RESULT REVIEW

BUY TP: Rs 350 |  41%

| Oil & Gas

PETRONET LNG

| 09 February 2018

Upbeat volumes, stable margins PLNG’s Q3FY18 earnings at Rs 5.3bn (+33% YoY, –10% QoQ) marginally underperformed our estimates. Key Q3 highlights: (a) operating margins marginally lower at Rs 38/mmbtu, with EBITDA at Rs 8.5bn (+40% YoY, –6% QoQ); (b) volumes in line at 223tbtu (+16.5% YoY), at ~91% average utilisation of effective Dahej capacity. There is a high probability of PLNG garnering some part of the incremental LNG volumes in the industry. We roll over to a Mar’19 DCF value of Rs 350 (from Rs 330). PLNG remains our top pick.

Rohit Ahuja +91 22 6138 9311 [email protected]

Robust volumes: PLNG’s overall Q3 volumes were in line at 223tbtu (+16.5% YoY, +1.4% QoQ), led by a surge in regasification volumes to 92tbtu (~1.7mmt, +22% YoY). Long-term contract volumes were at 125tbtu (+16.3% YoY, -6.7% QoQ), leading to a total of 472tbtu (or 8.9mmtpa) for CY17, in line with offtake necessary for the RasGas and Dahej contracts. Similarly, regasification service volumes for 9MFY18 at 252tbtu (or 4.75mmtpa) are on track to meet 85-90% of known contractual commitments.

Ticker/Price Market cap Shares o/s 3M ADV 52wk high/low Promoter/FPI/DII

Akshay Mane +91 22 6138 9318 [email protected]

PLNG IN/Rs 249 US$ 5.8bn 1,500mn US$ 20.0mn Rs 276/Rs 187 50%/26%/24%

Source: NSE

Margins stabilise, reflecting utility nature of business: PLNG’s EBITDA/ mmbtu averaged at Rs 38 (+20% YoY, –7% QoQ), outperforming the annualised 5% re-gas tariff hike on better operating efficiencies. Margins should trend higher from Q4FY18 led by annual re-gas tariff hikes across all PLNG’s contracts. Kochi has achieved profitability at the EBITDA level and we expect net breakeven by FY20, once volumes scale up to ~2mmt. Valuations carry strong re-rating potential: With structural improvement expected in EBITDA/mmbtu coupled with >25% ROE visibility for the long term, we believe PLNG is ripe for a re-rating. Current valuations at 10.5x FY20E EPS are compelling. PLNG remains our top pick in the oil & gas sector, with our revised DCF-based target price of Rs 350 carrying over 40% upside. KEY FINANCIALS

STOCK PERFORMANCE FY16A

FY17A

FY18E

FY19E

FY20E

(Rs)

9,133

17,057

22,157

26,525

35,446

Adj. EPS (Rs)

6.1

11.4

14.8

17.7

23.6

Adj. EPS growth (%)

3.5

86.8

29.9

19.7

33.6

14.6

23.2

24.1

24.0

27.7

320 270 220 170 120 70

40.9

21.9

16.9

14.1

10.5

25.1

14.6

12.1

10.0

7.5

Adj. net profit (Rs mn)

Adj. ROAE (%) Adj. P/E (x) EV/EBITDA (x)

Source: Company, BOBCAPS Research BOB Capital Markets Ltd is a wholly owned subsidiary of Bank of Baroda Important disclosures, including any required research certifications, are provided at the end of this report.

PLNG

Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18

Y/E 31 Mar

Source: NSE

PETRONET LNG

FIG 1 – QUARTERLY PERFORMANCE (Rs mn)

Q3FY18

Q3FY17

YoY (%)

Q2FY18

QoQ (%)

9MFY18

9MFY17

YoY (%)

Net sales

77,571

62,993

23.1

77,702

(0.2)

219,624

182,510

20.3

Cost of Goods

67,559

55,569

21.6

67,427

0.2

190,453

158,949

19.8

87.1

88.2

-

86.8

-

86.7

87.1

-

1,538

1,354

13.6

1,288

19.4

4,268

3,801

12.3

2.0

2.1

-

1.7

1.9

2.1

-

8,474

6,071

39.6

8,987

(5.7)

24,903

19,760

26.0

10.9

9.6

-

11.6

-

11.3

10.8

-

% of sales Other expenditure % of sales EBITDA EBITDA margin (%) EBITDA (Rs/mmbtu)

38.0

31.7

19.8

40.9

(7.0)

39.2

36.0

8.9

Blended margin (Rs/mmbtu)

44.9

38.8

15.7

46.7

(3.9)

46.0

43.0

7.0

Depreciation & amortization

1,039

1,009

3.0

1,039

0.0

3,104

2,675

16.1

Interest

367

517

(29.1)

465

(21.1)

1,296

1,627

(20.4)

Other income

414

550

(24.8)

1,019

(59.4)

2,140

1,959

9.3

PBT

7,482

5,095

46.8

8,504

(12.0)

22,643

17,417

30.0

Provision for tax

2,194

1,121

95.8

2,616

(16.1)

7,092

5,068

39.9

PAT

5,288

3,975

33.0

5,888

(10.2)

15,552

12,349

25.9

6.8

6.3

-

7.6

-

7.1

6.8

-

3.5

2.6

33.0

3.9

(10.2)

10.4

8.2

25.9

Q3FY18

Q3FY17

YoY (%)

Q2FY18

QoQ (%)

9MFY18

9MFY17

YoY (%)

NPM (%) EPS (Rs) Source: Company, BOBCAPS Research

FIG 2 – VOLUME PROFILE (tbtu) Long-term contract

125

107

16.3

134

(6.7)

666

316

110.8

Dahej

119

107

10.7

127

(6.3)

666

316

110.8

Kochi

6

-

-

7

(14.3)

-

-

-

6

9

(30.2)

7

(14.3)

62

47

33.2

4

5

(16.5)

4

-

50

35

42.2

Spot Dahej Kochi

2

4

(47.4)

3

(33.3)

12

11

5.0

92

75

22.2

79

16.5

426

186

128.9

Dahej

92

75

22.2

79

16.5

426

186

128.9

Kochi

-

-

-

-

-

-

-

-

Regasification services

Total Volumes

223

191

16.5

220

1.4

1,154

548

110.4

Dahej

215

188

14.6

210

2.4

1,142

537

112.6

Kochi

8

4

110.5

10

(20.0)

12

11

5.0

Source: Company, BOBCAPS Research

FIG 3 – OPERATING TRENDS Term Blended margin (R)

(tbtu) 250

Spot EBITDA margin (R)

Tolling

(Rs/tbtu) 50

Q3FY18

Q2FY18

Q1FY18

Q4FY17

Q3FY17

Q2FY17

Q1FY17

Q4FY16

0 Q3FY16

0 Q2FY16

10 Q1FY16

50 Q4FY15

20

Q3FY15

100

Q2FY15

30

Q1FY15

150

Q4FY14

40

Q3FY14

200

Source: Company, BOBCAPS Research

EQUITY RESEARCH

2

09 February 2018

PETRONET LNG

Earnings call takeaways Dahej 

Long-term volumes at Dahej stood at 119tbtu (+10.7% YoY, –6.3% QoQ) in Q3FY18, while spot volumes were at 4tbtu and re-gas volumes at 92tbtu. The Dahej terminal operated at ~91% utilisation of effective capacity.



PLNG achieved higher profitability on efficiency gains and higher volumes due to an increase in re-gas capacity.



All contracted volumes were lifted during CY17. Volumes will fluctuate from quarter to quarter, but will tally with full contracted volumes on a calendar year basis.



Management saw no impact on volumes due to higher oil prices. No take-orpay volumes were booked at Dahej.



The company took a price hike of 5% in January.



Further expansion at Dahej from 15mmtpa to 17.5mmtpa is proceeding as per schedule and is expected to be operational by Jun’19. About 70% of the work has been completed. PLNG has no further expansion plans. One more LNG tank is to be constructed for which bids have been invited. This tank is being built for ease of operations and will not add to capacity.



The additional capacity of 2.5mmt at Dahej is yet to be contracted. Management believes this will provide some operational flexibility, but remains open to tying up the capacity should the opportunity arise.

Kochi

EQUITY RESEARCH



Kochi operated at only 12% utilisation in Q3FY18 (8tbtu, –20% QoQ), as FACT stopped lifting volumes from Nov’17 and will resume only by Apr’18. Also, BPCL’s Kochi terminal is yet to fully stabilise and have full volume offtake.



On a steady basis, management expects offtake from Kochi refinery to be ~0.5mmt and from FACT ~0.25mmt.



Management has guided that utilisation will continue to improve gradually, while a more significant uptick should occur once the Kochi-Mangalore pipeline commences operations by Dec’18.

3

09 February 2018

PETRONET LNG

Sri Lanka and Bangladesh projects 

PLNG aims to expand operations in Bangladesh and Sri Lanka. All commercial discussions have been completed for the Bangladesh projects, while talks with Sri Lanka are underway. Management does not expect to incur significant capex on these projects in the next one year.



The Sri Lanka project cost is estimated at ~US$ 300mn with PLNG’s stake proposed at 47.75%, while the balance would be held by a Japanese partner and the Sri Lankan government.

Capex 

PLNG’s capex for FY18 was Rs 2bn. Management has guided for capex of Rs 4bn in FY19, of which Rs 1bn will be spent on the LNG tank. A bulk of the outlay will be toward the ongoing expansion of Dahej capacity.



Total capex on the tank would be Rs 5.5bn-6bn over three years.



After the expansion at Dahej and tank construction, management has guided for maintenance capex of Rs 320mn-400mn on a steady basis.

Other highlights

EQUITY RESEARCH



Current debt levels are at ~Rs 15.2bn while cash in hand stands at ~Rs 40bn.



Other expenditure for Q3FY18 was higher on IndAS adjustments to forex gains/loss on loans of ~Rs 220mn and MTM valuations of investments at ~Rs 310mn.



Additional volumes of 1.2mmt from Gorgon will not start for the next 1-2 years.

4

09 February 2018

PETRONET LNG

Valuation methodology With our expectations of structural improvement in EBITDA/mmbtu coupled with >25% ROE visibility for the long term, we believe PLNG is ripe for a re-rating. Current valuations at 10.5x FY20E EPS are compelling. We roll over to a Mar’19 DCF value of Rs 350 (from a Sep’18 TP of Rs 330) and reiterate BUY. PLNG remains our top pick in the oil & gas sector. FIG 4 – VALUATION SNAPSHOT Particulars

Dahej terminal

Kochi terminal

NPV of FCFE (Rs mn)

246,918

26,857

273,775

Terminal value (Rs mn)

191,499

17,142

208,641

EV (Rs mn)

438,417

43,999

482,417

EV (Rs/share)

Total

292

29

322

Add: Net cash, other investments (Rs mn)

-

-

45,208

Equity Value (Rs mn)

-

-

527,625

Equity value (Rs/share)

-

-

350

Source: BOBCAPS Research

FIG 5 – VALUATION SENSITIVITY

Terminal growth (%)

Cost of Equity (%) (Rs)

9.7

10.7

11.7

12.7

(2)

400

(1)

415

0

13.7

363

331

305

282

375

341

312

288

434

389

350

321

294

1

457

406

365

331

302

2

486

427

380

343

311

Source: BOBCAPS Research

FIG 6 – CONTRACTS FOR DAHEJ Company

(mmtpa)

Current contracts

8.5

GAIL

5.1

IOCL

2.6

BPCL

0.9

GSPC

1.25

Post expansion (FY18 onwards)

8.5

GAIL

2.5

GSPC

1.0

IOCL

1.5

BPCL

1.0

Torrent Power

0.75

Total effective long-term contracts

15.5

Source: BOBCAPS Research

EQUITY RESEARCH

5

09 February 2018

PETRONET LNG

FIG 7 – KEY ASSUMPTIONS Particulars

FY18E

FY19E

FY20E

Volumes (mmtpa)

15.3

16.3

18.3

Re-gas tariffs (Rs/mmbtu)

45.3

47.5

49.9

0.8

1.0

2.2

76.3

75.2

64.1

Dahej terminal

Kochi terminal Volumes (mmtpa) Re-gas tariffs (Rs/mmbtu) Total volumes (mmtpa)

16.1

17.3

20.5

Blended EBITDA (Rs/mmbtu)

37.9

40.0

42.9

Blended re-gas tariffs (Rs/mmbtu)

44.6

46.8

49.6

Source: BOBCAPS Research

FIG 8 – ROLLING P/E BAND (ONE-YEAR FORWARD) Price

300 250

Max Min Avg Median Last

18.0 8.5 13.1 13.2 14.4

Feb-13

350

Sep-12

(Rs) 400

8x

11x

14x

17x

20x

200 150 100 50 Mar-17

Aug-17

Feb-18

Mar-17

Aug-17

Feb-18

Sep-16

Apr-16

Nov-15

May-15

Dec-14

Jun-14

Jan-14

Aug-13

Apr-12

0

Source: Bloomberg, BOBCAPS Research

FIG 9 – ROLLING P/B BAND (ONE-YEAR FORWARD) Price

300 250 200

Max Min Avg Median Last

3.7 1.4 2.4 2.3 3.2

Feb-13

350

Sep-12

(Rs)

1x

2x

3x

4x

150 100 50 Sep-16

Apr-16

Nov-15

May-15

Dec-14

Jun-14

Jan-14

Aug-13

Apr-12

0

Source: Bloomberg, BOBCAPS Research

EQUITY RESEARCH

6

09 February 2018

PETRONET LNG

FIG 10 – RELATIVE STOCK PERFORMANCE PLNG

NSE Nifty

320 270 220 170 120

Feb-18

Nov-17

Aug-17

May-17

Feb-17

Nov-16

Aug-16

May-16

Feb-16

Nov-15

Aug-15

May-15

Feb-15

70

Source: NSE

Key risks

EQUITY RESEARCH



Regulatory risks: The regasification tariffs charged by PLNG are currently not regulated by PNGRB. Any move by the government to regulate tariffs can lead to a sharp de-rating of the stock.



Competition from other regasification terminals: About 20mmtpa of regasification capacities are likely to come up across India over the next 3-5 years. The closest terminal to Dahej is Mundra (GSPC-Adani JV) in Gujarat, to be ready by FY19. PLNG may have to compete for incremental contracts if it expands Dahej capacity to 20mmtpa. While current contracts fully hedge PLNG against competition, marketing margins on spot volumes could be affected.

7

09 February 2018

PETRONET LNG

FINANCIALS Income Statement Y/E 31 Mar (Rs mn) Total revenue

FY16A

FY17A

FY18E

FY19E

FY20E

2,71,334

2,46,160

3,29,156

3,74,756

4,43,412

15,863

25,923

32,299

36,712

46,604

EBITDA EBIT Net interest income/(expenses) Other income/(expenses) EBT Income taxes Adjusted net profit

12,647

22,232

27,745

32,033

41,797

(2,388)

(2,097)

(1,237)

(275)

0

1,733

3,466

4,698

6,135

8,126

11,992

23,602

31,207

37,893

49,923

(2,860)

(6,545)

(9,050)

(11,368)

(14,478)

9,133

17,057

22,157

26,525

35,446

FY16A

FY17A

FY18E

FY19E

FY20E

Balance Sheet Y/E 31 Mar (Rs mn) Accounts payables

7,721

9,446

18,732

20,729

20,729

17,961

17,702

20,107

22,548

24,123

408

723

723

723

723

Debt funds

26,146

22,180

6,342

0

0

Other liabilities

5,886

7,302

7,582

7,862

8,142

7,500

7,500

15,000

15,000

15,000

58,640

73,439

87,819

1,03,482

1,22,339

Other current liabilities Provisions

Equity capital Reserves & surplus Shareholders’ fund Total liabilities and equities

66,140

80,939

1,02,819

1,18,482

1,37,339

1,24,261

1,38,291

1,56,304

1,70,343

1,91,055

Cash and cash eq.

21,829

3,273

12,891

25,164

43,224

Accounts receivables

9,885

12,108

18,815

21,403

25,171

Inventories

2,461

5,405

8,720

9,072

9,072

Other current assets

5,576

3,438

3,235

3,610

4,171

900

29,351

29,351

29,351

29,351

Net fixed assets

68,105

84,230

82,662

81,114

79,437

CWIP

15,505

486

630

630

630

1,24,261

1,38,291

1,56,304

1,70,343

1,91,055

Investments

Total assets

Source: Company, BOBCAPS Research

EQUITY RESEARCH

8

09 February 2018

PETRONET LNG

Cash Flows Y/E 31 Mar (Rs mn)

FY16A

FY17A

FY18E

FY19E

FY20E

Net income + Depreciation

12,349

20,744

26,710

31,204

40,253

Changes in working capital

19,479

(1,248)

1,873

1,123

(2,754)

Other operating cash flows

(780)

(2,050)

(4,418)

(5,855)

(7,846)

Cash flow from operations

31,047

17,445

24,164

26,471

29,652

Capital expenditures

(9,931)

(33,244)

(3,130)

(3,130)

(3,130)

1,733

3,466

4,698

6,135

8,126

(8,198)

(29,778)

1,568

3,005

4,996

0

0

7,500

0

0

Debt raised/repaid

(2,832)

(3,966)

(15,838)

(6,342)

0

Dividends paid

(2,257)

(4,513)

(7,777)

(10,862)

(16,589)

447

2,256

0

0

0

Cash flow from financing

(4,641)

(6,223)

(16,115)

(17,204)

(16,589)

Changes in cash and cash eq.

18,208

(18,556)

9,618

12,273

18,060

Closing cash and cash eq.

21,829

3,273

12,891

25,164

43,224

FY16A

FY17A

FY18E

FY19E

FY20E

Reported EPS

6.1

11.4

14.8

17.7

23.6

Adjusted EPS

6.1

11.4

14.8

17.7

23.6

Dividend per share

1.3

2.5

4.4

6.2

9.5

44.1

54.0

68.5

79.0

91.6

FY16A

FY17A

FY18E

FY19E

FY20E

1.5

1.5

1.2

1.0

0.8

EV/EBITDA

25.1

14.6

12.1

10.0

7.5

Adjusted P/E

40.9

21.9

16.9

14.1

10.5

5.6

4.6

3.6

3.2

2.7

FY16A

FY17A

FY18E

FY19E

FY20E

Other investing cash flows Cash flow from investing Equities issued/Others

Other financing cash flows

Per Share Y/E 31 Mar (Rs)

Book value per share

Valuations Ratios Y/E 31 Mar (x) EV/Sales

P/BV

DuPont Analysis Y/E 31 Mar (%) Tax burden (Net profit/PBT)

76.2

72.3

71.0

70.0

71.0

Interest burden (PBT/EBIT)

94.8

106.2

112.5

118.3

119.4

4.7

9.0

8.4

8.5

9.4

230.2

187.5

223.5

229.5

245.4

1.9

1.8

1.6

1.5

1.4

14.6

23.2

24.1

24.0

27.7

EBIT margin (EBIT/Revenue) Asset turnover (Revenue/Avg TA) Leverage (Avg TA/Avg Equity) Adjusted ROAE

Source: Company, BOBCAPS Research | Note: TA = Total Assets

EQUITY RESEARCH

9

09 February 2018

PETRONET LNG

Ratio Analysis Y/E 31 Mar

FY16A

FY17A

FY18E

FY19E

FY20E

Revenue

(31.3)

(9.3)

33.7

13.9

18.3

EBITDA

10.2

63.4

24.6

13.7

26.9

3.5

86.8

29.9

19.7

33.6

5.8

10.5

9.8

9.8

10.5

EBIT margin

4.7

9.0

8.4

8.5

9.4

Adjusted profit margin

3.4

6.9

6.7

7.1

8.0

Adjusted ROAE

14.6

23.2

24.1

24.0

27.7

ROCE

10.7

16.4

18.6

19.7

23.2

16

16

17

20

19

YoY growth (%)

Adjusted EPS Profitability & Return ratios (%) EBITDA margin

Working capital days (days) Receivables Inventory

8

7

9

10

9

Payables

8

14

17

21

19

Ratios (x) Gross asset turnover

3.1

2.5

3.0

3.3

3.8

Current ratio

1.5

0.9

1.1

1.3

1.8

Net interest coverage ratio

5.3

10.6

nm

nm

nm

Adjusted debt/equity

0.1

0.2

(0.1)

(0.2)

(0.3)

Source: Company, BOBCAPS Research

EQUITY RESEARCH

10

09 February 2018

PETRONET LNG

Disclaimer Recommendations and Absolute returns (%) over 12 months BUY – Expected return >+15% ADD – Expected return from >+5% to +15% REDUCE – Expected return from -5% to +5% SELL – Expected return <-5% Note: Recommendation structure changed with effect from 1 January 2018

Rating distribution As of 09 February 2018, out of 65 rated stocks in the BOB Capital Markets Limited (BOBCAPS) coverage universe, 44 have BUY ratings, 7 are rated ADD, 5 have HOLD* ratings, 2 are rated REDUCE and 7 are rated SELL. None of these companies have been investment banking clients in the last 12 months. (*Our HOLD ratings are in the process of being migrated to the new recommendation structure.)

Analyst certification The research analyst(s) authoring this report hereby certifies that (1) all of the views expressed in this research report accurately reflect his/her personal views about the subject company or companies and its or their securities, and (2) no part of his/her compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) in this report. Analysts are not registered as research analysts by FINRA and are not associated persons of BOBCAPS.

General disclaimers BOBCAPS is engaged in the business of Institutional Stock Broking and Investment Banking. BOBCAPS is a member of the National Stock Exchange of India Limited and BSE Limited and is also a SEBI-registered Category I Merchant Banker. BOBCAPS is a wholly owned subsidiary of Bank of Baroda which has its various subsidiaries engaged in the businesses of stock broking, lending, asset management, life insurance, health insurance, wealth management and portfolio management, among others. BOBCAPS’s activities have neither been suspended nor has it defaulted with any stock exchange authority with whom it has been registered in the last five years. BOBCAPS has not been debarred from doing business by any stock exchange or SEBI or any other authority. No disciplinary action has been taken by any regulatory authority against BOBCAPS affecting its equity research analysis activities. BOBCAPS has obtained registration as a Research Entity under SEBI (Research Analysts) Regulations, 2014, having registration No.: INH000000040 valid till 03 February 2020. BOBCAPS generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, BOBCAPS generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of BOBCAPS’s clients. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. BOBCAPS does not provide tax advice to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment in certain transactions — including those involving futures, options, and other derivatives as well as non-investment-grade securities —that give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavour to update on a reasonable basis the information discussed in this material, but regulatory, compliance, or other reasons may prevent us from doing so.

EQUITY RESEARCH

11

09 February 2018

PETRONET LNG

We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein and may from time to time add to or dispose of any such securities (or investment). We and our affiliates may act as market makers or assume an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell them to or buy them from customers on a principal basis, and may also perform or seek to perform investment banking or advisory services for or relating to these companies and may also be represented in the supervisory board or any other committee of these companies. For the purpose of calculating whether BOBCAPS and its affiliates hold, beneficially own, or control, including the right to vote for directors, one per cent or more of the equity shares of the subject company, the holdings of the issuer of the research report is also included. BOBCAPS and its non-US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non-US issuers, prior to or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies, effectively assume currency risk. In addition, options involve risks and are not suitable for all investors. Please ensure that you have read and understood the Risk disclosure document before entering into any derivative transactions. In the US, this material is only for Qualified Institutional Buyers as defined under rule 144(a) of the Securities Act, 1933. No part of this document may be distributed in Canada or used by private customers in the United Kingdom. No part of this material may be (1) copied, photocopied, or duplicated in any form by any means or (2) redistributed without BOBCAPS’s prior written consent.

Company-specific disclosures under SEBI (Research Analysts) Regulations, 2014 The research analyst(s) or his/her relatives do not have any material conflict of interest at the time of publication of this research report. BOBCAPS or its research analyst(s) or his/her relatives do not have any financial interest in the subject company. BOBCAPS or its research analyst(s) or his/her relatives do not have actual/beneficial ownership of one per cent or more securities in the subject company at the end of the month immediately preceding the date of publication of this report. The research analyst(s) has not received any compensation from the subject company in the past 12 months. Compensation of the research analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. BOBCAPS or its research analyst(s) is not engaged in any market making activities for the subject company. The research analyst(s) has not served as an officer, director or employee of the subject company. BOBCAPS or its associates may have material conflict of interest at the time of publication of this research report. BOBCAPS’s associates may have financial interest in the subject company. BOBCAPS’s associates may hold actual / beneficial ownership of one per cent or more securities in the subject company at the end of the month immediately preceding the date of publication of this report. BOBCAPS or its associates may have managed or co-managed a public offering of securities for the subject company or may have been mandated by the subject company for any other assignment in the past 12 months. BOBCAPS may have received compensation from the subject company in the past 12 months. BOBCAPS may from time to time solicit or perform investment banking services for the subject company. BOBCAPS or its associates may have received compensation from the subject company in the past 12 months for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory services in a merger or specific transaction. BOBCAPS or its associates may have received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.

EQUITY RESEARCH

12

09 February 2018