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Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

Equitymaster Agora Research Private Limited Independent Investment Research 5 April 2012
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Hindustan Unilever Ltd.

Sell
Market Data
Price on reco. date (Rs) CMP - BSE / NSE (Rs) Change since reco. 52-week High/Low (Rs) NSE Symbol BSE Code No. of shares Free float Market cap (Rs m) 400 (BSE) 414 / 415 3.5% 420 / 266 HINDUNILVR 500696 2161 m 47.5% 864,400

Investment Concerns Defensive tag stretched valuations beyond capability: Hindustan Unilever has been among the best performing stocks in FY12. The company has been basking in its new-found pricing power and reaping benefits of its focused business strategy. Despite taking calibrated price-hikes, the company was able to garner robust volume growth in each of the April-December 2011 quarters. During 9mFY12, not only has its topline grown by 16% but the company has managed to improve its margins. This has been possible on account of its increased focus towards the high-margin, under-penetrated personal care segment and efficient cost management. This speaks volumes about the growing financial prowess of the company. However, apart from improved financials, HUL's defensive play in a weak macroeconomic environment arising from high inflation, hardening interest and slowdown in capital expenditure have ratcheted up its valuations considerably. This is reflected in the fact that the company's scrip is currently trading at a steep multiple of 33 times its trailing 12 months earnings. Going forward, the company's financials are likely to be impacted by growing competition in all segments and continued high price of crude. Even the 2% hike in indirect taxes is expected to make a host of services & goods of daily consumption expensive and outweigh consumer tax savings from the increased exemption ceiling. This limits FMCG companies from undertaking big-ticket price hikes which inturn will adversely impact margins. We believe that such expensive valuations do not fully justify the future growth potential that the HUL stock holds. Therefore, we would advise investors to exit and re-enter the stock at around 40% discount to current price levels. Competitive intensity on the rise: Competition is heating up in all segments that the company operates in. In the core detergent business, the company is not only facing the heat from established players such as Procter & Gamble, but also from regional players such as Rohit Surfactants'. Ghari, the second largest detergent brand by sales (in 2010) and owned by Rohit Surfactants, managed to topple HUL's largest selling detergent Wheel for two months last year. The Kanpur-based private company achieved this feat by entering 10 new states in the last three years widening its reach to 19 states. Rohit Surfactants is planning to raise Rs 10 bn over the next two years through the capital market to scale up its production and distribution network. In soaps too, the company has to contend with strong competition from Godrej Consumer Products (Godrej No 1) in the Northern India and Wipro Consumer Care (Santoor) in Southern India. In personal products, oral care has been languishing on account of delay in launches in the emerging advanced oral care segment coupled with huge promotions by established players Colgate (Colgate Sensitive) as well as entrants such as GlaxoSmithkline Consumer Healthcare (Sensodyne). The reported entry of Procter & Gamble in toothpastes through its Oral Care brand will further make the going difficult for HUL. Even the other personal care segments such as shampoo and skincare are witnessing growing competition that has forced the company to dole out higher price promotions thereby clipping margins. Packaged foods business remains a drag on profitability: HUL's packaged foods portfolio continues to remain its Achille's heel generating the lowest segmental margins of around 3%. The processed food business comprising of Knorr, Annapurna, Kissan range and Modern Foods have been around for a while but the profitability has not really improved much. Its previous launches, Annapurna Atta and Nutrismart malted beverages, have not been very successful. The Knorr brand which has been extended to noodle segment is facing stiff competition from existing players such as Nestle (Maggi), GSKCH (Foodles) and ITC (Yipee)..
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Updates On Hindustan Unilever: Add An Alert Rs 100 invested is now worth

Stock price performance

HUL 1-Yr 3-Yrs 5-Yrs 43.0% 18.3% 7.4% Index* -11.2% 4.5% 8.5%

Returns over 1 year are compounded annual averages * BSE Sensex

Shareholding (Dec-2011)
Category Promoters FIIs Public Others Total (%) 52.5 18.7 11.4 17.5 100.0

Input www.equitymaster.com/qv/qdetail.asp?story=7&date=04/05/2012 cost inflation: The commodity bull-run has pushed up HUL's operating costs .

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Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

Input cost inflation: The commodity bull-run has pushed up HUL's operating costs . During 9mFY12, the company's raw material-to-sales ratio swelled up to 53% from 50% in the same period last year. Although prices have eased off, some of the commodities such as milk, tea, coffee and palm oil still rule high as compared to levels seen during the previous year. Even crude continues to hover well above the US$ 100 per barrel mark. Therefore, prices of crude-based derivatives such Linear Alkyl Benzene (LAB) and Light Liquid Paraffin (LLP) which are the increasingly used in the core business of Home & Personal care continue to remain high. Thankfully HUL, till now, had been able to mitigate the cost inflation through calibrated price hikes and rationalization in advertisement spends. But going forward, intense competition and costlier consumer goods and services post the tax-hike, will prevent the company from fully passing on the cost burden thereby impacting profitability. We expect net margin to decline by 50 basis points to 11.2% in FY12. Comparative valuation
Parameter (FY11) Net sales (US$) EBDITA margin (%) Net margin (%) Return on equi. (%) Debt to equtiy ratio Return on inv. Cap.(%) Sales/GFA P/E (x)* HUL 3,841.8 12.2 11.9 79.7 0.0 23.1 5.2 33.0 Marico 619.4 13.1 9.2 30.6 0.8 27.7 5.1 33.3 Dabur 807.4 18.0 13.9 51.2 0.8 50.8 2.1 29.7

Investment Rationale Brand equity: HUL earlier followed a margin-led growth strategy due to which it had not strived to grow its brand portfolio. Rising competition from established as well as regional players forced the company out of its slumber. As a result, the pace of innovations have intensified since 2009-10 with 70-80 innovations launched annually, more than it did in the entire decade. In the past one year, the company has re-launched more than 50% of its product basket. HUL has a presence in most categories in the FMCG sector, something no other company can boast about (Refer table 1 on page 7). It is the market leader in a number of segments such as skin cleaning, face care, hand & body, shampoo, deos, fabric cleaning, dish wash and tea. In segments such as toothpaste and ketchup, the company is the second largest player. It has extremely strong brands like Kissan, Knorr, Brooke Bond, Lipton, Wheel, Rin, Surf Excel, Lakme, Lifebuoy, Lux, Dove, Vim and Fair & Lovely across business segments. Moreover, the company has brands across the price spectrum ranging from mass to premium in every product segment. In recent times, the company has been deriving greater mileage from its brand strength by extending renowned brands in niche categories. For example, Hamam has been extended to hand wash segment, Rin to fabric whitening and Rexona to deodorants. In personal care, the company has entered new categories riding on its time & tested brands. It has also launched l brands, Sure and Comfort, from its international portfolio in the Indian market. Armed with a strong brand equity and presence across price points, the company is wellgeared to tackle any demand slowdown. Extensive portfolio spread
Category Fabric Wash Personal Wash Shampoo Skin Premium Surf Excel Dove, Pears, Liril Dove, Clear Popular Rin, Sunlight Hamam, Lux, Rexona Sunsilk Mass Wheel Lifebuoy, Breeze Clinic Plus+ Fair & Lovely cream & face wash Closeup small pack Sehatmand,Ruby Bru small pack
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Vaseline Men's range, Pond's Gold Radiance, Lakme Fruit Blast, Vaseline Total Moisture White. Ponds Lakme Fruit moisture, Lakme Perfect Radiance, Lakme Sun Faceash, Ponds Age Miracle,Ponds Expert Flawless White Pepsodent Red Label, Taaza Bru

Toothpaste Closeup Tea 3 Roses, Taj Mahal. Lipton Yellow Label, Lipton Clear Green, Lipton Darjeeling, Lipton Iced Tea

Coffee CoffeeMate www.equitymaster.com/qv/qdetail.asp?story=7&date=04/05/2012

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Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

Coffee

CoffeeMate

Bru Kissan Jam, Kissan Ketchup Kwality Walls Cornetto

Bru small pack Kissan Ketchup in polypack Kwality Walls Paddle Pop, Twister Pureit Intella

Processed Kissan Soya Juice, Kissan Creamy Spread,Knorr Soupy Foods Noodles, Knorr Soups, Knorr Ready to Cook Ice Cream Kwality Walls Selection,

Water

Pureit Marvella

Pureit Classic

Renewed focus on personal care to drive demand: With its core business of soaps & detergents maturing, the company has shifted focus towards personal care segment which is currently under-penetrated and enjoys higher margins. To expand presence in personal care segment, HUL launched entire skin care portfolios across established brands - Lakme, Ponds, Fair & Lovely, Vaseline and Dove. The company has launched 40 innovations in skin-care alone in 2010-11 marking its entry into new segments such as premium skin lightening, hand & body lotion, male grooming and anti-ageing. As a result, Dove, in the past two years, has moved from being an insignificant Rs 800 m brand to Rs 6.5 bn brand with an enlarged portfolio of face wash, shampoo, hair conditioners and hair treatments. Similarly, Vaseline has graduated from petroleum jelly to rapidly growing men's range of grooming products including body, skin and moisturizing lotions. To increase footprint of recent premium offerings, the company engages services of professionally trained beauty advisors at point of sale. For market development, HUL has entered into medical marketing through tie-ups with dermatologists. The company is, also, capitalizing on the growing consumer spends in beauty salons through its chain of more than 140 Lakme salons and studios. This is not only expected to add to company turnover but build on a steady demand base for the company's products. As a result of these initiatives, the share of personal care has risen from 26% in FY07 to 29.7% in FY11 and is expected to cross 30% in the future. Market reach: HUL's distribution network is a benchmark for its peers, given its high penetration levels. HUL has set up a strong and efficient distribution network with a direct coverage of over 2 m retail outlets. These comprise of 12.5 lakh outlets in urban region and 7.5 lakh outlets in villages and are serviced through manufacturing plants in 70 locations, 43 depots and 2,400 distributors. In fact, the company has doubled its direct outreach during the past two years by tripling reach in rural India to 7.5 lakh stores in 2010. The Shaktiman initiative (part of project Shakti) and use of digital technology contributed to the higher rural outreach. Through this initiative, men from the Shakti Amma families have been distributing HUL products to villages adjoining the respective Shakti village. The GIS (Geographical Information System) tracks villages around the 'Shakti' families and on the basis of which the Shaktimaan is allotted five to six villages. They go on bicycles (provided by HUL) to these villages and sell HUL products. HUL currently has over 30,000 Shaktimaans on board across the country. The contribution of modern trade channels to overall sales has gone up to 10% with the share reaching 30% in major cities such as Hyderabad, Gurgaon, Bangalore and Chennai. The growing clout of modern trade can be gauged from the fact that the company's market share in modern trade is higher than in general trade across categories. HUL's presence across all distribution channels from family grocer to rural to modern trade makes it a strong player as increased penetration and reach plays a very important role. Business restructuring and growth in new segment: The company has been restructuring business to minimize costs and optimize operations. The company shifted production of Wheel detergent to 20 supplier-owned factories across the country instead of limiting it to particular zones. This has led to savings of Rs 1,000-1,500 per tonne in logistics cost. The company has been trimming its distribution network particularly in large cities where it was cut down by 20%in FY11. In fact the number of distributors has reduced from a huge 10,000 in FY03 to 2,400 in FY11. The company demerged its export and Lakme Salon service businesses into separate subsidiaries for better focus. In the new business segment of water purifier, HUL has extended its offerings across the price spectrum. The water business is expected to break-even in the near future.

Background Hindustan Unilever Ltd is a 53% owned subsidiary of Unilever. It occupies the topmost position in the FMCG industry in India. At revenues of Rs 203 bn, HUL constitutes 14% of the Rs 1,463 bn worth FMCG industry in India. It is present in over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. The brand equity of its products remains virtually unrivalled. In the past three years, the company has embarked on an aggressive growth path. Its key strengths include extensive distribution network powerful brand equity, strong balance sheet, and high-quality management. The Anglo-Dutch parent, Unilever, wants 70 per cent of its revenues to come from emerging markets, against the current 53 per cent. From 17 emerging market countries on its radar, India and Brazil are the two larger ones in focus for the parent. To reinforce its faith in the company, Unilever had announced a share buy-back programme in June 2010 which it completed in March 2011 and acquiringone per cent of the equity for 6.2 bn. Industry prospects The FMCG sector is valued at Rs 1,463 bn or $33 bn (AC Nielsen report). At present, urban India still accounts for the major share of 66% of total FMCG consumption while rural India accounts for the remaining 34%. However backed by low unit packs and aggressive distribution, the resurgence in rural demand that started two years ago continued in 2010-11. In urban India, rising disposable income and increased aspirational levels has led to the phenomenon of value vaulting wherein after a threshold level of penetration, consumers move up the value chain rather than increase consumption. The trend of premiumization has been catalyzed by modern
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Hindustan Unilever consumers move up the value chain Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster been catalyzed by modern rather than increase consumption. The trend of premiumization has trade format and explosion of new launches and is particularly witnessed in personal-care and convenience food categories. The personal care sector is currently valued at Rs 300 bn and is growing in double-digits.

The FMCG industry has benefitted from rising domestic consumption. Total consumption expenditure forms a lion's share of 69% of GDP. Growing employment, rising disposable income, a relatively young population (median age of 26 years) and changing consumption pattern have led to higher domestic consumption. The FMCG industry grew at a compounded annual growth rate of 11% in the past decade. India is at the cusp of yielding the demographic dividend. As per the International Labour Organisation, India will have the highest working age population in the world by 2020. As per National Council of Applied Economic Research, the proportion of middle class population will swell from 13% at present to 37% by 2025-26. The growing working-age population and rising middle class will translate into higher purchasing power & boost consumerism. In the rural markets, deepening penetration and evolution in consumption pattern will drive demand. As per Associated Chambers of Commerce & Industry, the FMCG sector will witness more than 50% growth in rural and semi-urban segments by 2012. The percapita expenditure in rural market is half that of the urban market. But at 150 million household, rural India is nearly three times bigger than urban India holding immense potential demand. The FMCG sector is expected to grow at a compounded annual growth rate of 12% and reach market size of $ 74 bn by 2018. Key management personnel Mr.Harish Manwani, Chairman, joined the company in 1976. In 2000, he moved to UK as Senior Vice President for the Global Hair Care and Oral Care categories and in 2001, he was appointed President Home & Personal Care, Latin America Business Group. In 2004, he was appointed President and CEO of HPC North America Business Group and was elevated to President- Asia & Africa in April 2005. Mr. Manwani assumed charge as the Non-Executive Chairman of the company in July 2005. He is also President Asia & Africa, Central & Eastern Europe and a member of Unilever Executive. Mr. Manwani is an Honour's graduate and holds a Master's Degree in Management Studies and has attended Advanced Management Program at Harvard Business school. Mr. Nitin Paranjpe, Managing Director and Chief Excecutive Officer, joined the Company as Management Trainee in 1987. In his early years, he works as Area Sales Manager and Product Manager in the detergents division and became the Branch ManagerChennai in 1996. In 2008, he assumed the designation of Managing Director and Chief Executive Officer of the company.Mr. Paranjpe holds a Bachelor's Degree in Mechanical Engineering and MBA in Marketing from JBIMS, Mumbai. Risk Analysis Sector: The Rs 1,436 bn FMCG sector grew at an average of 11% in the last decade and is expected to continue growing in double-digits in future. Strong macroeconomic fundamentals, burgeoning disposable income, robust consumerism, greater rural penetration and growing organized retail will drive future demand in FMCG industry. However, higher raw material prices and intense competition remains headwinds. Thus we assign a Medium' rating on this parameter. Company standing: HUL is the largest FMCG player with interests in home & personal care, beverages and foods. HUL's broad product portfolio provides the best play on rising disposable income and growing consumer aspirations. Its strong product portfolio, offerings across price points and renewed focus towards under-penetrated, high-margin segments makes it a strong player in the FMCG space. We have, thus, assigned a Strong' rating to the stock on this parameter. Sales: HUL has generated average revenues to the tune of Rs 175.8 bn (US$ 3.5 bn) per annum in the past five years. In FY11, the company reported sales of Rs 203 bn (US$ 4 bn). Given the growth prospects of the FMCG sector, rising consumerism and company's strong presence and brands across segments, we believe that the company has the ability to grow its topline in double digits. We thus assign a strong rating of 10 to the stock on this parameter. Operating margin: Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as raw materials, wages, and sales and marketing costs. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. The higher the margin, the better it is for the company as it indicates its operating efficiency. HUL's average operating margin for the past five years has been 13.5%. However, with increasing competition and rising input prices, we expect the margins to witness some pressure in the next year, after which they would get stabilized. We thus assign a rating of 4 on this parameter. Long term EPS growth: HUL has grown its net profits at a CAGR of 6% in the past five years. Though the growth was slow over the last few years, we expect the company to do well going forward on account of its product re-launches and brand innovation. As such, the rating assigned to the stock on this factor is 2. Return on capital invested (ROIC): ROIC is an important tool to assess a company's potential to be a quality investment by determining how well the management is able to allocate capital into its operations for future growth. A ROIC of above 15% is considered decent for companies that are in an expansionary phase. Considering HUL's last five years' average ROIC of 92%, we have assigned a low-risk rating of 9 to the stock on this parameter. Dividend payout: A stable dividend history inspires confidence in the management's intentions of rewarding shareholders. HUL's average payout ratio has been around 80% over the past 5 years. Thus, we have assigned a low-risk rating of 9.

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average payout ratio has been around 80% over the past 5 years. Thus, we have assigned a low-risk rating of 9. Promoter holding: A larger share of promoter holding indicates the confidence of the people who run it. We believe that a greater than 40% promoter holding indicates safety for retail investors. HUL's promoter group holds 52.5% stake in the company. As such, we have given a rating of 4 to the stock. FII holding: We believe that FII holding of greater than 25% can lead to high volatility in the stock price. The FII holding in HUL at the end of December 2011 stood at 19%. Based on our parameters, the rating assigned is 5. Liquidity: The average daily trading volumes of HUL's stock over the past 52 weeks stand at over 267,000 shares. Such high liquidity level is a matter of comfort, as this might protect the stock from undue volatility in case of exchange of large holdings among market participants/investors. The rating assigned is 9. Current ratio: HUL five-year average current ratio has been 0.8 times. While this is low, it should be borne in mind that the company has an extremely strong bargaining power with its suppliers and vendors. Further, its liquid investments position is also very healthy. We thus assign a risk rating of 3. Debt to equity ratio: A highly leveraged business is the first to get hit during times of economic downturn, as companies have to consistently pay interest costs, despite lower profitability. Considering HUL's debt-to-equity ratio at a low of 0.1, we have assigned a low-risk rating of 10 to the stock. Interest coverage ratio: It is used to determine how comfortably a company is placed in terms of payment of interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense for a given period. The lower the ratio the greater is the risks. HUL being a debt free company, we have assigned a low-risk rating of 10 to the stock. P/E Ratio: The P/E ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the per share income or profit earned by the company. This is one of the important metrics to judge the attractiveness of a stock, and thus gets the highest weightage in our risk matrix. HUL's P/E stands at 33 times on 12 month trailing earnings, which makes the stock fairly valued from a medium term perspective. As such, we have assigned a high risk rating of 2 to the stock on this parameter. Considering the above analysis, the total ranking assigned to the company is 77 that, on a weighted basis, stands at 5.9. This makes the stock a low-risk investment from a long-term perspective. Risk Matrix
Rating accorded Rating Sector risk Company's standing Performance parameters Sales Operating margins Long term EPS growth Return on invested capital Technical parameters Dividend payout Promoter holding FII holding Liquidity Safety parameters Current ratio Debt to equity ratio Interest coverage ratio P/E ratio Final Rating** 5.0% 10.0% 5.0% 20.0% 5 10 10 2 77 0.3 1.0 0.5 0.4 5.9 5.0% 10.0% 5.0% 10.0% 9 4 5 9 0.4 0.4 0.3 0.9 5.0% 5.0% 10.0% 10.0% 10 4 2 9 0.5 0.2 0.1 0.9 Weightage* (A) Rating# (B) Medium Strong Weighted (A*B) NA NA

Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

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# Rating has been assigned on the basis of the company's performance over the past five years and expected performance over the next 3 to 5 years. Rating is on a scale of 1 to 10, with 1 indicating highest risk and 10 indicating lowest risk. * 'Weightage' indicates the relative importance in percentage terms of the parameter. For instance, for an investor, given all the performance metrics, return on equity should be the foremost criteria for buying/not buying stocks. ** The final rating has

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Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

For instance, for an investor, given all the performance metrics, return on equity should be the foremost criteria for buying/not buying stocks. ** The final rating has been arrived at by multiplying the rating/points given on each parameter with the respective weightage. # Rating has been assigned on the basis of the company's performance over the past five years and expected performance over the next 3 to 5 years. Rating is on a scale of 1 to 10, with 1 indicating highest risk and 10 indicating lowest risk. * 'Weightage' indicates the relative importance in percentage terms of the parameter. For instance, for an investor, given all the performance metrics, return on equity should be the foremost criteria for buying/not buying stocks. ** The final rating has been arrived at by multiplying the rating/points given on each parameter with the respective weightage.

Valuations The worsening macroeconomic fundamentals in FY12 saw the investment community flock to defensive counters such as FMCG. And HUL being the largest player in this sector saw a dream-run on the bourses last year. HUL, in the past three years, has embarked on an aggressive growth path through product re-launches and brand innovations. Its increased focus on the personal care segment is expected to favourably impact its profitability. We expect, the company's earnings to grow at a robust 17% CAGR over the next three years. But the recent rally on a defensive plays has made the scrip unreasonably expensive even after discounting for the benefits of improved business dynamics. At a current price of Rs 400, the stock is trading at 26 times our estimated FY14 earnings. . Hence, any potential upside from a medium term perspective appears very limited. We thus recommend a 'Sell' on the stock. It should be also borne in mind that investment in the stock can be considered if the price falls by 40% from the current levels. Financials at a glance
Standalone (Rs m) Net Sales Sales growth (%) Operating profit Operating profit margin (%) Net profit Net profit margin (%) Diluted earnings per share (Rs) FY11 194,011 10.7% 23,652 12.2% 20,991.4 10.8% 9.7 FY12E 222,925 14.9% 28,291 12.7% 24,075.6 10.8% 11.1 FY13E 252,729 13.4% 32,668 12.9% 27,786.9 11.0% 12.9 FY14E 286,896 13.5% 39,408 13.7% 33,570.2 11.7% 15.5

Valuations
Standalone (Rs m) Revenue (Rs m) PAT (Rs m) Adjusted EPS (Rs) Price to earnings (x) EV/EBITDA (x) D/E (x) RoE (%) RoIC (%) FY11 203,055 20,991 9.7 41.2 35.9 79.7% 79.7% FY12E 234,658 24,076 11.1 35.9 30.0 74.4% 74.4% FY13E 266,031 27,787 12.9 31.1 26.0 71.8% 71.8% FY14E 301,996 33,570 15.5 25.7 21.5 69.6% 69.6%

Balance Sheet Fixed assets Current assets Investments Deferred Tax Asset Total Assets 24,682 60,952 12,607 2,097 100,338 24,803 73,477 12,607 2,097 112,983 24,975 88,488 12,607 2,097 128,166 25,281 106,072 12,607 2,097 146,057

Net worth Loan Funds Current liabilities Deferred Tax Liability Total liabilities

26,339 73,999 100,338

32,365 80,617 112,983

38,676 89,490 128,166

48,243 97,813 146,057

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Equitymaster Agora Research Private Limited. All rights reserved.

Hindustan Unilever Ltd. - StockSelect: Research on Indian Large Cap Stocks from Equitymaster

Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any share in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services. Disclaim er: This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in w hole or in part, for any purpose w hatsoever, w ithout the consent of Equitymaster. This document is not directed to, or intended for display, dow nloading, printing, reproducing or for distribution to or use by, any person or entity, w ho is a citizen or resident or located in any locality, state, country or other jurisdiction, w here such distribution, publication, reproduction, availability or use w ould be contrary to law or regulation or w hat w ould subject Equitymaster or its affiliates to any registration or licensing requirement w ithin such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, the same may be ignored. This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any advice or recommendation in this document, investors should consider w hether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go dow n as w ell as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not w arrant its completeness or accuracy. The view s/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time w ithout notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees w ill not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any investment decisions based on this document.

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