Sector Update | 21 June 2019
SFinancials
| Fuelled To Fly
Technology
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The trend of gradually receding gross margins
Profitability a key near- term risk; Watch out for 1Q performance
The trend of declining gross margins in IT Services…:
Aggregate gross margins
of Tier-I IT companies plunged by 370bp to 37.7% during FY14-19 from earlier
41.5%. Within Tier-II, aggregate gross margins declined by ~290bp, but the dip
was not as uniform as seen in Tier-I companies due to bottom-up company-
specific factors. TCS and INFY both contributed to the downward trend. While
employee costs played truant in the case of TCS, sub-contractor expenses hurt
INFY. Further, investments in Digital capabilities and pressure in traditional
contracts too played a part in the declining gross margin trend.
…while the margin levers have played their part:
The INR’s 15% depreciation
v/s the USD would have been offset by up to 40-50% by cross currency
movements. But even adjusting for that, it would leave the companies with
~250bp of positive margin impact theoretically. TCS has often cited that the
currency depreciation is incidental to the prevailing cost inflation of wages in
India. And hence, that fact as a natural offset to the wage escalation should be
inherently embedded in the model. Utilization rates too have increased across
the board, visible in the few companies that continue to report the metric. The
uptick in utilization is understandable, with feasibility for the same facilitated by
declining growth rates over this period, which did away with the need for high
bench strength seen in earlier years.
Downward risk to estimates for companies such as INFY, TCS?:
The recent
currency stability, rising attrition rates across the industry and on-going supply
crunch coupled with high visa rejection rates pose a threat to margin estimates
for FY20.
INFY
is faced with headwinds from wage hikes, visa costs and also remnant
investments in localization, which collectively add up to 150-200bp. A soft
start at ~20% EBIT levels would imply full-year average near the lower end
of 21-23% margin band. Currently, 1QFY20 estimate stands at 20.8% and
FY20 consensus estimate is 22.2%.
TCS
has cited that wage hikes are ~200bp headwind to margins (180bp in
1QFY19). In the absence of significant pull-back from some levers, it may
start the year close to ~24% (v/s 1QFY20 estimate of 24.4% and FY20
estimate of 25.5%).
HCLT’s
contraction of the margin band for FY20 was a key negative surprise.
Multiple TIER-II IT companies have cited that the going w.r.t the supply
dynamics has been toughening in recent quarters.
CYL and ZENT are expecting to buck the trend.
ZENT’s
non-core business has been a material drag on its margins in the past.
The company is looking to exit this segment, a step which should aid margins. In
addition, there are levers (sub-contractors, Digital) to expand core margins by
100bp too.
Ashish Chopra
– Research analyst
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Research Analyst: Anmol Garg
(Anmol.Garg@MotilalOswal.com); +91 22 7193 4271 /
Mohit Sharma
(Mohit.Sharma@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.

Technology
CYL
has hired an external consultant for improving profitability. This has led to
the following objectives: (a) discontinuation of non-profitable clients, (b)
optimization of the people supply chain, (c) centralization of marketing, and (d)
scope to up the ante further in terms of charging. If all the cost savings
initiatives go according to plan, it will help CYL to save 300-400bp; of this, 100-
200bp would be offset due to the wage hike and the rest may flow towards
margin expansion.
21 June 2019
2

Technology
Story in charts
Exhibit 1:
Gross margins have witnessed a steady decline…
41.5%
Tier I
40.2%
39.0%
38.1%
Tier II
37.6%
37.7%
32.9%
60.8
61.2
Exhibit 2:
…against backdrop of INR depreciation
INR/USD
67.1
64.5
70.0
65.7
35.8%
34.6%
33.8%
33.1%
32.6%
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 3:
Realization rate has stabilize recently…
CC Realization indexed at 100
Exhibit 4:
…led by revenue-headcount dissociation due to
utilization…
INFO
1,000
750
500
250
0
Employee Growth
USD Revenue Growth
TCS
104
101
98
95
92
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5:
…yet employment cost as a % of revenue
increasing
Dev employees + subcon costs as a % of rev
Exhibit 6:
Supply remains tight amid high visa rejections
Share of H1B Visa Acceptance
56.3
48.6
94.5
91.9
92.2
83
75.4
TCS
55.0
53.4
44.8
54.3
45.7
54.5
46.2
INFO
55.3
47.7
43.0
Source: Company, MOFSL
Source: Company, MOFSL
21 June 2019
3

Technology
The trend of IT Services’ declining gross margins…
For Tier-I IT, aggregate gross margins during FY14-19 declined by 370bp to
37.7% from earlier 41.5%.
TCS saw the highest dip in gross margins, which slipped from 48.4% to 43%; but
at the same time with maximum optimization of SGA (170bp). This is partly due
to its classification of costs, as the uptick in utilization does not show in COGS,
but in SGA, unlike peers.
Gross margin decline was lowest for Infosys at 135bp, mainly due to the base
effect, with significant drop in GPM in the previous 5-year period. Cost
optimization measures taken by Infosys at onsite locations and increase in
utilization from levels of 73% in FY14 to 80% in FY19 helped stem the decline.
Exhibit 7:
Gross margins dip for both, more for TCS and less for INFY
48.4%
45.8%
45.2%
TCS
INFO
44.5%
39.3%
43.4%
38.6%
43.0%
38.6%
40.3%
39.7%
37.3%
Source: Company, MOFSL
Within Tier II, aggregate gross margins plunged by ~290bp, although the dip was
not as uniform as in Tier-I companies.
GPM at LTI, HEXW and CYL saw the most contraction (>500bp) while MPHL and
NITEC remained flat; this was particularly due to the lower base of the latter set
of companies.
MPHL was helped by traction and revenue commitment from the HP/DXC
portfolio, which gave the company leverage for cost optimization and choosing
projects without compromising on margins. NITEC has been able to grip its
margins with reduction in low-yield government business, increase in digital
projects, uptick in deal wins and consolidation of its position in loss-making
accounts.
21 June 2019
4

Technology
Exhibit 8:
Gross margins dip with currency depreciation and pricing pressures in legacy
41.5%
Tier I
40.2%
39.0%
Tier II
38.1%
33.1%
37.6%
32.6%
37.7%
32.9%
35.8%
34.6%
33.8%
Source: Company, MOFSL
Exhibit 9:
Decline seen across the board
Gross Margin Diffrence ( 5 Years)- bps
37
83
(135)
(408)
(543)
(325)
(510)
(592)
(764)
(419)
(665)
(241)
Source: Company, MOFSL
…. while margin levers have played their part
A well-documented fact is the support from currency movement during this
period, with the INR depreciating ~15% v/s the USD. Of this, ~40-50% would
have been offset by cross currency movements, still leaving the companies with
~250bp of positive margin impact, theoretically.
Exhibit 10:
….despite 15% INR depreciation
INR/USD
65.7
60.8
61.2
67.1
64.5
70.0
Source: Company, MOFSL
Utilization rates too have increased across the board, visible in the few
companies that continue to report the metric, while others have discontinued
the same. The uptick in utilization is understandable, with feasibility for the
21 June 2019
5

Technology
same being facilitated by falling growth rates over this period, which did away
the need for high bench strength seen in earlier years.
Exhibit 11:
…..and increase in utilization across the board (%)
INFY
WIPRO
81
76
75
78
79
76
TechM
81 80
82 82% 82%
79
85%
82% 82%
84% 85%
83%
Source: Company, MOFSL
Exhibit 12:
Non linearity in revenues and employee growth clearly visible across Tier-I
TCS
2000
1500
1000
500
0
Employee Growth
CC Revenue Growth
INFY
1000
750
500
250
0
Employee Growth
CC Revenue Growth
HCLT
2000
1500
1000
500
0
Employee Growth
CC Revenue Growth
TECHM
2000
1500
1000
500
0
Employee Growth
CC Revenue Growth
Source: Company, MOFSL
Source: Company, MOFSL
The duel of investments in Digital and pricing in traditional
Investments in Digital and pressure in traditional contracts have both played
their part in the trend witnessed in gross margins.
Realization rates in traditional services have trended downwards, weighing on
overall rates, at least up to FY18. Most of the incremental revenue came in from
Digital projects.
21 June 2019
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Technology
While Digital realizations are higher, (a) percentage of Digital projects remain
small (although increasing), and (b) capability-led investments in new areas are
still WIP, thereby offsetting the impact from better project-level productivity.
To align with the evolving demand-supply dynamics, IT services’ companies
inched up their investments during this period by (a) setting up centers at onsite
locations, (b) increasing local hires, (c) setting up training centers, (d) acquiring
companies with Digital expertise, and (e) increasing employee benefits to retain
and attract employees with skills around ‘new-gen’ services.
All this along with tightening H1B visa regulations created a supply shortage in
the market. To curb this, company had to increase onsite salaries and deploy
sub-contractors wherever talent was not available.
Continuous increase in Digital revenues
41%
35%
28%
22%
15%
TCS
INFO
WPRO
Source: Company, MOFSL
Scale leverage helped SGA moderate impact on EBITDA
While pressure has gradually been building up on COGS, SGA has offered part-
reprieve to moderate the intensity of the impact on EBITDA. Within Tier-I, TCS, HCLT
and TECHM were able to command some SGA leverage. With teams across the
board investing in front-end capabilities, proactive selling, consulting and domain
experience, we believe the leverage came from G&A efficiencies, while S&M would
have held up.
Exhibit 13:
SGA has come off as a % of revenues – mainly from G&A efficiencies
Tier I
17.2%
17.4%
17.7%
Tier II
17.3%
17.2%
16.4%
14.6%
14.4%
14.4%
14.4%
14.2%
13.9%
Source: Company, MOFSL
21 June 2019
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Technology
Exhibit 14:
LTI optimized its operations covering for the fall in gross margins
SGA Diffrence ( 5 Years)- bps
58
103
78
(168)
(5)
(71)
(113)
(481)
(96)
(280)
(17)
(163)
Source: Company, MOFSL
TCS and INFY: Different nature of cost escalations
Exhibit 15:
Two different approaches
Margin difference ( 2014-19) bps
Gross Margin
Employee Cost increase (as a % of revenues)
% contribution to Gross Margin decline
Sub-Contacting Cost increase (as a % of revenues)
% of Gross Margin
SGA
EBIT Margin
TCS
(543)
428
79%
138
25%
(168)
(353)
Infosys
(135)
(217)
-160%
340
252%
58
(151)
Source: Company, MOFSL
Within TCS, increase in employee cost (430bp) contributed to ~80% of the dip in
gross margins. The rest was contributed by increase in sub-contracting expense,
which grew from 5.9% in FY14 to 7.3% in FY19, explaining the 25% impact on
gross margin for the period.
For INFY, dip in gross margin was lower (135bp), but this was affected by the
steep jump in sub-contracting expense, which increased from 3.9% in FY14 to
7.3% in FY19. During this period, INFY trimmed its employee expense by 160bp,
hence optimizing it.
Increase in INFY sub-con expenses caught up with TCS (as a % of revenues)
10.0%
7.5%
5.0%
2.5%
0.0%
TCS
INFO
Source: Company, MOFSL
21 June 2019
8

Technology
EBITDA margins of Tier-I companies has dipped by 150bp in the past nine years,
despite 47.8% INR depreciation (which should ideally have a benefit).
Over FY10-14 (INR depreciation of 28.47%), EBITDA margins have inched up by
140bp. Thereon, it went on a sharp downfall, declining 280bp and ending at
24.1% in FY19 (INR depreciation 14.35%). INFY has the lowest fall over the
period (150bp) led by cost optimization measures on a smaller and sub-
optimally efficient base.
In FY19, margins inched up a tad; this was led by INR appreciation and cost
optimization measures undertaken by some companies. Noteworthy is TECHM
EBITDA margin, which increased 290bp during FY19.
Exhibit 16:
EBITDA margin has been continuously trending down after FY14…
Tier 1 Aggregate
27.0%
25.6%
25.4%
25.6%
26.0%
24.8%
24.1%
23.9%
24.1%
Source: Company, MOFSL
The gap between Tier-II and Tier-I margins has narrowed slightly in the past five
years. Overall, decline in Tier-II was lesser (240bp) than the decline in Tier-I
(280bp) — this was the period when Digital/Cloud took center-stage.
Exhibit 17:
…more in Tier-I than in Tier-II
Delta between Tier I and Tier II EBITDA margin (bp)
8.8%
8.0%
8.7%
8.4%
8.5%
7.6%
Source: Company, MOFSL
21 June 2019
9

Technology
Potential downside risks, at least in the near term
For 4QFY19, aggregate gross margins for Tier-I stood at 37.1%, a decline of 60bp
sequentially. Almost all companies hinted at the rising onsite cost and increasing
subcontractors to fulfil demand.
As TCS has often cited, currency depreciation is not an event in complete mutual
exclusion to the cost inflation of wages in India. And hence, that fact as a natural
offset to the wage escalation should be inherently embedded in the model.
While that may continue to prevail, we see factors that potentially thwart the
execution on margins at least for FY20:
In more recent quarters, low unemployment levels in the US and increasing
attrition rates for IT companies have coincided with a tightening visa regime, the
main factors for the decline in gross margins.
Currency has been largely stable so far this calendar year, and that holds the
potential to pull margin estimates downwards.
Pockets of concerns exist, which drive expectation of some deceleration in
growth in majority of our coverage universe. Any further severing on that front
will weigh on profitability too.
Exhibit 18:
Increase in denial rates
Company
Accenture
TCS
Cognizant
Infosys
Wipro
HCL America
Tech Mahindra
Americas
Initial
Approvals
363
528
500
69
273
196
579
Initial
Denials
160
152
790
80
82
100
201
Denial
Rate
31%
22%
61%
54%
23%
34%
26%
Company
Amazon
Microsoft
Intel
Google
Apple
Facebook
JP Morgan Chase
Initial
Approvals
2552
1252
873
724
698
651
321
Initial
Denials
37
13
9
6
13
5
8
Denial
Rate
1%
1%
1%
1%
2%
1%
2%
Source: Company, MOFSL
Continuous decline in denial rates increasing onsite expense
Share of H1B Visa Acceptance
94.5
91.9
92.2
83
75.4
Source: Company, MOFSL
21 June 2019
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Technology
1QFY20 will be a crucial quarter towards that end, which could challenge the
current full-year margin assumptions:
INFY is faced with headwinds from wage hikes, visa costs and also remnant
investments in localization, which collectively add up to 150-200bp. This
would imply a soft start, potentially ~100bp below the lower end of the
guided band. So, ramp-up through the course of 2Q-4QFY20 may be
sufficient to get full-year average near the lower end of 21-23% margin
band. Currently, 1QFY20 estimate stands at 20.8% and FY20 consensus
estimate is 22.2%
TCS has cited that wage hikes are ~200bp headwind to margins (180bp in
1QFY19). In the absence of significant pull-back from some levers, it may
start the year close to ~24% (v/s 1QFY20 estimate of 24.4% and FY20E
Estimate of 25.5%)
With solid order bookings across the board, we see a sanguine visibility from the
revenue growth standpoint this fiscal. But we remain watchful of the trend in
margins, where there exists downside risk for the foreseeable future.
That said, we observed similar potential risks in FY18, when INR was
appreciating and the revenue growth remained challenging. Drop in headcount
and consequent increase in utilizations saved the day during that period.
Margin Commentary
TCS: “IT is not an easy industry to work in, but it is one of those few industries
which have perennial demand and multi-decadal visibility; this is where our
confidence in margin comes from. IT Services is not a commodity, which is why
our margins are as resilient as you see.” (+)
INFOSYS:
“On the attrition front, attrition is definitely higher than we
anticipated. It has increased slightly from 17.8% to 18.3% at Infosys Limited
level. There are multiple interventions we have started in the last quarter or
so….We are also looking at gaps in compensation and trying to fix that as well. In
our kind of business there are always pricing pressures, but you have other
levers to make this up. For instance, Digital pricing where you can command a
premium — we have also said that our Digital margins are higher than our core
margins. Wage increases will occur within the FY20 plan. There is also much
focus on us building localization. We plan to build a new way of looking at the
workforce and that is a part of the approach we are taking.”
– (-)
HCL:
“We do expect the 1QFY20 (June quarter) margin to be lower than the
guided rage. Definitely, costs are going up. That is, some of it is baked into our
run rate because if you see this quarter we are at 18.9%. The cost of
replacement, the cost of fulfillment onsite, I mean you have been hearing this
from the industry. So, some of that impacts us as well.”
--(-)
WIPRO:
“Revenue in our business drives the impact and the margin is a very
good byproduct that all of us are aware of. So we will remain focused on getting
revenue momentum. Having said that, on margins — “we do have the salary
increase for the whole company and that will be a headwind as we enter into
1QFY20.” Amongst SG&A, we have done much optimization of our G&A; we
continue to invest in sales and in practices which are also part of the SG&A. So
we do see headroom for margin improvement where we invest and I feel quite
pleased that the team has done very well in terms of taking cost out from the
21 June 2019
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Technology
G&A areas, and reinvesting a part of it in sales and practices, as well as passing a
part of it into the margin.”
–(-/+)
TECHM:
“I think we still probably stand by the statement that from our
perspective, the goal would be to hold our increased margins, and we do believe
there are enough levers out there. Now, obviously, 1QFY20 margins will dip
because of the seasonality in Comviva, the H1B fees and the wage hikes, all
coming together in one quarter. And then we will recover as we go along with
some efficiency improvements, I would think of it, the baseline would be flat
margins.”
LTI:
“In terms of the margin, yes, we do give guidance and at margin you have to
see us as a growth company. Our entire focus is on keeping the margin at net
income levels steady and in a narrow band of 15% and focus and invest back
everything on driving up the top-line growth. In these changing times, this is
even more important.”
(-)
MTCL:
“Given all of these developments as well as our visibility at this moment,
we are committed as a management to drive operational efficiency and improve
our margins between 100-120bp for the full-year FY20.”
A few companies that we expect to buck the trend
There are a few companies where due to a low base, for levers in progress,
margins may yet expand, amidst stable currency / talent challenges:
ZENT:
For ZENT, its non-core business has been a material drag on margins
in the past. It is looking to exit this segment, which should aid margins. In
addition, there are levers (sub-contractors, Digital) to expand core margins
by 100bp too.
CYL:
CYL has hired an external consultant for improving on the profitability
front. This has led to setting of the following objectives: (a) not continuing
with clients that are non-profitable, (b) optimizing the people supply chain,
(c) centralization of marketing, and (d) scope to up the ante further in terms
of charging. If all the cost-saving initiatives go according to plan, it will help
CYL save 300-400bp. Of this, 100-200bp should be offset due to the wage
hike and the rest may flow towards margin expansion.
Potential Risks to our thesis
Currency depreciation should eventually provide some offset. Over the medium-
to-long term, there remains economic justification for the same. Our PAT
estimates changes by 1-3pp for every 1% of INR depreciation. Whether it could
drive / thwart near-term margin, remains anybody’s guess.
Additionally, industrialization of digital may change the subdued margin trend –
driving offshore-based large-sized Digital engagements. There are hopes that
automation and better digital realization should help navigate pressure on
margins.
There is little to suggest what could turn the direction of gross margins in the
foreseeable future. Gross margin pressure may continue, on elevating employee
expenses and high levels of subcontracting. Sub-con may cool off slightly as
more and more localized hiring is done by most Tier-I players and demand
anticipation smoothens out compared to the last year.
21 June 2019
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Technology
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.
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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 MOSL, 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 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, 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 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
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Technology
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
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financial interest in the subject company
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actual/beneficial ownership of 1% or more securities in the subject company
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received compensation/other benefits from the subject company in the past 12 months
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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.
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acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
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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)
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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.
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