INDIA

Strategy
Market SEPTEMBER 20, 2019
UPDATE
BSE-30: 38,015

‘Santa’raman brings in Diwali cheer. In a major positive move, the government cut
corporate tax rate to 22% from 30% (before surcharges). We see this as a huge boost
to private sector investment, particularly domestic manufacturing. Automobiles, banks,
consumer staples and global commodity sectors will see large earnings upgrades while
electric utilities, IT and pharmaceutical sectors will see little or no earnings changes.
Our FY2020E EPS for the Nifty-50 Index will increase by 10% from previous estimates.

Government announces large tax benefits for corporate India QUICK NUMBERS

The government cut the effective tax rate for domestic companies to 25.6% from 34.9% earlier  Effective corporate
(see Exhibit 1 for details). These companies will not be able to avail any tax exemptions if they tax rate reduced to
avail the lower tax rate, while companies currently availing exemptions can opt to pay the new 25.6% from 34.9%
(lower) tax rates once the exemption periods get over. MAT for companies availing exemptions
has been reduced to 15% from 18.5%. Exhibit 2 shows the current effective tax rates and the  Estimated revenue
new effective tax rates for companies under our coverage. We believe India will become more forgone for FY2020
competitive versus other emerging markets (see Exhibit 3) post the significant overhaul of direct at `1.45 tn
tax rates for companies, which may nudge FDI in manufacturing.
 Earnings growth of
Push for fresh investments in manufacturing; land and labor reforms equally critical Nifty-50 Index at
The government has proposed that new manufacturing companies that start production before 25% and 19% for
March 2023 and are incorporated on or after October 1, 2019 will have an option to pay tax at FY2020 and FY2021
a lower rate of 15% if they do not avail exemptions. We envisage acceleration in investment in
manufacturing, especially through incorporation of new companies by Indian and foreign
companies, who were perhaps earlier reluctant to invest in manufacturing in India. At the same
time, we hope that the government takes this opportunity to undertake factor reforms in the
areas of land and labor that can unlock productivity further.

Fiscal boost of `1.45 tn (0.7% of GDP); other minor tweaks to boost sentiment

The government estimates revenue foregone of `1.45 tn (0.7% of GDP) on a full-year basis due
to abovementioned tax changes. We expect a corresponding increase in central fiscal deficit as
the government has not indicated any expenditure cuts, which will push up bond yields (+17 bps
today). Also, the government announced a rollback of the increase in surcharge introduced in
the FY2020 union budget on capital gains for individuals and other entities from sale of equity.
The enhanced surcharge will also not apply to capital gains arising on sale of any security including
derivatives, in the hands of foreign portfolio investors. Also, companies that had announced Sanjeev Prasad
buybacks before July 5, 2019 will not be required to pay taxes on buyback. sanjeev.prasad@kotak.com
Mumbai: +91-22-4336-0830

Sharp boost to earnings; automobiles, banks, consumer staples among key beneficiaries Sunita Baldawa
sunita.baldawa@kotak.com
We expect net profits of the Nifty-50 Index to grow 25% for FY2020 versus 15% earlier buoyed Mumbai: +91-22-4336-0896
by the sharp cut in corporate tax rate. This assumes that companies will retain the bulk of the
Anindya Bhowmik
tax cuts; in reality, some of them will pass on some benefits to consumers. Automobiles, banks,
anindya.bhowmik@kotak.com
capital goods, consumer staples, diversified financials and oil, gas & consumable fuels will be Mumbai: +91-22-4336-0897
key beneficiaries of the sharp cut in corporate tax rate while electric utilities, IT and
pharmaceuticals will see little or no impact.

Kotak Institutional Equities Research

kotak.research@kotak.com
Mumbai: +91-22-4336-0000

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
India Strategy

Exhibit 1: Effective tax rate has been reduced sharply for domestic companies
Effective tax rates for domestic companies (%)
Previous tax regime New tax regime
Effective Effective
Tax Surcharge Cess tax rate Tax Surcharge Cess tax rate
Turnover/Gross receipts less than Rs4 bn
Taxable income less than Rs10 mn 25 0 4 26.0 22 0 4 22.9
Taxable income more than Rs10 mn 25 7 4 27.8 22 7 4 24.5
Turnover/Gross receipts more than Rs4 bn
Taxable income less than Rs10 mn 30 0 4 31.2 22 0 4 22.9
Taxable income more than Rs10 mn but less than Rs100 mn 30 7 4 33.4 22 7 4 24.5
Taxable income more than Rs100 mn 30 12 4 34.9 22 12 4 25.6

Source: Union budget, PIB, Kotak Institutional Equities

Exhibit 2: 153 out of 204 companies in our coverage universe will benefit in FY2020 under the new tax regime
Effective tax rates for companies under coverage, March fiscal year-ends, 2019-20E (%)
Effective tax rate (%) New tax rate (%) Benefit
Company Sector Ticker 2019 2020 2020 (bps)
Amara Raja Batteries Automobiles & Components AMRJ IN Equity 33.8 33.9 25.6 830
Apollo Tyres Automobiles & Components APTY IN Equity 23.5 23.0 23.0 —
Ashok Leyland Automobiles & Components AL IN Equity 20.6 30.0 25.6 440
Bajaj Auto Automobiles & Components BJAUT IN Equity 30.3 31.0 25.6 540
Balkrishna Industries Automobiles & Components BIL IN Equity 34.2 32.7 25.6 706
Bharat Forge Automobiles & Components BHFC IN Equity 35.4 34.0 25.6 840
CEAT Automobiles & Components CEAT IN Equity 35.1 32.8 25.6 717
Eicher Motors Automobiles & Components EIM IN Equity 35.4 34.7 25.6 915
Endurance Technologies Automobiles & Components ENDU IN Equity 31.6 33.4 25.6 780
Escorts Automobiles & Components ESC IN Equity 32.9 32.0 25.6 640
Exide Industries Automobiles & Components EXID IN Equity 38.6 33.0 25.6 740
Hero Motocorp Automobiles & Components HMCL IN Equity 32.4 32.5 25.6 690
Mahindra & Mahindra Automobiles & Components MM IN Equity 22.7 25.1 25.1 —
Mahindra CIE Automotive Automobiles & Components MACA IN Equity 27.1 34.0 25.6 836
Maruti Suzuki Automobiles & Components MSIL IN Equity 28.3 30.0 25.6 440
Motherson Sumi Systems Automobiles & Components MSS IN Equity 35.7 33.4 25.6 778
MRF Automobiles & Components MRF IN Equity 31.6 33.4 25.6 780
Schaeffler India Automobiles & Components SCHFL IN Equity 33.5 34.0 25.6 840
SKF Automobiles & Components SKF IN Equity 35.9 35.0 25.6 940
Tata Motors Automobiles & Components TTMT IN Equity (4.1) 68.8 25.6 4,318
Timken Automobiles & Components TMKN IN Equity 33.6 33.5 25.6 790
TVS Motor Automobiles & Components TVSL IN Equity 30.3 32.0 25.6 640
Varroc Engineering Automobiles & Components VARROC IN Equity 19.1 15.0 15.0 —
AU Small Finance Bank Banks AUBANK IN Equity 34.2 34.1 25.6 854
Axis Bank Banks AXSB IN Equity 32.9 32.4 25.6 684
Bandhan Bank Banks BANDHAN IN Equity 35.2 34.2 25.6 863
Bank of Baroda Banks BOB IN Equity 37.9 30.0 25.6 440
Canara Bank Banks CBK IN Equity 114.9 36.6 25.6 1,100
City Union Bank Banks CUBK IN Equity 26.2 26.2 25.6 57
DCB Bank Banks DCBB IN Equity 35.8 34.0 25.6 840
Equitas Holdings Banks EQUITAS IN Equity 34.8 37.0 25.6 1,140
Federal Bank Banks FB IN Equity 34.8 34.8 25.6 918
HDFC Bank Banks HDFCB IN Equity 34.5 34.0 25.6 844
ICICI Bank Banks ICICIBC IN Equity 11.0 28.5 25.6 290
IndusInd Bank Banks IIB IN Equity 33.7 32.5 25.6 690
J&K Bank Banks JKBK IN Equity 29.5 30.0 25.6 440
Karur Vysya Bank Banks KVB IN Equity 34.6 34.6 25.6 896
Punjab National Bank Banks PNB IN Equity 35.0 32.0 25.6 640
RBL Bank Banks RBK IN Equity 33.3 33.3 25.6 767
State Bank of India Banks SBIN IN Equity 46.4 30.0 25.6 440
Ujjivan Financial Services Banks UJJIVAN IN Equity 26.6 29.6 25.6 404
Union Bank Banks UNBK IN Equity 24.9 24.9 24.9 —
YES Bank Banks YES IN Equity 27.0 27.5 25.6 192
Astral Poly Technik Building Products ASTRA IN Equity 30.0 31.0 25.6 540

Source: Companies, Kotak Institutional Equities

2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Strategy India

Exhibit 2: 153 out of 204 companies in our coverage universe will benefit in FY2020 under the new tax regime (contd)
Effective tax rates for companies under coverage, March fiscal year-ends, 2019-20E (%)
Effective tax rate (%) New tax rate (%) Benefit
Company Sector Ticker 2019 2020 2020 (bps)
ABB Capital Goods ABB IN Equity 21.6 28.1 25.6 247
Ashoka Buildcon Capital Goods ASBL IN Equity 28.2 32.0 25.6 640
Bharat Electronics Capital Goods BHE IN Equity 29.7 29.7 25.6 409
BHEL Capital Goods BHEL IN Equity 40.9 34.6 25.6 900
Carborundum Universal Capital Goods CU IN Equity 34.7 34.6 25.6 904
Cochin Shipyard Capital Goods COCHIN IN Equity 36.0 34.6 25.6 904
Cummins India Capital Goods KKC IN Equity 29.9 29.5 25.6 392
Dilip Buildcon Capital Goods DBL IN Equity 5.0 31.9 25.6 627
IRB Infrastructure Capital Goods IRB IN Equity 34.6 34.6 25.6 900
Kalpataru Power Transmission Capital Goods KPP IN Equity 36.0 34.4 25.6 883
KEC International Capital Goods KECI IN Equity 34.6 34.9 25.6 930
L&T Capital Goods LT IN Equity 30.4 27.8 25.6 223
Sadbhav Engineering Capital Goods SADE IN Equity 27.7 29.1 25.6 348
Siemens Capital Goods SIEM IN Equity 34.9 34.6 25.6 905
Thermax Capital Goods TMX IN Equity 20.6 32.3 25.6 671
SIS Commercial & Professional Services SECIS IN Equity (2.3) (1.8) (1.8) —
Asian Paints Commodity Chemicals APNT IN Equity 33.6 34.0 25.6 840
Tata Chemicals Commodity Chemicals TTCH IN Equity 21.2 23.5 23.5 —
ACC Construction Materials ACC IN Equity (0.8) 32.5 25.6 690
Ambuja Cements Construction Materials ACEM IN Equity 21.7 32.0 25.6 640
Dalmia Bharat Construction Materials DALBHARA IN Equity (2.5) 20.0 20.0 —
Grasim Industries Construction Materials GRASIM IN Equity 49.5 33.1 25.6 747
J K Cement Construction Materials JKCE IN Equity 44.1 34.9 25.6 929
JK Lakshmi Cement Construction Materials JKLC IN Equity 16.8 30.0 25.6 438
Orient Cement Construction Materials ORCMNT IN Equity 36.4 33.0 25.6 740
Shree Cement Construction Materials SRCM IN Equity 12.3 25.0 25.0 —
UltraTech Cement Construction Materials UTCEM IN Equity 31.3 31.3 25.6 573
Crompton Greaves Consumer Consumer Durables & Apparel CROMPTON IN Equity 31.8 35.0 25.6 940
Havells India Consumer Durables & Apparel HAVL IN Equity 31.3 31.0 25.6 540
Page Industries Consumer Durables & Apparel PAG IN Equity 35.0 35.0 25.6 940
Polycab Consumer Durables & Apparel POLYCAB IN Equity 33.7 35.0 25.6 940
TCNS Clothing Co. Consumer Durables & Apparel TCNSBR IN Equity 18.7 35.0 25.6 940
Vardhman Textiles Consumer Durables & Apparel VTEX IN Equity 31.8 33.6 25.6 800
Voltas Consumer Durables & Apparel VOLT IN Equity 22.0 28.0 25.6 240
Whirlpool Consumer Durables & Apparel WHIRL IN Equity 35.0 34.0 25.6 840
Bajaj Consumer Care Consumer Staples BAJAJCON IN Equity 21.7 22.0 22.0 —
Britannia Industries Consumer Staples BRIT IN Equity 34.6 34.5 25.6 893
Colgate-Palmolive (India) Consumer Staples CLGT IN Equity 33.1 34.7 25.6 906
Dabur India Consumer Staples DABUR IN Equity 19.9 19.6 19.6 —
GlaxoSmithKline Consumer Consumer Staples SKB IN Equity 35.0 35.5 25.6 990
Godrej Consumer Products Consumer Staples GCPL IN Equity 13.1 21.6 21.6 —
Hindustan Unilever Consumer Staples HUVR IN Equity 30.7 31.5 25.6 590
ITC Consumer Staples ITC IN Equity 32.2 33.0 25.6 740
Jyothy Laboratories Consumer Staples JYL IN Equity 18.7 21.7 21.7 —
Marico Consumer Staples MRCO IN Equity 21.8 26.3 25.6 65
Nestle India Consumer Staples NEST IN Equity 33.8 34.0 25.6 840
Tata Global Beverages Consumer Staples TGBL IN Equity 35.5 32.1 25.6 647
United Breweries Consumer Staples UBBL IN Equity 35.9 35.9 25.6 1,034
United Spirits Consumer Staples UNSP IN Equity 33.6 24.1 24.1 —
Varun Beverages Consumer Staples VBL IN Equity 31.1 28.9 25.6 332
Bajaj Finance Diversified Financials BAF IN Equity 35.3 35.0 25.6 940
Bajaj Finserv Diversified Financials BJFIN IN Equity 34.1 32.9 25.6 734
Cholamandalam Diversified Financials CIFC IN Equity 34.9 34.3 25.6 870
HDFC Diversified Financials HDFC IN Equity 26.6 25.0 25.0 —
L&T Finance Holdings Diversified Financials LTFH IN Equity 26.9 27.4 25.6 181
LIC Housing Finance Diversified Financials LICHF IN Equity 28.2 28.0 25.6 240
Mahindra & Mahindra Financial Diversified Financials MMFS IN Equity 34.6 34.0 25.6 840
Muthoot Finance Diversified Financials MUTH IN Equity 35.9 36.0 25.6 1,040
PNB Housing Finance Diversified Financials PNBHOUSI IN Equity 31.5 33.0 25.6 740
Shriram City Union Finance Diversified Financials SCUF IN Equity 35.0 35.0 25.6 940
Shriram Transport Diversified Financials SHTF IN Equity 32.1 34.0 25.6 840

Source: Companies, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

India Strategy

Exhibit 2: 153 out of 204 companies in our coverage universe will benefit in FY2020 under the new tax regime (contd)
Effective tax rates for companies under coverage, March fiscal year-ends, 2019-20E (%)
Effective tax rate (%) New tax rate (%) Benefit
Company Sector Ticker 2019 2020 2020 (bps)
CESC Electric Utilities CESC IN Equity 24.8 27.3 27.3 —
JSW Energy Electric Utilities JSW IN Equity 24.6 31.1 31.1 —
NHPC Electric Utilities NHPC IN Equity 31.9 29.9 29.9 —
NTPC Electric Utilities NTPC IN Equity 31.2 25.2 25.2 —
Power Grid Electric Utilities PWGR IN Equity 33.3 18.8 18.8 —
Tata Power Electric Utilities TPWR IN Equity 36.3 62.8 62.8 —
Bayer Cropscience Fertilizers & Agricultural Chemicals BYRCS IN Equity 35.1 35.0 25.6 940
Dhanuka Agritech Fertilizers & Agricultural Chemicals DAGRI IN Equity 26.9 32.0 25.6 640
Godrej Agrovet Fertilizers & Agricultural Chemicals GOAGRO IN Equity 54.8 33.5 25.6 790
PI Industries Fertilizers & Agricultural Chemicals PI IN Equity 23.7 22.1 22.1 —
Rallis India Fertilizers & Agricultural Chemicals RALI IN Equity 29.7 25.9 25.6 34
UPL Fertilizers & Agricultural Chemicals UPLL IN Equity 9.9 14.2 14.2 —
GAIL (India) Gas Utilities GAIL IN Equity 33.7 33.2 25.6 762
GSPL Gas Utilities GUJS IN Equity 33.9 33.9 25.6 835
Indraprastha Gas Gas Utilities IGL IN Equity 34.4 34.7 25.6 910
Mahanagar Gas Gas Utilities MAHGL IN Equity 34.7 34.6 25.6 901
Petronet LNG Gas Utilities PLNG IN Equity 33.3 33.6 25.6 803
Apollo Hospitals Health Care Services APHS IN Equity 46.5 30.0 25.6 440
Aster DM Healthcare Health Care Services ASTERDM IN Equity 10.5 11.0 11.0 —
Dr Lal Pathlabs Health Care Services DLPL IN Equity 33.3 33.9 25.6 830
HCG Health Care Services HCG IN Equity (10.2) 28.0 25.6 240
Metropolis Healthcare Health Care Services METROHL IN Equity 33.5 33.8 25.6 818
Narayana Hrudayalaya Health Care Services NARH IN Equity 35.6 33.0 25.6 740
Jubilant Foodworks Hotels & Restaurants JUBI IN Equity 35.1 35.1 25.6 946
Lemon Tree Hotels Hotels & Restaurants LEMONTRE IN Equity (25.0) 21.8 21.8 —
HDFC Life Insurance Insurance HDFCLIFE IN Equity 1.0 16.0 16.0 —
ICICI Lombard Insurance ICICIGI IN Equity 34.4 33.0 25.6 740
ICICI Prudential Life Insurance IPRU IN Equity 31.2 7.0 7.0 —
SBI Life Insurance Insurance SBILIFE IN Equity 3.4 4.0 4.0 —
Info Edge Internet Software & Services INFOE IN Equity 27.9 33.0 25.6 740
Just Dial Internet Software & Services JUST IN Equity 28.2 28.0 25.6 241
HCL Technologies IT Services HCLT IN Equity 19.7 24.1 24.1 —
Hexaware Technologies IT Services HEXW IN Equity 19.7 17.9 17.9 —
Infosys IT Services INFO IN Equity 26.8 26.9 25.6 127
L&T Infotech IT Services LTI IN Equity 25.2 25.5 25.5 —
Mindtree IT Services MTCL IN Equity 23.6 26.0 25.6 41
Mphasis IT Services MPHL IN Equity 23.7 25.3 25.3 —
TCS IT Services TCS IN Equity 24.1 23.7 23.7 —
Tech Mahindra IT Services TECHM IN Equity 22.4 26.0 25.6 40
Wipro IT Services WPRO IN Equity 21.9 22.7 21.7 97
DB Corp. Media DBCL IN Equity 33.8 34.0 25.6 840
DishTV Media DITV IN Equity - 35.0 25.6 940
Jagran Prakashan Media JAGP IN Equity 34.3 34.3 25.6 865
PVR Media PVRL IN Equity 33.0 33.0 25.6 740
Sun TV Network Media SUNTV IN Equity 34.6 34.7 25.6 907
Zee Entertainment Enterprises Media Z IN Equity 35.7 34.0 25.6 840
Hindalco Industries Metals & Mining HNDL IN Equity 32.0 31.9 30.4 149
Hindustan Zinc Metals & Mining HZ IN Equity 23.9 25.0 23.0 200
Jindal Steel and Power Metals & Mining JSP IN Equity 13.9 20.0 20.0 —
JSW Steel Metals & Mining JSTL IN Equity 32.5 39.4 25.6 1,377
National Aluminium Co. Metals & Mining NACL IN Equity 36.8 34.0 25.6 840
NMDC Metals & Mining NMDC IN Equity 36.9 35.0 25.6 940
Tata Steel Metals & Mining TATA IN Equity 42.8 35.0 25.6 940
Vedanta Metals & Mining VEDL IN Equity 28.5 25.3 23.0 233
BPCL Oil, Gas & Consumable Fuels BPCL IN Equity 31.7 31.5 25.6 586
Coal India Oil, Gas & Consumable Fuels COAL IN Equity 35.6 34.2 25.6 860
HPCL Oil, Gas & Consumable Fuels HPCL IN Equity 35.2 34.4 25.6 878
IOCL Oil, Gas & Consumable Fuels IOCL IN Equity 32.8 34.6 25.6 901
Oil India Oil, Gas & Consumable Fuels OINL IN Equity 33.9 33.6 25.6 796
ONGC Oil, Gas & Consumable Fuels ONGC IN Equity 36.8 35.5 25.6 994
Reliance Industries Oil, Gas & Consumable Fuels RIL IN Equity 27.9 29.4 25.6 385

Source: Companies, Kotak Institutional Equities

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Strategy India

Exhibit 2: 153 out of 204 companies in our coverage universe will benefit in FY2020 under the new tax regime (contd)
Effective tax rates for companies under coverage, March fiscal year-ends, 2019-20E (%)
Effective tax rate (%) New tax rate (%) Benefit
Company Sector Ticker 2019 2020 2020 (bps)
Aurobindo Pharma Pharmaceuticals ARBP IN Equity 22.9 24.0 24.0 —
Biocon Pharmaceuticals BIOS IN Equity 19.0 24.0 24.0 —
Cipla Pharmaceuticals CIPLA IN Equity 27.4 27.0 27.0 —
Dr Reddy's Laboratories Pharmaceuticals DRRD IN Equity 16.5 24.5 24.5 —
Laurus Labs Pharmaceuticals LAURUS IN Equity 21.7 24.0 24.0 —
Lupin Pharmaceuticals LPC IN Equity 48.7 37.5 37.5 —
Sun Pharmaceuticals Pharmaceuticals SUNP IN Equity 15.8 13.7 13.7 —
Torrent Pharmaceuticals Pharmaceuticals TRP IN Equity 13.7 24.0 24.0 —
Brigade Enterprises Real Estate BRGD IN Equity 34.2 34.0 25.6 840
DLF Real Estate DLFU IN Equity 39.2 30.0 25.6 440
Embassy Office Parks REIT Real Estate EMBASSY IN Equity 44.6 10.9 10.9 —
Godrej Properties Real Estate GPL IN Equity 28.4 34.0 25.6 840
Oberoi Realty Real Estate OBER IN Equity 30.8 33.0 25.6 740
Prestige Estates Projects Real Estate PEPL IN Equity 38.2 33.0 25.6 740
Sobha Real Estate SOBHA IN Equity 33.7 33.9 25.6 830
Sunteck Realty Real Estate SRIN IN Equity 34.8 31.4 25.6 582
Aditya Birla Fashion and Retail Retailing ABFRL IN Equity (115.4) 21.5 21.5 —
Avenue Supermarts Retailing DMART IN Equity 36.5 35.0 25.6 940
Titan Company Retailing TTAN IN Equity 30.3 29.0 25.6 340
Castrol India Speciality Chemicals CSTRL IN Equity 37.7 35.6 25.6 1,005
Pidilite Industries Speciality Chemicals PIDI IN Equity 32.6 32.4 25.6 681
S H Kelkar and Company Speciality Chemicals SHKL IN Equity 23.5 30.0 25.6 442
SRF Speciality Chemicals SRF IN Equity 22.4 23.0 23.0 —
Bharti Infratel Telecommunication Services BHIN IN Equity 39.1 35.9 26.5 938
Adani Ports and SEZ Transportation ADSEZ IN Equity 21.1 24.2 24.2 —
Container Corp. Transportation CCRI IN Equity 22.6 28.0 25.6 240
Gateway Distriparks Transportation GDPL IN Equity 33.2 15.3 15.3 —
Gujarat Pipavav Port Transportation GPPV IN Equity 35.9 32.6 25.6 697
InterGlobe Aviation Transportation INDIGO IN Equity 204.8 28.5 25.6 290
Mahindra Logistics Transportation MAHLOG IN Equity 35.1 34.6 25.6 900

Source: Companies, Kotak Institutional Equities

Exhibit 3: Corporate India will become more competitive compared with other Asian economies in
the new regime
Base corporate tax rates of major Asian economies, calendar year-end, 2019 (%)

35
30 30
30 28
25 25 25 25 24
25 23.2
22
20 20 20 20
20 17

15

10

0
Korea
China

Thailand
Philippines
India (old)

Cambodia
Bangladesh

India (new)
Japan
Malaysia

Singapore
Taiwan

Vietnam
Sri Lanka

Indonesia

Source: Deloitte, KPMG, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Disclosures

"Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which
the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views
about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or views expressed in this report: Sanjeev Prasad, Sunita Baldawa,
Anindya Bhowmik."

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.

60%
Percentage of companies within each category for which Kotak
Institutional Equities and or its affiliates has provided
50%
investment banking services within the previous 12 months.

40% * The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over the
29.9% next 12 months; Add = We expect this stock to deliver 5-15%
30% 26.0%
23.5% returns over the next 12 months; Reduce = We expect this stock
20.6% to deliver -5-+5% returns over the next 12 months; Sell = We
20% expect this stock to deliver less than -5% returns over the next
12 months. Our target prices are also on a 12-month horizon
basis. These ratings are used illustratively to comply with
10%
3.4% 3.4% applicable regulations. As of 30/06/2019 Kotak Institutional
0.5% 0.0% Equities Investment Research had investment ratings on 204
0% equity securities.
BUY ADD REDUCE SELL

Source: Kotak Institutional Equities As of June 30, 2019

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our Fair Value estimates are also on a 12-month horizon basis.

Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not
strictly be in accordance with the Rating System at all times.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock
and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

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