4 October 2019

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Research Team (Gautam.Duggad@MotilalOswal.com)

Equities - India Close Chg .% CYTD.%

Sensex 38,107 -0.5 5.7 Nifty-50 11,314 -0.4 4.2 Nifty-M 100 15,715 -0.1 -12.1

Equities-Global Close Chg .% CYTD.% S&P 500 2,911 0.8 16.1 Nasdaq 7,872 1.1 18.6

FTSE 100 7,078 -0.6 5.2 DAX 11,925 0.0 12.9 Hang Seng 10,221 0.4 1.0

Nikkei 225 21,342 -2.0 6.6 Commodities Close Chg .% CYTD.% Brent (US$/Bbl) 58 -2.6 9.0

Gold ($/OZ) 1,505 1.8 17.4 Cu (US$/MT) 5,628 -0.5 -5.4 Almn (US$/MT) 1,704 -1.0 -8.5

Currency Close Chg .% CYTD.% USD/INR 70.9 -0.3 1.6 USD/EUR 1.1 0.3 -4.4

USD/JPY 106.9 -0.8 -2.5 YIELD (%) Close 1MChg CYTDchg 10 Yrs G-Sec 6.6 -0.05 -0.8

10 Yrs AAA Corp 7.8 -0.04 -0.7 Flows (USD b) 3-Oct MTD CYTD FIIs -0.11 -0.33 7.94

DIIs 0.12 0.45 6.88 Volumes (INRb) 3-Oct MTD* CYTD* Cash 372 432 364

F&O 27,920 23,233 12,253

Note: *Average

Today’s top research idea Market snapshot

Chart of the Day: Consumer (Amidst growth woes, weak earnings likely in 2QFY20)

Consumer: Amidst growth woes, weak earnings likely in 2QFY20 After 8Q of continued outperformance, rural growth slipped below urban for

several consumer staple companies in 2QFY20. The operating environment in 2QFY20 was perhaps the most somber since 1QFY18, which had witnessed massive down-stocking ahead of the GST implementation from Jul’17.

In such a weak demand environment, competitive intensity is increasing in the form of promotions and price-offs, which means that benefits of the low material costs will be nowhere as high as it would have been in a more favorable operating environment. Aggregate sales for 2QFY20 are likely to grow at 8.4% YoY while EBITDA/PAT to growth by 10.2%/7.4%.

We are not assuming any corporate tax reduction benefit in 2QFY20 as many companies would have paid advance tax. We continue to prefer HUVR as our large-cap pick. Post corporate tax cuts and consequent, we have elevated BRIT and CLGT to our list of preferred picks and continue to be positive on MRCO and UNSP.

Cos/Sector Key Highlights Consumer Amidst growth woes, weak earnings likely in 2QFY20 Technology Could BFSI wane seasonal strength? HDFC Stable performance; Loan assignment trend stable NTPC Khargone unit-1 set to commercialize Coal India Disruption at Dipka mine due to flooding Expert Speak CONCOR’s divestment process likely to face various challenges

Research covered

Expect subdued 2QFY20 volume growth Quarter Ending 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20E Asian Paints (Dom Deco) 12.0 2.0 10.0 4.0 9.0 6.0 10.0 10.0 11.0 21.0 10.0 16.0 9.0 Britannia (Biscuits) 10.0 2.0 2.0 2.0 5.0 11.0 11.0 11.0 11.0 7.0 7.0 3.0 4.0 Colgate (Toothpaste) 4.0 (12.0) (3.0) (5.0) (0.9) 12.0 4.0 4.0 7.0 7.0 5.0 4.0 6.0 Dabur 4.5 (5.0) 2.4 (4.4) 7.2 13.0 7.7 21.0 8.1 12.4 4.3 9.6 4.0 Emami 11.0 0.2 (1.5) (18.0) 10.0 6.0 8.0 18.0 (4.0) 3.5 0.0 0.0 8.0 GSK Consumer (3.0) (17.0) (1.0) 0.0 2.5 15.0 8.0 12.0 10.0 8.0 6.5 4.0 6.0 Hindustan Unilever (1.0) (4.0) 4.0 0.0 4.0 11.0 11.0 12.0 10.0 10.0 7.0 5.0 6.0 ITC (cigarette) 4.0 (1.0) 0.0 1.0 (6.0) (3.0) (2.0) 1.0 6.0 7.0 8.0 3.0 2.0 Marico Domestic 3.0 (4.0) 10.0 (9.0) 8.0 9.4 1.0 12.4 6.0 5.0 8.0 6.0 7.8 Pidilite 7.8 (1.5) 7.0 0.0 15.0 23.0 13.0 20.2 11.0 13.0 4.0 6.0 8.0

Source: Company, MOFSL

Piping hot news

Apollo Global to invest up to $150 million in Altico Private equity (PE) firm Apollo Global Management has offered to invest up to $150 million in troubled real estate lender Altico Capital India Ltd, said two people aware of the development, requesting anonymity.

4 October 2019 2

2 HDIL directors arrested in PMC Bank scam case Mumbai police on Thursday arrested two directors of the Housing Development Infrastructure Limited (HDIL) in the Punjab and Maharashtra Cooperative (PMC) Bank scam and also seized ₹3,500 crore property of the company, a senior official said…

RBI relaxes ban for those looking to buy stake of foreign firms in India The Reserve Bank of India (RBI) has clarified that there would be no “blanket ban” on Indian companies wanting to buy stakes in overseas firms, which already have investments in India under the automatic route. An approval from the apex bank would be required, though…

No major hurdle to trade deal: India, US India and the US on Thursday said there was no structural reason or major issue holding back a bilateral trade deal, even as the two sides differed on New Delhi's ecommerce policy…

PMC Bank withdrawal limit raised to ₹25,000 from ₹10,000: RBI In a further relief to Punaj and Maharashtra bank customers, Reserve Bank of India (RBI) on Thursday increased the withdrawal limit to ₹25,000 from ₹10,000…

IRDAI working group to revisit title insurance structure The Insurance Regulatory and Development Authority of India has constituted a working group that will revisit the product structure of title insurance, develop a standard product and recommend measures to spur demand for the product…

Japanese retailer Uniqlo pads up for India play Japanese fashion retail giant Uniqlo, which made its formal India debut on Thursday, is betting big on the country and feels that the ongoing economic slowdown is cyclical…

Odisha to auction 20 iron ore, manganese mines starting Friday Odisha is inviting bids for 20 iron ore and manganese mines in the state starting Friday, marking an important transition for the sector since the Narendra Modi government amended mining laws in 2015 to introduce the auction system to allocate mining licences…

Kindly click on textbox for the detailed news link

In the news today

2

5

6 7

4

1

3

4 October 2019 3

Amidst growth woes, weak earnings likely in 2QFY20 Rural growth slips below urban after earlier sustained outperformance

Bleakest operating outlook since the quarter before GST implementation After eight quarters of continued outperformance, rural growth slipped below urban growth for several consumer staple companies in 2QFY20. Additionally, the on-going liquidity concerns, succession of drought and floods during the monsoon season in large parts of the country, and muted initial response to the festive season added to the woes. The operating environment in 2QFY20 was perhaps the most somber since the Jun’17 quarter (1QFY18), which had witnessed massive down-stocking ahead of the GST implementation from Jul’17. In such a weak demand environment, competitive intensity is increasing in the form of promotions and price-offs, which means that benefits of the low material costs will be nowhere as high as it would have been in a more favorable operating environment. On the other hand, adspends and new launches will continue to be lower than usual as companies await signs of revival.

Aggregate sales for 2QFY20 are likely to grow at 8.4% YoY while EBITDA/PAT growth is likely to come in at 10.2%/7.4%. We are not assuming any benefits of the corporate tax reduction in 2QFY20 as many companies would have paid advance tax. HUVR’s sales growth for 2QFY20 is expected at ~7.0% YoY (with 6% volume growth). While EBITDA growth is likely to be 14.4% YoY, very high other income in base quarter would result in Adj. PAT growth of 6.6% YoY. We expect ITC to report 2% cigarette volume growth, driving sales growth of 6.7% YoY and PAT growth of 7.9% YoY. Tepid operating performance for the quarter is expected from Britannia Colgate, Dabur, Emami, GSK Consumer, Nestle, PGHH and Page. We expect UBBL and UNSP to likely see a sharp YoY decline in EBITDA and PAT, mainly due to very high base of margins in 2QFY19. Marico is expected to report 9% sales growth and EBITDA/PAT growth between 15-20%. APNT and PIDI are likely to report sales growth between 13-15% and EBITDA growth above 20%, due to better-than-peer volume growth and soft commodity cost environment.

Commodity costs are largely benign, agri inflation increasing moderately For 2QFY20, PFAD prices declined 16.4% YoY, while Mentha prices were down 20.5% YoY. Moderate YoY inflation is being witnessed for Wheat/Sugar at 5.3%/1.9%. Barley costs were up 14.8% YoY for the quarter. On the other hand, Palm Oil costs were down 7.8% YoY. Tio2 costs were marginally up 0.6% YoY but were down sequentially. VAM costs YTD declined sharply, both YoY/sequentially at 25%/5%. Copra costs declined 12.7% YoY YTD while HDPE costs declined over 28% YoY YTD till August; Safflower was up 3.8% YoY and LLP costs were down 8.9% YoY.

Preference for quality and longevity of growth Our framework for earnings visibility, longevity of growth and quality management drives our choices in the consumer universe. We continue to prefer HUVR as our large-cap pick. Post corporate tax cuts and consequent likely passing on of benefits, we have elevated BRIT and CLGT to our list of preferred picks. We continue to be positive on the prospects for MRCO and UNSP.

Asian Paints

Britannia Industries

Colgate

Dabur

Emami

Godrej Consumer

GSK Consumer

Hindustan Unilever

ITC

Jyothy Labs

Marico

Nestle India

Page Industries

Parag Milk Foods

Pidilite Industries

P&GHH

United Breweries

United Spirits

Consumer

September 2019 Results Preview | October 2019

4 October 2019 4

Exhibit 1: Muted overall performance likely in 2QFY20 Sector Sales (INR M) EBITDA (INR M) Net Profit (INR M)

Consumer CMP (INR) RECO Sep-19 Var % YoY

Var % QoQ Sep-19 Var %

YoY Var % QoQ Sep-19 Var %

YoY Var % QoQ

Asian Paints 1,765 Sell 52,421 13.0 2.2 9,804 25.0 -15.2 5,608 10.8 -16.6 Britannia 2,919 Buy 30,992 8.0 14.8 4,844 6.6 22.7 3,176 4.8 20.2 Colgate 1,497 Buy 12,616 8.0 16.3 3,183 -3.4 6.2 1,897 -3.4 12.2 Dabur 440 Neutral 22,392 5.4 -1.5 4,751 5.4 3.8 3,926 4.2 4.4 Emami 316 Buy 6,996 11.4 7.9 1,972 4.1 47.0 1,473 2.3 41.8 Godrej Consumer 680 Neutral 28,453 7.0 21.1 6,186 14.9 34.8 4,125 14.8 39.2 GSK Consumer 8,547 Neutral 13,737 8.0 15.0 3,682 4.1 31.3 3,019 13.6 27.7 Hind. Unilever 1,989 Buy 98,785 7.0 -2.3 23,107 14.4 -12.7 16,142 6.1 -7.8 ITC 256 Neutral 118,120 6.7 2.7 45,914 9.2 0.6 31,894 7.9 0.5 Jyothy Labs 168 Neutral 4,619 8.0 12.2 836 14.3 27.6 518 14.3 44.3 Marico 388 Buy 19,998 8.9 -7.7 3,541 20.4 -23.2 2,509 17.1 -23.3 Nestle 13,678 Neutral 31,892 8.5 6.3 8,051 8.5 13.8 5,088 9.9 13.6 P&G Hygiene 11,973 Neutral 9,185 16.0 44.1 2,137 2.0 229.8 1,382 2.4 127.3 Page Industries 22,011 Neutral 7,426 7.5 -11.1 1,559 9.2 -16.4 941 1.6 -15.0 Parag Milk Foods 156 Buy 6,618 15.4 5.1 650 11.9 14.4 338 11.2 23.0 Pidilite Inds. 1,439 Neutral 20,211 15.0 0.2 4,600 26.1 3.7 3,050 31.5 3.7 United Breweries 1,324 Neutral 17,182 12.6 -16.1 2,921 -8.2 -11.2 1,393 -15.0 -15.4 United Spirits 644 Buy 23,713 6.6 6.9 3,773 -14.8 -5.0 2,043 -21.1 2.8 Sector Aggregate

525,355 8.5 3.1 131,512 9.9 0.3 88,519 7.1 1.6

Source: MOFSL

Exhibit 2: Expect subdued 2QFY20 volume growth Quarter Ending 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20E Asian Paints (Dom Deco) 12.0 2.0 10.0 4.0 9.0 6.0 10.0 10.0 11.0 21.0 10.0 16.0 9.0 Britannia (Biscuits) 10.0 2.0 2.0 2.0 5.0 11.0 11.0 11.0 11.0 7.0 7.0 3.0 4.0 Colgate (Toothpaste) 4.0 (12.0) (3.0) (5.0) (0.9) 12.0 4.0 4.0 7.0 7.0 5.0 4.0 6.0 Dabur 4.5 (5.0) 2.4 (4.4) 7.2 13.0 7.7 21.0 8.1 12.4 4.3 9.6 4.0 Emami 11.0 0.2 (1.5) (18.0) 10.0 6.0 8.0 18.0 (4.0) 3.5 0.0 0.0 8.0 GSK Consumer (3.0) (17.0) (1.0) 0.0 2.5 15.0 8.0 12.0 10.0 8.0 6.5 4.0 6.0 Hindustan Unilever (1.0) (4.0) 4.0 0.0 4.0 11.0 11.0 12.0 10.0 10.0 7.0 5.0 6.0 ITC (cigarette) 4.0 (1.0) 0.0 1.0 (6.0) (3.0) (2.0) 1.0 6.0 7.0 8.0 3.0 2.0 Marico Domestic 3.0 (4.0) 10.0 (9.0) 8.0 9.4 1.0 12.4 6.0 5.0 8.0 6.0 7.8 Pidilite 7.8 (1.5) 7.0 0.0 15.0 23.0 13.0 20.2 11.0 13.0 4.0 6.0 8.0

Source: Company, MOFSL

Exhibit 3: Material change in EPS forecasts following corporate tax cut EPS (INR) Old New Change (%) (INR) FY20E FY21E FY20E FY21E FY20E FY21E Asian Paints 25.3 29.9 27.6 33.0 9.1 10.4 Britannia* 51.9 61.3 57.9 67.5 11.6 10.1 Colgate* 29.6 34.1 29.7 36.8 0.3 7.9 GSK Consumer 250.0 275.2 281.0 313.2 12.4 13.8 Hind. Unilever* 33.1 39.1 33.7 40.8 1.8 4.3 ITC 10.7 11.9 12.1 13.1 13.1 10.1 Nestle* 195.4 223.2 212.4 244.7 8.7 9.6 P&G Hygiene 155.7 197.6 176.6 224.0 13.4 13.4 Page Industries* 373.2 449.0 401.4 480.4 7.6 7.0 Pidilite Inds.* 22.6 25.7 24.8 27.9 9.7 8.6 United Breweries* 19.0 25.6 21.7 27.3 14.2 6.6 United Spirits* 12.3 16.6 13.8 18.0 12.2 8.4

*Gains are assumed lower than corporate tax cut impact due to passing on of benefits and/or moderation in EPS due to weak environment Source: Company, MOFSL

September 2019 Results Preview | Consumer

4 October 2019 5

Could BFSI wane seasonal strength? Back-ended growth expectations for FY20

Aggregate performance We expect our coverage universe to deliver sales/EBIT/PAT growth of

8.7%/2.5%/-1.8% YoY in 2QFY20. Although July-September is the strongest quarter for the industry, softening BFS

momentum (owing to macro concerns in Europe and weak spending by capital market clients across geographies) is a cause for concern.

Sequential organic constant currency (CC) growth across our tier-I universe is estimated at 0-2.5%, with TCS, and INFO likely to grow at the higher end of the range. Overall CC growth at INFO and HCLT will better that range, led by inorganic contribution.

TCS and INFO are likely to deliver sequential margin expansion off a low base, while HCLT is likely to benefit from the integration of the high-margin IP business. WPRO’s margin performance is expected to be the softest across tier-I with an impact from two months of wage hikes.

However, we note that increasing supply crunch, higher visa/sub-contracting expense and elevated investments in digital have been driving a structural contraction in margins. EBIT margin for Tier 1 companies is estimated to shrink 120bp YoY but expand 80bp QoQ due to a low base (impacted by seasonal expenses).

Expect continued polarization of mid-cap performance While growth across midcaps is expected to be relatively good compared to tier-

1 (aggregate 8.2% YoY in USD terms for tier1 v/s 10% for tier 2), LTI’s performance (1% QoQ CC) might lag given some client-specific challenges. Particularly, the revenue performance at MPHL, MTCL, NITEC and HEXW is likely to be strong, with the latter two getting a boost from the integration of inorganic transactions in the quarter.

In terms of margins, wage hikes at LTI, PSYS and ZENT are likely to drag the performance. While a sharp recovery on the low 1Q base is crucial for MTCL and CYL, we do not see that happening due to limited levers for the former and revenue pressures for the latter. Overall, as cited in the past, the supply situation will hurt tier-II more than tier-I, and we expect a continuum of this trend.

Aggregate EBIT margin for 2QFY20 is estimated at 21% for tier 1 and 13.5% for tier II. On a YoY basis, the differential between the margins of tier I and tier II is estimated to have increased by 70bp, indicating cost pressure on tier II companies amid supply crunch and digital investments.

Watch out for commentary on BFS, margins Slight deceleration that we expect in FY20 CC organic revenue growth can

mainly be attributed to the softer BFS. This is manifesting more prominently at TCS and WPRO, while the inorganic Stater NV deal is driving BFS for INFO.

Company Name Cyient

HCL Tech

Hexaware

Infosys

L&T Infotech

Mindtree

Mphasis

NIIT Tech

Persistent

TCS

Tech Mahindra

Wipro

Zensar

Technology

September 2019 Results Preview | October 2019

4 October 2019 6

Margins are yet to benefit meaningfully from currency, as the slight depreciation of the INR v/s the USD is largely offset by cross-currency movements of USD-GBP and USD-EUR. This means that the high attrition rates, H-1B rejections and supply crunch may continue weighing on profits.

Maintaining our bottom-up approach at current valuations; Prefer INFO Barring pockets of weakness, the overall environment remains stable. Earnings

estimates, however, have somewhat moderated across the board due to the ongoing pressure on profitability. With valuation multiples already running high (at the upper half of historical band if not at the higher end), upsides in such an environment will likely be capped over the near term.

We maintain our bottom-up stance – INFO is our top pick in tier-I, and MPHL and ZENT in tier-II.

Expected quarterly performance summary Sector CMP Sales (INR M) EBDITA (INR M) Net Profit (INR M) Technology (INR) RECO Sep-19 Var % YoY Var % QoQ Sep-19 Var % YoY Var % QoQ Sep-19 Var % YoY Var % QoQ Cyient 464 Buy 11,226 -5.4 3.1 1,672 2.8 15.7 1,266 -0.5 40.0 HCL Technologies 1,060 Neutral 176,686 18.9 7.6 41,281 18.0 21.4 25,208 -0.8 13.6 Hexaware Tech. 376 Neutral 14,843 22.7 13.5 2,412 19.2 23.9 1,746 1.4 15.5 Infosys 794 Buy 225,688 9.5 3.5 55,037 2.7 6.8 39,670 -3.5 4.4 L&T Infotech 1,505 Neutral 25,290 8.5 1.8 4,620 -3.6 0.9 3,563 -11.0 0.2 Mindtree 721 Neutral 19,073 8.7 4.0 2,592 -3.9 11.8 1,790 -13.2 40.1 MphasiS 936 Buy 21,586 12.7 4.7 4,033 21.1 7.7 2,853 5.3 7.8 NIIT Tech. 1,348 Neutral 10,506 15.8 9.5 1,845 12.9 12.4 1,201 7.4 17.5 Persistent Systems 560 Buy 8,656 3.6 4.0 1,148 -20.1 -4.5 764 -13.4 -7.4 TCS 2,060 Neutral 392,067 6.4 2.7 105,855 3.0 5.5 80,759 0.5 -0.7 Tech Mahindra 705 Buy 88,718 2.8 2.5 13,746 -15.1 4.6 9,488 -10.8 -1.1 Wipro 234 Neutral 150,256 3.3 2.1 30,110 5.1 4.7 22,388 -2.1 -4.0 Zensar Tech 215 Buy 10,841 14.5 1.7 1,386 8.7 -8.5 843 -11.4 7.2 Sector Aggregate 1,155,436 8.4 3.7 265,736 4.2 7.9 191,539 -1.8 2.5

Revenue prospects intact, but YoY margin headwinds persist Revenue (USD m) Revenue (INR b) Company 2QFY20E 2QFY19 YoY (%) 1QFY20 QoQ (%) 2QFY20E 2QFY19 YoY (%) 1QFY20 QoQ (%) TCS 5,553 5,215 6.5 5,485 1.2 392 369 6.4 382 2.7 Infosys 3,197 2,921 9.4 3,131 2.1 226 206 9.5 218 3.5 Wipro 2,052 2,010 2.1 2,039 0.6 150 145 3.3 147 2.1 HCLT 2,503 2,099 19.3 2,364 5.9 177 149 18.9 164 7.6 TECHM 1,257 1,218 3.2 1,247 0.8 89 86 2.8 87 2.5 Aggregate 14,561 13,462 8.2 14,266 2.1 1,033 955 8.2 998 3.6 EBITDA Margin (%) PAT (INR b) Company 2QFY20E 2QFY19 YoY (%) 1QFY20 QoQ (%) 2QFY20E 2QFY19 YoY (%) 1QFY20 QoQ (%) TCS 27.0 27.9 (160) 26.3 70 81 80 0.5 81 (0.7) Infosys 24.4 26.0 (240) 23.6 80 40 41 (3.4) 38 4.4 Wipro 18.7 15.0 340 18.4 30 22 23 (2.1) 23 (4.0) HCLT 23.4 23.5 (280) 20.7 270 25 25 (0.8) 22 13.6 TECHM 15.5 18.8 (360) 15.2 30 9 11 (10.8) 10 (1.1) Aggregate 23.6 24.0 (40) 22.7 100 178 180 (1.6) 174 1.8

Source: Company, MOFSL

4 October 2019 7

BSE SENSEX S&P CNX CMP: INR1,975 TP: INR2,600 (+32%) Buy 33,107 11,314

Stock Info Bloomberg HDFC IN Equity Shares (m) 1,721 M.Cap.(INRb)/(USDb) 3409.4 / 48.1 52-Week Range (INR) 2357 / 1646 1, 6, 12 Rel. Per (%) -10/-2/4 12M Avg Val (INR M) 6881 Free float (%) 100.0

Financials Snapshot (INR b) Y/E March 2019 2020E 2021E Core PPoP 126.5 143.7 161.8 Adj. PAT 75.5 84.8 96.3 Adj. EPS (INR) 41.9 47.0 53.4 EPS Gr. (%) 38.7 12.2 13.5 BV/Sh. (INR) 448.2 497.3 564.8 ABV/Sh. (INR) 324.9 374.0 421.7 RoAA (%) 1.8 1.7 1.8 Core RoE (%) 14.0 13.5 13.4 Payout (%) 52.2 51.9 47.6 Valuation

AP/E (x) 25.9 20.4 14.8 P/BV (x) 4.4 4.0 3.5 AP/ABV (x) 3.3 2.6 1.9 Div. Yield (%) 1.1 1.1 1.2

Shareholding pattern (%) As On Jun-19 Mar-19 Jun-18 Promoter 0.0 0.0 0.0 DII 14.8 16.7 16.2 FII 74.7 72.4 72.9 Others 10.6 10.9 10.9

FII Includes depository receipts

Stock Performance (1-year)

Stable performance Loan assignment trend stable; INR11b dividend received

In line with trend, HDFC disclosed key price-sensitive information regarding

the quarterly numbers.

Profit on sale of investments nearly doubled YoY to INR16.32b, largely due to

stake sale in GRHF (shareholding now stands at 38.2%). We expect HDFC to

use 30% of the one-off profits to make provisions against NPLs.

Dividend received amounted to INR10.74b compared to INR60m YoY due to

the timing issue (dividends from HDFCB and GRHF were received in 1Q last

year compared to 2Q this fiscal).

HDFC assigned loans worth INR71.6b to HDFCB during the quarter (+18%

YoY). The company had earned an upfront income of INR4b from the loan

assignments in 2QFY19.

1,500

1,750

2,000

2,250

2,500

Oct

-18

Jan-

19

Apr-

19

Jul-1

9

Oct

-19

H D F CSensex - Rebased

3 October 2019

Update | Sector: Financials - NBFC

HDFC

4 October 2019 8

BSE SENSEX S&P CNX CMP: INR117 TP: INR167 (+43%) Buy 38,305 11,360

Stock Info Bloomberg NTPC IN Equity Shares (m) 9,895 M.Cap.(INRb)/(USDb) 1157.7 / 16.3 52-Week Range (INR) 146 / 107 1, 6, 12 Rel. Per (%) -6/-13/-22 12M Avg Val (INR M) 1741 Free float (%) 43.6 Financials Snapshot (INR b) Y/E Mar 2019 2020E 2021E Net Sales 906.4 995.7 1,096.0 EBITDA 199.1 306.2 359.5 PAT 114.6 134.7 154.4 EPS (INR) 11.6 13.6 15.6 Gr. (%) 30.3 17.5 14.6 BV/Sh (INR) 111.2 119.1 128.4 RoE (%) 10.7 11.8 12.6 RoCE (%) 6.7 6.9 7.7 P/E (x) 10.1 8.6 7.5 P/BV (x) 1.1 1.0 0.9 Shareholding pattern (%)

As On Jun-19 Mar-19 Jun-18

Promoter 56.4 56.1 61.7

DII 28.5 29.1 23.6

FII 11.6 11.5 11.3

Others 3.5 3.4 3.4

FII Includes depository receipts Stock Performance (1-year)

Khargone unit-1 set to commercialize Capitalization picking up; Maintain Buy

NTPC has recently commissioned the first unit (660MW) of its Khargone TPP (2x600MW). This plant is India’s first ultra-super-critical project with a station heat rate (SHR) of 2,070kcal/kWh. Notably, it is ~3% more efficient than the super critical ones given the higher steam parameters. Unit-1 is likely to commercialize soon, while unit-2 commissioning is scheduled for Jan’20. NTPC organized an analyst visit to this plant. Below are our key takeaways from it: Trial run for unit-1 completed, commercialization soon NTPC has completed trial-run operations at full load for unit-1 on 29th Sep’19 and will likely commercialize the unit this month. For unit-2, light up will likely be completed over the next one month with commissioning scheduled for Jan’20. Total project cost for the plant is ~INR110b (~INR83m/MW) –excluding FGD. FGD contract of INR5.2b has been awarded and likely to commission in Nov ’20. In terms of PPA, 50% of capacity is tied up with Madhya Pradesh, ~19% with Gujarat and ~10% with Chhattisgarh. Balance is with other states (Maharashtra, Goa) and UTs (Daman & Diu, Dadra & Nagar Haveli). Dependent on coal from Pakri Barwadih; fuel costs to be high Coal for the plant would be sourced from its own captive mine (Pakri Barwadih or – PB). The mine is located ~1,100km from the plant and significant investments (~INR15b) are made to ensure rail connectivity. This includes (a) ~INR9b on preparing a 37km railway corridor from the plant to Nimarkhedi station (nearest to the plant), (b) ~INR5b of deposit for BG conversion of line from Nimarkhedi to Khandwa station (42km) and (c) ~INR1b for carrying out electrification. Given the long distance between the mine and plant, freight cost is high (~INR2,200/t). Fuel costs are at ~ INR3-3.3/kWh for the plant. Initial tariffs would be >INR5/kWh.

Rake handling infra in place NTPC has two wagon tipplers in place at the site, with the third one set to commission by Nov’19. The plant is being supplied 2-3 rakes on a daily basis. At full operations (including Unit 2), the company will have to handle ~5 rakes/day. Given turnaround time of ~5 hours, each wagon tippler can handle ~4 rakes/day. Thus, rake handling infra appears to be in place.

Coal availability – a key monitorable We note that PB is a basket mine (FY19 production: 6.8mt) supplying to various plants of NTPC. Given annual coal requirement of ~6-6.5mt for Khargone, if PB does not ramp up, NTPC may be dependent on coal from WCL, SCCL – which are not nearby either, according to the company. Besides, NTPC may also look at diverting coal from some of its other plants. Coal availability will be a key factor to watch out upon commercialization.

100115130145160

Oct

-18

Jan-

19

Apr-

19

Jul-1

9

Oct

-19

NTPC Sensex - Rebased

3 October 2019

Update | Sector: Utilities

NTPC

4 October 2019 9

BSE SENSEX S&P CNX CMP: INR187 TP: INR251(+34%) Buy 38,107 11,314

Stock Info Bloomberg COAL IN Equity Shares (m) 6,207 M.Cap.(INRb)/(USDb) 1150.3 / 16.2 52-Week Range (INR) 288 / 178 1, 6, 12 Rel. Per (%) -1/-18/-38 12M Avg Val (INR M) 1912 Free float (%) 29.0 Shareholding pattern (%)

As On Jun-19 Mar-19 Jun-18

Promoter 54.5 54.5 54.5

DII 22.3 21.6 20.0

FII 8.7 8.9 10.9

Others 14.5 15.0 14.6

FII Includes depository receipts Stock Performance (1-year)

Disruption at Dipka mine due to flooding

FY20 production target appears stiff Production at Dipka mine halted due to heavy floods Coal India’s (COAL) Dipka mine (capacity: ~30mt) has stopped production since the past three days due to heavy flooding post the abrupt change in the course of Lilagar river amid heavy rains. Our interactions with COAL indicate that necessary pumps for de-logging have been sent to the site, but the exact timeline on the commencement of production there cannot be determined. Dipka was operating at ~20-25mtpa (3-4% of COAL’s FY19 production). As the same time, the company noted that its other mines within the Korba coalfields are operating. FY20 production target appears stiff Shutdown for one month would imply a loss of ~2mt for COAL. This – while small (<0.5% of FY20 target production) in overall terms – would further dent COAL's plan to ramp up overall production in 2H. In fact, heavy monsoon, intermittent plant shutdowns and trade union strikes have impacted COAL’s production in recent months. For 1HFY20, COAL’s production was down 6% YoY. Against this backdrop, the company’s FY20 target production of 660mt (9% YoY growth) now appears stiff and would require 20% YoY production growth in 2H. Coal availability could be impacted NTPC's Sipat (2,980MW) sources coal from the Dipka mine of the Korba coalfield. Coal stock at the plant was at near zero days at end-Sep’19. Non-availability of coal poses a risk of achieving normative PAF for the full year at Sipat, leading to under-recoveries for NTPC. Average PAF at Sipat for 5MFY20 was 82%. Our analysis suggest 1% lower than normative PAF would lead to ~INR225m of FC u/r from Sipat. COAL, however, highlighted that, given the shutdown at Dipka, it would look to divert coal from its other mines to these units. We believe that the extent of impact on coal availability on NTPC will depend on the timelines of shutdown. Given that it is a pit head plant, if restarted on time, availability can be scaled up for the remainder of the year.

150

200

250

300

350

Oct

-18

Jan-

19

Apr-

19

Jul-1

9

Oct

-19

Coal IndiaSensex - Rebased

3 October 2019

Update | Sector: Utilities

Coal India

4 October 2019 10

CONCOR’s divestment process likely to face various challenges …Land lease terms would need reworking

On 30th Sep’19, a group of secretaries cleared the government’s plan of a 30% strategic stake sale in Container Corporation of India (CONCOR). We hosted a conference call with Mr. Rakesh Mehrotra (former MD & CEO of CONCOR) to understand the implication of the government’s divestment plan in CONCOR. Key insights highlighted below:

Mr. Mehrotra believes that Indian Railways (IR) will need to rework the land lease terms in order to maintain a level playing field for other operators.

He expects the divestment process to face challenges with respect to labor union laws, security guidelines and various contractual relationships involved with joint ventures (JVs) and other subsidiaries.

He further opines that creation of monopoly and predatory pricing by a dominant player can disturb the competitive dynamics of the industry. According to Mehrotra, privatization of CONCOR will not necessarily add to its efficiencies as it is already one of the most efficient operators.

Land lease terms will require reassessment In FY19, 41.3% volumes handled by CONCOR were from land leased from Indian Railways. Land lease charges

paid by CONCOR amounted to INR1.8b (CONCOR paid at the rate of INR1,160/TEU); thus, handling volumes from leased terminals were 15,79,741TEUs (translates to 41.3% of total volumes handled in FY19).

Indian Railways will need to reassess the lease rent for the land leased to CONCOR as currently it charges on per TEU basis (applied on volumes handled), while private players are levied charges at a fixed rate of 7% of the land’s market value (irrespective of volumes handled).

If CONCOR transforms into a private player, in order to have a level playing field, its lease rates would have to get aligned with that of other private players, thereby increasing operating costs.

Issues related to security, labor, relationship with JVs/subsidiaries will need addressing Labor union issues could also be a stumbling block; employee benefits cannot be modified by a new private

owner without the consent of the labor union. Reportedly, the employees' union has already raised a dispute with the Regional Labor Commissioner under the Industrial Disputes Act to protect their jobs and employment benefits in the event of a change in ownership. This will have to be addressed; reconciliation will have to be achieved between the government and the union before the ownership can change hands.

Private ownership of CONCOR could also create problems in some of the various JVs operated by CONCOR, particularly if the new owner is a business rival of the JV partner. For instance, according to the JV agreement, the CEO of Gateway Terminals India Limited (GTIL) is always a CONCOR nominee.

Moreover, CONCOR moves some material for the government, which requires complete trust and secrecy, like currency notes, arms and ammunitions, nuclear fuel, etc. It might be tough to trust a private operator with these sensitive objects.

3 October 2019 Logistics

Expert Speak

Mr. Rakesh Mehrotra, Former MD & CEO of CONCOR

Mr. Mehrotra is the former MD & CEO of Container

Corporation of India – India’s largest multi-modal logistics company. He is the founding

member of Tantra Consultancy & Advisory Services, which

provides exhaustive consultancy & advisory

services in Logistics & Supply Chain Management.

4 October 2019 11

Private ownership can result in creation of monopoly If ownership moves to a dominant player like the Adani Group (media reports state their keenness), it would

result in creation of a monopoly in the logistics value chain as Adani already has a dominant presence in port operations, particularly in the East coast of India.

Private ownership of CONCOR could be harmful for the rail logistics sector in the long run as a dominant private owner could resort to predatory pricing in an attempt to eliminate competition, which the current management does not believe in.

Privatization to add limited value to an already efficient company With more than 75% market share, CONCOR already has the best infrastructure and technology available in the

market and a new private owner will not be able to add much value here. Also, change in ownership should have no impact on CONCOR's other contractual terms and agreements with

the Ministry of Railways as these have all been entered into on an arm's length basis and are reflective of market dynamics.

Valuation and view: CCRI is a direct play on the upcoming large rail infrastructure (DFCC) in the country. We expect CONCOR to witness EBITDA CAGR of 16% over FY19-21, led by volume growth, benefit of double-stacking and the recent price hikes. Our DCF methodology implies a fair value of INR710/share.

4 October 2019 12

1. INDUSIND BANK: WE HAVE SEEN SIGNIFICANT RECOVERIES IN STRESSED ACCOUNTS; Romesh Sobti, MD

When bank ended the last financial year, had said that credit costs would be range bound and that range was around 60 — give or take 10-12 basis points — and quarter one showed a trending — it was 14-15 basis points. Q2 also seems to be trending in same sort of way.

Would like to emphasize that nothing really has changed. In fact bank has had very significant recoveries in the so called stressed accounts.

Exposures in various sectors have remained constant. (In housing finance) Not seeing the stress which the market is assuming. In fact,

seeing very significant recoveries and so to that extent because of recoveries the corporate book will not show the sort of growth that bank normally shows and none of them is even a day overdue with bank.

Getting Rs 5,000-6,000 crores of retail deposits every quarter. So deposit growth will show same sort of trending as seen in past. The commercial vehicle portfolio continues to grow at over 20 percent.

2. SPICEJET : BOEING 737 MAX GROUNDING - AIRBUS

CONTINUES TO BE AN OPTION ON THE TABLE; Ajay Singh, Chairman

Sector is seeing an improvement. Have added 32 aircraft from Jet Airways' fleet. At airports like Mumbai, had only

30 flights. Company now has 81 flights. Have taken up as much space as company possibly could and continue to look at opportunities.

Boeing is working very hard on MAX and has indicated the aircraft will be back in the air by January 2020.

Keeping up yields will be a challenge in this environment. Company has always been in dialogue with Airbus. But cost of replacing aircraft

is not an easy process.

In conversation

4 October 2019 13

3. DLF: ON TRACK FOR SALES GUIDANCE GIVEN FOR THE YEAR; Ashok Tyagi, Whole time Director

Sales guidance for the current year is about Rs 2,700 crore. In Q1 company did about Rs 700 and in Q2 also should be hitting the same number. So appear to be on track for Rs 2,700 number that company had put.

About a third of the total sales for FY20 will come from super-luxury segment The total outstanding due from company to DLF Cyber City Developers Ltd

(DCCDL) was a remnant of the closure of transaction in December 2017 with GIC.

Had a total outstanding of Rs 8,700 crore. Therefore, have transferred entities which had five different assets of company’s which was either rent bearing like Mall of India at Noida and Saket Mall or which had shareholding in commercial land parcels at Gurugram, Chennai and about 50 percent holding in joint venture that company had with Hines.

Therefore, that coupled with a net cash settlement of about Rs 475 crore odd is the total quantum that is taken but now as of October 1st this complete receivable is squared off.

Total external debt plus DCCDL's debt as on January 1 was at Rs 17,000 crore, which today should be a number between Rs 3,500-4,000 crore.

4. MANAPPURAM FINANCE : TARGET 20% CAGR IN FY20 AIDED

BY STRONG GOLD LOAN BIZ; VP Nandakumar, MD ** Manappuram Home Finance, a wholly-owned subsidiary of Manappuram

Finance, has raised Rs 200 crore via non-convertible debentures (NCDs) and is targeting Rs 100 additional as Greenshoe option.

Cost of borrowing for home finance companies is still high because the asset size is only slightly above Rs 500 crore. The cost of borrowing for them is at 9.8 percent.

Net interest margin is expected to improve or remain at current levels due to product change.

Company is now focusing on small-ticket loans up to Rs 10 lakhs – these are self-constructed properties where independent houses are built, the focus is also on small-ticket LAP to SMEs. This can give an average yield of 15 percent, so NIMs are expected to improve to 5 percent from the current 4.7 percent.

On a path to achieving a CAGR of 20 percent for FY20. Around 60 percent is gold loan portfolio and 15 percent is microfinance and balance is distributed amongst vehicles, home finance and on-lending to other NBFCs etc.

Expect commercial vehicle loan book to growth 50-60 percent this year depending on seasonality. Currently, have crossed Rs 1300 crore in the portfolio.

4 October 2019 14

1. THE SLOWDOWN PUZZLE AND RBI’S MONETARY POLICY BIAS What should be the role of monetary policy in spurring growth when faced with

a slowdown of the type that India is witnessing? The Reserve Bank of India (RBI) seems to be following spiritual author Eckhart Tolle’s maxim: “Any action is better than no action, especially if you have been stuck in an unhappy situation for a long time". This is evident from the aggressive monetary easing that it has undertaken in 2019, bringing down the policy repo rate by 110 basis points to 5.4%. The use of such counter-cyclical monetary policy is crucially dependent on the diagnosis regarding the nature of the slowdown. Slowdowns may be transitory ‘soft patches’ which can be ignored, or caused by cyclical or structural factors. Cyclical downswings may warrant counter-cyclical monetary policies. However, where the slowdown is structural, deep-seated structural reforms would be the need of the hour. RBI, in its recently released Annual Report has concluded that “the recent deceleration could be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural slowdown". This would justify further monetary easing in 2019. The problem with such monetary easing is two-fold: One, how appropriate, in the first place, is monetary policy as a panacea to the slowdown, especially when it is cyclical? Two, how sure are we that the slowdown is cyclical and not structural?

2. THE DIGITAL WAY: GROWTH WITH WELFARE India has managed to leverage digital technology to usher in socio-economic

equity and growth in the last 10 years. Digital technologies are key to Prime Minister Narendra Modi’s efforts to make India a $5-trillion economy. The Digital India initiative launched in 2015 has helped improve the delivery of government support and public services. The software industry has revolutionised India in more ways than one. Apart from creating millions of jobs, it also helped the central and state governments to improve governance. The focus on digitising various welfare schemes, creating a robust database and having a universal identifier in Aadhaar helped the government target its welfare efforts and save crores of rupees. Improved delivery of welfare expenditure is expected to have a multiplier effect on economic growth and welfare. With its more than 1.3 billion population, India had no option but to embrace digitisation to optimise resources for effective outcomes. There are several success stories of Digital India in governance, service delivery, financial transactions, identification mechanism and population register. Efforts are on to replicate these success stories in more areas to facilitate informed decision-making, inclusiveness in financial dealings, creation of a population register and better infrastructure planning.

From the think tank

4 October 2019 15

3. THE IMF AFTER ARGENTINA In case you blinked, the Argentine government built up a pile of debt out of

almost nothing with surprising speed, and then proceeded to default on it almost as quickly. Compared to the country’s slow-motion 2002 default, the latest crisis feels like 60-second Shakespeare. But in both cases, default was inevitable, because the country’s mix of debt, deficits, and monetary policy was unsustainable, and the political class was unable to make the necessary adjustments in time. And in both cases, loans from the International Monetary Fund seemed only to postpone the inevitable, and, worse, to exacerbate the ultimate collapse. So, after the second debacle in Argentina in less than a generation, it’s high time to ask how to refocus the IMF’s mandate for dealing with emerging-market debt crises. How can the IMF be effective in helping countries regain access to private credit markets when any attempt to close unsustainable budget deficits is labeled austerity? The only answer is to increase substantially the resources of international aid agencies (the IMF is a lender). Unfortunately, there seems little appetite for that. Why was the IMF willing to pour resources into a situation that – at least with the benefit of hindsight – could be resolved only through stronger fiscal adjustment (more austerity), a debt default, more foreign aid, or a mixture of all three?

4 October 2019 16

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Automobiles BHEL 0.7 -4.4 -35.7 Amara Raja Batt. 1.3 14.9 -3.4 Blue Star 0.0 12.3 36.8 Ashok Leyland 2.5 3.4 -43.1 CG Cons. Elec. -0.9 6.0 15.0 Bajaj Auto -0.4 5.0 6.1 Cummins -0.7 0.1 -16.5 Bharat Forge -0.7 15.6 -26.7 Engineers India -1.8 8.9 -1.3 Bosch 2.0 -1.8 -31.1 GE T&D -2.4 23.0 -29.3 CEAT -0.3 7.4 -12.7 Havells -1.0 7.4 14.8 Eicher Motors 2.6 15.9 -21.1 K E C Intl 0.1 11.2 -1.8 Endurance Tech. -2.8 4.9 -27.2 L&T -0.3 12.7 17.2 Escorts 1.6 25.9 -0.4 Siemens -1.3 31.3 55.3 Exide Inds. 1.5 11.6 -24.1 Solar Ind -0.2 1.1 3.1 Hero Motocorp -0.9 4.2 -8.6 Thermax -0.3 14.0 21.6 M & M 1.1 9.1 -28.9 Va Tech Wab. -1.9 -2.9 -8.0 Mahindra CIE 0.1 8.3 -35.2 Voltas 0.1 8.9 27.4 Maruti Suzuki -0.5 11.6 -6.9 Cement Motherson Sumi -4.5 4.7 -38.7 Ambuja Cem. -1.6 1.7 -8.4 Tata Motors 6.2 8.7 -46.2 ACC -1.9 6.6 2.9 TVS Motor Co. -3.5 12.3 -25.2 Birla Corp. -2.4 1.1 -14.8 Banks - Private Dalmia Bhar. -0.7 -12.3 AU Small Fin. Bank -0.5 -2.6 15.1 Grasim Inds. -1.9 -2.2 -29.9 Axis Bank -1.7 3.5 17.1 India Cem -1.1 9.5 -20.0 DCB Bank 0.4 -7.6 26.6 J K Cements -1.4 2.7 36.6 Equitas Holdings -0.1 -5.7 -12.0 JK Lakshmi Ce -2.4 -7.2 1.6 Federal Bank 1.3 9.2 26.4 Ramco Cem -2.3 1.9 12.8 HDFC Bank -2.0 10.7 20.4 Orient Cem -2.1 10.3 -4.6 ICICI Bank 0.6 9.0 40.7 Prism Johnson -1.2 -8.1 -12.9 IndusInd Bank -2.9 -6.5 -23.3 Sanghi Inds. -2.1 7.3 -26.1 Kotak Mah. Bank -1.9 14.3 47.0 Shree Cem -1.6 2.5 9.5 RBL Bank 3.9 -1.3 -40.6 Ultratech -1.6 6.7 7.3 South Ind.Bank -0.5 -0.7 -24.9 Consumer Banks - PSU Asian Paints -0.9 11.0 39.8 BOB -0.4 -0.7 -12.1 Britannia -0.6 7.3 1.2 BOI 1.1 -1.6 -23.3 Colgate -0.5 19.3 36.8 Canara 2.0 -8.0 -21.7 Dabur -1.3 -1.9 1.8 Indian Bk 2.5 -31.3 -51.9 Emami -0.1 5.4 -36.4 PNB 0.4 -0.6 -8.7 Godrej Cons. -2.8 10.0 -13.9 SBI -0.4 -5.0 -5.8 GSK Cons. -1.0 6.1 26.1 Union Bk 1.1 -3.9 -24.8 HUL -1.4 6.5 20.9 NBFCs ITC 2.2 8.3 -11.2 Aditya Birla Cap -3.2 -10.0 -28.5 Jyothy Lab -2.3 17.7 -14.9 Bajaj Fin. -0.8 21.5 77.6 Marico -0.9 -0.6 17.6 Cholaman.Inv.&Fn -1.3 8.4 20.8 Nestle 0.2 8.1 46.7 HDFC -1.1 -5.5 9.8 Page Inds -1.8 20.9 -33.6 HDFC Life Insur. -0.9 10.5 55.6 Parag Milk -0.8 12.6 -38.0 Indostar Capital 3.0 -22.5 -29.2 Pidilite Ind. -3.2 3.3 39.6 L&T Fin.Holdings -1.4 -10.8 -36.0 P&G Hygiene -1.9 15.6 23.6 LIC Hsg Fin 0.8 -7.5 -7.6 United Brew 0.2 1.0 2.9 M&M Fin. 1.3 4.3 -19.6 United Spirits -3.6 -0.1 23.2 Muthoot Fin -1.1 9.8 63.6 Healthcare MAS Financial Serv. -2.0 19.5 39.0 Alembic Phar 1.7 6.4 -15.6 ICICI Pru Life 0.4 10.6 41.7 Alkem Lab -2.5 3.2 -7.3 PNB Housing -1.8 -10.2 -36.8 Ajanta Pharma 2.5 -0.2 -2.4 Repco Home -0.6 -2.5 -27.6 Aurobindo 0.6 -4.0 -24.7 Shriram City Union -1.6 -2.2 -21.0 Biocon 4.5 2.9 -29.7 Shriram Trans. -1.2 7.2 -4.4 Cadila -0.1 2.1 -40.5 Capital Goods Cipla 1.4 -10.9 -36.0 ABB -1.5 9.9 3.0 Divis Lab 0.3 -0.7 24.0 Bharat Elec. -1.6 4.5 26.2 Dr Reddy’s -0.5 5.7 7.6

MOSL Universe stock performance

4 October 2019 17

Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%) Glenmark 0.1 -18.3 -48.9 Jubilant Food -1.0 12.4 11.1 Granules -1.6 14.8 5.5 Spencer's Retail -2.6 -9.6 GSK Pharma -0.3 11.2 -6.0 Shoppers St. -0.4 5.6 -11.3 IPCA Labs 1.6 -5.7 38.3 Titan Co. 1.2 22.0 63.0 Jubilant Life -2.3 13.0 -29.3 Trent 4.2 10.4 47.8 Laurus Labs -0.3 8.8 -16.4 V-Mart Retail -3.0 0.0 -20.0 Lupin -0.3 -4.6 -21.9 Technology Strides Pharma 1.4 -17.5 -30.0 Cyient 0.4 10.7 -39.7 Sun Pharma 0.4 -11.7 -37.6 HCL Tech. 1.7 -2.8 -1.5 Torrent Pharma -1.3 -6.8 -3.1 Hexaware -2.1 -4.8 -15.0 Infrastructure Infosys -1.0 -3.5 7.9 Ashoka Buildcon 0.2 1.1 -12.5 L&T Infotech 0.1 -6.4 -21.0 IRB Infra.Devl. -2.9 -3.3 -49.9 Mindtree -0.1 5.2 -32.9 KNR Construct. -2.9 1.8 13.6 Mphasis 0.2 -4.1 -19.1 Sadbhav Engg. -3.7 -5.1 -40.5 NIIT Tech 1.5 -7.2 13.6 Logistics Persistent Sys -0.6 0.6 -24.6 Allcargo Logist. 3.9 21.4 8.9 TCS 0.0 -8.6 -4.8 Concor -1.2 28.4 23.4 Tech Mah -0.4 -0.3 -6.4 Gateway Distr. -1.1 9.5 -20.0 Wipro 1.1 -7.0 -4.0 Media Zensar Tech -2.1 -3.1 -35.2 D B Corp -1.5 4.5 -32.4 Telecom Ent.Network -5.5 -11.7 -51.2 Bharti Airtel -1.7 2.5 17.9 Jagran Prak. -1.4 -1.8 -45.6 Bharti Infra. -0.5 0.0 -1.7 Music Broadcast 1.9 1.5 -41.4 Idea Cellular -5.6 -0.8 -77.1 PVR 0.5 22.4 49.5 Tata Comm 1.5 46.2 23.7 Sun TV 1.5 13.0 -22.8 Utiltites Zee Ent. 7.9 -30.4 -42.6 Coal India -3.8 3.2 -32.5 Metals CESC 1.9 -1.8 12.0 Hindalco -3.7 2.5 -28.1 JSW Energy -2.3 -8.4 -2.9 Hind. Zinc -1.7 -1.3 -28.5 NHPC Ltd -0.2 -7.0 -4.4 JSPL -1.6 3.2 -48.7 NTPC -0.2 -0.7 -16.3 JSW Steel -0.6 5.3 -42.1 Power Grid 1.2 1.1 5.3 Nalco -2.4 11.2 -35.5 Tata Power -0.1 10.2 -12.3 NMDC 1.0 21.1 -14.8 Torrent Power 0.7 4.2 25.2 SAIL -2.0 3.3 -54.2 Others Vedanta -4.7 7.6 -39.9 Brigade Enterpr. 1.0 4.0 64.3 Tata Steel -3.4 2.5 -41.4 BSE 0.1 6.4 -16.0 Oil & Gas Coromandel Intl 0.0 9.1 5.8 Aegis Logistics 4.0 -1.5 -2.1 Delta Corp -6.4 -8.3 -28.4 BPCL 7.7 49.4 40.9 Godrej Agrovet -1.4 5.3 -11.2 Castrol India -1.0 11.4 -7.0 Indian Hotels 0.9 15.1 24.4 GAIL -1.1 3.8 -31.0 Interglobe -2.4 12.4 134.9 Gujarat Gas -1.5 -1.9 36.3 Info Edge 3.0 4.2 52.4 Gujarat St. Pet. -3.1 -4.1 13.1 Kaveri Seed 0.6 5.7 -6.6 HPCL 4.5 25.7 28.5 Lemon Tree Hotel -1.1 5.6 -19.5 IOC 2.4 29.5 -3.6 MCX 0.8 8.8 34.4 IGL 0.7 7.2 45.6 Navneet Educat. -0.8 6.8 -10.3 Mahanagar Gas -1.3 7.4 10.0 Oberoi Realty -0.1 -8.2 22.6 MRPL 6.9 13.3 -28.1 Phoenix Mills -0.2 1.8 33.6 Oil India 1.2 1.1 -34.7 PI Inds. 2.6 12.1 83.4 ONGC 0.0 9.5 -29.4 Piramal Enterp. -5.6 -20.1 -31.8 PLNG -0.2 -2.3 16.2 Quess Corp 1.8 -0.9 -46.4 Reliance Ind. 0.5 8.7 8.8 SRF 1.9 0.2 54.7 Retail S H Kelkar -4.7 3.1 -39.2 Aditya Bir. Fas. 1.5 12.2 15.5 Tata Chemicals 0.5 0.9 -12.6 Avenue Super. -0.6 25.0 44.5 Team Lease Serv. 0.9 12.9 28.7 Future Lifestyle 0.7 1.1 8.2 Trident -2.2 2.7 -1.6 Future Retail 0.2 -3.7 -13.6 UPL -0.1 7.4 38.8

MOSL Universe stock performance

4 October 2019 18

N O T E S

4 October 2019 19

Explanation of Investment Rating Investment Rating Expected return (over 12-month) BUY >=15% SELL < - 10% NEUTRAL > - 10 % to 15% UNDER REVIEW Rating may undergo a change NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation *In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend. Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations). Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products. Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject company in the past 12 months. MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the past 12 months. MOFSL and/or its associates may have received any compensation from the subject company in the past 12 months. In the past 12 months , MOFSL or any of its associates may have: a) managed or co-managed public offering of securities from subject company of this research report, b) received compensation for investment banking or merchant banking or brokerage services from subject company of this research report, c) received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report. d) Subject Company may have been a client of MOFSL or its associates in the past 12 months. MOFSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOFSL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Terms & Conditions: This report has been prepared by MOFSL 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 MOFSL. 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. MOFSL will not treat recipients as customers by virtue of their receiving this report. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Disclosure of Interest Statement Companies where there is interest Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views. Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions. For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong. For U.S: Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore: In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore, as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL. Disclaimer: 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. 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. 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. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed 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, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com. CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000. Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085. * MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.

THEMATIC/STRATEGY RESEARCH GALLERY

RECENT INITIATING COVERAGE REPORTS

REPORT GALLERY

DIFFERENTIATED PRODUCT GALLERY