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1 Result Update Reuters: L.BO; Bloomberg: L IN Good Content Drives Strong Performance posted a strong set of numbers in. Consolidated (including SPI Cinemas for the entire quarter compared to a half-quarter in ) revenues/ebitda/pat beat our estimates by 9%/17%/11%, respectively. We believe is on track to deliver our above consensus estimates for FY19-FY21 (content being the key unknown/monitorable). revenue growth of 51% YoY was driven by SPI Cinemas acquisition which was absent in the base quarter. However, standalone revenue growth was strong at 27% YoY with net box office/f&b/convenience/advertising revenues growing 26%/24%/145%/16%, respectively. On a standalone basis, net box office and F&B income were driven by robust admits growth of 23% (occupancy up 39bps at 33%). Standalone ATP was up 3% while F&B SPH was down 3%. Higher occupancy rate (despite having 9% more seats to fill YoY) was because of good content - 2., Badhai Ho, Andhadhun, Kedarnath along with a modest performance by supposed blockbusters - Thugs of Hindostan and Zero. Simmba delivered four days of good revenues. Aquaman and Bohemian Rhapsody were notable movies from Hollywood. The decline in F&B SPH is a conscious decision by to improve the price value equation and focus on volume growth. SPH growth is expected to pick up after a few quarters. Muted YoY ATP and advertisement revenue growth was because of supposed blockbusters Thugs of Hindostan or TOH and Zero fizzling out. Consolidated margins were better driven by lower-than-expected film exhibition costs (as some sleeper hits were in theatres for a longer span) and better-thanexpected margins in SPI Cinemas. Post, we have retained our Buy rating on with a September 219 target price (TP) of Rs1,796. The TP is based on target EV/EBITDA multiple of 12.5x September 22E EBITDA. Our estimates have been tweaked a bit with better revenues expected from SPI Cinemas while building in lower revenue and margins from standalone driven by a cut in occupancy rate (factoring in some cannibalisation effect because of strong screen openings likely by both and Inox Leisure), slower growth in both SPH and advertisement revenue per screen (the latter because of a likely slight market share shift towards Inox Leisure). is a good consumer discretionary story available at a reasonable valuation (although not as cheap as it used to be at the peak of the F&B controversy). While we like both and Inox Leisure on an absolute basis, from here on we like Inox Leisure more because of its larger potential upside and convergence of operating metrics with. Positive 4QFY19 outlook: The content pipeline looks good for 4QFY19. Advertisement revenues will also see a pick-up in 4QFY19 going by the management s guidance of 15% for FY19. With reduction in GST on tickets and decrease in gross ATP, is looking for volume-driven growth in 4QFY19. Rapid expansion is also scheduled for the quarter 3-35 screens. While was a strong quarter because of postponement of Padmaavat, indicated that January 219 has been strong so far and expects reasonable growth in standalone in 4Q. Content drives better profitability: indicated that the movie market has become highly contentoriented and is moving away from star-driven blockbuster movies. This is a good development for the market and will increase predictability of revenue streams. Also, content-driven movies work on wordof-mouth basis. Hence, movies run longer and producer/distributor share of net box-office revenues will go down, thereby helping exhibition margins. 28 January 219 BUY Sector: Film Exhibition CMP: Rs1,562 Target price: Rs1,796 Upside: 15% Girish Pai Head of Research girish.pai@nirmalbang.com Key Data Current Shares O/S (mn) 46.7 Mkt Cap (Rsbn/US$bn) 73./1. 52 Wk H / L (Rs) 1,666/1,63 Daily Vol. (3M NSE Avg.) 48,19 Price Performance (%) 1 M 6 M 1 Yr Nifty Index 1.1 (3.2) (2.6) Source: Bloomberg Y/E March (Rsmn) YoY (%) QoQ (%) E Var (%) Net revenue 5,573 7,86 8, , Film Exhibition Cost 1,323 1,65 1, ,934 (4.3) Cost of food & beverages consumed (2.3) Employee benefit expenses Other exp. (includes production, distribution & print charges) 2,246 2,882 3, , Total expenditure 4,569 5,845 6, , EBITDA 1,3 1,241 1, , EBITDAM (%) Depreciation Interest costs Other income PBT Tax Net profit NPM (%) EPS (Rs) Source: Company, Nirmal Bang Research, Note: Consolidated numbers including that of SPI Cinemas.

2 Exhibit 1: Key financials (including SPI) Y/E March (Rsmn) FY17 FY18 FY19E FY2E FY21E Revenue 21,598 23,341 3,115 36,381 41,97 YoY % EBITDA EBITDA (%) Adj. PAT YoY % (19.3) FDEPS (Rs) ROE (%) ROCE (%) ROIC (%) P/E(x) P/BV (x) EV/EBTDA Source: Company, Nirmal Bang Research Exhibit 2: Change in our earnings estimates Y/E March New Old Deviation (%) (Rsmn) FY19E FY2E FY21E FY19E FY2E FY21E FY19E FY2E FY21E Revenues 3,115 36,381 41,97 28,494 33,32 39, EBITDA 5,495 6,852 8,71 5,264 6,288 8, (2.1) EBITDA Margin (%) PAT 1,72 2,249 2,875 1,86 2,469 3,324 (4.7) (8.9) (13.5) FDEPS (Rs) (4.8) (9.) (13.5) Source: Nirmal Bang Research Exhibit 3: Change in operational assumptions- (ex SPI) Actuals New Old Parameter FY16 A FY17A FY18A FY19E FY2E FY21E FY19E FY2E FY21E Number of Screens (YE) Growth (%) Number of screens added Footfalls (mn) Growth (%) Occupancy Rate (%) Gross ATP Growth (%) Net ATP Growth (%) Gross SPH Growth (%) (.8) Net SPH Growth (%) Advertisement Revenue per screen Growth (%) Source: Company, Nirmal Bang Research 2

3 We are positive on the film exhibition sector (see sector report: Indian Film Exhibition Sector- Oligopolistic Business In Its Infancy). We believe that: (1) Indian multiplex industry is an oligopoly (top four players control ~7% of screens) and will remain so as entry barriers are quite formidable and there are no substitutes. This industry s structure will deliver steady revenue growth, and improve margins as well as RoIC over a long period of time. (2) and Inox Leisure (the two large players) can deliver in the next 1 years at least 5%-1% volume/footfall growth (new screen-driven, attracting both single-screen and new generation customers) per year, respectively, with rise in realisation of 4%-5%. This will result in revenue CAGR of 1%-15% with PAT growing a tad faster. Structurally, expectations of a rise in relevant customer households which can afford this type of entertainment (currently at 8%-11% of total, in our view) is going to drive demand. Same store/screen sales growth (SSG), in our view, will be realisation-led at 4%-6%. We believe that: (1) These players deserve premium valuations, considering the longevity of earnings compounding and good RoICs. (2) Expensive M&A activity in the past five years and consequent weak return ratios are a small price to pay for achieving consolidation in a nascent industry. Over the long run, as organic growth predominates, the benefits of a better industry structure will far outweigh the price paid. We believe the stranglehold over retail real estate (and slow pace of its expansion) to be the key driver of positive industry dynamics. This will lead to a steady increase in capacity, solid pricing power and a high occupancy rate. The key risk to sector earnings tends to be the volatility induced by success of content. This is a very difficult thing to predict. Some movies may look great on paper, but may turn out to be duds at the box office. But increasingly the content risk is being lowered as Hollywood and regional movies (both in their original and dubbed versions) are able to command a greater share of GBOC. Also lately the content has been less star-driven and more based on good story lines which we may be a structural shift happening in the industry for the better. F&B controversy On the public interest litigation or PIL to allow outside food into theatres, the management clarified that: (1) The multiplex industry is challenging high court rulings in various states. (2) The rulings have been in favour of the industry in case of Hyderabad and also various high courts in Madhya Pradesh. The J&K high court ruling is the only one that has gone against the industry and that has been quashed by the Supreme Court. (3) It is trying to move various cases from the state level to the apex court and get a common verdict. (5) It has rationalised prices in certain theatres in Maharashtra to address some of the customer concerns surrounding this issue. Currently, the case is subjudice and a final ruling will come out in due course of time. But multiplexes are optimistic on the outlook as the affidavit filed by Maharashtra government is positive and so far, the multiplexes have a strong case. Why is F&B important F&B constituted ~27%/~3% and ~23%/26% of s and Inox Leisure s revenues/gross margin in FY18, respectively, and the fear among investors was that this lucrative revenue stream would be adversely impacted. The atmosphere got vitiated by populist posturing of political parties and looked ominous when juxtaposed with the upcoming general elections in 219. To assuage consumers incensed by what seems like prohibitive pricing of F&B, companies have reduced the prices of popular food items by as much as 4% during non-peak hours in certain regions of the country. To keep the environment stable, has not increased its F&B prices much after the controversy. But the controversy has abated more or less as most rulings have been in favour of the multiplexes. However the final ruling by the Supreme court will likely put all of this at rest and while no specific dates for the judgement have been indicated, we believe this would now be taken up only once the new Central Government comes to power post the April-May 219 elections. Takeaways from results and analyst call Screen opening guidance held on to, heavy screen addition expected in 4QFY19 maintained screen-opening guidance of 9 screens across 16 properties for FY19 (on a standalone basis ex-spi Cinemas). 55 screens have been opened on YTD basis and 33 screens were added in. indicated that it is on track to achieve the guidance, except 1-15 screens which are dependent on third-party/completion of malls and their opening may get shifted to April 219. This implies heavy screen addition in 4QFY19 of Screen addition in FY2 will have the same or greater momentum as that in FY19. Advertising and ATP set to grow In the conference call, had provided guidance of 15%-2% growth in advertisement revenues for FY19 which it continues to maintain, though the focus has shifted to the lower end of the band. The ninemonth advertising income has grown only by 12%. Advertising revenue grew 16% YoY in, which was a tad disappointing (as it fell at the lower end of the guidance), especially as the quarter was 3

4 particularly strong driven by the festive season and good content. This indicates some amount of market share loss to Inox Leisure. The 16% YoY growth was driven by premium pricing in Tier-I cities and higher volume in Tier-II and III cities. mentioned that the slow growth in advertisement revenues can be attributed to fizzling out of supposed blockbusters like Zero and TOH which didn t pick up as per expectations. While initially we were a tad disappointed by the advertisement revenue number per screen of SPI Cinemas (which was higher than that of standalone average), indicating low head room for growth, we believe that impression may be misplaced. Just as some of the Metro and Tier-1 locations of generate significantly better advertising revenues compared to the company average, believes that it can drive something similar in SPI Cinemas too as screens are located in affluent metros and Tier-1 cities in the relatively more affluent South India. Gross standalone ATP stood at an all-time high of Rs22. It increased ~3% YoY which is in line with expectations and guidance. With the GST on tickets priced above Rs1 brought down from 28% to 18%, we expect higher volume growth, especially in smaller cities that operates in. ATP also increased for SPI Cinemas on a standalone basis from Rs154 in to Rs172 in primarily because of better content during the quarter. SPH stalled in 2HFY19, but will pick up in a few quarters Because of the F&B controversy, had cut F&B prices in Maharashtra and had also come up with deals on certain days. We understand from the company that this has not led to any serious uptick in volume on the F&B front. The SPH numbers are yet to recover fully after the PIL controversy. Gross SPH declined by ~3% YoY to Rs9. This slow growth is because of the conscious decision of the company to keep the prices under check. The impression we get is that SPH hikes would be done after possibly two to three quarters once the F&B controversy cools off. Following input credit loss on F&B, effective food cost is higher. F&B gross margin also declined because of lower prices. Rise in demand because of GST cut The government reduced the GST on tickets above Rs1 from 28% to 18%. For tickets below Rs1, the GST was reduced from 18% to 12%. This was effective from 1 January 219 and will be passing this on to customers in the form of reduced ATP. This is supposed to drive demand and give more pricing power to multiplexes. This will also ensure penetration in small towns. has not increased its F&B prices as it is anticipating the demand to pick up driven by GST cut. MENA region joint venture plans on the backburner for now The management had stated in previous con-calls that aimed at entering the Middle East & Asia (MENA) region by way of joint ventures or JVs where it could bring in its own operational expertise with the funds provided by JV partners to set up cinemas. But in the con-call, the management indicated that the MENA venture is still in the business planning and feasibility study phase. The focus of the management now is to carry out the merger of SPI Cinemas and expansion in India smoothly. Miscellaneous Talkies, which is a low-cost brand, will be expanding more in 4QFY19. This will target tier II and III cities. The ATP will range from Rs1-Rs125. will try to gauge consumer behaviour in Tier II and III cities from this platform before any material scale-up. After acquisitions, is targeting to keep its D/E ratio less than 1.The net debt post acquisition was Rs12bn at the end of which increased in, although not significantly. One of the reasons indicated by the management for the planned fresh Rs7.5bn fund raise (either through fresh equity or through convertible debt) is for decreasing the leverage. It is also for faster organic growth in FY2 as about screens are expected to be opened. SPI Cinemas merger with will likely be completed in the next 6 months. Other expenses increased 48% YoY, driven by disallowance in input tax credit and payments to a consulting firm for building its loyalty programme. 4

5 Rental costs continue to remain under pressure because of new sites and rental renegotiations, and will get offset by increase in revenues. The capex guidance for FY19 is of Rs4,75mn-Rs5,mn. In terms of screen addition, the impression we get is that FY2 could potentially see 1-12 screens being organically added. consolidates leadership position by acquisition of a strong South India player, on 12 August 218, entered into an agreement to acquire/merge with SPI Cinemas a prominent South India-based film exhibition player. This is through a cash-cum-stock deal which will consummate in 12 months. had hinted at a pick-up in M&A when it passed an enabling resolution to raise debt of Rs1bn in May 218 and also in its results con-call (see our note: - Mall Development Pick-up And M&A Could Accelerate Growth). The EV for the transaction is Rs1bn. Valuation of SPI Cinemas looks optically rich, but is fair if one includes the screen pipeline Based on 89 screens that SPI Cinemas will have in the next 12 months, EV/screen works out to Rs112mn per screen which puts this acquisition in the same league as the expensive DT Cinemas one (done in June 215) which had EV/screen of Rs135mn (capex for an average screen is ~Rs3mn). The only difference here is that the SPI Cinemas deal (unlike the DT Cinemas deal) comes with a pipeline of 1- plus screens. The premium being paid in M&A transactions is because of the high entry barrier on real estate as the lockin period with mall operators is as long as 15-2 years. Considering the difficulty in getting access to prime locations, we believe this pipeline should not be ignored. If one does that, the deal looks fair and falls into the ball park of deal valuation of in the past (~Rs6mn/screen). The -SPI Cinemas deal was discussed in the media in early 215 at around the same kind of absolute EV with half the current screen base. This means that sellers have lowered their valuation expectations considerably. EV/EBITDA for the deal works out to 1x which is where the stock was trading at on 9 August 218 based on FY2E numbers (our estimates). We believe this is a positive development for because: (1) It will be the leader in all key South Indian cities - Chennai, Bengaluru, and Hyderabad. SPI Cinemas was the leader in Chennai market earlier. (2) Besides addition of 89 screens (existing + upcoming), a strong pipeline of 1+ screens will be delivered over the next five years. (3) Attractive financial performance of SPI Cinemas with highest occupancy rate in the country and EBITDA margin in excess of 2%. (4) Diversification of content risk. (5) Potential for synergy gains from box office, F&B, and advertisement revenues with a larger geographic footprint. South India, which would have accounted for 26% of its screen base, will now form 35% of the screen base by the end of FY19. While South India contributes half the screens operational in the country (9,53 is the total based on industry data, including single screens), multiplex penetration is at just 14% compared to 6% in North India. South India has the highest occupancy level of 5%-6% - much higher than the national average of 3%-35%. This is partly because of capped ticket prices (which were increased by 25% from Rs12 to Rs16 in Chennai for multiplexes from October 217- base price before GST). Gross ATP (including GST) of SPI Cinemas was Rs141 while that of was Rs21 in FY18. The F&B-related gross spending per head difference was much narrower (Rs89 for vs. Rs83 for SPI Cinemas) which means the higher occupancy rate helps drive high-margin F&B sales. The only downsides we see in this transaction in the near term are: (1) Dilution of return ratios because of the high acquisition price of screens. (2) Incremental pressure on the balance sheet because of slightly higher debt. Details of the acquisition Acquisition of ~72% equity stake in SPI Cinemas was for Rs6.3bn in cash with Rs1bn being deferred payment based on milestones. The remaining ~28% of SPI Cinemas would be acquired through a stock swap with 1.6m shares of being exchanged for it. This amounts to Rs2.1bn based on 1 August 218 closing price of stock. SPI Cinemas apparently carries a debt of Rs1.6bn. The total EV for the transaction thus comes to Rs1bn. The cash portion of the transaction is being funded through internal accruals (Rs3.85bn), new debt issuance (Rs1.5bn) and deferred payment of Rs1bn. The whole process of acquisition/merger is supposed to be completed within the next 9-12 months. The financials of SPI Cinemas have been reflected in starting 18 August 218 (43 days of ). The 5

6 expectation is that full consolidation of the company with would likely happen by 4QFY19 (compared to just ~72% currently). About SPI Cinemas SPI Cinemas has 76 screens across 17 properties in 1 cities of India currently with 13 more to be added in the next 12 months. It is #1 cinema in Chennai with 31 operational screens including the iconic Sathyam Cinema which was established in SPI Cinemas operates cinemas under several brands Sathyam, Escape, Palazzo, The Cinema, and S2 Cinema. FY18 revenues stood at Rs3.1bn and EBITDA at Rs633mn (2.4% EBITDA margin). Based on our rough math, we believe the RoIC of SPI Cinemas was ~2% in FY18. FY19 revenues are expected to be Rs4.1bn-Rs4.25bn for SPI Cinemas with possibly better EBITDA margin than that in FY18 - when both revenues and margins were impacted by film exhibition industry strike on two occasions during the yearwhich apparently led to a loss of more than 45 days of billing. Deal with online ticket aggregators has entered into an agreement with Bookmyshow (BMS) and PayTM (two of the largest online ticketing aggregators) for selling s ticketing inventory for a term of three years. will receive an aggregate amount of Rs4.1bn over the next three years as minimum guarantee and refundable security deposit. Of this, has received Rs3.5bn as upfront payment. We believe the new deal ensures a minimum convenience income which would be 2.5x what it was earlier (~Rs6mn in FY18). Besides, with much of the payment being frontloaded, it eases pressure on s cash flow and balance sheet. This convenience income has a very high gross margin with next to no direct costs. The deal kicked in from mid-july 218 and the rest of the payment would come in by the end of FY19. The significant increase got by is indicative of its leadership position in the market and also the likely hypercompetition in the ticket aggregator space driven by aggressive bidding by PayTM which has very deep pockets (funded by Alibaba). Media reports indicate that out of Rs4.1bn around Rs2.35bn is being paid by Bookmyshow and the rest (Rs1.75bn) is being paid by PayTM. There is upside to these numbers as this is a minimum guarantee + revenue share deal (beyond threshold revenues). In, 5% of revenues came from online ticketing 44.6% from online aggregators and 5.6% from its own platform. We expect the percentage of tickets sold through the online channel to increase to close to 7%-75% over the coming years. 6

7 Operational metrics of (ex-spi Cinemas) Exhibit 4: Net box office revenues (Rsmn) (Rsmn) 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 2,37 2,32 2,282 1,579 2,742 2,746 2,512 2,144 3,433 3,56 2,993 3,124 2,931 2,781 2,692 2,646 3,849 3,691 3,515 Exhibit 5: Food & beverage revenues (Rsmn) (Rsmn) 2,5 2, 1,5 1, 5 1, ,475 1,646 1,571 1,349 1,298 1,196 1,136 1,396 1,285 1,423 1,438 1,37 2,27 1,778 1,783 Source: Company, Nirmal Bang Research Exhibit 6: Advertisement revenues (Rsmn) (Rsmn) 1,2 1,4 1, Source: Company, Nirmal Bang Research Exhibit 7: Advertisement revenues per screen (annualised) (Rsmn) Source: Company, Nirmal Bang Research Source: Company, Nirmal Bang Research Exhibit 8: F&B spending per head (Rs)- SPH Exhibit 9: Occupancy rate (%) (Rs) (%) Source: Company, Nirmal Bang Research Source: Company, Nirmal Bang Research 7

8 Exhibit 1: Footfalls (mn) (mn) Exhibit 11: Number of screens Source: Company, Nirmal Bang Research Source: Company, Nirmal Bang Research Exhibit 12: Gross average ticket price (Rs) (Rs) Source: Company, Nirmal Bang Research 8

9 Exhibit 13: Admits (mn) Exhibit 14: Average ticket price (Rs) (Rsmn) (Rs) Admits (mn) Comparable Properties 15 Average Ticket Price (Rs) Comparable Properties Exhibit 15: Spending per head (Rs) Exhibit 16: Sponsorship revenues (Rsmn) (Rs) (Rsmn) 1, , Spending Per Head (Rs) Comparable Properties Sponsorship Revenues (Rs mn) Comparable Properties Source: Company, Nirmal Bang Research Exhibit 17: Occupancy rate (%) (%) Occupancy Rate (%) Comparable Properties Source: Company, Nirmal Bang Research 9

10 Aug-8 Jan-9 Jun-9 Nov-9 Apr-1 Sep-1 Feb-11 Jul-11 Dec-11 May-12 Oct-12 Mar-13 Aug-13 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18 Jan-19 Exhibit 18: EV/EBITDA chart (x) Source: Company, Nirmal Bang Research EV/EBITDA MEAN 2SD (2)SD 1

11 Financials (consolidated including SPI Cinemas) Exhibit 19: Income statement Y/E March (Rsmn) FY17 FY18 FY19E FY2E FY21E Exhibit 2: Cash flow Y/E March (Rsmn) FY17 FY18 FY19E FY2E FY21E Net Sales 21,598 23,341 3,115 36,381 41,97 EBIT 2,221 2,481 3,647 4,864 6,82 Growth (%) (Inc.)/dec. in working capital 1, ,472 (49) (555) Exhibition Cost (Distributor Share) 4,641 5,377 6,841 8,85 9,411 Cash flow from operations 3,921 3,229 7,119 4,374 5,527 Food & BeverAHes Cost 1,41 1,591 2,274 2,799 3,268 Other income Employee Benefits Expense 2,25 2,541 3,46 4,169 4,745 Depreciation & amortisation 1,384 1,491 1,847 1,988 1,988 Rent 3,847 4,111 5,127 6,253 7,98 Financial expenses ,264 1,677 1,677 Repairs & Maintenance, ,11 1,478 1,671 Tax paid ,24 1,37 1,751 Electricity & common area 2,493 2,563 3,29 3,941 4,47 Dividends paid maintenance Other Exp (includes production, Net cash from operations 3,971 3,399 6,886 3,522 4,26 2,361 2,264 2,843 2,84 3,172 distribution and print charges) Capital expenditure 3,18 2,6 5,158 5,848 6,436 Total Expenses 17,855 19,368 24,621 29,529 33,836 Increase in other non current 4,134 (9) 7, EBITDA 3,743 3,973 5,495 6,852 8,71 assets Net cash after capex (3,272) 1,348 (6,123) (3,17) (3,5) Growth (%) Inc./(dec.) in debt 1,56 (687) 3,719 % of sales (Inc.)/dec. in investments (2,42) 1 2,5 Depreciation & Amortization 1,384 1,491 1,847 1,988 1,988 Equity Issuance (29) (5) (16) 2,5 () EBIT 2,36 2,481 3,647 4,864 6,82 Cash from financial activities 3,952 (739) (1,497) (1,458) (1,457) % of sales Others (7,66) 1, , Other income (net) Opening cash 2, ,255 1,197 Interest ,264 1,677 1,677 Closing cash ,98 1, Exceptional Item Change in cash (1,554) (13) 2, (824) PBT 1,667 1,952 2,76 3,619 4,626 PBT margin (%) Source: Company, Nirmal Bang Research Tax ,24 1,37 1,751 Effective tax rate (%) Exhibit 22: Key ratios Net profit 1,97 1,247 1,736 2,249 2,875 Y/E March (Rsmn) FY17 FY18 FY19E FY2E FY21E Minority Interest (1) 7 (11) Per share (Rs) Adjusted Net Profit 1,96 1,254 1,725 2,249 2,875 FDEPS Growth (%) (8) Dividend Per Share Net profit margin (%) Dividend Yield (%) Source: Company, Nirmal Bang Research Exhibit 21: Balance sheet Return ratios (%) Book Value Dividend Payout Ratio (incl DT) Y/E March (Rsmn) FY17 FY18 FY19E FY2E FY21E RoE Equity capital RoCE Reserves & surplus 9,183 1,286 11,838 16,22 18,795 ROIC Networth 9,65 1,754 12,35 16,829 19,422 Tunover Ratios Minority Interest ,521 2,521 2,521 Asset Turnover Ratio Other liabilities ,449 3,449 3,449 Debtor days Total Debt 7,31 6,614 1,333 1,333 1,333 Working Capital Cycle Days (67) (73) (99) (77) (62) Total liabilities 17,436 17,482 28,68 33,132 35,725 Solvency Ratios Net Fixed Assets 11,53 12,39 16,79 19,65 21,565 Net Debt/Equity Intangible assets 4,569 4,55 12,782 12,782 12,782 Net Debt/EBITDA Goodwill on consolidation Valuation ratios (x) Long term loans and advances 1,784 2,144 2,52 2,958 3,365 PER Deferred tax asset P/BV Other non-current assets 6,914 6,821 14,337 14,59 14,824 EV/EBTDA Cash & bank balances ,98 1, EV/Sales Current Investment ,511 2,511 M-cap/Sales Current assets 2,125 2,311 2,886 3,338 3,757 Source: Company, Nirmal Bang Research Current liabilities 6,71 7,5 11,52 11,14 1,877 Net current assets (3,946) (4,694) (8,166) (7,676) (7,12) Total assets 17,437 17,482 28,68 33,132 35,725 Source: Company, Nirmal Bang Research 11

12 Apr-16 May-16 Jul-16 Sep-16 Oct-16 Dec-16 Feb-17 Mar-17 May-17 Jul-17 Aug-17 Oct-17 Dec-17 Jan-18 Mar-18 May-18 Jun-18 Aug-18 Oct-18 Nov-18 Jan-19 Rating track Date Rating Market price (Rs) Target price (Rs) 5 October 216 Buy 1,235 1,416 1 November 216 Buy 1,223 1,446 6 December 216 Buy 1,69 1,275 6 February 217 Accumulate 1,298 1, February 217 Accumulate 1,298 1, May 217 Accumulate 1,514 1, May 217 Accumulate 1,448 1, July 217 Accumulate 1,357 1,453 3 October 217 Accumulate 1,42 1,458 1 February 218 Accumulate 1,46 1,59 7 May 218 Buy 1,425 1, July 218 Buy 1,119 1, October 218 Buy 1,296 1, January 219 Buy 1,562 1,796 Rating track graph Not Covered Covered 12

13 DISCLOSURES This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) for private circulation. NBEPL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 214 having Registration no. INH1436. NBEPL is also a registered Stock Broker with National Stock Exchange of India Limited and BSE Limited in cash and derivatives segments. NBEPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. NBEPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. NBEPL, its associates or analyst or his relatives do not hold any financial interest in the subject company. NBEPL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. NBEPL or its associates or Analyst or his relatives do not hold beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of this research report. NBEPL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. NBEPL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and NBEPL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I, Girish Pai, research analyst, am the author of this report, hereby certifies that the views expressed in this research report accurately reflects my personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 13

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