Technology

India I Equities
Company Update
Change in Estimates  Target  Reco 

6 August 2018

Firstsource Solutions Rating: Buy

Target Price: `80
Revenues in line but profitability surprises; retaining a Buy Share Price: `69
FSOL’s Q1 FY19 revenue came at $134m, down 1.1% q/q (~1% cross- Key data FSOL IN / FISO.BO
currency impact as the UK contributes 45% to revenue), up 5% y/y. FSOL 52-week high / low `84 / 33
expects this to inch up toward 7% in FY19. The positive was the 12.7% Sensex / Nifty 37692 / 11387
3-m average volume $9.2m
EBITDA margin (up 47bps q/q, 405bps y/y), supported by higher revenue
Market cap `48bn / $695.6m
(collections and mortgage business) and deal ramp-ups in BFSI, which
Shares outstanding 690m
provided better revenue productivity despite stable pricing. We raise our
FY19e/FY20e earnings 6.5%/6% and our target to `80, valuing the
company at 13x PE (unchanged). Shareholding pattern (%) June'18 Mar'18 Dec'17
Promoters 54.3 54.5 54.6
Revenue growth lagging, but margin expansion provides upside risk. - of which, Pledged - - -
FSOL is still in a low-growth trajectory as its top client (25% of revenue) and Free float 45.7 45.5 45.4
the Healthcare vertical (35% of revenue) are faced with growth challenges - Foreign institutions 10.7 7.6 5.9
offsetting the strong growth in BFS (35% of revenue). BFS growth was - Domestic institutions 8.9 7.1 6.2
driven by new deals (a UK bank), collections (renewed business from the Ed), - Public 26.1 30.8 33.3

and the mortgage business (more servicing-driven and high growth currently
but has exhibited volatility in the past). Margins, on the other hand, moved to Estimates revision (%) FY19e FY20e
12.7% in Q1, driven by currency, operational improvements and fixed cost Sales ($) (2.7) (1.8)
leverage. The margin is likely to maintain its upward trajectory with the EBITDA 16.5 15.2
company guiding to better margins in H2 FY19. PAT 6.5 6.0

Top client faltering, but growth targets intact. Firstsource is facing some
challenges with its top client in terms of revenue shortfall (FY18 revenue was Relative price performance
$150m, FY19 estimated at $132m) of ~$18m-20m (~3.5% of FY18 revenue). 85

This will be covered completely by growth in new accounts and the company 75 FSOL

can still deliver ~4-5% growth in dollar terms. Also, revenue per employee is 65

`on an upswing and may turn out to be its biggest margin lever in FY19 and 55

FY20. 45
35
Raising estimates, target price; retaining a Buy. We raise our target to `80 25
Sensex

(13x FY20e EPS, same as before), the multiple reflecting return to growth and
Aug-17
Sep-17

Aug-18
Nov-17
Dec-17

Feb-18

Jul-18
Mar-18
Oct-17

Jan-18

Apr-18
May-18
Jun-18

superior execution on the margin side. Risks: M&A-driven growth and great
dependence on a few large deals. Source: Bloomberg

Key financials (YE Mar) FY16 FY17 FY18 FY19e FY20e

Sales (` m) 31,747 34,569 34,315 37,457 39,789
Net profit (` m) 2,650 2,800 3,265 3,751 4,062
EPS (`) 3.8 4.0 4.8 5.5 5.9 Mohit Jain
PE (x) 18.3 17.4 14.6 12.7 11.7 Research Analyst

EV / EBITDA (x) 15.1 15.6 14.9 10.8 9.9

PBV (x) 2.0 2.4 2.0 1.8 1.7
RoE (%) 11.7 12.6 14.9 15.2 15.1
Shobit Singhal
Research Associate
RoCE (%) 7.8 7.3 8.7 11.0 11.6
Dividend yield (%) - - 2.2 2.5 3.6
Net debt / equity (x) 0.3 0.4 0.2 0.2 0.1
Sugandhika Singh
Source: Company, Anand Rathi Research

Anand Rathi Share and Stock Brokers Limited (hereinafter “ARSSBL”) is a full-service brokerage and equities-research firm and the views expressed therein are solely of
ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient. Disclosures and analyst
certifications are present in the Appendix.

Anand Rathi Research India Equities

6 August 2018 Firstsource Solutions – Revenues in line but profitability surprises; retaining a Buy

Quick Glance – Financials and Valuations

Fig 1 – Income statement (` m) Fig 2 – Balance sheet (` m)
Year-end: Mar FY16 FY17 FY18 FY19e FY20e Year-end: Mar FY16 FY17 FY18 FY19e FY20e
Revenues ($ m) 484.9 515.4 532.0 552.2 586.6 Share capital 6,733 6,813 6,865 6,865 6,865
Growth (%) -1 6 3 4 6 Net worth 24,251 20,280 23,518 25,830 27,897
Net revenues 31,747 34,569 34,315 37,457 39,789 Total debt 8,775 9,224 6,723 5,923 5,331
Employee & direct costs 21,722 23,834 23,955 25,636 27,021 Minority interest 20 12 13 13 13
Gross profit 10,025 10,735 10,360 11,821 12,768 DTL / (asset) 272 -903 -1,911 -1,911 -1,911
Gross margins % 32 31 30 32 32 Capital employed 33,318 28,613 28,342 29,855 31,329
SG&A 6,532 7,342 6,809 6,947 7,417 Net tangible assets 892 878 882 951 980
EBITDA 3,493 3,393 3,552 4,874 5,351 Net intangible assets 436 576 624 1,212 1,212
EBITDA margins (%) 11.0 9.8 10.3 13.0 13.4 Goodwill 24,692 19,224 19,308 19,308 19,308
- Depreciation 662 590 659 730 771 CWIP (tang. & intang.) 79 43 4 4 4
Other income 650 1,019 1,092 574 491 Investments (strategic) - - - - -
Interest expenses 524 453 404 229 203 Investments (financial) 768 1,523 220 154 146
PBT 2,957 3,369 3,580 4,489 4,868 Current assets (ex cash) 9,116 8,497 9,532 10,522 11,305
Effective tax rate (%) 10 17 9 16 17 Cash 689 387.61 1,230.01 1,550.23 2,537
+ Associates / (minorities) -4 8 -1 -0 -0 Current liabilities 3,354 2,515 3,458 3,847 4,164
Net income 2,650 2,800 3,265 3,751 4,062 Working capital 5,762 5,982 6,074 6,675 7,141
WANS 700 700 685 688 688 Capital deployed 33,318 28,613 28,342 29,855 31,329
FDEPS (` / sh) 3.8 4.0 4.8 5.5 5.9 Contingent liabilities 1,460 1,389 1,119 - -

Fig 3 – Cash-flow statement (` m) Fig 4 – Ratio analysis

Year-end: Mar FY16 FY17 FY18 FY19e FY20e Year-end: Mar FY16 FY17 FY18 FY19e FY20e
PBT 2,957 3,369 3,580 4,489 4,868 P/E (x) 18.3 17.4 14.6 12.7 11.7
+ Non-cash items 1,067 778 1,195 889 879 EV / EBITDA (x) 15.1 15.6 14.9 10.8 9.9
Oper. prof. before WC 4,024 4,147 4,775 5,377 5,746 EV / sales (x) 1.7 1.6 1.5 1.4 1.3
- Incr. / (decr.) in WC 451 1,598 304 292 126 P/B (x) 2.0 2.4 2.0 1.8 1.7
Others incl. taxes -577 -567 -764 -1,046 -1,145 RoE (%) 11.7 12.6 14.9 15.2 15.1
Operating cash-flow 2,997 1,981 3,706 4,039 4,475 RoCE (%) - after tax 7.8 7.3 8.7 11.0 11.6
- Capex (tang. + intang.) 858 854 791 800 800 RoIC (%) - after tax 8.2 7.8 9.2 11.6 12.4
Free cash-flow 2,139 1,128 2,915 3,239 3,675 DPS (` / sh) - - 1.5 1.8 2.5
Acquisitions -134 -813 -200 -588 - Dividend yield (%) - - 2.2 2.5 3.6
- Div.(incl. buyback & taxes) - - - 1,439 1,996 Dividend payout (%) - incl. DDT - - 36.7 37.2 49.1
+ Equity raised 117 158 142 - - Net debt / equity (x) 0.3 0.4 0.2 0.2 0.1
+ Debt raised -1,486 329 -3,033 -800 -592 Receivables (days) 61 48 56 58 58
- Fin investments 61 716 -1,313 -66 -8 Inventory (days) - - - - -
- Misc. (CFI + CFF) 689 387 295 158 107 Payables (days) 12 12 11 12 12
Net cash-flow -113 -302 842 320 987 CFO : PAT % 112.9 71.0 113.5 107.7 110.2
Source: Company, Anand Rathi Research Source: Company, Anand Rathi Research

Fig 5 – Price movement Fig 6 – Revenue

(`) ($m)
90 136 135
80 134 134

70 132
FSOL 132 131
60
50
128
40
30
124
20
10
0 120
1QFY18

2QFY18

3QFY18

4QFY18

1QFY19
Nov-13

Nov-14

Nov-15

Nov-16

Nov-17
Aug-13

May-14
Aug-14

May-15
Aug-15

May-16
Aug-16

May-17
Aug-17

May-18
Aug-18
Feb-14

Feb-15

Feb-16

Feb-17

Feb-18

Source: Bloomberg Source: Company

Anand Rathi Research 2

6 August 2018 Firstsource Solutions – Revenues in line but profitability surprises; retaining a Buy

Result Highlights
Q1 FY19 Results at a Glance

Fig 7 – Segment-wise results

Q1 FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q/Q % Y/Y %

Revenues ($ m) 132 131 134 135 134 -1.1 1.3

Growth Y/Y % 0.8 6.0 9.6 8.5 5.3 -321 bps 446 bps
Volume growth % -10.7 -20.1 4.1 -2.7 -6.0 -333 bps 461 bps
Revenues (` m) 8,507 8,464 8,631 8,713 9,060 4.0 6.5
Eff. exchange rate 64.5 64.5 64.5 64.5 67.8 5.2 5.2
Employees (EoP) 25,013 19,194 19,226 18,703 18,759 0.3 -25.0
Revenue productivity ($ ‘000/employee) 5.3 6.8 7.0 7.2 7.1 -1.4 35.0
No. of seats 23,136 17,215 17,294 16,679 16,287 -2.4 -29.6
Seat-fill factor (%) 73.0 76.0 79.0 79.0 74.0 -500 bps 100 bps
CoR (excluding D&A) (5,942) (5,941) (6,045) (6,027) (6,210) 3.0 4.5
As % of revenue -69.8 -70.2 -70.0 -69.2 -68.5 63 bps 130 bps
SG&A (1,830) (1,691) (1,666) (1,621) (1,700) 4.9 -7.1
As % of revenue -22 -20 -19 -19 -19 -16 bps 275 bps
EBITDA 735 831 920 1,065 1,150 8.0 56.4
EBITDA margins % 9 10 11 12 13 47 bps 405 bps
EBIT 582 668 749 893 970 8.6 66.5
EBIT margins % 7 8 9 10 11 46 bps 386 bps
Other Income 320 270 267 234 148 -36.8 -53.8
Forex gain / loss 271 266 241 260 131 -49.4 -51.5

PBT 794 837 912 1,038 1,055 1.7 33.0

PBT margins % 9 10 11 12 12 -26 bps 232 bps
Taxes (140) (149) 84 (109) (169) 54.8 21.4
ETR % -18 -18 9 -11 -16 -551 bps 154 bps
PAT 654 688 996 929 886 -4.6 35.5
PAT margins % 8 8 12 11 10 -88 bps 209 bps
Source: Company Note: Q2 FY18 figures include India business partially while Q3, Q4 FY18 and Q1 FY19 figures do not include the India business, which had been sold off by then

Fig 8 – Quarterly result (` m)

Year-end: Mar Q1 FY19 % Q/Q % Y/Y FY18 FY17 % Y/Y
Sales ($ m) 134 (1.1) 1.3 532 515 3.2
Sales 9,060 4.0 6.5 34,315 34,569 (0.7)
EBITDA 1,150 8.0 56.4 3,552 3,393 4.7
EBITDA margin (%) 13 47 bps 405 bps 10.3 9.8 54 bps
EBIT 970 8.6 66.5 2,892 2,803 3.2
EBIT margin (%) 11 46 bps 386 bps 8.4 8.1 32 bps
PBT 1,055 1.7 33.0 3,580 3,369 6.3
Tax (169) 54.8 21.4 (314) (577) (45.5)
Tax rate (%) (16) -551 bps 154 bps (8.8) (17.1) 834 bps
Net income 886 (4.5) 35.5 3,265 2,800 16.6
Source: Company

Anand Rathi Research 3

6 August 2018 Firstsource Solutions – Revenues in line but profitability surprises; retaining a Buy

Conference call takeaways

Company
 In its mortgage business, the company has won a few large deals in the
US. It is expecting this business to grow 7-10% q/q for the next three
quarters.
 It is also seeing ramp-ups in its UK business, with the top-three banks
among its clientele. This would deliver growth in H2 FY19
 Healthcare and BFSI would drive growth in FY19 due to a robust sales
pipeline.
 Net debt in Q1 FY19 was $21.3m, excluding working capital debt. The
company expects to be debt-free by Q2 FY19. This pertains to long-
term debt.
 The tax rate in FY19 would be ~15-18%.
 The seat-fill factor has come down 500bps q/q to 74% as the company
opened new facilities in Chennai for its payer business and on
seasonality of collections business.
 Other operating income was down 51% y/y, 50% q/q, which largely
reflects the hedging policy.
Business outlook
 The company has lowered its revenue-growth guidance to 7-9% for
FY19 in constant currency terms, against 9-10% earlier, as it would see
some re-alignment in its top client in FY19.
It has maintained its previous, 14%, margin guidance (incl. other
income) in FY19 at constant currency, which would chiefly be driven
by automation and operating leverage.

Notes from the last quarters’ conference calls

From Q4 FY18
 The Q4 FY18 revenue growth rate was affected by portfolio
rebalancing of its top clients (the top-clients’ concentration stepped
down to 27% in Q4, against 29.2% the quarter prior). Management is
expecting flat to slightly less y/y growth in FY19 from its top clients if
one large deal doesn’t materialise.
 FY19 revenue growth (in constant currency) at 9-10% would be ahead
of the industry growth rate. The Q1 FY19 growth rate would come at
over 25% y/y at the operating profit level.
 In Q4 the company recommended a maiden dividend of `1.5 a share, a
15% payout. Management believes that it can move the payout toward
35-40% from FY19.
 Capex in FY19 would be $10m-12m.

Anand Rathi Research 4

6 August 2018 Firstsource Solutions – Revenues in line but profitability surprises; retaining a Buy

Factsheet
Fig 9 – Revenue
Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Revenues ($ m) 132 131 134 135 134

Source: Company, Anand Rathi Research

Fig 10 – Revenue by area

(%) Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

North America 53 52 54 56 54
The UK 41 45 45 43 45
India 6 3 1 1 1
APAC (RoTW) 0 0 0 0 0
Source: Company, Anand Rathi Research

Fig 11 – Revenue by vertical

(%) Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

BFSI 27 29 29 31 35
Telecoms 37 35 33 31 29
Life Sciences 36 36 37 38 35
Others 0 0 0 0 1
Source: Company, Anand Rathi Research

Fig 12 – Client concentration

(%) Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Top client 28 29 29 27 25
Top-5 clients 47 47 48 45 43
Source: Company, Anand Rathi Research

Fig 13 – Revenue by delivery location

(%) Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Offshore 20.7 21.3 22.9 22.9 23.1

Domestic 6.2 2.6 2.6 2.6 2.6
On-shore 73.1 76.1 77.1 77.1 76.9
Source: Company, Anand Rathi Research

Fig 14 – Workforce spread

Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

India (%) 61 46 46 47 46
Abroad (%) 39 54 54 53 54
Total 25,013 19,194 19,226 18,703 18,759
Source: Company, Anand Rathi Research

Fig 15 – Seats
Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Number of seats 23,136 17,215 17,294 16,679 16,287

Seat-fill factor (%) 73 76 79 79 74
Source: Company, Anand Rathi Research

Anand Rathi Research 5

6 August 2018 Firstsource Solutions – Revenues in line but profitability surprises; retaining a Buy

Valuations
The stock trades at 12x FY20e EPS of `5.9. This, we think, is quite
attractive, given that the business is likely to match organic industry-level
growth, is already past macro-economic headwinds in the UK, and on our
fears of the impact of automation on the business not turning out to be
true in 2018.
We are giving Firstsource (a BPO company) a ~25% discount to mid-sized
generic IT-services companies, reflecting its relatively weaker balance sheet,
slower organic growth, and higher top-client and UK concentration. IT
services companies, being higher up the value chain than BPO companies,
command a higher billing rate and enjoy higher margins than BPO
companies. We still believe that, at this stage, automation threats may be
greater for BPO companies than for IT-service companies and, therefore,
BPO companies would need to transition faster to higher-value-added
services. For Firstsource, particularly, client concentration seems high, with
the top client contributing 25%, and the top-five 43%, of revenue.
Despite these factors, the risk-reward seems favourable to us at current
trading multiples. Our target price is based on a PE of 13x, which reflects
an EV/EBITDA of 10.2x.

Fig 16 – Change in estimates

FY19e FY20e
(` m) New Old Chg % New Old Chg %
Revenues ($ m) 552 568 (2.7) 587 597 (1.8)
Revenues 37,457 37,476 (0.1) 39,789 39,434 0.9
EBITDA 4,874 4,183 16.5 5,351 4,646 15.2
EBITDA margin % 13.0 11.2 185bps 13.4 11.8 167bps
EBIT 4,143 3,469 19.4 4,580 3,892 17.7
EBIT margin % 11 9 180bps 12 10 164bps
PAT 3,751 3,522 6.5 4,062 3,834 6.0
Source: Anand Rathi Research

Fig 17 – PE band
17

15

13
FSOL
11

5
Oct-13

Jan-14

Sep-14

Jan-15

Sep-15

Jan-16

Aug-16

Dec-16

Aug-17

Dec-17

Aug-18
May-14

May-15

May-16

Apr-17

Apr-18

Source: Bloomberg, Anand Rathi Research

Risks
 Dependent on inorganic growth: The company is using acquisitions
and lift-out deals to accelerate revenue growth. This, though, comes
with risks associated with inorganic growth measures.
 Long-term risks due to automation: We reckon that the BPO sector
might see slower-than-industry revenue growth on account of the
impact of automation on the industry.

Anand Rathi Research 6

Appendix
Analyst Certification
The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research
analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange
Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have
no bearing whatsoever on any recommendation that they have given in the Research Report.

Important Disclosures on subject companies

Rating and Target Price History (as of 6 August 2018)
TP Share
90 FSOL Date Rating (`) Price (`)
1 28-Oct-14 Buy 59 39
80
2 17-Nov-14 Buy 57 40
70 3 09-Apr-15 Buy 47 31
13 4 04-Aug-15 Buy 40 32
60 6 5 13-May-16 Sell 40 40
11 6 28-Jul-16 Sell 44 47
50 7 8 9 7 28-Oct-16 Hold 44 39
1 5
40 2 12 8 31-Jan-17 Hold 42 39
3 4 9 08-May-17 Hold 40 39
30 10 10 08-Aug-17 Hold 38 35
11 02-Nov-17 Hold 41 41
20 12 08-Feb-18 Buy 55 40
Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

Jan-16

May-16

Sep-16

Jan-17

May-17

Sep-17

Jan-18

May-18
13 08-May-18 Buy 75 63

Anand Rathi Ratings Definitions

Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described
in the Ratings Table below:
Ratings Guide (12 months)
Buy Hold Sell
Large Caps (>US$1bn) >15% 5-15% <5%
Mid/Small Caps (<US$1bn) >25% 5-25% <5%

Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014
Anand Rathi Share and Stock Brokers Ltd. (hereinafter refer as ARSSBL) (Research Entity) is a subsidiary of Anand Rathi Financial Services Ltd. ARSSBL is a
corporate trading and clearing member of Bombay Stock Exchange Ltd, National Stock Exchange of India Ltd. (NSEIL), Multi Stock Exchange of India Ltd (MCX-
SX) and also depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd. ARSSBL is engaged in the business of
Stock Broking, Depository Participant and Mutual Fund distributor.
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi research have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.
General Disclaimer: This Research Report (hereinafter called “Report”) is meant solely for use by the recipient and is not for circulation. This Report does not
constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The
recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed to be neither advice for the purpose of
purchase or sale of any security, derivatives or any other security through ARSSBL nor any solicitation or offering of any investment /trading opportunity on behalf
of the issuer(s) of the respective security (ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide for
the readers. No action is solicited based upon the information provided herein. Recipients of this Report should rely on information/data arising out of their own
investigations. Readers are advised to seek independent professional advice and arrive at an informed trading/investment decision before executing any trades or
making any investments. This Report has been prepared on the basis of publicly available information, internally developed data and other sources believed by
ARSSBL to be reliable. ARSSBL or its directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy,
completeness, adequacy and reliability of such information / opinions / views. While due care has been taken to ensure that the disclosures and opinions given are
fair and reasonable, none of the directors, employees, affiliates or representatives of ARSSBL shall be liable for any direct, indirect, special, incidental,
consequential, punitive or exemplary damages, including lost profits arising in any way whatsoever from the information / opinions / views contained in this Report.
The price and value of the investments referred to in this Report and the income from them may go down as well as up, and investors may realize losses on any
investments. Past performance is not a guide for future performance. ARSSBL does not provide tax advice to its clients, and all investors are strongly advised to
consult with their tax advisers regarding taxation aspects of any potential investment.
Opinions expressed are our current opinions as of the date appearing on this Research only. We do not undertake to advise you as to any change of our views
expressed in this Report. Research Report may differ between ARSSBL’s RAs and/ or ARSSBL’s associate companies on account of differences in research
methodology, personal judgment and difference in time horizons for which recommendations are made. User should keep this risk in mind and not hold ARSSBL,
its employees and associates responsible for any losses, damages of any type whatsoever.
ARSSBL and its associates or employees may; (a) from time to time, have long or short positions in, and buy or sell the investments in/ security of company (ies) mentioned
herein or (b) be engaged in any other transaction involving such investments/ securities of company (ies) discussed herein or act as advisor or lender / borrower to such
company (ies) these and other activities of ARSSBL and its associates or employees may not be construed as potential conflict of interest with respect to any
recommendation and related information and opinions. Without limiting any of the foregoing, in no event shall ARSSBL and its associates or employees or any third party
involved in, or related to computing or compiling the information have any liability for any damages of any kind.
Details of Associates of ARSSBL and Brief History of Disciplinary action by regulatory authorities & its associates are available on our website i.e. www.rathionline.com
Disclaimers in respect of jurisdiction: This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in
any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject ARSSBL to
any registration or licensing requirement within such jurisdiction(s). No action has been or will be taken by ARSSBL in any jurisdiction (other than India), where any action for
such purpose(s) is required. Accordingly, this Report shall not be possessed, circulated and/or distributed in any such country or jurisdiction unless such action is in
compliance with all applicable laws and regulations of such country or jurisdiction. ARSSBL requires such recipient to inform himself about and to observe any restrictions at
his own expense, without any liability to ARSSBL. Any dispute arising out of this Report shall be subject to the exclusive jurisdiction of the Courts in India.
Statements on ownership and material conflicts of interest, compensation - ARSSBL and Associates
Answers to the Best of the knowledge and belief of ARSSBL/ its Associates/ Research Analyst who is preparing this report
ARSSBL/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company, at the end of No
the month immediately preceding the date of publication of the research report?
ARSSBL/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company No
ARSSBL/its Associates/ Research Analyst/ his Relative have any other material conflict of interest at the time of publication of the research report? No
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation from the subject company in the past twelve months No
ARSSBL/its Associates/ Research Analyst/ his Relative have managed or co-managed public offering of securities for the subject company in the past twelve No
months
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation for investment banking or merchant banking or brokerage services from No
the subject company in the past twelve months
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation for products or services other than investment banking or merchant No
banking or brokerage services from the subject company in the past twelve months
ARSSBL/its Associates/ Research Analyst/ his Relative have received any compensation or other benefits from the subject company or third party in connection No
with the research report
ARSSBL/its Associates/ Research Analyst/ his Relative have served as an officer, director or employee of the subject company. No

Other Disclosures pertaining to distribution of research in the United States of America

This research report is a product of ARSSBL, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the
research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not
subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules
or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by ARSSBL only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the
Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major
Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or
transmitted onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with
Major Institutional Investors, ARSSBL has entered into an agreement with a U.S. registered broker-dealer, Cabrera Capital Markets. ("Cabrera"). Transactions in securities
discussed in this research report should be effected through Cabrera or another U.S. registered broker dealer.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect
to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those
securities or options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on
which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit
to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
© 2018. This report is strictly confidential and is being furnished to you solely for your information. All material presented in this report, unless specifically indicated otherwise,
is under copyright to ARSSBL. None of the material, its content, or any copy of such material or content, may be altered in any way, transmitted, copied or reproduced (in
whole or in part) or redistributed in any form to any other party, without the prior express written permission of ARSSBL. All trademarks, service marks and logos used in this
report are trademarks or service marks or registered trademarks or service marks of ARSSBL or its affiliates, unless specifically mentioned otherwise.
Additional information on recommended securities/instruments is available on request.
ARSSBL registered address: 4th Floor, Silver Metropolis, Jaicoach Compound, Opposite Bimbisar Nagar, Goregaon (East), Mumbai - 400 063.
Tel No: +91 22 4001 3700 | Fax No: +91 22 4001 3770 | CIN: U67120MH1991PLC064106.