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January 18, 2011

ICICIdirect.com | Equity Research

Initiating Coverage

ICICI Securities Limited

Expanding on existing brand equity… Leveraging on its strong brand equity of ‘Ujala’, Jyothy Laboratories (JLL) has diversified from a single brand and single product into a multi-product company. Remaining a niche player in segments (liquid whitener, fabric enhancer, mosquito repellent coils and dishwashing bars), JLL’s brands (Ujala, Maxo and Exo) have grown at a CAGR of 25.8% from FY08-10. With the extension into detergents, aerosols and fabric wash we believe the company would continue to grow at a CAGR of 19.6% from FY11-13E. We are initiating coverage on the stock with an ADD rating.

Extension of brands to drive revenue growth Capitalising on its brand equity in Ujala (72% market share) and Maxo (21% market share), JLL has expanded its portfolio to washing powders, fabric enhancer, aerosols and outdoor mosquito repellent products. The increasing demand for these products and the company’s aggressive marketing initiatives would be key drivers for the brand’s performance. The venture into the niche fabric wash segment through JFSL, that has relatively less competition and attractive opportunity, would further help JLL to witness the expected CAGR (FY11-13E) of 19.6%.

Margin concerns to prevail Rising material costs (especially crude that has touched $92/bbl) and increasing advertisement expenses (from 8% in FY10 to ~9.5% in FY11E) for the promotion of its new products and launching products nationally would continue to keep margins lower at ~15%. Moreover, with intensifying competition (especially in detergents and coils that are highly price sensitive) pricing would be a challenge to maintain sales (volume) growth. Higher operating margins (~36% as in FY10) in JFSL could also get trimmed with increasing competition due to the attractive valuation.

Valuation At the CMP of |276, the stock is trading at 25.1x its FY11E EPS of |11 and 21x its FY12E EPS of | 13. With the company’s expansion into detergents, fabric wash, aerosols & outdoor repellent products, we have valued the stock at 22x its FY12E EPS, arriving at a fair value of | 292. Also, on comparison with the FMCG Index, JLL is trading at 21.4x its FY12E EPS while the FMCG index is trading at 27x its one year forward earnings (estimated). With JLL being a relatively smaller player and in its nascent stage, we believe the discount of ~20% to the index is justified. We are initiating coverage on the stock with an ADD rating. Exhibit 1: Financial Performance

FY09* FY10 FY11E FY12E FY13ENet Sales (| Crore) 363.5 598.1 719.9 870.1 1,029.2 EBITDA (| Crore) 48.8 91.8 106.4 130.6 158.4 PAT (| Crore) 38.4 75.3 88.9 106.2 127.3 EPS (|) 5.3 10.4 11.0 13.2 15.8 Price / Book (x) 5.8 5.2 3.1 2.9 2.7 EV/EBITDA (x) 43.7 23.2 19.4 15.5 12.6 RoCE (%) 11.9 20.0 12.8 15.0 16.9 RoE (%) 11.1 19.4 12.3 13.8 15.2

*2009 figures are for 9 months from June, 2008 to March, 2009 Source: Company, ICICIdirect.com Research

Jyothy Laboratories (JYOLAB) | 276

Rating matrix Rating : Add

Target : | 292

Target Period : 12-15 months

Potential Upside : 6%

YoY Growth (%) (YoY Growth) FY10 FY11E FY12E FY13ENet Sales 64.5 20.4 20.9 18.3 EBITDA 88.3 15.9 22.8 21.3 Net Profit 88.3 15.9 22.8 21.3 EPS (|) 96.2 18.1 19.4 19.9

*2010 growth percentage is calculated over 9 months 2009 data; hence not comparable

Current & Target Multiples FY10 FY11E FY12E FY13E

P/E 26.7 25.1 21.0 17.5 Target P/E 28.2 26.5 22.2 18.5 EV / EBITDA 23.2 19.4 15.5 12.6 Target EV / EBITDA 24.5 20.5 16.5 13.3 Price to Book Value 5.2 3.1 2.9 2.7

Stock data Bloomberg/Reuters Code JYL IB. / JYOI.NSSensex 18874.1

Average volumes 46009.0Market Cap (| crore) 2233.5

52 week H/L 318 / 156

Equity Capital (| crore) 8.1Promoter's Stake (%) 70FII Holding (%) 11.2DII Holding (%) 18.0 Price movement

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Comparable Return Matrix (%) Return % 1M 3M 6M 12MJyothy Laboratories Ltd 3.0 (2.3) 2.1 64.3

Emami (1.5) (15.6) (3.1) 53.7

Godrej Consumer 5.0 (0.1) 14.5 49.1 HUL 1.4 1.1 17.4 18.2

Analyst’s name

Sanjay Manyal [email protected]

Parineeta Poddar [email protected]

ICICIdirect.com | Equity Research Page 2


Company Background Jyothy Laboratories Ltd (JLL) is the market leader in the niche fabric whitener category with its flagship brand ‘Ujala’ (market share by value of 72% in FY10). It is also present in the household insecticide and dishwashing segments through two other brands Maxo (market share by value of 21.2% in FY10) and Exo (market share by value of 23% in FY10), respectively. JLL commenced its operations in 1983 led by MP Ramachandran. Initially, it was a proprietary concern with a team of six sales people who sold Ujala going house to house in Trichur and Malappuram districts in Kerala. However, over the years, the company has successfully grown by expanding its reach throughout the country as well as entering new segments.

• In 2000, Jyothy entered the household care segment and launched its mosquito repellent brand ‘Maxo’ and dishwashing brand ‘Exo’ in West Bengal and Kerala, respectively

• In 2001, it introduced its brand Maya (incense sticks) in selected states in the country

• In 2002, JLL acquired Sri Sai Homecare Products Pvt Ltd, a mosquito repellent coil manufacturing facility in Hyderabad and during the same year launched its ayurvedic soap brand Jeeva

• In 2005, the company introduced Exo Liquid and Ujala Stiff & Shine (fabric enhancer) in South India. Further, in 2008, it launched these products across the nation

• In 2009, JLL forayed into the laundry service segment and set up its new venture Jyothy Fabricare Services Ltd (JFSL) with the aim of providing “world class laundry at affordable prices at one’s doorstep” both to retail and institutional categories. Currently, JFSL’s operations are restricted only to Bangalore.

Over the years, JLL has grown at a CAGR of 18.6% from 2006-10 with the sales in FY10 being | 598.1 crore. Ujala is the leading brand in the company’s portfolio and contributes 45.6%* (| 264.2 crore in FY10) to the topline, followed by Maxo contributing 30.8%* (| 178.8 crore in FY10), Exo 16.4%* (| 95.3 crore in FY10), JFSL ~0.8%* (| 4.7 crore in FY10) and around 6.3%* (| 36.6 crore in FY10) followed by others (Maya and Jeeva).

Shareholding Pattern (FY10)

Shareholder % holding

Promoters 70.1

Institutional Invetsors 21.6

Other Investors 8.3

Promoter & Institutional Holding Trend

70.1 70.1 70.1 70.1 63.1

29.222.121.621.422.4

0

20

40

60

80

Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11

Promoters Institutional Invetsors

*% is on standalone sales



JLL’s brands and their contribution in revenues (standalone figures for FY10)

JYOTHY LABORATORIES (JLL)

|579.6 crores*

Ujala Supreme (Fabric Whitener) |183.2 cr (69.3%

of Ujala sales)

UJALA | 264.2 cr

(45.6% of JLL sales)

MAXO | 178.8 cr


EXO | 95.3 cr


OTHERS | 41.3 cr

(7.1% of JLL sales)

Ujala Detergents | 64.7 cr

(24.5% of Ujala sales)

Ujala Stiff & Shine (Fabric Enhancer)

| 16.3 cr (6.2% of Ujala

sales)

Maxo coils |179 cr

Exo Dishwash bars and liquid

|61.9 cr (65% of Exo sales)

Exo Safai Units (scrubbers)

|33.4 cr (35% of Exo sales)

Maya (incense sticks) & Jeeva

(ayurvedic soaps) |36.6 cr

(6.3% of JLL sales)

JFSL | 4.7 cr

(0.8% of JLL sales)



Investment Rationale Brand extensions and geographical expansion to drive revenue growth

Expansion of Ujala’s portfolio to drive brand’s growth

JLL’s flagship brand Ujala comprises whiteners, detergents and fabric enhancer in the product portfolio and constitutes ~44% of JLL’s total sales (FY10). The brand has grown at a CAGR of 17% from 2007-10. Going ahead, we expect the growth (CAGR) to be ~19% in 2010-13E. The growth would be led by detergent (~34% CAGR FY10-13E) and fabric enhancer (~12% CAGR FY10-13E) sales with the growth in liquid whiteners remaining muted. Exhibit 2: Ujala's sales in | crore from 2007 to 2013E

163.2201.2 220.0

264.2

334.3

388.8

448.3

0.0

100.0

200.0

300.0

400.0

500.0

2007 2008 2009* 2010 2011E 2012E 2013E

| Cr

Source: Company, ICICIdirect.com Research *2009 includes sales from June, 2008 to March, 2009

Exhibit 3: Ujala’s contribution in overall sales

45 53 44 44 46 45 44

55 47 56 56 54 55 56

0

20

40

60

80

100

120

2007 2008 2009* 2010 2011E 2012E 2013E

% o

f tot

al s

ales

Ujala Others

Source: Company, ICICIdirect.com, Research *2009 includes sales from June, 2008 to March,2009

Exhibit 4: Brand composition of Ujala

84 79 69 69 64 60

8 15 24 26 31 35

555667

0

20

40

60

80

100

120

2008 2009* 2010 2011E 2012E 2013E

% o

f Uja

la S

ales

Ujala Supreme Ujala Detergents Stiff and Shine

Source: Company, ICICIdirect.com, Research *2009 includes sales from June,2008 to March,2009

Ujala Supreme

Ujala Supreme, the fabric whitener, is the main offering of the company contributing ~30% (| 183.2 crore) to JLL’s topline and ~70% of Ujala’s sales. It has an overall market share of 72% by value (FY10) and the entire market in Kerala (the company’s largest market for all its products). The closest competitor for this product is Robin Blue having a mere 4% share by value (FY10). Ujala Supreme has grown at a CAGR of ~4% from 2008-

Growth in sales from FY11-13E will be led by detergents

and fabric enhancer sales (Stiff and Shine) with the fabric whitener’s growth remaining subdued



10. We expect it to grow at ~14% (CAGR) from 2010-13E. The higher estimated growth is on the back of ~15% price increase taken in FY11E though we believe volume growth (CAGR FY10-13E) would remain at~6%.

Exhibit 5: Market share of Ujala with its closest competitor

65.1 66.7 68.5 68.974.3 74.8 72

4.2 4.3 4 4.2 3.9 3.5 4.1

01020304050607080

2004 2005 2006 2007 2008 2009 2010

Mar

ket S

hare

(in

%)

Ujala Fabric Whitener Robin Blue

Source: Company, ICICIdirect.com, Research

Exhibit 6: Sales of Ujala Supreme (| crore)

169.7125.9

183.2

230.3250.3

269.8

0

100

200

300

2008 2009* 2010 2011E 2012E 2013E

Sale

s in

| C

r

CAGR 14%

~26% increase FY11E sales due to 15% increase in prices and 7.5% increase in volumes

Source: Company, ICICIdirect.com, Research *2009 includes sales from June, 2008 to March,2009

Ujala Detergents

Leveraging on the brand equity of Ujala Supreme, JLL entered the detergent segment (market size of | 12,000 crore in FY10) and launched Ujala washing powder in Kerala in 2001. It has categorised the detergents into two variants, Ujala washing powder (80% of detergent sales priced at | 54/kg) and Technobright (20% of detergent sales priced at | 90/kg), targeting the economy and premium categories, respectively. Having test marketed the product in Kerala (garnered a market share of 17% by volume in FY10), the company launched the product pan-India in August, 2010. Exhibit 7: Growth in sales & contribution of Ujala Detergents

118.885.964.723.5 156.016.8

8.4%

14.8%

24.5% 25.7%

30.6%34.8%

10.8%15.2%13.7%11.9%

6.5%

4.4%

0

40

80

120

160

200

2008 2009* 2010 2011E 2012E 2013E

0%

10%

20%

30%

40%

Ujala Detergents (| Cr) (LHS) % of Ujala Sales % of Total Sales

National Roll out led to ~175% growth

34% CAGR

Source: Company, ICICIdirect.com Research *2009 includes sales from June, 2008 to March, 2009

We expect detergents to grow at CAGR of ~34% (volume growth of 35%) from FY10-13E backed by the company’s strategy of avoiding the overlapping segments of market leaders (HUL and P&G). Moreover, with the marketing initiatives taken by the company, signing Sachin Tendulkar (high brand equity in rural areas) as the product’s brand ambassador and increasing its advertisement expenses by ~132% in H1FY11 for Ujala (especially detergents) alone to |11.6 crore to increase its penetration and

With the aggressive marketing initiatives and inorganic

growth prospects for detergents, we expect the

contribution to increase from ~11% in FY10 to 15% by FY13E



fight competition from the smaller players (Ghari and Nirma), we believe the expected growth of ~34% would be achieved.

The company is also looking for inorganic expansion (targeting regional players) in the detergent segment (not accounted for in the estimated growth) and has raised | 228 crore via QIP for the same. It is in advanced talks with Safechem Industries (West Bengal based player) to buy its detergent brand Safed.

Ujala Stiff & Shine

The smallest contributor (6% by value in FY10) to Ujala’s sales, Stiff & Shine (fabric enhancer nationally launched in Q3FY08) has grown at a CAGR of 6.8% from 2008-10. Going forward, we expect it to witness a CAGR of ~12% from FY10 to FY13E. With the increasing demand for products that safeguard the quality of clothes, appropriate distribution and marketing of the product would help JLL to achieve the targeted growth and create a market for the product (it being a niche and new concept with no competition).

Thus, with ~15% growth among all products under the brand, led both by volume and value we expect Ujala to continue to be the largest contributor to topline (~44% in FY13E), going ahead.



Growth in Maxo sales to be driven by introduction of aerosols, DEPA products

Maxo, the second largest brand by sales (| 178.8 crore in FY10 and contributing ~30% to topline) for JLL grew at a CAGR of ~26% from FY08 to FY10 garnering an overall market share 12% by value in the mosquito repellent category (market size of ~| 2000 crore). However, it is the market leader in rural India with 32.4% share by value (FY10). With the company introducing Diethyl Phenyl Acetamide (DEPA) products and aerosols in its product portfolio from FY11, we expect overall growth for the segment to be maintained at around 22% (CAGR) from FY10-13E, thereby reaching | 324.6 crore by FY13E from | 178.8 crore in FY10.

Exhibit 8: Market share of JLL in mosquito repellent category (FY10)

Market Size is |2000 cr

Godrej33%

Reckitt22%

Jyothy12%

Johnson18%

Others15%


Exhibit 9: Maxo’s sales from 2007-2013E

141.5110.9

138.0

178.8217.5

265.6

0

100

200

300

2007 2008 2009 2010 2011E 2012E

Sale

s (|

Cr)


In March, 2010 Defence Research & Development Organization (DRDO) assigned JLL the exclusive rights to develop and sell its DEPA (multi insect repellent technology) products in various formulations (through its established brand Maxo) in Indian and International markets. The technology aims to provide repellent solution for outdoor use as all products in this category have been predominantly for indoor use (Odomos). In exchange for the technology, JLL is required to pay a royalty fee of 2% on domestic sales, 3% on sales in military canteens and 4% for exports.

With the company’s usual practice of test marketing its products in Kerala, DEPA products were launched in Kerala on July 16, 2010 and are expected to be introduced nationally in January, 2011. JLL being the sole owner of the technology (with relatively no player in the outdoor mosquito repellent products), we expect the sale from these products to witness a CAGR of ~100% and reach | 80 crore by FY13E from | 20 crore in FY11E (including the sales to GoI for CWG and ~| 1.5 crore per month sales from Kerala). With the national launch of the product, we expect sales of around | 1.5 crore per month from all-India for January-March, 2011.

Maxo’s sales would be led by higher growth in aerosols than in coils with the increasing demand for the former.



Exhibit 10: Maxo's product portfolio and expected sales growth

142 111 115179 178 180 183

20 408045

61

20

21.7%

22.1% 22.2%

0

100

200

300

400

2007 2008 2009* 2010 2011E 2012E 2013E

Coils

Vol

(in

cr u

nits

)

20%

21%

21%

22%

22%

23%

Sale

s Gr

owth

(%)

Sales (from coils in | cr) DEPA Products (in | cr)

Sales (from aerosols in | cr) Sales Growth

25% share from aerosols to be achieved only by FY13E

100% YoY growth till FY13E to be led by national roll out

Source: Company, ICICIdirect.com Research

Aerosols and sprays (market size as of FY10 was | 260 crore) are the new products in Maxo’s portfolio. The margins from aerosols are higher than from coils at ~20% and ~6%, respectively. Therefore, with the increased marketing efforts of the company and higher opportunity backed by relatively less competition in the category, we believe that contribution of aerosols in Maxo’s portfolio would increase to ~25% by FY13E from 10% in FY10 clocking a CAGR of 50% from FY10-13E. With the huge opportunity in the aerosols market, competition would intensify in the coming years especially from the market leader (Godrej with 33.1% share as of FY10). However, we believe JLL’s strong brand equity and rural presence would help it to maintain its sales growth.

In spite of tough competition in the coils market from industry leaders, Good Knight (Godrej’s brand having 21.4% share as in FY10) and Mortein (Reckitt Benckiser’s brand having 32% share in coils segment as on FY10), Jyothy maintained its market share (by value) over the years (at 21.2% in FY10) with others witnessing a loss in share. The large players are facing tough competition from the smaller/unorganised players who are increasingly gaining pace through their low cost strategy. Thus, with increasing competition in the coils segment and consumers (largely rural) shifting their usage to electricals, aerosols and creams (JLL’s presence in this category is relatively very low), we believe JLL’s move to tap the opportunity in these faster growing categories would help it in maintaining its market share.

Exhibit 11: Maxo’s market share from FY08-FY10

20.9%

33.6%

21.3%20.3%

36%

22.8%21.4%21.2%

32%

10%

20%

30%

40%

Maxo Mortein Good Knight

2008 2009 2010


Exhibit 12: Volume & value growth in coils segment from FY08-FY10

513

885

539

994

533

1081

400

550

700

850

1000

Volume (Cr units) Value (| Cr)

FY08 FY09 FY10


Break-up of mosquito repellent segment (FY10)

Coils53%

Electricals30%

Aerosols13%

Others4%


Intensifying competition, stagnant demand and lower margins in coils are the key drivers for JLL in expanding Maxo’s offerings



Exo sales to be driven by increase in rural contribution

Exo (dish wash bars and scrubbers) constitutes the dishwashing category of JLL and contributes 16% (| 95.3 crore) of total sales (FY10). The brand has witnessed robust grown of ~53% (CAGR) from 2007-10. Going ahead, we expect the growth (CAGR) to be ~20% from FY10-13E. With relatively low penetration for utensil cleaners in rural India (~17%) compared to urban India (~60%), we believe the growth would largely be driven by contribution form rural consumers. Also, with Exo’s national roll out in January, 2010, the company has been able to increase its market share to 23% (FY10) from 17.6% (FY08) with the market leader Vim (HUL) losing market share to 61.6% (FY10) from 69.5% (FY08). However, with Vim sales still being almost 3x that of Exo, JLL’s marketing strategy for the brand would play a crucial role.

Exhibit 13: Exo’s market share from FY08-10

69.5%

17.6%

66.9%

20.7%

61.6%

23.0%

0%

20%

40%

60%

80%

Vim Exo

2008 2009 2010


Exhibit 14: Exo’s sales

36.452.5

95.3

117.7142.0

162.6

020406080

100120140160180

2008 2009* 2010 2011E 2012E 2013E

Sale

s (|

cr)

Dishwash bars Scrubbers (Exo Safai)

CAGR 22%


Going ahead, with the increasing penetration of dishwashing products in the country (at around 35% in FY10) and the strengthening of the company’s distribution network (from 3.5 lakh retail outlets in 2008 to ~10 lakh outlets in 2010), we expect the sales to increase to | 163 crore by FY13E from | 95 crore in FY10 and the overall market share to increase to ~35% contributed largely by the rural economy.



Diversification in Maxo’s portfolio, rationalisation of costs in Ujala to improve margins

JLL’s introduction of Maxo aerosols in the brand’s offerings would expand its margins from the brand as margins from aerosols are ~20% compared to coils that have ~6% margin (in FY10).

Maxo contributes ~9% (FY10) to JLL’s margins (| 91.8 crore in FY10) with margins being ~6% (FY10). With the extensive marketing undertaken by the company (increase in advertisement expenditure for Maxo in H1FY11 by 132% from | 2.01 crore to | 4.67 crore), we expect the contribution of aerosols to increase from around 10% in FY11E to ~25% by FY13E. The increasing contribution would, hence, improve margins from Maxo by 140 bps to ~7.5% in FY11E and by 350 bps to ~9.5% by FY13E.

Exhibit 15: Margin expansion in Maxo with increase in aerosols sales

6.0%

7.4%

8.8%9.5%

0

50

100

150

200

250

2010 2011E 2012E 2013E

Max

o Sa

les

(| C

r)

0%

2%

4%

6%

8%

10%

Mar

gins

(%)

Coils (| Cr) Aerosols (| Cr) Total margins from Maxo

Source: Company, ICICIdirect.com Research * For calculation of margins DEPA products sales has not been included in Maxo sales as the margins in them are not known.

JLL modified the packaging of Ujala Supreme (75 ml bottles – largest selling SKU) by reducing the grammage of its bottles (75 ml) from 18 gm to 8 gm, subsequently leading to cost savings of | 0.5 per bottle and increasing margins by 3% from it. The driver for this change was the rising HDPE (crude derivative) prices, the key packaging product used by JLL. Exhibit 16: Cost reduction initiatives in Ujala

Wt of 75ml bottle (earlier) in gm 18

Wt of 75ml bottle (now) in gm 8

HDPE price/tonne* 55350

No. of bottles sold per day (mn) 1

Total cost at 18gm (in | Cr) 0.1

Total cost at 8gm (in | Cr) 0.04

Savings (in | Cr.) 0.06

% of savings 56% Source: Company, ICICIdirect.com Research

Brand Sales (FY10) EBITDA (%) EBITDA (| Cr)

Ujala 264.2 30% 79.2

Maxo 178.8 6% 10.7

Exo 95.3 10% 9.5

EBITDA from JLL’s brands



Entry into niche fabric wash category through JFSL

JLL ventured into the untapped laundry segment (estimated market size is | 2000 crore by KPMG and INSEAD Analysis in their report, 2007-12: Outlook for Dry Cleaning and Laundry Services) in November, 2009 in Bangalore. By the end of FY10, the company has processed 28,000 pieces per day generating ~| 5 crore by the end of FY10. Led by increasing household income, growing working population, aggressive expansion plans of the company and the competitive advantage of being the sole player in the segment, we believe the sales would grow at a CAGR of ~140% from FY10-13E clocking sales of | 68 crore by FY13E.

JFSL has been formed with JLL holding a 75% stake and 25% being held by Ullas Kamath (managing director of JLL). The cost of the venture was ~| 35 crore. JFSL owns a laundry facility in Bengaluru with a total capacity of washing ~40,000 pieces a day. JFSL acquired a Bangalore based laundry services chain ‘Snoways’ with eight outlets in November, 2009 and has increased it to 30 stores. The company also launched the ‘Fabric Spa’ JFSL’s flagship brand on November 15, 2009 with two quick service stations and 10 collection and delivery centres.

JFSL caters to both the retail (10% by volume and 20% by value for FY11E) and institutional categories (90% by volume and 80% by value as on FY11E). The margins from the retail category (~60%) are higher than the institutional category (~30%).

With JFSL being assigned the official launderers for CWG, 2010 and already (by the end of Q2FY11) processing ~38,000 pieces (~3500 in retail and ~34,500 in institutional), we expect the company’s revenues from JFSL for FY11E to be ~| 17 crore. Going ahead, JFSL plans to extend its operations to Chennai, Hyderabad and Pune in Phase 1 by FY12 and to Mumbai, Delhi and Kolkata between FY12-15. We estimate the sales from JFSL will witness a CAGR of ~100% from FY11E-13E taking into account the expansion plans (of phase 1 only and add to revenues from FY12E) too. We believe that the total cost of expansion (Phase 1 &2) for JFSL would be ~|200 crore based on the same scale of cost that was expended for setting up the Bangalore facility; which could be could be funded through selling off JFSL stake (of JLL) to a private equity player or through internal cash accruals. Exhibit 17: JFSL Estimates (FY11-13E)

2011E 2012E 2013E

Clothes washed per day

Institutional 32500 58500 93600

Retail 4000 7200 11880

Price

Institutional (per kg) 27 27 25

Retail (per piece/% of total retail sales)Economy(| 40/pc) 45% 30% 30%

Busy Easy (|50/pc) 50% 50% 50%

Premium (|90/pc) 5% 20% 20%

Days of operation

Institutional 250 270 270

Retail 180 270 270

Total Revenues (| cr)

Institutional 13.2 34.1 50.5

Retail 3.4 10.7 17.7

Source: Company, ICICIdirect.com Research For institutional per piece weight is estimated to be 600gm (FY11E &FY12E) and 800 gm for FY13E

Setup Cost break uo for JFSL in Bengaluru Cost of the Project | Crore

Land 2.5

Building (~70,000 sq. ft of built up area) 8

Machinery 12

Acquisition of Snoways 1.5

Retail Outlet Deposit/Interiors 3

IT Hardware & Infrastructure 3

Vehicle/Logistics 2

Pre operative expenses 2

Contingencies 1

Total 35

JFSL (|17 cr sales in FY11E

Retail (20% of sales by

value in FY11E)

Institutional (80% of sales by value in FY11E)

Busy Easy & Snoways Priced at Rs.50/pc

and Rs.40/pc

Premium (Fabric Spa)

priced at Rs.90/pc

JFSL Corporate

Prices range from Rs.27

to Rs.40 per kg



Extension of flagship brands through acquisitions JLL has followed the inorganic route of expansion since its inception with all acquisitions being funded by the company’s internal accruals. Recently, the company ventured into the fabricare services business in 2009 by acquiring ‘Snoways’ chain of laundry in Bangalore operating with eight stores, which it increased to 30. The company plans to continue its presence in the fabricare space and recently raised | 228 crore via QIP (issued 80, 67,370 shares of face value | 1 shares issued at a premium of | 281.6 per share) for the same purpose. Having raised the money, the company has plans to acquire a regional detergent brand ‘Safed’ in eastern India (West Bengal). Exhibit 18: Acquisitions over the years Year Acquired Segment

2002 Sri Sai Homecare Products Pvt. Ltd. Mosquito Repellant Coil

2007 Ruby Liquid blue Fabric Whitener

2007 More Light Fabric Whitener

2007 Bangalore Detergents & Plastics Company Fabricare

2009 Snoways Laundry Fabricare

2010 Safed Detergents Fabricare




Risks and concerns High dependence on flagship brand Ujala We believe that the entry of detergents with better formulations would gradually wipe off the market for liquid whiteners and the price war concerns in the detergent segment would increase pressure on the company to operate on lower margins and face tough challenges in maintaining its market share. With JLL’s 31% sales coming from Ujala Supreme (fabric whitener) and 11% sales from Ujala detergents, the slightest deviation in their sales would adversely impact JLL’s topline. With Ujala being the highest contributor to EBITDA (~90% in FY10), an impact on the sales from it would also hit the margins.

JFSL’s performance to temper down JFSL’s expansion plans is estimated to require ~| 200 crore (management estimates only | 150 crore) considering the investment of | 35 crore in setting up a single facility in Bengaluru in November, 2009. With operations in Bengaluru alone not having achieved breakeven even after two years of operation, the aggressive expansion plans look stretched. Moreover, with the intentions of the company to increase JFSL’s contribution to JLL’s topline to 25% by FY13E, revenue per city would have to be ~| 80 crore (considering the expansion plans of Phase 1 will be completed by FY13E). This seems quite stretched based on the performance in Bengaluru till date. The higher margins of ~30% from institutional segment and ~60% from retail (blended margin of ~36%) would not sustain in the long run with competition from unorganised players pouring in. With an increase in the cost of processing passing on the costs to consumers could impact the volume growth.

Rising raw material and advertisement costs to pressurise margins Rising crude prices to $92/bbl in January, 2011 from ~85/bbl in January, 2010 leading to increase in prices of HDPE (crude based derivative) and plastic (~20% of JLL’s raw material costs for manufactured goods as of FY10) would impact JLL’s margins by ~200 bps (FY12E). Thus, any further increase in crude from would further lead to margin contraction. We believe that with the introduction of detergents, aerosols and targeted growth in Exo & JFSL would keep advertisement expenses higher at ~9.5% of net sales (FY11E) at | 68.3 crore against 8.1% in FY10 at | 48.5 crore. JLL’s advertisement costs were already higher by ~98% in H1FY11 at | 20.8 crore against | 10.5 crore in H1FY10. Exhibit 19: Raw materials, advertisement expenses & EBITDA margins

0

75

150

225

300

2007 2008 2009 2010 2011E 2012E 2013E

Advertisement Expenses RM Exp EBITDA Margins (%)

Source: Company, ICICIdirect.com Research Costs are indexed to the base of 2007

JFSL Estimates

2010 2011E 2012E 2013E

Institutional (pieces/day) 25000 32500 58500 93600

Retail (pieces/day) 3000 4000 7200 11880

Revenue (| Cr) 4.7 16.6 44.8 68.2

Contribution to Revenue 0.8% 2.3% 5.2% 6.6% *the estimates include the expansion plans of Phase 1 to come by FY13E only.



Financials Sales to grow at 19.6% CAGR from FY11-13E JLL’s sales grew at a CAGR of 18% from FY07-10 to | 598.1 crore (FY10). We expect it to grow at 19.6% from FY11E-13E to |1029.2 crore (FY13E). Ujala - Higher sales growth would largely be accounted by the increase in Ujala sales at ~16% CAGR from FY11E-13E to | 448 crore (FY13E) against 15% CAGR from FY08-10 to | 264 crore in FY10. We expect Ujala detergents & S&S sales to witness ~35% and ~12% CAGR from FY11-13E. Maxo - CAGR growth in Maxo sales is expected to be ~22% (FY11-13E) against ~8% CAGR from FY07-10 and reach | 325 crore (FY13E). The growth (CAGR) in aerosols and DEPA products is expected to be robust at ~75% (| 61 crore by FY13E from | 20 crore in FY11E) and 100% (| 80 crore in FY13E from | 20 crore in FY11E). Exo - Exo grew at ~53% CAGR from FY07-10 (| 26 crore to | 95 crore) witnessing robust growth (~71%) in 2009 when it was launched nationally. Hence, we expect the growth (CAGR from FY11-13E) to moderate to 17.5% (due to the high base effect) but remain higher than the category growth rate of ~13% (FY10). Also, increasing sales of JFSL at ~100% CAGR (FY11-13E) would marginally contribute to the growth. Exhibit 20: Sales growth from FY08-13E

380 465 598 719 870 1029

-200

0

200

400

600

800

1000

1200

2008 2009 2010 2011E 2012E 2013E

Sale

s (|

Cr)

-25.0

0.0

25.0

50.0

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th (%

)

Net Sales Ujala Maxo Exo


Margins to remain under pressure We expect margins to remain under pressure from FY11-13E at ~15% (declining by 50 bps in FY11E to 14.8% from 15.3% in FY10). Rise in crude prices to ~$92/bbl would increase the cost of HDPE (crude derivative) and plastic (both constituting ~40% of raw material cost for manufactured goods). Moreover, the extension of the brand’s portfolio and launching products nationally would increase the advertisement cost (FY11E saw 9.5% of sales compared to 8.1% in FY10) pressurising margins further.

With national launches for products (Exo in FY09 and detergents

in August, 2010), we believe the sales would continue to be led by growth from all three brands



Exhibit 21: Impact on margins from RM (% of sales) & ad (%of sales) expenses

15.415.014.815.3

13.4

16.114.9

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2007 2008 2009 2010 2011E 2012E 2013E

Ad &

EBI

TDA

mar

gins

48.0

50.0

52.0

54.0

RM E

xp

Ad exp (LHS) EBITDA Margins (LHS) RM Exp (RHS)

Rise in RM expenses & higher ad expenses in FY11E impacting margins in FY11E. In FY12 ad exp continue to remain higher; however decline in RM helps margins to improve


Profitability growth to moderate We expect bottomline growth from FY11-13E to grow at a CAGR of 19.7% to | 127 crore against 23% CAGR from FY08-10. The bottomline growth is expected to slow down on the back of increased interest cost for JFSL (| 13 crore loan at ~11% per annum rate of interest raised in FY10).

Return ratios to remain low led by expansion plans JLL’s return ratios would decline considerably from 19.4% in FY10 to 12.3% in FY11E. However, it would improve gradually to 15.2% by FY13E. The drastic fall in the ratio was led by the company’s expansion plans (in detergent and fabric care space) for which it raised | 228 crore in FY11 via QIP, thereby increasing the net worth. However, going ahead, incremental earnings from the expansion (detergents, aerosols and JFSL) would improve the returns to 15.2% by FY13E. Exhibit 22: RoNW (%) from FY07-13E

17.615.3

16.5

19.4

12.313.8

15.2

0

5

10

15

20

25

2007 2008 2009 2010 2011E 2012E 2013E

Led by increase in NW by Rs.228 from QIP & decline in PAT by ~20bps

With the growth in sales from the anticipated acquisition & expansion; ratios would improve


Higher raw material costs and advertisement expenses would continue to keep margins under pressure.



Valuation At the CMP of | 276, the stock is trading at 25.1x its FY11E EPS of | 11 and 21x its FY12E EPS of | 13. With the company’s expansion into detergents, fabric wash, aerosols and outdoor repellent products, we have valued the stock at 22x its FY12E EPS, arriving at a fair value of | 292. Also, on comparison of JLL’s stock price with that of the FMCG Index, JLL is trading at 21.4x its FY12E EPS while the FMCG index is trading at 27x its one year forward earnings (estimated). With JLL being a relatively smaller player and in its nascent stage, we believe the discount of ~20% to the index is justified. We are initiating the coverage on the stock with an ADD rating. Exhibit 23: P/E band

0

75

150

225

300

375

450M

ar-0

8

Jun-

08

Sep-

08

Dec-

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-09

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-10

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10

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-11

Jun-

11

Sep-

11

Dec-

11

Share Price

20x

15x

10x

5x

25x


Exhibit 24: Comparative performance of JLL’s P/E with that of BSE FMCG Index

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Mar

-08

May

-08

Jul-0

8

Sep-

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Nov

-08

Jan-

09

Mar

-09

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-09

Jul-0

9

Sep-

09

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-09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov

-10

Jyothy PE(X) FMCG P/E(X)


Historically, JLL’s stock has been trading in the range of 10-20x

its one year forward earnings. Led by the expansion plans and the

higher earnings, the stock commanded a higher P/E in H1FY11.



DCF Valuation Using the DCF methodology, we have arrived at a fair value per share of | 292.8 based on WACC of 11.4% and terminal growth rate of 4%. Hence, we are initiating coverage on the stock with an ADD rating. Exhibit 25: WACC Calculation Beta 0.5

Risk free rate 8.0%

Market Return 15.1%

Risk Premium 7.1%

Required rate of return (Cost of Equity) 11.4%

Cost of Debt 11.0%

After Tax cost of Debt 8.6%

WACC 11.4% Source: Company, ICICIdirect.com Research

Exhibit 26: Sensitivity to WACC and terminal growth

10.4% 10.9% 11.4% 11.9% 12.4%3.0% 311 289 269 251 2363.5% 327 302 280 261 2444.0% 345 317 293 272 2534.5% 366 335 307 284 2645.0% 392 355 324 298 275

WACC %

Term

inal

Gr

owth

Rat

e %


DCF Assumptions

DCF Assumptions (FY11E-FY20E)

Rs crore FY11E FY12E FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E

EBITDA 106.4 130.6 158.4 188.2 222.1 261.0 302.7 349.7 402.1 458.4 Depreciation 12.2 13.7 16.2 24.3 28.7 33.7 39.1 45.1 51.9 59.1 Tax 25.1 28.7 34.9 36.1 42.6 50.0 58.0 67.0 77.1 87.8 Capital Expenditure 10.0 70.0 67.9 21.9 25.8 29.5 29.3 33.8 32.4 37.0 Change in Working Capital 42.4 (35.9) 79.3 17.9 28.4 32.6 35.0 39.4 44.0 47.2 Free Cash Flow 28.8 67.9 (23.6) 112.4 125.3 148.9 180.4 209.5 248.6 286.4

DCF Valuation Rs crorePV of firm 2,244.4 AssumptionsLess: Current Debt 10.4 WACC 11.4%Total present value of the Equity 2,234.0 Revenue CAGR over FY11E - FY20E 17.0%Cash Per Share 15.6 Terminal Growth 4.0%Number of Equity Shares outstanding (Cr) 8.1 DCF - Target price (Rs) 292.7


700045

700045



Tables and ratios

Exhibit 27: Profit and loss account (| Crore) (| Crore) FY09* FY10 FY11E FY12E FY13ENet Sales 363.5 598.1 719.9 870.1 1,029.2 Growth (%) NA NA 20.4 20.9 18.3 Other Incomes 7.6 17.8 21.0 18.8 20.5 Total Revenue 371.1 615.9 740.9 888.8 1,049.7 Raw Material Expenses 196.0 322.5 390.3 469.6 547.8 Marketing Expenses 25.1 48.5 68.3 78.3 92.6 Employee Expenses 47.5 75.4 90.6 109.6 129.7 Power & Fuel 10.4 16.0 20.5 26.1 32.4 Administrative Expenses 17.4 23.4 27.0 32.6 38.6

Excise 1.6 1.8 2.2 2.6 3.1 Royalty - - 0.1 1.0 1.9

(Increase)/Decrease in inventory 2.7 (5.3) (7.2) (7.8) (10.3)

Other Operating Expenses 10.1 18.0 14.4 19.6 25.7 Miscellaneous Expenses 3.9 6.1 7.2 7.8 9.3 Total Operating Expenditure 314.7 506.3 613.5 739.4 870.7 Gross Profit 147.0 241.5 294.6 354.8 423.2 EBITDA 48.8 91.8 106.4 130.6 158.4 Growth (%) NA NA 15.9 22.8 21.3 EBITDA Margin (%) 13.4 15.3 14.8 15.0 15.4 Interest 0.7 1.7 1.1 0.8 0.6 Depreciation 7.5 11.4 12.2 13.7 16.2 Less: Exceptional Items - - - - - Total Tax 10.8 21.5 25.1 28.7 34.9 PAT before MI 37.4 75.0 88.9 106.2 127.3 Minority Interest (1.0) (0.3) - - - PAT after MI 36.4 74.7 88.9 106.2 127.3 Growth (%) NA NA 19.0 19.4 19.9 PAT Margin (%) 10.0 12.5 12.4 12.2 12.4 EPS 5.3 10.4 11.0 13.2 15.8 Growth (%) NA NA 6.3 19.4 19.9

Source: Company, ICICIdirect.com Research *2009 figures pertain to 9 months figures from June, 2008 to March, 2009.



Exhibit 28: Balance sheet (| Crore) (Year-end March) FY09* FY10 FY11E FY12E FY13EEquity Capital 7.3 7.3 8.1 8.1 8.1

Reserve and Surplus 339.6 381.0 713.8 763.4 828.5 Total Shareholders funds 346.9 388.3 721.9 771.5 836.6

Long term Debt - 12.9 10.3 7.7 5.1

Short Term Debt 0.5 0.2 0.2 0.2 0.2 Deferred Tax Liability 10.5 13.3 15.8 18.4 21.0 Minority Interest 0.3 0.5 0.5 0.5 0.5 Sources of Funds 358.1 415.1 748.6 798.2 863.3 Total Gross Block 236.0 277.2 287.2 357.2 417.2 Less Accumulated Depreciation on Ta 48.8 63.5 74.1 86.2 100.7 Net Block 187.2 213.7 213.1 271.0 316.5 Capital Work in Progress in Tangible A 11.0 11.0 11.0 11.0 11.0 Total Fixed Assets 198.2 224.7 224.1 282.0 327.5 Net Intangible Assets 8.9 14.1 12.4 10.8 17.1 Other Investments 0.2 0.0 228.0 228.0 128.0 Liquid Investments 0.0 - 60.0 90.0 135.0 Goodwill on Consolidation 1.0 1.5 1.7 2.1 2.4 Inventory 47.0 73.0 105.6 89.7 153.5 Debtors 42.9 70.7 61.8 95.6 92.2 Loans and Advances 21.8 34.0 39.9 45.3 57.9 Other Current Assets 0.3 1.1 0.3 1.6 0.5 Cash 105.3 120.8 125.9 124.8 113.6 Total Current Assets 217.3 299.7 333.4 357.0 417.6 Creditors 42.2 78.6 69.6 107.9 103.0 Provisions 25.3 46.2 41.3 63.7 61.0 Misc. Exp. Not written off 0.1 - (0.0) (0.1) (0.1) Total Current Liabilities 67.6 124.8 110.9 171.4 163.9 Net Current Assets 149.7 174.9 222.5 185.6 253.7

Misc. Exp. Not written off 0.1 - (0.0) (0.1) (0.1) Application of Funds 358.1 415.2 748.8 798.5 863.6

*2009 figures pertain to 9 months figures from June, 2008 to March,2009 Source: Company, ICICIdirect.com Research



Exhibit 29: Cash flow statement (Year-end March) FY09* FY10 FY11E FY12E FY13E

PAT 38.4 75.3 88.9 106.2 127.3

Depreciation 7.5 11.4 12.2 13.7 16.2

Inventory 0.8 (26.0) (32.5) 15.9 (63.8)

Debtors (17.5) (27.8) 9.0 (33.8) 3.4

Loans and Advances (2.9) (12.2) (5.9) (5.4) (12.6)

Other Current Assets (0.1) (0.8) 0.9 (1.4) 1.2

Creditors 5.4 36.4 (9.0) 38.3 (4.8)

Provisions 3.2 20.8 (4.8) 22.4 (2.7)

Net cash flow from operating activities 34.8 77.1 58.7 155.8 64.2

Miscellaneous Expenses not written off - 0.1 0.0 0.1 0.0

Other Investments (0.2) 0.2 (228.0) - 100.0

Liquid Investments (0.0) 0.0 (60.0) (30.0) (45.0)

Goodwill on Consolidation - (0.5) (0.2) (0.4) (0.3)

(Purchase)/Sale of Fixed Assets (10.3) (43.1) (10.0) (70.0) (67.9)

Deferred Tax Liability 2.2 2.8 2.5 2.6 2.6

Minority Interest 0.3 0.2 - - -

Net Cash flow from Investing Activities (8.1) (40.2) (295.7) (97.7) (10.6)

Equity Capital - - 0.8 - -

Long term Debt - 12.9 (2.6) (2.6) (2.6)

Short Term Debt - (0.3) - - -

Total Outflow on account of dividend (17.0) (33.8) (37.7) (56.6) (62.3)

Securities Premium Account - - 281.6 - -

Net Cash flow from Financing Activities (17.0) (21.3) 242.1 (59.2) (64.9)

Net Cash flow 9.7 15.5 5.1 (1.1) (11.2)

Cash and Cash Equivalent at the beginning 95.6 105.3 120.8 125.9 124.8

Cash 105.3 120.8 125.9 124.8 113.6

Source: Company, ICICIdirect.com Research *2009 figures pertain to 9 months figures from June, 2008 to March,2009



Exhibit 30: Ratios % to sales FY08 FY09* FY10 FY11E FY12E FY13E

Raw Material Cost 49.8 53.9 53.9 54.2 54.0 53.2

Staff Cost 13.4 13.1 12.6 12.6 12.6 12.6

Marketing Cost 10.2 6.9 8.1 9.5 9.0 9.0

Profitability Ratios (%) FY08 FY09* FY10 FY11E FY12E FY13E

EBITDA Margin 16.1 13.4 15.3 14.8 15.0 15.4

PAT Margin 13.1 10.6 12.6 12.4 12.2 12.4

Per Share Data FY08 FY09* FY10 FY11E FY12E FY13E

EV 2138.4 2128.7 2125.8 2058.1 2026.6 1990.2

Book Value 44.9 47.8 53.5 89.5 95.7 103.7

Cash 13.2 14.5 16.6 15.6 15.5 14.1

EPS 6.9 5.3 10.4 11.0 13.2 15.8

Cash EPS 8.0 6.3 11.9 12.5 14.9 17.8

DPS 2.0 2.0 4.0 4.0 6.0 6.6

Return Ratios (%) FY08 FY09* FY10 FY11E FY12E FY13E

RoNW 15.3 11.1 19.4 12.3 13.8 15.2

RoCE 16.3 11.9 20.0 12.8 15.0 16.9

Financial Health Ratios FY08 FY09* FY10 FY11E FY12E FY13E

Operating Cash Flows (Rs. Cr.) 77.1 34.8 77.1 58.7 155.8 64.2

Interest Coverage (x) 77.4 58.2 47.3 83.3 138.5 254.9

Debt to EBITDA (x) 0.0 0.0 0.1 0.1 0.1 0.0

Dupont Analysis FY08 FY09* FY10 FY11E FY12E FY13E

PAT/PBT 74.9 79.6 78.0 78.0 78.8 78.5

PBT/PBIT 125.5 116.7 120.0 121.1 115.3 114.0

PBIT/Sales 14.0 11.4 13.4 13.1 13.4 13.8

Sales/Assets 113.5 101.5 144.1 96.1 109.0 119.2

Assets/Net worth 102.7 103.3 106.9 103.7 103.5 103.2

Working capital ratios FY08 FY09* FY10 FY11E FY12E FY13E

Woking cap. / sales 33.4 44.5 54.1 96.6 60.7 140.0

Creditors days 36.2 39.7 36.9 37.6 37.2 37.4

Debtors days 31.8 34.3 34.7 33.6 33.0 33.3

Inventory turnover days 42.9 47.6 36.6 45.3 41.0 43.1

Current ratio 3.2 3.2 2.4 3.0 2.1 2.5

Quick ratio 1.6 1.7 1.4 1.9 1.4 1.9

Cash to assets 0.5 0.5 0.4 0.4 0.3 0.3

Y-o-Y Growth(%) FY08 FY09* FY10 FY11E FY12E FY13E

Net Sales 4.5 -4.2 66.0 20.4 20.9 18.3

EBIDTA 12.7 -20.1 88.3 15.9 22.8 21.3

Net Profit 12.7 -20.1 88.3 15.9 22.8 21.3

EPS 12.7 -20.1 88.3 15.9 22.8 21.3

Valuation FY08 FY09* FY10 FY11E FY12E FY13E

PE 40.3 52.4 26.7 25.1 21.0 17.5

EV/EBITDA 35.1 43.7 23.2 19.4 15.5 12.6

EV/Sales 5.6 5.9 3.6 2.9 2.3 1.9

Div Yield(%) 0.7 0.7 1.4 1.4 2.2 2.4

Price/BV 6.2 5.8 5.2 3.1 2.9 2.7*2009 figures pertain to 9 months figures from June, 2008 to March,2009



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, Add, Reduce 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: 20% or more; Buy: Between 10% and 20%; Add: Up to 10%; Reduce: Up to -10% Sell: -10% or more;

Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 7th Floor, Akruti Centre Point, MIDC Main Road, Marol Naka, Andheri (East) Mumbai – 400 093

[email protected]

ANALYST CERTIFICATION We /I, Sanjay Manyal M.B.A.(FINANCE) Parineeta Poddar M.B.A.(FINANCE) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of 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. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.

Disclosures: ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. 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 ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities, its subsidiaries and associated companies, their directors and employees (“ICICI Securities and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may 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. ICICI Securities 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. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return of investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

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