Amara Raja Batteries (AMARAJ) 870

Result Update Rating matrix Rating : Hold Target : 925 Target Period : 12 months Potential Upside : 6% What s Changed? Target Changed from 1000 to 925 EPS FY16E Changed from 29.8 to 30.2 EPS FY17E Changed from 39.5 to 35.0 EPS FY18E Introduced at 42.1 Rating Changed from Buy to Hold Quarterly Performance Q3FY16 Q3FY15 YoY (%) Q2FY16 QoQ (%) Revenue 1,225.1 1,066.5 14.9 1,158.6 5.7 EBITDA 228.6 180.1 27.0 199.0 14.9 EBITDA (%) 18.7 16.9 178 bps 17.2 148 bps PAT 136.2 102.3 33.1 122.9 10.8 Key Financials Crore FY15 FY16E FY17E FY18E Net Sales 4,178 4,762 5,602 6,600 EBITDA 709 862 998 1,176 Net Profit 411 516 598 720 EPS ( ) 24.1 30.2 35.0 42.1 Valuation summary FY15 FY16E FY17E FY18E P/E (x) 36.2 28.8 24.8 20.7 Target P/E(x) 38.4 30.6 26.4 22.0 EV / EBITDA(x) 20.9 17.0 14.4 11.9 P/BV (x) 9.3 7.0 5.7 4.7 RoNW (%) 25.6 24.4 23.2 22.9 RoCE (%) 34.3 32.9 31.3 30.8 Stock data Particular Amount Market Capitalization 14860.5 Crore Total Debt (FY15) 74.1 Crore Cash and Investments (FY15) 125.4 Crore EV (FY15) 14707.8 Crore 52 week H/L ( ) 1132 / 773 Equity capital ( crore) 17.1 Crore Face value ( ) 1 Price performance (%) 1M 3M 6M 12M Amara Raja Batteries Ltd -0.6-3.3-2.3-3.5 Exide Industries Ltd -17.2-19.9-16.5-37.4 Research Analyst Nishit Zota nishit.zota@icicisecurities.com Vidrum Mehta vidrum.mehta@icicisecurities.com February 3, 2016 Amara Raja Batteries (AMARAJ) 870 Strong performance; valuations stretched Amara Raja Batteries (ARBL) revenues grew 14.9% YoY to 1,225 crore vs. our estimate of 1,185 crore. The growth was led by both automotive (replacement & OEMs) and industrial battery segment. The quarter was mainly driven by strong volumes of 4-W batteries in the replacement segment and higher demand from the telecom sector (primarily due to data growth) in the industrial space EBITDA margins were at 18.7% (up 178 bps YoY and 148 bps) mainly due to gross margin expansion (of 366 bps YoY & 246 bps QoQ). Part of this benefit was offset by higher employee & other expense PAT grew 33.1% YoY to 136 crore vs. estimate of 126 crore ARBL is likely to continue its growth momentum. However, margins may get softer assuming higher lead prices, going ahead. Valuations also look stretched ARBL well placed in duopoly battery business The Indian battery industry is a duopoly in nature with top players, viz. Exide and Amara Raja controlling ~90% of the organised market. The battery business was considered to be a strong RoCE generator with high margins and strong pricing power. However, all those assumptions went out of the window as Exide Industries (EIL) lost its way in the wake of ARBL s competitive onslaught. ARBL, on the other hand, was able to gain on all fronts ranging from market share [4W-replacement rose from 20%- 25% (FY10) to 38-40% (FY15)] to financials (RoCEs rose from 24% in FY09 to 34% in FY15). ARBL, thus, benefited from EIL s lack of clear strategy to gain a major foothold in the minds of customers in a profitable manner. Consistent business strategy drives performance ARBL s key differentiator is that it has been able to grow its presence in the battery business across OEMs and end customers in a very smooth manner. ARBL s automotive strategy has been smart in the sense that it continues to maintain 8-10% product pricing gap with EIL s products maintaining highest quality standards. Thus, customers have taken to ARBL s products well, thereby, enabling ARBL to be consistent. On the dominant telecom business, it withstood the challenging times but maintained price discipline for its high quality products, thereby aiding profitable albeit relatively slower growth. Thus, the overall focus on market share gains and financials has allowed ARBL to post better results. Capacity to be in place, poised to grow profitably across segments ARBL launched an expansion plan of ~ 750 crore that is being commissioned. It has also ventured into tubular battery expansion of 1.4 million units worth ~ 500 crore. Automotive capacity is expected to rise to ~19 million units in FY16E from ~10 million units in FY13. On the industrial side, VRLA battery capacity expansions are complete (~1000 million Amp Hr) with ramp-up set to happen in FY16E. ARBL is also witnessing strong growth in the telecom/ups space, which contributes ~40% of overall revenues. The gradual demand revival in the auto/infra demand is likely to aid growth, going ahead. Quality play but available at steep valuations ARBL s performance continues to be impressive even as the industry leader struggles with consistency in profitability. It posted a consistent performance, strong return ratios (~23% RoE, ~31% RoCE), good earnings visibility & a strong balance sheet (net debt negative). However, ARBL is trading at huge premium (>30% compared to EIL). Hence, we have HOLD rating on the stock with a TP of 925, valuing at 22x FY18E. ICICI Securities Ltd Retail Equity Research

Variance analysis- Standalone Q3FY16 Q3FY16E Q3FY15 YoY (%) Q2FY16 QoQ (%) Comments Total Operating Income 1225 1185 1066 14.9 1159 5.7 Sales driven by both the automotive (replacement and OEM) and industrial segment (registered double digit) Raw Material Expenses 754.3 751.8 695.6 8.4 741.9 1.7 Mainly due to lower raw material (lead) cost Employee Expenses 62 59 49 24.8 58 6.5 Other Expenses 180.5 162.8 141.3 27.7 159.8 12.9 EBITDA 229 211 180 27.0 199 14.9 EBITDA Margin (%) 18.7 17.8 16.9 178 bps 17.2 148 bps Margin expanded mainly due to higher gross margins but part of this benefit was offset by higher employee and other expense Other Income 11 9 5 140.6 12-2.8 Depreciation 35.5 37.3 28.8 23.4 34.3 3.6 Interest 0.3 0.2 0.1 466.7 0.0 750.0 Tax 67.9 56.6 53.6 26.8 53.4 27.0 Reported PAT 136 126 102 33.1 123 10.8 Higher than estimated revenue and margins lifted profitability, which came in above our estimates EPS ( ) 8.0 7.4 6.0 33.1 7.2 10.8 Key Metrics Sales ( crore) 1,225.1 1,184.9 1,066.5 14.9 1,158.6 5.7 RM cost (% to net sales) 61.6 63.4 65.2-366 bps 64.0-246 bps Benefit of lower raw material cost (average lead price down ~10.6% YoY) Other expenses (% to net sales) 14.7 13.7 13.3 148 bps 13.8 94 bps Employee Exp (% to net sales) 5.0 5.0 4.6 40 bps 5.0 4 bps Change in estimates FY16E FY17E FY18E ( Crore) Old New % Change Old New % Change Introduced Comments Revenue 4,746 4,772 0.5 5,603 5,624 0.4 6,622 Introduced FY18 estimates. Better-than-expected numbers resulted into a marginal increase in our estimates for FY1E & FY17E EBITDA 845 862 2.0 1,092 998-8.6 1,176 EBITDA Margin (%) 17.8 18.1 26 bps 19.5 17.7-175 bps 17.8 Margin may contract assuming the reversing of lead prices, going ahead PAT 509 516 1.3 675 598-11.3 720 EPS ( ) 29.8 30.2 1.3 39.5 35.0-11.3 42.1 Assumptions Current Earlier FY18E Comments Units (mn) FY14P FY15E FY16E FY17E FY16E FY17E Introduced 11.3 13.6 15.5 17.3 15.6 17.5 19.5 Automotive volume growth moderated; after subdued OEM demand & with replacement demand likely to grow at a slower pace (assuming three phase cycle) Automotive volumes Industrial volumes 3.8 4.0 4.4 5.4 4.5 5.4 6.2 ASP/Battery ( ) 2,278 2,393 2,393 2,460 2,348 2,434 2,564 Better product mix likely to drive average ASP higher, going forward RM/Battery ( ) 1,542 1,512 1,523 1,563 1,519 1,520 1,634 Lead cost ( / Kg) 126.5 129.0 120.3 127.3 120.2 127.2 140.6 ICICI Securities Ltd Retail Equity Research Page 2

Company Analysis Revenue to rise as OEM demand picks up along with replacement! We expect revenues to grow at 16.5% CAGR in FY15-18E to 6,622 crore driven by increasing share of demand from the auto OEM side as well as a gradual pick-up in the replacement battery segment (due to ARBL s strong position in the organised market as well shortening life cycle). The company had embarked on a strong capacity addition programme vis-àvis FY13, FY14, which would also aid new market growth. Capacity, on the automotive side, is expected to go up to ~19 million units in FY16E from ~10 million units in FY13 on the automotive side. On the industrial side, large VRLA capacity is expanding to ~1000 million AmpHr from 760 million AmpHr in FY13. The small VRLA battery capacity is also expected to go up to ~5 million units from ~2.1 million units in FY13 on the back of 1.4 million capex for the tubular segment. The gradual demand recovery in the industrial segment is likely to aid growth, going forward. ARBL benefits from strong brand equity and distribution network and now has in excess of ~30,000 touch points on the automotive side and ~100 aqua channel partners on the industrial side. Exhibit 1: We build in revenue growth at 16.5% CAGR in FY15-18E 7,000 6,622 6,000 5,624 5,000 4211 4,772 ( crore) 4,000 3,000 2,364 2,961 3,437 2,000 1,000 0 FY12 FY13 FY14 FY15 FY16E FY17E FY18E EBITDA margins to moderate marginally! The duopoly nature of the industry lends decent pricing power to ARBL vis-à-vis EIL. However, we believe a northward movement of lead prices, going ahead, may adversely impact ARBL s margins over the next two or three years. The smelting contribution for ARBL is ~15%, which could provide a cushion in the coming years. Also, its gradual focus on tapping the lower margin OEM segment would dent margins. Hence, we expect EBITDA to rise to ~ 1176 crore, assuming a marginal contraction of 20-30 bps on margins to 17.8%. ICICI Securities Ltd Retail Equity Research Page 3

Exhibit 2: EBITDA margins to rise steadily 1,250 ( crore) 1,000 750 500 250 0 16.3 15.2 14.5 14.4 255 340 452 560 17.7 18.1 16.8 709 862 998 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E 1176 17.8 22 18 14 10 (%) EBITDA - LHS Margin (%) - RHS Return ratios to remain strong! Return ratios are expected to remain healthy with rising profitability. Return ratios witnessed a decline in FY11 primarily due to the significant investment to boost the manufacturing capacity. However, post the same, ratios moved higher. With new capacity coming on stream over the next six to nine months, the initial lower utilisation level is likely to result in higher overhead cost. Thus, it is likely to moderate return ratios marginally. Despite the same, we believe the company has maintained strong return in the past and is likely to post strong RoNW & RoCE of ~31% & ~23%, respectively, for FY18E. Exhibit 3: Strong return ratios 45.0 (%) 36.0 27.0 18.0 9.0 28.9 32.3 33.6 34.3 34.3 32.9 31.3 27.0 26.1 27.0 22.9 25.6 24.4 23.2 30.8 22.9 0.0 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E RoCE RoNW ICICI Securities Ltd Retail Equity Research Page 4

ARBL remains a cash generating franchise, which has an annual CFO in excess of ~ 951 crore (FY18E). The company has maintained tight control on the working capital and maintained around a month s lead inventory in FY15. PAT is expected to grow to 720 crore at ~20.5% CAGR (FY15-18E). We believe ARBL could increase dividend payouts in coming years as major capex expenses for the immediate period start to get over. Exhibit 4: Profit to continue to grow strong! 800 700 600 500 400 300 200 100 0 10.7 10.8 10.6 10.9 516 598 720 9.7 411 9.8 367 9.1 287 215 FY12 FY13 FY14 FY15 FY16E FY17E FY18E 12 11 11 10 10 9 9 8 PAT (crore) PAT margin (%) (RHS) Source: Company press release, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 5

Outlook and valuation Amara Raja s financial performance has been ahead of market leader Exide Industries for quite some time. Amara Raja has been able to chip away at Exide s market share in the replacement segment despite Exide s early start in establishing a large penetrated dealer network. This serves to highlight the fact that the replacement market, especially the automotive replacement segment, is large enough for two players in the market to grow. Now, with ARBL s focus on growing the OEM side of the business, we expect ARBL to further gain market share. The increase in volumes to Honda Motorcycles India (the only fast growing 2-W OEM) has also aided in higher utilisations and brings benefits of operating leverage. We remain positive on the long-term growth prospects of the auto industry and believe the duopolistic battery segment will be a major beneficiary of the return to growth for the auto industry. ARBL s performance has continued to be impressive even as the industry leader struggles with consistency of profitability. ARBL has put up a consistent performance; strong return ratio (~23% RoE, ~31% RoCE), good earnings visibility and a strong balance sheet (net debt negative). However, ARBL is trading at a huge premium (>30% compared to EIL). Hence, we revise our recommendation from BUY to HOLD on the stock with a target price of 925 (earlier 1,000), valuing at 22x FY18E. Exhibit 5: Valuation Revenues Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY15 4,178.2 22.8 24.1 11.9 36.2 20.9 25.6 34.3 FY16E 4,761.9 14.0 30.2 25.5 28.8 17.0 24.4 32.9 FY17E 5,602.4 17.7 35.0 16.1 24.8 14.4 23.2 31.3 FY18E 6,599.8 17.8 42.1 20.3 20.7 11.9 22.9 30.8 ICICI Securities Ltd Retail Equity Research Page 6

Company snapshot 1,200 1,000 Target Price: 925 800 600 400 200 0 Jan-11 Apr-11 Jul-11 Oct-11 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-15 Jan-16 Apr-16 Jul-16 Oct-16 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Apr-09 May-09 Nov-10 Mar-11 Mar-12 Aug-12 Mar-12 Mar-13 Oct-13 May-14 Nov-14 Apr-15 May-15 Event ARBL reports strong EBITDA margin jump of 500 bps to ~20% for FY10 results The company undertakes new capacity expansion drive in the industrial battery side both of large VRLA and medium VRLA Receives best supply chain leader in the auto components business The company is able to gain on EIL's loss of market share in replacement market and increases replacement share by 6% QoQ The increase in costs of lead causes decline in gross margins for the complete battery industry The stock gets re-rated vis-à-vis EIL due to consistency of earnings as EIL's financial performance deteriorates ARBL reports strong EBITDA margins performance The company announces next growth capex of 700 crore across various segments ARBL commissions the new two wheeler capacity aiding volume growth Surprises on the negative side on the EBITDA margins front ARBL announces new capacity expansion plan of 500 crore for tubular battery with 1.4 million unit capacity Company commissions 4-W battery plant at Chittoor with installed capacity at 2.25 million p.a. taking total capacity to 8.25 million per annum Clocks highest ever revenue & PAT in FY15 Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 1 Johnson Controls Mauritius Pvt. Ltd. 30-Sep-15 0.3 44.4 0.00 Promoter 52.1 52.1 52.1 52.1 52.1 2 Galla (Jayadev) 30-Sep-15 0.1 12.8 0.00 FII 18.1 18.2 18.0 13.6 20.2 3 Galla (Ramachandra N) 30-Sep-15 0.1 12.8 0.00 DII 8.8 8.7 9.0 14.4 8.7 4 Gourineni (Ramadevi) 30-Sep-15 0.0 8.1 0.00 Others 21.1 21.0 20.9 19.4 19.0 5 Galla (Amara Kumari) 30-Sep-15 0.0 5.3 0.00 6 Franklin Templeton Asset Management (India) Pvt. Ltd. 30-Sep-15 0.0 4.1-0.76 7 Franklin Advisers, Inc. 30-Sep-15 0.0 3.9-0.43 8 Amara Raja Group 30-Sep-15 0.0 3.1 0.00 9 ICICI Prudential Asset Management Co. Ltd. 30-Sep-15 0.0 3.0-0.20 10 Capital Research Global Investors 31-Dec-15 0.0 3.0 0.00 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares William Blair Investment Management, LLC 8.9516878 0.569511 HDFC Asset Management Co., Ltd. -15.643539-0.99525 Wasatch Advisors, Inc. 7.8306815 0.498192 Franklin Templeton Asset Management (India) Pvt. Ltd. -11.964788-0.761206 J O Hambro Capital Management Limited 5.3007272 0.337235 Franklin Advisers, Inc. -6.802837-0.4328 Motilal Oswal Asset Management Company Ltd. 1.5895328 0.122098 William Blair & Company, L.L.C. -5.8577016-0.37267 UBS Global Asset Management (Americas), Inc. 1.1440728 0.08283 Birla Sun Life Asset Management Company Ltd. -3.5584905-0.257632 ICICI Securities Ltd Retail Equity Research Page 7

Financial summary Profit and loss statement Crore (Year-end March) FY15 FY16E FY17E FY18E Total operating Income 4,178 4,762 5,602 6,600 Growth (%) 22.8 14.0 17.7 17.8 Raw Material Expenses 2,776.1 3,006.1 3,559.3 4,205.5 Employee Expenses 195.1 237.7 280.1 330.0 Other Expenses 531.0 666.0 787.1 910.8 Total Operating Expenditure 3,502.2 3,909.8 4,626.5 5,446.2 EBITDA 709 862 998 1,176 Growth (%) 26.6 21.6 15.7 17.8 Depreciation 134.0 141.7 165.3 183.8 Interest 0.2 0.6 0.7 0.7 Exceptional Items 7.3 1.8 0.0 0.0 PBT 609.9 757.0 880.0 1,058.2 Total Tax 199.0 241.4 281.6 338.6 PAT 411 516 598 720 Growth (%) 11.8 25.5 16.1 20.3 EPS ( ) 24.1 30.2 35.0 42.1 Cash flow statement Crore (Year-end March) FY15 FY16E FY17E FY18E Profit after Tax 410.9 515.6 598.4 719.6 Add: Depreciation 134.0 141.7 165.3 183.8 (Inc)/dec in Current Assets -58.6-315.5-24.4-157.8 Inc/(dec) in CL and Provisions -84.5 187.0 42.1 214.0 CF from operating activities 401.8 528.8 781.4 959.6 (Inc)/dec in Investments 0.0-40.0-40.0 0.0 (Inc)/dec in Fixed Assets -398.0-350.0-350.0-350.0 Others 6.7 0.0 0.0 0.0 CF from investing activities (391.2) (390.0) (390.0) (350.0) Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0 Inc/(dec) in loan funds -10.1 0.0 0.0 0.0 Dividend paid & dividend tax -74.0-99.6-129.5-159.3 CF from financing activities (180.6) (3.1) (129.5) (159.3) Net Cash flow -170.0 135.7 262.0 450.2 Opening Cash 295.4 125.4 261.1 523.1 Closing Cash 125.4 261.1 523.1 973.3 Balance sheet Crore (Year-end March) FY15 FY16E FY17E FY18E Liabilities Equity Capital 17.1 17.1 17.1 17.1 Reserve and Surplus 1,586.1 2,098.7 2,567.7 3,127.9 Total Shareholders funds 1,603.2 2,115.8 2,584.7 3,145.0 Total Debt 74.1 74.1 74.1 74.1 Deferred Tax Liability 36.8 36.8 36.8 36.8 Total Liabilities 1,714.2 2,226.8 2,695.7 3,256.0 Assets Gross Block 1,432.8 1,782.8 2,132.8 2,482.8 Less: Acc Depreciation 492.3 632.5 796.4 978.7 Net Block 944.9 1,153.2 1,337.9 1,504.2 Capital WIP 86.2 86.2 86.2 86.2 Total Fixed Assets 1,031.1 1,239.4 1,424.1 1,590.3 Investments 16.1 56.1 96.1 96.1 Inventory 418.1 390.7 530.2 554.7 Debtors 554.1 587.1 675.4 795.6 Loans and Advances 139.6 450.9 243.8 257.8 Other Current Assets 3.3 7.2 4.3 7.4 Cash 125.4 261.1 523.1 973.3 Total Current Assets 1,240.5 1,697.1 1,976.8 2,588.9 Creditors 152.1 195.7 230.2 271.2 Provisions 163.9 191.3 202.0 238.0 Other current liabilities 261.6 377.5 374.4 511.4 Total Current Liabilities 577.5 764.5 806.6 1,020.6 Net Current Assets 663.0 932.6 1,170.1 1,568.2 Other Non-Current Assets 0.1 0.3 0.0 0.0 Application of Funds 1,714.2 2,226.8 2,695.7 3,256.0 Key ratios (Year-end March) FY15 FY16E FY17E FY18E Per share data ( ) EPS 24.1 30.2 35.0 42.1 Cash EPS 31.9 38.5 44.7 52.9 BV 93.9 123.9 151.3 184.1 DPS 3.6 5.0 6.5 8.0 Cash Per Share 7.3 15.3 30.6 57.0 Operating Ratios (%) EBITDA Margin 16.8 18.1 17.7 17.8 PBT / Net sales 14.6 15.9 15.7 16.0 PAT Margin 11.4 8.4 9.1 9.7 Inventory days 32.9 31.0 30.0 30.0 Debtor days 48.4 45.0 44.0 44.0 Creditor days 13.3 15.0 15.0 15.0 Return Ratios (%) RoE 25.6 24.4 23.2 22.9 RoCE 34.3 32.9 31.3 30.8 RoIC 40.4 40.0 38.3 43.4 Valuation Ratios (x) P/E 36.2 28.8 24.8 20.7 EV / EBITDA 20.9 17.0 14.4 11.9 EV / Net Sales 3.5 3.1 2.6 2.1 Market Cap / Sales 3.6 3.1 2.7 2.3 Price to Book Value 9.3 7.0 5.7 4.7 Solvency Ratios Debt/Equity 0.0 0.0 0.0 0.0 Current Ratio 2.2 2.2 2.5 2.5 Quick Ratio 1.9 1.9 1.8 1.6. ICICI Securities Ltd Retail Equity Research Page 8

ICICIdirect.com coverage universe (Auto & Auto Ancillary) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE ( %) Sector / Company ( ) TP( ) Rating ( Cr) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E Amara Raja (AMARAJ) 870 925 Hold 14854 24.1 30.2 35.0 36.2 24.8 20.6 20.8 16.9 14.4 34.3 32.9 31.3 25.6 24.4 23.2 Apollo Tyre (APOTYR) 140 200 Buy 7037 19.0 20.6 20.5 7.4 6.8 6.8 4.5 4.7 4.9 26.0 23.1 18.9 18.9 17.9 15.5 Ashok Leyland (ASHLEY) 89 90 Hold 25213 1.2 3.5 5.0 75.9 25.6 17.8 26.6 12.9 10.3 7.2 18.3 23.0 6.5 17.2 21.0 Bajaj Auto (BAAUTO) 2371 2910 Buy 68610 97.2 129.9 165.3 24.4 18.3 14.3 16.0 12.7 10.1 35.6 38.4 41.1 26.3 31.1 33.8 Balkrishna Ind. (BALIND) 612 720 Hold 5910 50.6 57.9 59.2 13.2 11.5 11.2 8.0 7.3 6.3 17.8 18.1 19.1 21.3 17.8 18.1 Bharat Forge (BHAFOR) 792 970 Buy 18442 32.8 40.1 46.9 24.1 19.7 16.9 14.8 12.6 10.9 18.6 22.3 25.1 22.2 24.2 23.7 Bosch (MICO) 16892 22500 Buy 53041 426.0 414.0 546.7 45.5 46.8 35.4 29.6 30.7 24.8 18.2 15.6 17.8 19.4 18.0 19.5 Eicher Motors (EICMOT) 16964 19000 Hold 45819 227.1 520.7 607.4 74.7 32.6 27.9 40.1 18.4 15.5 24.5 43.5 39.6 24.5 39.9 34.9 Exide Industries (EXIIND) 119 150 Buy 10077 6.4 6.9 8.0 18.5 17.1 14.8 11.5 10.1 9.0 18.9 19.3 19.9 13.5 13.4 14.1 Hero Mototcorp (HERHON) 2519 2625 Hold 50311 119.5 155.9 175.0 21.1 16.2 14.4 14.0 11.3 10.0 45.9 48.5 45.3 36.5 39.1 36.9 JK Tyre & Ind (JKIND) 87 130 Buy 1966 14.5 22.6 24.7 6.0 3.8 3.5 5.2 3.8 3.5 18.7 23.5 22.7 23.3 27.5 23.5 M&M (MAHMAH) 1208 1470 Buy 71325 50.7 57.9 75.1 23.8 20.9 16.1 18.0 11.5 9.0 14.5 16.1 19.1 17.1 15.7 17.7 Mahindra CIE (MAHAUT) 220 300 Buy 7103-2.4 8.8 13.1 NA 24.9 16.7 22.7 13.5 10.8-4.1 12.3 16.9 5.9 11.5 15.9 Maruti Suzuki (MARUTI) 3827 4940 Buy 115663 122.9 168.9 222.3 31.2 22.7 17.2 18.3 12.8 10.4 17.2 23.0 23.7 15.6 18.4 20.4 Motherson (MOTSUM) 250 300 Hold 33115 6.5 10.6 19.6 38.4 23.5 12.8 12.3 10.2 6.5 24.7 27.6 39.5 25.9 34.3 47.1 Tata Motors (TELCO) 321 480 Buy 99593 41.2 30.4 49.3 9.7 13.2 8.1 3.7 3.9 3.1 22.8 13.6 15.9 24.9 10.7 14.8 Wabco India (WABTVS) 5516 6250 Hold 10480 63.6 106.3 146.2 86.7 51.9 37.7 52.1 35.4 26.2 14.0 19.2 21.2 18.2 23.1 25.3 ICICI Securities Ltd Retail Equity Research Page 9

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 10

ANALYST CERTIFICATION We /I, Nishit Zota, MBA & Vidrum Mehta, MBA Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. 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