Q1FY22 Sector review SECTOR UPDATE - Edelweiss
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
India Equity Research Specialty Chemicals August 25, 2021
Q1FY22 Sector review
SECTOR UPDATE
Near-term margin concerns
Specialty chemical players continued to clock solid growth in Q1FY22
with most players reporting better-than-estimated numbers. Though
sharp jump in input prices drove large part of revenue growth
resulting in 46% YoY growth in our universe, EBITDA / PAT also grew
by 50%/72%.
We expect rising input costs and logistic challenges arising from
container unavailability to pose near-term risks to margins. However,
managements across the industry remain buoyant about demand and
continue to share bullish outlook driven by encouraging growth. We
maintain our positive view on the sector. Our top picks are Aarti, SRF
and Galaxy.
Solid top-line growth driven by input price rally
As input prices continue to witness upward rally--benzene (+124% YoY), vegetable
oil (40-80%), acetic acid (140%)--speciality chemical players posted solid revenue
growth of 40-50% YoY in Q1FY22. However, volume growth also boosted revenues,
mainly driven by low base of last year. Driven by overall revenues, EBITDA / PAT
growth for most players was also solid and slightly above our estimates. As input
prices continue to soar, we expect revenue growth to remain solid, while near-term
margins could come under pressure. The industry is also witnessing sharp rise in
freight cost (Baltic dry index up 5x from pre-covid level) and the issue of container
availability further poses risk of margin pressure in the near term.
Managements’ outlook buoyant
Management commentaries across speciality chemical players remain buoyant as
most players have talked about Indian players gaining from strong domestic
demand and export opportunities. China plus one strategy being reinforced by
many global players is offering attractive structural growth for Indian players and
companies are bracing themselves to reap this opportunity by aggressively putting
capex. Most players remain confident about 25-30% growth over the next 2-3 years
despite near-term margin concern.
Outlook: Valuations to remain expensive factoring long term growth
As we remain buoyant about strong growth across specialty chemicals players
driven by solid sector tailwind and visible structural changes in the long run,
valuations across the sector have been continuously getting expensive. As our long-
term view on the sector remains positive, we have been continuously raising our
valuation framework to capture favourable growth scenario across the industry.
In Q1FY22, post results, we have raised P/E target multiple to 38-48x from 38-42x.
We believe Aarti Industry (BUY) and SRF (BUY) are strong beneficiaries of capex
driven growth, while Galaxy Surfactant (BUY) offers sustainable growth at
reasonable valuation. Though PI Industry (HOLD) will benefit from recent
acquisition of Indswift Lab, current stock price factors in large synergy benefit. Fine
Organics (HOLD) will continue to face margin pressure over the next 2-3 quarters.
Rohan Gupta Sneha Talreja Bharat Gupta
+91 (22) 4040 7416 +91 (22) 4040 7417 +91 (22) 6620 3320
Rohan.Gupta@edelweissfin.com Sneha.Talreja@edelweissfin.com Bharat.Gupta@edelweissfin.com
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedCompany wise highlights
Stock (INR mn) Q1FY22 Estimate Q1FY21 Q4FY21 Key highlights
Galaxy Surfactants Revenues 8,264 8,375 6,072 7,835 Galaxy Surfactants (GSL) reported results along expected lines with
revenue /EBITDA /PAT growing by 36%/20%/36% in Q1FY22. Despite
logistical challenges affecting the AMET region the most (revenue
EBITDA 1,085 1,208 905 1,174
down by 6% YoY), overall volume grew by 15% YoY even as input cost
pass-through boosted overall sales.
PAT 768 771 565 787 GSL’s specialty chemicals basket is facing covid-19 related challenges
and capacity constraints, but we believe commissioning of capacity in
the near term would drive up revenue and margins
Fine Organics Revenues 3,576 3,240 2,400 3,229 Fine Organics’ (FOIL’s) Q1FY22 numbers came broadly in line with our estimates .
Revenue growth of 49% YoY, primarily driven by price increase, surpassed our
EBITDA 520 535 525 484 estimate; however, margin continued to be under pressure at 14.5% (down 730bps
YoY). PAT growth of 25% YoY was marginally ahead of our estimate. Rolling over to
PAT 365 332 283 316 Q3FY23E, we revise TP to INR3,129 (earlier INR2,873). Maintain ‘HOLD’.
Aarti Industries Revenues 13,167 13,071 9,373 12,094 Aarti industry’s (AIL) Q1FY22 revenue growth was bolstered by
demand pick up in discretionary and commissioning of new capacities.
EBITDA 3,138 2,759 1,821 2,603 Overall revenue/EBITDA/PAT growth of 41%/72%/98% exceeded our
estimates.
PAT 1,648 1,477 833 1,361 Driven by sustained capex (INR15bn in FY22), focus on value addition
and benefit of operating leverage, along with strong Q1FY22 numbers,
we expect AIL to report strong earnings growth (CAGR of 28% over
FY23/21), while favourable industry scenario will sustain the
momentum
PI Industries Revenues 11,940 13,107 10,601 11,971 PI Industries (PI) reported weaker-than-estimated Q1FY22 numbers with revenue
growth of 13% YoY. The miss on top line was largely due to soft domestic business
(down 8% YoY) owing to high base of last year despite CSM business sustaining 30%
EBITDA 2,491 2,832 2,292 2,274
plus growth. Acquisition of Ind Swift Laboratories (ISLL) at reasonable valuation of
7.5x EV/EBITDA further provides a new growth lever for the company. Going forward,
PAT 1,874 2,049 1,455 1,798 we believe the ISLL acquisition seems not only lucrative, but a growth lever for PI.
SRF Revenues 26,994 24,450 15,450 26,077 SRF’s outperformance in Q1FY22 was driven by solid growth in all the segments with
revenue/EBITDA/PAT growth of 75%/79%/112% on low base. Though growth in
EBITDA 6,643 6,121 3,722 6,343 speciality chemicals was solid (EBIT up 1.5x YoY), technical textiles boosted overall
profit. While the chemical business remains primary growth driver supported by
PAT 3,899 3,603 1,768 3,747 aggressive capex, we believe value addition in technical textiles / packaging film will
continue to boost cash flows and enhance ROCE
Source: Company, Edelweiss Research
2 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedQ1FY22 Sector review
Key raw material prices trend
Raw material prices across the chemical industry continue to rise driving prices
across the value chain. We have seen a sharp increase across basic chemicals,
chlorine-based chemicals, benzene value chains as well as edible oil prices. Prices of
ethylene-based chemicals have catapulted more than 200%. We believe supply-side
disruption as well as shutdown of plants across China is likely to trigger upward
movement in the chemical chain and keep the prices across the chemical value chain
at elevated levels.
Price trends across different chemical chains
Commodity Index Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21
Benzene chain
Benzene USD/MT 443 435 422 520 620 633 754 855 911 1,009 988 1,066 992
Propylene USD/MT 798 850 873 868 964 948 966 1,130 1,060 1,077 988 968 972
Toulene USD/MT 395 404 396 417 475 520 632 727 694 755 746 754 757
Xylene USD/MT 441 436 432 407 485 530 626 710 704 717 754 776 776
Basic Chemicals
Phenol CNY/MT 5,547 5,407 5,639 6,225 6,629 6,313 7,336 8,687 8,859 9,523 9,228 9,490 9,110
Acetone CNY/MT 5,847 7,130 7,000 8,322 8,253 6,494 8,061 8,935 8,463 7,250 5,318 5,094 5,908
Chlorine Chemicals
PVC CFR USD/MT 836 919 1,040 1,092 1,198 1,236 1,267 1,443 1,590 1,535 1,355 1,287 1,305
Soda Ash INR/50kg 1,350 1,281 1,250 1,250 1,235 1,214 1,200 1,200 1,200 1,200 1,215 1,259 1,250
Caustic Soda INR/50kg 1,379 1,239 1,327 1,283 1,275 1,275 1,275 1,325 1,350 1,385 1,422 1,442 1,737
Caprolactum CNY/MT 9,316 9,365 9,394 10,367 11,566 10,994 12,346 13,844 13,103 13,727 13,527 14,700 14,452
TDI CNY/MT 12,861 16,647 16,742 13,630 12,661 12,595 14,882 17,316 15,320 14,011 13,492 14,181 14,468
Ammonia INR/kg 250 301 295 295 361 314 320 320 542 556 640 668 670
Methanol USD/MT 155 207 260 274 347 345 388 412 353 362 383 400 422
Vegetable oil
Palm Oil MYR/MT 2,534 2,638 2,599 2,799 2,916 3,051 3,108 3,446 3,484 3,935 3,651 4,139 4,505
Soybean Oil Index 32 33 32 34 37 39 42 47 48 58 61 63 61
Mustard Oil Index 132 134 136 139 145 150 154 157 160 167 179 187 186
Coconut Oil Index 950 1,030 1,107 1,339 1,464 1,463 1,447 1,545 1,644 1,728 1,658 1,580 1,500
Ethylene Chain
Fatty alcohol Index 1,272 1,326 1,297 1,472 1,864 2,049 2,014 2,137 2,107 2,156 2,058 1,890 1,839
Acetic Acid CNY/MT 2,471 2,457 2,501 2,887 4,415 4,200 5,123 5,986 6,897 7,740 7,708 6,055 5,912
Ethyl Acetate Index 105 105 105 106 110 114 118 121 133 139 142 141 140
Source: Bloomberg, Edelweiss Research
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited 3% change YoY shows a sharp increase in chemical prices
Commodity(% YoY) Index Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21
Benzene chain
Benzene USD/MT -32 -38 -38 -20 -14 -14 11 64 165 168 131 152 124
Propylene USD/MT -13 -5 -2 3 24 13 26 59 80 54 34 24 22
Toulene USD/MT -39 -39 -39 -35 -30 -24 4 63 144 119 84 85 92
Xylene USD/MT -37 -39 -37 -40 -30 -23 -1 74 142 118 79 80 76
Basic Chemicals
Phenol CNY/MT -28 -36 -32 -17 -11 -17 -2 32 51 41 26 61 64
Acetone CNY/MT 55 58 47 65 42 18 46 91 54 -12 -53 -39 1
Chlorine Chemicals
PVC CFR USD/MT -4 5 22 31 44 45 47 71 115 135 79 61 56
Soda Ash INR/50kg -7 -11 -14 -14 -15 -14 -14 -14 -14 -14 -13 -10 -7
Caustic Soda INR/50kg -21 -27 -15 -18 -29 -25 -23 -22 -22 -22 -11 -8 26
Caprolactum CNY/MT -23 -25 -22 -5 7 -2 14 50 56 45 30 53 55
Other chemicals
TDI CNY/MT -3 31 30 16 13 8 30 61 62 36 24 36 12
Ammonia INR/kg 0 9 0 0 24 7 6 9 97 134 170 167 168
Methanol USD/MT -28 -4 17 33 76 53 81 116 127 150 177 169 173
Vegetable Oils
Palm Oil MYR/MT 6 10 7 9 10 14 23 43 49 71 51 67 78
Soybean Oil Index -1 3 0 5 8 15 30 58 68 102 105 107 93
Mustard Oil Index 13 15 17 19 24 26 25 26 28 34 43 45 41
Coconut Oil Index 34 42 55 63 56 45 70 84 94 109 84 78 58
Ethylene Chain
Fatty alcohol Index NA NA NA NA 37 40 54 89 93 108 80 63 45
Acetic Acid CNY/MT -20 -26 -19 2 74 61 94 156 217 207 253 142 139
Ethyl Acetate Index 2 2 -2 -1 4 9 12 13 27 37 36 36 34
Source: Bloomberg, Edelweiss Research
4 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedQ1FY22 Sector review
Shipping / logistic costs adding to margin pressure
Container availability and rising freight cost across global shipping routes driven by
demand - supply mismatch and pandemic-related challenges has been increasing
the logistics cost for most chemical players for input as well as outward freight. Key
benchmark, Baltic Dry Index has surged sharply since March 2021 increasing up to
3600 by Aug 2021 from 1500 in March 2021. Shipping rates across the routes have
increased by 2-5x over the past one year.
Most of the specialty chemical players are witnessing both, either container
unavailability or rising freight cost. With this issue continuing to persist, many
industry people are expecting the logistic challenges to remain there for next 4-6
quarters, there may be pressure on margins. However, most players have started
passing on the rising freight cost with some lag.
Shipping costs have increased globally
US Gulf
US Gulf Australia
to China Shipping from
BALTIC To India to India
Month LNG Japan
DRY (Index) LNG Shipping LNG Shipping
Shipping to US (Index)
(Index) (index)
(index)
Jan-20 725.7 2.0 1.1 2.1 4412.9
Feb-20 461.9 1.9 1.1 2.0 3732.8
Mar-20 600.5 1.4 0.7 1.4 5051.6
Apr-20 662.7 1.4 0.8 1.5 3743.3
May-20 496.3 1.3 0.7 1.4 5158.1
Jun-20 1167.8 1.2 0.6 1.2 6773.3
Jul-20 1645.7 1.2 0.6 1.2 7777.4
Aug-20 1504.2 1.2 0.6 1.2 8429.0
Sep-20 1407.4 1.4 0.7 1.4 9341.7
Oct-20 1637.7 1.5 0.8 1.5 9195.2
Nov-20 1181.6 1.8 1.0 1.8 8823.3
Dec-20 1271.4 2.3 1.3 2.3 9483.9
Jan-21 1628.8 2.6 1.6 2.7 10019.4
Feb-21 1502.9 2.9 1.7 3.0 11946.4
Mar-21 2029.1 1.5 0.8 1.6 21717.7
Apr-21 2410.2 1.5 0.8 1.5 22643.3
May-21 2944.2 1.5 0.8 1.5 27229.0
Jun-21 2934.7 1.7 0.9 1.7 27580.0
Jul-21 3195.9 1.8 1.0 1.8 27729.0
Aug-21 3610.9 1.8 1.0 1.8 31793.8
Source: Bloomberg, Edelweiss Research
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited 5Valuations across the sector to remain expensive
As we believe that despite near-term challenges, medium to long term growth for
most speciality chemical players will remain solid, valuations across the sector are
likely to remain elevated. Factoring strong growth and solid sector tailwind we have
been raising our valuation framework to factor earnings growth momentum and
enhancing future growth visibility.
In Q1FY22, post results, we have raised P/E target multiple to 38-48x from 38-42x.
We believe Aarti (BUY) and SRF (BUY) are strong beneficiaries of capex driven
growth, while Galaxy (BUY) offers sustainable growth at reasonable valuation. PI
(HOLD) though will benefit from recent acquisition of Indswift Lab, current stock
price factors in a large synergy benefit. Fine Organics (HOLD) will continue to face
margin pressure over the next 2-3 quarters.
Valuation snapshot
P/E EV/EBITDA RoE (%)
CMP Target Mcap FY22E
Company Rating (INR) Price Target Multiple (INR bn) EPS FY21 FY22E FY23E FY21 FY22E FY23E FY21 FY22E FY23E
Specialty Chemicals
Aarti Industries Buy 911 1,096 46x Q3FY23 EPS 322 10.6 62.3 44.5 38.3 31.7 22.1 19.3 16.2 19.7 19.7
SRF Buy 8,971 9,571 SOTP Based 518 270.9 43.8 33.1 31.1 17.0 14.5 13.4 20.3 18.1 16.4
Fine Organics Hold 2,758 3,129 40x Q3FY23 EPS 82 59.0 69.5 46.7 32.6 45.0 32.1 23.0 18.0 22.8 27.3
Galaxy Surfactants Buy 2,965 3,774 38x Q3FY23 EPS 102 89.7 34.8 33.1 28.9 24.6 21.3 18.6 26.0 23.3 23.0
PI Industries Hold 3,090 3,506 48x Q3FY23 EPS 457 60.0 63.9 51.5 40.1 40.1 32.7 27.6 18.4 15.8 15.8
Mean 54.8 41.8 34.2 31.7 24.5 20.4 19.8 19.9 20.4
Median 62.3 44.5 32.6 31.7 22.1 19.3 18.4 19.7 19.7
Source: Edelweiss Research
Raising multiple across the sector
Given favourable sector tailwinds as well as buoyant demand across end-user
industries of agrochemical and pharmaceuticals, we have raised our target multiples
for PI Industries, Aarti Industries and SRF. We believe PI’s foray into APIs post Ind-
Swift acquisition is likely to help the company deliver 20% plus growth in the long
run.
Change in valuation multiple
Target Multiple Target Multiple Target Price
Company
(New) (Old) (INR)
PI Industries 48x Q3FY23E EPS 42x Q2FY23E EPS 3,506
Aarti Industries 46x Q3FY23E EPS 42x Q2FY23E EPS 1,096
SOTP Based SOTP Based
(25x EV/EBITDA Chemical, (25x EV/EBITDA Chemical,
12x EV/EBITDA Packaging 8x EV/EBITDA Packaging
SRF 9,571
Films and Films and
12x EV/EBITDA Technical 8x EV/EBITDA Technical
textile textile
Fine Organics 40x Q3FY23E EPS 40x Q2FY23E EPS 3,129
Galaxy Surfactants 38x Q3FY23E EPS 38x Q2FY23E EPS 3,774
Source: Company, Edelweiss Research
6 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedQ1FY22 Sector review
Highlights from management commentary
Aarti Industries
Revenue front: There has been a sharp increase in raw material prices. The
company following a pass through mechanism has taken pricing hikes.
Increased utilization+ value addition helped the company deliver strong growth
during the quarter. The company has taken 20% realization led growth QoQ
basis, while volume growth was 9-10% QoQ.
Long-term contracts are witnessing some delays with large part of revenue
contribution expected in FY23.
Witnessing sustained ramp up in recently commissioned capacities across the
product line.
Pharma: Additional capacities to come online during H2FY22. Margin is lower
due to higher inventory of final product, which could not be shipped due to
logistics issue.
Despite delays in commissioning of long-term contracts, management is
confident about 25-35% revenue growth in the current year.
SRF
Specialty chemicals: Growth momentum in agrochemicals is expected to
continue across key markets visible traction in specialty chemical space.
o The second wave of covid-induced lockdowns resulted in disruption of
supply chains, leading to an overall increase in raw material prices and
export freight across geographies.
o Focus on expanding pharma product profile. SRF continues to make
investments in capacity expansion to maintain the growth momentum.
o Capex: The Board approved projects at Dahej to be implemented in the next
24 months. Integrated expansion of the fluorocarbon-based refrigerant
capacity at an investment of ~INR5.5bn.
Packaging films:
o Growing product portfolio with two new products and increasing
contribution from value-added products.
o Pressure on margins expected due to the start-up of new lines leading to
price corrections.
Technical textile:
o Improved demand in the nylon tyre cord, belting fabrics and polyester
industrial yarn segments.
o Restructuring of margin with long-term customers and continued focus on
enhancing operational performance across all plants.
PI Industries
Q1FY22: High propensity to pre-purchase low single digit growth (35% growth
last year). Expect business to reach back-western part and cotton region
suffering. Optimistic-Q2FY21-3 products to give new opportunities.
API industry situated in southern India-advantage for acquisition-criteria:
1) Quality of assets. 2) Product pipeline. 3) Regulatory approvals. Found this
requirement was met through the option. Additional value and synergies-all can
get met.
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited 7 Value, economics, the company to be acquired, add value to existing business->
Pharma-different platform-developing new technology, opening up
complementary requirements-PI well versed. It will be moving up in ladder chain.
Growth-synergy backed by technological benefits. Acquiring, creating and
building IP-focus of PI.
Deepak Nitrite
Focussed on import replacement and gaining market share in existing set of
product basket. As per management, company remains well positioned to
transition itself to specialty chemical manufacturer.
Company has announced a healthy capex of INR 10bn in phenol based
downstream products which will be focussed on import replacement as well as
china plus one strategy.
Company expects to witness good pricing scenario across most of its products.
Galaxy Surfactants
Demand outlook remains robust amid supply chain disrupting with covid-19 and
logistical issues. Rising freight costs compounded the supply disruption.
Unavailability of key raw material further impacted. Logistical issues, though
getting addressed, may persist in the near term.
Delay in new capacity commissioning for specialty chemicals also affected sales
of speciality chemicals.
Plant in Egypt-couldn’t run up due to supply side disruption. Situation has eased
off. Turkey, Egypt-incoming is delayed, outgoing from Egypt to US, Europe-also
impacted.
Fine organics
Global market has witnessed sharp pickup in demand while domestic market is
witnessing slow demand pick up as markets continue to remain impacted by
lockdown and covid-19 restrictions.
Large integrated players have gained some market share domestically however
small regional players continue to remain impacted by lock down related
challenges.
Raw material prices have been very volatile and have witnessed sudden spike.
Though company is passing on rising input prices, but renegotiations may take
some time and there can be pressure on margins
Logistic challenges and container unavailability is putting pressure on margins.
However other global suppliers are facing these issues more severally which is
helping the company gain more market share globally
Rossari biotech
Current quarter witnessed a challenging operating environment due the second
wave of the COVID-19 pandemic, the demand and offtake across our HPPC, TSC
and AHN divisions broadly remained steady
HPPC business demonstrated strong growth led by robust volumes in hygiene
products and anti-viral portfolio.
broader operating constraints due to the lockdown restrictions moderated
growth of TSC business sequentially, it has started witnessing sustained
improvement in sales from June onwards. In addition, higher consumption in
the AHN segment assisted our overall results
8 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedQ1FY22 Sector review
It has announced strategic acquisitions of two speciality Chemical players -
Unitop Chemicals and Tristar Intermediates. These acquisitions bring in
multitude of synergies such as expanded product portfolio, stronger presence
in new markets, cross-selling opportunities, and access to newer technologies,
capacity and talent
Anupam Rasayan
Expertise in chemistry and innovative technology remains a key differentiator.
Two types of innovation are carried out by company: (i) process and (ii)
operations. Company has developed 15-17 step manufacturing process and has
customer base for outsourcing molecules. Company has ability to manufacture
intermediates in continuous process.
In FY22, large growth to come from exports. 10 new molecules to get
commercialized.
China plus one-company is receiving new enquiries for specialty molecules given
its cost leadership. With India to gain from China plus one strategy-Anupam is
likely to do well.
Jubilant Ingrevia
Specialty chemicals segment is witnessing good demand. Demand from
domestic markets remains strong while china plus one remains a key driver for
exports. Covid second wave has improved demand of domestic drugs
Focus of company remains on introducing new product-new offerings and
adding new customer. Value added segment and foray in Diketene based
chemistries is expected to fortify company’s leadership
In Life Science: 103% YoY growth on revenue with unprecedented improvement
in margin driven by favorable market conditions. Disruptions created in US on
account of availability of acetic acid and acetic anhydride helped company get
better realization.
Nutritional business demand grew across geographies. Efforts to increase B3
application in cosmetic, north American markets
Further during the year we have committed investment worth INR 3.60 bn for
following growth capex. At peak capacity these investments are expected to
generate additional annual revenue of INR 9bn at prevailing prices
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited 9DISCLAIMER
Edelweiss Securities Limited (“ESL” or “Research Entity”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, Investment
Adviser, Research Analyst and related activities.
This Report has been prepared by Edelweiss Securities Limited in the capacity of a Research Analyst having SEBI Registration No.INH200000121 and distributed as per SEBI (Research Analysts)
Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Securities as
defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 includes Financial Instruments and Currency Derivatives. The information contained herein is from publicly
available data or other sources believed to be reliable. This report 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 report should make such investigation as it deems necessary to arrive at an independent
evaluation of an investment in Securities referred to in this document (including the merits and risks involved), and should consult 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.
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 in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a
citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which
would subject ESL and associates / group companies to any registration or licensing requirements within such jurisdiction. The distribution of this report in certain jurisdictions may be
restricted by law, and persons in whose possession this report comes, should observe, any such restrictions. The information given in this report is as of the date of this report and there can
be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. ESL reserves the right to make
modifications and alterations to this statement as may be required from time to time. ESL or any of its associates / 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 in this report. ESL is committed to providing independent and transparent recommendation
to its clients. Neither ESL nor any of its associates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or
consequential including loss of revenue or lost profits that may arise from or in connection with the use of the information. Our proprietary trading and investment businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest
statements incorporated in this report are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. The information
provided in these reports remains, unless otherwise stated, the copyright of ESL. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and
copyright of ESL and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.
ESL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in the system, break
down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the ESL to present the data. In no event shall
ESL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented
by the ESL through this report.
We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the
same time. We will not treat recipients as customers by virtue of their receiving this report.
ESL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the
Securities, mentioned herein or (b) be engaged in any other transaction involving such Securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conflict of interes t with
respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance. ESL may have proprietary long/short
position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment
objective of any particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business
with ESL.
ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co-managed public offering of securities
for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject
company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services
from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the
research report. Research analyst or his/her relative or ESL’s associates may have financial interest in the subject company. ESL and/or its Group Companies, their Directors, affiliates and/or
employees may have interests/ positions, financial or otherwise in the Securities/Currencies and other investment products mentioned in this report. ESL, its associates, research analyst
and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research
report or at the time of public appearance.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii)
the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes
in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as
ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.
Research analyst has served as an officer, director or employee of subject Company: No
ESL has financial interest in the subject companies: No
ESL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research
report.
Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication
of research report: No
ESL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No
Subject company may have been client during twelve months preceding the date of distribution of the research report.
There were no instances of non-compliance by ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except
that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in
relation to their charges of non registration as a broker dealer.
A graph of daily closing prices of the securities is also available at www.nseindia.com
Analyst Certification:
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 companies and 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 in this report.
10 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities LimitedQ1FY22 Sector review
Additional Disclaimers
Disclaimer for U.S. Persons
This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing
the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and 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.
This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934
(the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional
Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any
U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional
Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in
this research report should be effected through Edelweiss Financial Services Inc.
Disclaimer for U.K. Persons
The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA").
In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within
Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated
associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”).
This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only
to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its contents. This
research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person.
Disclaimer for Canadian Persons
This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts
preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject
to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian
provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among
other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst.
This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an
"Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the
report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person.
ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31-103 available to certain international advisers and/or dealers. Please be advised that
(i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or
principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because
of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3
Canada.
Disclaimer for Singapore Persons
In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and
an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited i nvestors" as defined in section 4A(1) of the Securities and Futures
Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter
110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact
EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.
Disclaimer for Hong Kong persons
This report is distributed in Hong Kong by Edelweiss Securities (Hong Kong) Private Limited (ESHK), a licensed corporation (BOM -874) licensed and regulated by the Hong Kong Securities
and Futures Commission (SFC) pursuant to Section 116(1) of the Securities and Futures Ordinance “SFO”. This report is intended for distribution only to “Professional Investors” as defined
in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional
investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The
report also does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of any individual recipients. The Indian
Analyst(s) who compile this report is/are not located in Hong Kong and is/are not licensed to carry on regulated activities in Hong Kong and does not / do not hold themselves out as being
able to do so.
Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved.
ADITYA
Digitally signed by ADITYA NARAIN
Aditya Narain DN: c=IN, o=Personal,
pseudonym=7f6bf1f19fd694c483c06e7
33b50938654dc1a674849a933dfed9576
6c0ca3fa, postalCode=400011,
Head of Research
NARAIN
st=MAHARASHTRA,
serialNumber=e0576796072ad1a3266c2
7990f20bf0213f69235fc3f1bcd0fa1c300
Aditya.Narain@edelweissfin.com 92792c20, cn=ADITYA NARAIN
Date: 2021.08.25 21:26:35 +05'30'
Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited 11You can also read
