Infrastructure: Sector Update | 10 December 2018

India Roads

Financial closure concerns for HAM projects receding

Focus now shifts to execution and fresh awarding

Of late, infrastructure (Roads) sector stocks have witnessed a sharp correction.

Concerns regarding (a) financial closure of recently awarded projects, (b) delays in

receiving appointed date impacting timely execution of projects awarded, and (c)

sluggishness in FY19 NHAI awarding given upcoming general elections and financing

constraints for HAM projects are weighing down the sector. However, our recent

channel checks with developers, lenders and Road sector awarding authority

indicate that financial closure concerns for HAM projects are waning and focus is

now on execution and fresh awarding. Key takeaways:

FY19 to see a dip in awarding

Awarding activity in the road sector has remained lackluster recently given (a)

multiple HAM projects awarded in FY18 are yet to receive an appointed date, (b)

changes at NHAI’s top brass, which has further delayed the awarding process, and

(c) difficulty in acquisition of land for new projects to be awarded. Financial closure

of awarded projects has been delayed due to liquidity tightness. Additionally, non-

availability of land is a road-block for the appointed date of most projects. FY19

being an election year, we believe project awarding from NHAI should see a YoY

decline and EPC should remain the preferred mode of awarding. As against INR1.2t

awarding witnessed in FY18, we expect a decline in awarding to INR700-800b in

FY19. Our channel checks suggest meaningful ordering should begin from Jan’19 as

NHAI starts fresh awarding after prior awarded projects are in execution phase.

Tender pipeline from NHAI remains encouraging with live projects worth INR900b;

however, there has been considerable delay in invitation of bids for tenders floated.

Lower ordering not a dampener for the sector

Although, we anticipate a decline in FY19 ordering, we believe it is not a dampener

for the sector as current order backlog of all players is healthy with an average

revenue visibility of 3.5-4x TTM. Even the project pipeline under the Bharatamala

program (INR6.9t opportunity) should ensure ordering activity to revive going

forward with ample business opportunities for players in the sector. However,

timely execution and avoidance of cost overrun would depend on availability of land

and funding, ensuring profitable execution.

Financial closure concerns receding

Our analysis of the HAM projects awarded till date suggest that 60% (in km terms)

and 58% (in value terms) of projects were awarded to listed companies, and balance

40% (in km terms)/42% (in value terms) of projects were awarded to non-listed

players. Our interactions with listed players indicate delay in financial closure given

the cautious approach of banks while lending to infrastructure projects and multiple

covenants included in the loan agreement. However, most listed companies have

been able to achieve financial sanction and NHAI approval is awaited for financial

closure. In the non-listed space, ~65% players have achieved financial closure.

Overall, ~20% projects are yet to achieve financial closure.

Amit Shah – Research Analyst

(Amit.Shah@MotilalOswal.com); +91 22 3029 5126

Ankur Sharma – Research Analyst

(Ankur.VSharma@MotilalOswal.com); +91 22 3982 5449

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.

Capital Goods

Non-availability of land delaying issuance of appointed date for projects

Land availability is a bigger issue than financial sanctions for the HAM projects.

Multiple projects are yet to receive appointed date from NHAI and are awaiting

financial closure approvals. Our interaction with developers indicate that delay in

receiving appointed date is mainly due to non-availability of land because of (a) non-

availability of physical possession of land, (b) pending forest clearances, and (c)

utility shifting. As bankers have a clause of disbursing loan only after 80% of land

availability, developers are insisting to take appointed date post 80% of physical

land availability.

Stringent financial closure norms to lead to consolidation and lower

competition in the HAM projects

We believe that with financial closure getting stringent and difficult to achieve, the

sector is poised for consolidation going forward and players with strong balance

sheet dominating the sector. Even competitive intensity in the HAM projects is

expected to reduce further, given non-availability of finance to weaker and smaller

players in the sector. Testimony to this is the recent INR6b tender floated by NHAI,

which saw participation from only two players as against an average of ten bidders

in earlier concluded HAM projects. Consolidation and lower competition should

further improve profitability of the upcoming HAM projects.

EPC to emerge as preferred mode of ordering for NHAI

Given the cautious approach of lenders while financing HAM projects and the

limited appetite of developers to take on incremental equity-oriented projects,

NHAI’s preferred mode of awarding is expected to shift to EPC projects. Of the live

tenders from NHAI, 58% are EPC projects, 6% on ToT basis and the balance 38% are

HAM projects. For FY18, EPC orders stood at 51%, HAM orders at 46% and balance

3% was BoT ordering.

However, competitive intensity to remain elevated in EPC projects

EPC ordering should see competitive intensity at elevated levels as it remains the

preferred way to participate in a sector, which is seeing depleting support from

financial institutions. We believe the government would try and award more

projects on EPC basis to expedite construction activity in the country and reduce

reliance on banking fraternity for funding.

Funding in place to support EPC awarding

EPC projects require 100% funding from NHAI, while HAM awarding needs 40%.

However, NHAI has ample bandwidth to raise funds and accomplish its awarding

and construction target as debt equity ratio for NHAI as at FY17 stands at 0.5:1.

NHAI has signed a MoU with SBI for INR250b and with LIC for another INR80b. It also

has plans to raise INR100b from taxable bonds. Monetization of assets by awarding

ToT model to Macquarie has also enabled NHAI to raise INR97b. NHAI also has

bundled package-II on ToT basis with a reserve price of INR56b.

10 December 2018

2

Capital Goods

Our view on the sector

Although near-term awarding outlook for the sector remains muted given FY19 is an

election year and delays in existing awarded projects being executed, we believe

that companies in the sector have a healthy order backlog to tide through the near-

term drought in new project awarding. Even the financial health of most EPC players

is good to timely execute order backlog accumulated over the past two years. The

recent sharp stock price correction offers an attractive entry opportunity at

reasonable valuation to play the road infrastructure story. We believe it’s best to

play the road infrastructure story through EPC players and asset developers with

healthy balance sheet and decent road asset portfolio. Our preferred plays in the

sector are

KNR (Buy, TP: INR280)

and

Ashoka Buildcon (Buy, TP: INR175).

10 December 2018

3

Capital Goods

Key charts

Exhibit 1: Awarding stands muted in YTD FY19

Awarded km(NHAI+ Morth)

16,270 17,055

Exhibit 2: Construction activity stable at 26km/day run rate

construction Km (NHAI+MoRTH)

9,829

8,230

6,029

4,260 4,410

2345

892

9,794

10,404

7,980

3,169

5,013

5,732

1,916

FY12

FY13

FY14

FY15

FY16

FY17

FY18 1QFY19

Source: NHAI, MOSL

FY12

FY13

FY14

FY15

FY16

FY17

FY18 1QFY19

Source: NHAI, MOSL

Exhibit 3: HAM ordering picked up sharply over last three

years

FY16

71

54

46

51

38

21

8

HAM

EPC

8

BoT

Source: MOSL, NHAI

Exhibit 4: FY18 sees strong ordering in the western region

Rajasthan

27

17

10

6

10

6

7

7

10

Maharashrta

Uttar pradesh

Odhisa

Tamil Nadu

Andhra Prdesh

karnataka

Gujarat

Others

Source: MOSL, NHAI

FY17

FY18

3

Exhibit 5: Mode-wise bifurcation of live tenders (%)

6

38

HAM

EPC

56

ToT

Exhibit 6: Regional bifurcation of live tenders (%)

3

21

44

9

23

Northern

Central

Eastern

Southern

Western

Source: MOSL, NHAI

Source: MOSL, NHAI

10 December 2018

4

Capital Goods

Live tender pipeline from NHAI

TENDER TITLE







































































4/6 laning of Narnaul Bypass crossing to Paniyala mor

Eight Lane access- controlled Expressway carriageway from Miyati Village to MP-Gujarat Border

Eight Lane access- controlled Expressway carriageway from Ranni Village to Miyati Village of Jhabua district

Eight Lane access- controlled Expressway carriageway from Kamliya village to Kandarwasa village of Ratlam

district

Eight Lane access-controlled Expressway carriageway from Kandarwasa village to Bawadi village (Near

Shivgarh) of Ratlam district

Eight Lane access controlled Expressway carriageway from Bawadi village (Near Shivgarh) of Ratlam district

to Ranni Village of Jhabua district

Construction of Flyover at Morampudi Junction at Rajahmundry City in the State of Andhra Pradesh

Balance Work for Four Laning of Ranchi Bypass in the State of Jharkhand under NHDP–III on EPC( Item rate)

Mode. Package-I)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (Phase-I)

(AJ/SR-Package-9)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic (AJ/SR-Package-8)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-7)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-6)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-5)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic (AJ/SR-Package-4)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-3)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-2)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/SR-

Package-1)

Eight Lane access controlled Expressway starting near section of Delhi - Vadodara Green field Alignment

(NH-148N)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-

Package-6)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-

Package-5)

6-lane access controlled Greenfield as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-Package-4)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-

Package-3)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-

Package-2)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/RD-

Package-1)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/DRGB-

Package-8)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/DRGB-

Package-7)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic Corridor (AJ/DRGB-

Package-6)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic (AJ/DRGB-Package-5)

6-lane access controlled Greenfield highway Deogarh (near Dhandhaniya)-Rajasthan/Gujarat Border section

as a part of Amritsar-Jamnagar Economic Corridor (AJ/DRGB-Package-4)

6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic (AJ/DRGB-Package-3)

Construction of 6-lane access controlled Greenfield highway as a part of Amritsar-Jamnagar Economic

Corridor (AJ/DRGB-Package-2).

6-lane access controlled Greenfield highway Deogarh (near Dhandhaniya)-Rajasthan/Gujarat Border section

as a part of Amritsar-Jamnagar Economic Corridor (AJ/DRGB-Package-1)

Eight Lane access-controlled Expressway carriageway from Bardawadi village of Mandsaur district to

Kamliya village of Ratlam district section of Delhi – Vadodara Greenfield Alignment

Eight Lane access-controlled Expressway carriageway from Bani village to Bardawadi village of Mandsaur

district section of Delhi – Vadodara Greenfield Alignment

Eight Lane access-controlled Expressway carriageway from Jodmi village to Bani village of Mandsaur district

section of Delhi – Vadodara Greenfield Alignment

INR M

8,934

9,664

9,216

9,196

10,375

11,399

210

STATE

Haryana

MP

MP

MP

MP

MP

AP

TYPE

HAM

EPC

EPC

EPC

EPC

EPC

EPC

4,841

4,581

4,067

4,334

3,630

3,828

5,104

5,282

5,200

9,034

4,646

4,566

4,299

5,415

5,356

4,466

5,434

4,836

6,685

4,097

4,225

4,680

4,406

4,449

7,367

8,806

9,738

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

MP

MP

MP

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

10 December 2018

5

Capital Goods

Live tender pipeline from NHAI

TENDER TITLE



Eight Lane access-controlled Expressway from Rajasthan/MP Border to Jodmi village of Mandsaur district

section of Delhi – Vadodara Greenfield Alignment (NH-148N



Eight Lane access-controlled Expressway from Start of Bridge near Manoharpur to Rajasthan/MP Border

section of Delhi - Vadodara Green field Alignment (NH-148N)



Eight Lane access-controlled Expressway from Junction with NH-12 to Start of Bridge near Manoharpur

section of Delhi - Vadodara Green field Alignment including construction of tunnel in Mukundra Hills

(Darrah)



Four Laning of from Kodad to Khammam (Design Length=31.800 Km)



Eight Lane access controlled Expressway starting near Junction with MDR-1 (Baonli-Jhalai road) to Start of

RoB near village Itawa section of Delhi - Vadodara Green field Alignment



Eight Lane access controlled Expressway starting near Major Bridge on Mej River to Junction with SH-37A

section of Delhi - Vadodara Green field Alignment



Eight Lane access controlled Expressway starting near Major Bridge on Chakan River to Major Bridge on

Mej River section of Delhi - Vadodara Green field Alignment



Eight Lane access-controlled Expressway starting near Junction with NH-11 to Start of RoB near junction

with NH-11A section of Delhi - Vadodara Green field Alignment



RFP for Construction of Eight Lane access controlled Expressway



Eight Lane access controlled Expressway starting near Start of RoB near village Itawa to Major Bridge on

Chakan river section of Delhi - Vadodara Green field Alignment



Eight Lane access controlled Expressway starting near Junction with SH-37A to Junction with NH-76 section

of Delhi - Vadodara Green field Alignment



Six Lanning of Sriperumbudur to Karaipettai from of NH-4



Four Laning of from Kodad to Khammam



Four Laning of the Suryapet to Khammam of NH-365BB



Elevated Structure including approaches at Phagwara city



Balance work of Two Lane with Paved Shoulder of Piprakothi-Motihari Raxaul Link Road



Four lane Durg-Raipur bypass section under Bharatmala Pariyojana (Lot-3/Chhattisgarh/ Package-1,

Mumbai – Kolkata Economic Corridor)



4 lane Durg – Raipur bypass Section of NH-53, near Tendesara Village to near Khatti Village under

Bharatmala Pariyojana (Lot3/Chhattisgarh/ Package-1, Mumbai – Kolkata economic corridor)



Eight Lane Expressway starting before KMP Expressway near Khanpur Ghati section of Delhi – Vadodara

Green field Alignment



Eight Lane Expressway near Khanpur Ghati and ends at Haryana-Rajasthan Border section of Delhi –

Vadodara Green field Alignment



Eight Lane Carriageway starting at Junction with Keshopura Road to of Delhi – Vadodara Green field

Alignment



Eight Lane Carriageway starting with Keshopura Road section of Delhi – Vadodara Greenfield Alignment



Eight Lane Carriageway starting at Haryana-Rajasthan border section of Delhi – Vadodara Green field

Alignment



RFP for Construction of Grade Separated 4 lane U Turn on NH 8 near Ambience Mall and Grade Separated 3

lane U Turn near DLF Phase 2 in Gurugram



RFP for Projects comprising of 8 National Highway stretches (Bundle 2) on Toll Operate Transfer (TOT)

mode.



NH 24 4lane



4-laning of Haridwar Dehradun Section under NHDP Phase-III - Package-1 from Haridwar to Laltappar



Delhi-Saharanpur NH-709B in the state of Uttar Pradesh (Package-II)



Six laning &strengthening of NH248A in Gurugram under NHDP Phase –IV



Four Laning of from EPE Crossing to start of Shamli bypass in the State of Uttar Pradesh



Four Laning of Dindigul to Oddanchatram section of NH-209 and Dindigul bypass under Bharatmala

Pariyojna Phase-I under the category of Residual Works of NHDP



Four Laning of Oddanchatram - Madathukulam section under Bharatmala Pariyojna Phase-I under the

category of Residual Works of NHDP



Four Laning of Madathukulam - Pollachi section of NH-209 with Two Spur Roads in Udulampet and

improvement in Udulampet existing road under Bharatmala Pariyojna



Four Laning of Rohtak-Jind Section and connecting link



4 laning of Akkalkot - Solapur section of NH - 150E with paved shoulders including Akkalkot bypass (design

length 7.350 km.)



Four-Lane divided Highway from Melur to Karaikudi



Four Laning of Bellary to Byrapura Section of NH-150A



Construction of Elevated corridor in Ranchi City including down Ramp on NH 23 in the state of Jharkhand

on EPC mode

INR M

8,884

7,097

9,098

8,521

8,081

8,864

8,850

9,560

7,039

7,581

9,410

6,493

8,521

12,173

1,650

3,371

7,662

6,952

10,177

7,986

8,586

9,251

9,588

1,630

53,620

STATE

MP

MP

MP

Telangana

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Rajasthan

Tamil Nadu

Telangana

Telangana

Punjab

Bihar

Chattishgarh

Chattishgarh

Haryana

Haryana

Rajasthan

Rajasthan

Rajasthan

Haryana

TYPE

EPC

EPC

EPC

HAM

EPC

EPC

EPC

EPC

EPC

EPC

EPC

EPC

HAM

HAM

EPC

EPC

HAM

HAM

EPC

EPC

EPC

EPC

EPC

EPC

ToT

3,002

UP

EPC

2,923 Uttarakhand EPC

6,098

UP

EPC

6,892

Haryana

HAM

5,585 Uttar Pradesh EPC

7,830

6,132

7,267

4,144

Tamil Nadu

Tamil Nadu

Tamil Nadu

Haryana

HAM

HAM

HAM

EPC

HAM

EPC

EPC

EPC

6,421 Maharashtra

7,676

10,276

2,125

Tamil Nadu

Karnataka

Jharkhand

10 December 2018

6

Capital Goods

Live tender pipeline from NHAI

TENDER TITLE



4 Laning of NH 80 section of Mirza Chauki to Farakka in the state of Jharkhand (Package-I) on Hybrid

Annuity Mode



Four laning of Bamitha-Khajuraho in the state of Madhya Pradesh on EPC mode



Four laning of Sattanathapuram to Nagapattinam



New 4-Lane Elevated Highway including approaches & service roads connecting Kazhakuttam Junction &

Technopark Junction



Dwarka Expressway from Road under Bridge (RuB) near Dwarka Sector 21 to delhi harayana broder



Six Lanning of Karaipettai to Waljapet Section of NH-4



Six Lanning of Sriperumbudur to Karaipettai Section of NH-4



Up-gradation of Four/ Six Lane of Rewari – Ateli Mandi section Package-III as Feeder



Six lane Elevated Expressway as a part of Bangalore – Chennai Expressway (Phase IV)



Up-gradation to Four Lane of Road Connectivity from Jamujhadih on NH-16 to Dhamra Port via Basudevpur



RFP for Up-gradation to Four Lane of Road Connectivity from Jamujhadih on NH-16 to Dhamra Port via

Basudevpur in the State of Odisha (Package - II)



Widening and Rehabilitation of existing Two Lane/ Single Lane to Four Lane road Bilaspur



4 laning of Aligarh- Kanpur Section (Package – V from Mitrasen- Kanpur) of NH-



4 laning of NH 80 section of Mirza Chauki to Farakka



6-laning of Nashik Phata to Khed on Pune Nashik Section of NH-60 (Old NH-50)



6 lane Durg – Raipur bypass Section of NH-53, (Lot-3/Chhattisgarh/ Package-1, Mumbai – Kolkata economic

corridor)



6 lane Durg-Raipur bypass section of NH-53 (Lot-3/Chhattisgarh/ Package-1, Mumbai – Kolkata Economic

Corridor)



Four Laning of Chettikulam to Natham Section of NH-785 from Chettikulam to Natham



Four Laning of Madurai- Chettikulam Section of NH-785 from Madurai to Chettikulam



Four laning of Satna-Maihar section (Package III)



4/6 laning of Narnaul Bypass crossing to Paniyala Mor (NH-148B) Package-I



Rehabilitation and upgradation to 2-lane with paved shoulder from Jind-Gohana Section



Rehabilitation and Up- gradation from 2 lane to 4 lane of NH Stretch under NHDP-IVB for Lalganj -

Hanumanha Section of NH-7 (Pkg-3)



Dwarka Expressway –Package 1, from Shiv Murti Intersection till Road under Bridge (RuB) near Dwarka

Sector 21



Upgradation of NH – 131A near Narenpur to Km 79.970 near Purnea to 4 lane standard and from near

Purnea to 2 lane with paved shoulder standard



4-laning of Ujjain to Badnawar Section of SH-18



Four laning of Jagdishpur - Faizabad Section in the State of Uttar Pradesh on Hybrid Annuity Mode under

Bharatmala Pariyojana



Four laning of NH-163 from Hyderabad to Manneguda



Four laning for Sagar – Banda –Chhatarpur – Kabrai



RFP for Upgradation to two lane with paved shoulders of Belakeri Port to Kumta –Sirsi road



4-laning of Aligarh-Kanpur section from Km 289.000 (Package-IV from Naviganj - Mitrasen).



Construction/Up-gradation of two lane with paved shoulder of NH-70 from Munabao Sundra – Myajlar -

Dhanana – Asutar – Ghotaru – Tanot under Phase-1 of Bharatmala Pariyojana



Eight lane Bangalore-Chennai Expressway



Construction of four laning for Harda - Bedul



Four Laning of Indore Harda section of NH-59A (New NH- 47)



4-Laning of Jangipur/Omarpur (- Teghari-Barjumla-Lalgola- Bhagwangola-Sabjikatra Section: Package-1



Four laning of Kannod to Ashta Road Section of SH-41

INR M

6,611

969

14,704

3,560

14,691

7,516

9,382

6,185

21,653

3,163

2,935

STATE

Jharkhand

Madhya

Pradesh

Tamil Nadu

Kerala

Delhi

Tamil Nadu

Tamil Nadu

Haryana

Tamil Nadu

Odhisa

Odhisa

TYPE

HAM

EPC

HAM

EPC

EPC

EPC

EPC

HAM

EPC

EPC

EPC

HAM

HAM

HAM

HAM

HAM

HAM

EPC

EPC

HAM

HAM

EPC

EPC

EPC

HAM

HAM

9,090 Chattishgarh

16,150 Uttar Pradesh

7,353

Jharkhand

9,782 Maharashtra

14,557 Chattishgarh

15,771 Chattishgarh

4,319

5,491

7,432

10,844

1,838

Tamil Nadu

Tamil Nadu

Madhya

Pradfesh

Haryana

Haryana

8,709 Uttar Pradesh

14,618

12,231

6,933

Delhi

Bihar

Madhya

Pradesh

12,407 Uttar Pradesh HAM

7,798

6,088

Telangana

HAM

Madhya

HAM

Pradesh

3,704

Karnataka

EPC

19,479 Uttar Pradesh HAM

11,584

11,196

Rajasthan

HAM

EPC

HAM

HAM

HAM

HAM

Karnataka

Madhya

7,176

Pradesh

Madhya

6,991

Pradesh

22,066 West Bengal

Madhya

7,031

Pradesh

10 December 2018

7

Capital Goods

NOTES

10 December 2018

8

Capital Goods

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 becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the

inconsistency, 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 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), Multi Commodity Exchange of India (MCX) & National Commodity & Derivatives Exchange Ltd. (NCDEX) 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/List%20of%20Associate%20companies.pdf

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

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. Details of pending Enquiry Proceedings of Motilal Oswal Securities 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 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

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

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

10 December 2018

9

Capital Goods

****************************************************************

****************************************************************

The associates of MOSL 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 MOSL

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 MOSL 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 MOSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOSL 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 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.

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.:022-38281085.

Registration details: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MCX/NCDEX); 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 Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate

products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products.

* 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 existing registration no(s) of MOSL would be used until receipt of new MOFSL registration numbers.

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