first call 08oct21
TRANSCRIPT
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'BANYAN SERIES' Bearings – New Report; On The Ball India’s bearings industry at USD1.5bn is just 1% of the global bearings market
(USD119bn) and has plenty of ground to roll around—particularly considering China
commands a 25% share (USD31bn). And while the industry has been a strong play
on industrial and automotive capex cycles, it is now looked upon for developing
cutting-edge product offerings as the world strides towards a frictionless future.
Home Decor - Sector Update - Multiple factors driving consolidation The plastic pipes industry continues to see accelerated consolidation with a host of
factors hurting smaller players disproportionately, viz., i) sharp increase in PVC
prices inflating working capital needs; ii) unavailability of raw materials; and iii) strict
implementation of BIS norms. Large players mostly produce ISI pipes; whereas small
players producing non-ISI products (30–35% of industry) may be severely hit.
Metals & Mining - Sector Update - Steel: Breaking past stagnation
Domestic HRC price in traders’ market rose 5% last week on average. This follows a
similar increase in rebar and intermediate products a fortnight ago. Our channel
checks indicate that prices across the steel value chain – from pellets to pig iron –
have gone up. Regional markets remained quiet owing to the China’s national
Golden Week holiday.
Macrotech - Company Update - Q2FY22 sales: Strong performance
With the second wave subsiding, Lodha Developers (Macrotech) turned in a good
performance, clocking Q2FY22 pre-sales of ~INR20bn (up 88% YoY/109% QoQ), its
best-ever Q2. The company has maintained the ~INR90bn pre-sales guidance for
FY22. Net debt for the India business is broadly flat QoQ at ~INR125bn (~INR124bn
in Q1FY22). The company added a JDA project with GDV of ~INR10.5bn during the
quarter.
India Equity Research October 8, 2021
FIRST CALL DAILY REPORT
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Sectoral Movements %Change Ticker 7-Oct-21 1 D 1 M 3 M 1 Y
Nifty 17,790 0.8 2.5 13.1 50.3
Banking 43,010 0.5 2.6 7.8 63.7
IT 35,704 1.8 3.0 24.2 64.6
Pharmaceuticals 26,271 0.6 -1.0 2.1 28.1
Oil 18,899 -0.5 8.8 18.6 56.3
Power
3,318 0.2 10.8 22.9 103.6
Auto 24,791 4.5 9.4 6.4 34.1
Metals 20,273 0.4 -1.1 9.1 146.7
Real Estate
4,247 6.0 27.1 49.2 145.9
FMCG 14,800 0.1 -0.2 9.0 32.6
Capital Goods 26,291 0.9 3.0 14.1 92.9
MARKETS Change in % 07-Oct-
21 1D 1M 1Y
Nifty 50 17,790 0.8 2.5 50.3 Nifty 200 9,452 1.0 3.0 54.9 Nifty 500 15,290 1.0 3.3 57.4
INDIA STOCK PERFORMANCE
GLOBAL 07-Oct-21 1D 1M 1Y
Dow 34,755 1.0 -0.8 22.3
China 3,589 0.6 0.6 11.5
EM Index 1,253 2.1 -4.6 12.2
UPCOMING EVENTS CALENDER
MACRO Change in %
07-Oct-21 1D 1M 1Y
Fx (INR/USD)
74.8 0.3 -1.8 -1.9
!0-yr G-sec 6.3 -0.2 1.2 4.2 Oil (USD) 83.0 1.3 14.4 91.6
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October 2021
Edelweiss Securities Limited
Sector Report
Bearings
On The Ball
fcus
Shradha Sheth+91 22 6623 [email protected]
Meera Midha+91 22 4088 5804
Miscellaneous
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Executive Summary
India’s bearings industry at USD1.5bn is just 1% of the global bearings market (USD119bn) and has plenty of ground to roll around—particularly considering China commands a 25% share (USD31bn). And while the industry has been a strong play on industrial and automotive capex cycles, it is now looked upon for developing cutting-edge product offerings as the world strides towards a frictionless future.
Cyclical drivers – auto and industrial sector – would turn favourable
over the medium term, whereas structural drivers are likely to look up over the medium to long term with increasing localisation of industrial bearings, rising exports and a step-up in technology. These factors would not only improve margins but also value growth.
One key lever of value growth is improving bearings content and technological differentiation. Technology-driven increase in content per vehicle in railways and passenger vehicles augurs well for organised bearings players, which are sharpening focus on manufacturing lighter bearings by adopting new technologies and lightweight alloys. They are also focusing on new mobility, powertrain
electrification and autonomous production. This would drive future-ready applications and lower the risk of technological disruption.
Technological superiority coupled with a comprehensive product portfolio gives players such as Timken India (TMKN), Schaeffler India (SCHFL) and SKF India (SKF) an edge as preferred suppliers to original equipment manufacturers (OEMs), right from the product development stage.
After clocking a 6% CAGR over the last four years, the bearings industry is at an inflection with strong cyclical and structural drivers likely to propel our coverage’s sales CAGR to 18–23%. Moreover,
earnings at SKF, SCHFL and TMKN are likely to turn in CAGRs of 23–40%. The industry is ready to roll.
We are initiating TMKN with a ‘BUY’ and TP of INR2,278 (34% upside potential) and maintaining a ‘BUY’ each on SCHFL (TP: INR8,460; 15% upside potential) and SKF India (TP: INR3,670; 17% upside potential).
Secular drivers: Set in motion by cyclical factors
The Indian bearings industry is driven by the industrial sector (52% contribution) and
automobiles (48% contribution). All the players mainly import industrial bearings
from parentcos: this is in the form of traded bearings, with TMKN earning 29%
revenue, SKF earning 43% revenue and SCHFL 24% from this segment.
With a cyclical uptick, bearings players are planning massive capital outlays (40–58%
gross block expansion). This shall spur localisation, in turn propelling a huge
structural opportunity for the industry. That lead times shall compress and cost
benefits immense, are no less important.
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SCHFL has moved up the curve the most with its localisation ratio rising from ~71%
in CY16 to ~76% in CY20. TMKN follows with its ratio edging up from 67% in FY16 to
71% in FY21. SKF’s ratio has remained similar over the years, but has moved up from
53% to 57% of sales in recent years.
We expect the companies to pass on benefits of growing localisation, which could
lead to market share gains. Additionally, Indian bearings companies are
strengthening R&D capabilities locally while scaling up capabilities to provide
engineering support to global R&D centres. Thus, management teams in the industry
are also optimistic about the exports opportunity. Exports are a key focus for TMKN
and SCHFL, contributing 24% and 11% to their sales in FY21 and CY20, respectively.
Cyclical drivers: Major growth components get moving
The automobile sector is a major driver for the bearings industry with revenue
contribution of ~48%. With expected recovery in automobiles, SCHFL will be the
strongest beneficiary as it derives ~82% of sales from the mobility segment
(including railways). It is followed by TMKN (derives ~74% revenue from automotive)
and SKF (derives ~50%).
In general, bearings companies have a diversified revenue mix with almost half
(~52%) coming from the industrial sector. Hence, with expected revival in IIP, the
industrial bearings segment too is expected to post robust growth led by key
segments such as manufacturing, railways, power and mining sectors. SKF India
derives 45–50% of sales from industrial bearings; hence it is best placed to leverage
the uptick in the segment.
Competitive edge: Excelling in niche backed by global parentco
SKF, SCHFL and Timken have carved a niche with dominant positioning in their
product portfolios, not to mention their rising technological expertise. TMKN is a
leader in tapered roller bearings (45% market share), SCHFL in spherical and
cylindrical roller bearings (60% market share) and SKF in ball bearings (45% share).
Overall SCHFL is the market leader with an overall ~36% revenue share driven by its
global parentage and all entities being housed in the listed arm. SKF stands at No.2
with an overall revenue share of 25% and TMKN stands at 13% market share.
Strong global parentage brings in huge expertise and global processes to these
companies, which new companies find difficult to replicate. Parentcos spend 2–6%
of annual sales on R&D, and license it to Indian counterparts in lieu of royalty fees.
Additionally, the technology-driven increase in content per vehicle, particularly in
the railways and passenger vehicle segments, augurs well for organised players such
as TMKN and SCHFL, as their parents remain strong in these categories. Thus,
dominant positions in niche areas provide Indian bearings players a high-growth
opportunity in respective segments.
Meanwhile, companies are sharpening focus on manufacturing lighter bearings by
adopting new technologies and lightweight alloys. They are focusing on new
mobility, powertrain electrification and autonomous production. This would drive
future-ready applications lowering the risk of technological disruptions.
Financial metrics: Robust
The bearings industry boasts strong financial KPIs with robust returns ratios across
companies with average pre-tax RoCE of ~16%. The RoCEs are expected to move up
by 770–1,160bps to >25% (23–30%) over FY21–24 (core RoCE of ~33%) from 13–23%
currently (average of ~16%).
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Furthermore, our three coverage companies would record EBITDA margin gains of
155–475bps over FY21–24E, ensuring healthy cash accretion. These three are cash-
rich with expected net cash per share of 6–7% of current market cap by FY24/CY23E.
Investment case: Strong long-term prospects
Strong competitive advantages, long-term growth prospects, relatively consolidated
nature of the industry, pricing power, steady cash flows and superior returns ratios
underpin our positive view on the sector. The three companies trade at a premium
to their global counterparts and historical averages owing to superior earnings
growth potential. We project 18–23% sales CAGRs and 23–40% EPS CAGRs for SKF,
SCHFL and TMKN.
TMKN: It is our top pick in the sector, and we are initiating coverage with a
‘BUY’. We believe the company is well positioned as a late cycle play, driven by
a strong uptick in heavy mobility segments such as railways and MHCVs,
followed by industrials, and the opportunity in exports. We value the stock at
44x FY23E EPS (TMKN IN, TP INR2,278), implying 34% upside potential.
SCHFL; We remain excited driven by its parentco’s leap in e-mobility, and thus
expect SCHFL to benefit as and when EV penetration picks up in India. Reiterate
‘BUY’ on SCHFL India with a TP of INR8,460, valuing the stock at 42x Q1CY23,
implying 15% upside potential.
SKF: We remain enthused by its well-diversified nature, though sourcing from
the unlisted parent entity remains a concern. Accordingly, we value the stock at
39x FY23E EPS (8% and 12% discount to SCHFL and TMKN’s target valuation),
yielding a TP of INR3,670 (17% upside potential).
Key risks: Potential friction areas
Slower-than-expected growth in automobile industry led by semi-conductor
chip shortage and delay in recovery in capex cycle could lead to downward risks
to our revenue forecasts.
Further delay in execution of dedicated freight corridor or metro projects could
delay the ramp-up in revenues of the bearings industry.
We are projecting healthy IIP growth. If growth slows down here, it could impact
our industrial sales projections.
Disruption risk: There is a concern about the number of bearings coming down
in the EV era. However parents of the bearing companies globally believe the
value will remain similar or even go up in the EV era. Furthermore, players have
started focusing on new mobility and powertrain electrification, and developing
ceramic bearings for high performance EV powertrains.
Royalty increase: Bearing players are required to pay royalty on revenues
generated from technology sourced from the global parent entity. Royalty rates
were increased by 1pp on manufactured items from Oct-20 for TMKN,
impacting EBITDA margins by 30bps. Thereby royalty increased for TMKN from
2.5% to 3% of manufactured sales. SKF’s and SCHFL’s royalty as a percentage of
manufactured sales stands at 4.6% and 2.6%, respectively.
Commodity pressure: Operating margins are expected to remain under
pressure as OEMs have been slow in passing through price hikes to end
consumers, thus delaying price contract negotiations.
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Multiple factors driving consolidation
The plastic pipes industry continues to see accelerated consolidation with a host of factors hurting smaller players disproportionately, viz., i) sharp increase in PVC prices inflating working capital needs; ii) unavailability of raw materials; and iii) strict implementation of BIS norms. Large players mostly produce ISI pipes; whereas small players
producing non-ISI products (30–35% of industry) may be severely hit.
The jump in PVC prices will dampen volumes in Q3FY21 on the one hand and, on the other, result in higher revenues, inventory gains and strong margins. On balance, we are raising revenue projections for Prince Pipes and Supreme Industries by 5–10% and multiples by 10–15%. Upgrade PPL to ‘BUY’ while retaining ‘BUY’ on SIL.
Amid supply tightness, PVC prices at all-time high
The plastic pipes industry continues to see a sharp increase in PVC prices due to
disruption in global supply chains, container shortages and declaration of force
majeure by large resin manufacturers. Unorganised players thus face a double
whammy: raw material availability challenges and inflationary prices (that have
more than doubled and continuing northward). Furthermore, the sharp increase in
PVC prices has narrowed the gap between CPVC and PVC pipes, leading to market
share gains for the former in the residential sector. Meanwhile, with likely real
estate revival, government’s infrastructure push, and the continued shift towards
organised players, prospects for the industry look bright.
BIS norms: An added accelerator for industry consolidation
On March 30th, the government had mandated a BIS licence for all pipe
manufacturers by September-end. Accordingly, it necessitated plant/machinery
upgradations for all non-ISI certified PVC pipes manufactures to ISI norms, or face
closures from October 1. Large branded players were anyway producing ISI-
standard pipes, implying unorganised players would bear the brunt. Even in case of
a slight production halt/delay by smaller players, it’s a big structural driver for
branded players.
Outlook: Earnings upgrade continues for large branded players
Plastic pipes continue to be the fastest-growing sizable segment across home décor
(14–16% CAGR over FY21–26E) riding substantial investments in irrigation and
urban infrastructure. Orgaised players (65–70%) continue to gain market share
from smaller players amid raw material challenges and BIS norms’ implementation.
Given the jump in raw material prices, we are revising up estimates by 15–20%. And
given rising consolidation, we are raising the target by 10–15% to near peak
multiples. Consequently, we are maintaining ‘BUY’ on Supreme Industries with a
revised TP of INR2,917 (from INR2,477) and upgrading Prince Pipes to ‘BUY’ with a
revised TP of INR844 (from INR661). Continued consolidation and earnings
upgrades can further drive multiples expansion.
India Equity Research Home Decor October 7, 2021
PLASTIC PIPES SECTOR UPDATE
Sneha Talreja Rohan Gupta +91 (22) 4040 7417 +91 (22) 4040 7416 [email protected] [email protected]
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Steel: Breaking past stagnation
Domestic HRC price in traders’ market rose 5% last week on average. This follows a similar increase in rebar and intermediate products a fortnight ago. Our channel checks indicate that prices across the steel value chain – from pellets to pig iron – have gone up. Regional markets remained quiet owing to the China’s national Golden Week holiday.
We expect the recent price increase to mitigate the adverse impact of higher coking coal prices in Q3FY22. That said, we await China to resume business post-holidays to get a grip on the regional price trend. In all, we maintain our positive view on the sector with Tata Steel (TP: INR2,055; 5x Q3FY23E EBITDA) as the preferred pick.
Price hikes at last
Domestic HRC price in traders’ market rose ~5% WoW to INR67,300/t on average—
the highest in past four months. Among main players, ArcelorMittal Nippon Steel
(AMNS) announced a hike of INR1,500–2,000/t for flat products. We expect other
domestic mills to follow suit in an attempt to partially offset the higher coking coal
cost (expected to be up USD100/t in Q3FY22). Secondary rebar price has increased
11.5% over the past ten days to INR51,715/t, resulting in primary rebar mills also
taking a price hike of INR4,000–4,500/t last week. Even at current levels, domestic
prices are trading at a discount of 15–20% to the landed price of imports.
Furthermore, revised domestic price remains the lowest in the world (barring CIS).
Q3FY22 spreads likely to be lower; demand uptick a positive
The recent price hike in traders’ market is a precursor to the demand improvement
and restocking. Also, the differential between traders’ market and list price of
companies has been bridged, setting ground for the consequential price hike by
main producers being accepted in the market. Furthermore, the hike in secondary
rebar prices and the DRI-IF value chain is likely to result in domestic iron ore prices
bottoming out, supporting earnings of producers such as NMDC.
Outlook: All eyes on China; stay positive on ferrous space
We see the recent HRC price in traders’ channel as positive and a precursor to
potential price hikes by main players flowing through. As we highlighted earlier, the
sharp uptick in secondary rebar prices indicates construction demand is improving.
The price gap between primary and secondary rebar is back at the historical average
of INR4,200/t while the HRC-rebar differential has also fallen from historic highs.
Though spot spreads stay compressed, we believe that blending and PCI injection
will aid steel players in limiting the coal cost escalation somewhat.
We will keep a close tab on China and possibility of policy support, given the
deteriorating macros. All in all, we remain positive on ferrous space with Tata Steel
(TP: INR2,055; 5x Q3FY23E EBITDA) as our preferred pick.
India Equity Research Metals & Mining October 7, 2021
METALS & MINING SECTOR UPDATE
Amit Dixit Meera Midha +91 (22) 6620 3160 +91 (22) 4088 5804 [email protected] [email protected]
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KEY DATA
Rating BUY Sector relative Neutral Price (INR) 1,053 12 month price target (INR) 1,201 Market cap (INR bn/USD bn) 484/6.5 Free float/Foreign ownership (%) 11.5/7.9
What’s Changed
Target Price ⚊
Rating/Risk Rating ⚊
INVESTMENT METRICS
Q2FY22 sales: Strong performance
With the second wave subsiding, Lodha Developers (Macrotech) turned in a good performance, clocking Q2FY22 pre-sales of ~INR20bn (up 88% YoY/109% QoQ), its best-ever Q2. The company has maintained the ~INR90bn pre-sales guidance for FY22. Net debt for the India business is broadly flat QoQ at ~INR125bn (~INR124bn in Q1FY22). The company added a JDA project with GDV of ~INR10.5bn
during the quarter.
With the housing cycle likely turning (refer to Real Estate – Leadership matters), we expect the sales momentum to remain healthy going ahead. Pre-sales and cash flow trajectory will be the key triggers, in our view. Maintain ‘BUY’ with a target price of INR1,201.
FINANCIALS (INR mn)
Year to March FY21A FY22E FY23E FY24E
Revenue 54,486 86,744 91,071 1,04,312
EBITDA 13,720 23,673 24,897 29,699
Adjusted profit 402 11,030 13,210 18,702
Diluted EPS (INR) 1.0 24.7 29.5 41.8
EPS growth (%) (94.5) 2,331.0 19.8 41.6
RoAE (%) 0.9 12.7 13.1 15.6
P/E (x) 1,037.8 42.7 35.6 25.2
EV/EBITDA (x) 42.9 24.4 21.6 17.0
Dividend yield (%) 0 0 0 0
PRICE PERFORMANCE
Sales momentum improves; guidance maintained
New sales value grew 88% YoY to ~INR20bn; this healthy performance came despite: i)
covid-19’s lingering impact; ii) Q2 being a seasonably weak quarter due to monsoon; and
iii) the Shraadh period, widely regarded as inauspicious. H1FY22 sales at ~INR30bn are
up 88% YoY. The company has maintained its sales guidance of ~INR90bn for FY22; this
means it will have to notch up sales of ~INR60bn in H2FY22, growth of ~36% YoY
(considering H2FY21 sales of ~INR44bn). We believe Lodha can achieve this considering
revival in Mumbai housing demand and strong launch pipeline of ~INR60bn.
UK projects also perform well
The Grosvenor Square project achieved pre-sales of GBP110mn (~INR11bn) in
September while the Lincoln Square project achieved pre-sales of GBP35mn during
the quarter, its best-ever quarterly performance. During Q1FY22, sales from these
projects had stood at GBP22mn.
Business development continues unabated
The company added a JDA project spanning 0.7msf and with a GDV of ~INR10.5bn
during the quarter. The project has already been launched, signifying the quick
turnaround between acquisition and launch.
Explore:
Outlook and valuation: Prepped for home run; maintain ‘BUY’
As highlighted in our comprehensive sector report Real Estate - The Charge of the
Consolidating Brigade, RERA-driven consolidation is throwing up growth
opportunities for organised players such as Lodha.
Revival in housing demand (refer to Hot Property - Rising like a phoenix), Lodha’s
leadership position in MMR, its strong execution skills, a promising start to asset-
light business development through the JDA mode, ready inventory liquidation and
interest cost reduction are likely to culminate in robust cash flows and debt
reduction going ahead. Faster land monetisation at Palava, portfolio growth,
geographical diversification and annuity asset sale can be potential stock catalysts.
We maintain ‘BUY/SN’ and target price of INR1,201 (on a par with Dec-22E based
NAV of INR1,201).
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465
935
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Sales Growth(%)
EPS Growth(%)
RoE(%)
PE(x)
Real Estate LODHA IN EQUITY
India Equity Research Real Estate October 7, 2021
MACROTECH COMPANY UPDATE
Parvez Qazi +91 (22) 4063 5405 [email protected]
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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 ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in relation to their charges of non registration as a broker dealer.
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.
MACROTECH
Edelweiss Securities Limited
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Disclaimer for U.S. Persons
This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.
This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.
In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.
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. Disclaimer for Canadian Persons
This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst.
This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person.
ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31-103 available to certain international advisers and/or dealers. Please be advised that (i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3 Canada.
Disclaimer for Singapore Persons
In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited investors" as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.
Disclaimer for Hong Kong persons
This report is distributed in Hong Kong by Edelweiss Securities (Hong Kong) Private Limited (ESHK), a licensed corporation (BOM -874) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to Section 116(1) of the Securities and Futures Ordinance “SFO”. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The report also does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of any individual recipients. The Indian Analyst(s) who compile this report is/are not located in Hong Kong and is/are not licensed to carry on regulated activities in Hong Kong and does not / do not hold themselves out as being able to do so. Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved.
Aditya Narain
Head of Research