DOMESTIC:

HCL Technologies signs MoU with MADC

Pennar Industries bags orders worth Rs538cr

Cupid wins orders worth Rs14cr

USFDA classifies Halol plant as 'No Action Indicated for Sun Pharma

Dr Reddy’s launched Versavo in India

Booster dose for Sun Pharma on entering licensing agreement

Titan Company bought 2.8% stake in subsidiary Carat Lane at Rs328 per share

Tech Mahindra divests 73.38% stake in subsidiary FixStream Networks to US-based company for USD2mn

Mahindra inaugurates its first automotive assembly plant in Sri Lanka

Nestle India launches world's no. 1 cocoa-malt beverage - MILO in India

KEC International bags Rs845cr orders for railway infrastructure

Indian Oil Corporation to invest Rs25,000cr in green energy

NTPC eyes mega solar park in Kutch Gujarat

SPARC faces Abraxis’ complaint in the US

DRL gets 8 observations from USFDA for its Duvvada facility

Goldiam International received an international order worth Rs100cr

GAIL to invest Rs45,000cr in expansion of pipelines, city gas network

TVS Srichakra rolls out tyre brand Eurogrip

Aster Healthcare to invest Rs1,000cr in five new hospitals

Adani group in talks with Krishnapatnam Port to acquire majority stake

Temasek, True North-CPPIB seek to invest in Biocon Biologics

Marquee investors plan stake sale in LIC Housing

L&T consortium bags large order from Saudi Aramco

Glenmark in talks to sell up to 30% in API biz to PremjiInvest

Amazon acquires 49% stake in Future Coupons

FDA issues observations for Granules India’s US arm facility

Pidilite subsidiary commissions plant in Bangladesh

Britannia to increase prices marginally to beat slowdown

Lupin divests Kyowa Criticare to Neopharma group

Reliance Capital to exit MF business

ECONOMY:

India's growth may slow down to 5.7% In April-June: Nomura

INDUSTRY:

In breather to the auto firms, government to go slow on the e-vehicle push

Media & entertainment set for slowdown, may grow 12% in FY20

Indian Pharma firms receive 34% of FDA warnings this year

Telecom minister Ravi Shankar Prasad has sought urgent relief for the telecom sector from the finance minister

The week that went by:

Following the Asian peers, the Indian bourses started the week on a strong note. The markets had a flat opening with underperformance continued by the metals. Midweek session opened on the negative stance with FMCG and Metals continuing with the underperformance. The negative trend continued with the markets opening lower with Metals leading the underperformance. The down move further continued even for the last trading day of the week.

Price Performance

Company 1M 3M 12M

Supreme Petrochem Ltd -16.0% -16.8% -37.5%

Shanthi Gears Ltd -17.3% -26.9% -34.8%

Hind Rectifiers Ltd 2.3% -3.2% -10.0%

KCP Ltd -9.1% -16.2% -29.5%

Hester Biosciences Ltd -5.4% 1.2% 24.2%

The Hi-Tech Gears Ltd -27.5% -35.2% -62.7%

Bharat Bijlee Ltd -6.9% -10.2% -33.6%

Triveni Turbines Ltd 6.9% -4.7% -14.9%

Siemens Ltd -4.5% -2.8% 10.9%

GMM Pfaudler Ltd 8.3% 14.0% 35.2%

Alicon Castalloy Ltd -26.7% -36.9% -37.9%

Gufic Biosciences Ltd -5.7% -24.5% -53.4%

Excel Industries Ltd -15.2% -32.6% -58.6%

Vesuvius India Ltd -4.1% -9.65% -16.5%

Munjal Showa Ltd -4.8% -15.2% -42.2%

Bharat Rasayan Ltd 7.6% 5.3% -36.5%

Alkyl Amines Chemicals Ltd -5.0% -6.4% 18.1%

Grauer and Weil (India) Ltd -3.1% -0.9% -6.6%

Texmaco Rail & Engineering Ltd -22.1% -35.5% -40.7%

Nagarjuna Agrichem Ltd -4.9% -6.4% -26.8%

ITD Cementation India Ltd -21.0% -36.6% -46.5%

Westlife Development Ltd -7.2% -20.9% -28.8%

Federal Mogul Goetze (India) Ltd -9.6% -11.7% 7.9%

Dynamatic Technologies Ltd -8.6% -15.9% -27.4%

Hitech Corporation Ltd -49.7% -10.2% -39.2%

NRB Bearings Ltd -29.5% -47.8% -49.7%

Kokuyo Camlin Ltd -18.2% -24.8% -56.3%

Timken India Ltd 0.1% 3.6% -1.2%

Morganite Crucible (India) Ltd 6.4% 16.4% -18.0%

Vardhman Special Steels Ltd -12.5% -21.9% -48.3%

Zen Technologies Ltd 1.1% -25.5% -37.5%

KSB Ltd -8.3% -11.2% -22.5%

Thermax Ltd -7.2% 2.6% 2.0%

Transpek Industry Ltd -2.8% -8.8% -18.8%

BASF India Ltd -4.8% -21.8% -47.8%

Artson Engineering Ltd -36.1% -16.8% -46.3%

Remsons Industries Ltd -13.3% -5.7% -21.0%

Snowman Logistics Ltd -7.5% -6.8% -31.1%

Alembic Pharmaceuticals Ltd -5.6% -4.7% -15.35%

SKF India Ltd -0.9% -1.2% 5.6%

HFCL Ltd -3.3% -9.2% -25.4%

Sudarshan Chemical Industries Ltd -1.7% 2.3% -28.1%

Huhtamaki PPL Ltd -8.0% -14.4% -18.2%

Mishra Dhatu Nigam Ltd -3.4% -18.0% -27.6%

Indian Hume Pipe Co. Ltd -16.0% -10.8% 71.4%

Engineers India Ltd -5.7% -13.4% 60.9%

Gulshan Polyols Ltd 13.9% -14.6% -29.6%

Nesco Ltd -3.6% 8.7% 3.3%

Castrol India Ltd -5.5% -17.0% 50.2%

Hikal Ltd -7.9% -15.4% 52.5%

Please Turn Over

23 Aug 2019

Page No: 1

Recommendations adjusted as per Corporate Actions

Company Reco Target Corp Action Adj Price Adj Tgt Price Appreciation

IHP Ltd 341 600 Bonus 1 : 1 171 500 42%

Engineers India Ltd 211 200 Bonus 1 : 1 105 200 -5%

Gulshan Polyols Ltd 390 500 Stock Split from Rs.FV 5 to Rs.FV 1 110 78 -48%

Nesco Ltd 2397 3200 Stock Split from Rs.FV 10 to Rs.FV 2 479 640 10%

Castrol India Ltd 447 550 Bonus 1 : 1 223 200 -46%

Hikal Ltd 143 325 Bonus 1 : 2 95 216 49%

Coverage Universe Valuations

Company Reco Adj Reco CMP Tgt price Upside Mcap EPS(x) PE(x) EV/EBITDA (x)

(Rs) (Rs) (Rs) (%) (Rs bn) FY18 FY19 FY18 FY19 FY18 FY19

IHP Ltd 341 171 243 500 106.1 11.8 13.6 20.1 19.2 13.0 10.6 8.1

Engineers India Ltd 211 105 100 200 99.7 33.7 6.0 7.0 17.5 14.9 15.9 12.7

Gulshan Polyols Ltd 390 78 41 78 90.9 1.9 3.9 5.1 9.6 7.4 4.6 3.7

Nesco Ltd 2397 479 525 640 21.9 7.4 25.1 23.7 21.0 22.3 17.2 17.9

Castrol India Ltd 447 223 120 200 66.7 59.4 7.1 15.6 16.8 7.6 11.0 10.0

Hikal Ltd 143 95 142 216 52.2 11.7 9.4 10.1 15.8 14.8 9.8 8.9

Please Turn Over

23 Aug 2019

Page No: 2

Coverage Universe Valuations

Company Reco Reco at CMP Tgt price Upside Mcap EPS(x) PE(x) EV/EBITDA (x)

(Rs) (Rs) (Rs) (%) (Rs bn) FY18 FY19 FY18 FY19 FY18 FY19

Supreme Petrochem Ltd BUY 77 168 275 63.6 16.2 6.6 6.4 28.6 29.6 8.7 10.7

Shanthi Gears Ltd BUY 107 85 150 77.0 6.9 3.5 3.9 25.7 23.1 19.9 16.9

Hind Rectifiers Ltd BUY 69 123 175 42.3 1.9 0.8 5.3 162.3 24.2 26.6 13.2

KCP Limited BUY 71 71 125 76.6 9.1 7.0 7.0 10.7 10.7 8.5 7.5

Hester Biosciences Ltd BUY 566 1589 2250 41.6 13.5 35.9 39.8 46.7 42.2 13.8 12.4

The Hitech Gears Ltd BUY 298 152 450 196.1 2.9 17.0 21.2 10.3 8.2 7.1 6.2

Bharat Bijlee Ltd BUY 787 880 1500 70.5 5.0 25.1 37.4 35.6 23.9 21.5 17.9

Triveni Turbines Ltd BUY 92 103 150 45.8 0.3 3.0 3.1 33.9 32.4 21.2 20.3

Siemens Ltd BUY 1128 1148 1500 30.7 408.7 53.0 53.6 21.9 21.6 29.5 29.0

GMM Pfaudler Ltd BUY 332 1413 1600 13.2 20.6 19.4 26.7 69.1 50.3 42.2 30.8

Alicon Castalloy Ltd BUY 288 376 650 73.1 4.6 29.0 46.6 13.8 8.6 7.1 5.2

Gufic Biosciences Ltd BUY 50 61 120 98.2 4.7 1.9 3.1 29.0 17.4 12.9 10.1

Excel Industries Ltd BUY 380 745 1200 61.1 9.6 58.1 112.2 13.0 6.7 7.7 4.1

Vesuvius India Ltd BUY 1165 1044 1500 43.7 20.9 52.3 56.3 18.0 16.7 8.7 8.4

Munjal Showa Ltd BUY 191 125 191 52.7 5.0 19.4 21.5 6.8 6.1 4.5 4.0

Bharat Rasayan Ltd BUY 2747 4475 6500 45.3 18.8 227.3 257.5 21.6 19.1 14.0 12.2

Alkyl Amines Chemicals Ltd BUY 391 734 1000 36.3 15.0 31.5 38.9 23.8 19.3 14.4 11.0

Grauer and Weil (India) Ltd BUY 45 49 65 33.9 11.0 2.7 3.0 18.2 16.4 11.4 10.8

Texmaco Rail & Engineering Ltd BUY 91 44 91 106.1 20.2 0.5 1.8 104.2 26.4 49.3 14.6

Nagarjuna Agrichem Ltd BUY 29 27 45 66.7 4.2 0.7 0.8 40.1 34.8 13.2 12.4

ITD Cementation India Ltd BUY 158 71 130 82.1 11.1 8.3 9.8 8.6 7.3 5.3 4.6

Westlife Development Ltd BUY 266 281 450 60.2 43.7 0.8 1.6 337.5 176.4 58.5 41.1

Federal Mogul Goetze (India) Ltd BUY 540 489 750 53.4 27.2 14.9 18.0 34.5 28.5 15.3 14.0

Dynamatic Technologies Ltd BUY 2160 1188 2160 81.8 7.5 1.1 51.1 1082.4 24.1 10.5 8.0

Hitech Corporation Ltd BUY 175 79 125 58.2 1.4 4.5 6.4 17.7 12.5 7.8 5.9

NRB Bearings Ltd BUY 138 89 138 54.9 8.6 8.5 10.4 10.4 8.5 6.6 5.6

Kokuyo Camlin Ltd BUY 132 61 132 117.1 6.1 1.0 1.5 66.9 44.5 20.6 16.4

Timken India Ltd BUY 883 698 1000 43.2 47.5 13.5 19.0 52.1 37.1 29.3 18.7

Morganite Crucible (India) Ltd BUY 1047 1490 2000 34.2 4.2 49.6 63.9 29.2 22.7 2.9 2.6

Vardhman Special Steels Ltd BUY 151 71 110 55.8 2.5 7.0 8.7 10.9 8.7 7.8 6.6

Zen Technologies Ltd BUY 115 53 125 137.9 4.1 -0.1 0.8 -1130.6 70.8 -232.2 42.4

KSB Ltd BUY 820 593 1100 85.5 20.6 18.8 21.2 37.0 32.8 15.5 13.8

Thermax Ltd BUY 1019 1015 1230 21 120.9 22.1 26.8 47.9 39.5 34.0 29.1

Transpek Industry Ltd BUY 1547 1259 2000 58.9 7.0 47.3 76.0 25.4 15.8 16.2 12.1

BASF India Ltd BUY 1954 1028 1700 65.4 44.5 20.3 43.5 49.2 22.9 15.4 12.2

Artson Engineering Ltd BUY 64 33 75 130.8 1.2 0.4 2.3 91.0 14.9 55.9 17.1

Remsons Industries Ltd BUY 104 78 130 66.0 0.4 6.0 7.9 13.8 10.5 9.3 7.3

Snowman Logistics Ltd BUY 33 28 55 94.3 4.7 -0.2 0.1 -142.7 211.2 14.3 11.7

Alembic Pharmaceuticals Ltd BUY 605 500 751 50.1 94.3 22.3 26.7 22.9 19.2 16.0 13.6

SKF India Ltd BUY 1942 1845 2620 42.0 94.7 57.6 60.7 32.2 30.5 21.8 20.3

HFCL Ltd BUY 25 19 35 86.2 23.4 1.3 1.7 14.9 11.2 9.9 7.1

Sudarshan Chemical Industries Ltd BUY 372 315 500 58.7 25.8 12.4 13.8 26.6 23.9 13.0 11.6

Huhtamaki PPL Ltd BUY 254 221 320 45.1 16.7 4.6 11.2 48.6 20.1 9.2 7.3

Mishra Dhatu Nigam Ltd BUY 123 111 160 44.1 23.0 6.7 7.0 17.3 16.6 11.4 11.6

*Castrol, Vesuvius – Dec Ending | Siemens—Sept ending|

Recommendations adjusted as per Corporate Actions

Company Reco Target Corp Action Adj Price Adj Tgt Price Appreciation

IHP Ltd 341 600 Bonus 1 : 1 171 500 42%

Engineers India Ltd 211 325 Bonus 1 : 1 105 200 -5%

Gulshan Polyols Ltd 390 500 Stock Split from Rs.FV 5 to Rs.FV 1 110 78 -48%

Nesco Ltd 2397 3200 Stock Split from Rs.FV 10 to Rs.FV 2 479 640 10%

Castrol India Ltd 447 550 Bonus 1 : 1 223 200 -46%

Hikal Ltd 143 325 Bonus 1 : 2 95 216 49%

*Castrol, Vesuvius – Dec Ending | Siemens—Sept ending| * T= Target

Coverage Performance Sheet

Company Reco at CLS Target Price (Rs) Appreciation

(Rs) (Rs) T1 T2 T3 T4 T5 T6 T7 T8 T9

IHP Ltd 341 243 500 600 500 - - - - 42% - -

Engineers India Ltd 211 100 200 250 200 - - - - -5% - -

Gulshan Polyols Ltd 390 41 110 78 - - - - - -48% - -

Nesco Ltd 2397 525 640 - - - - - - 10%

Castrol India Ltd 223 120 275 250 200 - - - - -46% - -

Hikal Ltd 143 142 200 250 325 216 - - - 49% - -

Please Turn Over

23 Aug 2019

Page No: 3

Coverage Performance Sheet

Company Reco at CLS Target Price (Rs) Appreciation

(Rs) (Rs) T1 T2 T3 T4 T5 T6 T7 T8 T9

Supreme Petrochem Ltd 77 168 120 150 200 275 350 500 275 - - 118%

Shanthi Gears Ltd 107 85 150 200 150 - - - - - - -21%

Hind Rectifiers Ltd 69 123 110 140 175 - - - - - - 78%

KCP Limited 71 71 105 150 200 150 125 - - - - 0%

Hester Biosciences Ltd 566 1589 750 875 1150 1500 2200 1750 2250 - - 181%

The Hitech Gears Ltd 298 152 450 600 500 450 - - - - - -49%

Bharat Bijlee Ltd 787 880 1100 1500 2000 1500 - - - - - 12%

Triveni Turbines Ltd 92 103 135 150 - - - - - - - 12%

Siemens Ltd 1128 1148 1500 1350 1500 - - - - - - 2%

GMM Pfaudler Ltd 332 1413 500 700 800 1000 1300 1600 - - - 326%

Alicon Castalloy Ltd 288 376 450 600 750 1000 850 650 - - - 30%

Gufic Biosciences Ltd 50 61 75 100 140 175 150 120 - - - 21%

Excel Industries Ltd 380 745 550 650 800 1100 1400 1800 2200 1800 1200 96%

Vesuvius India Ltd 1165 1044 1500 - - - - - - - - -10%

Munjal Showa Ltd 191 125 250 300 350 300 250 191 - - - -35%

Bharat Rasayan Ltd 2747 4475 3500 4250 5000 6500 9000 5000 6500 - - 63%

Alkyl Amines Chemicals Ltd 391 734 550 700 850 1000 - - - - - 88%

Grauer and Weil (India) Ltd 45 49 65 80 100 65 - - - - - 8%

Texmaco Rail & Engineering Ltd 91 44 125 150 91 - - - - - - -51%

Nagarjuna Agrichem Ltd 29 27 45 60 75 60 45 - - - - -7%

ITD Cementation India Ltd 158 71 225 180 130 - - - - - - -55%

Westlife Development Ltd 266 281 350 425 525 450 - - - - - 6%

Federal Mogul Goetze (India) Ltd 540 489 750 - - - - - - - - -9%

Dynamatic Technologies Ltd 2160 1188 3000 2750 2160 - - - - - - -45%

Hitech Corporation Ltd 175 79 230 180 150 125 - - - - - -55%

NRB Bearings Ltd 138 89 200 240 138 - - - - - - -35%

Kokuyo Camlin Ltd 132 61 175 132 - - - - - - - -54%

Timken India Ltd 883 698 1200 1000 - - - - - - - -21%

Morganite Crucible (India) Ltd 1047 1490 1500 1750 2300 2000 - - - - - 42%

Vardhman Special Steels Ltd 151 71 225 140 110 - - - - - - -53%

Zen Technologies Ltd 115 53 170 125 - - - - - - - -54%

KSB Ltd 820 593 1100 - - - - - - - - -28%

Thermax Ltd 1019 1015 1230 - - - - - - - - 0%

Transpek Industry Ltd 1547 1259 2000 - - - - - - - - -19%

BASF India Ltd 1954 1028 2500 2000 1700 - - - - - - -47%

Artson Engineering Ltd 64 33 95 75 - - - - - - - -49%

Remsons Industries Ltd 104 78 155 130 - - - - - - - -25%

Snowman Logistics Ltd 33 28 55 - - - - - - - - -14%

Alembic Pharmaceuticals Ltd 605 500 751 - - - - - - - - -17%

SKF India Ltd 1942 1845 2620 - - - - - - - - -5%

HFCL Ltd 25 19 35 - - - - - - - -25%

Sudarshan Chemical Industries Ltd 372 315 500 - - - - - - - - -15%

Huhtamaki PPL Ltd 254 221 320 - - - - - - - -13%

Mishra Dhatu Nigam Ltd 123 111 160 - - - - - - - - -10%

TERM OF THE WEEK: Planned Producer Price Index (PPI): The Producer Price Index (PPI) is an economic measurement of the average change in prices that domestic producers of goods receive for their products in a given country or region. PPI is a metric used in economics to help define inflation rates; it is one of many price indices, like the Consumer Price Index (CPI), that collectively define the cost of living.

COVERAGE NEWS: NACL Industries Limited: Facility update A new facility is being built at the Srikakulam site to meet the expected growth in demand for Technical as well as Intermediates. This is also to mitigate input supply risk from China. Manufacturing of a new Intermediate has commenced at Srikakulam Plant in this quarter. HFCL bags Purchase Order worth Rs2,467cr from Bharat Sanchar Nigam Limited HFCL has received a Purchase Order worth Rs2,467cr from Bharat Sanchar Nigam Limited, New Delhi for setting up of the Converged Nationwide IP/MPLS Backbone & Access Network for Armed Forces under the Network for Spectrum Programme of the Government of India. The scope of work under the above PO also include Operation and Maintenance for a period of 10 years including 3 year warranty period for which Rs862cr will be paid by the Indian Defence Services, after the warranty period is over. Our Comments: This project is funded by Department of Telecom, Government of India, (the timely realisation against the said PO is secured) and BSNL has been appointed as the nodal agency by the DoT for project execution. Hitech Corporation Limited: Plant update The company informed that the manufacturing operations at Baddi unit have been disrupted from 18th August, 2019 due to floods caused by heavy rains in the region. The company is in the process of ascertaining the damage/ loss (for which it has the insurance cover) and will take necessary steps to restart the operations at the earliest. Alembic Pharmaceuticals Limited: Inspection update The company's Bioequivalence facility in Vadodara was inspected by USFDA with no 483 observations at the end of the inspection. Our Comments: This is positive for the company in the stringent regulatory environment.

Please Turn Over

Weekly Sectoral Gainers & Losers in (%)

23 Aug 2019

NACL Facility Update

Page No: 4

HFCL Bags Orders

Hitech’s Corporate Announcement

Zero Observations For Vadodara Facility

Result update: Vardhman Special Steels Limited: The total revenue for the quarter de-grew by 10.7% to Rs2408mn as compared to Rs2695mn in the same quarter last year; on account of decline in sales volume by ~4000 tonnes and decline in prices. The EBITDA margin stood at 6.4% as against 6.6% in the corresponding quarter of last year. The net profit dropped by 87.4% to Rs11mn as against Rs91mn in the comparative quarter, mainly on account of increase in interest cost of loans taken to build inventory for planned shutdown of steel melting shop. The EPS stands at Rs0.3. The Board of Directors has approved the proposal of investment by Aichi Steel Corporation in the company in pursuance to the issuance of equity shares amounting to Rs500mn, resulting to 11.46% equity stake in VSSL. Our comments: The lower revenue and PAT in the quarter under reference is on account of slow demand of vehicles by the consumers, which has impacted the value chain company, VSSL. The management however being an opportunistic is looking for ways to be more operationally efficient and cost-effective in this challenging environment. One of the development made in this quarter is towards the investment by ASC, which will help the company enter new avenues in the automotive steel space by adopting latest technology to manufacture special alloy steels. Thus, we believe that the company will gradually improve its earnings in the next few quarters in FY20. However, to factor in the recent slowdown and impact on the stock performance, we reduce our target to Rs110 from the earlier Rs140 over a 12-month horizon and adopt buy on dips strategy for the stock.

GMM Pfaudler Limited: The net sales for the quarter grew by 33.8% to Rs1,503mn as compared to Rs1,123mn in the same quarter last year. The EBITDA margins for the quarter under review stood at 18.36%.The net profit grew by 54% to Rs177mn as against Rs115mn in the comparative quarter. The EPS stands at Rs12.1. Our comments: GMM continues to be a premium supplier of equipment’s and has a royal customer base. To further strengthen the efficiencies, the company intends to add another gas furnace which will be installed by end of Q2FY20. The company continues to reward its shareholders with incremental dividend. The company continues to look stronger, ambitious hungry for growth, which compels us to maintain our target price of Rs1600 over a 12 months horizon.

Fundamental Call Closed: Aksh Optifibre Limited: We had initiated a BUY on the stock at the price of Rs15 (coverage initiated on 13th June 2016) for a target of Rs24. Post our recommendation, the target of Rs24 was achieved and further revised to Rs35. The stock almost achieved this target as well with the 52 week high standing at Rs33. With the optimism seen in the industry we had further revised the target to Rs45. However, the past couple of quarter performances have not been satisfactory, in terms of expectations from the company and also in tandem to the industry growth where the peers are doing pretty well amidst the fluctuating raw material prices as well. Although the company could have certain corporate developments going forward, one cannot time the same and wait in anticipation. We thereby would like to close the call on our recommendation. Our comments: We close the call on the stock

Fundamental Call Closed: Simplex Infrastructures Limited We had initiated BUY on the stock at the price of Rs540 (coverage initiated on 10th July 2017) for a target of Rs700. With the kind of economic push that was expected for the Infrastructure space, we had expected that the legacy that the company enjoyed in the sector especially in the upcoming Metro developments should work in favour of the company. This was the reason for us to stick around our recommendation inspite of downgrades. However, the issue that has been a laggard for the company is the elevated debtors, recovery of which is been attempted since a year now which has led to the slowdown in execution as well. Also the recent revision of ratings by CARE has been yet another negative for the stock. The company has the fresh order inflow during the quarter of Rs1,122cr, with the order book as of June 2019 standing at Rs15,347cr in addition to the L1 of Rs1,070cr. This advocates the fact that the company should actually be better positioned in terms of the performance which is not the case. There has been nothing meaningful seen out of the efforts of the company to recover debts or for that matter improve on the execution. We would recommend our investors to Exit positions if any in the stock in the current context. However, the company would be under our soft coverage in order to gauge if execution picks up and we could re-enter the counter. Our comments: We close the call on the stock.

Cautious Approach

Please Turn Over

Good Set Of Numbers

23 Aug 2019

Call Closed

Page No: 5

Call Closed

Result Snapshot: Q1FY20: There was not much to offer in the Q1FY20 results for our coverage; with flat to maintained performance across the board. The slowdown in the Auto sector led to our recommendations taking a hit. There was an impact seen in the quarter performance with the slowdown creeping into the system. Companies like NRB bearings, Federal Mogul, Munjal Showa, Hitech gears, Alicon Castalloy were the ones impacted by the overall Auto slowdown. But there were a few to impress as well. Bharat Rasayan, GMM Pfaudler, HFCL, Huhtamaki PPL, Mishra Dhatu, Timken were some of the companies that did stand out in performance for the quarter. There was a decent performance show-cased by Sudarshan Chemicals, SKF India, Remson Industries, Hikal, Texmaco, Simplex and Shanthi Gears. On the other hand it was a tepid quarter for KSB and Kokuyo while a flat one for Nesco, Vesuvius and Hester, Artson, BASF, Dynamatic, and Gulshan Polyols. Hitech Corp saw a turnaround while Hind Rectifiers continued with the strong comeback performance. IHP, Triveni Turbines had a good quarter with strong order book ahead. Transpek results were impacted due to the plant closure while increase in cost of commodity chemicals dragged Grauer & Weil. The increase in raw material costs also impacted Morganite while overall increase in costs hit the performance of Bharat Bijlee. Good set of numbers were reported by Thermax, Zen Tech, KCP, EIL and Siemens. Strong Performance was reported by Alkyl Amines and Gufic Biosciences. Where Supreme Petrochem had a good start to the year; Snowman contradicted with a poor show, although the focus was maintained. Castrol had good numbers with financial delivery, while NACL also had improvement in margins. ITD cementation had a decent growth in revenues but the margins were impacted. Alembic had a strong US performance supporting the quarter. Westlife had a good operational performance but was impacted by IndAS, while VSSL was impacted by the slowdown in demand. Our Take: Overall, impacted by the slowdown, the bouquet did see downward target revisions to match with the recent correction, but the conviction remains intact. We feel H2FY20 should see a gradual pick up across the portfolio. ECONOMY:

India's growth may slow down to 5.7% in April-June: Nomura As per Nomura’s report, India's economic growth is likely to slow down further to 5.7% in the April-June quarter of this year due to low consumption, weak investments and an under-performing service sector. It attributed the slowdown to the ongoing crisis in shadow banks, which were funding the consumption drive before liquidity crisis hit them hard last September, as well as weakening global growth and the resultant demand slump. The economy, however, is expected to observe some sort of recovery in the July-September quarter to 6.4% and expected to increase further to 6.7% in the three months after that. The report also indicated that the industry and investment indicators are relatively stable. Our comments: As per the report, while the concurrent state of the economy remains a concern, nascent signs of green shoots and positive performance of leading indicators provide some signs that a recovery may be slowly materialising. INDUSTRY:

In breather to auto firms, government to go slow on e-vehicle push and put registration fee hike on hold The government has turned sympathetic towards the slowdown in the auto industry and is not aggressively pushing the proposal to ban the sale of internal combustion engine three-wheelers after 2023 and two-wheelers of engine capacity up to 150cc. Government departments which were working on a package to promote electric vehicles have been asked to put several initiatives on hold to discourage the sale of ICE vehicles. Additionally, the government has also decided to review the proposed registration fee hike of petrol and diesel vehicles. During one of their meetings with the Finance and Heavy industry Minister, auto makers flagged these issues as one of the key reasons for the recent slump that has seen sales decline at the fastest pace in 18 years. This move is in the backdrop of other packages that the government is looking at to revive the auto industry. Our comments: Government is of the view that they can gradually increase the share of electric vehicles rather than going for major disruption in the auto sector.

Please Turn Over

Likely Economic Slowdown

23 Aug 2019

Page No: 6

Auto Sector Looking To Breathe

Q1FY20 Wrap Up

INDUSTRY:

Media & Entertainment set for slowdown, may grow 12% in FY20 A report by KPMG states that Media and Entertainment industry will grow at 12% in FY20, slower than that of FY19 i.e. 13%. The main reasons for the slowdown in growth cited by the report are TRAI’s new tariff order and the signs of economic slowdown. The 12% growth estimate has taken into account one more round of regulatory changes. TV ad spend was subdued as advertisers waited since they wanted to access the impact of the new norms and the changes on the basis of these norms. The media and entertainment industry is expected to grow 13.5% per annum during FY19-24 to reach Rs3.07tn in FY24 on the back of greater focus on monetisation of emerging digital business models, strong regional opportunities and favourable regulatory and operating scenario across traditional businesses. Our comments: The growth would’ve been even lower than 12% had it not been for the gains from the higher ad spends during the April-May general elections and the cricket World Cup. Government looks to cut down imports of chemicals, make India a manufacturing hub At an event organised by the Indian Chamber of Commerce, according to the Chemicals and Petrochemicals Secretary’s opinion, there is a need to increase the capacity utilisation in this industry from the current level of 75-80% and cut the unnecessary imports; thus trying to make India a manufacturing hub of chemicals and petrochemicals. Additionally, in the event, emphasis was laid on the need for utilising the full manufacturing capacity of the industry for production of quality products. The government is of the opinion that the factories should come up in a cluster so that it could provide all infrastructure facilities at one place. India’s net imports have risen to Rs1.21lakhcr in 2018-19 from mere Rs1,000cr in 2004-05 and there is a projection that this figure could touch Rs3lakhcr in the next five years. Our comments: Government's focus is on strengthening the sector, which would lead to higher domestic production and thereby reduction in unnecessary imports. COMPANY:

Pennar Industries bags orders worth Rs538cr Pennar Industries bagged orders worth Rs538cr during the months of June and July 2019. It has received multiple orders aggregating Rs538cr across its business verticals namely, the Pre-engineered building division received significant orders aggregating Rs211cr from Tata Steel, Wipro, Bharti Infra, Mylan Laboratories, etc. These orders comprise of factory buildings, warehouses and solar projects. Railways business vertical received orders aggregating to Rs66cr from customers such as Integrated Coach Factory, Rail Coach Factory, Universal Engineering, Konkan Railways, BEML etc. The tubes division received orders worth Rs77cr and Industrial Components division received orders worth Rs37cr.The Environmental and Water Treatment division received orders aggregating Rs26cr from GMR and JSW for water treatment and effluent treatment plants. Our comments: This is positive for the company. Dr. Reddy's Laboratories launched Versavo in India Dr Reddy's Laboratories launched Versavo, a biosimilar of Roche's Avastin in India that is indicated for the treatment of various types of cancers. Versavo, is available in strengths of 100 and 400mg single use vials. The management is of the view that Versavo will help improve access to high quality therapy at an affordable cost, addressing the needs of patients with different cancers in India. The company now has six biosimilar products commercialised in India and various emerging markets and an active development pipeline of several biosimilar products in the oncology and immunology space. Our comments: The launch of Versavo is another step in that journey and helps in strengthening the company's oncology portfolio.

23 Aug 2019

Page No: 7 Please Turn Over

Slowdown In Media & Entertainment

Steps To Reduce Import Of Chemicals

Orders For Pennar

DRL’s Biosimilar Launch

COMPANY:

Booster dose for Sun Pharma on entering licensing agreement Sun Pharmaceutical Industries’ wholly owned subsidiary has granted an exclusive license to a subsidiary of China Medical System Holdings (CMS) to develop and commercialize seven generic products in Mainland China. The collaboration with CMS now covers eight generic products. The total addressable market size for all these eight products is about USD1bn (as per recent IQVIA data) in Mainland China. The initial term of the agreement shall be 20 years from the first commercial sale of the respective products and may be extended for additional three years' as per mutual agreement of the two parties. Our comments: As per the management, this collaboration gives the company an entry into the Chinese generic pharmaceutical market. KEC International bags Rs845cr orders for railway infrastructure KEC International bagged orders worth Rs845cr for railway infrastructure. One order of Rs580cr is for a job to construct an elevated viaduct and stations of the Delhi-Meerut Regional Rapid Transit System corridor, from the National Capital Region Transport Corporation. The other order, worth Rs265cr, is for the construction of a viaduct along with stations for the Phase 1 extension of the Kochi metro rail project, from Kochi Metro Rail Ltd. According to the management, these orders are considered as a part of the company’s strategy to expand its railway presence. These orders further expands its client portfolio. Our comments: These two orders mark the entry of KEC into Rapid Transit System and Metros in India. Temasek, TrueNorth-CPPIB seek to invest in Biocon Biologics Singapore’s investment company Temasek and home grown PE fund True North along with Canadian Pension Plan Investment Board (CPPIB) are separately in discussions to invest USD300mn in Biocon Biologics India Limited (BBIL), a wholly owned subsidiary of Biocon, for a minority stake. The subsidiary would be valued higher than Biocon and those valuations could be upwards of ~USD4bn (Rs28,000cr). Earlier in 2016, Biocon had hived off all its biologic assets into one single entity Biocon Biologics UK following which it received its first ever approval to sell biosimilar version of mega-cancer drug Trastuzumab in US through its partner Mylan. Subsequently, during FY18, the board and shareholders of BBIL had approved the acquisition of existing biosimilars business from Biocon Limited, for a consideration of Rs578cr, subject to regulatory approvals. The restructuring was done with an aim to unlock value in future with a listing or PE investment much like Syngene, its listed subsidiary for contract drug manufacturing. Our comments: The parent Biocon is becoming a holding company as the company seeks to unlock value across its arms through demergers and listings. With expansion plans, new Greenfield units, the growth capital is for future earnings and its pipeline. Pidilite Industries unveils state-of-the-art adhesive manufacturing plant in Bangladesh A state-of-the-art manufacturing plant of Pidilite Speciality Chemicals Bangladesh Private Limited (PSCBL) was formally commissioned at Bhaluka in Mymensingh. The new plant will manufacture leading brands such as Fevicol SH, Fevicol Speedx, Fevicol Marine, Pigment Emulsion, Piditint, and White Emulsion for the local market. This will be an environment-friendly plant with zero-discharge. This will be PSCBL’s second plant in addition to the existing plant at Munshigonj in Bangladesh. Pidilite has earmarked over BDT550mn as an investment towards the plant; spread over 5.9 acres, the plant will further strengthen Pidilite’s position in the adhesive market in Bangladesh and enhance its market presence. Our comments: With this facility, Pidilite will be the first major manufacturer of pigment emulsions in Bangladesh and will provide solutions to local textile, footwear, paper & packaging applications.

23 Aug 2019

Page No: 8

Entry Into China’s Generic Space

Investment In Biocon Biologics

Plant Commissioning

KEC Bags Orders

DISCLAIMERS AND DISCLOSURES- Progressive Share Brokers Pvt. Ltd. and its affiliates are a full-service, brokerage and financing group. Progressive Share Brokers Pvt. Ltd. (PSBPL) along with its affiliates are participants in virtually all securities trading markets in India. PSBPL started its operation on the National Stock Exchange (NSE) in 1996. PSBPL is a corporate trading member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE) for its stock broking services and is Depository Participant with Central Depository Services Limited (CDSL) and is a member of Association of Mutual Funds of India (AMFI) for distribution of financial products. PSBPL is SEBI registered Research Analyst under SEBI (Research Analysts) Regulations, 2014 with SEBI Registration No. INH000000859. PSBPL hereby declares that it has not defaulted with any stock exchange nor its activities were suspended by any stock exchange with whom it is registered in last five years. PSBPL has not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has its certificate of registration been cancelled by SEBI at any point of time. PSBPL offers research services to clients as well as prospects. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Other disclosures by Progressive Share Brokers Pvt. Ltd. (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject company (s) covered in this report-: · PSBPL or its associates financial interest in the subject company: NO · Research Analyst (s) or his/her relative's financial interest in the subject company: NO · PSBPL or its associates and Research Analyst or his/her relative's does not have any material conflict of interest in the subject company. The research Analyst or research entity (PSBPL) has not been engaged in market making activity for the subject company. · PSBPL or its associates actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report: NO · Research Analyst or his/her relatives have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report: NO · PSBPL or its associates may have received any compensation including for brokerage services from the subject company in the past 12 months. PSBPL or its associates may have received compensation for products or services other than brokerage services from the subject company in the past 12 months. PSBPL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Subject Company may have been client of PSBPL or its associates during twelve months preceding the date of distribution of the research report and PSBPL may have co-managed public offering of securities for the subject company in the past twelve months. · The research Analyst has served as officer, director or employee of the subject company: NO PSBPL and/or its affiliates may seek investment banking or other business from the company or companies that are the subject of this material. Our sales people, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses (if any) may make investment decisions that may be inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest including but not limited to those stated herein. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution publication, availability or use would be contrary to law or regulation or which would subject PSBPL or its group companies to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, the same may be ignored. Unless otherwise stated, this message should not be construed as official confirmation of any transaction. None of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of PSBPL. All trademarks, service marks and logos used in this report are trademarks or registered trademarks of PSBPL or its Group Companies. The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing in Indian Securities Market. In so far as this report includes current or historic information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. Terms & Conditions: This report has been prepared by PSBPL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential 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 PSBPL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. PSBPL will not treat recipients as customers by virtue of their receiving this report.

Compliance Officer: Mr. Shyam Agrawal, Email Id: compliance@progressiveshares.com, Contact No.:022-40777500.

Registered Office Address: Progressive Share Brokers Pvt. Ltd, 122-124, Laxmi Plaza, Laxmi Indl Estate, New Link Rd, Andheri West, Mumbai-400053; www.progressiveshares.com Contact No.:022-40777500.