KPITTech-ICICIDirect-281015

October 27, 2015

ICICI Securities Ltd | Retail Equity Research

Result Update

Optimistic recovery… • KPIT reported a strong set of quarterly earnings in Q2FY16 • US$ revenues grew 5.3% QoQ to $124.6 million significantly above

our 1% QoQ growth and $119.5 million estimate • EBITDA margins improved 441 bps QoQ to 14%, above our 60 bps

decline and 9% estimate led by growth, improvement in people metrics, rupee, partially offset by the wage hike impact (200-225 bps)

• Reported PAT of | 75.1 crore was above our | 45 crore estimate led by revenue, margin beat

Optimistic recovery… KPIT reported a strong set of Q2FY16 earnings, which were better operationally as well. Dollar revenues grew 5.3% QoQ led by 1) recovery in top 10 customers (3.5% QoQ growth), 2) growth in products and platforms (P&P) (21.5%), SAP (9.9%) and product engineering services (PES, 9.2%) SBUs and 3) automotive (5.8%) and energy & utilities (19.8%) businesses. As highlighted in the previous quarter, KPIT expects marginal growth in both topline and bottomline in FY16E relative to FY15. The management has highlighted four key factors that could improve revenue and margin trajectory, going ahead, 1) profitability – pyramid correction as KPIT targets 70% gross recruits to be freshers, improve utilisation and productivity, tail accounts rationalisation, 2) people development – focused training to align employees’ skill sets with their respective SBUs and devise a clear career progression plan, 3) growth – increasing investments in newer technologies (digital, IMS, Internet of Things) and hiring subject matter experts, sales and account management personnel, and 4) predictability. Adjusting estimates to account for margin beat… Though we maintain our revenue growth estimate, we are adjusting margin assumption, led by H1 beat leading to revision in EPS estimate. We now expect FY16E margins to expand 110 bps YoY to 12% (10 bps, 11% earlier). We also raise our FY17E margin assumption to 12% vs. 11.5% earlier as the management reiterated that the margin improvement trajectory could continue led by operational efficiency (freshers replacing middle level employees), utilisation improvements (onsite utilisation was up 413 bps to 91.2% while offshore was up 334 bps to 69.6%), rupee and rationalisation of tail accounts. Top account recovery aids performance… Large client revenue growth recovered in Q2. Top customer revenues revenue grew 5.4% QoQ (down 8.2%, 0.8%, 1.1% QoQ in Q1FY16, Q4, Q3FY15, respectively) but declined 5.1% YoY. Top 6-10 grew 8% QoQ vs. 3.5% decline while top 2-5 customer revenues declined 1.2% QoQ vs. 5.9% growth in Q1. Note that top customer revenues declined 0.6% YoY in FY15, top 2-5 clients saw a considerable decline of 15% YoY while top 6-10 grew a healthy 31% YoY. Raising estimates and target price… We estimate KPIT will report rupee revenue, earnings CAGR of 10%, 8.7% (5% earlier) in FY15-17E (average 12% EBITDA margins in FY16-17E, 11.3% earlier), vs. 33%, 23% reported during FY10-15 (average 15.7%), respectively, driven by weakness in select business units and uneven margin profile in SAP SBU. We now value the stock at 9.5x (8x) FY17E EPS estimate of | 14 (| 13) and raise our target price to | 135 (| 105). Higher multiple is to account for recovery in growth, margin trajectory.

KPIT Technologies (KPISYS) | 137 Rating matrix

Rating : HoldTarget : | 135Target Period : 12 monthsPotential Upside : -1%

What’s changed?

Target Changed from | 105 to | 135EPS FY16E Changed from |10.9 to | 12.5EPS FY17E Changed from |13 to | 14Rating Unchanged

Quarterly performance

Q2FY16 Q2FY15 YoY (%) Q1FY16 QoQ (%)Revenue 812 757 7.2 758 7.1 EBITDA 114 101 12.7 73 56.3 EBITDA (%) 14.0 13.3 68 bps 9.6 442 bpsPAT 75 71 6.4 44 69.1

Key financials

| Crore FY14 FY15E FY16E FY17ENet Sales 2,694 2,990 3,262 3,588 EBITDA 423 327 392 430 Net Profit 249 237 250 280 EPS (|) 13.0 11.9 12.5 14.0

Valuation summary

FY14 FY15E FY16E FY17EP/E 10.6 11.5 11.0 9.8 Target P/E 10.4 11.4 10.8 9.6 EV / EBITDA 6.6 8.3 6.6 5.6 P/BV 2.1 2.0 1.7 1.5 RoNW (%) 19.5 17.0 15.4 14.9 RoCE (%) 20.8 14.7 17.4 17.4

Stock data Particular AmountMarket Capitalization (| Crore) 2,617.6

Total Debt (Sept-15) (| Crore) 447.8 Cash and Investments (Sept-15) (| Crore) 440.2

EV (| Crore) 2,625.2 52 week H/L 232 / 85

Equity capital 38.2 Face value 2.0

Price performance

1M 3M 6M 12M

TechMahindra (6.1) (16.7) (26.8) (0.7) MindTree (6.6) 3.2 (10.0) 46.0 KPIT Tech 7.2 (30.7) (50.5) (41.6) NIIT Tech 22.8 33.3 31.9 20.8

Research Analysts

Abhishek Shindadkar [email protected]


Variance analysis Q2FY16 Q2FY16E Q2FY15 YoY (%) Q1FY16 QoQ (%) Comments

Revenue 812.3 776.0 757.4 7.2 758.3 7.1Revenue growth led by growth in top accounts products and platforms, SAP, product engineering services SBUs

Employee expenses 551.4 562.6 532.4 3.6 545.4 1.1

Gross Margin 260.8 213.4 225.1 15.9 212.9 22.5Gross margin (%) 32.1 27.5 29.7 240 bps 28.1 403 bps Gross margin improvement led by employee rationalisation effortsSG&A expenses 146.9 143.6 124.0 18.5 140.1 4.9

EBITDA 113.9 69.8 101.0 12.7 72.9 56.3EBITDA Margin (%) 14.0 9.0 13.3 68 bps 9.6 441 bps Gross margin improvement leads to EBITDA margin expansionDepreciation & amortisation 16.7 17.1 24.5 -31.6 16.4 2.1EBIT 97.1 52.8 76.6 26.9 56.5 72.0EBIT Margin (%) 12.0 6.8 10.1 185 bps 7.4 451 bpsOther income (less interest) 3.6 9.7 0.3 1,023.7 5.1 -29.7PBT 100.7 62.5 76.9 31.0 61.6 63.6Tax paid 25.6 17.5 6.3 NM 17.2 NMPAT 75.1 45.0 70.6 6.4 44.4 69.1 PAT was above our estimates led by revenue, margin beat

Key MetricsClosing employees 10,659 10,900 9,933 7.3 10,839 -1.7 Headcount declined 180 QoQ over 141 decline reported in Q1Overall utilisation (%) 74.0 71.0 75.5 -150 bps 70.4 353 bps Utilisation jump led by pyramid correctionAverage $/| 65.2 64.9 60.6 7.6 64.1 1.7

Source: Company, ICICIdirect.com Research Change in estimates

FY16E FY17E(| Crore) Old New % Change Old New % Change Comments

Revenue 3,262 3,262 0.0 3,588 3,588 0.0 Revenue growth could likely be muted in FY16E led by soft H1EBITDA 359 392 9.2 413 430 4.2EBITDA Margin (%) 11.0 12.0 100 bps 11.5 12.0 50 bps Margin expansion to be driven by operational efficiency and pyramid correctionPAT 217 250 15.2 259 280 8.0EPS (|) 10.9 12.5 15.2 13.0 14.0 8.0

Source: Company, ICICIdirect.com Research Assumptions

FY14 FY15 FY16E FY17E FY16E FY17EClosing employees 9,296 10,980 12,280 13,680 12,280 13,680 Management targets 70% of gross recruits to be freshers in FY16E Overall utilisation (%) 76.0 73.4 70.9 72.8 70.9 72.8Average $/| 60.6 61.1 63.5 63.5 63.5 63.5

Current Earlier

Source: Company, ICICIdirect.com Research


Company Analysis Operating highlights Quarterly growth was led by volumes – onsite grew ~5% while offshore grew 3.8% leading to blended growth of ~4% – likely helped by price realisations. Sequentially, P&P grew 21.5%, followed by SAP and PES with 9.4% and 9.2%, respectively. Integrated Enterprise Solutions (IES) declined 0.1% QoQ (vs. 2.5% decline in Q1) while enterprise solutions (ES) declined 0.5% vs. 7.4% growth in Q1. From a geography perspective, there was broad based growth with Europe and APAC growing 14.7% and 14.5%, respectively, followed by the US with 1.2% growth. The management commentary suggests that investments in developing capabilities in engineering, digital, IoT and IMS have started yielding results as it sees traction across these offerings both in terms of deal wins as well as pipeline. Margins rise led by operational levers… EBITDA margins improved 441 bps QoQ to 14% vs. 9.5% in Q1 and were above our 9% estimate, led by growth, improvement in people metrics (utilisation, people pyramid, span of control at the middle level) and rupee, partially offset by the wage hike impact of 200-225 bps. SAP business margins continue to be volatile but could stabilise as maintenance revenue contribution rises. Recall, SAP business margins turned negative in Q4, a sharp reversal from the healthy recovery in the Q3 (8%), Q2 (~4.5-5%) and Q1 (break-even). Exhibit 1: Margins improve ~950 bps from lows of 4.5% in Q4FY15

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Adjusting estimates to account for margin beat… Though we maintain our revenue growth estimate, we are adjusting margin assumption, led by H1 beat, leading to a revision in EPS estimate. We now model FY16E margins could expand 110 bps YoY to 12% (10 bps, 11% earlier). We also raise our FY17E margin assumption to 12% vs. 11.5% earlier as the management reiterated that the margin improvement trajectory could continue led by operational efficiency (freshers replacing middle level employees), utilisation improvements (onsite utilisation was up 413 bps to 91.2% while offshore was up 334 bps to 69.6%), rupee and rationalisation of tail accounts.


Exhibit 2: Dollar revenue may grow at 7.5% CAGR in FY15-17E

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Exhibit 3: KPIT growth vs. Nasscom guidance – KPIT may likely underperform industry average growth in FY16E

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Top account recovery aids performance… Large client revenue growth recovered in Q2. Top customer revenue grew 5.4% QoQ (down 8.2%, 0.8%, 1.1% QoQ in Q1FY16, Q4, Q3FY15, respectively) but declined 5.1% YoY. Top 6-10 grew 8% QoQ vs. 3.5% decline while top 2-5 customer revenues declined 1.2% QoQ vs. 5.9% growth in Q1. Note, top customer declined 0.6% YoY in FY15, top 2-5 clients saw a considerable decline of 15% YoY while top 6-10 grew a healthy 31% YoY. Client metric was steady in Q2 as clients contributing >$1 million increased by one vs. decline of three in Q1. Note, KPIT had added 10 customers to >$1 million category in FY15 and 55 since FY10 largely due to acquisitions.


Exhibit 4: Company adds 56 clients to $1 million+ category since FY10

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Utilisation improvement continues… Onsite and offshore utilisation improved 413 bps (130 bps in Q1) and 334 bps (81 bps) during the quarter to 91.2% (87.1%) and 69.8% (66.4%), respectively. Note, Q4 utilisation was impacted by volume de-growth and higher net additions and led to management initiating multiple actions to improve utilisation and productivity, which were margin levers in the quarter. Exhibit 5: Utilisation improvement led by pyramid correction; could be margin lever in FY16E

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Outlook and valuation KPIT reported a strong set of quarterly earnings in Q2FY16 led by growth in products and platforms, SAP, product engineering services SBUs and automotive, energy & utilities business. The management has highlighted four key factors that could improve revenue and margin trajectory, going ahead, profitability, people development, growth and predictability. However, execution has to be flawless and consistent to regain investor confidence. We estimate KPIT will report rupee revenue, earnings CAGR of 10%, 8.7% (5% earlier) in FY15-17E (average 12% EBITDA margins in FY16-17E, 11.3% earlier), vs. 33%, 23% reported during FY10-15 (average 15.7%), respectively, driven by weakness in select business units and uneven margin profile in SAP SBU. We now value the stock at 9.5x (8x) FY17E EPS estimate of | 14 (| 13) and raise our target price to | 135 (| 105). Higher multiple is to account for recovery in growth, margin trajectory. Exhibit 6: One year forward rolling PE chart

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Exhibit 7: Valuations

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%)

FY14 2,694 20.3 13.0 22.8 10.6 6.6 19.5 20.8 FY15E 2,990 11.0 11.9 (8.3) 11.5 8.3 17.0 14.7 FY16E 3,262 9.1 12.5 5.3 11.0 6.6 15.4 17.4 FY17E 3,588 10.0 14.0 12.0 9.8 5.6 14.9 17.4



Company snapshot

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Target price : | 135

Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event

Oct-10 Announces it has completed the merger of German vehicle diagnostics and telematics specialist In2Soft Gmbh

May-11 Enters into a definitive agreement to take 50% stake in SYSTIME, world's largest JD Edwards solution provider

Apr-12 In Q4FY12, reports eighth consecutive quarter of best-in-the-industry growth rate (30% QoQ). Guides for 35% dollar revenue growth for FY13E

Jan-13 Reports flat QoQ dollar revenue growth during Q3FY13 and maintains its annual guidance for FY13

Apr-13 During Q4FY13, dollar revenues grow 2% QoQ against a difficult macro environment and guides for 14-16% dollar growth during FY14E

Jun-13 Acquires the consulting and services business of Baltimore, MD-based Learn2Perform (L2P), to expand in the Human Capital Management (HCM)

Sep-13 Unveils its new brand and visual identity with a new logo and name, KPIT Technologies Ltd, as part of rebranding initiative

Jan-14 Reports a 2.3% QoQ decline led by weakness in SAP business and likely to miss its FY14E guidance of 14-16%

Jul-14 Guides for 12-14% dollar revenue growth with at least 17% margins for FY15E though achieving it becomes challenging post a weaker Q1

Sep-14 Acquires Bharat Forge's 50% stake in Impact Automotive JV for | 10.8 crores. The JV was formed to manufacture hybrid solutions for automotives

Apr-15Reports disappointing Q4FY15 earnings as revenues decline 3.2% QoQ while EBITDA margins decline 940 bps to 4.5%. Growth and margins may remain muted in FY16E

Jul-14 Reports mixed set of Q1FY16 earnings as $ revenues declined 3.3% QoQ while margins improve 510 bps QoQ to 9.5%

Oct-15 Reports strong Q2FY16 earnings as revenues grow 5.3% QoQ while EBITDA margins improved 441 bps to 14%.

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m)1 Nuvo ChrysCapital Advisors Pvt. Ltd. 30-Jun-15 13.80 27.3 0.02 Proficient Finstock, L.L.P. 5-Aug-15 12.27 24.2 1.13 Ruane, Cunniff & Goldfarb, Inc. 30-Jun-15 8.28 16.4 6.34 Fidelity Management & Research Company 30-Jun-15 4.56 9.0 -0.65 KPIT Systems Employees Welfare Trust 30-Jun-15 4.38 8.7 0.16 CX Advisors LLP 30-Jun-15 2.57 5.1 0.07 Grandeur Peak Global Advisors, LLC 30-Apr-15 2.00 4.0 -0.28 Patil (Kishore P) 5-Aug-15 1.94 3.8 -1.19 DSP BlackRock Investment Managers Pvt. Ltd. 30-Jun-15 1.87 3.7 -1.510 Norges Bank Investment Management (NBIM) 30-Jun-15 1.83 3.6 -0.6

(in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15Promoter 22.22 21.78 21.67 21.68 22.31FII 45.81 33.61 31.17 29.16 30.10DII 8.02 8.93 11.18 7.73 5.64Others 23.95 35.68 35.98 41.43 41.95

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesRuane, Cunniff & Goldfarb, Inc. 9.19m 6.28m CX Securities, Ltd. -17.71m -5.29m Capital Research Global Investors 3.89m 2.66m Reliance Capital Asset Management Ltd. -3.77m -2.57m Proficient Finstock, L.L.P. 1.74m 1.13m Morgan Stanley Investment Management Inc. (US) -2.46m -1.59m Kulkarni (Anil Gajanan) 0.82m 0.32m DSP BlackRock Investment Managers Pvt. Ltd. -2.20m -1.50m The Vanguard Group, Inc. 0.49m 0.30m Patil (Kishore P) -1.73m -1.12m

Buys Sells

Source: Reuters ICICIdirect com Research


.

Financial summary Profit and loss statement | Crore

FY14 FY15E FY16E FY17E

Total Revenues 2,694 2,990 3,262 3,588

Growth (%) 20.3 11.0 9.1 10.0

COGS 1,818.0 2,147.3 2,299.1 2,544.8

SG&A expenses 452.8 515.5 570.8 613.6

EBITDA 423 327 392 430

Growth (%) 15.8 (22.7) 19.8 9.7

Depreciation 54.0 85.1 70.0 78.9

Other Income (7.4) 35.1 38.0 45.0

Interest 28.6 28.6 22.0 18.0

PBT before Exceptional Items 343.0 248.5 338.0 378.0

Growth (%) 19.9 (27.6) 36.0 11.8

Tax 94.1 11.5 87.9 98.0

PAT before Exceptional Items 249.0 237.0 250.0 280.0

Exeptional items - - - -

PAT before MI 249.0 237.0 250.0 280.0

Minority Int & Pft. from associates - - - -

PAT 249 237 250 280

Growth (%) 25.1 (4.8) 5.5 12.0

EPS 13.0 11.9 12.5 14.0

EPS (Growth %) 22.8 (8.3) 5.3 12.0


Cash flow statement | Crore FY14 FY15E FY16E FY17E

Profit before Tax 343 248 338 378

Depreciation 54 85 70 79

(inc)/dec in Current Assets (160) (125) (102) (116)

(inc)/dec in current Liabilities 32 83 (20) 64

CF from operations 103 226 208 257

Other Investments (116) 150 38 45

(Purchase)/Sale of Fixed Assets (68) (100) (85) (90)

CF from investing Activities (191) 50 (47) (45)

Inc / (Dec) in Equity Capital 8 - - -

Inc / (Dec) in sec.loan Funds 105 6 (50) (50)

Dividend & Divendend tax (20) (24) (22) (27)

Interest Paid on Loans (18) (29) (22) (18)

CF from Financial Activities 79 (47) (94) (95)

Net change in cash (9) 229 67 117

Other adjustments - - - -

Closing cash 191 420 487 604


Balance sheet | Crore

FY14 FY15E FY16E FY17E

Equity 39 39 39 39

Reserves & Surplus 1,237 1,358 1,586 1,839

Networth 1,275 1,397 1,624 1,878

Minority Interest - - - -

Other liabilities 23 42 46 50

Loans 439 445 395 345

Source of funds 3,013 3,280 3,689 4,151

Gross Block 530 630 715 805

Acc.dep 317 402 472 551

Net Block 214 229 244 255

CWIP 2 2 2 2

Investments (long term) 12 12 12 12

Investments (short term) 174 59 59 59

Goodwill 599 508 508 508

Inventories 3 23 23 23

Debtors 674 702 746 847

Cash & Cash equivalents 191 420 487 604

Loans and advances 74 90 98 108

Other current assets 73 81 88 97

Trade payables 102 127 123 152

Current liabilities 226 254 228 251

Provisions 58 69 75 83

Application of funds 3,013 3,280 3,689 4,151


Key ratios FY14 FY15E FY16E FY17E

Per share data (|)

EPS 13.0 11.9 12.5 14.0

BV 66.3 70.0 81.2 93.9

DPS 1.1 1.1 1.0 1.2

Cash Per Share 9.9 21.0 24.3 30.2

Operating Ratios (%)

EBITDA Margin 15.7 10.9 12.0 12.0

PAT Margin 9.2 7.9 7.7 7.8

Debtor days 91 86 83 86

Creditor days 14 16 14 15

Return Ratios (%)

RoE 19.5 17.0 15.4 14.9

RoCE 20.8 14.7 17.4 17.4

RoIC 55.6 35.3 41.1 41.1

Valuation Ratios (x)

P/E 10.6 11.5 11.0 9.8

EV / EBITDA 6.6 8.3 6.6 5.6

Market Cap / Sales 1.0 0.9 0.8 0.8

Price to Book Value 2.1 2.0 1.7 1.5

Solvency Ratios

Debt / Equity 0.3 0.3 0.2 0.2

Debt / EBITDA 1.0 1.4 1.0 0.8

Current Ratio 2.1 2.0 2.2 2.2



ICICIdirect.com coverage universe (IT) CMP M Cap(|) TP(|) Rating (| Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E

Cyient (INFENT) 550 500 Hold 6,181 31.4 34.0 40.0 17.5 16.2 13.7 13.5 11.0 8.6 22.2 21.9 22.4 19.2 18.1 18.6Eclerx (ECLSER) 1,870 1,500 Sell 5,700 74.3 99.0 110.0 25.2 18.9 17.0 15.1 11.7 9.9 40.4 45.8 43.5 32.1 35.5 33.2Firstsource (FIRSOU) 32 45 Buy 2,168 3.3 4.2 5.1 9.7 7.8 6.4 7.3 5.8 4.4 9.5 11.6 14.1 11.2 12.2 12.9HCL Tech* (HCLTEC) 859 1,050 Buy 120,838 51.4 55.0 64.0 16.7 15.6 13.4 12.5 11.0 9.0 35.2 31.7 30.5 29.3 25.7 24.7Infosys (INFTEC) 1,147 1,300 Buy 263,505 53.9 57.0 65.0 21.3 20.1 17.6 14.9 13.4 11.4 31.4 29.7 30.1 22.5 21.3 21.7KPIT Tech (KPISYS) 136 135 Hold 2,681 11.9 12.5 14.0 11.5 10.9 9.7 8.3 6.6 5.6 14.7 17.4 17.4 17.0 15.4 14.9Mindtree (MINCON) 1,529 1,450 Buy 12,818 63.9 73.0 93.0 23.9 20.9 16.4 13.8 11.5 9.1 33.7 32.2 33.7 26.6 25.3 26.4NIIT Technologies (NIITEC) 573 525 Hold 3,502 31.8 42.0 47.5 18.0 13.7 12.1 8.2 5.9 4.9 23.4 29.8 31.9 14.3 16.6 16.6Persistent (PSYS) 674 715 Hold 5,392 36.3 45.0 51.0 18.5 15.0 13.2 11.7 8.9 7.3 27.5 28.7 27.4 20.7 21.2 20.2TCS (TCS) 2,537 2,800 Buy 499,957 110.8 119.0 130.0 22.9 21.3 19.5 17.2 15.2 13.4 81.8 77.3 74.6 42.8 36.1 31.9Tech Mahindra (TECMAH) 537 600 Buy 51,721 26.7 29.0 36.0 20.1 18.5 14.9 11.8 11.6 9.3 26.9 24.9 26.5 21.5 19.4 20.4Wipro (WIPRO) 569 680 Buy 140,577 35.1 37.0 40.5 16.2 15.4 14.1 11.6 10.4 9.1 23.0 22.6 22.4 21.2 19.7 19.1

RoE (%)Sector / Company

EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)

* June year end, Source: Company, ICICIdirect.com Research


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

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ANALYST CERTIFICATION We /I, Abhishek Shindadkar, MBA, Research Analyst, 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.

Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. 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. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Abhishek Shindadkar, MBA, Research Analyst of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Abhishek Shindadkar, MBA, Research Analyst do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. 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KPITTech-ICICIDirect-281015

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