India Daily: June 3, 2021

INDIA DAILY
June 3, 2021 India 2-Jun 1-day 1-mo 3-mo

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Motherson Sumi Systems: All set for accelerated growth
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kspcg.research@kotak.com
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
ADD
Motherson Sumi Systems (MSS)
https://ultraviewer.et/en/own Automobiles & Components JUNE 02, 2021
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RESULT
Sector view: Cautious
All set for accelerated growth. Motherson Sumi reported 4QFY21 consolidated CMP (`): 269
EBITDA Rs17.2 bn (+39% yoy), 8% below our estimates led by weaker margin Fair Value (`): 260
performance in SMRPBV and PKC businesses. We believe the company is well-placed to
BSE-30: 51,849
capitalize on the recovery in auto demand from FY2022E onwards. It is well-poised to
benefit from the increase in electronics content per vehicle in passenger vehicles and
the shift towards electric vehicles globally, given strong order wins. Maintain ADD with
revised FV of Rs260 (from Rs200).
Motherson Sumi Systems
Stock data Forecasts/valuations 2021 2022E 2023E
CMP(Rs)/FV(Rs)/Rating 269/260/ADD EPS (Rs) 3.4 8.9 11.5
52-week range (Rs) (high-low) 273-86 EPS growth (%) (7.5) 160.1 29.4
Mcap (bn) (Rs/US$) 850/11.7 P/E (X) 78.5 30.2 23.3
ADTV-3M (mn) (Rs/US$) 3,373/46 P/B (X) 6.8 5.4 4.3
Shareholding pattern (%) EV/EBITDA (X) 20.6 10.7 8.6
Promoters 61.7 RoE (%) 9.1 19.9 20.5
FPIs/MFs/BFIs 16.6/10.1/3.0 Div. yield (%) 0.6 0.6 0.9
Price performance (%) 1M 3M 12M Sales (Rs bn) 574 750 823
Absolute 25.3 15.7 164.0 EBITDA (Rs bn) 44 79 93
Rel. to BSE-30 17.9 12.2 72.2 Net profits (Rs bn) 11 28 36
4QFY21 performance – consolidated EBITDA 8% below our estimates
Motherson Sumi reported 4QFY21 consolidated EBITDA (excluding DWH) of Rs17.2 bn (+39%
yoy), 8% below our estimates due to weaker-than-expected performance of SMRPBV and PKC.
Consolidated revenues (excluding DWH) came in at Rs169.7 bn (+18% yoy) led by (1) 28% yoy
increase in the domestic business, (2) 4% yoy growth in the SMRPBV business and 19% yoy
growth in the PKC business (in EUR terms) and (3) benefit of EUR appreciation against INR.
Consolidated EBITDA margin (excluding DWH) came in at 10.1% (+250 bps yoy, -40 bps qoq),
50 bps below our estimates due to weaker-than-expected operating performance of SMRPBV
and PKC businesses. SMRPBV EBITDA margin came in at 9.8% (KIE: 10.6%) and PKC EBITDA
margin came in at 8% (KIE: 8%) mostly due to lagged impact of RM headwinds. Consolidated
PBT (excluding DWH) came in at Rs8.9 bn (+157% yoy), 11% below our estimates due to miss
at EBITDA level and higher-than-expected depreciation.
Increase our FY2022-23E consolidated EPS estimates by 2-7%; maintain ADD
We have increased our FY2022-23E consolidated EPS estimates by 2-7% led by (1) higher
revenues and EBITDA margin assumptions for the standalone business and (2) lower tax rate
assumptions for the SMRPBV business. We believe auto demand will likely recover in FY2022E
led by gradual recovery in economic activity globally, which augurs well for the company. Also,
we expect the content per vehicle for MSS to increase as customers globally shift
towards EVs over the medium term and 25% of the SMRPBV’s order book (EUR15.6 bn)
constitutes dedicated EV models as of March 2021, which is encouraging. We expect the
Hitesh Goel
company to generate >Rs160 bn of FCF (assuming no major capex) over the next three years
led by (1) strong operating performance and (2) reduction in capex spends. Also, the company
has reduced its consolidated net debt to Rs48.2 bn as of March 2021 from Rs69.2 bn as of March
Rishi Vora
2020, which is encouraging. ADD stays with a revised SoTP-based FV of Rs260 (from Rs200)
due to (1) higher terminal growth assumptions for the SMRPBV business given strong order
winds in the EV segment and (2) 2-7% earnings upgrade. We ascribe Rs76 to the standalone
business, Rs169 to the SMRPBV business and Rs16 to the global wiring harness business.
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Motherson Sumi Systems Automobiles & Components
Other key quarterly highlights
 Standalone business (excluding domestic wiring business). The standalone business

reported revenues of Rs12.7 bn (+28% yoy, +13% qoq) despite low single-digit qoq
growth in PV production volumes possibly due to higher realizations as copper and crude
derivative prices had significantly increased on a yoy basis in 4QFY21. EBITDA came in at
Rs1.7 bn (+21% yoy) in 4QFY21, 17% above our estimates due to higher-than-expected
revenue growth. EBITDA margin came in at 13.7%, -80 bps yoy due to RM headwinds.
Reported PAT came in at Rs747 mn (-31% qoq), 16% below our expectations due to
higher-than-expected tax rate. For FY2021, revenues declined by 8% yoy led by decline in
automotive production volumes. EBITDA margin came in at 12% (-190 bps) led by
negative operating leverage and RM headwinds.
 Domestic wiring harness business (Motherson Sumi Wiring India). MSS will hold
33% in the domestic wiring harness business post the reorganization. MSWIL reported
revenues of Rs15.1 bn (+48% yoy) led by (1) higher PV production during the quarter and
(2) higher realizations due to 50% yoy increase in copper prices. EBITDA margin came in
at 15.8% in 4QFY21 (+210 bps yoy) due to operating leverage benefits. 4QFY21 PAT
came in at Rs1.7 bn (+78% yoy). In FY2021, revenues increased by 5% yoy and PAT
declined by 9% yoy.
 SMRPBV reported revenues of EUR1.4 bn (KIE: EUR1.5 bn), up 5% yoy led by (1) 6% yoy
revenue growth in SMP and (2) flattish yoy revenue growth in SMR. SMR revenues came
in at EUR371 mn (flat yoy) with EBITDA margin of 12.9% (-190 bps yoy) due to RM
headwinds during 4QFY21. SMP revenues came in at EUR991 mn (+6% yoy) with EBITDA
margin of 8.7% (+420 bps yoy) led by sharp improvements in operating performance of
greenfield plants (Tuscaloosa and Kecskemet) in 4QFY21. SMPRBV reported PAT came in
EUR31 mn (versus loss of EUR9 mn in 4QFY20) due to sharp improvement in operating
performance. The company has taken several cost-cutting initiatives in the greenfield
plants over the past few quarters. Order book stood at EUR15.6 bn out of which 25%
of order book content was for dedicated EV models as of March 2021, which does
not include EV variants of multi-power train models.
 PKC revenues came in at EUR314 mn (KIE: EUR264 mn), +19% yoy led by recovery in
global CV segment demand. EBITDA margin came in at 8% (flat yoy) despite strong
volume growth due to RM headwinds in 4QFY21. We expect a sharp recovery in PKC
revenues in the next two years led by recovery in US Class 8 truck volumes and strong
growth in China. Reported PAT came in at EUR13 mn in 4QFY21 versus EUR4 mn in
4QFY20.
 SAMIL business (ex MSSL and SMRPBV) on an aggregated basis reported revenues of
Rs9 bn in 4QFY21 (versus revenues of Rs7.9 bn in 3QFY21). EBITDA came in at Rs1.2 bn
in 4QFY21 versus EBITDA of Rs1.1 in 3QFY21. EBITDA margin declined by 150 bps on a
qoq basis in 4QFY21. For FY2021, net revenues came in at Rs26.5 bn versus Rs28 bn in
FY2020. EBITDA margin came in at 11.6% in FY2021 versus 13.3% in FY2020. SAMIL’s
net debt on consolidated basis stood at Rs12.7 bn as of March 2021 versus Rs12.7 bn as
of December 2020 and Rs11.4 bn as of September 2020.
 Consolidated debt position. Consolidated net debt stood at Rs48.2 bn as of March

2021 from Rs62.1 bn as of December 2020 and Rs87.9 bn as of March 2020 (excluding
lease liability).
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Automobiles & Components Motherson Sumi Systems
Exhibit 1: 4QFY21 standalone EBITDA (excluding DWH) was 17% above our estimates due to better-than-expected revenue growth
MSSL standalone 4QFY21 results, March fiscal year-ends (Rs mn)
(%chg.)
4QFY21 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 FY2021 FY2020 Yoy (%)
Net sales from operations 12,154 9,377 10,742
Other operating income 536 536 527
Net sales 12,690 11,000 9,913 11,269 15.4 28.0 12.6 36,692 39,851 (7.9)
Raw materials (7,810) (6,710) (5,672) (6,812) 16.4 37.7 14.7 (21,844) (23,318)
Staff costs (1,327) (1,400) (1,287) (1,419) (5.2) 3.1 (6.5) (5,026) (5,133)
Other expenses (1,810) (1,400) (1,515) (1,437) 29.3 19.5 25.9 (5,416) (5,852)
Total expenses (10,947) (9,510) (8,474) (9,668) 15.1 29.2 13.2 (32,286) (34,303)
EBITDA 1,743 1,490 1,439 1,601 17.0 21.2 8.8 4,406 5,547 (20.6)
Depreciation (491) (500) (792) (486) (1.8) (38.0) 1.0 (1,983) (2,313)
EBIT 1,252 990 646 1,115 26.5 93.7 12.3 2,424 3,235 (25.1)
Other income 227 500 2,857 454 (54.6) (92.1) (50.1) 1,104 3,723
Interest expense (239) (300) 69 (306) (20.4) (448.6) (21.9) (897) (248)
Profit before tax 1,240 1,190 3,572 1,264 4.2 (65.3) (1.9) 2,631 6,709 (60.8)
Tax expense (493) (298) (670) (176) (492) (1,323)
Exceptional loss — — — 0 199 0
Profit after tax 747 893 2,903 1,088 (16.3) (74.3) (31.3) 1,940 5,386 (64.0)
Adj PAT 747 893 2,903 1,088 (16.3) (74.3) (31.3) 2,079 5,386 (61.4)
# of shares 3,158 3,158 3,158 3,158 3,158 3,158
EPS (Rs/share) 0.2 0.3 0.9 0.3 0.7 1.7 (61.4)
Tax rate (%) 39.7 25.0 18.7 13.9 18.7 19.7
Discontinued operations financials (Rs mn)
Revenues 15,104 10,197 13,480 48.1 12.0 41,382 39,438 4.9
Other income 162 (46) 37 274 64 328.6
Total expenses 12,970 8,853 11,639 46.5 11.4 36,942 34,450 7.2
Profit before tax 2,296 1,298 1,878 76.8 22.2 4,395 4,906 (10.4)
Tax 594 341 473 1,129 1,303 (13.4)
Profit after tax 1,702 958 1,405 77.7 21.1 3,267 3,602 (9.3)
As a % of revenues
Raw material 61.5 61.0 57.2 60.4 59.5 58.5
Staff costs 10.5 12.7 13.0 12.6 13.7 12.9
Other expenses 14.3 12.7 15.3 12.8 14.8 14.7
Gross margin (%) 38.5 39.0 42.8 39.6 40.5 41.5
EBITDA margin (%) 13.7 13.5 14.5 14.2 12.0 13.9
EBIT Margin 9.9 9.0 6.5 9.9 6.6 8.1
Source: Company, Kotak Institutional Equities estimates
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 2: 4QFY21 consolidated EBITDA was 8% below our estimates due to lower-than-expected EBITDA in SMRPBV and PKC businesses
MSSL consolidated 4QFY21 results, March fiscal year-ends (Rs mn)
(%chg.)
4QFY21 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 FY2021 FY2020 Yoy (%)
Net sales from operations 166,710 141,561 168,252
Other operating income 3,010 2,784 2,672
Net sales 169,719 174,978 144,345 170,924 (3.0) 17.6 (0.7) 573,699 607,290 (5.5)
Raw materials (95,696) (96,607) (81,199) (96,897) (0.9) 17.9 (1.2) (325,979) (349,687)
Staff costs (39,494) (40,401) (36,161) (38,477) (2.2) 9.2 2.6 (140,996) (143,726)
Other expenses (17,306) (19,355) (14,562) (17,595) (10.6) 18.8 (1.6) (63,135) (67,336)
Total expenses (152,496) (156,363) (131,923) (152,969) (2.5) 15.6 (0.3) (530,109) (560,748)
EBITDA 17,223 18,615 12,422 17,955 (7.5) 38.6 (4.1) 43,590 46,542 (6.3)
Depreciation (7,568) (7,353) (7,794) (7,353) 2.9 (2.9) 2.9 (29,261) (27,210)
EBIT 9,655 11,262 4,628 10,602 (14.3) 108.6 (8.9) 14,329 19,332 (25.9)
Other income 616 100 198 652 515.5 211.5 (5.6) 2,293 2,246
Interest expense (1,365) (1,400) (1,366) (1,380) (2.5) (0.1) (1.1) (5,115) (5,928)
Profit before tax 8,906 9,962 3,460 9,875 (10.6) 157.4 (9.8) 11,508 15,649 (26.5)
Exceptional item (2) — — (25) (623) —
Tax expense (656) (2,491) (2,974) 1,092 693 (6,881)
Share of profit from associates 238 309 (87) 336 849 575
Minority interest 3,051 2,000 (477) 4,699 5,302 1,244
Profit after tax (excluding DWH) 5,435 5,781 876 6,579 (6.0) 520.2 (17.4) 7,124 8,098 (12.0)
Adj PAT (excluding DWH) 5,436 5,781 876 6,596 (6.0) 520.4 (17.6) 7,560 8,098 (6.6)
# of shares 3,158 3,158 3,158 3,158 3,158 3,158
EPS (Rs/share) 1.7 1.8 0.3 2.1 (17.6) 2.4 2.6 (6.6)
Tax rate (%) 7.4 25.0 85.9 (11.1) (6.0) 44.0
Discontinued operations financials (Rs mn)
Revenues 15,104 10,197 13,480 48.1 12.0 41,382 39,438 4.9
Other income 162 (46) 37 274 64 328.6
Total expenses 12,970 8,853 11,639 46.5 11.4 36,942 34,450 7.2
Profit before tax 2,296 1,298 1,878 76.8 22.2 4,395 4,906 (10.4)
Tax 594 341 473 1,129 1,303 (13.4)
Profit after tax 1,702 958 1,405 77.7 21.1 3,267 3,602 (9.3)
As a % of revenues
Raw material 56.4 55.2 56.3 56.7 56.8 57.6
Staff costs 23.3 23.1 25.1 22.5 24.6 23.7
Other expenses 10.2 11.1 10.1 10.3 11.0 11.1
Gross margin (%) 43.6 44.8 43.7 43.3 43.2 42.4
EBITDA margin (%) 10.1 10.6 8.6 10.5 7.6 7.7
EBITDA margin (ex forex) 10.1 10.6 8.6 10.5 7.6 7.7
EBIT Margin 5.7 6.4 3.2 6.2 2.5 3.2
Exhibit 3: EBITDA margin for PKC business was impacted by RM headwinds

SMRPBV and PKC quarterly financials, March fiscal year-ends, 2020-21 (EUR mn)
(%chg.)
4QFY21 4QFY21E 4QFY20 4QFY21E 4QFY20
SMRPBV
Revenue 1,362 1,488 1,302 (8.5) 4.6
EBITDA 134 158 90 (15.1) 49.0
EBITDA margin 9.8 10.6 6.9
PKC
Revenue 314 296 264 6.1 18.9
EBITDA 25 30 21 (15.1) 19.6
EBITDA margin 8.0 10.0 8.0

Exhibit 4: Net debt declined to Rs48.2 bn in 4QFY21 from Rs62.1 in 3QFY21

MSSL consolidated net debt position, March fiscal year-ends, 2012-21 (Rs bn)
120
100
80
60
40
20
0
4QFY12
1QFY13
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
Source: Company, Kotak Institutional Equities
Exhibit 5: We expect PKC Group’s revenues to grow at 18% CAGR over FY2021-24E; expect EBITDA margin to remain around ~10%
Income statement of PKC Group, March fiscal year-ends, 2012-24E (EUR mn)
CY2012 CY2013 CY2014 CY2015 CY2016 FY2018 FY2019 FY2020 FY2021 FY2022E FY2023E FY2024E
Income statement (EUR mn)
Revenues 928 884 830 908 846 1,282 1,176 1,177 1,038 1,453 1,628 1,693
Other operating income 2 2 4 4 6 1 — — — — — —
Net sales 931 886 834 912 852 1,283 1,176 1,177 1,038 1,453 1,628 1,693
RM cost 565 536 504 539 503 799 729 718 657 923 1,034 1,075
Staff costs 203 201 222 233 212 300 244 242 230 276 303 316
Other operating expenses 86 86 81 84 78 103 98 98 83 112 123 126
EBITDA 76 63 26 56 59 81 105 120 68 143 168 177
Depreciation 33 33 33 33 33 39 33 41 43 45 47 49
EBIT 43 30 (7) 23 27 42 72 79 25 98 121 128
Interest expense 6 7 4 5 4 6 2 8 — — — —
Foreign currency exchange differences (3) (2) 1 1 (2) (2) — 2 — — — —
Profit before tax 35 22 (11) 18 21 33 70 73 25 98 121 128
Income tax 11 8 19 11 8 2 18 17 8 32 40 42
Profit after tax 24 14 (29) 7 12 31 52 56 17 65 81 86
Ratios (%)
EBITDA Margin 8.2 7.1 3.2 6.1 7.0 6.3 8.9 10.2 6.6 9.8 10.3 10.4
EBIT Margin 4.7 3.4 (0.8) 2.5 3.1 3.3 6.1 6.7 2.4 6.7 7.4 7.5
Raw materials as % of sales 60.7 60.5 60.5 59.1 59.1 62.3 62.0 61.0 63.3 63.5 63.5 63.5
Employee costs as % of sales 21.8 22.7 26.6 25.6 24.9 23.4 20.7 20.6 22.1 19.0 18.6 18.6
Other expenses as % of sales 9.2 9.7 9.8 9.2 9.1 8.0 8.3 8.3 8.0 7.7 7.6 7.4
Effective tax rate 31.3 35.3 (174.9) 60.0 40.2 7.4 25.8 23.4 33.0 33.0 33.0 33.0
Yoy growth (%)
Revenue (4.8) (5.9) 9.4 (6.6) 50.6 (8.4) 0.1 (11.8) 40.0 12.0 4.0
EBITDA (16.7) (58.2) 110.6 6.6 36.8 29.2 14.0 (43.0) 109.3 17.4 5.5
Net profit (41.9) (309.0) (125.1) 70.4 148.4 67.9 7.0 (69.6) 288.0 23.4 5.9
Exhibit 6: We value MSSL at Rs260 on SoTP basis

Motherson Sumi sum-of-the-parts valuation methodology (Rs)
Value per share Valuation methodology

Standalone business 76 DCF-based valuation
SMRPBV business 169 DCF-based valuation
Global wiring harness business 16 DCF-based valuation
Equity value per share 261
KIE fair value 260

Exhibit 7: We value MSSL’s standalone business at Rs76 per share based on DCF methodology
Motherson Sumi standalone business DCF valuation, March fiscal year-ends, 2018-40E (Rs mn, %)
CAGR (%)
2018 2019 2020 2021 2022E 2023E 2024E 2025E 2040E 2021-40E
Standalone revenues 74,561 75,813 68,290 67,074 92,290 105,962 115,085 126,593 528,812 11.5
Standalone EBIT 11,135 10,536 8,529 7,248 11,929 14,641 16,755 16,457 58,169 11.6
EBIT (1-tax) 8,085 6,993 6,847 5,893 8,923 10,951 12,533 12,310 43,511 11.1
Depreciation (2,183) (2,193) (3,249) (2,642) (2,848) (3,064) (3,312) (3,611) (10,024) 7.3
(Incr)/Decr in Working Capital (923) 44 1,459 (4,909) 2,693 625 1,101 (347) 1,449
Capital Expenditure (3,070) (3,999) (3,519) (1,927) (2,500) (2,500) (3,000) (3,784) (11,057) 9.6
Free Cash Flows 6,275 5,231 8,035 1,698 11,963 12,140 13,946 11,790 43,926 18.7
Discounted cash flow 11,963 10,888 11,217 8,505 6,191
WACC used (%) 11.5

Terminal growth rate (%) 6.0
Capitalisation rate (%) 5.5
Terminal value calcuations
Cash flow in terminal year 6,191
Terminal value 119,321
Sum of free cash flow 154,652
EV value 273,973
Net debt 33,294
Equity value 240,679
Exhibit 8: We value MSSL’s SMRPBV business at Rs169 (proportionate share) per share based on DCF methodology
Motherson Sumi SMRPBV business DCF valuation, March fiscal year-ends, 2018-30E (EUR mn, %)
CAGR (%)
2018 2019 2020 2021 2022E 2023E 2024E 2025E 2030E 2021-30E
SMP revenues 3,452 3,704 4,056 3,519 4,675 5,101 5,389 5,820 7,936 7.7
SMR revenues 1,575 1,611 1,551 1,286 1,479 1,597 1,677 1,811 2,355 4.8
Total revenues 5,026 5,315 5,607 4,805 6,153 6,698 7,066 7,631 10,291 7.0
SMP EBIT 127 37 (14) 30 290 380 436 466 635
SMR EBIT 145 137 126 83 139 152 161 181 236
SMRPBV EBIT 272 174 111 113 429 532 596 647 870 25.7
EBIT (1-tax) 190 122 82 84 318 394 441 485 653 25.9
Depreciation (123) (168) (237) (232) (238) (245) (250) (270) (349) 4.4
(Incr)/Decr in Working Capital (59) 17 150 152 47 56 60 64 109
Capital Expenditure (345) (250) (175) (159) (175) (175) (150) (259) (427) 10.4
Free Cash Flows (90) 57 294 308 428 519 601 560 684 9.8
Discounted cash flow 428 481 516 446 372
After tax cost of debt (%) 5.6

Risk free rate (%) 2.0
Equity Risk premium 4.0
Beta 1.2
Exchange risk premium (%) 4.0
Cost of equity (%) 10.8
Debt/Capital employed (%) 55.3
Equity/Capital employed (%) 44.7
FY2021E debt 980
FY2021E equity 792
FY2021E capital employed 1,772
WACC used (%) 7.9
Cash flow in terminal year 372
Terminal value 9,854
Sum of free cash flow 3,910
EV value 13,764
Net debt 475
Equity value (EUR mn) 13,289
Equity value (Rs mn) 1,089,691
Equity value per share proportionate stake 169

Exhibit 9: We value MSSL’s global wiring harness business at Rs16 per share based on DCF methodology
Motherson Sumi global wiring business DCF valuation, March fiscal year-ends, 2018-30E (EUR mn, %)
CAGR (%)
2018 2019 2020 2021 2022E 2023E 2024E 2025E 2030E 2021-30E
PKC revenues 1,283 1,176 1,177 1,038 1,453 1,628 1,693 1,896 3,223 11.8
Stoneridge revenues 303 306 284 260 364 394 409 458 793 12.1
Total revenues 1,586 1,482 1,461 1,298 1,818 2,021 2,102 2,354 4,016 11.9
PKC EBIT 42 72 79 25 98 121 128 143 226
Stoneridge EBIT 12 31 32 4 23 29 33 37 60
Total EBIT 54 102 111 29 121 149 161 180 285 11.1
EBIT (1-tax) 38 72 77 21 84 105 113 126 200 11.1
Depreciation (43) (37) (46) (49) (51) (58) (61) (64) (88) 7.5
(Incr)/Decr in Working Capital — 16 3 24 (78) (31) (12) (25) (37)
Capital Expenditure (63) (59) (58) (52) (73) (81) (84) (94) (141) 10.2
Free Cash Flows 17 65 68 42 -15 51 77 71 111 5.6
Discounted cash flow -15 46 62 52 47
Risk free rate (%) 2.0

Equity Risk premium 4.0
Beta 1.3
Exchange risk premium (%) 4.0
WACC used (%) 11.2
Cash flow in terminal year 47
Terminal value 685
Sum of free cash flow 401
EV value 1,086
Net debt 475
Equity value (EUR mn) 610
Equity value (Rs mn) 50,059
Exhibit 10: We expect EBITDA mix of SMRPBV business to increase in FY2022-23E as we build in improvement in SMP’s EBITDA margin
Breakdown of key consolidated financials by different entities, March fiscal year-ends, 2016-24E (Rs mn, %)
2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Revenues
Standalone 52,930 62,867 74,561 75,813 39,851 36,692 50,724 57,446 62,688
SMRPBV 305,824 320,040 382,384 433,949 445,134 420,788 537,931 585,604 617,998
PKC — — 96,889 95,138 92,712 89,891 125,847 140,949 146,587
Stoneridge and others 13,410 40,849 9,099 30,328 29,593 26,328 35,515 38,605 40,695
Consolidated Net Revenues 372,163 423,756 562,933 635,229 607,290 573,699 750,018 822,604 867,968
EBITDA
Standalone 9,637 12,149 13,318 12,728 5,547 4,406 7,073 8,352 9,700
SMRPBV 21,362 26,932 28,556 28,072 26,474 28,943 57,769 67,262 73,271
PKC — — 6,127 8,485 9,415 5,904 12,354 14,508 15,302
Stoneridge and others 4,177 2,587 3,224 4,198 5,105 4,337 2,249 3,296 3,855
Consolidated EBITDA 35,177 41,668 51,226 53,484 46,542 43,590 79,445 93,419 102,128
EBITDA margin (%)
Standalone 18.2 19.3 17.9 16.8 13.9 12.0 13.9 14.5 15.5
SMRPBV 7.0 8.4 7.5 6.5 5.9 6.9 10.7 11.5 11.9
PKC — — 6.3 8.9 10.2 6.6 9.8 10.3 10.4
Stoneridge and others 31.2 6.3 35.4 13.8 17.2 16.5 6.3 8.5 9.5
Revenue Mix (%)
Standalone 14.2 14.8 13.2 11.9 6.6 6.4 6.8 7.0 7.2
SMRPBV 82.2 75.5 67.9 68.3 73.3 73.3 71.7 71.2 71.2
PKC — — 17.2 15.0 15.3 15.7 16.8 17.1 16.9
EBITDA mix (%)
Standalone 27.4 29.2 26.0 23.8 11.9 10.1 8.9 8.9 9.5
SMRPBV 60.7 64.6 55.7 52.5 56.9 66.4 72.7 72.0 71.7
PKC — — 12.0 15.9 20.2 13.5 15.6 15.5 15.0
Note: From FY2020 onwards, financials of DWH are reported as part of discontinued operations

Exhibit 11: We expect standalone earnings to grow by 40% CAGR during FY2021-24E
Motherson Sumi standalone profit model, balance sheet and cash model, March fiscal year-ends, 2012-24E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Profit model (Rs mn)
Net sales 35,718 43,041 45,245 49,850 52,930 62,867 74,561 75,813 39,851 36,692 50,724 57,446 62,688
EBITDA 5,184 7,570 8,448 8,754 9,637 12,149 13,318 12,728 5,547 4,406 7,073 8,352 9,700
Other income 881 865 990 763 1,708 1,680 1,404 1,865 3,723 1,104 2,548 3,757 4,968
Interest 548 485 324 208 474 124 433 248 248 897 1,392 1,272 1,072
Depreciation 1,172 1,453 1,530 2,071 2,008 1,977 2,183 2,193 2,313 1,983 2,148 2,314 2,512
Profit before tax 4,345 6,497 7,584 7,238 8,863 11,728 12,106 12,153 6,709 2,631 6,081 8,525 11,084
Current tax 1,188 1,801 2,295 2,348 2,515 3,556 3,316 4,086 1,454 610 1,533 2,148 2,793
Deferred tax (15) - (62) (259) (169) (100) — — (130) (118) — — —
Profit from discontinued operations 3,602 3,267 4,540 5,776 6,538
Net profit 3,172 4,696 5,351 5,149 6,887 8,273 8,790 8,067 8,988 5,368 9,089 12,153 14,828
Earnings per share (Rs) 1.1 1.6 1.8 1.7 2.3 2.6 2.8 2.6 2.8 1.7 2.9 3.8 4.7
Balance sheet (Rs mn)
Equity 12,855 16,240 19,056 21,021 24,539 58,027 61,802 64,382 62,443 67,429 71,064 75,926 81,857
Deferred tax liability 214 177 115 — — — — — — — — — —
Total Borrowings 9,552 9,273 7,578 5,336 4,852 12,935 11,531 11,374 14,193 35,789 33,789 29,789 23,789
Current liabilities 7,649 8,714 9,895 11,032 9,549 11,818 14,764 14,676 15,392 32,210 32,108 34,664 36,816
Total liabilities 30,270 34,404 36,644 37,389 38,940 82,780 88,096 90,432 92,029 135,427 136,961 140,379 142,462
Net fixed assets 13,432 15,057 14,863 15,017 14,741 14,363 16,397 18,867 17,469 17,874 18,226 18,413 18,901
Investments 3,704 5,132 5,821 7,320 7,230 44,772 46,529 45,845 46,637 55,673 55,673 55,673 55,673
Cash 202 658 191 1,461 185 1,891 1,054 1,382 2,366 2,495 1,931 (2,546) (8,539)
Other current assets 12,912 13,547 15,769 13,591 16,783 21,755 24,117 24,339 25,556 59,386 56,591 58,523 59,573
Miscellaneous expenditure 19 10 — — — — — — — — — — —
Total assets 30,270 34,404 36,644 37,389 38,940 82,780 88,096 90,432 92,029 135,427 132,420 130,062 125,607
Free cash flow (Rs mn)
Operating cash flow excl. working capital 5,364 6,488 7,044 7,093 7,568 9,057 9,316 9,381 8,904 8,310 6,088 6,762 7,474
Working capital changes (1,073) (488) (351) 1,115 (785) (1,926) (923) 44 1,459 (4,909) 2,693 625 1,101
Capital expenditure (3,673) (3,182) (1,526) (2,113) (1,731) (2,522) (3,070) (3,999) (3,519) (1,927) (2,500) (2,500) (3,000)
Free cash flow 79 2,377 4,818 5,883 4,939 4,532 5,054 5,107 6,522 1,197 4,890 3,615 4,504
Ratios
Gross margin (%) 39.8 41.2 44.4 43.9 44.8 46.2 45.0 44.5 41.5 40.5 38.9 39.1 39.7
EBITDA margin (%) 14.5 17.6 18.7 17.6 18.2 19.3 17.9 16.8 13.9 12.0 13.9 14.5 15.5
PAT margin (%) 8.9 10.9 11.8 10.3 12.3 13.2 11.8 10.6 22.6 14.2 17.9 21.2 23.7
Net debt/equity (X) 0.7 0.5 0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.5 0.4 0.4 0.4
Book value (Rs/share) 4.3 5.5 6.4 7.1 8.2 18.4 19.6 20.4 19.8 21.4 22.5 24.0 25.9
RoAE (%) 27.6 32.3 30.3 25.7 28.6 20.0 14.7 12.8 14.2 8.0 13.1 16.5 18.8
RoACE (%) 21.5 25.8 27.1 26.6 33.3 34.6 34.4 29.0 18.6 7.6 12.1 14.7 16.4

Exhibit 12: We expect consolidated earnings to grow at 58% CAGR during FY2021-24E
Motherson Sumi consolidated profit model, balance sheet and cash model, March fiscal year-ends, 2012-24E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Profit model (Rs mn)
Net sales 147,141 256,170 307,210 350,319 372,163 423,756 562,933 635,229 607,290 573,699 750,018 822,604 867,968
EBITDA 8,301 17,778 26,873 32,027 35,177 41,668 51,226 53,484 46,542 43,590 79,445 93,419 102,128
Other income 2,070 170 176 177 392 2,642 1,701 2,202 2,246 2,293 6,183 7,546 9,694
Interest 1,649 2,495 2,944 3,178 3,450 3,749 4,108 4,232 5,928 5,115 4,377 3,364 1,677
Depreciation 3,796 7,145 8,172 9,206 10,872 10,591 15,752 20,582 27,210 29,261 31,315 33,345 36,016
Profit before tax 4,926 8,308 15,934 19,819 21,246 29,970 33,067 30,872 15,649 11,508 49,936 64,255 74,128
Current tax 2,060 3,805 5,169 5,218 5,193 9,103 10,072 11,022 6,881 (693) 13,650 17,505 20,103
Deferred tax 93 31 (174) (846) (1,287) 476 55 (838) (874) (6,760) — — —
Minority interest 631 (70) (3,316) (4,294) (4,814) (6,180) (6,629) (4,850) (1,244) (5,302) (13,682) (17,199) (19,467)
Profit from discontinued operations 3,602 3,267 4,540 5,776 6,538
Adj Net profit 2,596 4,411 7,622 9,866 12,617 16,225 17,214 16,132 11,700 10,827 28,162 36,447 42,306
Earnings per share (Rs) 1.0 1.5 2.6 3.3 4.2 5.1 5.5 5.1 3.7 3.4 8.9 11.5 13.4
Equity 18,717 22,890 29,593 33,238 43,971 82,727 98,841 109,628 112,609 125,606 157,456 198,034 244,372
Deferred tax liability 1,506 1,441 1,680 1,457 2,394 4,260 5,236 5,762 4,628 3,363 3,363 3,363 3,363
Total Borrowings 46,023 48,556 47,758 51,979 60,688 103,493 103,736 121,139 118,711 107,261 87,261 62,261 12,261
Current liabilities 49,289 52,175 66,696 78,892 76,863 110,895 137,564 161,975 183,360 204,386 217,910 247,733 266,543
Minority interest 5,027 4,025 7,896 10,142 15,123 22,322 29,600 34,797 35,650 40,233 40,233 40,233 40,233
Total liabilities 120,562 129,088 153,623 175,708 199,038 323,697 374,977 433,302 454,958 480,850 506,225 551,625 566,773
Net fixed assets 51,380 56,629 65,660 70,847 83,089 121,900 150,329 172,777 176,363 167,785 154,470 141,124 135,108
Investments 938 716 749 649 5,317 4,737 7,917 8,503 7,960 8,466 8,466 8,466 8,466
Cash 4,557 5,944 9,061 18,919 17,717 48,866 27,816 35,469 48,789 59,062 83,235 110,039 110,024
Other current assets 63,687 65,798 78,153 85,293 89,987 128,818 166,273 194,435 197,785 220,820 235,337 267,278 288,457
Goodwill — — — — 2,928 19,376 22,643 22,118 24,060 24,718 24,718 24,718 24,718
Total assets 120,562 129,088 153,623 175,708 199,038 323,697 374,977 433,302 454,958 480,850 506,225 551,625 566,773
Free cash flow (Rs mn)
Operating cash flow excl. working capital 9,244 15,879 24,547 21,247 30,875 31,353 45,128 44,081 47,319 44,080 72,996 84,579 92,928
Working capital changes (3,357) (1,019) 2,403 12,650 (8,991) 6,644 (12,488) (958) 16,202 6,432 (993) (2,119) (2,369)
Capital expenditure (10,758) (11,389) (14,120) (19,443) (20,388) (28,086) (30,621) (27,627) (22,741) (19,700) (18,000) (20,000) (30,000)
Free cash flow (5,921) 1,428 10,552 12,514 (872) 6,737 (1,612) 12,111 35,911 27,046 49,626 59,096 58,883
Ratios
Gross margin (%) 35.1 35.7 37.0 38.3 39.8 39.2 39.0 42.2 42.4 43.2 40.6 40.9 41.0
EBITDA margin (%) 5.6 6.9 8.7 9.1 9.5 9.8 9.1 8.4 7.7 7.6 10.6 11.4 11.8
PAT margin (%) 1.8 1.7 2.5 2.5 3.4 3.7 2.8 2.5 1.9 1.8 3.8 4.4 4.9
Net debt/equity (X) 2.2 1.9 1.3 1.0 1.0 0.7 0.8 0.8 0.6 0.4 0.0 (0.2) (0.4)
Book value (Rs/share) 6.3 7.7 9.9 11.2 14.8 26.2 31.3 34.7 35.7 39.8 49.9 62.7 77.4
RoAE (%) 17.5 21.2 29.0 31.4 32.7 25.6 19.0 15.5 10.5 9.1 19.9 20.5 19.1
RoACE (%) 5.5 8.5 17.8 19.8 19.6 16.4 14.8 12.2 6.3 4.7 14.9 17.6 18.8

SELL
Berger Paints (BRGR)
https://ultraviewer.et/en/own Commodity Chemicals JUNE 03, 2021
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RESULT
Sector view: Neutral
Valuation premium unwarranted. BRGR reported 50% revenue growth (+17% CMP (`): 794
2-year CAGR) with 52%/54% yoy value/volume growth in decorative paints – ahead of Fair Value (`): 630
peers, aided partially by lumpy institutional business. Paints companies have taken
BSE-30: 51,849
calibrated price hikes to mitigate input cost pressure. BRGR continues to execute well
but valuation at 65X FY2023E PE (premium to APNT) is unwarranted, especially in view
of rising competition. Retain SELL.
Berger Paints
CMP(Rs)/FV(Rs)/Rating 794/630/SELL EPS (Rs) 7.4 9.8 12.3
52-week range (Rs) (high-low) 843-470 EPS growth (%) 9.4 32.4 25.0
Mcap (bn) (Rs/US$) 772/10.6 P/E (X) 107.1 80.9 64.7
ADTV-3M (mn) (Rs/US$) 925/13 P/B (X) 22.8 19.7 17.0
Promoters 75.0 RoE (%) 23.8 26.1 28.1
Rel. to BSE-30 6.1 8.0 3.0 Net profits (Rs bn) 7 10 12
4QFY21— Strong industry leading growth with better gross margin performance
Berger Paints reported 50% yoy revenue growth (+17% 2-year CAGR) to Rs20.3 bn (KIE:
Rs18.2 bn),11% ahead of estimates. Per our estimate, decorative paints revenues grew 52%
yoy with 54% yoy volume growth; industrial paints grew 40% yoy. The company has
outperformed peers in decorative paints with APNT and KNPL registering 48%/46% yoy and
37%/31% yoy volume/value growth respectively. Consolidated GM stood at 43.7% (KIE:
41.5%), flat yoy and down 55 bps qoq. GM performance was much better than peers aided by
low cost RM inventory, renegotiated sourcing contracts and formulation efficiencies. Stronger
revenue and GM delivery (versus peers) can also be partially attributed to an institutional supply-
apply contract in 4Q. Consolidated gross profit grew 50% yoy to Rs8.9 bn (KIE: Rs7.6 bn).
EBITDA grew 61% yoy to Rs3.4 bn (KIE: Rs3.1 bn), 10% ahead of expectations. On 2-year
CAGR basis, EBITDA grew 26%. EBITDA margin stood at 16.6%, up 117 bps yoy but down 303
bps on qoq basis. Employee costs grew 3% yoy while other expenses grew 63% yoy
(application cost for supply-apply contract, higher A&P). PBT/PAT grew 76%/101% yoy, around
4-6% ahead of our estimates. Standalone revenue/EBITDA/PBT grew 53%/59%/8% yoy while
PAT declined 2% yoy. Subsidiaries - STP and SPL specialty did well, while Berger Nippon and
Bolix saw improved performance in 4Q.
Key highlights from earnings conference call

Key takeaways – (1) Demand outlook is uncertain with Covid second wave and no additional
benefit from pent-up demand. (2) Metro/Tier-1 markets saw good recovery in 4Q driving
convergence in value-volume growths. (3) Management highlighted significant raw material
inflation (Monomers, Crude derivatives) necessitating 2.2-2.5% price increase in decorative
Jaykumar Doshi
paints from May, and additional price increase of about 2-3% in June. (4) Management expects
recovery in Bolix subsidiary to be sustainable aided by strong demand and pricing in European
markets. STP and SPL specialty subsidiaries saw sharp margin pressure in 4Q, (5) Berger Paints
Sushruta Mishra
has expanded distribution network significantly faster than the usual 10-12% in FY2021, (6)
Capex plans remain unchanged with Rs8 bn outlay in FY2022 (U.P factory).
We tweak estimates, roll-over to June-2023E, DCF-based FV of Rs630 (versus Rs600 earlier)

We cut FY2022-23E EPS by 1-3%, building in Covid impact and RM inflation pressures (lagged
pricing). We roll-over and revise DCF-based FV to Rs630 (Rs600), implying 49X Jun-23E PE.
Contact: +91 22 6218 6427
Commodity Chemicals Berger Paints
Exhibit 1: Berger Paints - Interim consolidated results, March fiscal year-ends, (Rs mn)
(% change) 2-year
4QFY21 4QFY21E 4QFY20 3QFY21 KIE Est yoy qoq FY2021 FY2020 (% chg.) 4QFY19 CAGR
Net operating revenue 20,261 18,212 13,548 21,182 11 50 (4) 68,176 63,658 7 14,721 17
Material cost (11,410) (10,648) (7,639) (11,812) 7 49 (3) (38,686) (37,258) 4 (8,838)
Gross profit 8,851 7,564 5,910 9,370 17 50 (6) 29,490 26,400 12 5,883 23
Gross margin (%) 43.7 41.5 43.6 44.2 215 bps 6 bps -55 bps 43.3 41.5 178 bps 40.0
Employee cost (1,268) (1,310) (1,237) (1,281) (3) 3 (1) (4,851) (4,525) 7 (1,053) 10
Other expenditure (4,227) (3,194) (2,589) (3,939) 32 63 7 (12,860) (11,265) 14 (2,713) 25
Total expenditure (16,905) (15,152) (11,464) (17,032) 12 47 (1) (56,397) (53,048) 6 (12,604)
EBITDA 3,356 3,059 2,084 4,150 10 61 (19) 11,779 10,610 11 2,117 26
EBITDA margin (%) 16.6 16.8 15.4 19.6 -24 bps 117 bps -303 bps 17.3 16.7 60 bps 14.4
Other income 150 235 167 156 (36) (10) (4) 616 685 (10) 165
Interest (119) (103) (141) (89) (441) (470) (6) (97)
Depreciation (542) (500) (493) (529) 8 10 2 (2,111) (1,910) 11 (346)
Pretax profits 2,845 2,691 1,617 3,689 6 76 (23) 9,842 8,915 10 1,839 24
Tax (748) (678) (560) (949) 10 33 (21) (2,589) (2,271) 14 (721)
PAT before MI/AI 2,097 2,013 1,057 2,740 4 98 (23) 7,253 6,644 9 1,118 37
Extraordinary items — — — — — — —
Minority interest/Associate income
(11) (5) (19) 8 (56) (66) (8)
Net profit 2,086 2,008 1,037 2,748 4 101 (24) 7,197 6,578 9 1,110 37
Recurring EPS 2.1 2.1 1.1 2.8 4 101 (24) 7.4 6.8 9 1.1 37
Income tax rate (%) 26.3 25.2 34.7 25.7 109 bps -837 bps 56 bps 26.3 25.5 83 bps 39.2
Costs as a % of net operating revenues
Material cost 56.3 58.5 56.4 55.8 -216 bps -7 bps 54 bps 56.7 58.5 -179 bps 60.0
Employee cost 6.3 7.2 9.1 6.0 -94 bps -288 bps 21 bps 7.1 7.1 0 bps 7.2
Other expenditure 20.9 17.5 19.1 18.6 332 bps 175 bps 226 bps 18.9 17.7 116 bps 18.4
Exhibit 2: Berger Paints - Interim standalone results, March fiscal year-ends, (Rs mn)
(% change) 2-year
4QFY21 4QFY20 3QFY21 yoy qoq FY2021 FY2020 (% chg.) 4QFY19 CAGR
Net operating revenue 17,970 11,748 18,619 53 (3) 60,214 56,917 6 13,527 15
Material cost (10,104) (6,705) (10,475) 51 (4) (34,386) (33,673) 2 (8,230)
Gross profit 7,866 5,043 8,144 56 (3) 25,828 23,244 11 5,297 22
Gross margin (%) 43.8 42.9 43.7 84 bps 3 bps 42.9 40.8 205 bps 39.2
Employee cost (909) (832) (918) 9 (1) (3,527) (3,425) 3 (810) 6
Other expenditure (3,931) (2,302) (3,444) 71 14 (11,343) (10,241) 11 (2,456) 27
Total expenditure (14,944) (9,839) (14,837) 52 1 (49,256) (47,339) 4 (11,497)
EBITDA 3,027 1,909 3,782 59 (20) 10,958 9,578 14 2,030 22
EBITDA margin (%) 16.8 16.2 20.3 59 bps -347 bps 18.2 16.8 137 bps 15.0
Other income 213 1,085 152 (80) 40 569 1,508 (62) 155
Interest (92) (96) (62) (332) (327) 2 (67)
Depreciation (476) (432) (468) 10 2 (1,861) (1,705) 9 (307)
Pretax profits 2,671 2,466 3,404 8 (22) 9,334 9,054 3 1,811 21
Tax (676) (519) (868) 30 (22) (2,378) (2,064) 15 (652)
Recurring PAT 1,995 1,947 2,536 2 (21) 6,956 6,990 (0) 1,160 31
Extraordinary items (148) — — (148) — (286)
Net profit (reported) 1,847 1,947 2,536 (5) (27) 6,808 6,990 (3) 873 45
Recurring EPS 1.96 2.0 2.6 (2) (25) 7.1 7.2 (2) 1.0 40
Income tax rate (%) 25.3 21.1 25.5 426 bps -18 bps 25.5 22.8 268 bps 36.0
Costs as a % of net operating revenues
Material cost 56.2 57.1 56.3 -85 bps -4 bps 57.1 59.2 -206 bps 60.8
Employee cost 5.1 7.1 4.9 -203 bps 12 bps 5.9 6.0 -17 bps 6.0
Other expenditure 21.9 19.6 18.5 227 bps 337 bps 18.8 18.0 84 bps 18.2
Notes:
(1) About 80% of standalone revenues is domestic decorative paints segment and 20% is domestic industrial coatings segment (normative mix pre-Covid)

Berger Paints Commodity Chemicals
Exhibit 3: Key changes to estimates, Berger Paints, March fiscal year-ends, 2020-23E
FY2020-23E
Revised Earlier Change (%) CAGR (%) / Change (bps)
2022E 2023E 2022E 2023E 2022E 2023E Revised Earlier
Revenues (Rs mn) 82,667 94,468 80,943 92,766 2.1 1.8 13.9 13.2
Revenue growth (%) 21.3 14.3 25.2 14.6
Gross margin (%) 42.1 43.0 42.3 43.1 -20 bps -11 bps 152 bps 162 bps
EBITDA (Rs mn) 15,222 18,444 14,945 18,028 1.9 2.3 20.0 19.1
EBITDA margin (%) 18.4 19.5 18.5 19.4 -5 bps 9 bps 285 bps 276 bps
Net income (Rs mn) 9,532 11,911 9,788 12,092 (2.6) (1.5) 21.6 22.3
EPS (Rs/share) 9.8 12.3 10.1 12.5 (2.6) (1.5) 21.6 22.3
Exhibit 4: Berger Paints - Trends in gross margin of Asian Paints, Berger Paints and Kansai Nerolac
Crude price- Brent (LHS, Rs per 10 Barrels) APNT's standalone GM (RHS, %)

KNPL's GM (RHS, %) Berger's standalone GM (RHS, %)
70,000 46.3 46.1 47
47.0 45.4
44.4 44.5 44.7 44.6 44.8 44.7
60,000 43.8 43.5 44.0 43.7
43.0 43.4 42.9
42.3 44
42.2 42.1 42.3 43.8
41.5 41.3 41.3 41.6
40.7 40.5 40.8 40.6
50,000 40.2 40.2 40.1 40.2
39.8 40.0 41
41.5 38.9 39.2 39.2
39.9 38.3 38.3 38.4 38.5 38.4
38.0 37.7
40,000 37.5
36.8 38
36.3
35.5
34.5 34.4
30,000 35
20,000 32
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21

Commodity Chemicals Berger Paints
Exhibit 5: Consolidated financials of Berger Paints, March fiscal year-ends, 2014-24E
Indian GAAP Ind AS

2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Profit model
Revenues 37,318 41,702 42,231 45,523 51,657 60,619 63,658 68,176 82,667 94,468 107,740
EBITDA 4,314 5,107 6,447 7,186 8,070 8,816 10,610 11,880 15,222 18,444 21,531
Depreciation (707) (925) (987) (1,081) (1,242) (1,378) (1,910) (2,111) (2,424) (2,738) (2,924)
Other income 360 360 347 545 459 600 685 515 622 928 1,319
Interest expense (466) (501) (273) (162) (246) (323) (470) (441) (357) (338) (338)
PBT 3,500 4,041 5,535 6,488 7,041 7,715 8,915 9,842 13,063 16,296 19,588
Tax (1,006) (1,394) (1,886) (2,294) (2,439) (2,732) (2,271) (2,589) (3,396) (4,237) (5,093)
PAT before MI and EO 2,494 2,647 3,649 4,194 4,602 4,984 6,644 7,253 9,667 12,059 14,495
Minority Interest/Associate income — — 57 101 6 (9) (66) (56) (135) (149) (163)
Extraordinary items — — — 442 — — — — — — —
Recurring PAT 2,494 2,647 3,705 4,451 4,608 4,975 6,578 7,197 9,532 11,911 14,332
Recurring EPS (diluted) (Rs) 2.6 2.7 3.8 4.6 4.7 5.1 6.8 7.4 9.8 12.3 14.8
Balance sheet
Total equity 11,203 12,606 15,621 19,016 21,945 24,727 26,601 33,769 39,222 45,442 52,925
Total borrowings 6,235 6,096 3,095 4,062 4,222 4,839 5,359 3,838 3,838 3,838 3,838
Current liabilities 7,768 7,793 9,373 10,511 12,435 13,148 13,820 17,867 17,323 19,666 22,282
Other liabilities 792 716 684 814 832 913 3,270 3,737 3,737 3,737 3,737
Total equity and liabilities 25,998 27,211 28,773 34,403 39,434 43,627 49,050 59,211 64,120 72,683 82,782
Cash and cash equivalents 2,748 3,043 4,053 4,697 4,326 4,893 3,993 6,494 7,401 11,843 19,458
Other current assets 13,230 13,805 13,407 16,017 19,472 21,112 22,087 29,128 28,725 32,567 36,847
Net fixed assets 6,408 7,335 7,765 9,571 10,026 11,029 13,288 14,221 18,627 18,906 17,110
CWIP 1,333 1,004 511 622 972 1,699 1,785 1,068 1,068 1,068 1,068
Goodwill 2,230 1,971 1,865 1,789 2,646 2,693 2,790 2,876 2,876 2,876 2,876
Total assets 25,998 27,211 28,773 34,403 39,434 43,627 49,050 59,211 64,120 72,683 82,782
Cash flow
Operating cash flow excl. w-cap 3,358 3,888 4,807 5,220 5,499 6,542 8,245 9,638 11,691 14,058 16,275
W-cap changes (255) (434) 1,138 (1,275) (1,280) (925) (999) (1,680) (141) (1,498) (1,665)
Operating cash flow 3,103 3,454 5,946 3,945 4,219 5,617 7,246 7,958 11,550 12,560 14,610
Interest expense (net) (215) (304) (155) (116) (189) (182) (140) (108) 265 590 981
Capital expenditure (2,431) (1,615) (1,218) (2,686) (2,929) (3,182) (2,950) (1,861) (6,831) (3,017) (1,128)
Acquisitions/divestment (1) 20 (15) (71) 51 (387) (1,400) — — — —
Free cash flow 456 1,555 4,558 1,072 1,152 1,866 2,757 5,989 4,985 10,134 14,463
Key ratio and assumptions
Revenue growth (%) 15.6 11.7 7.4 7.8 13.5 17.3 5.0 7.1 21.3 14.3 14.0
EBITDA margin (%) 11.6 12.2 15.3 15.8 15.6 14.5 16.7 17.4 18.4 19.5 20.0
PAT margin (%) 6.7 6.3 8.8 9.8 8.9 8.2 10.3 10.6 11.5 12.6 13.3
Net debt 3,488 3,053 (957) (635) (104) (54) 1,366 (2,656) (3,563) (8,005) (15,620)
Net debt/equity (X) 0.3 0.2 (0.1) (0.0) (0.0) (0.0) 0.1 (0.1) (0.1) (0.2) (0.3)
Book value (Rs/share) 11.5 13.0 16.1 19.6 22.6 25.5 27.4 34.8 40.4 46.8 54.5
RoAE (%) 24.1 22.2 26.3 25.7 22.5 21.3 25.6 23.8 26.1 28.1 29.1
RoACE (%) 15.8 15.2 19.2 18.9 18.1 17.2 21.1 20.7 23.5 25.2 26.0

REDUCE
Muthoot Finance (MUTH)
https://ultraviewer.et/en/own Diversified Financials JUNE 02, 2021
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RESULT
Sector view: Attractive
Near-term tailwinds. Muthoot’s 4QFY21 performance was in line with expectations. Even CMP (`): 1,415
as qoq loan growth moderated following a fall in gold prices during 4QFY21 by 12% qoq, Fair Value (`): 1,375
we expect the recent rally in gold prices to accelerate FY2022 loan growth. Long-term
growth will however likely remain moderate, linked to the gold price trajectory. The recent BSE-30: 51,849
rating upgrade will provide NII tailwinds although we expect the same to be passed on over
time. We revise estimates; retain REDUCE as we roll over FV to Rs1,375 (from Rs1,250).
Muthoot Finance
CMP(Rs)/FV(Rs)/Rating 1,415/1,375/REDUCE EPS (Rs) 92.8 110.1 125.2
52-week range (Rs) (high-low) 1,439-883 EPS growth (%) 23.3 18.7 13.7
Mcap (bn) (Rs/US$) 568/7.8 P/E (X) 15.3 12.9 11.3
QUICK NUMBERS
ADTV-3M (bn) (Rs/US$) 1.4/0.1 P/B (X) 3.7 3.0 2.5
Shareholding pattern (%) BVPS 379.8 464.2 560.0
 Core PBT up 25%
Promoters 73.4 RoE (%) 27.8 26.1 24.4
yoy in 4QFY21
Price performance (%) 1M 3M 12M NII (Rs bn) 66 81 93
 Gold AUM up 27%
Absolute 22.2 7.9 57.0 PPOP (Rs bn) 51 61 69
Rel. to BSE-30 15.0 4.7 2.4 Net profits (Rs bn) 37 44 50 yoy/5% qoq
 Cost-to-income ratio
down 500 bps
Strong near-term growth
yoy/up 340 bps qoq
Muthoot Finance reported loan growth of 4% qoq in 4QFY21, lower than 7-14% qoq over the to 27.5%
preceding two quarters; improvement in funding lines and sharp rally in gold prices had fuelled
high growth in the past. Incrementally, we expect gold loan growth to remain strong (19%
loan growth in FY2022E) following 12% gold price rally during QTD 1QFY22E; loan growth will
likely moderate to mid-teen levels over the next two years. The management has provided
moderate growth guidance for 1QFY22 to new loans due to lockdown-related restrictions.
Performance of subsidiaries weak and concerning
Muthoot’s lending subsidiaries (10% of consolidated loan book) reported significant rise in
stressed loans in FY2021. The performance of its affordable housing subsidiary is below peers
with 4% gross stage-3 loans (down from 6.3% qoq, likely supported by write-offs) as
compared to 1-1.5% for better-run peers; the company reported 3% RoE in FY2021, down
from 8% in FY2020 and 14% in FY2019. The microfinance business reported 25% loan growth Nischint Chawathe
(among the highest in peers) despite severe challenges in the marketplace; RoA moderated to
1.5% from 4.4% in FY2020. The vehicle finance subsidiary reported 8.6% gross stage-3 loans
(down from 9.2% qoq, partially likely supported by write-offs); the company reported 7.9% M B Mahesh, CFA
RoE versus 3.5% in FY2020.
Raising estimates, gold price linkages remain strong; retain REDUCE Dipanjan Ghosh
We are revising our estimates by 4-9% to reflect higher loan growth, marginal NIM tailwinds (a
combination of recent rating upgrade and gradual decline in loan yields) and better expense
Abhijeet Sakhare
management. We expect near-term RoE in the range of 22-26% although moderating to
~20% levels over the medium term. Notably, strong gold prices help the company to deliver
higher loan growth as well as improve realizations due to stronger LTVs. We hence believe that Ashlesh Sonje
its business prospects remain linked to gold prices, driving our moderate view on valuations; at
our RGM-based FV of Rs1,375, the stock will trade at 2.4X book June 2023E.
Contact: +91 22 6218 6427
Diversified Financials Muthoot Finance
Exhibit 1: Muthoot Finance – quarterly summary

March fiscal year-end, 4QFY21 (Rs mn)
Ind-AS Ind-AS Ind-AS Ind-AT (% chg.) Ind-AS Ind-AS Ind-AS
4QFY21 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 2022E 2021 (% chg.) 2023E
Income statement
Operational income 28,239 28,280 24,004 27,649 (0.1) 17.6 2.1 122,474 105,577 16.0 139,385
Interest income 27,891 28,057 23,506 27,168 (0.6) 18.7 2.7 121,473 103,285 17.6 138,668
Net gain on fair value change 203 8 312 279 2,515.7 (35.0) (27.3) 300 1,595 (81.2) 500
Sale of services 37 318 41 36 (88.5) (10.2) 1.9 141 121 16.7 148
Service charges 108 (96) 135 165 NM (19.9) (34.4) 550 555 (0.8) 60
Other operational income - (6) 9 - 10 21 (51.8) 10
Interest expense 9,513 9,212 7,700 9,455 3.3 23.5 0.6 40,700 36,924 10.2 45,279
NII 18,378 18,844 15,806 17,713 (2.5) 16.3 3.8 80,772 66,361 21.7 93,389
Net operational income 18,726 19,068 16,303 18,193 (1.8) 14.9 2.9 81,774 68,653 19.1 94,106
Other income 42 6 23 116 635.4 87.0 (63.6) 50 166 (70.0) 35
Total income 18,768 19,073 16,326 18,309 (1.6) 15.0 2.5 81,824 68,819 18.9 94,141
Operating expenses 5,160 5,002 5,304 4,410 3.2 (2.7) 17.0 20,674 17,804 16.1 25,036
Employee expense 2,760 2,831 3,088 2,411 (2.5) (10.6) 14.5 11,461 10,063 13.9 13,586
Depreciation expense 154 110 122 141 39.4 25.6 9.3 515 507 1.5 520
Other operating expenses 2,246 2,060 2,094 1,858 9.0 7.3 20.9 8,699 7,235 20.2 10,930
PPOP 13,608 14,072 11,021 13,900 (3.3) 23.5 (2.1) 61,150 51,015 19.9 69,105
Provisions 111 810 48 585 (86.3) 133.0 (81.0) 1,785 950 88.0 1,615
PBT 13,496 13,261 10,974 13,314 1.8 23.0 1.4 59,364 50,065 18.6 67,490
Tax 3,540 3,453 2,822 3,401 2.5 25.4 4.1 15,197 12,843 18.3 17,277
PAT 9,957 9,808 8,151 9,914 1.5 22.1 0.4 44,167 37,222 18.7 50,213
Core PBT 13,368 13,757 10,659 13,585 (2.8) 25.4 (1.6) 60,703 49,293 23.1 68,452
Tax rate (%) 26 26 26 26 19 bps 51 bps 69 bps 26 26 -5 bps 26
Key highlights (Rs mn)
AUM 526,223 526,196 416,106 503,907 0.0 26.5 4.4 623,843 526,223 18.6 715,840
Borrowings 460,196 372,264 465,517 23.6 (1.1) 499,649 460,196 8.6 564,746
Net worth 152,389 115,718 141,780 31.7 7.5 186,222 152,389 22.2 224,686
Key calculated ratios (%)
Yield on loans on balance sheet 21.7 23.5 22.3 -181 bps -65 bps 21.1 21.9 -80 bps 20.7
Cost of borrowings 8.2 8.8 8.5 -60 bps -30 bps 8.5 8.9 -39 bps 8.5
NIM 14.3 14.6 15.8 14.5 -36 bps -151 bps -28 bps 14.0 14.1 -4 bps 13.9
Cost-to-income 27.5 26.2 32.5 24.1 127 bps -500 bps 341 bps 25.3 25.9 -60 bps 26.6
Cost-to-average AUM 4.0 3.9 5.3 3.6 12 bps -129 bps 39 bps 3.6 3.8 -18 bps 3.7
Credt cost (% of AUM) 0.1 0.6 0.0 0.5 -54 bps 4 bps -39 bps 0.3 0.2 11 bps 0.2
Asset quality
Gross stage-3 (Rs mn) 4,641 8,992 6,568 (48.4) (29.3) 6,238 4,641 34.4 8,590
Gross stage-3 (%) 0.9 2.2 1.3 -128 bps -42 bps 1.0 0.9 12 bps 1.2
Capital adequacy details (%)
CAR 27.4 25.5 26.4 197 bps 106 bps
Tier-I 26.4 24.3 25.3 206 bps 108 bps
Operational highlights
Branches (#) 4,632 4,567 4,632 1.4 - 4,702 4,632 1.5 4,752
Gold (weight in tons) 171 176 166 (2.8) 3.0
Employees (#) 25,911 25,554 25,893 1.4 0.1 26,829 25,911 3.5 27,656
Loan per gram (Rs) 3,077 2,364 3,036 30.2 1.4
Source: Company, Bloomberg, Kotak Institutional Equities estimates
Strong growth in core PBT

Muthoot reported PAT (standalone) of Rs10 bn in 4QFY21 (up 22% yoy). Strong growth in
core earnings (up 25% yoy) supported PAT. Core PBT growth was led by strong 16% yoy
growth in NII and 3% yoy decline in expenses.
NII increased 16% yoy led by strong 26% yoy growth in standalone AUM (gold AUM up
27% yoy/5% qoq).
In line with seasonal trends, expenses increased qoq in 4QFY21. On a yoy basis, expenses
declined 3% indicating strong expense management despite robust growth in business.
Calculated cost-to-income ratio declined 500 bps yoy to 27.5% (up 350 bps qoq). On yoy
basis, cost-to-income declined 410 bps yoy in FY2021 to 26% – reflecting lower overheads,
discretionary spends, business promotion expenses and marginal decline in per employee
cost during the year.
Credit cost was muted at 9 bps. This however tends to be volatile. The company’s margin of
safety declined to 25% in FY2021 from 32-42% over FY2016-20 reflecting sharp decline in
gold prices in 4Q; it however increased to ~34-35% in 1QFY22E QTD. As such, net losses in
the business are negligible.

Muthoot Finance Diversified Financials
Gold loan growth slows down a bit sequentially
 Growth in gold loans slows down sequentially. On a sequential basis, standalone

AUM growth slowed down to 4.4% qoq from 7-14% qoq growth over the past few
quarter reflecting impact of sharp 12% qoq decline in gold prices. Sequential rise in gold
loans is however strong in an environment of declining gold prices (gold prices down
12% qoq in 4QFY21/up 7% yoy).
 A significant proportion of the growth was driven by growth in gold tonnage (up
3% qoq) – this remains a key positive as the company reported tonnage growth for
the second straight quarter (up 2% qoq in 3QFY21).
 Muthoot’s gold loan disbursements slowed down from peak levels to Rs77 bn per
month in 4QFY21 (lower than Rs102-167 bn over 2QFY21-3QFY21) – impact of lower
gold prices.
 While gold prices declined 12% qoq in 4QFY21, it increased 12% QTD in
1QFY22E; gold prices tend to be countercyclical in nature.
 Focus on activating old customers and adding new customers. Muthoot remains
focused on increasing gold loan growth by activating inactive customers. Share of gold
loan AUM from inactive customers increased to 28% in 4QFY21 from 22-25% over
4QFY19-1QFY21.
AUM growth to remain strong in FY2022E and moderate thereafter

Rise in gold prices in 1QFY22E to support strong AUM growth in FY2022E. We expect
Muthoot’s AUM growth (standalone) to remain strong at 19% yoy in FY2022E. Gold prices
rallied ~12% qoq in 1QFY22E (QTD). While reduced footfalls will likely drive lower
volumes in 1Q, it is expected to pick up sharply in 2Q as business activity gains momentum,
similar to trends observed during the first wave. Strong growth in gold loans in FY2022E
thus reflects the impact of recently rally in gold prices.
 Over FY2022-24E, we expect growth in AUM (standalone) to moderate to ~15% CAGR,

assuming stable gold prices. Addition of new customers, activation of old customers and
increase in gold tonnage will support overall growth over FY2022-24E. While fintechs and
banking peers try to make some inroads, the gold loan markets is underpenetrated
(<7.5%) and has a high share of unorganized players (>60%), which charge exorbitant
interest rates thereby providing headroom for growth over the next few years. Movement
in gold prices however tends to be volatile and crucial to business growth.

Exhibit 2: Gold loan companies deliver strong RoEs during phases of rally in gold prices
Select data points for Muthoot and Manappuram, March fiscal year-ends, 2007-21
Rally in gold prices Drop in gold prices Rally in gold prices

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
YoY growth in gold prices (%)
Gold price yoy 10 29 24 8 27 34 10 (7) (8) 9 (0) 8 1 30 7
AUM (Rs bn) 14 22 33 73 157 247 260 219 234 244 273 291 342 416 526
YoY (%) 53 51 122 114 57 5 (16) 7 4 12 7 18 22 26
Gold weight (tons) 23 30 39 66 112 137 134 118 131 142 149 155 169 176 171
YoY (%) 30 30 69 70 22 (2) (12) 11 8 5 4 9 4 (3)
Key ratios (%)
Yield on AUM 19.9 22.1 20.2 19.9 22.4 21.1 20.4 18.8 20.1 21.9 22.0 21.3 22.6 27.6
NII/AUM 9.9 10.8 11.3 11.0 10.9 10.0 9.5 9.5 10.7 13.0 15.1 14.3 15.2 14.1
Cost-to-income 48.3 52.1 43.4 38.2 38.0 37.6 46.7 52.0 43.5 36.2 29.9 33.2 30.0 25.9
Cost-to-average AUM 5.1 5.9 5.0 4.2 4.2 3.8 4.5 5.1 4.8 4.8 4.7 4.9 4.7 3.8
Credit cost 0.0 0.0 0.1 0.3 0.2 0.3 0.2 0.2 0.7 1.1 0.8 0.1 0.3 0.2
Return ratios (%)
ROAAUM 3.5 3.6 4.3 4.3 4.4 4.0 3.3 3.0 3.4 4.6 6.3 6.2 8.0 7.9
ROE 29.7 33.9 48.1 51.5 41.9 29.3 19.0 14.3 15.1 19.4 24.8 22.4 28.3 32.2
Asset quality
GNPL/gross stage 3 (%) 0.5 0.3 0.6 2.0 1.9 2.2 2.9 2.1 4.4 2.7 2.2 0.9
Manappuram (Rs mn) Consolidated Standalone
Gold AUM (Rs bn) 4 6 10 26 75 115 99 82 92 101 111 117 130 170 191
YoY (%) 48 73 167 188 53 (14) (18) 13 9 10 5 10 31 12
Gold weight (tons) 22 53 66 51 46 53 60 61 64 68 72 65
YoY (%) 136 24 (22) (11) 17 12 3 5 5 7 (10)
Key ratios (%)
Yield on AUM 16.5 20.8 26.5 23.2 27.5 20.9 22.9 22.4 22.7 28.1 25.3 27.3 28.2 28.5
NII/AUM 13.4 15.8 18.9 16.7 16.2 9.8 11.5 12.4 13.5 18.7 18.3 19.1 18.9 19.0
Cost-to-income 46.4 49.8 42.6 44.8 44.3 63.9 64.1 60.3 58.6 41.6 48.9 48.4 40.4 30.9
Cost-to-average AUM 6.4 8.2 8.1 7.5 7.3 6.4 7.7 7.7 8.1 7.9 9.2 9.4 8.0 6.0
Credit cost 0.7 2.3 0.8 0.9 0.0 0.8 0.5 0.3 0.3 0.5 0.4 0.2 0.6 0.7
Return ratios
ROAAUM 4.4 3.9 6.7 5.5 6.2 1.9 2.5 3.1 3.5 6.8 6.0 6.4 8.2 9.4
ROE 34.2 23.2 30.8 22.0 27.5 8.6 9.2 10.6 12.6 24.0 19.3 19.3 25.2 27.7
Asset quality
GNPL (%) 1.1 1.2 1.2 1.0 2.0 0.7 0.5 0.9 0.9
Notes:
(1) For Manappuram, data prior to FY2012 refers to consolidated entity.
(2) For Manappuram, data for interest income prior to FY2012 refers to overall operational revenues.
(3) Numbers from FY2018 onwards are based on Ind-AS.

Exhibit 3: Divergence between tonnage growth and AUM growth from FY2019 unlike last few cycles
Relationship between AUM (standalone) growth and gold tonnage growth, March fiscal year-ends, 2008-21
(%)
AUM yoy Gold tonnage yoy

140
105
70
35
-35
2008
2009
2012
2015
2016
2019
2010
2011
2013
2014
2017
2018
2020
2021
Exhibit 4: Gold prices tend to be countercyclical in nature; it has increased during the Covid-19 second wave
Relationship between Covid-19 cases, gold prices and share price of Muthoot Finance, March fiscal year-ends, March 2020-May 2021
Gold price (LHS) Muthoot share price (RHS)
Covid-19 cases (LHS) Gold price (RHS)
(Rs/10 gm) (Rs/share)
(#) (Rs/10 gm) 60,000 1,500
450,000 60,000
56,000 1,300
360,000 56,000
52,000 1,100
270,000 52,000
48,000 900
180,000 48,000
44,000 700
90,000 44,000
40,000 500
- 40,000
Mar-20
May-20
May-21
Mar-21
Aug-20
Apr-20
Sep-20
Apr-21
Jul-20
Nov-20
Dec-20
Feb-21
Oct-20
Jun-20
Jan-21
May-20
May-21
Aug-20
Nov-20
Mar-20
Dec-20
Mar-21
Oct-20
Jul-20
Sep-20
Jun-20
Apr-21
Apr-20
Jan-21
Feb-21
Source: Company, Bloomberg, Covid-19 India

Exhibit 5: Focus on activating old customers

Detail of customers and AUM for fresh loans, March fiscal year-ends, 4QFY19-4QFY21
4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21
Break-up of fresh loans
Customers (# mn) 1.5 1.6 1.5 1.6 1.4 0.7 1.4 1.5 1.6
Fresh loans to inactive customers 0.4 0.4 0.4 0.4 0.4 0.2 0.4 0.4 0.4
(% of overall active customers) 8 9 8 8 7 4 8 9 8
Fresh loans to new customers 0.4 0.4 0.3 0.4 0.3 0.2 0.4 0.4 0.4
Fresh loans with new collateral to existing active customers 0.8 0.8 0.8 0.8 0.7 0.4 0.6 0.7 0.8
Customer mix in overall fresh loans by number (%)
Fresh loans to inactive customers 25 25 24 25 25 26 27 28 28
Fresh loans to new customers 24 24 23 24 25 23 28 25 23
Fresh loans with new collateral to existing active customers 51 51 53 51 50 51 44 47 49
Outstasing loan amount (Rs mn) 85,922 92,792 78,071 98,852 89,796 41,930 104,046 105,534 105,557
Fresh loans to inactive customers 20,023 21,226 17,549 23,608 21,806 10,547 27,268 29,600 29,170
(% of gold AUM) 6 6 5 6 5 3 6 6 6
Fresh loans to new customers 23,148 23,487 19,241 25,583 25,622 10,807 33,388 29,759 27,528
(% of gold AUM) 7 7 6 7 6 3 7 6 5
Fresh loans with new collateral to existing active customers 42,751 48,079 41,281 49,661 42,368 20,576 43,390 46,175 48,859
(% of gold AUM) 13 14 12 13 10 5 9 9 9
Customer mix in overall fresh loans by value (%)
Fresh loans to inactive customers 23 23 22 24 24 25 26 28 28
Fresh loans to new customers 27 25 25 26 29 26 32 28 26
Fresh loans with new collateral to existing active customers 50 52 53 50 47 49 42 44 46
Average loan /customers (rs) 56,536 56,327 51,526 62,606 64,084 59,020 71,787 68,212 68,100
Fresh loans to inactive customers 52,668 51,205 47,704 58,889 61,943 56,903 68,893 67,553 67,473
(Relative to average ticket size) 0.7 0.7 0.7 0.8 0.7 0.7 0.7 0.7 0.7
Fresh loans to new customers 64,255.2 60,629.8 55,314.4 68,033.4 73,918.3 67,491.9 81,625.9 76,621.2 76,235.8
(Relative to average ticket size) 1 1 1 1 1 1 1 1 1
Fresh loans with new collateral to existing active customers 54,854 56,866 51,637 61,920 60,305 56,378 67,320 64,080 64,576
(Relative to average ticket size) 0.8 0.8 0.7 0.8 0.7 0.7 0.7 0.6 0.6
Notes:
(1) The above data only includes fresh loans and does not include top-up loans provided to existing customers.
Exhibit 6: Average gold prices increased in 1QFY22E post moderating in 2HFY21

Domestic gold price, March fiscal year-ends, June 2008-June 2021 (Rs/gm)
6,000
4,800
3,600
2,400
1,200
-
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-08
Dec-09
Dec-10
Dec-11
Dec-18
Dec-19
Dec-20
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-18
Jun-19
Jun-20
Jun-21
Source: Bloomberg, Kotak Institutional Equities

Exhibit 7: Strong 21% yoy rise in average ticket size in FY2021

Average ticket size, loan accounts and loan book, March fiscal year-ends, 2011-21
CAGR (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YoY (%) (2011-21)
Average ticket size (Rs) 33,438 39,900 41,120 40,000 37,865 36,500 37,186 38,345 42,478 51,869 62,570 21 6
Loan accounts (# mn) 4.7 6.2 6.3 5.7 6.2 6.6 7.3 7.6 8.1 8.0 8.4 5 6
Loan book (Rs mn) 117,518 246,730 260,004 218,620 234,050 243,789 272,785 291,420 342,461 416,106 526,223 26 16
Notes:
Exhibit 8: AUM growth in FY2021 reflects strong rally in gold prices in 1HFY21 even as it moderated
in 2HFY21
Muthoot’s loans and gold prices, March fiscal year-ends, 2009-21
Muthoot's AUM (LHS, Rs bn) Gold price yoy (RHS, %)

550 60
440 45
330 30
220 15
110 -
- (15)
2012
2013
2014
2015
2016
2017
2018
2019
2009
2010
2011
2020
2021
Source: Bloomberg, Company, Kotak Institutional Equities
Exhibit 9: Disbursements strong for Muthoot Finance in FY2021

Monthly run-rate of disbursements for select NBFCs, March fiscal year-ends, 2015-21, 1QFY21-4QFY21
2015 2016 2017 2018 2019 2020 2021 1QFY21 2QFY21 3QFY21 4QFY21
Growth in gold price
YoY growth (7.9) 9.4 (0.2) 7.6 1.0 29.7 7.3 42 35 31 7
Disbursement monthly run-rate (Rs bn)
Muthoot 43 41 48 55 61 81 104 69 167 102 77
YoY (%) (5) 17 15 11 32 29 6 146 12 (21)
QoQ (%) (30) 142 (39) (25)
Manappuram 20 31 44 52 75 141 220 228 311 192 149
YoY (%) 52 41 18 44 88 56 159 86 43 (14)
QoQ (%) 32 37 (38) (22)
SCUF 5.2 4.1 5.5 5.6 4.8 5.9 4.9 2.2 5.2 6.4 6.0
YoY (%) (22) 35 1 (15) 24 (17) (64) (5) 5 (2)
QoQ (%) (64) 141 24 (7)
Notes:
(1) To arrive at monthly disbursement run-rate for Manappuram and SUCF, we divided overall disbursements for the period by number of months in
the respective period.

Exhibit 10: AUM growth to moderate over medium term

Loans and yoy growth (standalone), March fiscal year-ends, 2007-24E (%)
AUM (LHS) YoY (RHS)

(Rs bn) (%)
850 121 140
113
680 105
510 53 51 55 70
22 26
340 18 19 15 15 35
7 12 7
5 4
170 (16) 0
- -35
2024E
2022E
2023E
2009
2010
2014
2015
2019
2020
2007
2008
2011
2012
2013
2016
2017
2018
2021
Notes:
Elevated write-offs in subsidiaries

Muthoot’s subsidiaries, engaged in microfinance, housing finance and auto loans,
contribute ~10% to overall consolidated AUM for Muthoot Finance. While asset quality
deteriorated sharply post moratorium exit, it improved qoq led by rise in collections. Gross
stage-3 loans declined qoq in vehicle finance and housing finance led by rise in collections
and elevated write-offs. The second wave poses asset quality risk to the MFI business;
collections were however up in 4Q on qoq basis. While the management does not envisage
any significant capital infusion into the subsidiaries, we continue to bake in gradual rise in
investment in subsidiaries over the next few years.
 Home finance: high write-offs and improvement in collections drive qoq decline
in gross stage-3 loans. Home Finance subsidiary (engaged in affordable housing finance
loans and targets customers in Economically Weaker Sections (EWS) and Lower Income
Groups (LIG; loan book of Rs17 bn) in Tier II & Tier III cities) witnessed 280 bps qoq
decline in gross stage-3 loans (without considering impact of asset quality freeze in
3QFY21) in 4QFY21 to 4% (up 230 bps yoy). Improvement in collections and elevated
write-offs were ley reasons. A back-of-the-envelope calculation suggests that the
company wrote off ~2.1% of AUM (% of opening AUM) in 4QFY21 (not annualized).
Additionally, collection increased to ~99% in March 2021 from <90% in 3QFY21.
Muthoot Home Finance’s overall rise in stressed loans post the pandemic has been higher
than most peers operating in the affordable housing segment.
 Overall disbursements declined 75% yoy in FY2021 (down 73% yoy in 4QFY21).
Management guided that growth will gradually pick up pace from 2QFY22E onwards.
PAT was down 60% yoy.
 ECL coverage on the book declined 50 bps qoq to 1.5% (up 60 bps yoy). Coverage on
stage 1 and 2 loans declined sharply qoq to 33 bps from 148 bps in 3QY21 (down 2
bps yoy). These provisions are sufficient to absorb 1% increase in gross stage-3 loans
(excluding tax credit) assuming LGD of 30%. We expect asset quality remain under
pressure over the next few quarters due to lower collections, impact of second wave.
As such, credit cost is likely to remain high over the next few quarters.

 Elevated write-offs. Muthoot owns 70% in Belstar Investment Finance – a microfinance

business with loan book of Rs33 bn (up 25% yoy) as of FY2021. Gross stage-3 loans
increased 145 bps yoy to 2.4% reflecting impact of the pandemic. The company
continues to aggressively write-off loans. A back-of-the-envelope calculation suggests
that write-offs likely increased ~100-250 bps yoy to ~5-6% in FY2021. Overall ECL
coverage increased 160 bps yoy to 3% (up 60 bps qoq).
 AUM was up 25% yoy in FY2021. PAT was down 53% yoy in FY2021 due to higher
provisions. CAR declined 400 bps yoy to 22%.
 Asset quality weak for Muthoot Money as well; high write-offs in 4QFY21. Gross
stage-3 loans declined 365 bps qoq to 8.6% led by elevated write-offs and marginal
improvement in asset quality. The company likely wrote off >10% of its portfolio in
4QFY21 leading to sequential decline in stage-3 loans. Collections improved a bit to 97%
in March 2021 from 88% in 3QFY21; it however remains significantly lower compared to
peers.
 Overall ECL coverage declined 85 bps qoq to 4.7%.
Exhibit 11: Contribution of subsidiaries to overall AUM is ~10%

Key data points for top subsidiaries, March fiscal year-ends, 2018-21 (Rs mn)
Ind-AS Ind-AS Ind-AS Ind-AS

2018 2019 2020 2021 YoY (%)
Loan book (Rs mn)
Muthoot (parent) 291,420 342,461 416,106 526,223 26
Subsidiaries 25,970 37,494 46,079 50,041 9
Homefin 14,589 19,075 19,769 17,042 (14)
Belstar (MFI) 11,381 18,419 26,310 32,999 25
Subsidiaries to parent (%) 8.9 10.9 11.1 9.5 -156 bps
PBT (Rs mn)
Muthoot (parent) 28,447 30,768 40,416 50,066 24
Subsidiaries 737 1,541 1,758 739 (58)
Homefin 336 512 425 169 (60)
Belstar (MFI) 401 1,029 1,333 570 (57)
Net worth (Rs mn)
Muthoot (parent) 78,120 97,928 115,718 152,389 32
Subsidiaries 3,335 7,944 9,238 9,804 6
Homefin 2,079 3,942 4,260 4,387 3
Belstar (MFI) 1,256 4,002 4,978 5,417 9

Exhibit 12: High write-offs led to qoq decline in gross stage-3 loans for Muthoot Home Finance
Key data points for Muthoot Home Finance, March fiscal year-ends, 2019-21, 4QFY20-4QFY21 (Rs mn)
Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS
4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 YoY (%) 2019 2020 2021 YoY (%)
Key P&L items (Rs mn)
Revenue 475 588 571 508 742 56 2,257 2,876 2,409 (16)
Expense 469 582 500 483 675 44 1,746 2,452 2,240 (9)
PBT 6 5 71 25 68 1,033 511 424 169 (60)
PAT 12 4 53 18 51 325 363 318 126 (60)
Key balance sheet items (Rs mn)
Shareholder's funds 4,260 4,264 4,318 4,336 4,387 3 3,942 4,260 4,387 3
Liabilities 14,590 15,062 13,713 13,556 12,397 (15) 15,531 14,590 12,397 (15)
Net assets 18,850 19,326 18,031 17,892 16,784 (11) 19,472 18,850 16,784 (11)
Loan book 19,769 19,787 19,377 18,807 17,042 (14) 19,075 19,769 17,042 (14)
Disbursements 570 613 116 126 155 (73) 6,543 4,127 1,010 (76)
Key reported ratios (%)
Yield on advances 10.1 13.0 12.7 11.6 NA NA 12.2 11.8 12.5 74 bps
Interest spread 0.6 3.7 3.5 2.7 NA NA 3.4 2.3 3.4 112 bps
NIM 2.7 5.5 5.0 4.3 NA NA 5.4 4.4 5.1 73 bps
Cost to income 28.6 43.5 30.2 35.8 NA NA 26.1 36.1 42.2 610 bps
RoA 0.3 0.1 1.3 0.4 NA NA 2.2 1.7 0.8 -90 bps
RoE 1.1 0.4 5.0 1.7 NA NA 14.1 7.8 2.9 -483 bps
Asset quality details (%)
Gross stage 3 1.7 1.7 1.7 1.6 4.0 229 bps 0.7 1.7 4.0 229 bps
ECL coverage on stage 3 32.8 32.9 33.5 37.9 30.4 -244 bps 38.7 32.8 30.4 -244 bps
Overall ECL coverage 0.9 1.6 1.8 2.1 1.5 62 bps 0.2 0.9 2 62 bps
CAR 52.0 47.0 48.0 46.0 50.0 -200 bps 47.0 52.0 50.0 -200 bps
Other key metrics (#)
Sales offices 107 107 107 108 108 1 132 107 108 1
Employees 412 344 280 281 301 (27) 382 412 301 (27)
Customers 24,390 24,088 23,812 23,418 22,765 (7) 23,466 24,390 22,765 (7)
Notes:
(1) Gross stage 3 loans is 6.8% (without asset freeze) in 3QFY21.

Exhibit 13: AUM up 25% yoy

Key data points for Belstar Investment and Finance, March fiscal year-ends, 2019-21, 4QFY20-4QFY21 (Rs mn)
Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS
4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 YoY (%) 2019 2020 2021 YoY (%)
Revenue 1,327 1,171 1,320 1,454 1,587 20 3,681 5,007 5,532 10
Expense 1,021 983 1,124 1,398 1,457 43 2,650 3,675 4,962 35
PBT 306 188 196 56 130 (58) 1,031 1,332 570 (57)
PAT 221 145 151 54 117 (47) 729 990 467 (53)
Shareholder's funds 4,978 5,131 5,244 5,293 5,417 9 4,002 4,978 5,417 9
Liabilities 20,210 23,454 24,300 25,355 29,256 45 16,437 20,210 29,256 45
Net assets 25,188 28,585 29,544 30,648 34,673 38 20,439 25,188 34,673 38
Gross AUM 26,310 25,754 26,867 28,856 32,999 25 18,419 26,310 32,999 25
Gross stage 3 0.9 1.1 0.6 0.7 2.4 146 bps 1.2 0.9 2.4 146 bps
ECL coverage on stage 3 90.0 74.9 91.6 81.4 78.9 -1107 bps 82.1 90.0 78.9 -1107 bps
Overall ECL coverage 1.4 1.6 1.7 2.4 3.0 157 bps 1.4 1.4 3.0 157 bps
CAR 26 26 27 24 22 -400 bps 26 26 22 -400 bps
Other key metrics (#)
Branches 603 603 618 619 649 8 400 603 649 8
Employees 4,425 4,197 4,413 4,365 4,562 3 2,876 4,425 4,562 3
Exhibit 14: High write-offs drive qoq decline in gross stage-3 loans for Muthoot Money
Key data points for Muthoot Money, March fiscal year-ends, 2020-21, 4QFY20-4QFY21 (Rs mn)
Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS Ind-AS

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 YoY (%) 2020 2021
Revenue 211 198 185 159 538 155 697 1,080
Expense 212 193 138 178 478 125 656 987
PBT (1) 5 47 (20) 61 NM 41 93
PAT (16) (25) 73 (15) 52 NM 37 85
Shareholder's funds 1,062 1,037 1,110 1,095 1,099 3 1,062 1,099
Liabilities 4,323 4,161 3,701 3,402 2,789 (35) 4,323 2,789
Net assets 5,385 5,198 4,811 4,497 3,888 (28) 5,385 3,888
Loan book 5,090 4,966 4,633 4,210 3,668 (28) 5,090 3,668
Gross stage 3 4.9 3.6 5.1 9.2 8.6 367 bps 4.9 8.6
ECL coverage on stage 3 26 26 80 26 41 1498 bps 26 41
Overall ECL coverage 2.8 3.9 4.1 5.9 4.7 188 bps 2.8 4.7
Other key metrics (#) 143 192 190 247 172 143 172
Branches 24 18 18 18 14 (42) 24 14
Employees 304 245 234 225 188 (38) 304 188
NIM compression in the horizon; lower funding cost to provide cushion
 NIM compression over medium term. We expect Muthoot’s NIM (calculated) to

moderate over the medium term to 13.8% by FY2024E from 14.1% in FY2021E. Lower
cost of incremental borrowings led by rating upgrade will drive gradual decline in funding
cost. The company might however pass on some of the benefit of lower funding cost to
its customers to drive growth in the gold loan business. As such, we expect sharp yield
compression to offset impact favorable funding cost over the next few years, thereby
driving NIM compression.
 Additionally, the yields of the company are significantly higher than loan-term average
and we expect it to decline going ahead.

 While Muthoot faced challenges on incremental funding during April and May 2020,
overall liquidity situation has improved aided by higher availability of bank lines,
liquidity through various schemes announce by GOI/RBI and ease of funding avenues
on debt funding side.
 The company however continues to maintain higher liquidity on balance sheet of

~Rs7-8 bn, significantly higher than Rs3-5 bn earlier. The management guided that it
will prefer to maintain elevated liquidity buffers to deliver stable growth over the
medium term and sway through unforeseen liquidity tightening.
Exhibit 15: We forecast NIM compression over medium term post peaking in FY2021
Yield on loans, cost of funds and NIMs, March fiscal year-ends, 2007-24E (%)
Yields on AUM (LHS) Cost of funds (LHS) NIM (RHS)

25 18
21.7 22.3 21.9 22.0 21.3 22.6 21.9
21.1 20.4 21.1 20.7 20.5
19.9 19.5 19.9 19.7 20.1
20 18.8 15.1 15.2 16
14.3 14.1 14.0 13.9 13.8
15 13.0 14
10 11.0 11.2 12
10.6 10.9 10.8 10.7
9.7 10.0
9.5 9.5
5 10
9.1 10.9 12.2 11.2 12.0 17.0 14.3 11.9 10.7 11.8 11.5 9.1 9.3 8.7 8.9 8.5 8.5 8.5
0 8
2023E
2024E
2022E
2009
2012
2015
2017
2018
2020
2021
2007
2008
2010
2011
2013
2014
2016
2019
Notes:

Exhibit 16: Average monthly disbursements slowed down Exhibit 17: Average monthly collections moderated in 4QFY21
sequentially in 4QFY21 Average monthly collections, March fiscal year-ends, 2015-21,
Average monthly disbursements, March fiscal year-ends, 2015-21, 1QFY20-4QFY21 (Rs bn)
1QFY20-4QFY21 (Rs bn)
Average monthly collections (Rs bn)
Average monthly disbursements (Rs bn) 150
175
120
140
90
105 148
60
167
70 95 90
75 82 87
30 60 69 70 70
104 102 54 58
81 91 98 41 42 45
35 69 77
55 61 65 68
43 43 48 0
2015
2018
2019
2020
2021
2016
2017
1QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
2QFY20
3QFY20
0
2016
2017
2018
2020
2021
2015
2019
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21

Exhibit 18: Share of bank loans at 43%

Borrowings mix, March fiscal year-ends, 2014-21 (%)
Gold bonds Listed NCDs (secured) Bank loans Subordinated debt CP ECB Others
- 3 3 2 2
4 4 3
100 2 - 2
13 13 15 13 18 16
11 20
80 8
9 5 2
30 10
37 0
60 41 1
44 53 49 43
13 39
40 16
19
20 42 18
31 21 28 26 29
22
12
- 4 2 1 1
2014
2015
2016
2017
2018
2019
2020
2021
Notes:
(1) Numbers from 1QFY18 onwards are based on Ind-AS.
Forecasting credit cost remains challenging
 Credit cost to remain muted at 50 bps. We expect credit cost for Muthoot to remain
low at ~25-30 bps. Given the nature of collateral and high margin of safety (~35% as on
date), overall credit losses are negligible unless gold prices correct sharply. Correction in
gold prices from peak levels led to drop in margin of safety to ~25% in March 2021,
45% in June 2021.

We however bake in marginally higher credit cost at 25-30 bps (20 bps in FY2021)
over FY2022-24E to reflect (1) marginal rise in stage-2 loans and (2) likely increase in
delinquencies to 90+ dpd post the second wave.
 Timing to auction key determinant to NPLs. Muthoot follows a strategy of providing

additional time to their customer to repay their loans rather than an aggressive auctioning
policy. Overall auctions declined to Rs1,700 mn in FY2021 (this compared with >Rs4 bn
write-offs for Manappuram in 4QFY21) from Rs5,000 mn in FY2020 and Rs10,000 mn in
FY2019.
Exhibit 19: ECL coverage remains broadly stable

Asset quality forecast, March fiscal year-ends, 2019-24E (Rs mn)
2019 2020 2021 2022E 2023E 2024E

AUM break-up (Rs mn)
Stage-3 9,326 8,992 4,641 6,238 8,590 9,906
Stage-1 and 2 333,135 407,114 521,582 617,605 707,250 815,557
Gross AUM 342,461 416,106 526,223 623,843 715,840 825,463
AUM mix (%)
Gross stage 3 2.7 2.2 0.9 1.0 1.2 1.2
Gross stage 1 and 2 97.3 97.8 99.1 99.0 98.8 98.8
ECL provisions (Rs mn)
Stage-3 1,295 950 550 749 1,031 1,189
Stage-1 and 2 5,064 4,477 5,707 6,794 7,426 8,971
Total ECL provisions 6,359 5,427 6,257 7,542 8,457 10,160
ECL coverage ratio (%)
Stage-3 13.9 10.6 11.9 12.0 12.0 12.0
Stage-1 and 2 1.5 1.1 1.1 1.1 1.1 1.1
ECL coverage 1.9 1.3 1.2 1.2 1.2 1.2
Credit cost break-up (% of average AUM)
Overall credit cost 0.1 0.3 0.2 0.3 0.2 0.3
Write-offs 0.1 0.2 0.1 0.1 0.1 0.1
Provision for loans 0.0 0.1 0.1 0.2 0.1 0.2
Notes:
(1) ECL mix between stage-1 and 2 and stage-3 loans for FY2021 is KIE estimate.
Exhibit 20: GNPLs remain volatile due to timing difference in auctions

GNPL/gross stage 3 for Muthoot Finance, March fiscal year-ends, 2010-24E
GNPL/gross stage 3 (%)

5
4.4
2.9
3 2.7
2.2 2.1 2.2
2.0 1.9
2
1.2 1.2
0.9 1.0
1 0.6
0.5
0.3
0
2018
2019
2020
2021
2010
2011
2012
2013
2014
2015
2016
2017
2022E
2023E
2024E

Exhibit 21: Credit cost to remain muted

Credit cost for Muthoot Finance, March fiscal year-ends, 2007-24E
Credit cost (% of AUM)

1.5
1.2 1.1
0.8
0.9
0.7
0.6
0.3 0.3 0.3
0.3 0.3 0.2
0.3 0.2 0.2 0.2 0.2
0.1 0.1
0.0 0.0 0.0
0.0
2011
2012
2013
2018
2019
2020
2007
2008
2009
2010
2014
2015
2016
2017
2021
2022E
2023E
2024E
Exhibit 22: Margin of safety declined in FY2021 due to sharp decline in gold prices in 4QFY21
Margin of safety on loans, March fiscal year-ends, 2015-21 (%)
2015 2016 2017 2018 2019 2020 2021

Gold loans assets (Rs bn) 233 243 272 288 336 407 519
Gold volume (tonnes) 131 142 149 155 169 176 171
Gold price per gram (Rs) 2,470 2,670 2,725 2,824 2,910 3,955 4,048
Lender's perspective
Market price of gold held as ornaments (Rs bn) 324 379 406 438 492 696 692
Margin of safety on loans (%) 28 36 33 34 32 42 25
Cost ratios to inch up from trough levels

While Muthoot will focus on reducing discretionary spends, it will continue to invest in (1)
business expansion of the gold loan franchise, (2) advertising and business promotion and
(3) digital initiatives. We expect cost-to-income ratio to inch up to 28% in FY2024E from
26% in FY2021 but remain lower than pre-Covid levels of 30-33% over FY2019-20.
Exhibit 23: Branch productivity has increased

Business per branch, March fiscal year-ends, 2015-21 (Rs mn)
2015 2016 2017 2018 2019 2020 2021

East 66 80 74 90 102 117 146
West 59 65 76 85 96 108 135
North 76 78 86 91 103 123 147
South 48 48 53 54 61 74 95
Overall business 55 57 64 68 76 91 114
Notes:

Exhibit 24: Cost ratios to pick up from trough levels

Cost ratios, March fiscal year-ends, 2007-24E
Cost-to-income (LHS) Cost-to-average AUM (RHS)

(%) (%)
55 7.5
5.8 5.8
44 5.1 6.0
5.0 4.9 4.8 4.8 4.7 4.9 4.7
4.5
4.2 4.2
33 3.8 3.8 3.6 3.7 3.9 4.5
22 3.0
11 1.5
49.4 48.3 52.1 43.4 38.2 38.0 37.6 46.7 52.0 43.5 36.2 29.9 33.2 30.0 25.9 25.3 26.6 28.0
0 0.0
2008
2010
2013
2015
2017
2019
2007
2009
2011
2012
2014
2016
2018
2020
2021
2022E
2024E
2023E
Notes:
Exhibit 25: Share of rental expenses declined in FY2021

Operating expenses mix, March fiscal year-ends, 2007-21 (%)
Employee expense Depreciation Rent Advertising Business promotion Ohers
100
20 16 18 17 17 18 16 16 17 20
29 26 23
33 31 3 1 1 2 3
80 3 6 5 2
4 5 4 2
2 3 6 6 7 7 7
2 10
2 2 13 14 14 15 14 15 13
2 7 12 14 12 12
60 6 13 12 5 5 4 3 3 2
7 9 4 7 3
11 12
8 4
11 8 6 4
6
40
57 55 55 56 58 59 58 58 57
44 44 45 50
20 41 41
-
2007
2008
2009
2013
2014
2019
2020
2010
2011
2012
2015
2016
2017
2018
2021
Notes:

Exhibit 26: Continued investment in business expansion Exhibit 27: Marginal increase in per employee cost going ahead
Branch and branch productivity for Muthoot Finance, March fiscal Employee count and per employee cost for Muthoot Finance, March
year-ends, 2007-24E fiscal year-ends, 2007-24E
Branches (LHS) AUM per branch (RHS) Employees (LHS) Per employee cost (RHS)
(#) (Rs bn) (#) (Rs mn)
5,000 0.20 37,500 1.00
4,000 0.16 30,000 0.80
3,000 0.12 22,500 0.60
15,000 0.40
2,000 0.08
7,500 0.20
1,000 0.04
0 0.00
- 0.00
2007
2009
2010
2012
2014
2015
2017
2019
2020
2008
2011
2013
2016
2018
2021
2022E
2024E
2023E
2023E
2024E
2022E
2007
2008
2010
2011
2013
2015
2016
2018
2019
2020
2021
2009
2012
2014
2017

Exhibit 28: Muthoot Finance – old and new estimates

March fiscal year-ends, 2022-24E (Rs mn)
New estimates Old estimates New vs old (%)
2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E
AUM (Rs mn) 623,843 715,840 825,463 602,224 695,181 800,221 3.6 3.0 3.2
AUM yoy (%) 18.6 14.7 15.3 14.4 15.4 15.1 410 bps -69 bps 20 bps
NIM (%) 14.0 13.9 13.8 14.1 13.9 13.7 -10 bps 8 bps 9 bps
Interest income 121,473 138,668 157,995 120,018 134,334 153,314 1.2 3.2 3.1
Interest expenses 40,700 45,279 51,463 40,207 44,388 50,642 1.2 2.0 1.6
Net Interest income 80,772 93,389 106,532 79,811 89,946 102,671 1.2 3.8 3.8
Provisions 1,785 1,615 2,403 2,364 3,186 3,924 (24.5) (49.3) (38.8)
Operating expenses 20,674 25,036 30,013 21,981 27,175 32,022 (5.9) (7.9) (6.3)
Profit before tax 59,364 67,490 74,875 56,856 60,692 67,856 4.4 11.2 10.3
Tax 15,197 17,277 19,168 14,555 15,537 17,371 4.4 11.2 10.3
Profit after tax 44,167 50,213 55,707 42,301 45,155 50,485 4.4 11.2 10.3
Core PBT 60,703 68,452 76,619 58,436 62,871 70,750 3.9 8.9 8.3
EPS (Rs) 110.1 125.2 138.9 105.5 112.6 125.9 4.4 11.2 10.3
BVPS (Rs) 464.2 560.0 666.4 440.2 526.4 622.8 5.5 6.4 7.0
Cost-to-income (%) 25.3 26.6 28.0 27.1 29.8 30.8 -180 bps -325 bps -288 bps
Cost-to-average AUM 3.6 3.7 3.9 3.9 4.2 4.3 -30 bps -45 bps -39 bps
Credit cost (%) 0.3 0.2 0.3 0.4 0.5 0.5 -11 bps -25 bps -21 bps
ROA (%) 6.6 6.7 6.4 6.6 6.2 6.0 4 bps 43 bps 38 bps
ROE (%) 26.1 24.4 22.6 26.4 23.3 21.9 -30 bps 114 bps 74 bps
Source: Kotak Institutional Equities estimates

Exhibit 29: Muthoot is trading at 2.9X one-year forward book

One-year forward trading PER and PBR, March fiscal year-ends, June 2011-June 2021 (X)
Rolling PER (LHS) Rolling PBR (RHS)
20 4.0
16 3.3
12 2.6
8 1.9
4 1.2
0 0.5
Dec-14
Dec-18
Dec-11
Dec-12
Dec-13
Dec-15
Dec-16
Dec-17
Dec-19
Dec-20
Jun-11
Jun-12
Jun-15
Jun-16
Jun-17
Jun-19
Jun-20
Jun-21
Jun-13
Jun-14
Jun-18
Notes:
(1) FY2018-FY2022E numbers are based on Ind-AS.

Exhibit 30: Muthoot Finance – key financial ratios and growth rates
March fiscal year-ends, 2018-24E (%)
2018 2019 2020 2021 2022E 2023E 2024E
Growth in key parameters (%)
Profit and loss statement - yoy (%)
Operating income NA 10 27 21 16 14 14
Interest income NA 9 27 21 18 14 14
Net interest income NA 6 28 15 22 16 14
Total income NA 5 28 16 19 15 14
Operating expense NA 17 16 0 16 21 20
Employee expense NA 15 15 (2) 14 19 18
PPOP NA 1 34 23 20 13 12
PBT NA 8 32 23 19 14 11
PAT NA 11 53 23 19 14 11
Core PBT NA (1) 34 21 23 13 12
Balance sheet - yoy (%)
Cash and bank balances NA 256 225 27 (25) 15 15
Loans NA 18 22 27 15 15 15
Investment NA 148 46 11 15 15 15
Net assets NA 24 33 26 11 15 15
Borrowings NA 27 38 24 9 13 14
Total liabilities NA 23 38 24 7 13 14
Shareholders' funds NA 25 18 32 22 21 19
Key ratios (%)
Yield on loans 22.0 21.3 22.6 21.9 21.1 20.7 20.5
Cost of borrowings 9.1 9.3 8.7 8.9 8.5 8.5 8.5
NIM 15.1 14.3 15.2 14.1 14.0 13.9 13.8
Cost-to-income 29.9 33.2 30.0 25.9 25.3 26.6 28.0
Cost-to-average AUM 4.7 4.9 4.7 3.8 3.6 3.7 3.9
Credit cost (% of AUM) 0.8 0.1 0.3 0.2 0.3 0.2 0.3
ROE tree (% of average assets and off-balance sheet assets)
Net interest income 13.9 13.1 13.0 11.6 12.1 12.4 12.3
Total income 14.3 13.5 13.4 12.1 12.2 12.5 12.4
Operating expenses 4.3 4.5 4.0 3.1 3.1 3.3 3.5
Provisions 0.8 0.1 0.2 0.2 0.3 0.2 0.3
(1-tax rate) 0.6 0.6 0.7 0.7 0.7 0.7 0.7
ROA 5.8 5.7 6.8 6.5 6.6 6.7 6.4
Average assets and off-balance sheet assets/average equity 4.3 3.9 4.1 4.2 4.0 3.7 3.5
ROE 24.8 22.4 28.3 27.8 26.1 24.4 22.6

Exhibit 31: Muthoot Finance – income statement and balance sheet

March fiscal year-ends, 2018-24E (Rs mn)
2018 2019 2020E 2021E 2022E 2023E 2024E
Operating income 62,670 68,788 87,154 105,577 122,474 139,385 158,719
Interest income 62,021 67,570 85,644 103,285 121,473 138,668 157,995
Net gain on fair value change 101 481 696 1,595 300 500 500
Other operational income 548 737 814 697 701.48 217.55 223.93
Interest expense 19,314 22,368 27,909 36,924 40,700 45,279 51,463
Net interest income 42,707 45,202 57,735 66,361 80,772 93,389 106,532
Net operational income 43,356 46,419 59,244 68,653 81,774 94,106 107,256
Other income 662 19 74 166 50 35 35
Total income 44,017 46,438 59,319 68,819 81,824 94,141 107,291
Employee expense 7,824 8,976 10,290 10,063 11,461 13,586 16,071
Other expenses 36,194 37,462 49,029 58,757 70,363 80,555 91,220
PPOP 30,843 31,044 41,531 51,015 61,150 69,105 77,278
Provisions 2,397 275 957 950 1,785 1,615 2,403
PBT 28,447 30,768 40,574 50,065 59,364 67,490 74,875
Tax 10,671 11,047 10,391 12,843 15,197 17,277 19,168
PAT 17,776 19,721 30,183 37,222 44,167 50,213 55,707
Core PBT 30,495 30,334 40,622 49,293 60,703 68,452 76,619
Cash and cash equivalents 4,552 17,135 55,046 71,167 53,375 61,382 70,589
Bank balance other than above 318 220 1,360 731 804 885 973
Loans 295,068 349,329 426,042 540,634 623,843 715,840 825,463
Investment 3,954 9,826 14,383 15,903 18,288 21,031 24,186
Property plant and equipment 1,922 1,867 2,227 2,416 2,756 2,789 2,815
Other intangible assets 140 287 338 438 300 300 300
Other assets 1,968 2,023 5,201 3,360 3,604 4,306 5,148
Net assets 307,923 380,687 504,597 634,649 702,971 806,532 929,474
Borrowings 212,680 269,223 372,264 460,196 499,649 564,746 645,013
Provisions 2,239 2,106 3,633 3,626 2,500 2,500 2,501
Other liabilities 14,883 11,431 12,981 18,438 14,601 14,601 14,602
Total liabilities 229,802 282,760 388,878 482,260 516,750 581,846 662,115
Equity share capital 4,000 4,007 4,010 4,012 4,012 4,012 4,012
Reserves and surplus 74,120 93,921 111,708 148,377 182,210 220,674 263,346
Total shareholder funds 78,120 97,927 115,718 152,389 186,222 224,686 267,358
Loans under management 291,420 342,461 416,106 526,223 623,843 715,840 825,463

BUY
PVR (PVRL)
https://ultraviewer.et/en/own Media JUNE 03, 2021
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RESULT
Sector view: Cautious
Well-capitalized to sail through uncertainty. PVR demonstrated good cost CMP (`): 1,321
management in 4Q while operating with capacity restrictions and limited content Fair Value (`): 1,650
supply. The company is well-capitalized to navigate through an uncertain 1HFY22
BSE-30: 51,849
thanks to a recent fund raise through a QIP. We expect PVR to emerge stronger relative
to peers and a permanent downward reset in cost structure would boost profitability
(post-Covid) once occupancy normalizes. We cut FY2022-23 EPS estimates to factor in
the second wave of Covid and equity dilution. We roll-over and revise FV to Rs1,525,
valuing PVR at 11.25X 2-year forward EV/EBITDA (Rs1,650 earlier). BUY.
PVR
CMP(Rs)/FV(Rs)/Rating 1,321/1,525/BUY EPS (Rs) (109.5) (32.5) 45.3
52-week range (Rs) (high-low) 1,592-923 EPS growth (%) (478.2) 70.3 239.3
Mcap (bn) (Rs/US$) 81/1.1 P/E (X) (12.1) (40.6) 29.2
ADTV-3M (mn) (Rs/US$) 1,867/26 P/B (X) 2.9 3.1 2.9
Shareholding pattern (%) EV/EBITDA (X) (18.1) 127.2 10.7
Promoters 17.1 RoE (%) (26.7) (7.5) 10.3
FPIs/MFs/BFIs 46.1/16.3/3.4 Div. yield (%) (0.8) (0.2) 0.3
Absolute 16.2 (5.0) 38.5 EBITDA (Rs bn) (5) 1 8
Rel. to BSE-30 9.4 (7.8) (9.7) Net profits (Rs bn) (7) (2) 3
4QFY21— Cash burn contained well in view of capacity restrictions and limited supply
PVR’s 4QFY21 results have limited relevance given complete shutdown of operations following
the onset of the second wave. Key highlights from 4Q results— (1) EBITDA loss adjusted for
Ind-AS 116 lease accounting stood at Rs1.3 bn in 4Q, marginally better than our estimate. PVR
managed costs well and contained cash burn as cinemas operated with capacity restrictions and
limited content supply, (2) QIP of Rs8 bn in 4Q strengthened balance sheet. Gross debt as at
Mar-21 stood at Rs13.5 bn (down Rs1.5 bn qoq) and cash and cash equivalents stood at Rs7.3
bn (up Rs3.6 bn qoq). PVR is adequately capitalized to sail through the second wave of Covid.
The management indicated that negotiations with real estate developers for rent and CAM
waivers/concessions are underway and it expects significant relief.
FY2021— (1) EBITDA loss was Rs4.6 bn and cash burn post net interest cost was Rs5.7 bn, (2)
net debt reduced to Rs6.1 bn from Rs9.7 bn, (3) PVR raised Rs11 bn (Rs3 bn rights and Rs8 bn
QIP) through aggregate issuance of 9.3 mn shares taking total share count to 60.7 mn.
We expect PVR to emerge stronger post Covid

We expect PVR to emerge stronger on three counts: (1) permanent downward reset in cost
structure— PVR expects its employee and other fixed costs to settle 10-15% below pre-Covid
levels. This, in our view, could boost EBITDA margin by 100-150 bps once occupancy recovers
to normative levels (35-36%), (2) capex intensity and competitive intensity (especially in new
lease signings) can potentially moderate, (3) single screen closures could accelerate. We believe
that PVR could emerge stronger relative to most other cinema operators and is well placed to
capitalize on likely pent-up demand once the second wave subsides, vaccination picks up and
cinemas resume operations. It remains to be seen if PVR steps up focus on valuation accretive
new growth engine— recently PVR on boarded on Zomato to cater to food delivery market. Jaykumar Doshi
PVR has scale (presence across 175 locations) and capabilities to cater to F&B delivery market
and ramp up its overall F&B sales, improving profitability, return ratios and valuations.
We cut estimates to factor in Covid 2.0 and revise FV to Rs1,500 (Rs1,650)

We cut FY2022-23 estimates to factor in ongoing lockdown restrictions. We roll-over and revise
FV to Rs1,525 (Rs1,650 earlier), valuing PVR at 11.25X 2-year forward EV/EBITDA.
Contact: +91 22 6218 6427
Media PVR
Exhibit 1: Interim results of PVR Limited (PVRL), March fiscal year-ends (Rs mn)
% chg.
4QFY21 4QFY21 4QFY20 3QFY21 KIE yoy qoq FY2021 FY2020 % chg.
Total revenues 1,795 1,295 6,433 365 2,704 34,170 (92)
Ticket sales 879 715 3,300 134 1,019 17,312 (94)
F&B sales 565 475 1,746 140 756 9,605 (92)
Advertising 136 25 685 42 178 3,759 (95)
Convenience fees — 30 382 10 — 1,719 (100)
Other operating revenues 216 50 320 39 752 1,776 (58)
Total expenditure (3,091) (2,787) (6,023) (1,626) 11 (49) 90 (7,345) (28,371) (74)
Film hire costs (407) (308) (1,436) (62) (472) (7,335) (94)
F&B consumption (176) (157) (512) (57) (258) (2,637) (90)
Employee expenses (596) (600) (740) (486) (1) (19) 23 (2,171) (3,938) (45)
Rent (709) (798) (1,388) (392) (1,199) (5,763) (79)
Other expenses (1,911) (1,723) (3,336) (1,021) 11 (43) 87 (3,246) (8,699) (63)
EBITDA (1,296) (1,491) 410 (1,260) (13) (416) 3 (4,641) 5,799 (180)
EBITDA Margin (%) 6.4 (171.6) 17.0
Other income 114 135 185 173 (16) (38) (34) 401 352 14
Finance costs (384) (400) (325) (402) (4) 18 (5) (1,490) (1,521) (2)
Depreciation (612) (590) (614) (585) 4 (0) 5 (2,383) (2,324) 3
Pretax profits (2,178) (2,346) (344) (2,075) (7) 533 5 (8,113) 2,305 (452)
Taxes (538) 774 149 707 1,463 (978) (250)
Net profit before minorities (2,717) (1,572) (196) (1,367) (6,651) 1,327 (601)
Minority interest 1 1 (0) 1 4 1
Exceptional items — — (283) — — —
Net profit (2,716) (1,571) (478) (1,366) 73 468 99 (6,646) 1,328 (600)
Recurring net profit (2,716) (1,571) (196) (1,366)
Recurring EPS (Rs/share) (53.0) (30.7) (9.3) (26.7) 73 468 99 (113.9) 24.2 (571)
Key operational metrics

Screens (#) 842 831 845 831 842 845 (0)
Footfalls (mn) 5.8 5.0 19.5 1.0 6.8 101.7 (93)
Average ticket price (ATP) (Rs) 183 170 204 164 180 204 (12)
F&B spends per head (SPH) (Rs) 95 95 96 95 96 99 (3)
Ad rev/screen (annualized) (Rs mn) 0.7 0.1 3.3 0.2 0.2 4.4 (95)
Film hire costs as % of ticket sales — — 43.5 46.3 42.4 9
F&B COGS as % F&B sales 29.3 34.1 27.5 24
Occupancy (%) 7.4 6.4 30.6 1.5 2.8 34.9 (92)
Notes:
(a) Above financials are as per Indian GAAP (adjusted for Ind AS 116).

PVR Media
Exhibit 2: Revised earnings estimates of PVR, FY2022-23E (Rs mn)
Revised Previous Change (%)

2022E 2023E 2022E 2023E 2021E 2022E 2023E
Ticket sales (net) 8,896 21,139 19,201 23,227 (26.1) (53.7) (9.0)
F&B sales 5,138 12,208 10,609 12,834 (9.5) (51.6) (4.9)
Ad revenues 1,833 4,308 3,948 4,579 (40.3) (53.6) (5.9)
Convenience fees 1,006 1,915 1,800 2,073 (100.0) (44.1) (7.7)
Other operating income 957 1,700 1,372 1,740 80.7 (30.2) (2.3)
Total revenues 17,831 41,270 36,930 44,452 (12.8) (51.7) (7.2)
Film hire charges (3,825) (9,142) (8,257) (10,034) (20.3) (53.7) (8.9)
F&B consumption (1,464) (3,357) (2,891) (3,497) 6.4 (49.3) (4.0)
Employee costs (2,975) (4,524) (4,029) (4,760) (6.5) (26.2) (5.0)
Rent (3,959) (6,912) (6,538) (7,508) (8.2) (39.4) (7.9)
Other operating costs (4,915) (9,309) (8,067) (9,644) 18.8 (39.1) (3.5)
Total operating costs (17,139) (33,245) (29,782) (35,443) 2.1 (42.5) (6.2)
EBITDA 692 8,025 7,148 9,010 13.4 (90.3) (10.9)
PAT (1,976) 2,752 2,184 3,336 30.0 (190.5) (17.5)
EPS (Rs/share) (32.5) 45.3 39.6 60.5 20.7 (182.2) (25.1)
Key assumptions
EBITDA margin (%) 3.9 19.4 19.4 20.3
Screen additions (#) 70 80 80 90 (80.0) (12.5) (11.1)
Footfalls (mn) 52 120 108 125 (22.4) (51.6) (4.0)
ATP gross (Rs) 200 208 209 220 (2.7) (4.3) (5.2)
SPH gross (Rs) 103 107 103 108 (4.0) — (1.0)
Ad revenue growth (%) 930 135 1,224 16
Occupancy (%) 16.0 34.4 33.0 35.5
F&B revenue growth (%) 580.1 137.6 1,170.4 21.0
F&B gross margin (%) 71.5 72.5 72.8 72.8
F&B gross profit (Rs mn) 3,674 8,851 7,718 9,336 (16.0) (52.4) (5.2)

Media PVR
Exhibit 3: Bollywood movie pipeline

PVR Media
Exhibit 6: Hollywood movie pipeline

Media PVR
Exhibit 7: Regional movie pipeline
Exhibit 8: Regional movie pipeline

PVR Media
Exhibit 9: Condensed consolidated financials for PVR, March fiscal year-ends (Rs mn), 2016-23E
2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Profit model
Revenues 13,475 14,813 18,688 21,628 23,478 30,947 34,170 2,704 17,831 41,270 47,333
Ticket sales (net) 7,947 8,240 10,138 11,256 12,471 16,354 17,312 1,019 8,896 21,139 24,298
F&B sales 3,215 3,732 4,967 5,794 6,250 8,584 9,605 756 5,138 12,208 14,033
Ad revenues 1,511 1,771 2,145 2,518 2,969 3,535 3,759 178 1,833 4,308 4,847
Other operating income 803 1,071 1,437 2,060 1,788 2,474 3,495 752 1,963 3,615 4,155
EBITDA 2,117 2,044 3,306 3,570 4,155 5,955 5,799 (4,641) 692 8,025 9,228
Other income 113 46 283 189 177 240 352 401 425 275 275
Depreciation 944 1,168 1,252 1,384 1,537 1,913 2,324 2,383 2,528 2,946 3,364
Interest expense 795 783 839 806 837 1,280 1,521 1,490 1,412 1,120 1,030
Pretax profits 523 118 1,432 1,528 1,952 3,002 2,305 (8,113) (2,823) 4,234 5,109
Tax 19 8 232 570 704 1,096 978 (1,463) (847) 1,482 1,788
PAT before minority interest 504 110 1,200 958 1,247 1,906 1,327 (6,651) (1,976) 2,752 3,321
Minority interest (57) (11) 5 1 0 — 1 4 — — —
PAT 561 121 1,194 958 1,247 1,906 1,326 (6,655) (1,976) 2,752 3,321
Diluted earnings per share (Rs) 13.7 2.9 25.6 20.5 26.7 40.8 24.2 (113.9) (32.5) 45.3 54.7
Balance sheet
Total equity 3,993 4,092 8,695 9,650 10,754 12,395 22,482 27,302 25,563 27,984 30,906
Deferred taxation liability 4 11 93 9 6 955 14 7 7 7 7
Total borrowings 6,134 7,470 6,623 8,196 8,305 12,824 12,947 11,013 12,947 11,947 10,947
Minority interest 771 383 401 405 8 2,566 3 0 0 0 0
Current liabilities 2,600 2,309 3,276 3,925 4,316 7,896 7,069 7,675 7,669 10,055 10,807
Total liabilities and equity 13,533 14,288 19,108 22,257 23,488 39,090 44,257 47,482 46,722 50,529 53,202
Cash and cash equivalents 495 261 2,674 309 339 352 3,246 7,323 5,255 6,090 6,516
Other current assets 3,763 4,605 5,763 5,363 5,880 5,861 6,834 5,308 7,279 8,937 9,749
Tangible fixed assets 6,990 7,523 8,824 10,447 11,270 14,900 16,358 14,904 15,268 16,615 18,082
Goodwill and Intangibles 1,466 1,273 1,262 4,640 4,629 13,108 12,455 12,294 12,216 12,184 12,152
CWIP 806 611 570 1,056 1,017 2,208 1,547 2,172 2,172 2,172 2,172
Total assets 13,533 14,288 19,108 22,257 23,488 39,090 44,257 47,482 46,722 50,529 53,202
Free cash flow
Operating cash flow, excl. working capital 2,003 2,170 3,169 3,442 3,880 5,312 10,518 (3,323) 1,539 6,543 7,440
Working capital changes 128 (617) 204 (246) 582 2,984 (2,647) (803) (1,978) 729 (61)
Interest expense (net) (667) (759) 837 (617) (660) (1,041) (1,169) (1,090) (987) (845) (755)
Capital expenditure (1,802) (1,940) (2,528) (3,024) (3,287) (4,362) (3,851) (1,167) (2,814) (4,261) (4,798)
Free cash flow (337) (1,146) 1,683 (445) 516 2,894 2,851 (6,384) (4,240) 2,166 1,825
Key ratios and assumptions
Footfalls (mn) 59.9 59.1 69.6 75.2 76.1 99.3 101.7 6.8 52.4 119.7 131.0
Average Ticket Price (ATP) (Rs) 168 177 188 196 210 207 204 180 200 208 218
F&B spends per head (SPH) (Rs) 54 66 72 81 89 91 99 96 103 107 112
Ad revenue growth (%) 75.9 17.2 21.1 17.3 17.9 19.1 6.3 (95.3) 929.9 135.0 12.5
Screens (#) 421 464 516 579 625 763 845 842 912 992 1,082
EBITDA margin (%) 15.7 13.8 17.7 16.5 17.7 19.2 17.0 (171.6) 3.9 19.4 19.5
Net debt/equity (X) 1.4 1.8 0.5 0.8 0.7 1.0 0.4 0.1 0.3 0.2 0.1
RoAE (%) 10.8 3.0 18.7 10.4 12.2 16.5 7.6 (26.7) (7.5) 10.3 11.3
RoACE (%) 10.3 7.8 14.4 9.1 9.2 11.8 7.0 (18.2) (4.0) 9.8 11.0
Notes:
(1) FY2020-24E estimates above are underlying financials without adoption of Ind-AS 116.
(2) Adoption of Ind-AS 116 would result in about 60% increase our EBITDA estimate and about 25-30% decrease in net profit.

ADD
Narayana Hrudayalaya (NARH)
https://ultraviewer.et/en/own Health Care Services JUNE 02, 2021
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RESULT, CHANGE IN RECO.
Sector view: Attractive
Impressive recovery in mature cluster. NARH’s 4QFY21 revenues grew 13% yoy, 5% CMP (`): 505
ahead of our estimates with the India business growing 10% yoy. Strong revenue Fair Value (`): 540
recovery led to EBITDA exceeding our estimates by 17%. With gradual recovery in
BSE-30: 51,849
flagship units and continued strong performance at Cayman, NARH is well-positioned
to deliver robust EBITDA growth over FY2022-23. Prioritizing capital allocation to
Cayman over India remains a dampener. After the recent run-up, we see limited upside
and downgrade the stock by a notch to ADD with Fair Value of Rs540.
Narayana Hrudayalaya
CMP(Rs)/FV(Rs)/Rating 505/540/BUY EPS (Rs) (3.0) 9.7 12.6
52-week range (Rs) (high-low) 567-251 EPS growth (%) (151.6) 421.4 31.0
Mcap (bn) (Rs/US$) 104/1.5 P/E (X) (168.0) 52.3 39.9
ADTV-3M (mn) (Rs/US$) 206/3 P/B (X) 9.6 8.1 6.7
Promoters 63.9 RoE (%) (5.6) 16.8 18.4
Rel. to BSE-30 16.7 13.7 11.4 Net profits (Rs bn) (1) 2 3
Strong recovery in India business
NARH posted 4QFY21 revenue growth of 13% yoy, 5% ahead of our estimates with India
hospitals driving the outperformance. Flagship units recovered well driven by easing travel
restrictions while performance at Tier-2 units also remained strong driving 10% yoy growth in
the India segment (+6% vs KIE). The Cayman unit sustained its strong performance recording
22% yoy growth (in c/c) benefitting from increased footfalls of local patients, increased focus
on outpatient segment and recalibration of prices. Gross margins increased 180 bps qoq (+130
bps qoq) led by robust recovery in cardiac surgeries. Employees and SG&A expenses remained
under control growing 1% and 6% yoy. Strong revenue growth and higher gross margins led
to EBITDA exceeding pre-Covid levels and was 17% ahead of our estimates. Consolidated
EBITDA margins at 16.9% expanded 290 bps qoq. NARH’s cash flow generation continues to
impress with net debt declining by Rs600 mn qoq to Rs3.7 bn.
Second wave to delay near-term recovery; focus on Cayman to impact long-term India growth
NARH impressed with its resilient operating performance in a challenging year while efficient
cash management led to further reduction in net debt. Notwithstanding near-term headwinds
driven by the second wave, we expect recovery in footfalls across flagship units to continue with
capacity debottlenecking and case mix improvement aiding growth over next two years. NARH’s
Tier-2 units have benefitted from travel restrictions and we expect performance across these
cities to sustain while Cayman will also continue its strong operating performance in FY2022.
While outlook on the India business remains promising over the medium term, the
management’s decision to prioritize expansion in Cayman (US$100 mn capex for additional Kumar Gaurav
unit) over India could impact long-term growth in India. Unlike other large hospital chains,
NARH has also decided not to profit from vaccine administration across its hospitals.
Samitinjoy Basak
Downgrade a notch to ADD with Fair Value of Rs540
We increase our FY2022-23E EBITDA estimates by 4% each to bake in a faster recovery across
hospitals. Post the sharp rally, we see limited upside and downgrade NARH to ADD (from BUY).
Contact: +91 22 6218 6427
Narayana Hrudayalaya Health Care Services
Exhibit 1: NARH 4QFY21 EBITDA was ahead of our estimates

4QFY21 interim results, March fiscal year-ends (Rs mn)
(% chg.)
4QFY21E 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 FY2021 FY2020 % chg. FY2022E FY2021 % chg.
Revenues 8,378 8,001 7,429 7,504 5 13 12 25,823 31,278 (17) 35,839 25,823 39
COGS (2,069) (2,080) (1,788) (1,988) (1) 16 4 (6,779) (7,453) (9) (8,781) (6,779) 30
Gross profit 6,308 5,921 5,642 5,515 7 12 14 19,045 23,825 (20) 27,059 19,045 42
Employee expenses (1,696) (1,628) (1,680) (1,567) 4 1 8 (6,268) (6,814) (8) (7,200) (6,272) 15
Other expenses (3,198) (3,087) (3,005) (2,899) 4 6 10 (10,956) (12,782) (14) (14,248) (10,952) 30
EBITDA 1,414 1,206 957 1,049 17 48 35 1,821 4,229 (57) 5,611 1,821 208
EBITDA (adjusted for Ind-AS) 1,281 1,077 774 922 19 65 39 1,313 3,820 (66) 5,180 1,314 294
Depreciation (445) (527) (551) (465) (1,835) (1,858) (2,054) (1,835)
EBIT 969 679 407 584 NM 138 66 (14) 2,371 3,557 (14)
Other income 85 55 70 46 282 238 256 282
Finance costs (182) (268) (208) (186) (760) (853) (573) (760)
Exceptional items 0 0 (109) 0 0 (109) 0 0
PBT 872 466 269 445 87 224 96 (492) 1,756 3,240 (492)
Tax (172) (190) (36) (8) 418 (423) (833) 418
Minorities/associates (20) 19 (4) (29) (68) (35) (30) (68)
PAT (adjusted) 680 295 120 408 131 465 67 (143) 1,190 2,377 (143)
Number of shares 204 204 204 204 204 204 204 204
EPS 3.3 1.4 0.6 2.0 131 465 67 (0.7) 5.8 11.6 (0.7)
As % of sales
Gross profit 75.3 74.0 75.9 73.5 73.8 76.2 75.5 73.8
Employee cost 20.2 20.3 22.6 20.9 24.3 21.8 20.1 24.3
Other expenses 38.2 38.6 40.4 38.6 42.4 40.9 39.8 42.4
EBITDA margin 16.9 15.1 12.9 14.0 7.1 13.5 15.7 7.1
EBITDA margin (pre-Ind-AS) (%) 15.3 13.5 10.4 12.3 5.1 12.2 14.5 5.1
Revenues (Rs mn)
Mature centers 6,267 5,808 5,755 5,345 8 9 17 18,286 24,461 (25) 27,425 18,286 50
New centers 735 790 639 744 (7) 15 (1) 2,420 2,479 (2) 2,900 2,420 20
India hospitals 7,002 6,598 6,394 6,089 6 10 15 20,706 26,940 (23) 30,325 20,706 46
Cayman 1,376 1,403 1,035 1,415 (2) 33 (3) 5,117 4,338 18 5,514 5,117 8
Consolidated revenues 8,378 8,001 7,429 7,504 5 13 12 25,823 31,278 (17) 35,839 25,823 39
EBITDA (Rs mn)
Mature centers 813 552 698 393 47 17 107 (23) 3,415 (101) 3,299 (23) NM
New centers (82) (50) (132) (41) 64 (38) 100 (424) (581) (27) (160) (424) (62)
India hospitals 731 502 566 352 NM 29 108 (447) 2,834 (116) 3,139 (447) (802)
Cayman 550 575 209 570 (4) 164 (4) 1,857 986 88 2,040 1,857 10
Consolidated EBITDA 1,281 1,077 774 922 19 65 39 1,313 3,820 (66) 5,180 1,314 294
EBITDA margin (pre-Ind-AS) (%)
Mature centers 13.0 9.8 12.1 7.4 (0.1) 14.0 12.0 (0.1)
New centers (11.2) (5.1) (20.7) (5.5) (17.5) (23.4) (5.5) (17.5)
India hospitals 10.4 7.6 8.8 5.8 (2.2) 10.5 10.4 (2.2)
Cayman 40.0 41.0 20.2 40.3 36.3 22.7 37.0 36.3
Consolidated EBITDA 15.3 13.5 10.4 12.3 5.1 12.2 14.5 5.1
Exhibit 2: We increase our FY2022-23E EBITDA estimate by 4% each

Earnings revision table, March fiscal year-ends, 2022-23E (Rs mn, %)
New estimates Old estimates Change (%)

2022E 2023E 2022E 2023E 2022E 2023E
Revenues 35,839 40,299 35,586 40,207 0.7 0.2
EBITDA 5,611 6,420 5,396 6,165 4.0 4.1
EBITDA (LFL, Ind-AS adjusted) 5,180 5,966 4,964 5,712 4.3 4.5
PBT 3,240 4,093 2,697 3,519 20.1 16.3
PAT 2,377 3,011 1,974 2,585 20.5 16.5
EPS 11.6 14.7 9.7 12.6 20.5 16.5
EBITDA margin (%) 15.7 15.9 15.2 15.3
EBITDA margin (%) (LFL, Ind-AS adjusted) 14.5 14.8 14.0 14.2

Health Care Services Narayana Hrudayalaya
Exhibit 3: EBITDA growth driven by new units and Cayman

Earnings revision table, March fiscal year-ends, 2018-24E (Rs mn, %)
2018 2019 2020 2021 2022E 2023E 2024E

EBITDA (Rs mn)
Existing centers 2,443 2,918 3,446 (23) 3,299 4,017 4,336
New centers (405) (703) (581) (424) (160) - 200
Cayman 85 663 973 1,857 2,040 1,949 1,969
Consolidated EBITDA (adjusted for
Ind-AS) 2,123 2,878 3,838 1,410 5,180 5,966 6,504
Consolidated EBITDA (post IndAS) 2,123 2,878 4,229 1,821 5,611 6,420 6,980
Growth (%)
Existing centers 19.4 18.1 (100.7) NM 21.8 7.9
New centers NM NM NM NM NM NM
Cayman NM 46.7 90.9 9.9 (4.5) 1.0
Consolidated EBITDA 35.6 33.3 (63.3) 267.4 15.2 9.0

Narayana Hrudayalaya Health Care Services
Exhibit 4: Ramp-up of new hospitals to drive revenue growth

Cluster-wise revenue break-up, March fiscal year-ends, 2019-24E (Rs mn)
2019 2020 2021 2022E 2023E 2024E

Operational beds
Bangalore 1,646 1,591 1,588 1,608 1,638 1,668
Southern Peripheral 514 513 529 529 529 529
Kolkata 1,337 1,334 1,376 1,396 1,446 1,496
Eastern peripheral 360 359 423 423 423 423
Western 874 872 953 983 1,003 1,023
Delhi NCR 412 411 423 423 423 423
Heart centers 322 345 318 318 318 318
Managed centers 498 112 112 112 112 112
Cayman 106 106 106 106 106 106
Total 6,070 5,644 5,828 5,898 5,998 6,098
Occupancy (%)
Bangalore 51.5 51.1 30.5 46.0 51.0 53.0
Southern Peripheral 40.7 41.5 31.1 42.0 44.0 45.0
Kolkata 58.5 57.2 40.8 55.0 56.0 57.0
Eastern peripheral 51.6 51.6 34.0 53.0 54.0 55.0
Western 45.9 51.4 36.1 51.0 50.0 50.0
Delhi NCR 26.4 35.6 31.5 40.0 50.0 55.0
Heart centers 50.0 48.0 35.0 48.0 49.0 49.0
Managed centers NM NM NM NM NM NM
Cayman 32.1 34.0 36.0 37.0 37.0 37.0
Total 49.3 50.4 34.7 48.9 51.5 52.8
ARPOB (Rs)
Bangalore 29,315 31,781 34,247 35,658 37,798 40,065
Southern Peripheral 17,808 19,178 25,205 21,518 22,809 24,177
Kolkata 23,014 24,932 24,932 27,973 29,652 31,431
Eastern peripheral 16,712 18,356 21,644 20,596 21,831 23,141
Western 21,644 22,740 27,123 25,514 27,045 28,667
Delhi NCR 34,247 37,260 38,904 41,806 44,314 46,973
Heart centers 21,001 22,051 23,154 24,741 26,226 27,799
Managed centers NM NM NM NM NM NM
Cayman 306,542 287,671 385,205 385,205 389,058 392,948
Overall ARPOB 24,543 26,213 28,413 23,193 24,611 26,131
Revenues (Rs mn)
Bangalore 9,062 9,432 6,059 9,625 11,522 12,925
Southern Peripheral 1,359 1,489 1,515 1,746 1,939 2,102
Kolkata 6,570 6,950 5,113 7,839 8,763 9,782
Eastern peripheral 1,133 1,241 1,136 1,687 1,822 1,967
Western 3,172 3,723 3,408 4,667 4,948 5,350
Delhi NCR 1,359 1,986 1,894 2,584 3,424 3,992
Heart centers 1,488 1,347 1,035 1,378 1,492 1,581
Managed centers 654 773 735 800 820 820
Cayman 3,811 4,338 5,117 5,514 5,569 5,625
Total revenues 28,609 31,278 26,013 35,839 40,299 44,144

Health Care Services Narayana Hrudayalaya
Exhibit 5: We expect strong recovery in FY2022

Financial summary, March fiscal year-ends, 2013-24E (Rs mn)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E
Net revenues 8,393 10,951 13,639 16,138 18,782 22,809 28,609 31,278 25,823 35,839 40,299 44,144
Gross profit 6,065 8,138 10,232 12,267 14,423 17,244 21,734 23,825 19,045 27,059 30,426 33,328
EBITDA 813 1,201 1,292 1,746 2,289 2,123 2,878 4,229 1,821 5,611 6,420 6,980
EBITDA (adjusted for Ind-AS) 813 1,201 1,292 1,746 2,289 2,123 2,878 3,821 1,314 5,180 5,966 6,504
Depreciation & amortisation (460) (574) (667) (761) (799) (1,000) (1,374) (1,858) (1,835) (2,054) (2,199) (2,345)
EBIT 353 626 625 985 1,489 1,123 1,505 2,371 (14) 3,557 4,220 4,636
Net interest (15) (60) (332) (148) (43) (279) (547) (615) (478) (317) (127) 7
Profit before tax 338 567 294 837 1,446 845 957 1,756 (492) 3,240 4,093 4,642
Tax & deferred tax (100) (213) (175) (301) (524) (290) (341) (423) 418 (833) (1,052) (1,193)
Less: minority interest (7) (22) (24) (4) (1) — 1 1 — — — —
Net income (reported) 248 317 (109) 212 831 514 592 1,189 (143) 2,377 3,011 3,419
EPS (reported) (Rs) 1.3 1.7 (0.5) 1.0 4.1 2.5 2.9 5.8 (0.7) 11.6 14.7 16.7
Balance sheet
Cash & equivalents 254 281 296 241 341 353 1,007 1,841 2,421 1,444 1,877 3,245
Debtors 915 1,342 1,429 1,518 1,569 2,790 2,664 2,622 2,785 3,928 3,864 4,233
Other current assets 592 766 885 1,101 1,105 1,651 1,602 1,401 1,445 1,654 2,402 2,539
Current assets 1,761 2,388 2,610 2,860 3,016 4,793 5,274 5,864 6,651 7,026 8,144 10,017
Fixed assets (incl. goodwill) 6,647 7,581 9,281 10,683 11,348 18,830 18,943 18,662 17,806 20,260 22,130 23,916
Other non-current assets 1,223 1,588 1,758 2,021 2,104 1,733 2,154 4,384 3,243 2,735 2,165 1,535
Total assets 9,632 11,557 13,649 15,564 16,468 25,356 26,370 28,911 27,700 30,021 32,439 35,468
Short-term loans 313 522 985 700 369 376 115 108 212 212 212 212
Creditors and other liabilities 1,262 2,019 1,803 2,702 3,135 4,722 4,988 5,894 6,435 7,242 7,521 8,016
Current liabilities 1,575 2,542 2,788 3,401 3,504 5,098 5,103 6,003 6,647 7,454 7,734 8,229
Long-term loans 2,246 2,808 2,635 1,876 1,798 6,963 8,020 7,070 5,041 4,041 3,041 2,041
Other liabilities (incl. deferred) 291 376 571 1,524 1,532 2,935 2,432 4,474 4,803 4,941 5,068 5,182
Total liabilities 4,112 5,725 5,995 6,801 6,835 14,996 15,555 17,546 16,492 16,436 15,842 15,452
Equity 5,520 5,832 7,654 8,763 9,633 10,360 10,815 11,365 11,208 13,586 16,597 20,016
Total equity and liabilities 9,632 11,557 13,649 15,564 16,468 25,356 26,370 28,911 27,700 30,021 32,439 35,468
Cash flow
Operating cash flow excl. working capital 666 1,034 1,161 1,524 2,109 2,088 2,703 3,946 2,307 4,779 5,368 5,787
Working capital (220) 66 (394) 217 84 (265) 83 488 826 (545) (405) (11)
Interest expenses (165) (281) (390) (253) (206) (316) (553) (509) (567) (404) (300) (220)
Capex (1,301) (1,291) (982) (905) (1,350) (5,575) (1,500) (1,159) (254) (4,000) (3,500) (3,500)
FCF (1,020) (472) (604) 583 637 (4,068) 733 2,766 2,312 (170) 1,162 2,056
Ratios (%)
EBITDA margin (%) 9.7 11.0 9.5 10.8 12.2 9.3 10.1 13.5 7.1 15.7 15.9 15.8
RoE (%) 4.5 5.4 (1.4) 2.4 8.6 5.0 5.5 10.5 (1.3) 17.5 18.1 17.1
RoCE (%) (post-tax) 3.0 4.7 3.8 5.9 8.7 4.3 5.6 10.8 (0.0) 16.1 17.4 18.1
Net debt/equity (X) 0.4 0.5 0.4 0.3 0.2 0.7 0.7 0.5 0.3 0.2 0.1 (0.0)

ATTRACTIVE
Metals & Mining
India JUNE 03, 2021
UPDATE
BSE-30: 51,849
Steel - China dampens sentiments but fundamentals intact. We see only a

sentimental impact of recent Chinese regulators warning against commodity price
speculation in China. The underlying market fundamentals remain robust led by China’s
determination of carbon neutrality, demand recovery in the West and limited supply
flexibility. The prices in China and Rest of World (RoW) have diverged in recent weeks
partly factoring a risk of export tax in China, as speculated by the media. Indian flat
steel prices, after a recent 5% hike are still at 10% discount to import parity. Earning
upgrades should continue and stocks have steam left. TATA is our preferred play.
China - striving to balance inflation concerns and emissions, supply reforms to continue
News flow from China, over the past few weeks, has been a mixed bag. Late April 2021,
China removed export incentives and reduced import tax on steel products, reflecting its
determination to reduce domestic production/emissions. However, the surge in commodity
prices in May 2021 (+21%/17% iron ore/steel prices in two weeks) raised inflation concerns.
The subsequent warning by regulators against price speculation and recent media reports on
easing of production relaxation in Tangshan have dampened sentiments and reversed the price
spike (Exhibit 1).
We read these developments as short term policy adjustments towards a short term goal to cool
down prices. We believe that China’s medium-long term goals of emission reduction and
restricting steel production remains intact and supply-side reforms should continue. Removal of
13% export rebate has structurally elevated global steel prices and is unlikely to reverse.
Further, recent media reports on possible imposition of steel export duty in China is a key
upside risk for global steel prices and steel stocks.
Divergent price moves in China and RoW as robust fundamentals

Demand headwinds in India due to a second wave of Covid-19 had pushed domestic prices at
~20% to import parity. Steel producers have taken a 5% price hike in June 2021 and despite
the recent softness in regional prices, domestic prices are still at 10% discount to imports. The
prices in US and Europe continue to rise with HRC prices up 20%/38% in two months and
43%/50% CYTD 2021. With strong underlying demand recovery and relatively rigid supply,
fundamentals remain strong. We estimate RoW steel utilization at 72% in CY2021E and see
limited risk of restarts. Of the total 275 mtpa of effective surplus capacity in RoW, we estimate
that (1) ~75-80% is EAF-based with product mismatch (make long steel whereas the tightness
is in flat steel) or have issues with power and scrap availability; (2) 8-10% of capacity is
permanently shut and (3) only ~10% capacity is mothballed that could restart.
India’s capacity expansions to just address the deficit, RoW supply growth visibility is limited
India’s steel producers would be adding 32 mtpa capacity over FY2021-25E, with ~80%
coming from primary producers. However, utilization remains healthy at an average of 93%
over FY2021-24E and attractive export market could add to domestic tightness. Elsewhere in Sumangal Nevatia
world, the capacity pipeline is lean. China’s capacity swap program is resulting in a net
reduction in capacity whereas only a ~6-8 mtpa fresh EAF capacity is planned in the US. The
rising utilization in RoW has upside risk from potentially stronger demand driven by stimulus. Prayatn Mahajan
Earnings upgrades to continue, risk-reward attractive across the sector, TATA is our top pick
After a record 4QFY21, steel margins have not yet peaked as 1QFY22E margins should be
Rs4,000-6,000/ton higher qoq. Recent margin strength and structural reforms led by China
suggest upside risk to FY2022/23E earnings and Fair Value. TATA is our preferred play.
Contact: +91 22 6218 6427
India Metals & Mining
China striving to strike a balance between short term price inflation and
medium-long term reform goals
News flow in China with regards to steel has been mixed bag. The set of positive
developments started from February 2021 with supply restrictions in Tangshan, China’s
largest steel producing city. Later, in April 2021, China cut export incentives (13% VAT
rebate) and reduced import taxes. However, with a sharp surge in commodity prices in May-
2021, inflation has become a key short-term priority for the regulators and has led to all the
recent warnings and policy action. We read these developments as short term policy
adjustments towards a short term goal to cool down prices. We believe that China’s
medium-long term goals of emission reduction and restricting steel production remains
intact and supply-side reforms should continue.
 Tangshan production cuts: In February 2021, Tangshan city announced steel supply cut
policy. The duration of policy was broken down into two periods March 2021 to June
2021 and July 2021 to December 2021. Seven mills have been asked to cut BF capacity
by 50% in Period 1 and 30% in Period 2, the rest to cut by 30% throughout. Total
volume of capacity cut in Tangshan was at 38.8 mtpa (22.2% of Tangshan's total iron
making capacity). But the impact would be less for production. Using a post-Covid
capacity utilization rate (UR) as a proxy, ~72% in Tangshan, the impact is ~28 mtpa
which is 3% of total production in China. Considering that the restrictions are for nine
months in 2021, the impact would be around 21 mtpa for hot metal production.
 Rebate cut and import duty reduction. China announced the removal of VAT rebates
on exports of 146 steel products from May 2021. The prevailing rebate of 13% has been
discontinued on key exported products like hot rolled coil (HRC), wire rod and rebar. In a
separate announcement, China had also cut import duty on pig iron, crude steel and steel
scrap. Further, it has raised export duty by 5 percentage points on high silicon steel (to
25%), ferrochrome (to 20%) and foundry pig iron (to15%).
With these policy changes, China is discouraging exports and reducing trade barriers on
imported steel. This suggest that Chinese government no longer wants steel producers to
produce steel for the export market and is open to address the domestic shortage with
imports.
 Warning against speculation. Commodity prices in China peaked mid-May 2021, after
rising to record high, after Chinese Premier Li Keqiang urged the country to take actions
on commodity price rally and regulators in Shanghai and Tangshan warned of price
manipulation by steel mills. Later, China’s National Development and Reform Commission
and another five departments held a meeting on 23 May 2021 to discuss the recent price
surge of some key commodities and requested participating firms to “operate in an
orderly manner in accordance with laws and regulations” and warned that companies
should not “collude with each other to manipulate market prices, fabricate and spread
information about price increases”.
 Tangshan production relaxation. Media reports suggest that the steelmaking city of
Tangshan plans to ease restrictions on steel production. The local authorities held a
symposium on Monday June 01, 2021, mulling over plans to lower output curtailment
ratio for some mills that had completed ultra-low emission upgrades, according to media
reports.
In our opinion, this relaxation of production restrictions in Tangshan is an example of

taking market-oriented means to adjust the market's balance and stability. However, we
do not expect China to relax its overall environmental protection efforts and see this as a
short term measure in controlling inflation.

Metals & Mining India
 Media reports on potential export tax. As highlighted in media reports and in our
interaction with traders, China is mulling an export duty on finished steel items, in a bid
to further restrict exports and control inflation. As per trading sources, the duty could be
anywhere from 10-25%.This would achieve dual goals of Chinese government (1) Further
discourage steel exports and potentially reduce production (2) Increase domestic
availability of steel and deflate domestic prices. Structurally lower risk of Chinese exports
would raise the steel price floor in RoW market and could re-rate steel stocks.
 China targeting fresh round of steel capacity cut. As per CISA chairman, the Chinese
government aims to eliminate old/inefficient 236 mtpa of crude steel capacity during its
14th 5 year plan over CY2021-25E. China also plans to update 221 mtpa of capacity
during the same time to reduce carbon emissions. Meanwhile, the ecology and
environment ministry has announced it will strengthen controls on energy-intensive,
polluting industries such as steel and aluminium to promote low-carbon development.
Each provincial environment regulator now has to coordinate and manage high-energy
intensity and high-emission projects in their area, report the findings to the ministry by
the end of October and then give updates every six months
Exhibit 1: China domestic ferrous prices corrected on government warning against speculation
China domestic prices of HRC, Rebar and Iron Ore, June 2020-21 (US$/ton)
China Domestic Rebar prices (US$/ton) China domestic HRC prices (US$/ton)
China domestic iron ore prices (US$/ton) (RHS)
1,150 300
1,050 250
950
200
850
150
750
100
650
550 50
450 0
Dec-20
Mar-21
Jun-20
Jun-21
May-21
Apr-21
Sep-20
Nov-20
Jan-21
Jul-20
Oct-20
Aug-20
Feb-21
Source: Kotak Institutional Equities Estimates, Bloomberg

Exhibit 2: China’s CPI and PPI increased 0.9% and 6.8% yoy respectively in April 2021
China CPI, PPI, April 2020-21 (% yoy)
China CPI % yoy China PPI % yoy

8
Dec-18
Dec-19
Dec-20
Jun-20
Jun-18
Jun-19
Apr-18
Apr-19
Apr-20
Apr-21
Aug-18
Oct-18
Aug-19
Oct-19
Oct-20
Aug-20
Feb-19
Feb-20
Feb-21
(2)
(4)
Source: Kotak Institutional Equities Estimates, Bloomberg
Exhibit 3: Chinese export prices trade at a premium to domestic prices post removal of export
rebates in China in March 2021
China domestic HRC spot prices, China Export HRC prices, June 2012-21 (US$/ton)
1,200 Domestic HRC Prices Export HRC Prices
1,000
800
600
400
200
0
Jun-12
Jun-13
Jun-14
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-15
Jun-16
Oct-13
Oct-14
Oct-15
Oct-16
Oct-19
Oct-20
Oct-12
Oct-17
Oct-18
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Feb-21
Source: Kotak Institutional Equities Estimates, Steelmint, Bloomberg

Exhibit 4: Chinese export prices are trading at a premium to domestic prices, an aberration due to
risk of export duty
China export prices versus domestic prices, June 2012-21 (%)
25% Export Prices vs Domestic Prices

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
Jun-12
Jun-15
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-13
Jun-14
Jun-16
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Feb-19
Feb-20
Feb-21
Oct-12
Oct-14
Oct-15
Oct-17
Oct-18
Oct-20
Oct-13
Oct-16
Oct-19
Source: Kotak Institutional Equities Estimates, Steelmint, Bloomberg
Exhibit 5: Steel prices in US and UK continue to increase and diverge from China
HRC prices for US, UK ,Germany and China, June 2017-21 (US$/ton)
China US UK Germany
1,800
1,600
1,400
1,200
1,000
800
600
400
Dec-17
Dec-18
Dec-19
Dec-20
Jun-18
Jun-20
Jun-17
Jun-19
Jun-21
Apr-19
Apr-20
Apr-21
Apr-18
Oct-17
Aug-18
Oct-19
Aug-17
Oct-18
Aug-19
Aug-20
Oct-20
Feb-18
Feb-19
Feb-20
Feb-21
Source: Kotak Institutional Equities estimates, Steelmint, Bloomberg

Exhibit 6: Demand tailwinds arising from sharp recovery in manufacturing activity

PMI data for US, UK ,Germany and China, May 2018-2021
China Germany USA UK
70
65
60
55
50
45
40
35
30
Jul-18
Jul-19
Jul-20
Sep-18
Sep-19
Sep-20
Mar-19
Mar-20
Mar-21
Nov-18
Nov-19
Nov-20
Jan-19
Jan-20
Jan-21
May-18
May-19
May-20
May-21
Source: Kotak Institutional Equities estimates, Bloomberg
Exhibit 7: RoW steel production recovering back to pre-Covid Exhibit 8: China’s steel production higher than pre-Covid levels
levels China steel production, April 2017-21, (mn tons, % yoy)
World Ex-China steel production, April 2017-21, (mn tons, % yoy)
China crude steel production (LHS)
World Ex-China crude steel production
China growth (% yoy) (RHS)
(LHS)
World Ex- China growth (% yoy) (RHS) 120 25
90 50
100 20
80 40
70 30 80 15
60 20
60 10
50 10
40 0 40 5
30 (10)
20 0
20 (20)
10 (30) 0 (5)
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Aug-17
Aug-18
Aug-19
Aug-20
Dec-17
Dec-18
Dec-19
Dec-20
0 (40)
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Aug-17
Aug-18
Aug-19
Aug-20
Dec-17
Dec-18
Dec-19
Dec-20
Source: Bloomberg, Kotak Institutional Equities estimates


Limited supply additions to keep utilizations on an uptrend
Limited steel capacity expansions are planned outside of India over the next 3-4 years.
India’s steel producers would be adding 32 mtpa capacity over FY2021-25E. Elsewhere in
world, capacity pipeline is lean. China’s capacity swap program is resulting in a net reduction
in capacity whereas only a ~6-8 mtpa fresh EAF capacity is planned in USA. The rising
utilization in RoW has upside risk from potentially stronger demand driven by stimulus.
We estimate RoW steel utilization at 72% in CY2021E and see limited risk of restarts. Of the
total 275 mtpa of effective surplus capacity in RoW, we estimate that (1) ~ 75-80% is EAF-
based with product mismatch (make long steel whereas the tightness is in flat steel) or have
issues with power and scrap availability; (2) 8-10% of capacity is permanently shut and (3)
only ~10% capacity is mothballed that could restart
 China’s capacity swap program is likely to restrict further capacity additions. China
renewed its capacity swap program in CY2020 (first drafted in CY2018) enforcing stricter
restriction on capacity swaps. Key changes were as follows:
 The closure/addition ratio has been further increased in Version 2020 to 1.5:1 from
1.25:1 earlier in 28 key cities. Whereas for other sensitive regions the closure/addition
ratio has been further increased to 1.1:1 from 1.25:1. As per CISA, the earlier program
resulted in a net capacity reduction of 29 mtpa in CY2019. These policies are likely to
result in higher capacity cuts going forward.
 The scope of the ‘26+2’ cities had been extended in Version 2020 to include cities
in provinces such as Anhui, Henan, Shanxi, Shaanxi and Shandong in the Yangtze River
Delta and Fenwei Plain regions.
 Small furnace swaps are no longer allowed. The new version does not allow for
swaps of BF volumes less than 1,200 m3, BOFs less than 100 tons or EAFs less than 50
tons.
 Encouraging EAF steelmaking. Exceptions are made in Version 2020 for companies
that change from BF/BOF steelmaking to EAF steelmaking such that they can enjoy a
‘one-for-one’ swap, meaning that new capacity can equal the closed capacity.
Exhibit 9: Global steel production is expected to grow at 6.4% yoy in CY2021E

Steel capacity, production, demand and exports data from China, World ex-China, December year-ends, 2014-24E (mn tons)
2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
Capacity (mtpa)
China steel capacity 1,175 1,250 1,089 1,048 1,073 1,123 1,211 1,188 1,178 1,178 1,178
World ex-China capacity 1,152 1,151 1,178 1,190 1,197 1,203 1,213 1,219 1,228 1,236 1,254
World steel capacity 2,316 2,334 2,281 2,251 2,270 2,326 2,424 2,407 2,406 2,414 2,432
China demand-supply (mn tons)

China steel capacity 1,175 1,250 1,089 1,048 1,073 1,123 1,211 1,188 1,178 1,178 1,178
Crude steel production 863 901 870 894 939 993 1,054 1,077 1,093 1,109 1,109
Utilization (%) 73 72 80 85 88 88 87 91 93 94 94
Demand (apparent) 781 788 768 833 874 928 997 1,042 1,073 1,089 1,089
Growth yoy (%) 3 1 (3) 8 5 6 7 5 3 2 -
China Exports 83 105 96 62 57 64 54 35 20 20 20
Exports as % of world ex-China demand 9 11 10 7 6 7 6 4 2 2 2
World ex-China demand-supply (mn tons)

Crude steel production 846 816 820 858 883 871 789 884 919 947 966
Growth yoy (%) 2 (4) 0 5 3 (1) (9) 12 4 3 2
Utilization (%) 73 71 70 72 74 72 65 72 75 77 77
Demand (apparent) 929 921 916 920 940 935 843 919 939 967 986
World (mn tons)

Crude steel production 1,669 1,620 1,690 1,752 1,822 1,864 1,843 1,961 2,012 2,056 2,075
Utilization (%) 72 69 74 78 80 80 76 81 84 85 85
Growth yoy (%) 1.2 (2.9) 4.3 3.7 4.0 2.3 (1.1) 6.4 2.6 2.2 0.9
Source: WSA, Kotak Institutional Equities Estimates, Steelmint

Exhibit 10: We estimate global steel utilization levels to increase on limited capacity additions
China and World Ex-China steel utilizations, December year-ends, 2007-24E (%)
100 China Utilization (%) World Ex-China Utilization (%)
95
90
85
80
75
70
65
60
2021E
2022E
2023E
2024E
2007
2010
2011
2012
2013
2016
2017
2018
2008
2009
2014
2015
2019
2020
Source: WSA, Kotak Institutional Equities Estimates
Exhibit 11: We estimate 275 mtpa of surplus steel capacity in World Ex-China in CY2021E
World Ex-China steel rated capacity, effective capacity, production and surplus capacity in CY2021E (mtpa)
World ex China Steel capacity - CY2021E

1,400
1,200
1,000 275
800
600 1,219 1,158

883
400
200
0
Rated Capacity Effective Capacity Surplus Production

Exhibit 12: Surplus capacity in World Ex-China has limited flexibility to restart
Proportion of surplus steel capacity by production type in World ex-China in CY2021E (%)
BF- Permantly
Closed
10%
BF - Mothballed
10%
EAF
80%
Exhibit 13: Domestic steel industry is expected to add ~32 mtpa of crude steel capacity over FY2022-25E
Crude steel capacity additions by players in India, March fiscal year-ends, 2020-25E (mtpa)
FY2020 FY2021 FY2022E FY2023E FY2024E FY2025E Addition (FY2021-25E)

Tata Steel 1.0 — — — — 5.0 5.0
SAIL — — — — — — —
JSW Steel — — 5.0 1.0 — 5.0 11.0
Essar — — — — — — —
JSPL — — 1.0 — 3.3 3.0 7.3
RINL 1.0 — — — — — —
Bhushan — — — — — — —
NMDC — — — 3.0 — — 3.0
Others (1.0) — — — — — —
EAF/IF - Mini Mills — — — 2.0 2.0 2.0 6.0
Total Capacity Addition (mn tons) 1.0 — 6.0 6.0 5.3 15.0 32.3
Source: Kotak Institutional Equities Estimates, Steelmint
Exhibit 14: Domestic steel industry utilization will improve over next 2-3 years led by limited capacity additions
Finished steel production, consumption and capacity details in India, March fiscal year-ends, 2015-25E (mn tons)
2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E
Crude steel capacity - Gross (end of year) 110.0 112.5 122.0 127.3 127.3 128.3 128.3 134.3 140.3 145.6 160.6
Crude steel capacity - Effective (end of year) 100.0 102.5 112.0 117.3 117.3 118.3 118.3 124.3 130.3 135.6 150.6
Finished steel capacity - Effective (during the year) 87.8 95.3 101.1 108.0 110.3 110.8 111.2 114.2 119.9 125.2 135.0
Production 90.7 90.4 101.8 111.2 115.7 102.6 94.7 106.0 111.3 116.9 122.7
Less: Double counting 15.9 16.5 15.3 19.0 19.7
Net production 74.8 73.9 86.5 92.3 96.0 102.6 94.7 106.0 111.3 116.9 122.7
Imports 9.3 11.7 7.2 7.5 7.8 6.8 4.8 4.0 7.0 8.0 12.0
Exports 5.6 4.1 8.2 9.6 6.4 8.4 10.8 10.0 10.0 9.0 11.0
Add: Net Imports 3.8 7.6 (1.0) (2.1) 1.5 (1.6) (6.0) (6.0) (3.0) (1.0) 1
Assumed consumption 78.6 81.5 85.5 90.1 97.5 101.0 88.6 100.0 108.3 115.9 123.7
Stock change 1.6 1.1 1.4 (0.6) (1.2) 0.9 (4.8) 0 0 0 0
Consumption 76.9 80.4 84.0 90.7 98.7 100.2 93.4 100.0 108.3 115.9 123.7
Capacity utilization (%) 85.2 77.6 85.5 85.5 87.1 92.6 85.1 92.8 92.9 93.4 90.9
Growth (%)
Production 0.0 (1.2) 17.0 6.7 4.0 6.9 (7.8) 12.0 5.0 5.0 5.0
Consumption 4.1 4.6 4.5 7.9 8.8 1.5 (6.7) 7.0 8.3 7.0 6.8
Source: Kotak Institutional Equities Estimates, Steelmint, Industry Data

Domestic flat steel prices still at a 10% discount to import parity
Exhibit 15: Domestic HRC prices increase 5% mom in June 2021

India domestic prices of HRC and rebar (Secondary), June 2020-21 (Rs/ton)
HRC prices (Rs/ton) Secondary rebar 12mm (Rs/ton)
70,000
65,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
Sep-20
Apr-21
Jul-20
Aug-20
Feb-21
Mar-21
Oct-20
Jun-20
Nov-20
May-21
Jun-21
Dec-20
Jan-21
Exhibit 16: Domestic prices remain at a discount to import parity prices

Import parity HRC prices from China and FTA, domestic HRC prices, June 2018-21 (Rs/ton)
Import Parity - FTA (Rs/ton) Mumbai HRC (Rs/ton) Import parity - China (Rs/ton)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
Jul-19
Jul-20
Aug-19
Aug-20
Sep-19
Apr-20
Sep-20
Apr-21
Mar-20
Mar-21
Oct-19
Oct-20
Feb-20
Feb-21
Nov-19
Nov-20
Jun-19
Jun-20
Jun-21
Dec-19
Jan-20
Dec-20
Jan-21
May-20
May-21
Source: Kotak Institutional Equities Estimates, Steelmint, Industry Data

Exhibit 17: Domestic prices are at 10% discount to import parity
Japan/South Korea Export - FOB US$/ton 1,055

Sea Freight US$/ton 25
Japan/South Korea Export - CNF India…..a) US$/ton 1,080
China Export - FOB US$/ton 945
Sea Freight US$/ton 25
Import duty % 7.50
China Export - CNF India…..b) US$/ton 1,043
Anti Dumping Reference Price US$/ton 489
Anti Dumping Duty…………c) US$/ton —
Landed Import Cost ………Lower (a,b) +c US$/ton 1,043
Port & Other Charges US$/ton 20
Price at port gate US$/ton 1,063
FX 73
Price at port gate Rs/ton 77,581
India Domestic Price (Mumbai HRC) Rs/ton 70,000
Premium/(Discount) to Import Parity Rs/ton (7,581)
Premium/(Discount) to Import Parity % (10)
Exhibit 18: International iron ore prices increased 26% mom in Exhibit 19: Domestic iron ore prices increased 30% mom in May
May 2021 2021
China iron ore (Fe 62%) prices, June 2018-21 (US$/ton) NMDC iron ore fines, lumps price movement, June 2018-21 (Rs/ton)
China import Iron ore fines 62% Fe CFR (US$/ton) NMDC-Fines (Rs/ton)
240 NMDC - lumps (10-150 mm) (Rs/ton)
220 7,800
200
6,800
180
160 5,800
140 4,800
120
3,800
100
2,800
80
60 1,800
Sep-18
Sep-19
Sep-18
Sep-19
Sep-20
Sep-20
Mar-20
Mar-21
Mar-19
Mar-20
Mar-19
Mar-21
Jun-19
Jun-20
Jun-18
Jun-19
Jun-20
Jun-18
Jun-21
Jun-21
Dec-18
Dec-19
Dec-20
Dec-18
Dec-19
Dec-20
Source: Steelmint, Kotak Institutional Equities estimates Source: Steelmint, Kotak Institutional Equities estimates

Exhibit 20: Average coking coal prices increased 15% mom in May 2021
Australian coking coal spot prices, June 2020-21 (US$/ton)
150 Australian HCC spot (US$/ton)
145
140
135
130
125
120
115
110
105
100
Dec-20
Mar-21
Jun-21
Jun-20
Sep-20
Apr-21
May-21
Jul-20
Nov-20
Jan-21
Feb-21
Oct-20
Aug-20
Exhibit 21: India's steel demand increased 573% yoy in April 2021
India's steel production, consumption and trade volumes, April 2020-21 (mn tons)
Apr-21 Apr-20 Change (%)

Production 8 2 386.6
Less: Double counting
Net production 8 2 386.6
Imports 0.4 0.4 (10.6)
Exports 1.0 0.4 121.7
Add: Net Imports (1) (0)
Assumed consumption 7 2 355.6
Stock change (0.3) 0.5
Consumption 7.3 1.1 572.3
Source: JPC, Kotak Institutional Equities estimates

Exhibit 22: Steel production increased 387% yoy in April 2021 Exhibit 23: Steel consumption increased 573% yoy in April 2021
India steel production, April 2017-21 (mn tons, % yoy) India steel consumption, April 2017-21 (mn tons, % yoy)
Production (mn tons) (LHS) Consumption (mn tons) (LHS)

% Change in Production yoy (RHS) 14 % Change in Consumption yoy (RHS) 700
14 500
600
12
12 400
500
10 300 10
400
8 200 8 300
6 200
6 100
100
4 0 4
0
2 (100) 2
(100)
0 (200) 0 (200)
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Aug-18
Aug-19
Aug-17
Aug-20
Dec-17
Dec-18
Dec-19
Dec-20
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Aug-17
Aug-18
Aug-19
Aug-20
Dec-17
Dec-19
Dec-20
Dec-18
Source: Steelmint, JPC Source: Steelmint, JPC
Exhibit 24: Steel exports increased 122% yoy in April 2021 Exhibit 25: Steel imports declined 10% yoy in April 2021
India steel exports, April 2017-21 (mn tons, % yoy) India steel imports, April 2017-21 (mn tons, % yoy)
Exports (mn tons) (LHS) Imports (mn tons)

1.8 400 1.4 100
% Change in Exports yoy (RHS) % Change in Imports yoy (RHS)
1.6 350 80
1.2
1.4 300 60
250 1.0 40
1.2
200 20
1.0 0.8
150 0
0.8 0.6
100 (20)
0.6
50 0.4 (40)
0.4 0 (60)
0.2
0.2 (50) (80)
- (100) - (100)
Aug-17
Aug-18
Aug-19
Aug-20
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Aug-17
Aug-18
Aug-19
Aug-20
Dec-17
Dec-18
Dec-19
Dec-20
Apr-17
Apr-18
Apr-19
Apr-20
Apr-21
Dec-17
Dec-18
Dec-19
Dec-20
Source: Steelmint, JPC Source: Steelmint, JPC

Exhibit 26: India’s net exports declined 26% mom in April 2021
Net exports annualized, April 2019-21 (mn tons)
Net exports annualised

20
15
10
(5)
Dec-19
Dec-20
Mar-20
Mar-21
Jun-20
Jun-19
May-20
May-19
Apr-20
Apr-19
Sep-20
Apr-21
Sep-19
Nov-20
Nov-19
Jan-20
Jan-21
Jul-20
Jul-19
Oct-20
Oct-19
Aug-20
Aug-19
Feb-20
Feb-21
Exhibit 27: Domestic steel inventory continues to decline with improved domestic demand
Domestic Inventory levels, April 2019-21 (mn tons)
Domestic Steel Inventory (mn tons)

20
18
16
14
12
10
8
6
4
2
-
Dec-19
Dec-20
Mar-20
Mar-21
Jun-19
Jun-20
May-20
May-19
Apr-19
Sep-19
Apr-20
Sep-20
Apr-21
Nov-19
Jan-20
Jan-21
Nov-20
Jul-19
Oct-19
Oct-20
Aug-19
Jul-20
Aug-20
Feb-20
Feb-21
Exhibit 28: Margins are yet to peak for all ferrous companies
TATA, JSTL, JSP, Volumes, Realization/ton, EBITDA/ton, 4QFY19-21, FY2021-23E (000’ tons, Rs/ton)
Growth (%)
4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 Spot YoY QoQ FY2021 FY2022E FY2023E
Volumes (000 tons)
JSW Steel 4,290 3,750 3,600 4,030 3,700 2,800 4,120 3,900 4,060 10 4 14,880 17,400 20,238
Tata Steel - India 4,720 3,870 4,012 4,688 3,893 2,803 4,870 4,484 4,498 16 0 16,675 17,619 17,806
Jindal Steel 1,450 1,430 1,330 1,610 1,400 1,560 1,930 1,876 1,910 36 2 7,512 8,002 8,607
Realisation/ton
JSW Steel 46,294 47,195 41,717 38,504 41,289 36,761 40,769 49,331 60,094 46 22 47,532 54,544 49,073
Tata Steel - India 53,434 53,460 50,071 44,522 48,786 44,281 45,577 53,870 64,153 31 19 52,487 59,318 53,384
Jindal Steel 50,244 46,919 45,020 39,762 42,359 39,491 40,722 46,577 54,606 29 17 44,337 49,413 44,719
EBITDA/ton
JSW Steel 10,238 10,219 6,372 5,998 8,703 5,104 10,136 14,444 19,756 23,756 127 37 12,943 16,868 13,030
Tata Steel - India 12,143 11,780 9,429 7,641 11,362 5,005 11,769 18,573 26,131 32,131 130 41 17,611 22,091 15,546
Jindal Steel 9,591 10,649 8,596 8,096 11,159 10,949 12,615 20,833 25,568 28,568 129 23 17,378 17,490 12,678

Exhibit 29: Enterprise value of TATA has increased by 21% in the past 18 months
Net debt, Market cap and Enterprise Value of TATA, March fiscal year-ends, 4QFY19-21,2022E (Rs bn)
Tata - EV (Rs bn)

2,500 Net Debt Market Cap
2,000 EV +21%
1,500
1,000
500
0
4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 FY2022E
Source: Kotak Institutional Equities estimates, Company
Exhibit 30: Enterprise value of JSP has increased by 3% in the past 18 months
Net debt, Market cap and Enterprise Value of JSP, March fiscal year-ends, 4QFY19-21,2022E (Rs bn)
JSP- EV (Rs bn)

700
Net Debt Market Cap
600 EV +3%
500
400
300
200
100
-

Exhibit 31: Enterprise value of JSTL has increased by 95% in the past 18 months
Net debt, Market cap and Enterprise Value of JSTL, March fiscal year-ends, 4QFY19-21,2022E (Rs bn)
JSTL - EV (Rs bn)

2,500
Net Debt Market Cap
2,000
1,500
1,000
500
-
Exhibit 32: JSTL trades 1 sd above mean on EV/EBITDA Exhibit 33: JSTL trades above previous peak on P/B
2 year forward EV/EBITDA chart for JSTL, FY2012-22E (X) 2 year forward P/B chart for JSTL, FY2012-22E (X)
x JSTL - EV/EBITDA - 2Y FWD x JSTL - P/B - 2Y FWD

14 3.0
-1sd 5Y Avg +1sd -1sd 5Y Avg +1sd
12 2.5
10
2.0
8
1.5
6
1.0
4
2 0.5
- 0.0
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-11
Dec-12
Dec-13
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-11
Jun-12
Dec-11
Dec-12
Dec-14
Dec-15
Dec-16
Dec-17
Dec-19
Dec-20
Dec-13
Dec-18
Jun-11
Jun-12
Jun-14
Jun-15
Jun-16
Jun-17
Jun-19
Jun-20
Jun-21
Jun-13
Jun-18
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates

Exhibit 34: TATA trades below mean on EV/EBITDA Exhibit 35: TATA trades at previous peaks on P/B
2 year forward EV/EBITDA chart for TATA, FY2012-22E (X) 2 year forward P/B chart for TATA, FY2012-22E (X)
(X) TATA - EV/EBITDA - 2Y FWD (X) TATA - P/B - 2Y FWD

16 2.0 -1sd 5Y Avg +1sd
-1sd 5Y Avg +1sd
14 1.8
1.6
12
1.4
10 1.2
8 1.0
0.8
6
0.6
4 0.4
2 0.2
0.0
-
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Jun-13
Jun-15
Jun-16
Jun-18
Jun-21
Jun-12
Jun-14
Jun-17
Jun-19
Jun-20
Exhibit 36: JSP trades below mean on EV/EBITDA Exhibit 37: JSP trades above recent peaks on P/B
2 year forward EV/EBITDA chart for JSP, FY2012-22E (X) 2 year forward P/B chart for JSP, FY2012-22E (X)
JSP - EV/EBITDA - 2Y FWD (X) JSP - P/B - 2Y FWD

(X)
25 -1sd 5Y Avg +1sd 4.0 -1sd 5Y Avg +1sd
3.5
20
3.0
15 2.5
2.0
10
1.5
5
1.0
- 0.5
Jun-11
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-12
Jun-13
Jun-14
Jun-15
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
0.0
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20

Exhibit 38: Steel companies are deleveraging at a fast pace

Net debt/EBITDA for steel companies, FY2020-24E (X)
TATA JSTL JSP
7.00
6.0
6.00
5.3
4.8
5.00
4.00
3.00 2.7 2.6
1.8 1.9
2.00 1.5 1.7
1.1 1.3
0.9 1.0
1.00 0.7
0.2
-
2020 2021 2022E 2023E 2024E
Exhibit 39: Indian metal coverage – Valuation snapshot
Market cap. CMP (Rs) Target EPS (Rs) P/E (X)

Company (US$ mn) 3-Jun price (Rs) Rating 2020 2021 2022E 2023E 2020 2021 2022E 2023E
Jindal Steel and Power 5,566 399 520 ADD (1.7) 62.9 74.1 55.2 (234.1) 6.3 5.4 7.2
JSW Steel 23,353 706 640 REDUCE 10.1 33.0 58.9 51.4 70.0 21.4 12.0 13.7
Tata Steel 18,523 1,124 1,400 BUY 56.6 71.2 256.3 143.4 19.9 15.8 4.4 7.8
EV/EBITDA (X) Price/BV (X) RoE (%)

Company 2020 2021 2022E 2023E 2020 2021 2022E 2023E 2020 2021 2022E 2023E
Jindal Steel and Power 12.1 4.8 3.9 4.5 1.3 1.3 1.0 0.9 3.4 11.8 15.3 11.0
JSW Steel 19.9 11.0 7.3 8.0 4.6 3.6 2.9 2.5 6.8 19.1 27.0 19.3
Tata Steel 13.1 7.0 3.6 4.9 1.8 1.8 1.4 1.2 9.4 11.8 35.8 16.0
Source: Kotak Institutional Equities Estimates, Company

INDIA
Economy
External Sector JUNE 02, 2021
UPDATE
BSE-30: 51,849
Lockdown-led moderation in trade deficit. Even as the revival in global demand

supported exports, a sequential fall in imports amid state-wide restrictions led to a
moderation in trade deficit. With import growth likely to recover as restrictions ease
from June, we expect current account deficit at 0.6% of GDP in FY2022E after a
surplus of 0.9% of GDP in FY2021E. We expect BOP surplus to be lower at US$46.7 bn
in FY2022E as against US$86.8 bn in FY2021E.
Global economic recovery supporting export growth
Preliminary estimates suggest that exports rose sharply by 67% over May 2020 and by 5% over QUICK NUMBERS
April 2021 to US$32.2 bn in May (April: US$30.6 bn) (Exhibits 1-2). Easing of restrictions amid
faster vaccination in the developed countries has led to a sharp rebound in global economic  May trade deficit at
activity. Comparison with May 2019 (to reduce the base effect) shows that oil exports increased US$6.3 bn
7% and non-oil exports by 8% (Exhibits 3). Industry-led exports were supported by 16%
growth in engineering goods, 8% in chemicals products, and 69% in ores and minerals.  Export growth at
Consumption-led exports were weaker amid 13% fall in exports of gems and jewelry and 6% 67%, import
in textiles, even as exports of electronics and agriculture rose 5% and 12%, respectively. growth at 69%
Lockdown impact visible in imports  FY2022E CAD/GDP

likely at 0.6%;
Imports rose by 69% over May 2020 to US$45.5 bn amid favorable base effects. Over April
surplus of 0.9% of
2021, imports registered a sharp fall of 16% owing to lockdowns. While non-oil imports grew
GDP in FY2021E
51% over May 2020, it registered a fall of 15% over May 2019 and 16.6% over April 2021
(Exhibit 3). Non-oil, non-gold imports were flattish over last month. Compared to May 2019  Expect USD-INR in
(pre-Covid comparison), consumption-led imports were weak with fall of 86% in gold imports
range of 71.5-74 in
and 12% in electronics while agriculture products were 51% higher. Industry-led imports saw a
the near term
marginal fall with capital goods imports and base metals and ores falling by 21% and 11%,
respectively while chemical products were higher by 11%. Trade deficit in May fell to US$6.3 bn
(US$15.1 bn in April). 2MFY22 trade deficit is at US$21.4 bn (US$10.4 bn in 2MFY21).
Expect FY2022 BOP surplus to be lower than in FY2021
With restrictions likely to ease from June, import activity should start recovering along with
progress in vaccination. Amid higher commodity and crude prices, we believe that import
growth for FY2022 would be higher than export growth. We therefore expect CAD/GDP at
0.6% in FY2022E after a surplus of 0.9% in FY2021E. Further, with expectations of global
economic recovery and the assurance of continued policy support from central banks, we
expect capital flows to remain favorable, at least until 1HFY22, leading to a comfortable BOP
surplus of US$46.7 bn in FY2022E (US$86.8 bn in FY2021E) (Exhibit 4). Suvodeep Rakshit
USD-INR likely to remain in the range of 71.5.-73.5 over next few months
Despite the downside risks to domestic economic activity, INR emerged as the top-performing Upasna Bhardwaj
Asian currency in May amid favorable risk sentiments, RBI’s limited intervention, muted trade
deficit, a plateauing Covid curve and Fed’s assurance of continuous asset purchases. In addition,
Avijit Puri
China’s intent to keep CNY firm to offset commodity price inflation bodes well for EM
currencies. Barring the recent weakness in INR, we expect the above factors to continue to
provide a fillip to INR in the near term. We expect USD-INR to trade in the range of 71.5-74
over the next few months.
Contact: +91 22 6218 6427
For Private Circulation Only.

India Economy
Exhibit 1: Trade deficit moderated to US$6.3 bn in May 2021

Trend in exports, imports and trade balance (US$ bn)
May-21 / May-21 / May-21 / May-21 /

May-21 Apr-21 May-20 Feb-20 May-19 May-20 (%) Feb-20 (%) May-19 (%) Apr-21 (%)
Exports 32.2 30.6 19.2 27.7 29.8 67.4 16.1 7.9 5.2
Imports 38.5 45.7 22.9 37.9 46.7 68.6 1.7 (17.5) (15.7)
Trade balance (6.3) (15.1) (3.6) (10.2) (16.8)
Non-oil exports 26.9 26.9 17.5 24.3 24.9 54.1 10.9 8.1 0.3
Non-oil imports 29.1 34.9 19.3 27.1 34.1 50.8 7.2 (14.7) (16.6)
Non-oil trade balance (2.1) (8.0) (1.8) (2.8) (9.2)
Non-oil non-gems and jewellery exports 24.0 23.5 16.4 21.3 21.5 46.1 12.7 11.5 2.2
Non-oil non-gems and jewellery imports 26.1 26.1 18.5 22.2 27.3 41.4 17.7 (4.1) 0.1
Non-oil non-gems and jewellery trade balance (2.2) (2.7) (2.1) (0.9) (5.7)
Source: PIB, CEIC, Kotak Economics Research
Exhibit 2: Export and import growths remain high amid favorable base effects
Trend in export growth and import growth (%)
Export growth (%yoy) Import growth (%yoy)

200
150
100
50
0
Nov 14
Nov 16
Nov 17
Nov 18
Nov 19
Nov 15
Nov 20
May 14
May 15
May 16
May 18
May 20
May 17
May 19
May 21
(50)
(100)
Source: CEIC, Kotak Economics Research
66 KOTAK ECONOMIC RESEARCH

Economy India
Exhibit 3: Imports were lower compared to May 2019 levels, while exports were higher
Comparison of exports and imports (US$ bn and %)
May-21 / May-21 / May-21 / May-21 /
May-21 May-20 May-19 May-20 (%) May-19 (%) May-21 May-20 May-19 May-20 (%) May-19 (%)
Exports 32.2 19.2 29.8 67.4 7.9 Imports 38.5 22.9 46.7 68.5 (17.5)
O il exports 5.3 1.7 4.9 207.3 7.0 O il imports 9.5 3.6 12.6 164.8 (25.0)
Non-oil exports 26.9 17.5 24.9 54.1 8.1 Non-oil imports 29.1 19.3 34.1 50.8 (14.7)
Consumption-led exports 9.9 5.2 10.5 91.5 (5.0) Consumption-led imports 9.8 5.3 13.9 86.0 (29.5)
- Agri and allied products 2.1 1.7 1.9 25.1 12.0 - Agri and allied products 1.7 0.8 1.1 114.3 51.4
- Textiles and allied products 2.8 1.2 3.0 128.0 (5.9) - Gems and jewellery 2.9 0.8 6.8 269.7 (57.1)
- Gems and jewellery 3.0 1.1 3.4 177.8 (13.4) - Gold 0.7 0.1 4.8 790.2 (85.8)
- Electronic goods 1.0 0.5 0.9 92.3 5.1 - Electronics 4.2 2.9 4.8 47.3 (12.1)
Industry-led exports 14.9 11.0 12.8 35.0 16.0 Industry-led imports 16.9 12.0 17.2 40.6 (2.1)
- Chemicals and related products 4.1 3.8 3.8 7.6 8.3 - Chemicals and related products 4.3 2.8 3.8 51.6 11.5
- Enginerring goods 8.7 5.7 7.5 53.2 16.1 - Capital goods 4.1 3.4 5.2 19.5 (20.6)
- O res and minerals 1.0 0.7 0.6 41.2 68.7 - Base metals, ores and minerals 5.1 3.9 5.8 31.7 (11.3)
Source: PIB, CEIC, Kotak Economics Research
KOTAK ECONOMIC RESEARCH 67

India Economy
Exhibit 4: We expect FY2022E BOP surplus to be lower than in FY2021E

India's balance of payments, March fiscal year-ends, 2017-22E (US$ bn)
2022E
2017 2018 2019 2020 2021E Oil@47.5/bbl Oil@57.5/bbl Oil@67.5/bbl
Current account (14.4) (48.7) (57.3) (24.7) 23.6 (3.4) (19.3) (32.4)
GDP 2,290 2,651 2,703 2,870 2,659 3,041 3,041 3,041
CAD/GDP (%) (0.6) (1.8) (2.1) (0.9) 0.9 (0.1) (0.6) (1.1)
Trade balance (112) (160) (180) (158) (101) (129) (145) (160)
Trade balance/GDP (%) (4.9) (6.0) (6.7) (5.5) (3.8) (4.2) (4.8) (5.3)
- Exports 280 309 337 320 296 342 347 352
- oil exports 32 37 47 41 26 38 42 47
- non-oil exports 249 272 291 279 270 304 304 304
- Imports 393 469 518 478 397 471 492 512
- oil imports 87 109 141 131 83 100 121 140
- non-oil imports 306 360 377 347 315 371 371 371
- gold imports 28 34 33 28 35 31 31 31
Invisibles (net) 98 111 123 133 125 126 126 128
- Services 68 78 82 85 87 90 90 90
- software 71 72 78 85 87 90 90 90
- non-software (2.4) 5.4 4.3 0.3 0.0 0.0 0.0 0.0
- Transfers 56 62 70 75 74 74 74 76
- Income (net) (26) (29) (29) (27) (36) (38) (38) (38)
Capital account 36 91 54 83 63 66 66 66
Percentage of GDP 1.6 3.4 2.0 2.9 2.4 2.2 2.2 2.2
Foreign investment 43 52 30 44 80 55 55 55
- FDI 36 30 31 43 43 40 40 40
- FPI 8 22 (1) 1 37 15 15 15
- Equities 8 2 3 0 44 15 15 15
- Debt (1) 21 (4) 1 (7) 0 0 0
Banking capital (17) 16 7 (5) (22) 0 0 0
- NRI deposits (12) 10 10 9 10 10 10 10
Short-term credit 6 14 2 (1) 0 3 3 3
ECBs (6) (0) 10 23 (2) 4 4 4
External assistance 2 3 3 4 7 3 3 3
Other capital account items 8 6 1 18 0 1 1 1
E&O (0) 1 (0) 1 — — — —
Overall balance 21.6 43.6 (3.3) 59.5 86.8 62.6 46.7 33.6
Memo items
Average USD/INR 67.2 64.5 69.9 70.9 74.3 75.0 75.0 75.0
Average Brent (US$/bbl) 49.0 57.6 70.0 60.9 44.8 47.5 57.5 67.5
Source: RBI, Kotak Economics Research estimates

March 2021: Results calendar
69
Mon Tue Wed Thu Fri Sat

31-May 1-Jun 2-Jun 3-Jun 4-Jun 5-Jun
Aurobindo Pharma Gujarat Gas Motherson Sumi Systems GIC Bank of India Interglobe Aviation
Honeyw ell Auto ITC Muthoot Finance Gujarat State Petronet Bharat Forge
Narayana Hrudaya PVR Punjab National Bank
Varroc Engineering
7-Jun 8-Jun 9-Jun 10-Jun 11-Jun 12-Jun
MRF Max Financial Services Bata India J K Cements
New India Assurance Petronet LNG TeamLease Services
Union Bank of India Prestige Estates Projects
14-Jun 15-Jun 16-Jun 17-Jun 18-Jun 19-Jun
Jubilant Foodw orks CESC Timken India
Source: NSE, Kotak Institutional Equities
India Daily Summary - June 3, 2021

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3M
Company Rating 2-Jun-21 (Rs) (%) (Rs bn) (US$ bn) (mn) 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E (US$ mn)
Automobiles & Components
Amara Raja Batteries SELL 742 725 (2) 127 1.7 171 38 42 48 (2) 10 16 20 18 15 11.2 9.8 8.4 3.0 2.7 2.4 16.4 15.9 16.3 1.5 1.4 1.6 20
Apollo Tyres ADD 230 240 4 146 2.0 638 13 15 19 57 17 24 18 15 12 6.8 6.2 5.1 1.3 1.2 1.1 7.8 8.3 9.5 1.5 1.2 1.2 25
Ashok Leyland REDUCE 124 125 1 364 5.0 2,936 (1) 2 6 (207) 239 254 NM 68 19 104.1 24.1 11.2 5.3 5.1 4.3 NM 7.6 24 0.0 0.4 1.6 38
Bajaj Auto BUY 4,295 4,600 7 1,243 17 289 157 199 239 (11) 27 20 27 22 18 20.8 16.0 12.7 4.9 4.5 4.1 20 22 24 3.3 2.8 3.3 37
Balkrishna Industries SELL 2,229 1,500 (33) 431 5.9 193 61 67 79 23 10 19 37 33 28 23.2 20.5 17.2 7.2 6.2 5.3 21 20.0 20 0.8 0.8 0.9 16
Bharat Forge SELL 698 375 (46) 325 4.4 466 (5) 11 19 (164) 319 76 NM 66 37 51.2 29.8 20.6 6.5 6.1 5.3 NM 9.5 15.2 0.0 0.4 0.4 19
CEAT ADD 1,336 1,500 12 54 0.7 40 114 98 126 82 (15) 29 12 14 11 6.8 6.9 5.8 1.6 1.5 1.3 14.9 11.4 13.3 1.3 1.4 1.8 5
Eicher Motors SELL 2,678 2,200 (18) 732 10.0 272 49 75 103 (26) 51 38 54 36 26 36.7 26.9 20.5 7.5 6.5 5.4 15.0 19.3 23 0.6 0.5 0.5 34
Endurance Technologies SELL 1,484 1,260 (15) 209 2.9 141 38 49 62 (7) 30 27 40 30 24 19.7 15.1 12.2 5.9 5.0 4.3 14.6 16.6 17.9 0.4 0.5 0.7 3
Escorts BUY 1,161 1,700 46 117 2.1 101 86 91 101 58 6 11 13 13 11 9.2 8.4 7.1 2.2 1.9 1.7 16.2 14.9 14.6 0.6 1.2 1.3 23
Exide Industries REDUCE 193 180 (7) 164 2.2 850 9 10 12 (10) 16 12 22 19 17 12.0 10.2 9.2 2.4 2.2 2.1 11.5 12.3 12.8 1.0 2.3 2.3 9
Hero Motocorp REDUCE 2,973 2,900 (2) 594 8.1 200 148 195 211 (7) 32 8 20 15 14 12.1 9.8 8.8 3.9 3.5 3.2 20 24 24 3.5 3.9 4.2 41
Mahindra CIE Automotive SELL 196 150 (24) 74 1.0 378 3 8 15 (70) 178 88 70 25 13 17.2 8.7 7.0 1.5 1.4 1.3 2.2 5.9 10.4 — — — 1
Mahindra & Mahindra BUY 806 975 21 1,002 13.7 1,138 29 39 53 22 34 36 28 21 15 14.0 12.9 9.9 2.6 2.3 2.1 9.4 11.9 14.5 1.1 0.7 1.0 58
Maruti Suzuki SELL 7,185 5,600 (22) 2,170 29.7 302 140 213 266 (25) 52 25 51 34 27 32.3 19.6 15.2 4.2 3.9 3.5 8.5 12.0 13.6 0.6 0.7 0.9 80
Motherson Sumi Systems ADD 269 260 (3) 850 11.6 3,158 3 9 12 (7) 160 29 78 30 23 20.6 10.7 8.6 6.8 5.4 4.3 9.1 19.9 21 0.6 0.6 0.9 46
MRF SELL 84,433 78,000 (8) 358 4.9 4 3,155 3,735 4,321 (6) 18 16 27 23 20 11.0 9.5 7.9 2.6 2.4 2.1 10.4 11.1 11.5 0.1 0.1 0.2 28
Schaeffler India SELL 5,221 4,350 (17) 163 2.2 31 93 153 191 (21) 65 25 56 34 27 28.1 18.6 14.9 5.2 4.7 4.1 9.5 14.4 16.1 — — — 1
SKF SELL 2,373 1,890 (20) 117 1.6 49 60 75 90 3 25 19 39 32 26 26.7 22.2 18.2 7.5 6.3 5.3 19.0 20.0 20.0 4.6 0.5 0.6 1
Tata Motors SELL 323 205 (37) 1,237 15.7 3,829 (4) 16 25 82 541 52 NM 20 13 6.9 4.9 4.1 2.2 2.0 1.7 NM 10.7 14.4 — — — 273
Timken SELL 1,309 830 (37) 98 1.3 75 22 36 43 (34) 65 20 60 37 30 34.8 22.4 18.6 7.2 6.1 5.2 11.1 18.1 18.4 0.1 0.1 0.1 1
TVS Motor SELL 617 425 (31) 293 4.0 475 13 20 26 (1) 55 28 48 31 24 20.6 15.9 13.0 7.0 6.1 5.1 15.7 21 23 0.5 0.8 1.0 25
Automobiles & Components Cautious 10,936 149.0 13 84 32 47 26 19 14.5 10.6 8.6 3.8 3.4 3.0 8.0 13.3 15.5 1.0 1.0 1.2 786
Banks
AU Small Finance Bank SELL 1,010 800 (21) 316 4.3 312 39 27 34 75 (29) 24 26 37 30 — — — 5.4 4.7 4.1 22.9 12.9 13.9 — — — 28
Axis Bank BUY 737 810 10 2,259 30.9 3,064 22 48 58 273 122 21 34 15 13 — — — 2.3 2.1 1.8 7.1 13.6 14.6 0.4 1.0 1.2 162
Bandhan Bank ADD 312 350 12 502 6.9 1,611 14 23 28 (27) 65 26 23 14 11 — — — 3.2 2.6 2.1 13.5 19.1 20.0 — 1— 1— 41
Bank of Baroda ADD 81 95 17 420 5.7 5,178 2 16 20 35 890 29 51 5 4 — — — 0.7 0.6 0.6 1.2 11.0 12.8 0.0 3.9 5.0 66
Canara Bank REDUCE 164 150 (8) 270 3.7 1,647 16 17 20 172 7 21 11 10 8 — — — 0.8 0.7 0.7 4.6 4.5 5.3 — — — 48
City Union Bank REDUCE 168 160 (5) 124 1.7 739 8 8 11 24 (2) 45 21 21 15 — — — 2.5 2.3 2.1 10.6 9.6 12.7 1.4 0.9 1.4 8
DCB Bank BUY 103 150 45 32 0.4 311 11 12 17 (1) 8 43 10 9 6 — — — 1.0 1.0 0.8 10.0 9.9 12.8 1.0 1.1 1.6 3
Equitas Holdings BUY 88 100 14 30 0.4 342 8 8 16 30 5 97 11 11 5 — — — 1.0 1.0 0.8 9.2 8.8 15.4 — — — 2
Equitas Small Finance Bank ADD 60 65 8 69 0.9 1,139 3 4 5 46 21 22 18 15 12 — — — 2.1 1.8 1.6 12.5 12.8 13.7 — — — 2
Federal Bank BUY 87 100 15 174 2.4 1,996 8 9 13 3 9 54 11 10 7 — — — 1.2 1.1 0.9 10.4 10.3 14.4 0.8 1.8 2.8 31
HDFC Bank ADD 1,504 1,650 10 8,299 113.6 5,513 56 65 75 18 15 16 27 23 20 — — — 4.1 3.7 3.3 16.6 16.5 17.0 0.0 1.1 1.3 197
ICICI Bank BUY 648 710 10 4,487 61.4 6,917 23 33 36 91 41 10 28 20 18 — — — 3.3 2.9 2.6 12.3 14.6 14.3 0.3 1.0 1.1 192
IndusInd Bank ADD 1,028 1,050 2 795 10.9 773 37 65 85 (41) 73 31 28 16 12 — — — 1.9 1.7 1.5 7.6 11.1 13.1 0.5 0.9 1.2 96
Karur Vysya Bank BUY 56 65 17 44 0.6 799 4 7 11 53 63 53 12 8 5 — — — 0.8 0.7 0.6 5.3 8.2 11.6 0.9 3.4 5.2 1
Punjab National Bank REDUCE 44 36 (18) 484 6.6 10,481 3 5 6 577 46 28 13 9 7 — — — 0.8 0.8 0.7 4.9 5.8 6.9 — — — 83
RBL Bank BUY 221 240 9 132 1.8 598 8 17 32 (15) 103 85 26 13 7 — — — 1.1 1.0 0.9 4.4 7.9 13.3 0.6 1.2 2.2 45
SBI Cards and Payment Services ADD 1,055 975 (8) 993 13.6 941 10 18 27 (21) 68 54 101 60 39 — — — 15.7 12.7 9.7 16.9 23 28 0.1 0.1 0.2 49
State Bank of India BUY 437 470 8 3,902 53.4 8,925 23 39 49 41 69 26 19 11 9 — — — 2.1 1.8 1.4 8.4 12.7 14.1 0.0 0.0 0.0 278
Ujjivan Financial Services BUY 214 345 61 26 0.4 121 34 44 — 25 32 (100) 6 5 - — — — 1.0 0.9 — 17.0 19.3 NM 2.0 2.8 0.0 2
Ujjivan Small Finance Bank ADD 29 34 16 51 0.7 1,728 (0) 1 3 (103) 2,275 112 NM 22 11 — — — 1.8 1.7 1.4 0.3 7.4 13.5 0.0 0.0 0.0 2
Union Bank REDUCE 35 30 (15) 241 3.3 6,407 3 2 4 134 (39) 159 12 20 8 — — — 0.6 0.6 0.5 3.2 1.9 4.8 1.2 0.7 1.9 7
YES Bank SELL 13 11 (18) 337 4.6 25,055 (1) (1) (0) 89 37 89 NM NM NM — — — 1.3 1.4 1.4 NM NM NM 0.0 0.0 0.0 24
Banks Attractive 23,987 328.2 111 53 25 26 17 14 2.1 1.9 1.7 7.9 10.9 12.3 0.2 0.8 1.0 1,367

70
71
Building Products
Astral SELL 1,888 1,100 (42) 379 5.2 201 20 23 27 63 17 16 94 80 70 58.2 49.2 42.3 20.0 16.6 14.0 24 23 22 0.1 0.2 0.3 10
Building Products Cautious 379 5.2 63 17 16 94 80 70 58.2 49.2 42.3 20.0 16.6 14.0 21 21 20 0.1 0.2 0.3 10
Capital goods
ABB BUY 1,701 1,550 (9) 360 4.9 212 8 21 28 (54) 157 35 210 82 61 122.6 57.3 41.9 10.0 9.2 8.4 4.8 11.7 14.5 0.3 0.4 0.4 4
Ashoka Buildcon BUY 93 145 56 26 0.4 281 12 12 13 (14) 1 9 8 8 7 6.4 5.4 4.5 0.9 0.8 0.8 12.2 11.2 11.2 2.0 2.1 2.2 2
Bharat Electronics BUY 150 150 (0) 366 5.0 2,437 8 8 8 4 (1) 7 19 20 18 12.6 11.9 10.8 3.3 3.0 2.8 17.9 16.1 15.7 1.9 1.9 2.0 34
BHEL SELL 72 31 (57) 252 3.4 3,482 (4) 2 3 (4) 149 42 NM 33 24 (15.4) 14.2 10.7 0.9 0.9 0.9 NM 2.6 3.7 (2.7) 1.2 1.5 84
Carborundum Universal ADD 585 545 (7) 111 1.5 190 15 21 26 4 37 26 39 29 23 22.4 17.3 13.7 5.2 4.7 4.1 14.3 17.2 19.2 0.7 1.0 1.2 2
Cochin Shipyard BUY 376 550 46 49 0.7 132 41 48 43 (15) 16 (10) 9 8 9 4.8 4.8 4.8 1.2 1.1 1.0 13.8 14.6 12.0 3.1 3.4 3.8 2
Cummins India BUY 794 890 12 220 3.0 277 23 31 39 (10) 36 25 35 25 20 35.8 24.6 18.7 5.0 4.7 4.4 14.8 19.0 22 1.9 2.2 2.7 17
Dilip Buildcon BUY 550 630 14 80 1.1 146 22 40 58 (23) 84 45 25 14 9 7.7 6.2 5.2 2.1 1.6 1.4 8.5 13.1 15.6 0.2 0.1 0.2 3
IRB Infrastructure BUY 131 145 11 46 0.6 351 3 9 12 (84) 178 28 39 14 11 8.1 7.4 6.0 0.7 0.6 0.6 1.7 4.6 5.7 2.9 1.1 1.6 4
Kalpataru Power Transmission BUY 431 525 22 64 0.9 153 33 37 46 29 12 27 13 12 9 5.5 5.4 4.4 1.8 1.4 1.3 14.2 13.4 14.5 2.0 0.9 1.2 2
KEC International BUY 409 430 5 105 1.4 257 21 27 35 (2) 24 32 19 15 12 10.6 8.6 6.9 3.1 2.7 2.2 18.0 18.7 21 0.6 0.7 0.9 3
L&T BUY 1,471 1,850 26 2,066 28.3 1,405 49 71 95 (23) 46 34 30 21 16 20.8 15.3 13.3 3.2 3.1 2.9 11.3 15.2 19.0 2.4 2.0 2.6 64
Siemens SELL 2,090 1,740 (17) 744 10.2 356 35 40 48 63 14 21 60 53 44 42.3 36.9 30.5 7.2 6.6 6.0 12.5 13.1 14.4 0.5 0.5 0.6 12
Thermax SELL 1,424 1,200 (16) 170 2.3 113 23 33 42 22 42 28 62 44 34 43.2 32.1 24.9 43.2 32.1 24.9 8.3 11.1 13.5 0.5 1.1 1.4 1
Capital goods Attractive 4,661 63.8 (17) 58 28 38 24 19 3.1 2.9 2.7 8.0 11.8 14.0 1.4 1.5 1.9 235
Commercial & Professional Services
SIS BUY 436 430 (1) 65 0.9 149 25 20 23 63 (20) 20 18 22 19 12.4 12.6 11.2 3.5 3.2 2.8 23 15.1 16.0 1.4 1.1 1.3 2
TeamLease Services ADD 3,456 3,775 9 59 0.8 17 53 84 113 161 56 35 65 41 31 58.0 36.2 27.0 8.9 7.3 5.9 14.8 19.4 21 — — — 1
Commercial & Professional ServicesAttractive 124 1.7 76 (5) 25 27 28 23 19.7 17.8 15.1 5.0 4.3 3.7 18.4 15.2 16.4 0.7 0.6 0.7 3
Commodity Chemicals
Asian Paints REDUCE 2,904 2,500 (14) 2,785 38.1 959 33 38 47 20 15 24 89 77 62 56.6 50.2 42.2 21.7 19.4 17.2 27 27 29 0.6 0.7 1.0 69
Berger Paints SELL 794 630 (21) 771 10.6 971 7 10 12 9 32 25 107 81 65 64.7 50.4 41.4 22.8 19.7 17.0 24 26 28 0.3 0.4 0.6 13
Kansai Nerolac REDUCE 582 610 5 314 4.3 539 10 12 15 1 21 26 58 48 38 37.6 31.8 25.5 7.6 7.0 6.3 13.6 15.1 17.3 0.5 0.7 0.9 2
Tata Chemicals SELL 712 540 (24) 181 2.5 255 11 32 36 (66) 198 14 67 22 20 11.0 7.6 6.9 1.3 1.3 1.3 2.0 5.7 6.5 1.4 4.4 5.1 66
Commodity Chemicals Neutral 4,051 55.4 1 29 23 87 67 55 47.7 39.2 33.1 11.7 10.9 10.1 13.5 16.3 18.5 0.6 0.8 1.1 150
Construction Materials
ACC REDUCE 1,997 1,950 (2) 375 5.1 188 75 95 106 4 27 11 27 21 19 12.8 10.7 9.3 3.0 2.7 2.4 11.7 13.5 13.5 0.7 1.2 1.3 27
Ambuja Cements REDUCE 331 320 (3) 657 9.0 1,986 13 13 16 28 1 22 25 25 20 11.1 9.0 7.3 2.9 2.6 2.4 11.3 11.2 12.4 5.4 0.8 1.0 28
Dalmia Bharat BUY 1,785 1,800 1 334 4.6 187 54 58 80 286 7 37 33 31 22 12.0 10.8 8.5 2.6 2.4 2.2 8.7 8.2 10.3 — — — 5
Grasim Industries ADD 1,442 1,520 5 949 13.0 657 68 86 108 (22) 27 25 21 17 13 9.2 7.6 6.1 1.4 1.3 1.2 7.3 8.3 9.4 0.6 0.6 0.5 36
J K Cement ADD 2,846 2,300 (19) 220 3.0 77 87 127 140 35 47 10 33 22 20 15.6 12.2 11.4 6.1 4.9 4.0 20 24 22 0.4 0.4 0.4 2

JK Lakshmi Cement ADD 542 550 1 64 0.9 118 38 39 43 60 2 11 14 14 13 7.7 6.9 6.3 3.0 2.5 2.2 23 19.7 18.4 0.7 1.1 1.2 5
Orient Cement ADD 137 140 2 28 0.4 205 10 10 11 147 (6) 9 13 14 13 6.3 6.0 6.2 2.1 1.9 1.7 17.7 14.5 14.2 1.5 1.5 1.5 2
Shree Cement SELL 27,894 20,000 (28) 1,006 13.8 36 641 833 983 47 30 18 44 33 28 24.9 19.5 16.6 6.6 5.6 4.7 16.4 18.1 18.0 0.2 0.2 0.2 25
The Ramco Cements SELL 969 800 (17) 229 3.1 236 32 34 43 26 4 27 30 29 23 16.6 14.2 11.4 4.0 3.5 3.1 14.2 13.0 14.6 0.3 0.3 0.4 9
UltraTech Cement REDUCE 6,594 6,300 (4) 1,903 26.0 289 193 245 282 (3) 27 15 34 27 23 17.0 14.1 12.5 4.3 3.8 3.4 13.4 15.0 15.3 0.6 0.3 0.4 55
Construction Materials Attractive 5,766 78.9 7 22 19 30 24 20 13.6 11.3 9.5 3.1 2.8 2.5 10.5 11.4 12.2 1.0 0.5 0.5 193



Consumer Durables & Apparel

Crompton Greaves Consumer SELL 401 305 (24) 252 3.4 628 9 10 11 19 4 15 43 41 35 36 30 26 13.0 10.6 8.6 35 29 27 0.5 0.6 0.6 9
Havells India SELL 1,047 845 (19) 655 9.0 626 17 20 24 41 23 18 63 51 43 41 35 29 13.3 11.6 10.0 23 24 25 0.6 0.7 0.8 25
Page Industries REDUCE 30,776 30,500 (1) 343 4.7 11 305 486 598 (1) 59 23 101 63 51 64 43 35 38.8 32.3 27.3 40 56 57 0.8 1.1 1.5 16
Polycab ADD 1,676 1,700 1 250 3.4 149 59 62 69 14 6 10 28 27 24 21 17 15 5.3 4.5 3.9 20 18.1 17.1 0.4 0.4 0.5 7
TCNS Clothing Co. REDUCE 540 390 (28) 33 0.5 68 (7) 11 15 (162) 269 37 NM 48 35 110 17 13.3 5.4 4.6 3.9 NM 10.4 12.2 — — — 1
Voltas SELL 1,034 830 (20) 342 4.7 331 13 24 29 (21) 85 23 80 43 35 63 35 29 6.9 6.2 5.5 9.2 15.0 16.4 0.3 0.6 0.7 27
Whirlpool SELL 2,176 1,930 (11) 276 3.8 127 26 48 63 (30) 85 30 83 45 35 51 31 23 10.0 9.0 8.1 12.5 21 25 0.4 0.9 1.4 3
Consumer Durables & Apparel Cautious 2,152 29.4 4 36 19 60 44 37 42 31 26 10.3 8.9 17.0 20 21 0.5 0.7 89
Consumer Staples
Bajaj Consumer Care ADD 289 325 13 43 0.6 148 15 16 18 21 8 9 19 18 16 15.1 14.1 12.5 5.6 5.1 4.6 32 30 30 3.5 3.8 3.8 5
Britannia Industries ADD 3,475 3,650 5 837 11.5 241 78 70 82 32 (9) 16 45 49 43 34 36 31 23.6 43.1 39.8 46 61 96 3.1 2.2 1.7 28
Colgate-Palmolive (India) ADD 1,718 1,760 2 467 6.4 272 38 39 44 34 3 12 45 44 39 30.4 28.8 25.8 40.1 40.2 37.3 75 92 99 2.2 2.2 2.4 14
Dabur India ADD 532 555 4 941 12.9 1,767 10 10 12 11 8 18 56 51 44 46 42 35 12.3 11.8 10.8 24 24 26 0.9 1.0 1.2 19
Godrej Consumer Products ADD 851 925 9 870 11.9 1,023 17 18 21 25 6 16 49 46 40 36 33 28 9.2 8.2 7.5 20 18.7 19.5 0.0 1.1 1.4 22
Hindustan Unilever ADD 2,359 2,650 12 5,542 75.8 2,350 34 40 48 9 19 18 70 58 49 48 40 34 11.7 11.3 10.9 29 19.7 23 1.3 1.6 1.9 66
ITC BUY 209 257 23 2,573 35.2 12,330 11 12 13 (8) 10 12 20 18 16 14.8 12.9 11.3 4.4 4.3 4.1 21 23 25 5.1 5.0 5.3 90
Jyothy Laboratories ADD 157 170 8 58 0.8 367 6 6 7 26 3 19 26 26 22 18.1 18.5 15.8 4.0 3.9 3.7 16.4 15.3 17.4 2.5 2.9 3.2 2
Marico ADD 491 465 (5) 634 8.7 1,290 9 10 11 11 11 13 54 49 43 39 35 31 19.5 18.3 17.1 37 39 41 1.5 1.7 1.9 16
Nestle India ADD 17,654 18,250 3 1,702 23.3 96 216 255 301 6 18 18 82 69 59 53 46 39 84.3 61.0 46.2 106 102 90 1.1 1.0 1.2 22
Tata Consumer Products ADD 674 650 (3) 621 8.5 922 10 11 15 21 16 32 70 60 46 38 34 27 4.3 4.1 3.9 6.3 7.0 8.7 0.6 0.6 0.7 35
United Breweries ADD 1,243 1,365 10 329 4.5 264 5 14 31 (72) 212 119 273 87 40 85 44 23 9.2 8.3 7.1 3.4 10.0 19.2 0.0 0.5 1.3 8
United Spirits ADD 616 680 10 448 6.1 727 6 11 16 (45) 75 48 97 55 37 46 33 24 10.4 8.8 7.6 11.1 17.3 22 — — 0.8 17
Varun Beverages BUY 1,019 1,150 13 294 4.0 289 14 26 37 (16) 89 42 74 39 28 27 17 14 8.3 7.0 5.7 11.5 19.4 23 0.1 0.3 0.3 5
Consumer Staples Attractive 15,357 210.1 3 14 18 47 41 35 33 29 24 9.5 9.1 8.6 20 22 25 1.9 2.0 2.2 348
Diversified Financials
Aavas Financiers ADD 2,298 2,500 9 180 2.5 79 37 45 57 17 21 27 62 51 40 — — — — — — 12.9 13.6 15.0 0.0 0.0 0.0 3
Aditya Birla Capital NR 123 — — 297 4.1 2,414 4 6 8 4 36 43 29 21 15 — — — — — — 7.8 9.7 12.4 45.8 50.5 57.2 7
Bajaj Finance SELL 5,808 4,200 (28) 3,506 48.0 602 73 139 174 (16) 89 25 79 42 33 — — — 9.5 7.9 6.5 12.8 21 21 0.2 0.2 0.3 194
Bajaj Finserv ADD 11,824 11,450 (3) 1,882 25.7 159 281 426 526 33 52 24 42 28 22 — — — 5.3 5.1 4.4 13.3 18.7 21 0.1 0.1 0.1 65
Cholamandalam BUY 557 625 12 457 6.3 820 18 30 36 44 62 20 30 19 15 — — — 5.1 4.1 3.3 17.1 23 23 0.4 0.6 0.7 40
Computer Age Management Services SELL 2,516 1,900 (24) 123 1.7 49 42 49 56 18 17 14 60 51 45 — — — 23.8 20.1 17.1 39 43 41 2.5 1.3 1.4 6
HDFC BUY 2,562 3,050 19 4,626 63.3 1,804 67 72 86 (35) 8 19 38 36 30 — — — 4.2 3.9 3.6 12.0 11.5 12.6 0.8 0.9 1.0 133
HDFC AMC SELL 3,016 2,260 (25) 642 8.8 213 62 71 83 5 14 17 48 43 37 — — — 13.4 11.6 10.0 30 29 30 1.1 1.3 1.5 12
IIFL Wealth ADD 1,179 1,300 10 104 1.4 89 42 50 60 75 20 21 28 24 20 — — — 3.7 3.5 3.3 12.7 15.1 17.6 5.9 2.9 3.6 1
L&T Finance Holdings ADD 94 115 23 231 3.2 2,469 4 8 10 (55) 111 24 24 12 9 — — — 1.2 1.1 1.0 4.8 10.2 11.4 0.0 0.6 0.6 19
LIC Housing Finance ADD 482 430 (11) 243 3.3 505 59 73 79 24 24 8 8 7 6 — — — 1.4 1.2 1.0 15.3 16.7 15.9 2.1 2.5 2.8 21
Mahindra & Mahindra Financial ADD 163 200 23 201 2.8 1,230 3 14 16 (81) 421 15 60 11 10 — — — 1.5 1.3 1.2 2.6 11.4 12.0 0.5 1.7 2.0 26
Muthoot Finance REDUCE 1,415 1,375 (3) 568 7.8 401 93 110 125 23 19 14 15 13 11 — — — 3.7 3.0 2.5 28 26 24 1.4 1.6 1.8 19
Shriram City Union Finance BUY 1,655 1,725 4 109 1.5 66 153 173 196 1 13 13 11 10 8 — — — 1.4 1.3 1.1 13.2 13.3 13.4 2.0 1.6 1.8 1
Shriram Transport BUY 1,430 1,575 10 362 5.0 253 98 139 167 (11) 41 20 15 10 9 — — — 1.7 1.5 1.3 12.6 15.2 16.0 1.3 1.5 1.7 48
Diversified Financials Attractive 13,648 186.7 (11) 37 18 36 26 22 4.2 3.8 3.4 11.7 14.4 15.3 0.6 0.7 0.8 596

72
73
Electric Utilities
CESC BUY 688 815 18 91 1.2 133 96 106 117 (3) 11 10 7 6 6 5.4 4.5 4.0 0.7 0.6 0.6 11.2 10.3 10.4 6.5 2.0 2.4 4
JSW Energy REDUCE 131 70 (47) 215 2.9 1,640 6 5 7 (12) (1) 25 24 24 19 9.9 9.1 8.7 1.7 1.6 1.5 7.5 6.9 8.0 — — — 14
NHPC ADD 26 27 5 259 3.5 10,045 4 3 4 26 (2) 1 7 7 7 10.4 9.8 9.2 0.8 0.8 0.7 11.1 10.4 10.0 7.6 7.7 7.7 2
NTPC BUY 111 125 12 1,078 14.7 9,697 15 15 17 32 4 8 8 7 7 8.7 6.6 5.6 0.9 0.8 0.8 12.2 11.8 11.8 3.6 4.1 4.5 32
Power Grid BUY 227 250 10 1,190 16.3 5,232 25 28 30 18 15 7 9 8 8 6.9 6.0 5.6 1.7 1.5 1.4 18.8 19.4 18.7 4.4 5.2 6.9 39
Tata Power ADD 108 110 2 345 4.7 3,196 4 6 6 (10) 52 (1) 27 18 18 9.1 7.9 7.7 1.7 1.5 1.4 6.6 8.9 8.2 — — — 81
Electric Utilities Attractive 3,178 43.5 20 10 7 9 9 8 1.2 1.1 1.0 12.6 12.6 12.5 3.7 4.0 4.8 172
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 5,300 4,600 (13) 238 3.3 45 130 159 184 0 22 15 41 33 29 28 24 20 9.3 7.6 6.3 23 25 24 0.5 0.6 0.7 2
Dhanuka Agritech SELL 937 775 (17) 44 0.6 48 44 43 47 49 (3) 10 21 22 20 15.6 16.0 14.5 5.6 4.8 4.1 28 23 22 0.4 1.4 1.8 2
Godrej Agrovet SELL 558 455 (18) 107 1.5 192 16 20 23 41 25 12 34 27 24 21 17 15 4.4 4.0 3.6 13.4 15.2 15.5 1.4 1.8 2.0 2
PI Industries REDUCE 2,671 2,420 (9) 405 5.5 152 50 61 74 50 22 23 54 44 36 39 31 25 7.4 6.6 5.7 18.5 16.0 17.1 0.2 0.3 0.4 15
Rallis India ADD 311 310 (0) 60 0.8 195 11 14 17 26 26 20 27 22 18 18.8 14.9 12.2 3.8 3.3 2.9 14.8 16.5 17.4 1.0 1.1 1.2 4
UPL SELL 837 650 (22) 640 8.8 765 38 46 55 62 22 20 22 18 15 10.3 8.6 7.4 3.6 3.1 2.7 16.8 18.3 19.1 1.2 1.5 1.7 85
Fertilizers & Agricultural ChemicalsCautious 1,495 20.4 47 22 19 30 25 21 15.0 12.6 10.8 4.9 4.2 3.7 16.1 17.1 17.6 0.8 1.0 1.2 110
Gas Utilities
GAIL (India) BUY 159 170 7 705 9.7 4,510 10 13 14 (22) 30 4 15 12 11 11.9 8.5 7.9 1.5 1.4 1.3 10.2 12.4 12.0 2.5 3.5 3.8 41
GSPL SELL 280 200 (29) 158 2.2 564 13 12 8 (23) (11) (32) 21 24 35 9.7 10.4 14.0 2.1 2.0 1.9 10.6 8.7 5.6 0.7 0.8 0.7 4
Indraprastha Gas ADD 531 575 8 372 5.1 700 16 23 26 (4) 43 11 33 23 21 23.4 16.7 14.7 6.3 5.3 4.6 21 25 24 0.5 1.0 1.3 17
Mahanagar Gas BUY 1,186 1,350 14 117 1.6 99 63 75 105 (16) 20 39 19 16 11 12.0 9.9 6.9 3.6 3.2 2.8 20 22 26 1.9 2.5 4.0 10
Petronet LNG BUY 240 300 25 361 4.9 1,500 20 21 23 16 4 9 12 11 10 6.6 6.2 5.8 3.1 2.9 2.8 27 26 28 6.4 7.1 8.2 13
Gas Utilities Attractive 1,713 23.4 (11) 20 7 17 14 13 11.2 9.0 8.3 2.3 2.1 2.0 13.6 15.1 14.9 2.7 3.4 3.9 85
Health Care Services
Apollo Hospitals ADD 3,274 2,860 (13) 471 6.4 144 5 48 65 (71) 785 36 606 68 50 42.9 25.9 21.6 10.3 9.5 8.5 2.0 14.4 17.8 0.1 0.6 0.8 40
Aster DM Healthcare BUY 145 220 51 73 1.0 500 3 10 12 (52) 245 21 51 15 12 9.0 6.1 5.3 2.1 1.9 1.7 4.3 13.6 14.5 — — — 2
Dr Lal Pathlabs SELL 2,909 1,810 (38) 242 3.3 83 35 43 46 29 23 7 83 68 63 53.3 42.0 39.6 19.5 16.8 14.7 26 27 25 0.5 0.7 0.7 19
HCG BUY 184 175 (5) 23 0.3 143 (8) (2) (2) 30 71 21 NM NM NM 18.0 10.3 9.0 2.7 2.8 2.9 NM NM NM — — — 1
Metropolis Healthcare SELL 2,471 1,800 (27) 126 1.7 51 36 44 47 21 21 7 68 57 53 42.7 34.1 30.7 17.7 14.8 12.6 30 29 26 0.4 0.5 0.6 6
Narayana Hrudayalaya ADD 505 540 7 103 1.4 204 (1) 12 15 (112) 1,762 27 NM 43 34 58.2 18.9 16.3 9.2 7.6 6.2 NM 19.2 20.0 — — — 3
Health Care Services Attractive 1,038 14.2 (41) 250 24 185 53 43 32.6 20.7 18.0 8.7 7.8 6.9 4.7 14.7 16.1 0.2 0.5 0.6 70
Hotels & Restaurants
Burger King SELL 150 115 (23) 57 0.8 382 (4) (1) 1 (66) 78 167 NM NM 229 545.1 35.3 21.5 8.5 9.0 8.7 NM NM 3.9 0.0 0.0 0.0 6
Jubilant Foodworks BUY 3,043 3,200 5 402 5.5 132 17 33 51 (29) 98 54 181 92 59 50.8 35.7 27.0 31.9 24.8 19.0 18.5 31 36 0.2 0.4 0.6 24
Lemon Tree Hotels REDUCE 43 39 (9) 34 0.5 790 (2) (0) 1 (1,176) 72 237 NM NM 72 75.7 36.1 14.1 4.8 4.7 4.4 NM NM 6.3 — (1.4) (0.1) 1
Westlife Development ADD 491 460 (6) 77 1.0 156 (5) 1 6 (1,655) 125 346 NM 384 86 104.8 31.0 21.4 15.3 14.7 12.5 NM 3.9 15.7 — 0.0 0.0 2

Hotels & Restaurants Attractive 569 7.8 (164) 358 116 NM 147 68 62.2 35.0 23.6 18.2 16.3 13.7 NM 11.1 20 0.1 0.2 0.4 33



Insurance
HDFC Life Insurance ADD 676 750 11 1,366 18.7 2,011 7 8 9 5 13 14 100 88 77 — — — 16.1 14.9 13.7 17.6 17.5 18.5 0.3 0.3 0.3 29
ICICI Lombard SELL 1,467 1,150 (22) 667 9.1 490 32 35 40 23 8 15 45 42 37 — — — 9.0 7.8 6.6 22 21 19.6 0.5 0.5 0.5 12
ICICI Prudential Life BUY 566 660 17 813 11.1 1,436 7 7 9 (10) 11 15 85 76 67 — — — 8.9 8.2 7.4 11.5 11.2 11.7 0.3 0.0 0.0 25
Max Financial Services BUY 950 1,000 5 328 4.5 343 10 12 16 (6) 29 29 100 77 60 — — — — — — 13.5 15.4 17.5 0.1 0.3 0.3 10
SBI Life Insurance BUY 984 1,360 38 985 13.5 1,002 15 16 18 2 12 9 68 60 55 — — — 9.8 8.6 7.6 15.3 15.2 14.6 0.3 0.3 0.3 59
Insurance Attractive 4,159 56.9 6 14 14 75 65 57 11.0 9.7 8.7 14.8 14.9 15.2 0.2 0.2 0.2 134
Internet Software & Services
Info Edge SELL 4,555 3,170 (30) 587 8.0 128.3 22 43 53 (19) 98 23 209 106 86 179.8 98.7 78.3 12.9 11.9 10.7 8.0 11.7 13.1 0.1 0.2 0.3 43
Just Dial SELL 940 595 (37) 59 0.8 61.9 35 31 36 (17) (11) 17 27 30 26 28.0 24.2 21.1 4.6 4.0 3.5 16.8 14.1 14.2 — — — 36
Internet Software & Services Cautious 645 8.8 (18) 51 21 131 87 72 128.9 81.2 66.3 11.2 10.1 9.1 8.5 11.7 12.7 0.1 0.2 0.3 79
IT Services
HCL Technologies ADD 944 1,080 14 2,561 35.0 2,714 48 51 57 18 7 11 20 18 17 11.9 10.9 9.7 4.1 3.6 3.2 24 21 20 2.4 2.2 2.2 83
Infosys BUY 1,379 1,600 16 5,875 80.4 4,250 46 52 61 17 15 16 30 26 23 20.2 17.6 15.1 7.7 6.8 6.0 27 27 28 2.0 2.2 2.5 149
L&T Infotech REDUCE 3,838 3,850 0 671 9.2 176 110 127 149 27 15 18 35 30 26 23.3 21.2 18.2 9.3 7.7 6.4 30 28 27 0.7 0.9 1.0 18
L&T Technology Services ADD 2,669 2,800 5 280 3.8 106 63 88 106 (19) 40 21 42 30 25 26.1 19.7 16.4 8.1 6.8 5.7 21 24 25 0.7 0.8 1.0 14
Mindtree SELL 2,387 1,620 (32) 393 5.4 165 67 82 88 76 22 8 35 29 27 22.4 19.8 18.3 9.1 7.7 6.6 30 29 26 0.8 1.4 1.5 38
Mphasis REDUCE 1,908 1,650 (14) 357 4.9 187 65 77 86 2 18 13 29 25 22 18.8 16.2 14.3 5.5 4.9 4.5 19.7 21 21 3.4 2.1 2.4 14
TCS REDUCE 3,129 3,250 4 11,576 158.4 3,699 89 108 122 4 21 13 35 29 26 23.8 19.6 17.6 13.2 11.1 10.2 38 42 42 1.2 2.1 3.1 130
Tech Mahindra BUY 1,017 1,150 13 886 12.1 880 51 61 68 11 20 11 20 17 15 11.4 9.9 8.7 3.6 3.2 2.9 19.2 20 20 3.8 2.4 2.5 52
Wipro ADD 543 480 (12) 2,975 40.7 5,504 19 20 23 15 7 15 28 27 23 18.1 16.3 14.1 5.6 4.7 4.0 19.5 18.8 18.7 0.4 0.9 0.9 97
IT Services Attractive 25,574 349.9 10 15 14 30 26 23 19.6 16.9 14.9 7.8 6.8 6.0 26 26 26 1.5 1.9 2.5 595
Media
DB Corp. REDUCE 94 81 (14) 17 0.2 175 5 14 14 (66) 167 1 18 7 7 5.9 3.0 3.1 1.0 1.0 1.0 5.4 14.3 14.6 2.1 12.7 13.8 0
Jagran Prakashan REDUCE 58 37 (36) 15 0.2 281 4 7 8 (44) 87 NA 15 8 NA 3.7 2.4 NA 0.8 0.8 NA 5.7 10.3 11.5 3.4 8.6 8.6 1
PVR BUY 1,321 1,525 15 80 1.1 61 (110) (33) 45 (478) 70 239 NM NM 29 (18.1) 127.2 10.7 2.9 3.1 2.9 NM NM 10.3 (0.8) (0.2) 0.3 26
Sun TV Network REDUCE 524 465 (11) 207 2.8 394 38 40 42 7 7 5 14 13 12 9.8 8.8 8.4 3.5 3.3 3.2 26 26 26 4.8 5.2 5.7 21
Zee Entertainment Enterprises REDUCE 213 210 (1) 204 2.8 960 12 15 18 5 29 16 18 14 12 10.3 8.4 7.2 2.0 1.9 1.7 11.6 13.9 14.9 1.2 1.9 2.1 47
Media Cautious 523 7.2 (30) 53 25 24 16 13 12.8 9.2 7.4 2.3 2.2 2.1 9.6 14.1 16.5 2.4 3.4 3.8 95
Metals & Mining
Hindalco Industries BUY 399 500 25 896 12.3 2,220 26 43 45 44 67 4 16 9 9 7.8 5.7 5.2 1.3 1.2 1.0 9.1 13.4 12.4 0.8 0.8 1.0 100
Hindustan Zinc BUY 324 370 14 1,371 18.8 4,225 19 24 24 17 25 1 17 14 14 10.4 7.9 7.8 4.2 4.2 4.2 22 31 31 6.6 7.3 7.3 14
Jindal Steel and Power ADD 399 520 30 407 5.6 1,020 63 74 55 3,790 18 (25) 6 5 7 4.3 3.5 4.0 1.3 1.0 0.9 20 21 13.4 — — — 77
JSW Steel REDUCE 706 640 (9) 1,707 23.4 2,417 33 59 51 227 79 (13) 21 12 14 11.1 7.4 8.1 3.6 2.9 2.5 19.1 27 19.3 0.9 1.3 1.0 150
National Aluminium Co. SELL 73 65 (11) 134 1.8 1,866 4 7 6 452 71 (10) 18 10 12 8.2 5.4 6.2 1.4 1.3 1.3 7.8 13.1 11.1 2.8 4.8 4.3 35
NMDC REDUCE 183 110 (40) 537 7.4 2,931 20 14 8 34 (28) (40) 9 13 22 8.9 16.6 28.9 1.8 1.7 1.6 19.8 13.2 7.5 2.7 3.9 2.3 39
Tata Steel BUY 1,124 1,400 25 1,354 18.5 1,219 71 256 143 26 260 (44) 16 4 8 7.1 3.6 4.8 1.8 1.4 1.2 11.8 36 16.0 2.2 2.5 1.6 329
Vedanta REDUCE 275 270 (2) 1,023 14.0 3,717 33 40 36 406 21 (11) 8 7 8 5.0 3.4 3.4 1.6 1.4 1.3 21 22 17.8 3.5 6.3 6.4 67
Metals & Mining Attractive 7,428 101.6 109 68 (22) 13 8 10 7.4 5.1 5.7 2.1 1.8 1.6 15.7 22 15.4 2.6 3.4 3.1 812

74
Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
75
Oil, Gas & Consumable Fuels
BPCL BUY 475 550 16 1,030 14.1 2,093 67 34 41 541 (49) 20 7 14 12 5.8 8.8 7.6 1.8 2.2 2.0 32.2 14.3 17.9 16.6 3.6 4.3 86
Coal India BUY 149 185 24 919 12.6 6,163 19 17 18 (31) (8) 4 8 9 8 7.5 7.2 6.4 2.9 3.1 3.3 36.2 34.7 38.1 13.4 13.4 13.4 31
HPCL BUY 288 310 7 409 5.6 1,419 80 34 37 1,014 (58) 11 4 9 8 4.9 8.4 7.8 1.1 1.0 1.0 34.7 12.7 13.1 8.1 4.7 5.2 24
IOCL BUY 111 125 13 1,044 14.3 9,181 26 14 16 755 (46) 17 4 8 7 4.0 5.2 4.7 0.9 0.9 0.8 23.2 11.3 12.4 10.8 6.3 7.4 37
Oil India SELL 138 85 (38) 150 2.0 1,084 0 8 9 (100) 8,787 13 1,478 17 15 11.1 7.2 6.9 0.6 0.6 0.6 0.0 3.6 4.0 2.5 2.4 2.7 3
ONGC SELL 118 90 (24) 1,481 20.3 12,580 8 14 15 (42) 85 4 15 8 8 5.2 3.7 3.4 0.6 0.6 0.6 4.2 7.5 7.4 2.1 4.6 4.9 44
Reliance Industries ADD 2,201 2,050 (7) 13,976 191.2 6,349 72 80 100 8 11 25 31 27 22 18.0 13.3 10.6 1.9 1.8 1.7 7.5 7.0 8.1 0.3 0.3 0.4 257
Oil, Gas & Consumable Fuels Attractive 19,008 260.1 52 (8) 17 17 18 15 10.1 9.0 7.7 1.6 1.5 1.4 9.6 8.3 9.1 2.7 1.9 2.1 482
Pharmaceuticals
Aurobindo Pharma REDUCE 966 930 (4) 566 7.7 586 55 60 65 13 8 10 18 16 15 10.4 9.8 8.6 2.6 2.3 2.0 14.7 14.0 13.6 0.4 0.9 1.1 34
Biocon SELL 388 300 (23) 466 6.4 1,202 6 8 10 1 31 26 62 47 37 28.0 20.4 16.8 5.5 5.0 4.5 8.9 10.6 12.1 - 0.7 0.9 20
Cipla BUY 955 1,040 9 770 10.5 806 30 34 48 55 15 40 32 28 20 17.6 15.9 11.4 4.1 3.7 3.2 12.9 13.3 16.1 (0.0) 0.7 1.0 85
Divis Laboratories REDUCE 4,214 3,750 (11) 1,119 15.3 265 75 94 107 44 26 14 56 45 39 38.4 31.8 27.6 12.0 10.2 8.8 21.3 22.9 22.3 - (0.8) (0.9) 40
Dr Reddy's Laboratories SELL 5,312 4,700 (12) 883 12.1 166 156 184 251 20 18 37 34 29 21 19.7 16.3 12.3 5.2 4.5 3.8 15.2 15.6 18.0 0.5 0.6 0.6 82
Gland Pharma REDUCE 3,160 2,550 (19) 518 7.1 163 61 78 92 23 28 18 52 40 34 37.5 30.5 25.1 8.7 7.2 5.9 16.9 17.8 17.4 — — — 14
Laurus Labs REDUCE 536 390 (27) 288 3.9 536 18 21 25 284 15 17 29 25 22 19.5 16.5 13.8 11.1 7.7 5.7 37.9 30.4 26.2 (—) — — 25
Lupin BUY 1,247 1,320 6 566 7.7 450 27 41 54 24 51 31 46 31 23 20.4 14.9 11.7 4.0 3.6 3.2 8.8 11.9 13.8 0.5 0.5 0.6 44
Sun Pharmaceuticals ADD 678 740 9 1,626 22.2 2,406 25 25 30 47 3 19 27 27 22 18.2 15.8 13.4 3.5 3.2 2.8 12.8 12.4 12.6 1.0 0.7 0.9 72
Torrent Pharmaceuticals REDUCE 2,795 2,800 0 473 6.5 169 74 86 103 29 16 20 38 33 27 19.9 17.6 15.4 8.1 7.0 6.0 21.4 21.3 22.0 0.7 1.1 1.3 12
Pharmaceuticals Attractive 7,274 99.5 36 15 23 34 30 24 20.3 17.3 14.2 4.9 4.3 3.7 14.2 14.4 15.5 0.4 0.4 0.5 429
Real Estate
Brigade Enterprises BUY 267 310 16 56 0.8 204 (4) 14 19 (158) 480 38 NM 19 14 23.1 7.5 6.8 2.5 2.3 2.0 NM 12.7 15.6 0.9 0.9 0.9 1
DLF REDUCE 291 245 (16) 720 9.9 2,475 5 7 9 298 48 28 62 42 32 48.9 42.1 35.2 2.1 2.0 1.9 3.4 4.8 6.0 0.7 0.7 0.7 38
Embassy Office Parks REIT ADD 325 360 11 308 4.2 948 7 10 12 (26) 35 20 44 33 27 20.5 16.0 13.6 1.1 1.2 1.3 2.8 3.6 4.5 6.0 7.5 8.8 5
Godrej Properties SELL 1,391 890 (36) 387 5.3 278 (7) 13 27 (163) 286 113 NM 110 52 (117) 180.8 71.7 4.6 4.5 4.1 NM 4.1 8.3 — — — 17
Mindspace REIT ADD 279 320 15 165 2.3 593 5 14 18 (39) 170 25 54 20 16 23.9 13.8 11.7 1.0 1.0 1.0 3.3 5.0 6.2 3.4 7.0 7.6 1
Oberoi Realty ADD 604 610 1 220 3.0 364 20 29 39 8 40 37 30 21 15 23.6 19.1 10.6 2.3 2.1 1.9 8.2 10.6 12.9 0.3 0.3 0.3 4
Phoenix Mills BUY 807 940 16 139 1.9 172 3 11 31 (72) 244 193 264 77 26 34.4 21.3 12.6 2.8 2.8 2.5 1.2 3.7 10.1 0.1 0.3 0.4 2
Prestige Estates Projects ADD 274 340 24 110 1.5 401 6 11 24 (41) 93 116 48 25 12 6.9 6.1 5.2 1.0 0.9 0.9 2.9 3.9 7.7 0.5 0.5 0.5 2
Sobha BUY 502 480 (4) 48 0.7 95 11 38 54 (65) 259 43 48 13 9 8.1 5.4 4.6 1.9 1.7 1.5 4.1 13.8 17.4 1.4 1.4 1.4 3
Sunteck Realty BUY 290 345 19 42 0.6 140 7 18 17 4 141 (8) 39 16 17 25.9 12.9 14.6 1.3 1.3 1.2 3.5 8.1 6.9 0.3 0.3 0.3 2
Real Estate Attractive 2,194 30.0 18 105 43 70 34 24 27.8 19.0 14.4 1.8 1.8 1.7 2.6 5.2 7.2 1.5 1.9 2.2 75
Retailing
Aditya Birla Fashion and Retail BUY 199 230 16 183 2.5 938 (8) (4) 4 (277) 47 184 NM NM 56 33.3 26.1 11.8 6.9 7.5 6.6 NM NM 12.6 — — — 8
Avenue Supermarts SELL 3,066 1,950 (36) 1,986 27.2 648 17 22 39 (19) 32 77 181 138 78 112 89 52 16.3 14.6 12.3 9.4 11.2 17.1 — — — 19

Titan Company ADD 1,586 1,625 2 1,408 19.3 888 11 19 27 (35) 76 43 145 82 58 81 51 38 18.8 16.2 13.5 13.7 21.2 25.6 0.2 0.4 0.5 41
Retailing Attractive 3,577 48.9 (50) 106 93 268 130 67 88 63 39 16.0 14.4 12.2 6.0 11.1 18.1 0.1 0.1 0.2 68



Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
Speciality Chemicals
Castrol India BUY 132 165 25 131 1.8 989 6 8 9 (28) 39 13 22 16 14 14.1 10.4 9.2 9.2 8.7 8.2 43.0 56.8 60.4 4.2 5.7 6.4 3
Pidilite Industries REDUCE 2,065 1,760 (15) 1,049 14.4 508 22 26 34 (3) 15 32 92 81 61 62 55 43 18.8 16.5 14.0 22.6 21.8 24.9 0.4 0.5 0.6 18
S H Kelkar and Company BUY 157 185 18 22 0.3 141 10 10 12 107 4 18 16 16 13 10.9 9.5 8.1 2.3 2.1 1.9 15.2 14.0 14.8 1.1 1.6 2.1 1
SRF SELL 6,529 6,000 (8) 387 5.3 59 205 240 303 49 17 26 32 27 22 19.1 16.5 13.4 5.6 4.8 4.0 20.3 19.0 20.2 0.4 0.4 0.6 19
Speciality Chemicals Attractive 1,589 21.7 7 20 25 52 43 34 32.7 27.4 22.3 10.7 9.3 8.0 20.7 21.7 23.2 0.7 0.9 1.1 41
Telecommunication Services
Bharti Airtel BUY 530 700 32 2,909 39.8 5,492 (5) 11 22 NM NM NM NM 49 24 8.9 7.3 5.8 4.9 4.9 4.4 NM 10.1 19.6 - 1.1 1.1 103
Indus Towers ADD 242 250 3 651 8.9 2,695 20 19 19 10 (8) 2 12 13 13 5.3 5.0 4.8 4.1 3.9 3.7 32.8 31.3 30.3 8.3 6.6 6.6 12
Vodafone Idea RS 9 — — 253 3.5 28,735 (8) (6) (4) NM NM NM NM NM NM 10.4 8.0 6.5 (0.8) (0.6) (0.4) 176.3 47.4 25.7 — — — 27
Tata Communications BUY 1,136 1,220 7 324 4.4 285 47 52 62 24 11 19 24 22 18 9.9 8.8 7.6 280.4 27.4 13.0 NM 226 95.6 1.2 1.4 1.6 14
Telecommunication Services Attractive 4,136 56.6 40 72 213 NM NM 64 8.7 7.2 5.9 9.9 12.2 13.8 NM NM 21.4 1.3 1.9 1.9 155
Transportation
Adani Ports and SEZ ADD 812 825 2 1,657 22.7 2,112 21 30 37 (18) 44 21 38 27 22 24.4 17.3 13.4 5.6 4.1 3.5 15.9 17.8 17.2 0.6 0.4 0.4 204
Container Corp. SELL 692 540 (22) 421 5.8 609 10 14 18 (41) 39 31 69 49 38 38.4 30.4 18.8 4.1 3.8 3.5 6.0 8.0 9.8 0.7 - 0.5 35
Gateway Distriparks BUY 297 215 (28) 37 0.5 125 8 9 12 79 20 28 39 33 26 13.5 12.8 10.8 2.5 2.4 2.3 6.8 7.5 9.1 1.7 1.0 1.0 2
GMR Infrastructure BUY 26 25 (5) 158 2.2 6,036 (5) (3) (2) (54) 26 33 NM NM NM 67.8 19.8 14.7 (3.0) (2.2) (2.3) 71.3 33.3 21.8 — — — 7
Gujarat Pipavav Port BUY 104 119 14 50 0.7 483 5 6 7 (25) 38 17 23 17 14 10.1 8.7 7.4 2.5 2.5 2.5 10.6 14.9 17.6 4.3 5.9 6.9 1
InterGlobe Aviation BUY 1,764 2,100 19 679 9.3 383 (143) (93) 129 (2,103) 35 239 NM NM 14 161.7 24.6 4.2 44.0 (33.2) 4.2 NM 1,423.8 1,119.6 — — — 24
Mahindra Logistics REDUCE 550 490 (11) 39 0.5 71 5 13 18 (43) 161 36 109 42 31 28.1 18.5 14.3 6.9 6.1 5.3 6.5 15.6 18.6 — — — 1
Transportation Attractive 3,042 41.6 (158) 177 494 NM 141 24 31.7 19.3 10.5 7.4 6.3 5.1 NM 4.5 21.4 0.5 0.3 0.4 274
KIE universe 168,204 2,301 33.9 33.2 17.7 30.8 23.2 19.7 14.7 11.9 10.5 3.3 3.0 2.8 10.8 13.1 14.0 1.3 1.4 1.6
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2021 means calendar year 2020, similarly for 2022 and 2023 for these particular companies.
(c) Exchange rate (Rs/US$)= 73.08

76
Disclosures
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

32.5% expect this stock to deliver more than 15% returns over the next
27.4% 12 months; Add = We expect this stock to deliver 5-15% returns
30%
23.6% over the next 12 months; Reduce = We expect this stock to
deliver -5-+5% returns over the next 12 months; Sell = We
20% 16.5% 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%
3.8% 4.7% applicable regulations. As of 31/12/2020 Kotak Institutional
2.8%
0.5% Equities Investment Research had investment ratings on 212
0% equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities As of March 31, 2021
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.

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INDIA DAILY

June 3, 2021 India 2-Jun 1-day 1-mo 3-mo

Contents Global/Regional indices

Change, basis points

10yr govt bond, % 6.0 (2) (3) (23)

Net investment (US$ mn)

31-May MTD CYTD

FIIs 712 2,473 23,258

MFs 8 (68) (6,991)

Best performers 2-Jun 1-day 1-mo 3-mo

JSTL in Equity 706 1.7 (1.6) 70.8

TATA in Equity 1,124 2.1 8.7 52.8

UPLL in Equity 837 2.6 38.0 42.1

NMDC in Equity 183 1.0 17.7 36.9

VEDL in Equity 275 2.6 7.0 28.1

MMFS in Equity 163 1.8 0.6 (21.5)

HMCL in Equity 2,973 (0.1) 5.4 (14.5)

HAVL in Equity 1,047 1.7 5.7 (8.5)

INFOE in Equity 4,555 2.9 (7.3) (8.2)

EXID in Equity 193 1.7 8.5 (7.5)

4QFY21 performance – consolidated EBITDA 8% below our estimates

Increase our FY2022-23E consolidated EPS estimates by 2-7%; maintain ADD

Other key quarterly highlights

 Standalone business (excluding domestic wiring business). The standalone business

 Consolidated debt position. Consolidated net debt stood at Rs48.2 bn as of March

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Source: Company, Kotak Institutional Equities estimates

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

Exhibit 3: EBITDA margin for PKC business was impacted by RM headwinds

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Exhibit 4: Net debt declined to Rs48.2 bn in 4QFY21 from Rs62.1 in 3QFY21

Source: Company, Kotak Institutional Equities estimates

Exhibit 6: We value MSSL at Rs260 on SoTP basis

Value per share Valuation methodology

Source: Company, Kotak Institutional Equities estimates

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

WACC used (%) 11.5

Source: Company, Kotak Institutional Equities estimates

After tax cost of debt (%) 5.6

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Risk free rate (%) 2.0

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

Source: Company, Kotak Institutional Equities estimates

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Key highlights from earnings conference call

We tweak estimates, roll-over to June-2023E, DCF-based FV of Rs630 (versus Rs600 earlier)

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

Crude price- Brent (LHS, Rs per 10 Barrels) APNT's standalone GM (RHS, %)

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

Exhibit 5: Consolidated financials of Berger Paints, March fiscal year-ends, 2014-24E

Indian GAAP Ind AS

Source: Company, Kotak Institutional Equities estimates