John Keells Holdings ADD

21 October 2013

Event Update

Institutional Equities
CMP 12-mth TP (LKR) Market cap (USD m) Bloomberg Sector LKR217.30 226 (4.0%) 1,423 JKH SL Diversified Stock performance
Shares ('000) 100,000 80,000 60,000 40,000 20,000 0

Betting on the house advantage

John Keells Holdings (JKH) has finalised plans for funding its new integrated development project, Waterfront Properties (Pvt) Limited (WPL), located in the commercial district of Colombo. Shareholder approved the previously announced 2:13 rights issue with additional embedded warrants, to part-finance this new venture. The project is modelled on the lines of regional integrated projects in South East Asia. In scale and scope, we believe that Resort World Manila (RWM) would serve as close proxy, both operationally and from the valuation perspective. The project will initially cater mainly to the Indian Meetings, Incentives, Conventions, and Exhibitions (MICE), leisure and gaming tourism segments. We have revised our target price to LKR226 adjusting for dilution from the rights issue with a substantial portion on this attributed to the WPL project. We maintain ADD. Benefits from Leisure and MICE tourism market: JKH is hoping to leverage Sri Lankas location as an attractive Leisure and MICE tourism market, especially for the emerging Indian middle class. With construction of large-scale convention centres and allied hotel facilities, Sri Lanka can cater to the existing capacity shortfall in the Indian MICE market. JKHs new project, which is expected to feature a 2500+ seat convention centre along with an 800-room luxury city hotel, stands to benefit from spillover from the Indian MICE market. Gaming operation should bring in substantial value: Sri Lanka is positioning itself as a potential new location for the casino and gaming industry, especially given its geographic advantage. JKHs project is expected to include a 150,000 sq. ft. gaming facility which is the centrepiece of this project. Australian gaming operator, Crown has recently indicated that it would commence operations in Sri Lanka. Valuation: Our revised 12-month SOTP-based target price is LKR226, with a substantial portion of this value (~LKR85/share) derived from JKHs integrated development project. Within this, the gaming operation represents a majority of the value. Any material changes to this should see us revising our valuation thesis and target price. Maintain ADD.
Abdul Hafeel | abdul.hafeel@iiflcap.com ( +94 112 147121

Price performance (%)

1M 3M 1Y

JKH Rel. to CSEALL

3.9 (1.5)

(12.6) (11.6)

(0.6) (0.7)

Shareholding pattern (%) as at 30 Jun 13 FII DII Others 52Wk High/Low (LKR) Shares o/s (m) Daily volume (US$ m) Free float (%) Financial Summary YE 31 Mar/ (LKR m) Revenue (LKR m) YoY (%) EBITDA (LKR m) EBITDA margin (%) PAT - Reported (LKR m) PAT - Recurring (LKR m) EPS - Recurring (LKR m) PER (x) PBV (x) EV/EBITDA (x) ROE (%) Core ROE (%) 40 15 45 298/203 858 1.1 80

16.0 Volume (LHS) 10.3 Price (RHS) 8.0 65.7

(LKR) 400
300 200 100

0
Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13

FY12* 76,700 26.8 9,450 12.3 9,775 9,883 11.5 18.8 2.6 19.9 15.0 15.1

FY13 85,557 11.5 10,319 12.1 12,201 10,267 12.0 18.1 2.1 18.2 15.2 12.8

FY14ii 89,707 4.8 10,486 11.7 10,792 10,691 12.5 17.4 1.9 17.9 11.4 11.3

FY15ii 98,120 9.4 10,838 11.0 11,782 11,782 13.8 15.8 1.7 17.3 11.4 11.4

FY16ii 102,202 4.2 11,103 10.9 13,887 13,887 16.2 13.4 1.6 16.9 12.2 12.2

Source: Company, IIFL Research. Prices as of close of business on 17 October 2013. *SLAS, excludes WPL

Institutional Equities
Sri Lanka is an attractive MICE destination for Indian businesses Around a third of Indian outbound travel in 2010 was for business purposes; of this MICE accounted for two third. With the Indian economy expected to show secular growth over the next decade and established presence of several large Multi-national corporations (MNCs), we expect the Indian outbound MICE market to remain strong. Sri Lanka stands to benefit from the spillover effect from the India. Figure 1: Meetings and Conventions held in the wider Asian region in 2008-2012 Sri Lanka India Singapore Thailand Hong Kong 2008 9 92 118 95 66 2009 7 91 119 103 67 2010 11 100 136 88 82 2011 10 105 142 101 79 2012 14 150 150 150 96
Source: ICCA, IIFL Research

John Keells Holdings - ADD Indian outbound leisure travel boom should benefit Sri Lanka Outbound travel from India has increased over the last 20 years, thanks to a growing middle class and higher disposable income. The leisure segment accounted for ~30% of Indian outbound travel in 2010. Moreover, the Indian outbound travel market is expected to grow rapidly; the UNWTO estimates that by 2020, Indian outbound tourism should account for ~50m travelers. As such, given the right products and infrastructure, Sri Lanka stands to attract a sizeable portion of Indian outbound tourist traffic. Figure 3: Indian outbound tourism has increased over the last decade
16 14 12 10 8
6 4 2 0

UAE 30 37 48 43 63

Indian Nationals Departures From India (mn)

Figure 2: Indias ranking amongst Asian peers has improved over 2008 -2012 Sri Lanka India Singapore Thailand Hong Kong 2008 71 31 21 29 36 2009 86 33 5 30 38 2010 74 16 6 9 10 2011 82 8 5 9 10 2012 73 5 6 7 10
Source: ICCA, IIFL Research

UAE 47 45 12 13 12

2004

2005

2006

2007

2008

2009

2010

2011

Source: Ministry of Tourism-India, IIFL Research

At present, the Sri Lankan hotels are ill equipped to cater to this segment. Only a handful of five start resort hotels and city hotels are capable of accommodating a small-mid scale corporate conference or meeting. At present, Exhibition facilities are limited to two locations in Colombo the BMICH convention hall and the Exhibition and Convention Centre. With the latter slated for demolition to make way for the proposed gaming district, Colombo would be left with only one meaningful site as an exhibition and convention facility. As such, WPLs 2500 seat convention centre and 800-room city hotel would go a long way in meeting this anticipated demand.

Positioning Colombo as a regional gaming centre At present, there are no established international casino operators in Sri Lanka. Local casinos are best described a small scale gaming centres run by a few local individuals. As part of positioning Sri Lanka as a highend tourism destination, the Government of Sri Lanka has been keen in promoting the gaming and entertainment industry. To this end, the government has ear marked a special zone in the commercial heart of Colombo city, overlooking the iconic Beira Lake. The government streamlined the existing gaming regulations in 2010. Interestingly Sri Lankas gaming tax of 5% is one of the lowest in the region. In addition, the government has given several other tax incentives to attract foreign investors to this sector.

abdul.hafeel@iiflcap.com

Institutional Equities
Nevertheless, to allay concerns over promotion of gambling which is looked down upon by Sri Lankas religious leaders and a large segment of society, which adopt a conservative attitude towards such social vices, the government has halted the issue of fresh gaming licenses. As such, gaming operators entering Sri Lanka have to partner with existing licensees. Figure 4: Sri Lanka has geographic advantage on the trade and travel route

John Keells Holdings - ADD Indian gaming demand should prop up Colombos casinos Gaming is highly restricted in India, with casinos permitted to operate only in Goa (mainly offshore), Daman, and Sikkim. While no official statistics are available, the Indian gaming market is estimated at ~USD60b. Currently there are no global casino brands in India. As such, Colombos proposed casino projects have the potential to attract high spending Indian gamblers, who at present have to travel to South East Asia to indulge in gambling. With frequent connectivity to major Indian airports provided by Sri Lankan and major Indian airlines, shorter travel times (cf. South East Asia) and on arrival visa facilities for Indian tourists, Colombo should be able to attract a sizeable chunk of outbound Indian gaming tourism. While there is not exact data on what proportion can be identified as travel solely for related to gaming, leisure can be considered a close proxy to gaming, especially in destinations such as Macau and Philippines. Figure 5: Indian outbound tourism to South East Asia has eclipsed Sri Lanka
SriLanka 1,000,000 800,000 Malaysia Philippines Singapore Macau

Source: Nations Online, IIFL Research

600,000 400,000
200,000 -

Given Sri Lankas advantageous geographic location, apart from catering to the Indian market, Sri Lanka could also be positioned as a gaming destination for high spending middle-eastern and Eastern European gamblers, albeit over the medium long term. The centrepiece of JKHs WPL project would be a gaming operation run by a global casino brand. JKH has stated that it would not be involved in operating the Casino. Australian casino mogul, James Packers Crown Group is slated to set up a ~USD400m gaming project in partnership with Rank Holdings (a local gaming licensee). This project has been granted a 10-year holiday. Another local entrepreneur who has an established presence in Sri Lankas gaming industry, is planning on setting up a ~USD350m resort and casino project (Queensbury).

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Ministry of Tourism-India, IIFL Research

The unfavourable attitude towards gaming in Goa (the most popular among Indian gaming destinations) by the incumbent state administration may also encourage Indian gamblers to look at Sri Lanka as a gaming destination. Moreover, Indian corporates active in the

abdul.hafeel@iiflcap.com

Institutional Equities
Indian gaming sector (e.g. Delta Corp) are reportedly eyeing Sri Lanka as a possible investment opportunity. Though it seems unlikely that Indian casino brands would directly operate in Sri Lanka in the short medium term, it is quite possibly that these entities may play a role similar to junket operators, facilitati ng the arrival of Indian gamblers to Sri Lanka. Benefit from Asia Pacific Gaming growth over the medium term The Asia Pacific region is forecast to be fastest growing for casino spending over the next five years. The region is expected to account for ~42% of global casino spend in 2015 (cf. ~29% in 2010). The bulk of this growth is expected to come from Macau and Singapore. Figure 6: Asia Pacific gaming revenue to grow over the next five years
100
80

John Keells Holdings - ADD Risks and concerns From a domestic perspective, execution and regulatory concerns remain the key risk factors. From an execution risk perspective, risks range from not meeting construction deadlines to cash flow (liquidity) constraints to management ability to manage and guide the project. From a regulatory risk perspective, key would be a change in government attitude to the large-scale organised gaming industry. Gaming and Casino are taboo words in Sri Lanka. Not surprisingly gaming projects are referred euphemi stically as integrated resorts. With a large part of the WPL projects value expected to come from the gaming operation, any decision by the government to limit the scale and scope of gaming in Sri Lanka would represent large-scale value erosion for JKH. From a regional risk perspective, a slowdown in the Indian economy and change in the Indian governments attitude to gaming are key concerns. With JKH marketing WPL as a destination for Indian tourists (both in the MICE and Leisure/Gaming segments), a significant slowdown in the Indian economy is bound to dent Indian outbound tourism demand. However, conversely it can be argued that such a scenario may in fact favour Sri Lanka as Indian visitors to high-end gaming destinations such as Macau and Singapore would look at Sri Lanka as a more affordable alternative. Though currently gaming is largely restricted in India, a change in the Indian governments attitude to Casinos and gaming, especially given the prospect of large fiscal benefits from gaming related taxes may create competition to Sri Lankas proposed gaming ventures. With recent high profile sports betting scandals, there have been calls to legalise and regulate gaming in India. Sri Lanka may also face competition from Myanmar, which is reportedly studying the promotion of gaming and integrated resorts as a part of its tourism promotion drive. Under an USD500m Asian Development Bank (ADB) and Norwegian government funded tourism master plan, Myanmar plans to attract 7.5m tourists by 2020 and gaming is identified as a potential driver of tourism demand.

United States

EMEA

Asia Pacific

Latin America

Canada

60 40
20

0 2006 2007 2008 2009 2010 2011f 2012f 2013f 2014f 2015f
Source: PWC, IIFL Research

Another indication of the growing importance of Asia in the global casino industry is the ascent of several Asian gaming companies (e.g. Sands China, Wynn Macau, Genting) to the top ten in the GBGC 50 index a ranking of top 50 gaming companies globally by market capitalisation.

abdul.hafeel@iiflcap.com

Institutional Equities

John Keells Holdings - ADD that optimum debt-to-equity ratio should be at ~60:40. Initial investment in WPL will also consist of land (from JKH and its subsidiaries) valued at USD60m. Figure 7: Artists rendering of the Proposed mega development

Details of proposed integrated project

JKH has disclosed initial details of its proposed mega development project. Initial capex is estimated at ~USD650m in the first phase of the project with option to spend additional ~LKR170m in the second phase. The project will be located in the commercial district of Colombo, on land owned by or under long-term lease with JKH and several JKH subsidiaries. Shares in WPL would be allotted to JKH and its subsidiaries as consideration for the extent of land transferred to WPL. The planned shareholding structure of WPL is as follows: JKH (79.24%), Ceylon Cold Stores (14.15%), John Keells Ltd. (5.03%), and John Keells Properties (Pvt) Ltd. (1.57%). JKH has effective control of 96.7% in WPL. The first phase of the project is expected to include: 800 room five star hotel Convention centre with seating capacity for 2,500 400,000 sq ft shopping mall Entertainment and gaming facility spanning 150,000 sq ft 240 room luxury serviced apartments complex Car park with ~2,500 slots The second phase should include: Office complex spanning 400,000 sq ft 200 room luxury serviced apartments complex Since this project is classified as a strategic investment by the Sri Lankan government, WPL stands to receive several tax benefits. These include a 10-year tax holiday on profit (excluding profit from gaming operations) and a concessionary tax rate for the next 15 years. Dividends paid from non-gaming profit to WPLs shareholders are to be exempted from income tax. WPL is exempt from withholding tax (WHT) on interest on FX denominated loans and technical fees. WPL is also exempt from VAT and other import levies on project-related purchases. The project is expected to be funded through a mix of from apartment presales (~USD110m), new equity infusion (~300m from rights and warrants subscription) and Debt of ~USD350-400m. JKH has stated

Source: Company Data, IIFL Research

This project is modelled on other mixed development properties in the South East Asian region. Sri Lankas tourism potential is a key factor for this projects success. Sri Lankas geographic advantages and proximity to India, which has a growing middle class that has increased spending power and appetite for travel and tourism, are also key success factors for the new project. JKH is reportedly in talks with two global casino operators to select an operator for its gaming project. JKH has stated that it would preferably look at an operator who is not already operating in a country closer to Sri Lanka (a tacit reference to Singapore). The thinking being that such an operator is more likely to promote Sri Lanka as a gaming destination in the wider region. In this context it is noteworthy that MGM was reportedly in talks with Rank Holdings (James Packers local pa rtner) to commence an integrated resort project in the 2010-11 period.

abdul.hafeel@iiflcap.com

Institutional Equities
JKH is expected to facilitate the selected operator acquire a license from an existing gaming license holder, potentially through a separate investment vehicle, in which JKH is unlikely to hold equity as JKH has insisted that it would prefer to refrain from directly owing and/or operating a casino and only be a landlord for the selected casino operator. Nevertheless, this gaming license would be specific to the gaming operation conducted within WPL premises and not transferable to another site. As the project is in its early stages, we refrain from modelling the detailed operations of the casino project (e.g. the types of games, number of slot machines, tables or the mix between mass market and VIP guests which would affect margins and the bottom line). Nevertheless, based solely on the scale and scope of JKHs gaming operation we expected the closest Asian peer to be Resort World Manila (RWM). We expect annual Gross Gaming Revenue (GGR) of ~250-300m for JKHs gaming operation. JKH is expected to receive a fixed rental and a percentage of net operating cash flows (or EBITDA). RWM is the first integrated gaming project in Manila. RWM is operated by Travellers International Hotel Group which is joint venture between Genting Hong Kong (GENHK) and Philippines based Alliance Global Group (AGI). Travellers International is currently in the process of listing in the Manila bourse. RWM offers Tables (VIP-113, Mass market168), Slot machines (1,737) on a 141,728 sq ft gaming area (comparable in size to WPLs casino). It also encompasses three luxury hotels, restaurants and hosts entertainment shows and events. Figure 8: Selected KPIs of RWM Revenue (USD m) EBITDA margin (%) ROE (%) Annual foot fall Average daily foot fall
Source: Company, IIFL Research

John Keells Holdings - ADD Figure 9: Valuation of separate properties encompassing WPL Segment Valuation Basis Phase 1 Residential Apartments DCF City Hotel EV/Room Serviced apartments DCF Gaming operation DCF Phase 2 Serviced Apartments Office Complex Total Enterprise Value Less: Net Debt Equity Value
Source: Company, IIFL Research: Wacc of 14%, g of 6% and FX rate of LKR131/USD

Value (LKR m) 2,996 42,823 4,332 57,073 107,225 17,051 5,272 22,323 129,548 (45,438) 84,109

DCF DCF

Details of equity raising

Current number of shares in issue = 857,921,888 Rights issue ratio = 2:13 New shares to be issued = 131,987,983 Details of Warrants: Shareholders are also entitled to two warrants per right as follows Warrant 1 1 warrant for every 3 right Exercise price = LKR185 Callable after 24 months of issue Exercise ratio 1:1 Warrant 2 1 warrant for every 3 right Exercise price = LKR195 Callable after 36 months of issue Exercise ratio 1:1 We have valued the warrants as call options using the Black-Scholes model and adjusted for the share dilution when warrants are exercised. 6

2010 335.8 28.3 23.1 3,272,979 8,945

2011 659.3 32.6 29.5 6,017,178 16,480

2012 752.4 31.5 33.7 6,288,498 17,179

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Institutional Equities
Figure 10: Sum of the parts (SOTP) valuation Segment Transportation (Excl. SAGT) SAGT Leisure CFR IT Other NTB UAL On-going property projects Integrated development project Investment Property Other adjustments Less: Value of warrants Equity value Share Count (m) Target price (LKR/share)
Source: Company, IIFL Research

John Keells Holdings - ADD Figure 11: Valuation of warrant 1 No of shares ( ex rights) No of warrants Stock Price Exercise Price Maturity (in years) Risk free rate Standard deviation of return on stock Dividend yield d1 d2 N(d1) N(d2) Warrant value
Source: Company, IIFL Research

Valuation Basis DCF (Wacc 14%, TG 6%) Dividend valuation (CoE 14%, Finite Cash Flows) DCF (Wacc 19%, D/D+E 20%, TG 6%) DCF (Wacc 17%, D/D+E 20%, TG 6%) DCF (Wacc 20%, TG 6%) EV/EBIT (~8x) P/BV (Residual Income LKR70/share) P/BV (~2x) DCF (CoE 18%) SOTP valuation Market Value/acquisition (adj. for net debt and minority interest)

Value (LKR m) 12,712 17,751 52,682 11,201 2,302 1,935 4,827 6,925 2,858 84,109 3,671 29,046 (6,535) 223,483 989.9 226

989,909,871 43,995,994 215 185 2 12% 22% 1% 1.359 1.043 0.91299263 0.85148132 69.30

Our base case SOTP-based 12-month target price is LKR226/share. A substantial portion of the value is attributable to the value assigned to JKHs WPL project. Within this, not only does the gaming component represents a large majority of value directly but is also central to the operation of WPL as currently envisaged (ie as an integrated resort). Significant risks to assumption are execution risk and political risk emanating from cultural sensitivities related to the gaming projects and overall regional macro-economic (especially India) weakness. Any material changes to the gaming project should see us revisiting our valuation thesis and target price. Maintain ADD.

Figure 12: Valuation of warrant 2 No of shares ( ex rights) No of warrants Stock Price Exercise Price Maturity (in years) Risk free rate Standard deviation of return on stock Dividend yield d1 d2 N(d1) N(d2) Warrant value
Source: Company, IIFL Research

989,909,871 43,995,994 215 195 3 12% 22% 1% 1.335 0.948 0.909126562 0.828341356 79.25

abdul.hafeel@iiflcap.com

Institutional Equities

John Keells Holdings - ADD Figure 14: Singapore is also expected to see strong growth in GGR
8,000
(US$ m)

Overview of regional gaming industry

Macau has 35 casinos operated by six concessionaries (SJM, Galaxy Casinio, Venetian Macau, Wynn Resorts, Melco Crown and MGM Grand Paradise) within its territory. Since it opened up to International casino chains, Macau has seen a gaming boom. A large portion of the Asia Pacific regions gaming industry growth is expected to be derived from Macau. Gaming taxation in Macau is one of the highest in Asia (~38-39% of which GGR tax is 35%). In addition to Casinos, Macau also has other forms of gambling such as sports betting and lottery. Figure 13: Macaus gaming revenue growth has been exponential
70,000
60,000 50,000 40,000

7,000 6,000
5,000

4,000 3,000 2,000

1,000

0 (US$ m) 2010
Source: PWC, IIFL Research

2011f

2012f

2013f

2014f

2015f

30,000 20,000 10,000 0 2006 2007 2008 2009 2010 2011f 2012f 2013f 2014f 2015f
Source: PWC, IIFL Research

The Philippines is also aggressively promoting gaming industry. PAGCOR, the state owned company promoting the gaming industry has plans to set up four more gaming resorts in a special gaming zone located close to Manila city. Gaming revenues from foreigners are taxed at 15% while revenues from locals are taxed at 27%. Figure 15: New gaming initiative should lead to accelerated GGR growth
1,400
1,200 1,000 800 (US$ m)

Singapore has a gaming duopoly unlike Macau. The two casinos are Resort World Sentosa (RWS) operated by the Genting Singapore (GENS) part of the Genting group and Marina Bay Sands (MBS) operated by US based Las Vegas Sands (LVS). Both operators have a 30 years license and have an exclusivity period for the first 10 years. Effective tax on Casino is in the 12-22% range. GGR tax on premium players (defined as those who deposit SGD100,000 or more with a casino) is 5% while GGR on the rest are taxed at 15%.

600 400 200 0 2006 2007 2008 2009 2010 2011f 2012f 2013f 2014f 2015f
Source: PWC, IIFL Research

abdul.hafeel@iiflcap.com

Institutional Equities
Figure 16: Peer comparison of regional gaming stocks Company Name Code Mkt cap (USD m) Melco Crown SJM Holdings Galaxy Ent. Wynn Macau Sands China MGM China Nagacorp Genting Malaysia Genting Singapore Genting HK Leisure & Resorts Melco Crown Philippines Delta Corp
Source: Bloomberg, IIFL Research

John Keells Holdings - ADD

ROE (%) 13.16 36.38 40.9 88.65 22.26 87.76 30 11.18 10.66 8.89 10.32 nm 3.77

ROIC (%) na 29.52 25.08 52.26 16.39 na 29.32 9.93 7.67 2.03 4.33 nm 4.04

EBITDA margin (%) 22 9.68 16.68 26.77 27.79 24.08 49.59 30.87 44.25 23.13 5.43 nm 23.7

PE (x) 2013E 31.2 19.47 25.98 21.28 27.6 21.48 14.27 14.9 30 14.33 na nm na 2014E 24.35 17.77 21.24 23 21.43 18.79 11.8 14.45 23.33 11.03 na nm na

PBV (x) 2013E 4.98 6.6 8.11 17.46 9.74 16.29 3.4 1.75 2.14 1.72 na 4.22 na 2014E 4.16 5.88 5.93 14.4 8.31 12.5 3.16 1.61 1.99 1.58 na 4.51 na

EV/EBITDA (x) 2013E 17.31 14.67 20.38 18.9 22.69 17.42 10.98 8.13 14.09 26.13 18.48 na na 2014E 15.6 13.36 17.2 17.45 18.25 15.44 8.98 7.71 12.05 23.55 8.94 14.14 na

6883 HK 880 HK 27 HK 1128 HK 1928 HK 2282 HK 3918 HK GENM MK GENS SP GENHK SP LR PM MCP PM DELTA IN

20,225 18,910 32,527 163,927 60,315 14,483 2,019 24,503 14,506 3,455 170 1,136 291

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Institutional Equities

John Keells Holdings - ADD

Key to our recommendation structure BUY - Absolute - Stock expected to give a positive return of over 20% over a 1-year horizon. SELL - Absolute - Stock expected to fall by more than 10% over a 1-year horizon. In addition, Add and Reduce recommendations are based on expected returns relative to a hurdle rate. Investment horizon for Add and Reduce recommendations is up to a year. We assume the current hurdle rate at 10%. Add - Stock expected to give a return of 0-10% over the hurdle rate, i.e. a positive return of 10%+. Reduce - Stock expected to return less than the hurdle rate, i.e. return of less than 10%.

Analyst Certification (a) that the views expressed in the research report accurately reflect such research analyst's personal views about the subject securities and companies; and (b) that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in the research report.

Published in 2013, IIFL Ceylon Pvt Ltd 2013 This report is published by IIFLs Institutional Equities Research desk. IIFL has other business units with independent research teams separated by Chine se walls, and therefore may, at times, have different or contrary views on stocks and markets. This report is for the personal information of the authorized recipient and is not for public distribution. This should not be reproduced or redistributed to any other person or in any form. This report is for the general information of the clients of IIFL, a division of India Infoline, and should not be construed as an offer or solicitation of an offer to buy/sell any securities. MICA(P) 017/10/2012. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. India Infoline or any persons connected with it do not accept any liability arising from the use of this document. The recipients of this material should rely on their own judgment and take their own professional advice before acting on this information. India Infoline or any of its connected persons including its directors or subsidiaries or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained, views and opinions expressed in this publication. India Infoline and/or its affiliate companies may deal in the securities mentioned herein as a broker or for any other transaction as a Market Maker, Investment Advisor, etc. to the issuer company or its connected persons. India Infoline generally prohibits its analysts from having financial interest in the securities of any of the companies that the analysts cover. In addition, the company prohibits its employees from conducting F&O transactions or holding any shares for a period of less than 30 days.

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