India Market Strategy

How Should Investors Act During Economic Inactivity

Sahil Kapoor Shobana Krishnan Ankita Pathak

Chief Market Strategist Chief Economist Economist
sahil.kapoor@edelweissfin.com Ankita.pathak@edelweissfin.com March 2020
Shobana.Krishnan@edelweissfin.com
Novel Crisis- Economic Inactivity
• We stand at a unique juncture of a novel crisis when economic activity, other than the essentials, is shut. At this crucial point, policy will
play a very important role.
• This crisis would ebb with some clarity on clampdown on coronavirus outbreak but investors would benefit if they make a valuation call
at this juncture.
Monetary Policy-
• The monetary policy action today has been heartening. With a steep 75 bps cut in repo rate and other measures, RBI has delivered.
• Targeted Long Term Repo Operations(TLTROs) worth INR 1 trillion to be re-invested in investible grade corporate bonds and mutual
funds is a welcome step.
• Overall, we believe that monetary policy is headed in right direction but ultimately for the purpose of this crisis, it will have to go
towards monetization of deficit and aggressively increasing money supply in the economy.
• We argue that Money is non-neutral in short term and has the ability to foster growth.

Fiscal Policy-
• When the economy is shut, the ability of money to multiply itself falls. This means there is a pressing need to move money in the
economy.
• This is best achieved by fiscal policy. The Government needs to step in to lubricate the economy and get the wheels moving.
• It involves steps like giving a Universal Basic Income, reducing Income tax, giving material benefits to corporates so they can continue
paying their employees. Monetary Policy will do the creation, fiscal is needed for the distribution. At this point, impactful Monetary and
fiscal stimulus, if it comes through, will make recovery visible and path clearer. Also, with 21- day lockdown India has taken a remarkable
step towards curbing Coronavirus. The steps, so far, are small. Of the supposedly, INR 1.7 lakh cr package, total cash handouts are
about INR 73,700 crores or 37bps of GDP.

2
How Should Investors Act During Economic Inactivity
• Take a valuation call, start buying in a staggered manner. Focus on robust companies with high return on capital, proven
track record and ability to withstand the current turmoil. Best still is to buy diversified portfolios. We request investors
to deploy 5% of their investible capital every week.
• Valuations have corrected and the sticky P/Es have been washed off in this crisis. On TTM basis, NIFTY traded below 15
times its EPS with FY20 EPS at 520.
• On Forward basis, P/E range varies between 12.5-15.3, with worst case being EPS of 488 and best case EPS being be
600. At the lower end, these numbers are conservative and does not account for a catalyst.
• We believe with a catalyst in the form of sizeable Monetary and fiscal stimulus, Indian markets are significantly cheap.
Bounce back, when it comes, is likely to be strong.
• Until then, we suggest deploying capital in dips in a staggered fashion, utilizing the current period to increase allocation
to equities.
• On debt front, we believe there’s a case for playing credit again as credit spreads have increased and will get relief
from the TLTROs. Duration continues to be a fair play as RBI has clearly signaled- it will keep a handle on Gsec Yields.
Though Operation Twists, OMOs and LTROs are helping in curtailing the jump in yields, the rate cuts will assist in
keeping the yields at 5.5% levels. We believe ~80-100bps spread of yields over repo rate will be fair.
• At this juncture Bharat Bond appears to be an attractive debt market investments with yields at 7.58% at the longer
duration.

3
The World Shuts Down

About 1/3rd of the Total World Population Under Lockdown

• About 82 countries
in the world are
under partial or full
lockdown.
• This translates to
about 3 billion
people around the
world under
lockdown.
• China witnessed
drop in transmission
of virus after 8
weeks of imposing
strict quarantine
measures in Hubei
Province.
• Estimates indicate
the dent on World
GDP can between 50
bps to 150bps

4
India Still Has More Ammunition
Among the available policy options in a crisis, India has utilized a few on Monetary front.
RBI has delivered a
rate cut of 75bps. In
Monetary crisis, policy space
Stimulus bringing
rates to floor available is infinite,
RBI can therefore act
further.

Add Quantitative
Easing
Is more important in a
medical crisis amidst
a lockdown
Add Fiscal
Stimulus The announcements
so far are minimal,
more is needed

Move to
This is the need of the
Monetization of
Deficit and Reflate hour. More clarity on
the Economy it is awaited.

5
Need A Bigger Stimulus To Fill The Bill
India's Total Annual GDP 204 INR trillion
India's Monthly GDP 17
% of activity happening Weighted Impact
Worst Best Worst Best
Weights
Case Case Case Case
22 Agri 70 100 7 0
2 Mining and quarrying 15 30 2 1
14 Manufacturing 15 30 12 10
2 Electricity, gas, water supply and other utility services 100 105 0 0
7 Construction 15 30 6 5
18 Trade, hotels, transport, storage and communication 15 30 15 12
18 Financial services, real estate and professional services 70 80 5 4
16 Public administration, defence and other services 90 105 2 -1
100 Total 49 32

One Month Impact 8.3 5.4

Impact as % GDP 4.1 2.6

• The gap created by 21 days of lockdown is as big as INR 5 lakh crore to INR 8 lakh crore or between 2.5 to 4% of current
GDP, a stronger and targeted fiscal boost will be needed to fill this gap.

• In the financial crisis of 2008-09, total fiscal support extended was 3.5% of GDP. A response of similar or higher
magnitude is needed at this juncture. The INR 1.7 trillion response announced at 0.83 percent of GDP is unlikely to
move the needle.
6
India Needs A Huge Fiscal Thrust

Fiscal Stimulus Needed for Economic Recovery

25 6.57 7 • We estimate a large

6.11
6.5 stimulus of INR 5 trillion is
6 required to put economy
20 back on track
5
• This can take the fiscal
15 deficit to ~6.5% of GDP
4

% GDP
% YoY

• Announced fiscal
10
3 measures are a good
start but more is needed.
2 Since pay-outs begin in
5 FY21, the impact will be
1 on FY21 deficit numbers.
Total cash handouts look
0 0 like INR 73,600 cr or
FY02
FY01

FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
about 37bps of GDP.
Nominal GDP GFD as % GDP-RHS

Source: CMIE, Edelweiss Professional Investor Research

7
The Efforts By States Are Insufficient To Move The Needle

States Have Announced Small Support Measures, But Are Insufficient

Amount
State Description
(INR Crore)

Includes INR 500 crore health package, INR 14,000 crore to clear all pending
Kerala 20,000
arrears

UP 353 Cash handouts to be given to daily wage earners

Punjab 116 INR 96 crore towards daily wage earners and INR 20 crore towards free food

Relief package may go up to INR 1200 crore monthly but no specific amount
Haryana NA
mentioned

Himachal Pradesh 530 INR 500 crore package for poor and needy, INR 30 crore for construction workers
Bihar 100

Source: Newspaper Reports, Edelweiss Professional Investor Research

8
Money Multiplies Slower- Need More Money!
Money Multiplying Process Impedes During Crisis In the short run, Changes In Money Supply
Matches Changes In Output
6.0
10000
5.8
8000
5.6
6000
5.4
4000

INR Billion
5.2
2000
Ratio

5.0
0
4.8
-2000
4.6
-4000
4.4
-6000
4.2

Dec-17
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16

Dec-18
Dec-19
4.0
Jul-01

Jul-06

Jul-11
Jul-02
Jul-03
Jul-04
Jul-05

Jul-07
Jul-08
Jul-09
Jul-10

Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Change In Money Supply Change In Nominal GDP
M3/M0 Source: CMIE. Edelweiss Professional Investor Research

• The process of money multiplying itself impedes in crisis as transactions slow. This will be even more worse in this crisis as the
lockdown prevails. Thus, the gap between M3 and M0 shrinks. One way to counteract this is to increase M0 aggressively.

• In short run, Money is non-neutral. Therefore, changes in Money Supply transform to changes in output and there’s a strong merit in
increasing Money Supply.
9
Monetization of Deficit Leads To A Higher Monetary Base
RBI Is Expanding Its Balance Sheet But It Has To Do It At Much Faster Pace
45318
45000 15%

40000 10%
7%
35000 5%
5%
30000
INR Billion

25000 0%

20000
-5%
15000
-10%
10000

5000 -15%
Mar-08

Mar-09
Mar-05

Mar-06

Mar-07

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
Sep-08
Sep-05

Sep-06

Sep-07

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19
RBI Total Assets RBI Total Assets YoY- RHS
Source: RBI, Edelweiss Professional Investor Research

• RBI has expanded its balance sheet by INR 5 trillion in FY20, to INR 45 trillion. However, there’s a pressing need to expand this
at much faster rate to pump in the money supply. RBI’s Balance sheet stands at 22% of GDP and is below Fed’s balance sheet
of 25%(expected to go up to minimum of 30% in this QE) and ECB’s balance sheet of 39% of GDP

• The Gsec holdings on RBI balance sheet add to reserve money and also signify the monetization of debt in secondary market.
Therefore, RBI should adopt aggressive OMOs at this juncture to reflate the economy via money supply.
10
Blessing in Disguise: India’s Low Leverage Levels
India’s Credit To GDP Are Much Below The Financial Crisis Levels
134.0
132.6
132.0

130.0

128.0
% of GDP

126.0
124.8
124.0

122.0

120.0

118.0

116.0

Mar-17
Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-18

Mar-19
Sep-17
Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-18

Sep-19
Source: CMIE, Edelweiss Professional Investor Research

• India’s leverage levels are low. The chances of debt defaults and therefore a further dent to the economy are limited.

11
Globally, Measures Taken Have Been Encouraging

Fiscal Spending Measures

Rate Cuts (In bps) Other Monetary Stimulus
(% GDP)
Monetary Stimulus of USD 245 billion, lowering bank
China 2.5 10
Requirement Rates, Another USD 15.9 billion to SME
US 9.4 100 QE of USD 700 billion and could increase it to USD 1.5 trillion
UK 1.5 65 QE of USD 228 billion
Germany 5.0 NA ECB has announced USD 817 billion in bond purchases apart
Italy 1.4 NA from USD 131 billion asset purchase it had announced before
South Korea 0.7 50 "QE light"- Unlimited Repo Transactions for next 3 months
Canada 0.05 50 Lower Bank Reserve Requirements
CB to boost ETF Purchases to an annual purchase of $112
Japan 10 NA
billion from $ 56 billion

Australia 25 Infusing USD 3.6 billion of liquidity

3.5
New Zealand 3.4 75 QE of USD 17 billion
Hong Kong 4.2 65
India 0.8 75 Targeted Long Term Repo Operations, CRR cut etc

Fed’s measures are commendable and their success will lie in bringing the dollar down
Source: Newspaper Reports, Edelweiss Professional Investor Research 12
Valuations Are Pointing To Limited Downside
Market Cap Got Beaten Down Without A Preceding Bubble
India’s Market Cap Is Significantly Eroded
180

160

147
140

120 122 121

India Market Cap to
GDP has been beaten
%

104 down without a pre-

100
95 existing bubble, unlike
the crisis. Ideally, with
80 formalization of the
economy, India’s
Market cap should
60 have gone up.
56

45
40
CY03

CY04

CY05

CY06

CY07

CY08

CY09

CY10

CY11

CY12

CY13

CY14

CY15

CY16

CY17

CY18

CY19

Q1CY20
USA Market cap to GDP World Market Cap to GDP India Market Cap to GDP
Source: Bloomberg, Edelweiss Professional Investor Research
14
NIFTY Is Trading Way Below Its Historical Valuations
NIFTY’s TTM PE Is Below Its Lower Band

29

26

23

20

17
The sticky P/E has
been washed away
14 14.4 in probably the
fastest decline in
11
valuations from near
25x TTM to sub-15x.
8

5
Mar-08

Mar-17
Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-18

Mar-19

Mar-20
Sep-12
Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19
Nifty TTM P/E Median +2SD -2SD

*updated at NIFTY level of 7500 Source: Bloomberg, Edelweiss Professional Investor Research
15
Forward P/E Is Signalling Undervaluation
Even on Conservative Basis, Forward P/E Is Significantly Lower

23

20

FY20 EPS will be ~520.

17
In a scenario we clock
EPS of 530 in FY21, we
14 14.2 will be approx. at PE
levels of 14.. In the
11 worst case EPS of 488
and best case EPS of
600, PE will range in
8
levels of 15.3-12.5, still
offering a significant
5 upside hereon.
Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
Sep-14
Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19
Nifty Fwd. P/E Median +2SD -2SD

*updated at NIFTY level of 7500 Source: Bloomberg, Edelweiss Professional Investor Research

16
Nifty Is Now Trading At Multi Year Low Valuation on P/B
On Price to Book basis, NIFTY is Below Its Long Term Average
6.0

5.5

5.0

4.5

4.0 With Private Banks

getting significantly
Ratio

3.5 beaten down, the Price

to Book ratio at 1.8 is
3.0 significantly below its
Long Term 20 Year
2.5 Average of 2.9 and
offers significant upside
2.0 hereon.
1.8
1.5
Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
NIFTY P/B LTA

Source: Bloomberg, Edelweiss Professional Investor Research

17
Relative Valuations Are Low, Too Low
Bond vs Equity Valuations Are At Their Historical Best

400 12000

300
10000

200

8000
100 The relative valuations
Spread bps

between asset classes

Index
0 6000 of Bonds and Equity
has moved in favour of
-100 equity with bond and
4000
equity earnings yield
-200 spread at historical low
2000 levels.
-300

-400 0
Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19

Bond-Earning Yield Spread (bps) +1SD -1SD NSE 500 Index-RHS

Source: Bloomberg, Edelweiss Professional Investor Research

18
There Is Value Across Sectors
Significant Value Has Emerged Across Sectors
Undervalued Stocks (% of total) 26-Mar-20 31-Dec-19 31-Oct-19 30-Aug-19 31-Mar-18 31-Mar-17 31-Mar-16 31-Mar-14 31-Mar-12 31-Mar-09

Nifty 54% 30% 34% 52% 48% 36% 52% 29% 53% 53%

2 Yr. CAGR 10% 14% 7% 13% 39%

Automobile & Ancillaries 75% 50% 70% 85% 28% 28% 61% 17% 22% 44%

Financials 74% 33% 50% 61% 33% 4% 71% 35% 78% 87%

IT 61% 48% 43% 39% 17% 65% 35% 17% 48% 86%

Capital Goods & Infrastructure 75% 48% 35% 65% 40% 29% 44% 8% 46% 79%

Pharmaceuticals 46% 36% 43% 54% 32% 54% 39% 21% 43% 62%

Consumption Durables & Apparels 67% 33% 33% 60% 33% 27% 27% 33% 47% 62%

FMCG 77% 47% 43% 63% 30% 37% 30% 37% 37% 52%

Source: Bloomberg, Edelweiss Professional Investor Research

* Numbers signify percentage of stocks below the 30 percentile in the 2 standard deviation rolling** valuation bands

Across sectors, more stocks are now trading below their historical valuations. For example, 54% stocks in NIFTY are trading below the 30 percentile in
their two standard deviation valuation bands. This correction has been broad based.
** 2-year rolling valuations
19
Returns Are Higher At Cheaper Valuations
Lower Valuations, Higher Returns
18%
20%
16%
9%
10%
14%

0% 12%
Avg. 1 year return

Avg. 3 Year CAGR

10%
-10%
8%
-20%
6%

-30% 4%

2%
-40%
0%
-50% 22-20 20-18 18-16 16-14 14-12 12-10
22-20 20-18 18-16 16-14 14-12 12-10 -2%
Nifty Fwd. P/E
Nifty Fwd. P/E
Source: Bloomberg, Edelweiss Professional Investor Research

Over the span of 15 years, NIFTY has given higher average returns on lower valuations. With NIFTY forward PE now in
~12-14 band, the chances of upside are significant

20
The Panic Is Defying Valuations
Higher ATR, Lower Prices- This Time It’s No Different!
14,500 640

12,500 540

10,500 440
Despite value
emerging, the selling
Index

ATR
8,500 340
has continued owing
to the panic. NIFTY’s
6,500
Average True range
240
has spiked at
unprecedented
4,500 140 levels.

2,500 40
Apr-10

Mar-13

Oct-13

Jul-15

Apr-17

Mar-20
Jan-12

Jan-19
Jul-08

Jun-18
Dec-07

Aug-12

Aug-19
Nov-10

Jun-11
Feb-09

Sep-09

May-14

Dec-14

Feb-16

Sep-16

Nov-17
NIFTY NIFTY ATR- RHS

Source: Bloomberg, Edelweiss Professional Investor Research

21
VIX Needs To Cool Off To Get FIIs Back
VIX greater than 25 is Usually Accompanied With High FII Outflows
8000 -25

-15
6000

-5
4000
Volatility and FII
5
flows move in
USD Million

2000
15 opposite direction.
High VIX is usually
0 25 associated with FII
outflows. With VIX
-2000 35 at 60+ levels in
March trading days,
45 FIIs have withdrawn
-4000
~USD7.5billion from
55 Indian Equities in
-6000 March alone
Apr-06

Oct-09

Apr-13

Oct-16
Jul-04

Mar-09

Jul-11

Mar-16

Jul-18
Jan-08
Aug-08

Jan-15
Aug-15
Dec-03

Jun-07

May-10
Dec-10

Jun-14

May-17
Dec-17
Feb-05
Sep-05

Nov-06

Feb-12
Sep-12

Nov-13

Feb-19
Sep-19
FII VIX Index- RHS
Source: Bloomberg, Edelweiss Professional Investor Research

22
Bonds- Risk Premium Needs More Correction Than Time Premium

23
Equity and Bond Prices Move In Opposite Direction
It’s All Relative.
45000 1000

40000
950
35000

30000
900
Index

25000

850
20000

15000
800
10000

5000 750
Mar-10
Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
SENSEX Index CCIL Bond Price Index

Source: CCIL, Bloomberg Edelweiss Professional Investor Research

24
India’s Yield Curve Has Come Down To Intervention
RBI’s Interventions Have Brought Down The Sovereign Yield Curve In 3 Months

7.5

7.0

The ‘Operation Twists’,

6.5 Long Term Repo
Operations and Open
Market Operations
6.0
%

totalling ~ INR 3 lakh

crore in the last 3
months has brought
5.5
down the yield curve

5.0

4.5
10Y

11Y

12Y

13Y

14Y

15Y

16Y

20Y

27Y

40Y
3M

6M

1Y

8Y
2Y

3Y

4Y

5Y

6Y

7Y

India Yield Curve India Yield Curve- 3M Ago

Source: Bloomberg, Edelweiss Professional Investor Research

25
Corporate Spreads Have Risen, Again
The ‘Risk Premium ‘ Is High
250

200
India’s credit system
is in a confidence
150
crisis. The borrowing
cost for corporates is
extremely high.
bps

With RBI
100 announcing TLTROs
to be deployed in
Corporate Bonds,
CPs and NCDs, the
50
credit spreads are
likely to ease
hereon.
0

Sep-19
Mar-15

Sep-15

Mar-16

Sep-16

Mar-17

Sep-17

Mar-18

Sep-18

Mar-19

Mar-20
India AAA spread India AA Spread AAA Mean AA Mean
Source: Bloomberg, Edelweiss Professional Investor Research

26
US Spreads Spiked Too, Arrested By Fed’s Actions
US Corporate Spreads Have Spiked Too But Fed’s Interventions Helped

450

400

350

300
US corporate bonds
also showed a rise
250
in spreads. However,
bps

with Fed doing

200
timely actions and
expanding its
150
toolset, there should
100
be a cooling off
soon.
50

0
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
US AA Spread AA-Mean US AAA Spread AAA-Mean
Source: Bloomberg, Edelweiss Professional Investor Research

27
Fed’s Actions Have Been Timely
TEDRATE indicates that Fed curbed Trust Deficit Very timely
5.00

4.50

4.00
LIBOR measures the
3.50 interbank lending
rate so as the spread
3.00 between LIBOR and
the T-bill rate
bps

2.50 increases, it shows

an accelerating lack
2.00 of trust between
banks and a
1.50 corresponding
tightening of credit
1.00 for all other
counterparties.
0.50

0.00
Mar-07

Apr-09

Oct-11
Mar-12

Apr-14

Oct-16
Mar-17

Apr-19
Jul-10

Jul-15
Aug-07
Jan-08
Jun-08

Aug-12
Jan-13
Jun-13

Aug-17
Jan-18
Jun-18
Dec-10
May-11

Dec-15
May-16
Nov-08

Sep-09
Feb-10

Nov-13

Sep-14
Feb-15

Nov-18

Sep-19
Feb-20
Source: St Fred Louis, Edelweiss Professional Investor Research
28
In Conclusion

• There is a strong need for a catalyst at this point to revive the economy and markets

• The fiscal measures announced are a good start but are unlikely to move the needle. More will be needed
to fill the dent of the lockdown.

• The Great Depression was a result of tight Fed and Laissez Faire Government. This crisis stands at chance
of getting abated and an opportunity to seize only if timely and targeted policy action comes in.

• RBI has positively stepped in. In the financial crisis, RBI had responded by 425 bps of repo cut, 400 bps of
CRR cut and 100 bps of SLR cut. Therefore, more ammunition can be needed from RBI this time around
too. RBI will need to monetize the deficit and pump in money supply. However, TLTROs, moratorium on
term loan repayments etc. are all a welcome move.

• The markets are undoubtedly cheap for long term investors. We recommend staggered deployment of
equity.

• In bonds, credit can be played again with spreads rising. They will ease off with TLTROs announced by RBI
Duration will be favorable as it seems to have regulator’s support. Gsec yields are expected to drop
further to 5.5% levels.

29
Edelweiss Broking Limited, Edelweiss House, Off, CST Road, Kolivery Village, MMRDA Area, Kalina, Santacruz East, Mumbai, Maharashtra
400098

Vinay Khattar
VINAY
Digitally signed by VINAY KHATTAR
DN: c=IN, o=Personal, postalCode=400072,

Head Research st=Maharashtra,

2.5.4.20=87db74ffb17a70c89e8519a4d13e40e93c4bcab

KHATTAR
a1a64d00f3c841d2fee3fa678,
serialNumber=cd5737057831c416d2a5f7064cb6931838
vinay.khattar@edelweissfin.com 87e7ff342c50bd877e00c00e2e82a1, cn=VINAY KHATTAR
Date: 2020.03.27 21:17:26 +05'30'

30
Disclaimer
Edelweiss Broking Limited (“EBL” or “Research Entity”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related activities. The business of EBL and its Associates (list available on www.edelweissfin.com) are organized around five broad business groups – Credit
including Housing and SME Finance, Commodities, Financial Markets, Asset Management and Life Insurance.
Broking services offered by Edelweiss Broking Limited under SEBI Registration No.: INZ000005231; Name of the Compliance Officer: Mr. Brijmohan Bohra, Email ID: complianceofficer.ebl@edelweissfin.com Corporate Office: Edelweiss House, Off CST Road, Kalina, Mumbai - 400098; Tel. 18001023335/022-42722200/022-40094279

Disclosures under the provisions of SEBI (Research Analysts) Regulations 2014 (Regulations)
Edelweiss Broking Limited ("EBL" or "Research Entity") is regulated by the Securities and Exchange Board of India ("SEBI") and is licensed to carry on the business of broking, depository services and related activities. The business of EBL and its associates are organized around five broad business groups – Credit including Housing and SME Finance,
Commodities, Financial Markets, Asset Management and Life Insurance. There were no instances of non-compliance by EBL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years. This research report has been prepared and distributed by Edelweiss Broking Limited ("Edelweiss") in the
capacity of a Research Analyst as per Regulation 22(1) of SEBI (Research Analysts) Regulations 2014 having SEBI Registration No.INH000000172

This Report has been prepared by Edelweiss Broking Limited in the capacity of a Research Analyst having SEBI Registration No.INH000000172 and distributed as per SEBI (Research Analysts) Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other sources believed to be reliable. This report is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this report
should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not
be suitable for all investors.

This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any
person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject EBL and associates / group companies to any registration or licensing requirements within such jurisdiction. The distribution of this
report in certain jurisdictions may be restricted by law, and persons in whose possession this report comes, should observe, any such restrictions. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without
any prior notice. EBL reserves the right to make modifications and alterations to this statement as may be required from time to time. EBL or any of its associates / group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. EBL is committed
to providing independent and transparent recommendation to its clients. Neither EBL nor any of its associates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue or lost profits that may arise from or in connection with the use of the
information. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest statements incorporated in this report are provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. The information provided in these reports remains, unless otherwise stated, the copyright of EBL. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright of EBL and may not be used in any form or for any purpose
whatsoever by any party without the express written permission of the copyright holders.

EBL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the EBL to present the data.
In no event shall EBL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by the EBL through this report.
We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.

EBL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company(ies), mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as
a market maker in the financial instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public
appearance. EBL may have proprietary long/short position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment objective of any particular investor; readers are requested to take independent professional advice before investing.
This should not be construed as invitation or solicitation to do business with EBL.
EBL or its associates may have received compensation from the subject company in the past 12 months. EBL or its associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. EBL or its associates may have received compensation for investment banking or merchant banking or brokerage
services from the subject company in the past 12 months. EBL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. EBL or its associates have not received any compensation or other benefits from the
Subject Company or third party in connection with the research report. Research analyst or his/her relative or EBL’s associates may have financial interest in the subject company. EBL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and
opinions at the time of publication of research report or at the time of public appearance.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt
markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.

Research analyst has served as an officer, director or employee of subject Company: No

EBL has financial interest in the subject companies: No
EBL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report.
Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
EBL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
Subject company may have been client during twelve months preceding the date of distribution of the research report.

There were no instances of non-compliance by EBL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years.
A graph of daily closing prices of the securities is also available at www.nseindia.com

Analyst Certification:
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.

Additional Disclaimer for U.S. Persons

Edelweiss is not a registered broker – dealer under the U.S. Securities Exchange Act of 1934, as amended (the“1934 act”) and under applicable state laws in the United States. In addition Edelweiss is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the
"Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Edelweiss, including the products and services described herein are not available to or intended for U.S. persons.
This report does not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the
United States. US Citizens living abroad may also be deemed "US Persons" under certain rules.
Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.

Additional Disclaimer for U.K. Persons

The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA").
In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth
companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”).
This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its
contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person.

Additional Disclaimer for Canadian Persons

Edelweiss is not a registered adviser or dealer under applicable Canadian securities laws nor has it obtained an exemption from the adviser and/or dealer registration requirements under such law. Accordingly, any brokerage and investment services provided by Edelweiss, including the products and services described herein, are not available to or
intended for Canadian persons.
This research report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services. 31