SECTOR REPORT INDIA AUTOS - BNP Paribas · Mahindra & Mahindra: Mahindra is our top pick among...

INDIA AUTOS BNP PARIBAS Kumar R akesh

19 OCTOBER 2016 SECTOR REPORT

INDIA AUTOS

Picking up speed as we enter a recovery cycle

Strong growth outlook for PV, motorcycle competition may intensify Taking another look at some of the indicators we highlighted in Signs of rural pick-up, broader

recovery to follow (13 July, 2016) gives us confidence that Indian autos have entered a strong demand recovery cycle. TTM sales growth has now turned positive for tractors as well as commuter motorcycles, while PV sales look set to accelerate in the coming quarters. However, we expect domestic commuter motorcycles to face stiffer competition in the coming months, as export markets remain weak and scooters find acceptance in the rural markets.

Broader recovery should ease competitive intensity for PV and may mean less cost pressure

While passenger vehicles started seeing strong double-digit growth in July, we are yet to see a recovery in older models, except in September, which is typical of a festival month. Growth coming back in older models would suggest a broader recovery, which could reduce industry competitive intensity and ease cost pressure in the medium term as discounting and sales promotion costs lessen. We expect passenger vehicle growth to accelerate in 2017, aided by older models, which should support margins as well.

2QFY17 preview: MSIL and EIM to lead in revenue growth; EIM and MM remain our top picks

We expect 9-37% y-y revenue growth across our coverage, partly on an early start to the festive season, with EIM and MSIL leading the pack on strong volume growth and recent price hikes. We do not expect commodity prices to impact margins in the September quarter and expect q-q margin expansion for MSIL, TTMT and HMCL, flattish for EIM and a decline for MM on higher SG&A expenses and a poor mix. We have revised our target multiples (MSIL, HMCL and EIM) as we go into the demand recovery cycle, adjusted estimates and rolled over TPs to Dec 2017E.

BNPP recommendations

Note: Priced at close of business 17/10/2016. Share prices and TPs are in listing currency. Sources: FactSet; BNP Paribas estimates

Our research is available on Thomson One, Bloomberg, TheMarkets.com, FactSet and on http://eqresearch.bnpparibas.com/index. Please contact your salesperson for authorisation. Please see the important notice on the back page.

PREPARED AND PUBLISHED BY NON-US BROKER-DEALER(S): BNP PARIBAS SECURITIES INDIA PVT. LTD. (SEBI REGISTERED RESEARCH ANALYST). THIS MATERIAL HAS BEEN

APPROVED FOR U.S DISTRIBUTION. ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES CAN BE FOUND AT APPENDIX ON PAGE 20

Kumar Rakesh [email protected] +91 22 6196 4350

Company BBG code Share price Current Previous Current Previous %change Up/downside

Mahindra & Mahindra MM IN 1,313.10 BUY Buy 1,675.00 1,700.00 -1.5% +27.6%

Eicher Motors EIM IN 24,645.50 BUY Buy 30,200.00 27,150.00 +11.2% +22.5%

Maruti Suzuki India MSIL IN 5,599.10 BUY Buy 6,600.00 5,225.00 +26.3% +17.9%

Hero MotoCorp HMCL IN 3,405.50 HOLD Hold 3,440.00 3,285.00 +4.7% +1.0%

Tata Motors TTMT IN 547.55 HOLD Hold 515.00 450.00 +14.4% -5.9%

Rating Target price

https://eqresearch.bnpparibas.com/researchfs/SRF__650240466e8d470eb2c4a4508946f777.pdf

https://eqresearch.bnpparibas.com/researchfs/SRF__650240466e8d470eb2c4a4508946f777.pdf

mailto:[email protected]

INDIA AUTOS Kumar Rakesh

2 BNP PARIBAS 19 OCTOBER 2016

Investment thesis

We expect near-term volume growth of passenger vehicles to continue to be driven by new model launches, implementation of the Seventh Pay Commission, One Rank One Pension (OROP) for government/armed forces employees, improving sentiment in the private sector and an expected economic revival.

With the vast majority of India’s population on low disposable incomes, we believe two-wheelers will remain the preferred choice for daily personal transportation requirements. We expect a rising trend of two-wheeler penetration in rural India and a plateauing trend in urban India. With a hike in MSPs, although modest, the government’s focus on boosting the rural economy, normal monsoon and continued strength in urban demand, we expect strong 2W demand growth.

The Medium & Heavy Commercial Vehicle (M&HCV) segment showed strong growth y-y in FY16. We expect replacement demand and pre-buying before implementation of BS IV norms nationally to wait for clarity on GST rates. Light commercial vehicles (LCVs) usually lag M&HCV in slowdowns as well as in recovery. We expect the current LCV recovery to continue off a low base and gradual economic revival.

India autos offer some of the best exposure to an Indian demand recovery, in our view, and have outperformed the broader index, especially during periods of demand recovery.

Top picks

Mahindra & Mahindra: Mahindra is our top pick among passenger vehicle manufacturers as we believe the company offers disproportionately higher earnings growth potential if a good monsoon translates into accelerated utility vehicles (UV) in the rural market and sustained strong demand for tractors.

Eicher Motors: Eicher is our top pick among two-wheeler manufacturers as we believe there is substantial growth potential in the premium motorcycle target market, and Royal Enfield should be one of the biggest beneficiaries of this market expansion. Also, we believe the company has multiple untapped revenue drivers and margin tailwinds in hand.

Risk to our call

Downside risks: 1) High-cost implications of regulatory requirements; 2) poor harvesting output; 3) sudden surge in crude prices; 4) government initiatives not translating into rural income growth; and 5) a global economic slowdown resulting in an overall worsening of demand.

Upside risks: 1) Better than expected demand recovery; 2) weakness in commodity and crude prices; 3) a sudden fall in lending rates; and 4) a pick-up in corporate earnings.

Summary of 2QFY17 estimates

Revenue Change EBITDA Change EBITDA margin Change Adj. PAT Change

(INR m) (y-y %) (INR m) (y-y %) (%) (y-y; bp) (INR m) (y-y %)

Maruti Suzuki 180,522 29.8 28,475 26.8 15.8 (38) 17,579 17.4

Tata Motors 665,870 8.6 105,139 36.1 15.8 319 31,279 40.7

Mahindra & Mahindra* 100,291 14.0 12,857 10.6 12.8 (40) 10,467 7.0

Eicher Motors** 17,783 36.7 5,469 51.7 30.8 304 3,870 69.3

Hero MotoCorp 80,028 17.0 13,507 24.7 16.9 103 9,668 25.2

*M&M and MVML **Standalone numbers Source: BNP Paribas estimates

Event calendar

Date Events

26-Oct-16 Hero MotoCorp results

27-Oct-16 Maruti Suzuki results

28-Oct-16 Eicher Motors results

11-Nov-16 Mahindra & Mahindra results

11-Nov-16 Tata Motors results (E)

Source: BNP Paribas estimates



Exhibit 1: Strong tractor volume growth in recent months Exhibit 2: Sharp up-tick in tractor demand

M&M taken as industry proxy as it is the largest tractor manufacturer in India with a stable c40% market share Sources: M&M; BNP Paribas

M&M taken as industry proxy as it is the largest tractor manufacturer in India with a stable c40% market share Sources: M&M; BNP Paribas estimates

Exhibit 3: Strong recovery in two-wheeler demand

Exhibit 4: PV sales growth set to accelerate in coming quarters after a slight dip in December

Sources: SIAM; BNP Paribas estimates Sources: SIAM; BNP Paribas estimates

Exhibit 5: Older PV models showing early signs of recovery Exhibit 6: Strong growth in 2W has resulted in broad-based

growth lately

Sources: SIAM; BNP Paribas Sources: SIAM; BNP Paribas

(70)

(50)

(30)

(10)

10

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Jan-

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(y-y %) M&M's monthly domestic tractor sales chg

(30)(25)(20)(15)(10)(5)05

10152025

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(y-y %) M&M's TTM tractor sales

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(y-y %) Commuter motorcycles (75-125cc) TTM salesTwo-wheelers TTM sales

Largest 2W segment has turned positive

(10)

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(y-y %) Passenger vehicle TTM sales

(20)(15)(10)(5)05

1015202530

Mar

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(%) New modelsExisting modelsDomestic PV sales

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(%) New models Existing modelsDomestic 2 W growth



Exhibit 7: We expect commuter motorcycles to see greater competitive intensity

Sources: SIAM; BNP Paribas estimates

Exhibit 8: Key points to watch-out for in 2QFY17 results

Maruti Suzuki

Quarterly expectations (Result date: 27Oct)

• We expect 29.8% y-y revenue growth, aided by strong volume growth and higher realisation. • Strong realisation due to better product mix and recent price hikes across the models. • 90bp q-q EBITDA margin expansion on higher volumes.

Management commentary • Retail sales trend during festival season; rural demand trend; industry discounting; export potential of new models.

Tata Motors

Quarterly expectations (Result date: 11 Nov (E))

• We expect 15.4% y-y GBP revenue growth at JLR and 14.9% y-y INR revenue growth for Tata Motors standalone. • 8.6% y-y INR consolidated revenue growth. • 400bp q-q JLR EBITDA margin expansion with the first full quarter impact from favourable FX post Brexit. • 290bp q-q consolidated EBITDA margin expansion.

Management commentary • Demand and discounting trends in the US and China market; details of FX hedges and benefit from GBP weakness; discounting trends in commercial vehicles.

Mahindra & Mahindra

Quarterly expectations (Result date: 11 Nov)

• We expect 14.0% y-y revenue growth, with 7.7% y-y automotive revenue growth and 25.8% y-y farm equipment revenue growth. • 130bp q-q EBITDA margin decline on higher advertisement and sales promotion expenses and poor product mix.

Management commentary • Guidance on tractor sales volume; demand outlook on older UV models; retail sales trend during festival season; rural demand trend.

Eicher Motors

Quarterly expectations (Result date: 28 Oct)

• We expect 36.7% y-y revenue growth on strong volume and recent price hikes. • Flattish q-q EBITDA margin at 30.8%.

Management commentary • Update on full year production target; progress on new plant construction; outlook on international markets, spare parts and merchandise business.

Hero MotoCorp

Quarterly expectations (Result date: 26 Oct)

• We expect 17.0% y-y revenue growth on strong volume growth. • 25bp q-q EBITDA margin expansion to 16.9%, on strong volumes and as we do not expect commodity pressure to hit margins as yet.

Management commentary • Retail sales trend during festival season; rural demand trend; reasons for recent underperformance versus peers; competitive pressure in the industry.


(10)(5)05

101520253035

Jun-

14

Sep-

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Dec

-14

Mar

-15

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(y-y %)Commuter motorcycles (75-125cc) TTM salesPremium motorcycles (125 cc+) TTM salesScooters TTM sales



Exhibit 9: India autos - domestic volume estimates

Passenger vehicle estimates FY15 FY16 FY17E FY18E FY19E

Sales volume ('000) Passenger cars 2,031 2,182 2,330 2,644 3,030

Utility vehicles 552 587 758 880 1,020

Domestic passenger vehicles 2,582 2,769 3,088 3,524 4,050

Market composition (%) Passenger cars 78.6 78.8 75.5 75.0 74.8

Utility vehicles 21.4 21.2 24.5 25.0 25.2

Growth (y-y %) Passenger cars 3.6 7.4 6.8 13.5 14.6

Utility vehicles 5.0 6.4 29.2 16.1 16.0

Domestic passenger vehicles 3.9 7.2 11.5 14.1 14.9

Two-wheelers estimates

Sales volume (m) Scooters 4.5 5.0 6.2 7.2 8.1

Motorcycles 10.7 10.7 12.0 13.1 14.0

Mopeds 0.7 0.7 0.9 0.9 0.9

Total domestic 16.0 16.5 19.1 21.2 23.0

Market composition (%) Scooters 28.2 30.6 32.5 34.0 35.1

Motorcycles 67.1 65.0 63.0 61.7 60.8

Mopeds 4.7 4.4 4.6 4.3 4.1

Growth (y-y %) Scooters 24.9 11.8 23.3 16.0 12.0

Motorcycles 2.3 (0.2) 12.5 8.6 7.1

Mopeds 3.6 (3.3) 20.5 5.0 3.0

Total domestic 7.9 3.0 16.2 10.8 8.6

Commercial vehicles estimates

Sales volume ('000) Heavy commercial vehicles 232 302 317 341 347

Light commercial vehicles 382 383 430 473 520

Commercial vehicles 614 686 747 814 868

Growth (y-y %) Heavy commercial vehicles 15.6 30.4 4.8 7.4 2.0

Light commercial vehicles (11.5) 0.3 12.2 10.0 10.0

Commercial vehicles (2.9) 11.7 9.0 8.9 6.7

Tractors estimates

Sales volume ('000) Tractors 551 493 601 691 758

Growth (y-y %) Tractors (13.0) (10.5) 21.8 15.0 9.7

Sources: SIAM; BNP Paribas estimates



We adjust our estimates and target prices, EIM and MM remain our top picks

Maruti Suzuki: We modestly revise our estimates on recent higher than expected volume growth. We now value Maruti Suzuki at 21.5x PE which is slightly ahead of its +1SD five year average one year forward PE (21.1x), from a more conservative 18.0x previously, for the following reasons:1) the PV industry has entered a demand recovery cycle; we expect demand to accelerate in the coming quarters; 2) we believe Maruti’s unique dominance in India will put it among the biggest beneficiaries of this market expansion; and 3) Maruti should continue to trade at premium valuations as we explained in “Explaining this high valuation”. We roll over our target price to December 2017E (from September 2017E) and maintain BUY.

Tata Motors: Given recent volatility in the currency, we now use current quarter FX assumptions for all the future forecast periods; we revise our estimates accordingly. We are now modelling JLR margin expansion of 150bp over FY17E-FY19E as company benefits from favourable currency and hedges roll off. We roll over our target price to December 2017E (from September 2017E) and maintain HOLD.

Mahindra & Mahindra: We modestly cut our automotive volume estimates and margin assumptions. Our target multiple remains unchanged as we believe M&M automotive business is yet to enter the recovery cycle. We roll over our target price to December 2017E (from September 2017E) while the per share market value of subsidiaries goes down. We maintain BUY. Mahindra & Mahindra remains our top-pick among four-wheelers as we believe the company offers disproportionately higher earnings growth potential if a good monsoon translates into accelerated utility vehicles (UV) in the rural market and sustained strong demand for tractors.

Eicher Motors: We make modest changes to our estimates to factor in recent monthly sales numbers. We change our target multiple to 31.0x from 30.0x, so that it is in line with Harley Davidson’s multiples during its high growth phase (1999-2002) and we believe is well justified given Eicher’s strong growth potential and market leadership position. Eicher is our top-pick among two-wheelers as we believe there is substantial growth potential in the premium motorcycle target market, and Royal Enfield should be one of the biggest beneficiaries of this market expansion. Also, we see multiple untapped revenue drivers and margin tailwinds in hand.

Hero MotoCorp: We modestly revise our estimates on better industry growth assumptions, and an updated target multiple of 17.0x from 16.5x previously. While we believe a recovery cycle for two-wheelers has started, HMCL has major exposure to commuter motorcycles which have high competitive intensity. Hence we now value HMCL at slightly below +1SD above its five-year average one-year forward PE.

Exhibit 10: Valuation methodology

Company Rating New TP Old TP Valuation

method Key target multiples Comments

(INR) (INR)

Maruti Suzuki BUY 6,600 5,225 PE 21.5x Dec'18E EPS (changed from 18.0x previously)

Valued at slightly more than 1SD above its five-year average one-year forward PE multiple (ie 21.1x) given we have entered a broad-based recovery cycle and believe Maruti will be the biggest beneficiary of the upcycle.

Tata Motors HOLD 515 450 SoTP 3.5x Dec '17E JLR EBITDA (unchanged)

10.0x Dec'17E China JV EPS (unchanged)

9.5x Dec '17E standalone EBITDA

(unchanged)

Mahindra & Mahindra BUY 1,675 1,700 SoTP 16.0x Dec'18E core auto EPS (unchanged)

Eicher Motors BUY 30,200 27,150 SoTP 31.0x Dec'18E Core Auto EPS of RE (changed from 30.0x previously)

We are now valuing RE in line with average of Harley Davidson's P/E multiples during high growth phase (1999-2002) i.e. 31.0x.

9.0x Dec'18E VECV EBIDTA (unchanged)

Hero MotoCorp HOLD 3,440 3,285 PE 17x Dec’18E EPS (changed from 16.5x previously)

We believe we have entered a recovery cycle in two-wheelers, but HMCL’s major exposure is to commuter motorcycles which have high competitive intensity. Hence we value HMCL at slightly below +1SD above its five-year average one-year forward PE.


https://eqresearch.bnpparibas.com/researchfs/CR__e71de9fa1fad4e2b928fb7130c1c01e1.pdf



Exhibit 11: Tata Motors SoTP valuation

Tata Motors (SoTP)

Per share

(INR)

JLR

Dec '17 EBITDA (INR b) 400

Dec '17 EBITDA (adjusted for R&D amortisation) (INR b) 346

EV/EBITDA (x) (unchanged) 3.5

359

China JV

Dec '17 PAT (50% Tata Motors share) (INR b) 25

P/E (x) (unchanged) 10.0

75

Tata Motors (Standalone)

Dec '17 EBITDA (INR b) 47

EV/EBITDA (x) (unchanged) 9.5

131

Other subsidiaries (post 50% holding company discount) 35

Net debt (cash) & pension obligation 84

Target price (INR) 515

Implied group EV/EBITDA 4.4

Entity name Valuation methodology

TTMT stake

Per share

(%) (INR)

Subsidiaries

Tata Daewoo, Korea

Applying PE multiple of 8x FY16 Earnings

100 6

Tata Hitachi Based on stake sale valuation in 2010 40 3

Tata Technologies Applying PE multiple of 20x FY16 PAT 72 16

Tata Motors Finance

Based on 1x FY15 book value for a company having 5 years avg ROE of 8%

100 11

Other investments

Tata Sons Based on market value of holdings in listed companies (Mar'16)

3 34

Tata Steel Based on current market cap 0.5 0.4

Total 70

Value per share (after 50% holding company discount) 35

50% R&D expensed vs approx. 18% currently being expensed. BMW and Mercedes expenses 60-75%. We apply a holding company discount of 50% as the company has limited direct control and no dividend Source: BNP Paribas estimates

Exhibit 12: Mahindra & Mahindra SoTP valuation EPS Target P/E Per share

(INR) (x) (INR)

Core auto business valuation (MM & MVML, based on Dec '18 EPS)

79.4 16.0 1,267

Subsidiaries/ Associates Current mkt cap M&M's stake Holding co. discount Per share

(INR m) (%) (%) (INR)

Tech Mahindra 394 26 20 139

M&M Financial services 201 52 20 139

Ssangyong Motors 64 73 20 62

Mahindra Lifespace Developers 18 51 20 12

Mahindra Holidays & Resorts 40 75 20 39

Mahindra CIE 60 22 20 18

Subsidiaries/ Associates value per share

408

12-month target price (INR) 1,675

Priced as of 17 October 2016 Source: BNP Paribas estimates



Exhibit 13: Eicher Motors SoTP valuation summary

Per share

(INR)

Royal Enfield

Core EPS – Dec 2018 (INR) 907

P/E (x) 31.0

28,114

VECV (54.4% stake)

EBITDA – Dec 2018 (INR m) 10,188

EV/EBITDA (x) 9.0

Net debt (INR m) (3,460)

1,910

EPPL (50% stake)

Book value (INR) 4,786

Price to book value (x) 2.0

176

Target price (INR) 30,200


Exhibit 14: Changes in estimates

------------------------------ Revised -------------------------------- --------------------------- Change vs prior ---------------------------

FY17E FY18E FY19E FY17E FY18E FY19E

(INR m) (INR m) (INR m) (%) (%) (%)

Revenue

Maruti Suzuki 680,688 795,200 938,830 0.5 0.3 0.2

Tata Motors 3,075,676 3,267,911 3,519,261 1.8 0.0 0.1

Mahindra & Mahindra 434,085 508,851 587,651 (0.5) (1.9) (2.8)

Eicher Motors* 72,143 92,196 114,994 0.2 0.3 0.2

Hero MotoCorp 315,462 353,571 391,681 0.9 1.8 2.2

EPS

Maruti Suzuki 214.3 261.0 323.0 2.3 (0.8) 2.1

Tata Motors 48.2 57.1 67.3 2.1 13.3 16.6

Mahindra & Mahindra 61.8 76.2 90.8 (3.3) (4.8) (3.9)

Eicher Motors* 554.0 740.6 962.5 1.8 1.6 1.3

Hero MotoCorp 185.0 195.8 205.3 5.0 1.6 0.3

Volume

Maruti Suzuki (units) 1,587,238 1,800,304 2,069,819 1.3 1.3 1.2

JLR (units) 631,328 676,574 714,154 1.2 1.0 1.2

Tata Motors Standalone (units) 570,372 653,773 753,210 (1.3) (0.9) (0.1)

M&M-Total automotive (units) 543,489 608,110 686,772 (1.3) (2.2) (3.1)

M&M -Tractors (units) 258,137 296,857 326,543 5.1 5.1 5.1

Royal Enfield (000' units) 671 810 937 0.0 0.0 (0.0)

Hero MotoCorp ('000 units) 7,155 7,791 8,413 0.5 1.5 2.2

Currency

GBPUSD 1.34 1.31 1.31 (2.8) (5.1) (5.1)

USDINR 67.6 68.2 68.2 (2.1) (2.6) (2.6)

USDJPY 106.6 108.0 108.0 (2.2) (1.8) (1.8)




Exhibit 15: Comparable valuation summary

BBG code Price Mkt. cap --- FY17-FY19 CAGR ---

EBITDA margin -------- EV/EBITDA --------- -------------- P/E -------------- Div yield

Rev. EPS

FY17E/ CY16E

FY17E/CY16E

FY18E/CY17E

FY19E/CY18E

FY17E/CY16E

FY18E/CY17E

FY19E/CY18E

FY17E/ CY16E

(LC) (USD m) (%) (%) (%) (x) (x) (x) (x) (x) (x) (%)

Indian OEMs

Maruti Suzuki MSIL IN 5,599 25,430 17.4 22.8 15.0 14.7 12.5 10.6 26.1 21.5 17.3 0.9

Tata Motors TTMT IN 548 26,647 7.0 18.2 15.3 4.2 3.7 3.4 11.4 9.6 8.1 0.4

Mahindra & Mahindra MM IN 1,313 12,264 16.4 23.6 13.4 9.5 7.8 6.7 16.6 13.2 10.9 1.1

Hero MotoCorp HMCL IN 3,406 10,187 11.4 5.3 16.4 12.3 11.6 10.7 18.4 17.4 16.6 2.5

Bajaj Auto BJAUT IN 2,754 11,994 11.4 12.9 20.8 13.8 12.0 10.9 21.5 19.2 16.8 2.3

Eicher Motors EIM IN 24,647 10,063 26.3 31.2 31.0 28.2 21.3 16.6 41.8 33.5 30.8 0.6

Ashok Leyland AL IN 82 3,531 17.2 28.3 11.6 10.1 8.8 8.2 22.5 16.4 13.7 1.7

TVS Motor TVSL IN 389 2,793 14.9 30.5 7.6 19.3 15.3 12.9 41.6 32.1 24.4 0.8

Indian Auto ancillaries Bosch BOS IN 22,151 10,439 15.2 28.0 18.7 30.1 23.2 19.6 57.0 45.3 34.7 0.5

Motherson Sumi Systems MSS IN 322 6,824 15.0 28.4 9.9 11.2 9.1 7.6 33.1 26.2 20.1 1.1

Bharat Forge BHFC IN 890 3,124 15.3 7.6 23.7 18.4 14.9 13.2 27.9 31.2 24.1 0.9

MRF MRF IN 49,873 3,187 (9.1) 5.4 21.6 6.5 6.1 na 13.6 12.6 12.3 0.1

Apollo Tyres APTY IN 210 1,608 12.0 2.8 15.4 5.3 4.8 4.3 9.8 9.9 9.3 1.0

Amara Raja Batteries AMRJ IN 1,018 2,597 17.3 18.2 17.6 17.7 14.7 12.6 34.2 30.0 24.5 0.5

Exide Industries EXID IN 185 2,373 11.6 19.6 15.3 12.5 11.1 10.0 26.3 21.1 18.4 1.4

Global OEMs BMW BMW GY 77 54,636 2.5 0.9 15.4 5.5 5.6 5.4 7.9 7.8 7.8 4.3

Daimler DAI GY 64 75,307 2.5 1.1 12.0 4.6 4.4 4.3 7.7 7.9 7.6 5.2

Volkswagen VOW3 GY 121 69,626 0.6 2.8 12.9 3.9 3.4 3.1 6.1 7.5 5.7 2.1

Ford Motor F US 12 47,202 1.1 (5.6) 9.3 1.6 1.8 1.6 6.2 6.6 6.9 5.0

General Motors GM US 32 49,294 2.0 7.0 10.7 4.1 4.2 4.1 6.3 5.4 5.5 4.8

Tesla TSLA US 197 29,054 48.1 na 7.0 53.4 22.5 12.3 -85.4 -190.2 127.7 -

Fiat Chrysler FCAU US 6 8,069 2.4 13.3 10.0 1.9 1.8 1.7 4.8 4.4 3.7 -

Toyota Motor 7203 JP 6,030 191,978 (1.8) (11.0) 10.9 5.7 5.3 5.0 8.1 11.1 10.2 3.5

Nissan Motor 7201 JP 996 40,950 (1.9) 4.5 11.0 8.1 7.5 7.2 7.5 7.6 6.8 4.7

Suzuki Motor 7269 JP 3,590 16,766 2.0 (1.9) 11.5 3.6 3.2 3.1 13.7 14.5 14.2 0.9

Hyundai Motor 005380 KS 133,000 26,155 2.3 (7.8) 10.0 4.3 4.1 4.0 4.6 5.5 5.4 3.2

Great Wall Motor 2333 HK 8 13,593 11.7 7.0 15.0 8.2 7.8 7.9 9.6 8.6 8.4 3.6

Dongfeng Motor 489 HK 8 9,029 2.0 4.4 2.3 21.7 19.8 17.3 6.0 5.7 5.5 2.7

Astra International ASII IJ 8,225 26,058 4.2 14.3 13.4 14.2 12.5 11.6 23.0 20.7 17.6 2.2

SAIC Motors 600104 CH 22 36,935 6.9 5.8 4.5 5.1 4.5 3.8 8.2 7.8 7.3 6.4

Guangzhou Automobile 2238 HK 11 17,141 31.1 36.7 9.7 29.3 22.3 23.2 16.3 9.8 8.7 3.0

Priced as on 17 October 2016; MM valuations adjusted by deducting investment value of INR408 per share Sources: BNP Paribas estimates for MSIL IN, TTMT IN, MM IN, EIM IN and HMCL IN; Bloomberg; for the rest



Financial statementsMaruti Suzuki India

Profit and Loss (INR m) Year Ending Mar 2015A 2016A 2017E 2018E 2019E

Revenue 498,740 575,774 680,688 795,200 938,830

Cost of sales ex depreciation (350,080) (387,166) (460,821) (545,058) (647,209)

Gross profit ex depreciation 148,660 188,608 219,867 250,142 291,621Other operating income - - - - -

Operating costs (81,101) (99,739) (117,460) (129,761) (149,462)

Operating EBITDA 67,559 88,869 102,407 120,381 142,160Depreciation (24,703) (28,245) (27,952) (29,841) (30,309)

Goodwill amortisation 0 0 0 0 0

Operating EBIT 42,856 60,624 74,455 90,541 111,850Net financing costs 7,326 13,785 14,501 17,461 21,803

Associates 0 0 0 0 0

Recurring non operating income 0 0 0 0 0

Non recurring items 0 0 0 0 0

Profit before tax 50,182 74,409 88,956 108,002 133,653Tax (11,870) (20,756) (24,212) (29,161) (36,086)

Profit after tax 38,312 53,653 64,743 78,842 97,567Minority interests 0 0 0 0 0

Preferred dividends 0 0 0 0 0

Other items 0 0 0 0 0

Reported net profit 38,312 53,653 64,743 78,842 97,567Non recurring items & goodwill (net) 0 0 0 0 0

Recurring net profit 38,312 53,653 64,743 78,842 97,567

Per share (INR)

Recurring EPS * 126.83 177.61 214.33 261.00 322.98

Reported EPS 126.83 177.61 214.33 261.00 322.98

DPS 25.00 35.00 50.00 60.00 75.00

Growth

Revenue (%) 14.1 15.4 18.2 16.8 18.1

Operating EBITDA (%) 32.6 31.5 15.2 17.6 18.1

Operating EBIT (%) 42.3 41.5 22.8 21.6 23.5

Recurring EPS (%) 39.1 40.0 20.7 21.8 23.8

Reported EPS (%) 39.1 40.0 20.7 21.8 23.8

Operating performance

Gross margin inc depreciation (%) 24.9 27.9 28.2 27.7 27.8

Operating EBITDA margin (%) 13.5 15.4 15.0 15.1 15.1

Operating EBIT margin (%) 8.6 10.5 10.9 11.4 11.9

Net margin (%) 7.7 9.3 9.5 9.9 10.4

Effective tax rate (%) 23.7 27.9 27.2 27.0 27.0

Dividend payout on recurring profit (%) 19.7 19.7 23.3 23.0 23.2

Interest cover (x) n/a n/a n/a n/a n/a

Inventory days 22.5 27.1 23.5 20.0 19.5

Debtor days 9.1 7.5 8.7 9.5 8.8

Creditor days 70.9 79.6 79.7 75.8 70.7

Operating ROIC (%) 30.4 46.1 59.7 72.1 94.2

ROIC (%) 30.4 46.1 59.7 72.1 94.2

ROE (%) 17.1 21.2 21.9 22.3 22.9

ROA (%) 10.2 12.0 12.7 13.3 13.9*Pre exceptional pre-goodwill and fully diluted

Revenue By Division (INR m) 2015A 2016A 2017E 2018E 2019E

Domestic 440,096 532,808 632,231 737,859 871,250

Export 50,710 51,390 63,651 72,576 85,582

Spares 46,879 56,370 67,147 78,200 92,326

Source: Maruti Suzuki India, BNP Paribas estimates



Financial statementsMaruti Suzuki India

Cash Flow (INR m) Year Ending Mar 2015A 2016A 2017E 2018E 2019E


Depreciation 24,703 28,245 27,952 29,841 30,309

Associates & minorities (540) 0 0 0 0

Other non-cash items (6,726) (13,854) (14,501) (17,461) (21,803)

Recurring cash flow 55,750 68,045 78,195 91,221 106,073Change in working capital 8,356 (1,121) 4,926 5,550 4,151

Capex - maintenance 0 0 0 0 0

Capex - new investment (32,468) (24,571) (40,000) (30,000) (30,000)

Free cash flow to equity 31,638 42,352 43,120 66,771 80,225Net acquisitions & disposals - - - - -

Dividends paid (4,241) (9,090) (12,677) (15,104) (18,125)

Non recurring cash flows (12,531) (34,770) (26,096) (42,742) (58,900)

Net cash flow 14,866 (1,507) 4,348 8,925 3,200Equity finance 0 (0) 0 0 0

Debt finance (20,980) 1,716 (1,546) (297) (297)

Movement in cash (6,114) 208 2,802 8,628 2,903

Per share (INR)

Recurring cash flow per share 184.55 225.25 258.85 301.98 351.14

FCF to equity per share 104.73 140.20 142.75 221.04 265.57

Balance Sheet (INR m) Year Ending Mar 2015A 2016A 2017E 2018E 2019E

Working capital assets 51,832 62,374 72,126 82,375 93,245

Working capital liabilities (90,802) (112,900) (127,578) (143,376) (158,398)

Net working capital (38,970) (50,526) (55,452) (61,001) (65,153)Tangible fixed assets 141,421 137,747 149,795 149,955 149,645

Operating invested capital 102,451 87,221 94,343 88,953 84,493Goodwill 0 0 0 0 0

Other intangible assets 0 0 0 0 0

Investments 0 0 0 0 0

Other assets 0 0 0 0 0

Invested capital 102,451 87,221 94,343 88,953 84,493Cash & equivalents (142,257) (191,835) (236,779) (305,907) (389,810)

Short term debt 0 0 0 0 0

Long term debt * 2,855 4,244 4,244 4,244 4,244

Net debt (139,402) (187,591) (232,535) (301,663) (385,566)Deferred tax 4,810 4,741 4,741 4,741 4,741

Other liabilities 0 0 0 0 0

Total equity 237,043 270,071 322,138 385,875 465,317

Minority interests 0 0 0 0 0

Invested capital 102,451 87,221 94,343 88,953 84,493

Per share (INR)

Book value per share 784.70 894.04 1,066.40 1,277.39 1,540.38

Tangible book value per share 784.70 894.04 1,066.40 1,277.39 1,540.38

Financial strength

Net debt/equity (%) (58.8) (69.5) (72.2) (78.2) (82.9)

Net debt/total assets (%) (41.5) (47.9) (50.7) (56.0) (60.9)

Current ratio (x) 2.1 2.3 2.4 2.7 3.0

Valuation 2015A 2016A 2017E 2018E 2019E

Recurring P/E (x) * 44.1 31.5 26.1 21.5 17.3

Recurring P/E @ target price (x) * 52.0 37.2 30.8 25.3 20.4

Reported P/E (x) 44.1 31.5 26.1 21.5 17.3

Dividend yield (%) 0.4 0.6 0.9 1.1 1.3

P/CF (x) 30.3 24.9 21.6 18.5 15.9

P/FCF (x) 53.5 39.9 39.2 25.3 21.1

Price/book (x) 7.1 6.3 5.3 4.4 3.6

Price/tangible book (x) 7.1 6.3 5.3 4.4 3.6

EV/EBITDA (x) 23.0 16.9 14.2 11.5 9.2

EV/EBITDA @ target price (x) 27.4 20.3 17.2 14.1 11.3

EV/invested capital (x) 15.1 17.2 15.5 15.6 15.5* Pre exceptional & pre-goodwill and fully diluted

Source: Maruti Suzuki India, BNP Paribas estimates

* includes convertables and preferred stock which is being treated as debt



Financial statementsTata Motors


Revenue 2,631,590 2,755,611 3,075,676 3,267,911 3,519,261

Cost of sales ex depreciation (1,599,200) (1,624,190) (1,794,479) (1,909,667) (2,057,200)

Gross profit ex depreciation 1,032,390 1,131,421 1,281,198 1,358,243 1,462,061Other operating income 0 0 0 0 0

Operating costs (640,003) (769,812) (847,216) (868,519) (924,126)



Operating EBIT 258,500 191,467 247,062 278,646 300,133Net financing costs (48,615) (46,234) (37,797) (34,613) (29,587)


Recurring non operating income 8,987 9,817 1,892 12,857 23,592

Non recurring items (1,847) (15,242) 4,851 0 0


Profit after tax 140,597 111,083 165,048 194,847 229,443Minority interests (868) (1,059) (961) (961) (961)

Preferred dividends 0 (708) 4,290 0 0

Other items 134 213 90 120 30

Reported net profit 139,863 109,529 168,467 194,006 228,512Non recurring items & goodwill (net) 1,847 15,242 (4,851) 0 0


Per share (INR)

Recurring EPS * 44.03 36.74 48.18 57.13 67.29

Reported EPS 43.45 32.25 49.61 57.13 67.29

DPS 0 0.20 2.00 3.00 4.00

Growth

Revenue (%) 13.0 4.7 11.6 6.3 7.7

Operating EBITDA (%) 12.6 (7.8) 20.0 12.8 9.8

Operating EBIT (%) 8.7 (25.9) 29.0 12.8 7.7

Recurring EPS (%) (5.4) (16.5) 31.1 18.6 17.8

Reported EPS (%) (0.0) (25.8) 53.8 15.2 17.8





Net margin (%) 5.4 4.5 5.3 5.9 6.5



Interest cover (x) 5.5 4.4 6.6 8.4 10.9

Inventory days 64.5 70.4 70.7 70.7 67.4

Debtor days 16.1 16.9 18.3 19.7 18.3

Creditor days 177.8 193.3 195.6 197.2 187.0

Operating ROIC (%) 22.0 17.6 20.3 21.0 20.0

ROIC (%) 17.3 14.6 16.3 17.5 17.7

ROE (%) 23.3 18.2 20.4 22.4 22.0



Domestic business 363,016 423,698 480,167 547,234 623,684

JLR 2,174,727 2,236,003 2,419,181 2,580,288 2,742,315

Others 93,847 95,910 138,135 112,388 125,261

Source: Tata Motors, BNP Paribas estimates



Financial statementsTata Motors



Depreciation 133,886 170,142 186,919 211,079 237,802

Associates & minorities (14,129) 1,059 961 961 961

Other non-cash items 127,080 64,530 12,335 34,613 29,587

Recurring cash flow 388,547 360,502 363,830 440,659 496,862Change in working capital (36,718) 47,892 27,696 20,559 3,772



Free cash flow to equity 35,691 93,957 75,536 84,505 94,798Net acquisitions & disposals (1,447) 0 0 0 0

Dividends paid (6,811) 0 (815) (7,946) (11,920)

Non recurring cash flows (27,604) 8,626 (39,070) 0 0

Net cash flow (170) 102,584 35,650 76,559 82,878Equity finance 0 0 0 0 0

Debt finance 58,825 (132,473) 86,278 20,387 25,413

Movement in cash 58,655 (29,889) 121,929 96,946 108,292

Per share (INR)





Working capital liabilities (871,319) (995,968) (1,104,160) (1,139,277) (1,148,921)

Net working capital (315,855) (363,746) (391,442) (412,001) (415,773)Tangible fixed assets 1,124,226 1,288,507 1,324,704 1,495,698 1,669,985

Operating invested capital 808,371 924,761 933,262 1,083,697 1,254,212Goodwill 46,970 48,365 48,365 48,365 48,365


Investments 170,468 175,689 209,907 209,907 209,907

Other assets 13,900 0 0 0 0

Invested capital 1,039,709 1,148,814 1,191,535 1,341,970 1,512,485Cash & equivalents (462,120) (520,929) (562,346) (613,653) (690,661)


Long term debt * 783,534 730,465 774,211 829,211 884,211

Net debt 321,414 209,535 211,866 215,559 193,550Deferred tax 0 0 0 0 0

Other liabilities 0 4,397 (21,066) (21,066) (21,066)

Total equity 562,619 807,827 793,351 940,093 1,132,617

Minority interests 4,333 8,883 8,883 8,883 8,883

Invested capital 1,039,709 1,148,814 1,191,535 1,341,970 1,512,485

Per share (INR)

Book value per share 174.80 237.89 233.62 276.83 333.52

Tangible book value per share 160.21 223.65 219.38 262.59 319.28

Financial strength

Net debt/equity (%) 56.7 25.7 26.4 22.7 17.0

Net debt/total assets (%) 13.5 7.9 7.4 7.0 5.8

Current ratio (x) 1.2 1.2 1.2 1.2 1.2

Valuation 2015A 2016A 2017E 2018E 2019E

Recurring P/E (x) * 12.4 14.9 11.4 9.6 8.1


Reported P/E (x) 12.6 17.0 11.0 9.6 8.1

Dividend yield (%) 0.0 0.0 0.4 0.5 0.7

P/CF (x) 4.5 5.2 5.1 4.2 3.7

P/FCF (x) 49.4 19.8 24.6 22.0 19.6

Price/book (x) 3.1 2.3 2.3 2.0 1.6


EV/EBITDA (x) 5.3 5.7 4.8 4.3 3.8



Source: Tata Motors, BNP Paribas estimates




Financial statementsMahindra & Mahindra


Revenue 374,683 388,666 434,085 508,851 587,651


Gross profit ex depreciation 117,414 123,585 135,732 155,840 179,249Other operating income 0 0 0 0 0

Operating costs (71,381) (71,676) (77,571) (85,184) (96,962)



Operating EBIT 35,053 39,522 44,999 56,628 68,733Net financing costs (3,039) (2,330) (1,934) (2,054) (2,059)


Recurring non operating income 8,201 7,858 8,767 9,100 9,200

Non recurring items 3,357 60 910 0 0





Reported net profit 34,233 32,967 38,101 45,846 54,629Non recurring items & goodwill (net) (3,357) (60) (910) 0 0


Per share (INR)

Recurring EPS * 51.33 54.67 61.79 76.17 90.76

Reported EPS 56.91 54.77 63.30 76.17 90.76

DPS 15.93 14.38 14.40 16.80 21.60

Growth

Revenue (%) (3.9) 3.7 11.7 17.2 15.5

Operating EBITDA (%) (8.4) 12.8 12.0 21.5 16.5

Operating EBIT (%) (12.1) 12.8 13.9 25.8 21.4

Recurring EPS (%) (15.5) 6.5 13.0 23.3 19.2

Reported EPS (%) (7.6) (3.8) 15.6 20.3 19.2





Net margin (%) 8.2 8.5 8.6 9.0 9.3



Interest cover (x) 14.2 20.3 27.8 32.0 37.9

Inventory days 42.5 42.3 42.1 39.5 38.3

Debtor days 23.5 22.4 21.6 21.4 20.9

Creditor days 114.7 125.1 124.4 113.1 108.8

Operating ROIC (%) 38.7 38.7 41.9 54.8 71.6

ROIC (%) 16.4 15.6 16.3 18.3 19.9

ROE (%) 16.6 15.6 15.6 17.1 18.0



Automotive 242,204 262,522 285,910 333,860 390,859

Farm Equipment 133,468 127,413 148,623 174,991 196,792

Source: Mahindra & Mahindra, BNP Paribas estimates



Financial statementsMahindra & Mahindra



Depreciation 10,980 12,386 13,162 14,027 13,554

Associates & minorities 997 2,707 0 0 0

Other non-cash items 0 0 0 0 0

Recurring cash flow 42,853 48,000 50,353 59,873 68,184Change in working capital (1,694) (1,149) (576) (1,772) 2,954



Free cash flow to equity 19,928 20,065 37,777 46,102 59,137Net acquisitions & disposals 0 0 0 0 0

Dividends paid (9,581) (8,654) (8,667) (10,112) (13,001)

Non recurring cash flows (22,172) (13,570) (32,000) (40,000) (42,000)

Net cash flow (11,825) (2,160) (2,890) (4,010) 4,136Equity finance 26 0 0 0 0

Debt finance (11,440) (4,674) 0 0 0

Movement in cash (23,239) (6,834) (2,890) (4,010) 4,136

Per share (INR)









Investments - - - - -

Other assets - - - - -



Long term debt * 30,382 25,416 25,416 25,416 25,416

Net debt (8,325) (22,649) (32,669) (40,659) (56,795)Deferred tax 11,509 14,216 14,216 14,216 14,216


Total equity 198,769 223,843 251,832 284,677 323,416



Per share (INR)



Financial strength

Net debt/equity (%) (4.2) (10.1) (13.0) (14.3) (17.6)


Current ratio (x) 1.1 1.1 1.2 1.2 1.3

Valuation 2015A 2016A 2017E 2018E 2019E

Recurring P/E (x) * 25.6 24.0 21.3 17.2 14.5


Reported P/E (x) 23.1 24.0 20.7 17.2 14.5

Dividend yield (%) 1.2 1.1 1.1 1.3 1.6

P/CF (x) 18.4 16.5 15.7 13.2 11.6

P/FCF (x) 39.6 39.4 20.9 17.1 13.4

Price/book (x) 4.0 3.5 3.1 2.8 2.4


EV/EBITDA (x) 17.0 14.8 13.0 10.6 8.9



Source: Mahindra & Mahindra, BNP Paribas estimates




Fiscal year ending changed from December to March in FY16. FY15 and FY16 recalculated for Apr-Mar quarters Source: Eicher Motors, BNP Paribas estimates

Financial statementsEicher Motors


Revenue 33,567 52,259 72,143 92,196 114,994



Operating costs (5,522) (8,590) (11,521) (14,362) (17,479)

Operating EBITDA 8,380 14,711 22,357 29,574 38,080Depreciation (583) (1,186) (1,790) (2,523) (3,236)


Operating EBIT 7,797 13,525 20,566 27,051 34,844Net financing costs (12) (12) (7) 0 0


Recurring non operating income 964 1,817 2,322 3,088 4,162






Reported net profit 6,118 10,700 15,851 21,097 27,304Non recurring items & goodwill (net) 0 0 0 0 0


Per share (INR)

Recurring EPS * 224.78 392.85 581.98 774.59 1,002.45

Reported EPS 224.78 392.85 581.98 774.59 1,002.45

DPS 49.76 99.63 149.45 199.27 298.90

Growth

Revenue (%) – 55.7 38.0 27.8 24.7

Operating EBITDA (%) – 75.6 52.0 32.3 28.8

Operating EBIT (%) – 73.5 52.1 31.5 28.8

Recurring EPS (%) – 74.8 48.1 33.1 29.4

Reported EPS (%) – 74.8 48.1 33.1 29.4





Net margin (%) 18.2 20.5 22.0 22.9 23.7



Interest cover (x) – 1,257.5 3,521.3 n/a n/a

Inventory days – 33.5 34.3 35.9 36.2

Debtor days – 2.2 2.7 2.7 2.7

Creditor days – 129.0 132.2 138.9 140.4

Operating ROIC (%) – 784.1 517.9 528.2 724.1

ROIC (%) – 285.4 247.9 291.8 389.4

ROE (%) – 59.5 58.7 53.1 48.9

ROA (%) – 36.6 37.7 35.5 34.1*Pre exceptional pre-goodwill and fully diluted


Domestic motorcycles 30,222 47,261 64,125 79,224 93,841

Export motorcycles 1,008 1,336 2,159 3,304 4,719

Spares and parts 2,336 3,662 5,859 9,667 16,434



Fiscal year ending changed from December to March in FY16. FY15 and FY16 recalculated for Apr-Mar quarters Source: Eicher Motors, BNP Paribas estimates

Financial statementsEicher Motors



Depreciation 583 1,186 1,790 2,523 3,236

Associates & minorities 0 0 0 0 0


Recurring cash flow 5,594 10,213 15,320 20,532 26,378Change in working capital 1,729 1,429 2,835 2,683 2,992

Capex - maintenance - - - - -


Free cash flow to equity 3,609 7,636 12,155 17,716 23,870Net acquisitions & disposals - - - - -

Dividends paid (1,625) (3,256) (4,885) (6,513) (9,769)

Non recurring cash flows 964 (4,630) (3,678) (6,912) (10,838)

Net cash flow 2,948 (250) 3,592 4,291 3,262Equity finance 0 0 0 0 0

Debt finance 0 0 0 0 0

Movement in cash 2,948 (250) 3,592 4,291 3,262

Per share (INR)







Operating invested capital 344 2,064 3,438 3,732 3,004Goodwill - - - - -

Other intangible assets - - - - -

Investments - - - - -

Other assets 1,452 3,644 3,644 3,644 3,644



Long term debt * - - - - -

Net debt (13,102) (16,734) (26,326) (40,617) (58,879)Deferred tax 188 331 331 331 331


Total equity 14,472 21,508 32,475 47,059 64,593

Minority interests - - - - -


Per share (INR)

Book value per share 531.74 789.65 1,192.29 1,727.76 2,371.53

Tangible book value per share 531.74 789.65 1,192.29 1,727.76 2,371.53

Financial strength

Net debt/equity (%) - - - - -


Current ratio (x) 1.7 1.8 2.0 2.3 2.7

Valuation 2015A 2016A 2017E 2018E 2019E

Recurring P/E (x) * 109.7 62.7 42.4 31.8 24.6


Reported P/E (x) 109.7 62.7 42.4 31.8 24.6

Dividend yield (%) 0.2 0.4 0.6 0.8 1.2

P/CF (x) 119.9 65.7 43.8 32.7 25.5

P/FCF (x) 185.9 87.9 55.2 37.9 28.1

Price/book (x) 46.4 31.2 20.7 14.3 10.4


EV/EBITDA (x) 78.5 44.5 28.8 21.3 16.1






Financial statementsHero MotoCorp


Revenue 275,853 284,427 315,462 353,571 391,681



Operating costs (42,892) (46,675) (53,582) (60,529) (64,627)



Operating EBIT 30,022 40,189 46,640 49,570 54,082Net financing costs 4,817 4,180 5,396 6,194 7,569


Recurring non operating income 0 0 0 0 0






Reported net profit 23,856 31,615 36,943 39,102 40,998Non recurring items & goodwill (net) (1,550) 0 0 0 0


Per share (INR)

Recurring EPS * 127.22 158.31 184.99 195.80 205.30

Reported EPS 119.46 158.31 184.99 195.80 205.30

DPS 60.00 72.00 85.00 95.00 100.00

Growth

Revenue (%) 9.1 3.1 10.9 12.1 10.8

Operating EBITDA (%) 0.1 25.9 15.7 6.5 8.3

Operating EBIT (%) 23.4 33.9 16.1 6.3 9.1

Recurring EPS (%) 20.5 24.4 16.9 5.8 4.8

Reported EPS (%) 13.1 32.5 16.9 5.8 4.8





Net margin (%) 9.2 11.1 11.7 11.1 10.5



Interest cover (x) n/a n/a n/a n/a n/a

Inventory days 13.7 14.1 13.0 13.3 13.0

Debtor days 15.3 17.1 15.6 15.4 14.8

Creditor days 55.7 60.5 57.8 54.3 50.5

Operating ROIC (%) 128.4 103.7 98.6 89.6 90.0

ROIC (%) 94.9 80.2 77.0 72.1 72.8

ROE (%) 41.9 43.6 42.1 37.6 34.0



Domestic 6,431,686 6,421,913 6,980,230 7,599,510 8,202,479

Export 200,017 210,239 174,351 191,786 210,965

Source: Hero MotoCorp, BNP Paribas estimates



Financial statementsHero MotoCorp



Depreciation 5,400 4,414 4,949 5,380 5,412

Associates & minorities - - - - -


Recurring cash flow 22,986 32,366 36,466 38,288 38,840Change in working capital (3,359) (5,673) (5,103) (1,256) (1,477)



Free cash flow to equity 8,070 14,110 23,363 30,632 33,363Net acquisitions & disposals 0 0 0 0 0

Dividends paid (22,194) (7,204) (20,412) (22,813) (24,014)

Non recurring cash flows 14,551 (6,430) (589) (5,306) (4,431)

Net cash flow 427 475 2,362 2,512 4,918Equity finance 0 0 0 0 0

Debt finance (111) 35 15 0 0

Movement in cash 316 511 2,377 2,512 4,918

Per share (INR)









Investments 0 0 0 0 0

Other assets 6,770 9,441 9,441 9,441 9,441



Long term debt * 0 0 0 0 0

Net debt (33,134) (43,977) (52,354) (66,366) (83,285)Deferred tax (735) 2,278 2,278 2,278 2,278

Other liabilities 970 1,193 1,193 1,193 1,193

Total equity 65,413 79,448 95,979 112,268 129,252



Per share (INR)



Financial strength

Net debt/equity (%) (50.7) (55.4) (54.5) (59.1) (64.4)


Current ratio (x) 1.6 1.7 2.1 2.4 2.8

Valuation 2015A 2016A 2017E 2018E 2019E

Recurring P/E (x) * 26.8 21.5 18.4 17.4 16.6


Reported P/E (x) 28.5 21.5 18.4 17.4 16.6

Dividend yield (%) 1.8 2.1 2.5 2.8 2.9

P/CF (x) 29.6 21.0 18.6 17.8 17.5

P/FCF (x) 84.3 48.2 29.1 22.2 20.4

Price/book (x) 10.4 8.6 7.1 6.1 5.3


EV/EBITDA (x) 18.3 14.3 12.2 11.2 10.0



Source: Hero MotoCorp, BNP Paribas estimates




Disclaimers and Disclosures

APPENDIX

DISCLAIMERS AND DISCLOSURES APPLICABLE TO NON-US BROKER-DEALER(S): BNP PARIBAS SECURITIES INDIA PVT. LTD. (SEBI REGISTERED RESEARCH ANALYST)

ANALYST(S) CERTIFICATION

Kumar Rakesh, BNP Paribas Securities India Pvt. Ltd. (SEBI registered research analyst), +91 22 6196 4350, [email protected] The BNP Paribas Securities India Pvt. Ltd. (SEBI registered research analyst) Analysts mentioned in this disclaimer are employed by a non-US affiliate of BNP Paribas Securities Corp., and are not registered/ qualified pursuant to NYSE and/or FINRA regulations

The individual(s) identified above certify(ies) that (i) all views expressed in this report accurately reflect the personal view of the analyst(s) with regard to any and all of the subject securities, companies or issuers mentioned in this report; and (ii) no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed herein.

IMPORTANT DISCLOSURES REQUIRED IN THE UNITED STATES BY FINRA RULES AND OTHER JURISDICTIONS "BNP Paribas” is the marketing name for the global banking and markets business of BNP Paribas Group. No portion of this report was prepared by BNP Paribas Securities Corp (US) personnel, and it is considered Third-Party Affiliate research under NASD Rule 2711. The following disclosures relate to relationships between companies covered in this research report and the BNP entity identified on the cover of this report, BNP Securities Corp., and other entities within the BNP Paribas Group (collectively, "BNP Paribas"). The disclosure column in the following table lists the important disclosures applicable to each company that has been rated and/or recommended in this report:

BNP Paribas represents that: 1. Within the past year, it has managed or co-managed a public offering for this company, for which it received fees. 2. It had an investment banking relationship with this company in the last 12 months. 3. It received compensation for investment banking services from this company in the last 12 months. 4. It expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the next 3 months. 5. It beneficially owns 1% or more of any class of common equity securities of the subject company. 6. It makes a market in securities in respect of this company. 7. The analyst(s) or an individual who assisted in the preparation of this report (or a member of his/her household) has a financial interest position in

securities issued by this company. The financial interest is in the common stock of the subject company, unless otherwise noted. 8. The analyst (or a member of his/her household) is an officer, director, employee or advisory board member of this company or has received

compensation from the company.

IMPORTANT DISCLOSURES REQUIRED IN KOREA The disclosure column in the following table lists the important disclosures applicable to each Korea listed company that has been rated and/or recommended in this report:

1. The performance of obligations of the Company is directly or indirectly guaranteed by BNP Paribas Securities Korea Co. Ltd (“BNPPSK”) by means of payment guarantees, endorsements, and provision of collaterals and/or taking over the obligations.

2. BNPPSK owns 1/100 or more of the total outstanding shares issued by the Company. 3. The Company is an affiliate of BNPPSK as prescribed by Item 3, Article 2 of the Monopoly Regulation and Fair Trade Act. 4. BNPPSK is the financial advisory agent of the Company for the Merger and Acquisition transaction or of the Target Company whereby the size of the

transaction does not exceed 5/100 of the total asset of the Company or the total number of outstanding shares. 5. BNPPSK has taken financial advisory service regarding listing to the Company within the past 1 year. 6. With regards to the tender offer initiated by the Company based on Item 2, Article 133 of the Financial Investment Services and Capital Market Act,

BNPPSK acts in the capacity of the agent for the tender offer designated either by the Company or by the target company, provided that this provision shall apply only where tender offer has not expired.

7. The listed company which issued the stocks in question in case where 40 days has not passed since the new shares were listed from the date of entering into arrangement for public offering or underwriting-related agreement for issuance of stocks

8. The Company that has signed a nominated advisor contract with BNPPSK as defined in Item 2 of Article 8 of the KONEX Market Listing Regulation. 9. The Company is recognized as having considerable interests with BNPPSK in relation to No.1 to No. 8. 10. The analyst or his/her spouse owns (including delivery claims of marketable securities based on legal regulations and trading and misc. contracts) the

following securities or rights (hereinafter referred to as “Securities, etc.” in this Article) regardless of whose name is used in the trading. 1) Stocks, bond with stock certificate, and certificate of pre-emptive rights issued by the Company whose securities dealings are being solicited. 2) Stock options of the Company whose securities dealings are being solicited. 3) Individual stock future, stock option, and warrants that use the stocks specified in Item 1) as underlying.

Company Ticker Disclosure (as applicable)

Hero MotoCorp HMCL IN 2, 3, 4

Maruti Suzuki India MSIL IN 2, 3, 4

Company Ticker Price (as of 17-Oct-2016 closing price) InterestN/A N/A N/A N/A



History of change in investment rating and/or target price

Maruti Suzuki India (MSIL IN)

Kumar Rakesh started covering this stock from 26 May 2016 Price and TP are in local currency Sources: FactSet; BNP Paribas

Tata Motors (TTMT IN)

Kumar Rakesh started covering this stock from 13 Jul 2016 Price and TP are in local currency Sources: FactSet; BNP Paribas

800

1,600

2,400

3,200

4,000

4,800

5,600

6,400Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16

Maruti Suzuki India Target Price(INR)

Date Rating Target price Date Rating Target price Date Rating Target price17-Oct-13 Reduce 1,100.00 31-Oct-14 Buy 3,600.00 15-Jul-15 Buy 4,460.0015-Jan-14 Reduce 1,580.00 15-Jan-15 Buy 3,900.00 10-May-16 Buy 4,500.0026-Apr-14 Reduce 1,750.00 28-Jan-15 Buy 4,060.00 13-Jul-16 Buy 5,000.0016-May-14 Buy 2,560.00 23-Apr-15 Buy 3,910.00 27-Jul-16 Buy 5,225.0001-Aug-14 Buy 2,870.00 28-Apr-15 Buy 4,300.00

210

280

350

420

490

560

630

700Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16

Tata Motors Target Price(INR)

Date Rating Target price Date Rating Target price Date Rating Target price17-Oct-13 Buy 336.40 12-Aug-14 Buy 519.44 23-Apr-15 Buy 640.0009-Nov-13 Buy 435.34 08-Sep-14 Buy 568.91 27-May-15 Buy 600.0015-Jan-14 Buy 445.24 17-Nov-14 Buy 593.65 15-Jul-15 Buy 525.0011-Feb-14 Buy 469.97 13-Jan-15 Buy 623.33 10-May-16 Hold 385.0016-May-14 Buy 494.71 09-Feb-15 Buy 633.22 13-Jul-16 Hold 450.00



Mahindra & Mahindra (MM IN)

Kumar Rakesh started covering this stock from 24 Jun 2016 Price and TP are in local currency Sources: FactSet; BNP Paribas

Eicher Motors (EIM IN)

Kumar Rakesh started covering this stock from 17 Sep 2016 Price and TP are in local currency Sources: FactSet; BNP Paribas

600

800

1,000

1,200

1,400

1,600

1,800


Mahindra & Mahindra Target Price(INR)

Date Rating Target price Date Rating Target price Date Rating Target price17-Oct-13 Hold 815.00 15-Jan-15 Hold 1,260.00 10-May-16 Buy 1,530.0014-Nov-13 Hold 870.00 16-Feb-15 Hold 1,275.00 24-Jun-16 Buy 1,650.0015-Jan-14 Hold 910.00 23-Apr-15 Hold 1,290.00 13-Jul-16 Buy 1,700.0016-May-14 Hold 1,225.00 01-Jun-15 Hold 1,305.0005-Nov-14 Hold 1,220.00 15-Jul-15 Hold 1,300.00

0

4,000

8,000

12,000

16,000

20,000

24,000

28,000


Eicher Motors Target Price(INR)

Date Rating Target price17-Sep-16 Buy 27,150.00



Hero MotoCorp (HMCL IN)

Kumar Rakesh started covering this stock from 13 Jul 2016 Price and TP are in local currency Sources: FactSet; BNP Paribas

Company Ticker Price Rating Valuation & Risks

Eicher Motors EIM IN INR 24,645.50 Buy Key downside risks to our P/E-based target price include: 1) Entry of competitors in the cruiser bike segment at a competitive price. 2) Shift in consumer preference away from cruiser bikes to sports or other bikes. 3) Weakening of overall macro-economic environment leading to weak consumer sentiment. 4) Sudden weakening of demand for commercial vehicles, especially medium duty trucks and buses.

Hero MotoCorp HMCL IN INR 3,405.50 Hold Key upside risks to our P/E-based target price include: 1) greater-than-expected demand recovery and 2) higher-than-expected cost efficiencies. Key downside risks include: 1) the underperformance of recently launched scooter models and 2) more-than-expected commodity price rises.

Mahindra & Mahindra MM IN INR 1,313.10 Buy Key downside risks to our SoTP-based target price include: 1) underperformance of new models, 2) lower-than-expected tractor demand, and 3) below-average rainfall.

Maruti Suzuki India MSIL IN INR 5,599.10 Buy Key downside risks to our P/E-based target price include: 1) weaker-than-expected industry demand growth, 2) underperformance of new models, 3) higher competitive pressure from peers, and 4) a larger-than-expected JPY appreciation against INR.

Tata Motors TTMT IN INR 547.55 Hold Key upside risks to our SoTP-based target price include: 1) stronger-than-expected ASP and 2) better cost efficiencies. Key downside risks include: 1) deterioration of US and China market, 2) failure of recently launched products or delay in product launches.

Sources: Factset, BNP Paribas

GENERAL DISCLAIMER

This report was produced by BNP Paribas Securities India Pvt. Ltd. (SEBI registered research analyst), member company(ies) of the BNP Paribas Group.

This report is for the use of intended recipients only and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set forth herein. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Customers are advised to use the information contained herein as just one of many inputs and considerations prior to engaging in any trading activity. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other investments. This report is not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Information and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without the recipient’s own independent verification, or taken in substitution for the exercise of judgment by the recipient. Additionally, the products mentioned in this report may not be available for sale in certain jurisdictions. As an investment bank with a wide range of activities, BNP Paribas may face conflicts of interest, which are resolved under applicable legal provisions and internal guidelines. You should be aware, however, that BNP Paribas may engage in transactions in a manner inconsistent with the views expressed in this document, either for its own account or for the account of its clients. Australia: This report is being distributed in Australia by BNP Paribas Sydney Branch, registered in Australia as ABN 23 000 000 117 at 60 Castlereagh Street Sydney NSW 2000. BNP Paribas Sydney Branch is licensed under the Banking Act 1959 and the holder of Australian Financial Services Licence no. 238043 and therefore subject to regulation by the Australian Securities & Investments Commission in relation to delivery of financial services. By accepting this document you agree to be bound by the foregoing limitations, and acknowledge that information and opinions in this document relate to financial products or financial services which are delivered solely to wholesale clients (in terms of the Corporations Act 2001, sections 761G and 761GA; Corporations Regulations 2001, division 2, reg. 7.1.18 & 7.1.19) and/or professional investors (as defined in section 9 of the Corporations Act 2001). Canada: The information contained herein is not, and under no circumstances is to be construed as, a prospectus, an advertisement, a public offering, an offer to sell securities described herein, or solicitation of an offer to buy securities described herein, in Canada or any province or territory thereof. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. To the extent that the information contained herein references securities of an issuer incorporated, formed or created under the laws of Canada or a province or territory

1,500

1,800

2,100

2,400

2,700

3,000

3,300

3,600

3,900


Hero MotoCorp Target Price(INR)

Date Rating Target price Date Rating Target price Date Rating Target price17-Oct-13 Hold 1,925.00 05-Aug-14 Buy 3,000.00 10-May-16 Hold 3,100.0024-Oct-13 Hold 2,150.00 20-Oct-14 Buy 3,200.00 13-Jul-16 Hold 3,225.0015-Jan-14 Hold 2,230.00 15-Jan-15 Buy 3,300.00 09-Aug-16 Hold 3,285.0031-Jan-14 Hold 2,160.00 23-Apr-15 Buy 2,800.0016-May-14 Buy 2,775.00 15-Jul-15 Buy 3,000.00



of Canada, any trades in such securities must be conducted through a dealer registered in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials, the information contained herein or the merits of the securities described herein, and any representation to the contrary is an offence. Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent. BNP Paribas Securities (Asia) Limited, a subsidiary of BNP Paribas, is regulated by the Securities and Futures Commission for the conduct of dealing in securities, advising on securities, dealing in futures contracts and advising on corporate finance. For professional investors in Hong Kong, please contact BNP Paribas Securities (Asia) Limited (address: 63/F Two International Finance Centre, 8 Finance Street, Central, Hong Kong; tel:2909 8888; fax: 2845 2232) for all matters and queries relating to this report. India: In India, this document is being distributed by BNP Paribas Securities India Pvt. Ltd. ("BNPPSIPL"), having its registered office at 5th floor, BNP Paribas House, 1 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, INDIA (Tel. no. +91 22 3370 4000 / 6196 4000, Fax no. +91 22 6196 4363). BNPPSIPL is registered with the Securities and Exchange Board of India (“SEBI”) as a research analyst (Regn. No. INH000000792) and as a stockbroker in the Equities and the Futures & Options segments of National Stock Exchange of India Ltd. (“NSE”) and BSE Ltd. and in the Currency Derivatives segment of NSE (SEBI Regn. Nos.: INB/INF/NSF/NSE231474835, INB/INF011474831; CIN: U74920MH2008FTC182807; Website: www.bnpparibas.co.in). No material disciplinary action has been taken against BNPPSIPL by any regulatory or government authority. BNPPSIPL or its associates may have received compensation or other benefits for brokerage services or for other products or services, from the company(ies) that have been rated and/or recommended in the report and / or from third parties. Indonesia: This report is being distributed by PT BNP Paribas Securities Indonesia and is delivered by its licensed employee(s), including marketing/sales person, to its client. PT BNP Paribas Securities Indonesia, having its registered office at Menara BCA, 35th floor, Grand Indonesia, JL. M.H. 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Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Malaysia: This report is issued and distributed by BNP Paribas Capital (Malaysia) Sdn Bhd. The views and opinions in this research report are our own as of the date hereof and are subject to change. BNP Paribas Capital (Malaysia) Sdn Bhd has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of BNP Paribas Capital (Malaysia) Sdn Bhd. This publication is being provided to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of BNP Paribas Capital (Malaysia) Sdn Bhd. 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In relation to the distribution to such categories of investors, BNPPSSL and its representatives are exempted under Regulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act of Singapore, regarding the disclosure of certain interests in, or certain interests in the acquisition or disposal of, securities referred to in this report. For Institutional and Accredited Investors in Singapore, please contact BNP Paribas Securities (Singapore) Ptd Ltd (company registration number: 199801966C; address: 10 Collyer Quay, 34/F Ocean Financial Centre, Singapore 049315; tel: (65) 6210 1288; fax: (65) 6210 1980) for all matters and queries relating to this report. South Africa: In South Africa, BNP Paribas Securities South Africa (Pty) Ltd is a licensed member of the Johannesburg Stock Exchange and an authorised Financial Services Providers and subject to regulation by the Financial Services Board. BNP Paribas Securities South Africa (Pty) Ltd does not expressly or by implication represent, recommend or propose that the financial products referred to in this report are appropriate to the particular investment objectives, financial situation or particular needs of the recipient. This document does not constitute advice as contemplated in the Financial Advisory and Intermediary Services Act, 2002. South Korea: BNP Paribas Securities Korea is registered as a Licensed Financial Investment Business Entity under the FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT and regulated by the Financial Supervisory Service and Financial Services Commission. This document does not constitute an offer to sell to or the solicitation of an offer to buy from any person any financial products where it is unlawful to make the offer or solicitation in South Korea. Switzerland: This report is intended solely for customers who are “Qualified Investors” as defined in article 10 paragraphs 3 and 4 of the Swiss Federal Act on Collective Investment Schemes of 23 June 2006 (CISA) and the relevant provisions of the Swiss Federal Ordinance on Collective Investment Schemes of 22 November 2006 (CISO). “Qualified Investors” includes, among others, regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes, regulated insurance companies as well as pension funds and companies with professional treasury operations. This document may not be suitable for customers who are not Qualified Investors and should only be used and passed on to Qualified Investors. For specification purposes, a “Swiss Corporate Customer” is a Client which is a corporate entity, incorporated and existing under the laws of Switzerland and which qualifies as “Qualified Investor” as defined above." 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This publication may not be distributed to the public media or quoted or used by the public media without the express written consent of BNP Paribas.

Thailand: Research relating to Thailand and Thailand based issuers is produced pursuant to an arrangement between BNP PARIBAS (“BNPP”) and Finansia Syrus Securities Public Company Limited (“FSS”). FSS International Investment Advisory Securities Co Ltd (“FSSIA”) prepares and distributes research under the brand name “BNP PARIBAS/FSS”. BNPP is not an affiliate of FSSIA or FSS. FSS also publishes a different research product under the brand name “FINANSIA SYRUS,” which is prepared by research analysts who are not part of FSSIA and who may cover the same securities, issuers, or industries that are the subject of this report. The ratings, recommendations, and views expressed in this report may differ from the ratings, recommendations, and views expressed by other research analysts or research teams employed by FSS. This report is being distributed outside Thailand by members of BNP Paribas. Turkey: This report is being distributed in Turkey by TEB Investment (TEB YATIRIM MENKUL DEGERLER A.S., Teb Kampus D Blok Saray Mah. Kucuksu Cad. Sokullu Sok., No:7 34768 Umraniye, Istanbul, Turkey, Trade register number: 358354, www.tebyatirim.com.tr) and outside Turkey jointly by TEB Investment and BNP Paribas. Information, comments and suggestions on investment given in this material are not within the scope of investment consulting. The investment consulting services are rendered tailor made for individuals by competent authorities considering the individuals’ risk and return preferences.



However the comments and recommendations herein are based on general principles. These opinions may not be consistent with your financial status as well as your risk and return preferences. Therefore, making an investment decision only based on the information provided herein may not bear consequences in parallel with your expectations. This material issued by TEB Yatırım Menkul Değerler A.Ş. for information purposes only and may be changed without any prior notification. All rights reserved. No part of this material may be copied or reproduced in any manner without the written consent of TEB Yatırım Menkul Değerler A.Ş. Although TEB Yatırım Menkul Değerler A.Ş. gathers the presented material that is current as possible, it does not undertake that all the information is accurate or complete, nor should it be relied upon as such. TEB Yatırım Menkul Değerler A.Ş. assumes no responsibility whatsoever in respect of or arising out or in connection with the content of this material to third parties. If any third party chooses to use the content of this material as reference, he/she accepts and approves to do so entirely at his/her own risk.

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Additional Disclosures Target price history, stock price charts, valuation and risk details, and equity rating histories applicable to each company rated in this report is available in our most recently published reports available on our website: http://eqresearch.bnpparibas.com, or you can contact the analyst named on the front of this note or your BNP Paribas representative. All share prices are as at market close on 17 October 2016 unless otherwise stated.

RECOMMENDATION STRUCTURE

Stock Ratings Stock ratings are based on absolute upside or downside, which we define as (target price* - current price) / current price. BUY (B). The upside is 10% or more. HOLD (H). The upside or downside is less than 10%. REDUCE (R). The downside is 10% or more. Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on market price and the formal recommendation. * In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases, therefore, our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value. Industry Recommendations Improving (): The analyst expects the fundamental conditions of the sector to be positive over the next 12 months. Stable (previously known as Neutral) (): The analyst expects the fundamental conditions of the sector to be maintained over the next 12 months. Deteriorating (): The analyst expects the fundamental conditions of the sector to be negative over the next 12 months. Country (Strategy) Recommendations Overweight (O). Over the next 12 months, the analyst expects the market to score positively on two or more of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. Neutral (N). Over the next 12 months, the analyst expects the market to score positively on one of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. Underweight (U). Over the next 12 months, the analyst does not expect the market to score positively on any of the criteria used to determine market recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity.

RATING DISTRIBUTION (as at 18 October 2016)

Should you require additional information concerning this report please contact the relevant BNP Paribas research team or the author(s) of this report. © 2016 BNP Paribas Group

Total BNP Paribas coverage universe 459 Investment Banking Relationship (%)

Buy 268 (58.4%) Buy 31.34

Hold 131 (28.5%) Hold 35.11

Reduce 60 (13.1%) Reduce 26.67

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