NiveshDaily. From Research Desk. Economy Updates. Review of Sixth Bi monthly Monetary Policy Statement, Result Preview

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1 NiveshDaily February 3, 2016 Daljeet S. Kohli Head of Research Tel: From Research Desk Economy Updates Review of Sixth Bi monthly Monetary Policy Statement, Result Preview Bajaj Finance Rating: HOLD Target: Rs Meghmani Organics Ltd. Rating: BUY Target: Rs.34 Result Update KPR Mills Ltd Majesco Ltd (MJCO) First Cut Analysis HSIL Ltd Monthly Auto Numbers January 2016 Global Markets Outlook IndiaNivesh Research IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai Tel: (022) IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.

2 Daljeet S. Kohli Head of Research Tel: Economy Updates Review of Sixth Bi monthly Monetary Policy Statement, Kaushal Patel Research Associate Tel: RBI continued to maintain status quo on policy rates; Fiscal consolidation path to decide future rate cut In line with our expectations, the Reserve Bank of India (RBI) continued to maintain statusquo and it kept the repo rate unchanged at6.75% in its sixth bi monthly monetary policy review and also left all other policy tools like cash reserve ratio (CRR) and Statutory Liquidity Ratio (SLR) unchanged at 4.00% and 21.50%, respectively. However, the RBI reiterated its accommodative monetary policy stance but such action will be more of data dependent. We believe that FY17 budget to remain in focus as RBI seeks clarity on quality and quantum of fiscal consolidation. Monetary and Liquidity Measures: On the basis of an assessment of the current and evolving macroeconomic situation, the RBI has decided to: keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75%; keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liability (NDTL); continue to provide liquidity under overnight repos at 0.25% of bank wise NDTL at the LAF repo rate and liquidity under and 14 day term repos as well as longer term repos of up to 0.75% of NDTL of the banking system through auctions; and continue with daily variable rate repos and reverse repos to smooth liquidity. Consequently, the reverse repo rate under the LAF will remain unchanged at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 7.75%. Policy Stance and Rationale: Inflation: Inflation will continue to remain a key monitorable for the RBI. The RBI expects the inflation target of 6% in January 16 to be attained. The RBI projects inflation to be around 5% by the end of FY17. Though the RBI remains hopeful that inflation will remain under check, it has not factored the impact of the 7th Pay Commission in its inflation forecast. Any adjustments to the CPI forecast will be made once clarity on the implementation of 7 th Pay Commission emerges. In addition, the RBI has also assumed a normal monsoon and the current level of international crude oil prices and exchange rates while projecting inflation for FY17. In such a scenario, we believe that the RBI's current inflation projection will continue to face upward pressures and the depth of further rate cut will be limited. Growth: The RBI expects a modest expansion of activity in Q4FY16. It sees GVA growth for FY16 at its earlier projected 7.4% but with a downside bias. It sees the growth at 7.6% in FY17 led by a normal monsoon after two consecutive years of rainfall deficiency, the large positive terms of trade gain, improving real incomes of households and lower input costs of firms. However, the RBI believes that weak domestic private investment demand in a phase of balance sheet adjustments, re emergence of concerns relating to stalled projects, excess capacity in industry, sluggish external demand conditions dampening export growth may act as headwinds.

3 Other Developments Monetary Transmission: The RBI firmly believes that marginal cost of funding will actually help in transmission of rates and expects banks to cut lending rates faster and by a larger quantum once marginal cost of funding kicks in from April 01, Further, the competition among banks and market disintermediation of bank credit are also likely to support further reduction in base rates. Impact of Implementation of Seventh Pay Commission Report: The implementation of the seventh pay commission proposals and its effect on wages and rents will also be a one of the factors in the RBI's future deliberations. However, the RBI expects the direct effect of the recommendations on aggregate demand to be offset by appropriate budgetary tightening as the government stays on the fiscal consolidation path. The RBI will monitor the overall effect of pay commission proposals as this will help boost aggregate demand while government spending is likely to fall as it tries to remain on the path of fiscal consolidation. Fiscal Deficit: The RBI continues with its view that the government should stick to its fiscal consolidation path which was also quite visible in the two statements made in the RBI s sixth bi monthly monetary policy. (1) The Indian economy is currently being viewed as a beacon of stability because of the steady disinflation, a modest current account deficit and commitment to fiscal rectitude. (2) Structural reforms in the forthcoming Union Budget that boost growth while controlling spending will create more space for monetary policy to support growth, while also ensuring that inflation remains on the projected path of 5% by the end of FY17. NPA Recognition: The RBI has been working with all the commercial banks to ensure that all the known stressed assets are recognized on a proactive basis and banks' balance sheets represent a true and fair picture. In addition, the RBI wants all the banks to make enough provisions against these stressed assets by FY17 so that the banks can focus more on new assets rather than legacy assets. As per the RBI, the majority of the stressed portfolio has been scrutinized by the RBI in the recent review of the banks books and it believes that the banking system has enough capital to absorb this stress.rbi is also shortly coming up with a review of provisions dealing with asset quality stress, including the joint lender forum mechanism and the strategic debt reconstruction. Capital: The RBI has been working to recognize unrecognizable capital that is already on banks' balance sheets such as undervalued assets to help them meet the minimum capital requirement standards. However, more clarity on it will only be available once the RBI comes out with detailed guidelines on it. The first bi monthly monetary policy statement for FY17will be announced on April 05, 2016 (Tuesday). Conclusion: As expected, the RBI maintained status quo in terms of policy in the sixth bi monthly monetary policy statement of FY16.However, the RBI reiterated its accommodative monetary policy stance while ensuring the disinflationary path is a clear priority. So, it clearly indicated that the future action will be more of data dependent. In addition, while maintaining a status quo on rates, the RBI has clearly put the onus on the government to maintain fiscal prudence while presenting the union budget for FY17. So, the RBI is likely to wait and watch the quantity and quality of fiscal consolidation to be announced in the budget and will act accordingly in the future. Overall, it seems that the size of the fiscal deficit in the forthcoming budget will perhaps have the highest influence on the next monetary policy actions. We expect the rate cuts to be limited to 50 bps in CY16.

4 Repo & Reverse Repo Rates CRR (%) Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 16 Source: RBI, IndiaNivesh Research Repo (%) Reverse Repo (%) Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 16 Source: RBI, IndiaNivesh Research CRR (%) SLR (%) SCBs Credit & Deposit growth (%) Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 16 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 9MFY16* SLR (%) Aggregate Deposits (%) Gross Bank Credit (%) Source: RBI, IndiaNivesh Research Source: RBI, IndiaNivesh Research; Outstanding as of December 25, 2015 USD/INR Trends in Export and Import Growth (y o y %) /05/ /06/ /07/ /08/ /12/ /01/ /04/ /05/ /06/ /10/ USD/INR Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 Apr 14 Jun 14 Exports Aug 14 Oct 14 Dec 14 Feb 15 Imports Apr 15 Jun 15 Aug 15 Oct 15 Dec 15 Source: RBI, IndiaNivesh Research Source: Department of Commerce, IndiaNivesh Research CPI vs WPI(%) IIP Growth (%) Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 IIP growth (%) Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct CPI (%) WPI (%) Source: RBI, IndiaNivesh Research Source: RBI, IndiaNivesh Research

5 Daljeet S. Kohli Head of Research Tel: Yogesh Hotwani Research Analyst Tel: Result Preview Bajaj Finance Rating: HOLD Target: 6300/ (Rs mn) Q3FY16E Q2FY16 Q3FY15A % QoQ % YoY Net Interest Income 10,881 8,974 8, Pre Provisioning Profit 6,626 5,648 5, Net Profit 3,371 2,794 2, EPS (Rs) Source: Company Filings, IndiaNivesh Research Bajaj Finance Ltd (BFL) is expected to maintain its growth momentum with healthy AUM growth of 32% yoy to Rs bn led by healthy growth in SME and consumer financing. Net Interest income growth to remain healthy at 32% yoy and NIMs (Calc) to improve on qoq by 131 bps to 11.1% mainly due to seasonality of higher disbursements in high yielding consumer segment on back of festive season. Operating profit to grow by 32% yoy to Rs 6.6 bn led by healthy NII growth. Despite higher provisioning expense (up 36% yoy). Net profit growth to remain healthy at 31% yoy to Rs 3.4 bn. Gross and Net NPA is expected to remain stable at 1.7% and 0.6% respectively. Valuation At CMP of Rs 5811, Bajaj Finance is trading at P/ABV of 4.4x and 3.6x for FY16E and FY17E respectively. We have Hold rating on Bajaj Finance with target price of Rs Key things to watch out for Growth in major segments like consumer and SME Asset quality in Mortgage book

6 Daljeet S. Kohli Head of Research Tel: Amar Mourya Research Analyst Tel: Meghmani Organics Ltd. Rating: BUY Target: Rs.34 (Rs Mn) Q3FY16 Q2FY16 Q3FY15 Q/Q % Y/Y % Sales 3,283 3,456 3, % 8.0% EBITDA % 27.2% PAT % NM EPS % NM Source: Company Filings; IndiaNivesh Research INSL Estimate for Dec 2015 Quarter We expect revenue growth of 8.0% Y/Y to Rs.3,283 mn on back of growth in Basic Chemicals and Pigment segments; partially offset by muted performance in Agrochemicals on account of delay in monsoon. In Q3FY16, we forecast EBITDA margin of 16.0% (v/s 13.6% in Q3FY15). The key reason for the improvement in EBITDA margins would be improved margins in Basic Chemical segments and operating efficiency in Pigments business. As a result, the company is also likely to see net profit of Rs.164 mn from loss of Rs.45 mn in Q3FY15. Key things to watch out: Revenue growth in all key segments. EBITDA margin performance in Basic, Agro & Pigments business. Debt Level. Valuations: At CMP of Rs.21.4, the stock is trading at EV/EBITDA multiple of 5.4x FY16E and 4.6x FY17E estimates. We have a BUY with target price of Rs.34 on the stock.

7 KPR Mills Ltd Main BUY with target price of Rs 1059 Q3FY16 Result Updates February 03, 2016 Current CMP : Rs.713 Rating : BUY Target : Rs.1059 Previous Rating : BUY Target : Rs.1059 STOCK INFO Co. Name KPR Mills Ltd BSE NSE KPRMILL Bloomberg KPR IN Reuters KPRM.BO Sector Textiles Index S&P BSE SMALL CAP Face Value (Rs) 10 Equity Capital (Rs mn) 377 Mkt Cap (Rs mn) 26,866 52w H/L (Rs) (Adj.) 923 / 386 3m Avg Daily Volume (BSE + NSE) SHAREHOLDING PATTERN % (as on Sept. 2015) Promoters 75.0% FIIs 3.7% DIIs 9.8% Public & Others 11.5% Source: BSE STOCK PER. (%) 1m 3m 12m KPR Mills Sensex Source: Capitaline, IndiaNivesh Research KPR Mills v/s SENSEX 270 KPR Mills declared Q3FY16 consolidated results that missed our estimates in terms of profitability. Cotton price decline impacted average realisations. The company would continue to focus on value added products like garments and improve its captive consumption ratio which would help protect margins. Management guidance of becoming debt free in next 2 3 years is a key positive. Consolidated (Rs Mn) Q3FY16 Q2FY16 Q3FY15 QoQ (%) YoY (%) INSPL Variance Estimate (%) Net Sales 6,195 5,873 5, EBIDTA 953 1, PAT EPS Source: Company, IndiaNivesh Research Net Sales growth of 3.6% driven by sugar and garments Net sales stood at Rs 6195 mn in Q3FY16 against Rs 5979 mn in Q3FY15 (vs. INSL est: Rs 6332 mn). This growth of 3.6% yoy was on account of 198% yoy growth in sugar segment. Textile segment reported sales decline of 6.6% yoy in Q3FY16. This decline is on account of higher captive consumption of fabric s business and lower average realisation across textile products on yoy basis on back of reducing cotton prices. Garment sales reported growth of 15.7% yoy in Q3FY16 increasing its share in revenue mix to 22.6% from 20.2% in Q3FY Feb/2015 Mar/2015 Apr/2015 Source: Capitaline, IndiaNivesh Research Daljeet S. Kohli Head of Research May/2015 Jun/2015 KPR Mills Tel: daljeet.kohli@indianivesh.in Jul/2015 Aug/2015 Aug/2015 Sep/2015 Sensex Oct/2015 Nov/2015 Dec/2015 Jan/2016 Particulars Q3FY16 Q2FY16 Q3FY15 QoQ(%) YoY(%) 9mFY16 9mFY15 Chg(%) Qty Yarn (tons) Fabric (tons) Garment (Mn Pcs) Value (Rs Mn) Yarn Fabric Garments Sugar Others Total Avg Realisation Yarn (Rs/kg) Fabric (Rs/kg) Garment (Rs/pc) Revenue Mix (%) Yarn Fabric Garments Sugar Others Total Source: Company, IndiaNivesh Research Prerna Jhunjhunwala Research Analyst Tel: prerna.jhunjhunwala@indianivesh.in IndiaNivesh Research IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai Tel: (022) IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.

8 Q3FY16 Result Update (contd...) EBITDA stood at Rs 953 mn in Q3FY16 against Rs 867 mn in Q3FY15, growth of 9.9% yoy. EBITDA margin improved to 15.4% in Q3FY16 from 14.5% in Q3FY15, an improvement of 88 bps yoy (INSL est: 16.7%). EBITDA was positively impacted by lower raw material cost (63.6% of net sales in Q3FY16 vs 64% of net sales in Q3FY15) and lower other expenses (12.1% vs 13.8%). Employee cost was higher at 8.9% of sales in Q3FY16 vs. 7.7% in Q3FY15 probably on account of higher garment sales. PAT grew 25.5% yoy to reach Rs 530 mn in Q3FY16 from Rs 422 mn in Q3FY15 (INSL est: Rs 580 mn). This growth in PAT is on account of reduction in interest cost ( 31.5% yoy) and lower effective tax rate (24.9% vs. 27.5%). PAT margin improved 148 bps yoy to reach 8.6% in Q3FY15 against 7.1% in Q3FY15 (INSL est: 9.2%). On segmental basis, textile segment reported sales de growth of 6.6% yoy to reach Rs 5074 mn in Q3FY16 against Rs 5434 mn in Q3FY15. EBIT margin of the segment increased 211 bps yoy to reach Rs 14.7% in Q3FY16 from 12.6% in Q3FY15. In our opinion, margin improvement was aided by decline in cotton prices and higher proportion of garments in revenue mix. Sugar segment grew 198.3% yoy to reach Rs 870 mn in Q3FY16 from Rs 292 mn in Q3FY15. Sugar segment managed to report EBIT profit of Rs 4 mn in Q3FY16 against profit of Rs 3 mn in Q3FY15. We attended the conference call of the company and following are the key takeaways: The management mentioned that 12 mn pcs capacity of garments expanded in FY15 has reached 50% utilisation level (ideally a garment facility reaches optimal utilisation at 75% level). The new garments expansion of 36 mn pcs annum is progressing as per schedule. The facility would commence operations in phases starting from Q2FY17 and full commissioning by March The company has already spent Rs 600 mn of total cost of Rs 2000 mn project cost. It would be taking debt of Rs 750 mn for the new capacity while balance would be financed through working capital. The company has converted part of its existing facility to produce value added yarns. It has started production of melange yarn (30000 tons per annum capacity) and polyester cotton yarn (16000 tons per annum capacity). It guided that the company would become debt free in next 2 3 years. Current debt of the company stood at Rs 5660 mn. Long term debt stood at Rs 2400 mn and short term debt stood at Rs 3260 mn. The company will not expand in spinning business. Going forward, it would take a decision on increasing its processing capacity which currently stands at 9000 tons per annum. It is adding printing machines which would aide higher realisation of garments. The management mentioned that cotton yarn spread depends on the count of yarn. In Q3FY16, the spread was 15%, which has started improving in Q4FY16E. The current employee strength of the company stood at people. On commissioning of new garment facility headcount is likely to increase by additional 4000 people. The company is looking for volume growth of 10% over the next 2 years. Revising estimates and introducing FY18E estimates Taking into consideration the performance of the company in 9mFY16, management guidance and decline in cotton prices, we have revised our estimates downwards. We also introduce FY18E estimates. We expect net sales / EBITDA / PAT to grow at a CAGR of 6.2%/12.3%/24.4% over FY15 18E. PAT growth is likely to be higher than sales growth due to higher EBITDA growth and lower depreciation and interest cost. Revised EPS of the company would stand at Rs 57, Rs 73.2 and Rs 88.8 for FY16E, FY17E and FY18E respectively. (contd...) February 03,

9 Q3FY16 Result Update (contd...) Particulars (Rs Mn) FY16E FY17E Introducing New Earlier % Chg New Earlier % Chg FY18E Sales EBITDA PAT EPS EBITDA Margin (%) bps (14 bps) 17.1 PAT Margin (%) bps bps 11.2 Source: Company, IndiaNivesh Research Valuation At CMP of Rs 713, the stock trades at PE of 12.5x, 9.7x and 8x its FY16E, FY17E and FY18E earnings of Rs 57, Rs 73.2 and Rs 88.8 per share. The company reported results that missed our estimates on profitability front. However, cotton price decline enabled better profitability in the textile segment; though lower than our expectations. Better financial leverage is likely to continue on account of expected reduction in debt. We are positive on the future prospects of the company given its vertically integrated facilities; focus on value added products like garments and determination to become debt free. We roll forward our target price on FY18E estimates. Though peers are currently trading at lower multiples, we assign premium multiple to KPR Mills on account of superior financial performance, strong business model (captive power) and expected debt free balance sheet. Recently valuation of peers (average EV/EBITDA FY18E 6x) has reduced due to correction in equity markets and disappointing results reported by most companies. However, this valuation is likely to improve with demand improvement and stability in raw material scenario. We value sugar segment on EV/ton basis at Rs 0.5 mn per ton, in line with average peer valuation. We maintain BUY rating with target price of Rs 1059 per share. Segment Multiple Amount Target Multiple Target EV Textiles EV/EBITDA (FY18E) 5, Sugar EV/ton (capacity) 5, EV Debt current 5660 Cash (H1FY16) 460 Market Cap Target Price (Rs Per Share) 1059 Source: Company, IndiaNivesh Research (contd...) February 03,

10 Q3FY16 Result Update (contd...) Financial Performance Rs in mn Q3FY16 Q2FY16 Q3FY15 QoQ (%) YoY (%) 9mFY16 9mFY15 Chg (%) Net sales 6,195 5,873 5, ,070 18, Raw Materials 3,939 3,734 3, ,426 12, Staff cost ,611 1, Other expenditure ,081 1, Operating Expenses 5,242 4,867 5, ,118 15, EBITDA 953 1, ,952 2, EBITDA Margin (%) 15.4% 17.1% 14.5% (175 bps) 88 bps 16.3% 15.0% 134 bps Other Operating Income Other Income Depreciation ,147 1, Profit bef. Int. & Tax ,607 2, Interest & finance ch Profit before tax ,163 1, Total tax expenses Add/Less: Extraordinary Items Net profit ,557 1, PAT ,557 1, Effective tax rate 24.9% 28.3% 27.5% 28.0% 26.8% Adj. PAT Margins (%) 8.6% 8.9% 7.1% (33 bps) 149 bps 8.6% 6.7% 188 bps EPS Source: Company, IndiaNivesh Research Segmental Performance Rs in mn Q3FY16 Q2FY16 Q3FY15 QoQ (%) YoY (%) 9mFY16 9mFY15 Chg (%) Revenue (Rs Mn) Textile Sugar Others Total EBIT (Rs Mn) Textile Sugar Others Total EBIT Margin (%) Textile (71 bps) 211 bps bps Sugar (20 bps) (71 bps) (255 bps) Others bps (492 bps bps Source: Company, IndiaNivesh Research (contd...) February 03,

11 Q3FY16 Result Update (contd...) Consolidated Financial Statements: Income statement Y E March (Rs m) FY 14 FY 15P FY 16E FY 17E FY 18E Net sales Growth % Expenditure Raw Material Power and Fuel Employee Others EBITDA Growth % EBITDA Margin % Other Income 915 1,013 1,067 1,163 1,267 Depreciation and amortisation EBIT EBIT Margin % Interest Exceptional/Extraordinary item PBT PBT Margin % Tax Effective tax rate % PAT Adj. PAT Growth% Adj. PAT Margin % Source:Company, IndiaNivesh Research Balance sheet Y E March (Rs m) FY 14 FY 15P FY 16E FY 17E FY 18E Equity Share Capital Preference Capital and others Reserves & Surplus Net Worth Total debt Net defered tax liability Total Liabilities Gross Fixed Assets Less Depreciation Capital Work in Progress Net Fixed Assets Goodwill on Consolidation Investments Current Assets Inventories Sundry Debtors Cash & Bank Balance Loans & advances Other Current assets Current Liabilities & provisions Net Current Assets Mis Exp not written off Total assets Source:Company, IndiaNivesh Research Cash Flow Y E March (Rs m) FY 14 FY 15P FY 16E FY 17E FY 18E PBT Adjustment for: Depreciation Others Changes in working capital Tax expenses Cash flow from operations Capital expenditure Free Cash Flow Others Cash flow from investments Interest Loans availed or (repaid) Proceeds from Issue of shares (incl share premium) Dividend paid (incl tax) Cash flow from Financing Net change in cash Cash at the beginning of the year Cash at the end of the year Reconciliation with other balances Cash as per Balance Sheet Source:Company, IndiaNivesh Research Key ratios Y E March FY 14 FY 15P FY 16E FY 17E FY 18E Adj. EPS (Rs) Cash EPS (Rs) BVPS DPS (Rs) Adj. P/E (x) P/CEPS (x) P/BV (x) EV/EBITDA(x) M cap/sales (x) ROCE ROE Inventory (days) Debtors (days) Trade Payables (days) Total Asset Turnover (x) Fixed Asset Turnover (x) Debt/equity (x) Debt/ebitda (x) Interest Coverage (x) Dividend Yield % Source:Company, IndiaNivesh Research (contd...) February 03,

12 Majesco Ltd (MJCO). In line Performance; Transformation remains on track. Q3FY16 Result Update February 3, 2016 Current CMP : Rs.569 Rating : BUY Target : Rs.899 Daljeet S. Kohli Head of Research Tel: daljeet.kohli@indianivesh.in Amar Mourya Research Analyst Previous Rating : BUY Target : Rs.899 Tel: amar.mourya@indianivesh.in IndiaNivesh Research Revenue Highlights Q3FY16 revenue increased 47.3% Y/Y to Rs.1.98 bn (v/s Rs.1.34 bn in Q3FY15). We estimated Rs.2.01 bn of revenue in Q3FY16. The growth was primarily driven by favorable momentum in Majesco s P&C business and new customer wins during the 9MFY16. Revenue increased 5.6% Q/Q compared to Rs.1.87 bn in Q2FY16. During the quarter, MJCO s key geographies delivered growth US and UK grew by 5.2% Q/Q and 17.1% Q/Q, respectively; partially offset by 4.0% Q/Q decline in others. License revenue increased 58.6% Q/Q (8% of Rev) followed by Cloud (+35.0% Q/Q 18.0% of Rev), and Support (+0.7% Q/Q 15.0% of Rev). During the quarter, Professional Services (58% of Rev) de grew by 4.0% Q/Q to Rs.1.1 bn. P&C business now accounts for 69% of total revenue and delivered 8.9% Q/Q growth followed by Consulting, which accounts for 12% of revenue and grew by 24.0% Q/Q. The Non Insurance and Life & Annuities segment de grew by 20.4%/10.3% Q/Q and contributed 2%/17% to the overall Revenue. Profitability Highlights MJCO reported operating loss of Rs.69 mn (v/s Profit of Rs.94 mn in Q3FY15). The reasons for operating level loss was: (1) Salary hike 10% offshore and 4% onsite, (2) 56.9% Y/Y increase in SG&A expenses, and (3) 72.6% Y/Y increase in other expenditure. As a result, the company reported negative EBITDA of Rs 27 mn ( 1.4% of revenue) as compared to Rs 144 mn (10.7% of revenue) in Q3FY15. During the quarter, Other income and finance expenditure stood at Rs.12/10 mn (v/s Rs.24/2 mn in Q3FY15). Restructuring expenditure (Exceptional Item) stood at Rs.6 mn in Q3FY16. On account of tax benefit of Rs.175 mn, MJCO reported Net profit of Rs 79 mn as compared to a net profit of 88 mn in Q3FY15. Operating Highlights The company added four new clients during the quarter and expanded its relationship with existing client accounts that included two tier 1 clients. 12 month backlog at December 31, 2015 was $63.0 million as compared to $54.1 million at September 30, 2015 up 16.4% reflecting strong growth momentum. During the quarter, Maine Mutual Group selected Majesco P&C Suite to replace their core systems as a foundation to transform their business. They selected Majesco Business Analytics to provide their business intelligence and analytics platform. They will deploy the entire solution portfolio on Majesco Cloud. Majesco also announced the additions of Blueprint and Appulate to the company s partnership ecosystem to strengthen the portfolio offerings to clients. IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai Tel: (022) IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.

13 Q3FY16 Result Update (contd...) Outlook In our view the company's performance was largely in line with our estimate. As expected the company started attracting business through cross selling. Further, MJCO'S marketing initiatives started paying results, getting good rating and recognition from top independent agencies. The disappointment on EBITDA and PAT front was expected on account of integration of AGILE and COVERALL. The overall story remains intact post consolidation MJCO has emerged as one of the leading third party insurance vendors. Valuations At CMP of Rs.569, the stock is trading at EV/Sales of 1.6x/1.1x/0.9x FY16E/FY17E/FY18E estimates (P/E 31.5x FY17E). We value MJCO at EV/Sales multiple of 2.2x FY18E and arrived at TP of Rs.899. Given the 53% upside from the target price we continue to maintain BUY on MJCO. Table: EV/Sales (x) Target Price Calculation (Rs Mn) FY15 FY16E FY17E FY18E Forward Sales 4,860 7,582 10,592 12,885 Debt Cash 1,025 1,025 1,025 1,025 Forward Multiple (at CMP) 2.1x 1.5x 1.3x FY18E TP Multiple (x) 2.2x Rev CAGR (5Yrs) 38.4% EV 28,875 Less: Holding Co. Discount (30%) 8,662 Less: Debt 736 Add: Cash 1,025 Shareholder Value 20,502 O/Shares 22.8 TP 899 Profit & Loss Account (Consolidated) FY15 FY16 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Income from operations 1,011 1,156 1,344 1,349 1,478 1,842 1,929 Other operating income Total Sales 1,011 1,156 1,344 1,349 1,502 1,874 1,980 Q/Q Gr % NA 14.4% 16.3% 0.4% 11.3% 24.8% 5.6% Y/Y Gr % NA NA NA NA 48.6% 62.1% 47.3% Expenses Employee benefits expense ,284 1,387 Travelling and conveyance expenses Depreciation and amortisation expenses Other expenses Total expenses ,475 1, Operating Profit (137) (18) 94 (49) 27 (27) (69) Other income Finance costs 2 (0) Exceptional items (loss) / gain, net (19) (20) (6) PBT (120) (5) 116 (29) 45 (42) (73) Tax expense Total (69) (34) (175) Net Profit (52) (14) 85 (52) 17 (8) 101 Minority interest 1 (2) 22 India Business Net Profit (49) (11) 88 (49) 15 (6) 79 EBITDA (92) (27) Margin % 9.1% 2.5% 10.7% 0.5% 5.7% 0.7% 1.4% PAT Margin % 4.8% 0.9% 6.6% 3.7% 1.0% 0.3% 4.0% Source: Company Filing; IndiaNivesh Research (contd...) February 3,

14 Q3FY16 Result Update (contd...) Revenues analysis (%) Segment Revenue (Rs mn) Q1FY16 FY16 Q2FY16 Q3FY16 Q/Q % Ch % of Rev North America 1,277 1,644 1, % 87% UK % 8% Others % 4% Total 1,502 1,874 1, % 100% Segment Results PBTI North America 3 (70) (60) 15.1% 3% UK % 3% Others (3) (9) 55 NM 3% Total 18 (54) 57 NM 3% Vertical (Rs Mn) Q1FY16 Q2FY16 Q3FY16 Q/Q % Ch % of Rev License % 8% Professional Services 941 1,205 1, % 58% Cloud % 18% Support (Maintenance) % 15% Total 1,502 1,874 1, % 100% Service Offering (Rs Mn) Q1FY16 Q2FY16 Q3FY16 Q/Q % Ch % of Rev Property & Casualty 997 1,261 1, % 69% Consulting % 12% Life & Annuities % 17% Non Insurance % 2% Total 1,502 1,874 1, % 100% Clients Detail (No's) FY16 Q1FY16 Q2FY16 Q3FY16 Q/Q % Ch Active Clients during the Quarter % New Client Additions % New Cross Sell / Upsell to existing clients % Clients accounting for >5% of Revenue % % of Revenue Top 5 Clients 29.7% 28.4% 26.7% % of Revenue Top 10 Clients 46.5% 43.9% 40.7% Order Book (Rs Mn) 3,596 3,988 4, % Manpower Metrics (No's) FY16 Q1FY16 Q2FY16 Q3FY16 North America 1,611 1,671 1,736 UK Asia Pacific Domestic Corporate Services( Including trainees) Total 2,095 2,164 2,242 ONSITE OFFSHORE 1,562 1,623 1,669 Total 2,095 2,164 2,242 TECHNICAL 1,903 1,967 2,031 TECHNICAL SUPPORT MARKETING SUPPORT Total 2,095 2,164 2,242 (contd...) February 3,

15 Q3FY16 Result Update (contd...) Consolidated Financial Statements: Income Statement Balance Sheet Y E March (Rs m) FY15 FY16e FY17e FY18e Y E March (Rs m) FY15 FY16e FY17e FY18e Net sales 4,860 7,519 10,504 12,778 Share Capital Y/Y Ch % Reserves & Surplus 2,463 2,322 2,380 2,966 Net Worth 2,577 2,437 2,495 3,080 COGS 3,759 5,794 7,878 9,023 SG&A 1,073 1,764 2,383 2,729 Minority EBITDA ,026 Long term loans Y/Y Ch % Others EBITDA Margin % Total Liabilities 4,129 3,988 4,206 4,942 Deprecaition EBIT Net Block EBIT Margin % Goodwill 1, Long Term Inv & Others Interest Other Income (Inc Forex) Current Assets 2,746 3,192 4,003 5,174 Extra Ordinary Exps/(Income) 1 Sundry Debtors 896 1,360 1,928 2,381 PBT Cash & Bank Balance Tax Inventories Effective tax rate % Others ,366 1,661 Reported PAT Current Liabilities 1,054 1,647 2,277 2,718 Y/Y Ch % Trade Payables 1,137 1,730 2,360 2,801 Provisions Minority 6 Adj. PAT (APAT) Net Current Assets 1,692 1,544 1,726 2,457 RPAT Margin % Y/Y Ch % Total assets 4,128 3,988 4,206 4,941 Source:Company filings; IndiaNivesh Research Source:Company filings; IndiaNivesh Research Cash Flow Key Ratios Y E March (Rs m) FY15 FY16e FY17e FY18e Y E March FY15 FY16e FY17e FY18e Operaing Profit Adj.EPS (Rs) Depreciation Cash EPS (Rs) Changes in Working Capital DPS (Rs) Interest Paid BVPS Cash Flow After Chang in WC Tax ROCE % Others ROE % Cash flow from operations EBITDA Margin % Capital expenditure (net) Net Margin % Free Cash Flow Other income PER (x) 321.9x 92.3x 223.8x 22.2x Investments P/BV (x) 5.0x 5.3x 5.2x 4.2x Cash flow from investments P/CEPS (x) 117.2x 272.2x 47.8x 15.6x Long Term Debt (Decrease) Increase EV/Sales (x) 2.4x 1.6x 1.1x 0.9x Dividend paid (incl tax) Dividend Yield % Share Issue / Repurchase & Others m cap/sales (x) 2.6x 1.6x 1.2x 1.0x Cash flow from Financing net debt/equity (x) 0.2x 0.1x 0.0x 0.1x Net change in cash net debt/ebitda (x) 21.2x 5.4x 0.4x 0.2x Cash at the beginning of the year 1,025 1, Debtors (Days) Cash at the end of the year 1, ,133 Creditors (Days) Source:Company filings; IndiaNivesh Research Source:Company filings; IndiaNivesh Research (contd...) February 3,

16 HSIL Ltd In line with expectations; Maintain BUY on long term prospects Q3FY16 First Cut Analysis February 3, 2016 Current CMP : Rs.273 Rating : BUY Target : Rs.396 Previous Rating : BUY Target : Rs.396 STOCK INFO STOCK INFO Co. Name HSIL Ltd BSE NSE HSIL Bloomberg HSI IN Reuters HSNT.BO Sector Ceramic Products & Containers Index S&P BSE 500 Face Value (Rs) 2 Equity Capital (Rs mn) 145 Mkt Cap (Rs mn) 19,738 52w H/L (Rs) (Adj.) 477/238 3m Avg Daily Volume (BSE + NSE) 100,942 SHAREHOLDING PATTERN % (as on Dec. 2015) Promoters 47.1 FIIs 10.3 DIIs 22.6 Public & Others 20.0 Source: BSE STOCK PER. (%) 1m 3m 12m HSIL Sensex Source: Capitaline, IndiaNivesh Research HSIL v/s SENSEX Feb/2015 Mar/2015 Apr/2015 Source: Capitaline, IndiaNivesh Research Daljeet S. Kohli Head of Research May/2015 Tel: daljeet.kohli@indianivesh.in Prerna Jhunjhunwala Research Analyst Jun/2015 HSIL Jul/2015 Aug/2015 Tel: prerna.jhunjhunwala@indianivesh.in Aug/2015 Sep/2015 Sensex Oct/2015 Nov/2015 Dec/2015 Jan/2016 Standalone (Rs Mn) Q3FY16 Q2FY16Q3 FY15 QoQ (%) YoY (%) INSPL Var (%) Estimate Net Sales 4,907 4,137 4, EBIDTA PAT EPS Source: Company, IndiaNivesh Research HSIL reported Q3FY16 standalone results that were in line with expectations. Building products segment reported lower profit than expected at 16.2% against our expectation of 18.3%, though sales were in line with expectations. Packaging products segment underperformed on sales front while outperformed on profitability front (14.8% margin vs. INSL expectation of 9%). HSIL reported 7.7% yoy growth in net sales at Rs 4907 mn in Q3FY16 against Rs 4555 mn in Q3FY15 (vs. INSL est: Rs 5097 mn). This was supported by building products segment which grew by 17.3% yoy while packaging products segment grew by 2% yoy. Building products sales stood at Rs 2676 mn in Q3FY16 against Rs 2282 mn in Q3FY15 (vs. INSLexp: 2601 mn). Packaging products sales stood at Rs 2385 mn in Q3FY16 against Rs 2339 mn in Q3FY15 (vs. INSLexp: 2573 mn). EBITDA de grew by 8.9% to reach Rs 799 mn in Q3FY16 from Rs 877 mn in Q3FY16 (INSLest: 892 mn). EBITDA margin declined297 bps yoyat 16.3% in Q3FY16due to lower operating leverage. Raw material, employee and other expenses increased 20.4% yoy, 15.8% yoy and 19.3% yoy respectively.power and fuel cost declined 19.0% yoy. PAT of the company grew 22% yoy to reach Rs369mn in Q3FY16 against Rs 303 mn in Q3FY15 (INSLest: 240 mn). This relatively higher PAT growth is on account of 50.9% yoy decline in interest cost and 132.7% increase in other operating income. Interest cost stood at Rs 96 mn in Q3FY16 against Rs 196mn in Q3FY15. This was due to debt repayment through capital raised from Qualified Institutional Placement in March Effective tax rate for Q3FY16 stood at 36.1% against 30.8% in Q3FY15. On segmental performance, building products reported sales growth 17.3% yoy to reach Rs 2676 mn in Q3FY16. Improved sales growth could be the outcome of higher advertisement expenditure incurred to attract demand and lower base of Q3FY15 (segment Q3FY15 reported single digit growth of 7%).EBIT of the segment grew by 2.7% yoy to reach Rs 433 mn in Q3FY16. EBIT margin declined 229 bps yoy to reach 16.2%. However, it is better than 15.4% margin of Q2FY16 and 13.8% of Q1FY16. Higher profitability could be on account of higher sales growth providing operating leverage. Packaging products segment reported 2% yoy growth in Q3FY16 to reach Rs 2385mn. EBIT of the segment increased 12.6% yoy to reach Rs 353 mn in Q3FY16 against Rs 313 mn in Q3FY15. EBIT margin for the segment improved 140 bps yoy to reach 14.8% in Q3FY16 from 13.4% in Q3FY15. This improvement in profitability could be on account of reducing power cost. IndiaNivesh Research IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai Tel: (022) IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.

17 Q3FY16 First Cut Analysis (contd...) For 9mFY16, net sales grew 2.6% yoy at Rs mn against Rs mn in 9mFY15. EBITDA of the company declined 8.3% yoy to reach Rs 1991 mn in 9mFY16 against Rs 2172 mn in 9mFY15. EBITDA margin reduced 180 bps yoy to reach 15.2% in 9mFY16 from 17% in 9mFY15. However, PAT grew 22.2% yoy to reach Rs 786 mn in 9mFY16 against Rs 644 mn in 9mFY15. PAT margin increased 96 bps yoy to reach 6% in 9mFY16 against 5% in 9mFY15. Building products segment reported 11.2% yoy growth to reach Rs 7198 mn in 9mFY16 against Rs 6472 mn with margin decline of 402 bps yoy. Packaging products segment reported 3.4% yoy de growth with EBIT margin improvement of 148 bps yoy. Valuation At CMP of Rs 273, HSIL trades at PE of 20.5x and 17.6x its FY16E and FY17E earnings of Rs 13.3 and Rs 15.5 per share respectively. In our opinion, the long term outlook of the building products sector continues to be robust and HSIL being the market leader in sanitaryware products should be the key beneficiary in such an event. Double digit growth in building products segment and improvement in margins of packaging products segment are the key positives of Q3FY16 performance. We maintain BUY rating on the stock with SOTP based target price of Rs 396 per share. Key risk to our estimates would include increase in power and fuel cost lead by increase in gas prices and continuance of subdued demand. Management conference call on results is scheduled on 3 rd February We would come with a detailed note post the conference call. (contd...) February 3,

18 Q3FY16 First Cut Analysis (contd...) Financial Performance Rs in mn Q3FY16 Q2FY16 Q3 FY15 QoQ (%) YoY (%) 9mFY16 9mFY15 Chg (%) Net sales 4,907 4,137 4, ,125 12, Raw Materials 1,810 1,301 1, ,580 4, Power and Fuel ,775 2, Staff cost ,680 1, Other expenditure 1,105 1, ,100 2, Operating Expenses 4,108 3,538 3, ,134 10, EBITDA ,991 2, EBITDA Margin (%) 16.3% 14.5% 19.3% 180 bps (297 bps) 15.2% 17.0% (180 bps) Other Operating Income Other Income Depreciation Profit bef. Int. & Tax ,522 1, Interest & finance ch Profit before tax , Total tax expenses Add/Less: Extraordinary Items Net profit PAT Effective tax rate 36.1% 37.0% 30.8% 36.1% 32.1% PAT Margins (%) 7.5% 5.9% 6.6% 165 bps 88 bps 6.0% 5.0% 96 bps EPS Source: Company, IndiaNivesh Research Segmental Performance Rs in mn Q3FY16 Q2FY16 Q3 FY15 QoQ (%) YoY (%) 9mFY16 9mFY15 Chg (%) Revenue (Rs Mn) Building Products Packaging Products Others Total EBIT (Rs Mn) Building Products Packaging Products Others NA Total EBIT Margin (%) Building Products bps (229 bps) (402 bps) Packaging Products bps 140 bps bps Others NA NA (148 bps) Source: Company, IndiaNivesh Research (contd...) February 3,

19 Daljeet S. Kohli, Head of Research Tel: Abhishek Jain, Research Analyst Tel: Aman Vij, Research Analyst Tel: Monthly Auto Numbers January 2016 Bajaj Auto Ltd.: Total sales up 2% YoY; Maintain BUY with target price of Rs Segment Jan 16 Jan 15 Change YoY Dec 15 Change MoM YTD FY16 YTD FY15 Change YoY Motorcycle 252, ,955 2% 247,782 2% 2,858,721 2,866,070 0% 3 Wheeler 40,951 41,791 2% 41,221 1% 456, ,208 1% Total Sales 293, ,746 2% 289,003 2% 3,315,062 3,317,278 0% Domestic Sales 161, ,754 11% 143,526 13% 1,775,911 1,722,812 3% Export 132, ,992 8% 145,477 9% 1,539,151 1,594,466 3% Source: Company Filings; IndiaNivesh Research Bajaj Auto showed strong performance in Domestic market but weak performance across 3 wheelers and exports in the month of January Total sales were up 2% YoY to 293,939 units. Domestic volume was up 11% YoY to 161,870 units while export volumes slid by 8% YoY to 132,069 units. Motorcycle sales were up 2% YoY to 252,988 units while three wheeler sales went down 2% YoY to 40,951 units. The response to the new Avenger series (launched in October 2015) has been encouraging, with the company doing close to units in January 2016 vs units December 15. The company has set production target of about 30,000 units for Avenger series for March 16. The company unveiled a 150 cc bike 'V' on Monday, 1 st February 2016, which contains metal from India's first aircraft carrier INS Vikrant which was decommissioned in The bike is expected to be priced between Rs 60,000 and Rs 70,000 and is expected to be launched in March with initial capacity of 20,000 units a month. On export front the company believes that in every year one quarter will be a bit soft. The company is exposed to at least 10 major markets where the foreign exchange (forex) availability and the political scenario will cause company to miss targets in few months every year. The company is expecting to do export sales close to units per month by March 16. Valuation Though export growth is expected be remain muted, we expect domestic volumes to improve on the back of new launches like Pulsar RS200, Platina, Avenger and new CT100. At CMP of Rs 2363, the stock is trading at PE multiple of 16.8x FY17E EPS. We maintain BUY rating on the stock with target price of Rs (20x FY17E EPS).

20 Dharmesh Kant VP Equity and Derivatives Strategist Tel: Global Markets Outlook US Markets: Wall Street stocks ended sharply lower Tuesday as investor s unloaded energy and financial stocks amid a selloff in crude oil futures, which settled below $30 a barrel. The downdraft in energy shares and banks offset strong gains in Google parent Alphabet Inc. which officially surpassed Apple Inc. to become the most valuable company in the world. The energy sector had the worst performance of the S&P 500 s 10 sectors, down 3.3%, followed by financials, declining 2.6%. Tuesday s trading action was characterized by the resumption of a positive correlation between oil prices and stocks, after briefly breaking that pattern Monday, when stocks pared losses to end flat despite plummeting oil prices. For months, stocks have traded in the same direction as oil even though the two assets should be influenced by a different set of fundamentals. The American Petroleum Institute late Tuesday reported that crude supplies climbed by 3.8 million barrels for the week ended Jan. 29, according to sources who reviewed the report. The more closely watched Energy Information Administration report is due Wednesday. Day s Performance: The S&P 500 dropped points, or 1.9%, to 1, The Dow Jones Industrial Average skidded points, or 1.8%, to 16, Meanwhile, the Nasdaq Composite ended the day down points, or 2.2%, at 4, Set ups on S&P 500, Dow Industrial Average and Nasdaq 100 are in pull back mode. We expect markets to remain volatile where pull backs from lows will be sold into. Emerging markets: Asian indices are trading with deep cuts this morning on weak global cues and falling oil prices. China s central bank injected 100 billion yuan ($15.2 billion) in short term loans to money markets. The bank s move effectively staves off potential liquidity squeezes ahead of the weeklong Lunar New Year holiday that starts Feb. 7 and was the first leg of its usual twice a week money market operations. Shanghai is now down 47% from its peak last June. Bullions & Commodities: Gold is trading at $1128 per troy ounce this morning up 0.07% from previous close. WTI Crude future is trading at $29.45 per barrel while Brent Crude future is trading at $32.39 per barrel. Currencies: The U.S. Dollar Index tracking the U.S. currency against a basket of six others currencies trading at this morning down (0.05%) from previous close. Long term set up on Dollar Index remain strong, a break above 100 on a weekly closing basis will initiate a new up move for a target of 120. Usually, the dollar and U.S. stocks often trade on opposite paths, with a weak dollar seen as providing investors with cheap funding to buy stocks. Plus the dollar s drop generally helps U.S. companies overseas sales. Source: Bloomberg