Visit Note

Kirloskar Pneumatic Co. Ltd.

We attended Kirloskar Pneumatic Co. Ltd (KPCL)’s investor day. KPCL manufactures air, Himanshu Yadav
refrigeration and gas compressors and systems that account for 95% of sales. It serves Research Analyst
diverse industries such as oil, gas, steel, cement, food processing, air separation and Himanshu.Yadav@edelweiss.in
automobiles, among others. The manufacturing facilities are located at Pune and Nashik.

The compressor industry is dominated by four large organised players that account for
80%+ of sales. KPCL aims to double its revenue to INR2,000cr in next 2–3 years, implying
CMP: INR 584
a 25%+ CAGR. Margin expansion potential exists, as the business scales up and reduces
Rating: Not Rated
losses in transmission gears. Management expects margins to reach 17–18% by FY25E.
Date: August 24, 2022
Management focused on expanding addressable market
KPCL is focusing on improving its product mix to tap future opportunities and fill the existing
portfolio gaps. Several recent initiatives in this direction include increased presence in screw QUICK DATA
compressors (air and refrigeration), launch of booster compressors for the CGD market and No of shares (in Cr) 6.4
entry into overseas oil and gas markets after executing a major export order in Q1FY23. 52-week High/Low (INR) 325 / 572
Over the medium term, KPCL has set its sight on the gasification of energy basket and plans Bloomberg Code KKPC
to manufacture compressors catering to hydrogen and biogas markets.
Market cap (INR Cr) 3,635

City Gas Distribution (CGD) provides a structural opportunity

Based on the lucrative activity in CGD till date, the opportunity size for KPCL stands at 4,000 SHAREHOLDING PATTERN (%)
compressors over eight years. KPCL accounted for some slack here, as the execution of CNG Promoters 53.63%
timelines depends on the customers. A typical CNG package costs INR40–50 lakhs. KPCL
FIIs 0.17%
expects to cater to ~350 CNG stations per year, and its entry into the booster compressor
category provides further growth optionality. In the mother stations, the market is served DIIs 19.13%
by two major players including KPCL (50% share), while the daughter station market Others 27.07%
includes several local players. Management thinks CNG is a structural opportunity. *Based on June 2022 data; Post this a section of promoters
has decreased stake by 14.4%
Moreover, all CNG installations will be adding to future replacement demand, as stations
would need replacements every eight years.

Screw compressors to provide market share gain opportunity in air compressor market
KPCL recently increased its presence in the screw compressor category, which accounts for
70% of the domestic air compressor market of INR3,330cr. The market has a potential of
INR5,000cr given demand tailwinds, and we note management commentary is shifting
towards this number. KPCL will look to improve its air compressor market share as it exploits
certain niche offerings. Bridging this portfolio gap has led to KPCL now being present in all
three compressor categories – reciprocating, screw and centrifugal.

INR2,000cr topline target in 2–3 years

KPCL targets top-line of INR2,000cr in 2–3 years depending on market demand. Key drivers
will be growth in screw centrifugal, and exports categories. The company expects exports
to rise from INR30–50cr to INR300cr over this timeframe. In Q1FY23, the company executed
a major export order, marking its entry into the overseas oil and gas sector. The Middle East
and Southeast Asia will be key addressable markets for exports. Management intends to
improve margins to 17–18% as it scales up business and reduces losses in gears segment.

At CMP, the stock is trading at FY24E PE of 22x based on consensus expectations.

Financial Summary
Year to March (INR crore) FY18 FY19 FY20 FY21 FY22
Net revenue 601 710 829 823 1,021
EBITDA 75 89 96 113 139
EBITDA margin (%) 12.5 12.6 11.5 13.7 13.6
PAT 49 57 53 64 85
PAT margin (%) 8.1 8.0 6.5 7.8 8.3
EPS basic (INR) 38 9 8 10 13
P/E (x) 19.7 23.1 11.3 25.9 31.0
EV/EBITDA (x) 12.0 14.4 6.3 14.5 18.6
RoCE (%) 12.8 13.9 12.2 13.0 15.9
RoAE (%) 11.0 11.9 10.8 11.8 13.6

1
Visit Note
Kirloskar Pneumatic Co. Ltd.

Key Takeaways

About the company

KPCL manufactures air, refrigeration and gas compressors and systems that account for 95% of sales. The “other” unreported
segment houses the transmission business and a very small road-railer business. The company serves diverse industries such as
oil and gas, steel, cement, food processing, air separation and automobiles, among others. Its manufacturing facilities are located
at Pune (Hadapsar and Saswad) and Nashik. KPCL is led by Mr. Rahul Kirloskar (Chairman), Mr. K Srinivasan (MD), and Mr. Suhas
Kolhatkar (CFO).

Broader industrial and infra capex activities drive the demand for compressors. The compressor industry in India is dominated by
four large organised players that account for 80%+ of sales – Atlas Copco, Ingersoll Rand, Elgi Equipment and KPCL.

Products
KPCL primarily offers compressors across air, gas and refrigeration categories. Based on the mechanics of generating volume
compression, air compressors are further divided into three types – reciprocating, screw and centrifugal.
• Reciprocating compressors are low-cost but have relatively high maintenance, and work by reciprocating a piston driven by
a crankshaft. KPCL has a major presence in this segment.
• Screw (rotary) compressors are low- to medium-cost and involve low maintenance compared with reciprocating
compressors. In screw compressors, two closely meshed helical screws (rotors) move to compress air. KPCL has been trying
to bridge product gaps in its portfolio, and marked its recent entry into screw air compressors.
• Centrifugal compressors work on dynamic displacement, unlike positive displacement for reciprocating and screw
compressors. These are high-cost but more efficient than reciprocating and screw compressors, as these involve fewer stages
to achieve the same rise in pressure. These are often preferred in oil-free applications and use an impeller to increase air
velocity and a diffuser to convert the increased velocity into pressure.

Within the gas and refrigeration categories, KPCL offers refrigeration equipment and systems, process gas systems and vapour
absorption chillers.

KPCL’s execution cycle from order to delivery is between 8-12 weeks for products and 8-10 months for projects. It has been filling
the product gaps in its portfolio, and recently (over the past two years), the company entered the screw compressor category for
air compressors and is about to launch the Khione compressor for refrigeration, which will cater to industries such as dairy and
pharma.

Exhibit 1: KPCL significantly bridged the portfolio gap in its product mix

Compressor

Refrigerator & Gas

Air Compressor
Compressor

Vapour
Refrigeration Refrigeration Process Gas
Reciprocating Screw Centrifugal Absorption
Equipment Systems Systems
Chillers

Source: Company, Edelweiss Wealth Research

2
Visit Note
Kirloskar Pneumatic Co. Ltd.

Market Size
KPCL’s entry into screw air compressors significantly widened the addressable market for the company over the past two years.
Management indicated towards improving market size of air compressors. Its old estimates indicated market size of INR3,300cr
for air compressors; however, in the recent meeting, management guided for potential to inch up as the strong demand
environment and INR4,000–5,000cr market size for air compressors appears plausible.

Exhibit 2: FY22 market size as per June presentation – air compressor market potentially expanding to INR 4,000–5,000cr

INR4,000–5000cr
plausible?

Source: Company, Edelweiss Wealth Research

Mix
• Management highlighted that KPCL is not just a compressor manufacturer, but they also supply compression systems. A
compressor system would sell for ~INR30 lakh, else the cost of a compressor is just one-third of that.
• Current sales mix is 25% for air compressors, 30–35% for refrigeration and 40–45% gas compressors. Overall, the project
product split ranges around 60:40 for the company.

3
Visit Note
Kirloskar Pneumatic Co. Ltd.

Air Compressors
• The air compressor market size as per the management is INR4,000–5,000cr (revised up from their earlier stance of
3,300cr). Of this, ~75% share is held by screw compressors. Overall, growth for the industry should be mapped to GDP
plus inflation and not just IIP, as compressors have end-use beyond industries.
• KPCL has been a small player till now in the air compressor segment. In FY22, it sold ~150cr recirpocating compressors,
~100cr screw compressors and small amount of centrifugal compressors. With its entry into the screw compressor
segment, KPCL stands to grow this pie.
• Screw compressors are used when there is a requirement to deliver relatively contonous air, and this segment requires
a distribution network; hence, it is not being targetted for exports currently.
• Another growth driver for the company would be centrifugal compressors, which are relatively complex with respect to
reciprocating and screw compressors. KPCL manufactures its own impellers and gear boxes. These compressors find use
in large industries, such as steel and textiles, which require large volumes of dry air.
• KPCL’s strength lies in customised end-user requirements instead of standard offerings.

Refrigeration
• The overall domestic refrigeration market stands at INR800cr. The mix for KPCL is 50:50 between projects and products.
• KPCL has a dominant position in bare shaft compressors for cold storage, and is the leader with minimal competition in
ammonia recirprocating compressors.
• In terms of product offerings, KPCL provides base compressors to OEMs that install chilling plants for customers by
making other additions. This market is growing at a slow pace, as the installed base is sufficient and generating demand
for spares.
• KPCL launched a new screw compressor, Khione, for the refrigeration market that has an addressable size of INR150cr,
which is being met through imported compressors (Japanese). End-users will include pharma and dairy companies.
• KPCL claims to substitute imports through Khione compressors and provide a 25% cost benefit to the customers. The
company received healthy enquiries, and it will take 1–2 quarters for these to start reflecting in numbers.
• Under project orders, KPCL supplies refrigeration systems to oil and gas, chemical, fertiliser and pharma sectors. The
company provides the entire engineering package, of which compressor is a part.
• Project demand comes in lumps whenever a big refinery is being planned. KPCL’s exection time for such projects is 8–10
months. Currently, the company is receiving many enquires, driven by growth in oil and gas capex.
• KPCL also executes HVAC plants for the marine sector, and has executed orders for INS Vikrant.

Gas
• Gas offerings are primarily divided into CNG and oil and gas projects, roughly at a 50:50 mix.
• CNG stations are divided into mother stations (connected to pipeline) and daughter stations (supplied gas separately
and not through pipeline). Mother stations have only two dominant players including KPCL. Daughter stations have
sevral local players, and to compete with them, KPCL launched booster compressors.
• CNG demand after accounting for some slack could be 350 station per year for KPCL. One package costs INR40–50 lakh.
Based on the bidding rounds for various geographical areas, there is a potential demand for 8,000 compressors over
next eight years.
• CNG tenders are typically based on base compressor and five-year O&M agreement. Local players may try to compete
for booster stations by offering lower bids, but will not offer O&M credibility, unlike KPCL.
• Over the long term, these stations will start seeing replacement demand, as they would need replacements every eight
years. Moreover, KPCL is targeting its research efforts towards other gassification areas, for instance, hydrogen and
biogas.

Other businesses
• Compressors are the key reportable segment for KPCL with 95%+ sales share. The “other” segment consists of two main
bsuiness – transmission gears and road railer.
• For transmission gears, KPCL intends to shift production towards captive needs and expects INR10–12 cr of loss to go
away by next year.
• Road railers, though with an established use case, will take time to scale and would need a logisitc partner in the future.

4
Visit Note
Kirloskar Pneumatic Co. Ltd.

Financials/Outlook
• KPCL expects top-line to reach INR2,000cr in 2–3 years, driven by strong demand. Key drivers would be growth in screw
and centrifugal compressors while retaining solid positioning in refrigeration systems.
• Based on its current asset base, KPCL will likely clock INR1,600cr top-line and require INR150–200cr capex over the next
two years to reach the INR2,000cr target. Capex intensity for the business is at 1:4 of sales.
• Working capital requirement is high, and the business has a net working capital intensity of 18–20% of sales.
• The company’s INR2,000cr target assumes exports increasing from current INR50–100cr to INR300cr. KPCL’s main target
market will be projects in the Middle East and South East Asia.
• Spares account for 15% of sales mix for the industry, with better margins.
• Overall, margins of ~15% at consolidated level include 17–18% margins for compressor segment, which is currently
moderated due to the negative impact of “other” segment. With losses in the “other” segment expected to reduce, KPCL
expects margins to inch towards 18% as the company achieves the INR2,000 target.
• None of the orders have a pass through clause for raw materials. KPCL accordingly manages raw material ordering in
sync with new orders.
• Current order book stands at ~INR1,226cr with a 60:40 split between projects and products. Order book enquiries are
strong and inflows are likely to materialise in upcoming quarters.

5
Visit Note
Kirloskar Pneumatic Co. Ltd.

Financials
Income statement (INR crs)
Year to March FY19 FY20 FY21 FY22 FY23E
Income from operations 710 829 823 1,021 1,320
Direct costs 374 444 451 560 700
Power & Fuel 10 11 11 14 17
Employee costs 101 116 113 129 172
Other expenses 136 162 135 179 261
Total operating expenses 621 733 710 882 1,150
EBITDA 89 96 113 139 171
Depreciation and amortisation 22 33 38 35 41
EBIT 68 63 75 104 130
Interest expenses 0 2 2 2 0
Other income 15 11 10 12 11
Profit before tax 82 72 84 114 141
Provision for tax 25 18 20 29 36
Core profit 57 53 64 85 105
Minority Interest 0 0 0 0 0
Profit after tax 57 53 64 85 105
Extraordinary items -0 0 0 0 0
Reported net profit 57 53 64 85 105
Adjusted Net Profit 57 53 64 85 105
Equity shares outstanding (cr) 6.4 6.4 6.4 6.4 6.4
EPS (INR) basic 38.1 8.9 8.3 9.9 13.2
Diluted shares (Cr) 6.4 6.4 6.4 6.4 6.4
EPS (adj) fully diluted 8.9 8.3 9.9 13.2 16.3
Dividend per share 2.5 2.7 3.5 4.0 4.9
Dividend payout (%) 11% 32% 35% 30% 30%

Common size metrics- as % of net revenues

Year to March FY19 FY20 FY21 FY22 FY23E
Operating expenses 87.4 88.5 86.3 86.4 87.1
Depreciation 3.1 3.9 4.6 3.4 3.1
Interest expenditure 0.0 0.2 0.2 0.2 0.0
EBITDA margins 12.6 11.5 13.7 13.6 12.9
Net profit margins 8.0 6.5 7.8 8.3 7.9

Growth metrics (%)

Year to March FY19 FY20 FY21 FY22 FY23E
Revenues 18.3 16.7 (0.7) 24.0 29.3
EBITDA 19.4 6.9 18.2 23.1 22.7
PBT 12.9 (12.4) 16.6 36.1 23.3
Net profit 16.3 (6.0) 19.3 33.0 23.3
EPS (76.7) (6.0) 19.3 32.6 23.3

6
Visit Note
Kirloskar Pneumatic Co. Ltd.

Balance sheet (INR crs)

As on 31st March FY19 FY20 FY21 FY22 FY23E
Equity share capital 13 13 13 13 13
Preference Share Capital
Reserves & surplus 481 482 576 646 719
Shareholders funds 494 495 589 658 732
Secured loans 1 28 38 0 0
Unsecured loans 0 1 0 0 0
Borrowings 1 28 38 1 1
Minority interest 0 0 0 0 0
Other liabilities 8 6 10 12 12
Sources of funds 502 529 636 671 745
Gross block 181 286 289 379 435
Depreciation 60 79 117 152 193
Net block 122 207 172 227 242
Capital work in progress 64 7 4 5 0
Total fixed assets 186 214 177 232 242
Other non-current assets 12 10 9 11 11
Investments 196 138 223 205 205
Inventories 96 159 114 203 262
Sundry debtors 184 189 308 299 386
Cash and equivalents 32 30 52 39 58
Loans and advances 41 39 40 36 36
Other current assets
Total current assets 353 417 515 576 742
Sundry creditors and others 244 239 285 347 449
Provisions 5 7 4 6 6
Total CL & provisions 249 246 289 353 455
Net current assets 104 171 226 223 287
Net Deferred tax 5 0 0 0 0
Uses of funds 502 532 636 671 745
Book value per share (INR) 77 77 92 102 114

Cash flow statement (INR crs)

Year to March FY19 FY20 FY21 FY22 FY23E
Net profit 57 53 64 85 105
Add: Depreciation 22 33 38 35 41
Add: Misc expenses written off 16 19 14 24 25
Gross cash flow 95 105 116 144 171
Less: Changes in W. C. 42 95 59 35 81
Operating cash flow 53 10 57 109 89
Less: Capex 72 54 3 89 50
Free cash flow -19 -44 54 20 39

7
Visit Note
Kirloskar Pneumatic Co. Ltd.

Ratios
Year to March FY19 FY20 FY21 FY22 FY23E
ROAE (%) 11.9 10.8 11.8 13.6 15.1
ROACE (%) 13.9 12.2 13.0 15.9 18.4
Debtors (days) 94 83 137 107 107
Inventory (days) 50 70 51 72 72
Payable (days) 126 105 126 124 124
Cash conversion cycle (days) 18 48 61 55 55
Debt/EBITDA 0.0 0.3 0.3 0.0 0.0
Adjusted debt/Equity (0.1) (0.0) (0.0) (0.1) (0.1)

Valuation parameters
Year to March FY19 FY20 FY21 FY22 FY23E
Diluted EPS (INR) 8.9 8.3 9.9 13.2 16.3
Y-o-Y growth (%) (76.7) (6.0) 19.3 32.6 23.3
CEPS (INR) 12.3 13.4 15.8 18.6 22.6
Diluted P/E (x) 23.1 11.3 25.9 31.0 34.7
Price/BV(x) 2.7 1.2 2.8 4.0 5.0
EV/Sales (x) 1.8 0.7 2.0 2.5 2.7
EV/EBITDA (x) 14.4 6.3 14.5 18.6 21.0
Diluted shares O/S 6.4 6.4 6.4 6.4 6.4
Dividend yield (%) 0% 3% 1% 1% 1%

8
Visit Note
Kirloskar Pneumatic Co. Ltd.

The Team

Analysts Sector Sales Team Location

Vinay Khattar Head of Research
Sharad Tripathi Mumbai
Sandeep Raina Head - Fundamental
Sagar Doshi Head - Trading Ketan Malkan Mumbai
Arun Jain Practice Head - Trading Vikas Sharma Bengaluru
Kavita Chacko Chief Economist
Abhishek Agarwal Kolkata
Dharmesh Kant Practice Head - Trading
Consumption, Healthcare, Building Vivek Khanna Delhi
Praveen Sahay
Materials
Kapil Jagasia Consumption, Textile, QSR, Retail
Raj Jha BFSI, NBFC
Jigar Jani BFSI, NBFC
Anshul Verdia Power , Chemicals
Himanshu Yadav Cement, Logistics, Mid-caps
Sushil Sharma IT, Capital Goods, Defence
Mohit Gupta Auto, Auto-Anc.
Tushar Chaudari Metals, Mid- Caps
Parag Shah Technical Analyst
Ankit Narshana Option Trader

Coverage Universe
Sr. No Coverage Sr. No Tactical Buy
1 Aditya Birla Fashion & Retail Ltd 1 ACC Ltd
2 Aegis Logistics Ltd 2 Ajanta Pharma Ltd
3 Amber Enterprises India Ltd 3 Ambuja Cements Ltd
4 Astral Ltd 4 Ashok Leyland Ltd
5 Balaji Amines Ltd 5 Axis Bank Ltd
6 Bata India Ltd 6 Bharat Electronics Ltd
7 Birla Corporation Limited 7 Brigade Enterprises Ltd
8 Can Fin Homes Ltd 8 DLF Ltd
9 Century Plyboards India Ltd 9 eClerx Services Ltd
10 Cholamandalam Inv and Finance Ltd 10 Globus Spitits Ltd
11 City Union Bank Ltd 11 GNA Axles Ltd
12 CreditAccess Grameen Ltd 12 HDFC Life Insurance Co. Ltd
13 Crompton Greaves Consumer Electricals Ltd 13 ICICI Bank Ltd
14 CSB Bank Ltd 14 Indusind Bank Ltd
15 Deepak Nitrite Ltd 15 Jamna Auto Industries Ltd
16 Easy Trip Planner Ltd 16 JK Cement Ltd
17 Escorts Ltd 17 Larsen & Toubro Ltd
18 Finolex Industries Ltd 18 Mahindra and Mahindra Ltd
19 Home First Finance Company India Ltd 19 Max Financial Services Ltd
20 Indo Count Industries Ltd 20 Max Healthcare Institute Ltd
21 K P R Mill Ltd 21 PNC Infratech Ltd
22 KNR Constructions Ltd 22 RBL Bank Ltd
23 Krishna Institute of Medical Sciences Ltd 23 Sun Pharma Ltd
24 Lumax Industries .Ltd 24 TechMahindra Ltd
25 Metropolis Healthcare Ltd 25 Ultratech Cement Ltd
26 Minda Industries Ltd 26 Elecon Engineering Company Ltd
27 Motherson Sumi Ltd
28 Navin Fluorine International Ltd
29 Neogen Chemicals Ltd
30 Newgen Software Technologies Ltd
31 Orient Electric Ltd
32 PSP Projects Ltd
33 Rossari Biotech Ltd
34 Shriram Transport Finance Company Ltd
35 SRF Ltd
36 Vinati Organics Ltd
37 Voltas Ltd
38 Westlife Development Ltd
39 Zydus Wellness Ltd
40 Tarsons Products Ltd
41 MTAR Technologies Ltd.

9
Edelweiss Broking Limited, 1st Floor, Tower 3, Wing B, Kohinoor City Mall, Kohinoor City, Kirol Road, Kurla(W)
Board: (91-22) 4272 2200

Vinay Khattar
Head Research
VINAY Digitally signed by
VINAY KHATTAR

vinay.khattar@edelweissfin.com
KHATTAR Date: 2022.08.24
16:09:47 +05'30'

10
Disclaimer

Edelweiss Broking Limited ("EBL" or "Research Entity") is regulated by the Securities and Exchange Board of India ("SEBI") and is licensed to carry on the business of broking,
depository services and related activities. The business of EBL and its associates are organized around five broad business groups – Credit including Housing and SME
Finance, Commodities, Financial Markets, Asset Management and Life Insurance. There were no instances of non-compliance by EBL on any matter related to the capital
markets, resulting in significant and material disciplinary action during the last three years. This research report has been prepared and distributed by Edelweiss Broking
Limited ("Edelweiss") in the capacity of a Research Analyst as per Regulation 22(1) of SEBI (Research Analysts) Regulations 2014 having SEBI Registration No. INH000000172.

Broking services offered by Edelweiss Broking Limited under SEBI Registration No.: INZ000005231 (Member of NSE, BSE, MCX and NCDEX). EBL CIN:
U65100GJ2008PLC077462. Research services offered by Edelweiss Broking Ltd. under SEBI Registration No. INH000000172. Depository Participant SEBI Registration No.:
IN-DP-656-2021 with NSDL having DP ID: IN302201 & IN303719 and with CDSL having DP ID: 12032300. Investor grievance resolution team: 040-41151621; Email ID:
Helpdesk@edelweiss.in (for trading related) and dpservicesebl@edelweiss.in (for demat related). Name of the Compliance Officer for Trading & DP - Mr. Pranav Tanna,
Email IDs: complianceofficer.ebl@edelweissfin.com / ebl.dpcompliance@edelweissfin.com. Edelweiss Broking Ltd. also acts in the capacity of distributor for Products such
as OFS, Mutual Funds and NCD etc
Corporate Office: Edelweiss House, Off CST Road, Kalina, Mumbai - 400098, Contact 18001023335 / (022)-42722200 / 022-40094279.

This Report has been prepared by Edelweiss Broking Limited in the capacity of a Research Analyst having SEBI Registration No.INH000000172 and distributed as per SEBI
(Research Analysts) Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation
of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable. This report is provided for assistance only and
is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each
recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred
to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment
discussed or views expressed may not be suitable for all investors.

This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on
directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or
use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject EBL and associates / group companies to any registration or licensing requirements within such jurisdiction.
The distribution of this report in certain jurisdictions may be restricted by law, and persons in whose possession this report comes, should observe, any such restrictions.
The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This
information is subject to change without any prior notice. EBL reserves the right to make modifications and alterations to this statement as may be required from time to
time. EBL or any of its associates / group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in
the information contained in this report. EBL is committed to providing independent and transparent recommendation to its clients. Neither EBL nor any of its associates,
group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue
or lost profits that may arise from or in connection with the use of the information. Our proprietary trading and investment businesses may make investment decisions
that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest statements
incorporated in this report are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. The information
provided in these reports remains, unless otherwise stated, the copyright of EBL. All layout, design, original artwork, concepts and other Intellectual Properties, remains
the property and copyright of EBL and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright
holders.

EBL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in
the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the EBL
to present the data. In no event shall EBL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or
expenses arising in connection with the data presented by the EBL through this report.
We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive
this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.

EBL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and
buy or sell the securities thereof, of company(ies), mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such
company(ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of
research report or at the time of public appearance. EBL may have proprietary long/short position in the above mentioned scrip(s) and therefore should be considered as
interested. The views provided herein are general in nature and do not consider risk appetite or investment objective of any particular investor; readers are requested to
take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with EBL.

EBL or its associates may have received compensation from the subject company in the past 12 months. EBL or its associates may have managed or co-managed public
offering of securities for the subject company in the past 12 months. EBL or its associates may have received compensation for investment banking or merchant banking or
brokerage services from the subject company in the past 12 months. EBL or its associates may have received any compensation for products or services other than
investment banking or merchant banking or brokerage services from the subject company in the past 12 months. EBL or its associates have not received any compensation
or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or EBL’s associates may have financial
interest in the subject company. EBL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any
recommendation and related information and opinions at the time of publication of research report or at the time of public appearance.
Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large
fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in
equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the
value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume
currency risk.

Research analyst has served as an officer, director or employee of subject Company: No

EBL has financial interest in the subject companies: No

11
Disclaimer

EBL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of
publication of research report.
Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the
date of publication of research report: No

EBL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research
report: No
Subject company may have been client during twelve months preceding the date of distribution of the research report.

There were no instances of non-compliance by EBL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three
years.
A graph of daily closing prices of the securities is also available at www.nseindia.com

Analyst Certification:
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and
its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.

Additional Disclaimer for U.S. Persons

Edelweiss 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 Edelweiss 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 Edelweiss, including the products and services described herein are not available to or intended for U.S. persons.

This report does not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not
be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated
under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under certain rules.

Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.

Additional Disclaimer for U.K. Persons

The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA").
In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to
investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including
high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together
being referred to as “relevant persons”).

This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates
is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research
report or any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person.

Additional Disclaimer for Canadian Persons

Edelweiss is not a registered adviser or dealer under applicable Canadian securities laws nor has it obtained an exemption from the adviser and/or dealer registration
requirements under such law. Accordingly, any brokerage and investment services provided by Edelweiss, including the products and services described herein, are not
available to or intended for Canadian persons.
This research report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or
investment services.

Disclosures under the provisions of SEBI (Research Analysts) Regulations 2014 (Regulations)
Edelweiss Broking Limited ("EBL" or "Research Entity") is regulated by the Securities and Exchange Board of India ("SEBI") and is licensed to carry on the business of broking,
depository services and related activities. The business of EBL and its associates are organized around five broad business groups – Credit including Housing and SME
Finance, Commodities, Financial Markets, Asset Management and Life Insurance. There were no instances of non-compliance by EBL on any matter related to the capital
markets, resulting in significant and material disciplinary action during the last three years. This research report has been prepared and distributed by Edelweiss Broking
Limited ("Edelweiss") in the capacity of a Research Analyst as per Regulation 22(1) of SEBI (Research Analysts) Regulations 2014 having SEBI Registration No.INH000000172.

12