Indo Count Industries Ltd Bloomberg Code: ICNT IN

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1 Aug 26, 215 Consumer Discretionary - Apparel & Textile Products Aug 26, 215 Bloomberg Code: ICNT IN India Research - Stock Broking Home Textile Segment - Key Growth Driver Higher contribution from Bed-Linen to expand EBITDA margin The revenue share of Bed-Linen is increased from Rs.129mn to Rs.1382mn, a growth of 39% in FY15. The growth in revenue is mainly attributed to Home Textile segment on the back of higher realization and better product mix. Indo Count recorded EBITDA with an increase of 19% from Rs.2488mn to Rs.363mn from FY14 to FY15. ICIL has increased its bed sheet manufacturing capacity from 36 Mn metre in FY7 to 68 mn by FY15. This Bed-Linen segment is expected to continue to be a key growth driver as the company plans to expand to new geographies and premium product segments such as utility bedding and top-of-the-bed, which are relatively bigger markets than bed sheets. Principal export to the most demanding international market ICIL is 3rd largest exporter of Bed Linen from India and the 4th largest Bed Sheet exporter to USA. Indo Count currently supplies a wide range of bed linen to global retail chains across 49 countries in 5 continents. ICIL is a net exporter, with ~7% of its clientele in the international markets. ICIL exports account for ~9% of its revenue (~7% of exports to the US). The company has a ~2% share in the Indian bed linen exports to the US. The contribution of export revenue is increasing at a CAGR of 33% in FY11 to FY15. We expect the export revenue will be increased with the contribution from institutional linen, utility and fashion bedding. Expecting good execution of business post CDR mechanism In FY8 due to global recessionary conditions and the consequent cash flow constraints, the company had approached its lenders to restructure its debts under the Corporate Debt Restructuring (CDR) system in FY9. With an improved demand scenario and ramp up of capacities, the company was able to exit CDR by FY15 which is four years ahead of the scheduled exit by paying Rs.257 mn as right to recompense to the bankers. The total debt as on FY15 is at Rs.344 Mn. Valuation and Outlook At CMP of Rs. 87, Indo Count is trading at 12.1x FY17E EPS, on back of lower raw material prices, favorable product mix, improving cost efficiency and economies of scale; we initiate coverage on Indo Count with a BUY rating with a target price of Rs. 13, based on 14.5x P/E FY17E, representing an upside potential of 18.3% in a 9-12 months period. Exhibit 1: Valuation Summary (Rs. Mn) YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Net Sales EBITDA EBITDA Margin (%) Adj. Net Profit EPS (Rs.) RoE (%) PE (x) ; *Represents multiples for FY13, FY14 & FY15 are based on historic market price For private circulation only. For important information about Karvy s rating system and other disclosures refer to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>, Thomson Publishers & Reuters BUY Recommendation (Rs.) CMP (as on Aug 25, 215) 87 Target Price 13 Upside (%) 18.3 Stock Information Mkt Cap (Rs.mn/US$ mn) / wk High/Low (Rs.) 135 / 13 3M Avg. daily volume (mn).1 Beta (x).7 Sensex/Nifty 2632 / 7881 O/S Shares(mn) 39.5 Face Value (Rs.) 1. Shareholding Pattern (%) Promoters 59. FIIs 7. DIIs 1.8 Others 32.3 Stock Performance (%) 1M 3M 6M 12M Absolute Relative to Sensex Source: Bloomberg Relative Performance* Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 ICNT Sensex Source: Bloomberg; *Index 1 Analyst Contact Prasanth Victor v.prasanth@karvy.com 1

2 Aug 26, 215 Company Financial Snapshot (Y/E Mar) Profit & Loss (Rs. Mn) FY15 FY16E FY17E Net sales Optg. Exp (Adj for OI) EBITDA Depreciation Interest Other Income PBT Tax Adj. PAT Profit & Loss Ratios EBITDA margin (%) Net margin (%) P/E (x) EV/EBITDA (x) Company Background Indo Count is one of the leading vertically integrated home textile manufacturing and exporting companies. The company has integrated the entire value chain of textiles from spinning, weaving to processing, cutting and sewing. In addition to the core manufacturing processes, the company has integrated procurement, design and packaging to ensure a total end-toend solution for its clients. Indo Count has three manufacturing units in Kolhapur. It acquired Pranavaditya Spinning Mills Ltd. (PSML) in 27. The company has a total of 816 spindles producing around 14 tons of combed cotton yarn per annum. Home Textile division was set up in 26 and continued its fast-paced growth, building momentum with another recordbreaking performance for the year. The US is the largest market for the company accounting for a major share in the total exports of home textile products. The company has been consistently engaging with the top retail chains, brands and has built deep and lasting relationship with them. Balance sheet (Rs. Mn) FY15 FY16E FY17E Total Assets Net Fixed assets Current assets Other assets Total Liabilities Networth Debt Current Liabilities Deferred Tax Other Liabilities & Provision Balance Sheet Ratios RoE (%) RoCE (%) Net Debt/Equity.7.3 (.1) Equity/Total Assets P/BV (x) Cash Flow (Rs. Mn) FY15 FY16E FY17E PBT Depreciation Interest (net) Tax (487) (95) (118) Changes in WC (158) (538) (564) Others 174 (27) (14) CF from Operations Capex (862) (95) (82) Others (166) CF from Investing (128) (95) (82) Change in Equity 4 Change in Debt (528) (35) (35) Dividends & interest paid (65) (57) (55) Others (2) CF from Financing (1139) (92) (855) Change in Cash Exhibit 2: Shareholding Pattern (%) Exhibit 3: Segment Break Up DIIs 1.8% Others 32.3% FIIs 7.% Promoter 59.% Home Textile 83.8% Spinning 13.1% Consumer Durables 3.% 2

3 Home Textile and Spinning are the major revenue contributors for ICIL Aug 26, 215 The company was organized into three business-operating segments viz: Home Textiles, Yarn and Consumer Durables. Initially, the company manufactured only yarn. The company has a total of 816 spindles producing around 14 tons of combed cotton yarn per annum. In 24, ICIL forayed into Electronic Manufacturing Services (EMS) of electronic products for the Multi National Compaines (MNC) brands such as LG, Samsung, etc. Share of this Consumer Durables unit in the company s overall business was marginal which is less than 5% since FY13 to FY15. Recently in Q1FY16 the management declared that they have discontinued the Consumer Durables segment as it is no longer a revenue generating segment for them and to focus on the product portfolio for bed sheets, expanding the genre to institutional linen, utility and fashion bedding. In 27, the company forayed into the high-margin home textiles business. ICIL is 3rd largest exporter of Bed Linen from India and the 4th largest Bed Sheet exporter to USA. The company is a net exporter, with ~7% of its clientele in the international markets. The biggest product segment being bed linen, it is a complete export oriented product, the company started with a capacity of 36mn metres in FY7 and has gradually increased its capacity to 45 mn metres in FY14. In FY15 the company expanded the capacity further to 68 mn metres that will be operational in this current year FY16. This strategic investment will cater to two-thirds of the home textiles market occupied by bed and bath linen. As per domestic home textiles market, bed linen contributes 49% of value and the home textile market is expected to grow at a CAGR of ~8.3% for the period By focusing on expanded capacity going forward, we are expecting that the company will catch up much more good set of client base in internationally in the Bed-Linen segment. Exhibit 4: Revenue in Million Robust operating performance in Bed Linen with new expansion FY9 FY1 FY11 FY12 FY13 FY14 FY15 Textile Consumer Durables Exhibit 5: Indian Home Textiles Industry (US$ Billion) Indo Count has a strong position in bed linen exports by offering high product quality and meeting delivery deadlines. It boasts marquee clientele of global retailers including Wal-Mart, Bed Bath & Beyond, Target, Macy s, JC Penney; and in UK, like Debenhams House of Fraser, British Home Stores and John Lewis. In FY15, the company has expanded its capacity by 5 percent from 45 Mn meters to 68 Mn meters p.a with a capex of around Rs.7 mn. As a result, capacity of bed sheet too has increased from 12 Mn bed sheet per annum to 17 Mn bed sheet per anum. The company has around 6 months of orders at any point of time. As per management, the incremental demand will result in full utilization of the expanded capacity in the next 2-3 years. This indicates a 2% volume growth year on year for the company. In addition to that the company in FY15 has enhanced its product mix by moving into fashion a result, Utility bedding and Fashion bedding are expected to be generating improved margins. Indo Count recorded EBITDA with an increase of 99% from Rs mn to Rs. 363 mn from FY14 to FY15. The revenue share of bed linen was at 82% in 215 compared to 65% in P 221E Indian Home Textiles Industry (US$ billion) Exhibit 6: Product Mix Sheet Sets Institutional Linens Fashion Bedding Utility Bedding Flat sheet, Fitted sheet & pillow cases Flat sheets, pillow cases, duvet covers and shams Bed in a Bag, Quilts & Coverlets, Decorative Pillows etc. Mattress Pads /protectors, White filled comforters filled with poly fill fibre Exhibit 7: Home textiles capacity and utilisation FY11 FY12 FY13 FY14 FY15 FY16E FY17E Home Textile Capacity (Mn mtrs) Utilization (%) 3

4 CDR exit marks a significant step forward for ICIL Aug 26, 215 Indo Count has exited from the corporate debt restructuring mechanism in Q4FY15. In FY8 due to global recessionary conditions and the consequent cash flow constraints, the company had approached its lenders to restructure its debts under the Corporate Debt Restructuring (CDR) System. In July 28, the company was admitted into the CDR cell; Rs 3 mn has been spent on restructuring the company s debts. For FY8, the company s debt-to-equity ratio was at ~3.7x. With an improved demand scenario and ramp up of underutilised capacity, the company was able to exit CDR by FY15 which is four years ahead of the scheduled exit. This is due to improved demand scenario and ramp up of capacities by making repayments on time. Currently the company was recorded debt-to-equity ratio of ~.69x in FY15. Total debt as on FY15 is at Rs.343 mn which includes long term debt of Rs.672 mn and the working capital debt of Rs.2759 mn. We expect post CDR, Indo Count s balance sheet will be improved significantly with a debt repayment of Rs.35 mn p.a. Exhibit 8: Debt-equity and Interest Coverage (%) FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16E FY17E -1. Debt-equity Interest Coverage Exhibit 9: Revenue (Rs. Mn) and EBITDA Margin (%) % % % % % % 15.7% % 15.% 1.% 5.%.% FY11 FY12 FY13 FY14 FY15 FY16E FY17E Revenue (Rs. Mn) EBITDA Margin (%) Indo Count s strong competitive position in bed linen exports Exhibit 1: Geographical - Revenue (Rs. Mn) Indo Count is amongst the leading suppliers of bed linen to US. Apart from US, the company also exports its product to Europe, UK, Japan, Latin American countries, Middle East, Canada and Australia. ICIL is 3rd largest exporter of Bed Linen from India and the 4th largest Bed Sheet exporter to USA. It currently supplies a wide range of bed linen to global retail chains across 49 countries in 5 continents. ICIL is a net exporter, with ~7% of its clientele in the international markets. The revenue from exports is Rs mn which is 9 percent of consolidated revenue in FY15. The export revenue is increasing with a CAGR of 33% in FY11 to FY15. Over the years, the company has developed strong domain expertise in the designing and printing of bed linen products that are critical processes in developing innovative varieties. It has also received patents for a few bed linen products. Subsequently, Indo Count also started its supplies to the professionally managed e-platforms like Amazon.com, Wayfair, overstock.com and other websites. Adding to this, the new product mix which was recently launched like Fashion Bedding and Utility Bedding which also attract more client base and new channel of sales in international market. Currently, the Bed Sheets account for about 9% of the total volume sales in home textiles. Over a period of three years, the management is expecting to bring down the revenue from bed sheets to about 7 percent level, the difference of 3 percent can be expected from the new products like Utility Bedding, Fashion Bedding. No further expansion in spinning Marginal contribution in sales FY11 FY12 FY13 FY14 FY15 Domestic Revenue Export Revenue Indo Count is a relatively small player in the domestic yarn market with a manufacturing capacity of around 8 spindles. Only ~2% of the consolidated revenue is from spinning. The plant is currently running at a peak utilization rate of 95%. The company does not have any capacity expansion plan in the yarn business as its current focus is on scaling up the home textile business. Going ahead, we expect growth in the yarn business to remain stable. In the total production of Yarn, up to ~25 percent will be used for captive consumption and the entire thrust will be on Home Textile only. 4

5 Aug 26, 215 Exhibit 11: Business Assumptions Y/E Mar (Rs. Mn) FY14 FY15 FY16E FY17E Comments Consolidated Revenue Revenue Growth (%) EBITDA EBITDA Margins (%) PAT (normalized) Fully Diluted EPS (Rs.) Capex (ex. Acquisition) - cash capex (193) (862) (95) (82) Net CFO Net Debt (862) Free Cash Flow With a normalized scenario with stable Cotton and Yarn prices; and improvement in demand of Yarn and with capacity expansion in Bed linen, we expect revenue to improve at 2-25% in FY17E with a CAGR of 2% We expect 18 to 19% EBITDA margin on a sustainable basis in the years FY16E & FY17E. Growth and profitability in FY16E & FY17E would be driven by improved utilization levels with the new capacity driven by sustained focus on expanding customer base in Home Textile segment. Normal organic capex could be in the range of around Rs. 5-7 Mn and in terms of any expansion there is nothing on the cards at the moment as the company undergone a major expansion in Bedlinen segment with a Capex of Rs.7 mn in FY14 & FY15. Total debt as on FY15 is at Rs.343 mn. We are expecting debt-to-equity ratio may gradually come down to.2 percent and we expect Indo Count will turn in to zero debt company in near future. Improvement in the business scenario is expected to improve the cash flow from operation. Exhibit 12: Karvy vs Consensus Revenues (Rs. Mn) Karvy Consensus Divergence (%) Comments FY16E (3.4) We expect revenue growth of 15-18% in FY17E (2.1) EBITDA (Rs. Mn) FY16E-17E in comparison with FY15 FY16E (9.3) Low input costs to increase EBITDA with a FY17E (8.1) EPS (Rs.) growth of 18-2%. FY16E (5.2) PAT is improving, however with higher FY17E depreciation and taxes, the growth in PAT is somewhat at lesser pace Source: Bloomberg, Karvy Research 5

6 Aug 26, 215 Exhibit 13: Revenue (Rs. Mn) & Revenue Growth (%) FY FY FY FY FY FY16E Revenue (Rs. Mn) Revenue Growth (%) FY17E Revenue has grown at a CAGR of 25% between FY11-FY15. The growth in revenue is mainly attributed to Home Textile segment on the back of higher realization and better product mix. Going forward, we anticipate the revenue will ramp up with a growth of 2 percent between FY16E-FY17E due to demand scenario, expanded capacity and the better product mix of Utility Bedding and Fashion Bedding. Exhibit 14: PAT (Rs. Mn) & PAT Margin (%) FY FY FY FY14 FY FY16E FY17E The consolidated profit after tax of the year is at Rs Mn compared to Rs. 114 Mn in the previous year with an increase of 32 percent in FY15 with a PAT margin of 8.5 percent vs 7.5 percent in FY14. Profit after tax increased with a CAGR of 92 percent in FY11 to FY15 which is due to increase in revenue from home textile and operational efficiency. We expect profitability to improve significantly over FY15-17E with a CAGR of 4 percent driven by increasing contribution in Bed-Linen segment. PAT (Rs. Mn) PAT Margin (%) Exhibit 15: Net Debt-Equity (%) FY11 FY12 FY13 FY14 FY15 FY16E FY17E -.5 Net Debt-Equit Indo Count has exited from the corporate debt restructuring mechanism in Q4FY15. In July 28, the company was admitted into the CDR cell; Rs 3 mn has been spent on restructuring the company s debts. For FY8, the company s debt-to-equity ratio was at ~3.7x. With an improved demand scenario and ramp up of underutilised capacity, the company was able to exit CDR by FY15. Currently, the company was recorded debt-to-equity ratio of ~.69x in FY15. Total debt as on FY15 is at Rs.343 mn. We are expecting debt-to-equity ratio may gradually come down to.2x and we expect Indo Count will turn into zero debt company in near future. Exhibit 16: RoE & RoCE (%) FY11 FY12 FY13 FY14 FY15 FY16E FY17E RoE RoCE The company s RoCE and RoE have improved due to increased EBIT margins moving forward, RoCE & RoE will improve to 11% & 12% by FY17E as management expecting to focus on debt repayment, thereby the company is expected to witness improvement in RoE & RoCE. 6

7 Valuation & Outlook Aug 26, 215 Indo Count continues to grow in revenues and profitability across its home textile businesses. The company also plans to tap into the global markets and enhance its current market share by tapping into new product mix in Bed Linen. Indo Count, with its focus on cost optimization measures will eventually improve its margins on account of new product pipeline & improving operating performance, which in turn would stabilize the growth in the long term. We expect revenues and PAT to grow at 2% & 39% CAGR during FY15-17E on back of higher RoE and RoCE of 42.5% & 42.7% by FY17E. At CMP of Rs. 87, Indo Count is trading at 12.1x FY17E EPS, on back of lower raw material prices, favorable product mix, improving cost efficiency and economies of scale; we initiate coverage on Indo Count with a BUY rating with a target price of Rs. 13, based on 14.5x P/E FY17E, representing an upside potential of 18.3% in a 9-12 months period. Exhibit 17: PE Band Oct-5 Nov-5 Dec-5 Jan-6 Feb-6 Mar-6 Apr-6 May-6 Jun-6 Jul-6 Aug-6 Sep-6 Oct-6 Nov-6 Dec-6 Jan-7 Feb-7 Mar-7 Apr-7 May-7 Jun-7 Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 PE Average SD1 SD2-1SD Jul-8 Aug-8 Exhibit 18 (a): Comparative Valuation Summary CMP Mcap EV/EBITDA (x) P/E (x) EPS (Rs.) (Rs.) (Rs. Mn) FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E FY14 FY15 FY16E FY17E Indo Count Himatsingka Seide Welspun India Source: Bloomberg, Karvy Research Exhibit 18 (b): Comparative Operational Metrics Summary CAGR % (FY15-17E) RoE (%) Price Perf (%) Net Sales (Rs. Mn) Sales EBITDA EPS FY14 FY15 FY16E FY17E 3m 6m 12m FY14 FY15 FY16E FY17E Indo Count Himatsingka Seide Welspun India Source: Bloomberg, Karvy Research Exhibit 19: Company Snapshot (Ratings) Low High Quality of Earnings 33 Domestic Sales 33 Exports 33 Net Debt/Equity 33 Working Capital Requirement 33 Quality of Management 33 Depth of Management 33 Promoter 33 Corporate Governance 33 7

8 Aug 26, 215 Peer Comparison Exhibit 2: Revenue Growth (%) FY11 FY12 FY13 FY14 FY15 Indo Count Himatsingka Seide Welspun India Exhibit 21: EBITDA Margin (%) FY11 FY12 FY13 FY14 FY15 Indo Count Himatsingka Seide Welspun India Exhibit 22: EPS (%) FY11 FY12 FY13 FY14 FY15 Indo Count Himatsingka Seide Welspun India Exhibit 23: Net Profit (Rs. Mn) FY11 FY12 FY13 FY14 FY15 Indo Count Himatsingka Seide Welspun India Key Risks ymajority of the company s revenue is generated by exporting product to developed economies namely USA, UK and European Union. Demand crunch in these economies would impact the company s order book in any given year. ythere has been a major volatility in the global currency market where many currencies are significantly depreciating against the US dollar. Although Rupee has been stable over the last few quarters but it has also witnessed depreciation in the recent past. The volatility in currency could have bearing impact on the company s profitability. yincrease in cotton prices may have bearing impact on the company s profitability. ythe company faces a regular competition from China and ASEAN countries in the cotton yarn and home textiles segments while catering to multi-brand retail chain stores and overseas producers. 8

9 Aug 26, 215 Financials Exhibit 24: Income Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Revenues Growth (%) Operating Expenses EBITDA Growth (%) Depreciation & Amortization Other Income EBIT Interest Expenses PBT Tax Adjusted PAT Growth (%) NA Exhibit 25: Balance Sheet YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E Cash & Equivalents Sundry Debtors Inventory Loans & Advances Investments Gross Block Net Block CWIP Miscellaneous Total Assets Current Liabilities & Provisions Debt Other Liabilities Total Liabilities Shareholders Equity Reserves & Surplus Total Networth Minority Interest Total Networth & Liabilities

10 Aug 26, 215 Exhibit 26: Cash Flow Statement YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E PBT Depreciation Net Interest Tax Paid (231) (487) (95) (118) Inc/dec in Net WC (772) (196) (158) (538) (564) Others (6) (198) 174 (27) (14) Cash flow from operating activities Inc/dec in capital expenditure (215) (193) (862) (95) (82) Inc/dec in investments Others (166) Cash flow from investing activities (151) 18 (128) (95) (82) Inc/dec in borrowings (528) (35) (35) Issuance of equity 4 Dividend paid Interest paid (498) (499) (65) (57) (55) Others (2) Cash flow from financing activities (22) (133) (1139) (92) (855) Net change in cash Exhibit 27: Key Ratios YE Mar FY13 FY14 FY15 FY16E FY17E EBITDA Margin (%) EBIT Margin (%) Net Profit Margin (%) Dividend Payout ratio..... Net Debt/Equity (.1) RoE (%) RoCE (%) Exhibit 28: Valuation Parameters YE Mar FY13 FY14 FY15 FY16E FY17E EPS (Rs.) DPS (Rs.)..... BV (Rs.) PE (x) P/BV (x) EV/EBITDA (x) EV/Sales (x) ; *Represents multiples for FY13, FY14 & FY15 are based on historic market price 1

11 Aug 26, 215 Stock Ratings Absolute Returns Buy : > 15% Hold : 5-15% Sell : <5% Connect & Discuss More at (Toll Free) research@karvy.com Live Chat f in You Tube Disclaimer Analyst certification: The following analyst(s), Prasanth Victor, who is (are) primarily responsible for this report and whose name(s) is/are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report. Disclaimer: Karvy Stock Broking Limited [KSBL] is a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on information obtained from public sources, the respective corporate under coverage and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. y Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. y Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity. y KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. y Compensation of KSBL s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. y KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. y KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. y KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report. y Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report. y It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. y It is confirmed that Prasanth Victor, Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. y KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. y Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. y We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities. 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