9 January 2018
Update
| Sector:
Consumer
Emami
Buy
BSE SENSEX
34,353
S&P CNX
10,624
CMP: INR1,340
TP: INR1,655(+23%)
Rural recovery just the beginning of growth revival
Valuations attractive; maintain Buy
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
Financials Snapshot (INR b)
Y/E Mar
2017
HMN IN
227
1,350/985
3/19/1
304.1
4.8
200
27.3
We maintain our BUY rating on Emami, as:
It is a great play on rural demand growth and wholesale recovery.
Before the slowdown caused by extraordinary factors like demonetization, Emami
had the best track record among peers on consistency of earnings growth, which we
expect will make a comeback.
Emami has a formidable portfolio of dominant brands, with best-in-class R&D and
advertisement to support existing brands and new launches.
Despite likely resumption of better-than-peers’ earnings growth of 20% CAGR over
FY18-21, the stock trades in line with peer multiples.
Our target price of INR1655 implies a one-year upside of 23% and a two-year upside
of 39%. Our bull case upside is 33% for one year and 53% for two years.
2018E
2019E
Net Sales
EBITDA
PAT
EPS (INR)
Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
24.9
7.6
5.9
26.5
4.5
77.3
35.8
31.0
50.5
17.3
26.6
8.0
6.0
26.6
0.2
90.4
31.7
32.1
50.4
14.8
31.5
9.6
7.5
33.2
25.0
104.7
34.0
37.7
40.3
12.8
Shareholding pattern (%)
As On
Sep-17 Jun-17 Sep-16
Promoter
72.7
72.7
72.7
DII
4.2
3.5
2.3
FII
14.4
14.9
16.7
Others
8.6
8.9
8.2
FII Includes depository receipts
Stock Performance (1-year)
Emami
Sensex - Rebased
1,350
1,250
1,150
1,050
950
Prime play on rural demand growth and wholesale recovery
With the highest proportion of sales from rural and the highest proportion of sales
from wholesale, Emami is a great play on recovery in both channels. Rural demand
has already perked up from 2QFY18 and we believe will only pick up momentum
because of a confluence of positives like near-normal monsoon, benefits of
extension of DBT, rural wage increases, another year of healthy increase in
minimum support prices (MSPs) and farm loan waivers granted in the past few
months. In addition, the upcoming budget on February 1, 2018, the last full budget
before national elections in 2019, is likely to have schemes to benefit the rural
voter. The wholesale channel is likely to recover by 4QFY18. Emami will be the
biggest beneficiary of the resurgence in both these channels.
High quality play on rural recovery
Until as recently as the quarter just before demonetization, Emami had continued
its consistently best-of-breed earnings growth. Domestic EBITDA growth in 1HFY17
was 29% YoY; following 26% overall EBITDA CAGR over the preceding three years
(FY13-16) at a time when peer earnings had started slowing down. Emami also has
a concentrated portfolio of strong brands, with 80% of sales coming from
categories that are problem solving in nature and thus less prone to slowdown
compared to peers. In many key categories, penetration and distribution reach has
a long runway of growth, which Emami is looking to speed up with its Project
Dhanush (targeting to double rural reach in two years) and Project Race (working
with AC Nielsen on urban expansion).
Pace of innovation among the best of breed; R&D and advertising spend highest
among peers
Emami has launched 12 new products in the past 18 months at a time when there
has been a scarcity of launches by peers. Its best-of-breed R&D spends (1% of sales)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Krishnan Sambamoorthy – Research Analyst
(Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Vishal Punmiya – Research Analyst
(Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547

Emami
and highest A&P to sales among peers mean that not only is its innovation pipeline
among the best, support to new and existing brands is also enviably high.
International business poised to turn around; recovery in Kesh King business key
After declining sharply in three quarters starting from 3QFY17, the international
business is showing signs of revival, aided by weak base and gradual stabilization of
the economy and currency in the MENA region. Kesh King revival may have to wait
until the end of the year owing to 70% contribution from wholesale, but the
company seems to be getting its act together on this front with a new campaign.
Higher growth in what is by far the highest margin product in the portfolio augurs
very well for medium to longer term earnings growth prospects.
Valuation and view
We believe Emami remains a credible long-term play due to (a) healthy growth likely
in existing product categories where it has dominant market share, (b) best-of-breed
R&D spend and A&P spend, resulting innovative products as well as ability to back
up innovation with strong marketing, and (c) much-needed efforts on improving
direct distribution reach. All these factors make it an attractive play on rural
recovery. Before demonetization and GST implementation, Emami had best-of-
breed earnings growth, which we expect will resume once disruptions caused by
these factors come to an end by the beginning of FY19. Earnings growth CAGR of
20% (over FY18-21) is best-of-breed and valuations are undeservedly in line with
peers for a company that has the advantage of a great pedigree of brands, best-in-
class R&D spend, innovation and advertising support, and RoCE of around 40% on
recovery. Our base case (targeting 44x December 2019E EPS and 42x December
2020E EPS) entails a one-year upside of 23% and two-year upside of 39%, while our
bull case entails an upside of 33% and 53%, respectively. Maintain
BUY.
9 January 2018
2

Emami
Rural recovery to kick-start strong demand revival
Emami’s dependence on the rural channel is one of the highest among
Consumer peers. Its growth was, therefore, sub-optimal over FY14-17, a period
of rural slowdown. While drought had impacted rural demand in FY15 and FY16,
demonetization washed away the benefits of a near normal monsoon in FY17.
With another year of normal monsoon in FY18, rural growth has started
exceeding urban growth (from 2QFY18 onwards) for the first time in many
years, and players like Emami, HUL, Colgate and Dabur (having higher rural
salience) are poised to benefit from the recovery.
Exhibit 1: Emami has the highest share of rural among coverage consumer companies
Urban
20
40
28
50
50
Rural
40
40
34
20
20
80
60
72
50
50
60
60
66
80
80
Britannia Colgate
Dabur
Emami
GCPL
HUVR
Jyothy
Marico
Nestle
PGHH
Source: Company, MOSL
As highlighted in our Rural Strategy note (Back
on the saddle – Volume II),
in
addition to good monsoons, there are a host of other factors contributing to the
rural demand recovery:
1) Increase in the purview of DBT
Transfer of government subsidies and payments directly into the bank accounts of
beneficiaries has helped cut out middlemen and check leakages in the system. It has
enabled better targeting of subsidies and increased transparency. The use of DBT
continues to expand at a rapid pace in FY18.
Along with the number of schemes covered, the number of beneficiaries receiving
payments via DBT has also increased sharply, from 357m in FY17 to 475m currently.
PAHAL, which provides subsidy on LPG, accounts for more than half the total
number of beneficiaries receiving money via DBT. The amount of funds transferred
via DBT has also increased every year, with more than INR747b disbursed in FY17,
up ~21% from INR619b disbursed in FY16. As much as INR873b has already been
disbursed through this mechanism in FY18 so far, taking the cumulative amount
disbursed via DBT to INR2.7t over the last four-and-a-half years.
9 January 2018
3

Emami
Exhibit 2: Number of schemes covered under DBT
Number of schemes
409
Exhibit 3: Number of beneficiaries covered under DBT
600
500
400
300
Other Schemes
All Scholarship Schemes
PAHAL (DBTL)
NSAP (IGNOAPS, IGNWPS & IGNDPS)
MGNREGS
28
FY14
34
FY15
59
140
200
100
0
FY16
FY17
FY18*
*Till date
FY14
FY15
FY16
FY17
FY18*
Source: GOI, MOSL
Exhibit 4: Total funds transferred via DBT (INR b)
(INRb)
800
600
400
200
0
FY14
*Till date
FY15
FY16
FY17
FY18*
Source: GOI, MOSL
MGNREGS
NSAP
PAHAL
All Scholarship Schemes
Other
2) Rural wage increases
Growth in nominal rural wages has remained stable at 6-6.5% in FY17 and also in the
first four months of FY18. However, owing to the sharp fall in inflation, real rural
wages accelerated over the last 12 months. After remaining flat YoY in 1HFY17,
growth improved to 3.3% in 2HFY17 and further to 4.6% during April-July 2017, the
fastest pace in four years. The sustained improvement in real rural wages is a
positive for rural demand.
Exhibit 5: Growth in real rural wages has picked up (% YoY)
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
Nominal rural wage growth YoY (%)
Real rural wage growth YoY (%)
-1.0
4.6
2.4
*Till date ; Source: Labour Bureau, MOSL
9 January 2018
4

Emami
3) MSP hike higher than five-year average
The government announced MSPs for rabi crops in October 2017. On a simple
average basis, MSP hike for rabi crops is 8.3% for FY18. Although this is lower than
the 11.3% hike seen in FY17, it is much better than the average hike of 7.1% seen
across the last five years. Importantly, MSP for wheat, which is the most-procured
rabi crop, has been increased by 6.8% in FY18, the fastest pace in six years.
Exhibit 6: Changes in MSP of Rabi crops over the past six years
% YoY, MSP
Wheat
Barley
Gram
Masur (Lentil)
Rapeseed/Mustard
Safflower
Simple average
2012-13
5.1
0
7.1
3.6
20
12
8.0
2013-14
3.7
12.2
3.3
1.7
1.7
7.1
5.0
2014-15
3.6
4.5
2.4
4.2
1.6
1.7
3.0
2015-16
5.2
6.5
10.2
10.6
8.1
8.2
8.1
2016-17
6.6
8.2
14.3
16.2
10.4
12.1
11.3
2017-18
6.8
6.4
10.0
7.6
8.1
10.8
8.3
Source: Department of Agriculture, MOSL
MSPs for kharif crops were increased by 6.2% in FY18 – better than the 5% growth in
FY17 and the highest growth in five years.
Exhibit 7: Changes in kharif MSPs over the past six years
% YoY, MSP
Paddy, common
Paddy, Grade A
Jowar, hybrid
Jowar, Maldandi
Bajra
Maize
Ragi
Tur (Arhar)
Moong
Urad
Cotton, Medium staple
Cotton, Long staple
Groundnut in shell
Sunflower seed
Soyabean, yellow
Sesamum
Simple average
2012-13
15.7
15.3
53.1
52.0
19.9
19.9
42.9
20.3
25.7
30.3
28.6
18.2
37.0
32.1
32.5
23.5
27.7
2013-14
4.8
5.1
0.0
0.0
6.4
11.5
0.0
11.7
2.3
0.0
2.8
2.6
8.1
0.0
14.3
7.1
5.1
2014-15
3.8
4.1
2.0
2.0
0.0
0.0
3.3
1.2
2.2
1.2
1.4
1.3
0.0
1.4
0.0
2.2
1.6
2015-16
3.7
3.6
2.6
2.6
2.0
1.1
6.5
6.3
5.4
6.3
1.3
1.2
0.8
1.3
1.6
2.2
3.1
2016-17
4.3
4.1
3.5
3.8
4.3
3.0
4.5
9.2
7.7
8.1
1.6
1.5
4.7
3.9
6.7
6.4
4.9
2017-18
5.4
5.3
4.6
4.5
7.1
4.4
10.1
7.9
6.7
8.0
4.1
3.8
5.5
3.8
9.9
6.0
6.2
Source: Department of Agriculture, MOSL
4) Farm loan waivers
Beginning February 2017, a series of farm loan waivers took off in several states
following the announcement of such waiver in the Uttar Pradesh (UP) election
campaign by the BJP government, ruling in the center. After its landmark victory, the
new BJP chief minister, Mr Yogi Adityanath, announced a farm loan waiver totaling
INR364b. This opened the Pandora’s Box. Post UP, Maharashtra (MH), Punjab (PB),
Karnataka (KR) and Madhya Pradesh (MP) have already announced farm loan
waivers and several other states including Gujarat, Haryana, Rajasthan and Tamil
Nadu are under immense pressure to follow suit. Consequently, total farm loan
waiver amount has crossed INR1,000b following Uttar Pradesh (INR364b),
Maharashtra (INR305b), Punjab (INR150b), Karnataka (INR82b), Madhya Pradesh
(INR60b), Telangana (INR40b), and Andhra Pradesh (INR36b). This has aided growth
in rural demand.
9 January 2018
5

Emami
Exhibit 8: Total amount of farm loan waiver by different
states
364
340
Farm loan waiver amount
(INRb)
Exhibit 9: Aggregate amount of farm loan waiver in FY18 half
of FY09 (% of GDP)
(% of GDP)
Farm loan waiver amount
1.2
0.6
150
82
60
40
36
FY09
Source: Industry Sources, MOSL
FY18*
Source: Industry Sources, MOSL
The momentum created in terms of rural demand is also likely to be bolstered by
government spending or sops likely to be announced ahead of the 2019 national
elections with an eye on rural votes. This process is likely to begin with the national
budget in February 2018. There has been a decline in rural votes in the recent state
elections in Gujarat and the government may be keen to assuage the rural voter
well ahead of elections in mid-2019.
Emami, with its larger rural portfolio compared to most peers, appears well placed
to gain growth momentum ahead of others as a result of the ongoing revival in rural
demand, which is likely to pick up momentum, going forward.
Recovery in wholesale channel to boost sales from FY19
Apart from high rural dependence, Emami also has the highest dependence (45-50%
of domestic sales) among peers on the wholesale channel. Starting from 3QFY17,
during which the wholesale channel was badly affected by demonetization, followed
by the impact of GST implementation, the wholesale channel has been under
pressure. As compliance gradually picks up and understanding of GST implications
increases, the wholesale channel is moving towards normalcy – a process that is
likely to culminate by 4QFY18.
With the highest dependence on wholesale and weaker than usual base on
wholesale sales for nearly a year and a half starting from 3QFY17, Emami is set to
grow sales rapidly over the next few years.
The growth that could potentially happen, once rural market recovers and
wholesale trade normalizes after the impact of extraordinary factors affecting
growth lessens, can be gauged from the fact that as recently as 1HFY17, just before
demonetization, Emami had reported 15% YoY sales growth and 29% YoY EBITDA
growth. In the preceding three years (FY13-Y16) when other consumer companies
had started witnessing slower earnings growth, Emami had witnessed EBITDA CAGR
of 26.2% and EPS CAGR of 22.3%.
9 January 2018
6

Emami
Concentrated portfolio with authority in key categories
Emami derives 80% of its sales from categories where it is the dominant market
leader and from
problem-solving
products. These categories enjoy higher growth
resilience and promise sustainability of longer-term growth.
Emami’s product portfolio includes ayurvedic antiseptic cream, fairness cream,
prickly heat powder, cool talc, pain relievers, herbal petroleum jelly, cool oils, face
washes, and ayurvedic medicines/oils. The company has seven power brands, all of
which have clocked sales of at least INR1b.
Penetration is low in many categories. We note that Emami is a dominant player in
its leading categories, which puts it at the forefront to drive category growth.
Exhibit 10: Penetration is low in many categories in which Emami is present
Penetration of categories as on May'17 (%)
89
35
41
4
8
8
11
16
25
Source: IMRB, Company, MOSL
Exhibit 11: Emami is the dominant market leader in most of its categories
Brands
Navratna Oil
BoroPlus Cream
Zandu & Mentho Plus Balms
Fair & Handsome
Kesh King
Navratna Cool Talc
Segment
Cooling oil
Antiseptic Cream
Balms
Men's Fairness Cream
Ayurvedic Hair and Scalp care
Cool Talc
Market Size
(INR m)
8,500
4,600
9,000
3,900
7,200
5,500
Market Size
(USD m)
131
71
139
59
111
84
Market share (%) Market share (%)
2011
2016
52
61
75
70
56
59
58
60
0
34
131
26
Source: AC Nielsen, MAT Dec ’16, Company, MOSL
Brands like
Fair & Handsome
(now with a wide men’s personal care portfolio)
are available in only 1.4m of the 4.3m outlets Emami reaches across India.
Balms (INR9b market size) is another category where penetration is low at 35%.
Zandu Balm
and
Mentho Plus
reach only 1.6m and 1.2m outlets, respectively.
Zandu
and
Mentho Plus
together have 59% market share.
Mentho Plus
witnessed strong offtake in South India in FY17, with market leadership in
Andhra Pradesh and Karnataka.
Zandu
can also emerge as a strong ayurvedic products brand. The management
believes that Emami’s strength lies in its ability to validate product efficacy on
the basis of data derived from systematic scientific research at NABL and
Ministry of AYUSH-accredited laboratories, accreditation for which was achieved
in FY17. Emami’s products are herbal/vegetarian and developed via proprietary
9 January 2018
7

Emami
methods using quality scientific tools. As of 31 March 2017, the company’s field-
force reached more than 21,000 doctors across the country. Emami has engaged
an external consultant to grow this business and has already begun test-
marketing products across select states.
New projects to substantially aid distribution
As pointed out in our
FY17 annual report analysis,
the company has initiated two
projects to rapidly boost distribution.
Project Race:
Emami initiated ‘Project Race’ in FY17 to expand its direct reach in
urban towns. It has engaged AC Nielsen to conduct a study in the top 30 towns
to understand the best way to take the expansion plan forward.
Project Dhanush:
In FY17, the company also initiated ‘Project Dhanush’ to
enhance its direct rural reach via van operations (which were introduced on
~1,500 routes covering 6,000 towns with a population of below 5,000). The
target is to double rural reach in two years.
A combination of both these projects will substantially aid rapid sales growth in key
categories.
Exhibit 12: Emami reaches an overall ~4.3m outlets including ~0.73m direct retail outlets
Source: Company, MOSL
Highest ad and R&D spends among peers enables innovation and support
to innovation
Emami spends more on R&D than most listed FMCG companies in India. FY17
spend stood at INR231m (0.99% of sales), of which INR207m was recurring R&D
and INR24m was capital R&D.
Despite demonetization, absolute A&P spend grew from INR4.3b in FY16 to
INR4.43b in FY17. On a percentage of sales basis, Emami is easily among the top
players in the FMCG space.
8
9 January 2018

Emami
Exhibit 13: Emami is among the top spenders on advertisement in terms of % of sales
19.3
Ad spends as a % of sales
19.0
17.6
15.8
16.4
15.2
17.7
18.3
17.8
18.0
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Source: Company, MOSL
Both of these factors mean that apart from expansion in existing categories, led by
factors detailed above, new product introduction is also rapid due to healthy R&D
spend and high advertising enables not just consistent support to existing categories
but also helps push growth of new products. Product pipeline thus remains strong.
Over the last five years, Emami has launched more than 25 products, variants and
extensions. In FY17, for example, the company launched eight new products:
1. Boro Plus Perfect Touch Cream
2. Navratna Almond Cool Oil
3. Navratna i-Cool Talc
4. Fair & Handsome 100% Oil Clear Instant Fairness Face Wash
5. He Respect Deodorant
6. He range of perfumes and deodorants
7. Kesh King ayurvedic medicinal oil with blend of coconut oil
Pace of new launches has not slowed in 1HFY18. The company launched:
1. He On-the-Go waterless face wash
2. Zandu gel, Zandu spray, Zandu roll on
3. Boro Plus Zero Oil Zero Pimple Face Wash
4. Fair & Handsome Laser 12 Advanced Whitening and Multi Benefit Cream
5. Diamond Shine Luxury Hair Colour
6. Navratna I-Cool Dynamite Talc
Exhibit 14: Emami’s new launches in FY18 YTD
Source: Company, MOSL
Despite demonetization and GST-related disruption, Emami continued its pace of
new launches, which will serve the company well in the medium to long term.
9 January 2018
9

Emami
International and domestic Kesh King business to bounce back
Worst is over for international business
As a result of pressure from the MENAP region, international business (27% of sales)
sales began declining sharply from 3QFY18. This included 38% decline in 4QFY18 and
19% decline in 1QFY18 before the 22% YoY growth reported in 2QFY18.
With weak base for the next few quarters and the economy and currency gradually
stabilizing, international business could be back to healthy growth levels instead of
being a drag on the business as has been the case in the past few quarters.
Revival of Kesh King to be a key factor to watch for
Kesh King revival may have to wait until the end of the year owing to 70%
contribution from wholesale, but the company seems to be getting its act together
on this front with a new campaign. Higher growth in what is by far the highest
margin product in the portfolio augurs very well for medium to longer term earnings
growth prospects.
Emami has a superior track record on growth compared to peers
Emami has been among the most consistent on EBITDA and PAT growth among
peers.
Exhibit 15: Emami’s EBITDA CAGR over three, five and 10 years (sorted by 10-year CAGR)
EBITDA performance
Page Industries
Emami
Godrej Consumer
Britannia
Pidilite Inds.
Asian Paints
Marico
Colgate
P&G Hygiene
Jyothy Labs
Dabur
United Breweries
GSK Consumer
Nestle
ITC
Hind. Unilever
United Spirits
3yr CAGR
17.4
19.5
17.7
29.7
21.4
17.5
15.7
11.7
16.5
17.4
9.8
4.1
(2.7)
(0.3)
5.3
10.6
8.7
5yr CAGR
23.1
22.2
17.2
32.9
19.5
15.4
19.3
10.0
27.1
24.7
11.7
10.2
9.9
4.8
10.5
12.9
0.7
10yr CAGR
31.0
27.7
26.5
24.7
21.2
20.2
19.1
17.2
16.8
16.7
15.7
14.9
13.8
13.8
13.6
12.7
8.7
Source: Company, MOSL
9 January 2018
10

Emami
Exhibit 16: Emami’s adjusted PAT CAGR over three, five and 10 years (sorted by 10-year
CAGR)
Adj. PAT performance
Page Industries
Godrej Consumer
Emami
Marico
Britannia
Pidilite Inds.
Asian Paints
GSK Consumer
P&G Hygiene
Dabur
Jyothy Labs
United Breweries
ITC
Colgate
Nestle
Hind. Unilever
United Spirits
3yr CAGR
20.1
20.1
14.4
18.7
30.7
23.7
17.9
(0.9)
12.7
11.8
33.6
0.5
5.1
5.6
0.5
6.1
21.9
5yr CAGR
24.2
19.4
18.4
20.5
34.7
21.6
15.3
13.1
19.0
14.7
39.6
9.4
10.6
5.3
3.2
10.6
4.6
10yr CAGR
31.6
25.4
24.8
23.4
22.9
22.7
21.5
17.9
17.0
16.1
15.4
15.4
14.3
14.3
13.7
10.7
5.8
Source: Company, MOSL
Slowdown in earnings growth in the past year has meant relative underperformance
in the stock price in the past year compared to its outstanding performance on a 3-
year, 5-year and 10-year comparison with peers.
Exhibit 17: Emami has underperformed v/s peers over last one year
CAGR return (%)
United Spirits
Page Industries
Hind. Unilever
Britannia
Pidilite Inds.
United Breweries
P&G Hygiene
Nestle
Asian Paints
Godrej Consumer
Dabur
Emami
GSK Consumer
Marico
Colgate
Jyothy Labs
ITC
1yr
88.8
77.9
64.7
62.2
49.4
35.6
35.5
33.6
29.3
29.0
28.5
28.4
26.3
25.2
22.2
12.6
6.5
3yr
9.4
25.6
21.4
35.0
17.4
9.0
16.9
7.5
14.8
26.8
14.8
19.2
2.7
25.0
5.9
13.0
2.0
5yr
13.7
48.4
20.4
55.4
31.5
3.1
28.0
10.1
21.7
22.2
22.7
27.7
10.7
24.1
7.5
18.0
6.7
10yr
6.5
48.1
19.3
31.3
25.3
12.9
28.0
18.3
26.4
30.6
19.3
26.9
24.9
23.6
17.0
15.8
13.5
Source: Company, MOSL
With earnings likely to report stronger growth of 20% CAGR over FY18-21,
mainly led by a host of positives discussed above, we believe that Emami will be
back to resume its impressive consistency of wealth generation.
9 January 2018
11

Emami
Base case numbers indicate healthy upside; bull case scenario
indicates 53% upside over two years
Key assumptions in bull case
There is no change in FY18 sales growth and margins; the base and bull case
remain the same for FY18.
From FY18 onwards, there could be faster recovery in Kesh King off a weak base,
which has persisted in 2HFY17 and 9MFY18. There are two reasons why sales
growth was affected for this product:
High wholesale trade dependence at 70%, which meant that both
demonetization and disruptions to the wholesale channel as a result of GST
implementation had an adverse impact on sales compared to other
segments. With almost complete recovery in wholesale channel likely by
4QFY18 and initiatives taken by the company to reduce wholesale
dependence, the outlook looks better from FY19 onwards.
Competition from Patanjali: There has been some effect on sales of Kesh
King because of competition from Patanjali’s
Kesh Kanti.
However, the new
campaign on Kesh King seems to indicate an incipient revival. Emami’s
advertising to sales is the highest among peers and because its business is
concentrated in a few key brands, the impact is more significant when the
company decides to crank up the intensity. Moreover, our channel checks
confirm the Emami management contention that over half of the sales of
Patanjali’s
Kesh Kanti
brand come from shampoos. We are also of the belief
that after being initially taken by surprise, Consumer companies have been
bouncing back well in response to the Patanjali impact. Patanjali’s weakness
in general trade and its quest for huge topline growth taking focus away
from key brands are also factors that come into play.
Kesh King’s revival will not only aid sales but also contribute disproportionately
higher to profitability, as EBITDA margin is over 45%. In our bull case, we have
assumed 25-30% CAGR in sales for Kesh King over the next few years compared
to 20-25% growth assumed in the base case.
In our bull case, we have assumed faster recovery off a weak base in rural sales
over FY19-21, leading to 300bp higher volume growth for key categories
compared to base case volume growth assumptions.
Our bull case also assumes faster recovery in the exports business in the next
three years – 20%, 15% and 15% against 12%, 10% and 10% in the base case.
Since debt on Kesh King will be paid by the end of FY18 (the management has
maintained its original target), there will be no interest payout from FY19 in
both the base and bull case, leading to faster growth in PAT than in EBITDA.
Despite stronger earnings growth in the bull case, we are not assuming a
different target multiple.
Based on past three-year averages, we get a one-year upside of 23% (44x
multiple) and two-year upside of 39% (42x multiple) in base case. In the bull
case, assuming the same multiples, we get a one-year upside of 33% and two-
year upside of 53%.
9 January 2018
12

Emami
Exhibit 18: Base case implies one-year upside of 23%
Base case
Sales (INR m)
Sales growth (%)
Gross Profit (INR m)
Gross margin (%)
EBITDA (INR m)
EBITDA growth (%)
EBITDA margin (%)
Depreciation
Int. and Finance Charges
Other Income
Tax
Adj. PAT (INR m)
Adj. PAT growth (%)
Adj. PAT margin (%)
EPS (INR)
Target multiple (x)
Target Price (INR)
Upside/downside
FY17 FY18E FY19E FY20E FY21E
24,930 26,639 31,511 36,255 42,033
5.7
66.6
7,591
10.5
30.5
469
580
311
836
6,021
4.5
24.2
26.5
6.9
65.7
8,013
5.6
30.1
519
370
320
1,411
6,033
0.2
22.6
26.6
18.3
66.0
19.6
30.4
537
0
378
1,885
7,539
25.0
23.9
33.2
15.1
66.2
17.0
30.9
555
0
435
2,225
17.6
24.4
39.0
44
1,655
23%
15.9
66.5
17.3
31.3
573
0
504
2,632
17.9
24.9
46.0
42
1,860
39%
16,595 17,515 20,803 23,991 27,973
9,583 11,208 13,146
Exhibit 19: Bull case implies one-year upside of 33%
Bull case
Sales (INR m)
Sales growth (%)
Gross Profit (INR m)
Gross margin (%)
EBITDA (INR m)
EBITDA growth (%)
EBITDA margin (%)
Depreciation
Int. and Finance Charges
Other Income
Tax
Adj. PAT (INR m)
Adj. PAT growth (%)
Adj. PAT margin (%)
EPS (INR)
Target multiple (x)
Target Price (INR)
Upside/downside
FY17 FY18E FY19E FY20E FY21E
24,930 26,639 32,328 38,109 44,710
5.7
66.6
7,591
10.5
30.5
469
580
311
836
6,021
4.5
24.2
26.5
6.9
65.7
8,013
5.6
30.1
519
370
320
1,411
6,033
0.2
22.6
26.6
21.4
66.5
24.6
30.9
537
0
388
1,969
7,866
30.4
24.3
34.7
17.9
67.2
21.8
31.9
555
0
381
2,397
21.9
25.2
42.2
44
1,775
33%
17.3
67.8
19.5
32.5
573
0
447
2,877
20.3
25.8
50.8
42
2,044
53%
16,595 17,515 21,500 25,612 30,309
9,984 12,160 14,536
8,862 10,445
9,589 11,532
Source: Company, MOSL
Source: Company, MOSL
9 January 2018
13

Emami
Story in charts
Exhibit 20: Brand-wise revenue share (%)
Others
22
OTC
products
10
BoroPlus
16
Exhibit 21: Region-wise contribution to export revenues (%)
ROW
9
Fair &
Handsome
28
CISEE
11
FY17
Navratna
24
MENAP
27
FY17
SSEA
53
Source: Company, MOSL
Source: Company, MOSL
Exhibit 22: Domestic volume declined 4% in 1HFY18
20.0
12.3
Domestic volume growth (%)
15.3
14.0
11.8
6.9
0.9
Exhibit 23: Revenue to grow at CAGR of 16.4% over FY18-21
Revenue (INR b)
21.8
16.6 16.9
7.2
(4.0)
15
17
18
22
18.3
15.1 15.9
Revenue growth (%)
6.4
24
5.7
25
6.9
27
32
36
42
Source: Company, MOSL
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
Exhibit 24: Gross margin to expand by 80bp over FY18-21
Gross Margin (%)
64.8 65.6
62.6
56.9
57.9
66.6 65.7 66.0 66.2 66.5
Exhibit 25: Ad spends to increase, led by spends on new
launches
Advertising and Promotion (%)
18.3 18.4 18.5
17.7 18.3 17.8 18.1
15.2
15.8
16.4
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
9 January 2018
14

Emami
Exhibit 27: EBITDA margin to expand by 120bp over the
same period
EBITDA Margin (%)
29.1
17.0 17.3
19.2 20.1
10
11
13
24.4 24.2
30.5 30.1 30.4 30.9 31.3
Exhibit 26: EBITDA to grow at CAGR of 17.9% over FY18-21
EBITDA (INR b)
30.1
22.5
5.1
3
3
4
5
7
20.5
10.5
5.6
8
28.3
19.6
EBITDA growth (%)
8
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
Exhibit 28: Adjusted PAT to grow at CAGR of 20.1% over
FY18-21
PAT (INR m)
27.9
21.6
13.2
4.5
0.2
6
8
9
10
20.7 18.7
PAT Growth (%)
25.0
17.6 17.9
Exhibit 29: Return ratios expected to improve
47.1
42.4
37.1
35.6
28.6
ROCE (%)
44.9
40.5
43.2 44.0
35.8
31.0 32.1
35.8
31.7
34.0
37.7
36.6
38.0
ROE (%)
43.2
45.1
3
3
4
5
6
6
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
*FY16 & FY17 as per IND-AS
Source: Company, MOSL
Exhibit 30: Net working capital days (average basis) increased in FY17 due to higher inventory days and lower creditor days
Cash conversion cycle
INR m
Inventory
Account Receivables
Account Payables
Days
Inventory days
Debtor days
Creditor days
Cash conversion cycle (Days)
28
29
22
35
26
26
28
23
28
26
41
13
28
26
37
17
30
27
26
31
30
26
25
31
24
23
23
24
26
19
25
19
22
15
29
8
21
18
35
5
24
17
32
9
24
16
30
10
22
17
29
10
22
17
28
11
22
17
28
11
412
458
413
401
350
738
710
826 1,234 1,122 1,140 1,411 1,267 1,505 1,792 1,739 2,052 2,344 2,697
755 1,087 1,005 1,122
793 1,027 1,309
970 1,408 1,578 1,715 2,105
890
883 1,071 1,061 1,480 1,990 2,487 1,847 2,566 2,508 2,989 3,430
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17 FY18E FY19E FY20E FY21E
477 1,201
Source: Company, MOSL
9 January 2018
15

Emami
Exhibit 31: Emami P/E (x)
P/E (x)
50.0
35.0
20.0
5.0
36.9
26.8
16.8
8.3
41.6
Avg (x)
Max (x)
50.9
Exhibit 32: Consumer P/E (x)
47.0
39.0
31.0
23.0
15.0
P/E (x)
Avg (x)
37.2
Max (x)
41.2
30.3
23.4
17.1
40.6
Source: Company, MOSL
Source: Company, MOSL
Exhibit 33: Valuation matrix
Company
Reco
CMP
(INR)
1,183
4,681
1,117
361
1,340
994
6,351
1,367
Target Price
(INR)
1,282
6,098
1,357
410
1,665
1,042
5,785
1,497
Mkt Cap
EPS Growth YoY (%)
FY19E
19.8
26.4
19.8
20.0
25.0
15.8
13.4
21.0
10.2
25.2
24.3
14.2
16.6
39.3
38.7
20.7
22.4
53.5
28.0
22.3
27.7
FY20E FY18E
20.5
25.2
20.2
17.1
16.1
12.0
13.2
17.3
13.3
24.4
20.2
20.9
18.5
31.8
35.6
15.5
24.2
37.3
31.8
27.8
24.9
54.8
55.4
47.7
46.6
50.4
47.0
39.5
59.9
29.1
45.6
52.0
61.8
61.4
82.3
33.5
53.0
78.8
107.3
90.2
33.3
74.4
P/E (x)
FY19E
45.8
43.8
39.8
38.9
40.3
40.5
34.8
49.5
26.4
36.4
41.9
54.1
52.6
59.1
24.2
43.9
64.4
69.9
70.4
27.3
58.2
FY20E
38.0
35.0
33.1
33.2
34.7
36.2
30.8
42.2
23.3
29.3
34.8
44.8
44.4
44.8
17.8
38.0
51.8
50.9
53.4
21.3
46.6
Upside
(INR B) (USD B) FY18E
(%)
8
30
21
14
23
5
-9
9
4
-2
10
3
2
17
5
15
14
-12
-30
11
5
1,095
560
298
624
302
671
269
2,921
3,170
69
414
757
305
274
26
467
283
523
122
188
760
17.3
8.8
4.7
9.8
4.8
10.6
4.2
46.0
50.0
1.1
6.5
11.9
4.8
4.3
0.4
7.4
4.5
8.2
1.9
3.0
12.0
2.6
14.7
10.3
6.8
0.2
11.9
3.0
16.2
8.5
-25.0
-1.2
4.0
14.0
24.3
147.7
2.9
68.9
36.5
114.2
41.0
37.7
RoE
(%)
FY18E
26.9
34.0
48.8
26.0
31.7
23.8
20.7
75.9
23.2
14.3
32.3
39.1
64.8
39.8
10.8
24.1
15.5
18.9
16.5
16.5
23.2
Div.
(%)
FY18E
0.8
0.0
0.9
0.7
0.7
0.6
1.1
1.2
2.2
1.6
0.9
0.8
3.5
0.4
0.0
0.5
0.1
0.0
0.1
0.2
0.4
Consumer
Asian Paints
Neutral
Britannia Inds.
Buy
Colgate-Palm.
Buy
Dabur India
Buy
Emami
Buy
Godrej Cons.
Neutral
GlaxoSmith C H L Neutral
Hind. Unilever
Buy
ITC
Jyothy Lab.
Marico
Nestle India
P & G Hygiene
Page Industries
Parag Milk
Pidilite Inds.
United Breweries
United Spirits
Retail
Jubilant Food.
PC Jeweller
Titan Company
Neutral
Neutral
Neutral
Neutral
Neutral
Buy
Neutral
Buy
Buy
Neutral
Sell
Buy
Buy
265
276
384
375
323
355
7,952 8,173
9,300 9,461
24,414 28,650
299
314
912
1,044
1,155 1,320
3,913 3,449
1,933
502
925
1,359
556
973
Source: Company, MOSL
9 January 2018
16

Emami
Financials and Valuations
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
2013
16,991
16.9
3,415
20.1
220
3,196
66
557
0
3,687
540
14.6
1
3,146
3,146
21.6
2014
18,208
7.2
4,444
24.4
352
4,092
54
622
-89
4,571
547
12.0
0
4,024
4,024
27.9
2015
22,172
21.8
5,355
24.2
343
5,012
51
964
0
5,924
1,070
18.1
2
4,853
4,853
20.6
2016
23,583
6.4
6,873
29.1
423
6,450
540
445
-2,127
4,228
597
14.1
5
3,626
5,752
18.5
2017
24,930
5.7
7,591
30.5
469
7,123
580
311
-2,617
4,236
976
23.0
4
3,256
5,873
2.1
2018E
26,639
6.9
8,013
30.1
519
7,494
370
320
-2,400
5,044
1,411
28.0
0
3,633
6,033
2.7
2019E
31,511
18.3
9,583
30.4
537
9,046
(INR Million)
2020E
36,255
15.1
11,208
30.9
555
10,653
0
378
-2,400
7,024
1,885
26.8
0
5,139
7,539
25.0
0
435
-2,400
8,688
2,225
25.6
0
6,462
8,862
17.6
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2013
151
7,623
7,775
1,201
137
9,113
9,394
5,472
3,922
475
1,631
6,088
1,140
1,122
2,817
1,009
3,049
1,328
1,721
3,039
9,113
2014
227
9,094
9,321
450
48
9,819
10,341
6,382
3,959
119
2,958
5,987
1,411
793
2,700
1,083
3,203
1,821
1,383
2,783
9,819
2015
227
12,079
12,306
470
120
12,942
6,393
1,882
4,511
265
5,013
6,934
1,267
1,027
3,541
1,100
3,821
2,458
1,363
3,113
12,942
2016
227
15,889
16,116
6,838
90
23,086
24,162
4,408
19,754
616
474
6,037
1,505
1,309
1,084
2,138
3,836
3,147
689
2,200
23,086
2017
227
17,320
17,547
4,846
422
22,829
27,341
7,357
19,983
129
1,277
4,687
1,792
970
501
1,425
3,288
2,469
819
1,399
22,829
2018E
227
20,292
20,519
2,846
422
23,801
28,841
7,846
20,995
129
849
5,905
1,739
1,408
1,379
1,379
4,118
3,135
983
1,787
23,801
2019E
227
23,544
23,771
0
422
24,206
29,841
8,351
21,489
129
764
5,992
2,052
1,578
731
1,632
4,209
3,030
1,179
1,783
24,206
(INR Million)
2020E
227
24,462
24,689
0
422
25,124
30,841
8,874
21,967
129
688
7,184
2,344
1,715
1,247
1,878
4,883
3,468
1,415
2,300
25,125
9 January 2018
17

Emami
Financials and Valuations
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2013
20.8
22.3
51.4
8.0
38.5
64.1
26.0
11.7
58.1
0.6
2014
17.7
19.3
41.1
7.0
39.5
75.2
32.5
16.3
67.0
0.5
2015
21.4
22.9
54.2
7.0
32.7
62.3
24.6
13.3
55.0
0.5
2016
25.4
27.2
71.0
3.0
11.8
52.5
18.8
13.1
44.8
0.2
2017
26.5
28.6
77.3
8.7
33.0
50.5
17.3
12.3
40.5
0.7
2018E
26.6
28.9
90.4
9.0
33.9
50.4
14.8
11.4
38.0
0.7
2019E
33.2
35.6
104.7
9.0
27.1
40.3
12.8
9.6
31.6
0.7
2020E
39.0
41.5
108.8
9.0
23.0
34.3
12.3
8.3
27.0
0.7
42.4
35.6
49.1
1.7
24
47.1
43.2
56.3
1.6
16
44.9
44.0
50.9
1.4
17
40.5
35.8
39.1
1.1
20
35.8
31.0
28.1
1.1
22
31.7
32.1
27.3
1.1
19
34.0
37.7
31.7
1.3
18
36.6
43.2
36.2
1.5
17
-0.2
-0.2
-0.2
0.4
0.2
0.1
0.0
-0.1
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2013
3,415
0
187
-540
-61
3,002
-723
2,278
-828
0
-1,551
0
-410
0
-983
-1,394
57
2,760
2,817
2014
4,444
0
139
-547
123
4,159
-591
3,568
-1,327
0
-1,918
0
-751
0
-1,607
-2,358
-117
2,817
2,700
2015
5,355
0
512
-1,070
961
5,758
3,802
9,560
-2,054
0
1,748
0
19
0
-6,683
-6,664
842
2,700
3,541
2016
6,873
0
-1,544
-472
165
5,022
-18,121
-13,099
4,539
0
-13,582
0
6,369
0
-266
6,103
-2,457
3,541
1,084
2017
7,591
0
218
-966
141
6,984
-2,691
4,293
-803
0
-3,494
0
-1,992
0
-2,082
-4,074
-584
1,084
500
2018E
8,013
0
491
-1,411
-370
6,723
-1,500
5,223
428
0
-1,072
0
-2,000
0
-2,772
-4,772
879
501
1,379
2019E
9,583
0
-644
-1,885
0
7,054
-1,000
6,054
85
0
-915
0
-2,846
0
-3,941
-6,788
-649
1,379
730
(INR Million)
2020E
11,208
0
-1
-2,225
0
8,981
-1,000
7,981
76
0
-924
0
0
0
-7,541
-7,541
516
731
1,247
9 January 2018
18

Emami
NOTES
9 January 2018
19

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 Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, 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. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed
public company, the details in respect of which are available on
www.motilaloswal.com.
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), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited
(CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold
inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice. The matter is currently
pending.
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in
the subject company at the end of the month immediately preceding the date of publication of the Research Report.
MOSL 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 MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the
research report.
Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in
the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
managed or co-managed public offering of securities from subject company of this research report,
b)
received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)
received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)
Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure
of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL 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 MOSL 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.
Terms & Conditions:
This report has been prepared by MOSL 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 MOSL. 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. MOSL will not treat recipients as customers by virtue of their receiving this report.
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.
Emami
Disclosure of Interest Statement
Analyst ownership of the stock
Emami
No
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 MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL 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 MOSL & 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 Securities Limited (MOSL) 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 MOSL 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 MOSL, 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., MOSL 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
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following
representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
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. MOSL, 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 MOSL. 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 MOSL 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 MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or
employees responsible for any such misuse and further agrees to hold MOSL 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.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser:
INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal
Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private
Equity products
9 January 2018
20