INDIA

Credit Rating Agencies

Financials

Sector Update

18 June 2014
Stock Price Performance (%)*

Unlisted rating agencies and bankers sound optimistic

Company Name

Our interaction with managements of (unlisted) credit rating agencies (CRA), which
we present in a Q&A form, indicated early signs of revival in investment, raising
prospects of improvement in rating revenues, led partly by increase in blended
yields (more from outside bank loan ratings). Though the risk of attrition remains
and CRAs will have to price their assets (employees) accordingly, loss of revenue due
to migration to internal rating approach (IRB) by banks is unlikely to be debilitating
in the immediate future. Bankers too agreed with this assessment. We retain our
positive stance on the sector and retain Buy on CARE and Hold on CRISIL.

1 Mth

3 Mth

6 Mth

1 Yr

18.0
33.7
25.3
6.1

34.6
52.5
25.1
17.3

33.1
65.0
52.2
23.0

35.5
50.1
44.5
21.3

CARE
CRISIL
ICRA
Nifty

Source: Bloomberg; *as on 17 June 2014

Revenue mix to move away from bank loan rating: With relatively nascent MSME
ratings and highly under-penetrated corporate bond market, experts believe bank
loan rating (BLR) constitutes 50%+ of systemic rating revenues currently. With
efforts to revive the corporate bond market and MSME ratings, experts say that in
the next 3-4 years, these segments will account for ~75% of total revenues. The
shift in revenue mix will also enable CRAs to mitigate the risk of revenue loss from
migration to internal rating based approach (Basel-II norms) by the banks.

Pricing situation competitive, but improvement expected: Moderation in
systemic volumes# and competitive pricing saw the six CRAs garner just 12% CAGR
in their rating revenues over FY11-14. While pricing situation in the BLR business
will remain competitive with gradual improvement in better yielding corporate
bond market (investor-pay model), overall blended yields are expected to inch
upwards. MSME rating is the next big opportunity and experts pointed out that at
least 60% of initially rated MSMEs have renewed their ratings in subsequent years.

Risk of migration to IRB approach limited in immediate future: Interaction with
bankers (both private and PSU) suggests limited risk of revenue loss from migration
to IRB approach in the immediate future. While private banks (in general) have an
internal ratings approach in place, they are yet to adhere to regulatory norms. PSU
banks, barring large ones, continue to struggle with other issues and will take
longer to meet RBI requirements. Experts believe only ~50% of banks will be able to
migrate to IRB approach in the next 3-years.

Outlook and preference: We factor in 17% CAGR in rating revenue growth for
both CARE and CRISIL over FY14-16E led partly by improvement in volumes and
partly pricing. We retain Buy on CARE given its superior returns profile and
attractive valuations at 16.7x FY16E EPS, at 32% / 55% discount to ICRA and CRISIL.
Valuations at 36.9x CY15E EPS for CRISIL are expensive relative to its historic
valuations, with limited risk-reward, though it has enjoyed a premium in the past.
# banking credit to industries and services sector and corporate bond issuances.

Company
Name

Rating

CARE
CRISIL*

Aalok Shah, aalok.shah@centrum.co.in; 91 22 4215 9075

EPS

P/E (x)

RoCE (%)

RoE (%)

Dividend yield (%)

Target
Price (Rs)

Upside /
Downside (%)

FY14

FY15E

FY16E

FY14

FY15E

FY16E

FY14

FY15E

FY16E

FY14

FY15E

FY16E

FY14

FY15E

FY16E

Buy

1,150

19.2

44.4

48.7

57.6

21.8

19.8

16.7

39.2

38.9

41.9

28.3

28.0

30.2

2.9

3.1

3.3

Hold

1,340

(18.7)

33.2

38.1

44.7

49.6

43.3

36.9

57.6

54.2

54.3

39.0

36.6

36.7

1.6

1.5

1.9

Source: Company, Centrum Research Estimates* CRISIL is a Dec ending company.

Centrum Equity Research is available on Bloomberg, Thomson Reuters and FactSet

Q: What are the regulatory requirements for setting up a CRA? Are there any entry
barriers?
A: Credit rating agencies are regulated by CRA Regulations,1999. They are subject to guidelines of SEBI
(for bond rating), RBI (for bank loan rating) and National Small Industries Corporation NSIC (for MSME
ratings). Test of independence, credibility, fit & proper are some of the pre-requisites for setting up a
credit rating agency and hence entry barriers are negligible but the process is stringent.

SEBI grants license for 5-years in the initial period and if performance is satisfactory, it issues a
permanent license.

The advent of BLR in 2008 made it mandatory for CRAs to acquire licenses from the RBI. The
process of licensing is stringent (as it requires track records, historical default statistics, validated
data efficiency etc) and hence takes longer for new entrants to acquire licenses.

Banks have offered

discounted rates
(between 25bps- 100bps)
to rated MSME

NSIC is being set-up to promote MSME ratings and allows the units (rated) to avail of the
subvention scheme from the government in the initial year. Under the scheme, CRA gets Rs40,000
or 75% (whichever is lower) of the initial rating fees reimbursed by the government agency.

Q: What opportunities does the market offer? What market share do the top 3 CRAs
enjoy?
A: Rating revenues for all six rating agencies cumulatively stood at ~Rs9.4bn (FY14) with top-3 CRAs
accounting for 86% of the market share. There has been a decline in revenues, attributed to
moderation in funds raised by corporates under the bank route and also corporate bond issuances.
Under-cutting has also affected revenues. However with gradual improvement in bond issuances and
yields thereof, the industry can witness 15%+ CAGR in their rating revenues over the longer run.
Exhibit 1: Rating revenue market share (FY14)
3%

4%

8%
CRISIL
CARE
17%
ICRA
44%

India Ratings
SMERA
Brickworks

24%

Source: Companies, MCA, Centrum Research * CRISIL revenues include outsourcing rating revenues from S&P

Q: What is your view on revival in the corporate bond market and MSME ratings? Can it
help mitigate the risk of revenue loss due to migration to IRB approach by banks?
A: With relatively nascent MSME ratings and highly under-penetrated corporate bond market, experts
believe that BLR currently comprises 50%+ of total rating revenues. Considerable efforts have been
made to revive the corporate bond market that can be a driving factor going forward. The
improvement in bond issuance though gradual will be driven by:

Rating of a corporate
bond facilitates
acceptance and ability to
offload

Inability of the banking system to meet capital requirements of corporates given their limitations
on a) ALM mismatch b) cautious approach adopted towards lending following huge spike in
stressed loans and c) weak capital position especially in the context of meeting Basel-III norms on
capital adequacy requirement.

Increased FII limit in Gsec and corporate

bonds
encouraging
participation from retail
investors and domestic
institutions

Expectations of moderation in interest rates will prompt corporates to adopt the bond route over
bank loans. Though, historically, there exists no direct correlation between interest spreads and
bond issuance.

The recent buoyancy in the capital market could see corporates resort to de-leveraging and tap
the equity route over debt (as was seen in FY08). However, with the nature of funds required

Credit Rating Agencies

(short-term capital requirement ie bond route vs the permanent nature of capital ie equity route),
the issuances will be on the better side vis--vis past periods.

Over the next 3-4 years, experts believe bond revenues will contribute ~50% of total rating
revenues vs ~35% currently. The increased contribution will be due to the improvement in
systemic bond issuance and better pricing.

Q: How is the pricing situation? Can there be improvement in overall blended yields
going forward? What can be the driving factor?
A: The industry has seen huge under-cutting in both BLR and non-BLR segments. While this is likely to
continue in the BLR segment, with the revival in bond issuances, yields on non-BLR (especially
corporate bond issuance) could increase and contribute to improvement in overall blended yields.

Bond rating ie (investorpay model) enable garner

better yields over BLR
(more of ticking the
boxes)

BLR is a low yielding business (more of ticking the boxes) and hence the initial rating fees are
lower vis--vis bond rating (more of investor-pay model).

Franchise value plays an important role in preventing rating shopping and can drive surveillance
fees (ASF). ASF on BLR is low vis--vis bond rating fees.
Gradual improvement in bond issuance will enable rating revenue mix to shift towards relatively
higher yielding (both IRF and ASF) non-BLR segment and drive improvement in overall blended yields.

Q: MSME ratings can it be a big opportunity?

A: MSME is the backbone of large industries and according to central estimates contributed 8% to
GDP, 45% to manufacturing and 40% to exports. RBI in its recent report pointed out that 30mn MSME
unit provided employment opportunities to 70mn people.

NSIC scheme has made more and more MSMEs get rated as it saves on their interest costs.
According to a CRISIL report, MSME rating has made 30 banks offer discounted rate of 25bps
100bps and save on costs.

MSME rating is the next big opportunity as nearly 60% of the initially rated MSMEs have renewed
their ratings in subsequent years.
Exhibit 2: Interest rate concession offered by banks to rated SME enterprises

(Interest rate differential)

Others

0.50-1%

0.25-1%

0.25-0.5%

0.50%

10

0.25%

4
0

6
No of banks

10

12

Source: CRISIL report on MSME, Centrum Research

Q: What are the risks to the business - both internally and externally?
A: Internal risk: Employees are the core assets of our organisation and hence retention is very
important especially in the current cycle of improving job market. Attrition at mid-senior level impacts
the business and hence compensation needs to be aligned to the industry trend.
B: External risk: Rating is a highly regulated oligopolistic business that generates high margins.
Credibility of the franchise is of the utmost importance. If a CRA continues to comprise on the same,
regulator may take a stringent action.

Credit Rating Agencies

Q: Are banks prepared to adopt IRB approach? What is the potential risk of loss of
revenue to CRAs in the event of migration to the said approach?

Migration to IRB
approach is a long
process and will need
satisfactory performance

A: While private banks (in general) have an internal ratings approach in place, they are yet to adhere to
RBI norms. PSU banks, barring the large ones, continue to struggle with other issues and will need
longer than expected time to build in the required system to meet RBI norms.

Our assessment suggests ~50% of banks will be able to migrate to IRB approach in the next 3years. Smaller ones will take a much longer time and hence the risk of revenue loss to credit rating
agencies in the immediate future is limited.

Extract from our report

Shift to Internal rating based approach can impact rating revenues significantly
RBI circular dated July 7, 2009 advised banks to apply for migration to an internal rating based (IRB)
approach for measuring credit risk from April 1, 2012 onwards. The IRB Approach will allow banks,
subject to the approval of RBI and fulfilling certain requirements, to use their own internal estimates
for some or all of the credit risk components in determining the capital requirement for a given credit
exposure.
Bank loans are currently rated by an external agency and in the event of this being evaluated by the
banks internal team it could severely impact the revenue for credit rating agencies and especially
CARE that derives ~50% of its revenue from the BLR related market. ICRA has ~26% of its revenue from
BLR. Proportion for CRISIL is lower at ~10%.
but this is unlikely in immediate future
Interaction with industry experts and bank agencies suggest longer than expected time towards
implementation of the said norms. Agencies suggested that the process may get delayed as a) even if
a bank comes up with its own internal rating framework, it is mandatory to get it vetted by RBI (which
itself is a lengthy process), b) smaller PSU banks are not likely to have a proper internal rating
framework in place (given the lack of technology, know-how, union related problems) and c) lack of
standardisation and transparency.
Gist of recent Reserve Bank of India speech on: Growing NPAs in Banks: Efficacy of Ratings
Accountability & Transparency of Credit Rating Agencies
Although the road has been set for Indian banks to migrate to an internal rating based approach for
evaluating their credit risk, the ability and preparedness of these banks to migrate to the internal rating
approach is expected to be contingent on banks being in a position to test data based on the models to be
used for this purpose. Banks would thus necessarily have to rely on external credit ratings for their
calculation of credit risk until all the systems are in place.

Credit Rating Agencies

Financials - CARE
Exhibit 3: Income Statement

Exhibit 5: Balance Sheet

Y/E March (Rs mn)

FY13

FY14

FY15E

FY16E

FY17E

Y/E March (Rs mn)

FY13

FY14

FY15E

FY16E

FY17E

Net Sales
Growth (%)
Expenditure
Employee Cost
EBITDA
Growth (%)
EBITDA margin (%)
Depreciation
EBIT
EBIT margin (%)
Other Income
Interest expenses
PBT
Tax
Effective tax rate (%)
Adjusted PAT
Growth (%)
Net Margin (%)
(Profit)/loss from JVs/Ass
Adj. PAT After JVs/Ass/MI
E/O items
Reported PAT
Growth (%)

1,988
11.6
649
507
1,339
8.7
67.4
26
1,599
80.4
286
0
1,598
466
29.1
1,133
5.4
57.0

2,294
15.4
828
606
1,466
9.5
63.9
29
1,794
78.2
357
0
1,794
507
28.3
1,286
13.5
56.1

2,656
15.8
1,025
789
1,631
11.2
61.4
32
1,975
74.4
376
0
1,975
563
28.5
1,412
9.8
53.2

3,114
17.3
1,160
886
1,955
19.9
62.8
36
2,338
75.1
419
0
2,338
666
28.5
1,671
18.3
53.7

3,677
18.1
1,404
1,081
2,273
16.3
61.8
39
2,703
73.5
470
0
2,703
770
28.5
1,933
15.6
52.6

Equity share capital

Reserves & surplus
Net worth
Minority Interest
Net deferred tax liability
Total Liabilities

286
3,953
4,239
0
39
4,278

290
4,553
4,843
0
39
4,882

290
4,954
5,244
0
43
5,287

290
5,547
5,837
0
47
5,884

290
6,333
6,623
0
54
6,677

1,133
(1)
1,132
5.3

1,286
0
1,286
13.6

1,412
0
1,412
9.8

1,671
0
1,671
18.3

1,933
0
1,933
15.6

Gross Block
Less: Depreciation
Net block
Capital work in progress
Investment
Current Assets
Sundry debtors
Cash & bank balance
Loans & advances
Other current assets
Current liabilities & Prov
Current liabilities
Provisions
Net current assets
Misc. exp
Total Assets

615
(103)
512
0
3,901
758
293
187
127
151
893
510
383
(134)
0
4,278

647
(132)
515
0
4,677
590
142
267
142
39
899
422
477
(310)
0
4,882

676
(164)
512
0
4,973
1,456
458
815
144
39
1,655
464
1,191
(199)
0
5,287

708
(200)
508
0
5,462
1,732
512
1,033
148
39
1,818
516
1,302
(86)
0
5,884

744
(239)
505
0
5,999
2,170
604
1,375
152
39
1,997
574
1,423
173
0
6,677

FY13

FY14

FY15E

FY16E

FY17E

67.4
57.0
39.6
28.3

63.9
56.1
39.2
28.3

61.4
53.2
38.9
28.0

62.8
53.7
41.9
30.2

61.8
52.6
43.0
31.0

39.1

44.4

48.7

57.6

66.6

40.0
148.5
19.7

45.4
167.0
28.0

49.8
180.8
30.0

24.7
24.1
6.5
2.0

21.8
21.3
5.8
2.9

19.8
19.4
5.3
3.1

Source: Company, Centrum Research Estimates

Exhibit 4: Key Ratios

Y/E March
Profitability (%)
EBITDA Margin
Net Margin
ROCE
ROE
Per Share Data (Rs)
EPS
CEPS
BVPS
DPS
Valuations (x)
PER
P/CEPS
P/BV
Dividend Yield (%)

Source: Company, Centrum Research Estimates

58.9
201.3
32.0
16.7
16.4
4.8
3.3

68.1
228.4
34.0
14.5
14.2
4.2
3.5

Source: Company, Centrum Research Estimates

Exhibit 6: Cash Flow

Y/E March (Rs mn)
Profit before tax
Depreciation
Interest Provided
Other Non-Cash items
Change in working cap
Tax paid
Operating Cashflow
Capital expenditure
Free Cash Flow
Other income
Investments
Investing Cashflow
Equity Capital Raised
Loans Taken / (Repaid)
Interest Paid
Dividend paid (incl tax)
Income from investments
Others
Financing Cashflow
Net change in cash
Opening cash position
Closing cash position

FY13

FY14

FY15E

FY16E

FY17E

1,242
26
(3)
(267)
(87)
(431)
1,325
(57)
1,268
286
(1,112)
(825)
0
0
0
(398)

1,417
29
(3)
(357)
128
(507)
1,594
(32)
1,562
357
(776)
(420)
4
0
0
(944)

1,557
32
0
(376)
440
(563)
2,071
(29)
2,042
376
(296)
80
0
0
0
(1,011)

2,337
36
0
(418)
111
(666)
2,065
(32)
2,034
419
(488)
(70)
0
0
0
(1,079)

2,702
39
0
(469)
89
(770)
2,362
(36)
2,326
470
(537)
(68)
0
0
0
(1,146)

(398)
(372)
686
314

(682)
(47)
314
267

(1,011)
547
267
815

(1,079)
219
815
1,033

(1,146)
342
1,033
1,375

Source: Company, Centrum Research Estimates

Credit Rating Agencies

Financials CRISIL - (consolidated)

Exhibit 7: Income Statement

Exhibit 9: Balance Sheet

Y/E Dec (Rs mn)

CY12

CY13

CY14E

CY15E

CY16E

Y/E March (Rs mn)

CY12

CY13

CY14E

CY15E

CY16E

Net Sales
Growth (%)
Expenditure
Employee Cost
EBITDA
Growth (%)
EBITDA margin (%)
Depreciation
EBIT
EBIT margin (%)
Other Income
Interest expenses
PBT
Tax
Effective tax rate (%)
Adjusted PAT
Growth (%)
Net Margin (%)
(Profit)/loss from JVs/Ass/MI
Adj PAT After JVs/Ass/MI
E/O items
Reported PAT
Growth (%)

9,777
21.2
6,501
4,432
3,276
24.8
33.5
343
3,061
31.3
128
0
3,137
933
29.7
2,151
14.6
22.0
2,151
76
2,204
6.8

11,107
13.6
7,501
5,212
3,606
10.1
32.5
379
3,350
30.2
124
0
4,252
1,273
29.9
2,347
9.2
21.1
2,347
902
2,979
35.2

12,733
14.6
8,619
6,029
4,113
14.1
32.3
451
3,843
30.2
181
0
3,843
1,153
30.0
2,690
14.6
21.1
2,690
0
2,690
(9.7)

14,862
16.7
10,073
7,072
4,789
16.4
32.2
488
4,514
30.4
213
0
4,514
1,354
30.0
3,160
17.5
21.3
3,160
0
3,160
17.5

17,618
18.5
11,871
8,337
5,747
20.0
32.6
528
5,460
31.0
241
0
5,460
1,638
30.0
3,822
20.9
21.7
3,822
0
3,822
20.9

Equity share capital

Reserves & surplus
Net worth
Minority Interest
Net deferred tax liability
Total Liabilities

70
5,220
5,290
0
(175)
5,115

71
6,674
6,745
0
(229)
6,516

71
7,874
7,944
0
(269)
7,675

71
9,211
9,282
0
(315)
8,967

71
10,879
10,950
0
(371)
10,579

Gross Block
Less: Depreciation
Net block
Capital work in progress
Investment
Current Assets
Sundry debtors
Cash & bank balance
Loans & advances
Other current assets
Current lia & Prov
Current liabilities
Provisions
Net current assets
Total Assets

5,996
(1,328)
4,668
0
1,151
3,837
1,172
1,371
703
591
4,541
3,818
723
(704)
5,115

6,137
(1,645)
4,493
0
2,443
4,302
1,195
1,515
691
900
4,721
3,340
1,381
(420)
6,516

6,421
(2,096)
4,325
0
3,160
5,767
1,370
2,806
701
890
5,577
3,531
2,045
190
7,675

6,714
(2,583)
4,131
0
3,780
7,212
1,629
3,981
712
890
6,156
3,779
2,377
1,056
8,967

7,044
(3,112)
3,933
0
4,525
8,915
1,931
5,368
726
890
6,794
4,086
2,708
2,121
10,579

CY12

CY13

CY14E

CY15E

CY16E

3,060
343
0
(80)
(268)
(897)
2,157
(397)
1,760
77
(785)
(708)
96
0
0
(1,203)

4,146
379
0
(839)
(20)
(1,187)
2,479
(157)
2,321
107
(1,333)
(1,226)
249
0
0
(1,073)

3,663
451
0
(41)
492
(1,153)
3,411
(284)
3,128
181
(535)
(355)
0
0
0
(1,491)

4,302
488
0
(50)
101
(1,354)
3,486
(293)
3,193
213
(408)
(195)
0
0
0
(1,823)

5,219
528
0
(48)
73
(1,638)
4,134
(330)
3,804
241
(504)
(263)
0
0
0
(2,154)

498
(609)
443
938
1,381

(83)
(906)
189
1,381
1,524

0
(1,491)
1,282
1,524
2,806

0
(1,823)
1,175
2,805
3,981

0
(2,154)
1,387
3,980
5,368

Source: Company, Centrum Research Estimates

Source: Company, Centrum Research Estimates

Exhibit 10: Cash Flow

Exhibit 8: Key Ratios

Y/E March (Rs mn)

Y/E March
Profitability (%)
EBITDA Margin
Net Margin
ROCE
ROE
RoIC
Per Share Data (Rs)
EPS
CEPS
BVPS
DPS
Valuations (x)
PER
P/CEPS
P/BV
Dividend Yield (%)

CY12

CY13

CY14E

CY15E

CY16E

33.5
22.0
67.1
45.6
66.2

32.5
21.1
57.6
39.0
58.3

32.3
21.1
54.2
36.6
62.9

32.2
21.3
54.3
36.7
64.3

32.6
21.7
55.9
37.8
66.4

30.6
35.2
30.5
16.0

33.2
38.2
50.9
19.0

38.1
43.9
70.1
18.0

44.7
51.2
91.2
22.0

54.1
61.2
117.1
26.0

53.9
46.8
54.1
1.3

49.6
43.2
32.4
1.6

43.3
37.5
23.5
1.5

36.9
32.2
18.1
1.9

30.5
26.9
14.1
2.2

Source: Company, Centrum Research Estimates

Profit before tax

Depreciation
Interest Provided
Other Non-Cash items
Change in working cap
Tax paid
Operating Cash flow
Capital expenditure
Free Cash Flow
Other income
Investments
Investing Cash flow
Equity Capital Raised
Loans Taken / (Repaid)
Interest Paid
Dividend paid (incl tax)
Income from investments
Others
Financing Cash flow
Net change in cash
Opening cash position
Closing cash position

Source: Company, Centrum Research Estimates

Credit Rating Agencies

Appendix A
Disclaimer
Centrum Broking Limited (Centrum) is a full-service, Stock Broking Company and a member of The Stock Exchange, Mumbai (BSE) and National Stock
Exchange of India Ltd. (NSE). Our holding company, Centrum Capital Ltd, is an investment banker and an underwriter of securities. As a group Centrum
has Investment Banking, Advisory and other business relationships with a significant percentage of the companies covered by our Research Group. Our
research professionals provide important inputs into the Group's Investment Banking and other business selection processes.
Recipients of this report should assume that our Group is seeking or may seek or will seek Investment Banking, advisory, project finance or other
businesses and may receive commission, brokerage, fees or other compensation from the company or companies that are the subject of this
material/report. Our Company and Group companies and their officers, directors and employees, including the analysts and others involved in the
preparation or issuance of this material and their dependants, may on the date of this report or from, time to time have "long" or "short" positions in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Centrum or its affiliates do not own 1% or more in the
equity of this company Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to
our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. We may have earlier issued or may issue in future reports on the
companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you
should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. We and our Group may rely on
information barriers, such as "Chinese Walls" to control the flow of information contained in one or more areas within us, or other areas, units, groups or
affiliates of Centrum. Centrum or its affiliates do not make a market in the security of the company for which this report or any report was written.
Further, Centrum or its affiliates did not make a market in the subject companys securities at the time that the research report was published.
This report is for information purposes only and this document/material should not be construed as an offer to sell or the solicitation of an offer to buy,
purchase or subscribe to any securities, and neither this document nor anything contained herein shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever. This document does not solicit any action based on the material contained herein. It is for the general
information of the clients of Centrum. Though disseminated to clients simultaneously, not all clients may receive this report at the same time. Centrum
will not treat recipients as clients by virtue of their receiving this report. It does not constitute a personal recommendation or take into account the
particular investment objectives, financial situations, or needs of individual clients. Similarly, this document does not have regard to the specific
investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities
discussed in this report may not be suitable for all investors. The securities described herein may not be eligible for sale in all jurisdictions or to all
categories of investors. The countries in which the companies mentioned in this report are organized may have restrictions on investments, voting rights
or dealings in securities by nationals of other countries. The appropriateness of a particular investment or strategy will depend on an investor's
individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for
his/ her/their particular circumstances and, if necessary, seek professional/financial advice. Any such person shall be responsible for conducting
his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved
in the securities forming the subject matter of this document.
The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant
uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates
on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase
over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company.
These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting
principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not
regard the inclusion of the projections and forecasts described herein as a representation or warranty by or on behalf of the Company, Centrum, the
authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you
should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the
assumptions underlying such projections and forecasts.
The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may
realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital
may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to
change without notice. Centrum does not provide tax advice to its clients, and all investors are strongly advised to consult regarding any potential
investment. Centrum and its affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Foreign currencies
denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from
the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies effectively assume currency risk.
Certain transactions including those involving futures, options, and other derivatives as well as non-investment-grade securities give rise to substantial
risk and are not suitable for all investors. Please ensure that you have read and understood the current risk disclosure documents before entering into any
derivative transactions.
This report/document has been prepared by Centrum, based upon information available to the public and sources, believed to be reliable. No
representation or warranty, express or implied is made that it is accurate or complete. Centrum has reviewed the report and, in so far as it includes
current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed. The opinions expressed in
this document/material are subject to change without notice and have no obligation to tell you when opinions or information in this report change.
This report or recommendations or information contained herein do/does not constitute or purport to constitute investment advice in publicly accessible
media and should not be reproduced, transmitted or published by the recipient. The report is for the use and consumption of the recipient only. This
publication may not be distributed to the public used by the public media without the express written consent of Centrum. This report or any portion
hereof may not be printed, sold or distributed without the written consent of Centrum.
The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions. Neither Centrum nor 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.
This document does not constitute an offer or invitation to subscribe for or purchase or deal in any securities and neither this document nor anything
contained herein shall form the basis of any contract or commitment whatsoever. This document is strictly confidential and is being furnished to you
solely for your information, may not be distributed to the press or other media and may not be reproduced or redistributed to any other person. The
distribution of this report in other jurisdictions may be restricted by law and persons into whose possession this report comes should inform themselves
about, and observe any such restrictions. By accepting this report, you agree to be bound by the fore going limitations. No representation is made that
this report is accurate or complete.

Credit Rating Agencies

The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking
and are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this
report and there can be no assurance that future results or events will be consistent with any such opinions, estimate or projection.
This document has not been prepared by or in conjunction with or on behalf of or at the instigation of, or by arrangement with the company or any of its
directors or any other person. Information in this document must not be relied upon as having been authorized or approved by the company or its
directors or any other person. Any opinions and projections contained herein are entirely those of the authors. None of the company or its directors or
any other person accepts any liability whatsoever for any loss arising from any use of this document or its contents or otherwise arising in connection
therewith.
Centrum and its affiliates have not managed or co-managed a public offering for the subject company in the preceding twelve months. Centrum and
affiliates have not received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this
report for service in respect of public offerings, corporate finance, debt restructuring, investment banking or other advisory services in a
merger/acquisition or some other sort of specific transaction.
As per the declarations given by them, Mr. Aalok Shah, research analyst and and/or any of his family members do not serve as an officer, director or any
way connected to the company/companies mentioned in this report. Further, as declared by him, he has not received any compensation from the above
companies in the preceding twelve months. He does not hold any shares by him or through his relatives or in case if holds the shares then will not to do
any transactions in the said scrip for 30 days from the date of release such report. Our entire research professionals are our employees and are paid a
salary. They do not have any other material conflict of interest of the research analyst or member of which the research analyst knows of has reason to
know at the time of publication of the research report or at the time of the public appearance.
While we would endeavour to update the information herein on a reasonable basis, Centrum, its associated companies, their directors and employees are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent Centrum
from doing so.
Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable
regulations and/or Centrum policies, in circumstances where Centrum is acting in an advisory capacity to this company, or any certain other
circumstances.
This report is not directed to, 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 or regulation or which would subject
Centrum Broking Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, this document does
not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any
transaction to any U.S. person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this
document may be distributed in Canada or used by private customers in United Kingdom.
The information contained herein is not intended for publication or distribution or circulation in any manner whatsoever and any unauthorized reading,
dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read Risk
Disclosure Document for Capital Market and Derivatives Segments as prescribed by Securities and Exchange Board of India before investing in Indian
Securities Market.
Rating Criteria

Rating
Buy
Hold
Sell

Market cap < Rs20bn

Upside > 25%
Upside between -25% to +25%
Downside > 25%

Market cap > Rs20bn but < 100bn

Upside > 20%
Upside between -20% to +20%
Downside > 20%

Market cap > Rs100bn

Upside > 15%
Upside between -15% to +15%
Downside > 15%

Member (NSE, BSE, MCX-SX), Depository Participant (CDSL) and SEBI registered Portfolio Manager
Registration Nos.
CAPITAL MARKET SEBI REGN. NO.: BSE: INB011454239, NSE: INB231454233
DERIVATIVES SEBI REGN. NO.: NSE: INF231454233 (TRADING & SELF CLEARING MEMBER)
CDSL DP ID: 12200. SEBI REGISTRATION NO.: IN-DP-CDSL-661-2012
PMS REGISTRATION NO.: INP000004383
MCX SX (Currency Derivative segment) REGN. NO.: INE261454230
Website: www.centrum.co.in
Investor Grievance Email ID: investor.grievances@centrum.co.in
Compliance Officer Details:
Tel: (022) 4215 9413; Email ID: compliance@centrum.co.in

Centrum Broking Limited

Registered Office Address
Bombay Mutual Building ,

Correspondence Address
Centrum House

2nd Floor,
Dr. D. N. Road,
Fort, Mumbai - 400 001

6th Floor, CST Road, Near Vidya Nagari Marg, Kalina,

Santacruz (E), Mumbai 400 098.

Tel: (022) 4215 9000

Credit Rating Agencies