TTK Prestige

BUY
COMPANY INSIGHT TTKPT IN EQUITY
CONSUMER Recommendation
Mcap (bn): 6M ADV (mn): CMP: TP (12 mths): Upside (%): `40/US$650mn `79/US$1.3 ` 3,490 ` 3,650 5

January 20, 2014

Waiting for a revival in 1QFY15

In line with our expectation, due to a high induction-cooktop base effect, TTK Prestige reported a revenue decline of 15% YoY in 3QFY14. Whilst 4QFY14 is likely to see a partial revival in sales growth, we expect strong growth in revenues and earnings only from 1QFY15. As nearterm headwinds are likely to fade over the next six months and with market shares continuing to increase/maintain across all products and geographies, we continue to expect over 20% revenue and earnings CAGR from FY15. Whilst the current FY15 P/E of 26.0x leaves limited room for an upward re-rating, we expect a strong revival in fundamentals to be priced in from 1QFY15. We reiterate our BUY stance with better entry points for investors likely over the next three months given the temporary short-term headwinds. Competitive position: STRONG Changes to this position: NONE 3QFY14 weakness solely due to high base of induction cooktop sales With a revenue decline of 15% YoY, negative operating leverage led to a 31% YoY decline in PAT during 3QFY14. However, after stripping out the induction cooktop base effect, the firm reported a 13% YoY growth in appliance sales and ~2% YoY growth in the revenues of pressure cookers and cookware. Other temporary headwinds facing the firm currently include distribution disruptions in Andhra Pradesh and the power crisis in Tamil Nadu. Positive catalysts likely from 1QFY15 onwards Since the Government revised the annual LPG-cylinder cap from 6 to 9 in Jan 2013, the induction cooktop high base effect will normalise fully only from March 2013. Also, revenue growth over the next six months will see support from: (a) rollout of hard-anodised cookware from its newly commissioned Gujarat plant; (b) expansion of export sales for cookware and microwave safe pressure cookers; and (c) new product launches like water-purifiers. Long-term fundamental strengths remain intact; market shares robust TTK Prestige continues to build on its competitive strengths including: (a) expansion of distribution network; (b) launch of innovative products; and (c) scale advantages allowing investments into brand recall creation. Consequently, the firm continues to gain share from Hawkins in non-south regions and from Preethi and Stovekraft in southern regions. Thus, we expect earnings growth to revive to above 20% CAGR from FY15 onwards. Fairly valued currently; growth related upside likely in FY15 Given the sustainability of its competitive advantages and strong cash generation, TTK Prestige deserves to trade at a premium to most other discretionary consumption firms. With its current FY15 P/E of 26.0x, the stock price looks fairly valued. However, we see the likelihood of better entry points for investors over 4QFY14 given the ongoing temporary headwinds. We reiterate our BUY stance with a DCF-based fair value of `3,650, 5% upside.
Key financials (` mn)
Year to March Operating income EBITDA EBITDA margin (%) EPS (`) RoE (%) RoCE (%) P/E (x) FY12 11,034 1,751 15.6% 100.1 47.6% 47.3% 34.8 FY13 13,585 2,085 15.0% 117.6 39.1% 35.0% 29.6 FY14E 13,304 1,909 13.6% 102.1 24.3% 22.7% 34.1 FY15E 16,435 2,436 14.2% 133.6 25.8% 25.8% 26.0 FY16E 20,267 3,020 14.2% 169.3 30.6% 30.6% 20.6

Flags
Accounting: Predictability: Earnings Momentum: GREEN AMBER AMBER

Catalyst Recovery in Tamil Nadu Favourable base effect 1QFY15 onwards Performance (%)
23,000 21,000 19,000 17,000
May-13 Sep-13 Nov-13 Mar-13 Jan-13 Jul-13 Jan-14

4000 3600 3200 2800

Sensex

TTK

Source: Bloomberg, Ambit Capital research

Analyst Details
Rakshit Ranjan, CFA Tel: +91 22 3043 3201 rakshitranjan@ambitcapital.com Shariq Merchant Tel: +91 22 3043 3246 shariqmerchant@ambitcapital.com

Source: Company, Ambit Capital research

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.

TTK Prestige

3QFY14 results Analysing the macroheadwinds

TTK Prestige reported, in line with our expectation, a weak set of quarterly results for 3QFY14, with a 15% YoY decline in revenues. Gross margins expanded by 80bps YoY because: (a) the firm passed on input cost inflation related to INR depreciation to customers through price increases; and (b) product mix was changed away from the low-margin electrical appliances segment. However, since some operating costs are fixed in nature, a 15% YoY decline in revenues led to a 170bps YoY compression in EBITDA margins for the firm. Consequently, EBITDA declined by 26% YoY and PAT declined by 31% YoY during 3QFY14. However, since there was a temporary headwind during the quarter in the form of a high base effect of induction cooktop sales, we have analysed below the underlying performance of the business excluding this temporary headwind.
Exhibit 1: Quarterly snapshot (` mn)
3QFY14 Net Sales Total revenues Raw materials Gross Profit Gross Margin Employee cost Other expenditure Total expenditure EBITDA EBITDA margin Other income Depreciation PBIT Interest PBT Tax PAT EPS 3,694 3,694 2,078 1,616 43.7% 245 910 1,155 461 12.5% 25 46 440 20 421 115 306 25.30 2QFY14 3,455 3,455 2,047 1,409 40.8% 229 736 965 444 12.8% 26 40 431 22 409 106 303 26.03 3QFY13 3QFY14E 4,371 4,371 2,495 1,876 42.9% 231 1,024 1,255 621 14.2% 9 22 609 31 578 136 442 39.00 3,923 3,923 2,252 1,671 42.6% 247 883 1,130 541 13.8% 30 25 546 546 137 409 36.20 YoY -15% -15% -17% -14% 82 6% -11% -8% -26% (173) 169% 110% -28% -37% -27% -16% -31% -35% QoQ 7% 7% 2% 15% 297 7% 24% 20% 4% (36) -4% 16% 2% -10% 3% 8% 1% -3% Deviation from Ambit estimates -6% -6% -8% -3% 115 -1% 3% 2% -15% (131) -16% 85% -19% NA -23% -16% -25% -30%

Source: Ambit Capital research

Analysing the induction cooktop 3QFY14, 4QFY14 and FY15

base

effect

for

As shown in the exhibit below, induction cooktop sales as a proportion of overall revenues for TTK Prestige was 13-14% during FY12, 1HFY13 and 9MFY14. However, in September 2012, the Government announced a six cylinder cap on the annual consumption of subsidised gas-cylinders in every household. This led to a surge in the sales of induction cooktops for all players including TTK Prestige (~85% YoY growth in 3QFY13). However, once the cap was revised upwards from six cylinders to nine cylinders in January 2013, the growth of induction cooktop market moderated to normal levels by March 2013. Consequently, TTK Prestige saw the proportion of its overall revenues from induction cooktop sales rise to 23% in 3QFY14 and 20% in 4QFY13 (see the exhibit below). Moreover, all cooktop players in the market, including TTK Prestige, were running a promotion of induction-friendly pressure cookers and cookware bundled with each induction cooktop. This led to an amplified impact of the six-cylinder cap being felt on TTK Prestiges revenues including the pressure cookers and cookware segments (see bundled products in the table below).

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Ambit Capital Pvt. Ltd.

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TTK Prestige

Exhibit 2: Analysis of the base effect of induction cooktop sales

3QFY13 (` mn) Induction cooktops (IC) Bundled products with IC Total of IC and bundled products Pressure cookers (PC) Cookware (CW) Total of PC + CW Non-bundled PC + CW Appliances excl IC Total revs excl IC and Bundled products Yoy growth in above Induction cooktops as a % of total revenues IC and Bundled products as a % of total revenues Source: Ambit Capital research 1,000 480 1,480 1,580 750 2,330 1,850 990 2,840 3QFY14 (` mn) 500 160 660 1,330 710 2,040 1,880 1,120 3,000 6% 23% 34% 14% 18% 20% 29% 4QFY13 540 260 800 980 530 1,510 1,250 720 1,970 FY13 2,360 1,140 3,500 5,110 2,360 7,470 6,330 3,470 9,800 397% 18% 26%

Consequently, the underlying segment-wise performance of TTK Prestige during 3QFY14 includes the following: Appliances excluding induction cooktops reported a revenue growth of ~13% YoY during 3QFY14. This includes strong growth particularly from gas-stoves (37% YoY growth) and mixer-grinders (35% YoY growth). Pressure cookers and cookware segments, excluding sales generated from products bundled with induction cooktop promotions, reported a revenue growth of 2% YoY during 3QFY14. Overall revenues, excluding those related to induction cooktops and bundled products, reported a 7% YoY growth for TTK Prestige during the quarter.

Impact of other geography-specific macro-headwinds (Andhra Pradesh and Tamil Nadu)

As shown in the exhibit below, due to a combination of strong non-south growth rates and macro-headwinds related to Tamil Nadu, the contribution of southern states to overall revenues for TTK Prestige has steadily declined over the past three years.
Exhibit 3: Declining contribution of the southern states in the overall revenue mix
Region-wise contribution to TTK Prestige's revenues South Non-South Total Southern states as a % of total revs for TTK Prestige Tamil Nadu Karnataka Andhra Pradesh Kerala Total YoY growth in region-wise revenues for TTK Prestige South Non-South Total Source: Ambit Capital research FY12 65% 35% 100% 30% 20% 10% 5% 65% 49% 40% 46% FY13 57% 43% 100% 22% 20% 10% 5% 57% 6% 45% 23% FY14E 52% 48% 100% 20% 20% 8% 4% 52% -17% 20% 1%

We continue to expect the non-south regions to report over 20% revenue CAGR for TTK Prestige driven by a combination of: (a) expansion of the dealer network driven
January 20, 2014 Ambit Capital Pvt. Ltd. Page 3

TTK Prestige by improvements in the size and quality of the on-ground sales team; (b) the firms focus on creating a strong brand recall for Prestige through adverts on various media channels; and (c) wider product portfolio and after-sales service which allows TTK to leverage on the recall of its pressure cookers portfolio to expand other product categories in these regions. However, revival of growth in the southern states depends on the following factors: Andhra Pradesh (8-10% of overall revenues): With the political parties calling for a shutdown of the state on several occasions over the past four months, the retail distribution channel in the state has had disruptions on 10-20 days each during October and November 2013. Until these disruptions continue, revenue growth for all the segments of consumption, including for TTK Prestige, from Andhra Pradesh will be a challenge. Tamil Nadu (22-25% of overall revenues): The duration of power cuts across Tamil Nadu increased substantially in 2HFY13. As a result, not only was the sale of electrical appliances affected adversely for TTK Prestige, several small-scale industries and other manufacturing capacities exited the state over the past 18 months. This led to a substantial drop in the overall discretionary consumption spend across the state.

Although there remains uncertainty around the timing of reversal of these statespecific macro-headwinds, we expect: (a) distribution disruptions in Andhra Pradesh to end over the next six months given the upcoming elections; and (b) power situation in Tamil Nadu to improve in 2HFY15 given the ongoing initiatives taken by the Government to address the power deficit issue.

Competitive advantages remain sustainable; market share gained/maintained across products/geographies

Headwinds from state-specific issues and the high base effect of induction cooktops have led to weak revenue growth being reported by TTK Prestige consecutively over the past three quarters. However, we do not see TTK Prestiges market share being challenged across product categories and geographies due to the following: Non-south regions: Hawkins is the only major competitor for the firm in these regions. Whilst TTK Prestiges non-south regions have grown revenues at ~40% YoY over 1HFY14, Hawkins revenue growth over the same period has been 4% YoY. Our channel checks suggest that the largest drivers of this outperformance for TTK Prestige have been: (a) increased aggression around the shape and size of its on-the-ground distribution team including strengthening of area sales managers and appointment of new distributors; and (b) wider and more innovative product portfolio as compared to the competition, a factor that new dealers have become comfortable with over the past two years. Southern regions: TTK has three key competitors in the southern states Stovekraft (brand Pigeon), Butterfly Gandhimathi, and Preethi (part of Phillips). Stovekraft, we understand, is losing share to TTK Prestige currently, as it is focusing only on repairing its working capital cycle and balance sheet after the Tamil Nadu Civil Supplies Corporation rejected its finished products worth `4bn5bn nearly 12 months ago. Our channel checks suggest that the attraction of Preethis after-sales service, its biggest competitive advantage historically, has reduced after the acquisition by Phillips, leading to market share losses to Butterfly and Prestige. Butterfly Gandhimathi continues to grow strongly, as it expands its footprint across product categories in light electricals and across geographies. However, with a combined portfolio size of cookers and cookware worth less than `1bn in FY14E, our channel checks suggest that Gandhimathi has not been posing any meaningful challenges for TTK Prestige so far. We expect TTK Prestige to continue maintaining and expanding its market share in each of the product categories in the future, despite macro-headwinds in the

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige near term, due to a combination of: (a) wide and innovative product portfolio; (b) strong distribution network; and (c) scale advantages which allow it to invest incrementally in building a strong brand recall.

Revenue growth over next the six months to be supported by new product launches and exports expansion
Based on our channel checks and discussions with the management team, we expect a revival in earnings growth momentum over the next six months which would be supported by: Complete roll-out of hard-anodised (HA) cookware: Following the commissioning of its Vadodara plant in 3QFY14, we expect a complete rollout of its hard-anodised range of cookware across India over the next few months. Our channel checks suggest a strong demand for these products due to: (a) longer life (8-10 years) of these products as compared to non-stick cookware where the TEFLON coating tends to come off in less than three years especially if not maintained properly; and (b) superior aesthetics and design as compared to nonstick cookware, a characteristic already proven in the market through the success of Futuras (Hawkins) limited range of HA cookware and Prestiges range of HA pressure cookers. Launch of water-purifiers: The management has confirmed that after having tied up with the Swiss firm, Vestergaard Frandsen, last year, the firm intends to launch its water-purifier range of products in April 2014. Although this is a highly competitive segment of products, we expect Prestige to leverage effectively on its brand, distribution network, and product innovation to make at least some headway into this market through its product launch. Expansion of the exports franchise: Based on our discussions with the management team, export revenues for TTK Prestige are likely to report strong growth in the future due to a combination of: (a) redesign of its microwave safe pressure cookers underway in collaboration with the OXO Group, following which revival of its exports through Meyer into Japan and other European countries is likely to resume; and (b) export of attractively designed cookware products manufactured by the newly commissioned Gujarat plant.

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige

Key assumptions and change in forecasts

Change in forecasts
Our forecasts for TTK Prestige have been marginally revised downwards (see the exhibit below) to take into account the 3QFY14 results announcement which was slightly weaker than our expectation.
Exhibit 4: Key assumptions and estimates
FY12 Income statement YoY sales growth (%) Pressure cookers and pans (%) Nonstick cookware (%) Gas stoves (%) Kitchen appliances (%) Others (%) YoY growth in net consolidated sales (%) Gross margin (%) EBITDA margin (%) Tax rate (%) Net profit margin (%) Balance sheet Capex (` mn) Working capital days Debtor days Creditor days Inventory days Net debt to equity Cash flows (` mn) Net operating cash flows Free cash flows Source: Ambit Capital research 611 -918 972 -60 1,505 1,405 1,359 1,309 1,674 Strong FCF from FY14 onwards as the capex for the 1,624 Vadodara plant is through. (1,523) 20 34 73 57 (0.0) (924) 48 38 57 62 0.2 (100) 47 38 60 62 (0.2) (50) 47 38 60 62 (0.2) (50) 47 `3bn of FY11-13 capex plan + `100mn ongoing annual capex assumed in future years. 30.4% 45.9% 24.7% 81.1% 30.0% 45.6% 44.0% 15.6% 30.6% 10.3% 23.7% 5.0% 25.0% 30.8% 25.0% 23.5% 42.8% 15.0% 28.8% 9.8% -4.0% -5.0% 20.0% -5.0% 2.0% -2.1% 42.3% 13.6% 29.0% 8.9% 20.0% 20.0% 25.0% 28.0% 30.0% 23.5% 42.2% 14.2% 30.0% 9.4% 20.0% 20.0% We expect pressure cooker and kitchen appliance growth to recover as the impact of Tamil Nadu and 20.0% induction cooktops will be in the base from 1QFY15. 30.0% Export of microwave safe pressure cookers is built into the accelerated growth rate of the pressure cookers 20.0% segment for FY15. New products such as 'veggie cutter' and water purifiers will contribute to a high rate of 23.3% growth in the 'Others' category. 41.9% We expect operational leverage to help stabilise margins in FY15. 30.0% The Roorkee plant (20% of current sales) is the only unit receiving tax concessions. This is likely to keep the 9.7% tax rate stable around 30% over the next few years. 14.2% FY13 FY14E FY15E FY16E Comments

Have not factored in any improvement in working 38 capital which has been under pressure as the company 60 is expanding into the north, leading to higher inventory days. 62 Company should be debt-free in FY14, as new money (0.2) raised will be used to repay debt.

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige

Valuation fairly valued currently; better entry points over the next three months
As explained below, our DCF models for the two divisions (kitchenware and property development) generate a total value of `3,650/share, 5% higher than the current market price. The stock is currently trading at 26.0x FY15 EPS, broadly in line with our implied one-year forward P/E multiple. Headwinds related to the induction cooktop base effect are likely to abate from March 2014 onwards, since we expect the revival of revenue growth in Andhra Pradesh and Tamil Nadu only after 1QFY15. Therefore, we see the likelihood of better entry points for investors over the next three months, before its fundamentals gather momentum in 1QFY15.

DCF for the kitchenware business

We use a three-stage DCF approach for TTK Prestiges kitchenware business. Stage 1 includes explicit forecasts for the income statement and balance sheet for the next five years with 23% sales CAGR and 26% EPS CAGR over FY14-18. Stage 2 includes a decline in the sales growth over seven years from 21% in FY18 to 7% in FY25 i.e. sales CAGR of 12% and free cash flow CAGR of 17% over this period. Stage 3 includes terminal growth forecasts with a growth rate to perpetuity of 5%. The cash flow and return profiles generated by our model are shown in the charts below:
Exhibit 5: Cash flow profiles for TTK Prestige
3,000 2,500 2,000 1,500 1,000 500 FY14E FY15E FY16E FY17E FY18E FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

(500) (1,000)

CFO (Rs mn)

FCF (Rs mn)

Source: Company, Ambit Capital research

Valuation of the property development segment

As shown in the exhibit below, we value TTK Prestiges residential project at only `86/share. Our assumptions of the residential and commercial pricing of units for sales and lease are based on our discussions with developers in Bangalore. Given that Dooravani Nagar is considered a suburban location in Bangalore, we have used the pricing available in the Whitefield area of around `3,000 per sq ft for residential sales and around `25 per sq ft per month for commercial leasing.

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige
Exhibit 6: Valuation of real estate cash flows
Item Saleable area (in sq ft on a built-up basis) Proportion for residential use Proportion for commercial use Residential rate for sales (`/sq ft) Commercial rate for lease (`/sq ft/month) TTK Prestige's share of sales Cash flows to TTK from resi sales (` mn) Annual cash flows to TTK from comm lease Tax rate WACC Terminal growth rate Year of commencement of cash flows Total NPV NPV per share Above as a % of current share price Source: Company, Ambit Capital research Value 680,000 35% 65% 3000 25 43% 307 57 30% 14.3% 4% FY15 969 86 2%

Relative valuation
As shown in the table below, TTK Prestige is currently trading at 26.0x FY15E earnings. We do not cover its competitors, Hawkins and Gandhimathi, and hence we have no comparable estimates. Thus, we compare TTK with light electrical companies (such as V Guard and Havells), due to their similar industry structure and entry into kitchen appliances. Whilst TTK trades at a higher multiple than its light electrical peers, TTKs earnings multiples are justified, thanks to its diverse product portfolio, strong retail distribution, brand franchise and entry into new categories.
Exhibit 7: Relative valuations
Company name TTK Prestige Havells Bajaj Electricals V-Guard Share price (` ) 3,481 780 202 447 MCap (USD mn) 650 1,581 327 217 P/E(x) FY15E 26.0 18.5 11.0 12.4 FY16E 20.6 15.5 9.3 10.7 EV/EBITDA FY15E 17.4 12.0 5.5 7.8 FY16E 14.1 9.9 4.7 6.6 EPS CAGR (FY14-FY16) 29% 23% 50% 28% EBITDA CAGR (FY14-FY16) 26% 20% 41% 25%

Source: Ambit Capital research, Bloomberg

Thanks to a significantly smaller per unit cost of brown goods products and high frequency of purchase of brown goods products by households, the longer-term growth profile of the brown goods market is likely to remain steadier than that for the white goods market. In addition, TTK Prestiges company-specific competitive advantages include: (i) expansion across geographies, implying an underlying growth rate of over 40%, excluding the Tamil Nadu drag on the business; (ii) expansion of TTK Prestiges distribution network, allowing the company to evolve as one of the most-efficient retailers in India; and (iii) potential to leverage on its R&D and panIndia presence to expand its product offering over time. Moreover, given the temporary nature of headwinds currently being faced by the company and given its continued market share gains, we expect revenue and earnings growth for TTK Prestige to revive materially from 1QFY15 onwards regardless of when the broader discretionary consumption categories revive.

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige

Exhibit 8: 1 year forward P/E bandcharts 3800 3500 3200 2900 2600 2300 2000 1700 1400 1100 800
Mar-11 May-12 Nov-10 Nov-13 Sep-12 Oct-11 Aug-10 Jan-13 Jul-11 Aug-13 Feb-12 Apr-13

Exhibit 9: 1 year forward EV/EBITDA bandcharts 3800 3500 3200 2900 2600 2300 2000 1700 1400 1100 800
Nov-10 Mar-11 Oct-11 Aug-10 Jul-11 Feb-12

25x 22x 19x 16x 13x

16x 14x 12x 10x 8x

May-

Source: Bloomberg, Ambit Capital research

Source: Bloomberg, Ambit Capital research

Risks to our stance

Continued moderation in discretionary spending: Whilst the last 3-4 quarters have seen a slowdown in discretionary consumption, a continued moderation in discretionary spending over the next 6-8 months could result in TTK underperforming revenue expectations. Increased competition from Hawkins: With Hawkins entry into the induction cooktop market, and a rejuvenated launch of its existing portfolio, TTK could face higher competitive intensity in the northern markets.

Change in estimates
Exhibit 10: Change in estimates (` mn)
New Estimates FY15E Pressure Cookers & Pans Non stick cookware Gas Stoves Kitchen Electrical appliances Total revenue EBITDA EBITDA Margin (%) PAT 5,887 2,690 1,891 5,557 16,435 2,326 14.2% 1,553 FY16E 7,064 3,228 2,269 7,223 20,267 2,878 14.2% 1,967 Old Estimates FY15E 6,132 2,917 1,812 5,966 17,569 2,437 13.9% 1,638 FY16E 7,358 3,500 2,174 7,756 21,680 3,018 13.9% 2,076 Change FY15E -4% -8% 4% -7% -6% -5% 28 -5% FY16E -4% -8% 4% -7% -7% -5% 28 No meaningful changes in margin estimates. Comments Factor in lower sales in Tamil Nadu as the power situation still remains a concern. Lower sales of induction cooktops to lead to impact bundled offers of non-stick cookware. Expect increased sales momentum in gas stoves as induction cooktop sales are slower due to the power crises. Reduce our estimates factoring in lower sales of induction cooktops. Led by above changes.

-5% Led by the above changes.

Source: Ambit Capital research

Exhibit 11: Explanation for our forensic accounting scores on the first page
Segment Accounting Score GREEN Comments In the past, TTK Prestige has reported strong cash conversion, efficient management of working capital, and low levels of loans and advances and contingent liabilities. Consequently, we give a high rating to its accounting quality. TTK has encountered certain issues related to regular power supply in Tamil Nadu, due to which it has faced volatility in its sales momentum especially in the induction cooktops category. After a reduction in the revenue growth rate from 45% in FY12 to 23% in FY13 due to issues faced in Tamil Nadu, consensus earnings forecasts have been downgraded by 12% for FY14 and 17% for FY15 over the past six months.

Predictability Earnings momentum Source: Ambit Capital research

AMBER AMBER

January 20, 2014

Ambit Capital Pvt. Ltd.

Nov-13

Sep-12

Jan-13

Aug-13

Apr-13

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TTK Prestige

Institutional Equities Team

SaurabhMukherjea, CFA Research Analysts Aadesh Mehta Achint Bhagat Ankur Rudra, CFA Ashvin Shetty, CFA Bhargav Buddhadev Dayanand Mittal, CFA Deepesh Agarwal Dipti Abhyankar Gaurav Mehta, CFA Karan Khanna Krishnan ASV Nitin Bhasin Nitin Jain Pankaj Agarwal, CFA Pratik Singhania Parita Ashar Rakshit Ranjan, CFA Ravi Singh Ritika Mankar Mukherjee, CFA Ritu Modi Shariq Merchant Tanuj Mukhija, CFA Sales Name Deepak Sawhney Dharmen Shah Dipti Mehta Nityam Shah, CFA Parees Purohit, CFA Praveena Pattabiraman Sarojini Ramachandran Production Sajid Merchant Sharoz G Hussain Joel Pereira Nikhil Pillai
E&C = Engineering & Construction

CEO, Institutional Equities

(022) 30433174

saurabhmukherjea@ambitcapital.com

Industry Sectors Banking & Financial Services Cement / Infrastructure Technology / Telecom / Media Automobile Power / Capital Goods Oil & Gas / Metals & Mining Power / Capital Goods Economy Strategy / Derivatives Research Strategy Banking & Financial Services E&C / Infrastructure / Cement Technology Banking & Financial Services Real Estate / Retail Metals & Mining / Oil & Gas Consumer / Real Estate Banking & Financial Services Economy / Strategy Automobile / Healthcare Consumer E&C / Infrastructure

Desk-Phone E-mail (022) 30433239 (022) 30433178 (022) 30433211 (022) 30433285 (022) 30433252 (022) 30433202 (022) 30433275 (022) 30433229 (022) 30433255 (022) 30433251 (022) 30433205 (022) 30433241 (022) 30433291 (022) 30433206 (022) 30433264 (022) 30433223 (022) 30433201 (022) 30433181 (022) 30433175 (022) 30433292 (022) 30433246 (022) 30433203 aadeshmehta@ambitcapital.com achintbhagat@ambitcapital.com ankurrudra@ambitcapital.com ashvinshetty@ambitcapital.com bhargavbuddhadev@ambitcapital.com dayanandmittal@ambitcapital.com deepeshagarwal@ambitcapital.com diptiabhyankar@ambitcapital.com gauravmehta@ambitcapital.com karankhanna@ambitcapital.com vkrishnan@ambitcapital.com nitinbhasin@ambitcapital.com nitinjain@ambitcapital.com pankajagarwal@ambitcapital.com pratiksinghania@ambitcapital.com paritaashar@ambitcapital.com rakshitranjan@ambitcapital.com ravisingh@ambitcapital.com ritikamankar@ambitcapital.com ritumodi@ambitcapital.com shariqmerchant@ambitcapital.com tanujmukhija@ambitcapital.com

Regions India / Asia India / Asia India / USA USA / Europe UK / USA India / Asia UK

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Production Production Editor Database

(022) 30433247 (022) 30433183 (022) 30433284 (022) 30433265

sajidmerchant@ambitcapital.com sharozghussain@ambitcapital.com joelpereira@ambitcapital.com nikhilpillai@ambitcapital.com

January 20, 2014

Ambit Capital Pvt. Ltd.

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TTK Prestige

Explanation of Investment Rating

Investment Rating Buy Sell Expected return (over 12-month period from date of initial rating) >5% <5%

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Additional information on recommended securities is available on request.

Disclaimer 1. 2. 3. AMBIT Capital Private Limited (AMBIT Capital) and its affiliates are a full service, integrated investment banking, investment advisory and brokerage group. AMBIT Capital is a Stock Broker, Portfolio Manager and Depository Participant registered with Securities and Exchange Board of India Limited (SEBI) and is regulated by SEBI The recommendations, opinions and views contained in this Research Report reflect the views of the research analyst named on the Research Report and are based upon publicly available information and rates of taxation at the time of publication, which are subject to change from time to time without any prior notice. AMBIT Capital makes best endeavours to ensure that the research analyst(s) use current, reliable, comprehensive information and obtain such information from sources which the analyst(s) believes to be reliable. 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Conflict of Interests 15. In the normal course of AMBIT Capitals business circumstances may arise that could result in the interests of AMBIT Capital conflicting with the interests of clients or one clients interests conflicting with the interest of another client. AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that clients interests are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and employees personal account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activities of staff working in areas where conflicts of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions in relation to AMBIT Capitals services. 16. AMBIT Capital and/or its affiliates may from time to time have investment banking, investment advisory and other business relationships with companies covered in this Research Report and may receive compensation for the same. Research analysts provide important inputs into AMBIT Capitals investment banking and other business selection processes. 17. AMBIT Capital and/or its affiliates may seek investment banking or other businesses from the companies covered in this Research Report and research analysts involved in preparing this Research Report may participate in the solicitation of such business. 18. In addition to the foregoing, the companies covered in this Research Report may be clients of AMBIT Capital where AMBIT Capital may be required, inter alia, to prepare and publish research reports covering such companies and AMBIT Capital may receive compensation from such companies in relation to such services. However, the views reflected in this Research Report are objective views, independent of AMBIT Capitals relationship with such company. 19. In addition, AMBIT Capital may also act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities of companies covered in this Research Report (or in related investments) and may also be represented in the supervisory board or on any other committee of those companies. Additional Disclaimer for U.S. Persons 20. The research report is solely a product of AMBIT Capital 21. AMBIT Capital is the employer of the research analyst(s) who has prepared the research report 22. Any subsequent transactions in securities discussed in the research reports should be effected through J.P.P. Euro-Securities, Inc. (JPP). 23. JPP does not accept or receive any compensation of any kind for the dissemination of the AMBIT Capital research reports. 24. The research analyst(s) preparing the research report is resident outside the United States and is/are not associated persons of any U.S. regulated broker-dealer and that therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

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January 20, 2014

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