20-25%, respectively. For FY22, it expects topline of INR
34bn and an EBITDA margin of 17-18%.
FY20 22,442 5.0 4,871 21.7 2,359 (11.2) 16.8 15.5 19.7 18.4 8.6
FY21 26,828 19.5 5,160 19.2 2,356 (0.2) 8.4 13.5 22.4 36.9 16.8
FY22E 33,198 23.7 6,308 19.0 3,938 67.2 14.0 19.1 25.3 21.0 13.5
FY23E 37,622 13.3 7,148 19.0 4,490 14.0 16.0 18.2 24.1 18.5 11.9

219
Represented by:
Harish Barai
Joint GM, IR & Accounts
Larsen and Toubro
Shalmali Dange Bloomberg Code: LT IN, Market Cap: INR 1,982bn, CMP: INR 1,717 (as on 15 Sept 2021)
Assistant Manager, IR
Executive digest: Founded in 1938, Larsen & Toubro (LT IN) is a multinational major in engineering, construction,
manufacturing, technology and financial services. The company addresses critical needs in key
sectors, such as hydrocarbon, infrastructure, power, process industries and defense. As a
professionally managed group, its customer-focused approach and conforming to global
standards have enabled LT to sustain leadership in its major lines of business for more than 80
years. The company has GDR listed on the LSE and the LuxSE. It has 40,527 employees and
320,299 contract laborers as on FY21.
Investor insight:  Huge order pipeline: For FY21, order inflows declined 6%. However, FY22 pipeline stands
strong at INR 8.96tn (INR 6.4tn in Infra and INR 1.8tn in hydrocarbons). With a 15-20% strike
rate, order inflows were targeted at INR 1.3-1.8tn
 Lakshaya 2026 to be ready by October 2021: The much-awaited five-year plan will be
finalized in the next one month and focus will be to expand from old generation businesses,
such as hydrocarbons and power transmission, to new-age businesses, such as green
hydrogen, biofuels, offshore wind, decarbonization, plastics and solar. Also, it will decide on
capital allocation for new businesses to building capacity. On the non-core business,
management stays on course to monetize non-core developmental projects
 Hyderabad Metro, multiple avenues to restructure asset: For FY22, loss funding for this
project capped at INR 20bn, out of which the company has already infused INR 5bn in
Q1FY22. Simultaneously, management is exploring options, such as support from
Telangana government (under discussion), additional third-party equity infusion to repay
the debt, refinancing of debt, traffic improvement (currently at 160,000-170,000/day) and
monetization of real estate (out of 18mn sqft, 1.5mn sqft is ready and can be monetized in
some time). The asset is premium and will be monetized at the right time at the right price
 Capital allocation with aim to create value for shareholders: With divestment of assets at
various stages, the company’s primary aim is to reduce debt and fund incremental working
capital requirements for the core business. It is also exploring acquisitions to strengthen
capabilities. Any surplus money will be returned to shareholders in the form of dividends. At
the subsidiary level, the power JV and IT subsidiaries are cash surplus and self-sufficient. The
parent has infused money in L&T Finance through the rights issues in February 2021 (INR
20bn) and there will not be further infusion for the next couple of years
Analyst annotations: Key strengths include strategically diversified portfolio, market leadership across E&C, healthy
balance sheet (historically high cash surplus of INR 162bn; 7% of market cap), leveraging
technology for productivity gains, favorable capex tailwinds (public + private) and E&C business
trading at attractive valuation
FY20 1,454,524 7.6 163,290 11.2 95,491 30.8 68.0 14.8 7.8 25.2 23.5
FY21 1,359,790 (6.5) 156,241 11.5 69,010 (27.7) 49.1 9.7 7.2 20.8 24.1
FY22E 1,555,951 14.4 199,428 12.8 107,234 55.4 76.3 13.6 8.9 22.5 19.2
FY23E 1,796,872 15.5 234,081 13.0 131,079 22.2 93.3 15.2 9.9 18.4 16.5

220
Represented by:
Mr. Yogesh Patel, CFO Mahindra Logistics
Bloomberg Code: MAHLOG IN, Market Cap: INR 51bn, CMP: INR 713 (as on 15 Sept 2021)
Executive digest: Part of the Mahindra Group, Mahindra Logistics (MAHLOG) is a 3PL solutions provider in India,
with strong presence in the country, servicing diverse industries. It operates under two business
segments – Supply chain Management (SCM) and Enterprise Mobility (EM). Under its SCM
business, it provides various services such as Warehousing, Transportation, In-factory logistics,
Fulfilment logistics and freight forwarding. Under its EM business, it provides services such as
Employee Transportation, Enterprise On-call and Event Transportation.
Investor insight:  Demand to improve going ahead: Q2FY22 started on a good note, primarily due to pent-up
demand and festive season preparation. Currently, the consumption industry is doing well,
whereas there is some disruption in the automotive sector (production cuts and chip
shortage). Under the SCM business, MAHLOG is onboarding new clients for built-to-suit
warehouse business and some of them may go live in Q2FY22. Under the EM business,
demand has been steady and is expected to improve as on-premise offices resume (on higher
vaccination drive).
 Revenues to shift from auto to non-auto segment: Due to the recent chip shortages, auto
companies have called for production cuts, which has affected M&M and non-M&M auto
revenues. However, it is partially offset by healthy farm equipment sales. In the near term,
expect revenues to shift to non-auto industries such as FMCG, e-commerce, durables, etc.,
where demand is robust.
 Warehousing: Warehousing is an asset-light business – The company provides value-added
services to its integrated logistics business. The management is planning to add 2mn sqft of
built-to-suit warehouses by December 2022. Going ahead, the warehouse addition will be at
a faster rate than the historical rate seen in the past two years.
Analyst annotations: MAHLOG is recovering well from the pandemic and key focus areas are adding new services and
customers, providing integrated logistics solutions and technology integration. Near-term plans
are centered on new warehouse capacity addition of 2mnsqft, which should lead to margin
growth. Net cash balance sheet, asset-light business model, lean working capital cycle, healthy
return ratios, technology upgradation, client diversification and strong parentage make MAHLOG
a resilient business.
Key Financials:
FY20 34,711 (9.9) 1,583 4.6 546 (37.4) 7.6 10.5 15.4 93.5 31.9
FY21 32,637 (6.0) 1,342 4.1 303 (44.4) 4.2 5.5 8.2 168.2 36.4
FY22E 40,206 23.2 1,890 4.7 708 133.5 9.9 11.8 14.0 72.0 26.4
FY23E 48,330 20.2 2,513 5.2 1,146 61.8 16.0 16.9 19.2 44.5 19.8

221
Represented by:
YD Murthy
Executive VP of Finance
NCC
K Durga Prasad Bloomberg Code: NCC IN, Market Cap: INR 52bn, CMP: INR 86 (as on 15 Sept 2021)
Joint GM of Finance
Executive digest: Founded in 1978, as a partnership firm and converted into a limited company in 1990, NCC
(NCC IN) has been in existence for the past four decades. It undertakes civil construction in
segments, such as buildings & housing, water & environment, roads, electrical, mining,
irrigation, power, railways and metals. As on FY21, total orderbook stood at INR 379bn at a
book-to-bill ratio of ~5x.
Investor insight:  Orderbook healthy: Buildings, roads and water pipeline sectors continue to be major
contributors (75-80%) of orderbook. Inflows for FY22 YTD is INR 49bn and opportunity is
healthy across sectors: 1) roads – despite high competition in Engineering, procurement,
and construction (EPC), management plans to bid majorly for high value expressways and
might bid for selective hybrid annuity mode (HAM) projects, 2) buildings – affordable
housing under the PMAY and Central Vista projects (INR 190bn to be awarded), 3) railways
– participated in high speed rail projects (size of INR 100bn-plus) and metros, 4) water
supply – the company has already bagged orders of INR 62.5bn in Uttar Pradesh under the
Jal Jeevan Mission and will continue to bid under it, which is partly funded by the Centre
and the State government
 Payment issue: NCC saw delays in payment from Andhra Pradesh, Telangana, Uttarakhand
and Uttar Pradesh. During Q1FY22, it had realized INR 300mn from AP with total
outstanding of ~INR 5.7bn; it is confident of receiving the funds as the projects progress
 On the path to become debt-free: As on Q1FY22, the debt-equity ratio stood at 0.3x and
blended cost of borrowings stood at 8.6-8.7%. With planned monetization, management
targets to become debt-free in the next 2-3 years. The company expects to receive INR
3.7bn by FY23, primarily through divestment of NCC Vizag urban Infrastructure (INR 1.1bn
in loans and INR 0.5bn in equity), winding up Oman operations (INR 1.1bn of equity) and
loan repayment of INR 1.0bn by NCC Urban Infrastructure
 International projects wound up: NCC is in the process of completing the balance work and
is working on disposal of assets. Management is confident of retrieving its equity
investments (without any impairment) and receiving all claims, including rise in labor wages
 Promoter pledge reduced and shareholding to increase: As on date, promoter pledge has
been reduced from 16.65% in Q1FY22 to 4%. In February 2021, promoters were allotted
18mn warrants (1 warrant = 1 share) at INR 59 per warrant (total of INR 1.06bn) on a
preferential basis. They have paid 25% of total consideration of INR 0.27bn and the rest
might be paid by August 2022. Post conversion of warrants, promoter holding will increase
by ~3% from 19.7% currently
Analyst annotations: Management has guided for top-line growth of 20-25% in FY22 and EBITDA margin of 11.75-
12.00% (despite the increase in commodity prices) based on robust orderbook. Progress on
planned asset monetization is likely to help delever the balance sheet, improve capital allocation
and return ratios.
FY20 82,188 (32.0) 10,302 12.5 4,147 (33.4) 6.4 9.5 15.3 13.5 6.6
FY21 72,557 (11.7) 8,545 11.8 2,611 (37.0) 4.3 7.4 11.1 19.8 7.7
FY22E 90,966 25.4 10,916 12.0 4,238 62.3 7.1 7.3 13.6 12.2 6.2
FY23E 111,618 22.7 13,562 12.2 6,134 44.7 10.2 9.6 15.5 8.4 4.9

222
Represented by:
Mr. PS Patel, Chairman &
MD
PSP Projects
Ms. Hetal Patel, CFO Bloomberg Code: PSPPL BB IN, Market Cap: INR 16bn, CMP: INR 436 (as on 15 Sept 2021)
Executive digest: Incorporated in 2008, PSP Projects is an EPC company present across various industries such as
Industrial, Institutional, Commercial and Residential, Hotels and hospitality, Hospitals and high-
profile government projects. It provides its services across the construction value chain, ranging
from planning and design to construction and post-construction activities, including MEP work
and other interior fit-outs to private and public sector enterprises. As of Q1FY22, the company
had an order book of ~INR 39bn and a book-to-bill ratio of 2.7x.
Investor insight:  Domestic Project Updates: From July 2021, work on all projects has started, except for the
Bhiwandi project. For the projects in UP (six medical and one university project worth ~INR
15bn, and Kashi Vishvanath Dham worth ~INR 3bn), the state government has asked the
company to fast track the Kashi Project due to the imminent state elections in 2022 and
complete it by December 2021. The work on Surat Diamond Bourse will be completed by
October 2021 – Completion of this project will be critical to enable bid for the Central Vista
Project (new project awarding is slow as of now). For the Bhiwandi project, the company has
not started any work and is demanding either deadline extension or arbitration. For
Pandharpur project, payment concern exists. The management is not in a hurry to diversify
into different states, unless there are good opportunities and will continue to focus on the
existing states.
 International Project Update: For the San Francisco Project, the company has received
permissions from city municipality and the final approval of drawing is in the process. Also,
the management is looking for a good partner. The total equity invested till date stands at
INR 320mn. Unlike earlier, the management is confident of not providing any write-offs for
this in the future.
 Pre-Cast Facility: A new business stream: The company is building a Precast Concrete Building
facility near Sanand, Gujarat. Of the total planned capacity of 3mn sqft, Phase 1 with 1mn sqft
capacity has started. Total expenditure incurred for the precast unit is INR 850mn till June 30,
2021. The management is currently in talks with certain companies such as Reliance, L&T,
AIIMs, etc. and may receive an order within the next 1-2 months (minimum order size of INR
500mn). Also, the facility might break-even within three years if there is an annual order
inflow of INR 150-200mn.
Analyst annotations: With a healthy order book, strong order book inflow guidance (INR 15-18bn), revenue growth
(20-25% annual.), visibility (two years+) and management’s focus on maintaining EBITDA margins
(12.5%) and return ratios, PSP Projects is poised for future growth
FY20 14,992 43.6 1,910 12.7 1,293 43.3 35.9 31.2 40.7 12.1 7.6
FY21 12,409 (17.2) 1,348 10.9 835 (35.4) 22.4 16.2 22.1 19.4 10.5
FY22E 17,539 41.3 1,935 11.0 1,188 42.2 33.0 20.4 26.9 13.2 8.0
FY23E 20,921 19.3 2,409 11.5 1,470 23.8 40.8 21.3 28.0 10.7 6.3

223
Represented by:
Pradeep Gaur, Chairman
& MD
Rail Vikas Nigam
Rajesh Prasad, Director Bloomberg Code: RVNL IN, Market Cap: INR 63bn, CMP: INR 30 (as on 15 Sept 2021)
Operations
Executive digest: Founded in 2003, Rail Vikas Nigam (RVNL) is a category 1 MiniRatna CPSE under the Ministry of
Railways, government of India. It was incorporated with the twin objectives of raising extra
budgetary resources and project implementation related to creation and augmentation of rail
infrastructure capacity. The company is executing all types of railway infrastructure work such as
new lines, gauge conversion, doubling of lines, Railways electrification, institutional buildings,
mega bridges, metro railways, etc.
Investor insight:  Diversifying into new business areas: Currently, RVNL has an order book of INR 700bn which
is sufficient enough for the next 4-5 years. However, the management is venturing into new
segments as well as geographies. Recently, it signed an MoU with National Highways
Logistics Management Ltd (NHAI’s subsidiary) for the design, planning, feasibility study, DPR,
implementation and commissioning of the track connectivity work for MMLPs – It also won
one metro segment bid (INR 10bn). In the near term, RVNL is looking forward to bid for
projects in foreign countries too. For this, the management has formed a New Business
Development Cell and expects an order inflow of INR 50bn in the next 1-2 years.
 SPV: Work on doubling of railway line between Palanpur and Samakhiali (248Kms) section
will be completed by March 2022. The entire project cost of INR 25bn is being funded by the
SPV internally. As of Q1FY22, RVNL has five operational SPVs and is in the process of exploring
new SPVs for the future.
 Arbitration status: Currently, there is an ongoing arbitration between Krishnapatnam Railway
Company (SPV with 50% stake) and the Ministry of Railways with the INR 10bn amount
involved. The last hearing took place on July 21; the next should be within 1-2 months.
According to the management, the matter should conclude by February 2022. If the award
is in SPV’s favor, RVNL may receive most of its outstanding receivables.
 Railway capex: For FY22, the Indian Railways has set the highest-ever capex target of INR
2.2tn (+34% YoY), which may lead to higher tendering activities focusing primarily on
improving the existing infrastructure. With RVNL having 30% share in rail infrastructure
development, it would be a key beneficiary of capex spending by the Railways.
Analyst annotations: For FY22, the management has guided for INR 180-190bn topline and EBITDA margins similar to
FY21. Key focus areas are developing capabilities for competitive project bidding, diversifying to
non-railway projects, domestically and overseas and improving profitability.
FY20 145,306 44.4 7,865 5.4 7,899 37.0 3.8 19.2 12.9 7.9 12.1
FY21 154,037 6.0 8,802 5.7 9,406 19.1 4.5 19.9 11.8 6.7 11.2
FY22E 183,842 19.3 10,616 5.8 9,886 5.1 4.7 18.7 11.9 6.3 9.0
FY23E 220,692 20.0 12,757 5.8 11,362 14.9 5.4 19.1 12.9 5.5 7.3

224
Represented by:
B. P. Nayak, Director
Finance
RITES
Bloomberg Code: RITE IN, Market Cap: INR 67bn, CMP: INR 279 (as on 15 Sept 2021)
Executive digest: Rail India Technical and Economic Service or RITES (RITE IN), a government-owned company and
a Miniratna (Category – I) Schedule ‘A’ public sector enterprise, was incorporated on 1974. It is a
leading firm in the transport consultancy and engineering sector in India. RITES is the only
company that provides diversified services together with geographical reach. It has deep
expertise as a transport infrastructure consultancy organization in the railways sector. The
company also offers consultancy services across other infrastructure and energy market sectors,
including urban transport, roads & highways, ports, inland waterways, airports, institutional
buildings, ropeways, power procurement and renewable energy. It services various public sector
undertakings, government agencies and large private sector corporations, in India and abroad.
RITES has undertaken projects in 55 countries, including Asia, Africa, Latin America, South
America and the Middle East.
Investor insight:  FY22 should likely be better than pre-COVID levels of FY20, primarily driven by exports (INR
8-9bn in FY22). Expect turnkey to be lower as old projects approach completion and new
greenfield projects start in H2FY22. Consultancy should also perform better given RITES’ order
book. The company expects 8-10% revenue growth in FY22 and FY23, post which it should
ramp up to 15%+ as NIP execution commences.
 Exports: Two locomotives have been exported in Q4FY21 to Mozambique. Currently, two
locomotives are at the port and one is en route to the port. However, ship availability is a
concern. Eleven passenger coaches are certified by third party and are ready to move by
September-end. Thirty locomotives are already at Chennai and another 10 are also ready.
Forty locomotives would be exported by September-end.
 Turnkey construction: Turnkey projects are not throughout the season. Expect new projects
(INR 40bn) to be executed in the next five years. Turnkey should likely contribute 25-30% to
the total turnover. New orders are greenfield projects and it is expecting orders in
electrification and gauge conversion.
 Quality assurance revenues are likely to form one-third of total consultancy revenues in FY21.
This was affected in Q1FY22. However, the company has revived to pre-COVID levels. As
railway capex rises over the next five years, QA business should also scale up commensurately.
 Solar project update: Phase III capacity of RITES’ solar project has been reduced from 1GW to
400MW, phase II from 400MW to 210MW and the tender will open in September 2021. RITES
may incur an equity investment of INR 1bn. Solar projects have been scaled down because of
easy land availability for a very long period.
 REMCL: Railways operations have slowed down in the past two years – Power requirement
is at 1,700MW and supply 1,250-1,300MW (1,468MW out of 1,663MW supplied in FY21).
Normal power requirement is 2,100MW if trains run at 100% capacity. It may spike up to
3,000MW (due to electrification) in FY23 and 4,000MW when DFC is operational. Its
realization is at INR 5-7/kWh for each unit of power supplied and EBITDA margin may likely
be 50-55%.
Analyst annotations: As National Infrastructure Pipeline execution of INR 100tn picks pace, RITES should be a key
beneficiary with presence in key sectors such as roads, railways, airports, ports, etc. Watch out for
exports execution in Q2FY22 and Q3FY22 as ship availability is a challenge. Turnkey construction
is likely to pick up from Q4FY22.
225
FY21 18,595 (24.8) 5,039 (23.7) 4,324 (21.4) 17.3 17.2 17.2 16.1 11.5
FY22E 26,446 42.2 7,459 48.0 5,857 35.5 23.4 23.9 23.8 11.9 7.9
FY23E 29,629 12.0 8,124 8.9 6,424 9.7 25.7 24.5 24.4 10.9 7.1
FY24E 38,885 31.2 9,885 21.7 7,809 21.6 31.2 27.1 26.9 8.9 5.8
226
Represented by:
Akhilesh Maru, CFO Shakti Pumps (India) (Not Rated)
Bloomberg Code: SKPI IN, Market Cap: INR 14bn, CMP: INR 749 (as on 15 Sept 2021)
Executive digest: Shakti Pumps India Limited is a manufacturer of submersible pumps for domestic, industrial,
horticultural and agricultural use. Shakti Pumps exports to more than 100 countries, with
branches in the US, Australia and UAE. The company has two manufacturing facilities with a
capacity of 500,000 pumps per year in Indore, Madhya Pradesh. Shakti Pumps is also one of the
largest manufacturers and exporters of solar pumps in India.
Investor insight:  Revenue mix:

 Solar EPC accounts for 50-55% of the turnover. The segment is mainly driven by the
government via tenders. All state governments are covered under a single umbrella since
the launch of the Kusum scheme.
 Solar OEMs account for 10-15% of the turnover. Shakti Pumps supplies to OEMs such as
Waree and Tata Power.
 Exports account for 15-20% of the turnover (ex-solar) to ~100 countries. The company
will commence solar pump exports from this year to cater to INR 2.5bn order received
from Uganda, to be fulfilled over two years. Shakti Pumps expect to meet the entire order
in FY22 and receive further orders from Uganda and other neighboring African countries.
 Retail business accounts for 15-20% of the turnover on strong dealer network and
distributor channel of 550 dealers via 16 branches. Shakti Pumps is involved in
commercial sales of all pump types in India with strong foothold in West/Central India.
 Volume targets: In FY21, Shakti Pumps sold 21,000 solar pumps (including 15,000 under the
Kusum scheme). Currently, the government has a backlog of ~400,000 pumps to be
completed by FY22-end. Shakti Pumps is expecting to achieve 60-70,000 units volumes in
FY22 with incremental orders from the government and order execution from Uganda.
 Revenue and margin guidance: Shakti Pumps expects to achieve INR 20bn revenues in FY22,
subject to commencement of government orders. The management is still analyzing the time
lost and ability to pick pace to achieve the target. Installed capacity is adequate – Expect 16-
17% operating margin, with 7-8% PAT margin in FY22E.
 Solar pumps: Shakti Pumps commands 60% market share in solar pumps business. The
company is focusing on rooftops segment for solar segments. Shakti Pumps stands to benefit
from the Kusum policy and state-level pump policies.
 Solar pumps – Competitive landscape: Large pump players such as KSB and Grundfos are
operating in the premium segment and are reluctant to work with the government, thus
refraining from entering the solar pumps market. Most pump players are only catering to OEM
segments. Reliance’s entry in the solar business is good for the industry and indicates the
space’s growth potential. With large number of players entering, costs may reduce due to
economies.
 Kusum scheme: All the states are covered under one umbrella on T&C, pricing and
technology under the Kusum scheme. The central government will issue tenders in
consultation with states. The contribution mix for central government : state : farmers stands
at 30:30:40. Of the farmers share, the state governments have the option to extend further
incentives up to 30% of the cost.
227
 Government targets: The government had set a target to install 180,000 pumps pan-India in
FY21, of which, only 55,000 were installed due to Covid-related restrictions. The deadline has
been extended to 30 September, 2021. For FY22, the target is to install 317,000 pumps – This
is yet to commence.
 Components of pumps: Four major components are pump sets, Variable Frequency Drive
(VFDs), structures and panels. The panel cost accounts for 40-45% of the overall cost (earlier
80%), VFD cost is 20%, pump sets and structures 25% of the cost and installation accounts for
10% of the cost.
 Working capital cycle: Currently, the working capital cycle stands at 90-100 days. Initial 30
days act as the observation period, post which, the payment from the government is
disbursed within 60 days. The payment cycle is increasingly shortening with time – Expect it
to improve further on efficiencies from the government’s end as it mulls speeding up the
process.
Analyst annotations: Shakti Pumps is a market leader with dominant share of 60% in the solar pumps market in India.
Further, the Kusum scheme is likely to be a key growth driver, propping replacement of diesel
pump sets in favor of solar pumps. Tendering pipeline of the central and state governments is the
key monitorable in the quarters to come.
FY18 4,366 1.8 785 18.0 348 61.0 19.0 14.6 16.7 28.8 13.8
FY19 5,437 24.5 893 16.4 451 29.4 24.5 16.6 20.3 16.1 9.8
FY20 3,828 (29.6) 122 3.2 (141) NA (7.7) NA NA NA 29.8
FY21 9,156 139.2 1,421 15.5 756 NA 41.1 25.0 26.7 12.6 7.0
228
Represented by:
Chander Agarwal, MD TCI Express (Not Rated)
Mukti Lal, CFO
Bloomberg Code: TCIEXP IN, Market Cap: INR 59bn, CMP: INR 1,519 (as on 15 Sept 2021)
Executive digest: Established in 1996, TCI XPS was one of the divisions of Transport Corporation of India (TCI). In
2016, it was hived off from the parent and established as TCI Express (TCIEXP IN), an
independent company. It is a surface and express logistics solutions provider for India’s B2B
business and has 800 owned centers pan-India. It covers more than 40,000 pickup and delivery
points. Along with this, it has 28 state-of-the-art sorting centers too. Services that the company
offers are surface, C2C, air domestic, cold chain, air international and eCommerce express.
Investor insight:  New business to be growth drivers: Taking opportunity in adversity, despite the pandemic,
the company launched two new asset-light businesses, C2C Express and Cold Chain
Express, in FY21, which holds significant growth potential. Both businesses are growing as
per internal targets, getting enquiries and well accepted by customers. C2C contributed INR
500mn in FY21 and is expected to do ~INR 1bn in FY22 and reach INR 5bn in the next 4-5
years (ie, 20-25% of revenue from the current 5%)
 Margin expansion: Over FY17-21 EBITDA margin doubled from ~8% to ~16% and has
potential to increase to 17-18% in the near term. The levers are higher GDP growth, better
utilization and deployment of trucks, price hikes (around 2-3% already taken in Q1 and a
similar quantum for Q2), introduced minimum selling price concept, new customer addition
and arbitrage in other cost (higher price increase for customers and lower for vendors)
 Cost control, a key focus area: In Q1FY22, cost increased YoY due to business shutdown.
However, according to management, around 85-90% of cost is pass-through. To control
cost, it is automating facilities, which will increase speed of trucks and cargo, the number of
truck trips, reduce damages and resolve labor shortage issues, thereby raise customer
satisfaction. Also, it is confident cost in FY22 won’t exceed FY20 levels and growth in cost is
set to be less than revenue growth
Analyst annotations: Vision for the next 4-5 years is to increase topline by 2x to INR 2bn and PAT by 3x to INR 3bn
with EBITDA margin expansion to 21-22%. Key strengths include significant presence and focus
on the organized B2B segment (95% of revenue), pan-India reach, improved utilization to 85%+,
asset-light business model, balance sheet net debt-free and superior return ratios in excess of
20%. On low base of FY21, management has guided for 40% revenue growth for FY22, led by
35% volume growth and 100bp margin expansion. Management remains cautious on impact of
Third COVID Wave. Chip shortage in the auto sector is not cause for concern as the company
moves only auto spare parts, and not finished cars. The company also has pass-through
mechanism in place for increase in diesel prices.
FY18 8,851 907 10.2 584 15.2 31.8 33.5 31.1 20.3
FY19 10,238 15.7 1,222 11.9 728 24.7 19.0 30.7 32.2 39.2 23.3
FY20 10,320 0.8 1,249 12.1 891 22.3 23.2 29.5 30.3 23.5 16.5
FY21 8,440 (18.2) 1,394 16.5 1,006 12.9 26.2 26.1 26.8 36.2 25.5

229
Represented by:
Mr. Vineet Agarwal, MD Transport Corporation of India (Not Rated)
Mr. Ashish Tiwari, Group
CFO Bloomberg Code: TRPC IN, Market Cap: INR 33bn, CMP: INR 433 (as on 15 Sept 2021)
Executive digest: Founded in 1958, Transport Corporation of India (TCI) is a provider of integrated multimodal
logistics and supply chain solutions. The company provides a range of end-to-end logistics and
supply chain solutions in India and the SAARC region through multiple modes, including road,
rail and sea. TCI operates through three divisions – TCI Freight, TCI Supply Chain Solutions and
TCI Seaways. It also has JVs with Concor and Mitsui & Co. Ltd. As of FY21, the asset base comprises
of ~9,000 trucks, six cargo ships and12mn sqft of warehousing space.
Investor insight:  Freight rates may normalize: The reasons for increase in freight rates are higher diesel and
lubricant prices, increase in drivers’ costs and lower capacity expansion. However, the
management feels that the capacity expansion has started and this should result in
normalization of freight rates in the next few months.
 Capex to drive future growth: For FY22, the management has planned a capex of INR 2-2.2bn,
which may ensue in SCM and seaways business. Of the total amount, INR 1.2bn will be spent
on a new ship purchase. However, due to higher freight rates and ship price, the company
may end up spending INR 1bn on the SCM segment alone.
 Increasing the share of LTL business: The management is planning to increase the LTL share
mix from 33% (constant in FY20 and FY21) to 40% in the next 3-4 years. This is primarily due
to focus on SMEs and LTL movement done by large companies. For this, it has built a strong
marketing and sales team, tracking system, branch and hub network, etc. Also, the contract
on LTL side is on variable basis and hence, any cost increase is passed on immediately.
However, customer stickiness may be an issue.
 Capital Allocation Policy: With strong cash flow from operations and lower debt (INR 0.6bn
as on date), the management has decided to maintain a dividend pay-out ratio of 15-20%
depending on capex. Along with this, it has decided to retain some cash for organic and
inorganic growth opportunities.
Analyst annotations: For FY22, the management has guided for 10-12% revenue growth, 15-20% PAT growth and INR
2-2.2bn capex.
FY18 23,499 2,165 9.2 1,238 16.2 17.6 19.9 16.7 11.3
FY19 27,536 17.2 2,498 9.1 1,444 16.6 18.8 17.5 20.0 17.2 11.6
FY20 27,178 (1.3) 2,405 8.9 1,424 (1.4) 18.5 14.9 17.6 10.1 7.5
FY21 28,024 3.1 2,612 9.3 1,471 3.4 19.1 13.4 15.8 13.4 8.4

230
Represented by:
Manish Desai, Head of
Investor Relations
Voltas
Vaibhav Vora, Manager, Bloomberg Code: VOLT IN, Market Cap: INR 307bn, CMP: INR 490 (as on 15 Sept 2021)
Financial planning
Executive digest: Voltas (VOLT) is the market leader in room air conditioners in India. The company is recognized
globally for its engineering prowess and has clients base in India, the Middle East, South East Asia
and Africa. Voltas derives most of its business through products sales, including air conditioners,
air coolers and commercial refrigerators. Voltas has also expanded its business (through 50:50
joint venture with Turkish- based Arcelik) into mass market consumer durables products such as
refrigerators, washing machines, microwave ovens and dishwashers. Besides unitary cooling
products segment, the company has also significant presence in electro mechanical projects, with
engineering products and services accounting for the remaining.
Investor insight:  Demand scenario: Q2FY22 is usually a subdued phase for the cooling products industry, post
which the festive season commences, which is when fast recovery is expected. Favorable
demand from customers/channel partners is sustaining material/inventory, indicating
existing demand. Inventory should not be a concern for channel partners.
 Semi-conductor chip shortage: Controllers leverage local sources, thus are relatively protected
from overseas shortage. The PCB category is sufficiently provided for in case of Voltas. Thus,
slight delay may not matter as the seasonal requirement is adequately provisioned for.
 Industry deceleration in washing machines was moderate, while AC and refrigerators
witnessed heavy deceleration in FY21. A revival to pre-COVID levels by mid-FY23E for all
categories is likely.
 In Q1FY22, performance was muted as even in 2021, the lockdown extended for a similar
duration as in 2020 – Thus, the summer season was marred, making revival difficult.
 Commodity pricing is surging QoQ, thereby straining input costs. Thus, the need to pass on
prices to the end-consumer is rampant. As a leader, Voltas may not shy away from making
the first move to hike prices. Value engineering is underway for cost absorption and some of
it may be definitely passed on. Moderate price hikes are imminent.
 Invertor AC segment: The split AC segment now contributes 70% to Voltas’ revenues, in
alignment with the industry. The inverter AC market’s share is close to LG that commenced
operations in the space, 2-3 years ago.
 Voltas’ market share in the room air-conditioner segment stood at 26.7% as on June 2021, of
which, a large part was from LG. Voltas Beko’s market share in refrigerators stood at 3% and
washing machines at 2.7% during the same period.
 Voltas Beko may produce frost free refrigerator up to 300ltrs capacity by December 2022 at
its Sanand plant in Gujarat
 PLI will effect faster capex recovery, whereby backward integration of components will be
implemented. Export potential also exists, but Indian markets still offer immense opportunity.
Export may not be substantial, but efforts are ongoing to improve the share. Compressors
that are technical in nature may take longer for OEMs/manufacturers to build in-house.
However, other players have largely started manufacturing in India.
 The competitive landscape has intensified with Hitachi and Daikin turning aggressive, leaving
aside their premium positioning. Lloyd has also turned aggressive, but more efforts are
needed to gain share. Bluestar remains at similar levels. Rankings have largely been retained.
231
After two consecutive years of slack summer season due to Wave I-II, the cooling industry is
gearing up for the forthcoming festive period in 2021 and summer season in 2022. Commodity
inflation is partly passed on and partially absorbed by Voltas as competition intensifies in the mass
room AC market. Voltas, a clear market, is gradually establishing its footprint in other white goods
segments and is likely to formidably prop its revenue growth.
FY21 75,558 (1.3) 6,414 8.5 5,288 (5.0) 16.0 11.6 11.3 77.6 58.9
FY22E 85,796 13.5 7,737 9.0 6,532 23.5 19.7 12.6 12.2 62.8 48.9
FY23E 99,363 15.8 10,077 10.1 8,606 31.7 26.0 15.0 14.5 47.7 37.2
FY24E 112,493 13.2 11,998 10.7 10,289 19.6 31.1 15.9 15.4 39.9 31.0
232
Information Technology
233
Represented by:
Subhra Das, Principal,
Investor Relations
Infosys
Sweta Sheth Bloomberg Code: INFO IN, Market Cap: INR 7,184bn, CMP: INR 1,711 (as on 15 Sept 2021)
Investor Relations
Executive digest: Infosys (INFO IN) is among leading global IT services companies (second-largest in India), and it
has been in operation for 40 years. The company operates in 50 countries with an employee base
of more than 260,000 and revenue of USD 13.6bn & profit of USD 2.6bn in FY21.
Investor insight:  INFO deal pipeline is healthy and higher than the past year, with strong replenishment of the
pipeline following large deal wins. Few mega deals are in the pipeline and ramp-up of the
Daimler deal is on track
 Peripheral work around digital will take over post maturity of cloud migration (which itself is
expected to be a multi-year opportunity). The EU is a Greenfield area for the entire industry
and outsourcing propensity has increased in the region post the pandemic
 BFSI demand remains strong for technology spend. Banks are expanding into newer
geographies through digital channels, which is also fueling spend. Cards and the payments
sub-segment is witnessing recovery over the past few months
 INFO is firmly placed in engineering services. The company is working with the largest firms
in the automotive, aerospace & defence verticals and deals, such as Daimler & Rolls Royce are
a validation
 Traditional business pricing remains under pressure. Digital business pricing is relatively
healthy, but overall pricing is stable
 Attrition is expected to be elevated in the medium-term, which is in line with industry trends.
Higher variable pay to high performers and promotions are being rolled out. India is
witnessing heightened supply-side pressures compared to onshore
 Travel spend is expected to inch up but remain below the peak of ~3% of revenue. Delivery-
related travel is likely to remain low while sales travel may increase from current levels
 Onshore employee mix is top heavy; hence, the company is focusing more on hiring freshers
to improve the onshore pyramid. Onshore fresher mix can be 25-30% and onshore wage cost
is ~70% of total wage cost
 Sub-contracting expenses could remain high to cater to rising demand and attrition, but it is
expected to reduce post normalization of the environment
Analyst annotations: Large deal momentum and a growing pipeline, broad-based industry vertical growth, vendor
consolidation in traditional services and structural operational pivot despite transient supply
headwinds will support outperformance.
FY20 907,910 9.8 222,680 24.5 164,039 4.0 39.1 25.2 24.3 43.8 31.4
FY21 1,004,720 10.7 278,890 27.8 193,510 18.0 46.1 27.3 25.2 37.1 24.7
FY22E 1,182,814 17.7 310,165 26.2 213,107 10.1 50.8 28.8 26.3 33.7 22.4
FY23E 1,359,843 15.0 356,583 26.2 251,251 17.9 59.9 33.6 30.7 28.6 19.4
Analyst: Apurva Prasad, apurva.prasad@elaracapital.com, +91 22 6164 8500
234
Represented by:
Vinit Teredesai
Chief Financial Officer
Mindtree
Amisha Munvar Bloomberg Code: MTCL IN, Market Cap: INR 678bn, CMP: INR 4,117 (as on 15 Sept 2021)
Head - Investor Relations
Executive digest: Mindtree (MTCL IN) provides information technology consulting and implementation services
with a high mix of services in digital front-end. The company has been in operations for 21 years
(now owned by L&T at 61%) and has more than 27,000 employees with revenue of USD 1.1bn.
Investor insight:  MTCL continues to witness strong demand traction and market share gains across focused
service lines and industries. Pipeline and order conversion rate too are healthy. Post crossing
he USD 1bn+ revenue threshold, MTCL is now being invited for larger deals and the company
is focused on business transformation deals
 For MTCL, Azure services is more than 50% of T1 portfolio, and there is visibility in the top
accounts across six divisions, including Collaboration and Azure; new areas and opportunities
in T1 include localization, social media and gaming
 The company is broad-basing its hyperscaler relationships by investing in Google Cloud
Platform (GCP) practice and Amazon Web Services (AWS) practice, which will improve the
service profile. Top 2-20 accounts are expected to grow faster than T1
 Inroads into EU banks will accelerate growth. There is increased focus in DACH and the
Nordics. Management is cautiously optimistic on the travel & hospitality vertical
 Increased attrition is a challenge, but the company is able to attract good talent. It was adding
1,000-1,500 freshers annually over the past few years, but has accelerated to 1,300 in Q1FY22
and intends to add another 3,500 by the end of year, which will improve the employee
pyramid and provide margin defence
 To retain key talent, the ESOP pool is being expanded. ESOP is being issued to the second
layer of senior management vs earlier only senior management. The operating outlook of
more than 20% EBITDA margin has been retained
Analyst annotations: MTCL’s growth profile has turned more balanced and has been accelerating, led by interventions
to drive large and annuity deals, improved cross-selling, addition of local leadership, recovery in
the BFSI vertical and strong operational rigor.
FY20 77,643 10.6 10,623 13.7 6,659 (8.2) 40.4 19.5 18.8 101.8 62.6
FY21 79,678 2.6 16,428 20.6 11,574 73.8 70.3 29.7 26.7 58.6 39.6
FY22E 98,177 23.2 19,618 20.0 13,162 13.7 79.9 27.8 26.1 51.5 32.9
FY23E 115,732 17.9 24,339 21.0 16,190 23.0 98.3 28.6 27.1 41.9 26.3
235
Represented by:
Manish Dugar, CFO Mphasis
Viju George
Head-Investor Relations Bloomberg Code: MPHL IN, Market Cap: INR 595bn, CMP: INR 3,192 (as on 15 Sept 2021)
Executive digest: Mphasis (MPHL IN) provides application services & business process services, and it is controlled
by Blackstone (with a 55% stake). The company has more than 31,000 employees, revenue of
USD 1.3bn with 60% of its revenue from the BFSI vertical.
Investor insight:  The demand environment remains strong, led by transformation and change business spend.
The company expects demand to be strong at least for the next 1-2 years
 MPHL continues to gain market share, especially among its Top 20 clients, supported by its
proactive approach and front-to-back transformation services
 The deal pipeline remains healthy despite closure of large deals over the past few quarters
and the pipeline consists of large opportunities. The deal pipeline is higher by ~50% YoY and
higher than the period before winning the USD 250mn deal
 In the BFSI vertical, MPHL is getting selective pricing increase in Top 10 US banks (all are clients
compared to five around three years ago). Delivery capabilities and offerings have led to gain
in market share (from incumbent Tier-1) and also with addition of some logos. The company’s
BFSI portfolio is well diversified
 Leadership teams have been augmented in Canada, the UK and the EU. The company has
added three new members in the executive committee and sales & delivery additions in
accounts with USD 100mn+ potential
 The company is hiring 30-40% more freshers vs in the past few quarters. Supply-side
constraints are in line with management expectations, and operating margin (EBIT) guidance
has been retained in the range of 15.5-17.0%. The TalentNext training program is extensively
online. Around 85% of employee base goes through training intermittently and the company
has an incentive structure in place to encourage reskilling
Analyst annotations: MPHL growth has high visibility, driven by its large deal trajectory and consistent execution in the
direct business, account mining prowess, lower dependence (and impact from) on DXC channel
and stable operating track record.
FY20 88,436 14.4 16,504 18.7 11,424 6.4 61.3 20.6 20.2 52.1 35.0
FY21 97,222 9.9 18,027 18.5 12,166 6.5 65.3 19.7 18.3 48.9 31.8
FY22E 114,647 17.9 20,665 18.0 14,292 17.5 76.7 20.8 19.6 41.6 27.5
FY23E 136,554 19.1 25,930 19.0 18,196 27.3 97.6 23.6 22.3 32.7 21.7
236
Represented by:
Sapnesh Lalla, CEO NIIT (Not Rated)
Kapil Saurabh
Investor Relations Bloomberg Code: NIIT IN, Market Cap: INR 44bn, CMP: INR 333 (as on 15 Sept 2021)
Executive digest: Established in 1981, NIIT (NIIT IN), a global leader in skills and talent development, offers
multidisciplinary learning management and training delivery solutions to corporations,
institutions and individuals in 30 countries. The company has two main lines of business across
the globe: corporate learning group (CLG) and the skills & careers (SNC) group.
Investor insight:  Overall training, learning & development market is USD 400bn globally, out of which only
USD 4-5bn is being outsourced, which presents a large opportunity. Only ~20-25% of Fortune
1000 companies outsource training needs, thereby implying significant headroom for growth
 Out of 59 managed training services (MTS) customers in the company’s CLG business, full
capabilities have been explored in only 10-11. Energy, technology & telecom, BFSI and life
sciences are key verticals in the CLG business
 NIIT’s CLG business offers long-term annuity contracts (3-5 years duration), new logo sales
cycle of 6-9 months and the business has seen resilient growth over the past few years. In the
past ~10 years, the CLG business posted a 15%+ CAGR with ~15% margin, but the shift to
digital delivery has led to increase in margin
 Within the different horizontals in the CLG business, learning delivery contributes ~40-45%
to revenue, content development contributes 20-25% and learning administration
contributes 20%
 The growth outlook is mid-20s in the CLG business with a 20%+ margin. The SNC business is
expected to grow faster in the medium term as the business transitions into the edtech
business
Analyst annotations: NIIT’s growth and sustainability of higher margin is expected to be driven by its pivot to digital
delivery and visibility from 59 CLG customers. The company has INR 12bn cash (26% of Mcap)
post the buyback.
FY18 8,505 0.6 679 8.0 631 55.2 4.7 8.8 8.6 70.1 64.9
FY19 9,102 7.0 708 7.8 890 41.2 6.7 11.3 10.7 49.7 62.6
FY20 8,892 (2.3) 812 9.1 1,952 119.3 14.7 16.5 15.9 22.7 41.5
FY21 9,495 6.8 1,712 18.0 1,614 (17.3) 12.2 10.2 10.2 27.4 18.0
237
Represented by:
Saurabh Dwivedi
Head Business Finance
Persistent Systems
& Investor Relations Bloomberg Code: PSYS IN, Market Cap: INR 279bn, CMP: INR 3,654 (as on 15 Sept 2021)
Harit Shah
Investor Relations
Executive digest: Persistent Systems (PSYS IN) provides product engineering or software ER&D to independent
software vendors (ISV), BFSI and healthcare & life sciences enterprises. The company has operated
since 1990, listed in 2010 and currently has 15,000 employees with revenue of USD 600mn (TTM).
Investor insight:  Adoption of cloud native applications is witnessing strong traction, and the company is
benefitting from such tailwind
 Average deal size has increased, and the deal pipeline remains healthy. PSYS is looking to
expand beyond its sweet spot (USD 10-50mn) of deals and client mining has improved. In the
next 2-3 years, the company expects to cross the USD 1bn revenue threshold, which also will
increase the deal funnel
 Salesforce practice is now close to USD 100mn portfolio and a strong growth driver. Sales
cloud, services cloud, marketing cloud and Mulesoft are contributing a major share to PSYS’
salesforce practice
 The pace of hiring is likely to continue compared to the past few quarters at 1,200 net
additions quarterly
 Supply-side challenge is expected to take a couple of quarters to stabilize. The company has
initiated targeted retention incentives in some segments
 Wage hike reverted to normal cycle has been rolled out from July 2021, and it is expected to
impact margin by 250-275bp QoQ. Headcount has grown 38% over the past year with hiring
ahead of demand
 Inorganic expansion will not be large with focus on cloud capabilities, geographic expansion,
especially in the EU, and toward deepening focused verticals
Analyst annotations: PSYS growth visibility is high on account of strong deal wins, robust hiring, better client mining
(historically a challenge) and strong capabilities supported by cloud partnerships and software
product development pedigree.
Key Financials:
FY20 35,658 5.9 4,930 13.8 3,589 (1.8) 47.0 14.4 14.8 77.8 53.8
FY21 41,879 17.4 6,830 16.3 4,507 25.6 59.0 17.4 17.7 62.0 38.0
FY22E 53,405 27.5 8,790 16.5 6,595 46.3 86.3 21.8 22.0 42.3 29.3
FY23E 65,507 22.7 10,788 16.5 7,978 21.0 104.4 22.5 22.7 35.0 23.5
238
Represented by:
Kedar Shirali
Global Head - Investor &
Tata Consultancy Services
Analyst Relations Bloomberg Code: TCS IN, Market Cap: INR 14,628bn, CMP: INR 3,955 (as on 15 Sept 2021)
Executive digest: Tata Consultancy Services (TCS IN) is among the leading global IT services companies in
operations for more than 50 years. The company is part of the Tata Group with more than
500,000 employees in 46 countries and revenue of USD 22bn & profit of USD 4.5bn in FY21.
Investor insight:  Management anticipates the start of a multi-year upgrade cycle across horizons, led by Cloud,
which gives good visibility for the next 3-5 years. Cloud migration itself can be a growth driver
for the next 18-24 months, as currently only 25-30% of workloads is in Cloud. Value creation
in the next decade is expected to happen from software to services as Cloud gets
commoditized
 TCS benefited from flight to quality since the pandemic and its clients gave higher premium
for stability, resilience, execution track record, range of services and price becoming less of a
criterion
 Organizational structure is based on vertical structure. The vertical organization structures
and silos can evolve over time with proliferation of verticals (for eg, business models around
retail and payments)
 The EU has seen increased outsourcing since the pandemic and TCS is gaining share from
local service providers
 G&T deals are shorter from a contractual standpoint compared to the traditional outsourcing
deals, which are usually 5-7 years. G&T deals is not price sensitive and has higher pricing but
not better margin
 Hyperscalers deal sizes are increasing due to expansion into several industries and also as
some cloud providers are now expanding into larger enterprises
 Management is witnessing increased attrition and it could go to pre-pandemic high levels
over the next few quarters which also will drive higher wage expenses
 Traditional outsourcing deals continue to witness increased competition
Analyst annotations: Scale and breadth of services, long-term growth drivers, strong execution and operational track
record, balance sheet strength and payout will support value accretion.
Key Financials:
FY20 1,569,490 7.2 421,090 26.8 323,400 2.8 87.4 37.3 36.5 45.2 34.2
FY21 1,641,770 4.6 465,460 28.4 333,557 3.1 90.2 39.1 36.8 43.9 30.8
FY22E 1,895,714 15.5 535,782 28.3 380,247 14.0 102.8 43.2 40.7 38.5 26.8
FY23E 2,128,134 12.3 618,834 29.1 438,086 15.2 118.4 47.2 44.6 33.4 23.1
239
Represented by:
Manoj Raghavan
MD & CEO
Tata Elxsi (Not Rated)
Nitin Pai Bloomberg Code: TELX IN, Market Cap: INR 318bn, CMP: INR 5,113 (as on 15 Sept 2021)
Chief Strategy Officer &
Chief Marketing Officer
Executive digest: Tata Elxsi (TELX IN) is an integrated design and engineering services provider, primarily catering
to verticals, such as transportation, media & broadcasting and medical devices. Tata Sons holds
42% in the company, which has nearly 8,000 employees and revenue of ~USD 250mn in FY21.
 Management believes demand is not a constraint to deliver high single-digit QoQ growth in
Investor insight:
the near term, but the supply-side factors can have an impact
 Larger deals have 15-20% onsite component, and the delivery mix is not expected to revert
to higher levels of onsite delivery
 The company is ramping up its hiring process to cater to demand and defend rising attrition.
TELX has planned to add 1,000+ gross employees (delivery) each in Q2 and Q3
 The company is not seeing any cuts in budget and delay in projects from automotive
customers on account of the industry-wide chip shortage situation
 Industrial design & visualization (IDV) business growth trajectory should continue, supported
by upsell and cross-sell, though project-based, to have lumpiness on an intermittent basis. The
IDV business is creating work streams in embedded product design across three verticals for
design-led engineering & change in sales incentive structure, and leadership addition has
contributed to growth acceleration
 Over the past two years, the company has transformed its internal process and go-to-market
strategy, verticalized the business, expanded its competency and built adjacencies, initiated
changes in reporting metrics & dashboards to bolster business predictability and improved
performance review mechanism
 Supply-side issues persist and it is an industry-wide phenomenon. Attrition is largely to MNC
and captives compared to domestic competition. Margin can be similar to Q1 after taking the
salary hike impact
 TELX’s inorganic plans is to build adjacencies in the existing verticals
Analyst annotations: TELX has outperformed ER&D peers, supported by rapid scaling in its media & broadcast vertical
and medical devices vertical in its embedded product design (EPD) business, the recent
acceleration in the complementary design business unit, internal changes to align growth, strong
operational progression and supportive balance sheet (cash ~60% of total assets).
Key Financials:
FY18 13,863 12.0 3,460 25.0 2,400 53.5 38.5 37.0 35.2 132.7 90.9
FY19 15,969 15.2 4,150 26.0 2,900 20.8 46.6 34.5 33.7 109.8 75.5
FY20 16,099 0.8 3,430 21.3 2,714 (6.4) 43.6 26.7 26.1 117.3 90.9
FY21 18,262 13.4 5,224 28.6 3,681 35.6 59.1 30.1 28.6 86.5 59.1
240
Represented by:
Kaustubh Vaidya
Head - FP&A and
Tech Mahindra
Investor Relations Bloomberg Code: TECHM IN, Market Cap: INR 1,414bn, CMP: INR 1,465 (as on 15 Sept 2021)
Kavya Bagga
Investor Relations
Executive digest: Tech Mahindra (TECHM IN) provides IT services and business process services. TECHM is a ~USD
5.2bn company with 126,000+ employees across 90 countries and 1,000+ global customers (22
clients >USD 50mn annual revenue). It is a part of the Mahindra Group.
Investor insight:  Deal wins have been strong, and the pipeline remains healthy. Q2 deal wins are likely to be
above the average run-rate of USD 400-500mn total contract value (TCV). The deal size is
witnessing an uptick due to larger engagements and the outlook of double-digit growth for
FY22 has been retained
 The demand environment remains healthy and ramp-up of deals is likely to drive good
growth in Q2FY22. The 5G opportunity is scaling up with the buildup in network
modernization and transformation of systems & processes (more transformation deals seen
in communication)
 BPO growth has been driven by addition in horizontal offerings and expansion in the retail
vertical apart from the communication vertical. BPO growth was driven by 1) enterprise (now
50-50 mix between communication & enterprise vs 70% communication three years ago, and
2) creation of horizontals – customer experience (CX) and content moderation
 TECHM’s ER&D services is witnessing recovery, led by the automotive segment. Tech & hitech
continues to witness reasonable traction over the past few quarters
 Margin levers (offshore mix and improvement in portfolio companies’ operations) are
available, which could help to offset the impact from rising attrition, wage inflation and
investments in capabilities. TECHM retained its 15%+ EBIT margin guidance for FY22 and aims
to increase in the medium term. Medium-term margin drivers include greater focus on the
BFSI, healthcare & hi-tech verticals and sales investments in the EU and the US
 The company has stepped up its fresher hiring by 3x compared to its past hiring rate. It is also
expanding the supply-side coverage to Tier II cities
Analyst annotations: TECHM’s growth prospects appear strong, led by broad-based momentum across enterprise and
communication, improvement in 5G-related deals, large deal momentum and stable operational
performance.
FY20 368,677 6.1 57,261 15.5 42,505 (1.1) 48.2 20.2 14.5 30.4 21.5
FY21 378,551 2.7 68,471 18.1 45,055 6.0 51.1 19.3 15.6 28.7 17.3
FY22E 424,074 12.0 81,324 19.2 56,377 25.1 63.9 21.7 17.8 22.9 14.4
FY23E 477,397 12.6 92,449 19.4 61,718 9.5 70.0 21.7 18.6 20.9 12.6
241
Represented by:
Abhishek Kumar Jain,
GM, Head Investor
Wipro
Relations Bloomberg Code: WPRO IN, Market Cap: INR 3,692bn, CMP: INR 674 (as on 15 Sept 2021)
Executive digest: Wipro (WPRO IN) is a leading IT, consulting and business process services firm with a track record
of more than 30 years in IT services. The company has more than 200,000 employees in 55
countries with revenue of USD 8.5bn (IT services at USD 8.1bn) and profit of USD 1.5bn in FY21.
Investor insight:  The demand environment is robust with healthy pipeline; growth is expected to be volume-
led and the company expects to gain in market share. Management has guided for improved
growth outlook in the ANZ and APAC regions
 Key leadership team is now in place with onboarding of several regional leaders. Current
operating structure is enabling faster decision-making with the Global Account Executive
(GAE) structure and good progress has been made
 Increased activity in mega deals is expected as large deal team matures (work-in-progress).
The company is focusing on building a regular rhythm of winning mega deals. Despite any
mega deal, it has booked USD 715mn total contract value (TCV) with eight large deals in Q1.
The manufacturing vertical is expected to accelerate
 Wipro is getting selective price increases but it is not across the portfolio
 The Capco deal pipeline has improved since its acquisition and Capco standalone has been
performing better than expected. WPRO is currently focused on specific clients to cross-sell
and there have been early tuck-in wins with buildup in synergy pipeline
 Access to talent is not constraint to growth. Fresher hiring has stepped up, with 6,000 fresher
hiring in Q2 and junior employees (80% of base) will see wage revision from September 2021
 WPRO has stepped up lateral hiring and will not be constrained on supply-side factors. While
this will have short-term margin impact, there are tailwinds in the medium term that include
automation, price increase and pyramid restructuring.
Analyst annotations: WPRO has addressed some legacy challenges with leadership and organizational structure
change into four strategic market units & two global business lines and early success in client
mining, deal momentum & Capco synergy suggest structural improvement in the growth
trajectory.
Key Financials:
FY20 610,232 4.2 122,279 20.0 97,218 7.0 17.8 17.3 15.2 38.0 28.2
FY21 619,430 1.5 147,795 23.9 107,946 11.0 19.7 19.4 16.5 34.2 23.3
FY22E 773,795 24.9 170,375 22.0 125,934 16.7 23.0 21.5 17.9 29.3 20.3
FY23E 869,193 12.3 198,810 22.9 140,352 11.4 25.6 21.4 18.3 26.3 17.1
242
Represented by:
Arjun Warty
Head of Corporate
Zensar Technologies (Not Rated)
Development Bloomberg Code: ZENT IN, Market Cap: INR 132bn, CMP: INR 579 (as on 15 Sept 2021)
Executive digest: Zensar Technologies (ZENT IN), part of the RPG group, is a digital solutions and technology
services company. It has presence in eight countries and more than 9,500 employees with
revenue of USD 494mn in FY21.
Investor insight:  Management says the overall demand environment remains robust while challenges persist
around talent crunch. Significant headwinds are now being reversed from top clients in the
hitech vertical. Spend is coming back, led by recovery post the pandemic. Despite significant
challenges over the past 12 months, ZENT has not lost wallet share among large clients
 The consumer and retail vertical (14.5% of revenue), which affected ZENT disproportionately
is witnessing green shoots with client interest in transformation projects
 The company is focused on US banking where ZENT earlier was having relatively low
exposure. It has bagged new logo wins recently, which is expected to ramp up in the coming
quarters. The M3Bi acquisition bought significant new logos, which ZENT intends to leverage
further supported by new leadership
 In the insurance sub-vertical, for diversification from property & casualty to the Life & Annuity
(L&A) segment. the company continues to focus on Guidewire but it is also investing in
Duckcreek capabilities
 Investment in strategic growth opportunities (experience services, advanced engineering
services, data engineering & analytics and application & foundation services) and leadership
hiring in sales, capabilities & strengthening alliances, especially with hyperscalers are likely to
witness positive results over the next 3-7 quarters. A large part of leadership hiring (attracted
talent from Tier I) is done
 Q2FY22 margin is likely to face headwind from wage hikes (quantum will be higher than
January 2021 wage increase), uptick in sub-contractor cost and investments in sales &
capabilities, which could be offset by operational efficiency, offshoring, improving employee
pyramid and operating leverage. ZENT intends to maintain margin in the high teens in the
medium term
 M&A focus area is driven by capabilities, skills and market access (Fortune 500 clients and
geographic expansion & deepening).
Analyst annotations: The recent change in leadership, revamped sales engine and acquisition synergies are expected
to improve the deal and growth trajectory with a stable to improving operating profile.
FY18 31,157 1.4 3,727 12.0 2,411 2.9 10.6 15.1 15.2 54.9 33.8
FY19 37,252 19.6 5,246 14.1 3,386 40.4 14.8 18.4 18.3 39.1 24.5
FY20 40,104 7.7 5,037 12.6 2,629 (22.4) 11.5 12.7 12.3 50.4 24.8
FY21 36,682 (8.5) 6,841 18.7 3,497 33.0 15.3 15.7 14.4 37.9 17.3
243
Materials
244
Represented by:
Afzal Malkani, CFO Anupam Rasayan (Not Rated)
Bloomberg Code: ANURAS IN, Market Cap: INR 74bn, CMP: INR 741 (as on 15 Sept 2021)
Executive digest: Anupam Rasayan (ANURAS) features among India’s leading companies engaged in custom
synthesis and manufacturing (CSM) of specialty chemicals. The company’s focus is on CSM using
processes developed in-house for complex chemistries, thereby achieving cost optimization.
ANURAS operates in two distinct business verticals: (i) Life Science-related Specialty Chemicals
(~88% of FY21 revenues), comprising products linked to agrochemicals, personal care and
pharmaceuticals and (ii) Other Specialty Chemicals (~12% of FY21 revenues), comprising specialty
pigments & dyes, and polymer additives.
Investor insight:  Raw material price outlook: Key RM for ANURAS are Phenyl and Benzene, which are linked
with crude prices. Prices of both the products have increased in the past 4-5 months.
Customer contracts have in-built annual price revision clauses due to which the company was
unable to pass on any price inflation during the year. However, ANURAS keeps sufficient
inventory of six months to hedge against any price volatility, thus protecting margins from
sharp RM cost volatility. Going forward, the company plans to revise prices semi-annually.
 Product launches: ANURAS has been developing 70 products at its R&D and pilot facility. Of
the 70 products, 35-40 are for the existing customers and the remaining for new. In FY22, the
company will commercialize ~10 new products and expects INR 2bn revenues from these. It
plans to launch 8-10 products every year, for the next 2-3 years.
 IPO fund utilization: ANURAS had raised INR 7,600mn via an IPO in March 2021. Till now, the
company has repaid INR 5,600mn bank debt. ANURAS has used INR 1,600mn for expanding
and INR 400mn for solar plants, which should result in power cost savings of INR 100mn
annually for the next 25 years – INR 700mn has been used to meet working capital
requirements.
 Guidance: The management expects 30%+ revenue CAGR over FY21-23 on
commercialization of new molecules and higher utilization at newly commissioned plants.
The management is also confident of maintaining EBITDA margins at 25%.
Analyst annotations: ANURAS enjoys well-established relationships with multinational customers and has a successful
track record of meeting diverse customer needs via process innovation and continuous R&D. The
company’s ability to handle complex chemistries has strengthened its position in India’s specialty
chemical industry that is poised to register double-digit growth over the next 4-5 years.
FY18 3407 20% 734 21.5 387 11% 7.7 10.9 7.32 96.4 111.7
FY19 5015 47% 931 18.6 492 27% 6.6 10.2 6.7 112.9 88.0
FY20 5289 5% 1349 25.5 530 8% 6.9 9.6 6.69 107.3 60.8
FY21 8110 53% 1940 23.9 700 32% 7.04 4.5 10 105.8 42.3
245
Represented by:
Anubhav Gupta
Chief Strategy Officer
APL Apollo Tubes
Bloomberg Code: APAT IN, Market Cap: INR 232bn, CMP: INR 1,859 (as on 15 Sept 2021)
Executive digest: APL Apollo Tubes (APAT IN), with an installed capacity of 2.6mn tonne, is the largest manufacturer
of structural steel pipes & tubes in India. It has a pan-India presence with 10 manufacturing units.
Currently, it enjoys ~50% market share in the structural tube segment and has presence in 300
towns & cities through a distribution network of 800 distributors and 50K retailers.
Investor insight:  Post a mixed Q1FY22, which was affected by the Second COVID-19 Wave, the industry has
witnessed a gradual demand recovery. Management says demand was good in August;
however, the pace of recovery has softened slightly in September, primarily in North India,
due to unseasonal rains. It expects industry demand to move up strongly post Diwali, led by
improved construction activities; thus, APAT targets volume growth of ~10% YoY in FY22
 Management says APAT has reported a volume CAGR of ~20% over the past 10 years despite
past five years being challenging for the building materials industry. It should post sustainable
volume growth of 10-20%
 APAT is adding two new production lines at Raipur, Chhattisgarh, which will produce color
coated tubes and 500*500 diameter tubes. Each line will have capacity of 0.2mn tonne and
project is likely to be completed during Q4FY22. Post completion, capacity will rise to 3mn
tonne. Further, it targets expanding capacity to 4mn tonne over the next three years
 Apollo TriCoat Tube’s merger with APAT is on track, and it is expected to be completed by
end-March or April 2022 vs earlier guided timeline of January 2022. A delay of 2-3 months is
primarily on account of the slowdown in process during the Second Wave
 APAT’s value-added products contribution was ~57% in FY21 vs 45% in FY20 and given
continued focus on premiumization, value-added product’s share is likely to remain higher
 With gradual opening of the economy, traction from unorganized firms has improved.
However, management does not see any threat to the company as demand has improved,
which should help APAT retain its market share
 Exports used to be ~5% of APAT’s total volume; however, in the past two quarters, it has
increased to 6-7%. While margin in exports remains low, the company exports in value-added
products, due to which it is able to fetch better exports margin
 As a breakthrough project, APAT could convince the PwD Department of Delhi to construct
the upcoming seven hospitals on tubes, the first project in India where the structure will be
100% tubular. The government has already identified the contractor which will carry out the
work and the sole rights to supply this design on tubes rests with only APAT
We believe improving demand, led by easing COVID-19 restrictions, bodes well for APAT as it has
an industry-leading capacity with strong brand equity and higher market share, which will enable
it to tap this opportunity. Also, completion of 0.4mn tonne capacity expansion by end-FY22
should ensure long-term volume growth. Further, higher share of value-added products and a
healthy balance sheet on lower debt and working capital control support future earnings.
FY20 74,265 7.7 4,773 6.4 2,380 60.5 19.1 20.5 18.1 97.1 54.3
FY21 82,149 10.6 6,787 8.3 3,602 51.3 28.8 23.6 24.3 64.5 39.2
FY22E 112,290 36.7 10,085 9.0 6,769 87.9 48.9 32.3 32.6 38.1 24.2
FY23E 138,364 23.2 13,608 9.8 9,482 40.1 68.4 32.0 35.6 27.2 17.2
Analyst: Ravi Sodah, ravi.sodah@elaracapital.com, +91 22 6164 8517

Saurabh Mitra, saurabh.mitra@elaracapital.com, +91 22 6164 8546
246
Represented by:
Amit Agarwal, CFO DCM Shriram (Not Rated)
Manoj Gupta
Head – Treasury & IR Bloomberg Code: DCMS IN, Market Cap: INR 153bn, CMP: INR 983 (as on 15 Sept 2021)
Executive digest: DCM Shriram (DCMS IN) is a diversified company with a presence in chloro-vinyl (includes chloro
alkali, calcium carbide and polyvinyl chloride [PVC]), agri (includes fertilisers, seeds, farm
solutions and crop protection), sugar and windows solutions.
Investor insight:  Chloro-vinyl: Key raw materials (coal and salt) prices have increased, which has partially
offset gains from improved realization of caustic soda. PVC prices have increased more than
power cost rise; therefore, margin is likely to be better in the upcoming quarters. The new
power plant is likely to generate cost savings of INR 750mn in the first year of
commissioning
 Chemical business: Despite competitors adding epichlorohydrine (ECH) capacity, realization
may not drop since ramp-up of all plants will take 2-3 years and demand is growing. The
new R&D center is working toward developing forward integration projects, which will add
value to existing products.
 Fenesta: No COVID-19 constraints were witnessed in this business. Demand continues to be
healthy
 Sugar business: Domestic and international prices are attractive at INR 35/kg and INR 34/kg,
respectively. Ethanol demand has been stable. The company is expanding its ethanol
capacity by 120KLPD using the gain-based route. As on now, molasses are fully utilized and
there is no scope of expanding ethanol capacity using molasses.
 Agri business: Fertiliser subsidy is coming on time at INR1.5-2.0bn. This has further improved
cashflow and given DCMS the ability to invest in growth businesses. Bio seeds business is
going through an evolution as the company is working toward launching new products
that should drive growth. Availability of cheap but spurious cotton seed is hurting demand
for BT-Cotton seed
 The two new chlorine downstream capex of ECH and hydrogen peroxide (H2O2) are
progressing as per schedule and will be ready by Q4FY23 while aluminium chloride
expansion will be ready by Q1FY23. We expect these projects to drive significant earnings
growth from FY24 in the chemical segment
Analyst annotations: ECU realization has improved in the past few months and expected to remain firm, due to
buoyant demand. Prices of other chemicals have increased sharply due to logistics issues,
weather challenges and some plant shutdowns; these are likely to soften once these concerns
are resolved. However, we do not expect prices to revert to the lows witnessed during the start
of the pandemic. Firm sugar prices and healthy ethanol demand is likely to ensure healthy
profitability in the sugar business. Agri input may remain subdued this year due to below
normal Monsoon.
FY18 69,005 19.2 10,349 15.0 6,687 21.1 41.0 22.0 25.5 24.0 16.0
FY19 77,711 12.6 13,687 17.6 9,026 35.0 57.6 25.6 28.8 17.1 12.0
FY20 77,671 (0.1) 11,925 15.4 7,342 (18.7) 46.8 18.1 18.6 21.0 14.2
FY21 83,082 7.0 11,522 13.9 6,723 (8.4) 42.9 14.5 16.0 22.9 13.3
247
Represented by:
M K Dhanuka, MD Dhanuka Agritech
Bloomberg Code: DAGRI IN, Market Cap: INR 39bn, CMP: INR 830 (as on 15 Sept 2021)
Dhanuka (DAGRI) is one of the leading Indian agrochemicals formulation companies in domestic
Executive digest:
brand sales. The company has strong product portfolio of +90 brands with 100% domestic sales.
It enjoys robust relationships with global innovators and is always persevering to introduce latest
technologies to Indian farmlands.
Investor insight:  Agrochemical demand – July-August muted: Compared with Q1FY22, agrochemical demand
has been muted in the first two months of Q2FY22 due to deficient rains. However, the IMD
has now predicted normal rainfall in September, which may help improve demand. The only
positive factor has been high commodity prices. Farmers are getting good prices for
soyabean, cotton, groundnut, pulses, etc. Further, good monsoons in September may aid
sowing activity in the Rabi season.
 Raw material price outlook: Some price hikes were effected in July and August, but the full
impact has not been passed on as demand-supply seems unfavorable. RM prices have started
to moderate on muted demand. However, the company is still carrying high-cost inventory
that may affect margins slightly.
 Technical manufacturing and backward integration: DAGRI has initially started with just
generic molecules, but may veer into contract manufacturing for its Japanese partners, going
forward. DAGRI currently procures patented technology from its Japanese partners. The
company is setting up a multi-purpose plant to ensure flexibility, facilitating shift to any
molecule with high demand.
 DAGRI exploring CRAMS opportunities along with innovator companies: In order to capture
the huge CRAMS opportunity, the management is actively seeking partnerships with various
Japanese innovators for contract manufacturing. Since Japanese decision-making is typically
slow, any meaningful partnership will take some time to develop.
 Drone venture: DAGRI has invested INR 200mn in IoTech that manufacturers drones.
Globally, most pesticides are sprayed through drones, while in India, manual labour is used
that affects health. Spraying pesticides through drones will save labor costs and time. Also,
manually, usually pesticides are sprayed in the whole field, whereas via drones, specific areas
can be targeted. Thus, in times to come, farming precision may emerge in India. DAGRI is also
mulling providing spraying services to farmers who cannot afford to buy these drones.
 FY22 growth guidance revised downwards: The management has revised its FY22 revenue
growth guidance to single digit from double digit due to muted demand in Q2FY22. Inability
to pass-on the RM cost inflation to result in ~100bps EBITDA margin contraction in FY22.
Analyst annotations: Weak monsoons and high RM costs are likely to affect FY22 profitability. Forecasts of normal
monsoons in September and high commodity prices may prop agrochemical demand in the
upcoming Rabi season.
FY20 11,201 11.4 1,735 15.5 1415 25.6 29.7 21.0 25.5 10.9 7.9
FY21 13,875 23.9 2,691 19.4 2106 48.8 45.2 28.0 36.0 15.3 10.9
FY22E 14,971 7.9 2,771 18.5 2167 2.9 46.5 25.0 31.3 17.8 13.0
FY23E 17,173 14.7 3,257 19.0 2,472 14.1 53.1 24.3 30.7 15.6 11.1
248
Represented by:
Jamshed Cooper, CEO HeidelbergCement India
Anil Kumar Sharma, CFO
Amit Angra, VP Finance
Bloomberg Code: HEIM IN, Market Cap: INR 62bn, CMP: INR 274 (as on 15 Sept 2021)
Executive digest: HeidelbergCement India (HEIM IN), subsidiary of HeidelbergCement Group, Germany, is a
leading firm of Central India. It has an installed cement capacity of ~6.3mn tonne and its plants
are at Damoh (Madhya Pradesh), Jhansi (Uttar Pradesh) and Ammasandra (Karnataka). MYCEM
is the key brand and it sells ~85% of cement to the trade segment. Uttar Pradesh and Madhya
Pradesh are key markets where it sells ~85-90% of cement
Investor insight:  Currently, demand and prices are slightly soft due to the Monsoon; however, demand is likely
to improve while any major price decline is unlikely, given the sharp rise in fuel prices
 HEIM has been able to maintain its strong brand positioning and market share in its serving
markets. Premium products constitute ~20% of total sales and HEIM targets to increase them
to ~25%
 The company has applied for environment clearances for its Greenfield expansion in Gujarat.
Beside this, it is planning to debottleneck clinker at its Madhya Pradesh-based Narsingarh unit
to expand capacity by 0.2mn tonne
 With the recent changes in the MMDR act, HEIM is evaluating plans to merge with Zuari
Cement, a group company. HEIM is looking at several angles and related cost to complete the
transaction. Management believes the merger will lead to several synergistic benefits and
enable better tax management
 While Central India is expected to witness new capacity coming on stream in the next few
years, HEIM believes a majority of cement will outflow to other markets. Further, management
believes entrenched distribution network with loyal dealer base will continue to support the
company
 HEIM is likely to incur a capex of INR 700-800mn in FY22 and INR 500-700mn in FY23
 Green power comprises ~22% of total power consumption of HEIM. With an aim to further
enhance share of green power, the company has entered into an agreement to purchase
solar power under Group Captive Scheme. Beside this, it is adding 5MW solar capacity, which
is expected to be completed by end-Q3FY22
Analyst annotations: HEIM’s strong presence in demand-accretive Central India, which is expected to witness healthy
retail and institutional demand, augurs well for future volume. Further, healthy prices in Central
India, higher exposure to the retail segment, focus on premiumization and strong balance sheet
with net cash would support healthy earnings.
FY20 21,576 2.3 5,278 24.5 2,681 21.5 11.8 21.6 24.2 23.2 11.6
FY21 20,927 (3.0) 5,066 24.2 2,610 -2.6 11.5 18.6 21.9 23.8 12.0
FY22E 24,375 16.5 5,767 23.7 3,421 31.1 15.1 21.7 25.1 18.2 10.2
FY23E 26,536 8.9 6,951 26.2 4,334 26.7 19.1 24.7 29.4 14.3 8.2

249
Represented by:
Ashwin Bajaj
Head, Investor Relations
JSW Steel
Vishesh Pachnanda Bloomberg Code: JSTL IN, Market Cap: INR 1684bn, CMP: INR 697 (as on 15 Sept 2021)
AGM, Investor Relations
JSW Steel (JSTL IN), incorporated in 1982, is part of JSW Group. Today, it is one of India’s largest
Executive digest:
steelmakers with an installed capacity of 18mn tonne. It has plants at Vijayanagar (Karnataka) of
12mn tonne, Dolvi (Maharashtra) of 5mn tonne and Salem (Tamil Nadu) of 1mn tonne.
 The 5mn tonne Brownfield expansion at Dolvi, Maharashtra, is likely to be completed by end-
Investor insight:
Q2FY22 or early October. JSTL targets a volume of 1.5mn tonne during FY22 from this plant.
Considering the ramp-up in blast furnaces would take 8-10 months, JSTL expects to achieve
~90%+ utilization level during FY23
 Acquisition of Bhushan Power and Steel (BPSL) has enabled JSTL’s entry to eastern markets
and provided access to integrated flat steel as also downstream facilities. JSTL may expand
BPSL’s capacity from the current 2.5-2.7mn tonne to 3.5mn tonne in the first phase and to
5mn tonne in the next phase. Management expects Chandigarh- and West Bengal-based
downstream facilities to strengthen its presence and provide freight cost savings. Also, earlier
BPSL used to sell its products to the retail segment; however, JSTL with a strong presence in
the OEM segment, can divert BPSL output to this segment, enabling better margin
 JSTL’s product mix is mainly skewed toward flat products, which constitute ~75%. Post
completion of the Dolvi expansion, contribution of flat products is expected to move up
further to ~80%. Also, the share of value-added products in total sales has been ~50% for the
past several years and focus will remain on retaining this proportion in the upcoming years
 While JSTL may surrender one small iron ore mine in Odisha due to unfavorable business
prospects, focus will remain on firming backward integration. Thus, it may participate in the
upcoming auction of 10 mines in Odisha, which has a mix of virgin and operational mines
 JSTL may participate in the bidding process of some government’ steel plants which are on
the block for sale. Key criteria for acquiring any of these plants will be based on mines
availability, land banks, location and opportunity for any further capacity expansion
 US business generated healthy margin in Q1FY22 after resuming operations in February
2021. Currently, focus is on ramping up production, and JSTL guides production of ~1mn
tonne slabs in FY22 irrespective of the prices prevailing in the market
 Management says the PLI Scheme for “specialty steel” is likely to yield several benefits and will
bolster production of specialty steel products in India. From JSTL’s point of view, electrical
steel will be a key focus area for it as major advanced electrical steel gets imported
 On the cost front, coking coal is expected to increase by USD 30-35 per tonne QoQ in Q2FY22
and a by similar magnitude in the following quarters. JSTL is planning to blend low-grade
coking coal to reduce the impact of the sharp surge in cooking coal prices
Analyst annotations: JSTL, with scalable capacity and diversified product mix, is to benefit from the expected uptick in
domestic demand, profitable export opportunities and strong prices. Also, the recently acquired
BPSL, completion of Dolvi expansion in next few weeks and the upcoming Brownfield capacity
expansion at Vijayanagar, Karnataka, would ensure sustainable volume growth
FY20 711,160 -13.8 118,730 16.7 45,935 -39.9 19.1 12.9 8.5 36.4 18.1
FY21 780,590 9.8 201,410 25.8 79,691 73.5 33.1 19.1 14.7 21.1 10.7
FY22E 1,257,187 61.1 346,053 27.5 180,731 126.8 75.0 33.2 24.5 9.3 6.2
FY23E 1,371,155 9.1 328,407 24.0 165,533 -8.4 68.7 23.9 20.2 10.1 6.4

Analyst:
250
Represented by:
Rana Pratap, Promoter,
NDB Corporate Manager
MoldTek Packaging
Sundeep Adivishnu, Vice Bloomberg Code: MTEP IN, Market Cap: INR 16bn, CMP: INR 577 (as on 15 Sept 2021)
President
Executive digest: MoldTek Packaging Limited (MTPL) is the leader in rigid plastic packaging in India. The company
is involved in manufacturing injection molded containers for lubes, paints, food and other
products. It has seven processing plants and three stock points, spread across India to ensure
faster supplies. It has a huge injection molding capacity of ~20,000 TPA.
Investor insight:  MoldTek entered into the Food and FMCG segment with IML technology.
 MoldTek is the market leader in injection moulded rigid packaging segment.
 MoldTek makes moulds, labels and robotic arms in-house – The company is fully backward
integrated even as other companies are struggling to replicate a similar model.
 MoldTek started with QR code containers that gives digital identity to containers – Tracking
is possible from filling line to the time it reaches end-customers. At present, this is only enabled
for major customers since MoldTek wants to extend this USP to main clients for the time being.
QR code coupled with IML technology makes duplication next to impossible (just QR code
enabled label is difficult to replicate).
 The Paints and lubricants segments’ growth doubled YoY in Q1FY22 and F&F grew 40%.
 MoldTek added BPCL, Gulf and Chem Agro as new clients.
 MoldTek recently added 1,500tn in unit I (main unit) to ensure supply for the upcoming ice
cream season.
Industry landscape
 MoldTek’s market share in the Paints segment is at ~25-30%. The sector is growing at 15%.
New paint players are foraying into the space. JSW has already ventured into the space with
the Aditya Birla Group also trying to enter the market.
 MoldTek’s key competitors are Hi Tech (25-30%), Jolly (20%) and Baba etc.
 The lubricant segment has been stagnant over the past 3-4 years since demonetization. The
management expects the lube industry to grow at 2-4%. MoldTek has 40-50% market share
in lubes. DEF fluid will lead to replacement demand (blow moulded containers to injection
moulded containers).
 In the Food segment, MoldTek is catering to replacement demand and hence, is independent
of the FMCG industry – Cartons, flexible packaging etc. are being replaced by rigid containers.
 Kap Cones is MoldTek’s FMCG competitor and the former only makes thin wall containers
(less than 2L).
Medium-term growth levers
 In the Paint segment, MoldTek is doubling its capacity in the next 3-5 years in Mysore, Vizag
and Khandala, which will prop growth to 10%.
 The F&F segment – Ice creams, restaurants etc. – should likely contribute at least 5-6% to
overall growth. Supply stands at 4-5mn containers (at inception, MoldTek’s supply stood at 7-
8mn containers) monthly to Mondelez for Lickables product.
 The above two segments can support 15-16% growth in the next few years.
Medium-term margin levers
 EBITDA/kg spiked from INR 27 to INR 36/kg over FY16-FY21. Q1 EBITDA/kg stood at INR
42/kg (may be an aberration).
251
 EBITDA/kg should settle at INR 40 in the coming quarters.
Average asset turn and WC cycle
 Working capital cycle stands at 90 days currently and will be sustainable. It was over 100 days
in FY19.
 Asset turnover may improve to 2.2-2.3x once utilization rate betters.
 MoldTek is planning INR 200mn investment for 3,000tn capacity.
Pumps business
 During the onset of pandemic, pump prices shot up dramatically due to increased demand
for hand sanitizers and cleaners. However, currently, prices have dropped as demand has
stabilized.
 Demand did not pick up as the company expected. Clients approved the packs, but given
their high existing inventory levels, it was advanced.
 MoldTek’s current capacity utilization is at 20-25% and will reach 40-45% by Q4FY22.
 Also, MoldTek is manufacturing custom pumps for a few clients.
 MoldTek may post 1-2mn pieces sales volume in Q2FY22.
 The current industry size for cleaning and hand sanitizer pumps in India is INR 2,500mn.
Capacity utilization
 Current utilization rate is at 65%.
 It can reach 70-75% on sustainable basis.
 Every month, the company is adding 2-3 injection moulded machines.
Analyst annotations: The management has guided for 15-20% sales CAGR in the next 2-3 years and EBITDA/kg of INR
38-40. Part of the growth will be aided by paints segment, while rest through Food and FMCG.
Margin
March (INR mn) (%) (INR mn) (INR mn) (%) (INR) (%) (%) (x) (x)
(%)
FY20 4,374 7.8 800 18.3 382 19.3 13.8 19.7 21.1 41.8 21.3
FY21 4,789 9.48 960 20.0 481 25.88 16.9 21.2 21.4 34.2 18.2
FY22 5,623 17.40 1,159 20.6 619 28.82 21.7 22.7 22.5 26.6 15.0
FY23 6,679 18.79 1,394 20.9 782 26.25 27.4 25.1 24.7 21.0 12.3

252
Represented by:
Vijay Aggarwal, MD
Sarat Chandak, ED & CEO
Prism Johnson
(H&R Johnson-India) Bloomberg Code: PRSMJ IN, Market Cap: INR 62bn, CMP: INR 124 (as on 15 Sept 2021)
Manish Bhatia, CFO
Aditya Bob Mahendru,
Chief Strategy Officer
Prism Johnson (PRSMJ IN) is an integrated building materials company with business interests in
Executive digest: cement, tiles, bath & kitchen (TBK) and ready mix concrete (RMC). It has cement & clinker capacity
based in Madhya Pradesh with maximum volume potential of 7mn tonne. Its TBK division has tiles
capacity of 60mn sqm. Its RMC division currently operates 95 RMC plants and operates six large
quarries under the aggregates business.
Investor insight:  Cement capacity addition projects at Satna, Madhya Pradesh, of 0.9mn tonne through
debottlenecking and Brownfield expansion of 1mn tonne are progressing well and likely to
be completed by June 2022 and September 2023, respectively. Post completion, maximum
volume potential is expected to increase to 7.9mn tonne
 In the long run, PRSMJ may add another clinker line at Satna and split grinding units in a
different location
 PRSMJ has seen a gradual rise in its premium product sales contribution over the past few
years. Currently, it is ~27% and it targets to reach to ~40% over the next three years
 Amid the Monsoon, Uttar Pradesh (UP), the core market of the company, is exhibiting strong
demand whereas other parts of the country remain a bit subdued. The UP government’s
spending has been healthy to support infrastructure activities
 Improved traction across real estate, construction and home improvement activities is visible,
which is likely to support performance of PRSMJ’s cement, TBK and RMC divisions
 The cement division is expected to realize full benefits of recently added waste heat recovery
and solar capacity of 22.4MW and 23.2MW, respectively, during FY22, which will help the
company to keep a check on operating cost amid the sharp rise in fuel prices
 The tiles industry is facing cost pressure on account of the rise in gas prices, higher logistics
cost with elevated diesel prices and increased packaging cost. However, tiles companies have
taken price hikes to partly offset this pressure
 The sale of Raheja QBE General Insurance is under process, and PRSMJ is awaiting regulatory
approvals to complete the deal
 After witnessing sharp deleveraging in FY21, debt reduction is expected to be limited albeit
improvement in overall performance, which should lead to rise in return ratios
We believe completion of the ongoing capacity expansion projects in the cement and tiles
divisions over the next two years will result in healthy volume growth in the long run. Further,
continued focus on cost savings, efforts to improve utilization levels of the TBK & RMC divisions
and successful sale of its insurance business will bolster earnings
FY20 58,901 (3.8) 5,386 9.1 204 -84.1 0.4 1.8 7.8 306.8 14.7
FY21 54,949 (6.7) 6,218 11.3 1,198 488.3 2.4 10.3 8.8 52.1 11.7
FY22E 66,160 20.4 8,626 13.0 3,399 183.8 6.8 24.3 14.8 18.4 8.3
FY23E 71,890 8.7 10,829 15.1 5,040 48.3 10.0 28.1 18.6 12.4 6.5

253
Represented by:
Prakash Sanghvi, CMD Ratnamani Metals and Tubes
Vimal Katta, CFO
Bloomberg Code: RMT IN, Market Cap: INR 101bn, CMP: INR 2,157 (as on 15 Sept 2021)
Executive digest: Ratnamani Metals and Tubes (RMT IN), incorporated in 1983, is a leading player that
manufactures stainless steel (SS) and carbon steel (CS) tubes & pipes in India. It commenced
production of SS pipes in 1985 and CS pipes in 1995. RMT is a well-established player in both
domestic and exports markets, and provides services to many sectors, such as oil & gas, chemicals,
fertilizers, power (thermal, solar and nuclear), desalination, aerospace and water transportation.
Investor insight:  In Q4FY21, RMT completed capacity expansion capex for: 1) seamless pipes by 20,000 tonnes,
2) longitudinal submerged arc welded (LSAW) pipes by 120,000 tonnes and 3) electric
resistance welded (ERW) pipes by 50,000 tonnes. Post completion of these projects, total
capacity of SS pipes stands at 48,000 tonnes and CS pipes at 525,000 tonnes.
 As per management, rising capacity utilization will lead to higher working capital
requirement. With likely surge in revenues to INR 45bn in the next three years and raw
material continuing to constitute 65-70%, significant investments will be required in working
capital. Thus, the focus will be on internal accruals so as to meet working capital requirement.
 The management believes, the recently added capacities should reach optimum utilization in
the next three years. Thus, RMT may explore new growth opportunities beyond three years.
 FY22 revenues are likely to be ~INR 30bn and healthy capacity ramp-up should bolster FY23
revenues to INR 35-36bn+. The management reiterated its earlier EBITDA margin guidance
of 16-18%.
 As on 1 September 2021, total order book stood at ~INR 15.3bn, comprising ~INR 10.8bn for
CS pipes and ~INR 4.6bn for SS pipes. Contribution of CS pipes in the total order book is likely
to be higher. Also, oil & gas sector will continue to be major revenue contributor, going
forward.
 RMT is witnessing healthy exports opportunities from Europe, the US and the Middle East and
thus, anticipates improved exports, going ahead. At present, exports constitute ~20% of total
order book and RMT will focus on maintaining this proportion, moving forward.
 Although, some players are considering entering the SS pipes business, RMT expects
insignificant impact on its business given that: 1) new players may take a few years to develop
products and get required approvals, 2) opportunity exists to tap import market as 40-50,000
tonnes of SS pipes are imported in India and 3) RMT’s strong hold in exports market.
Analyst annotations: RMT, with strong positioning in the domestic as also export markets coupled with access to
incremental capacity, is likely to benefit from demand revival, going ahead. Also, rising
contribution of high-margin SS pipes and value-added products augur well for margin expansion.
FY20 25,554 (6.6) 4,265 16.7 3,016 19.3 64.6 18.7 18.0 33.4 23.5
FY21 22,675 (11.3) 3,997 17.6 2,759 (8.5) 59.0 14.9 14.7 36.5 23.9
FY22E 30,194 33.2 5,350 17.7 3,570 29.4 76.4 16.7 17.7 28.2 17.8
FY23E 36,121 19.6 6,468 17.9 4,416 23.7 94.5 17.9 19.1 22.8 14.3

Analyst: Saurabh Mitra, saurabh.mitra@elaracapital.com, +91 22 6164 8546
254
Represented by:
Akshay Kanoria
Executive Director
TCPL Packaging (Not Rated)
Vivek Dave, CFO Bloomberg Code: TCPL IN, Market Cap: INR 4.7bn, CMP: INR 525 (as on 15 Sept 2021)
Executive digest: TCPL Packaging (TCPL IN) is one of India’s largest manufacturers of folding cartons, and the
country’s largest standalone converter of paper board. TCPL manufactures folding cartons,
printed blanks and outers. It also has ventured into the flexible packaging industry, with capability
to produce printed cork-tipping paper, laminates, sleeves and wrap-around labels.
Revenue mix
Investor insight:  Revenue of INR 9bn in FY21
 85% of revenue from folding cartons
 Monocartons in FMCG, F&B, pharma and liquor packaging
 The rest from flexible packaging
 Pouches, shrink sleeves, wraparound labels and tipping paper
 Exports contributed 22% of revenue, INR 1.9bn in FY21
 Domestic: exports share at 78:22 to total revenue
Presence
 Seven manufacturing units across four locations
 Silvassa, Goa, Haridwar and Guwahati
TCPL Infofilms (subsidiary)
 TCPL Infofilms manufactures polyethylene films
 It supplies (sales) raw materials to parent company, which is then processed into final
packaging
Sales segmentation
 Only one customer contributes >10% of business
 FMCG is the largest segment for the company, followed by the F&B segment
In 4-5 years, FMCG revenue growth has been strong; however, volume growth is muted
 The company benefits if there is good volume growth
 It has not lost any major FMCG customers
 The carton segment also is under pressure as only premium brands have been using them
(customers downtraded with FMCG goods and hence less sales of cartons)
Year of demonetization, company grows 18%; year prior, growth at 25%
 During the year of GST introduction, the company grew by 2%
 With less headwinds, it can continue to grow faster
Margin
 Margin is muted at 14-15%
 Management says it can pass margin onto customers with a couple quarters lag after RM
prices go up
 Film production is sensitive to oil prices
 EBITDA margin will hover at 15%
Capacity
 Capacity is underutilized; the company can generate INR 11-12bn of revenue with current
machinery
255
Interest cost
Interest cost has been high in the past, but the company expects interest cost to come off
 TCPL is renegotiating better rates and as it pays off older and higher rate loans, the weighted
average will come off
 Old loans expected to be paid in the next 2-3 years
 Weighted average interest cost
 Term loan: 10%
 Working capital: 8%
Poor utilization for the past few years, leading to lower asset turnover
 The company expects asset turnover to improve in the upcoming years
Expansion
 Initiated Brownfield expansion in carton manufacturing this year
 Not much capex expected for next year
 Last year’s capex was at INR 450mn, year before it was INR 750mn
 This year, capex is expected to be INR 1,200mn
 Fixed asset turn
 Usually folding carton is at 1.5x
 Flexible carton is in the range of 1.5-2.0x
Growth expectations for the next five years
 Cartons
 18-20% is target with industry growth 5-8%
 Flexible packaging
 Using technology, management wants growth to be much faster than the industry
 Growth to recover to historical levels
Exporting
 For FMCG, carton exports is tough due to “just in time”
 For the flexible packaging space, there is a lot of room to grow the exports business
 There is increased demand in the EU and the US for renewable packaging
Analyst annotations: The company will able post good volume growth from the FMCG business. Over the next five
years, it expect double-digit growth along with an increase in the utilization level and improving
asset turnover.
FY18 6,980 13.9 850 12.2 200 -37.5 22.2 6.6 11.0 23.6 9.1
FY19 8,160 16.91 1,050 12.9 290 45.00 31.8 10.8 13.0 16.5 7.6
FY20 8,900 9.07 1,260 14.2 370 27.59 40.1 15.4 13.0 13.1 6.6
FY21 9,040 1.57 1,340 14.8 340 -8.11 37.1 15.7 13.0 14.2 6.0

256
Real Estate
257
Represented by:
Atul Goyal, CFO Brigade Enterprises
Bloomberg Code: BRGD IN, Market Cap: INR 89bn, CMP: INR 393 (as on 15 Sept 2021)
Executive digest: Brigade Enterprises (BRGD IN) is one of India’s leading property developers with three decades
of expertise. Instituted in 1986, it developed several landmark buildings and transformed the city
skyline across South India, namely Bengaluru, Mysuru, Mangaluru, Hyderabad, Chennai and
Kochi, with developments across residential, offices, retail, hospitality and education sectors.
BRGD’s residential portfolio includes villas, villaments, penthouses, premium residences, luxury
apartments, value homes, urban studios, independent living for seniors and mixed-use lifestyle
enclaves & townships. The company is among few developers which also enjoys a reputation of
developing Grade A commercial properties.
Investor insight:  In the office space, many corporate have started coming back to office, and if the Third
Wave concerns are not there, most offices are likely to start by December. The leasing
market is subdued as there has not been any significant supply in the market, and
management expects it to bounce back in the next 1-2 quarters.
 BRGD is witnessing healthy traction at its GIFT City project and Tech Gardens where it is
closing some deals. It will gain traction as corporate return to office. Management expects
Tech Gardens to be leased out in the next year. In Chennai, lease rental has started from
Amazon, interiors for McKinsey and Caterpillar is already complete and rentals will start
soon. BRGD has 2.5mn sqft of vacancy, which it expects to fill in the next year
 Retail has seen faster come-back. BRGD is at ~80% footfall levels of pre-COVID and retailer
sales are at almost pre-COVID levels. The company expects revenue from retail at ~80% of
pre-COVID levels in FY22 vs 50-55% in FY21
 Hospitality has started improving. In July, all hotels have done well and occupancy levels are
at 55-60% for most, except Kochi. However, there are challenges in average room rate
(ARR), which are below pre-COVID levels. The main traction will come from international
travel once it opens
 In Bengaluru, there are some indications that smaller firms have returned. However, there is
more customer confidence on larger and organized developers. Smaller developers are
going for more JD development with large firms
Analyst annotations: BRGD’s residential sales has scaled up since FY20, owing to right pricing and launch locations,
such as Utopia (Whitefield, Bengaluru) – city-centric with a ticket size of INR 0.4-12.0mn with
healthy demand. Given the rich launch pipeline and stable Bengaluru market, FY21 pre-sales
may sustain. BRGD has a growing annuity income portfolio, which is likely to get a boost, as
BTG and WTC get fully leased in the next 12-18 months.
FY20 26,322 (11.5) 6,632 25.2 1,511 (37.0) 6.2 6.3 7.3 53.2 18.7
FY21 19,500 (25.9) 4,719 24.2 300 (80.2) 1.4 1.2 3.4 276.7 26.4
FY22E 27,386 40.4 6,766 24.7 694 131.6 3.0 2.4 6.6 130.0 19.0
FY23E 37,125 35.6 9,141 24.6 2,339 237.0 10.2 7.7 9.3 38.6 14.0

258
Represented by:
Kuldeep Yadav
DGM
DLF (Not Rated)
Bloomberg Code: DLFU IN, Market Cap: INR 849bn, CMP: INR 343 (as on 15 Sept 2021)
Executive digest: DLF (DLFU IN) is one of India’s leading real estate developers with exposure across residential,
office and retail (malls) segments. The company is an established firm in Delhi-NCR and is also
present in 17 other cities across 13 states. Over seven decades of operations, it has built several
well-known urban colonies in Delhi-NCR, including DLF City (an integrated township in
Gurugram that includes residential, commercial, and retail properties).
Investor insight:  There are trends emerging in the residential space, which are 1) regulatory reforms
announced a few years ago, which are beneficial for the sector in the long run. Although
there was short-term pain, it is aiding large and credible developers which have skin in the
game, 2) fundamental demand drivers are in place, and affordability & mortgage rates are
lifting demand, and 3) post COVID-19, customers have realized it is not a aspiration, but a
necessity to own a house. People who already have a property are looking for larger space,
and rich customers are looking for a second holiday home
 Smaller firms are coming back to the market, given the demand uptick. However, what will
drive consolidation in the industry is customer preferences, which have shifted toward
credible companies, as customers have issues regarding smaller firms. If they are going with
a smaller developer then they do proper background checks and its ability to deliver projects
on time
 Management has guided for 30% pre-sales growth (INR 40bn of pre-sales) in FY22 despite
25% growth in FY21. However, the company is cautious of COVID-19 impact
 Key launch projects in FY22 are 1) Delhi, the Mid-Town project with an area of 2mn sqft, for
which it is awaiting approvals, 2) additional floors for its independent floors concept project
in Gurgaon, which the company launched 6-9 months ago. This product has seen healthy
traction, and 3) Chennai, which will be launched in Q3 with 2mn sqft area
 With the absorption in Camellias project in the past 4-5 quarters, the company has been able
to monetize 10-12 apartments per quarter at INR 3.0-3.5bn of sales realization. It has inventory
of 140-150 units in the project and will take 2.5-3.0 years
 Collections will be used to reduce debt. However, the current priority is on growth and the
company will spend on bringing projects to the market
Analyst annotations: DLF has strong growth potential with 14-16% rental income CAGR over the next 2-3 years with
commissioning of its 4.0mm sqft under-construction assets, which would further strengthen its
commercial portfolio and strong launch pipeline of 35mn sqft in the residential space in the next
5-6 years. Debt reduction would be aided by monetization of its rental portfolio through REIT
listing
FY18 67,068 (18.4) 23,774 35.4 44,639 524.5 23.6 14.9 20.1 8.0 20.1
FY19 83,661 24.7 21,415 25.6 13,192 (70.4) 6.0 3.8 14.9 27.4 25.6
FY20 60,828 (27.3) 11,350 18.7 -5,832 (144.2) (2.4) (1.7) (24.3) N/A 34.8
FY21 54,141 (11.0) 14,178 26.2 10,936 (287.5) 4.4 3.1 8.9 64.9 53.5

259
Represented by:
Subhas Bhat, CFO Sobha
Tejus Singh, Head IR
Bloomberg Code: SOBHA IN, Market Cap: INR 73bn, CMP: INR 767 (as on 15 Sept 2021)
Executive digest: Sobha Developers (SOBHA IN) is a premium developer in South India’s real estate market, with
strong brand equity in the region, notably at Bengaluru. The company has real estate presence
in nine cities, namely, Bengaluru, Gurugram, Chennai, Pune, Coimbatore, Thrissur, Calicut, Cochin
and Mysore. It is the only company in the realty space to have a fully fledged backward integrated
model of operations, ensuring timely completion and delivery of quality products at the right
price. Additionally, SOBHA has adopted a state-of-the-art precast technology. The company plans
to lower construction cost and time with better control over quality. Further, it also does
contractual business for marquee clients, which involves third-party construction work based on
cost-plus contracts.
Investor insight:  SOBHA has near no committed land payments over the next 2-3 years. The company has
adequate land for the upcoming launches, and will not require purchase of new land parcels.
With upcoming launches planned across all cities, SOBHA wants to reduce share of
Bengaluru in overall sales to 50% and simultaneously raise sales contribution from higher
realization cities of Gurgaon and Kochi
 The company has a strong launch pipeline of projects with 12.24mn sqft in areas to be
launched in phases over the upcoming quarters. Sales momentum remains healthy in July &
August and expects growth to continue backed by new launches and traction in ongoing
projects. Management’s focus on cash flows will continue to yield results in further net debt
reduction
 SOBHA has taken a 2-3% price hike across some key projects to combat input cost pressure.
Overall it is confident of maintaining its residential margin
 In FY21, the company achieved sales volume of 4mn sqft, with pre-sales of INR 25bn, up 4%
YoY. Excluding Bengaluru, other regions contribution to overall sales volume is the highest in
the company’s history. SOBHA’s foray into newer geography is yielding healthy results along
with the increase in market share across all operating cities
Analyst annotations: Timely new launches is key to sustained pre-sales momentum. This should result in further net
debt reduction in FY22. SOBHA has INR 79bn of cashflow (post construction spend) from
ongoing projects (sold+unsold), which may be received in the next 5-6 years.
FY20 37,539 9.1 7,593 20.2 2,815 (5.3) 6.6 12.1 13.2 25.8 13.5
FY21 21,098 (43.8) 4,102 19.4 623 (77.9) 6.6 2.6 6.0 116.7 25.0
FY22E 35,167 66.7 6,905 19.6 2,395 284.4 25.3 9.5 10.8 30.4 15.3
FY23E 39,199 11.5 8,056 20.6 3,070 28.2 32.4 11.3 12.0 23.7 13.1

260
Utilities
261
Represented by:
D Balasubramanyam
Group IR
Adani Green Energy (Not Rated)
Viral Raval, IR Bloomberg Code: ADANIGR IN, Market Cap: INR 1,763 bn, CMP: INR 1,127 (as on 15 Sept 2021)
Executive digest: Adani Green Energy (ADANIGR IN) is one of the largest renewable companies in India, with a
current project portfolio of 13,990MW. It is part of the Adani Group’s promise to provide a better,
cleaner and greener future for India. The company develops, builds, owns, operates and
maintains utility-scale grid-connected solar and wind farm projects.
Investor insight:  Operational capacity currently stands at 3,520MW. With under acquisition assets, it would
further increase to 5,370MW. With a target of 3,500MW Greenfield projects operational by
end-FY22, this would the total to 9,000MW operational by FY22. The company has a target
of 25GW of operational capacity by 2025
 ADANIGR can build 15GW at Khavda and is in the process of signing documents with the
government, which are in the advanced stage
 The company has signed agreements to acquire SB Energy’s 5GW renewable portfolio,
including 1,700MW operational assets from Soft Bank and Bharti Group - Out of this, a
300MW solar plant was commissioned in Q1FY22 post signing of definitive agreements.
Systems availability continues to be above 99.85%, thereby operating above normative levels
and earnings incentives
 ADANIGR has an Energy Network Operation Center which tracks all 72 locations by SCADA
software online, which helps in preventive maintenance and is able to sustain improved
performance, ie, 100% solar plant availability
 Modules prices have been up in the past six months due to higher domestic demand of China.
There is a temporary shortage of polysilicon, which is taking place and should be sorted out
in the next 9-12 months
 Battery storage and green hydrogen are promising. The company has a dedicated team of
10 working exclusively on this technology
 On the ESG front, it is following the United Nations global compact guideline, sustainable
development goals and GRI standards
Analyst annotations: AGEL participated in exponential growth of the solar sector in India with complete value chain
capture – in-house design and engineering, procurement through strategic partners, project
management, land acquisition as well as O&M through cutting-edge technology.
FY18 14,803 196.0 8,335 106.7 (1,375) 194.6 (0.9) (10.8)
FY19 20,580 39.0 15,255 83.0 (4,739) 244.6 (3.0) (28.9) 3.0
FY 20 25,486 23.8 14,502 (4.9) (232) (95.1) (0.1) (1.1) 10.2
FY21 31,240 22.6 22,350 54.1 2,100 (1,003.9) 1.3 9.2 12.7 822.9 78.5
Analyst: Rupesh Sankhe, rupesh.sankhe@elaracapital.com, +91 22 6164 8581
262
Represented by:
D Balasubramanyam
Group Head, Investor
Adani Total Gas (Not Rated)
Relations Bloomberg Code: ATGL IN, Market Cap: INR 1,546bn, CMP: INR 1,406 (as on 15 Sept 2021)
Priyansh Shah
Investor Relations
Investor insight: Adani Total Gas (ATGL IN) is developing city gas distribution (CGD) networks to supply piped
natural gas (PNG) to the industrial, commercial, domestic (residential) and compressed natural
gas (CNG) to the transport sector. The company has already set up CGD networks in
Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh. In
addition, the development of Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad,
and Udham Singh Nagar gas distribution has been awarded to a consortium of Adani Total Gas
and Indian Oil. Adani Total is a JV of Adani Group and Total Energies as parents with 37.4%
stake each.
Executive digest:  Infrastructure creation: During FY16-21, ATGL increases CNG stations from 65 to 217,
domestic connections from 0.22mn to 0.48mn, steel network from 355km to 705km and
peak gas volume from 1.11mmscmd to 2.04mmscmd
 Domestic gas price hike: The company is confident it would able to fully pass on the
anticipated increase in domestic gas prices by +USD 1/MMBtu from October 2021 without
hurting CNG demand
 Eleventh CNG auction round: ATGL would evaluate the proposed ~50 geographical areas
to be offered for bidding before taking final call on bidding
 Direct LNG sales: As a diversification, it is evaluating these proposals, if found viable
 Threat from electric vehicles: Electric vehicles would be potential competitor to CNG, but
that would be in the distant future
 Capex plans: The company plan to spend INR 50bn over the next five years, implying INR
10bn pa
Key focus on maintaining ROCE and profitability ratios to create further value for shareholders.
Despite COVID-19, there has been steady progress in developing infrastructure across ATGL.
FY18 12,916 19.8 3,652 28.3 1,729 70.9 1.6 21.6 16.8 894.3 290.9
FY19 18,235 41.2 5,446 29.9 2,287 32.3 2.1 22.9 21.6 676.1 195.1
FY20 19,909 9.2 5,951 29.9 4,362 90.7 4.0 33.7 27.8 354.5 178.5
FY21 17,845 -10.4 7,046 39.5 4,720 8.2 4.3 27.5 22.8 327.6 150.8

263
Represented by:
D Balasubramanyam,
Group IR
Adani Transmission (Not Rated)
Vijil Jain, IR Bloomberg Code: ADANIT IN, Market Cap: INR 2,138 bn, CMP: INR 1,944 (as on 15 Sept 2021)
Executive digest: Adani Transmission (ADANIT IN) is one of the largest private sector power transmission and
distribution companies in India. It is in the business of setting up, commissioning, operating and
maintaining electric power transmission systems. AEML is an integrated utility for Mumbai.
Investor insight:  ATL operationalized 207ckm along the Obra line in Q1FY22 with total network reaching at
18,801ckm; this is closer to the goal of 20,000ckt km by 2022
 System availability continues to be above 99.85%, thereby operating above normative levels
and earnings incentives
 The company continues to focus on reducing distribution losses which came in at 6.88%.
Collection efficiency in the distribution business (AEML) was more than 100%
 Units sold in AEML have increased by 18% to 2,036 on account of rise in power demand
 The company is aggressively participating in the smart meters program, which has already
started in Mumbai and has been part of capex plan for the next 4-5 years
 Receivables: The transmission segment’s collection efficiency is 90-95% currently and lagging
area is Rajasthan DISCOM (60-90 days is the payment cycle and beyond that will get late
payment surcharge). PGCIL (central) and state have pooling payment mechanisms. If the
payment stops, then the transmission stops and affects distribution
 Distribution: Collection efficiency has dropped due to COVID-19 (50% opt for physical
payment) and it is 100%. Digitalization has increased from 50% to 76-78% and 100% in some
cases
 Management is mindful net debt-EBITDA ratio should not rise beyond 4.5-5x and debt equity
of 2.0-3.0x
 It continues to identify assets on the private side (up for bid). However, there aren’t many
opportunities available on the TBCB side. Few benchmarks for selecting assets are IRR,
geography and ROW
 Acquisition, new license, franchise and PPP opportunities are in the T&D space
 Adani Electricity has successfully raised USD 300mn under its USD 2bn Global Medium-Term
Notes Program through a sustainability-linked (SLB) 10-year bond at 3.867% coupon with a
record subscription (9x) for a USD bond from India in 2021 reiterating faith of debt investors
in the Adani portfolio
Analyst annotations: Adani Transmission has a robust under-construction pipeline of INR 180bn, including the
Mumbai-HVDC project, which provides strong growth potential via TBCB transmission projects.
Several projects have been bid for renewable evacuation, ISTS and state projects. So, the pipeline
continues to be healthy. We expect the TBCB pipeline of INR 350bn over FY23-24E with only 3-4
firms, such as Power Grid Corporation of India, Adani Transmission, Sterlite and Tata Projects.
FY18 39,445 37.2 28,260 42.4 11,429 174.5 5.2 32.0 17.3 37.3 5.1
FY19 73,055 85.2 27,548 (2.5) 5,592 (51.1) 5.1 12.6 3.6 42.8 5.2
FY 20 114,160 56.3 44,781 62.6 7,065 26.3 6.4 14.3 3.0 29.4 4.0
FY21 99,263 (13.0) 39,411 (12.0) 12,240 73.3 11.1 21.6 9.6 81.6 16.4
Analyst:
Rupesh Sankhe, rupesh.sankhe@elaracapital.com, +91 22 6164 8581
264
Represented by:
Ramesh Chandak, IR CESC
Pankaj Kedia, IR
Bloomberg Code: CESC IN, Market Cap: INR 117bn, CMP: INR 880 (as on 15 Sept 2021)
Executive digest: CESC (CESC IN) is India’s first fully integrated electrical utility company. The firm owns and
operates the transmission & distribution system. This system comprises 567ckm of transmission
lines linking the company’s generating and receiving stations. CESC's Kolkata operations include
generation and distribution of electricity to 3.4mn across its licensed areas at Kolkata and Howrah,
West Bengal. Other than power sourced from the 600MW Haldia plant, which is operated by
CESC's 100% step-down subsidiary Haldia Energy, the Kolkata operations are directly under CESC.
The company’s distribution franchisees include four at Kota, Bharatpur & Bikaner in Rajasthan,
and Malegaon in Maharashtra.
 Receivables collection during the pandemic became difficult but management says currently
Investor insight:
things have started to improve
 Last month, the company won the Chandigarh bid; in the next 3-4 years, performance will
improve there with 100% ownership. Chandigarh is a low capex model so funding would be
from internal accruals. It is keen to expand distribution business in terms of license or the
franchise business. Pondicherry is a good asset to look at when opportunity arises
 Bikaner and Bharatpur is doing well. The business at Kota has bene affected by closure of
coastal industries but now it is doing reasonably well, and management wants to bring it to
10-12% in the next 3-4 years
 ESG rating was upgraded in January 2021 and is at BB
 Tariff order for Budge Budge license has been pending for two years; however, fuel cost
recovery is ongoing monthly, and the WB Regulatory Commission has started to issue orders
 The company does not plan to invest in projects where returns are less than 15-16%. It does
not expect any ROE cut for its regulated assets
 Annual capex is at INR 4,500-5,000mn over FY21-23 in the Kolkata distribution circles while
INR 1,500mn at Noida. There is not much capex in the franchisee business
 The Dhariwal-Chandrapur IPP has only 50% of capacity through long-term PPA, with Noida
at 187MW and Tamil Nadu at 100MW while the other unit remains dependent on short-term
PPA. Recently, the company signed a short-term PPA with Maharashtra DISCOM for 200MW.
From Dhariwal, it may sell some volume through the exchanges
 Privatization and distribution franchisee (DF) space are providing long-term growth potential,
given DISCOM weak financials. CESC has been active in the private distribution space outside
Kolkata. In the past few years, the company has won bids for three DF in Rajasthan: Kota,
Bharatpur and Bikaner. In 2019, it won bid for the Malegaon circle in Maharashtra, which
commenced operations on 1 March 2021. Around INR 20mn was from Malegaon in Q1FY22
CESC is reasonably valued based on 1) steady & low risk earnings from regulated standalone
Analyst annotations: operations. Kolkata PAT is at INR 8.1bn as well as Haldia at INR 3.2bn, 2) declining losses at
Chandrapur from INR 1.99bn in FY18 to INR 0.1bn in FY21, and 3) option value of incremental
earnings from three DF in Rajasthan with a strong balance sheet
FY20 78,360 1.1 14,330 18.3 9,180 152.4 68.9 9.1 7.6 8.3 0.8
FY21 73,714 (5.9) 18,015 24.4 8,654 (5.7) 65.0 8.1 9.5 8.9 0.7
FY22E 79,184 7.4 19,568 24.7 9,803 13.3 73.6 8.7 10.1 7.8 0.7
FY23E 81,949 3.5 20,907 25.5 11,535 17.7 86.6 0.1 10.4 6.6 0.6
265
Represented by:
Shruti Bhatia, VP India Energy Exchange
Aparna Vyas, IR
Bloomberg Code: IEX IN, Market Cap: INR 179 bn, CMP: INR 599 (as on 15 Sept 2021)
Executive digest: Indian Energy Exchange (IEX IN) is the first and largest energy exchange in India, providing a
nationwide, automated trading platform for physical delivery of electricity, renewable energy
certificates (REC) and energy savings certificates (ESC). The platform enables efficient price
discovery and increases accessibility & transparency of the power market in the country while also
enhancing speed and efficiency of trade execution. Currently, there are more than 6,600
participants registered on the exchange across 29 States and five Union Territories (UT).
Investor insight:  August volume sets a new milestone at 9.5bn units with growth of 75% YoY
 New exchange from PTC Pranurja is likely to take 1.0-1.5 years; however, management says
although PTC contributes 25% volume on the exchange it cannot be termed as PTC volume
as clients come to us for value add, price discovery, round-the-clock availability and flexibility
 The REC market is under subjudice; the Appellate Tribunal on Electricity is waiting on approval
on final hearing as it is also losing volume on certificates. There were 6.0-7.0mn certificates of
nine months inventory of last year and this year, there has been no trading since June 2020
 Management expects coupling with market-based economic dispatch (MBED); if
implemented, volume will see significant growth on exchanges
 The company is continuously innovating products and tech to become customer-centric. It
took significant initiatives to reach out to customers through webinars, events, eMeetings,
and made sizable investments in technology & process innovations for better user experience
 Management is working with State and Centre to raise awareness where it can avail green
power, marketing campaigns, telemarketing and webinars to generate awareness
 MOP allows long duration contracts; hence, management hopes to launch them. The RTM
market has seen a good response. Some 5-7% demand has shifted from DAM to RTM
 Management sees a need for derivatives as dependency of DISCOM in the short term has
increased and to hedge. MOP office memorandum allows derivatives and forward working;
management will first focus on forward markets on a delivery basis; hence, there should be
no regulatory issues. Financial markets may be a different company
 All matured market derivatives play a key role. Financial transaction on a delivery basis will
come to the exchange. No margin has been finalized for derivatives contracts. Management
says the global markets of derivatives volume is 7-10x more than the spot market
 There are a lot of initiatives on the gas exchange, such as 1) December formal authorization
received for the gas exchange in India, 2) customer-centric initiatives, and 3) day head market
which started in the past month. Domestic gas producers are selling 10%
In our view, the share of ST market will increase to ~15% by FY24E from 10% in FY20, driven by
competitive ST prices, given an oversupply situation, optimization of power procurement cost by
distribution companies (DISCOM), improved grid connectivity and increased focus on renewables
generation. We believe IEX will continue to benefit from the increasing trend toward ST power
market and rising share of exchanges. Given its good positioning in operating in a niche power
electricity market, high ROE and strong balance sheet, it can command a higher multiple.
Key Financials: YE
March
Revenue
(INR mn)
YoY
(%)
EBITDA
(INR mn)
EBITDA
Margin (%)
Adj PAT
(INR mn)
YoY
(%)
Fully DEPS
(INR)
ROE
(%)
ROCE
(%)
P/E
(x)
P/B
(x)
FY20 2,571 1.2 2,022 78.6 1,757 6.5 5.9 46.4 46.7 101.0 45.8
FY21 3,179 23.6 2,506 78.9 2,054 16.9 6.9 48.0 48.4 86.4 38.0
FY22E 3,737 17.6 2,959 79.2 2,434 18.5 8.2 46.2 46.5 72.9 30.3
FY23E 4,087 9.4 3,232 79.1 2,721 11.8 9.1 41.3 41.6 65.2 24.3
Rupesh Sankhe, rupesh.sankhe@elaracapital.com, +91 22 6164 8581

Analyst:
266
Represented by:
Kasturi Soundararajan
Chief of Corporate
Tata Power
Treasury & IR Bloomberg Code: TPWR IN, Market Cap: INR 447bn, CMP: INR 140 (as on 15 Sept 2021)
Executive digest: Tata Power (TPWR IN) is India's largest private sector power utility with operations across the
power value chain. It has ~8,584MW of operational projects and interests in coal mining through
its 30% stake at Bumi, apart from allocation of domestic coal blocks. In the T&D segment, the
company has a presence through its JV Powerlinks & NDPL. TPC has 1,100ckm of transmission
network in the Mumbai license area (MLA) comprising 973ckm of 220 kV/110 kV overhead lines
and 124ckm of 220 kV/110 kV underground cables. Its transmission system connects its Trombay
and hydel stations to 17 receiving stations across the MLA. It has a strategic 30% stake in Indocoal
KPC, which owns mines in Indonesia, providing a natural hedge against rising coal prices.
Investor insight:  TPWR plans to increase capacity to ~15.0GW by FY25 from the current 2.6GW with a 1.5GW
pipeline project, which will likely be commissioned over the next two years. Management
targets an increase in revenue of INR 230bn by FY25 from INR 40bn in FY20 from the
renewables business
 Renewables business IPO: Management sees more value creation through an IPO than InVit
as the portfolio is more stable
 Solar EPC orderbook stands at INR 80bn as on June 2021. The current orderbook is likely to
be commissioned over the next 12-18 months
 The company continues to expand and promote mass adoption of rooftop solar & solar
pumps, microgrids, home automation and focus on developing EV charging infrastructure in
the country.
 CGPL Mundra merger with standalone is on track. It will get tax benefits on accumulated
losses of INR 180bn. Management is hopeful of some positive development as a recent media
article quoted the Ministry of Power planning to allow imported power plant to sell power on
exchanges if DISCOM do not buy power
 The company plans to expand solar modules capacity, which is currently at 1,000MW
 Management expects INR 13bn divestment of its international power asset
 Net debt is reduced to INR 388.9bn in June 2021 from INR 400.9bn in Q1FY21 at1.57x vs
1.81x; however, it increased from INR 359.4bn in March 2021 due to perpetual debt prepaid
and RE capex
 Total capex is expected at INR 70-80bn in FY22 of which capex on renewables under
implementation will be INR 40-45bn primarily in FY22
Analyst annotations: The company is becoming aggressive in expanding the power distribution business through the
public-private-partnership (PPP) model; distribution franchisee opportunities are likely to reach
20mn customers by FY25 from 2.6mn in FY20. We believe valuation of RE InvIT, deleveraging of
balance sheet and strong focus on power distribution privatization opportunities will sustain the
stock’s performance.
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS ROE ROCE P/E P/B
FY20 291,364 (1.4) 79,428 23.7 10,174 66.0 6.2 5.2 10.7 22.1 1.9
FY21 324,681 11.4 81,075 2.1 11,274 0.1 4.2 5.5 12.1 33.1 1.9
FY22E 355,778 9.6 74,229 (8.4) 17,495 0.6 7.6 7.9 12.0 16.4 1.8
FY23E 381,741 7.3 87,109 17.4 23,301 0.3 10.6 9.5 14.3 11.7 1.6
267
Represented by:
Saurabh Mashruwala
VP Finance
Torrent Power
Jayprakash Khanani Bloomberg Code: TPW IN, Market Cap: INR 235bn, CMP: INR 489 (as on 15 Sept 2021)
AGM
Executive digest: Torrent Power (TPW IN) is among the best run power utilities in the country with highly efficient
generation asset. It has a portfolio of coal-, gas- and renewable power-based plants with an
aggregate generation capacity of 3,879MW. The company distributes power to 3.65mn
customers annually in its distribution areas of Ahmedabad, Gandhinagar, Surat & Dahej SEZ and
Dholera Special Investment Region (SIR) in Gujarat, at Bhiwandi and Shil, Mumbra & Kalwa (SMK)
area in Maharashtra and at Agra in Uttar Pradesh. During FY19, the company was awarded
distribution license for the Dholera SIR and distribution franchise for SMK area.
Investor insight:  Economic activity at the distribution franchise business continues to recover from the
pandemic. There was significant reduction in T&D losses, primarily in distribution of the
franchise business, due to recovery in industrial demand which was significantly affected in
the past year
 Disruption caused by the Second Wave has led to deferment of arrears recovery in FY21;
accordingly, provisions have been made. In the next 2-3 quarters, management expects to
recover material amount out of the provision made in case of Bhiwandi and Agra in particular
 On 30 July 2021, the company entered into a security purchase agreement with the
Lightsource Group for 50MW of solar projects in the Solapur area of Maharashtra. The initial
project cost was INR 62.5mn per MW on AC capacity basis. The project has 25-year PPA with
SECI with a balance life of 22 years and contracted tariff is at INR 4.43 per unit and average
PLF of the past three years is 21.6% on AC capacity basis. The company expects O&M cost
savings so that it further improves IRR
 TPW has emerged as the successful bidder for a 51% stake licensed distribution business of
Dadra & Nagar Haveli and Daman & Diu. The Supreme Court has vacated the stay enforced
by the Mumbai High Court on the tender process and the matter will now be heard by the
Supreme Court in the near term
 For FY22, the company’s gas plants are largely protected from the recent surge in prices
globally, which is about USD 4.36/MMBtu, and 70% of requirement is tied up. Management
says the current increase in spot prices is not sustainable and expects prices to fall
 Dgen is still not operating due to lower demand and higher spot gas prices
Analyst annotations: TPW’s regulated generation and distribution business is among the most efficient with assured
equity of 14.0-15.5%. TPL has balance sheet strength and strong focus on distribution as key
growth areas. Thus, we believe TPL is a well-balanced play on opportunities in the power
distribution sector in India. TPW will benefit from stable cashflow, backed by regulated tariff
structure and high operating efficiency, resulting in a 15% earnings CAGR over FY21-23E.
FY20 136,406 3.7 35,561 26.1 11,741 30.6 24.6 13.0 11.1 19.4 2.5
FY21 121,727 10.8 34,652 28.5 12,909 10.0 26.9 13.4 11.5 17.7 2.2
FY22E 135,615 11.4 35,729 26.4 15,748 22.0 32.8 14.5 10.6 14.5 2.0
FY23E 147,269 8.6 39,790 27.0 17,456 10.9 36.3 14.3 10.3 13.1 1.8
268
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 or other business from any company referred to in this Note. Each of these entities functions
as a separate, distinct and independent of each other. This Note is strictly confidential and is being furnished to you solely for your information. This Note should not be
reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This Note is not
directed 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, regulation or which would subject Elara Securities (India) Private Limited or any of its affiliates to any
registration or licensing requirements 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. It is
important to note that any dispute with respect to this research report, would not have access to stock exchange investor redressal forum or arbitration mechanism.
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 Elara Securities
(India) Private Limited for minor operational deviations in certain cases. Elara Securities (India) Private Limited has not been debarred from doing 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 Securities (India)
Private Limited or its associate entities have not managed or co-managed public offering of securities for the subject company in the past twelve months. Research analyst
or Elara Securities (India) Private Limited or its associates have not received any compensation for investment banking or merchant banking 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.
269
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.
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 different currency to the investor’s currency of
reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The information contained
in this report does not constitute advice on the tax consequences of making any particular investment 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.
270
India Europe USA Asia / Pacific
Elara Securities (India) Pvt. Ltd. Elara Capital Plc. Elara Securities Inc. Elara Capital (Asia) Pte.Ltd.
One International Center, Tower 3, 21st 6th Floor, The Grove, 950 Third Avenue, Suite 1903, 1 Raffles Place, #42-03
Floor, Senapati Bapat Marg, Elphinstone 248A Marylebone Road, New York, NY 10022, USA One Raffles Place
Road (West) London, NW1 6JZ Tel: +1 212 430 5870 Singapore 048616
Mumbai – 400 013, India United Kingdom Fax: +1 212 208 2501 Tel : +65 6692 0174
Tel : +91 22 6164 8500 Tel : +44 20 7486 9733
Harendra Kumar Managing Director harendra.kumar@elaracapital.com +91 22 6164 8571

Sales
Hitesh Danak India hitesh.danak@elaracapital.com +91 22 6164 8543
Karan Rathod India karan.rathod@elaracapital.com +91 22 6164 8570
Prashin Lalvani India prashin.lalvani@elaracapital.com +91 22 6164 8544
Shraddha Shrikhande India shraddha.shrikhande@elaracapital.com +91 22 6164 8567
Sudhanshu Rajpal India sudhanshu.rajpal@elaracapital.com +91 22 6164 8508
Gangadhara Kini US, Australia gangadhara.kini@elaracapital.com +91 22 6164 8558
Anita Nazareth Corporate Access, Conference & Events anita.nazareth@elaracapital.com +91 22 6164 8520
Tina D’souza Corporate Access tina.dsouza@elaracapital.com +91 22 6164 8595
Quantitative, Alternatives, Sales Trading & Dealing
Sunil Jain Quantitative & Alternates sunil.jain@elaracapital.com +91 22 6164 8531
Biren Mehta Head - Sales Trading biren.mehta@elaracapital.com +91 22 6164 8500
Manan Joshi India manan.joshi@elaracapital.com +91 22 6164 8555
Manoj Murarka India manoj.murarka@elaracapital.com +91 22 6164 8551
Nupur Barve India nupur.barve@elaracapital.com +91 22 6164 8532
Vinay Goel India vinay.goel@elaracapital.com +91 22 6164 8552
Shiv Chanani Head of Research shiv.chanani@elaracapital.com +91 22 6164 8572

Research
Akhil Parekh Analyst Consumer Discretionary, Mid Cap, Small Cap akhil.parekh@elaracapital.com +91 22 6164 8519
Amit Purohit Analyst FMCG amit.purohit@elaracapital.com +91 22 6164 8500
Ankita Shah Analyst Infrastructure, Ports & Logistics ankita.shah@elaracapital.com +91 22 6164 8516
Apurva Prasad Analyst IT Services apurva.prasad@elaracapital.com +91 22 6164 8500
Bhawana Chhabra, CFA Analyst Strategy bhawana.chhabra@elaracapital.com +91 22 6164 8500
Biju Samuel Analyst Quantitative & Alternate Strategy biju.samuel@elaracapital.com +91 22 6164 8505
Gagan Dixit Analyst Aviation, Oil & Gas gagan.dixit@elaracapital.com +91 22 6164 8504
Garima Kapoor Economist garima.kapoor@elaracapital.com +91 22 6164 8527
Harshit Kapadia Analyst Capital Goods, Consumer Electronics harshit.kapadia@elaracapital.com +91 22 6164 8542
Jay Kale, CFA Analyst Auto & Auto Ancillaries jay.kale@elaracapital.com +91 22 6164 8507
Karan Taurani Analyst Media & Entertainment, Alcobev, QSR, Internet karan.taurani@elaracapital.com +91 22 6164 8513
Madhukar Ladha Analyst Diversified Financials, Insurance madhukar.ladha@elaracapital.com +91 22 6164 8500
Mahrukh Adajania Analyst Banking & Financials mahrukh.adajania@elaracapital.com +91 22 6164 8500
Param Desai Analyst Healthcare, Pharmaceuticals, Real Estate param.desai@elaracapital.com +91 22 6164 8528
Pratik Tholiya Analyst Agrochemicals, Travel & Hospitality, Sugar pratik.tholiya@elaracapital.com +91 22 6164 8518
Ravi Sodah Analyst Cement, Building Materials, Metals & Mining ravi.sodah@elaracapital.com +91 22 6164 8517
Rupesh Sankhe Analyst Utilities, Renewables, Capital Goods rupesh.sankhe@elaracapital.com +91 22 6164 8581
Saurabh Mitra Sr. Associate Cement, Building Materials, Metals & Mining saurabh.mitra@elaracapital.com +91 22 6164 8546
Ankeet Pandya Associate Healthcare, Pharmaceuticals, Real Estate ankeet.pandya@elaracapital.com +91 22 6164 8535
Anushka Chhajed Associate Strategy anushka.chhajed@elaracapital.com +91 22 6164 8536
Ash Shah Associate Infrastructure, Ports & Logistics ash.shah@elaracapital.com +91 22 6164 8500
Jayprakash Nagar Associate Economics jayprakash.nagar@elaracapital.com +91 22 6164 8500
Jenish Karia Associate Diversified Financials, Insurance jenish.karia@elaracapital.com +91 22 6164 8500
Ketul Dalal Associate Auto & Auto Ancillaries ketul.dalal@elaracapital.com +91 22 6164 8500
Reena Shah Associate Aviation, Oil & Gas reena.shah@elaracapital.com +91 22 6164 8525
Riddhi Mehta Associate Banking & Financials riddhi.mehta@elaracapital.com +91 22 6164 8500
Rohit Harlikar Associate Dairy, FMCG, Paints rohit.harlikar@elaracapital.com +91 22 6164 8562
Tushar Wavhal Associate IT Services tushar.wavhal@elaracapital.com +91 22 6164 8500
Viren Deshpande Associate Media & Entertainment, Alcobev, QSR, Internet viren.deshpande@elaracapital.com +91 22 6164 8565
Vinayak Patil Database vinayak.patil@elaracapital.com +91 22 6164 8510
Priyanka Sheth Editor priyanka.sheth@elaracapital.com +91 22 6164 8568
Prakriti Singh Editor prakriti.singh@elaracapital.com +91 22 6164 8500
Gurunath Parab Production gurunath.parab@elaracapital.com +91 22 6164 8515
Jinesh Bhansali Production jinesh.bhansali@elaracapital.com +91 22 6164 8537
Access our reports on Bloomberg: Type RESP ESEC <GO> Also available on Thomson & Reuters
Elara Securities (India) Private Limited

CIN: U74992MH2007PTC172297 | SEBI Research Analyst Registration No.: INH000000933
Member of BSE Limited and National Stock Exchange of India Limited | SEBI REGN. NO.: INZ 000 238236
Member of Central Depository Services (India) Limited | SEBI REGN. NO.: IN-DP-370-2018
Website: www.elaracapital.com Investor Grievance Email ID: investor.grievances@elaracapital.com
271

Digital Renaissance of India

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Digital Renaissance of India

Uploaded by

Copyright:

Available Formats

ASHW AMEDH

POST CONFERENCE NOTES

India's Water Economy Compulsions and Conundrums 10

Jammu & Kashmir -New Beginning 14

Ravi Shankar Prasad - Electronic Manufacturing Renaissance on PLI Wings 18

India's Power Elite 20

Economy & Markets

Dr Duvvuri Subbarao - Modern Monetary Theory: Is it an Option for India? 29

Dr Viral Acharya - Future of India's Banking 33

Dr Eswar Prasad - Old Money New Money 37

Surjit Bhalla - Markers for India's Productivity Leap 43

Sergi Lanau - Inflation Red Herring 47

Preparing to Decouple from China 50

Defining and Regulating India's Emerging Data Ecosystem 56

Tech Enablers Rekindle Productivity 57

Evolution of Big Tech 58

E-Businesses Reboot in an AI Spring 59

Dr Dolf Gielen - Steel, Hydrogen And Renewables: Curious Symphony? 63

Dr Anant Sudarshan - India's Energy Transition 66

Potential of Hydrogen in India's Economy 70

Metals & Minerals

Paul Bartholomew - Mine the Metals: Global Perspective 74

Mine the Metals: China Angle 77

Mine the Metals: Domestic Narrative 80

Rohan Baid - Mine the Metals: Changing Dynamics 83

Long View from China 87

Turmoil in South Asia: India's Options 91

Young Corporate Honchos

Reimagining Business for the New Era 95

Dialogue #1: Vision for New India

 The government also is developing ports with 18-meter draft

Click here for the video link

Dialogue #2: India's Water Economy - Compulsions

Many challenge of water security

Click here for the video link

Dialogue #3: Jammu & Kashmir - New Beginning

Unemployment situation in the J&K

Terrorism is over in J&K

Click here for the video link

Dialogue #4: Electronic Manufacturing

Can AI replace routine judgement and judiciary work?

Click here for the video link

Dialogue #5: India's Power Elite

The Cultural Revolution

Changes in bureaucracy, business, and the entertainment sector

Fusion of economic-political power

Talent deficit in the government

Click here for the video link

Dialogue #1: India 2030: From Soft to Super Clout -

Capital expenditure as the only demand-side stimulus

COVID-19 will change dynamics of urbanization

Click here for the video link

Dialogue #2 : Modern Monetary Theory: Is it an

Exhibit 1: Key difference between convention economics and MMT

Why is there so much talk about MMT suddenly?

What if India goes the MMT way?

Click here for the video link

Dialogue #3: Future of India's Banking

Embedded Finance – Concept

Retail asset quality in India

Dialogue #4: Old Money New Money

The Bitcoin revolution