SELL

Tata Chemicals (TTCH)

https://ultraviewer.et/en/own Commodity Chemicals MAY 04, 2021
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RESULT, CHANGE IN RECO.
Sector view: Neutral

Weak end to FY2021. TTCH reported weak results in 4QFY21 as recovery in soda ash CMP (`): 709
volumes to pre-Covid levels across India and the US was offset by a sharp decline in Fair Value (`): 540
margins amid lower realizations and higher costs. We find the risk-reward balance
BSE-30: 48,254
unfavorable and downgrade the stock to SELL with an unchanged FV of Rs540. The
lack of progress on foray in Li-ion battery value chain and no visibility on monetization
of 2.5% stake in Tata Sons, may reverse the recent speculative rally in the stock.
Tata Chemicals
Stock data Forecasts/valuations 2021 2022E 2023E
CMP(Rs)/FV(Rs)/Rating 709/540/SELL EPS (Rs) 10.7 31.8 36.3
52-week range (Rs) (high-low) 834-272 EPS growth (%) (66.4) 198.2 14.2
Mcap (bn) (Rs/US$) 181/2.5 P/E (X) 66.6 22.3 19.5
ADTV-3M (mn) (Rs/US$) 5,752/78 P/B (X) 1.3 1.3 1.3
Shareholding pattern (%) EV/EBITDA (X) 11.0 7.6 6.9
Promoters 38.0 RoE (%) 2.0 5.7 6.5
FPIs/MFs/BFIs 14.0/8.7/12.0 Div. yield (%) 1.4 4.5 5.1
Price performance (%) 1M 3M 12M Sales (Rs bn) 102 118 130
Absolute (9.1) 33.8 152.1 EBITDA (Rs bn) 15 22 25
Rel. to BSE-30 (7.3) 40.6 64.3 Net profits (Rs bn) 3 8 9

Sharp decline in margins offsets recovery in volumes for India and the US to pre-Covid levels
Tata Chemical’s consolidated EBITDA declined sharply by 36% qoq to Rs2.8 bn in 4QFY21,
impacted by weakness in margins for soda ash amid—(1) lower realizations, (2) sharp spike in
power and fuel costs, partly due to surge in gas prices in North America during the polar storm
and (3) sequential increase in freight and other expenses. EBIT for specialty products (Rallis) was
negative at –Rs126 mn from Rs380 mn in 3QFY21 reflecting seasonal weakness, albeit up from
4QFY21 levels of –Rs368 mn. Adjusted net income declined 87% qoq to Rs177 mn (EPS of
Rs0.7); reported net income at Rs118 mn included an exceptional item of Rs165 mn relating to
a tax write-off for the UK operations. In FY2021, EBITDA declined 23% to Rs14.99 bn impacted
by Covid, while adjusted net income declined 67% to Rs2.67 bn further impacted by—(1) lower
other income, (2) higher depreciation and interest cost and (3) higher tax rate at 30.6% versus
17.7% in FY2020. Consolidated net debt increased marginally to Rs38.3 bn from Rs37.4 bn a
quarter ago, modestly lower than Rs40.4 bn a year ago. Capex for the year increased to Rs12.3
bn from Rs11.7 bn in FY2020. The Board recommended a dividend of Rs10/share.
Improving demand outlook for soda ash; no progress on Li-ion battery business
In 4QFY21 conference call, the management indicated—(1) the company has not finalized its
foray in the Li-ion battery business, other than the existing small-scale recycling plant; no
investments have been approved by the Board so far and any decision may be calibrated on
domestic demand, policy incentives and technology tie-ups, (2) optimism on recovery in soda
ash demand following normalization of export volumes from the US; prices and margins may
move up with a lag as contracts are reset to expected gradual increase in prices and (3)
guidance on 50-70% growth in revenues by FY2025 driven by capacity expansions underway
for salt, soda ash, sodium bi-carbonate and growth in nutraceuticals portfolio.
Cut estimates by 5%; downgrade to SELL with an unchanged FV of Rs540 Tarun Lakhotia

We reduce our FY2022-23 EPS estimates by 5% factoring in (1) lower margins, (2) higher
volumes and (3) other minor changes. Our SoTP-based Fair Value remains unchanged at Rs540 Hemang Khanna
based on March 2023 estimates. We downgrade the stock to SELL from ADD earlier noting an
unfavorable risk-reward balance. We find the recent rally in the stock price unwarranted in
anticipation of (1) value creation from foray into the Li-ion battery value chain in the medium
term despite no decision made by the company yet and (2) monetization of 2.5% stake in Tata
Sons, which seems unlikely given its strategic significance and lack of funding requirement for
Tata Chemicals amid a manageable leverage and adequate accruals to fund capex plans.

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Contact: +91 22 6218 6427

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Commodity Chemicals Tata Chemicals

Key highlights of 4QFY21 performance

 Basic chemistry—volumes for India and the US recover to pre-Covid levels; weak
margins across geographies. Domestic revenues increased 4% qoq to Rs7.9 bn as 10%
qoq rise in soda ash volumes was partly offset by 5% qoq decline in salt volumes. EBIT
increased marginally by 1% qoq to Rs1.67 bn reflecting moderation in margins. Revenues
for North America increased 13% qoq on a low base to Rs8.07 bn reflecting strong
recovery in volumes to pre-Covid levels of 566,000 tons, while realizations declined 4%
qoq in US$-terms. EBITDA for the US operations declined sharply to Rs630 mn amid the
sharp spike in gas prices due to the polar storm, higher gas prices impacted results by
Rs450 mn. EBITDA adjusted for the impact of gas prices would have remained 17% lower
qoq reflecting higher other expenses. Revenues for the Europe operations increased 2%
qoq, while EBITDA declined sharply by 58% as higher realizations were offset by lower
volumes, higher freight costs and one-off costs related to the floods. Revenues from
African operations increased 7% qoq, while EBITDA declined 23% qoq impacted by 10%
qoq decline in realizations and higher other expenses. In FY2021, revenues for the basic
chemistry segment declined 5% yoy to Rs75.8 bn, while EBIT declined 46% yoy to Rs7.3
bn reflecting the sharp decline in profitability impacted by Covid-related disruption.

 Specialty products—EBIT loss narrows. Specialty portfolio revenues increased by 38%

yoy to Rs5.2 bn on a low base reflecting 36% increase in revenues for Rallis and healthy
demand across nutritional science products. Segment EBIT loss narrowed to –Rs126 mn
from –Rs368 mn in 4QFY20 reflecting the sharp ~660 bps yoy margin expansion for Rallis
on a low base. In FY2021, segment revenues increased 11% yoy and EBIT increased 25%
yoy driven by robust expansion in margins for Rallis.

2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Tata Chemicals Commodity Chemicals

Exhibit 1: Interim consolidated results of Tata Chemicals, March fiscal year-ends (Rs mn)

(% chg.)
4QFY21 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 FY2021 FY2020 (% chg.) FY2022E
Net sales 26,362 24,987 23,781 25,789 6 11 2 101,726 103,568 (2) 117,760
O perating costs (23,535) (19,845) (19,779) (21,342) 19 19 10 (86,735) (84,076) 3 (95,651)
EBITDA 2,827 5,142 4,002 4,447 (45) (29) (36) 14,991 19,492 (23) 22,109
O ther income 645 779 756 427 (17) (15) 51 2,344 3,111 (25) 2,609
Interest cost (850) (800) (855) (809) 6 (1) 5 (3,674) (3,419) 7 (3,304)
Depreciation (1,916) (1,907) (1,739) (1,854) 0 10 3 (7,593) (6,665) 14 (8,080)
PBT 706 3,214 2,163 2,212 (78) (67) (68) 6,069 12,519 (52) 13,334
Tax (346) (700) (193) (538) (51) 79 (36) (1,813) (2,197) (17) (3,418)
Exceptionals (165) — — 272 (150) (80) —
PAT before MI 195 2,514 1,970 1,945 (92) (90) (90) 4,106 10,243 (60) 9,917
MI 78 305 123 337 (75) (37) (77) 1,542 2,257 (32) 1,823
PAT 118 2,208 1,847 1,609 (95) (94) (93) 2,564 7,986 (68) 8,093
Adjusted PAT 177 2,208 1,847 1,337 (92) (90) (87) 2,668 8,052 (67) 8,093
Adjusted EPS (Rs) 0.7 8.7 7.3 5.2 (92) (90) (87) 10.5 31.6 (67) 31.8

EBITDA margins (%) 10.7 20.6 16.8 17.2 (986)bps (610)bps (652)bps 14.7 18.8 (408)bps 18.8
Tax rate (%) 63.9 21.8 8.9 21.7 30.6 17.7 25.6

Segment sales
Basic chemistry products 21,113 19,987 19,594 6 8 75,817 80,137 (5) 87,407
Specialty products 5,196 3,776 6,183 38 (16) 25,800 23,289 11 30,205
Unallocated 67 28 55 224 242 (7) 269
Less: inter-segment 14 (9) (43) (257) (132) (87) (101) (13) (121)
Total sales 26,390 23,781 25,789 11 2 101,754 103,568 (2) 117,760
Segment profits
Basic chemistry products 1,672 3,544 2,709 (53) (38) 7,270 13,555 (46) 13,521
Specialty products (126) (368) 380 (66) (133) 2,093 1,669 25 3,539
Unallocated 11 158 (70) 379 714 (47) (422)
Total EBIT 1,722 3,334 3,020 (48) (43) 9,742 15,938 (39) 16,638
Segment margins (%)
Basic chemistry products 7.9 17.7 13.8 (981)bps (591)bps 9.6 16.9 (733)bps 15.5
Specialty products (2.4) (9.7) 6.2 732 bps (857)bps 8.1 7.2 95 bps 11.7
EBIT margin (%) 6.5 14.0 11.7 (749)bps (519)bps 9.6 15.4 (581)bps 14.1
Segment assets
Basic chemistry products 170,106 171,500 166,048 170,106 171,500
Specialty products 28,846 28,041 28,070 28,846 28,041
Unallocated 84,420 77,982 83,846 84,420 77,982
Total assets 283,372 277,522 277,965 283,372 277,522
Segment liabilities
Basic chemistry products 30,141 28,934 30,662 30,141 28,934
Specialty products 9,438 9,301 8,827 9,438 9,301
Unallocated 92,368 102,672 91,344 92,368 102,672
Total liabilities 131,946 140,908 130,832 131,946 140,908

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Commodity Chemicals Tata Chemicals

Exhibit 2: Standalone basic chemistry segment EBIT remained steady in 4QFY21

Quarterly details of standalone business, 1QFY19 onwards (Rs mn)
Change (%)
1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 Yoy Qoq
Volumes ('000 tons)
Soda ash 169 171 172 182 163 154 158 159 118 151 168 184 16 10
Salt 288 272 279 283 237 258 271 290 298 295 319 302 4 (5)
Financials (Rs mn)
Net sales 9,960 10,140 10,190 10,590 7,149 7,041 7,560 7,340 6,280 7,170 8,120 8,410 15 4
Basic chemistry products 7,400 7,390 7,460 8,530 7,045 6,920 7,260 7,030 6,120 6,770 7,650 7,920 13 4
Consumer products 4,380 4,600 4,710 4,790 — — — — — — — — — —
Specialty products 110 120 120 70 107 120 210 310 160 410 470 490 58 4
Unallocated 40 40 10 10 — — — — — — — — — —
Inter-segment (1,980) (2,000) (2,090) (2,810) — — 90 — — — — — — —
EBITDA 2,620 2,560 2,240 2,660 1,850 1,941 1,950 1,400 1,560 1,160 1,750 1,640 17 (6)
EBIT 2,800 2,510 2,360 2,850 2,003 2,002 2,040 1,830 1,440 1,130 1,660 1,670 (9) 1
Basic chemistry products 2,030 1,710 1,830 2,050 2,041 2,065 2,130 1,960 1,590 1,210 1,800 1,850 (6) 3
Consumer products 820 860 590 860 — — — — — — — — — —
Specialty products (50) (60) (60) (60) (48) (63) (80) (130) (150) (90) (140) (180) NM NM
PBT 3,680 3,800 1,890 2,830 2,802 2,398 1,990 1,420 1,420 1,660 1,480 1,580 11 7
PAT 2,640 2,950 1,280 2,300 2,025 2,346 1,500 1,180 1,090 1,350 1,160 1,200 2 3

Source: Company, Kotak Institutional Equities

Exhibit 3: Weak performance in the US despite a recovery in volumes

Quarterly details of the US business, 1QFY19 onwards (Rs mn)
Change (%)
1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 Yoy Qoq
Volumes ('000 tons) 536 555 571 550 541 570 569 553 387 475 474 566 2 19
Financials (Rs mn)
Net sales 7,650 8,580 8,890 8,700 8,450 8,860 8,720 8,000 6,190 7,110 7,148 8,070 1 13
Net sales per ton (US$) 213 221 216 225 225 221 215 200 211 201 204 196 (2) (4)
EBITDA 1,320 1,700 1,710 2,050 1,890 1,860 1,830 2,040 350 960 1,308 630 (69) (52)
EBITDA per ton (US$) 37 44 42 53 50 46 45 51 12 27 37 15 (70) (59)
PBT 520 890 800 2,340 910 860 790 920 (1,190) (260) 78 (600) (165) NM
Reported PAT 210 450 350 2,070 470 460 400 790 (1,070) (440) 190 (660) (184) NM

Source: Company, Kotak Institutional Equities

Exhibit 4: Unit EBITDA at Europe and Africa declined sequentially in 4QFY21

Quarterly details of Europe/Africa business, 1QFY19 onwards (Rs mn)
Change (%)
1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 Yoy Qoq
Volumes ('000 tons)
Europe-soda ash 82 83 83 76 68 77 70 71 62 67 70 67 (6) (4)
Magadi-soda ash 55 72 80 79 63 74 40 75 57 51 56 68 (9) 21
Financials (Rs mn)
Net sales 4,520 4,810 5,150 5,220 4,300 4,760 4,270 4,800 4,160 4,280 4,810 4,980 4 4
Europe 3,570 3,530 3,710 3,810 3,070 3,370 3,480 3,650 3,160 3,370 3,740 3,830 5 2
Magadi 950 1,280 1,440 1,410 1,230 1,390 790 1,150 1,000 910 1,070 1,150 — 7
Net sales per ton - Europe (US$) 650 607 620 712 650 622 698 709 672 676 724 784 11 8
Net sales per ton - Africa (US$) 258 254 250 254 281 267 277 211 231 240 259 232 10 (10)
EBITDA 330 460 430 580 350 720 370 620 380 520 710 390 (37) (45)
Europe 450 330 140 270 150 450 460 510 280 460 450 190 (63) (58)
Magadi (120) 130 290 310 200 270 (90) 110 100 60 260 200 82 (23)
EBITDA per ton - Europe (US$) 82 57 23 50 32 83 92 99 60 92 87 39 (61) (55)
EBITDA per ton - Africa (US$) (33) 26 50 56 46 52 (32) 20 23 16 63 40 99 (36)
PBT (200) 100 120 (70) (60) 240 (120) 90 (170) (30) 200 (180) NM NM
PAT (200) 100 (160) 80 (60) 240 (120) 90 (170) (30) 200 (340) NM NM

Source: Company, Kotak Institutional Equities

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Tata Chemicals Commodity Chemicals

Exhibit 5: We model a recovery for soda ash volumes and margins in FY2022-23E
Segment-wise assumptions, March fiscal year-ends, 2018-24E

2018 2019 2020 2021 2022E 2023E 2024E

Exchange rate (Rs/US$) 64.5 69.9 70.6 74.2 75.0 76.5 78.0
Volumes (k-tons)
Soda ash and related chemicals 3,981 3,736 3,625 3,243 3,698 3,854 4,124
India 793 797 743 728 785 855 1,037
USA 2,345 2,222 2,236 1,903 2,241 2,291 2,341
Europe 507 431 395 380 410 426 443
Africa 336 286 251 232 262 282 302
Salt 1,059 1,155 1,057 1,214 1,293 1,509 1,737
Consolidated segment revenues
Basic chemistry products 76,729 83,091 80,137 75,817 87,407 94,829 105,837
Consumer products 15,122 18,473 — — — — —
Specialty products 18,434 20,263 23,289 25,800 30,205 35,111 40,920
Unallocated and inter segment (6,832) (8,863) 142 109 148 196 254
Total 103,454 112,963 103,568 101,726 117,760 130,135 147,011
Segment EBIT
Basic chemistry products 14,611 13,036 13,555 7,285 13,521 14,891 17,259
Consumer products 2,347 3,139 — — — — —
Specialty products 2,039 1,721 1,669 2,093 3,539 4,421 5,137
Unallocated (32) 2,160 714 (379) (422) (489) (531)
Total 18,965 20,056 15,938 8,999 16,638 18,823 21,866
Segment EBIT margin (%)
Basic chemistry products 19.0 15.7 16.9 9.6 15.5 15.7 16.3
Consumer products 15.5 17.0 — — — — —
Specialty products 11.1 8.5 7.2 8.1 11.7 12.6 12.6
Total 18.3 17.8 15.4 8.8 14.1 14.5 14.9

Source: Company, Kotak Institutional Equities estimates

Exhibit 6: We value TTCH at Rs540/share

SoTP valuation for TTCH, March 2023E basis

March 2023E Multiple Valuation

Business Methodology (Rs bn) (X) (Rs bn) (Rs/share)
Basic chemistry products EV/EBITDA 19.4 5.5 106.5 418
Specialty products (ex-Rallis) EV/Sales 3.4 1.5 5.2 20
Rallis Fair value 30.6 0.8 24.5 96
Investments CMP 26.9 0.8 21.5 84
Enterprise value 157.7 619
Less: Net debt (30.4) (119)
Less: Pension and other liabilities (19.6) (77)
Fair value 107.6 422
Value of 2.5% stake in Tata Sons (a) MTM X probability 150.8 0.2 30.2 118
Fair value, including stake in Tata Sons 137.8 541

Source: Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Commodity Chemicals Tata Chemicals

Exhibit 7: Full value of Tata Chemicals’ 2.5% stake in Tata Sons could be worth Rs592/share, while
assuming 40% holding company discount on MTM value of listed entities
MTM value of stake in listed entities held by Tata Sons (Rs bn)

Market cap. Stake Value of holding

Company (Rs bn) (%) (Rs bn)
Indian Hotels 130 38 49
Tata Chemicals 181 32 58
Tata Communications 312 14 44
Tata Consumer 595 29 175
Tata Elxsi 240 42 101
Tata Investment Corporation 52 69 36
Tata Motors 1,025 40 405
Tata Power 323 45 146
Tata Steel 1,275 35 449
TCS 11,281 71 8,024
Titan Company 1,246 21 260
Trent 276 32 90
Voltas 331 27 88
MTM value of stake in listed entities 9,924
O utstanding shares of Tata Sons ('000) 404.1
Implied value of Tata Sons (Rs/share) 24,555
Holding company discount (%) 40
Shares of Tata Sons held by Tata Chemicals ('000) 10.2
Implied value of Tata Sons for Tata Chemicals 151
Implied full value of Tata Sons for Tata Chemicals (Rs/share) 592

Source: Company, Kotak Institutional Equities estimates

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Tata Chemicals Commodity Chemicals

Exhibit 8: Consolidated profit model, balance sheet and cash flow statement for Tata Chemicals, March fiscal year-ends, 2018-24E (Rs mn)

2018 2019 2020 2021 2022E 2023E 2024E

Profit model (Rs mn)
Sales 102,697 112,963 103,568 101,726 117,760 130,135 147,011
EBITDA 21,907 20,951 19,492 14,991 22,109 24,946 28,493
Other income 1,595 4,116 3,111 2,344 2,609 3,023 3,283
Interest (3,256) (3,631) (3,419) (3,674) (3,304) (3,506) (3,652)
Depreciation (5,180) (5,714) (6,665) (7,593) (8,080) (9,145) (9,910)
Extraordinary items 14,585 624 (80) (150) — — —
Profit before tax 29,650 16,346 12,439 5,919 13,334 15,317 18,214
Tax expense (3,118) (3,469) (2,197) (1,813) (3,418) (3,926) (4,668)
Minority interest (2,694) (2,309) (2,218) (1,799) (2,074) (2,408) (2,637)
Income from associates 492 992 (39) 256 251 261 256
PAT 24,331 11,559 7,986 2,564 8,093 9,245 11,165
Adjusted PAT 9,746 10,936 8,066 2,714 8,093 9,245 11,165
Adjusted EPS (Rs) 38.3 42.9 31.7 10.7 31.8 36.3 43.8

Balance sheet (Rs mn)

Equity 111,017 123,413 128,977 142,900 142,951 143,009 143,079
Total borrowings 64,180 61,429 78,900 56,657 60,913 63,850 66,104
Deferred tax liability/minority interest 40,397 42,119 23,977 25,796 27,620 29,766 32,147
Current liabilities and provisions 43,192 42,089 45,669 58,019 64,070 68,740 75,108
Total liabilites 258,786 269,049 277,522 283,372 295,553 305,365 316,438
Net fixed assets 114,358 124,386 141,696 143,364 149,619 155,809 162,233
Goodwill/Intangible assets 17,319 18,590 19,998 19,633 19,633 19,633 19,633
Investments 28,683 56,425 43,060 58,707 58,707 58,707 58,707
Cash and equivalents 44,830 19,522 20,795 14,110 14,875 14,514 13,730
Other current assets and miscellaneous 53,596 50,126 51,973 47,558 52,719 56,703 62,135
Total assets 258,786 269,049 277,522 283,372 295,553 305,365 316,438

Free cash flow (Rs mn)

Operating cash flow 21,149 15,018 16,010 13,681 15,387 17,514 20,173
Working capital changes (5,691) (2,144) (1,299) 3,233 889 686 936
Capital expenditure (net) (7,306) (10,795) (11,695) (12,335) (14,335) (15,335) (16,335)
Free cash flow 8,152 2,079 3,016 4,580 1,942 2,866 4,774

Ratios
EBITDA margin (%) 21.3 18.5 18.8 14.7 18.8 19.2 19.4
Net debt/equity (X) 0.17 0.34 0.45 0.30 0.32 0.34 0.37
Book value (Rs/share) 436 484 506 561 561 561 562
RoAE (%) 10.3 9.3 6.4 2.0 5.7 6.5 7.8
RoACE (%) 12.8 9.2 6.9 4.0 7.4 8.2 9.5

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

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.

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

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