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COMPANY INITIATING REPORT
GEOJIT BNP PARIBAS Research
RETAIL EQUITY RESEARCH
Bharat Electronics Ltd Defence Electronics
BUY Rating as per large Cap
BSE CODE:500049
NSE CODE: BEL
Bloomberg CODE: BHE IN
SENSEX: 25,337
12 month period
CMP Rs1199 TARGET Rs1,355 RETURN 13%
28th March, 2016
The leader in defence electronics... Bharat Electronics Ltd (BEL) is a Navaratna enterprise having 37% market share in Indian Defence Electronics. BEL’s core capabilities are in radar & weapons systems, defence communication & electronic warfare. BEL is emerging as a substantial beneficiary of the “Make in India” reform in defence. The current order book is robust at Rs32,333cr, 551% up from last year. On a conservative basis we expect 15% CAGR in earnings over FY16EFY20E. More potential in earnings growth will emerge as per the progress of the recently initiated modernization & indigenisation programme. Cash rich, total cash as on 3QFY16 at Rs5,280cr (including term deposit) and is debt free. ROE to be above 14% over the next 2-3years. BEL is trading at 1yr fwd P/E of 18x, which is 17% premium to its global peers owing to its superior EBITDA margins profile & improved earnings outlook considering higher indigenous procurement. We have a BUY rating on the stock with a target price of Rs1,355, based on P/E of 20x on FY18E EPS of Rs68.
Indian Defence industry on cusp of change... GoI is giving greater priority to defence in its “Make in India” programme with emphasis on indigenization to reduce import cost. Some of the measures taken in this direction include: hike in FDI in defence to 49% from 25%, fast tracking of Rs2,3900cr projects and relaxed industrial license norms to build domestic capabilities. Also ministry of defence is likely to announce new defence procurement policy in which Indian designed, developed and manufactured products to get priority with focus on enhancing the role of MSMEs & deep interaction with the industry at every stage of procurement.
Defence Electronics a thrust area... Defence electronics is impetus for better performance of defence forces and all major global forces are arming themselves with products including radars, unmanned aerial vehicles, network centric systems, electronic warfare and tactical communication systems to gain upper hand from its peers. The opportunity in Indian defence electronics is estimated to be more than USD70bn over the next 10-15 years.
Leader in Defence Electronics... BEL has limited competition from other private players due to its niche capabilities and strong technological tie-ups (both national technical laboratories & joint ventures with global defence players). The strategic nature of projects, capital intensive nature & high gestation periods act as strong barriers for competition. BEL spends 8% of sales in R&D and 80% of its products are developed indigenously which underlines its leadership position.
Valuations
Company Data Market Cap (cr)
Rs28,782
Enterprise Value (cr)
Rs26,164
Outstanding Shares (cr)
24.0
Free Float
25%
Dividend Yield
1.1%
52 week high
Rs1,417
52 week low
Rs974
6m average volume (cr)
0.03
Beta
1.3
Face value
Rs10
Shareholding %
Q1 FY16
Q2 FY16
Q3 FY16
75.0
75.0
75.0
3.8
3.9
4.1
15.6
14.7
14.7
Public
5.4
6.0
6.0
Others
0.2
0.2
0.2
Promoters FII‟s MFs/Insti
Total
100.0
100.0
100.0
Price Performance
3mth
6mth
1 Year
Absolute Return
-8.9%
2.5%
10.9%
Absolute Sensex
-1.9%
-2.0%
-10.0%
Relative Return*
-7.1%
4.6%
23.3%
*over or under performance to benchmark index 1700
BEL
Sensex Rebased
1200 700 200 Jan-13
Jul-13
Y.E Mar (Rs cr)
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
FY16E
FY17E
FY18E
7,181
8,422
9,836
1.3
17.3
16.8
1,190
1,402
1,598
16.6
16.6
16.3
1,257
1,457
1,626
5.0
15.9
11.6
52.4
60.7
67.7
5.0
15.9
11.6
P/E
22.9
19.8
17.7
P/B
3.1
2.8
2.4
22.0
18.5
16.2
14.3
14.8
14.6
0.0
0.0
0.0
Sales Growth (%) EBITDA EBITDA Margins% PAT Adj. Growth (%) Adj.EPS Growth (%)
EV/EBITDA
At CMP, BEL is trading at 20x and 18x FY17E & FY18E EPS of Rs61 & Rs68 ROE (%) respectively. Going forward BEL will benefit from healthy order book which D/E is 4.6x of FY15 sales at Rs32,333cr. We value BEL at 20x on FY18E, with a ANIL R target price of Rs1,355 and we have a „Buy‟ rating for the stock. Analyst
Valuations BEL‟s valuations have hovered at lower end of 13x-15x during last 10 years, though its average peak valuation was at 22x. BEL‟s 80% of revenue comes from defence orders which largely depend on defence requirements and its procurement policies.
We Value at 20x… At CMP, BEL is trading at 20x and 18x on FY17E & FY18E EPS of Rs61 & Rs68 respectively. We value BEL at 20x on FY18E, with a target price of Rs1,355 and we have a “BUY” rating.
During FY13-FY15, BEL‟s execution has been hit by declining order inflow, slower approval of Bulk production clearance (BPC) and stretched timelines by clients, leading to lower than historical execution rates impacting its valuations. During FY15 its valuation has witnessed significant re-rating; led by earnings growth of 26%.
Investment Rationale
1 Yr fwd P/E band 28 23
One year fwd P/E
Avg 1 year forward PE
Avg+1 SD
Avg - 1SD
18
17.3
13
13.0
8
8.6
3 2003
2005
2007
2009
2011
2013
2015
Source: Bloomberg, Company, Geojit BNP Paribas Research.
Peer comparison table Company
M.cap Sales ($bn) EBITDA% P/E ($ bn) CY15 CY15 CY15 CY16E CY17E Lockheed martin Co. 67.3 46.1 14.0 19.3 19.1 16.4 USA Raytheon Co. USA 37.2 23.2 15.1 19.6 17.6 15.6 BAE systems plc. UK 22.7 27.3 12.0 12.4 13.0 12.4 Thales SA. France 17.8 17.2 12.2 19.3 17.8 15.8 Average 13.3 17.7 16.9 15.1 FY15 FY15 FY16E FY17E FY18E BEL 4.2 1.1 16.6 22.7 19.7 17.7 Source: Bloomberg, Company, Geojit BNP Paribas Research.
Healthy order book…earnings growth to pick-up… During FY12, FY13 & FY14 BEL‟s order inflow dropped by 56%, 33% & 20% YoY respectively, largely due to snail pace approvals process. With new government, there was significant improvement in approval of defence projects. In FY15, BEL witnessed a healthy order intake of 21% YoY at Rs5,130cr. While, 9mFY16 order inflow grew by 551% YoY, with earnings growth of 27% YoY, which gives a strong indication that going forward, with healthy order book of 4.6x FY15 sales, earnings will improve. We factor a revenue growth of 17% CAGR and PAT growth 13% CAGR over FY16EFY18E.
Defence industry on cusp of change… India‟s 60% defence requirements are met through imports. GoI plans to bring down import dependence from current 60% to 30% in the next few years. In line with this, high priority is given to defence under “Make in India” initiative. For building domestic capabilities & transfer of technology: hiked FDI in defence from 25% to 49% and liberalization of the Industrial licensing regime for Indian manufacturers for boosting domestic participation including SMEs. These measures will help foreign original equipment manufacturers (OEMs) to enter into strategic partnerships with Indian companies, benefitting domestic companies in the longer term. Apart from this the maintenance, repairs, upgradation/modernization and supply of sub-systems and spares for existing/new defence projects throws higher opportunities for domestic companies. New defence policy... Emphasis on MSMEs, 'Make in India' focal point The Defence acquisition council (DAC) will announce the new defence procurement policy (DPP). The new policy will include a preamble which will be a guide for all decisions, new categories for procurement, to prioritize locally developed equipment and deep interaction with the industry at every stage of procurement. According to the new policy, DAC‟s first preferred category will be IDDM (Indigenously Designed, Developed and Manufactured). Those domestic companies who have the capability of designing and developing their products indigenously will get first preference in purchases for the three armed forces. Under IDDM equipment, it will be mandatory for 40% of the content to be sourced locally. Also revised the defence offset clause, which will now be applied to contracts of more than Rs2,000cr instead of the current Rs300cr to attract foreign companies. The new DPP will also have a provision for allowing the DAC to fast track the procedure by bypassing the Acceptance of Necessity (AON) process in case of urgently needed equipment.
Also the new policy agents will be allowed on defence transactions, who provides technological expertise, management support for a fee, which is reasonable and which does not depend on the value of the contract or outcome (positive or negative) of the contract. These measures are in the right direction, which is expected to speed-up the defence procurement process and remove ambiguity in the whole process. Defence Electronics a thrust area... Defence electronics is a thrust area; as global defence forces are equipping themselves with modern electronic equipments to counter threats. Major electronics products and systems include radars, unmanned aerial vehicles, thermal imagers, night vision devices, network centric systems, communication systems, electronic warfare, tactical communication systems, etc. The opportunity in Indian defence electronics is estimated to be more than USD70bn over the next 10-15 years, according „India Electronics and Semiconductor Association‟ (IESA). The opportunity for electronics in defence systems in India is spread across both standalone equipment and at a sub-system level. The opportunity at the standalone level is USD18.5bn while the chunkier pie is at a sub-system level of USD58bn. BEL to maintain leadership position… BEL has 37% market share in defence electronics, with core capabilities in radar & weapons systems, defence communication and electronic warfare. BEL has limited competition from private players due to its niche expertise, manufacturing & product development capabilities and has historically associated with DRDO & LRDE for new product development. Defence forces rely more on PSUs for strategic products. The development of these strategic products involves high capital expenditure and long & rigorous testing leading to high gestation periods limiting competition. Due to strong execution prowess in defence electronics, BEL‟s receives 90% of orders on a nomination basis. BEL is a lead integrator of Akash missile systems for IAF (Indian Air force) developed indigenously. Among the significant orders executed during 2014-15 is the missile system for the IAF and the Indian Army, passive night vision devices, tactical control radar, ship-borne electronic warfare systems, hull-mounted sonar, fire control systems, missile warning system and combat management system.
Future drivers of growth… Going forward, BEL‟s segments like Radar & Missile systems, Electronic ammunition fuses, Gigabit passive optical network, routing and switching products, communication and network centric systems, Tank electronics, gun upgrades, EO systems, Electronic warfare and avionics systems will drive revenue growth in next 5 years. In non-defence, infrastructure protection (homeland security), air traffic management radar, intelligent traffic management systems, solar power plants and smart city elements are being focused. Defence will continue to contribute 80%-90% of its revenues and remaining from civilian products. Projects planned for FY16 Akash Missile System 3D-Tactical Control Radar Low Level Light Weight Radar Hand Held Thermal Imagers Schilka Gun Tank Upgrade L70 Gun Upgrade New Generation Hull Mounted Sonar Gigabit Ethernet based Ship Data Network Combat Management System Ship Borne Electronic Warfare System Fire Control System Electronic Voting Machine Source: Company
CAPEX Rs2,000cr….. Currently, BEL is setting up a Greenfield weapon systems facility in Andhra Pradesh with an investment of Rs500cr. The new facility will focus on design, development and production of all kinds of weapon systems such as fire control, missile systems and other weapon upgrade programs and the plant is expected to be completed in 2 years. Further, BEL has planned a CAPEX of Rs1,500cr for next 3years. Roadmap for future expansions (Rs1,500cr for 3 years) Test Bed for Missile Systems at Bangalore Unit Sonar Integration & Testing Facility at Bangalore Unit Field Test Range (NFTRs) at Bangalore & Ghaziabad Units Facility to manufacture Zinc Sulphide (ZnS) Domes Highly Accelerated Life Test & Stress Screening Facility Tactical Communication System (TCS) Test Bed Battlefield Management System (BMS) Test Bed Robotic Welding facility 50MW Solar plants being setup Wind Energy Power Plant Source: Company
Step-up in R&D spending... Owing to close association with Defence research and Development organisation (DRDO) & other National Labs and higher in-house R&D has helped BEL in increasing the indigenous content in its sales mix. Currently, BEL‟s 80% of turnover is based on indigenous technology. Over the years R&D spending has increased to 8% in FY15 from 5.8% of sales in FY10. Going forward management focus will be development of core technology and R&D. In FY15, BEL spends Rs283cr for upgrading its facilities in R&D labs. Management has indicated that R&D spending will be increased to 10% of turnover. Order book piling-up… revenues to pick-up FY15 order inflow grew by 21% YoY to Rs5,130cr, while 9mFY16 order inflow grew by 551% YoY Rs15,300cr led by Integrated Air command control system (IACCS) of Rs8,000cr, USHUS-2 sonar, Shakti electronic warfare system, WLR and sub-systems for T-90 tanks (amounting to Rs7,000cr). BEL‟s current order backlog is Rs323.3bn, which is 4.6x of FY15 sales. Order booking & order backlog (Rs cr) 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000
Order inflow
FY10
FY11
FY12
FY13
Closing order book
FY14
FY15
FY16E
FY17E
FY18E
Source: Company, Geojit BNP Paribas Research.
Tie-up with global partners...MOUs BEL has a joint venture (JV) (named GE BE Pvt Ltd) with General Electric, USA, to manufacture CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. Recently, BEL formed a JV (BEL-THALES Systems Limited) with Thales Air Systems SAS, France and Thales India Pvt Ltd (TIPL) for design, development, marketing, supply and support of civilian and select defence radars for Indian and global markets. BEL is holding 74% of the equity in the JV. BEL has also signed MoUs with global defence contractors, aerospace majors and global OEMs like Lockheed Martin, Boeing, Airbus, Northrop Grumman, Raytheon, Rafale, Elbit Systems, Honeywell, SAAB, etc. for joint development and production. A number of international companies are using BEL‟s facilities for contract manufacturing.
Financials
Potential opportunities over next 3 years Name of the project Hand-held thermal imager Akash missile systems EW systems L70 gun upgrade Weapon locating radar (WLR) SAM orders ATC radar Tactical Communication Systems Battle Field Management Systems
BEL in achieving competitive cost advantage. Outsourcing non-core products and reduced dependency on foreign technology due to better utilisation of in-house talent pool has helped BEL in improving operational performance. In-line with the government‟s focus on the “Make in India” programme BEL will be focusing on core areas while outsourcing the remaining portion. As a result, the proportion of outsourcing is likely to increase from present levels of 32% to 36% in the next five years. Procurement from MSMEs will also increase in the medium term from 8% currently (4.73% in FY14). In line with this strategy, BEL is looking to add 800 indigenous vendors annually. Going forward we believe that BEL‟s focus on core activities will help in improving its project execution leading to higher revenue booking.
Value (Rs.cr) Rs4,000cr Rs8,000cr Rs2000cr Rs5000cr Rs1,610cr Rs5,000cr Rs230cr Rs13,000cr Rs50,000cr
Source: Company
Transformation into a system integrator... BEL has gradually transformed from components manufacturing company towards system integrator. Adopting well formulated outsourcing policy and collaborative R&D with small niche players has helped
Revenue growth to pick-up….earnings to improve During FY10-FY15, BEL‟s revenue growth was in single digit at 5.3% CAGR, while during FY12, FY13 & FY14 BEL‟s order inflow dropped by 56%, 33% & 20% YoY respectively, largely due to sloppy procurement policy and longer execution cycles. Post new government, FY15 order inflow grew by 21% YoY to Rs5,130cr and revenue grew by 9% YoY, highest in past 5 years. 9mFY16 revenue growth was at 4% YoY at Rs4,080cr, was lower due to some products related issues not related to BEL. BEL has a strong order pipeline beyond FY18 which includes Battlefield management Systems worth Rs50,000cr, Tactical Communication Systems worth Rs13,000cr & Short & Medium range SAM worth over Rs5,000cr which is likely accelerate its revenue
growth for next 5-10 years. Considering BEL‟s current order backlog of 4.6x of FY15 sales at Rs32,333cr, we expect revenues to grow at 17% CAGR over FY16-18E. PAT growth… During FY10-FY15, PAT grew by 10% CAGR, while during FY15 PAT grew by a healthy 26% YoY to Rs1,197cr. Historically, BEL‟s PAT margins are better than EBITDA margins largely owing to higher other income (interest income generated from customer advance from projects). BEL‟s FY15 other income was at Rs507cr. Average PAT margins for the last 5 years were 15%, while average EBITDA margins were in the range of 14%. 9mFY16 PAT grew by 27% YoY to Rs563cr led by margin expansion, improved 200bps and higher other income. We believe that order execution is likely to improve going forward leading to PAT growth of 15% CAGR over FY16E-FY20E. Strong balance sheet... BEL is cash rich with Rs5,280cr and is debt free. BEL‟s Rs2,000cr capacity expansion will be funded by internal accruals. We believe that with lower CAPEX requirement, healthy order book and improvement in execution will lead to strong cash flow generation leading to stable return ratios. We expect RoE to be stable at 14% over the next 3years.
About the company Bharat Electronics Limited (BEL) was established at Bangalore, India, by the Government of India under the Ministry of Defence in 1954 to meet the specialised electronic needs of the Indian defence services. Key business segments Radars, Sonars & Weapon Systems Communication Electronic warfare Network centric systems Anti submarine warfare Electro-Optics Tank Electronics Civilian products Source: Company
BEL's customers include Indian defence service organizations, paramilitary forces, civil aviation, meteorological department, space department, Department of Telecommunications, power sector companies, oil industry, railways, Election Commission of India, police departments, state governments, public sector undertakings and others.
Key risk Defence procurement policy is the key … Defence procurement policies are largely a state subject. Currently, the defence sector has been given high priority under “Make in India” leading to improved decision making, a slew of MOUs & JVs by foreign companies with domestic companies, revamping defence procurement policy etc. Any deviation from this will be negative for defence industry. Skewed pattern of order flow & long drawn process… Defence procurement procedures are complex and timeconsuming. The process of calling for request for proposal (RFP), development of prototype, testing, price fixing and selection of vendor is a lengthy process and there are chances that these orders might get cancelled in between due to change in priorities by these organizations.
Consolidated Financials Profit & Loss Account
Balance Sheet
Y.E March (Rs cr)
FY14A
FY15A
FY16E
FY17E
FY18E
Sales % change EBITDA % change Depreciation EBIT Interest Other Income PBT % change Tax Tax Rate (%) Reported PAT Adj.* Adj. PAT % change No. of shares (mn) Adj EPS (Rs) % change DPS (Rs)
6,276 2.8 922 38.8 150 772 4 437 1,206 5.4 254 20.7 951 951 4.5 24.0 39.6 4.5 45.9
7,093 8.8 1,175 27.4 166 1,008 3 507 1,513 25.5 316 20.9 1,197 1197 25.8 24.0 49.9 25.8 56.8
7,181 1.3 1,190 1.3 169 1,021 2 573 1,592 5.2 334 21.0 1,257 1,257 5.0 24.0 52.4 5.0 59.4
8,422 17.3 1,402 17.7 198 1,204 2 642 1,845 15.9 387 21.0 1,457 1,457 15.9 24.0 60.7 15.9 68.9
9,836 16.8 1,598 14.1 219 1,380 2 681 2,058 11.6 432 21.0 1,626 1,626 11.6 24.0 67.7 11.6 76.9
Cash flow
Y.E March (Rs cr) Cash Accounts Receivable Inventories Other Cur. Assets Investments Gross Fixed Assets Net Fixed Assets CWIP Intangible Assets Def. Tax (Net) Other Assets Total Assets Current Liabilities Provisions Debt Funds Other Liabilities Equity Capital Reserves & Surplus Shareholder‟s Fund Total Liabilities BVPS (Rs)
FY14A
FY15A
FY16E
FY17E
FY18E
1,786 4,156 3,340 4,240 0 2,346 694 269 190 302 14,976 6,918 605 8 80 7,361 7,441 14,976 93
2,171 3,805 3,424 4,773 1 2,684 888 140 185 338 15,726 6,590 786 26 80 8,238 8,318 15,726 104
2,644 4,230 3,649 4,801 0 2,964 999 150 185 405 17,063 6,971 807 26 240 9,013 9,253 17,063 39
2,818 5,076 4,172 5,492 0 3,314 1,151 200 185 483 19,577 8,216 900 26 240 10,189 10,429 19,577 43
2,930 6,063 4,907 6,413 0 3,634 1,252 200 185 569 22,519 9,662 1,051 25 240 11,534 11,774 22,519 49
FY14A
FY15A
FY16E
FY17E
FY18E
14.1 11.8 14.6 13.5 12.8
16.6 14.2 16.9 15.2 14.4
16.6 14.2 17.5 14.3 13.5
16.6 14.3 17.3 14.8 14.0
16.3 14.0 16.5 14.6 13.9
210.5 317.7 691.9 1.8 0.9
204.8 313.7 626.5 1.9 0.9
204.2 324.7 622.5 2.0 0.9
201.7 304.6 591.5 1.9 0.9
206.7 300.7 592.1 1.9 0.9
2.9 0.4 190.6 0.0
2.8 0.5 376.0 0.0
2.5 0.4 603.5 0.0
2.7 0.5 718.5 0.0
2.8 0.5 834.8 0.0
4.1 29.3 30.3 1.3
3.8 22.7 24.0 1.2
3.6 22.0 22.9 3.1
3.1 18.5 19.8 2.8
2.6 16.2 17.7 2.4
Ratios
Y.E March (Rs cr)
FY14A
FY15A
FY16E
FY17E
FY18E
Y.E March (Rs cr)
Net inc. + Depn. Non-cash adj. Changes in W.C C.F.O Capital exp. Change in inv. Other invest.CF C.F - investing Issue of equity Issue/repay debt Dividends paid Other finance.CF C.F - Financing Chg. in cash Closing cash
1,102 (519) (1,151) (569) (369) 703 425 759 (213) (213) (23) 1,786
1,363 (376) 446 1,434 (225) (1,048) 434 (839) 25 (223) 11 (209) 386 2,171
1,427 (638) (275) 514 (290) 573 283 (283) (41) (324) 473 2,644
1,655 (718) (722) 215 (400) 643 243 (283) (283) 174 2,818
1,845 (765) (1,046) 34 (320) 681 361 (1) (283) (283) 112 2,930
Profitab. & Return EBITDA margin (%) EBIT margin (%) Net profit mgn.(%) ROE (%) ROCE (%) W.C & Liquidity Receivables (days) Inventory (days) Payables (days) Current ratio (x) Quick ratio (x) Turnover &Levg. Gross asset T.O (x) Total asset T.O (x) Int. covge. ratio (x) Adj. debt/equity (x) Valuation ratios EV/Sales (x) EV/EBITDA (x) P/E (x) P/BV (x)
Recommendation Summary (last 3 years)
Dates 28-March-2016
1600
Rating Buy
Target 1,355
1400 1200 1000 800 600 400 200 Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Source: Bloomberg, Geojit BNP Paribas Research Large Cap Stocks; Buy Hold Reduce
Mid Cap and Small Cap; Buy Upside is 15% or more. Accumulate* Upside between 10% - 15%. Hold Absolute returns between 0% 10%. Reduce/Sell Absolute returns less than 0%. To satisfy regulatory requirements, we attribute „Accumulate‟ as Buy and „Reduce‟ as Sell. The recommendations are based on 12 month horizon, unless otherwise specified. The investment ratings are on absolute positive/negative return basis. It is possible that due to volatile price fluctuation in the near to medium term, there could be a temporary mismatch to rating. * For reasons of valuations/return/lack of clarity/event we may revisit rating at appropriate time. Please note that the stock always carries the risk of being upgraded to BUY or downgraded to a HOLD, REDUCE or SELL. -
Upside is 10% or more. Upside or downside is less than 10%. Downside is 10% or more.
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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. Distributing/taking/sending/dispatching/transmitting this document in certain foreign jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Failure to comply with this restriction may constitute a violation of any foreign jurisdiction laws. 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. Investors in securities such as ADRs, the value of which are influenced by foreign currencies effectively assume currency risk. REGULATORY DISCLOSURES: GBNPP‟s Associates consists of privately held companies such as Geojit Technologies Private Limited (GTPL- Software Solutions provider), Geojit Credits Private Limited (GCPL- NBFC Services provider), Geojit Investment Services Limited (GISL- Corporate Agent for Insurance products), Geojit Financial Management Services Private Limited (GFMSL) & Geojit Financial Distribution Private Limited (GFDPL), (Distributors of Insurance and MF Units).In the context of the SEBI Regulations on Research Analysts (2014), GBNPP affirms that we are a SEBI registered Research Entity and in the course of our business as a stock market intermediary, we issue research reports /research analysis etc that are prepared by our Research Analysts. We also affirm and undertake that no disciplinary action has been taken against us or our Analysts in connection with our business activities. In compliance with the above mentioned SEBI Regulations, the following additional disclosures are also provided which may be considered by the reader before making an investment decision: 1. Disclosures regarding Ownership*: GBNPP confirms that: (i) It/its associates have no financial interest or any other material conflict in relation to the subject company (ies) covered herein. (ii) It/its associates have no actual beneficial ownership greater than 1% in relation to the subject company (ies) covered herein. Further, the Analyst confirms that: (i) he, his associates and his relatives have no financial interest in the subject company (ies) covered herein, and they have no other material conflict in the subject company. (ii) he, his associates and his relatives have no actual/beneficial ownership greater than 1% in the subject company covered 2. Disclosures regarding Compensation: During the past 12 months, GBNPP or its Associates: (a) Have not received any compensation from the subject company; (b) Have not managed or co-managed public offering of securities for the subject company (c) Have not * received any compensation for investment banking or merchant banking or brokerage services from the subject company. (d) Have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company and is in receipt of compensation from the subject company.” (e) Have not received any compensation or other benefits from the subject company or third party in connection with the research report (f) The subject company is / was not a client during twelve months preceding the date of distribution of the research report. 3. Disclosure by GBNPP regarding the compensation paid to its Research Analyst: GBNPP hereby confirms that no part of the compensation paid to the persons employed by it as Research Analysts is based on any specific brokerage services or transactions pertaining to trading in securities of companies contained in the Research Reports. 4. Disclosure regarding the Research Analyst‟s connection with the subject company: It is affirmed that the I ANIL R Research Analyst(s) of GBNPP have not served as an officer, director or employee of the subject company 5. Disclosure regarding Market Making activity: Neither GBNPP/its Analysts have engaged in market making activities for the subject company. Please ensure that you have read the “Risk Disclosure Documents for Capital Market and Derivatives Segments” as prescribed by the Securities and Exchange Board of India before investing.
Digitally signed by ANIL R Date: 2016.03.28 10:41:15 +05'30'
Geojit BNP Paribas, 34/659-P, Civil Lane Road, Padivattom, Kochi – 682024. Toll Free Number: 1800-425-5501 / 1800-103-5501, Paid Number: 91 – 0484 – 3911777, Email id:
[email protected] Research Entity SEBI Registration Number: INH200000345
