Dmart Ultratech LTI Oil Gas Brookfield

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kspcg.research@kotak.com
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
Brookfield India Real Estate Trust (BIRET)
Company Report ADD
Real Estate
October 18, 2021
INITIATING COVERAGE
Sector view: Attractive
Tenacities. We initiate coverage on Brookfield REIT with an ADD rating and Fair
Value of Rs290. Brookfield has a portfolio of 14 mn sq. ft (10.4 mn sq. ft completed) CMP (`): 273
spread across key metros that will yield an NOI of Rs8.5 bn by FY2024E (9% CAGR). Fair Value (`): 290
Near-term earnings growth comes largely from contractual escalations as well as
build-out of new assets, the former makes Brookfield’s earnings less vulnerable to a BSE-30: 61,766
Covid-induced weakness in the leasing market.
Valuations—NOI of Rs8.5 bn valued at Rs117 bn for 14 mn sq. ft across key metros

We initiate coverage on Brookfield REIT with an ADD rating and a Fair Value of Rs290. Our Fair
Value comprises an asset value of Rs117 bn for operational as well as under-construction assets,
yielding an equity value of Rs88 bn based on September 2023E. The portfolio consists of (1) a
completed area of 10.4 mn sq. ft valued at Rs107 bn, and (2) future developments of 3.6 mn
sq. ft. Brookfield REIT currently trades at a dividend yield of 7.6% and capitalization rate of 7%
on FY2023E, with estimated growth in NOI of 9% CAGR between FY2021 and FY2024E.
Brookfield India REIT—commercial real estate aggregating 14 mn sq. ft

Brookfield REIT offers an initial portfolio of 14 mn sq. ft of Grade A office space that has been
acquired by the Brookfield group over the past five years. The portfolio comprises 10.4 mn sq.
ft of completed and 3.6 mn sq. ft of future development with office space spread across three
markets—Kolkata (5.7 mn sq. ft), NCR (6.8 mn sq. ft) and Mumbai (1.5 mn sq. ft). In-place
rentals of Rs62/sq. ft offer upside at current market rentals with a portfolio WALE of 6.8 years.
In addition, the REIT has a call option on two properties in Noida (4.5 mn sq. ft) and Gurugram
(3.8 mn sq. ft) that could take the overall portfolio to 22.3 mn sq. ft.
Financials—11% CAGR in revenues up to FY2024E

Brookfield REIT had revenues of Rs8.6 bn in FY2021 that is estimated to accelerate to Rs12 bn
(11% CAGR) by FY2024E, consequently leading to improvement in NOI to Rs8.5 bn by FY2024E
from Rs6.5 bn in FY2021. Contractual rent escalations form a substantial part of the
incremental revenues (Rs878 mn). Brookfield REIT had a capital employed of Rs102 bn as of
March 2021.
Risks—commercial real estate market, evolving regulatory regime

A structural weakness in service sector growth in India or overinvestment in commercial real
estate leading to a meaningful drop in occupancy levels, and slower-than-expected growth in
rental incomes may pose a risk to the growing annuities such as those of Brookfield REIT. Murtuza Arsiwalla
Expiry of lease for 90% of the area at Kensington (WALE of 3.2 years), and a large client
concentration (top-10 accounts for 75%) remain other areas of risk for Brookfield REIT.
Samrat Verma
Company data and valuation summary
Company data Stock data High Low Price performance 1M 3M 12M

Rating: ADD 52-week range (Rs) 282 215 Absolute (%) 6.8 2.8 13.0
Rel to BSE-30 (%) 1.6 (13.4) (13.6)
Current price (Rs) Priced at close of: October 18, 2021
273 Capitalization Forecast/valuation 2021 2022E 2023E
Market cap (Rs bn) 82,613 EPS (Rs) 4.3 6.7 8.6
Net debt/(cash) (Rs mn) 32,209 P/E (X) 63.4 40.6 31.6 kspcg.research@kotak.com
Free float (%) RoAE (%) 4.4 2.5 3.4 Contact: +91 22 6218 6427
Share outstanding (mn) 303 EV/EBITDA (X) 17 17 16
Source: Company data, Kotak Institutional Equities estimates
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Brookfield India Real Estate Trust Real Estate
TENACITIES: REVENUES OF RS13 BN BY FY2025E

Exhibit 1: Brookfield REIT’s earnings will show a revenue growth of 11% CAGR between FY2021 and FY2024E
Brookfield REIT, forecasts and valuation, March fiscal year-ends, 2018-25E (Rs mn)
Sales Growth EBITDA Growth Net profit Growth EPS Debt /Equity RoACE RoAE
Year (Rs mn) (%) (Rs mn) (%) (Rs mn) (%) (Rs) (X) (%) (%)
2018 8,218 5,438 1,567 10 (1.3) 66.0 (6.2)
2019 8,959 9.0 5,563 2.3 (157) (110.0) (1) (2.6) 20.6 0.6
2020 9,567 6.8 5,936 6.7 (2,344) 1,388.5 (14) (3.1) 11.6 (0.6)
2021 (a) 8,628 (9.8)
2021 (b) 1,309 825 253 1 0.3 0.8 0.8
2022E 9,295 7.7 5,900 614.9 1,735 585.5 6 0.4 4.0 2.2
2023E 10,160 9.3 6,637 12.5 2,267 30.7 7 0.5 4.5 3.0
2024E 11,575 13.9 7,761 16.9 2,930 29.2 10 0.5 5.5 4.0
2025E 12,737 10.0 8,652 11.5 3,348 14.3 11 0.6 6.4 4.8
Note:
(a) Brookfield REIT came into being in July 2020, hence the proforma financials upto that date are proforma financials.
(b) Reported financials for the period since Brookfield REIT was formed on July 2020.
Source: Company, Kotak Institutional Equities estimates
Exhibit 2: Brookfield REIT will see a modest growth in revenues on account of fewer contractual escalations in coming years
Profit model, balance sheet, cash model for Brookfield REIT, March fiscal year-ends, 2018-25E (Rs mn)
2018 2019 2020 2021 (a) 2021 (b) 2022E 2023E 2024E 2025E
Profit model
Net sales 8,218 8,959 9,567 8,628 1,309 9,295 10,160 11,575 12,737
EBITDA 5,438 5,563 5,936 825 5,900 6,637 7,761 8,652
Depreciation (903) (957) (1,123) (317) (2,057) (2,116) (2,210) (2,329)
EBIT 4,535 4,606 4,814 509 3,843 4,521 5,551 6,323
Interest (3,287) (4,404) (7,141) (411) (2,190) (2,350) (2,761) (3,094)
Other income 444 339 247 52 343 397 444 516
Pre-tax profits 1,692 541 (2,081) 149 1,995 2,569 3,235 3,744
Tax (124) (699) (263) 104 (261) (302) (305) (396)
Net income 1,567 (157) (2,344) 253 1,735 2,267 2,930 3,348
Extraordinaries 43 — 2,495 — — — — —
Reported net income 1,611 (157) 151 253 1,735 2,267 2,930 3,348
Earnings per share (Rs) 9.52 (0.96) (14.24) 0.84 5.73 7.49 9.68 11.06
Balance sheet
Total equity (26,189) (24,966) (22,197) 82,028 78,239 74,549 70,969 67,321
Total borrowings 33,458 64,593 68,430 21,015 30,255 34,006 36,801 38,225
Deferred tax liability 270 749 613 (2,641) 495 495 495 495
Current liabilities 41,369 10,039 6,909 6,747 8,947 8,990 9,080 9,138
Total liabilities and equity 48,908 50,415 53,755 107,148 117,935 118,040 117,345 115,180
Net fixed assets 89 92 105 101 105 105 105 105
Investment property 36,825 42,030 44,545 100,180 94,722 95,615 99,261 101,989
CWIP 4,358 1,939 520 792 4,089 6,068 4,033 1,466
Goodwill — — — — 1 1 1 1
Current assets 7,470 5,934 8,099 5,794 18,736 15,968 13,663 11,337
Investments 166 420 487 282 282 282 282 282
Total assets 48,908 50,415 53,755 107,148 117,935 118,040 117,345 115,180
Free cash flow
Operating cash flow excl. working capital 4,670 5,117 5,123 1,450 6,282 7,083 8,250 9,122
Working capital changes (521) (41) 199 (54) (4,129) 22 57 28
Capital expenditure (1,067) (3,205) (1,708) (137) (3,535) (3,985) (2,795) (1,425)
Free cash flow 3,081 1,871 3,614 1,260 (1,383) 3,120 5,512 7,725
Ratios (%)
RoAE (%) (6.2) 0.6 (0.6) 0.8 2.2 3.0 4.0 4.8
RoACE (%) 66.0 20.6 11.6 0.8 4.0 4.5 5.5 6.4
Note:
(a) Brookfield REIT came into being in July 2020, hence the proforma financials upto that date are proforma financials.
(b) Reported financials for the period since Brookfield REIT was formed on July 2020.
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Real Estate Brookfield India Real Estate Trust
VALUATION: NOI OF RS8.5 BN WITH GAV OF RS117 BN

We initiate coverage on Brookfield REIT with an ADD rating and Fair Value of Rs290. At CMP, Brookfield REIT
trades at a healthy 7.6% dividend yield and 7% capitalization rate on FY2023E. A strong pipeline of
development assets, ramp-up of recently commissioned assets as well as re-leasing of 2.4 mn sq. ft over the
next three years will aid revenue growth of 11% CAGR over the next three years, translating into a
corresponding growth in yields. In addition to the initial portfolio, the REIT has a call option to buy two more
properties owned by the sponsor aggregating 8.3 mn sq. ft (5.7 mn sq. ft completed), taking the aggregate
portfolio size to 22.3 mn sq. ft.
Initiate coverage with an ADD rating and Fair Value of Rs290

We initiate coverage on Brookfield REIT with an ADD rating and Fair Value of Rs290. Our
Fair Value is based on the enterprise value of Rs117 bn and net debt of Rs29 bn as of
September 2023. Our valuations are based on discounting of free cash flows up to FY2030E
with a terminal value assigned to net operating income (NOI) of FY2030E at 8%
capitalization rate.
Exhibit 3: We initiate coverage with Fair Value of Rs290

Valuation summary of Brookfield REIT based on March 2023E (Rs mn)
Sep-23
Enterprise value (attributable) 117,188
Net debt 29,442
Equity value 87,745
Equity value (Rs/unit) 290
Key assumptions
WACC (%) 11.0
Capitalization rate (%) 8
Exhibit 4: Brookfield REIT trades at 17X EV/EBITDA on FY2023E earnings

Key financial ratios and trading multiples for Brookfield REIT, March fiscal year-ends, 2018-25E
2018 2019 2020 2021E 2022E 2023E 2024E 2025E

At CMP of Rs273/share
EV/EBITDA (X) 21 26 25 122 17 17 15 14
Cap. rate (%) 7.1 6.1 6.4 1.3 6.7 6.9 7.5 7.9
P/E (X) 28.7 (285.4) (19.2) 326.7 47.7 36.5 28.2 24.7
P/B (X) (1.7) (1.8) (2.0) 1.0 1.1 1.1 1.2 1.2
Growth (%)
Revenue 7.0 10.7 (84.2) 583.9 7.6 15.3 10.7
EBITDA 2.3 6.7 (86.1) 614.9 12.5 16.9 11.5
PAT (110.0) 1,388.5 (110.8) 585.5 30.7 29.2 14.3
Margins (%)
EBITDA 66.2 62.1 62.1 63.0 63.5 65.3 67.0 67.9
PAT 19.1 (1.8) (24.5) 19.3 18.7 22.3 25.3 26.3
Return ratios (%)
RoAE (6.2) 0.6 (0.6) 0.8 2.2 3.0 4.0 4.8
RoACE 66.0 20.6 11.6 0.8 4.0 4.5 5.5 6.4
Dividend yield 7.0 7.6 8.3 8.9
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

At our Fair Value, Brookfield REIT offers a dividend yield of 7.4% on FY2023E with NOI
growth of 9% CAGR between FY2021 and FY2024E. We note that the minimal spread of
the dividend yield over the risk-free rate (traditional metric for global REITs), should be seen
in the context of high medium-term growth profile of yields for Brookfield in comparison to
global counterparts, through a combination of contractual escalations, re-leasing premium,
and commissioning of currently under-construction projects.
Asset value of Rs117 bn comprises Rs107 bn for operational assets

We value the asset portfolio of Brookfield REIT at Rs117 bn for the completed as well as
under-construction assets that are estimated to earn an NOI of Rs8.5 bn in FY2024E. The
valuation assigns a value of Rs107 bn (91%) for operational assets that earned revenues and
NOI of Rs8.6 bn and Rs6.5 bn, respectively in FY2021. The revenue and NOI are projected to
grow to Rs12 bn and Rs8.5 bn by FY2024E. We note that Candor Techspace G2 (Gurugram)
has been assigned a value of Rs39 bn (33%), making it the most valuable asset in the
portfolio, followed by Candor in Kolkata (Rs32 bn).
We note that in addition to the initial portfolio of 14 mn sq. ft with a value of Rs117 bn,
Brookfield REIT also has a call option to acquire two more properties aggregating 8.3 mn sq.
ft (5.7 mn sq. ft completed). The call option properties have a potential NOI of Rs6.4 bn in
FY2023E. The call option can be exercised based on an independent valuation, and which
vests within six months of the listing of the units of the REIT and can be exercised within a
period of 12 months after that.
Exhibit 5: Brookfield REIT’s initial portfolio is valued at Rs117 bn with an projected NOI of Rs8.5 bn in FY2024E
Valuation summary of Brookfield REIT (mn sq. ft, Rs mn)
Area (mn sq. ft) Value (Rs mn)

Asset Type Completed Construction Development Total Completed Construction Total
Kensington SEZ 1.5 — — 1.5 23,755 — 23,755
Candor Techspace G2 SEZ 3.9 — 0.1 4.0 38 ,311 563 38 ,8 74
Candor Techspace N1 IT Park 1.9 0.1 0.9 2.9 17,157 5,8 32 22,98 9
Candor Techspace K1 SEZ & Mixed Use 3.06 — 2.7 5.7 27,674 3,8 95 31,569
Initial portfolio 10.3 0.1 3.6 14.1 106,898 10,290 117,188
Candor Techspace G1 SEZ 2.8 0.9 0.1 3.8 37,961 8 ,748 46,709
Candor Techspace N2 SEZ 2.9 0.8 0.8 4.5 29,506 7,358 36,8 64
Call option 5.7 1.7 0.9 8.3
Proforma portfolio 16.0 1.8 4.5 22.4
We further highlight that the lower return ratios (RoE and RoCE) should be seen in the
context that the assets of Brookfield REIT in our reported financials have been marked-to-
market to current Fair Value estimates.
We note that most private transactions in the commercial real estate space have happened
in a range of 8.4-8.6% capitalization rate (See Exhibit 6), with a downward trend in recent
years reflecting the strength in the growth profile of commercial real estate in India, as well
as the declining interest rate trajectory. We further highlight that a platform of REIT with
assured dividend pay-outs, option value of RoFo assets, and lower execution risk should
trade at a premium to private transactions.

Exhibit 6: Capitalization rates have been declining over the past few years, and have ranged from 8.4-8.6%
Transactions in commercial real estate over the past few years
Area Value Cap. rate (%)

Asset City Transaction (mn sq. ft) Buyer (Rs mn) Minium Maximum
Global Village Tech Park Bengaluru 3QCY19 4.12 Blackstone 21,050 7.8 0 8 .00
Weikfield IT Citi Info Park Pune 3QCY19 1.08 Xander 9,000 8 .00 8 .20
One BKC Mumbai 3QCY19 0.70 Blackstone 25,000 7.90 8 .10
Waverock Hyderabad 1QCY19 2.32 Shapoorji & Allianz 18 ,000 7.90 8 .10
SP Infocity Chennai 4QCY18 2.70 Mapletree Investments 24,000 7.8 0 8 .00
One Indiabulls Park Chennai 2QCY18 1.92 Blackstone 9,000 8 .20 8 .40
One Indiabulls Centre Mumbai 1QCY18 1.67 Blackstone 19,250 8 .00 8 .20
Hiranandani Mumbai 1QCY17 1.00 Brookfield Asset Mgmt. 60,000 8 .30 8 .50
BPTP Gurugram 1QCY16 0.8 0 RMZ 8 ,500 8 .50 8 .70
Exora Business Park Bengaluru 3QCY15 2.13 Prestige Estates 6,000 9.20 9.40
247 Park Mumbai 2QCY15 1.14 Blackstone 10,500 9.30 9.50
Nirlon Tech Park Mumbai 2QCY15 3.30 GIC 12,8 00 9.50 9.70
Average 8.40 8.60
Source: CBRE, Kotak Institutional Equities
We highlight that our fair value estimate is highly sensitive to assumptions for capitalization
rate as well as WACC. We have currently assumed a capitalization rate of 8% and WACC of
11%--a 100 bps increase in cap. rate assumptions lowers value by Rs27/share whereas a
100 bps increase in WACC lowers fair value by Rs22/share.
Exhibit 7: Fair value estimates for Brookfield are highly sensitive to capitalization rate assumptions
Sensitivity of fair value (Rs/unit) on capitalization rate and WACC (%)
WACC (%)
290 10.00 11.00 12.00
7 352 327 303
Cap. rate (%) 8 313 290 268
9 284 263 243
According to our economy team, India will start turning the corner on interest rates by early
next year as the RBI will likely start with hiking the reverse repo rate. As growth recovers and
the economy moves ahead beyond pandemic impact the first hike in repo rate will likely
come in by 2HFY23 with a cumulative 100-125 bps over the next 18-24 months to 5-5.25%.
Long term G-Sec yields (10-year) which have already moved up close to pre-pandemic levels
will move closer to 7% as policy rates adjust higher. G-Sec yields as well as corporate bond
yields will be tempered by FPI flows, especially if India is included in the global bond indices,
which will act as a deterrent for any sharp uptick in yields as the economy and rates
normalize. As highlighted sensitivity of valuations to interest rates is very high for Brookfield
REIT.
From a currency perspective, INR over the next 12-18 months would be shaped by (1) a
widening current account deficit as the economy reverts to pre-pandemic level activities
across sectors, and (2) capital flows on the back of likely global bond index inclusion and
equity market flows. Even as the global monetary policy cycle turns with liquidity and rates
normalization, a heavy depreciation bias of the INR is unlikely given the large FX reserves of
over Rs640 bn that the RBI has built through the pandemic. As the dollar strengthens, the
INR will see some gradual depreciation moving into a range of 73-77, averaging around 76
in FY2023E against 74.6 in FY2022E. Depreciation of the INR will impact yields for global
investors looking at dollar-denominated returns.

Yields in India cannot be seen in isolation of growth profile

Brookfield REIT offers an attractive dividend yield of 7.6% on CMP on FY2023E. The
traditional framework of evaluating REITs as spread over risk-free rate may not fully do
justice to the underlying growth profile of Brookfield REIT. Brookfield REIT offers growth in
yields over the next decade through a combination of (1) contractual escalations of 5% per
annum, (2) re-leasing premium at current market rentals, and (3) under-construction
portfolio comprising 3.6 mn sq. ft of incremental office space.
Exhibit 8: Indian REITs offer lower spread over the risk-free rate in comparison to global REITs
Yields and risk-free rates of REITs in various geographies (%)
Capitaland Commercial Trust Mapletree Commercial Trust Regency Centers Federal Realty Kimco Realty 10 Yr G Sec
Suntec REIT 10 Yr G Sec 16.00
10.00
14.00
9.00
8.00 12.00
7.00 10.00
6.00
8.00
5.00
4.00 6.00
3.00
4.00
2.00
1.00 2.00
- -
May-20
May-21
Aug-20
Aug-21
Nov-19
Nov-20
Mar-20
Dec-19
Jul-20
Mar-21
Jul-21
Dec-20
Oct-19
Oct-21
Sep-20
Oct-20
Apr-21
Apr-20
Sep-21
Jun-20
Feb-21
Feb-20
Jun-21
Jan-20
Jan-21
Aug-19
Aug-20
Aug-21
Dec-20
Apr-19
Dec-19
Feb-20
Apr-20
Feb-21
Apr-21
Oct-19
Oct-20
Oct-21
Jun-20
Jun-21
Jun-19
Link REIT Fortune REIT 10 Yr G Sec Embassy REIT Mindspace REIT Brookfield REIT 10 Yr G Sec
9.00 10.00
9.00
8.00
8.00
7.00
7.00
6.00
6.00
5.00
5.00
4.00
4.00
3.00 3.00
2.00 2.00
1.00 1.00
- -
May-21
May-20
Mar-20
Mar-21
Aug-20
Aug-21
Aug-19
Aug-20
Aug-21
Nov-19
Apr-20
Jul-20
Nov-20
Apr-21
Jul-21
Sep-20
Dec-20
Sep-21
Dec-19
Feb-20
Feb-21
Dec-20
Oct-20
Oct-21
Dec-18
Dec-19
Oct-19
Jun-20
Jun-21
Apr-19
Jan-21
Oct-18
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Jan-20
Jun-19
Feb-20
Feb-19
Jun-20
Feb-21
Jun-21
Source: Bloomberg, Kotak Institutional Equities
We highlight that the top yielding stocks in the Indian markets have an average yield of
5.6%, though REITs should be seen in the context of long-term lease agreements which
provide stability to earnings profile.

Exhibit 9: Top-50 dividend yielding stocks in BSE 500 have an average yield of 5.6%
Top-30 high dividend paying stocks in BSE-500 Index, March fiscal year-ends, 2021 (%)
18
16
14
12
10
8
6
4
2
0
ACEM
NHPC
HPCL
SANL
MOIL
NMDC
RITE
ITC
CESC
BLCL
OFSS
NTPC
INDUSTOW
COAL
PTCIN
BAJAJCON
PLNG
POWF
HZ
PGHL
IOCL
BRIT
IHFL
IIFLWAM
SJVN
COCHIN
RECL
BPCL
GPPV
HUDCO
Source: Capitaline, Kotak Institutional Equities
Brookfield as an alternative to other listed commercial portfolios

Brookfield places well in terms of yields and lower risk to earnings due to a smaller
proportion of under-construction assets in the near term. However, it is much smaller in size
and more present in geographical markets of NCR (similar to DCCDL), Kolkata and
Mumbai—unlike Embassy (Bengaluru concentration) and Mindspace (Hyderabad and
Mumbai concentration).
 Yields. Brookfield has a dividend yield of 7.6% compared to 6.4% for Embassy and 6.3%
for Mindspace. On a cap. rate basis, Brookfield is trading at 7%, Embassy at 7.2% and
Mindspace at 7.6% on FY2023E NOI.
Exhibit 10: Brookfield has the highest dividend yield among all three REITs on FY2023E financials
Comparable valuations of Embassy, Mindspace and Brookfield, March fiscal year-ends, 2021-23E (Rs mn)
Embassy Mindspace Brookfield

2021 2022E 2023E 2021 2022E 2023E 2021 2022E 2023E
Valuation
Gross asset value 447,163 443,778 452,888 228,638 229,649 235,753 100,473 102,949 109,489
Net debt 114,082 110,698 119,807 32,402 33,413 39,517 17,860 20,336 26,876
Market cap. 333,080 333,080 333,080 196,236 196,236 196,236 82,613 82,613 82,613
Under-construction 60,111 60,111 60,111 14,564 14,564 14,564 10,290 10,290 10,290
Gross asset value (operating) 387,052 383,667 392,777 214,074 215,085 221,189 90,183 92,659 99,199
Cap. rate
Overall (%) 5.0 5.9 7.2 4.4 6.4 7.6 6.5 6.7 6.9
Operational (%) 5.7 6.8 8.3 4.7 6.9 8.1 7.3 7.4 7.6
NOI (Rs mn) 20,323 24,037 30,726 10,100 14,780 18,008 6,548 6,859 7,587
Adjusted NOI (Rs mn) 22,171 25,964 32,743 10,100 14,780 18,008 6,548 6,859 7,587
NDCF 18,356 20,412 21,275 11,232 12,317 5,823 6,307
NDCF (%) 5.5 6.1 6.4 5.7 6.3 7.0 7.6
Source: Bloomberg, Company, Kotak Institutional Equities estimates
 NOI-NDCF. Brookfield has a superior NOI to NDCF conversion on account of lower

effective tax rate owing to a higher component of interest (through inter-company loans).
Embassy traditionally benefitted from the use of zero-coupon bonds, while Mindspace
has the most inferior NOI-NDCF conversion on account of absence of use of inter-
company borrowings that lower the effective tax rate.

Exhibit 11: Brookfield has a higher NOI-NDCF conversion in comparison to Mindspace

Comparison of NOI-NDCF conversion across REIT portfolios
2020 2021 2022 2023

NOI (Rs mn)
Embassy 18,170 20,323 24,037 30,726
Embassy (adjusted) 19,978 22,171 25,964 32,743
Mindspace 12,330 10,100 14,780 18,008
Brookfield 6,763 6,548 6,859 7,587
NDCF (Rs mn)
Embassy 18,821 18,356 20,412 21,275
Mindspace — 5,687 11,232 12,317
Brookfield — 3,188 5,823 6,307
NDCF / NOI (%)
Embassy 104 90 85 69
Embassy (adjusted) 94 83 79 65
Mindspace 76 68
Brookfield 85 83
Source: Companies, Kotak Institutional Equities estimates
 Growth. Brookfield has the more predictable but moderated growth path, which is
primarily dependent on contractual escalations, and commissioning of 0.1 mn sq. ft of
new space in the near term. In contrast, Mindspace has the most aggressive growth path
with 3.4 mn sq. ft (19%) of assets likely to be commissioned over the next three years
yielding a 14% CAGR in revenues. Embassy has 5.7 mn sq. ft of asset space under
construction (21%) supplemented by a hotel portfolio of 1,137 keys.
Exhibit 12: Brookfield has a relatively low-risk portfolio with lower vacancy
Comparison of operational, under-construction, and re-leasing profile of REIT portfolios (mn sq. ft)
Embassy Mindspace Brookfield

Portfolio 42.4 31.2 14.1
Completed 32.3 23.9 10.4
Construction 10.1 7.3 3.7
Leased 29.3 20.2 10.0
Vacant 3.0 3.7 0.5
Vacant (%) 9.4 18.5 4.6
Expiry
2022E 1.3 2.4 0.4
2023E 2.5 1.6 0.5
2024E 1.2 1.0 —
2022-24E 3.8 4.0 0.9
2022-24E (%) 13.1 19.8 9.4
Construction
2022E 1.1 1.1 0.6
2023E 1.8 0.9 0.1
2024E 2.8 1.4 0.9
2022-24E 5.8 3.4 1.6
2022-24E (%) 19.6 16.9 16.0
Beyond 2024E 4.35 3.90 2.06
 Size. Brookfield REIT (14 mn sq. ft) has the smallest portfolio size among the listed REITs
with Embassy having the largest portfolio (42.4 mn sq. ft) post the RoFo acquisition of
Embassy Tech Village. Mindspace REIT has a total portfolio of 31.2 mn sq. ft with 1.8 mn
sq. ft under construction. We note that inclusion of the option portfolio of 8.3 mn sq. ft
could bulk up the size of Brookfield REIT, in addition to a more ready portfolio of RoFo
assets. Exhibit 13 compares the portfolio size across commercial portfolios in India.
Exhibit 13: Brookfield has the smallest portfolio among other listed REITs
Composition of portfolio across Indian commercial asset owners as of March 2021 (mn sq. ft)
Operational Future
60
50
18
40
10
30
7
20
34 32
24 4
10
10
-
DCCDL Embassy Mindspace Brookfield
Source: Companies, Kotak Institutional Equities
 Composition. Brookfield REIT (and Mindspace REIT) is a portfolio of purely office spaces,
compared to Embassy which has 5% value coming from hotels and a solar power plant,
and DLF which has 40% of the value coming from land and malls.
 Geography. As highlighted previously, each of the comparable portfolio have their

strength areas in terms of geographic concentrations. Brookfield REIT has a presence
across NCR, Mumbai and Kolkata; Embassy is a Bangalore-heavy portfolio, Mindspace has
equal contribution from Hyderabad and Mumbai and DCCDL has its presence
predominantly in Gurugram.
Exhibit 14: Brookfield has large presence in NCR, while Embassy in Bengaluru and Mindspace in
Hyderabad
City-wise portfolio of large office owners in India, March fiscal year-ends, 2021 (mn sq. ft)
Bengaluru Mumbai Hyderabad Pune NCR Others

34
35 32
30 9 4
25 6 24
2 4
20
15 22 10
10
10 21
3
5 9 5
3 2
-
DCCDL Embassy Mindspace Brookfield
 Ownership. Brookfield has 53.25% ownership from the sponsors, compared to 63%
ownership in Mindspace held by the promoter group (K Raheja), while Embassy REIT has
a high ownership from Blackstone. DCCDL is a subsidiary of DLF and is co-owned with
GIC (33% ownership in DCCDL).
 Taxation. Brookfield REIT has a high contribution of interest in the overall distribution,
compared to Embassy (20% interest) and Mindspace REIT (10% interest). Consequently,
distribution from Mindspace REIT is more tax efficient compared to Embassy and
Brookfield, whose distribution has so far been heavy on interest.
 Fees. Brookfield, Mindspace and Embassy have a lower fee structure in comparison to
Ascendas, with fees of the former equivalent to 4% of revenues while Ascendas charges
as much as 6% of revenues as fees on overall REIT revenues.
Exhibit 15: Brookfield REIT has a fee structure similar to Embassy and Mindspace REIT
Fee structure across REITs with Indian asset
MapleTree Capitaland Champion Suntec Ascendas OUE Embassy Brookfield Mindspace
Base fee (% p.a. of GAV) 0.25 0.1 0.3 0.5 0.3 Nil Nil Nil
5.25% p.a. of 25% of diff. in DPU 1% of 1% of 0.5% of
Performance fee (%) 4% p.a. of NPI 12% of NPI 4.5% p.a. of NPI 4% p.a. of NPI
NII between 2FY distributions distributions distributions
50% of base and
50% in units
Cash and/or 50:50 Cash and/or performance fee Cash and/or Cash and/or Cash and/or
Mode of payment and balance in Cash and/or units
units Cash:Units units in units and 50% units units units
cash
in cash
Acquistion fee (% of acq. price) 1% 1% — 1% 1% 0.75% / 1% Nil NA Nil
Divestment fee (% of sale price) 0.5% 0.5% — 0.5% 0.50% 0.50% Nil NA Nil
2% of Gross
3% p.a. of gross 3% p.a. of gross 3.0% p.a. of 3.0% p.a. of 3.5% p.a. of
Property Management fee 3% p.a. of NPI — revenue + 2% of NPI
revenue revenue facility rentals facility rentals gross rentals
+ 0.5% of NPI
Total fee (/acquisition fee) 13.6% / 15.2% 9.7% / 10.6% 9.7% / 9.7% 19.8% / 20.5% 15.0% / 15.1% 7.7% / 11.0% 3.3% / 3.3% NA / NA 3.1% / 3.1%
Regional comparison—richer yield, better growth

Brookfield REIT trades at a richer dividend yield compared to most Asian REITs—partly
reflective of the higher cost of capital, currency depreciation and high inflation of the Indian
economy. Adjusted for the same, Brookfield REIT trades at par to the risk-free rate compared
to 250-450 bps premium over the risk-free rate on average for Asian REITs. However, we
highlight the modest growth profile with 3% CAGR in revenues for Brookfield between
FY2018 and FY2021, compared to 2-15% CAGR in revenues estimated for other Asian REITs
that justify the lower spread over risk-free rate for Brookfield REIT.
Exhibit 16: Superior yield compensates for modest growth profile for Brookfield; also compensating for higher inflation
Comparison of Brookfield REIT with other Asian REITs (US$ mn)
Market Cap. Risk free rate Div. Yield (%) Growth (2021-23)
Name of REIT Country Year ends (US$ mn) (%) 2021E 2022E 2023E Revenue EBITDA
Link REIT Hong Kong March 17,698 1.40 4.39 4.69 4.79 5.4 5.4
Champion REIT Hong Kong December 3,142 1.40 5.85 5.78 5.85 1.8 1.3
Fortune REIT Hong Kong December 2,022 1.40 6.10 6.16 6.36 1.1 1.9
Ascendas India Trust Singapore March 9,204 1.59 5.27 5.54 5.74 5.3 5.2
Capitaland Singapore December 10,065 1.59 5.02 5.59 5.78 4.3 5.7
Suntec REIT Singapore December 2,998 1.59 5.87 6.36 6.50 8.9 6.9
Keppel REIT Singapore December 2,930 1.59 5.46 5.56 5.56 4.4 4.8
Manulife US REIT Singapore December 1,144 1.59 7.97 8.25 8.39 2.9 3.4
Embassy REIT India March 4,393 6.28 5.59 6.21 6.48 23.2 23.4
Mindspace REIT India March 2,423 6.28 6.46 7.09 16.5 18.7
Brookfield REIT India March 1,088 6.28 7.12 7.71 11.6 14.7
Source: Bloomberg, Kotak Institutional Equities estimates

Exhibit 17: We have used capitalization rate of 8% and WACC of 11% for valuing the assets of Brookfield REIT
Key assumptions used in the valuation of Brookfield REIT, March fiscal year-ends, 2019-25E
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26

Operational metrics
Leasable area (mn sq. ft) 10 10 10 10 11 11 12 12
Occupancy (%) 94 94 96 94 94 94 94 95
Area leased (msf) 9 9 9 10 10 11 11 12
In-place rent (Rs/sf) 49 50 52 55 58 62 65 68
Market rent (Rs/sf) — 59 64 65 66 68 70 73
Financial metrics
Revenue 8,959 9,567 8,628 9,595 10,510 11,925 13,087 13,852
Real estate 8 ,629 9,199 8 ,625 9,295 10,160 11,575 12,737 13,502
Other operating income 330 364 3 300 350 350 350 350
NOI 6,284 6,763 6,548 6,859 7,587 8,578 9,366 10,304
Real estate 6,003 6,447 6,640 6,559 7,237 8 ,228 9,016 9,954
Other operating income 28 0 312 1 300 350 350 350 350
EBITDA 5,563 5,936 5,963 6,200 6,987 8,111 9,002 9,552
PAT (157) 151 1,304 2,035 2,617 3,28 0 3,698 4,149
NDCF — — 3,188 5,823 6,307 6,859 7,346 7,779
Area (msf)
Contractual 2.5 2.8 2.8 2.8 2.9 3.0 3.2 3.4
Re-leasing 0.0 0.3 1.4 0.5 0.5 0.9 0.5 0.8
Constructed — — — 0.6 0.1 0.9 0.7 —
Work from home—the joker in the pack

The jury on working from home is still out—though we evaluate the constraints of working
from home in India and the potential impact the same could have on the domestic office
space market. On an overall basis—smaller homes, larger households, and weak
infrastructure dissuade work from home while long commute hours and potential cost
savings (debatable) support a continued work-from-home set-up.
The average Indian household has twice as many people (4.6) than their counterparts in
developed markets (2.5X), which impairs the ability to work from home (See Exhibit 18). The
average home in India at 504 sq. ft further accentuates the problems of larger families in
India (See Exhibit 19). The average Indian home would not support a dedicated workspace,
impairing overall productivity. Space constraints aside, India ranks poorly on internet
connectivity (Rank#65) with average download speed of 38 mbps compared to the world
average of 78 mbps (See Exhibit 20).

Exhibit 18: Average Indian household has twice as many people at home compared to the developed
world
Average people per household across countries (number of people)
5 4.6
4
3.4
2.8
3 2.5 2.5 2.6 2.6 2.6
2.3 2.3 2.4 2.4
2.1 2.2
2
United Kingdom
Germany
China
Canada
France
Russia
Spain
Italy
Australia
Japan
Hong Kong
India
United States
Greece
Source: shrinkthatfoot.com, Kotak Institutional Equities
Exhibit 19: Average unit size in India is significantly smaller than in developed markets
Average unit size across countries (sq. ft)
2,500 2,303
2,164
1,948
2,000
1,475
1,500 1,356
1,1731,206
1,023 1,044
1,000 8 18 8 72 8 93
614 646
48 4 504
500
-
China
Germany
United Kingdom
Canada
France
Australia
Denmark
Russia
Spain
United States
Italy
Japan
Hong Kong
Sweden
India
Greece
Source: shrinkthatfoot.com, Kotak Institutional Equities

Exhibit 20: India's average fixed line download speed at 38 mbps is half the world average of 78
mbps
Average fixed line download speed across countries (Mbps)
160 143 144 145

141
140 130 134
120 106
95
100
80 64 68 69
60 52
38
40 30
20
-
Germany
China
France
Canada
Australia
Kingdom
Russia
Spain
United States
Italy
Japan
Sweden
India
Greece
United
Source: Speedtest, Kotak Institutional Equities
On the other hand, Indians have longer commute hours with four among the top-10 most
congested cities in the world. Bangalore has been ranked the most congested city in the
world with congestion of 71% reflecting the extra travel time required due to traffic (See
Exhibit 21). The time savings on commute will likely be a favorable factor for employees
wanting to adopt work from home.
Exhibit 21: Bengaluru was ranked the most congested city in the world in a study of 416 cities with
average congestion of 29%
Details of congestion measured through incremental travel time, CY2019
Congestion
Rank City Country (%)
1 Bengaluru India 71
2 Manila Philippines 71
3 Bogota Colombia 68
4 Mumbai India 65
5 Pune India 59
6 Moscow Russia 59
7 Lima Peru 57
8 New Delhi India 56
9 Istanbul Turkey 55
10 Jakarta Indonesia 53
11 Bangkok Thailand 53
12 Kyiv Ukraine 53
13 Mexico City Mexico 52
14 Bucharest Romania 52
15 Recife Brazil 50
Source: TomTom, Kotak Institutional Equities

Companies will likely take into consideration concerns on data security and integrity as well
as softer aspects of team building as well as training and mentorship of a young work force
that may need increased collaboration, while implementing work from home strategies.
India’s rental cost at US$1/sq. ft per month is among the lowest in the world and may not
make a big dent on cost profiles of their largely global tenants (see Exhibit 22). Depreciation
of the local currency against the dollar neutralizes contractual escalations on rupee-rents.
Exhibit 22: Rentals in India are substantially lower than global cities
Comparison of rentals across key global cities (US$/sq. ft)
Rental (US$/sq. ft)

12 11.2
9.8
10
7.8
8 7.2 6.9 6.7
5.6 5.3
6
4.0 3.7 3.6
4
1.9
2 1.2 1.2 1.1 1.0 0.9
Bangalore
Singapore
New York
Beijing
Hyderabad
Pune
Delhi
LAX
SFO
Sydney
Hong Kong
Munich
Mumbai
Chennai
London
Milan
Shanghai
Source: Cushman & Wakefield, Kotak Institutional Equities

BROOKFIELD: COMMERCIAL REAL ESTATE AGGREGATING 14 MN SQ. FT

Brookfield REIT offers an initial portfolio of 14 mn sq. ft of Grade A office space that has been acquired by
the Brookfield group over the past five years. The portfolio comprises 10.4 mn sq. ft of completed area and
3.6 mn sq. ft of future development office space spread across three markets—Kolkata (5.7 mn sq. ft), NCR
(6.8 mn sq. ft) and Mumbai (1.5 mn sq. ft). In-place rentals of Rs65 per sq. ft offer 31% upside at current
market rentals with a portfolio WALE of 6.3 years. In addition, the REIT has a call option on two properties in
Noida (4.5 mn sq. ft) and Gurugram (3.8 mn sq. ft) that could take the overall portfolio to 22.3 mn sq. ft.
Portfolio with leasable area of 14 mn sq. ft spread across three metros

Brookfield REIT’s initial portfolio comprises 14 mn sq. ft of leasable area, with call options to
acquire a further 8.3 mn sq. ft and rights of first offer on an additional 6.7 mn sq. ft owned
by members of the Brookfield group. The initial portfolio comprises 10.4 mn sq. ft of
completed area and 3.6 mn sq. ft of future development potential.
The call option properties encompass 8.3 mn sq. ft, comprising (1) 5.7 mn sq. ft of
completed area (96% occupied), (2) 1.7 mn sq. ft of under-construction area expected to be
completed by September 2021, and (3) 0.8 mn sq. ft of future development potential. The
initial portfolio combined with the call option properties forms the pro forma portfolio
aggregating to 22.3 mn sq. ft.
In addition, Brookfield REIT may also benefit from rights of first offer on the ROFO properties
– the Brookfield group’s 100% owned commercial real estate assets in India’s financial
capital, Mumbai, comprising 6.7 mn sq. ft of office space. The pro forma portfolio and
ROFO properties combined create an overall portfolio of 28.9 mn sq. ft of high quality real
estate in premier locations.
Exhibit 23: Brookfield REIT’s portfolio is estimated to grow to 22.3 mn sq. ft post acquisition of call option properties
Key operational metrics of Brookfield REIT
Same store In-place
Area (mn sq. ft) Occupancy WALE rent NOI (Rs mn) Value
Asset Type Completed Construction Development Total (%) (years) (Rs/sq. ft) 2020 2021E 2022E 2023E (Rs mn)
Kensington SEZ 1.5 — — 1.5 82 2.4 93 1,313 1,431 1,471 1,616 23,300
Candor Techspace G2 SEZ 3.9 — 0.1 4.0 89 7.1 80 2,699 2,725 2,691 2,98 7 37,394
Candor Techspace N1 IT Park 2.0 — 0.8 2.8 94 6.9 46 78 1 8 07 889 1,043 21,690
Candor Techspace K1 SEZ & Mixed Use 3.1 — 2.7 5.8 91 7 43 1,457 1,48 0 1,508 1,591 30,006
CIOP — — — — — — — — 513 105 300 350 —
Initial portfolio — 10.4 — 3.7 14.1 89 6.3 65 6,763 6,548 6,859 7,587 112,391
Candor Techspace G1 SEZ 2.8 0.9 0.1 3.8 94 8 .8 67 2,18 1 2,438 2,962 3,492 46,709
Candor Techspace N2 SEZ 2.9 0.8 0.8 4.5 97 7.9 49 1,707 1,659 2,171 2,557 36,8 64
MIOP — — — — — — — — 206 209 306 323 —
Call option 5.7 1.7 0.9 8.3 4,094 4,306 5,439 6,372
Pro forma portfolio — 16.1 1.7 4.6 22.4 96 7.4 61 10,857 10,854 12,298 13,959
Brookfield REIT will be among the third largest listed Indian REITs with a portfolio of 14 mn
sq. ft that would grow to 22.3 mn sq. ft if it acquires the call option properties, and would
be among the largest Asian REITs in terms of area under lease.

Exhibit 24: Brookfield REIT with leasable area of 14 mn sq. ft is the fourth largest REIT in India
Developable area of listed REITs across Asia ( mn sq. ft)
50
40
30
22.3
20
8 .3 33.3
29.4
10 19.9
11.6 12 14
9.2
1.3 2.3 3.5 4 4.6
0 0.8
Capitaland REIT
Sunlight REIT
Champion REIT
JRE REIT
NBF REIT
KDO REIT
Mindspace REIT
Embassy REIT
Keppel REIT
Brookfield REIT
Prosperity REIT
AIT
Suntec REIT
Source: Company, Kotak Institutional Equities
As of June 31, 2021, the committed occupancy and in-place rent of the initial portfolio was
85% and Rs65/sq. ft, respectively. Brookfield’s office parks have outperformed their
respective micro-markets and cities in terms of rental growth and occupancy, and provide
critical infrastructure for major tenants in key gateway markets and established locations,
creating high barriers to entry. As a result, leasing rent and committed occupancy of the
initial portfolio has surpassed the averages in their respective micro-markets, delivering
sustained outperformance.
Exhibit 25: Occupancy levels are superior to the micro-market

Committed occupancy at Brookfield REIT portfolio (%)
Portfolio Micro-market
100 98
98 96
96 95
94
92 91
90 89
88
88 89
86 88 88
87
84
82
80
Dec-17 Dec-18 Dec-19 Dec-20 Jun-21

Call option properties can help Brookfield raise its portfolio to 22.3 mn sq. ft
As highlighted previously, the call option properties have an aggregate area of 8.3 mn sq. ft
between two properties—Gurugram and Noida. The key terms of the call options are as
follows:
 Exercise period. At any time on and from the date that is six months after the date of
listing of the units on the stock exchanges till one year or such later date as may be
provided in the call option agreements or as may be mutually agreed between the parties.
 Exercise price. Exercise price will be calculated based on the average of the valuations
determined by independent valuers at the time for exercise of the options, subject to a
pre-determined floor valuation set out in the agreement.
 Discharge of consideration. Upon execution of the sale and transfer of the shares of the
call option SPVs, the shareholders of the call option SPVs shall receive an amount equal to
the gross acquisition value, as adjusted for the agreed adjustments (as defined in the call
option agreements), by payment in cash or in any other manner as agreed between the
parties in accordance with the terms of the call option agreements.
ROFO assets could add another 6.7 mn sq. ft to the project portfolio
Brookfield REIT could also benefit from rights-of-first-offer on the ROFO properties – the
Brookfield group’s 100% owned commercial real estate assets in India’s financial capital,
Mumbai, comprise 6.7 mn sq. ft of office space. The pro forma portfolio and ROFO
properties combined create an overall portfolio of 29 mn sq. ft of high quality real estate in
premier locations.
Exhibit 26: 6.7 mn sq. ft of additional office stock could be offered to extant asset portfolio of 14 mn sq. ft
Properties which could be offered at ROFO to Brookfield REIT
Asset Asset Description Completed Construction Development Total

Portfolio of prime office and high street
Powai Business District 2.8 — 1.2 4.0
retail properties
Premium campus-style park located just
Equinox 1.3 — — 1.3
off BKC, Mumbai CBD
Greenfield development of a premium
Waterstones — 1.3 — 1.3
office campus near MIAL
Premium front-office space in BKC,
Units in Godrej BKC 0.2 — — 0.2
Mumbai's central CBD
Total 4.2 1.3 1.2 6.7

Diversification across sectors, though technology space dominates

The Brookfield REIT owns an initial portfolio of four large campus format office parks that
are business critical for their tenants. In addition to their diversified base of marquee tenants,
their initial portfolio has a stable, long-term tenancy profile with staggered expirations and a
WALE of 6.3 years, providing significant cash flow stability to their business. In their initial
portfolio, 75% of gross contracted rentals are contracted with multi-national corporations
such as Barclays, Bank of America Continuum, RBS, Accenture, TCS and Cognizant. In terms
of sector diversification, 48% of the initial portfolio is dominated by the technology space
with consulting (21%) and financial services (18%) forming the rest of the sectoral mix in
the initial portfolio.
Exhibit 27: Technology sector contributes 51% of leased area for Brookfield REIT
Split of portfolio across sectors based on leased area for initial portfolio (as of June 31, 2021) (%)
Others, 9
Hardware, 3
Healthcare, 2
Consulting, 17
Technology, 51
Financial Services,
18
Asset manager and sponsor

The Brookfield REIT is India’s only institutionally managed public commercial real estate
vehicle. Sponsored by an affiliate of Brookfield Asset Management (‘BAM’ or ‘Brookfield’),
which is one of the world’s largest alternative asset managers with approximately US$550
bn in assets under management as of June 30, 2020.
BAM is incorporated in Ontario, Canada and qualifies as an eligible Canadian issuer under
the Multijurisdictional Disclosure System and as a ‘foreign private issuer’ (as defined under
Rule 405 under the U.S. Securities Act and Rule 3b-4 under the U.S. Securities Exchange Act).
As a result, BAM complies with U.S. continuous reporting requirements by filing its
Canadian disclosure documents with the U.S. Securities Exchange Commission. BAM,
through the Brookfield Group, has a 120-year history as an owner and asset manager across
a broad portfolio of real estate assets with a focus on property, infrastructure, renewable
power and private equity.
Brookfield Property group carries out investments, directly and indirectly, through Brookfield
Property Partners L.P. (‘BPY’), which is listed on the NASDAQ, TSX and the Euronext, and
private funds, including its flagship real estate funds in the Brookfield Strategic Real Estate
Partners series. BAM acts, directly or indirectly, as the asset manager to all the public vehicles
and private funds in the Brookfield group. As BAM’s primary vehicle to make investments
across all strategies in real estate, Brookfield Property Group’s global portfolio of assets
includes office, retail, multifamily, logistics, hospitality, self-storage, triple net lease,
manufactured housing and student housing assets located in five continents . The Brookfield
group currently manages approximately US$17 bn of assets in India, which includes several
significant assets of the Brookfield Property Group such as the Pro Forma portfolio and the
ROFO properties.

The sponsor is the wholly owned subsidiary of BSREP India Holdings, a company
incorporated in Singapore, which is a part of the Brookfield Strategic Real Estate Partners
series of funds under the Brookfield Group.
Exhibit 28: Brookprop Management Services has been appointed as the manager to the Brookfield REIT
Proposed Brookfield REIT structure
Trustee Trust Manager
Axis Trustee Services Limited Brookfield REIT Brookprop Management Services Pvt. Ltd.
Operational Services
Asset SPV Asset SPV Asset SPV Call Option SPV Call Option SPV
Provider
Festus Properties Pvt. Candor Kolkata One Shantiniketan Candor India Office Candor Gurgaon One Seaview Developers
Ltd. Hi-Tech structures Properties Pvt. Ltd. Parks Pvt. Ltd. Realty Projects Pvt. Ltd. Pvt. Ltd.
Brookprop Management Services has been appointed as the manager of Brookfield REIT that
will be led by Alok Aggarwal (the Managing Director and CEO of the manager). The
manager’s team consists of 42 dedicated experienced professionals, as of June 30, 2020.
They believe that the team has in-depth experience in real estate investments, asset
management, research and property management, with the key managerial personnel
having an average of more than 25 years of experience in the real estate industry in India. As
such, the manager has operating and investing experience through multiple real estate
cycles, which they believe provides valuable insight and perspective into the portfolio
management of their current office parks as well as underwriting new investments for them.
Exhibit 29: Portfolio companies have employed 110 personnel (as of June 2020)
Details of staff employed by portfolio companies under Brookfield REIT
Personnel
SEZ, Approval, audit, legal and compliance 7
Leasing, CRM, business development and marketing 9
Finance, PMO and finance planning 4
Design and projects 90
Total 110
Exhibit 30: Manager has employed 42 personnel (as of June 2020)

Details of staff employed by manager of Brookfield REIT
Personnel
SEZ, Approval, audit, legal and compliance 3
Leasing, CRM, business development and marketing 5
Finance, PMO and finance planning 17
Operations 3
Design and projects 8
Support team 3
General Management 3
Total 42

Investment conditions applicable to the Brookfield REIT
In accordance with the REIT Regulations, the Brookfield REIT is required to ensure
compliance with, inter alia, the following investment conditions:
 invest not less than 80% of the value of its assets in completed and rent and/or income
generating properties;
 not more than 20% of the value of its assets shall be invested in certain permitted forms
of investments (whether directly or through a company or LLP) which include, among
other things, under-construction properties, completed but not rent generating properties,
mortgage backed securities, listed or unlisted debt of companies or body corporates in
the real estate sector, unlisted equity shares of companies which derive not less than 75%
of their operating income from real estate activity according to the audited accounts of
the previous financial year; and
 not less than 51% of the consolidated revenues of the Brookfield REIT, and their asset
SPVs, other than gains arising from disposal of properties, must at all times arise from
rental, leasing and letting real estate assets or any other income incidental to the leasing
of such assets.
 Further, the manager is required to monitor these thresholds on a half-yearly basis and at
the time of the acquisition of an asset. In the event these conditions are breached on
account of market movements of the price of the underlying assets or securities or
change in tenants or expiry of lease or sale of properties, the manager is required to
inform the trustee and ensure that these conditions are satisfied within six months of any
such breach (or within one year if approved by their unit holders).
 In addition to the investment ratios set out above, the REIT regulations and the trust deed
also impose restrictions on certain investments including, among other things, investing in
units of other REITs, launching schemes under the Brookfield REIT, investments in vacant
land, agricultural land or mortgages other than mortgage backed securities, and assets
located outside India. The Brookfield REIT is also restricted from co-investing with any
person(s) in any transaction in the event the investment by such other person(s) is on
terms more favorable than those offered to the Brookfield REIT.
 The properties (including under-construction properties which are part of existing income
generating properties) acquired by the Brookfield REIT are also required to be held for a
period of at least three years from the date of completion or purchase, as applicable,
pursuant to the REIT regulations.

RISKS: COMMERCIAL REAL ESTATE, EVOLVING REGULATORY REGIME

A structural weakness in service sector growth in India or overinvestment in commercial real estate leading to
a meaningful drop in occupancy levels, and slower-than-expected growth in rental incomes may pose a risk to
the growing annuities such as those of Brookfield REIT. Expiry of lease for 75% of the area at Kensington by
FY2024E (WALE of 2.4 years), and a large client concentration (top-10 accounts for 75%) remain other areas
of risk for Brookfield REIT.
Commercial assets may be exposed to market risks for rental incomes

Success of the office parks in the portfolio is highly dependent on the performance of the
commercial real estate market in India as well as general economic, demographic and
political conditions. The commercial real estate market in India may particularly be
dependent on market prices for developable land and the demand for leasing of finished
offices, both of which will continue to have a significant impact on the business, results of
operations and financial condition of Brookfield REIT.
The commercial real estate market may be affected by several factors outside the manager’s
control, such as prevailing global and local economic conditions, cyclical downturns as well
as downturns in specific sectors where tenants occupying the assets in the portfolio are
concentrated, such as the technology, consulting and financial services sectors.
Inability to (1) renew lease contracts at prevailing or improved rental rates, or (2) drop in
occupancy due to non-renewal of contracts may further impact earnings from rental income.
Further, rising interest rates, increases in property taxes, changes in development regulations,
zoning laws and other applicable regulations, political instability, acts of terrorism, natural or
man-made disasters, pandemics such as Covid-19, reduction in the availability of financing,
increase in operating costs and disruptions in amenities and public infrastructure may lead to
a decline in demand, which may adversely affect the business.
Technology clients contribute a bulk of rental income

Tenants in the technology sector accounted for 51% of the leased area in FY2021 for
Brookfield REIT. Further, Kensington is also registered as a private IT Park on SEZ land with
the DoI, which requires that not less than 80% of its leases be to tenants in the technology
sector. Also, the Ministry of Commerce and Industry and Department of Commerce have
issued notifications to Candor Techspace G2 and Candor Techspace K1 for setting up a
sector-specific SEZ for IT and ITeS.
Additionally, in accordance with the terms of the lease deed with Noida, SPPL Noida is
required to develop Candor Techspace N1 for technology services only.
Accordingly, the portfolio will experience concentration from tenants in the technology
sector. Such restrictions may limit the ability of the manager to select tenants from sectors
outside of technology on terms that may be more favorable. A concentration of tenants in
the technology sector may also make the portfolio more susceptible to fluctuations in value
resulting from adverse economic or business conditions affecting the technology industry.
Top-3 tenants contribute ~38% of the leased area

Top-10 largest tenants of Brookfield REIT accounted for 75% of the rentals as of June 2021.
Among these, three tenants Accenture, TCS and Cognizant accounted for 38% of the
leased area as of June 2021. Such a high concentration of clients poses a risk to the earnings
of the REIT and makes it vulnerable to change in business plans, expansions, and work-from-
home strategies of the key tenants.

Exhibit 31: Top-10 tenants contribute up to 75% of the total rentals for the REIT
Details of top-10 tenants by gross contracted rentals for Brookfield REIT
Area leased
Tenant Tenant Sector (%)
Accenture Consulting 18
Tata Consultancy Services Technology 16
Cognizant Technology 14
Sapient Technology 6
RBS Financial Services 5
Barclays Financial Services 5
Bank of America Continuum Financial Services 3
Capgemini Financial Services 3
Amdocs HR services and technology 2
E&Y Technology 2
Top-10 tenants 75
Gurugram asset contributes bulk of the rental income

In FY2021, revenues of Candor Techspace G2 accounted for 42.4% of the combined
revenue from operations of the portfolio. As a result, Candor Techspace G2 is a significant
contributor and should there be any adverse development relating to Candor Techspace G2
or in Gurugram North, the micro-market in which it is located, the business, revenue from
operations and cash flows and manager’s ability to make distributions to unit holders may
be impacted.
Large land developments are subject to various regulatory clearances
Real estate development is subject to various central, state and local legislation as well as
compliance to safety standards, health and fire compliances. Delay in permits/licenses and/or
approvals for various land developments may hinder the development of balance land
portfolio as well as leasing of extant assets. We list down instances of applications made to
various regulatory authorities for the purpose of expansion across assets by Brookfield REIT.
 Applications have been made (1) to obtain environmental clearance for the proposed
expansion from the State Environment Impact Assessment Authority in relation to the
proposed and ongoing construction in Candor Techspace N1, Candor Techspace K1,
Candor Techspace G1, and Candor Techspace N2; and (2) to obtain a single consent to
operate order for the entire Candor Techspace K1 project from the West Bengal Pollution
Control Board. Further, applications to renew the consent to establish with respect to
Candor Gurgaon G1 and Candor Techspace K1 are yet to be made.
 Candor Techspace G2 is situated on land owned by a third party and the development
and construction of buildings on Candor Techspace G2’s land is governed by the G2 Co-
Development Agreement.
Impact of Covid–19 on underlying commercial real estate market

The Covid-19 pandemic has affected several industries, however, certain industries such as
aviation, education, entertainment and events, food and beverage, co-working and
hospitality have been severely impacted. The proposed REIT has only one tenant in each of
the aviation and hospitality sectors and these tenants do not materially contribute to its
revenues.
Further the portfolio has not faced significant disruptions in its operations due to Covid-19
so far. However, continuation of the pandemic for a longer period could pose risks to the
business of the tenants. Collections for the period since April 2020 have been well above 95%
and do not show any signs of weakness so far.

Exhibit 32: Collection of rent continues to remain robust despite lockdown measures across India
Rental collection percentage for Brookfield REIT during lockdown period (%)
Percentage rents collected (%)

100 99 99
98 98 98
97 97
96
92
88
84
80
Apr-20 May-20 Jun-20 Jul-20 Aug-20 4QFY21 1QFY22
During the lockdown, certain tenants at the office parks limited the number of operating
staff and hours, while others announced ‘work-from-home’ measures. Certain essential
personnel and support staff of the tenants continue to work from the office parks.

FINANCIALS: 11% CAGR IN REVENUES UP TO FY2024E

Brookfield REIT had revenue of Rs8.6 bn in FY2021 that is estimated to accelerate to Rs12 bn (11% CAGR) by
FY2024E, consequently leading to improvement in NOI to Rs8.5 bn by FY2024E from Rs6.5 bn in FY2021. Lease
up of new assets (Rs1 bn or 47%) and contractual rent escalations (36% or Rs878 mn) form bulk of the
incremental revenues. Brookfield REIT had a capital employed of Rs102 bn as of March 2021 with net debt
(gross debt-cash) of Rs22 bn.
Revenues projected to grow to Rs12 bn by FY2024E

Brookfield REIT’s revenue from operations is projected to grow to Rs12 bn by FY2024E from
revenues of Rs8.6 bn as of FY2021 (11% CAGR) on the back of (1) contracted escalations
which will likely contribute Rs878 mn (36% of growth), (2) re-pricing of rentals (Rs408 mn)
of 2 mn sq. ft and (3) lease-up of vacant area and new developments aggregating 0.6 mn sq.
ft that will provide incremental revenues of Rs528 mn. We note that Brookfield REIT has 0.5
mn sq. ft of property that has been recently commissioned and 3.6 mn sq. ft of area under
future development that will continue to drive revenues beyond FY2024E.
Exhibit 33: Contractual escalations contribute significantly to revenue increasing to Rs11 bn

Initial portfolio revenue bridge for Brookfield REIT, March fiscal year-ends, 2021-24E (Rs mn)
13,000 862
1,149
11,000 408
878
9,000
7,000
11,925
5,000
8,628
3,000
1,000
(1,000)
2024E
2021
Construction
Others
Contractual
Re-leasing
The revenue improvement will translate into NOI growing from Rs6.5 bn in FY2020 to Rs8.5
bn by FY2024E. We highlight that the negative contribution from Covid-19 has a limited
bearing on NOI, as the same is largely reimbursement of common area expenses. We note
that in the past three years, Brookfield has been able to grow the NOI to Rs6.5 bn in FY2021
from Rs5.9 bn in FY2018. The asset manager has leased 4.4 mn sq. ft of area between
FY2015 and FY2020, having achieved 90% tenant retention during the same period.
Brookfield has commissioned 3.1 mn sq. ft of new area over the past five years, while
maintaining a committed occupancy above 96%.
Rental income accounted for 71% of the revenues in FY2021 at Rs6.1 bn and is estimated
to grow at 7% CAGR over the next three years to Rs7 bn, while maintaining a similar
proportion (67%) of overall revenues. Payments for maintenance services are the second
largest component of revenue (29% in FY2021) at Rs2.5 bn. We note the Covid-19 related
impact led to lower maintenance services in FY2021 and will likely normalize by FY2023E.

Exhibit 34: Rentals contribute ~65% of total revenues for Brookfield REIT
Composition of revenue for Brookfield REIT, March fiscal year-ends, 2018-25E (Rs mn)
2018 2019 2020 2021 2022E 2023E 2024E 2025E

Sale of services
- Income from operating lease rentals 5,028 5,38 1 5,954 6,100 6,451 6,943 8 ,008 8 ,8 65
- Income from maintenance services 2,905 3,248 3,244 2,525 2,8 43 3,216 3,567 3,8 73
- Property management services 226 270 302 — 300 350 350 350
Sale of products
- Sale of food and beverages 59 60 62 3 — — — —
- Others — — 4 — — — — —
Revenue from operations 8,218 8,959 9,567 8,628 9,595 10,510 11,925 13,087
Exhibit 35: Revenues are estimated to grow at a CAGR of 11% over the next three years to Rs12 bn
Profit and loss statement for Brookfield REIT, March fiscal year-ends, 2018-25E (Rs mn)
2018 2019 2020 2021 2022E 2023E 2024E 2025E

Revenue from operations 8,218 8,959 9,567 1,309 9,295 10,160 11,575 12,737
Cost of material consumed (52) (49) (52)
Employee benefit expenses (276) (141) (251)
Other expenses (2,452) (3,206) (3,328 ) (48 4) (3,395) (3,522) (3,8 15) (4,08 5)
EBITDA 5,438 5,563 5,936 825 5,900 6,637 7,761 8,652
Other income 444 339 247 52 343 397 444 516
Depreciation (903) (957) (1,123) (317) (2,057) (2,116) (2,210) (2,329)
EBIT 4,979 4,945 5,061 560 4,185 4,919 5,996 6,839
Finance costs (3,28 7) (4,404) (7,141) (411) (2,190) (2,350) (2,761) (3,094)
Profit before tax 1,692 541 (2,081) 149 1,995 2,569 3,235 3,744
Tax expense (124) (699) (263) 104 (261) (302) (305) (396)
- Current tax (544) (458 ) (319) (19) (261) (302) (305) (396)
- Deferred tax 420 (240) 56 123 — — — —
Profit after tax 1,567 (157) (2,344) 253 1,735 2,267 2,930 3,348
Exceptional items 43 — 2,495
Reported PAT 1,611 (157) 151 253 1,735 2,267 2,930 3,348
Growth (%)
Revenue (%) 9 7 (8 6) 610 9 14 10
EBITDA (%) 2 7 (8 6) 615 13 17 11
Margins (%)
EBITDA (%) 66 62 62 63 63 65 67 68
Note:
(a) Brookfield REIT came into being in xxx 2021, hence the financials upto that date are proforma financials with revenues of Rs8 .6 bn in FY2021.
Candor Techspace N1 (Noida), and Candor Techspace G2 (Gurugram) will likely be the key
drivers of revenue growth between FY2021 and FY2024E driven by contractual escalations,
even as revenue growth from Kensington and Candor Techspace K1 (Kolkata) is more back
ended. Exhibit 36 gives the detailed asset-wise projections for key financial metrics.

Exhibit 36: Rentals contribute ~65% of total revenues and are estimated to grow at 8.4% CAGR over 2020-25E
Rental, revenue, NOI, EBITDA, CFO and NDCF projections for Brookfield REIT, March fiscal year-ends, 2021-25E (Rs mn)
Growth Margins
2021 2022E 2023E 2024E 2025E (2021-24E) 2021 2022E 2023E 2024E 2025E
Rental
Kensington 1,481 1,535 1,719 1,934 2,013
Candor Techspace G2 2,518 2,655 2,819 2,946 3,118
Candor Techspace N1 718 862 916 1,352 1,795
Candor Techspace K1 1,400 1,400 1,489 1,776 1,938
Rental 6,117 6,451 6,943 8,008 8,865 9.4
Revenue
Kensington 1,660 1,721 1,913 2,136 2,223 9
Candor Techspace G2 3,657 3,844 4,267 4,424 4,641 7
Candor Techspace N1 1,191 1,482 1,605 2,217 2,837 23
Candor Techspace K1 2,092 2,249 2,374 2,800 3,037 10
Others 28 300 350 350 350
Revenue 8,628 9,595 10,510 11,925 13,087 11.4
NOI
Kensington 1,431 1,471 1,616 1,815 1,889 8 86 86 84 85 85
Candor Techspace G2 2,725 2,691 2,987 3,096 3,248 4 75 70 70 70 70
Candor Techspace N1 807 889 1,043 1,441 1,844 21 68 60 65 65 65
Candor Techspace K1 1,480 1,508 1,591 1,876 2,035 8 71 67 67 67 67
Others 105 300 350 350 350 379 100 100 100 100
NOI 6,548 6,859 7,587 8,578 9,366 9.4 76 71 72 72 72
EBITDA
Kensington 1,328 1,377 1,530 1,709 1,778 80 80 80 80 80
Candor Techspace G2 2,240 2,482 2,846 2,965 3,098 61 65 67 67 67
Candor Techspace N1 440 686 798 1,276 1,788 37 46 50 58 63
Candor Techspace K1 1,231 1,355 1,463 1,811 1,988 59 60 62 65 65
Others 697 63 (438) (774) (541)
EBITDA 5,936 5,963 6,200 6,987 8,111 5.6 69 62 59 59 62
CFO
Kensington 1,343 1,380 1,558 1,752 1,764 101 100 102 103 99
Candor Techspace G2 3,586 2,223 2,539 2,664 2,778 160 90 89 90 90
Candor Techspace N1 448 702 796 1,282 1,750 102 102 100 100 98
Candor Techspace K1 1,245 1,360 1,464 1,814 1,992 101 100 100 100 100
CFO 6,622 5,665 6,358 7,512 8,284 112 95 103 108 102
NDCF
Kensington 342 1,035 1,201 1,400 1,475 25 75 77 80 84
Candor Techspace G2 + K1 2,652 4,358 4,579 4,607 4,723 55 122 114 103 99
Candor Techspace N1 195 430 527 853 1,148 44 61 66 67 66
NDCF 3,188 5,823 6,307 6,859 7,346 48 103 99 91 89
In the following section we detail the growth in revenues from various factors, including the
underlying assets performance on each of the parameters over the past three years.
Contractual rent escalation—bulk of the contributor for incremental revenues

The leases for Brookfield’s initial portfolio are generally long term, ranging up to 15 years
and include lock-in of three to five years, which provides visibility on the growth of their
future cash flows. A majority of these leases have built-in escalations of either 12% to 15%
every three years or 4% to 5% every year, which provide strong cash flow growth and a
measure of protection against inflation for the unit holders. Over the projection period,
contractual rent escalations will generate additional revenues of Rs878 mn, representing 36%
of the total increase in the revenues of the initial portfolio.

Vacancy lease up—0.4 mn sq. ft to be leased up in the next three years

As of March 31, 2021, the initial portfolio had vacant and leasable space of 0.4 mn sq. ft
(0.1 mn sq. ft in Kensington and 0.1 mn sq. ft in Candor Techspace K1), which the manager
believes can be leased out in the near term based on the demand for high quality office
space, strong tenant relationships and the track record of the manager.
Re-leasing—2 mn sq. ft of area is coming up for renewal in next three years

Approximately 2 mn sq. ft is expected to come up for leasing during the projections period,
which could add Rs408 mn to the revenues representing 17% of the total increase in the
revenues of the initial portfolio. Mark-to-market potential within their initial portfolio is
expected to continue to drive growth as more leases come up for renewals.
We note that as of March 31, 2021, the average in-place rent across the initial portfolio was
Rs65/sq. ft compared to an estimated market rent of Rs85/sq. ft according to the industry
report, resulting in a substantial mark-to-market potential of 31%.
Exhibit 37: WALE of the asset portfolio is 6.3 years, with 39% of the leased area expiring by FY2025
Lease expiry profile of Brookfield REIT, March fiscal year-ends, 2022-25E (mn sq. ft)
Area expiring (mn sq. ft)

1.0
0.9
0.9
0.8
0.7
0.6 0.5
0.5 0.5
0.5
0.4
0.3
0.2
0.1
0.0
2022E 2023E 2024E 2025E
Commissioned area of 0.6 mn sq. ft to deliver additional rental income

The projections period includes 0.6 mn sq. ft of recently commissioned area at Candor
Techspace N1. Further, the initial portfolio has a future development potential of 3.6 mn sq.
ft, of which 0.1 mn sq. ft is at Candor Techspace G2 and 0.9 mn sq. ft is at Candor
Techspace N1. The remaining 2.7 mn sq. ft is located in Candor Techspace K1, which will be
developed based on strategic and commercial considerations.
Exhibit 38: Brookfield has demonstrated history of completing assets within defined timelines
Area completed over the years by Brookfield REIT, March fiscal year-ends, 2016-21 (mn sq. ft)
2016 2017 2018 2019 2020 2021 Total

Initial portfolio 0.4 0.2 2.3 0.6 0.9 0.6 4.9
Call option 0.4 0.7 0.8 0.8 0.5 NA 3.2
Pro-forma portfolio 0.8 0.9 3.1 1.4 1.4 0.6 7.5

Exhibit 39: Long-term relationships with multinational tenants have led to gradual expansion of leased area at existing office parks
Leasable area expansion of select key tenants from April 1, 2015 to March 31, 2020 (in ‘000 sq. ft)
2,000 350 323

2,000 1,8 93
1,730
300
1,600 1,600
+157% 250 +18 2%
+220%
1,200 1,200 200
673 150 115

800 592 800
100
400 400
50
0 0 0
Mar-15 Mar-20 Mar-15 Mar-20 Mar-15 Mar-20
A multinational IT and consulting company A multinational IT and consulting company A multinational healthcare services company
700 500
1,000 625
+31% 399
+33% 8 31 600
400 +60%
800 476
500
625
300 249
600 400
300 200
400
200
100
200 100
0 0
0 Mar-15 Mar-20 Mar-15 Mar-20
Mar-15 Mar-20
A multinational IT and consulting company A multinational IT company A multinational financial services company
Commercial asset business operates at high margins

The commercial real estate business in India operates with high operating margins in excess
of 60%. Property taxes form a substantial part of the expenses (accounted under other
expenses) for Brookfield REIT in addition to employee cost as well as maintenance expenses.
EBITDA margins will expand on account of absence of large renovation expenses.
Operating and maintenance expenses consist of repairs and maintenance of buildings,

power and fuel expenses, property management fees and expenses related to housekeeping
and security services. Exhibit 40 highlights the key expense component for Brookfield REIT
over the past three years. We note that power and fuel cost at Rs1.2 bn in FY2020 (12.2%
of revenue, 32% of pre-EBITDA cost) is the biggest expenditure for the REIT, followed by
repairs and maintenance cost at R867 mn and property management fees of Rs433 mn in
FY2020 (4.5% of revenues).
Exhibit 40: Power and fuel costs along with repair and maintenance expenses constitute major
expenses for Brookfield REIT
Breakup of expenses for Brookfield REIT, March fiscal year-ends, 2018-20 (Rs mn)
2018 2019 2020

Cost of material consumed 52 49 52
Employee benefit expenses 276 141 251
Property management fees 146 346 433
Power and fuel 1,212 1,314 1,167
Repair and maintenance 615 660 8 67
Insurance 28 26 22
Legal and professional expense 117 171 467
Audit fees 6 7 7
Rates and taxes 102 152 112
Brokerage 89 57 —
Facility usage fees 35 36 38
Lease rent 3 10 8
Others 100 428 208
Total 2,781 3,397 3,631

Brookfield REIT has projected capex of Rs11.6 bn over the next five years
Brookfield REIT incurred a capex of Rs7.5 bn over the past three years, during which time
the company completed 5.1 mn sq. ft of assets. Brookfield has a projected capex of Rs11.6
bn to be incurred over the next five years for upgrade at existing projects and completion of
3.6 mn sq. ft of new assets. We highlight that CWIP as of March 2021 stood at Rs792 mn,
and incremental capex will likely be funded entirely through debt.
Exhibit 41: Brookfield has spent Rs7.5 bn over the past three years
Capital expenditure profile for existing assets, March fiscal year-ends, 2018-20 (Rs mn)
2018 2019 2020

Festus (for Kensington) 47 6 37
Candor Kolkata (for Candor Techspace G2) 443 412 78 6
SPPL Noida (for Candor Techspace N1) 652 1,526 1,116
Candor Kolkata (for Candor Techspace K1) 364 1,8 05 296
CIOP 1 (0) —
Total 1,507 3,748 2,236
Their ongoing capital expenditure of Rs2.7 bn as of June 2021 is primarily towards upgrade
and construction activities for Candor Kolkata (for Candor Techspace G2 and Candor
Techspace K1) and SPPL Noida (for Candor Techspace N1), as illustrated in the table below.
Exhibit 42: Brookfield intends to spend Rs16 bn for construction and upgradation of its assets
Construction plan and required capital expenditure over the next five fiscal years (Rs mn)
Asset Tower Amount (Rs mn) Completion

Asset upgardes/tenant improvements
Kensington Lobby, food court and other upgrades 133 Mar-23
G2 Landscaping and other developments 37 Jun-22
N1 Ongoing campus works 105 Dec-21
K1 Food court and other upgrades 80 Dec-21
New development
N1 Amenity Block 3 202 Sep-21
K1 Mixed use development 2,207 Dec-24
Proposed development
G2 Proposed Tower 350 Jun-23
N1 Tower 4B 2,002 Mar-24
N1 Tower 4A 2,266 Mar-25
K1 Tower D1 1,226 Dec-24
K1 Multi-level car park 3,065 Jun-24
Total 11,673
Healthy cash generation makes for rich distributable surplus

Commercial real estate has a high cash conversion ratio with limited maintenance capex,
and high EBITDA margins. We expect cash conversion to further improve, as moving the
assets under the REIT structure will bring with it commensurate tax benefits. Brookfield REIT
is to distribute 90% of the net distributable surplus of the fund with a quarterly frequency.
We note that Brookfield REIT has continued to invest in projects over the past three years,
with aggregate capex of Rs7.5 bn, and CWIP of Rs792 mn as of March 2021.

Exhibit 43: Brookfield REIT’s CFO is expected to grow steadily to Rs7.1 bn by March 2023
Cash flow statement for Brookfield REIT, March fiscal year-ends, 2018 -25E (Rs mn)
2018 2019 2020 2021 2022E 2023E 2024E 2025E

Cash flow from operating activities
Profit after tax 1,056 (8 2) (343) 723 2,035 2,617 3,28 0 3,698
Add: Depreciation 903 957 1,123 317 2,057 2,116 2,210 2,329
Less: Interest income (493) (429) (251) (24) (343) (397) (444) (516)
Add: Interest expense 3,28 7 4,404 7,141 411 2,190 2,350 2,761 3,094
Others (8 3) 267 (2,546) 24 — — — —
Working capital (521) (41) 199 (54) (4,129) 22 57 28
Cash flow from operating activities 4,149 5,076 5,322 1,397 1,810 6,708 7,862 8,634
Cash flow from investing activities
Capex (1,043) (3,18 5) (1,678 ) (133) (3,535) (3,98 5) (2,795) (1,425)
Others 421 (17,350) 2,658 (348 ) — — — —
Cash flow from investing activities (622) (20,535) 980 (481) (3,535) (3,985) (2,795) (1,425)
Cash flow from financing activities
Debt 2,098 20,071 (1,98 9) (35,676) 9,240 3,751 2,795 1,425
Equity — — 3,8 50 37,732 — — — —
Interest (3,491) (4,376) (6,224) (593) (2,190) (2,350) (2,761) (3,094)
Dividend (3,102) — — — (5,8 23) (6,307) (6,8 59) (7,346)
Others — — — — 343 397 444 516
Cash flow from financing activities (4,495) 15,694 (4,363) 1,463 1,569 (4,508) (6,380) (8,500)
Total cash flow (968) 235 1,940 2,378 (157) (1,786) (1,313) (1,291)
Opening cash — (968) (733) 1,207 3,585 9,919 7,130 4,792
Closing cash (968) (733) 1,207 3,585 9,919 7,130 4,792 2,436
Balance sheet—total assets of Rs102 bn, funded through debt of Rs21 bn

Brookfield REIT had total assets of Rs102 bn as of March 2021 comprising (1) net fixed
assets and investment property of Rs101 bn (gross block of Rs101.4 bn), (2) assets under
construction of Rs792 mn, and (3) cash of Rs3.3 bn and other financial assets of Rs1.8 bn
including non-current tax assets of Rs1.4 bn.
Brookfield REIT had a net debt of Rs21 bn as of March 2021. We note that the net debt
reduction was aided by (1) equity infusion of Rs38 bn, and (2) convertible bonds of Rs10 bn
in favor of Brookfield REIT by the sponsor group. We note that the increase in debt in
FY2019 was on account of transfer of ownership in Candor Gurugram Techspace in favor of
Candor Kolkata K1 for an equity consideration of Rs30 bn, which was paid partly in cash
(Rs20 bn) and partly through issuance of bonds (Rs10 bn). The transfer also resulted in
creation of amalgamation reserve of Rs30 bn (excess consideration over book value of assets)
resulting in the negative net-worth on the balance sheet of Rs22.2 bn as of March 2020.

Exhibit 44: Brookfield REIT has assets of Rs107 bn funded through debt of Rs21 bn
Balance sheet for Brookfield REIT, March fiscal year-ends, 2018-25E (Rs mn)
2018 2019 2020 2021 2022E 2023E 2024E 2025E

Non-current assets
Property, plant and equipment 89 92 105 101 105 105 105 105
Investment property 36,8 25 42,030 44,545 100,18 0 94,722 95,615 99,261 101,98 9
Capital work-in-progress 4,358 1,939 520 792 4,08 9 6,068 4,033 1,466
Goodwill and intangibles 2 1 1 — 1 1 1 1
Investments 166 420 48 7 28 2 28 2 28 2 28 2 28 2
Current assets
Inventories — — — — — — — —
Trade receivables 318 565 449 204 235 256 28 9 319
Loans 3,8 65 2,094 2,050 517 7,48 2 7,48 2 7,48 2 7,48 2
Cash and bank 1,249 1,358 3,266 3,306 9,919 7,130 4,792 2,436
Other current assets 2,036 1,917 2,333 1,766 1,099 1,099 1,099 1,099
Total assets 48,908 50,415 53,755 107,148 117,935 118,040 117,345 115,180
Equity
Capital 152 552 652 8 1,775 8 1,775 8 1,775 8 1,775 8 1,775
Other equity (26,341) (25,518 ) (22,8 49) 253 (3,536) (7,226) (10,8 05) (14,453)
Total equity (26,189) (24,966) (22,197) 82,028 78,239 74,549 70,969 67,321
Deferred tax liabilities (net) 270 749 613 (2,641) 495 495 495 495
Borrowings 33,458 64,593 68 ,430 21,015 30,255 34,006 36,8 01 38 ,225
Current liabilities
Trade payables 698 561 624 1 567 567 567 567
Provisions 12 9 18 15 — — — —
Other liabilities 40,659 9,469 6,267 6,730 8 ,38 0 8 ,423 8 ,513 8 ,571
Total equity and liabilities 48,908 50,415 53,755 107,148 117,935 118,040 117,345 115,180

COMMERCIAL REAL ESTATE: A PLAY ON INDIA’S GROWING SERVICE SECTOR

India today has one of the largest pools of highly qualified STEM graduates in the world and the second
largest English-speaking population—a combination of which fuels the growth of the service sector in India.
The services sector in India continues to be the key driver of the Indian economy and represented
approximately 63% of India’s gross value added in FY2020—commercial real estate being a direct beneficiary
of the growth in the services sector in India.
India is the fifth largest and one of the fastest growing major economies in the world. India’s
GDP was US$2.9 tn in 2019 (3.4% share in global GDP). As per IMF, India’s economy is
projected to contract by 4.5% in 2020, as economic activities were restricted due to
stringent lockdown on account of the Covid-19 pandemic, and to recover to 6% in CY2021.
Exhibit 45: India is the fifth largest and one of the fastest growing major economies in the world
GDP growth rate of India (%)
India GDP growth rate (%)

12
9.8 10.2
10 9.3
8 .3 7.9 8 .2
7.4 7.0
8 6.7 6.4 6.1 6.0
5.5
6
4.0 4.2
4
2
0
(2)
(4)
(6) (4.5)
2007
2008
2010
2011
2013
2014
2016
2018
2019
2006
2009
2012
2015
2017
2021F
2020F
Source: IMF
Service sector growth and windfall of demographic dividend

India is the second most populous country in the world and its young population (~333 mn)
(those between 15 and 29 years of age) constitutes 28% of the total population of the
country and is the largest in the world. India’s young population is expected to further grow
to 367 mn by 2021. Growing working class and increasing urbanization have further
facilitated the benefits of the demographic dividend on the service sector growth.
 Growing working class. At 494 mn people, India has a formidable and talented labor
base, which is expected to further increase by approximately 90 mn by 2030, this
structural driver will further increase office absorption, creating compelling opportunities
across the commercial real estate market in India.
 Increasing urbanization. At 461 mn, India had one of the highest urban populations in
the world in 2018 (approximately 1.4 times the total population of the US), which is
expected to further grow to 543 mn by the year 2025.

Technology sector—mainstay of services growth in India

India has emerged as a leading hub for technology and corporate services due to a highly
skilled and young workforce and a distinct competitive cost advantage. Indian technology
industry has witnessed consistent growth with a CAGR of 11.3% during FY2014-19. As per
NASSCOM, the number of direct employees in the technology sector has significantly grown
from 0.4 mn in FY2001 to 4.4 mn in FY2020. With ~90 mn people expected to be added to
the workforce by 2030, this structural driver will further increase office absorption.
Exhibit 46: Technology sector contributed to 38% of 243 mn sq. ft of office space absorbed
Sectoral absorption analysis across top seven markets in India (2015-1QCY20) (%)
Professional
services, 8 .8
Technology, 37.6
Others, 23.7
Media & Telecom,

3.5
Healthcare &
Pharmaceutical, 3.8
Engg. & BFSI, 11.7
Manufacturing, 7.9 E-commerce, 3
The Covid-19 pandemic has accelerated the structural shift to technology that was already
underway prior to the crisis in relation to the usage and deployment of technology,
especially cloud, data analytics, e-commerce and digital transformation. The global spending
on software and IT services is expected to grow at a robust rate during FY2020-25 and the
technology industry in India is expected to grow at a CAGR of 13% to US$350 bn by
FY2025 from an estimated US$191 bn in FY2020 due to the large STEM talent pool,
competitive cost advantage and favorable demographics in the country.
Exhibit 47: Employment in IT sector has grown at a CAGR of 13.5% over the past 19 years in India
Number of people employed in IT sector in India (mn)
4.6
4.4
4.4
4.2 4.1
4
4.0 3.9
3.8 3.7
3.6
3.4
3.2
2016 2017 2018 2019 2020
Source: NASSCOM

Key drivers for success of Indian technology industry
 Availability of highly skilled STEM talent pool. India has one of the largest pools of
highly-qualified STEM graduates in the world and the second largest English-speaking
population in the world. The technology industry is one of the largest private sector
employers, currently employing approximately 4.4 mn people directly. With over 4.8 mn
students having graduated in 2019 and with the talent pool in India expected to continue
to grow, it should attract demand from large multinational corporates.
Exhibit 48: India has one of the largest pools of highly-qualified STEM graduates in the world
Number of STEM graduates across different countries (2016) (mn)
5 4.7
3 2.6
1 0.6 0.6
0.3 0.2 0.2
0
China India United States Russia Iran Indonesia Japan
Source: World Economic Forum
 Competitive cost advantage. India is one of the preferred destinations for technology
services in the world and continues to be a leader in the global outsourcing industry with
a 56% market share. Out of the total export of IT and business process management
services expected in FY2020, exports to the US contribute approximately 62% followed
by the UK and continental Europe with approximately 17% and 11%, respectively.
Exhibit 49: Cost of sourcing services from India is ~81% lower as compared to tier-II cities in the US
Operating cost per full time employee (in US$ '000 per annum)
80
70
70
60
50
40
28 27 27
30
20 15 13
10
0
US Tier II Shanghai Bucharest Kuala Lumpur Manila India
Source: NASSCOM

 Low-cost, high quality office infrastructure. Due to multinational operations and a

global clientele, technology companies often require infrastructure that supports a 24/7
work environment. Availability of high-quality offices conforming to global standards at
low cost has further enhanced India’s appeal for such corporates.
Exhibit 50: GCCs in India have grown at a CAGR of 9% over the past two decades
GCC evolution in India , March fiscal year-ends, 2000-19 (no.s)
Number of GCCs in India

1,400
1,250
1,18 2
1,200
98 1
1,000
800
620
600
400 28 5
200
0
Pre-FY2000 FY2005 FY2010 FY2015 FY2019
Source: NASSCOM
Exhibit 51: GCC market size has increased from US$19.5 bn to US$28.3 bn at a CAGR of 9.8%
GCC revenues in India, March fiscal year-ends, 2015-19 (US$ bn)
GCC Revenue (US$ billion)

30 28.3
25
19.5
20
15
10
0
FY2015 FY2019
Source: NASSCOM
India’s office market—top-seven cities rank ahead of most global peers

Although India’s office markets are well established, India’s per capita office stock of 0.4 sq.
ft is minimal compared to developed markets such as the US (16.4 sq. ft), Hong Kong (8.6
sq. ft) and Singapore (5.2 sq. ft). Low per capital supply along with growth of services sector
in India and increasing traction from international tenants has led to a higher absorption in
major Indian cities compared to some of the other global office markets.

Top-7 cities in India (Chennai, Mumbai, Pune, Hyderabad, Bengaluru, NCR and Kolkata)
have seen a total net absorption of approximately 163.4 mn sq. ft. during CY2008 –
1QCY20. Grade-A office stock in these cities has grown at a CAGR of 11% during the same
period and was at ~496 mn sq. ft as of March 2020. Further, the individual CAGR of the top
-7 cities between CY2008 and 1QCY20 have been in the range of 8% to 15%.
Brookfield REIT’s key markets—Mumbai, Gurugram, Noida and Kolkata have exhibited
strong market dynamics with robust absorption and limited high-quality supply resulting in
lower vacancy levels and higher rental growth during the past five years. During CY2015 -
1QCY20, 41.8 mn sq. ft of non-strata supply was delivered in the Brookfield REIT markets,
while the net absorption was 41 mn sq. ft. During the same period, vacancy decreased by
approximately 120 bps on the back of robust demand and improved infrastructure.
Exhibit 52: Vacancy is forecasted to rise to 12.7% with anticipated supply of 109 mn sq. ft
Demand-supply trend of Grade-A office space across top seven cities in India, December year-ends, 2015-22E
(mn sq. ft, %)
Supply (msf) [LHS] Net absorption (msf) [LHS] Vacancy (%) [RHS]
50 13.3 14
12.7 12.7
11.8 12.1 11.8 11.6
11.0 12
40 10.5
42.6 43.0
40.5
10
30 32.4 8
29.5 29.7 30.0
28 .0
42.1 6
20 37.8
32.9 31.8 31.2
27.4 4
23.3 23.6
10
9.2 2
5.9
0 0
2015 2016 2017 2018 2019 1QCY20 2020F 2021F 2022F
Exhibit 53: India’s per capita office stock of 0.4 sq. ft is minimal compared to developed markets
Per capita office stock across developed countries (in sq. ft)
18
16.4
16
14
12
10 8 .6
8
5.7
6 5.2
4 3.2
2
0.5 0.4
0
US Hong Kong UK Singapore Australia China India

Exhibit 54: Indian office market presents significant growth potential

Comparison of net absorption of office stock in key Indian cities and global cities (in msf) (2015 -1QFY20)
60
50.3
50
40 34.7
29.5 27.7
30 24.7 22.9 23.4
21 22
20 15.6
10.8 11.1 9.9
10 4.1 5.7 5.2 5.3 4.6
0
Bengaluru
Singapore
Tokyo
NCR
Hyderabad
Beijing
Shanghai
New York
Pune
Kolkata
San Francisco
Hong Kong
Sydney
Central London
Mumbai Region
Chennai
Munich
Greater Los Angeles

Exhibit 55: Rental yields in India offer higher yields and are available at attractive capital values
Rentals across different cities as of March 2020 (US$/sq. ft)
Rentals in USD psf per month

12 11.4
10.4
9.9
10
8 7.3 6.9
6.1
6 5.0 4.8
4.2
3.5 3.5
4
1.8
2 1.2 1.2 1.2 0.9 0.9 0.6
0
Singapore
Tokyo
Mumbai region
NCR
Hyderabad
Bengaluru
San Francisco
Beijing
Los Angeles
Hong Kong
Kolkata
Pune
Sydney
Shanghai
Chennai
London
Munich
New York

Exhibit 56: Rentals have grown at a CAGR of 4.8% during CY2015-19 in top seven markets
Rental trends across top seven office markets in India, December year-ends, 2015-1QCY20
130
120.9 121.8
120
111.8
108 .8
110 105.6
100
100
90
80
70
2015 2016 2017 2018 2019 1QCY20

INDIA
Strategy
Market OCTOBER 18, 2021
UPDATE
BSE-30: 61,766
The curious case of DMART’s market capitalization. The market capitalization of

DMART at Rs3.2 tn (US$42 bn) would suggest that the market expects DMART’s
market capitalization to be around Rs70-90 tn by FY2050 when India’s GDP per capita
will reach China’s current GDP per capita of US$11,000. The three largest Chinese
retailing companies (largely e-commerce) have a combined market capitalization of
US$0.75 tn (Rs55 tn) currently; they have other businesses too.
Market is super-optimistic on DMART’s growth QUICK NUMBERS
DMART’s current market capitalization of Rs3.2 tn (US$42 bn) will imply a market capitalization  Current market cap.
of Rs70 tn using a WACC of 11% and market capitalization of Rs90 tn using a WACC of 12% implies Rs70-90 tn
by FY2051. India’s GDP per capita will reach China’s current GDP per capita by then. The top- market cap. by
10 Chinese retailing (largely e-commerce) companies have a combined market capitalization of FY2051
US$1 tn (Rs75 tn); see Exhibit 1. We note that some of them have other businesses, the value of
which reflects in their overall market capitalization. It appears that the market is very confident of  Current market cap.
(1) strong growth in India’s GDP for the next several years, (2) large retailing market opportunity implies Rs4 tn of net
in terms of revenues and profits and (3) flawless execution on part of DMART. profits by FY2051
Assumption #1: India will reach China’s current GDP per capita in about 30 years  Current market cap.
This is feasible if India’s GDP was to grow at 7% and its GDP per capita was to grow at 6% per
implies 23% share
annum. China’s GDP per capita is currently US$11,000 and India’s US$2,000. India’s GDP per of India’s formal
capita will be about 5.5X if it was to compound at 6% for 29 years. We note that India’s GDP urban grocery
has grown at an average rate of 6.7% over FY2011-20 (see Exhibit 2). We are hopeful about market in FY2051
acceleration in India’s GDP growth on the back of economic reforms and a multi-year
investment cycle, which could result in a virtuous cycle of investment and consumption.
Assumption #2: Retailing market will present a large and profitable opportunity
A simple analysis (see Exhibit 3) shows that DMART would have to reach sales of around Rs70
tn, EBIT of Rs5.3 tn and net profits of Rs4 tn in FY2050 to justify today’s market capitalization.
We use a 20X P/E multiple for DMART in FY2051, which seems reasonable in the context of the
‘mature’ state of India’s economy and retailing market by then. Our grocery market forecasts
for FY2051 (see Exhibit 4) suggest that DMART would have to achieve 8% market share of
India’s total grocery market, 12% of India’s urban grocery market and 23% of India’s formal
urban grocery market. We assume 45% of India’s population and 30% of consumption will be
in rural markets in FY2050, which will largely be outside the purview of formal retailing. The Sanjeev Prasad
share of rural population in China’s total population is about 35% currently.
Assumption #3: Flawless and superior execution versus several other competitors Anindya Bhowmik
The current market capitalization also implies rapid expansion of DMART’s digital and physical
infrastructure that will enable it to meet the implied revenue and profit numbers (if not higher)
Sunita Baldawa
for FY2050. We are not sure how to convert the implied FY2050E revenues into digital and
physical infrastructure since the mix of offline and online retailing is a big variable.
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
India Strategy
Exhibit 1: Top-10 listed retail companies based out of China are worth close to US$1 tn currently
Market cap. of listed Chinese retail companies, calendar year-ends, 2015-21 (sorted on current market cap.)
(US$ bn)
Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Current

Alibaba Group Holding 201 219 442 355 569 630 457
JD.com 45 35 59 30 51 138 127
Pinduoduo NA NA NA NA NA 156 118
China Tourism Group Duty Free 9 6 13 17 25 84 79
Yihai Kerry Arawana Holdings NA NA NA NA NA 90 53
ANTA Sports Products 7 7 12 13 24 43 44
JD Health International NA NA NA NA NA 62 30
Li Ning Co 1 1 2 2 7 17 28
Zhongsheng Group Holdings 1 2 5 5 9 16 21
Mango Excellent Media 2 1 2 5 9 20 11
Total 266 272 535 428 695 1,255 968
Source: Bloomberg, Kotak Institutional Equities
Exhibit 2: India's GDP grew at 12.3% CAGR in nominal terms and 6.7% CAGR in real terms over FY2010-20
Annual nominal and real GDP growth rate of India, March fiscal year-ends, 2011-20 (%)
Nominal GDP growth (%) Real GDP growth (%)

25
20
15
10
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: CEIC, Kotak Institutional Equities
Exhibit 3: DMART market cap. implies net profits of Rs3.2-4 tn in FY2051

Estimate of net profits and sales of DMART, March fiscal year-end, 2051 (Rs tn)
Implied market capitalization of DMART in FY2051 @11.5% WACC 80 80

P/E multiple (X) 20 25
Net profits 4.0 3.2
Pre-tax profits 5.3 4.3
EBIT (assuming no interest) 5.3 4.3
Sales (assuming 8% EBIT margin) 67 53
Source: Kotak Institutional Equities estimates

Strategy India
Exhibit 4: We estimate India's organized grocery market to reach Rs300 tn by FY2051

Estimated size of India's grocery market and share of various entities, March fiscal year-ends, 2021-51E (Rs tn)
2021-25 2025-36 2036-51
2021E 2025E 2036E 2051E (% CAGR) (% CAGR) (% CAGR)
Breakdown of market between rural and urban
Total grocery market size 54 83 236 859 11 10 9
Market size—rural 22 33 83 258
Market size—urban 33 50 153 601
Organized market size—urban 4 9 46 301 24 16 13
Online market size—urban 0 1 14 150 41 24 17
Offline organized market size—urban 3 7 32 150 22 14 11
Organized market share—urban (%) 11 18 30 50
Online market share—urban (%) 9 15 30 50
Breakdown of market between organized and unorganized
Organized market size (Rs tn) 4 9 46 301 24 16 13
Organized market as % of total (%) 7 11 20 35
Organized online as % of total (%) 1 2 6 18
Organized offline as % of total (%) 6 9 14 18
Unorganized market size (Rs tn) 51 74 190 558 10 9 7
Unorganized market size—rural 22 33 83 258
Unorganized market size—urban 29 41 107 301
Unorganized market as % of total (%) 93 90 81 65

REDUCE
UltraTech Cement (UTCEM)
https://ultraviewer.et/en/own Construction Materials OCTOBER 18, 2021
load.html
RESULT
Seasonal hiccup but buoyant commentary. UTCEM‘s 2QFY22 EBITDA was CMP (`): 7,398
marginally higher than our estimates on higher-than-expected realizations. Margins Fair Value (`): 7,400
remained under pressure qoq with higher costs and lower volumes. Fuel cost inflation
BSE-30: 61,766
will keep costs elevated; however, we expect price hikes amid a strong demand
environment to offset it. Expansion projects are on track and we estimate UTCEM to
become net debt-free by end-FY2022E despite growth capex. Increase Fair Value on
rollover. Maintain REDUCE.
UltraTech Cement
Stock data Forecasts/valuations 2022E 2023E 2024E
CMP(Rs)/FV(Rs)/Rating 7,398/7,400/REDUCE EPS (Rs) 263.7 303.4 350.4
52-week range (Rs) (high-low) 8,073-4,440 EPS growth (%) 36.5 15.1 15.5
Mcap (bn) (Rs/US$) 2,136/28.4 P/E (X) 28.1 24.4 21.1
ADTV-3M (mn) (Rs/US$) 2,680/36 P/B (X) 4.2 3.7 3.3
Shareholding pattern (%) EV/EBITDA (X) 14.9 13.3 11.5
Promoters 60.0 RoE (%) 16.1 16.3 16.5
FPIs/MFs/BFIs 17.1/9.6/4.8 Div. yield (%) 0.3 0.3 0.3
Price performance (%) 1M 3M 12M Sales (Rs bn) 593 628 696
Absolute (4.1) 0.9 65.0 EBITDA (Rs bn) 143 154 169
Rel. to BSE-30 (9.3) (15.3) 9.6 Net profits (Rs bn) 76 88 101
2QFY22—EBITDA outperformance on higher-than-expected prices

UTCEM’s earnings were higher than our estimates—the company reported India operations
EBITDA of Rs27 bn (+2% yoy, -17% qoq) against our estimate of Rs25.5 bn. Volumes increased
6% yoy to 20.4 mn tons (flat qoq), in line with our estimate. Blended realizations increased to
Rs5,643/ton (+8% yoy, +1% qoq) on higher premium product sales and trade volumes.
Costs/ton increased to Rs4,318/ton (+13% yoy, +8% qoq) due to higher energy and freight
costs and were 3% higher than our estimates led by higher other expenses. EBITDA/ton
declined to Rs1,325/ton (-4% yoy, -17% qoq; KIE: Rs1,250/ton).
Expansion remains on track; focus on sustainability to aid margins
The management maintained its guidance for completion of its 19.5 mtpa grinding and 11.1
mtpa clinker capacity expansions by FY2023-end. UTCEM’s India capacity would increase to 131
mtpa by FY2023E (capex of US$46/ton) or at a two-year CAGR of 5.5%, ahead of industry
capacity growing at 4.4% CAGR. Further, WHRS capacity would increase from current 137 MW
(+12 MW in 2QFY22) to 300 MW by FY2023E-end, increasing the share of green power to
34% by FY2024E from 15% in 2QFY22. This shall result in annual power costs saving of Rs6 bn
or Rs60/ton annually.
Deleveraging to continue despite aggressive growth capex
With strong operational cash flows, we estimate 4-6% FCF yield in FY2021-24E despite growth
capex and to help UTCEM become net cash positive in FY2022E. UTCEM in the past added
leverage for inorganic growth; however, given no major cement asset on the block, we do not
see M&A as a likely risk. The management’s narrative suggests focus on RoE expansion towards
18% from current 15% and maintaining 15-20% dividend payout. Sumangal Nevatia
Maintain REDUCE with a revised Fair Value of Rs7,400 (from Rs6,950)

The management is confident of strong demand recovery (6-8% yoy in 2HFY22) post the Prayatn Mahajan
monsoons. Costs (fuel, freight) are expected to inch up further; however, we expect strong
demand in 2HFY22E to allow producers to pass the cost inflation into prices. We have
maintained our EBITDA estimates for FY2022/23/24E mainly led by higher prices, offset by
higher costs. Our Fair Value increases to Rs7,400 (from Rs6,950) on roll-forward to December
2022 and maintain our REDUCE rating.
Contact: +91 22 6218 6427
UltraTech Cement Construction Materials
Exhibit 1: UTCEM's India operations EBITDA/ton declined 17% qoq on lower prices and higher costs
Quarterly results for UTCEM India operations, March fiscal year-ends, 2QFY21-22, 2021-22E (Rs mn)
Change (%)
2QFY22 2QFY22E 2QFY21 1QFY22 KIE yoy qoq 1HFY22 1HFY21(% chg.) FY2022E
Net sales 115,280 110,842 100,040 114,500 4 15 1 229,780 173,500 32 577,657
Raw materials (12,790) (13,533) (13,640) (10,730) (5) (6) 19 (23,520) (23,510) 0 (90,555)
Employee costs (6,460) (5,628) (5,360) (5,580) 15 21 16 (12,040) (10,680) 13 (24,753)
Power costs (24,100) (24,244) (17,630) (23,060) (1) 37 5 (47,160) (30,450) 55 (130,939)
Freight costs (26,480) (26,878) (22,830) (26,310) (1) 16 1 (52,790) (38,770) 36 (129,252)
Other costs (16,370) (15,103) (12,320) (13,730) 8 33 19 (30,100) (20,360) 48 (62,184)
Total Costs (88,210) (85,386) (73,470) (81,850) 3 20 8 (170,060) (126,670) 34 (437,682)
EBITDA 27,070 25,455 26,570 32,650 6 2 (17) 59,720 46,830 28 139,974
EBITDA (%) 24.7 24.8 27.8 30.3 27.5 29.3 24.2
Other income 1,420 2,040 1,270 2,040 (30) 12 (30) 3,460 4,030 (14) —
Interest (2,250) (3,200) (3,480) (3,200) (30) (35) (30) (5,450) (7,310) (25) (12,422)
Depreciation (6,490) (6,330) (6,450) (6,330) 3 1 3 (12,820) (12,640) 1 (28,452)
PBT 19,750 17,965 17,910 25,160 10 10 (22) 44,910 30,910 45 99,100
Tax (6,460) (4,230) (5,690) (8,340) 53 14 (23) (14,800) (9,350) 58 (35,766)
Extraordinaries — — — — — (1,580) —
Reported PAT 13,290 13,735 12,220 16,820 (3) 9 (21) 30,110 19,980 51 63,334
Adjusted PAT 13,290 13,735 12,220 16,820 (3) 9 (21) 30,110 21,070 43 63,334
EPS 46 48 45 58 104 73 43 219
Sales (mn tons) 20.4 20.4 19.2 20.5 0 6 (0) 41.0 33.2 24 96.4
Realization (Rs/ton) 5,643 5,443 5,208 5,577 4 8 1 5,610 5,234 7 5,990
Cost (Rs/ton) (4,318) (4,193) (3,825) (3,987) 3 13 8 (4,152) (3,821) 9 (4,538)
Raw materials (626) (665) (710) (523) (6) (12) 20 (574) (709) (19) (939)
Employee costs (316) (276) (279) (272) 14 13 16 (294) (322) (9) (257)
Power & fuel costs (1,180) (1,191) (918) (1,123) (1) 29 5 (1,151) (919) 25 (1,358)
Freight costs (1,296) (1,320) (1,188) (1,282) (2) 9 1 (1,289) (1,170) 10 (1,340)
Other costs (801) (742) (641) (669) 8 25 20 (735) (614) 20 (645)
Profitability (Rs/ton) 1,325 1,250 1,383 1,590 6 (4) (17) 1,458 1,413 3 1,451
Key highlights from the conference call
 Demand outlook. 2QFY22 witnessed weak volumes qoq on the back of stringent
regional restrictions and severe monsoons pan-India. Volumes have shown a marginal
improvement since October as monsoons recede. The management refrained from giving
any guidance but expects demand to come back sharply post the monsoons and expects
volumes to grow by 6-8% yoy in 2HFY22E. The management expects to make up for the
lost volumes from a strong pickup in demand primarily led by pickup in commercial real
estate and higher government infrastructure spends on railways, road and irrigation
projects.
 Price guidance. The company indicated that they have taken a price hike of Rs10-15/bag
mom in October 2021, thereby returning to pre-monsoon levels. The management
indicated that the current round of price hikes have sustained in most markets. The
company plans to pass on the impact of rising fuel costs in the form of higher cement
prices in the coming months.
 Cost guidance. UTCEM increased its dependence on pet coke in 2QFY22 to 19% of the
fuel mix (17% in 1QFY22) given the continuous increase in thermal coal prices. The
management expects a cost headwind of Rs200/ton in 3QFY22 from higher fuel prices.
Freight costs are also expected to increase driven by increased diesel prices. As per the
management, there could be another Rs500/ton increase in fuel cost in the coming
quarters at spot coal prices; however, they see the current surge as transient. The
management expects fixed costs to remain in the range of Rs50-55 bn in FY2022 and the
company shall calibrate discretionary spends with the ongoing demand volatility.
Imported coal forms 80-85% of the overall coal mix.

Construction Materials UltraTech Cement
 Update on expansion projects. Majority of the expansion projects remain on track

barring a couple of smaller projects facing marginal delays. Most of the orders for
equipment have been placed and civil work has also commenced for the 20 mtpa
expansion projects. Commercial production from these capacities would go on stream in
a phased manner, during FY2022-23E. The Super Dalla plant has received stage 1
clearance from MoEF and the company plans to commission this 2.3 mtpa clinker plant
by 2QFY23E. UTCEM will commission cement capacity of 5.4 mtpa in FY2022 and 14.1
mtpa in FY2023. It has also started the expansion of the wall putty plant, which is
expected to commission by 2QFY23E.
 Capex guidance. The management has guided for capex spends of Rs50/30 bn for
FY2022/23E primarily towards the completion of the recently announced cement capex
projects (in North, East and Central India) and 180 MW of WHRS capacity. Capex spent in
1HFY22 stood at Rs21 bn (Rs5.2 bn in 1HFY21).
 Net debt increased by Rs7 bn (+6%) qoq. Net debt increased by 6% qoq but declined
47% yoy to Rs63 bn as of September 2021. Net debt increased despite strong
operational cash-flow due to seasonal increase in value of working capital and higher
capex spends during the quarter. Net debt/EBITDA remained stable at 0.5X as of 2QFY22
from 1.3X in 2QFY21.
 RMC business update. RMC revenues increased 57% yoy to Rs6.1 bn. The management
continues to increase its dealer network to 148 (+43 RMC plants yoy). The management
remains confident on the growth prospects of the RMC business. The management
shared that the RMC business enjoys RoCEs >25% and margins at 4-5% higher than grey
cement margins.
 Capital allocation. The management order of priority on allocation of cash flows

remains limited to (1) existing capex programs, (2) higher dividends and (3) Rs100 bn of
liquidity to pursue any inorganic expansion opportunities.
 RoE guidance. The management guided for RoEs of 18%+ by FY2025E from 15% in
FY2021.
 Incentives. Receipt of incentives at its Dhar project inflated the other operating income
during the quarter and the management guided to see it as a one-off gain.
 Trade sales increase. Trade sales remained stable qoq at 69% in 2QFY22. Premium
cement sales increased 14% yoy in 2QFY22.
 Lead distance. Lead distance remained stable qoq at 430 km in 2QFY22.
 Share of green power to increase. The company aims to meet 34% of its energy
consumption from green sources by FY2024. The current WHRS capacity of 137 MW is
expected to augment by an additional 60-80 MW each in FY2022/23/24E reaching 300
MW by FY2024E-end. We estimate ~Rs6 bn or Rs60/ton annual cost reduction from 180
MW WHRS capacity from FY2024E onwards. Share of green power stood at 13.7% as of
2QFY22.
 Bicharpur coal block. UTCEM expects to begin production from this block in 3QFY22E.
The block has extractable reserves of 29.12 mn tons.

Exhibit 2: UTCEM’s realizations increased 1% qoq in 2QFY22 Exhibit 3: UTCEM’s volumes increased 6% yoy in 2QFY22
Realization/ton for UTCEM, 2QFY19-22 (Rs/ton, % yoy) Volumes for UTCEM, 2QFY19-22 (mn tons, % yoy)
Realization (Rs/ton) (LHS) % Change (yoy) (RHS) Volumes (mn tons) (LHS) % Change (yoy) (RHS)
5,800 12 30 60
5,600 10 50
25
40
5,400 8
30
5,200 6 20
20
5,000 4 15 10
4,800 2 -
10
(10)
4,600 -
(20)
4,400 (2) 5
(30)
4,200 (4) - (40)
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates
Exhibit 4: UTCEM’s cost/ton increased 8% qoq in 2QFY22 Exhibit 5: UTCEM’s EBITDA/ton declined 17% qoq in 2QFY22
Cost/ton for UTCEM, 2QFY19-22 (Rs/ton, % yoy) EBITDA/ton for UTCEM, 2QFY19-22 (Rs/ton, % yoy)
Cost (Rs/ton) (LHS) % Change (yoy) (RHS) EBITDA (Rs/ton) (LHS) % Change (yoy) (RHS)
4,400 15 1,800 60
4,300 1,600 50
4,200 10 1,400 40
4,100 1,200 30
5
4,000 1,000 20
3,900 800 10
-
3,800 600 -
3,700 (5) 400 (10)
3,600 200 (20)
3,500 (10) - (30)
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21
1QFY22
2QFY22
Source: Company, Kotak Institutional Equities estimates Source: Company, Kotak Institutional Equities estimates

Exhibit 6: UTCEM’s consolidated net debt increased 6% qoq to Rs63 bn

Net debt, net debt/EBITDA for UTCEM, March fiscal year-ends, 2QFY20-22, 2022-24E (Rs bn, X)
Consolidated Net debt (Rs bn) Net debt/EBITDA (X)

250 206 2.5
186
200 169 2.0
2.3 147
150 121
2.0 94 1.5
100 1.8 1.7 67 60 63
50 1.3 (6) (91) 1.0
(197)
0 0.9 0.5
(50) 0.6 0.5 0.5 0.0
(100) -0.04 (0.5)
(150)
(200) -0.59 (1.0)
-1.17
(250) (1.5)
3QFY20
4QFY20
2QFY21
3QFY21
1QFY22
2QFY22
2QFY20
1QFY21
4QFY21
2023E
2024E
2022E
Exhibit 7: UTCEM capacity is expected to grow at CAGR of 5.5% over FY2020-23

Capacity, capacity addition details for UTCEM, March fiscal year-ends, 2021-23E (mn tons)
135
2.8 130.85
130 9.4
125
120 3.5 0.6
115 3.2
111.35
110
105
100
FY2021 2QFY22 1QFY23 2QFY23 3QFY23 4QFY23 FY2023 End
Capacity Capacity

Exhibit 8: UTCEM is on track to increase the share of green power to 34% by FY2024E
Share of green power for UTCEM, March fiscal year-ends, 2018-24E (mn tons)
Green Power (% of total power requirement)

40
34
35
30 28
25
20 18
15 13
10
10 8 7
5
0
FY2018 FY2019 FY2020 FY2021 FY2022E FY2023E FY2024E
Exhibit 9: Cement prices are expected to remain elevated in 3QFY22E on recent price hikes taken in October 2021
Quarterly trend in cement prices in India across geographies, 3QFY20-22E (Rs per 50 kg bag)
3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22E 3QFY22E
North 345 357 367 356 370 362 364 368 374
Central 345 354 362 355 361 355 360 357 367
East 336 343 346 337 331 318 347 351 341
West 315 327 347 343 335 334 347 354 366
South 293 301 393 383 378 365 398 392 395
All India average 322 331 368 360 360 351 369 369 374
Change per bag (%, qoq)
North (1) 3 3 (3) 4 (2) — 1 2
Central (4) 3 2 (2) 2 (2) 1 (1) 3
East (4) 2 1 (3) (2) (4) 9 1 (3)
West (4) 4 6 (1) (2) (0) 4 2 4
South (4) 3 31 (3) (1) (3) 9 (1) 1
All India average (4) 3 11 (2) — (2) 5 (0) 1
Change per bag (%, yoy)
North 15 17 4 2 7 1 (1) 3 1
Central 5 6 (1) (1) 5 — (0) 1 1
East 2 4 (5) (4) (1) (7) — 4 3
West 3 5 — 4 6 2 — 3 10
South (11) (13) 19 25 29 21 1 3 5
All India average — 1 5 8 12 6 — 3 4

Exhibit 10: UTCEM (India operations), changes in estimates, March fiscal year-ends, 2022-24E
Revised estimate Previous estimate Change (%)

2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E
India Operations
Volumes 96 104 113 96 104 113 0 0 0
Realization (Rs/ton) 5,990 5,882 6,000 5,657 5,770 5,885 6 2 2
Cost (Rs/ton) 4,538 4,428 4,537 4,206 4,321 4,429 8 2 2
EBITDA (Rs/ton) 1,451 1,454 1,462 1,451 1,449 1,457 0 0 0
India (Rs mn)
Revenues 577,657 612,551 680,842 545,565 600,908 667,900 6 2 2
EBITDA 139,974 151,463 165,948 139,939 150,901 165,323 0 0 0
Consolidated (Rs mn)
Revenues 593,031 627,926 696,217 560,939 616,282 683,275 6 2 2
EBITDA 142,565 154,054 168,539 142,529 153,492 167,913 0 0 0
EPS 264 304 351 264 302 349 0 0 0
Exhibit 11: Our assumptions factor a strong volume growth over FY2021-24E from ramp-up of acquired assets
Key assumptions for UTCEM (India operations, consolidated), March fiscal year-ends, 2017-24E (Rs bn, Rs/ton)
2017 2018 2019 2020 2021 2022E 2023E 2024E
India Operations
Capacity (mtpa) 80 98 105 111 113 118 131 131
Utilization (%) 62 66 79 71 73 82 80 87
Volumes (mn tons) 49 64 82 79 83 96 104 113
% yoy — 31 28 (4) 5 17 8 9
Realisation (Rs/ton) 4,853 4,557 4,915 5,157 5,222 5,990 5,882 6,000
Costs (Rs/ton) 3,848 3,717 4,046 4,004 3,852 4,538 4,428 4,537
EBITDA (Rs/ton) 1,005 840 869 1,153 1,370 1,451 1,454 1,462
Revenue (Rs mn) 238,914 293,579 404,808 406,180 431,150 577,657 612,551 680,842
Costs (Rs mn) 189,415 239,452 333,258 315,390 318,060 437,682 461,088 514,895
EBITDA (Rs mn) 49,499 54,127 71,550 90,790 113,090 139,974 151,463 165,948
Consolidated
Revenues (Rs mn) 250,916 309,786 416,088 424,299 447,258 593,031 627,926 696,217
EBITDA (Rs mn) 49,291 61,452 73,469 92,472 115,679 142,565 154,054 168,539
PAT (Rs mn) 27,135 22,246 24,004 57,521 53,168 76,114 87,572 101,128
Net Debt (Rs mn) 8,147 153,120 230,808 169,810 67,170 (5,573) (90,633) (197,414)
Capex (Rs mn) (12,593) (18,828) (68,557) (16,103) (18,387) (45,000) (30,000) (25,000)
Exhibit 12: We increase our Fair Value to Rs7,400/share (Rs6,950/share earlier) on rollover to
December 2022
UTCEM, valuation details, March fiscal year-end, December 2023E financials
Multiple EV
Rs bn (X) Rs bn Rs/share
Valuation
Consolidated EBITDA 165 10.5 1,739 6,026
Net-debt (adjusted for dividends and tax credit) (220) (763)
CWIP 174 601
Equity value 2,133 7,400
TP (Rs/share) 7,400

Exhibit 13: UTCEM, profit model, balance sheet and cash flow model (consolidated), March fiscal year-ends, 2017-24E (Rs mn)
2017 2018 2019 2020 2021 2022E 2023E 2024E

Profit model (Rs mn)
Net sales 250,916 309,786 416,088 424,299 447,258 593,031 627,926 696,217
EBITDA 49,291 61,452 73,469 92,472 115,679 142,565 154,054 168,539
O ther income 9,314 5,886 4,634 6,511 7,342 11,321 14,485 20,249
Interest (6,401) (12,376) (17,779) (19,917) (14,857) (10,638) (7,138) (6,088)
Depreciaiton (13,484) (18,479) (24,507) (27,227) (27,002) (29,090) (30,130) (31,170)
Profit before tax 38,720 36,482 35,818 51,840 81,162 114,159 131,272 151,531
Extra-ordinary items - (3,466) (1,133) — (2,607) — — —
Current tax (8,170) (6,846) (7,166) (9,203) (14,151) (27,851) (31,967) (36,853)
Deferred tax (3,416) (3,925) (3,515) 14,885 (11,237) (10,195) (11,733) (13,549)
Net profit 27,135 22,246 24,004 57,521 53,168 76,114 87,572 101,128
Adjusted PAT 27,121 25,734 25,169 57,553 55,809 76,195 87,669 101,225
Earnings per share (Rs) 99 94 92 199 193 264 304 351
Balance sheet (Rs mn)
Equity 243,919 263,812 337,507 390,437 441,746 502,685 572,803 653,766
Deferred tax liability 27,824 31,827 64,114 49,120 60,407 70,602 82,335 95,884
Borrowings 84,745 194,802 253,370 217,646 196,184 106,184 56,184 56,184
O ther Non current Liabilities 3,452 2,078 6,807 15,554 20,719 20,659 20,584 20,509
Total liabilities 422,189 571,506 765,374 792,198 861,835 867,823 909,159 1,022,306
Fixed assets 244,316 386,790 446,433 452,814 436,254 417,164 397,034 375,865
CWIP 9,215 15,112 11,486 9,095 16,810 51,810 71,810 86,810
Investments 12,721 14,870 13,862 16,618 12,554 12,554 12,554 12,554
Cash 22,488 2,191 7,397 5,399 20,076 2,819 37,879 144,660
O ther current assets 110,769 112,422 111,211 135,754 210,461 217,796 224,202 236,737
O ther Non current Assets 11,830 29,757 54,926 53,721 47,761 47,761 47,761 47,761
Goodwill 10,851 10,363 120,060 118,796 117,920 117,920 117,920 117,920
Total assets 422,189 571,505 765,374 792,198 861,835 867,824 909,160 1,022,306
Net Debt 8,147 153,120 230,808 169,810 67,170 (5,573) (90,633) (197,414)
Free cash flow (Rs mn)
O perating cash flow excl. working capital 41,122 54,606 66,304 83,269 101,529 114,714 122,087 131,685
Working capital changes 4,878 (12,554) (6,957) 5,157 23,289 17,580 3,155 6,174
Net finance cost/ income 2,913 (6,490) (13,144) (13,406) (7,515) 684 7,348 14,162
Cash flow from operations 48,913 35,562 46,202 75,020 117,303 132,978 132,590 152,021
Capital expenditure (12,593) (18,828) (68,557) (16,103) (18,387) (45,000) (30,000) (25,000)
Free cash flow 36,320 16,735 (22,355) 58,917 98,916 87,978 102,590 127,021
Ratios
Book value (Rs/share) 889 961 1,229 1,353 1,531 1,742 1,985 2,265
RoAE (%) 11.1 9.7 7.5 14.7 12.6 15.2 15.3 15.5
RoACE (%) 12.5 9.9 8.1 10.7 13.4 17.8 18.9 19.1
CRoCI (%) 17.0 12.5 12.4 21.8 19.1 23.5 25.2 27.9
EV (US$/ton) 366 333 299 283 250 231 200 187
EV/EBITDA 39.1 35.5 30.8 24.9 19.0 14.9 13.3 11.5
P/E 74.8 91.3 84.6 37.1 40.2 28.1 24.4 21.1
P/B 8.3 7.7 6.0 5.5 4.8 4.2 3.7 3.3
Net Debt/EBITDA 0.2 2.5 3.1 1.8 0.6 (0.0) (0.6) (1.2)

REDUCE
L&T Infotech (LTI)
https://ultraviewer.et/en/ownl IT Services OCTOBER 19, 2021
oad.html
RESULT
CMP (`): 5,906
Strong growth but valuations expensive. LTI reported strong organic revenue growth
Fair Value (`): 6,000
of ~8.5% led spending uptick and share gains, which will continue to power growth in
2HFY22. Margin headwinds were managed with 80 bps increase qoq despite a drop in BSE-30: 61,766
utilization. LTI’s business model is resilient and designed for scale and will be a top
beneficiary of industry demand uptick. Stock trades at full valuations. Retain REDUCE
with revised FV of Rs6,000—we raise FY2022-24E EPS by 3-7% taking cognizance of
good results.
L&T Infotech
Stock data Forecasts/valuations 2022E 2023E 2024E
CMP(Rs)/FV(Rs)/Rating 5,906/6,000/REDUCE EPS (Rs) 131.5 161.4 187.7
52-week range (Rs) (high-low) 6,499-2,821 EPS growth (%) 19.6 22.7 16.3
Mcap (bn) (Rs/US$) 1,035/13.8 P/E (X) 44.9 36.6 31.5
ADTV-3M (mn) (Rs/US$) 2,180/29 P/B (X) 11.7 9.5 7.8
Shareholding pattern (%) EV/EBITDA (X) 32.8 26.3 22.2
Promoters 74.3 RoE (%) 28.6 28.7 27.4
FPIs/MFs/BFIs 13.1/4.0/0.3 Div. yield (%) 0.6 0.7 0.8
Price performance (%) 1M 3M 12M Sales (Rs bn) 156 194 226
Absolute 3.3 38.0 92.5 EBITDA (Rs bn) 30 37 44
Rel. to BSE-30 (1.8) 21.8 37.0 Net profits (Rs bn) 23 28 33
Races ahead with sequential growth of 8.9% in c/c

LTI reported sequential growth of 8.3% in US$ terms to US$509 mn beating our estimates by
2.6%. CueLogic acquisition contributed Rs153 mn or ~40 bps to growth— organic c/c growth
was ~8.5%. Growth was democratic and broad based across verticals, geographies, services
and client base and led by strong demand for digital deals and elevated level of discretionary
spending. EBIT margin increased 80 bps qoq to 17.2%, 20 bps above estimates. 70-80 bps
headwind from lower utilization and headwind from higher employee cost was offset by 80 bps
lower SG&A expense as a % of revenue and higher working days. EBIT at Rs6.5 bn increased
14.1% qoq and 8.8% yoy and was 3.8% ahead of our estimate. Lower other income
suppressed the 1.4% beat at net profit, which grew 11.1% qoq and 20.8% yoy to Rs5.5 bn.
OCF generation was weak at 91.4% of net profit, while working capital cycle increased.
Strong demand environment to continue; qoq growth in 2HFY22 will be better than 1HFY22
Demand environment is exceptionally strong and powered by (1) discretionary spending on
effecting transformation roadmaps, (2) emergence of new areas of spending such as ESG and
cyber security where the opportunity potential is huge, creating a long runway for growth and
(3) global talent shortage, which is creating a demand for automation and staffing requirement
from IT vendors. The strong demand environment will continue for at least the next three years
as per the CEO. Growth is constrained by supply. Lack of adequate supply led to LTI leaving
some growth on the table. 2HFY22 will be better than 1HFY22 aided by seasonal strength for
LTI and strong demand as the company ramps up on people availability on demand.
Kawaljeet Saluja
Raise FV to Rs6,000; stock trades at full valuations; maintain REDUCE
We take cognizance of the strong revenue growth and outlook and increase FY2022-24
revenue estimates by 4-8%. EBIT margin estimates are largely unchanged. Our FY2022-24E EPS Sathishkumar S
increases by 3-7%. LTI’s strengths in core modernization, robust client base, smart S&M, strong
account mining and holistic participation in cloud and digital transformation journey of clients
will benefit from the demand uptick for the industry on a sustained basis. We increase our
target multiple to 34X September 2023E EPS (28X earlier) leading to FV increasing to Rs6,000
(from Rs4,500 earlier). Stock trades at full valuations. Maintain REDUCE.
Contact: +91 22 6218 6427
L&T Infotech IT Services
Aggressive increase in headcount; attrition rises despite generous wage revision

LTI added an impressive 4,034 employees on net basis, the highest ever and a qoq increase
of 77%. Fresher hiring target in FY2022 has been increased to 5,500 from 4,500 earlier
(~3,000 in FY2021). With the ramp up in headcount, LTI is well positioned to capture the
high demand expected in 2HFY22.
Attrition increased 440 bps qoq and 610 bps yoy to 19.6%. LTI’s high attrition of 19.6% on
ttm basis is only marginally lower than Wipro and Infosys. We are surprised with further high
attrition noting proactive measures including advancing wage revision cycle. Further, the
headcount is not as Bangalore heavy as peers.
High attrition will continue for 3-4 quarters and will subside as enough freshers are inducted
into the system. Attrition is highest in the 3-6 years band. IT industry did not hire enough
freshers in the previous 3-4 years due to demand issues leading to a backlog which is
currently being filled by aggressive hiring by all companies. Apart from fresher hiring and
lateral replacements LTI will (1) up skill and cross skill its existing workforce, (2) hire and train
employees with1-2 years of experience in new technologies and (3) tap non-tech workforce
to generate supply.
Broad-based revenue growth and improvement in client metrics

Revenue growth was led by the two largest verticals—BFS (32.5% of revenues) and
manufacturing (15.6% of revenues) which grew 10.6% and 12.9% respectively (qoq c/c
growth discussed). Others vertical grew 15%. Revenue growth was in the 6-7% range for
insurance, E&U and high-tech verticals. Growth was moderate in retail but will pick up from
the next quarter. On geography basis growth was strong across North America (9.1%),
Europe (7.5%), India (6.6%) and RoW (11.5%). Growth was broad based across service
lines and the client base as well.
Strong growth was accompanied by all-round improvement in client metrics. Number of

US$50 mn clients increased by 1 to 7, a new high. Number of US$20 mn clients increased
by 3 qoq and 5 yoy to 21.
Wins a large deal in Europe; not a meaningful contributor to growth at the

moment
LTI cleared the large deals’ drought of the previous quarter with a US$30 mn TCV win in
Europe. The deal will not be a meaningful contributor to growth given the strong flow of
short cycle deals. Pipeline of large deals is robust. However large deals are not the priority
for clients. Clients are busy with executing on transformation plans with bias towards speed
while dealing with double-digit attrition in workforce and do not have enough bandwidth
for large deals which typically involve consolidation, rebadging etc. We believe large deals
will return in FY2023 as clients’ bandwidth improves to manage large scale transformation
programs and decide on vendors. LTI can be a beneficiary courtesy its robust pipeline.
Key highlights from earnings call
 Return to office. Leadership team is back in office. Future operating model will be
hybrid with focus on seamless project governance, productivity and better employee
engagement. The model will be rolled out by the end of the year.
 Vertical-wise commentary. BFS- spending is shifting from run to modernization;

insurance-growth is picking up aided by efforts of new leadership; manufacturing-
pipeline is strong in industrial manufacturing and capital goods on account of investments
in new technologies and new ways of working. Key trends are core digitization which
includes ERP, leveraging real-time data from across organization and not just ERP systems
and changes in operating model such as D2C/ecommerce/real-time supply chain; E&U-
energy is volatile while demand is healthy in utilities; retail- demand is healthy and led by
cloud, ERP and data and new business models such as D2C and curbside pickup.

IT Services L&T Infotech
 Pricing. Pockets of opportunities to increase pricing. Focus is more on capturing growth.
 Data product business. Demand is healthy. The business significantly differentiates LTI in
data-to-decisions conversations with F-50 clients and is visible in strong growth in
analytics and data service line. LTI will continue to invest in data products business.
 Other highlights. New logo addition was strong; LTI will be in the leaders’ quadrant in
terms of growth in FY2022; 14-15% net profit margin guidance for FY2022; demand is
strong in Europe across verticals; dividend of Rs15/ share; size does not matter as
capabilities and expertise provide the edge to win in the market.; offshore mix can
continue to increase; LTI is better than peers in navigating changes with speed.
Exhibit 1: LTI: Consolidated quarterly results as per Ind-AS, March fiscal year-ends (Rs mn)
% chg.
2QFY22 2QFY22E 2QFY21 1QFY22 KIE yoy qoq 1HFY22 1HFY21 % chg. FY2022E FY2021 % chg.
Revenue (US$ mn) 509 496 405 470 2.6 25.8 8.3 979 795 23.2 2,093 1,670 25.3
Revenues 37,670 36,706 29,984 34,625 2.6 25.6 8.8 72,295 59,476 21.6 155,835 123,698 26.0
Employee costs (23,692) (22,979) (17,8 03) (22,08 2) 3.1 33.1 7.3 (45,774) (36,035) 27.0 (97,096) (74,28 9) 30.7
Other operating expenses (6,646) (6,58 8 ) (5,326) (6,066) 0.9 24.8 9.6 (8 ,8 22) (7,225) 22.1 (28 ,405) (22,158 ) 28 .2
EBITDA 7,332 7,139 6,855 6,477 2.7 7.0 13.2 17,699 16,216 9.1 30,333 27,251 11.3
Depreciation (8 50) (8 97) (8 99) (795) (5.2) (5.5) 6.9 (1,645) (1,68 0) (2.1) (3,434) (3,325) 3.3
EBIT 6,482 6,242 5,956 5,682 3.8 8.8 14.1 16,054 14,536 10.4 26,899 23,926 12.4
Other Income 437 701 579 526 (37.7) (24.5) (16.9) 963 1,227 (21.5) 2,544 2,651 (4.0)
Forex gains/(loss) 675 595 (212) 690 13.5 (418 .4) (2.2) 1,365 (202) (775.7) 2,456 93 2,541.1
Finance costs (174) (18 9) (192) (177) (7.7) (9.4) (1.7) (351) (400) (754) (78 8 ) (4)
Profit Before Tax 7,420 7,349 6,131 6,721 1.0 21.0 10.4 18,031 15,161 18 .9 31,145 25,882 20.3
Provision for Tax (1,903) (1,911) (1,563) (1,753) (0.4) 21.8 8 .6 (3,656) (2,98 8 ) 22.4 (7,973) (6,500) 22.7
Minority Interest (2) — (12) (5) (2) (10) (21) (21)
Net Profit (before EO) 5,515 5,438 4,556 4,963 1.4 21.0 11.1 14,373 12,163 18 .2 23,151 19,361 19.6
Extraordinary charge (net of taxes) — — — — — — — —
Net Profit- Reported 5,515 5,438 4,556 4,963 1.4 21.0 11.1 14,373 12,163 18.2 23,151 19,361 19.6
Recurring EPS (Rs/share) 31.4 30.9 26.0 28 .3 1.6 21.0 11.1 59.6 49.6 20.2 131.5 110.0 19.6
As % of revenues
EBITDA margin (post Fx gain/loss) 21.3 21.1 22.2 20.7 26.4 26.9 21.0 22.1
EBITDA margin (ex FX gain/loss) 19.5 19.4 22.9 18.7 24.5 27.3 19.5 22.0
EBIT margin (post forex gains/losses) 19.0 18 .6 19.2 18 .4 24.1 24.1 18 .8 19.4
EBIT margin (ex Fx gain/loss) 17.2 17.0 19.9 16.4 22.2 24.4 17.3 19.3
Net profit margin (%) 14.6 14.8 15.2 14.3 19.9 20.4 14.9 15.7
Effective tax rate (%) 25.6 26.0 25.5 26.1 20.3 19.7 25.6 25.1

Exhibit 2: Key changes to estimates, March fiscal year-ends, 2022-24E (Rs mn)
New Old Change (%)

2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E
Revenues 155,8 35 194,205 225,935 149,912 179,011 208 ,666 4.0 8 .5 8 .3
EBITDA (before Fx gain/(loss)) 30,333 37,48 5 43,651 29,8 11 34,8 42 40,629 1.8 7.6 7.4
EBIT (before Fx gain/(loss)) 26,8 99 33,8 15 39,38 8 26,226 31,166 36,38 2 2.6 8 .5 8 .3
Net profit 23,151 28 ,399 33,030 22,430 26,401 30,78 5 3.2 7.6 7.3
EPS (Rs/ share) 131.5 161.4 187.7 127.4 150.0 174.9 3.2 7.6 7.3
Revenues (US$ mn) 2,093 2,522 2,8 97 2,006 2,325 2,675 4.4 8 .5 8 .3
US$ revenue growth (%) 25.3 20.5 14.8 20.1 15.9 15.1
Revenue growth (c/c, %) 25.1 20.5 14.8 19.7 15.9 15.1
Revenue growth (organic c/c, %) 24.7 20.4 14.8 19.4 15.9 15.1
EBITDA margin (before Fx gain/(loss)) (%) 19.5 19.3 19.3 19.9 19.5 19.5 -42 bps -16 bps -15 bps
EBIT margin (before Fx gain/(loss)) (%) 17.3 17.4 17.4 17.5 17.4 17.4 -23 bps 0 bps 0 bps
Net profit margin (%) 14.9 14.6 14.6 15.0 14.7 14.8
Forex gains/(loss) 2,456 2,207 2,172 2,063 2,034 2,006 19.0 8 .5 8 .3
Exchange rate (Rs/US$) 74.5 77.0 78 .0 74.7 77.0 78 .0 (0.4) (0.0) 0.0
Exhibit 3: Revenue growth across geographies, verticals and service lines (Sep 2021)
Revenues Growth (%) Contribution to C/C growth (%)

US$ mn qoq yoy revenues (%) qoq yoy
Total revenues 509 8.3 25.8 100.0 8.9 25.5
Geographical split of revenues
North America 344 9.1 23.6 67.5 9.1 23.3
Europe 82 5.0 25.8 16.1 7.5 25.5
India 34 6.6 20.4 6.6 6.6 19.5
RoW 50 10.5 50.4 9.8 11.5 48 .5
Vertical split of revenues
Banking and financial services 165 9.6 36.8 32.5 10.6 36.0
Insurance 72 6.0 11.7 14.2 6.1 10.9
Manufacturing 79 12.6 21.2 15.6 12.9 20.8
Energy & utilities 45 5.9 5.7 8 .9 6.9 5.9
CPG retail and pharma 51 0.1 15.5 10.1 2.6 15.4
High-Tech, Media & Entertainment 64 6.5 48 .4 12.5 7.0 48 .4
Others 32 13.8 36.9 6.2 15.0 38 .4
Service line split of revenues
ADM and Testing 174 8 .9 19.5 34.2 9.2 19.3
Enterprise solutions 155 7.2 24.2 30.4 8 .1 23.6
Cloud infrastructure & security 71 1.7 22.3 14.0 2.7 22.7
Analytics, AI and Cognitive 62 12.0 43.6 12.1 12.1 43.6
Enterprise integration and mobility 47 15.7 41.0 9.3 16.7 41.1
Revenue metrics
Top 5 clients 144 8 .3 18 .3 28 .2
Top 10 clients 207 6.7 19.4 40.7
Top 20 clients 28 0 7.9 19.7 55.0
Ex-top 20 clients 229 8 .7 34.2 45.0

Exhibit 4: YoY revenue growth trend
USD yoy revenue growth (%)

30
25.8
23.4
25 21.6 21.4
19.7 20.5
20 18 .2
15.9
14.5 13.7
15 12.2 12.9 11.4 10.7
10.6 11.2
9.5
9.0 8 .5 9.1
10 7.1
0
Jun-17
Jun-18
Jun-20
Jun-21
Jun-19
Mar-18
Mar-19
Sep-16
Sep-17
Sep-19
Sep-20
Sep-21
Mar-17
Mar-20
Mar-21
Sep-18
Dec-18
Dec-19
Dec-16
Dec-17
Dec-20
Exhibit 5: SG&A decreases 80 bps to 11.5%
SG&A as a % of revenues
20
18 .5
17.9
18 17.1
16.8 16.817.0
16.416.2 16.2
15.915.7
16 15.415.5
14.6 14.814.7
14.2
13.7 13.6
14 13.0
12.4 12.3
12.011.7
11.5
12
10.1
10
Jun-15
Jun-18
Jun-19
Jun-16
Jun-17
Jun-20
Jun-21
Mar-16
Mar-18
Mar-19
Mar-20
Mar-17
Mar-21
Sep-15
Sep-18
Sep-19
Sep-16
Sep-17
Sep-20
Sep-21
Dec-15
Dec-17
Dec-18
Dec-19
Dec-16
Dec-20

Exhibit 6: Trend in gross margin
Gross margin (%)

37 36.4
35.8
35.4 35.235.1
35.0 34.8 34.8 35.0
34.5 34.3
35 34.0 33.9 34.0
33.8
33.5 33.333.5 33.1
32.832.5
33 32.0
31.831.7
31.0
31.0
31
29
27
Jun-15
Jun-16
Jun-19
Jun-20
Jun-17
Jun-18
Jun-21
Sep-15
Sep-16
Sep-19
Sep-20
Sep-17
Sep-18
Sep-21
Mar-16
Mar-17
Mar-19
Mar-20
Mar-21
Mar-18
Dec-15
Dec-16
Dec-18
Dec-19
Dec-20
Dec-17
Adjusted for one-time commercial settlement with a client for INR 617 million in Q4FY18
Exhibit 7: Trend in CFO as a % of net profit
CFO as a % of net profit

250 225.9
200
171.6
147.3 152.4
141.5
150 130.6 130.9
116.6
96.5 102.2 98 .0
93.7 91.4
100 8 1.4 8 2.3
70.7
53.1
44.0
50
12.0 19.0
0
Jun-17
Jun-19
Jun-21
Jun-18
Jun-20
Mar-17
Mar-19
Mar-20
Mar-18
Mar-21
Sep-17
Sep-19
Sep-21
Sep-18
Sep-20
Dec-16
Dec-18
Dec-19
Dec-17
Dec-20

Exhibit 8: Receivable days (including unbilled) trend: DSO unchanged at 98
Receivable days (LTM basis)

130
124
120 115
114
109 110 110
110 106 105 106
103 103 104
98 98 99 98 98
100
94 93 94
91
90
80
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Exhibit 9: Sharp uptick in attrition rate to 19.6%
19.7 Attrition (%)

19.5 19.6
20
18 .518 .4 18 .5 18 .318 .4
18 .1
17.5 17.7
18 16.9
16.5 16.5
16 15.115.3 15.2 15.2

14.7 15 14.614.8
13.5
14
12.412.3
12
10
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-15
Jun-16
Mar-21
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20

Exhibit 10: Wins a large deal in Europe after blip in 1QFY22

List of large deals announced by LTI since Mar-18 quarter
Period Vertical Nature of services New/Existing TCV (US$ mn)

Mar-18 E&U Application management and IT operations support New logo 25
Mar-18 BFS Core banking NA 25
Jun-18 CPG, retail and pharma ERP, data & analytics Existing 50
Sep-18 CPG, retail and pharma Managed services Existing 55
Dec-18 BFS Primary IT partner- multiple offerings Existing 50
Mar-19 Manufacturing Application operations Existing 92
Mar-19 Insurance IT landscape modernization New logo 40
Jun-19 Insurance IT infrastructure and IT security operations New logo 44
Sep-19 Energy & Utilties Cloud and infrastructure managed services New logo 53
Sep-19 Energy & Utilties Greenfield SAP S4/ HANA implementation New logo 15
Sep-19 BFS Managed services New logo 31
Dec-19 Manufacturing Application operations NA 60
Dec-19 Others Data management New logo 18
Mar-20 CPG, retail and pharma Managed services- apps and infra New logo 40
Mar-20 Others Applications, data and analytics NA 73
Jun-20 BFS IT infrastructure, cyber security, cloud migration NA 20
Sep-20 Others Data and analytics New logo 41
Dec-20 Hi-tech Infrastriucture and application operations support New logo 204
Dec-20 Energy & Utilties Application managed services New logo 74
Mar-21 Insurance Vendor consolidation Existing 21
Mar-21 BFS Core banking New logo 45
Jun-21 Others Managed services New logo 30
Note:
(a) KIE estmates used wherever data is not available
Exhibit 11: Segmental margin trend
Change (bps)
Verticals Margin (%) QoQ YoY Revenue mix (%)
BFSI 20.6 83 (269) 46.7
Manufacturing 23.8 460 (378 ) 15.6
E&U 16.9 (578 ) (736) 8 .9
Hi-tech, media & entertainment 15.7 147 (516) 12.5
CPG, retail, pharma & others 18 .9 129 59 16.3
Total 19.5 76 (340) 100.0

Exhibit 12: List of acquisitions since 2016
Date Company Country Capabilities Consideration (US$ mn)

Jun-21 Cuelogic India Digital engineering and outsourced software product development 8 .4
Oct-19 PowerupCloud Technologies India Cloud consulting, cloud managed services, Al and Data Analytics 15.0
Jul-19 Lymbyc India AI,ML and advanced analytics 5.5
Feb-19 Nielsen+Partners Germany Temenos WealthSuite impementation 31.6
Jan-19 Ruletronics US Pega implementation 7.5
Nov-17 Synchordis Luxembourg Core banking Temenos implementation 33.6
Oct-16 Augment IQ India Big data and analytics 1.0
Exhibit 13: Key model assumptions, March fiscal year ends, 2017-2024E
2017 2018 2019 2020 2021 2022E 2023E 2024E

INR/USD rate 64.5 70.0 71.4 74.1 74.5 77.0 78 .0 78 .0
Revenues (US$ mn) 1,132 1,349 1,525 1,670 2,093 2,522 2,897 3,248
% growth 16.7 19.1 13.0 9.5 25.3 20.5 14.8 12.1
C/c revenue growth (%) 10.2 14.7 20.9 14.2 8 .8 25.1 20.5 14.8
C/c revenue growth (organic %) 10.2 13.9 19.4 13.1 8 .6 24.7 20.4 14.8
EBITDA margin (%) 18 .9 16.3 19.9 18 .7 22.0 19.5 19.3 19.3
EBIT margin (%) 16.2 14.1 18 .4 16.1 19.3 17.3 17.4 17.4
NPM (%) 14.9 15.2 16.1 14.0 15.7 14.9 14.6 14.6
Headcount 21,023 24,139 28,169 31,437 35,991 45,840 51,589 58,189
Headcount addition 951 3,116 4,030 3,268 4,554 9,8 49 5,749 6,600
Blended pricing change (USD, %) (1.6) 0.5 0.7 (0.7) 0.1 (3.1) 1.7 2.5

Exhibit 14: LTI: Key operating metrics
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21

Revenues (US$ mn) 394 410 390 405 428 447 470 509
qoq growth (%) 8 .4 3.9 (4.8 ) 3.6 5.8 4.6 5.1 8 .3
Revenues (Rs mn) 28 ,111 30,119 29,492 29,98 4 31,528 32,694 34,625 37,670
Exchange rate 71.3 73.5 75.6 74.1 73.7 73.1 73.6 74.0
Revenue by verticals (%)
Banking and financial services 27.8 27.6 27.7 29.9 30.6 30.7 32.1 32.5
Insurance 17.7 16.8 17.2 16.0 15.0 14.5 14.5 14.2
Manufacturing 17.5 18 .0 15.8 16.2 16.8 16.9 15.0 15.6
Energy & utilities 11.3 11.4 10.8 10.6 10.0 9.1 9.1 8 .9
CPG retail and pharma 11.2 11.2 11.5 11.0 10.9 10.8 10.7 10.1
High-Tech, Media & Entertainment 10.8 11.0 11.6 10.6 10.6 11.8 12.7 12.5
Others 3.7 4.0 5.4 5.7 6.0 6.2 5.9 6.2
Revenue by service lines (%) - new classification
ADM
ADM and Testing 35.8 34.7 35.6 36.0 33.6 33.3 34.0 34.2
Enterprise solutions 28 .7 30.0 29.7 30.8 31.4 32.3 30.7 30.4
IMS 11.5 12.6 13.6 14.4 14.3 15.1 14.9 14.0
Testing
Analytics, AI and Cognitive 12.8 11.6 12.5 10.6 11.9 11.1 11.7 12.1
Enterprise integration and mobility 8 .5 8 .7 8 .6 8 .3 8 .8 8 .2 8 .7 9.3
Platform based solutions 2.7 2.5
Revenue by geographies (%) - new classification
North America 69.5 68 .9 70.8 68 .7 67.9 66.2 67.0 67.5
Europe 15.6 15.1 14.4 16.1 16.1 16.5 16.6 16.1
India 7.6 7.8 6.9 6.9 8 .6 8 .9 6.7 6.6
RoW 7.4 8 .1 7.9 8 .2 7.4 8 .4 9.6 9.8
Onsite-Offshore mix (%)
Onsite 21.9 21.5 21.1 19.4 18 .4 17.9 17.3 16.4
Offshore 78 .1 78 .5 78 .9 8 0.6 8 1.6 8 2.1 8 2.7 8 3.6
Revenue mix (%)
Onsite 49.0 50.9 49.2 46.5 44.3 44.1 42.7 40.8
Offshore 51.0 49.1 50.8 53.5 55.7 55.9 57.3 59.2
Billed person months
Onsite 15,198 15,044 14,634 13,8 8 7 13,8 36 14,044 14,791 15,111
Offshore 54,133 55,034 54,8 58 57,533 61,304 64,495 70,647 77,271
Total 69,331 70,078 69,492 71,420 75,140 78 ,539 8 5,438 92,38 2
Utilization (%)
Including trainees 79.2 79.3 79.4 8 0.5 8 1.1 8 0.8 8 3.7 8 1.6
Excluding trainees 8 1.3 8 0.6 79.6 8 2.0 8 4.1 8 2.2 8 4.1 8 3.7
Client metrics
Clients billed 429 424 409 419 419 427 438 463
Clients added 29 27 16 26 22 14 23 25
Revenue concentration (%)
Top 1 client
Top 5 clients 32.8 31.2 30.5 30.0 29.3 27.8 28 .2 28 .2
Top 10 clients 46.8 45.8 43.4 42.9 42.0 41.0 41.3 40.7
Top 20 clients 62.0 59.8 58 .2 57.8 57.1 55.6 55.2 55.0
Client size (ttm)
> US$1 mn 153 165 164 169 165 167 169 18 0
> US$5 mn 48 53 59 61 60 63 66 71
> US$10 mn 28 27 30 32 32 35 38 43
> US$20 mn 18 16 16 16 18 18 18 21
> US$50 mn 6 6 6 6 5 5 6 7
>US$100 mn 1 1 1 1 1 1 1 1
Employee metrics
Total employees (consolidated) 31,419 31,437 31,477 32,455 33,98 3 35,991 38 ,298 42,38 2
Development 29,669 29,68 3 29,712 30,68 2 32,194 34,176 36,431 40,395
Sales and support 1,750 1,754 1,765 1,773 1,78 9 1,8 15 1,8 67 1,98 7
Attrition (%) 17.7 16.5 15.2 13.5 12.4 12.3 15.2 19.6
Note
(a) Platform solutions grouped under Enterprise Solutions from 1QFY21

Exhibit 15: Condensed consolidated financials for LTIT, March fiscal year-ends, 2017-24E (Rs mn)
2017 2018 2019 2020 2021 2022E 2023E 2024E

Profit model
Revenues 65,009 73,065 94,458 108 ,78 6 123,698 155,8 35 194,205 225,935
EBITDA 12,302 11,876 18,833 20,292 27,251 30,333 37,485 43,651
Depreciation and amortization (1,779) (1,562) (1,472) (2,730) (3,325) (3,434) (3,670) (4,263)
EBIT 10,523 10,314 17,361 17,562 23,926 26,899 33,815 39,388
Other income 222 744 1,115 1,171 2,651 2,544 3,011 3,778
Forex gains/(loss) 1,645 3,357 1,8 26 2,121 93 2,456 2,207 2,172
Interest expense (32) — — (8 26) (78 8 ) (754) (8 34) (914)
Pretax profits 12,358 14,415 20,302 20,028 25,882 31,145 38,199 44,424
Tax (2,649) (3,291) (5,123) (4,8 25) (6,500) (7,973) (9,779) (11,372)
Adjusted profit from continuing ops 9,707 11,120 15,184 15,198 19,361 23,151 28,399 33,030
Adj diluted EPS (Rs) 55.8 63.5 86.4 86.6 110.0 131.5 161.4 187.7
Dividend per share (Rs) 16.6 21.5 28 .0 28 .0 40.0 42.0 47.0 54.0
Weighted avg fully diluted shares (mn) 174.0 175.0 175.6 175.5 176.0 176.0 176.0 176.0
Balance sheet
Total equity 31,443 38 ,598 48 ,938 54,040 73,034 8 8 ,793 108 ,920 132,446
Borrowings 0 1,042 936 3,204 859 859 859 859
Long term liabilities 456 411 347 9,230 8 ,446 9,446 10,446 11,446
Total liabilities and equity 44,344 53,826 66,692 88,249 107,091 128,466 156,381 186,560
Tangible fixed assets 2,578 2,508 3,052 11,723 10,078 12,479 14,962 17,570
Goodwill and Intangibles 2,8 41 4,298 6,247 7,474 8 ,98 2 8 ,623 8 ,316 7,994
Other non-current assets 5,625 5,010 5,577 5,170 6,056 6,306 6,556 6,8 06
Cash and cash equivalents 13,201 16,276 21,552 27,438 43,8 76 48 ,412 60,412 76,942
Other current assets 20,08 6 25,666 30,149 35,8 52 37,437 51,98 4 65,473 76,58 5
Total assets 44,344 53,826 66,692 88,249 107,091 128,466 156,381 186,560
Cash flow
Operating cash flow, excl. w-capital 10,98 0 11,8 14 16,340 17,8 37 21,28 6 24,8 16 29,913 34,451
Working capital changes 2,643 (3,8 39) (3,048 ) (2,313) 2,704 (9,096) (6,972) (5,731)
Capital expenditure (754) (98 3) 561 (1,977) (2,239) (5,476) (5,8 46) (6,549)
Acquisitions — — (2,092) (48 8 ) (426) — — —
Other income (net) (248 ) 540 762 (360) 1,393 3,544 4,011 4,778
Free cash flow (includes other income) 12,621 7,532 12,523 12,699 22,718 13,788 21,106 26,949
Key ratios/metrics
EBITDA margin before forex gains/loss (%) 18.9 16.3 19.9 18.7 22.0 19.5 19.3 19.3
EBIT margin before forex gains/loss (%) 16.2 14.1 18.4 16.1 19.3 17.3 17.4 17.4
NPM (excluding extraordinaries) (%) 14.9 15.2 16.1 14.0 15.7 14.9 14.6 14.6
US$ revenues from continuing ops 970 1,132 1,349 1,525 1,670 2,093 2,522 2,897
US$ revenue growth (%) 9.3 16.7 19.1 13.0 9.5 25.3 20.5 14.8
Net cash and cash equivalents 13,201 15,234 20,616 15,435 35,448 38 ,98 4 49,98 4 65,514
Effective tax rate (%) 21.4 22.8 25.2 24.1 25.1 25.6 25.6 25.6
RoAE (%) 37.6 31.8 34.7 29.5 30.5 28 .6 28 .7 27.4
RoACE (%) 38 .1 28 .7 38 .5 30.1 32.1 29.6 30.8 29.7

ATTRACTIVE
Oil, Gas & Consumable Fuels
India OCTOBER 19, 2021
UPDATE
BSE-30: 61,766
Calm after the perfect storm. We expect oil prices to remain elevated in the near
term underpinned by (1) sustained rebound in demand driven by recovery in economic
activity and rising mobility trends, (2) replacement of alternate fuels amid shortages and
(3) decline in inventory levels amid calibrated increase in OPEC+ and the US supplies.
However, we do see a possibility of moderation in oil prices from 1QCY22 onwards as
incremental growth in demand slows down and supply situation starts improving led by
rising production from non-OPEC+ countries and unwinding of curtailment by OPEC+.
Robust demand rebound led by improving economy/mobility and replacement of alternate fuels
Global oil demand has rebounded strongly in the recent months driven by (1) opening up of
economies post accelerated vaccination programs in several developed and emerging countries,
(2) diminishing impact on mobility from recurring Covid waves; global gasoline demand is only
2% below pre-Covid levels and (3) incremental off-take from replacement of alternate fuels
such as gas, LNG and coal, prices of which have spiked up sharply amid supply shortages across
regions; IEA forecasts additional demand of 0.5 mn b/d for oil products from substitution of
alternate fuels from September to 1QCY22. Overall oil demand is expected to rise by 1.1 mn
b/d qoq to 98.9 mn b/d in 4QCY21 taking CY2021 demand to 96.3 mn b/d, which is expected
to increase by 3.3 mn b/d yoy to an average of 99.6 mn b/d in CY2022, similar to CY2019.
Decline in inventory levels amid calibrated OPEC+ supplies and restraints/disruptions in the US
Overall inventory levels in OECD countries declined below the five-year range in August and
may continue to reduce further in the coming months amid (1) calibrated increase in supplies
from OPEC+, who have been fairly compliant with the production targets despite demand
exceeding supplies, (2) restrained increase in production by the US shale players, as they remain
focused on plans of deleveraging and dividend payments by maintaining discipline on their
capital projects and (3) hurricane-led disruptions in supplies. OPEC as well as non-OPEC nations
have been more than fully compliant in the recent months as select nations compensated for
the earlier under-compliance and OPEC+ have maintained targeted monthly increase of 0.4 mn
b/d for now. In the US, overall rig deployment remains ~35% below pre-Covid levels and
continues to rise at a gradual pace relative to previous periods of elevated crude prices.
Easing supply-demand situation from 1QCY22, if OPEC+ continues to unwind production cuts
We expect global crude oil supply-demand balance to ease out during 1QCY22 led by seasonal
moderation in demand, likely improvement in shortage situation for alternate fuels and targeted
unwinding of production cuts by OPEC+. We note that expected rise in production from the US,
Canada and Brazil along with sustained unwinding of production cuts by OPEC+ as per current
agreement until September 2022 may drive incremental global oil supply to exceed incremental
demand through CY2022—global oil supply can potentially increase by 7 mn b/d to 102.4 mn
b/d exceeding IEA’s global oil demand forecast of 99.6 mn b/d (+3.3 mn b/d), resulting in a
plausible reversal in inventory levels. Accordingly, we now assume Dated Brent crude price to
sustain around US$80/bbl for the remainder of FY2022 averaging US$75/bbl for the full year Tarun Lakhotia
and then reducing to US$70/bbl in FY2023 versus our earlier assumption of US$60-65/bbl.
Prefer GAIL over upstream PSUs as a hedge against crude prices

Hemang Khanna
We prefer GAIL as a hedge against higher oil prices as it benefits from a rise in profitability of
LPG production and LNG marketing segments; the recent increase in spot LNG prices also
augurs well for the latter. We recommend investors to avoid ONGC and OIL as a play on crude
prices, despite its higher direct leverage on their profits, given (1) uninspiring production track
record despite a sustained increase in capital expenditure and operating costs and (2) limited
FCF generation and deteriorating returns due to inefficient capital-allocation policies.
Contact: +91 22 6218 6427
India Oil, Gas & Consumable Fuels
Exhibit 1: Strong rebound in demand for transportation fuels and petrochemicals sector to drive a
robust recovery in global oil demand through CY2022E
Product-wise oil demand, CY2019-22E (mn b/d)
Global oil demand (mn b/d) Change (mn b/d) Change (%)
2019 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E
Product-wise demand
LPG and ethane 12.7 12.7 13.2 13.7 0.0 0.6 0.4 0.1 4.6 3.2
Naphtha 6.3 6.3 6.7 6.9 0.0 0.4 0.1 0.4 6.3 2.2
Motor gasoline 26.7 23.5 25.4 26.2 (3.2) 1.9 0.7 (12.0) 8.3 2.9
Jet fuel and kerosene 7.9 4.6 5.3 6.7 (3.3) 0.6 1.4 (41.5) 13.6 26.1
Gasoil/diesel 28.3 26.4 27.5 28.0 (1.9) 1.1 0.5 (6.6) 4.3 1.9
Residual fuel oil 6.2 5.7 6.1 6.2 (0.5) 0.4 0.1 (7.8) 7.1 2.3
Other products 11.7 11.6 12.0 12.0 (0.1) 0.4 (0.1) (0.8) 3.7 (0.4)
World oil demand 99.7 90.8 96.3 99.6 (8.9) 5.5 3.3 (8.9) 6.1 3.4
Source: IEA, Kotak Institutional Equities
Exhibit 2: Sustained rebound in demand across Asia, America and Europe

Region-wise oil demand, calendar year-ends, 2019-22E (mn b/d)
Global oil demand (mn b/d) Change (mn b/d) Change (%)
2019 2020 2021E 2022E 2020 2021E 2022E 2020 2021E 2022E
Region-wise demand
Africa 4.2 3.8 4.0 4.1 (0.4) 0.2 0.1 (9.8) 4.8 2.4
Americas 31.9 28.0 30.2 31.1 (3.9) 2.2 0.9 (12.1) 7.8 2.9
Asia/Pacific 35.5 33.6 35.8 37.3 (1.9) 2.2 1.5 (5.4) 6.6 4.1
Europe 15.1 13.2 13.7 14.2 (1.9) 0.5 0.6 (12.7) 3.7 4.3
FSU 4.7 4.5 4.8 4.9 (0.2) 0.3 0.1 (4.5) 6.2 2.8
Middle East 8.2 7.7 7.9 8.1 (0.5) 0.2 0.1 (5.8) 2.6 1.6
World oil demand 99.7 90.8 96.3 99.6 (8.9) 5.5 3.3 (8.9) 6.1 3.4
Exhibit 3: IEA forecasts additional demand of 0.5 mn b/d for oil products from replacement of
alternate fuels under short-supply such as gas, LNG and coal from September 2021 through 1QCY22
Additional oil demand in key countries from replacement of alternate fuels, September 2021-1QCY22 (k b/d)
(k b/d) Crude Fuel oil Gasoil Naphtha

100
80
60
40
20
0
India
Italy
Germany
Indonesia
Brazil
Japan
France
Korea
China
Pakistan

Oil, Gas & Consumable Fuels India
Exhibit 4: OPEC+ has remained remarkably compliant with their production targets
OPEC+ crude oil production, targets and compliance levels (mn b/d, %)
Production (mn b/d) Target mn b/d) Compliance (%)
Jul-21 Aug-21 Sep-21 Jul-21 Aug-21 Sep-21 Oct-21 Jul-21 Aug-21 Sep-21
OPEC-10
Algeria 0.91 0.92 0.94 0.91 0.92 0.93 0.94 101 101 94
Angola 1.10 1.13 1.11 1.32 1.33 1.35 1.36 203 204 232
Congo 0.27 0.26 0.25 0.28 0.28 0.29 0.29 125 159 197
Equatorial Guinea 0.10 0.10 0.10 0.11 0.11 0.11 0.11 159 169 180
Gabon 0.18 0.18 0.20 0.16 0.16 0.17 0.17 27 (13) (59)
Iraq 3.97 4.07 4.15 4.02 4.06 4.11 4.15 107 98 92
Kuwait 2.42 2.44 2.47 2.43 2.45 2.48 2.51 101 103 102
Nigeria 1.32 1.24 1.27 1.58 1.60 1.61 1.63 204 253 260
Saudi Arabia 9.46 9.56 9.68 9.50 9.60 9.70 9.81 102 103 102
UAE 2.72 2.77 2.80 2.74 2.77 2.80 2.83 103 99 99
Total OPEC-10 22.45 22.67 22.97 23.05 23.28 23.55 23.80 116 118 118
Non-OPEC
Azerbaijan 0.61 0.60 0.59 0.62 0.63 0.63 0.64 114 134 148
Kazakhstan 1.53 1.28 1.33 1.48 1.49 1.51 1.52 78 196 187
Mexico 1.68 1.62 1.65 1.75 1.75 1.75 1.75
Oman 0.75 0.76 0.76 0.76 0.77 0.78 0.79 110 113 114
Russia 9.58 9.73 9.81 9.50 9.60 9.70 9.81 95 92 92
Others 0.87 0.86 0.86 0.96 0.97 0.98 0.99 159 172 188
Total non-OPEC 15.02 14.85 15.00 15.07 15.21 15.35 15.50 99 112 113
Total OPEC+ 37.47 37.52 37.97 38.12 38.49 38.90 39.30 110 116 116
Exempted
Iran 2.45 2.42 2.46
Libya 1.17 1.15 1.15
Venezuela 0.59 0.57 0.57
Total OPEC 26.66 26.81 27.15
Exhibit 5: OPEC has more than fully complied to production cuts in the recent months
OPEC’s compliance to production cut targets, May 2020 onwards (%)
(%) OPEC compliance to production cuts

140
120
100
80
60
40
20
-
Dec-20
Jun-20
Mar-21
Jun-21
May-20
May-21
Apr-21
Sep-21
Sep-20
Nov-20
Jan-21
Jul-21
Jul-20
Oct-20
Aug-20
Aug-21
Feb-21

Exhibit 6: Compliance for non-OPEC countries increased in the recent months

Non-OPEC’s compliance to production cut targets, May 2020 onwards (%)
(%) Non-OPEC compliance to production cuts

120
100
80
60
40
20
Dec-20
Mar-21
Jun-20
Jun-21
May-20
May-21
Apr-21
Sep-21
Sep-20
Jul-21
Jul-20
Nov-20
Jan-21
Feb-21
Oct-20
Aug-20
Aug-21
Exhibit 7: US oil production has been disrupted by hurricane in the recent month
Weekly production of crude oil in the US, January 2018 onwards (mn b/d)
(mn b/d) US crude oil production

13.5
13.0
12.5
12.0
11.5
11.0
10.5
10.0
9.5
9.0
Mar-18
Mar-21
Mar-19
Mar-20
Sep-19
Sep-21
Sep-18
Sep-20
May-18
May-20
May-19
May-21
Jul-19
Jul-20
Jul-18
Jul-21
Nov-18
Jan-19
Jan-21
Jan-18
Nov-19
Jan-20
Nov-20
Source: EIA, Kotak Institutional Equities

Exhibit 8: Horizontal rigs deployed in the US by shale players have increased at a gradual pace, remaining well below pre-pandemic levels
despite a sharp recovery in crude prices
US horizontal oil rig count, January 2018 onwards (#)
(#) US horizontal rig count

1,000
900
800
700
600
500
400
300
200
100
0
Mar-18
Mar-20
Mar-19
Mar-21
Sep-18
Sep-20
Sep-19
Sep-21
May-18
May-20
May-19
May-21
Jul-18
Jul-20
Jul-21
Jul-19
Nov-18
Jan-19
Nov-20
Jan-21
Jan-18
Nov-19
Source: EIA, Kotak institutional Equities Jan-20
Exhibit 9: OECD inventories have declined below its five-year range in August 2021
Total industry and government-controlled crude and product stocks in OECD countries (bn bbls)
Range 2016-20 2015 2016 2017 2018 2019 2020 2021

5.0
4.9
4.8
4.7
4.6
4.5
4.4
4.3
4.2
4.1
4.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: IEA, Kotak Institutional Equities estimates

Exhibit 10: Call on OPEC+ oil supplies to remain below targets during CY2022, as rise in non-OPEC+ supplies exceeds incremental demand
Global crude demand-supply balance, 1QCY20 onwards (mn b/d)
1QCY20 2QCY20 3QCY20 4QCY20 1QCY21 2QCY21 3QCY21 4QCY21E 1QCY22E 2QCY22E 3QCY22E 4QCY22E
Global oil demand 93.9 83.1 92.1 94.0 93.4 95.2 97.8 98.9 98.6 99.1 100.5 100.2
Non-OPEC+ oil supply 53.2 49.0 50.6 51.1 51.8 52.6 53.3 53.3 53.8 54.2 54.7 55.1
OPEC NGLs supply 5.4 5.1 5.1 5.1 5.2 5.3 5.3 5.3 5.5 5.5 5.5 5.5
OPEC+ oil supply 41.8 37.7 35.4 36.0 35.3 36.4 37.7
Surplus/(deficit) 6.5 8.8 (1.1) (1.7) (1.0) (1.0) (1.5)
Call on OPEC+ oil 35.3 28.9 36.5 37.8 36.4 37.3 39.1 40.2 39.3 39.3 40.4 39.6
OPEC+ production targets (a) 39.7 40.9 42.1 43.4 43.3
Notes:
(a) Expected output by OPEC+ for 4QCY22E; OPEC+ production agrement to expire in September 2022.
Exhibit 11: Global oil demand is estimated to grow by 3.3 mn b/d in CY2022, lesser than potential
increase in supply by ~7 mn b/d if OPEC+ unwinds production cuts by September 2022
Global crude demand-supply balance, calendar year-ends, 2016-22E (mn b/d)
2016 2017 2018 2019 2020 2021E 2022E

Demand (mn b/d)
Total demand 96.4 98.0 99.2 99.7 90.8 96.3 99.6
Yoy growth 1.1 1.5 1.3 0.5 (8.9) 5.5 3.3
Supply (mn b/d)
Non-OPEC 59.1 59.9 63.6 65.6 63.0 63.6 66.6
Yoy growth (0.7) 0.8 3.7 2.0 (2.6) 0.6 3.0
OPEC
Crude 32.4 32.0 31.4 29.5 25.7 26.5 30.3
NGLs 5.4 5.5 5.5 5.4 5.2 5.3 5.5
Total OPEC 37.8 37.5 36.9 34.9 30.9 31.8 35.8
Total supply 96.9 97.4 100.5 100.5 93.9 95.4 102.4
Total stock change 0.5 (0.6) 1.2 0.8 3.1 (0.9) 2.8
World GDP growth (%) 3.2 3.8 3.6 2.8 (3.1) 5.9 4.7
Notes:
(a) Assuming OPEC+ unwinds production cuts by September 2022 as per agreement.

Exhibit 12: Production from Saudi Arabia has increased in recent months, albeit within its target
Monthly crude production from Saudi Arabia, January 2015 onwards (mn b/d)
(mn b/d) Saudi Arabia oil production Saudi Arabia target production level
13
12
11
10
5
Apr-15
Apr-16
Apr-18
Apr-20
Apr-17
Apr-19
Apr-21
Jan-15
Jan-17
Jan-19
Jan-21
Jan-16
Jan-18
Jan-20
Jul-16
Jul-17
Jul-18
Jul-19
Jul-21
Jul-15
Oct-15
Oct-17
Oct-19
Oct-16
Oct-18
Jul-20
Oct-20
Source: OPEC, Kotak Institutional Equities
Exhibit 13: Russia production has increased modestly in the recent months, aligned with targets
Monthly crude production from Russia, January 2017 onwards (mn b/d)
(mn b/d) Russia oil production Russia target production level

13
12
11
10
5
Apr-17
Apr-21
Apr-18
Apr-19
Apr-20
Jul-20
Jul-21
Jul-17
Jul-18
Jul-19
Jan-17
Jan-21
Jan-18
Jan-19
Jan-20
Oct-20
Oct-17
Oct-18
Oct-19
Source: Russia, Kotak Institutional Equities

Exhibit 14: Iran’s production has increased modestly in recent months

Monthly average crude production from Iran, January 2015 onwards (mn b/d)
(mn b/d) Iran oil production

4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Apr-15
Apr-17
Apr-18
Apr-20
Apr-21
Apr-16
Apr-19
Jul-15
Jul-17
Jul-18
Jul-20
Jul-21
Jul-16
Jul-19
Jan-16
Jan-17
Jan-19
Jan-20
Jan-15
Jan-18
Jan-21
Oct-15
Oct-16
Oct-18
Oct-19
Oct-20
Oct-17
Source: OPEC, Kotak Institutional Equities
Exhibit 15: Brent crude oil futures factor prices of ~US$84/bbl for the remainder of FY2022
Brent future curve, January 2021 onwards (US$/bbl)
Jan-21 Apr-21 Jul-21 Aug-21 Sep-21 Oct-21

90
85
80
75
70
65
60
55
50
45
40
Mar-22
Mar-23
Mar-21
Mar-24
May-21
May-24
May-22
May-23
Sep-21
Sep-22
Sep-23
Sep-24
Nov-21
Nov-22
Jan-23
Nov-23
Jan-24
Jan-21
Jan-22
Jul-23
Jul-24
Jul-21
Jul-22
Source: Bloomberg, Kotak institutional Equities

Exhibit 16: Outages in several LNG terminals across the globe have curtailed supplies
Details of outages in key LNG liquefaction terminals
Capacity Duration
Operator Facility (mn tons) Start (days) Issue
Equinor Hammerfest 4.2 Sep-20 18 months Fire incident in September 2020
Chevron Gorgon (Train 1) 5.2 Jan-21 62 Welding cracks in heat exchangers
Cheniere Sabine Pass Train 1 1.3 Feb-21 6 Shutdown for maintainence work on compressors
Sakhalin Energy Sakhalin-2 10.0 Mar-21 38 Breakdown of an onshore gas pumping unit
Chevron Gorgon (Train 3) 5.2 Mar-21 113 Welding cracks in heat exchangers
Chevron Gorgon 5.2 Apr-21 49 Planned maintainence
Santos Gladstone 3.9 May-21 29 Planned maintainence
Inpex Ichthys 4.5 May-21 35 Maintainence
Sempra Cameron 15.0 Jun-21 7 Production problems in Train 3
Sonatrach Skikda 4.0 Jun-21 119+ Failure of gas turbine control mechanism
Woodside Karratha Gas Plant 16.9 Jul-21 52 Corrosion issues
Sakhalin Energy Sakhalin-2 10.0 Jul-21 48 Panned maintenance
Origin Energy APLNG 4.5 Jul-21 29 Planned maintainence
PT Donggi-Senoro Donggi-Senoro 2.0 Sep-21 20 Planned maintenance.
Chevron Wheatstone 8.9 Sep-21 35+ Planned maintainence
BP Tangguh 7.6 Sep-21 14 Leakage in scrub column
Freeport LNG Freeport 13.9 Sep-21 7 Shutdown amid tropical storm Nicholas
Origin Energy APLNG 2.3 Oct-21 7 Planned maintainence
Source: Bloomberg, Industry journals, Kotak institutional Equities
Exhibit 17: Spot LNG prices have increased sharply above liquid fuel prices driven by a recovery in global demand post-Covid and curtailed
supply amid outages
Comparative price of LNG and fuel oil in calorific equivalent terms, January 2018 onwards (US$/mn BTU)
(US$/mn BTU) Spot LNG RasGas LNG Gorgon LNG US LNG Fuel oil
45
40
35
30
25
20
15
10
5
0
Dec-18
Dec-19
Dec-20
Jun-19
Jun-20
Jun-21
Jun-18
Mar-19
Mar-20
Mar-21
Mar-18
May-18
May-19
May-20
May-21
Sep-18
Sep-19
Sep-20
Sep-21
Apr-18
Apr-19
Apr-20
Apr-21
Nov-18
Nov-19
Nov-20
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Oct-18
Oct-19
Oct-20
Aug-18
Aug-19
Aug-20
Aug-21
Feb-18
Feb-19
Feb-20
Feb-21
Source: Bloomberg, Industry journals, Kotak institutional Equities

September 2021: Results calendar
India Daily Summary - October 19, 2021

Mon Tue Wed Thu Fri Sat
KOTAK INSTITUTIONAL EQUITIES RESEARCH
18-Oct 19-Oct 20-Oct 21-Oct 22-Oct 23-Oct

L&T Infotech ACC Havells India Asian Paints Crompton Greaves Consumer ICICI Bank
UltraTech Cement Hindustan Unilever Jubilant Foodworks Biocon Federal Bank
ICICI Pru Life Just Dial Container Corp. Gland Pharma
L&T Technology L&T Finance Holdings Gateway Distriparks HDFC Standard Life
Rallis India Syngene International ICICI Lombard Hindustan Zinc
Tata Communications IDBI Bank Polycab India
Indian Hotels PVR
JSW Steel Reliance Industries
Lemon Tree Hotel Supreme Industries
LIC Housing Finance Tata Consumer Products
Macrotech Developers Yes Bank
MphasiS
TVS Motor Co.
25-Oct 26-Oct 27-Oct 28-Oct 29-Oct 30-Oct
CEAT ABB Bajaj Auto Bajaj Finserv AIA Engineering IDFC Bank
Colgate-Palmolive (India) Ambuja Cements Cummins India Bajaj Holdings & Investment Atul
HDFC AMC Axis Bank Dalmia Bharat Coromandel International Bharat Electronics
Indus Towers Bajaj Finance IIFL Wealth Marico Castrol India
Kansai Nerolac Paints Canara Bank ITC MMFSL Cholamandalam Investment
Orient Cement Cipla Larsen & Toubro Schaeffler India Dr Reddys Laboratories
Tech Mahindra Kotak Mahindra Bank Lupin Tata Power Co. Exide Industries
The Ramco Cements Mahanagar Gas Mahindra Logistics GlaxoSmithkline Pharma
Nippon Life India Asset Management
Maruti Suzuki Indian Oil Corp.
PI Industries Oracle Financial S H Kelkar and Company
Sanofi India SBI Life Insurance Voltas
Torrent Pharmaceuticals SIS
SKF India
Titan Co.
Torrent Power
United Breweries
1-Nov 2-Nov 3-Nov 4-Nov 5-Nov 6-Nov
HDFC Dabur India
Gillette India
Godrej Properties
Procter & Gamble
Sun Pharmaceuticals
Trent
8-Nov 9-Nov 10-Nov 11-Nov 12-Nov 13-Nov
Bosch Pidilite Industries Endurance Technologies Amara Raja Batteries
Source: NSE, Kotak Institutional Equities

34
Kotak Institutional Equities: Valuation summary of KIE Universe stocks
35
Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3M
Company Rating 18-Oct-21 (Rs) (%) (Rs bn) (US$ bn) (mn) 2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E 2022E 2023E 2024E (US$ mn)
Automobiles & Components
Amara Raja Batteries SELL 727 660 (9) 124 1.6 171 42 48 54 11 13 12 17 15 14 9 8 7 2.6 2.3 2.1 16 16 16 1.5 1.6 1.8 11
Apollo Tyres ADD 243 255 5 154 2.0 638 15 19 22 13 27 20 16 13 11 7 6 5 1.3 1.2 1.1 8 9 10 1.1 1.1 1.1 13
Ashok Leyland REDUCE 145 125 (14) 425 5.6 2,936 1 6 9 231 370 38 108 23 17 29 12 10 5.9 5.1 4.3 6 24 28 0.4 1.7 2.4 35
Bajaj Auto BUY 3,916 4,650 19 1,133 15 28 9 176 224 253 12 27 13 22 17 15 16 12 10 4.2 3.8 3.5 19 23 23 2.7 3.4 3.9 25
Balkrishna Industries SELL 2,610 1,500 (43) 505 6.7 193 68 80 85 11 18 7 38 33 31 23 20 18 7.3 6.2 5.4 20 21 19 0.7 0.8 0.9 14
Bharat Forge SELL 799 555 (31) 372 4.9 466 20 26 30 8 47 25 17 39 31 27 22 18 16 6.0 5.1 4.4 16 18 18 0.4 0.4 0.4 24
CEAT ADD 1,361 1,500 10 55 0.7 40 89 119 130 (22) 34 10 15 11 10 7 6 5 1.5 1.4 1.2 10 13 12 1.2 1.6 1.8 4
Eicher Motors SELL 2,8 26 2,375 (16) 773 10.3 272 63 104 129 26 66 25 45 27 22 34 21 17 7.0 5.9 4.9 16 23 24 0.5 0.5 0.5 35
Endurance Technologies SELL 1,8 20 1,300 (29) 256 3.4 141 47 62 71 26 30 14 38 29 26 19 15 13 6.2 5.3 4.5 16 18 18 0.4 0.6 0.6 3
Escorts BUY 1,551 1,700 10 157 2.8 101 92 103 110 7 11 8 17 15 14 11 10 9 2.5 2.2 2.0 15 15 14 0.9 1.0 1.1 30
Exide Industries REDUCE 18 6 200 8 158 2.1 8 50 9 11 12 4 17 8 20 17 16 11 9 8 2.2 1.2 1.2 11 9 8 2.4 2.4 2.4 14
Hero Motocorp REDUCE 2,904 2,8 25 (3) 58 0 7.7 200 164 18 4 204 10 13 11 18 16 14 11 9 8 3.5 3.2 3.0 21 21 22 3.4 3.8 4.2 22
Mahindra CIE Automotive SELL 264 200 (24) 100 1.3 378 10 17 18 264 62 11 26 16 14 10 8 7 1.9 1.8 1.6 8 12 12 — — — 2
Mahindra & Mahindra BUY 911 1,050 15 1,132 15.0 1,138 37 52 58 26 43 11 25 17 16 15 11 10 2.7 2.4 2.1 11 14 14 0.6 0.9 1.0 41
Maruti Suzuki SELL 7,657 5,8 50 (24) 2,313 30.7 302 164 251 308 16 53 23 47 30 25 29 18 14 4.2 3.8 3.4 9 13 14 0.5 0.8 1.0 73
Minda Industries BUY 773 78 0 1 221 2.9 28 6 14 20 28 87 45 35 55 38 28 23 17 14 6.6 5.6 4.7 12 15 17 0.3 0.4 0.5 4
Motherson Sumi Systems ADD 240 250 4 757 10.0 3,158 6 10 11 84 56 16 38 24 21 12 9 7 5.1 4.1 3.4 15 19 18 0.5 0.8 0.9 28
MRF SELL 8 4,101 71,500 (15) 357 4.7 4 2,636 3,603 4,333 (12) 37 20 32 23 19 12 9 8 2.5 2.2 2.0 8 10 11 0.1 0.1 0.2 14
Schaeffler India ADD 7,957 5,950 (25) 249 3.3 31 174 217 244 87 25 12 46 37 33 27 21 19 7.1 6.2 5.5 16 18 18 — — — 3
SKF SELL 3,270 2,350 (28 ) 162 2.1 49 79 96 110 32 21 15 41 34 30 29 24 21 8 .6 7.1 6.0 21 21 20 0.4 0.4 0.5 3
Sona BLW Precision ADD 766 475 (38 ) 447 5.9 58 3 7 9 11 77 31 27 115 88 69 66 50 40 23.5 19.6 16.1 24 24 26 0.2 0.3 0.3 -
Tata Motors BUY 510 500 (2) 1,951 24.3 3,8 29 6 29 38 268 362 30 82 18 14 7 5 4 3.4 2.8 2.3 4 17 19 — — — 179
Timken SELL 1,792 1,18 0 (34) 135 1.8 75 33 47 58 71 46 22 55 38 31 34 24 20 8 .8 7.4 6.2 17 21 22 0.1 0.1 0.1 2
TVS Motor SELL 58 7 430 (27) 279 3.7 475 18 23 28 39 31 21 33 25 21 15 13 10 5.8 5.0 4.3 19 22 22 0.8 1.0 1.2 15
Varroc Engineering ADD 308 450 46 47 0.6 135 11 32 40 125 179 24 27 10 8 6 4 3 1.3 1.1 1.0 5 12 13 — — — 1
Automobiles & Components Cautious 12,840 169.5 49.1 62.1 19.5 36.6 22.6 18.9 13.4 10.0 8.5 4.0 3.5 3.0 11.0 15.4 16.1 0.8 1.0 1.2 596
Banks
AU Small Finance Bank SELL 1,224 8 50 (31) 38 3 5.1 312 30 36 45 (19) 18 26 40 34 27 — — — 5.8 5.0 4.2 14 14 16 — — — 30
Axis Bank BUY 8 13 8 60 6 2,494 33.1 3,064 43 53 64 100 23 22 19 15 13 — — — 2.4 2.1 1.8 12 14 15 0.8 1.0 1.2 79
Bandhan Bank ADD 332 335 1 535 7.1 1,611 14 29 37 6 101 27 23 11 9 — — — 3.0 2.4 1.9 13 22 22 — 0.6 0.8 26

Bank of Baroda ADD 93 95 2 48 1 6.4 5,178 14 18 22 756 28 24 7 5 4 — — — 0.8 0.7 0.6 9 11 13 2.9 3.8 4.7 38
Canara Bank REDUCE 199 150 (25) 361 4.8 1,647 18 20 32 13 12 64 11 10 6 — — — 0.8 0.8 0.6 5 5 8 — — — 40
City Union Bank REDUCE 171 150 (12) 126 1.7 739 6 9 12 (21) 44 33 27 19 14 — — — 2.4 2.1 1.9 8 10 13 0.7 1.1 1.4 5
DCB Bank BUY 97 150 55 30 0.4 376 8 14 15 (7) 70 7 12 7 6 — — — 1.1 1.0 0.8 9 13 13 0.9 1.5 1.6 2
Equitas Small Finance Bank ADD 67 65 (3) 77 1.0 1,139 3 5 6 (5) 48 27 21 14 11 — — — 2.1 1.8 1.6 10 13 15 — — — 1
Federal Bank BUY 95 100 5 200 2.7 2,101 8 13 15 6 56 15 11 7 6 — — — 1.2 1.0 0.9 10 14 14 1.6 2.5 2.8 19
HDFC Bank ADD 1,670 1,740 4 9,249 122.8 5,513 64 72 81 13 12 13 26 23 21 — — — 4.0 3.6 3.1 16 16 16 0.8 0.9 1.0 135
ICICI Bank BUY 745 8 10 9 5,169 68 .6 6,917 34 38 41 45 11 10 22 20 18 — — — 3.3 2.9 2.6 15 15 14 0.9 1.0 1.1 111
IndusInd Bank ADD 1,220 1,050 (14) 944 12.5 773 56 82 105 52 46 29 22 15 12 — — — 2.1 1.9 1.6 10 13 15 0.7 1.0 1.3 59
Karur Vysya Bank BUY 51 65 28 40 0.5 799 7 11 12 53 62 9 7 5 4 — — — 0.7 0.6 0.5 8 12 12 3.5 5.7 6.3 3
Punjab National Bank REDUCE 46 36 (22) 507 6.7 11,011 4 6 7 120 37 19 11 8 7 — — — 0.8 0.7 0.6 5 7 7 — — — 30
RBL Bank BUY 198 225 14 119 1.6 598 (0) 32 40 (101) 52,213 25 NM 6 5 — — — 1.0 0.9 0.8 NM 14 16 (0.0) 2.5 3.1 20
SBI Cards and Payment Services ADD 1,141 1,100 (4) 1,074 14.3 941 18 28 38 69 59 35 65 41 30 — — — 13.7 10.4 7.8 23 29 30 0.1 0.1 0.2 35
State Bank of India BUY 498 550 10 4,443 59.0 8 ,925 38 50 54 67 30 9 13 10 9 — — — 2.1 1.7 1.4 13 15 14 1.2 1.4 1.6 139
Ujjivan Small Finance Bank ADD 23 24 3 40 0.5 1,728 (2) 2 3 (3,778 ) 202 45 NM 10 7 — — — 1.7 1.4 1.2 NM 14 17 0.0 0.0 0.0 2
Union Bank REDUCE 49 34 (30) 334 4.4 6,407 6 8 11 30 38 41 8 6 4 — — — 0.7 0.6 0.5 6 8 10 0.0 0.0 0.0 7
YES Bank SELL 14 11 (21) 350 4.6 25,055 (1) (0) 0 56 93 78 7 NM NM 47 — — — 1.4 1.4 1.3 NM NM 2 0.0 0.0 0.0 27
Banks Attractive 26,956 357.8 49.8 27.5 16.9 20.0 15.7 13.4 2.1 1.9 1.7 10.6 12.2 12.7 0.8 1.0 1.1 808
Source: Company, Bloomberg, Kotak Institutional Equities estimates


Building Products
Astral SELL 2,38 3 1,250 (48 ) 479 6.4 201 26 30 33 28 17 12 93 80 71 58 50 45 20.6 17.2 14.7 24 24 22 0.2 0.3 0.4 12
Building Products Cautious 479 6.4 27.5 16.7 11.8 92.8 79.5 71.1 58.1 50.4 45.4 20.6 17.2 14.7 22 22 21 0.2 0.3 0.4 12
Capital goods
ABB BUY 1,8 29 2,030 11 38 8 5.1 212 19 27 36 135 44 32 96 67 50 67 46 35 10.0 9.1 8 .0 11 14 17 0.3 0.4 0.5 3
Ashoka Buildcon BUY 120 165 37 34 0.4 28 1 14 15 17 (4) 10 13 9 8 7 6 5 4 1.0 0.9 0.8 12 12 13 1.9 2.0 2.3 3
Bharat Electronics BUY 217 210 (3) 529 7.0 2,437 10 10 11 13 5 9 22 21 20 15 13 12 4.4 4.0 3.7 20 20 20 2.1 2.2 2.4 21
BHEL SELL 75 30 (60) 260 3.4 3,48 2 (4) 2 4 44 138 115 NM 45 21 (16) 19 10 1.0 1.0 1.0 NM 2 5 0.0 0.8 1.5 43
Carborundum Universal ADD 8 99 730 (19) 171 2.3 190 21 26 31 39 26 20 43 34 29 26 21 18 7.1 6.2 5.4 17 19 20 0.6 0.8 1.0 4
Cochin Shipyard BUY 370 510 38 49 0.6 132 41 42 36 (12) 3 (14) 9 9 10 4 4 4 1.1 1.0 1.0 13 12 10 3.4 3.7 4.0 1
Cummins India BUY 910 1,08 0 19 252 3.3 277 31 40 46 36 29 16 29 23 20 28 21 18 5.2 4.7 4.3 19 22 23 1.9 2.4 2.8 17
Dilip Buildcon BUY 68 3 670 (2) 100 1.3 146 32 52 64 49 61 23 21 13 11 8 7 6 2.0 1.8 1.5 11 14 15 0.1 0.1 0.2 5
IRB Infrastructure BUY 212 173 (18 ) 74 1.0 351 8 11 19 141 39 70 26 19 11 8 7 6 1.0 1.0 0.9 4 5 9 0.7 1.1 1.5 9
Kalpataru Power Transmission BUY 442 540 22 66 0.9 153 36 47 53 10 29 13 12 9 8 6 5 4 1.5 1.3 1.1 13 15 14 0.9 1.2 1.4 2
KEC International BUY 461 465 1 119 1.6 257 22 36 41 4 58 16 21 13 11 11 8 7 3.1 2.5 2.1 16 21 21 0.5 0.8 1.0 3
L&T BUY 1,78 8 2,100 17 2,511 33.3 1,405 61 82 95 25 36 15 29 22 19 19 16 15 3.8 3.5 3.3 13 17 18 1.4 1.9 2.2 56
Siemens SELL 2,266 1,8 8 0 (17) 8 07 10.7 356 39 47 68 24 20 43 58 48 34 40 33 23 7.2 6.6 5.8 13 14 18 0.5 0.6 0.8 12
Thermax SELL 1,38 9 1,240 (11) 166 2.2 113 31 40 50 36 29 24 44 34 28 33 25 20 32.8 25.4 20.4 11 13 15 1.1 1.4 1.7 1
Capital goods Attractive 5,524 73.3 39.5 45.5 20.0 35.3 24.3 20.2 19.6 15.5 13.6 3.5 3.3 3.0 9.9 13.5 14.9 1.1 1.5 1.8 180
Commercial & Professional Services
SIS BUY 496 550 11 74 1.0 147 20 25 31 (19) 24 24 25 20 16 14 12 11 3.7 3.3 2.8 16 17 19 1.0 1.2 1.5 2
TeamLease Services ADD 4,910 4,08 5 (17) 84 1.1 17 85 112 142 148 32 26 58 44 35 54 41 33 10.5 8 .5 6.8 20 21 22 — — — 2
Commercial & Professional Services
Attractive 158 2.1 3.1 26.7 24.8 35.9 28.3 22.7 22.9 19.2 16.1 5.7 4.9 4.2 16.0 17.3 18.3 0.5 0.6 0.7 4
Commodity Chemicals
Asian Paints REDUCE 3,242 2,675 (17) 3,109 41.3 959 35 47 54 7 34 15 92 69 60 60 47 41 21.8 19.3 17.2 25 30 30 0.6 0.9 1.0 52
Berger Paints SELL 8 38 640 (24) 8 14 10.8 971 9 12 15 25 32 20 90 68 57 56 44 37 20.9 18 .0 15.5 25 28 29 0.4 0.6 0.7 9
Kansai Nerolac REDUCE 597 650 9 322 4.3 539 11 15 18 13 30 19 52 40 34 34 27 23 7.3 6.8 6.2 15 17 19 1.0 1.4 1.6 3
Tata Chemicals SELL 1,094 640 (42) 279 3.7 255 32 39 43 222 21 10 34 28 25 12 11 10 2.0 1.9 1.9 6 7 8 2.9 3.6 3.9 44
Commodity Chemicals Neutral 4,524 60.1 22.5 31.3 15.4 79.3 60.4 52.3 46.1 37.0 32.5 12.3 11.4 10.6 15.5 18.9 20.2 0.7 1.0 1.2 108
Construction Materials
ACC ADD 2,304 2,300 (0) 433 5.7 18 8 113 126 143 50 11 13 20 18 16 11 9 8 3.0 2.7 2.4 16 16 16 1.2 1.4 1.6 19
Ambuja Cements REDUCE 411 375 (9) 8 15 10.8 1,98 6 15 18 21 15 18 16 27 23 19 10 8 7 3.2 2.9 2.6 13 14 14 0.7 0.8 1.0 25
Dalmia Bharat ADD 2,08 5 2,250 8 390 5.2 18 7 61 74 93 16 20 27 34 28 22 13 11 9 2.8 2.6 2.3 9 10 11 — — — 9
Grasim Industries ADD 1,756 1,675 (5) 1,155 15.3 657 89 112 127 30 26 13 20 16 14 9 7 6 1.6 1.5 1.3 8 10 10 0.5 0.4 0.5 29
J K Cement REDUCE 3,449 2,700 (22) 267 3.5 77 122 138 169 31 13 22 28 25 20 16 14 11 5.8 4.8 3.9 23 21 21 0.3 0.3 0.3 4
JK Lakshmi Cement REDUCE 621 630 1 73 1.0 118 43 46 47 14 8 2 14 13 13 7 7 7 2.9 2.4 2.1 22 20 17 1.0 1.1 1.1 6
Orient Cement ADD 160 190 18 33 0.4 205 14 15 17 36 7 12 11 10 9 6 6 5 2.1 1.8 1.5 20 18 18 1.2 1.2 1.2 2
Shree Cement SELL 28 ,191 21,550 (24) 1,017 13.5 36 8 30 98 4 1,156 30 19 18 34 29 24 20 17 14 5.6 4.8 4.0 18 18 18 0.2 0.2 0.2 20
The Ramco Cements SELL 1,022 8 40 (18 ) 241 3.2 236 33 43 52 3 28 21 31 24 20 15 12 10 3.7 3.3 2.9 13 15 15 0.3 0.4 0.5 6
UltraTech Cement REDUCE 7,398 7,400 0 2,135 28 .3 28 9 264 303 350 36 15 15 28 24 21 15 13 11 4.2 3.7 3.3 16 16 16 0.3 0.3 0.3 36
Construction Materials Attractive 6,560 87.1 29.3 18.5 15.6 25.9 21.9 18.9 12.3 10.4 8.8 3.1 2.8 2.5 12.1 12.8 13.1 0.4 0.5 0.5 156

36
37
Consumer Durables & Apparel
Crompton Greaves Consumer SELL 473 390 (18 ) 297 3.9 628 10 12 13 2 16 15 47 41 36 35 30 25 12.4 10.0 8 .2 29 27 25 0.5 0.5 0.5 9
Havells India REDUCE 1,455 1,050 (28 ) 911 12.1 626 20 23 28 23 14 21 71 62 52 49 43 36 16.1 14.0 12.1 24 24 25 0.5 0.6 0.7 35
Page Industries REDUCE 37,543 30,100 (20) 419 5.6 11 403 530 621 32 32 17 93 71 60 62 48 41 43.1 39.3 36.8 48 58 63 0.9 1.3 1.6 12
Polycab ADD 2,48 7 1,950 (22) 371 4.9 149 70 78 90 18 12 15 36 32 28 25 22 19 6.6 5.6 4.8 20 19 19 0.3 0.4 0.4 19
TCNS Clothing Co. SELL 672 455 (32) 41 0.5 68 0 15 18 104 3,425 18 1,549 44 37 36 17 13.8 6.9 5.7 4.7 0 14 14 — — — 1
Voltas SELL 1,338 8 00 (40) 443 5.9 331 18 23 29 13 30 23 75 57 47 58 47 41 8 .2 7.4 6.7 11 14 15 0.3 0.4 0.5 23
Whirlpool SELL 2,436 1,8 00 (26) 309 4.1 127 36 48 59 37 34 21 68 50 42 48 35 28 9.7 8 .5 7.4 15 18 19 0.3 0.4 0.5 4
Consumer Durables & Apparel Cautious 2,791 37.0 21.2 22.2 18.8 62.8 51.4 43.3 43.9 36.1 30.3 11.7 10.1 8.8 18.6 19.7 20.2 0.5 0.6 0.7 103
Consumer Staples
Bajaj Consumer Care ADD 255 325 27 38 0.5 148 16 17 19 4 11 9 16 15 13 13 11 10 4.6 4.1 3.7 29 29 29 4.3 4.3 4.7 3
Britannia Industries ADD 3,8 37 3,700 (4) 924 12.3 241 69 83 94 (11) 20 14 56 46 41 40 33 29 48 .3 44.1 31.7 60 98 89 2.0 1.6 1.8 22
Colgate-Palmolive (India) ADD 1,668 1,775 6 454 6.0 272 39 44 50 3 12 13 43 38 34 28 25 22 39.1 36.2 33.5 92 99 103 2.2 2.5 2.8 12
Dabur India ADD 614 630 3 1,08 6 14.4 1,767 10 12 14 8 17 14 59 50 44 47 40 35 13.7 12.4 11.2 24 26 27 0.9 1.1 1.2 21
Godrej Consumer Products ADD 1,017 1,050 3 1,040 13.8 1,023 18 22 25 6 18 16 56 47 41 40 33 29 9.8 8 .9 8 .1 19 20 21 0.9 1.1 1.3 18
Hindustan Unilever ADD 2,654 2,950 11 6,236 8 2.8 2,350 39 47 55 15 22 15 68 56 49 47 39 34 13.1 12.6 12.2 19 23 26 1.4 1.7 1.9 56
ITC BUY 263 275 5 3,232 42.9 12,330 12 13 14 9 13 8 23 20 19 17 14 13 5.4 5.2 5.0 23 25 27 3.9 4.3 4.6 81
Jyothy Laboratories ADD 163 190 17 60 0.8 367 6 7 9 (0) 22 18 28 23 19 20 16 14 4.0 3.8 3.6 15 17 19 2.8 3.1 3.4 1
Marico REDUCE 579 530 (8 ) 748 9.9 1,290 10 11 13 11 15 11 58 51 46 42 36 32 21.6 20.2 18 .8 38 41 43 1.4 1.6 1.8 21
Nestle India ADD 19,438 18 ,600 (4) 1,8 74 24.9 96 244 295 344 13 21 17 80 66 57 51 44 38 69.8 54.0 42.8 100 92 84 0.9 1.1 1.3 18
Tata Consumer Products ADD 8 44 78 0 (8 ) 777 10.3 922 11 15 17 11 42 13 79 56 50 45 34 31 5.1 4.8 4.6 7 9 9 0.5 0.6 0.7 27
United Breweries ADD 1,673 1,500 (10) 442 5.9 264 14 31 36 212 119 17 118 54 46 60 31 27 11.2 9.6 8 .6 10 19 20 0.4 1.0 1.2 14
United Spirits ADD 884 68 0 (23) 642 8 .5 727 11 16 18 77 40 16 79 56 48 47 36 32 12.6 10.9 9.6 17 21 21 — 0.6 0.8 31
Varun Beverages BUY 900 8 50 (6) 390 5.2 433 16 24 29 76 50 20 56 37 31 24 19 16 9.4 7.7 6.3 18 23 22 0.2 0.2 0.3 7
Consumer Staples Attractive 17,942 238.2 11.7 19.8 12.5 48.8 40.8 36.2 34.4 28.7 25.6 10.8 10.1 9.5 22 25 26 1.7 1.9 2.1 332
Diversified Financials
Aavas Financiers ADD 2,916 2,600 (11) 230 3.1 79 45 57 70 22 28 22 65 51 42 — — — — — — 14 15 16 0.0 0.0 0.0 10
Aditya Birla Capital NR 107 — — 259 3.4 2,414 6 8 10 36 43 24 19 13 11 — — — — — — 10 12 14 57.9 65.6 75.1 6
Bajaj Finance REDUCE 7,8 66 5,600 (29) 4,747 63.0 602 113 171 209 54 51 23 70 46 38 — — — 11.0 9.1 7.4 17 22 22 0.1 0.2 0.3 126
Bajaj Finserv ADD 18 ,678 14,150 (24) 2,972 39.5 159 362 519 630 29 43 21 52 36 30 — — — 8 .3 7.1 6.0 16 21 22 0.1 0.1 0.1 76
Cholamandalam BUY 599 650 9 491 6.5 8 20 29 34 40 55 19 18 21 18 15 — — — 4.8 3.8 3.1 22 22 21 0.5 0.6 0.7 22
Computer Age Management Services SELL 3,095 2,100 (32) 151 2.0 49 53 59 66 26 11 13 58 53 47 — — — 24.5 20.7 17.8 46 43 41 1.1 1.2 1.4 23
HDFC BUY 2,8 12 3,100 10 5,08 2 67.5 1,8 04 70 85 96 5 22 12 40 33 29 — — — 4.3 4.0 3.6 11 13 13 0.8 0.9 1.0 104

HDFC AMC SELL 2,932 2,350 (20) 625 8 .3 213 70 83 97 12 19 17 42 35 30 — — — 11.3 9.7 8 .4 29 29 30 1.3 1.6 1.8 30
IIFL Wealth ADD 1,675 1,700 1 148 2.0 89 54 63 72 30 18 14 31 26 23 — — — 5.5 5.2 4.9 17 20 22 4.2 2.8 3.2 3
L&T Finance Holdings ADD 93 115 24 230 3.1 2,469 7 9 11 84 23 24 13 11 9 — — — 1.1 1.0 0.9 9 10 11 0.7 0.7 0.7 10
LIC Housing Finance BUY 455 600 32 250 3.3 550 51 69 74 (6) 35 8 9 7 6 — — — 1.5 1.3 1.1 12 14 14 1.8 2.4 2.6 21
Mahindra & Mahindra Financial ADD 18 7 200 7 232 3.1 1,230 10 18 19 28 3 73 5 18 10 10 — — — 1.6 1.4 1.3 8 13 13 1.1 1.9 2.0 17
Muthoot Finance REDUCE 1,559 1,450 (7) 626 8 .3 401 111 127 143 20 14 12 14 12 11 — — — 3.4 2.8 2.3 26 25 23 1.4 1.6 1.8 18
Shriram City Union Finance ADD 2,251 2,250 (0) 149 2.0 66 145 196 225 (5) 35 15 16 11 10 — — — 1.7 1.5 1.4 11 14 14 1.0 1.3 1.5 3
Shriram Transport BUY 1,395 1,575 13 375 5.0 269 102 157 177 4 54 12 14 9 8 — — — 1.5 1.3 1.2 11 15 15 1.1 1.7 2.0 23
Diversified Financials Attractive 16,567 219.9 23.2 33.2 16.5 36.4 27.4 23.5 4.7 4.1 3.6 12.9 15.2 15.4 0.5 0.7 0.7 491



Electric Utilities
CESC BUY 98 82 (16) 130 1.7 1,326 11 13 15 14 10 16 9 8 7 5 5 4 0.9 0.9 0.8 12 12 12 1.4 1.7 1.8 8
JSW Energy SELL 392 100 (74) 644 8 .5 1,640 6 7 7 16 20 2 70 58 57 21 20 17 4.2 3.9 3.6 6 7 7 — — — 10
NHPC ADD 36 30 (15) 357 4.7 10,045 3 4 4 0 9 2 11 10 9 10 8 7 1.0 1.0 1.0 10 11 10 5.8 6.5 6.6 3
NTPC BUY 149 125 (16) 1,449 19.2 9,697 15 16 17 (4) 8 7 10 9 9 8 7 6 1.1 1.0 1.0 12 12 12 3.0 3.3 3.5 26
Power Grid BUY 204 205 1 1,422 18 .9 6,975 20 22 23 8 8 5 10 9 9 7 6 6 1.8 1.7 1.6 19 18 18 5.7 7.0 7.3 32
Tata Power ADD 257 145 (44) 8 22 10.9 3,196 5 6 7 21 22 12 53 43 39 14 14 13 3.7 3.4 3.1 7 8 8 — — — 106
Electric Utilities Attractive 4,823 64.0 2.9 9.1 6.0 13.4 12.3 11.6 8.4 7.6 7.0 1.6 1.5 1.4 12.2 12.4 12.2 3.1 3.6 3.7 185
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 5,204 4,700 (10) 234 3.1 45 148 172 198 14 16 15 35 30 26 25 21 18 7.6 6.3 5.3 24 23 22 0.6 0.7 0.8 2
Dhanuka Agritech SELL 8 25 795 (4) 38 0.5 48 43 48 57 (2) 11 19 19 17 14 14 12 10 4.2 3.6 3.1 24 23 23 1.6 2.0 2.8 1
Godrej Agrovet SELL 636 525 (17) 122 1.6 192 21 24 27 27 14 14 31 27 24 19 17 15 4.5 4.1 3.7 15 16 17 1.6 1.8 2.1 2
Rallis India REDUCE 319 300 (6) 62 0.8 195 14 17 19 27 15 12 22 19 17 19 16 14 3.4 3.0 2.7 17 17 16 1.0 1.1 1.3 3
UPL SELL 751 650 (13) 574 7.6 765 50 58 69 32 17 19 15 13 11 8 7 6 2.8 2.4 2.1 20 20 20 1.8 2.1 2.5 30
Fertilizers & Agricultural Chemicals
Cautious 1,030 13.7 27.4 16.2 18.1 19.3 16.6 14.0 10.4 8.9 7.6 3.5 3.1 2.6 18.3 18.4 18.8 1.4 1.7 2.0 38
Gas Utilities
GAIL (India) BUY 161 190 18 716 9.5 4,440 15 15 16 40 (2) 6 11 11 10 8 8 7 1.4 1.3 1.2 14 13 12 3.7 4.0 4.3 31
GSPL SELL 328 200 (39) 18 5 2.5 564 13 9 9 (21) (31) 4 25 37 35 12 16 15 2.3 2.2 2.1 9 6 6 0.8 0.7 0.8 5
Indraprastha Gas ADD 510 58 5 15 357 4.7 700 21 26 29 26 24 11 24 19 18 18 14 12 5.2 4.4 3.9 23 25 24 0.9 1.4 1.8 19
Mahanagar Gas BUY 1,069 1,350 26 106 1.4 99 91 104 110 44 15 5 12 10 10 7 6 6 2.8 2.4 2.2 26 25 23 3.4 4.4 5.1 7
Petronet LNG BUY 234 275 17 352 4.7 1,500 20 22 25 2 12 11 12 10 9 6 6 5 2.7 2.5 2.2 25 25 25 5.0 5.6 6.2 12
Gas Utilities Attractive 1,715 22.8 22.7 3.7 8.1 13.3 12.9 11.9 8.8 8.3 7.5 2.1 1.9 1.8 15.6 14.9 14.8 3.1 3.5 3.9 74
Health Care Services
Apollo Hospitals ADD 4,330 4,400 2 623 8 .3 144 52 68 95 731 30 40 84 64 46 32 27 22 12.3 11.1 9.7 15 18 23 0.5 0.6 0.9 60
Aster DM Healthcare BUY 204 200 (2) 102 1.4 500 8 11 12 163 36 14 26 19 17 8 7 6 2.7 2.4 2.2 11 13 13 — — — 7
Dr Lal Pathlabs SELL 3,607 2,000 (45) 301 4.0 83 49 46 53 40 (5) 15 74 78 67 47 49 43 20.5 17.9 15.6 30 25 25 0.6 0.6 0.7 17
HCG BUY 255 175 (31) 32 0.4 125 (3) (2) (1) 63 18 61 NM NM NM 15 13 11 4.8 5.1 5.2 NM NM NM — — — 1
Metropolis Healthcare SELL 2,700 1,925 (29) 138 1.8 51 44 47 55 22 7 16 61 57 49 37 36 31 16.2 13.7 11.6 29 26 26 0.5 0.5 0.6 10
Narayana Hrudayalaya ADD 525 540 3 107 1.4 204 13 16 18 1,8 90 27 13 42 33 29 19 16 14 7.8 6.3 5.2 21 21 19 — — — 2
Health Care Services Attractive 1,302 17.3 232.6 21.9 25.6 65.5 53.7 42.8 25.5 22.4 19.1 9.9 8.8 7.7 15.1 16.3 17.9 0.4 0.5 0.6 97
Hotels & Restaurants
Burger King SELL 161 133 (18 ) 62 0.8 38 2 (1) 1 1 82 201 30 NM 201 155 37 23 18 9.6 9.3 8 .7 NM 5 6 0.0 0.0 0.0 7
Jubilant Foodworks BUY 4,369 3,550 (19) 577 7.7 132 35 51 64 98 47 26 126 86 68 50 38 32 31.8 24.7 19.5 28 32 32 0.3 0.4 0.5 40
Lemon Tree Hotels ADD 55 50 (9) 43 0.6 790 (0) 1 2 69 233 217 NM 83 26 33 14 10 4.9 5.0 4.6 NM 6 18 0.0 1.2 1.6 4
Westlife Development ADD 591 550 (7) 92 1.2 156 1 7 10 113 669 55 679 88 57 40 24 20 18 .6 15.4 12.1 3 19 24 0.0 0.0 0.0 1
Hotels & Restaurants Attractive 774 10.3 333.7 115.1 41.0 193.2 89.8 63.7 45.6 30.5 24.4 20.2 17.3 14.4 10.5 19.2 23 0.2 0.4 0.5 52

38
39
Insurance
HDFC Life Insurance ADD 703 78 5 12 1,423 18 .9 2,020 17 20 23 25 18 16 42 35 30 — — — 7.7 7.0 6.3 39 42 44 0.6 0.7 0.8 34
ICICI Lombard SELL 1,519 1,225 (19) 691 9.2 490 32 40 46 (2) 27 14 48 38 33 — — — 7.8 6.7 5.7 18 19 19 0.4 0.5 0.5 24
ICICI Prudential Life BUY 674 750 11 967 12.8 1,436 6 9 10 (14) 55 16 117 76 65 — — — 9.9 9.0 8 .1 9 12 13 0.0 0.0 0.0 16
Max Financial Services BUY 1,002 1,225 22 346 4.6 345 10 10 11 237 7 8 104 96 89 — — — — — — 5 5 5 0.0 0.0 0.0 13
SBI Life Insurance BUY 1,193 1,425 19 1,193 15.8 1,002 13 18 21 (7) 34 17 89 66 57 — — — 10.7 9.4 8 .2 13 15 16 0.2 0.2 0.3 42
Insurance Attractive 4,620 61.3 11.4 26.6 15.4 61.8 48.9 42.3 8.3 7.4 6.6 13.4 15.2 15.7 0.2 0.3 0.3 130
Internet Software & Services
Info Edge SELL 7,020 4,400 (37) 904 12.0 128 .5 41 51 64 94 24 24 170 137 110 158 123 99 18 .3 16.7 15.1 11.2 12.8 14.4 0.1 0.2 0.2 41
Just Dial ADD 912 1,130 24 57 0.8 8 3.5 25 42 48 (27) 65 15 36 22 19 12 7 4 2.1 1.9 1.7 8 .6 9.2 9.6 — — — 23
Zomato BUY 144 175 21 1,130 15.0 7,98 1 (1) (0) 0 39 66 146 NM NM 880 (77) (106) (206) 7.1 7.7 7.6 NM NM 0.9 0.0 0.0 0.0 -
Internet Software & Services Cautious 2,091 27.8 67 751 92 NM 295 154 (321) #### 298 8.4 8.3 7.9 NM 2.8 5.1 0.1 0.1 0.1 63
IT Services
HCL Technologies ADD 1,221 1,400 15 3,314 44.0 2,714 50 57 63 3 14 11 25 22 19 15 13 12 5.1 4.7 4.4 21 23 24 2.8 3.1 3.5 87
Infosys BUY 1,792 2,000 12 7,637 101.4 4,221 51 60 68 13 17 14 35 30 26 24 21 18 10.1 8 .8 7.9 29 32 32 1.7 2.0 2.5 144
L&T Infotech REDUCE 5,906 6,000 2 1,035 13.7 176 132 161 18 8 20 23 16 45 37 31 33 26 22 11.7 9.5 7.8 29 29 27 0.6 0.7 0.8 29
L&T Technology Services ADD 4,8 52 4,250 (12) 510 6.8 106 88 111 131 40 26 18 55 44 37 36 30 25 12.4 10.4 8 .7 24 26 25 0.5 0.6 0.7 28
Mindtree SELL 4,707 3,250 (31) 775 10.3 165 94 108 120 39 15 11 50 44 39 36 31 28 14.8 12.3 10.4 32 31 29 0.8 0.9 1.0 75
Mphasis ADD 3,357 2,8 00 (17) 628 8 .3 18 7 75 90 111 16 19 24 44 37 30 29 24 20 9.0 8 .2 7.3 21 23 26 1.5 1.6 1.8 38
TCS ADD 3,647 4,100 12 13,491 179.1 3,699 102 118 133 14 15 13 36 31 27 25 21 19 13.0 12.0 11.0 39 40 42 1.7 2.6 2.9 133
Tech Mahindra BUY 1,478 1,58 0 7 1,28 8 17.1 880 65 73 83 27 12 14 23 20 18 14 13 11 4.6 4.1 3.6 21 21 21 1.6 1.7 1.9 68
Wipro REDUCE 710 625 (12) 3,8 90 51.6 5,477 23 25 27 18 9 11 31 29 26 21 18 16 6.0 5.1 4.5 21 19 19 0.7 0.7 1.3 76
IT Services Attractive 32,568 432.3 13.0 14.8 13.0 33.5 29.2 25.8 22.5 19.6 17.3 9.0 8.0 7.2 26.8 27.5 28.0 1.6 2.1 2.5 677
Media
PVR BUY 1,719 1,700 (1) 105 1.4 61 (33) 45 55 70 239 21 NM 38 31 162 14 12 4.1 3.7 3.4 NM 10 11 (0.2) 0.3 0.3 23
Sun TV Network REDUCE 550 490 (11) 217 2.9 394 43 46 48 11 8 3 13 12 12 8 8 7 2.7 2.5 2.3 23 22 20 3.6 4.5 5.5 16
Zee Entertainment Enterprises BUY 311 250 (20) 299 4.0 960 13 16 18 7 28 11 25 19 17 15 12 11 2.8 2.6 2.4 12 14 14 1.3 1.4 1.4 102
Media Cautious 620 8.2 36.1 34.7 7.7 23.0 17.0 15.8 14.1 10.5 9.6 2.9 2.7 2.5 12.8 15.7 15.5 1.9 2.3 2.7 141
Metals & Mining
Hindalco Industries BUY 543 565 4 1,220 16.2 2,220 51 56 58 99 10 4 11 10 9 6.3 5.5 5.0 1.6 1.4 1.2 16 15 14 0.6 0.7 0.7 75
Hindustan Zinc BUY 38 8 370 (5) 1,638 21.7 4,225 24 23 25 29 (4) 5 16 17 16 9.1 9.6 9.1 5.1 5.1 5.1 32 31 32 6.3 6.1 6.3 6

Jindal Steel and Power BUY 452 540 19 461 6.1 1,020 98 64 70 56 (35) 10 5 7 6 3.2 4.4 3.9 1.3 1.1 0.9 33 17 16 — — — 57
JSW Steel REDUCE 716 665 (7) 1,730 23.0 2,417 79 56 58 139 (29) 4 9 13 12 6.1 7.7 7.3 2.7 2.3 2.0 35 20 17 1.5 1.1 1.1 64
National Aluminium Co. BUY 122 100 (18 ) 224 3.0 1,8 37 11 12 11 58 7 (8 ) 11 10 11 6.0 5.7 6.2 1.9 1.7 1.5 18 17 14 3.2 3.4 3.2 53
NMDC REDUCE 158 150 (5) 462 6.1 2,931 28 15 11 26 (46) (25) 6 10 14 3.9 7.2 9.3 1.4 1.3 1.2 26 13 9 9.0 4.8 3.6 35
SAIL BUY 129 170 32 533 7.1 4,130 43 20 21 338 (54) 8 3 7 6 2.4 3.8 3.4 0.9 0.8 0.7 33 13 12 2.6 2.6 2.6 88
Tata Steel BUY 1,411 1,750 24 1,697 22.5 1,219 333 175 166 368 (48 ) (5) 4 8 8 3.4 4.9 4.6 1.6 1.3 1.2 44 18 15 2.7 1.5 1.4 225
Vedanta REDUCE 375 28 5 (24) 1,393 18 .5 3,717 43 36 36 32 (17) 0 9 10 10 4.2 4.6 4.5 1.9 1.8 1.6 24 18 16 4.8 4.6 4.8 67
Metals & Mining Attractive 9,358 124.2 123.1 (32.3) 0.5 6.9 10.2 10.1 4.5 5.7 5.4 1.9 1.7 1.5 27.3 16.3 14.7 3.3 2.8 2.8 669


Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
Oil, Gas & Consumable Fuels
BPCL BUY 463 550 19 1,003 13.3 2,093 34 40 43 (50) 18 8 14 12 11 8 .5 7.4 6.7 2.1 1.9 1.8 14 17 17 3.6 4.3 4.7 39
Coal India REDUCE 18 5 150 (19) 1,142 15.2 6,163 16 16 17 (20) (4) 8 11 12 11 10.1 10.0 8 .5 3.3 3.6 3.8 29 29 34 10.8 10.8 10.8 38
HPCL BUY 332 310 (7) 471 6.2 1,419 35 37 41 (56) 7 9 9 9 8 8 .8 8 .4 8 .1 1.2 1.1 1.0 13 13 13 4.2 4.5 4.9 16
IOCL BUY 136 125 (8 ) 1,28 4 17.0 9,18 1 18 17 19 (29) (8 ) 12 7 8 7 5.3 5.4 5.0 1.1 1.0 0.9 15 13 13 6.8 6.3 7.0 19
Oil India SELL 236 150 (36) 255 3.4 1,08 4 19 21 19 85 14 (11) 13 11 13 9.1 8 .2 8 .5 0.9 0.9 0.9 7 8 7 3.1 3.6 3.2 5
ONGC SELL 162 110 (32) 2,039 27.1 12,58 0 20 20 19 105 1 (7) 8 8 9 4.0 3.8 3.8 0.8 0.7 0.7 10 10 8 4.8 4.9 4.5 43
Reliance Industries ADD 2,707 2,8 00 3 17,18 7 228 .2 6,349 85 105 122 17 24 16 32 26 22 16.6 12.6 10.5 2.3 2.1 1.9 7 9 9 0.3 0.3 0.3 200
Oil, Gas & Consumable Fuels Attractive 23,381 310.4 1.1 11.4 9.3 19.5 17.5 16.0 10.4 8.9 7.9 1.8 1.7 1.6 9.4 9.8 10.0 1.8 1.8 1.8 361
Pharmaceuticals
Aurobindo Pharma REDUCE 718 790 10 421 5.6 58 6 58 63 67 5 8 7 12 11 11 7 6 6 1.7 1.5 1.4 14 13 13 1.2 1.5 1.8 33
Biocon SELL 343 310 (9) 411 5.5 1,202 6 9 11 2 48 18 54 36 31 20 16 14 4.5 4.1 3.7 8 11 12 0.7 1.0 1.1 13
Cipla BUY 904 1,070 18 729 9.7 8 06 34 47 62 13 41 30 27 19 15 15 11 8 3.5 3.1 2.6 13 16 18 0.7 1.0 1.3 36
Divis Laboratories REDUCE 5,340 4,250 (20) 1,417 18 .8 265 96 110 121 28 14 10 56 49 44 38 34 31 12.9 11.0 9.5 23 23 21 (0.6) (0.7) (0.8 ) 36
Dr Reddy's Laboratories SELL 4,8 78 4,650 (5) 8 11 10.8 166 171 246 308 9 44 25 29 20 16 17 12 9 4.2 3.5 2.9 15 18 19 0.7 0.6 0.6 44
Gland Pharma SELL 3,749 2,8 50 (24) 615 8 .2 163 80 96 108 31 20 12 47 39 35 36 29 26 8 .5 7.0 5.8 18 18 17 — — — 15
Laurus Labs SELL 645 445 (31) 346 4.6 536 21 25 28 14 18 11 31 26 23 20 17 15 9.3 6.8 5.3 30 26 23 — — — 26
Lupin BUY 936 1,220 30 425 5.6 450 36 51 66 33 42 28 26 18 14 13 9 7 2.8 2.5 2.1 11 13 15 0.6 0.8 1.0 25
Sun Pharmaceuticals ADD 8 36 8 30 (1) 2,006 26.6 2,406 27 32 37 10 17 17 31 26 23 19 17 14 3.9 3.5 3.1 13 13 14 0.6 0.8 0.9 49
Torrent Pharmaceuticals REDUCE 3,112 2,950 (5) 527 7.0 169 75 95 115 2 26 22 41 33 27 20 17 15 7.9 6.8 5.9 19 21 22 0.8 1.0 1.3 7
Pharmaceuticals Attractive 7,708 102.3 13.0 24.7 18.5 32.0 25.6 21.6 18.7 15.2 12.8 4.6 4.0 3.4 14.2 15.5 15.9 0.4 0.5 0.6 285
Real Estate
Brigade Enterprises BUY 443 350 (21) 102 1.4 230 (1) 13 16 32 1,002 18 NM 33 28 23 10 8 3.7 3.4 3.1 NM 11 12 0.6 0.6 0.6 5
Brookfield India Real Estate Trust ADD 273 290 6 83 1.1 303 7 9 11 56 29 25 41 32 25 17 16 14 1.1 1.1 1.2 3 3 5 7.0 7.6 8 .3 1
DLF REDUCE 441 300 (32) 1,093 14.5 2,475 7 9 14 60 29 60 63 49 31 66 56 49 3.0 2.9 2.6 5 6 9 0.5 0.5 0.5 65
Embassy Office Parks REIT ADD 351 38 0 8 333 4.4 948 8 12 16 12 49 31 42 28 22 18 15 13 1.3 1.3 1.4 3 5 6 6.1 6.4 7.9 9
Godrej Properties SELL 2,503 1,000 (60) 696 9.2 278 13 30 34 291 133 14 192 83 73 8 71 156 518 8 .0 7.3 6.6 4 9 10 — — — 43
Macrotech Developers ADD 1,18 4 970 (18 ) 530 7.0 447 18 16 48 39 (11) 205 67 75 25 47 46 17 6.7 6.2 4.9 13 9 22 — — — 7
Mindspace REIT ADD 331 320 (3) 196 2.6 593 8 14 17 61 70 18 40 23 20 17 14 13 1.2 1.2 1.2 3 5 6 5.7 6.3 7.0 1
Oberoi Realty ADD 967 700 (28 ) 352 4.7 364 29 39 46 42 36 16 33 25 21 30 16 13 3.4 3.0 2.6 11 13 13 0.2 0.2 0.2 20
Phoenix Mills BUY 98 0 1,040 6 168 2.2 172 8 30 41 158 28 6 34 124 32 24 29 15 12 3.4 3.1 2.8 3 10 12 0.3 0.3 0.4 4
Prestige Estates Projects ADD 451 38 0 (16) 18 1 2.4 401 14 25 38 105 73 54 31 18 12 10 7 6 2.3 2.1 1.8 8 12 16 0.3 0.3 0.3 12
Sobha BUY 8 29 660 (20) 79 1.0 95 37 60 65 464 60 8 22 14 13 8 6 6 2.9 2.5 2.1 14 19 18 0.8 0.8 0.8 6
Sunteck Realty BUY 497 490 (1) 73 1.0 140 18 16 42 365 (11) 166 28 31 12 19 19 7 2.3 2.2 1.8 9 7 17 0.2 0.2 0.2 11
Real Estate Attractive 3,884 51.6 82.2 50.8 48.4 58.0 38.4 25.9 31.2 22.4 16.8 2.9 2.8 2.6 5.0 7.2 10.0 1.2 1.2 1.4 184
Retailing
Aditya Birla Fashion and Retail BUY 267 255 (4) 238 3.2 938 (4) 4 6 47 18 4 54 NM 75 48 33 15 12 10.0 8 .8 7.5 NM 13 17 — — — 13
Avenue Supermarts SELL 4,8 95 3,08 0 (37) 3,171 42.1 648 26 40 53 55 54 33 18 7 121 92 120 80 61 22.8 19.2 15.9 13 17 19 — — — 22
Titan Company ADD 2,58 9 1,8 60 (28 ) 2,298 30.5 888 20 27 35 80 37 29 131 95 74 82 62 50 26.3 22.0 18 .3 22 25 27 0.2 0.3 0.4 39
Retailing Attractive 5,707 75.8 128.9 75.4 32.4 186.9 #### 80.4 92.5 61.6 48.5 22.7 19.2 15.9 12.2 18.0 19.8 0.1 0.1 0.2 75

40
Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) ADVT-3mo
41
Specialty Chemicals
Aarti Industries BUY 1,157 1,08 0 (7) 419 5.6 363 19 27 32 26 44 16 61 43 37 35 27 23 7.9 6.5 5.7 16 17 17 0.3 0.7 - 17
Atul ADD 10,694 10,000 (6) 316 4.2 30 241 28 6 339 9 19 19 44 37 32 32 27 23 7.3 6.4 5.6 17 18 19 0.6 0.8 1.0 4
Castrol India BUY 145 165 14 143 1.9 98 9 8 9 10 29 17 13 19 16 14 12 11 9 9.9 9.5 8 .8 54 61 65 5.2 5.9 6.2 2
Clean Science & Technology REDUCE 2,160 1,950 (10) 229 3.0 106 22 29 38 16 36 29 100 73 57 75 55 42 30.7 22.3 16.5 36 35 33 0.1 0.1 0.2 -
Navin Fluorine REDUCE 3,8 67 3,750 (3) 191 2.5 49 56 79 97 40 41 22 69 49 40 49 33 26 10.2 8 .6 7.2 16 19 19 0.1 0.2 0.2 15
Pidilite Industries REDUCE 2,502 1,8 50 (26) 1,271 16.9 508 25 34 40 13 33 19 99 74 62 66 51 44 20.0 17.1 14.6 22 25 25 0.4 0.5 0.6 15
PI Industries ADD 3,330 3,500 5 505 6.7 152 62 80 107 25 30 32 54 41 31 36 26 20 8 .2 7.0 5.9 16 18 21 0.2 0.4 0.6 19
S H Kelkar and Company BUY 154 18 0 17 22 0.3 141 9 11 13 (6) 22 14 17 14 12 10 8 7 2.1 1.9 1.7 13 14 15 1.6 2.1 2.8 1
SRF ADD 2,333 12,000 414 691 9.2 59 28 3 328 38 8 38 16 18 8 7 6 25 22 18 1.6 1.4 1.1 22 21 21 1.2 1.5 1.8 44
Vinati Organics BUY 2,075 2,200 6 213 2.8 103 35 49 62 32 41 27 60 43 34 43 30 24 11.7 9.3 7.8 21 24 25 0.3 0.6 0.9 3
Specialty Chemicals Attractive 4,003 53.1 25.1 27.1 20.7 56.6 44.6 36.9 36.8 29.4 24.3 10.7 9.0 7.7 18.9 20.2 20.8 0.5 0.7 0.8 120
Telecommunication Services
Indus Towers ADD 301 265 (12) 8 12 10.8 2,695 20 20 21 (3) 3 6 15 15 14 6 6 6 4.8 4.5 4.2 32 31 31 5.3 5.3 5.6 30
Vodafone Idea RS 11 — — 305 4.0 28 ,735 (9) (8 ) (7) NM NM NM NM NM NM 12 11 10 (0.5) (0.3) (0.3) 53 29 21 — — — 76
Tata Communications ADD 1,461 1,550 6 416 5.5 28 5 49 60 72 30 22 20 30 24 20 11 10 9 36.8 17.1 10.5 225 96 64 1.0 1.2 1.5 8
Telecommunication Services Attractive 5,271 70.0 21 77 225 NM NM 116.5 9.2 7.8 6.8 49 (169) (57) NM 116 NM 1.5 1.5 1.6 285
Transportation
Adani Ports and SEZ REDUCE 8 11 740 (9) 1,655 22.0 2,112 28 35 42 41 21 21 28 23 19 17 13 12 4.2 3.6 3.1 17 16 17 0.6 0.4 0.5 73
Container Corp. SELL 68 5 58 5 (15) 417 5.5 609 17 20 27 72 15 35 40 35 26 26 18 14 3.7 3.4 3.2 10 10 13 - 0.6 1.2 19
Gateway Distriparks BUY 28 2 310 10 35 0.5 125 12 16 21 63 28 31 23 18 14 11 9 7 2.2 2.0 1.8 10 12 14 1.1 1.1 1.1 1
GMR Infrastructure BUY 43 45 5 260 3.4 6,036 (2) (1) (1) 39 34 (8 ) NM NM NM 30 22 20 (9.9) (10.5) (9.3) 56 34 33 — — — 12
Gujarat Pipavav Port BUY 117 121 4 56 0.7 48 3 6 7 9 38 12 22 19 17 14 10 9 8 2.8 2.8 2.9 15 17 21 5.3 6.0 7.2 1
InterGlobe Aviation BUY 2,053 2,600 27 791 10.5 38 3 (18 3) 123 156 (27) 167 27 NM 17 13 NM 5 4 (12.0) (41.8 ) 4.2 216 NM 541 — — — 25
Mahindra Logistics REDUCE 753 560 (26) 54 0.7 71 11 17 23 123 48 40 67 45 32 23 18 14 8 .5 7.5 6.3 13 18 21 — — — 3
Transportation Attractive 3,268 43.4 72.6 2,201.8 25.9 NM 25.3 20.1 24.1 11.3 9.7 6.9 5.5 4.4 NM 22 22 0.4 0.4 0.5 135
KIE universe 206,464 2,740 34.4 17.2 14.6 27.6 23.5 20.5 14.1 12.6 11.2 3.7 3.3 3.0 13.3 14.1 14.6 1.2 1.4 1.6
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2022 means calendar year 2021, similarly for 2023 and 2024 for these particular companies.

(c) Exchange rate (Rs/US$)= 75.33


Disclosures
Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.
60%
Percentage of companies within each category for which Kotak
Institutional Equities and or its affiliates has provided
50%
investment banking services within the previous 12 months.
40% * The above categories are defined as follows: Buy = We expect

32.3% this stock to deliver more than 15% returns over the next 12
30.0%
30% months; Add = We expect this stock to deliver 5-15% returns
21.8% over the next 12 months; Reduce = We expect this stock to
deliver -5-+5% returns over the next 12 months; Sell = We
20% 15.9% expect this stock to deliver less than -5% returns over the next
12 months. Our target prices are also on a 12-month horizon
10% basis. These ratings are used illustratively to comply with
2.7% 2.3% 2.3% applicable regulations. As of 30/09/2021 Kotak Institutional
0.0% Equities Investment Research had investment ratings on 220
0%
equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities As of September 30, 2021
Ratings and other definitions/identifiers

Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our Fair Value estimates are also on a 12-month horizon basis.
Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not
strictly be in accordance with the Rating System at all times.
Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
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CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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INDIA DAILY

October 19, 2021 India 18-Oct 1-day 1-mo 3-mo

Contents Global/Regional indices

Initiating Coverage FTSE 7,204 (0.4) 3.4 5.3

Strategy KOSPI 3,017 0.4 (3.9) (7.0)

Value traded – India

UltraTech Cement: Seasonal hiccup but buoyant commentary

18-Oct 1-day 1-mo 3-mo

Net investment (US$ mn)

13-Oct MTD CYTD

FIIs 166 2,506 23,258

Best performers 18-Oct 1-day 1-mo 3-mo

TPWR in Equity 257 15.6 86.6 107.2

TTMT/A in Equity 270 8.9 84.1 86.5

TTMT in Equity 510 2.4 65.1 63.7

TTAN in Equity 2,589 1.0 23.5 52.7

BJFIN in Equity 18,678 1.0 10.9 46.5

ARBP in Equity 718 (1.2) (3.7) (26.4)

LPC in Equity 936 (1.1) (1.5) (20.6)

BIOS in Equity 343 (1.5) (9.2) (16.3)

NMDC in Equity 158 2.6 6.9 (11.8)

UPLL in Equity 751 0.4 1.2 (10.3)

Valuations—NOI of Rs8.5 bn valued at Rs117 bn for 14 mn sq. ft across key metros

Brookfield India REIT—commercial real estate aggregating 14 mn sq. ft

Financials—11% CAGR in revenues up to FY2024E

Risks—commercial real estate market, evolving regulatory regime

Company data Stock data High Low Price performance 1M 3M 12M

Source: Company data, Kotak Institutional Equities estimates

TENACITIES: REVENUES OF RS13 BN BY FY2025E

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

VALUATION: NOI OF RS8.5 BN WITH GAV OF RS117 BN

Initiate coverage with an ADD rating and Fair Value of Rs290

Exhibit 3: We initiate coverage with Fair Value of Rs290

Source: Company, Kotak Institutional Equities estimates

Exhibit 4: Brookfield REIT trades at 17X EV/EBITDA on FY2023E earnings

2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Source: Company, Kotak Institutional Equities estimates

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Asset value of Rs117 bn comprises Rs107 bn for operational assets

Area (mn sq. ft) Value (Rs mn)

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Area Value Cap. rate (%)

Source: CBRE, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities estimates

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Yields in India cannot be seen in isolation of growth profile

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Source: Capitaline, Kotak Institutional Equities

Brookfield as an alternative to other listed commercial portfolios

Embassy Mindspace Brookfield

Source: Bloomberg, Company, Kotak Institutional Equities estimates

 NOI-NDCF. Brookfield has a superior NOI to NDCF conversion on account of lower

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 11: Brookfield has a higher NOI-NDCF conversion in comparison to Mindspace

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