January 14, 2013

Strategy
INDIA STRATEGY THEMATIC

Tomorrows ten baggers, revisited!

On 19 January 2012, we had highlighted 25 stocks as potential ten
baggers over the next ten years. These ten baggers were identified
based on their relentless and consistent improvement in financial
performance over long periods of time (usually, six years).
The return target from such a portfolio is 26% per annum as this is the
return that a stock needs to deliver to be 10x in ten years. The
January 2012 ten baggers have comfortably beaten this target by
clocking in nearly 30% return over the past year. Now, we publish this
years iteration of ten baggers.

Beyond cyclical BUYs & SELLs, we are thinking long term

Over the past few months, our portfolio strategy research has focused on
helping clients play the ongoing cyclical recovery in India. Whilst we remain
focused on tactical plays, we cannot lose sight of the big picture in a country
like India where the robustness of the economy ensures that well managed
companies focused on cash generation have a high chance of doing well
especially if they are starting from a small base. Structural plays, like the ones
we attempt to identify here, are financially strong firms (with credible
managements) that remain consistent outperformers on a cross-cyclical basis.

The Greatness framework

Consistent improvements in corporate performance are more important than
great leapsthis has been the guiding philosophy of our greatness
framework which lies at the core of our process of identifying structurally
sound businesses. Not only do the great firms perform significantly better
than an average firm on a variety of measures, more importantly, they show a
more consistent and calibrated approach to growth over long periods (see
Exhibit 5 on page 6). In this note, we update our greatness framework to
include FY12 numbers. This framework uses the following key attributes to
measure consistent financial improvements across the universe of BSE500
firms (excluding Financial Services): judicious capex, conversion of capex to
sales, pricing discipline, balance sheet discipline, cash generation and EPS
improvement, and return ratio improvement. For each of these attributes, we
look for two kinds of improvements:

Improvements in performance over FY10-12 versus FY07-09; and

Consistency in performance over FY07-12

Analyst contacts
Gaurav Mehta
Tel: +91 22 3043 3255
gauravmehta@ambitcapital.com

Saurabh Mukherjea, CFA

Tel: +91 22 3043 3174
saurabhmukherjea@ambitcapital.com

Exhibit A: The ten baggers

Ticker

Company

Attractive Valuations*
Carborundum
CU IN Equity
Uni.
EXID IN Equity
Exide Inds.

MCap
(US$
mn)
504
2,236

JAGP IN Equity

Jagran Prakashan

659

MLIFE IN Equity

Mahindra Life.

303

REDI IN Equity

Redington India

635

SADE IN Equity

Sadbhav Engg.

TPW IN Equity

Torrent Power

1,553

373

TTAN IN Equity

Titan Inds.

4,338

Moderate Valuations**
BATA IN Equity

Bata India

1,029

NEST IN Equity

Nestle India

8,573

OBER IN Equity

Oberoi Realty

1,704

PSYS IN Equity

Persistent Sys

385

SHOP IN Equity

Shoppers Stop

670

WHIRL IN Equity

Whirlpool India

643

Rich Valuations***
APNT IN Equity

Asian Paints

BIL IN Equity

Balkrishna Inds

7,659
533

BYRCS IN Equity

Bayer Crop Sci.

CDH IN Equity

Cadila Health.

3,248

891

CRISIL IN Equity

CRISIL

1,325

EIM IN Equity

Eicher Motors

1,387

ELEQ IN Equity

Elgi Equipment

IPCA IN Equity

Ipca Labs.

281
1,156

ITC IN Equity

ITC

The winning stocks

KJC IN Equity

Kajaria Ceramics

We find that 77 firms from the BSE500 universe pass more than two-thirds of
the tests in our greatness framework. Of these 77, only 30 firms pass our
accounting quality and corporate governance filters and have
ADV>US$0.2mn (refer to Exhibit A).

KKC IN Equity

Cummins India

2,640

LPC IN Equity

Lupin

4,791

SI IN Equity

Supreme Inds.

SKB IN Equity

GlaxoSmith C H L

2,978

Of these 30 firms, the following 8 firms trade below their five-year valuation
averages currently and look particularly attractive: Carborundum, Torrent
Power, Sadbhav Engineering, Mahindra Life, Exide, Redington, Titan and
Jagaran Prakashan. However, for the long term all 30 stocks remain
candidates to be ten baggers from our perspective (as we show in the note,
todays valuations do not have a significant effect on long term returns!).

TRP IN Equity

Torrent Pharma.

1,160

TTKPT IN Equity

TTK Prestige

Of these 30 firms, we have bottom-up coverage with BUYs on Redington,

Sadbhav, Torrent Power, Oberoi Realty, Asian Paints, Balkrishna Industries,
Cadila Healthcare, Eicher Motors, Cummins India and TTK Prestige.

40,518
315

717

749

Source: Ambit Capital research;

* Trading below five-year P/E, P/B, EV/EBITDA
(on at least 2 of these 3 measures)
** Trading below either five-year P/E, five-year
P/B or five-year EV/EBITDA (on one of these
three measures)
*** Trading above five-year P/E, P/B,
EV/EBITDA

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit
Capital may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Please refer to disclaimer section on the last page for further important disclaimer.

Strategy

CONTENTS
Philosophy and framework............................................... 3
Performance check on the January 2012s tenbaggers... 5
Quantifying Greatness..... 6
2013s ten bagger list.... 7
Valuations - A long-term perspective!.......13
Appendix: Greatness framework on smaller caps....14

Ambit Capital Pvt Ltd

Strategy

Philosophy and framework

Greatness is not in where we stand, but in what direction we are
moving.
- Oliver Wendell Holmes

The greatness framework

The framework essentially
hinges on using publicly
available historical data to
assess which firms have over
a sustained period of time
(FY07-12) been able to
relentlessly and consistently:
(a) Invest capital;
(b) Turn investment into
sales;
(c) Turn sales into profit;
(d) Turn
profit
into
Balance
Sheet
strength;
(e) Turn all of that into
free cash flow; and
(f) Invest free cash flows
again.
Clearly, this approach will
have limited value if there is a
structural break in the sector
or in the company, which
makes past performance a
meaningless guide to future
performance. (For identifying
structural breaks of this sort
(eg. in the Indian boilerturbine-generator sector or in
the Indian utilities sector), we
look to our sector leads for
help.)
However, to the extent that
such structural breaks tend to
be the exception than the
rule, the greatness model
helps in creating a shortlist of
stocks that investors can then
analyse in greater detail.
Put simply, the greatness
model separates the wheat
from the chaff. Yet, it does not
cook the whole meal for you!

Ambit Capital Pvt Ltd

This quote appropriately captures the driving philosophy behind our greatness
framework that lies at the core of our process of identifying potential tenbaggers.
We had unveiled this framework on 19th January 2012 with the first iteration of the
Tomorrows tenbaggers note. This framework studies a firms structural strengths
by focusing not on absolutes but rather on improvements over a period of time
and the consistency of those improvements. A basic sketch of the underlying
process behind the making of a great firm has been recaptured in Exhibit 1 below.
Exhibit 1: The greatness framework

a. Investment (gross
block)

b. Conversion of
investment to sales
(asset turnover, sales)

c. Pricing discipline
(PBIT margin)

e. Cash generation
(CFO)

d. Balance sheet
discipline (D/E, cash
ratio)

Source: Ambit Capital research

We rank the BSE500 universe of firms (excluding Financial Services firms and
excluding firms with insufficient data) on our greatness score, which consists of six
equally weighted headingsinvestments, conversion to sales, pricing discipline,
balance sheet discipline, cash generation and EPS improvement, and return ratio
improvement.
Under each of these six headings, we further look at two kinds of improvements:

Percentage improvements in performance over FY10-12 versus FY07-09;

and

Consistency in performance over FY07-12 i.e. improvements adjusted for

standard deviations.

A complete list of factors that are considered whilst quantifying greatness have
been mentioned in Exhibit 2 on the next page.

Strategy
Exhibit 2: Factors used for quantifying greatness
Head
1 Investments

2 Conversion to sales

3 Pricing discipline

4 Balance sheet discipline

Criteria

Threshold or Medians
for BSE500 firms
(over FY07-FY12)

a.

Above median gross block increase (FY10-12 over FY07-09)*

66%

b.

Above median gross block increase to standard deviation

3.73

a.

Improvement in asset turnover (FY10-12 over FY07-09)*

0.00

b.

Positive improvement in asset turnover adjusted for standard deviation

0.00

c.

Above median sales increase (FY10-12 over FY07-09)*

67%

d.

Above median sales increase to standard deviation

3.11

a.

Above median PBIT margin increase (FY10-12 over FY07-09)*

b.

Above median PBIT margin increase to standard deviation

a.

Below median debt-equity decline (FY10-12 over FY07-09)*

(0.01)

b.

Below median debt-equity decline to standard deviation

(0.02)

c.

Above median cash ratio increase (FY10-12 over FY07-09)*

(0.01)

d.

Above median cash ratio increase to standard deviation

(0.01)

Cash generation and EPS

5
a.
improvement

0.06%
0.00

Above median CFO increase (FY10-12 over FY07-09)*

68%

b.

Above median CFO increase to standard deviation

0.35

c.

Above median EPS increase (FY10-12 over FY07-09)*

45%

d.

Above median EPS increase to standard deviation

0.83

6 Return ratio improvement a.

Improvement in RoE (FY10-12 over FY07-09)*

b.

Positive improvement in RoE adjusted for standard deviation

c.

Improvement in RoCE (FY10-12 over FY07-09)*

d.

Positive improvement in RoCE adjusted for standard deviation

0%
0.00
0%
0.00

Source: Ambit Capital research. * Rather than comparing one annual endpoint to another annual endpoint (say, FY07 to FY12), we prefer to average
the data out over FY07- 09 and compare that to the averaged data from FY10-12. This gives a more consistent picture of performance (as opposed to
simply comparing FY07 to FY12).

We rank the BSE500 universe of firms (excluding Financial Services firms) on this
score to arrive at this years rankings on this measure of structural strength. After
removing Financial Services firms and firms with insufficient data, 381 firms from
the BSE500 were ranked based on this measure. The highlights from the
distribution of these firms on our greatness score are displayed on page 6 but
before we go on to that, lets check whether this framework actually delivers in the
real world.

Ambit Capital Pvt Ltd

Strategy

Performance check on 2012s list

Exhibit 3: The 25 ten baggers published on 19 January 2012
Company

Bloomberg Code

Price (INR)
18-Jan-12

11-Jan-13

Performance
(%)

Attractive Valuations List

ICRA

ICRA IN Equity

857

1,396

63

Mahindra Life.

MLIFE IN Equity

255

394

54

Castrol India

CSTRL IN Equity

212

314

48

Torrent Pharma.

TRP IN Equity

559

749

34

Cadila Health.

CDH IN Equity

650

860

32

Cummins India

KKC IN Equity

392

516

32

Voltas

VOLT IN Equity

82

104

27

Bajaj Electrical

BJE IN Equity

167

208

25

Sadbhav Engg.

SADE IN Equity

113

133

17

Exide Inds.

EXID IN Equity

121

141

17

Tata Power Co.

TPWR IN Equity

98

107

GSFC

GSFC IN Equity

79

70

-12

BHEL

BHEL IN Equity

273

227

-17

Average (for this bucket)

25.3

Moderate Valuations List

Asian Paints

APNT IN Equity

2,724

4,299

58

CMC

CMC IN Equity

901

1,331

48

Titan Inds.

TTAN IN Equity

184

270

47

Elgi Equipment

ELEQ IN Equity

67

94

40

Lupin

LPC IN Equity

433

588

36

Nestle India

NEST IN Equity

4,038

4,840

Average (for this bucket)

20

41.3

Rich Valuations List

Supreme Inds.

SI IN Equity

183

303

66

GlaxoSmith C H L
ITC

SKB IN Equity

2,475

3,863

56

ITC IN Equity

210

273

30

CRISIL

CRISIL IN Equity

923

1,015

10

EID Parry

EID IN Equity

195

195

-0

Coromandel Inter

CRIN IN Equity

273

262

Average (for this bucket)

Average (overall)
Sensex

-4

26.4
29.4
16,451

19,664

19.5

Source: Bloomberg, Ambit Capital research

On average, the ten baggers highlighted by us on 19th January 2012 have clocked
nearly 30% returns over the year and hence cleared the 26% threshold (which is
the CAGR that a stock needs to compound at per year to be 10x in 10 years).
Moreover, the beginning of period valuations has not made much difference to
returns as seen from the performance of the three valuation buckets. Even more
interestingly, even in a year of upswing for Indian equities (Sensex up 19.5% over
the past 12 months), this basket with an average beta of only 0.72 has beaten the
Index by 10% points, reinforcing our faith in the framework.

Ambit Capital Pvt Ltd

Strategy

Quantifying greatness

*The greatness score is

calculated by assigning equal
weightages to the six factors
outlined in Exhibit 2 on page
4.

From the universe of BSE500 firms, after removing Financial Services firms and
firms with insufficient data, 381 firms were scored on the six headings highlighted
on the previous page. The cut-off for greatness was placed at 67%* and only 77
firms (20% of the total population of 381 firms) could manage a score above this
cut-off.
Exhibit 4: Distribution of firms on the greatness score (total population: 381 firms)

60

211 firms
score < 50%

Zone of greatness

93 firms
(between 50%
and 67%)

50
No. of firms

Thus, each of these six factors

carries a weightage of 16.7%.
The scoring on sub-criteria
within each of these factors is
binary, with a firm getting
either 1 or 0 based on
whether it has done better
than the respective threshold
or not.

Good,
not Great

Zone of mediocrity

Only 77 firms
score > 67%

40
30
20
10
0
0%-10%

10%-20%

20%-30%

30%-40%

40%-50%

50%-60%

60%-70%

70%-80%

80%-90%

90%-100%

Greatness Score

These
scores
are
then
cumulated to arrive at a final
greatness score on 100 for
the firm.

Source: Ambit Capital research

In the next exhibit, we present key financial data on the three zones defined above
Mediocrity (211 firms), Good but not great (93 firms), and Great (77 firms) based on their degrees of greatness.
Exhibit 5: Zones of greatness - Financial summary
Mediocre

Good but not great

Great

Number of firms

211

93

77

Mcap (US$ mn)

509

590

795

Share price (3-year CAGR)

-9%

7%

23%

Gross block (3-year CAGR)

15%

18%

16%

Sales (3-year CAGR)

13%

20%

22%

EPS (3-year CAGR)

1%

20%

32%

CFO (3-year CAGR)

3%

11%

24%

PBIT Margin (3-year average)

14%

17%

17%

RoE (3-year average)

13%

19%

26%

RoCE (3-year average)

14%

19%

27%

0.7

0.2

0.2

Trailing 12 month P/E

18.5

18.7

17.2

Trailing 12 month P/B

1.6

2.7

4.4

Trailing 12 month EV/EBITDA

9.4

9.7

9.4

Net debt equity

Source: Ambit Capital research, Capitaline; Note: All figures are based on median values of the firms analysed.

With regard to fundamentals, the superiority of the great firms compared with the
other two groups is evident in Exhibit 5. Inspite of that, on P/E and EV/EBITDA, the
great firms trade in line with the rest of the market. However, on P/B, the great
firms command a hefty premium to the rest of the market.
Of these 77 great firms, we identify the ones that perform the best on our
accounting and corporate governance filters, and this gives us our final list of 30
great companies. We present these 30 potential ten baggers in the next section.

Ambit Capital Pvt Ltd

Strategy

2013s ten-bagger list

From the 77 firms that cleared more than two-thirds of our cut-offs, we reached a
shortlist of 30 firms, after following a process of elimination as outlined below:

28 firms were removed by our accounting filter (for a full exposition of our
accounting filter, please refer to our 4th Jan 2013 note which explains how our
forensic accounting model works);

2 firms were removed for not meeting ADV requirement of US$0.2mn; and

17 firms were removed on suspect corporate governance or structural issues

with the underlying business.

After identifying the 30 great firms that exhibit the ingredients required to be
tomorrows winners, we run a valuation check to ascertain if they are currently
trading at reasonable prices for outright investments. In our view, whilst valuations
do matter on a tactical basis, how the underlying fundamentals evolve for the firm
over long periods plays a more important role in determining returns than the
beginning of the period valuation itself. We discuss this point in detail in the final
section of this note.
Here, we categorise these stocks into three buckets based on their relative
attractiveness on valuations with respect to their own history. We compare these
firms with respect to their five-year average valuations on three metricsP/B, P/E
and EV/EBITDA. We find 8 firms to be inexpensive (on at least two of the three
metrics): Carborundum, Torrent Power, Sadbhav Engineering, Mahindra Life,
Exide, Redington, Titan and Jagaran Prakashan. However, for the long term all
thirty stocks remain candidates to be ten baggers from our perspective (as we
show in the note, todays valuations do not have a significant effect on long term
returns!).
We have bottom-up coverage with BUYs on Redington, Sadbhav, Torrent Power,
Oberoi Realty, Asian Paints, Balkrishna Industries, Cadila Healthcare, Eicher
Motors, Cummins India and TTK Prestige.
We should also point out that 3 months ago, in our bottom-up coverage, we
turned SELLers on Exide Industries. Whilst we continue to be admirers of the firms
franchise, our SELL was driven by managements reluctance in CY12 to host postresults conference calls and its inability to offer convincing explanations for its
recent weak results when our Auto analyst, Ashvin Shetty, did speak to them
bilaterally.

Ambit Capital Pvt Ltd

Strategy
Exhibit 6: Ten baggers - Valuation perspective

Sr.
No.

Ticker

Company

MCap
(US$ mn)

P/E

P/B

Overall, cheap
on how many
counts?

Cheap w.r.t history?

1 for "yes")

Trailing valuations
EV/EBITDA

P/E

P/B

EV/EBITDA

Attractive Valuations*
1

CU IN Equity

Carborundum Uni.

EXID IN Equity

Exide Inds.

504

14.4

2.7

9.6

2,236

24.1

4.3

13.6

JAGP IN Equity

MLIFE IN Equity

Jagran Prakashan

659

18.3

4.4

12.4

Mahindra Life.

303

13.4

1.4

10.5

REDI IN Equity

Redington India

635

11.1

2.4

8.2

SADE IN Equity

Sadbhav Engg.

373

23.2

1.7

11.7

TPW IN Equity

Torrent Power

1,553

9.7

1.4

8.0

TTAN IN Equity

Titan Inds.

4,338

35.9

14.2

24.8

Moderate Valuations**
9

BATA IN Equity

Bata India

1,029

27.3

9.2

19.6

10

NEST IN Equity

Nestle India

8,573

49.5

32.6

26.8

11

OBER IN Equity

Oberoi Realty

1,704

18.0

2.3

13.2

12

PSYS IN Equity

Persistent Sys

385

12.8

2.3

6.3

13

SHOP IN Equity

Shoppers Stop

670

78.4

5.5

31.5

14

WHIRL IN Equity

Whirlpool India

643

25.2

6.3

12.6

7,659

39.3

13.8

24.9

Rich Valuations***
15

APNT IN Equity

Asian Paints

16

BIL IN Equity

Balkrishna Inds

533

9.8

2.3

7.4

17

BYRCS IN Equity

Bayer Crop Sci.

891

21.9

5.6

14.6

18

CDH IN Equity

Cadila Health.

3,248

25.8

6.3

16.4

19

CRISIL IN Equity

CRISIL

1,325

33.6

18.8

21.7

20

EIM IN Equity

Eicher Motors

1,387

23.6

4.7

12.1

21

ELEQ IN Equity

Elgi Equipment

22

IPCA IN Equity

Ipca Labs.

23

ITC IN Equity

ITC

24

KJC IN Equity

Kajaria Ceramics

25

KKC IN Equity

Cummins India

26

LPC IN Equity

Lupin

27

SI IN Equity

Supreme Inds.

28

SKB IN Equity

29
30

281

23.8

3.7

13.0

1,156

20.0

4.6

12.1

40,518

32.1

10.7

21.2

315

18.7

5.5

8.4

2,640

22.9

6.2

21.2

4,791

26.3

5.9

15.1

717

15.2

5.0

8.2

GlaxoSmith C H L

2,978

41.4

13.0

26.6

TRP IN Equity

Torrent Pharma

1,160

19.1

4.7

11.3

TTKPT IN Equity

TTK Prestige

749

32.8

11.1

20.7

Source: Bloomberg, Capitaline, Ambit Capital research.

* Trading below five-year average P/E, P/B, EV/EBITDA (on at least 2 of these 3 measures)
** Trading below either five-year average P/E, five-year P/B or five-year EV/EBITDA (on one of these three measures)
*** Trading above five-year average P/E, P/B and EV/EBITDA

Ambit Capital Pvt Ltd

Strategy
Exhibit 7: Ten baggers - Financial snapshot
Sr. Bloom
No. ticker

Company

Sector

Gross
Net
PBIT
Mcap
3-yr
EPS (3- CFO (3- RoE(3- RoCE (33M ADV
Block Sales
margin
(US$
price
year
year year
year
(US$ mn)
(3-year (3-year
(3-year
mn)
CAGR
CAGR) CAGR) avg)
avg)
CAGR) CAGR)
avg)

Net
Debt FY14 FY14
Equity
P/E
P/B
(FY12)

Attractive Valuations*
1 CU IN

Carborundum
Uni.

Industrials

2 EXID IN

Exide Inds.

Auto Anc

3 JAGP IN

Jagran
Prakashan

4 MLIFE IN

Mahindra Life.

5 REDI IN

Redington India IT

6 SADE IN

Sadbhav Engg. Infrastructure

7 TPW IN

Torrent Power

Utilities

8 TTAN IN

Titan Inds.

Retail

Bata India

10 NEST IN
11 OBER IN

504

0.4

21%

8%

22%

28%

62%

22%

24%

16.3

0.3

12.4

2.2

2,236

5.1

8%

12%

12%

30%

6%

26%

40%

16.4

-0.3

17.2

3.5

Media

659

0.3

-6%

36%

18%

23%

24%

28%

32%

24.7

0.5

15.4

3.7

Realty

303

0.5

5%

10%

27%

22%

19%

9%

11%

30.2

0.3

10.9

1.2

635

0.5

12%

72%

19%

22%

120%

20%

18%

2.7

1.2

8.6

1.7

373

0.3

3%

29%

38%

35%

95%

12%

12%

13.5

2.8

22.3

1.5

1,553

0.9 -15%

29%

23%

46%

34%

24%

21%

25.7

0.8

9.9

1.2

4,338

9.2

53%

10%

31%

54%

-1%

46%

61%

8.9

-0.7

26.1

9.3

Retail

1,029

4.2

65%

12%

16%

65%

-17%

25%

38%

11.5

-0.2

25.6

6.9

Nestle India

FMCG

8,573

2.4

25%

22%

20%

24%

18% 110%

141%

17.9

0.5

36.8

22.3

Oberoi Realty

Realty

1,704

0.5

9%

54%

25%

22%

39%

20%

23%

65.4

-0.3

10.0

1.8

12 PSYS IN

Persistent Sys

IT

385

1.3

10%

21%

19%

24%

27%

20%

23%

19.9

-0.4

10.0

1.7

13 SHOP IN

Shoppers St.

Retail

670

1.5

33%

30%

29%

42%

-140%

10%

11%

3.3

0.9

76.7

6.9

643

0.7

27%

7%

16%

20%

5%

38%

53%

7.1

-0.2

17.1

4.1

Moderate Valuations**
9 BATA IN

Consumer
14 WHIRL IN Whirlpool India
Durable
Rich Valuations***
15 APNT IN

Asian Paints

7,659

5.3

35%

12%

21%

36%

27%

45%

61%

15.4

-0.2

30.0

10.1

16 BIL IN

Balkrishna Inds Auto Anc

FMCG

533

0.6

41%

18%

30%

54%

-36%

30%

25%

16.9

1.2

7.4

1.6

17 BYRCS IN Bayer Crop Sci. Fertilisers

891

0.5

33%

2%

18%

14%

46%

24%

32%

11.0

-0.5

20.4

4.2

32%

34%

27%

18.9

0.7

18.9

4.7

18 CDH IN

Cadila Health.

Pharma

3,248

2.1

25%

21%

23%

28%

19 CRISIL IN

CRISIL

Miscellaneous

1,325

0.7

31%

21%

16%

15%

16%

43%

57%

35.2

-0.6

25.6

15.9

20 EIM IN

Eicher Motors

Auto

1,387

1.4

64%

13%

49%

58%

184%

15%

31%

8.8

-1.1

17.9

3.5

21 ELEQ IN

Elgi Equipment Capital Goods

281

0.2

27%

15%

22%

14%

14%

26%

39%

12.6

-0.4

16.3

3.0

22 IPCA IN

Ipca Labs.

Pharma

23 ITC IN

ITC

FMCG

24 KJC IN

Kajaria
Ceramics

1,156

2.4

35%

20%

22%

41%

22%

26%

25%

18.4

0.5

13.9

3.3

40,518

30.6

31%

10%

17%

21%

20%

32%

47%

23.8

-0.4

24.6

9.0

Miscellaneous

315

0.4

63%

16%

25%

108%

53%

28%

26%

12.0

1.0

12.1

3.7

25 KKC IN

Cummins India Capital Goods

2,640

1.8

20%

12%

5%

8%

24%

31%

43%

19.3

-0.4

19.8

5.4

26 LPC IN

Lupin

Pharma

4,791

8.6

28%

25%

23%

17%

6%

29%

26%

17.7

0.3

18.5

4.3

27 SI IN

Supreme Inds.

Industrials

717

0.2

58%

11%

21%

39%

16%

40%

36%

12.8

0.5

11.3

3.4

28 SKB IN

GlaxoSmith CHL FMCG

2,978

2.3

41%

6%

20%

23%

42%

31%

48%

18.5

-0.9

31.7

9.7

29 TRP IN

Torrent Pharma. Pharma

1,160

1.0

23%

18%

19%

15%

25%

30%

27%

17.9

-0.1

13.6

3.4

5.5 102%

39%

40%

73%

13%

49%

69%

15.6

0.1

24.2

7.6

30 TTKPT IN

TTK Prestige

Consumer
Durable

749

Source: Bloomberg, Capitaline, Ambit Capital research.

Ambit Capital Pvt Ltd

Strategy
Exhibit 8: Ten baggers - Forward-looking data using consensus estimates
Sr. No. Ticker

Company

CU IN Equity

Carborundum Uni.

EXID IN Equity

Exide Inds.

JAGP IN Equity

4
5

Mcap
(US$ mn)

3-month ADV
(US$ mn)

Next 3 years estimated

EPS CAGR (%)

Next 3 years estimated

BVPS CAGR (%)

504

0.4

9%

17%

2,236

5.1

28%

16%

Jagran Prakashan

659

0.3

14%

12%

MLIFE IN Equity

Mahindra Life.

303

0.5

17%

11%

REDI IN Equity

Redington India

635

0.5

20%

23%

SADE IN Equity

Sadbhav Engg.

373

0.3

9%

8%

TPW IN Equity

Torrent Power

1,553

0.9

5%

12%

TTAN IN Equity

Titan Inds.

4,338

9.2

24%

31%

BATA IN Equity

Bata India

1,029

4.2

29%

25%

10

NEST IN Equity

Nestle India

8,573

2.4

21%

25%

11

OBER IN Equity

Oberoi Realty

1,704

0.5

39%

18%

12

PSYS IN Equity

Persistent Sys

385

1.3

17%

20%

13

SHOP IN Equity

Shoppers Stop

670

1.5

80%

9%

14

WHIRL IN Equity

Whirlpool India

643

0.7

21%

29%

15

APNT IN Equity

Asian Paints

7,659

5.3

20%

23%

16

BIL IN Equity

Balkrishna Inds.

533

0.6

21%

27%

17

BYRCS IN Equity

Bayer Crop Sci.

891

0.5

31%

20%

18

CDH IN Equity

Cadila Health.

3,248

2.1

21%

22%

19

CRISIL IN Equity

CRISIL

1,325

0.7

11%

25%

20

EIM IN Equity

Eicher Motors

1,387

1.4

19%

16%

21

ELEQ IN Equity

Elgi Equipment

281

0.2

21%

15%

22

IPCA IN Equity

Ipca Labs.

1,156

2.4

26%

24%

23

ITC IN Equity

ITC

40,518

30.6

19%

14%

24

KJC IN Equity

Kajaria Ceramics

315

0.4

32%

28%

25

KKC IN Equity

Cummins India

2,640

1.8

12%

7%

26

LPC IN Equity

Lupin

4,791

8.6

23%

23%

27

SI IN Equity

Supreme Inds.

717

0.2

21%

26%

28

SKB IN Equity

GlaxoSmith C H L

2,978

2.3

20%

19%

29

TRP IN Equity

Torrent Pharma

1,160

1.0

25%

24%

30

TTKPT IN Equity

TTK Prestige

749

5.5

25%

36%

Source: Ambit Capital research, Bloomberg

Ambit Capital Pvt Ltd

10

Strategy
Exhibit 9: Tenbaggers - Business activity description
Sr.
Ticker
no.

Company

Business Description

CU IN Equity

Carborundum
Uni.

Carborundum Universal manufactures refractories and electromineral grains. The company produces
coated and bonded abrasives, super refractories, aluminum oxide grains, calcined bauxite,
electrocast refractories, silicon carbide grains, and industrial ceramic products.

EXID IN Equity

Exide Inds.

Exide Industries manufactures a wide range of lead and electric storage batteries. The company's
makes batteries for automobiles, railways, aircrafts, power stations, telephone exchanges, and other
uses.

JAGP IN Equity

Jagran Prakashan

Jagran Prakashan publishes a daily newspaper. The company publishes and distributes Dainik
Jagran.

MLIFE IN Equity Mahindra Life.

Mahindra Lifespace Developers specialises in the construction and operation of commercial and
residential property complexes, projects management services and business centres.

REDI IN Equity

Redington (India) is a supply chain solution provider. The company distributes information technology
(IT) products and mobile handsets and accessories and provides logistics, supply chain management
and other support services.

SADE IN Equity Sadbhav Engg.

Sadbhav Engineering provides construction services, with a focus on irrigation, roads and highways,
and mining operations. The company constructs earthen dams and canals, rehabilitates and
upgrades roads, and excavates overburden of mineral properties.

TPW IN Equity

Torrent Power generates, transmits and distributes power. The company also implements large power
projects in India.

TTAN IN Equity Titan Inds.

Titan Industries manufactures and retails jewellery and watches. The company produces quartz
analogue electronic watches, watch movements, step motors, and watch cases. Titan Industries
serves customers across the United States.

BATA IN Equity

Bata India

Bata India manufactures a wide range of leather, rubber/canvas and plastic footwear products. The
company also manufactures sports apparel and leather accessories. Bata India sells its products
through its chain of company owned retail stores in India, as well as to businesses in the US, United
Kingdom, Europe, the Middle East and the Far East.

Nestle India

Nestle India manufactures branded milk products and other food products. The company's products
include Everyday dairy whitener, milk powder and ghee, Milkmaid sweetened condensed milk and
Cerelac weaning foods. Nestle's beverages include Nescafe and Sunrise coffee and Nesfit enriched
glucose powder. Nestle also manufactures Maggi noodles, soups and sauces.

10

NEST IN Equity

Redington India

Torrent Power

11

OBER IN Equity Oberoi Realty

Oberoi Realty is a real estate development company operating in Mumbai and focused on premium
developments. The company's main focus is residential projects but they also have a diversified
portfolio of projects covering segments of the real estate market, which target the upper end of the
respective income or market segment.

12

PSYS IN Equity

Persistent Systems offers outsourced software product development. The company offer services that
include testing, support, and professional services.

13

SHOP IN Equity Shoppers St.

Shoppers Stop operates a chain of retail shops. The company retails men's, women's, and children's
clothing, cosmetics and skin and hair-care products, home appliances, housewares, linens, luggage,
jewellery, and accessories.

14

WHIRL IN Equity Whirlpool India

Whirlpool of India manufactures appliances. The company produces refrigerators, washing machines,
air conditioners, microwave ovens, water purifiers, built-in appliances and other products.

15

APNT IN Equity Asian Paints

Asian Paints manufactures a wide range of decorative paints, varnishes, enamels, and black &
synthetic resins. The company, through its subsidiaries, also manufactures specialty industrial
chemicals and vinyl pyridine latex products, which are used in the manufacture of rubber tyres.

16

BIL IN Equity

Balkrishna Industries manufactures automobile tyres and tubes. The company also manufactures
different varieties of paper & paper boards and processes synthetic textiles.

17

BYRCS IN Equity Bayer Crop Sci.

Bayer Cropscience is involved in the area of crop protection, non-agricultural pest-control, seed and
plant biotechnology.

18

CDH IN Equity

Cadila Healthcare manufactures and markets healthcare solutions ranging from formulations, active
pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to
cosmeceuticals. The company's products are available in the form of tablets, capsules, injections,
liquids, dry syrups, powders, granules, and ointments.

19

CRISIL IN Equity CRISIL

Crisil operates a credit rating agency in India. The company specialises in the areas of risk
identification, classification and assessment, across a broad spectrum of industries.

20

EIM IN Equity

Eicher Motors manufactures light commercial vehicles, which are sold domestically and are also
exported to other countries. Eicher Motors also manufactures tractors, two-wheelers and automotive
gears.

Ambit Capital Pvt Ltd

Persistent Sys

Balkrishna Inds

Cadila Health.

Eicher Motors

11

Strategy

Sr.
Ticker
no.

Company

Business Description

21

ELEQ IN Equity

Elgi Equipment

Elgi Equipments manufactures reciprocating and screw-type air compressors, diesel engines,
generators and pumps, garage equipment, auto products, and heat pressure cleaners. Elgi markets a
range of wheel balancers, oil suction units, AC recovery plants, mobile service units, and pasteuriser
and bottle washers. The company operates in India and markets its products globally.

22

IPCA IN Equity

Ipca Labs.

Ipca Laboratories operates a pharmaceutical company, which distributes products to more than 75
countries worldwide. The Group's products include finished dosage forms, drug delivery systems, bulk
drugs and intermediates.

23

ITC IN Equity

ITC

ITC has a diversified presence in cigarettes, hotels, paperboards & specialty papers, packaging, agri
business, packaged foods & confectionery, branded apparel, greeting cards, and other FMCG
products.

24

KJC IN Equity

Kajaria Ceramics

Kajaria Ceramics manufactures glazed and unglazed ceramic tiles. The company sells its products in
India and also exports them to other countries.

Cummins India

Cummins India manufactures internal combustion engines, including diesel, reciprocating piston, gas
turbine and gasoline engines. The company also manufactures power generation sets and public
transport-type passenger motor vehicles, including luxury coaches and airfield buses. In addition,
Cummins India operates a computerised and fully-equipped research and development facility.

25

KKC IN Equity

26

LPC IN Equity

Lupin

Lupin manufactures bulk actives and formulations. Its principal bulk actives manufactured include
Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars.
The company also possesses competencies in phytomedicines, in which medicines are made out of
plant and herbal resources supported by the discipline of modern medicine.

27

SI IN Equity

Supreme Inds.

Supreme Industries manufactures industrial and engineered moulded products and storage and
material handling crates. The company also manufactures chemicals, multi-layer sheets, multi-layer
films, packaging films and expanded polyethylene foam, PVC pipes and fittings, moulded furniture,
and disposable EPS containers.

28

SKB IN Equity

Glaxo SmithKline Consumer Healthcare manufactures and sells malted milk food products. The
GlaxoSmith C H L Group's products, which include energy & protein products, cereals, baby foods, and ghee & butter,
are sold under the brand names Horlicks, Boost, Viva, Brylcream, Eno, Maltova and Gopika.

29

TRP IN Equity

Torrent Pharma

30

TTKPT IN Equity TTK Prestige

Torrent Pharmaceuticals manufactures bulk drugs and pharmaceutical formulations. The company's
formulations include cardiovascular, psychotropic and antibiotic drugs whilst its bulk drugs include
atenolol, ciprofloxacin and norfloxacin. Torrent Pharmaceuticals has wholly owned subsidiaries in
several regulated and less-regulated international markets.
TTK Prestige manufactures a range of domestic appliances. The Group's products include pressure
cookers and non-stick cookware, stainless steel and glass vacuum flasks, and gas stoves.

Source: Bloomberg

Ambit Capital Pvt Ltd

12

Strategy

Valuations - A long-term perspective!

We have published research over the past few months, indicating how value and
growth as investment styles take turns in dominating investors preference at any
point in time (see our note dated 11th October 2012 The return of value
investing). Clearly, from a tactical standpoint valuations do play an important role
in shaping short-term returns. However, how underlying fundamentals evolve for
the firm over long periods plays a more important role in determining returns than
the beginning of the period valuation itself. This point can be understood better
with the following exhibits that plot ten-year returns over FY02-12 versus FY02
valuations as measured by P/B and P/E at the beginning of the period (in 2002).
Exhibit 10: Valuation impact on long-term returns - P/B
60%

FY02-FY12 returns

40%

R2 = 0.000

20%
0%
-20%

5.0

10.0

15.0

20.0

25.0

-40%
-60%
-80%
FY02 Price to Book

Source: Ambit Capital research, FY02 FY12 returns here are stock returns relative to Sensex

The value of R-square makes the story self-explanatory. A zero for this value
indicates that the beginning of period valuations do not play any meaningful role
in explaining stock returns over the next ten years. This holds true for both P/B and
P/E as the measures of valuation.
Exhibit 11: Valuation impact on long-term returns - P/E
60%

FY02-FY12 returns

40%
R2 = 0.001

20%
0%
-20%

10.0

20.0

30.0

40.0

50.0

60.0

70.0

-40%
-60%
-80%
FY02 Price to Earnings

Source: Ambit Capital research, FY02 FY12 returns here are stock returns relative to Sensex

In our note The return of value investing (dated 11th October 2012), we had
explained why we expect value stocks to do well over the next few quarters.
Hence, from this list of Great 30 stocks, we would expect the most attractively
priced bucket to do better over the immediate term. However, the two exhibits
above clearly suggest that from a long-term perspective each of these stocks stand
a fair chance of being a ten bagger. Indeed, as mentioned on page 5, our 2012
ten baggers did not have any correlation between the returns generated over the
past 12 months and the beginning of period valuations.

Ambit Capital Pvt Ltd

13

Strategy

Appendix - Greatness framework on smaller caps

Last year some of our clients suggested running the greatness framework on
smaller firms outside of the BSE500 as well. We present below a list of select small
caps from outside the BSE500 but above INR 5,000 mn market cap (including the
two firms that fail our liquidity constraints in the main list) that fare well on our
greatness framework. However, since our forensic accounting model has been
built only for the BSE500 universe, the list below has not been filtered for suspect
accounting or suspect corporate governance.
Exhibit 12: Greatness framework on smaller caps outside BSE500 (without filtering
for suspect accounting or corporate governance)
Sr. No. Ticker
1
2
3

VO IN
HMVL IN
MUNI IN

Company

Mcap 3-month ADV

(US$ mn)
(US$ mn)

FY13 P/E
(est)

FY13 P/B
(est)

Vinati Organics

139

0.1

10.4

3.0

Hindustan Media

202

0.0

13.7

2.1

97

0.1

12.8

4.3

0.3

4.1

0.9
NA

Mayur Uniquote

ICSL IN

Infinite Comp

104

CLRC IN

Clariant Chemical

302

0.1

NA

PI IN

P I Inds.

295

0.2

15.0

4.0

HAWK IN

Hawkins Cookers

232

0.1

55.2

22.2

ZENT IN

Zensar Tech.

220

0.2

6.4

1.5

AJP IN

Ajanta Pharma

173

0.2

9.4

2.4

10

GDYR IN

Goodyear India

142

0.1

14.0

2.2

11

SWE IN

Swaraj Engines

116

0.2

11.0

2.8

12

CRS IN

Cera Sanitary.

102

0.2

13.6

3.1

Sequent Scien.

95

0.1

NA

NA

Kewal Kir.Cloth.

164

0.0

16.7

3.5

Speciality Rest.

156

0.6

NA

NA

Styrolution ABS

236

0.1

20.4

3.0

Federal-Mogul

203

0.0

28.2*

2.6*

13
14
15
16
17

SEQ IN
KEKC IN
SRL IN
STAL IN
FMGI IN

Source: Ambit Capital research

Ambit Capital Pvt Ltd

14

Strategy

Institutional Equities Team

Saurabh Mukherjea, CFA Head of Equities

(022) 30433174

saurabhmukherjea@ambitcapital.com

Research
Analysts

Industry Sectors

Desk-Phone

Aadesh Mehta

Banking / NBFCs

(022) 30433239

E-mail
aadeshmehta@ambitcapital.com

Achint Bhagat

Cement

(022) 30433178

achintbhagat@ambitcapital.com

Ankur Rudra, CFA

Technology / Telecom / Media

(022) 30433211

ankurrudra@ambitcapital.com

Ashvin Shetty

Automobile

(022) 30433285

ashvinshetty@ambitcapital.com

Bhargav Buddhadev

Power / Capital Goods

(022) 30433252

bhargavbuddhadev@ambitcapital.com

Chhavi Agarwal

Construction / Infrastructure

(022) 30433203

chhaviagarwal@ambitcapital.com

Dayanand Mittal

Oil & Gas

(022) 30433202

dayanandmittal@ambitcapital.com

Gaurav Mehta

Strategy / Derivatives Research

(022) 30433255

gauravmehta@ambitcapital.com

Harshit Vaid

Power / Capital Goods

(022) 30433259

harshitvaid@ambitcapital.com

Jatin Kotian

Metals & Mining / Healthcare

(022) 30433261

jatinkotian@ambitcapital.com

Karan Khanna

Strategy / Derivatives Research

(022) 30433251

karankhanna@ambitcapital.com

Krishnan ASV

Banking

(022) 30433205

vkrishnan@ambitcapital.com

Nitin Bhasin

Construction / Infrastructure / Cement

(022) 30433241

nitinbhasin@ambitcapital.com

Nitin Jain

Technology

(022) 30433291

nitinjain@ambitcapital.com

Pankaj Agarwal, CFA

NBFCs

(022) 30433206

pankajagarwal@ambitcapital.com

Pratik Singhania

Real Estate / Retail

(022) 30433264

pratiksinghania@ambitcapital.com

Parita Ashar

Metals & Mining / Telecom

(022) 30433223

paritaashar@ambitcapital.com

Rakshit Ranjan, CFA

Consumer / Real Estate

(022) 30433201

rakshitranjan@ambitcapital.com

Ritika Mankar Mukherjee

Economy / Strategy

(022) 30433175

ritikamankar@ambitcapital.com

Ritu Modi

Cement / Infrastructure / Healthcare

(022) 30433292

ritumodi@ambitcapital.com

Shariq Merchant

Consumer

(022) 30433246

shariqmerchant@ambitcapital.com

Utsav Mehta

Telecom / Media

(022) 30433209

utsavmehta@ambitcapital.com

Sales
Name

Regions

Desk-Phone

Deepak Sawhney

India / Asia

(022) 30433295

deepaksawhney@ambitcapital.com

Dharmen Shah

India / Asia

(022) 30433289

dharmenshah@ambitcapital.com

Dipti Mehta

India / Europe / USA

(022) 30433053

diptimehta@ambitcapital.com

Parees Purohit, CFA

USA

(022) 30433169

pareespurohit@ambitcapital.com

Pramod Gubbi, CFA

India / Asia

(022) 30433228

pramodgubbi@ambitcapital.com

Sarojini Ramachandran

UK / USA

+44 (0) 20 7614 8374

E-mail

sarojini@panmure.com

Production
Sajid Merchant

Production

(022) 30433247

sajidmerchant@ambitcapital.com

Joel Pereira

Editor

(022) 30433284

joelpereira@ambitcapital.com

Ambit Capital Pvt Ltd

15

Strategy

Explanation of Investment Rating

Investment Rating

Expected return
(over 12-month period from date of initial rating)

Buy

>5%

Sell

<5%

Disclaimer
This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Ambit Capital. AMBIT Capital Research is disseminated and available primarily
electronically, and, in some cases, in printed form.

Additional information on recommended securities is available on request.

Disclaimer
1.
AMBIT Capital Private Limited (AMBIT Capital) and its affiliates are a full service, integrated investment banking, investment advisory and brokerage group. AMBIT
Capital is a Stock Broker, Portfolio Manager and Depository Participant registered with Securities and Exchange Board of India Limited (SEBI) and is regulated by SEBI
2.
The recommendations, opinions and views contained in this Research Report reflect the views of the research analyst named on the Research Report and are based upon
publicly available information and rates of taxation at the time of publication, which are subject to change from time to time without any prior notice.
3.
AMBIT Capital makes best endeavours to ensure that the research analyst(s) use current, reliable, comprehensive information and obtain such information from sources
which the analyst(s) believes to be reliable. However, such information has not been independently verified by AMBIT Capital and/or the analyst(s) and no representation
or warranty, express or implied, is made as to the accuracy or completeness of any information obtained from third parties. The information or opinions are provided as at
the date of this Research Report and are subject to change without notice.
4.
If you are dissatisfied with the contents of this complimentary Research Report or with the terms of this Disclaimer, your sole and exclusive remedy is to stop using this
Research Report and AMBIT Capital shall not be responsible and/ or liable in any manner.
5.
If this Research Report is received by any client of AMBIT Capital or its affiliate, the relationship of AMBIT Capital/its affiliate with such client will continue to be governed
by the terms and conditions in place between AMBIT Capital/ such affiliate and the client.
6.
This Research Report is issued for information only and should not be construed as an investment advice to any recipient to acquire, subscribe, purchase, sell, dispose of,
retain any securities. Recipients should consider this Research Report as only a single factor in making any investment decisions. This Research Report is not an offer to sell
or the solicitation of an offer to purchase or subscribe for any investment or as an official endorsement of any investment.
7.
If 'Buy', 'Sell', or 'Hold' recommendation is made in this Research Report such recommendation or view or opinion expressed on investments in this Research Report is not
intended to constitute investment advice and should not be intended or treated as a substitute for necessary review or validation or any professional advice. The views
expressed in this Research Report are those of the research analyst which are subject to change and do not represent to be an authority on the subject. AMBIT Capital may
or may not subscribe to any and/ or all the views expressed herein.
8.
AMBIT Capital makes no guarantee, representation or warranty, express or implied; and accepts no responsibility or liability as to the accuracy or completeness or
currentess of the information in this Research Report. AMBIT Capital or its affiliates do not accept any liability whatsoever for any direct or consequential loss howsoever
arising, directly or indirectly, from any use of this Research Report.
9.
Past performance is not necessarily a guide to evaluate future performance.
10. AMBIT Capital and/or its affiliates (as principal or on behalf of its/their clients) and their respective officers directors and employees may hold positions in any securities
mentioned in this Research Report (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). Such positions in
securities may be contrary to or inconsistent with this Research Report.
11. This Research Report should be read and relied upon at the sole discretion and risk of the recipient.
12. The value of any investment made at your discretion based on this Research Report or income therefrom may be affected by changes in economic, financial and/ or
political factors and may go down as well as up and you may not get back the full or the expected amount invested. Some securities and/ or investments involve
substantial risk and are not suitable for all investors.
13. This Research Report is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person
or published, copied in whole or in part, for any purpose. Neither this Research Report nor any copy of it may be taken or transmitted or distributed, directly or indirectly
within India or into any other country including United States (to US Persons), Canada or Japan or to any resident thereof. The distribution of this Research Report in other
jurisdictions may be strictly restricted and/ or prohibited by law or contract, and persons into whose possession this Research Report comes should inform themselves
about such restriction and/ or prohibition, and observe any such restrictions and/ or prohibition.
14. Neither AMBIT Capital nor its affiliates or their respective directors, employees, agents or representatives, shall be responsible or liable in any manner, directly or
indirectly, for views or opinions expressed in this Report or the contents or any errors or discrepancies herein or for any decisions or actions taken in reliance on the Report
or inability to use or access our service or this Research Report or for any loss or damages whether direct or indirect, incidental, special or consequential including without
limitation loss of revenue or profits that may arise from or in connection with the use of or reliance on this Research Report or inability to use or access our service or this
Research Report.
Conflict of Interests
15. In the normal course of AMBIT Capitals business circumstances may arise that could result in the interests of AMBIT Capital conflicting with the interests of clients or one
clients interests conflicting with the interest of another client. AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that clients
interests are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and employees personal
account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activities of staff working in areas where conflicts of interest may arise.
However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions in relation to AMBIT
Capitals services.
16. AMBIT Capital and/or its affiliates may from time to time have investment banking, investment advisory and other business relationships with companies covered in this
Research Report and may receive compensation for the same. Research analysts provide important inputs into AMBIT Capitals investment banking and other business
selection processes.
17. AMBIT Capital and/or its affiliates may seek investment banking or other businesses from the companies covered in this Research Report and research analysts involved in
preparing this Research Report may participate in the solicitation of such business.
18. In addition to the foregoing, the companies covered in this Research Report may be clients of AMBIT Capital where AMBIT Capital may be required, inter alia, to prepare
and publish research reports covering such companies and AMBIT Capital may receive compensation from such companies in relation to such services. However, the views
reflected in this Research Report are objective views, independent of AMBIT Capitals relationship with such company.
19. In addition, AMBIT Capital may also act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities of
companies covered in this Research Report (or in related investments) and may also be represented in the supervisory board or on any other committee of those
companies.
Additional Disclaimer for U.S. Persons
20. The research report is solely a product of AMBIT Capital
21. AMBIT Capital is the employer of the research analyst(s) who has prepared the research report
22. Any subsequent transactions in securities discussed in the research reports should be effected through J.P.P. Euro-Securities, Inc. (JPP).
23. JPP does not accept or receive any compensation of any kind for the dissemination of the AMBIT Capital research reports.
24. The research analyst(s) preparing the research report is resident outside the United States and is/are not associated persons of any U.S. regulated broker-dealer and that
therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or
required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading
securities held by a research analyst account.

Copyright 2013 AMBIT Capital Private Limited. All rights reserved.

Ambit Capital Pvt Ltd

Ambit Capital Pvt. Ltd.

Ambit House, 3rd Floor
449, Senapati Bapat Marg, Lower
Parel, Mumbai 400 013, India.
Phone: +91-22-3043 3000
16
Fax: +91-22-3043 3100