Alpha edge - April 2015

www.citadelle.in

Questions

Insight

Analysis

Action

“Oh earnings! Where art thou...?”

India Strategy | April 2015

April 2015 3

Oh earnings! Where art thou…?India Strategy | April, 2015

ForewordDear Investor,

The month of March has been a mixed bag for sentiment driven Indian markets. Firstly, themuch awaited dream budget on Feb 28th ended up as a ‘pragmatic’ one. Secondly, the 2nd

RBI’s rate cut that followed the budget was supposed to have translated into lower Long termbond yields. Whereas it stubbornly has stayed put as the budget gave room for marginal fiscalexpansion. Thirdly, the earnings season was supposed to have caught up with the fancy stock prices and they didn’t.Fourthly, the IIP character was supposed to atleast chart its firm upward trajectory but it went down south as if in badmood. Fifthly, investors FIIs and DIIs together poured in about another USD 2.2 billion expecting the markets to rise higherand stay there. But it didn’t.

Amidst all this, the only set of people whose expectations seems to have been met, are the ones who have been prepared.We have consistently stated that the only variable to watch is the earnings and the causes for it. And this variable for FY15 has been heading south for much longer, quietly since November 2014, creating a low base for FY 16. Therefore the FY16 absolute earnings expectations that retain their status quo seem elevated because of the lower base by the way FY 15ended. The next Quarter is the key and if there are any downgrades or lowered guidance to FY 16 numbers, we will reallystart worrying.

Our cautious stance since the beginning of the year seems to pay off so far. Despite our underweight stance in equitiesby 25%, all the five model portfolios, Conservative to the Aggressive, have out-performed their benchmarks. So has ourDirect Equity portfolio – Citadelle Growth Opportunities (CGOP) outperformed its benchmark Nifty by 6% and nearly 93%of all equity oriented Mutual Funds in the country, in Q1 2015, but with 0% portfolio turnover. Click here

With the RBIs April policy meet behind us and a status quo which waits to see if its earlier rate cuts are being transmittedby banks themselves, we are of the opinion that the best case scenario for further rate cuts to be another 50 bps for therest of year. Unless, any unforeseen global catastrophe forces RBI’s hand. The expectations on rates going forward arerather simple to our mind. Marrying the RBI’s preference to hold real rates at 1.5-2% to its targeted average inflation of5.00% to 5.50% over the next two years, suggests a repo rate of 7.00% to 7.25% by end of 2015. This implies a final 25bpto 50 bps rate cut. We expect this to come through sometime in the next few months, and for RBI to go on hold ratesthereafter. Any lofty Bond Fund return projections that advisors are prone to make may need to be seriouslyreconsidered.

In order to navigate the uncertain economic times that still lay ahead of us, both due to valuation concerns and thestuttering earnings pickup, we recommend investors to consider Ambit Alpha Fund. Ambit Alpha is an Absolute Returnseeking long-short Alternate Investment Fund, which in the last two financial years deftly managed market risk to giveNifty like returns of 63%, but with debt fund like behavior. Just what the clients probably need for the times ahead. Clickhere to know more. For further info kindly drop in a line at [email protected]

Warm Regards,

A V Srikanth

April 2015 4

Alpha Edge | “Oh earnings! Where art thou…?”

Asset Class performance

Asset Class returns for March 2015

Source: Bloomberg

Long term debt has been the best performer for March2015 with returns of 0.1%. Equity has been the worstperformer with returns of -4.6% followed by Goldperformance of -1.2%.

FII Flows for CY 2015

Source: ACEMF

Flows have continued to be buoyant in Equities and Debtmarkets in March 2015. Equities saw Net Inflow of Rs12,078 Crs whereas Debt market has seen net inflow ofRs 8,644 Crs.

Sector Returns

Source: Bloomberg

Health Care, Consumer Durables and Teck have beenoutperformers for March 2015. Metal, Realty andBankex have been the laggards during the same period.

-4.6%

0.1%

0.8%

-1.2%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

Equity 10 yrTresuries

Cash Gold

Asset Class Returns For March 2015

47 3771

-53

83133

-3

128 113 9736

-6

49

12

5

46

42

35

-51

160

43

-100

-50

0

50

100

150

200

250

300

Dec-

05

Dec-

06

Dec-

07

Dec-

08

Dec-

09

Dec-

10

Dec-

11

Dec-

12

Dec-

13

Dec-

14

CYTD

FII F

low

s (in

`000

Crs

)

Equity Debt

-10-9

-8-6-6-5-5-5-4-4-3-3-3-2

09

-12 0 12

S&P BSE METAL IndexS&P BSE Realty Index

S&P BSE BANKEXS&P BSE Power Index

S&P BSE PSUS&P BSE FMCG

S&P BSE SENSEXS&P BSE IT

S&P BSE OIL & GAS IndexS&P BSE AUTO Index

S&P BSE Small-CapS&P BSE Capital Goods

S&P BSE TECk IndexS&P BSE Mid-Cap

S&P BSE Consumer DurablesS&P BSE Health Care

Sector Returns for Mar 2015 (%)

April 2015 5


Global Macro

Inflation:

US

US consumer prices were unchanged in the year toFebruary 2015, after dropping 0.1 % in January asdecline in energy index was offset by a higher cost offood, shelter and medical care.Over the last 12 months the food index rose 3.0 % andthe index for all items less food and energy increased 1.7%. Additional upward pressure came from shelter (3 %),medical care services (1.8 %) and transportation services(1.8 %). These increases were offset by an 18.8% declinein the energy index.

Eurozone:

Consumer prices in Euro Area declined by 0.3 percent inFebruary, compared to a 0.6 percent fall in the previousmonth and matching preliminary estimates. Yet, coreinflation edged up due to higher rent cost.

The largest upward impacts to euro area annual inflationcame from restaurants & cafés (+0.12 percentagepoints), rents (+0.11 pp) and tobacco (+0.07 pp), whilefuels for transport (-0.64 pp), heating oil (-0.19 pp) andtelecommunications (-0.06 pp) had the biggestdownward impacts.

Core inflation rate, which excludes energy, food, alcohol& tobacco rose 0.7 percent, compared to 0.6 percent inJanuary.

In the European Union the inflation rate was -0.2percent. In February 2015, negative annual rates wereobserved in twenty Member States. The lowest annualrates were registered in Greece (-1.9 percent), Bulgaria(-1.7 percent) and Lithuania (-1.5 percent). Positiveannual rates were recorded in Sweden (0.7 percent),Malta (0.6 percent), Austria (0.5 percent), Romania (0.4percent) and Italy (0.1 percent).

On a monthly basis, consumer prices in the Euro Areaincreased 0.6 percent.

China

China's annual inflation rate accelerated to 1.4 percentin February of 2015 from a five-year low 0.8 percent in

the previous month and faster than market expectations.The politically sensitive food prices increased 2.4 percentwhile non-food cost rose at a slower 0.9 percent.

Among food prices, the highest increases came from egg(+11.4 percent in February from +8.3 percent in January),fresh vegetables (+4.3 percent from -0.6 percent) andfresh fruit (+4.1 percent from +3.3 percent). Pricesdecreased for pork (-1.5 percent from -5.3 percent) andliquid milk and dairy products (-1.5 percent from -0.5percent).

For non-food categories, upward pressures came fromprices of: household services and maintenance services(+9.8 percent from 4.6 percent); Western medicine (+1.3percent from +1.2 percent) and travel (+1.6 percent from-7.8 percent). While cost remained stable for clothing(+3.0 percent) and education services (+2.9 percent),prices moderated for health care services (+1.6 percentfrom +1.7 percent). Downward price pressures camefrom: transport and communications (-1.7 percent from-1.1 percent), water, electricity and fuels (-1.9 percentfrom -2.0 percent) and liqueur (-1.5 percent from -1.1percent).

On a monthly basis, consumer prices also quickened 1.2percent in February, following a 0.3 percent increase inthe preceding month.

Producer prices index fell by 4.8 percent from a yearearlier in February, worsening from a 4.3 percent fall inthe preceding month. The index has been in a chronicdecline since March 2012.

Interest Rates:

US

The Federal Reserve kept the interest rate at 0.25 %during the meeting held on March 18th but dropped thepledge to be patient on rate rise thus opening thepossibility of higher borrowing costs as early as June.

The monetary tightening scare has been deferred for atleast couple of months. Latest US wage data has againdisappointed economists’ longstanding expectationsthat wages are about to get traction in America.Moreover, previous wage data was revised down. Thus,US average hourly earnings growth for private

April 2015 6


employees slowed from 2.2% YoY in February to 2%YoYin March. Unless we see any traction in Wage data it willnot be prudent to say that the American economy isnothing like as robust as the consensus assumes. Giventhe importance of labor market data for the policyoutlook, next week's payrolls report will be important forgauging our call for a June hike.

Source: Bloomberg

Eurozone

ECB’s quantitative easing program was supported by alarge majority of voters, the first-ever minutes of ameeting revealed. Policymakers also showed concernsover low inflation.Following up on their decisions of 22 January 2015, ECBhas, on 9 March 2015, started purchasing euro-denominated public sector securities in the secondarymarket. They will also continue purchasing asset-backedsecurities and covered bonds, which they started lastyear. As previously stated, the combined monthlypurchases of public and private sector securities willamount to €60 billion. They are intended to be carriedout until the end of September 2016 and will, in any case,be conducted until we see a sustained adjustment in thepath of inflation which is consistent with our aim ofachieving inflation rates below, but close to, 2% over themedium term.

Japan

The Bank of Japan kept its pledge to increase themonetary base at an annual pace of about 80 trillion yen,saying the economy continues its moderate recoverywhile inflation is expected to slow due to falling energyprices.

The Policy Board also decided by an 8-1 vote to purchaseexchange-traded funds (ETFs) and Japan real estateinvestment trusts (J-REITs) so that their amountsoutstanding will increase at an annual pace of about 3trillion yen and about 90 billion yen respectively. As forCP and corporate bonds, the Bank will maintain theiramounts outstanding at about 2.2 trillion yen and about3.2 trillion yen respectively.

Currency:

Global divergence

Divergent monetary policy, interest rate differentials,and growth trajectories favor the US over Europe andJapan. This has become the key investment theme forglobal investors. Foreign flows into US financial assetshas hit a record last year while traders’ speculative longpositions in the dollar reached a new all-time high.

The faith in broad-based dollar strength is supported by decent US growth, higher yields than those of its main trading

partners, external balances that are in good shape, cheap currency valuation on a real effective

exchange- rate basis, and deliberate devaluations in the rest of the world.

But in near future, the dollar might be vulnerable to a re-widening of the current account deficit on the back ofstronger household US consumption.

00.5

11.5

22.5

33.5

4

Mar

/07

Mar

/08

Mar

/09

Mar

/10

Mar

/11

Mar

/12

Mar

/13

Mar

/14

Mar

/15

US Employee hourly wage rate

April 2015 7


Domestic Macro

Inflation:

A divergence is being observed in retail and wholesaleInflation numbers in the last 4 months. The WPI rate iscontinuously dwindling down whereas the CPI has beenstubborn and inching up back to its 4 month high inFebruary. The rise in CPI numbers was largely due to thebase effect and erratic weather pattern of unseasonalrains that firmed up vegetable inflation to 13% and foodinflation to 6.8%.

India CPI inflation increased to 5.37 % in February of2015 from a revised 5.19 % in the previous month,driven by higher food prices.

Cost of food and beverages rose 6.76 % in February, upfrom a 6.13 % in the previous month, provisionalestimates showed. The food alone index rose 6.79 %(6.06 % in January). Cost of vegetables jumped 13.01 %(9 % in the previous month) while fruit prices increasedat a slower 8.93 % (10.62 % in the previous month). Costof milk rose 9.21 %; spices surged 9.16 %; snacks,prepared meals and sweets rose 7.41 % and cost of meatand fish increased 5.03 %. In contrast, price decreaseswere reported for sugar (-1.01 %) and egg (-1.06 %).

Cost of fuel and light rose 4.72 % in February, up from3.74 % in January. Prices of clothing and footwearincreased by 6.38 % (6.15 % in the previous month)while growth in housing cost slowed slightly to 4.98 %(5.11 % in the previous month). In contrast, transportand communication cost fell 2.16 % compared to 1.17 %decline in January.The corresponding provisional inflation rates for rural

and urban areas for February of 2015 are 5.79 % and4.95 %.

Indian wholesale prices fell 2.06 % year-on-year inFebruary of 2015, following a 0.39 % drop in the previousmonth, as petrol prices declined while food cost slowed.The figure came far below market forecasts and is thedeepest decline since November of 1976.

Year-on-year, petrol prices fell 21.35 %, following a17.08 % drop in the previous month and cost of dieseldecreased by 16.62 %, following a 10.41 % fall in January.

Food prices rose 7.74 %, slowing from an 8.0 % increasein January. Among food prices, onion recorded thehighest increase (26.58 %), followed by fruits (16.84 %),vegetables (+15.54 %), pulses (+14.59 %), milk (+7.33 %)and rice (+3.80 %). In contrast, prices fell for fibres (-22.85 %), non-food articles (-5.55 %), potato (-3.56 %),and wheat (-1.63 %).

In February, cost of manufactured products edged up0.33 %, slowing from a 1.05 % increase in the previousmonth.

On a monthly basis, wholesale prices declined 1.4 %,following a 0.8 % drop in January.

Interest Rates:

The Reserve Bank of India cut its benchmark policy reporate by 25 bps to 7.5 percent in a surprise meeting onMarch 4th. It is the second rate cut this year, citingslowing inflation, weak growth and importantgovernment reforms.

Reserve Bank of India also decided to Continue with cash reserve ratio at 4 % of net

demand and time liabilities (NDTL). Continue to provide liquidity under overnight

repos at 0.25 % of bank-wise-NDTL at the LAFrepo rate and liquidity under 7-day and 14-dayterm repos of up to 0.75 per cent of NDTL of the

8.79 8.03 8.31 8.59 8.28 7.31 7.96 7.736.46 5.52

4.38 5 5.19 5.37

5.11 5.03 6 5.55 6.18 5.66 5.41 3.74 2.38 1.66

-0.17 -0.5 -0.39 -2.06-4-202468

10

Jan-

14

Feb-

14

Mar

-14

Apr-

14

May

-14

Jun-

14

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec-

14

Jan-

15

Feb-

15

Divergence in CPI and WPI

CPI WPI

April 2015 8


banking system through auctions and continuewith daily one-day term repos and reverse reposto smoothen liquidity.

Consequently, the reverse repo rate under theLAF has been reduced by 0.25% to 6.50 %, andthe marginal standing facility (MSF) rate and theBank Rate at 8.50 %.

Industrial Production:

Jan-15 IIP at 2.6% was above expectations. It also signifiedovercoming the adverse base to continue to registerrespectable growth.

While mining showed de-growth for the second month,electricity was the weakest in 15 months. Butmanufacturing did well for the third consecutive month.Upstream basic goods too registered good growth, whilecapital goods accelerated to double digit. However, restof the sectors — intermediate, consumer (both durablesand non-durables) registered de-growth.

According to new numbers, in the last three months ofThe YTDFY15 industrial growth stayed at 2.5% andshowed a steady uptick for the third consecutive monthdespite an adverse base. At this level, it was fairly higherthan the near no growth (0.1%) of YTDFY14.

With CPI in contention within Jan-16 target of 6% andshowed nearly no MoM inflation. IIP on the other hand isrecovering but the growth is still low.

April 2015 9


What we said What happened RemarksJanuary

“It is assumed that there is an inversecorrelation between commodityprices and India’s GDP growth andearnings, as Lower crude priceshasten disinflationary pressure,lower imports, reduce oil subsidy,lower fiscal deficit and rates, therebyboosting earnings and ratings.But we analyzed that the correlationbetween crude price (YoY) andIndia’s real GDP growth andcorporate earnings is predominantlypositive. Whereas the India growthcycle has converged with globalcycle, specifically Europe. Hence,cost advantage from decliningcommodity prices is neutralizedby slower growth in India.”It implies that the decline incrude oil prices does not indicatehigher earnings growth.

Subsequently the Q3FY2015 has seennegative 6% earnings growth YoY.We believe, that unless we seeupturn in demand and the Salesnumber improve, the earningsnumber for Q4FY2015 will also besubdued.

We believe that notwithstanding‘great expectations’ from the declinein oil prices, we will continue to seemuted earnings growth for atleast aquarter or more.

If at all, the so called benefits of lowoil prices have been quietly squirreledaway by the Central Government byway of excise duties.

In case you haven’t noticed, the pricesat the petrol pump hasn’t ‘collapsed’as they have in world’s traded Oilmarkets

February“We feel that once the new Greekgovernment settles down, theyand the Troika will meekly findtheir way to the negotiating table,notwithstanding their presentgrandstanding. It’s simple, Grexit= Catastrophe and every policymaker in Eurozone worth the saltknows it.”The inference is that though theTroika (the European Union, theEuropean Central Bank and theInternational Monetary Fund)and Syriza government even ifthey were firm on their standinitially, they both have tonegotiate on their terms.

Greece has rejected the offer fromECB which continue to have stringsattached to extension to its $ 240Billion bailout program.

They both are still trying their handin brinkmanship. Eurozone may bepreparing for a Grexit and itsimplications in the background,incase Greece carries forward withits threat. Even if it’s for their owncertain detriment.

April 2015 10


What we thought What happened RemarksMarch

“At the end of February, With Nifty atan all-time high on Union Budgetexpectation and RBI monetary policy,We tried to analyse the historicalmarket behaviour at trailing 24 P/Evaluations to see the chances ofcapital preservation and returns inEquities in the next 6 months are; andin only 1 instance, on 30th Dec 1999when markets were at 24 P/E, hasprincipal been retained in the next 6months. And when it did (1 out of all4036 trading days since Jan 1st 1999),it was a modest 0.80% absolutereturn. That’s less than 0.50% chanceof capital protection in the next 6months at an Index level, if historyrepeats. We foresee a considerablevolatility in markets on the back ofhigh prevailing valuations where theearnings have been passable for lastthree quarters”

It implies that the markets will notsustain such extreme valuationsinterminably, unless exceptionalearnings growth justify suchvaluations.

Lately, Equity markets after seeing astrong momentum at onset of 2015 areunder pressure due to stretchedvaluations and hesitant growth rateand gave away ~4.5% in the month ofMarch. The intra month volatility hasbeen close to 9%.

We expect a tepid earnings numbersfor Q4FY15 and anticipate furthervolatility for next couple of months.

April 2015 11


Model Portfolio: ConservativeConservative Market Cap wise (%)

Asset Class Sub-Asset Class Mutual Fund SchemesStrategic Tactical Large cap Mid &

Small cap Others

Equity - -PMS - -

Large Cap - -ICICI Pru Focused BlueChip Eq Fund - - 97.4 - 2.6UTI Opportunities Fund - - 98.1 1.9 -Mirae Asset India Opportunities Fund - - 80.5 12.2 7.3

Mid & Small Cap - -Religare Invesco Mid N Small Cap Fund - - 65.7 29.4 4.9HDFC Mid-Cap Opportunities Fund - - 74.9 21.2 3.9BNP Paribas Mid Cap Fund - - 62.3 35.6 2.2

Multi Cap - -L&T India Spl.Situations Fund - - 81.8 14.3 3.8ICICI Pru Value Discovery Fund-Reg - - 74.8 16.3 8.9Franklin India High Growth Cos Fund - - 65.2 32.2 2.7

Thematic / Sectoral Funds - -Equity Hybrid Funds - -

AverageMaturityYears

ModDurationYears

YTM(%)

Debt 90.0% 92.5%Short Term 30.0% 30.0%

Axis Short Term Fund 10.0% 10.0% 2.1 1.7 8.7Franklin India ST Income Plan 10.0% 10.0% 2.6 2.3 10.5HDFC STP 10.0% 10.0% 2.0 1.6 9.7

Dynamic Bond Funds 30.0% 32.5%IDFC Dynamic Bond Fund-Reg 10.0% 10.8% 14.5 8.1 8.2SBI Dynamic Bond 10.0% 10.8% 13.9 7.4 8.4UTI Dynamic Bond Fund-Reg 10.0% 10.8% 5.2 NA NA

Income Funds 30.0% 30.0%DWS Premier Bond Fund 10.0% 10.0% 2.3 1.9 8.5HDFC Income Fund 10.0% 10.0% 12.9 7.0 8.4UTI Bond Fund 10.0% 10.0% 11.6 NA NA

Gilt - -Debt Hybrid Funds - -

Cash 5.0% 5.0%Liquid Funds - -

Ultra Short Term 5.0% 5.0%Gold 5.0% 2.5%

Gold 5.0% 2.5%Total 100.0% 100.0%

0.0%

90.0%

5.0%5.0%

Strategic Portfolio

Equity Debt Cash Gold

0.0%

92.5%

5.0% 2.5%

Tactical Portfolio


98.0

99.0

100.0

101.0

102.0

103.0

31-Dec-14 31-Jan-15 28-Feb-15 31-Mar-15

Conservative UCI Index

April 2015 12


Model Portfolio: Moderately ConservativeMod Conservative Market Cap wise (%)


Small cap Others

Equity 25.0% 25.0%PMS - -

Large Cap 25.0% 25.0%ICICI Pru Focused BlueChip Eq Fund 8.3% 8.3% 97.4 - 2.6UTI Opportunities Fund 8.3% 8.3% 98.1 1.9 -Mirae Asset India Opportunities Fund 8.3% 8.3% 80.5 12.2 7.3

Mid & Small Cap - -Religare Invesco Mid N Small Cap Fund - - 65.7 29.4 4.9HDFC Mid-Cap Opportunities Fund - - 74.9 21.2 3.9BNP Paribas Mid Cap Fund - - 62.3 35.6 2.2




ModDurationYears

YTM(%)

Debt 65.0% 67.5%Short Term 30.0% 30.0%



Income Funds 5.0% 5.0%DWS Premier Bond Fund 1.7% 1.7% 2.3 1.9 8.5HDFC Income Fund 1.7% 1.7% 12.9 7.0 8.4UTI Bond Fund 1.7% 1.7% 11.6 NA NA

Gilt - -Debt Hybrid Funds - -

Cash 5.0% 5.0%Liquid Funds - -

Ultra Short Term 5.0% 5.0%Gold 5.0% 2.5%

Gold 5.0% 2.5%Total 100.0% 100.0%

25.0%

65.0%

5.0%5.0%

Strategic Portfolio


25.0%

67.5%

5.0% 2.5%Tactical Portfolio


96.0

98.0

100.0

102.0

104.0

31-Dec-14 31-Jan-15 28-Feb-15 31-Mar-15

Mod Conservative UCI Index

April 2015 13


Model Portfolio: BalancedBalanced Market Cap wise (%)


Small cap Others

Equity 45.0% 37.5%PMS - -


Mid & Small Cap 15.0% 7.5%Religare Invesco Mid N Small Cap Fund 5.0% 2.5% 65.7 29.4 4.9HDFC Mid-Cap Opportunities Fund 5.0% 2.5% 74.9 21.2 3.9BNP Paribas Mid Cap Fund 5.0% 2.5% 62.3 35.6 2.2




ModDurationYears

YTM(%)

Debt 45.0% 57.5%Short Term 30.0% 30.0%



Income Funds - -DWS Premier Bond Fund - - 2.3 1.9 8.5HDFC Income Fund - - 12.9 7.0 8.4UTI Bond Fund - - 11.6 NA NA

Gilt - -Debt Hybrid Funds - 7.5%

DSPBR Dynamic Asset Allocation Fund - 7.5% - - -Cash - -

Liquid Funds - -Ultra Short Term - -

Gold 10.0% 5.0%Gold 100.0% 100.0%

45.0%45.0%

0.0%10.0%

Strategic Portfolio


37.5%

57.5%

0.0%5.0%

Tactical Portfolio


96.0

98.0

100.0

102.0

104.0

106.0

31-Dec-14 31-Jan-15 28-Feb-15 31-Mar-15

Balanced UCI Index

April 2015 14


Model Portfolio: Moderately AggressiveMod Aggressive Market Cap wise (%)


Small cap Others

Equity 70.0% 52.0%PMS - -



Multi Cap 10.0% 6.7%L&T India Spl.Situations Fund 3.3% 2.2% 81.8 14.3 3.8ICICI Pru Value Discovery Fund-Reg 3.3% 2.2% 74.8 16.3 8.9Franklin India High Growth Cos Fund 3.3% 2.2% 65.2 32.2 2.7

Thematic / Sectoral Funds - -Equity Hybrid Funds - 3.3%

Edelweiss Absolute Return Fund 3.3%AverageMaturityYears

ModDurationYears

YTM(%)

Debt 20.0% 43.0%Short Term 20.0% 20.0%


Dynamic Bond Funds - 5.0%IDFC Dynamic Bond Fund-Reg - 1.7% 14.5 8.1 8.2SBI Dynamic Bond - 1.7% 13.9 7.4 8.4UTI Dynamic Bond Fund-Reg - 1.7% 5.2 NA NA


Gilt - 0.0%Debt Hybrid Funds - 18.0%

DSPBR Dynamic Asset Allocation Fund - 18.0% - - -

Cash - -


Gold 10.0% 5.0%

Gold 10.0% 5.0%Total 100.0% 100.0%

70.0%

20.0%

0.0%10.0%

Strategic Portfolio


52.0%43.0%

0.0%5.0%

Tactical Portfolio


90.0

95.0

100.0

105.0

110.0

31-Dec-14 31-Jan-15 28-Feb-15 31-Mar-15

Mod Aggressive UCI Index

April 2015 15


Model Portfolio: AggressiveAggressive Market Cap wise (%)


Small cap Others

Equity 90.0% 75.0%PMS - -



Multi Cap 30.0% 20.0%L&T India Spl.Situations Fund 10.0% 6.7% 81.8 14.3 3.8ICICI Pru Value Discovery Fund-Reg 10.0% 6.7% 74.8 16.3 8.9Franklin India High Growth Cos Fund 10.0% 6.7% 65.2 32.2 2.7

Thematic / Sectoral Funds - -Equity Hybrid Funds - 10.0%

Edelweiss Absolute Return Fund 10.0%AverageMaturityYears

ModDurationYears

YTM(%)

Debt - 20.0%Short Term - -

Axis Short Term Fund - - 2.1 1.7 8.7Franklin India ST Income Plan - - 2.6 2.3 10.5HDFC STP - - 2.0 1.6 9.7

Dynamic Bond Funds - 5.0%IDFC Dynamic Bond Fund-Reg - 1.7% 14.5 8.1 8.2SBI Dynamic Bond - 1.7% 13.9 7.4 8.4UTI Dynamic Bond Fund-Reg - 1.7% 5.2 NA NA


Gilt - -Debt Hybrid Funds - 15.0%

DSPBR Dynamic Asset Allocation Fund - 15.0% - - -Cash - -


Gold 10.0% 5.0%Gold 10.0% 5.0%Total 100.0% 100.0%

75.0%

20.0%

0.0% 5.0%Tactical Portfolio


90.0%

0.0%0.0%10.0%

Strategic Portfolio


90.0

95.0

100.0

105.0

110.0

31-Dec-14 31-Jan-15 28-Feb-15 31-Mar-15

Aggressive Nifty

April 2015 16


Citadelle Growth Opportunities PortfolioCompanyName

%Allocation

RecommendedPrice

Marketprice

%Incr/Decr Rationale Result Update

Axis Bank Ltd. 5% 502.05 560.40 16%

Axis Bank is geared up to ride the next growthcycle with strong capitalization (12.6% Tier I),healthy ROA (1.7%) and expanding liabilityfranchise (2,505 branches). Leveraging on thestrong distribution network AXSB increased theshare of retail deposits and CASA increased to79% as compared 59% in FY11.It has delivered stable numbers with improvingmargins though economy was at a recoverymode.We remain confident of bank’s ability ofstrengthening its retail franchise further.

Axis Bank delivered decent setof numbers with spike incredit uptick, stable marginsand credit costs withinexpected lines. It reportedstrong trends (a) Loan growthpicked up (+8% QoQ and+23% YoY) led by stronggrowth in retail (+10% QoQand +24% YoY) and Mid/Largecorporate segment (+10%QoQ and 25% YoY), (b) feesgrowth picked up to 16% YoY(1H-10%) led by retail fees(+50% YoY, 30% in 1H).

Bharat ForgeLtd. 5% 942.30 1276.10 35%

It is global leader in forging business havingtranscontinental presence across India, Germanyand Sweden, serving several sectors includingautomotive, power, oil and gas, etc. CV businesswill benefit from pre-buying in US beforeemission norm changes and strong cyclicalrecovery in India. This coupled with scale-up inPVs would drive strong growth in Auto segment.

Net revenue grew by ~44%YoY to ~INR11.9b (v/s est.INR10.5b), driven by 53%growth in exports (led by~122% growth in US) and~24% growth in domesticrevenue. Non-auto revenuegrew 69% YoY to ~INR5.8b(~48% of revenue).EBITDA margin expanded440bp YoY (+170bp QoQ) to30.2% (v/s est. 28.2%), drivenby RM cost savings andbenefit of operating leverage.Adj. PAT grew 109% YoY(~11% QoQ) to ~INR1.96b (v/sest. ~INR1.59b).

CromptonGreaves Ltd. 5% 187.65 166.00 -12%

Crompton Greaves is part of the USD4b AvanthaGroup, and is a global leader in the managementand application of electrical energyCrompton Greaves is aggressively focusing onincreasing exports and leveraging the Indianmanufacturing base.

Standalone results have beenstable (EBIDTA margins at8.7% and EPS of INR2/sh),while disappointmentcontinues to be the overseasbusiness (EBIDTA level loss,despite EUR revenues up 8.4%YoY; resulting in continuedPAT loss of INR1.2b).

Dewan HousingFin Corpn Ltd. 5% 395.15 465.90 18%

Dewan Housing is a good play on Tier 2 and Tier 3cities housing demand growth. Strong visibility onbusiness growth and margins, superior assetquality, healthy provision cover and healthyreturn ratios augurs well for Dewan Housing.

DHFL delivered strongearnings growth (28% YoY) onthe back of healthy NII growth(37% YoY). High loan growth(28% YoY) and NIM expansiondue to higher share of debtmarket borrowings are keydrivers.

Eicher MotorsLtd. 5% 15103.50 15890.2 5%

Eicher Motors is a leader in Cruise bikes in Indiaand No.2 player in Medium Commercial Vehicles.The management has increased its productiontarget to 280,000 units in CY2014 (from 250,000units) and is expected that demand can reach500,000 units in 3-4 years.Eicher Motors will invest Rs. 6 bn over the nexttwo years in the Royal Enfield business to expandcapacity in the Oragdum plant.

Consolidated operatingperformance was aboveestimate driven by a beat inEBITDA margin to 13.2% (v/sest. 12.6%). EBITDA was atINR3.03b (v/s est. INR2.8b)driven by strong VECVperformance but diluted byweaker RE performance. Taxrate was higher at 29.4% (v/sest. 25.8%), resulting in PAT ofINR1.54b (v/s est. INR1.6b),growth of 60% YoY (-7% QoQ).

Gujarat PipavavPort Ltd. 5% 206.50 217.45 5%

GPPV is favorably positioned on the West coastwhich enables access to the global traderoute/rich northern hinterland. Strong parentageand robustevacuation further provides comfort.GPPV is expanding its container handling facilityfrom 0.8m TEUs to 1.35m TEUs, which would bekey driver of volume growth. In addition, higherthroughput of liquid volume (2m tons capacity)would aid volume growth.

Not yet announced

HDFC Bank Ltd. 5% 952.00 1076.00 13%

HDFC Bank is best-placed in the currentenvironment, with a CASA ratio of ~45%, growthoutlook of at least 1.3x of industry and least assetquality risk.

Not yet announced

Hero MotoCorpLtd. 5% 3103.40 2869.55 -8%

Strong franchise of Splendor & Passion, and widedistribution reach makes it best placed to tapstrongdemand growth, especially in rural markets.It is targeting exports of 1m units over by FY17Post split from Honda, Hero MotoCorp is free totapglobal opportunity in 2W.

Not yet announced

IndusInd BankLtd. 5% 802.55 871.00 9%

IndusInd Bank Ltd is one of the new generationprivate sector banks in India. Asset qualityperformance remains healthy, despite achallenging environment and significantslowdown in the CV segment.The management expects that the worst for CVfinancing is behind and gradual improvement islikely to be seen in coming quarters

We believe that IndusIndBank has the potential togrow faster than the industryand strengthen its marketshare as it expands itsnetwork.

Kotak MahindraBank Ltd. 5% 1263.15 1320.85 5%

Kotak Mah. Bank is one of the fastest growingbank. Merger with ING Vysya Bank will be BVaccretive for Kotak Mah. Bank at standalone andconsolidated level. Merger places Kotak Bank in asweet spot for the next growth cycle with strongpresence across geographies, expertise in keyproduct lines and continued healthycapitalization.

Kotak Mahindra Bank’s3QFY15 consolidated PATmissed our estimate by 18%.While banking business’profits were in line withconsensus estimates, aided bystrong loan (+22% YoY) andfees (+45% YoY in 3Q/9M)growth, continuedcompetitive pressure onother businesses (EPS INR9.29) impacted overallprofitability (est. EPS of INR11.3).

Larsen &Toubro Ltd. 5% 1496.50 1700.10 14%

L&T is well placed to capitalize on long-terminfrastructure demand. L&T's order inflowprospects is expected to double from last year'slevel, to US$75bn. L&T’s preparedness to exploitthe evolving Indiadefence opportunity. The stock'sunderperformance vs. the BSE Sensex.

Not yet announced

Lupin Ltd. 5% 1427.55 1584.35 11%

Lupin is amongst the larger pharma companiesthat is actively targeting the regulated genericsmarkets.Strategy of focusing on niche, low-competitionproducts for the US market likely to benefit in thelong run. US generics is expected to grow 20-22%due to a rich generic pipeline.

Not yet announced

Maruti SuzukiIndia Ltd. 5% 3328.30 3645.25 10%

Maruti is the best auto OEM play on macro-economic recovery in India. Following flatvolumes for the past four years, we expect carsales to bounce back, led by high pent-updemand, economic recovery, and deceleration incar ownership costs.Maruti’s strong product pipeline, coupled withlowercompetitive intensity, should help it consolidateitsleadership.

Maruti Suzuki (MSIL) Q3FY15results surprised positively atoperating level as adjustedEBITDA margin surpassed 13%on softer RM costs. MSILcontinued to outpace industrygrowth and gain market sharewhich stood at 45% during9MFY15. We believe thistrend to continue for sometime until industry growthnormalizes.

April 2015 17


CompanyName

%Allocation

RecommendedPrice

Marketprice


Gujarat PipavavPort Ltd. 5% 206.50 241.35 17%

GPPV is favorably positioned on the West coastwhich enables access to the global traderoute/rich northern hinterland. Strongparentage and robust evacuation furtherprovides comfort.GPPV is expanding its container handling facilityfrom 0.8m TEUs to 1.35m TEUs, which would bekey driver of volume growth. In addition, higherthroughput of liquid volume (2m tons capacity)would aid volume growth.

GPPV reported 4QCY14revenues of INR1.9b, up 27%YoY, but marginally lower thanestimate of INR2b. This was ledby lower container volumegrowth, but higher bulk cargogrowth leading to marginallyimpacting overall realisation.Higher proportion of bulk cargoalso led to operating costincrease and EBIDTA stood atINR1bm lower than estimate ofINR1.3b. EBIDTA margin for thequarter thus stood at 54.5%, vs56.4% QoQ and 57.5% YoY.Reported PAT thus stood lowerat INR893m, vs estimate ofINR1.2b.E

HDFC Bank Ltd. 5% 952.00 1022.85 7%

HDFC Bank is best-placed in the currentenvironment, with a CASA ratio of ~45%, growthoutlook of at least 1.3x of industry and leastasset quality risk.

HDFC Bank's (HDFCB) 3QFY15PAT grew 20% YoY (in-line) toINR28b. Strong trading gains(INR2.7b) were utilized to makeprovisions (PCR +120bp QoQ to73.9%). NIMs declined 10bpQoQ to 4.4%. Momentum infee income (+15% YoY)continued to improve (+9% YoYin 1Q and +13% YoY in 2QFY15)

Other highlights: (1) NSLremains lowest at 36bp (2)Loan growth (+17% YoY) wasalso helped by strong growth inwholesale segment (+8% QoQand +22% YoY) (3) Opex growth(+19% YoY) continue tolag/grow inline revenue growth(+21% YoY)

Hero MotoCorpLtd. 5% 3103.40 2642.60 -15%

Strong franchise of Splendor & Passion, andwidedistribution reach makes it best placed to tapstrongdemand growth, especially in rural markets.It is targeting exports of 1m units over by FY17Post split from Honda, Hero MotoCorp is free totapglobal opportunity in 2W.

Sales was down 1%yoy asvolumes declined 2%yoy.EBITDA margin declined to12.1% as staff cost rose11%qoq (+30%yoy) withstarting of commercialproduction at Neemranafacility and festive bonus toemployees. Marketing/Advt.spend was higher due tosigning up Tiger Woods for afour year contract as part ofglobal branding strategy. Also,the company is the titlesponsor Indian Football Leaguewhich is played during thequarter. Going forward as wellQ3 will continue to have highermarketing spend due to thesefactors. PAT was up 11%yoydue to royalty phase out.

IndusInd BankLtd. 5% 802.55 882.50 10%

IndusInd Bank Ltd is one of the new generationprivate sector banks in India. Asset qualityperformance remains healthy, despite achallenging environment and significantslowdown in the CV segment.The management expects that the worst for CVfinancing is behind and gradual improvement islikely to be seen in coming quarters

We believe that IndusInd Bankhas the potential to grow fasterthan the industry andstrengthen its market share asit expands its network.


Kotak Mah. Bank is one of the fastest growingbank. Merger with ING Vysya Bank will be BVaccretive for Kotak Mah. Bank at standalone andconsolidated level. Merger places Kotak Bank ina sweet spot for the next growth cycle withstrong presence across geographies, expertise inkey product lines and continued healthycapitalization.

Kotak Mahindra Bank’s 3QFY15consolidated PAT missed ourestimate by 18%. Whilebanking business’ profits werein line with consensusestimates, aided by strong loan(+22% YoY) and fees (+45% YoYin 3Q/9M) growth, continuedcompetitive pressure on otherbusinesses (EPS INR 9.29)impacted overall profitability(est. EPS of INR 11.3).

Larsen &Toubro Ltd. 5% 1496.50 1700.10 14%

L&T is well placed to capitalize on long-terminfrastructure demand. L&T's order inflowprospects is expected to double from last year'slevel, to US$75bn. L&T’s preparedness to exploitthe evolving Indiadefence opportunity. The stock'sunderperformance vs. the BSE Sensex.

Not yet announced

Lupin Ltd. 5% 1427.55 1584.35 11%

Lupin is amongst the larger pharma companiesthat is actively targeting the regulated genericsmarkets.Strategy of focusing on niche, low-competitionproducts for the US market likely to benefit inthe long run. US generics is expected to grow 20-22% due to a rich generic pipeline.

Not yet announced

April 2015 18


CompanyName

%Allocation

RecommendedPrice

Marketprice



Kotak Mah. Bank is one of the fastest growingbank. Merger with ING Vysya Bank will be BVaccretive for Kotak Mah. Bank at standalone andconsolidated level. Merger places Kotak Bank ina sweet spot for the next growth cycle withstrong presence across geographies, expertise inkey product lines and continued healthycapitalization.

Kotak Mahindra Bank’s 3QFY15consolidated PAT missed ourestimate by 18%. Whilebanking business’ profits werein line with consensusestimates, aided by strong loan(+22% YoY) and fees (+45% YoYin 3Q/9M) growth, continuedcompetitive pressure on otherbusinesses (EPS INR 9.29)impacted overall profitability(est. EPS of INR 11.3).

Larsen &Toubro Ltd. 5% 1496.50 1719 15%

L&T is well placed to capitalize on long-terminfrastructure demand. L&T's order inflowprospects is expected to double from last year'slevel, to US$75bn. L&T’s preparedness to exploitthe evolving India defence opportunity. Thestock's underperformance vs. the BSE Sensex.

Revenues at INR150b (up 7%YoY, vs est of INR152b) and adjEBIDTA at INR15.7b (down 2%YoY, vs est of INR17b). Adjprofits (excluding subsidiarydividend) is down 2.6% YoY.Reported earnings have beenimpacted by increased interestcosts, partly on actuarialvaluations (decline in bondyields) and higher borrowings(INR28b).

Lupin Ltd. 5% 1427.55 2007.05 41%

Lupin is amongst the larger pharma companiesthat is actively targeting the regulated genericsmarkets.Strategy of focusing on niche, low-competitionproducts for the US market likely to benefit inthe long run. US generics is expected to grow 20-22% due to a rich generic pipeline.

Lupin (LPC) 3Q PAT at INR 6b(+26% YoY) beat est. solely dueto fx gains (INR 169m) & lowertaxes (28% vs 31% est.) asoperational results were in line.Sales at INR 31.4b (+5% YoY, 5%miss) disappointed on fewernew launches in US. However,EBITDA at INR 8.5b was largelyin line on continued marginsurprise (27% vs 26.3% est.).

Maruti SuzukiIndia Ltd. 5% 3328.30 3699.25 11%

Maruti is the best auto OEM play on macro-economic recovery in India. Following flatvolumes for the past four years, we expect carsales to bounce back, led by high pent-updemand, economic recovery, and decelerationin car ownership costs.Maruti’s strong product pipeline, coupled withlower competitive intensity, should help itconsolidate its leadership.

Maruti Suzuki (MSIL) Q3FY15results surprised positively atoperating level as adjustedEBITDA margin surpassed 13%on softer RM costs. MSILcontinued to outpace industrygrowth and gain market sharewhich stood at 45% during9MFY15. We believe this trendto continue for some time untilindustry growth normalizes.

Thermax Ltd. 5% 1067.65 1064.20 0%

Thermax is benefiting from few structuraltrends:(1) energy shortages and inconsistentavailability of power, driving demand for energyefficiency products, (2) hunt for alternativeenergy, given demanding regulations andimproving viability,(3) increased environmental concerns andstringent regulatory intervention, (4) currencydepreciation leading to increased possibilities ofexports etc.Thermax is likely to report acceleration inrevenue growth, driven by improvement in GFCFparticularly in base industries) and interplay ofseveral structural trends.

Earnings at EPS of INR 6.40were roughly in-line withconsensus estimates (EPS ofINR 6.70) with revenues atINR11.5b, up 13% YoY(estimate of INR11.2b) andEBIDTA margins at 11.5%, up250bps YoY (meaningfullyabove estimates of 10.5%).

April 2015 19


CompanyName

%Allocation

RecommendedPrice

Marketprice


PVR Ltd. 5% 703.10 662.85 -6%

India’s largest and fastest growing multiplex chainwith 23-25% bollywood market share and 33-35%Hollywood market share.Movie screening is an under-penetrated businessin India and we believe PVR will be the biggestbeneficiary of revival in discretionary spends.

Earnings came in 25% aboveexpectation on higher EBITDAand lower tax rate of 1%,versus our expectation of 5%.Revenue of Rs4.2bn (+24.6%yoy) was in line.

Shree CementLtd. 5% 9412.10 10767.5

0 14%

Shree Cement is one of the most cost efficientcement producers in India. Shree Cement is thelargest single-location integrated cement plant inNorth India, with an installed capacity of 13m ton.

Net sales at Rs16.05 bn(+28.7% yoy, -2.8% qoq) wasin-line with consensusestimate of Rs16.21 bn. Also,EBITDA at Rs3.37bn (+35%yoy) in line with estimate.Expansion plans of 4mtpa ontrack (2mt in Raipur and UttarPradesh each). We believethat the new capacities wouldhelp the co. to continue itsgrowth momentum, whichhas already been aboveindustry growth rate (14% inFY14 against industry growthrate of 3-4%).

Tech MahindraLtd. 5% 647.89 629.45 -3%

Satyam's acquisition will help Tech Mahindra todiversify its client base and industry focus.Large deals like those of KPN and a gradual revivalin the telecom vertical will help volume growth.Deals have kept growth coming (outside the BTaccount) despite challenged IT budgets in thetelecom vertical.

Result for Tech Mahindra hasbeen in-line with an EPS ofINR 33.69 (INR 33.70consensus estimates). EBITDAmargin of 20.2% is also in linewith consensus estimate of20.3%.

TVS MotorCompany Ltd. 5% 268.30 263.75 -2%

TVS is well positioned to benefit from thescooterization wave with its complete scooterportfolio.With international presence in more than 50countries in Asia, Africa and Latin America it plansto launch multiple products across segments toreinforce and fill gaps in portfolio in next 2 years.

Net sales grew 38.9% YoY (-1.1% QoQ) to INR26.5b (est.INR25.9b) driven by volumegrowth of 23% YoY (- 3% QoQ)to 655,571 units (est. 653,000units). Realizations rose by4.9% YoY (2% QoQ) to~INR40,495 (v/s est.~INR39,733), driven by highercontribution of Motorcyclesand 3Ws. EBITDA margin wasflat YoY, down 10bp QoQ to6% (v/s est. 6.3%). PAT grew~31% YoY (-4.9% QoQ) to~INR902m (v/s est.~INR943m).

UltratechCement Ltd. 5% 2671.25 2875.00 8%

Ultratech is the largest cement company withpan-India presence. It has potential to increase itsoutput without incurring major capex byincreasing utilization and blending, along withlocational advantage, gives it the flexibility toeither export or sell in the domestic market.Significant potential to increase output byincreasing blending. Allied businesses of whitecement and RMC lend stability to overallperformance.

Earnings at EPS of INR 13.28were way below theconsensus estimates (EPS ofINR 15.75) Earnings misspartially attributed to lowerRMC revenue.We expect double-digitcement demand growth nextyear with the Indiangovernment's oil relatedsavings translating into higherinvestments in nationalhighways, rural roads, ruraland urban housing andrailways (driving >70% of thecement demand). We believeUltratech is the best proxy toparticipate in a potentialcement upcycle.

April 2015 20


CompanyName

%Allocation

RecommendedPrice

Marketprice


VA Tech WabagLtd. 5% 737.40 820.85 11%

VA Tech Wabag (VATW) is one of the leadingplayers in water treatment industry, is attemptingto expand into new geographies, including SouthEast Asia, Sub-SaharaAfrica, LatAm, Central Asia, etc.In FY14, the company received initial orders inNepal, Tanzania, etc which also opens upinteresting growth possibilities to ramp-up thebusiness. Order intake in overseas subsidiarieshas increased from INR6-7b in FY12-13 toINR16.4b in FY14

Consolidated revenue grew5% YoY to INR6.2b, supportedby 9% YoY increase insubsidiary revenue toINR3.3b. Standalone revenueremained flat YoY at INR2.9b.Consolidated adjusted EBITDAdeclined 5% YoY to INR423mled by INR 100m of provisionsrelated to liquidity damagesfor Al Gubra project due toexecution delays and increasemanpower cost in Istanbulbecause of increased O&Morder inflows. ConsolidatedPAT declined 36% YoY toINR138m because of highertax provisioning at subsidiarylevel in order to comply withlocal tax regulations.

Citadelle Growth Opportunities PortfolioCurrent Asset Allocation

Equity Cash

28-F

eb-2

015

108.63

102.51

95

100

105

110

115

31-Dec-2014 31-Jan-2015 28-Feb-2015 31-Mar-2015

Citadelle Growth Opportunities PortfolioPerformance

Citadelle Growth Opportunities Portfolio NAV Nifty Index

Alpha Edge | Oh earnings! Where art thou…?

Thank you for your time!

Safe harbor statement!

This document has been prepared by Citadelle Asset Advisors Private Limited (CAAPL). CAAPL, its holding company and associate companies offer full range of,integrated investment banking, portfolio management and brokerage services, through own and or partnerships.

Our research analysts and sales persons provide important input into our investment advisory activities. This document does not constitute an offer or solicitationfor the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available dataor other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. CAAPL or any of its affiliates/group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained inthis report. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arriveat an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and shouldconsult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors.We and our affiliates, group companies, officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securitiesthereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or actas advisor or lender/borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information andopinions. This information is strictly confidential and is being furnished to you solely for your information.

This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or inpart, 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 CAAPL andaffiliates/ group companies to any registration or licensing requirements within such jurisdiction.

The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes, should inform themselvesabout and observe, any such restrictions. The information given in this document is as of the date of this report and there can be no assurance that future results orevents will be consistent with this information. This information is subject to change without any prior notice. CAAPL reserves the right to make modifications andalterations to this statement as may be required from time to time. However, CAAPL is under no obligation to update or keep the information current. Nevertheless,CAAPL is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specificclient queries. Neither CAAPL nor any of its affiliates, group companies, directors, employees, agents or representatives shall be liable for any damages whetherdirect, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Past performanceis not necessarily a guide to future performance.

The disclosures of interest statements incorporated in this document are provided solely to enhance the transparency and should not be treated as endorsement ofthe views expressed in the report. CAAPL generally prohibits its analysts, persons reporting to analysts and their family members from maintaining a financial interestin the securities or derivatives of any companies that the analysts cover.

The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companiesand its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed inthis report. Any dispute arising out of the document shall be subject to the exclusive jurisdiction of the Courts in Mumbai, India

April 2015 21

Economy & Finance

Alpha edge - April 2015