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Interaction with the CEO
Recovery on track; next few months pose acid test
We hosted United Breweries (UBBL)’s Mr Rishi Pardal – CEO & Managing Director and Mr
Berend Odink – CFO for a discussion on the near- and long-term prospects of the business.
Here are the key takeaways:
United Breweries
Global trends catching on faster in emerging markets:
Technology is accelerating
global trends in the developing markets. The management believes global trends
toward lower/no alcohol products could be at play in India as well.
Alleviating seasonality impact:
In an effort to reduce seasonal dependence on
Mr Rishi Pardal — CEO &
Managing Director
beer consumption (and the resulting company profitability), the company has
rolled out the “beer at home” campaign; the next 8–12 quarters would have more
Mr Rishi Pardal joined UBBL in
Aug’20. Previously, he served
initiatives on products and campaigns to address the challenge. The online channel
as VP of Global Apparel
could have been a game-changer, but state governments did not focus on this
Solutions for Retail Brand and
enough to overcome the obstacles. West Bengal is one state that successfully
Information Solutions of Avery
implemented an online alcobev sales channel, and the company hopes other states
Dennison and was also a
Member of the Corporate
would follow suit in the long term.
Leadership Team. Prior to
UBBL does not believe Kingfisher (which we believe contributes around 80% to
Avery Dennison Corporation,
sales) is losing traction among new-age customers:
The management believes
he served as MD of Marico
Bangladesh, following a 14-
there is no room for complacency that could lead to share loss – either from the
year career in various
age group or geographical perspective. Notably, unlike some other parts of the
management roles with HUVR.
world, India does not have an anti-large manufacturer trend. New-age customers
Mr Pardal has completed his
want freshness and variety. With the largest brewery network of 21 owned and
Masters’ Program in
International Business from
eight contract breweries, the company is well-placed to ensure freshness and could
IIFT, New Delhi. He has also
do even better on the variety front.
completed various leadership
More understanding from government:
After a very sharp increase in excise last
and management
year, governments – due to loss of revenues, despite hikes – are awakening to the
development programs from
Northwestern-Kellogg’s, IMD,
fact that steep increases are detrimental and heeding the opinions of alcobev
and HBS (in progress).
players.
Local brewing/distilling capacity to remain important or gain further importance:
This is likely over the
medium term, especially after GST refunds to states are halted by the center.
Spirits v/s beer:
While beer did lose share to spirits in the early part of the COVID disruption, the former is
clawing its way back gradually as markets reopen. The acid test, the management admits, would come in the
crucial months (for beer) of March, April, May, and June.
Technology to aid:
Technology is likely to be a key supporting factor in marketing to the next generation
(especially digital marketing) – in improving analytics, processes, and systems and reducing inventory.
Detailed notes from the call are as follows:
Longer term opportunity attractive
The Beer category in India is underpenetrated. Compared with other emerging markets as well, there is scope
for growth.
A marked preference is seen worldwide for low-alcohol or no-alcohol drinks – this trend is not only big already
but also rising.
The UBBL management believes global trends are catching on faster in emerging markets, with technology
accelerating these trends. It believes global trends toward lower/no alcohol products could be at play in India as well.
Taxation in India has a disproportionate price influence on alcobev as it is skewed in favor of spirits; this has
consequently skewed demand in this direction as well. Although beer falls under the affordable segment
globally, it remains an underpenetrated category in India due to high taxation.
Krishnan Sambamoorthy – Research analyst
(Krishnan.Sambamoorthy@MotilalOswal.com)
Research analyst: Dhairya Dhruv
(Dhairya.Dhruv@motilaloswal.com) /
Kaiwan Jal Olia
(Kaiwan.O@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
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Exhibit 1:
Convenience channel driving recovery
Per capita consumption of beer (Litres) - 2020
99
93
70
58
the
57
56
53
53
52
52
48
47
46
42
40
35
32
30
23
20
19
7
6
3
2
Source: Carlsberg, MOFSL
Recent developments encouraging
Beer had been disproportionately impacted by the lockdown, weighed by
higher taxation – many state governments have raised taxes on alcobev due
to the closure of bars and the out-of-home nature of beer consumption.
The company is creating “beer at home” occasions. Engaging with
consumers better is important for retention.
Many state governments, barring some, have reversed taxation.
Timeline of excise increases
A. Pre-COVID escalation
12th Feb:
Goa increased rates by ~30%, with a consequent price increase of
around 25%. We reckon Goa contributes 3–4% to UBBL’s sales. Despite this
increase, excise in Goa continues to be among the lowest in India.
6th Mar:
Karnataka increased excise by 6% (news
link).
Subsequently,
companies took a similar price increase. We reckon Karnataka contributes 14%
to UBBL’s sales.
B. During the COVID-led lockdown
30th Apr:
Rajasthan announced a 10% excise increase and allowed a price rise of
10% (news
link).
We reckon the state contributes 3–4% to UBBL’s sales.
3rd May:
Haryana announced it would consider increasing excise duty, but it is
yet to decide on the quantum (news
link).
4th and 5th May:
Andhra Pradesh announced an effective 75% increase in
excise over two days (news
link).
We reckon the state contributes 6% to UBBL’s
sales. The price increase is yet to be determined.
4th May:
Delhi announced a 70% COVID cess on liquor (news
link).
An effective
price increase is yet to be determined. We reckon Delhi contributes around 3%
to UBBL’s sales.
C. Post the COVID-19 unlock
7th Jun:
The Delhi government has decided to withdraw the special COVID fee
levied at 70% on MRP (news
link),
which it had placed on the sale of all types of
liquor in the state.
24th Oct:
States that had imposed a tax of 25% and above in the wake of COVID
are likely to end up with lower tax revenue from liquor sales and also collect less
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tax per bottle due to consumer downtrading, the Confederation of Indian
Alcoholic Beverage Companies (CIABC) stated (news
link).
5th Nov:
Under the new excise policy implemented by West Bengal, the rate of
excise duty and additional excise duty would depend on the ex-distillery price
(EDP) of the liquor – instead of excise duty and sales tax being levied on MRP
(news
link).
the
Summer months pose acid test
The benefits of a low base and open markets would reflect from Mar’21.
There has been no material excise or VAT increase by the state governments
that have declared their budgets thus far. This is a positive from an upcoming
demand perspective.
While demand and on-trade are improving month on month (90% recovery to
pre-COVID levels in recent months), the acid test would come in the crucial
months of March, April, May, and June – the pace of demand recovery and how
‘normal’ demand is in these months would be key monitorables. We note that
1Q has historically contributed 35–45% to full-year EBITDA for UBBL; thus,
achieving normal levels would have a big impact on FY22 EPS.
Furthermore, recovery may prove challenging with the second wave of
restrictions. On-trade (~25% of annual sales) is still constrained by the 50%
capacity restriction on bars/restaurants and pubs.
Exhibit 2:
1Q contributes higher to UBBL’s annual sales…
UBBL
UNSP
41%
37%
21%
21%
Exhibit 3:
…and even higher to EBITDA v/s UNSP
UBBL
45%
35%
17%
35%
18%
38%
26%
UNSP
31%
31%
23%
22%
33%
31%
30%
29%
24%
24%
22%
22%
18%
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 4:
UBBL’s volume recovery has been gradual
UB Volume growth (%)
12.0
24.0
12.0
17.0
16.0
9.0
5.0
6.5
-2.0
-21.0
-48.0
-15.0
-77.0
Source: Company, MOFSL
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Key strengths and initiatives under new CEO
Having taken over in Aug’20, Mr Pardal was particularly impressed by the
company’s balance sheet strength, the resilience of the brands, and the strength
exhibited by the workforce during the COVID crisis.
The management does not subscribe to the view that Kingfisher (which we
believe contributes around 80% to sales) is losing traction among new-age
customers. At the same time, it believes there is no room for complacency that
could lead to share loss in this key brand – from an age group or geographical
perspective. Notably, unlike some other parts of the world, India has no anti-
large manufacturer trend. New-age customers want freshness and variety. With
the largest brewery network of 21 owned and eight contract breweries, the
company is well-placed to ensure freshness and could do even better on the
variety front.
One of the key priorities for Mr. Pardal is reducing the seasonal dependence on
beer consumption (and the resulting company profitability). The company has
rolled out the “beer at home” campaign, and the next 8–12 quarters would have
more initiatives on products and campaigns to address this challenge. The online
channel could have been a game-changer, but state governments did not focus
on this enough to overcome the obstacles. West Bengal is one state that
successfully implemented an online alcobev sales channel, and the company
hopes other states would follow suit in the long term.
Cost control efforts and technology
The management is looking at rationalizing all line items.
The company has 21 breweries, which are smaller than ideal due to various
state restrictions.
If UBBL could improve the operational leverage of its smaller breweries with
improved demand from states, this would aid overall margins in the medium
term.
Process of digitization and bringing in tech – Mr Pardal believes there is scope to
increase the use of technology at the company level and Artificial Intelligence
(AI) in marketing. There is also potential to improve business analytics and real-
time data analysis and create digital twin products. Any improvement in any of
these areas could have a material impact on longer term performance
Technology could also aid in better marketing to the next generation (especially
digital marketing) – in improving processes and systems and reducing inventory.
Super Premium market share needs to improve
We believe the Super Premium segment’s contribution is around the mid to late
single digit percentage of beer sales and is growing rapidly. The management
would like to raise share in this segment to the company’s above-average
market share in the Beer category (in the early 50% range).
It has launched various brands to improve its share in Super Premium over the last
3–4 years – the Ultra range of products, Witbier, Amstel, Kingfisher Storm, etc.
However, plans to launch more such products as well as the impact of the
Witbier launch and Amstel expansion over the past 3–4 quarters were delayed
due to the COVID impact on on-trade sales.
the
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Raw material cost outlook benign; balance sheet improvement seen
Barley costs remain benign.
Bottling costs may increase on account of higher fuel costs, driven by an
increase in crude prices. Currently, no impact is seen on new glass bottle prices.
However, the company reported high COGS for the large part of 1HFY21 (which
has now declined to pre-COVID levels) on account of the unavailability of market
bottles. As a result, the YoY impact of higher fuel costs on total material costs
may be limited even if fuel costs remain at high levels.
It is still reviewing cost heads to further enhance cost efficiency.
Receivables days have not increased even during the COVID period, but this is
still not predictable for the future. Nevertheless, the management believes the
cash conversion cycle (CCC) could reduce in the future – if there are no major
disruptions in taxation or policy.
Exhibit 1: Barley (up to Feb’21) down 28.4% YoY / up 4.6%
QoQ
NCDEX Barley Spot (INR/quintal)
60.9
1,450
1,481
the
Exhibit 2: Crude (up to Feb’21) up17.2% YoY/32.9% QoQ
Brent Crude Index
68.2
Source: Bloomberg, MOFSL
Source: Bloomberg, MOFSL
Online channel offered promise, but not scaled up as per expectations
State governments have regarded online deliveries as a tactical/short-term
solution, resulting in minimal traction.
West Bengal is the only meaningful state in terms of online sales. UBBL has a
higher share in online than its average share in the state.
State governments now appear to be open to online delivery opportunities as
they have seen the ill effects of high taxes on alcobev.
Alcobev remains one of the few categories state governments could leverage to
grow their revenues. As long as this is done gradually, it would not affect their
finances.
Market share v/s spirits / other beer players
Market leaders have gained more amid the pandemic as they have been able to
leverage the strength of the balance sheet and brand strength.
Local brewing/distilling capacity would remain important or gain further
importance over the medium term, especially after GST refunds to states are
halted by the center within 3.5 years.
The lockdown saw increased preference for purchasing spirits over beer on
account of a) the longevity of a bottle of spirit v/s that of beer (reduced
shopping trips), b) the need to refrigerate beer, and c) an unwillingness to
consume chilled products in 1HFY21.
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the
As bars have opened up and taxation levels have moderated, they have clawed
back some of the loss of share to spirits.
Over the long term, the management believes there would be no loss of market
share to spirits.
Valuation and view
The new CEO’s efforts over the next 8–10 quarters to reduce the seasonal
dependence in the business would be interesting to watch. Another monitorable
would be the efforts to boost market share in the Super Premium segment,
which is far below the early 50% market share of the overall Beer category. The
use of technology to boost analytics and improve efficiency could also have
positive implications over the longer term.
We believe in-home consumption would be a trend over the next few quarters
as recovery in on-trade is likely to be gradual – especially with stricter
restrictions on the on-trade segment. This could delay total recovery and
subsequent growth in the Beer category – for which the upcoming summer
season is crucial, with 1Q historically contributing 35–45% to full-year EBITDA,
on average. The CCI investigation is another overhang that could affect the
company over the next year. We like the recent initiatives by the management,
as highlighted above; however, on account of stretched valuations (60.5xFY23
P/E, 30.7x FY23 EV/EBITDA), we maintain
Sell,
with TP of INR972 (24x FY23
EV/EBITDA) – implying a 22% downside to CMP.
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the
Financials and valuations
Consolidated – Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
% of Sales
Gross Profit
Margin (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Less: Minority Interest
Adjusted PAT
Change (%)
Margin (%)
Consolidated – Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Tax Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY16
48,408
3.0
21,209
43.8
27,198
56.2
41,402
85.5
7,006
14.5
2,436
4,569
787
764
4,547
0
4,547
1,560
34.3
4
2,983
14.8
6.2
2,982.8
FY16
264
21,207
21,471
25
634
8,062
30,193
33,084
15,104
17,980
242
608
1
24,827
6,881
11,189
140
6,618
13,466
4,176
9,291
11,361
30,193
FY17
47,603
-1.7
21,779
45.8
25,823
54.2
40,871
85.9
6,732
14.1
2,871
3,861
560
180
3,481
0
3,481
1,182
34.0
4
2,296
-23.0
4.8
2,295.4
FY17
264.4
23,078
23,342
28
470
5,940
29,780
35,089
17,827
17,262
242
1,372
1
25,911
7,508
12,954
243
5,205
15,007
4,596
10,412
10,903
29,780
FY18
56,196
18.1
26,315
46.8
29,881
53.2
47,170
83.9
9,025
16.1
2,597
6,429
456
105
6,078
0
6,078
2,132
35.1
4
3,942
71.7
7.0
3,944.3
FY18
264
26,638
26,903
29
182
3,121
30,235
37,208
20,152
17,056
242
723
2
29,212
8,080
14,986
242
5,904
16,999
5,217
11,782
12,212
30,235
FY19
64,754
15.2
30,077
46.4
34,678
53.6
53,371
82.4
11,384
17.6
2,599
8,785
239
247
8,793
0
8,793
3,160
35.9
4
5,629
42.8
8.7
3,077.6
FY19
265
31,572
31,838
30
114
2,115
34,097
39,954
22,425
17,529
242
1,899
3
34,171
10,325
15,110
462
8,275
19,747
5,902
13,845
14,424
34,097
FY20
65,092
0.5
31,511
48.4
33,581
51.6
56,334
86.5
8,758
13.5
2,851
5,907
287
69
5,689
0
5,689
1,406
24.7
6
4,277
-24.0
6.6
0.0
FY20
266
34,936
35,203
33
0
1,691
36,927
45,077
26,058
19,019
242
1,991
3
34,254
10,939
13,504
786
9,025
18,582
5,450
13,131
15,672
36,927
FY21E
43,612
-33.0
20,640
47.3
22,972
52.7
39,033
89.5
4,579
10.5
2,375
2,204
258
427
2,373
0
2,373
475
20.0
6
1,893
-55.8
4.3
0.0
FY21E
266
36,728
36,994
33
0
-1,310
35,718
46,277
28,433
17,844
242
758
3
33,316
8,895
12,783
1,260
10,378
16,445
6,498
9,947
16,872
35,718
FY22E
60,184
38.0
28,277
47.0
31,908
53.0
51,337
85.3
8,847
14.7
3,184
5,663
371
128
5,420
0
5,420
1,366
25.2
6
4,048
113.9
6.7
(INR m)
FY23E
67,407
12.0
31,387
46.6
36,019
53.4
56,555
83.9
10,852
16.1
3,660
7,192
40
135
7,286
0
7,286
1,836
25.2
6
5,445
34.5
8.1
(INR m)
FY23E
266
42,400
42,666
33
0
5,491
48,190
55,797
35,278
20,519
242
2,258
3
42,666
11,270
17,993
1,961
11,442
17,498
7,764
9,733
25,168
48,190
FY22E
266
39,266
39,533
33
0
-810
38,757
48,777
31,618
17,159
242
758
3
39,837
10,892
15,248
2,800
10,897
19,243
4,055
15,188
20,594
38,757
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the
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Debt/Equity
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
E: MOFSL Estimates
FY16
11.3
81.2
1.2
10.2
110.4
60.7
15.3
7.0
48.1
0.1
14.8
12.1
10.5
1.6
49
77
30
0.4
FY17
8.7
88.3
1.2
13.2
143.4
63.7
14.1
7.0
49.7
0.1
10.2
9.1
8.9
1.6
55
93
34
0.3
FY18
14.9
101.7
2.0
13.4
83.5
50.3
12.2
5.9
36.8
0.2
15.7
14.3
14.5
1.9
51
91
32
0.1
FY19
21.3
120.4
2.5
11.7
58.5
40.0
10.3
5.1
29.1
0.2
19.2
18.1
18.5
1.9
52
85
31
0.1
FY20
16.2
133.1
2.5
15.5
77.0
46.2
9.4
5.1
37.7
0.2
12.8
12.7
13.5
1.8
60
80
32
0.0
FY21E
7.2
139.9
0.0
0.0
173.9
77.1
8.9
7.5
71.3
0.0
5.2
5.8
5.2
1.2
83
110
50
0.0
FY22E
15.3
149.5
4.6
30.0
81.3
45.5
8.3
5.4
36.8
0.4
10.6
11.6
12.3
1.6
60
85
32
0.0
FY23E
20.6
161.4
7.2
35.0
60.5
36.2
7.7
4.9
30.7
0.6
13.2
12.6
13.6
1.4
60
90
32
0.1
(INR m)
FY23E
7,287
3,660
40
-1,377
-7,378
2,232
0
2,232
-7,000
-4,768
0
-7,000
0
6,300
-40
-2,331
0
3,929
-839
2,800
1,961
FY16
4,547
2,436
755
-1,595
-777
5,365
27
5,392
-2,430
2,962
85
-2,346
0
-1,857
-794
-317
0
-2,968
78
62
140
FY17
3,481
2,871
581
-1,435
22
5,519
-78
5,441
-2,355
3,086
29
-2,326
0
-2,122
-583
-307
0
-3,012
103
140
243
FY18
6,078
2,597
471
-2,534
-1,265
5,346
287
5,633
-2,014
3,619
16
-1,998
0
-2,820
-507
-308
0
-3,635
0
243
242
FY19
8,793
2,599
306
-3,898
-1,101
6,699
-269
6,430
-4,366
2,064
114
-4,252
0
-1,006
-313
-640
0
-1,959
219
242
462
FY20
5,689
2,851
305
-1,903
-2,196
4,746
332
5,078
-4,033
1,045
231
-3,802
0
115
-268
-800
0
-952
324
462
786
FY21E
2,373
2,375
258
-356
364
5,014
0
5,014
-1,180
3,834
0
-1,180
0
-3,000
-258
-102
0
-3,360
474
786
1,260
FY22E
5,420
3,184
371
-1,024
-2,537
5,413
0
5,413
-2,480
2,933
0
-2,480
0
500
-371
-1,523
0
-1,394
1,540
1,260
2,800
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 Motilal Oswal Financial Services
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Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (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 company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. 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 Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
the
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********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- 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
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, 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 MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
the
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