Uflex Ltd BUY - Ventura Securities Ltd

Uflex Ltd BUY CMP ` 174

Target Price ` 402

FY18E EV/EBITDA 4.0X

Uflex Ltd (Uflex) is one of the largest fully integrated Indian flexible Sensex 25,400 packaging solution providers with a global offering. In our opinion at the Nifty 7,758 CMP of Rs 174 (0.4 P/BV) the stock is extremely undervalued. However, Industry Packaging we believe this is set to change and expect the stock to get re-rated as the growth story unfolds. We recommend a buy on the stock with a SOTP based valuation price of Rs 402 (4x FY18 EV/EBITDA) representing an upside potential of 134% (over 18 months). At the CMP Scrip Details the stock is trading at 2.6x its forward FY18 EV/EBITDA. Index Details

1,258.3 416.5 O/s Shares (Cr) 7.2 AvVol 31,483 52 Week H/L 201.7/110.2 Div Yield (%) 1.6 FVPS (`) 10.0

We are positive on the stock given that: 

The Indian packaging industry is one of the fastest growing markets and expected to become the fourth-largest packaging market in the world. Within packaging, the flexible plastic segment is the fastestgrowing in India, clocking a CAGR of 16.6% during the last five years. Uflex by virtue of its leadership position is best placed to benefit from this opportunity.



Revenues are expected to grow at a CAGR of 7.4% from Rs 6,180 cr in FY 15 to 7,655 cr in FY 18 while consolidated net earnings are expected to grow at a CAGR of 23.5% to Rs 472.3 cr over the same period. Its marquee client portfolio ensures repeat business for value added products. Further the improving product mix - in favour of the packaging business - should help Uflex improve margins substantially. The EBITDA and PAT margins are expected to reach 14.3% (+250bps) and 6.2% (+210 bps) respectively by FY18.



Uflex has been at the forefront of innovation and in the past has added several feathers to its cap viz 3D bags, flexi tubes, High Barrier Laminate for Packaging Snacks etc. The Global Dupont Packaging Innovation Silver Award 2015 for the premium shower proof bag for building materials is testimony of its innovative DNA. This product if embraced would be a potential game changer for Uflex.

Shareholding Pattern Shareholders Promoters Public Total

% 47.6 52.4 100.0

Uflex vs. Sensex 30000 240

29000

200

28000

160

27000 26000

120

25000

80

24000

Uflex

Mar-16

Jan-16

Feb-16

Dec-15

Oct-15

Nov-15

Sep-15

Jul-15

Aug-15

22000 Jun-15

0 Mar-15

23000 May-15

40

SENSEX (RHS)

Key Financials (` in Cr) Net Y/E Mar EBITDA Sales 2015 6,180.3 731.6 2016E 6,504.2 841.6 2017E 6,921.9 937.6 2018E 7,654.8 1093.1

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PAT 251.0 277.1 344.9 472.3

EPS (`) 35.3 38.4 47.8 65.4

EPS Growth (%) 26.5 8.8 24.5 36.9

RONW (%) 8.3 8.5 9.7 11.8

ROCE (%)

P/E (x)

EV/EBITDA (x)

9.0 9.9 10.7 12.3

4.9 4.5 3.6 2.7

4.5 3.9 3.3 2.6

th

Tuesday, 05 April 2016

This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

STOCK POINTER

MktCap (` cr) BVPS (`)

 Uflex is setting up a Rs 550 crore Asceptic Packaging Material Project for packing liquids at Sanand, Gujarat. Global major Tetra Packaging is the only player currently operating in this space in India. We believe that Uflex’s foray into this segment should be well received by the end user industry considering Uflex’s reputation for offering quality products. Besides, having dual vendors always works well for the end user industry.

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Tuesday, 05 April 2016 This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

 Company Background Uflex Limited (Uflex), with a presence in more than 140 countries, is one of the largest fully integrated Indian flexible packaging solution providers. Uflex has a vast production capacity for Polyester chips, Biaxially Oriented Polyethylene Teraphthalate (BOPET) and Biaxially Oriented Polypropylene (BOPP) films, Cast Polypropylene (CPP) films, Printing and Coating Inks, adhesives, facilities for Holography, Metallization and PVDC coating, Gravure Printing Cylinders, Gravure Printing, Lamination and Pouch formation. The company has been conferred with the Global Dupont Packaging Innovation Silver Award 2015 for the ‘Safe Pack Bag’ for packaging building materials. Business structure of Uflex Ltd

‘

Source: Uflex Ltd, Ventura Research

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 Key Investment Highlights

 Packaging business to drive revenue growth We expect sales to grow at a CAGR of 7.4% from Rs 6,180 cr in FY 15 to 7,655 cr in FY18 driven by robust growth in the packaging product segment (CAGR of 13.7% to Rs 3,930 crore by FY18) which is expected to be the key focus area for the company. The traditional film business, with its lower contribution margin, is expected to post flat growth, at best, over the same period. Revenue growth for Uflex 8,000

7,655

Rs in cr 6,922

7,000 5,863

6,000

6,504

6,180

5,161 5,000 4,000

4,516 3,496

3,000 2,000 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

Net Sales Source: Uflex Ltd, Ventura Research

Packaging segment revenue

share set to improve

Volume share

Value share 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

100% 41%

40%

42%

49%

51%

20%

21%

22%

23%

25%

83%

80%

79%

78%

77%

75%

FY13

FY14

FY15

FY16E

FY17E

FY18E

60% 40% 59%

60%

58%

55%

51%

49%

FY17E

FY18E

20% 0%

FY13

FY14

FY15

Packaging Film Source: Uflex Ltd, Ventura Research

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45%

17% 80%

FY16E

Packaging product

Packaging Film

Packaging product


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 Rosy outlook for the packaging product business We expect the packaging product segment volumes to rise significantly (CAGR of 9.2%) on the back of new product launches and a continued improvement in the existing product portfolio. In line with this volume growth, revenues are expected to grow at a CAGR of 13.7% from 2,676 cr in FY15 to 3,930 cr in FY18. EBITDA margins are also slated to improve by 100 bps per annum to 15% going forward (from the current 13%). Uptick in volumes

Revenue growth in the packaging product business Rs in cr

4,500

21.0%

4,000

19.0%

3,500

17.0%

90,000

in MT

80,000

3,000

15.0%

2,500

13.0%

2,000

11.0%

1,500 1,000

9.0%

500

7.0%

0

5.0%

70,000 60,000 50,000 40,000

FY13

FY14

30,000 FY13

FY15 FY16E FY17E FY18E

Total Sales

FY15

FY16E FY17E FY18E

Sales Volume

EBITDA margin (RHS)


FY14


Our bullishness stems from the following : 





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The Indian flexible packaging market is the fastest growing market globally and Uflex by virtue of its leadership position is best placed to benefit from this upside. Uflex’s revenue growth and margin expansion are expected to leapfrog on the back of its innovative product portfolio. In particularly its foray into the aseptic packaging business should help diversify revenue mix and accelerate growth. Impressive portfolio of marquee clients provides good revenue visibility.

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 Fast paced growth of the flexible packaging industry puts Uflex in a sweet spot. The Indian packaging industry (valued at over USD 32 Bn in 2015) is one of the fastest growing markets and is expected to become the fourth-largest packaging market in the world. Within packaging, the flexible plastic packaging segment is the fastest-growing, clocking a CAGR of 16.6% (during the last five years) driven by strong growth of the Indian retail market and other end-users (including the pharmaceutical and processed food industry). This stupendous growth can be attributed to:    

Changing lifestyle and consumer trends towards packaging food. Increase in disposable income Improving shelf life due to packaging Rising population Global penetration of packaging

Indonesia 18%

Rest of world, 80%

Emerging market, 20%

India 27%

Others 32%

Brazil 15% Russia 7%

Source: PCI, Ventura Research

India’s per capita annual packaging expenditure was US$20 in 2011, which is significantly lower than the top 20 market average of US$347.6 representing a huge latent potential. We expect the overall packaging industry in India to reach ~USD 73 Bn by 2020 driven by faster growth of the flexible packaging (25% CAGR) and rigid packaging (15 % CAGR) segments. Uflex with its innovation focus and leadership position is best placed to benefit from it

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 Innovative product to leapfrog revenue growth and margin expansion. Uflex has been at the forefront of innovation and in the past has added several feathers to its cap viz 3D bags, flexi tubes, High Barrier Laminate for Packaging Snacks etc. This innovation has been the fulcrum of its growth story. Going forth game changing innovations are expected to consolidate its leadership position and create new business opportunities for the company. Premium shower proof bag for building materials is a potential game changer Uflex won the Global Dupont Packaging Innovation Silver Award 2015 for the ‘Safe Pack Bag’ for packaging building materials. This nano technology based innovation should find usage in retain packaging of cement and should help eliminate high levels of wastages and consequent pollution.This could become a potential game changer for Uflex should the industry embrace this innovative product. Besides the shower proof bag, Uflex’s flexi tubes division has several innovative products to its credit viz Innolok™ Pouches, Slider Zipper Pouches (for powder and granules), 4D Pouches, Centre sealed etc. These innovations have helped Uflex win repeat orders from marquee clients. The recent innovations with the value added features like the holographic effect, lens on front panel, anti-counterfeiting, reverse printing, dual barrier etc are expected to propel Uflex’s hold in the cosmetics and pharmaceutical markets which provide it with premium pricing power (over the traditional markets). This constant endeavor to add value has resulted in Uflex reporting higher EBITDA margins ( ~20%) than its peers. Foray into Asceptic packaging to drive the next leg of growth Uflex is setting up a Rs 550 crore Asceptic Packaging Material Project for packing liquids at Sanand, Gujarat. Global major Tetra Packaging is the only player currently operating in this space in India. We believe that Uflex’s foray into this segment should be well received by the end user industry considering Uflex’s reputation for offering quality products. Besides having dual vendors always works well for the end user industry. The facility is expected to be operational by mid 2017 and has a capacity of seven billion packs per year (for liquid products such as energy drinks, milk and juices). We estimate that ~90% of the output will be consumed by the domestic market and should enjoy high margins (20-25%) due to sparse competition.

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

Impressive portfolio of marquee clients provides good revenue visibility. Marquee clients to drive future growth


 Stable operations of the film business Intense global competition and a marked slowdown in European demand are expected to lead to the packaging film business (contributing ~58% of the total revenues and ~79% of the total volume) reporting muted growth. However revenues are expected to grow at a dismal rate of 0.1% over the same period due to muted pricing. With a current utilization of ~72% there is adequate capacity to manage future growth and hence no major additions to its 3,37,000 tpa capacity are planned.

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Muted volume growth for packaging film business 265

'000 MT

260 255

250 245 240

235 230

225 220

215 FY13

FY14

FY15

FY16(E) FY17(E) FY18(E)

Packaging Film volume Source: Uflex Ltd, Ventura Research

The packaging film business is spread across different geographies to cater to domestic and international demand. Geographical diversification of manufacturing facilities


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However margins set to expand While revenues are expected to decline due to a fall in the unit realizations, margins are expected to improve due to a larger fall in the input crude prices and improving working capital cycle. The prices of PET chips which were highly volatile over the past few years are also expected to stabilize and as a result we expect the EBITDA margin to improve by 300bps from 10.9% in FY15 to 13.9% in FY18. Wide variation in prices have had a serious impact on margins

EBITDA per ton expected to improve significantly Rs cr

3,800

'000 Rs / ton

25

3,700

23

3,600

20

3,500

18

3,400

15

3,300

100

Rs /kg

90 80 70

13

3,200

60

3,100

10

3,000

8

2,900

5

FY13

FY14

FY15 FY16E FY17E FY18E Total Sales


50 40

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 PET CHIPS Source: Uflex Ltd, Ventura Research

.

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 Financial Performance The company reported a marginal decline in its topline numbers during Q3 FY16. Net sales declined by 2.0% YoY to Rs 1,498 cr from 1,530 cr in Q3 FY15 due to a fall in raw material prices which was partially passed to the customers. However EBITDA margins improved marginally by 0.8% YoY to Rs 186.8 cr led by a decrease in raw material costs. The operating margin also improved by 40bps YoY to 12.5% from 12.1%. The PAT jumped by 38.4% YoY to Rs 78.6 cr due on account of a lower provision for tax. In FY15, Uflex’s net sales stood at Rs 6,180 cr, registering a growth of 5.4% YoY. Its EBITDA rose by 7% YoY to Rs 731.6 cr, while margins improved marginally by 10 bps YoY to 11.8%. PAT grew by 27.6% YoY to Rs 251 cr on the back of a reduction in finance cost. Consolidated Quarterly Financial Performance (Rs crores) Description

Q3FY16

Net Sales

1498.1

Growth (%)

-2.07

Total expenditure

Q3FY15 1529.8

FY15

FY14

6180.3

5863.3

5.41

1311.3

1344.5

5448.7

5179.6

186.8

185.3

731.6

683.6

Margin (%)

12.5

12.1

11.8

11.7

Depreciation

71.7

70.6

279.4

267.1

EBIT (Ex. OI)

115.1

114.7

452.2

416.6

11.7

3.5

16.6

28.6

126.8

118.2

468.8

445.2

8.5

7.7

7.6

7.6

47.0

46.2

186.9

233.3

0.0

0.0

0.0

0.0

79.7

72.0

281.9

211.9

Margin (%)

5.3

4.7

4.6

3.6

Provision for Tax

1.2

15.3

30.9

15.1

Profit after Tax

78.6

56.8

251.0

196.7

5.2

3.7

4.1

3.4

EBITDA

Non-Operating Income EBIT Margin (%) Finance Cost Exceptional Items PBT

Margin (%) Source: Uflex Ltd, Ventura Research

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 Financial Outlook With product innovation across different packaging products and an improving product mix in favor of value added products (proof bags, aseptic packs), the revenue growth trajectory should continue. We expect sales to grow at a CAGR of 7.4% from Rs 6,180 cr in FY 15 to 7,655 cr in FY 18 while net consolidated earnings are expected to grow at a CAGR of 23.5% to Rs 472.3 cr over the same period. The EBITDA and PAT margins are expected to reach 14.3% and 6.2% respectively by FY18. Strong business growth on the cards Rs in cr

Return ratios expected to improve 35%

40%

30%

35%

25%

30%

5,000.0

20%

25%

4,000.0

15%

20%

10%

15%

5%

10%

0%

5%

9,000.0

8,000.0 7,000.0

6,000.0

3,000.0 2,000.0

1,000.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Net Sales

EBITDA Margin (RHS)

FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

PAT Margin (RHS)


RoCE Source: Uflex Ltd, Ventura Research

Working capital set to improve 90

RoE

Improving solvency ratios 7

No of days

No of times

No of times

1.0

0.9

80

6

70

5

0.7

60

4

0.6

50

3

0.4

40

2

0.3

30

1

0.8

0.5

0.2

0.1

-

20

FY11

FY12

FY13

Creditor days

FY14

Debtor Days


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FY15

FY16E FY17E FY18E Inventory days

-

FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E Interest coverage

Debt Equity (RHS)


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 Valuation Uflex’s stock quoting at a CMP of Rs 172 (0.4 P/BV) is extremely undervalued. However we believe that Uflex’s business is on a firm wicket and given the compelling fundamentals the stock warrants a re-rating. We believe that the rerating will pan out as the market takes cognizance of the growth triggers viz i. ii. iii. iv. v.

Strong growth prospects of the packaging industry. Foray into aseptic packaging which is the next level of growth Strong revenue visibility given its marquee clients Concrete steps being taken to improve the overall profitability Constant innovation through which it is unlocking new business opportunities and consolidating its leadership position in the packaging industry.

We have valued the company using the Sum of the parts (SOTP) methodology and ascribe a value of Rs 402 per share. We have valued the films business at an EV/EBITDA of 3.5X FY 18 and the packaging business at an EV/EBITDA of 4.6X FY18. This price objective represents a potential upside of 134% over the next 18 months from the CMP of Rs 172. Based on above we recommend a BUY. SOTP valuation table Uflex SOTP Valuation Film Business Packaging Business

Basis FY18E EBITDA - Rs 518 cr FY18E EBITDA - Rs 575 cr

Multiple

EV ( Rs in cr)

3.5 X

1813.7

4.6 X

2644.4

Total EV

4,458.2

Less: FY18 Debt

(2,037.7)

Add: FY18 Cash

479.8

Market Capitalisation

2,900.3

No of shares outstanding

7.2

Total value per share

401.7

CMP

172.0

Potential upside

134%


We believe that further value unlocking could unfold post demerger of the two businesses. However we have not factored this in our valuation model and represents an upside tick to our estimates

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1- Yr Fwd EV/EBITDA Band

5,000 4,500 4,000 3,500 3,000 2,500 2,000

EV

3X

3.5X

4X

Mar-16

Mar-15

Mar-14

Mar-13

Mar-12

1,500

4.5X

5X


100

100

50

50

0

0

CMP

0.1X

0.2X


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0.3X

0.4X

0.5X

CMP

2X

3X

4X


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5X

Mar-16

150

Mar-15

150

Mar-12

200

Mar-16

200

Mar-15

250

Mar-14

250

Mar-13

300

Mar-12

300

Mar-14

1- Yr Fwd P/E Band

Mar-13

1- Yr Fwd P/B Band

6X

Peer comparison ( Rs in crores)

Y/E March Sales EBITDA Uflex Ltd 2015 6180.3 731.6 2016E 6504.2 841.6 2017E 6921.9 937.6 2018E 7654.8 1093.1 Cosmo Films (Films business) 2015 1646.8 104.0 2016E 1594.6 177.5 2017E 1760.0 199.6 2018E 2012.0 232.4 Essel Propack 2015 2394.6 390.8 2016E 2190.0 436.0 2017E 2396.2 491.4 2018E 2679.2 549.3 Huhtamaki PPL 2015 1311.6 119.8 2016E 2190.2 253.7 2017E 2415.0 287.9

PAT

EBITDA PAT Margin (%) Margin(%)

ROE(%)

P/E

P/BV

EV/EBITDA

251.0 277.1 344.9 472.3

11.8 12.9 13.5 14.3

4.1 4.3 5.0 6.2

8.3 8.5 9.7 11.8

4.9 4.5 3.6 2.7

0.4 0.4 0.3 0.3

4.5 3.9 3.3 2.6

27.7 91.1 106.1 113.6

6.3 11.1 11.3 11.6

1.7 5.7 6.0 5.6

7.5 21.9 21.5 19.6

16.0 5.9 5.0 4.7

1.2 1.2 1.0 0.9

8.7 4.8 4.2 3.6

145.0 183.2 221.4 260.0

16.3 19.9 20.5 20.5

6.1 8.4 9.2 9.7

19.5 20.7 21.2 21.3

13.9 13.7 11.3 9.7

2.5 2.7 2.3 1.9

6.8 7.3 6.5 5.8

68.5 114.9 143.6

9.1 11.6 11.9

5.2 5.2 5.9

14.4 15.4 17.2

19.7 13.2 12.2

2.3 2.2 2.0

10.4 7.0 6.2


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Financials and Projections Y/E March, Fig in ` Cr

FY15

FY16E

FY17E

FY18E

Net Sales

6180.3

6504.2 5.2

6.4

10.6

5448.7

5662.6

5984.4

6561.7

3.9

5.7

9.6

% Chg. Total Expenditure % Chg. EBDITA

Y/E March, Fig in ` Cr

FY15

FY16E

FY17E

FY18E

Per Share Data (Rs)

Profit & Loss Statement 6921.9

7654.8

Adj. EPS

35.3

38.4

47.8

65.4

Cash EPS

74.0

83.3

96.4

117.4

2.7

3.2

3.6

4.0

416.5

451.1

494.5

555.1

DPS Book Value

731.6

841.6

937.6

1093.1

EBDITA Margin %

11.8

12.9

13.5

14.3

Debt / Equity (x)

0.7

0.7

0.6

0.5

Other Income

16.6

19.5

20.8

23.0

Current Ratio (x)

1.2

1.3

1.4

1.6

PBDIT

748.2

861.2

958.3

1116.1

ROE (%)

8.3

8.5

9.7

11.8

Depreciation

279.4

324.2

350.9

375.3

ROCE (%)

9.0

9.9

10.7

12.3

Interest

186.9

193.9

184.0

171.5

Dividend Yield (%)

1.6

1.8

2.1

2.3

Exceptional items

Capital, Liquidity, Returns Ratio

0.0

0.0

0.0

0.0

281.9

343.1

423.4

569.3

P/E

4.9

4.5

3.6

2.7

Tax Provisions

30.9

66.0

78.5

97.0

P/BV

0.4

0.4

0.3

0.3

Reported PAT

251.0

277.1

344.9

472.3

EV/Sales

0.5

0.5

0.4

0.4

EV/EBIDTA

4.5

3.9

3.3

2.6

PBT

Minority Interest PAT PAT Margin (%) Other opr Exp / Sales (%) Tax Rate (%)

Valuation Ratio (x)

-3.7

0.0

0.0

0.0

254.7

277.1

344.9

472.3

4.1

4.3

5.0

6.2

Inventory (days)

39.0

40.9

41.2

41.6

Efficiency Ratio (x)

0.0

0.0

0.0

0.0

Debtors (days)

79.0

82.1

80.3

79.6

14.8

18.0

18.0

18.0

Creditors (days)

53.8

49.7

48.1

44.9

72.2

72.2

72.2

72.2

Profit Before Tax

286.4

343.1

423.4

569.3

2935.5

3184.8

3498.4

3936.0

Depreciation

279.4

324.2

350.9

375.3

Balance Sheet

Cash Flow Statement

Share Capital Reserves & Surplus Minority Interest

0.7

0.7

0.7

0.7

Working Capital Changes

-271.6

-157.3

-131.7

-207.7

Long Term Borrowings

1006.5

978.7

937.1

881.6

Others

209.4

131.7

107.3

68.6

Deferred Tax Liability

120.1

124.3

126.6

121.1

Operating Cash Flow

503.6

641.7

750.0

805.5

Other Non Current Liabilities

14.0

15.6

17.5

19.6

-200.0

-392.6

-350.0

-300.0

Total Liabilities

4149.0

4376.4

4652.5

5031.1

Other Investment Activities

0.4

0.4

0.4

0.4

Gross Block

4978.2

5403.2

5753.2

6053.2

Cash Flow from Investing

-199.5

-392.2

-349.6

-299.6

Less: Acc. Depreciation

-1738.3

-2062.5

-2413.5

-2788.8

Changes in Share Capital

0.0

0.0

0.0

0.0

Net Block

3239.8

3340.7

3339.7

3264.4

Changes in Borrowings

-111.2

-50.0

-75.0

-100.0

Capital Work in Progress

32.4

0.0

0.0

0.0

Dividend and Interest

-208.0

-221.6

-215.3

-206.3

Non Current Investments

139.9

140.0

140.2

140.3

Cash Flow from Financing

Net Current Assets

575.0

725.7

994.2

1439.0

Long term Loans & Advances

161.8

169.9

178.4

4149.0

4376.3

4652.5

Total Assets

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Capital Expenditure

-319.3

-271.6

-290.3

-306.3

Net Change in Cash

-15.2

-22.1

110.2

199.6

187.3

Opening Cash Balance

207.4

192.2

170.0

280.2

5031.2

Closing Cash Balance

192.2

170.0

280.2

479.8

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Disclosures and Disclaimer Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. RA involved in the preparation of this research report discloses that he / she has not served as an officer, director or employee of the subject company. RA involved in the preparation of this research report and VSL discloses that they have not been engaged in the market making activity for the subject company. Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. We may have earlier issued or may issue in future reports on the companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We may rely on information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or affiliates of VSL. This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is for the general information of the clients / prospective clients of VSL. VSL will not treat recipients as clients by virtue of their receiving this report. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of clients / prospective clients. Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document. The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by VSL, its associates, the authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions underlying such projections and forecasts. The price and value of the investments referred to in this document/material 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. Future returns are not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. We do not provide tax advice to our clients, and all investors are strongly advised to consult regarding any potential investment. VSL, the RA involved in the preparation of this research report and its associates accept no liabilities for any loss or damage of any kind arising out of the use of this report. This report/document has been prepared by VSL, based upon information available to the public and sources, believed to be reliable. No representation or warranty, express or implied is made that it is accurate or complete. VSL has reviewed the report and, in so far as it includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. The opinions expressed in this document/material are subject to change without notice and have no obligation to tell you when opinions or information in this report change. This report or recommendations or information contained herein do/does not constitute or purport to constitute investment advice in publicly accessible media and should not be reproduced, transmitted or published by the recipient. The report is for the use and consumption of the recipient only. This publication may not be distributed to the public used by the public media without the express written consent of VSL. This report or any portion hereof may not be printed, sold or distributed without the written consent of VSL. This document does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you solely for your information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other person. The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of VSL and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection. This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection therewith. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Securities Market. Ventura Securities Limited Corporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai – 400079

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