IPO Note

RETAIL EQUITY RESEARCH

Bharat Dynamics Ltd.
Subscribe
Sensex: 33,918
Price Range Rs. 413 - Rs. 428
Nifty: 10,421

12th March, 2018

A strategic business to own at... Issue Details

Bharat Dynamics Ltd (BDL) is the leading defence PSUs with over four decades Date of Opening 13th March 2018
of experience in manufacturing Surface to Air missiles (SAMs), Anti-tank Date of Closing 15th March 2018
guided missiles (ATGMs), underwater weapons, launchers, countermeasures Total no. of Shares offered(cr) 2.25
and test equipment. Additionally, BDL is engaged in the business of
Post Issue No. of shares (cr) 18.33
refurbishment & life extension of missiles manufactured and is also a sole
supplier of SAMs & ATGMs to Indian armed forces. The company currently Price Band Rs. 413 - 428
has three manufacturing facilities located in Hyderabad, Bhanur and Face Value Rs. 10
Vishakhapatnam. Over the last five years, BDL has delivered consistent growth Bid Lot Multiples of 35 shares
both in terms of financial and operational metrics. BDL’s revenue and PAT Listing BSE & NSE
grew by 39% and 11% CAGR respectively over FY14-17. During the same
SBI Capital Markets Ltd,
period, company has delivered healthy average RoE and RoCE at 29% and 17%
IDBI Capital Markets and
respectively. The current order book is at Rs10,543cr which is 2.1x FY17 sales. Lead Managers
Securities Ltd, Yes
Due to increasing geopolitical tensions, technology obsolescence and Securities(India)Ltd.
incremental needs for modern equipment’s, the Indian defence forces are on a
Registrar Alankit Assignments Ltd.
modernization drive. Further, GoI is giving greater priority to defence in its
“Make in India” programme with emphasis on indigenization to reduce import Issue size (at upper price) Rs. Cr
cost. BDL’s focus on increase in indigenisation of products, strong focus on Fresh Issue -
R&D and exports is expected to boost revenue visibility and profitability going OFS 961
forward. BDL’s ability to efficiently produce, deliver the products and services Total Issue 961
in a timely manner makes them stand out of the crowd. At an upper price band Shareholding (%) Pre Issue Post Issue
of Rs428, BDL is available at a reasonable valuation of 16x on FY17 EPS. As
Promoters 100 87.7
Indian defence industry is poised for growth, we recommend ‘Subscribe’ to the
issue, with a long term perspective. Others - 12.3
Total 100 100
[Note: A discount of Rs10 / share would be offered to employees and retail individual bidders.] Size Rs.cr
Issue structure Allocation %
(at upper band)
Purpose of IPO Retail 34 327
At the upper price band, total issue size stands at Rs961cr. The issue consists of
Non Institutional 15 144
only offer for sale (OFS) wherein the government will divest upto 2.25cr equity
Employee Reservation 2 19
shares, constituting 12.25% of equity share capital. Although the company will not
receive any proceeds from this offer yet the prime purpose of the issue is to QIB 49 471
achieve the benefits of listing shares on stock exchanges. Total 100 961
Y.E March (Rscr) FY16 FY17 H1FY18
Key Risks... Sales 4,079 4,833 1,806
Growth (%) 44% 18.5% -25%*
 Cancellation/modification of existing orders, lower budget allocation may
EBITDA 513 568 245
adversely affect the business.
 Significant decrease in demand for products or increase in raw material prices Margin% 13 12 13.6
may adversely affect the business. PAT Adj 562 490 173
 Increase in competition from other players can impact the business. Growth (%) 26.7 -12.8 -30*
EPS 30.7 26.8 18.8*
P/E (x) 14 16 22.7*
EV/EBITDA 17.9 14.8 17 *
P/BV (x) 4.2 3.5 4.8 *
Peer Valuation... *Annualised

Revenue Revenue
Mcap Revenue EBITDA Mcap/ CAGR% RoE CAGR%
Company (Rscr) (Rscr) Margin (%) EV/EBITDA EBITDA P/E (FY14-17) (FY14-17) D/E

Bharat Electronics Ltd 36,425 8296 21.2 18 21 22 11 18.8 11 -

Astra Microwave Products Ltd. 742 425 23.4 10 8 13 -7 13.3 -7 0.2

Bharat Dynamics Ltd. 7844 4833 11.8 15 14 16 39 24.1 39 -

Source: Geojit Research, Bloomberg; Note: Valuations of BDL are based on upper end of the price band, Financials as per FY17
Company Description
Bharat Dynamics Ltd (BDL) is one of the leading defence PSU in India, incorporated in 1970 and engaged in the manufacture of
Surface to Air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), under water weapons, launchers, countermeasures and test
equipment. They currently have three manufacturing facilities located in Hyderabad, Bhanur and Vishakhapatnam. It is the sole
manufacturer and supplier in India for SAMs, torpedoes, ATGMs to the Indian armed forces. Additionally, BDL is engaged in the
business of refurbishment and life extension of missiles manufactured. It is also the co-development partner with DRDO for the next
generation of ATGMs and SAMs. The company have over four decades of experience in manufacturing missiles and countermeasures
and its allied equipments.

Product portfolio of BDL

Bharat Dynamics Limited

SAMs Torpedoes Launchers ATGMs Counter measures Decoy systems Test Equipment

systems
Akash Light Launchers Milan 2T, Chaff& flare Submarine Health
Weight for KM & Konkurs-M, based air fired monitoring
Torpedo Milan 2T INVAR (3 defence decoys equipment
ATGMs UBK 20) systems, C- for ATGMs
303 torpedo
decoys

Source: RHP, Geojit Research

Key Competitive Strengths:

 Modern facilities and infrastructure to deliver quality products in a timely manner
BDL’s infrastructure at manufacturing facilities combined with their vast expertise enables them to cater to the needs of the Indian armed
forces in a timely manner. Company’s manufacturing facilities are equipped with robotic welding machines, four axis machines, flow
forming machines, vaccum furnace for heat treatment, automated electroplating shop, 3D– coordinating measuring machine, climatic
chambers and 800G acceleration measuring fixture. BDL’s Hyderabad manufacturing unit has been automated for material handling and
grain loading of SAMs (Surface to Air Missiles). Further, BDL’s Vishakhapatnam manufacturing facility is exclusively engaged in the
manufacture of torpedoes. BDL is also in the process of setting up two additional manufacturing facilities at Ibrahimpatnam (near
Hyderabad) and Amravati in Maharashtra which shall be used to manufacture SAMs (Surface to Air Missiles) and Very Short Range Air
Defence Missiles (VSHORADMs) respectively. Company also intends to automate their production systems at manufacturing facility in
Hyderabad to increase the production of SAMs. BDL is also in the process of establishing a test fire range in Rachakonda, Telangana
which is believed to result in operational advantages and cost efficiencies.
 Increase in indigenisation of products and implementation of the “Make in India” policy
In order to give an impetus to the GoI’s “Make in India” policy, company had implemented a vendor development policy in 2015. BDL
believes that the implementation of this policy has enabled them to improve their supply chain management in order to meet their long
term commitments to their primary customer, the MoD (Ministry of defense) and ensured transparency in identifying and developing
new vendors. The company identifies technically qualified vendors and suppliers and place purchase orders to ensure timely delivery of
materials. BDL has also published a list of items under import substitutions category which are to be supplied by indigenous vendors.
BDL has tie-ups with various domestic and international Original Equipment Manufacturers (OEMs) for the development of existing and
future products. BDL has achieved indigenisation of upto 75 – 90% of the Konkurs-M ATGM and Milan 2T ATGM (Source: F&S Report). The
management is constantly evaluating partnerships for transfer of technology to increase the indigenous content of their products.
Increase in indigenisation enables to reduce reliance on imports and the cost of the products.
BDL intends to leverage their experience to develop new products such as new generation SAMs, ATGMs, and heavy weight torpedoes
which enables the company to further increase their revenues. BDL is also joint development partner with the DRDO for the next
generation of ATGMs and SAMs. The MoD (Ministry of defence) has identified BDL as the production agency and the lead integrator for
one of the new generation of SAMs and the nominated agency for the third generation of ATGMs. BDL has also entered into several
MoUs and non-disclosure agreements with various companies for developing new products and transfer of technologies. The
management believes that the development of new products helps in diversifying offerings and reduces reliance on their current
products.
 Quality control of products
BDL’s products are primarily single shot devices which calls for the highest standards of reliability. Company’s all manufacturing
facilities have ISO 14001:2004 certifications from TUV India Private Limited. The Hyderabad (Akash Division) and Bhanur
manufacturing units have AS 9100C certifications (based on and including ISO 9001:2008) from NVT Quality Certification Private
Limited. BDL’s quality management systems and management system for the Hyderabad manufacturing unit have been certified ISO
9001:2008 and ISO 9001: 2015 compliant, by the IRClass Systems and Solutions Private Limited and TUV India Private Limited
respectively. All of BDL’s products undergo rigorous trials by the Indian armed forces prior to their induction and proof firing posts their
induction. In order to ensure that the products qualify the trials, company has set up various quality control processes such as multi-level
inspection at vendor’s plants, inspection of outsourced materials / components, sub-assembly checks and final checks of products in
order to ensure highest success rates of their products. Management also organize periodical meetings with the Indian armed forces for
monitoring progress and supply status of their products.

 Focus on R&D and Product offerings to international markets

BDL primarily caters to the requirements of Indian armed forces. BDL believes that the recent changes to the government policies
allowing private sector companies to participate in defence contracts will provide significant competition to the company. In order to
address these challenges, BDL intends to increase the R&D activities in order to provide novel and better products to customers. BDL
also intends to carry out process improvements, in order to improve the productivity and efficiency of operations and thereby lower
costs. The R&D expenses have grown at a CAGR of 23.60% from Rs22.721cr for the financial year 2015 to Rs34.71cr for the financial year
2017. BDL has established the missile development group with the objective to design and develop missiles. Company has also
established various technological labs such as RF labs, laser labs, aerodynamic labs and seeker labs to develop seeker technologies. BDL
is conducting R&D for an improved version of the second generation of the Konkurs-M ATGM. The GoI is encouraging BDL for export
of the products. BDL intends to interact with potential overseas customers with a view to exporting their products and thereby reduce
reliance on the GoI for future orders. BDL intends to offer products such as Akash SAM, light weight torpedoes and countermeasure
dispensing system to the international markets. BDL is currently exporting the light weight torpedoes.
 Strong order book and established financial track record of delivering growth
BDL aims to enhance its market position by expanding the capabilities, capitalising on opportunities both in domestic and international
markets in the industry and to enhance their competitiveness. BDL has a healthy order book of Rs10,543cr (as on Jan 31, 2018),
comprising the Akash weapon system, LR SAM, MR SAM, INVAR (3 UBK 20) ATGM and Konkurs-M ATGM. Going ahead, the strong
order book will further help in boosting BDL’s topline. Company has delivered consistent growth over the last five financial years both in
terms of financial and operational metrics. BDL’s revenue and PAT grew at a CAGR of 39% and 11% respectively over FY14-17.
Additionally, the company has been continuously delivering positive return ratios over the last five fiscals. Over FY14-17, BDL’s average
RoE and RoCE stood healthy at 29% and 17% respectively.
Revenue grew at a CAGR of 30% from FY15-17 EBITDA & EBITDA margins

6000 600 14%

4833 13%
5000 500 12% 12%
4079
4000 568 10%
400 EBITDA
10%
2841 513 8% EBITDA Margins
3000 Revenue(cr) 300
6%
2000 200
275 4%
1000 100 2%
0 0 0%
FY15 FY16 FY17 FY15 FY16 FY17
Source: RHP, Geojit Research

Return On Equity
40

30

20

10

0
FY15 FY16 FY17
Source: RHP, Geojit Research
Industry Outlook
The Indian defence market is in a state of transition, as a result of new policies promulgated by the government. The government is
outlining policies to convert India into a defence hub, with indigenous manufacturing being given the highest priority. Defence exports
will be permitted and foreign direct investment (FDI) holdings have been tweaked to enable more foreign original equipment
manufacturers (OEMs) to set up ventures in India. Several multi-billion dollar projects are expected to come to fruition. A few of these
projects will be executed through government-to-government (G2G) and off-the-shelf purchases; however, the majority will be through
partnerships between indigenous companies and foreign OEMs. Offset regulations are being relaxed to speed up procurements and
provide flexibility for suppliers while approaching tenders. The focus is on fast-track deals, tailored projects with Indo-foreign OEM
partnerships, and involving micro, small, and medium enterprises.

Indian defence exports are on the rise...

350 120
Defence Exports-India (US $ millions) 107.2
300 100
250 80
200 60
53.6
44.8 329.5
150 40
100 20
159
50 109.8 0
82 71.5
-12.8
0 -20
2011-12 2012-13 2013-14 2014-15 2015-16

Source: RHP, Geojit Research

India has been successful in developing many defence systems with high value export potential. The BrahMos cruise missile system and
the Akash surface to air missile systems are examples. The nation has decades of experience operating and upgrading Russian platforms
with indigenously produces subsystems such as sensors, avionics and spares. Thus, apart from export of full-fledged systems, subsystem
solutions can also be exported. India has finalized a contract for the export of light torpedoes with a foreign company. Several lesser
developed nations in East Asia and APAC region such as Vietnam, Philippines and Indonesia are upcoming markets for sale of missile
systems and offshore patrol vessels. Countries like UAE, Chile, South Africa and Vietnam have evinced interest in procuring the
BrahMos missile system. Main target markets for India’s exports will remain low and medium defence budget nations in the APAC,
Latin America, East Asia and Middle East regions. However, success in exports will be contingent upon demonstrating credibility of the
solutions developed.

Major Missile procurement and modernisation programs

S‐400 Triumf Procurement: India and Russia have reached an agreement worth over US$5bn for procuring the S ‐ 400 Triumf air defence
system. The contract is being executed by Russia’s arms export monopoly ‘Rosboronexport’. The deliveries are expected to be completed
within three years from agreement.

Akash Missile Procurement: The Cabinet Committee on Security (CCS) is set to clear the procurement of Akash missiles for the Air
defence systems of the Indian Air Force, enhancing the supersonic missile capability to intercept fighter jets, cruise missiles; ballistic
missiles etc. A ballistic missile system is a missile delivery system which follows a ballistic trajectory.

Barak- 8: India’s CSS has approved the procurement of MRSAM (Medium range/Long range (Naval version)) SAM systems, further
strengthening the defence capabilities to intercept aircraft, UAS and missile systems. Based on the ‘Make in India’ initiative, IAI has
partnered with Indian organisation DRDO for co‐development of both long range(Naval) and medium range(Land) versions of the
missile. BDL is manufacturing the missiles in India.

VSHORADS Procurement: Field trials for a US$5.2bn weapon systems procurement contract are underway at present. The total contract
is for the supply of 5,175 missiles and 1,276 single and multi‐launchers with streamlined technology transfer for the Defence Public Sector
Undertakings. Three international companies are participating, namely MBDA, Saab and Rosboron export. BDL is the nominated
production agency for the program.

Barak – I Procurement: The Indian government has approved the procurement of Barak – 1 missile system. The contract is worth over $
78Million and will be delivered over a period of 5 years from 2017 onwards.
The Guided Missile and Torpedo Market – India

The Indian Guided Missile and Torpedo market landscape consists of two main types of suppliers at present - DPSUs with indigenous
Research Development Testing and Evaluation (RDTE) and manufacturing capabilities and foreign players which export their missile
systems to India. There is also an emerging category – the Indian private sector teaming up foreign established defence experts to
manufacture missile systems in India. This category is still in its infantile stages.
Guided Missiles Market Split (2017-26) Tactical Segment market split (2017-26)

7%
1% 3% Ballistic
9%
3% Surface to Surface
Tactical 31%

80% 50%
Surface to air
Cruise
7%
Air to Air
Special mission 9%

ATGM
Torpedo
Air to surface

Source: RHP, Geojit Research

Indian Competitive Landscape – Guided Missile and Torpedo Systems

The Indian missile market today is dominated by DPSU produced missiles and foreign solutions at present. However, there is a drive
within the establishment to indigenize missile production as much as possible in order to extricate the armed forces from any external
dependencies for missile systems in the future. The goal is to aim for complete in house missile production and maintenance. BDL
maintains all Indian missile systems and selected foreign missile systems at present. Solutions from Russia, Israel, Europe and US are
well entrenched in the Indian market. At present, indigenous development and manufacturing is carried out by three DPSUs – DRDO,
BDL, and BEL. Amongst the three BDL is the main player in manufacturing and is the sole manufacturer in India for SAMs, torpedoes,
ATGMs. There are many opportunities in the Indian market which will be up for grabs in the future. These opportunities, coupled with
the ‘Make in India’ initiative and DPP 2016 has stimulated an interesting market dynamic in India. Foreign OEMs accord high priority to
the Indian market because of assured opportunities but has come to realize that partnering with DPSUs and private companies is the
way ahead. This has resulted in many partnerships in the field, as well as stand-alone indigenous development.

Future outlook
Frost & Sullivan has estimated the total Indian guided missile and torpedo market to be worth $ 24.49 Billion. 79% of the market
valuation remains unaddressed and $19.41 Billion worth of opportunities will emerge in the 2017-26 time-frame. Armed forces
modernization and new procurements in terms of fighters, IFVs, submarines, corvettes, frigates etc. will in turn drive procurement of
guided missile and torpedo systems. The ballistic missile system segment is expected to remain exclusively with DPSUs / GoI. DPSU
players such as BDL have strong track record of guided missile production with a well reinforced and holistic value chain in the same.
BDL is also expanding production capacities to make way for export and emerging internal demand and thus stand to gain in the short
and medium-terms. As the resource-rich private sector plays catch up with DPSUs in guided missile production during the initial few
years of the forecast, DPSUs such as BDL must broaden product portfolios, improve product-line depth to field missiles with varied
ranges, and incorporate modern technologies such as interchangeable warheads etc. to future proof product offerings against the
onslaught of private competition.
Promoter and promoter group
Promoter of the company is the President of India acting through the Ministry of Defence. The promoter, along with its nominees,
currently holds 100% of the pre-offer equity share capital of the company. After this Issue, the promoter shall hold 87.75% of the post
offer paid-up equity share capital of the company.

Brief profiles of Directors are as follows...

Currently, BDL has 10 Directors in its Board , of which four are Executive Directors, one is a Nominee director and five are non-
executive independent directors including two women directors in the board.

V. Udaya Bhaskar is the Chairman and Managing Director of the Company. He has been associated with the Company in the capacity of
a Chairman and Managing Director since January 30, 2015. He holds a bachelors degree in Technology in Plastics Technology and
Chemical Engineering from H.B Technological Institute, Kanpur University and holds masters degree in Technology ‘Polymer Science &
Technology’ from Indian Institute of Technology, Delhi. He joined the Company in the year 1990 prior to which he was associated with
Bakelite Hylam Limited, Dytron (India) Limited and SIP Resins Limited.

S. Piramanayagam, is the Director (Finance) and Chief Financial Officer of the Company. He has been on the board of the Company since
January 01, 2015. He holds a bachelors degree in Science from Madurai Kamraj University and is an associate member of the Institute of
Chartered Accountants of India. Prior to joining the Company, he has worked as a general manager (finance) of M/s. BEML Limited. He
has also worked at Neyveli Lignite Corporation Limited (now known as NLC India Limited) for ten years in the middle management
cadre.

V. Gurudatta Prasad, is the Director (Production) of the Company. He has been on the board of the Company since September 10, 2015.
He completed his Bachelors in Mechanical Engineering from Bangalore University and holds a degree in M. Tech (Industrial Engineering
& Management) from the Jawaharlal Nehru Technological University, Hyderabad. He has been associated with the Company since 1986
and prior to his appointment as Director (Production), he served as the General Manager at the Company’s office in Bhanur in the
capacity of Unit Head.

K. Divakar, is the Director (Technical) of Company. He has been on the board of the Company since July 01, 2016. He holds a degree of
Bachelors of Technology in the field of Mechanical Engineering from Jawaharlal Nehru Technological University, Andhra Pradesh and
has completed the post graduate course in tool, die and mould design from Central Institute of Tool Design, Hyderabad. He has been
associated with the Company since 1988. Prior to his appointment as Director (Technical), he served as the General Manager (Design &
Engineering), headed the Milan, Refurbishment and Explosive Divisions and played an instrumental role in establishing the naval
division of the Company at Vishakhapatnam. He is experienced in various areas of missile production.
Financials

Profit & Loss Account Balance Sheet

Y.E March (Rscr) FY15 FY16 FY17 H1FY18 Y.E March (Rscr) FY15 FY16 FY17 H1FY18
Sales 2,841 4,079 4,833 1,806 Cash 123.9 232.5 46.2 466.1
% change - 44% 18% -25%* Accounts Receivable 335 145 356 130
EBITDA 275 513 568 245 1476 2058 2251 2156
Inventories
% change - 87% 11% -14%* 4942 4722 3081 2394
Other Cur. Assets
Depreciation 67 53 62 30
Investments 741 1488 1729 1919
EBIT 208 460 506 215
3 4 4 2 Net Fixed Assets 388 558 605 599
Interest
Other Income 439 385 230 75 CWIP 135 125 130 176
PBT 644 841 732 288 137 140 161 161
Intangible Assets
% change - 31% -13% -21%*
Other Assets 94 96 89 88
Tax 200 279 242 115
Total Assets 8412 9641 8601 8285
Tax Rate (%) 31.1% 33% 33% 40%
Reported PAT 444 562 490 173 Current Liabilities 4532 6042 5115 5123
Adj Provisions 256 411 693 1027
Adj PAT 444 562 490 173 Debt Funds 1971 1318 581 504
% change - 26.7% -12.8% 30%* - - - -
Minority Interests
No. of shares (cr) 18.33 18.33 18.33 18.33
Def.Tax - 18 - -
Adj EPS (Rs) 24 30.7 26.8 18.8*
- 26.7% -12.8% -30%* Equity Capital 115 98 122 92
% change
*Annualised Reserves & Surplus 1538 1753 2090 1539
Shareholder’s Fund 1653 1851 2212 1631
Total Liabilities 8412 9641 8601 8285
BVPS (Rs) 90 101 121 89

Cash flow Ratios

Y.E March (Rscr) FY15 FY16 FY17 H1FY18 Y.E March FY15 FY16 FY17 H1FY18
PBT 644 841 732 288 Profitab. & Return
Non-cash adj. (277) (218) 85 (18) EBITDA margin (%) 9.7 12.6 11.8 13.6
Changes in W.C (966) (339) (840) 606 EBIT margin (%) 7.3 11.3 10.5 11.9
C.F.O (599.1) 284.3 (23.2) 875.5 Net profit mgn.(%) 15.6 13.8 10.1 9.6
Capital exp. (291) (216) (136) (70)
ROE (%) 30.3 32.1 24.1 18
Change in inv. - - - -
ROCE (%) 18.0 16.6 16.5 14.1
Sale of investment - - - -
Other invest.CF 353 365 139 65 W.C & Liquidity
C.F - investing 62.3 148.6 3.1 (4.5) Receivables (days) 21.5 21.5 18.9 24.6
Issue of equity - - - - Inventory (days) 135 229 244 356
Issue/repay debt - - - - Payables (days) 413 685 632 825
Dividends paid (59) (123) (122) - Current ratio (x) 1.6 1.3 1.3 1.2
Other finance.CF (2) (201) (44) (451) Quick ratio (x) 0.1 0.1 0.1 0.1
C.F - Financing (61) (324) (166) (451) Turnover &Levg.
Chg. in cash (598) 109 (186) 420 Net asset T.O (x) 14.6 8.6 8.3 6
Closing cash 123.92 232.5 46.2 466.1 0.7 0.5 0.5 0.4
Total asset T.O (x)
Int. covge. ratio (x) 62.6 130.9 137.6 138.4
Adj. debt/equity (x) - - - -
Valuation ratios
EV/Sales (x) 3.5 2.2 1.7 2.3 *
EV/EBITDA (x) 35.7 17.9 14.8 17*
P/E (x) 17.7 14 16 22.7*
P/BV (x) 4.7 4.2 3.5 4.8
*Annualised
Investment Rating Criteria
Large Cap Stocks; Mid Cap and Small Cap;
Buy - Upside is above 10%. Buy - Upside is 15% or more.
Hold - Upside is between 0% - 10%. Accumulate - Upside between 10% - 15%.
Reduce/Sell - Downside is more than 0%. Hold - Upside is between 0% - 10%.
Neutral - Not applicable Reduce/Sell - Downside is more than 0%.
Neutral - Not applicable

To satisfy regulatory requirements, we attribute ‘Accumulate’ as Buy and ‘Reduce’ as Sell.

The recommendations are based on 12 month horizon, unless otherwise specified. The investment ratings are on absolute positive/negative return basis. It is
possible that due to volatile price fluctuation in the near to medium term, there could be a temporary mismatch to rating.
For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. Please note that the stock always carries the risk of being
upgraded to BUY or downgraded to a HOLD, REDUCE or SELL.
Neutral-The analyst has no investment opinion on the stock under review.

General Disclosures and Disclaimers

CERTIFICATION
I, Sheen G, author of this Report, hereby certify that all the views expressed in this research report reflect our personal views about any or all of the subject
issuer or securities. This report has been prepared by the Research Team of Geojit Financial Services Limited, hereinafter referred to as Geojit.
COMPANY OVERVIEW
Geojit Financial Services Limited (hereinafter Geojit), a publically listed company, is engaged in services of retail broking, depository services, portfolio
management and marketing investment products including mutual funds, insurance and properties. Geojit is a SEBI registered Research Entity and as such
prepares and shares research data and reports periodically with clients, investors, stake holders and general public in compliance with Securities and
Exchange Board of India Act, 1992, Securities And Exchange Board Of India (Research Analysts) Regulations, 2014 and/or any other applicable directives,
instructions or guidelines issued by the Regulators from time to time.
DISTRIBUTION OF REPORTS
This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any
other person. Geojit will not treat the recipients of this report as clients by virtue of their receiving this report.
GENERAL REPRESENTATION
The research reports do not constitute an offer or solicitation for the purchase or sale of any financial instruments, inducements, promise, guarantee,
warranty, or as an official confirmation of any transaction or contractual obligations of any kind. This report is provided for assistance only and is not
intended to be and must not alone be taken as the basis for an investment decision. The information contained herein is from publicly available data or other
sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. We have also reviewed the
research report for any untrue statements of material facts or any false or misleading information. While we endeavor to update on a reasonable basis the
information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so.
RISK DISCLOSURE
Geojit and/or its Affiliates and its officers, directors and employees including the analyst/authors shall not be in any way be responsible for any loss or
damage that may arise to any person from any inadvertent error in the information contained in this report. Investors may lose his/her entire investment
under certain market conditions so before acting on any advice or recommendation in these material, investors should consider whether it is suitable for their
particular circumstances and, if necessary, seek professional advice. This report does not take into account the specific investment objectives, financial
situation/circumstances and the particular needs of any specific person who may receive this document. The user assumes the entire risk of any use made of
this information. Each recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in
the securities of companies referred to in this report (including the merits and risks involved). The price, volume and income of the investments referred to in
this report may fluctuate and investors may realize losses that may exceed their original capital.
FUNDAMENTAL DISCLAIMER
We have prepared this report based on information believed to be reliable. The recommendations herein are based on 12 month horizon, unless otherwise
specified. The investment ratings are on absolute positive/negative return basis. It is possible that due to volatile price fluctuation in the near to medium
term, there could be a temporary mismatch to rating. For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. The
stocks always carry the risk of being upgraded to buy or downgraded to a hold, reduce or sell. The opinions expressed are subject to change but we have no
obligation to tell our clients when our opinions or recommendations change. This report is non-inclusive and does not consider all the information that the
recipients may consider material to investments. This report is issued by Geojit without any liability/undertaking/commitment on the part of itself or anyof
its entities. We may have issued or may issue on the companies covered herein, reports, recommendations or information which is contrary to those contained
in this report.
The projections and forecasts described in this report should be evaluated keeping in mind the fact that these are based on estimates and assumptions and
will vary from actual results over a period of time. The actual performance of the companies represented in the report may vary from those projected. These
are not scientifically proven to guarantee certain intended results and hence, are not published as a warranty and do not carry any evidentiary value
whatsoever. These are not to be relied on in or as contractual, legal or tax advice. Prospective investors and others are cautioned that any forward-looking
statements are not predictions and may be subject to change without notice.
JURISDICTION
The securities described herein may not be eligible for sale in all jurisdictions or to all categories of investors. The countries in which the companies
mentioned in this report are organized may have restrictions on investments, voting rights or dealings in securities by nationals of other countries.
Distributing/taking/sending/dispatching/transmitting this document in certain foreign jurisdictions may be restricted by law, and persons into whose
possession this document comes should inform themselves about, and observe any such restrictions. Failure to comply with this restriction may constitute a
violation of any foreign jurisdiction laws. Foreign currencies denominated securities are subject to fluctuations in exchange rates that could have an adverse
effect on the value or price of or income derived from the investment. Investors in securities such as ADRs, the value of which are influenced by foreign
currencies effectively assume currency risk.

REGULATORY DISCLOSURES:
Geojit’s Associates consists of privately held companies such as Geojit Technologies Private Limited (GTPL- Software Solutions provider), Geojit Credits
Private Limited (GCPL- NBFC Services provider), Geojit Investment Services Limited (GISL- Corporate Agent for Insurance products), Geojit Financial
Management Services Private Limited (GFMSL) &Geojit Financial Distribution Private Limited (GFDPL), (Distributors of Insurance and MF Units).In the
context of the SEBI Regulations on Research Analysts (2014), Geojit affirms that we are a SEBI registered Research Entity and in the course of our business as a
stock market intermediary, we issue research reports /research analysis etc that are prepared by our Research Analysts. We also affirm and undertake that no
disciplinary action has been taken against us or our Analysts in connection with our business activities.
In compliance with the above mentioned SEBI Regulations, the following additional disclosures are also provided which may be considered by the reader
before making an investment decision:
1. Disclosures regarding Ownership*:
Geojit confirms that:
(i) It/its associates have no financial interest or any other material conflict in relation to the subject company (ies) covered herein.
(ii) It/its associates have no actual beneficial ownership greater than 1% in relation to the subject company (ies) covered herein.
Further, the Analyst confirms that:
(i) he, his associates and his relatives have no financial interest in the subject company (ies) covered herein, and they have no other material conflict in the
subject company.
(ii) he, his associates and his relatives have no actual/beneficial ownership greater than 1% in the subject company covered
2. Disclosures regarding Compensation:
During the past 12 months, Geojit or its Associates:
(a) Have not received any compensation from the subject company; (b) Have not managed or co-managed public offering of securities for the subject
company (c) Have not * received any compensation for investment banking or merchant banking or brokerage services from the subject company. (d) Have
not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company
(e) Have not received any compensation or other benefits from the subject company or third party in connection with the research report (f) The subject
company is / was not a client during twelve months preceding the date of distribution of the research report.
3. Disclosure by Geojit regarding the compensation paid to its Research Analyst:
Geojit hereby confirms that no part of the compensation paid to the persons employed by it as Research Analysts is based on any specific brokerage services
or transactions pertaining to trading in securities of companies contained in the Research Reports.
4. Disclosure regarding the Research Analyst’s connection with the subject company:
It is affirmed that I, Sheen G, Research Analyst(s) of Geojit have not served as an officer, director or employee of the subject company
5. Disclosure regarding Market Making activity:
Neither Geojit/its Analysts have engaged in market making activities for the subject company.

Please ensure that you have read the “Risk Disclosure Documents for Capital Market and Derivatives Segments” as prescribed by the Securities and
Exchange Board of India before investing

Digitally signed by SHEEN G

Date: 2018.03.12 17:44:10 +05'30'

Geojit Financial Services Ltd. (formerly known as Geojit BNP Paribas Financial Services Ltd.), Registered Office: 34/659-P, Civil Line Road, Padivattom,
Kochi-682024, Kerala, India. Phone: +91 484-2901000, Fax: +91 484-2979695, Website: geojit.com. For investor queries: customercare@geojit.com, For
grievances: grievances@geojit.com, For compliance officer: compliance@geojit.com.

Corporate Identity Number: L67120KL1994PLC008403, SEBI Regn.Nos.: NSE: INB/INF/INE231337230 I BSE:INB011337236 & INF011337237 | MSEI:
INE261337230, INB261337233 & INF261337233, Research Entity SEBI Reg No: INZ000104737, Investment Adviser SEBI Reg No: INA200002817, Portfolio
Manager:INP000003203, NSDL: IN-DP-NSDL-24-97, CDSL: IN-DP-CDSL-648-2012, ARN Regn.Nos:0098, IRDA Corporate Agent (Composite) No.: CA0226.
Research Entity SEBI Registration Number: INZ000104737