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Result Update February 3, 2016 Rating matrix Rating Target Target Period Potential Upside : : : : Jindal Saw (SAWPIP) Hold | 50 12 months 6% Volume disappoints; margins surprise positively What’s Changed? Target EPS FY16E EPS FY17E Rating Changed from | 60 to | 50 Changed from | 12.7 to | 9.0 Changed from | 16.0 to | 14.0 Unchanged Quarterly Performance Revenue EBITDA EBITDA (%) PAT Q3FY16 1077.0 179.6 16.7 39.2 Q3FY15 1777.4 238.5 13.4 61.9 YoY (%) -39.4 -24.7 326 bps -36.6 Q2FY16 1345.0 161.8 14.0 101.1 QoQ (%) -19.9 11.0 265 bps -61.2 Key Financials | Crore Total Op. Income EBITDA Net Profit EPS (|) FY14 6655.9 640.1 -85.6 -3.1 FY15 8324.7 935.7 25.9 0.9 FY16E 8367.5 1030.9 261.1 9.0 FY17E 10382.4 1352.9 406.1 14.0 FY14 NA NA 11.0 0.4 -2.4 3.3 FY15 52.7 56.0 9.1 0.4 0.7 4.6 FY16E 5.2 5.6 8.3 0.3 6.7 5.4 FY17E 3.4 3.6 5.9 0.3 9.5 7.9 Valuation summary P/E Target P/E EV / EBITDA P/BV RoNW (%) RoCE (%) Stock data Particular Market Capitalization (| Crore) Total Debt (FY15) (| Crore) Cash and Investments (FY15) (| Crore) EV (| Crore) 52 week H/L (|) Equity capital Face value | 47 Amount | 1431 crore | 7832 crore | 639 crore | 8624 crore 86/46 60.91 |2 Price performance (%) Return % Jindal Saw 1M -20.7 3M -23.5 6M -35.0 12M -38.4 Maharashtra Seamless -14.5 -2.6 -19.8 -27.9 Research Analyst Dewang Sanghavi [email protected] ICICI Securities Ltd | Retail Equity Research • Jindal Saw reported a mixed set of Q3FY16 numbers wherein the topline, EBITDA and PAT came in lower than our estimates. Pipes sales volume came in lower than our estimate. EBITDA margins, however, surprised positively during the quarter • Topline for the quarter came in at | 1077.0 crore (down 39.4% YoY, 19.9% QoQ and lower than our estimate of | 1350.5 crore). Pipes segment reported sales volume of ~146000 tonnes, lower than our estimate of ~200000 tonnes • EBITDA came in at | 179.6 crore (down 24.7% YoY, 4.8% QoQ and lower than our estimate of | 189.2 crore). However, the EBITDA margin came in higher than our estimate. The EBITDA margin came in at 16.7% (up 265 bps QoQ and 326 bps YoY and higher than our estimate of 14.0%) • Ensuing PAT for the quarter was at | 39.2 crore (down 36.6% YoY, 61.2% QoQ and lower than our estimate of | 57.2 crore) • The company is not doing any additional capex/projects other than normal/maintenance capex. It has deferred its decision to implement the steel plant at Bhilwara (Rajasthan) for the time being Order book increases QoQ… On a sequential basis, the order book of Jindal Saw increased ~12.5% QoQ. Jindal Saw’s order book at the end of Q3FY16 was at ~US$900 million. The break-up is as under: Large diameter pipes – US$470 million Ductile iron pipes – US$410 million Seamless pipes and others– US$10 million Pellets – US$10 million The order book position in terms of volume is over 1.2 million tonnes (MT), highest in the last five years. The orders of large diameter pipes are slated to be executed by June/September 2016. In case of ductile iron pipes, the same is slated to be executed over the next 12-18 months or more. The company has participated in various bids and is likely to get orders in phases. The current order book includes export of ~35%. The major exports orders are from Middle East, gulf region, South East Asia and Far East. Utilisation level of saw pipe segment, key monitorable, going forward Over the last couple of years, the saw pipe segment has been operating at muted capacity utilisation levels. The current order book of the large diameter pipe segment (LSAW and HSAW) is ~5,50,000 tonnes. During Q3FY16, production and dispatches were subdued on account of pressure on liquidity on domestic buyers. The management has guided that the situation is improving and expects to ramp up operations in the coming quarters. The company has also participated in a good amount of tenders in the water and oil & gas segments. Jindal Saw expects additional orders in the next few months. Higher debt continues to weigh; maintain HOLD… Going forward, we have modelled sales volume of 0.91 million tonne (MT) for FY16E (downward revised from 1.2 MT earlier) and 1.19 MT for FY17E (downward revised from 1.35 MT earlier). We have a cautious view on the company due to elevated debt levels. We have valued the stock at 6x FY17E EV/EBITDA. Subsequently, we have arrived at a target price of | 50 and assigned a HOLD recommendation to the stock. Variance analysis Comments Topline came in lower than our estimate Other income came in higher than our estimate Standalone Operations Total Operating Income Other Income Q3FY16 1,077.0 55.4 Q3FY16E 1,350.5 39.6 Q3FY15 1,777.4 34.7 YoY (%) -39.4 59.6 Q2FY16 1,345.0 43.8 QoQ (%) -19.9 26.5 Employee Expenses Raw Material Expenses 105.9 496.2 105.3 714.7 90.1 963.0 17.6 -48.5 108.4 768.1 -2.3 -35.4 Other Expenses 295.2 341.2 485.8 -39.2 279.8 5.5 EBITDA EBITDA Margin (%) Depreciation Interest Exceptional Item 179.6 16.7 59.9 84.5 -10.2 189.2 14.0 61.6 85.5 0.0 238.5 13.4 62.1 69.9 -40.1 -24.7 326 bps -3.5 21.0 -74.5 188.7 14.0 60.2 82.7 -17.9 -4.8 265 bps -0.5 2.2 -43.0 PBT Total Tax 80.4 25.8 81.7 24.5 101.3 39.3 -20.6 -34.4 71.7 -29.4 12.2 -187.7 PAT from ordinary activities Extraordinary items 54.6 15.4 57.2 0.0 61.9 0.0 -11.8 NA 101.1 0.0 -46.0 NA Net Profit for the period 39.2 57.2 61.9 -36.6 101.1 -61.2 Extraordinary items (net of tax expense) represents diminution in value of investments in overseas subsidiaries Ensuing PAT came in lower than our estimate 145,573 200,000 215,600 -32.5 198,858 -26.8 Pipes sales volume came in lower than our estimate Key Metrics Sales volume (Pipe ) (in tonne) Employee expense came in line with our estimate Raw material expense came in lower than our estimate EBITDA came in lower than our estimate EBITDA margin came in higher than our estimate Depreciation expense came in line with our estimate Interest expense came in line with our estimate Exceptional items primarily represent net result of amounts on account of reinstatement of foreign exchange denominated assets and liabilities (other than long term foreign exchange denominated loans) PBT came in broadly in line with our estimate Source: Company, ICICIdirect.com Research Change in estimates (Cons) FY16E (| Crore) Old New Total Op. Income 9,273.7 8,367.5 EBITDA 1107.8 1030.9 EBITDA Margin (%) 11.9 12.3 Adj PAT 369.5 261.1 Currency (US$/|) 60.0 65.0 Source: Company, ICICIdirect.com Research % Change Old -9.8 10,920.2 -6.9 1387 37 bps 12.7 -29.3 464.7 8.3 60.0 FY17E New % Change 10,382.4 -4.9 1352.9 -2.5 13.0 33 bps 406.1 -12.6 65.0 8.3 Comments Topline revised downwards for FY16E and FY17E EBITDA estimate revised downwards Margins revised upwards for FY16E and FY17E PAT estimate revised downwards We have incorporated a weaker rupee in our assumptions Assumptions Pipe Sales volume (in lakh tonne) Source: Company, ICICIdirect.com Research Current FY16E FY17E 9.1 11.9 ICICI Securities Ltd | Retail Equity Research Earlier FY16E FY17E 12.0 13.5 Comments Downward revised estimates Page 2 Company Analysis Utilisation level of saw pipe segment, key monitorable, going forward Over the last couple of years, the saw pipe segment has been operating at muted capacity utilisation levels. The current order book of the large diameter pipe segment (LSAW and HSAW) is ~5,50,000 tonnes. During Q3FY16, production and dispatches were subdued on account of pressure on liquidity on domestic buyers. The management has guided that the situation is improving and expects to ramp up operations in the coming quarters. The company has also participated in a good amount of tenders for water and oil & gas segments. Jindal Saw expects additional orders in the next few months. Over a medium to longer term horizon, within the water sector segment, specific and renewed focus of the Government of India on infrastructure, including urbanisation, is expected to accelerate. The management expects the domestic economy to need more pipelines, primarily for water and industrial applications. Net debt at consolidated level to remain at elevated levels As of December 31, 2015, the net debt of the company (standalone) was ~| 4807.5 crore (~US$728 million) including ECB/long term and funds working capital & other unsecured loans. This includes working capital loans of | 2434.3 crore (~US$369 million), which remained at an elevated level due to higher order book, inventory and receivables, etc. Exhibit 1: Net debt levels at consolidated level to remain elevated 7500 7192 7171 FY15 FY16E 6681 5757 6000 (| crore) 4615 4500 3000 1500 0 FY13 FY14 FY17E Net Debt Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 3 Key takeaways from conference call and other highlights ICICI Securities Ltd | Retail Equity Research • In terms of geographical break-up, sales in India contributed 94% while sales outside India (exports) contributed the balance 6% • Blended EBITDA/tonne for the quarter came in at ~| 14500/tonne (Q2FY16: ~| 10133/tonne) of sale of total pipes and pig iron of 150036 tonnes (Q2FY16 -213341 tonnes). This also includes the impact of job work business done by the company during the quarter. EBITDA for pellet was ~| 750/tonne • The company produced ~54000 tonnes of SAW pipes, which corresponds to the planned production and delivery schedules. Additionally, during the quarter, Jindal Saw also executed orders in the SAW pipe business segment for the job work with comparatively better profitability • With respect to DI pipes and pig iron unit, the company produced more than 1.01 lakh tonnes DI pipes and 3300 tonnes of pig iron. While dispatches in DI pipe during the quarter got impacted on account of pressure on liquidity primarily on domestic buyers. The situation is improving and sales are expected to ramp up in the coming quarters. The current order book in the DI segment is ~600000 tonnes of DI pipes, which is the all-time high for the segment. Due to a fall in commodity prices, the company expects sale prices to be softer for this segment • The seamless pipe segment has witnessed an improvement mainly due to diversification in product portfolio where the company started catering to niche/premium segment e.g. T91, 13 crome, ball bearing industry, etc. Seamless pipe demand in oil & gas remained weaker due to dumping of imported material in India primarily from China and imposition of anti-dumping duty by North America and Europe. In general, on account of continued weakness in oil prices, demand for OCTG pipes remained much weaker. The trend is likely to continue over the short to medium term. The production of seamless pipe in Q3FY16 was ~23000 tonnes compared to ~21000 tonnes in Q2FY16 • Due to the sharp decline in iron ore prices and availability of cheaper products in the market, operations in the pellet plant were contained while the company produced ~308000 tonnes of pellets in Q2FY15. The company has seen some improvement in prices due to revocation of export duty on iron ore. The company is also working on costs control measures to remain competitive • The current order book has ~900000 tonnes of pipe orders (DI and HSAW) for the water sector, which is primarily catering to the domestic market • The company’s product profile comprises only 35% from the oil & gas sector. Continued weakness in oil prices on account of oversupplied market conditions coupled with the geo-political and war-like situation in the MENA region may have a negative impact on new demand for pipes needed in this sector, OCTG products, etc. Further, due to a fall in commodity prices, sales prices are expected to weaken. The current order book includes more than 300000 tonnes pipe orders from the oil & gas sector. In addition, the company has orders for job work for the oil & gas sector • The company is currently undertaking a restructuring process, which is likely to take three to six months to be completed, subject to approval from concerned authorities Page 4 Valuation Going forward, we have modelled sales volume of 0.91 million tonne (MT) for FY16E (downward revised from 1.2 MT earlier) and 1.19 MT for FY17E (downward revised from 1.35 MT earlier). We have a cautious view on the company due to elevated debt levels. We have valued the stock at 6x FY17E EV/EBITDA. Subsequently, we have arrived at a target price of | 50 and assigned a HOLD recommendation to the stock. Exhibit 2: Valuation matrix Sales Sales Growth EPS EPS Growth PE EV/EBITDA RoNW RoCE (| Crore) YoY (%) (|) YoY (%) (x) (x) (%) (%) FY14 6655.9 -1.6 -3.1 353.4 NA 11.0 -2.4 3.3 FY15 8324.7 25.1 0.9 LP 52.7 9.1 0.7 4.6 FY16E 8367.5 0.5 9.0 908.6 5.2 8.3 6.7 5.4 FY17E 10382.4 24.1 14.0 55.5 3.4 5.9 9.5 7.9 Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 5 Company snapshot 200 180 160 140 120 100 80 Target Price: | 50 60 40 20 0 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Jan-08 Event The company receives an | 800 crore order from Cairn Energy India for supply of line pipes, tracer tube, insulation and bends for Barmer Salaya pipeline project of Cairn. The pipeline project, from Mangala oilfield to Salaya, will cover over 600 km with a weight of about one lakh tonne May-08 The company allots 26,00,000 warrants and 27,30,000 - 9.5% compulsorily convertible debentures (CCDs), both convertible into equity shares of the company at | 819 each to Anbeeco Investments Ltd, Cyprus. Anbeeco Investments belongs to the promoter group of Jindal Saw Anbeeco Investments Ltd declines to convert the warrants allocated to it by the company. Consequently, the advance amount of @ 10% of per warrant stands forfeited in accordance with Sebi guidelines The company announces the receipt of orders/letter of award (LoA) aggregating to more than | 1000 crore (US$210 million) for supply of large diameter pipes and ductile iron pipes in domestic and export markets. The total order book now stands at US$750 million (approximately | 3600 crore) The company executes a mining lease agreement for 30 years with the Rajasthan Government for iron ore mines in the state. The mines have ~180 MT of reserves of various categories of iron ore, based on initial estimates The company makes full and final payment towards redemption of foreign currency convertible bonds (FCCBs) outstanding as on date Apr-09 Jun-09 Jan-11 Jul-11 Nov-11 Jan-13 May-13 The company announces the receipt of order/letter of award aggregating to ~ | 1000 crore for supply of large diameter pipes (L saw pipes) and ductile iron pipes for various export markets. These orders are scheduled to be executed gradually in the next 12 months Morgan Stanley raises its stake in the company to about 5%, following additional 2.44% stake buying through open markets The company reports dismal results for FY13. Reports a loss at the PAT level amounting to | 19 crore vis-à-vis | 189 crore profit in FY12 Exhibit Valuation matrixOfficer & wholetime director with effect from July 1, 2013. Mr Kumar has earlier The company announces the appointment of Neeraj Kumar as 3: Group Chief Executive worked with Jindal Saw Ltd as Director (Finance) & CFO from 2002 to 2006Sales Sales Growth EPS EPS Growth PE EV/EBITDA RoNW RoCE Source: Company, ICICIdirect.com Research (| Crore) YoY (%) (|) YoY (%) (x) (x) (%) (%) Jul-13 Top 10 Shareholders Rank 1 2 3 4 5 6 7 8 9 10 Name Jindal Organisation Sigmatech, Inc. Four Seasons Investments, Ltd. Danta Enterprises Pvt. Ltd. Reliance Capital Asset Management Ltd. HSZ (Hong Kong) Limited OPJ Trading Pvt. Ltd. Dimensional Fund Advisors, L.P. Jindal (Abhyuday) Jindal (Deepika) Shareholding FY14 6655.9 -1.6 -3.1 353.4Pattern NA (in %) Sep-14 LatestFY15 Filing Date % O/S8324.7 Position 25.1 Change (m) 0.9 LP 71.7Dec-14 Promoter 1120.4 46.3 5.9 46.3 30-Sep-2015 17.89561.1 54.19M 14.9 -60.010.9 FY16E 18.1 11.5 30-Sep-2015 9.9 30.12M 0.0 FII FY17E 11236.4 17.5 16.3 49.7 3.9 11.8 13.1 30-Sep-2015 9.3 28.31M 0.0 DII Source: Company,7.7 ICICIdirect.com 23.8 29.1 30-Sep-2015 23.57MResearch 23.6 Others 31-Dec-2014 6.7 20.25M 0.6 30-Sep-2015 3.7 11.37M 0.0 30-Sep-2015 2.6 7.77M 7.8 30-Nov-2015 2.3 6.90M 0.0 30-Sep-2015 1.8 5.57M 0.8 30-Sep-2015 1.8 5.56M 0.0 11.8 Mar-15 9.7 48.8 8.4 10.9 6.1 13.2 27.1 -2.4 Jun-15 0.7 51.3 8.0 10.2 10.7 13.2 25.4 3.3 Sep-15 4.6 51.3 5.5 10.2 8.2 13.7 24.9 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Investor name Danta Enterprises Pvt. Ltd. OPJ Trading Pvt. Ltd. Sahyog Tradecorp Pvt. Ltd. Kuwait Investment Authority Value 23.0 7.6 5.2 3.3 Shares 23.6 7.8 5.3 3.4 Sells Investor name Jindal Organisation Anbeeco Investments, Ltd. Canara Robeco Asset Management Company Ltd. Pental Holding, Ltd. Van Eck Associates Corporation Value -58.5 -12.3 -1.1 -0.9 -0.2 Shares -60.0 -13.0 -1.2 -0.8 -0.2 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 6 Financial summary (Consolidated) Profit and loss statement (Year-end March) (| crore) Cash flow statement (| crore) FY14 FY15 FY16E FY17E Total Operating Income 6655.9 8324.7 8367.5 10382.4 Raw Material Expenses 3719.4 4274.3 4260.7 5308.4 521.2 683.2 664.9 775.3 Other expenses 1775.3 2431.5 2411.0 2945.8 Total Operating Expend. 6015.8 7389.0 7336.6 9029.5 (Inc)/dec in Investments 79.0 (232.3) 289.7 640.1 935.7 1030.9 1352.9 (Inc)/dec in Fixed Assets (850.3) (1,302.5) (200.0) Employee Expenses EBITDA Growth (%) (Year-end March) FY14 FY15 FY16E FY17E (Inc)/dec in Current Assets (400.6) (1,630.8) (52.5) (1,249.3) Inc/(dec) in CL and Provisions (123.6) 990.8 (380.9) 1,111.3 51.1 (7.2) 15.4 (237.4) (199.6) 256.4 Others CF from operating activities Others (14.7) 6.0 46.2 10.2 31.2 Depreciation 321.3 402.9 413.2 440.2 CF from investing activities Interest 392.0 539.8 460.9 442.9 Issue/(Buy back) of Equity 95.3 129.1 152.5 114.3 Inc/(dec) in loan funds 914.7 PBT before EI 22.2 122.1 309.2 584.1 Dividend paid & dividend tax Exceptional Item (EI) -67.7 -56.1 -23.5 0.0 PBT After EI -45.6 66.0 285.6 Total Tax 54.7 21.3 21.4 Other Income Net Profit Before EO EO (net of tax) (100.2) 44.7 264.2 - (1,534.8) 2.8 89.6 - (200.0) (200.0) - 1,869.0 (300.0) (300.0) (32.3) (32.3) (32.3) (32.3) Inc/(dec) in Share Cap 33.5 106.2 (3.1) 14.8 584.1 Others (40.2) (3.5) 192.7 CF from financing activities 875.7 1,942.1 Net Cash flow (147.7) 207.8 10.6 190.8 Opening Cash 289.7 142.0 349.8 360.4 Closing Cash 142.0 349.8 360.4 551.2 391.3 0.0 -30.0 Minorites, Associates,etc -14.7 -11.2 -12.3 -14.8 PAT After MI before EO -85.6 25.9 261.1 406.1 Growth (%) 353.4 LP 908.6 55.5 -3.1 0.9 9.0 14.0 FY15 FY16E EPS (|) (786.0) 708.4 -15.4 0.0 (335.4) (317.6) Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research Balance sheet (Year-end March) (| crore) FY14 Key ratios FY17E Equity Capital Total Shareholders funds Total Debt Deferred Tax Liability Minority Interest / Others Total Liabilities 55.3 3568.4 58.0 3689.8 58.0 3918.6 58.0 29.2 129.2 127.2 135.1 148.0 1.0 1.0 1.0 1.0 EBITDA Margin 9.6 11.3 12.3 13.0 PBT / Total Operating income 0.3 1.5 3.7 5.6 (1.3) 0.3 3.1 3.9 7531.9 7231.9 108.6 108.6 108.6 DPS Operating Ratios (%) 157.8 154.3 166.6 181.4 9805.3 11784.9 11726.0 11814.5 8199.2 8699.2 9099.2 2240.5 2680.7 Net Block 5372.4 6372.0 6458.7 6418.5 659.7 559.7 259.7 59.7 6032.2 6931.7 6718.5 6478.2 153.6 153.6 153.6 153.6 74.6 306.9 17.2 17.2 Inventory 1919.1 3002.4 2918.3 3635.9 Debtors 1744.7 2060.0 2175.6 2699.3 Loans and Advances 1342.1 1573.6 1593.6 1600.6 8.1 8.7 9.7 10.7 142.0 349.8 360.4 551.2 Total Current Assets 5155.9 6994.5 7057.6 Current Liabilities 1537.4 2501.4 2080.5 Provisions 14.0 9.0 23.2 7831.9 1827.3 Cash FY17E 0.9 115.8 1424.3 other assets FY16E 14.8 5962.9 6796.8 Investments FY15 8.5 BV Less: Acc Depreciation Goodwill FY14 (3.1) 4292.3 Gross Block Total Fixed Assets EPS Cash EPS Assets Capital WIP (Year-end March) Per share data (|) Liabilities Reported PAT Margin Inventory days 188.3 256.4 250.0 250.0 Debtor days 95.8 90.5 95.0 95.0 Creditor days 50.0 52.0 60.0 63.0 RoE (2.4) 0.7 6.7 9.5 RoCE 3.3 4.6 5.4 7.9 RoIC 3.4 4.8 5.6 8.3 Return Ratios (%) Valuation Ratios (x) P/E NA 52.7 5.2 3.4 11.0 9.1 8.3 5.9 EV / Net Sales 1.1 1.0 1.0 0.8 Market Cap / Sales 0.2 0.2 0.2 0.1 8497.7 Price to Book Value 0.4 0.4 0.3 0.3 3151.8 Solvency Ratios 5.3 EV / EBITDA 73.5 100.3 140.3 180.3 Debt/EBITDA 9.3 8.4 7.3 Current Liabilities & Prov 1610.9 2601.7 2220.8 3332.2 Debt / Equity 1.7 2.1 1.9 1.7 Net Current Assets 3545.0 4392.8 4836.8 5165.5 Current Ratio 3.2 2.7 3.2 2.6 Application of Funds 9805.3 11784.9 11726.0 11814.5 Quick Ratio 2.0 1.5 1.9 1.5 Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Source: Company, ICICIdirect.com Research Page 7 ICICIdirect.com coverage universe (Pipes) CMP Sector/Company Jindal Saw Maharashtra Seamles (|) EPS (|) M Cap TP (|) Rating (| Cr) FY15 FY16E P/E (x) FY17E EV/EBITDA (x) FY15 FY16E FY17E ROCE(%) FY15 FY16E FY17E ROE(%) FY15 FY16E FY17E FY15 FY16E FY17E 47 50 Hold 1431.4 0.9 9.0 14.0 52.7 5.2 3.4 9.1 8.3 5.9 4.6 5.4 7.9 0.7 6.7 9.5 149 135 Hold 1021.8 17.6 4.0 13.0 9.6 41.9 13.0 15.0 40.9 12.5 2.0 0.1 2.0 4.0 0.9 3.0 Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 8 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head – Research [email protected] ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected] ICICI Securities Ltd | Retail Equity Research Page 9 Disclaimer ANALYST CERTIFICATION We /I, Dewang Sanghavi, MBA (FIN) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. 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