Kotak Daily 12 Dec 24

India Daily
December 12, 2024 NIFTY50 [Dec 11]: 24,642
Contents
Special Reports
Initiating Coverage
BrainBees Solutions: Profitable parent, new businesses scaling up
Theme Report
Consumer Durables & Apparel: Room ACs—the heat is on!
Daily Alerts
Change in Reco
Indegene: Upgrade to BUY; growth recovery ahead
Company Alerts
KPIT Technologies: Some hope beyond near-term challenges
CEAT: Strengthening its position in global OH tire segment
Sector Alerts
Consumer Staples: Bhartia family acquires 40% stake in HCCB
Pharmaceuticals: IPM pulse—return to double digits
Private Circulation Only.

This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
INITIATING COVERAGE
Brainbees Solutions Ltd (FIRSTCRY) ADD

Internet Software & Services
CMP(₹): 599 Fair Value(₹): 630 Sector View: Attractive NIFTY-50: 24,642 December 11, 2024
Profitable parent, new businesses scaling up Company data and valuation summary
Brainbees Solutions Limited (Firstcry) is India’s largest multi-brand retailing Stock data
platform for products catering to mothers, babies and kids in terms of GMV,
CMP(Rs)/FV(Rs)/Rating 599/630/ADD
with 8.7 mn annual unique transacting consumers for FY2024. Increasing
52-week range (Rs) (high-low) 734-514
scale and improving profitability will drive 17% revenue CAGR and 30%
Mcap (bn) (Rs/US$) 311/3.7
adjusted EBITDA CAGR in this business over FY2024-27. Globalbees, a brand
ADTV-3M (mn) (Rs/US$) 516/6.1
aggregator, has turned profitable and can scale up rapidly. We initiate
coverage with ADD and an SoTP-based FV of Rs630. Shareholding pattern (%)
India multichannel: Largest of its kind with increasing margin trajectory 0.08.8
8.9
Firstcry is India’s largest multi-brand retailing platform selling products for 1.0
6.8
mothers, babies and kids. Its inventory-led omnichannel platform served 8.7 mn
ATCs in FY2024 and comprises its e-commerce portal Firstcry.com and a
74.5
network of 1,124 physical stores, as of September 30, 2024. A large population
of young people, high birth rates and growing demand for branded products are
key demand drivers for Firstcry’s products. We expect revenue growth of 17.0% Promoters FPIs MFs BFIs Retail Others
in this business over FY2024-27, driven by growth in customers and AOV.
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities Act of 1933
Price performance (%) 1M 3M 12M
Firstcry is attempting to replicate this business in the Middle East, though we Absolute 14 (6) 0
expect that business to achieve EBITDA profitability only by FY2028. Rel. to Nifty 12 (5) 0
Rel. to MSCI India 11 (4) 0
Globalbees: Steadily gaining scale
Forecasts/Valuations 2025E 2026E 2027E
Firstcry owns a 50.2% stake in Globalbees, a D2C brand aggregator with
EPS (Rs) (5.6) (2.8) 2.0
investments in fast-growing start-ups in the BPC, electronics and accessories
EPS growth (%) 10.0 49.4 171.2
segments. Globalbees reported revenues of Rs12 bn in FY2024, which we
P/E (X) (107.3) (212.1) 297.8
believe can increase at a CAGR of 25.9% over FY2024-27. Profitability prediction
P/B (X) 6.5 6.4 6.1
is harder, given various underlying businesses, though we believe EBITDA
EV/EBITDA (X) 257.0 83.6 40.0
margins of the entity can improve to 5.1% by FY2027 from 0.2% in FY2024.
RoE (%) (7.3) (3.0) 2.1
Div. yield (%) 0.0 0.0 0.0
Financials: Forecast 17% revenue CAGR, 30% EBITDA CAGR over FY2024-27
Sales (Rs bn) 79 94 111
We model 17.0% revenue CAGR for Firstcry’s India multichannel business over
EBITDA (Rs bn) 1.2 3.7 7.7
FY2024-27, driven by a 13.3% CAGR in ATCs, 3.5% CAGR in AOV and stable take
Net profits (Rs bn) (2.9) (1.5) 1.1
rate. Steady margin expansion will be driven by higher gross margins and
operating leverage will drive a 29.5% EBITDA CAGR over FY2024-27. Loss Source: Bloomberg, Company data, Kotak Institutional Equities estimates
reduction in the Middle East business and higher margins in Globalbees will Prices in this report are based on the market close of
December 11, 2024
drive a higher consolidated adjusted EBITDA CAGR of 57.7% over FY2024-27.
Higher upfront ESOP expense will, however, result in net loss in FY2025-26 and
we expect the first profit in FY2027.
Initiate coverage with ADD rating and FV of Rs630

We initiate coverage with an ADD rating and an SoTP-based FV of Rs630. We
value the India multichannel business using a DCF-based methodology, which
assumes healthy FY2024-44 revenue CAGR of 17%, gradual EBIT margin
expansion to ~10%, WACC of 12.0% and terminal growth of 6.0%. We ascribe
2X sales multiple to Globalbees and 1.5X sales multiple to foreign business as
profitability metrics are evolving. Key risks to the business include weak macro
demand trends, higher competitive intensity and higher RM prices.
Full sector coverage on KINSITE
Garima Mishra Ishani Swain

3
Financial snapshot
We expect Firstcry’s revenues to increase at CAGR of 19.6% and EBITDA to increase at a CAGR of
121.4% over FY2024-27E.
Key financials’ snapshot of Firstcry (consolidated), March fiscal year-ends, 2021-27E

EBIT Diluted
Revenues margin PAT EPS RoAE RoACE P/E EV/EBITDA
(Rs mn) Growth (%) (%) (Rs mn) (Rs/ share) (%) (%) (X) (X)
2021 16,029 (1.8) 2,149 5.7 7.3 (3.6) 145 328
2022 24,013 50 (5.4) (719) (1.7) (2.1) (10.8) (432) 391
2023 56,325 135 (10.9) (4,411) (10.0) (12.6) (30.5) (70) 681
2024 64,809 15 (4.6) (2,743) (6.2) (8.3) (16.5) (113) 124
2025E 78,788 22 (4.1) (2,921) (5.6) (7.3) (12.6) (106) 67
2026E 93,867 19 (1.6) (1,491) (2.8) (3.0) (5.7) (208) 44
2027E 110,968 18 1.7 1,071 2.0 2.1 6.1 290 31
Source: Company, Kotak Institutional Equities estimates
We expect consolidated GMV CAGR of 19% over FY2024-27

Key operating metrics of Firstcry, March fiscal year-ends, 2021-27E
CAGR (%)
Unit 2021 2022 2023 2024 2025E 2026E 2027E 2024-27
India
Annual unique transacting customers mn 5.2 6.7 7.7 8.7 10.1 11.3 12.6 13.3
Orders mn 18.7 25.7 29.6 34.1 39.7 44.9 50.3 13.9
Average order value (AOV) Rs 1,933 2,043 2,156 2,226 2,271 2,361 2,468 3.5
Gross merchandise value (GMV) Rs mn 36,087 52,389 63,831 75,818 90,165 106,027 124,164 17.9
Yoy growth % — 45 22 19 19 18 17
International
Orders mn 0.7 1.1 1.4 1.8 2.1 2.5 3.0 18.8
Yoy growth % — 48 57 75 22 22 22
Consolidated
Orders mn 19.4 26.7 31.0 35.9 41.8 47.4 53.3 14.1
Yoy growth % 35 46 25 26 19 18 18
Revenue from operations Rs mn 16,029 24,013 56,325 64,809 78,788 93,867 110,968 19.6
Yoy growth % 50 135 15 22 19 18
Adjusted EBITDA Rs mn 877 739 442 2,485 4,433 6,942 9,747 57.7
Adjusted EBITDA margin % 5.5 3.1 0.8 3.8 5.6 7.4 8.8
BrainBees Solutions
Internet Software & Services India Research
k.kathirvelu-kotak.com
4
Condensed consolidated financial statements of Firstcry, March fiscal year-ends, 2021-27E (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Revenue from operations 16,029 24,013 56,325 64,809 78,788 93,867 110,968
EBITDA 419 (182) (3,173) 705 1,162 3,660 7,650
Adjusted EBITDA 877 739 442 2,485 4,433 6,942 9,747
Depreciation and amortisation expense (702) (1,109) (2,943) (3,709) (4,363) (5,150) (5,762)
EBIT (284) (1,291) (6,116) (3,004) (3,202) (1,490) 1,888
Other income 1,372 1,156 987 942 1,118 1,117 879
Finance costs (141) (377) (716) (1,154) (1,441) (1,643) (1,779)
Profit before tax 948 (511) (5,844) (3,215) (3,524) (2,016) 988
Taxation 1,176 (275) 440 0 176 101 (148)
Profit after tax 2,124 (787) (5,404) (3,215) (3,348) (1,915) 840
Minority interest + share of loss in associates 25 68 450 472 561 426 232
Reported PAT 2,149 (719) (4,411) (2,743) (2,921) (1,489) 1,072
Diluted EPS (Rs/share) 5.7 (1.7) (10.0) (6.2) (5.6) (2.8) 2.0
Weighted average number of shares - diluted (mn) 375 414 443 442 523 528 533
Balance sheet
Shareholder's funds 34,371 35,279 34,563 31,707 48,372 49,739 52,676
Minority Interest 976 7,601 7,434 6,207 6,768 7,193 7,426
Total borrowings 169 902 1,765 4,627 - - -
Deferred tax liabilities 48 1,745 3,015 2,845 2,845 2,845 2,845
Lease liabilities 1,607 3,192 7,226 9,598 11,850 14,103 15,454
Total sources of funds 37,171 48,719 54,003 54,985 69,835 73,880 78,401
Fixed assets (tangible/intangible) 1,761 12,466 20,457 21,889 23,059 22,961 22,737
Cash and bank balances 22,952 22,427 11,595 6,738 12,756 5,212 5,425
Goodwill 3,320 6,418 7,758 7,782 7,782 7,782 7,782
RoU assets 1,607 3,242 7,117 9,009 11,261 13,513 14,865
Investments 0 0 0 50 50 50 50
Net working capital (ex-cash) 6,086 2,619 5,183 7,615 13,024 22,460 25,640
Deferred tax assets (net) 1,265 1,130 1,628 1,897 1,897 1,897 1,897
Total usage of funds 37,171 48,719 54,003 54,985 69,835 73,880 78,401
Cash flow
Operating cash flow before working capital changes 2,053 464 881 2,486 4,609 7,043 9,599
Working capital changes (1,885) (1,971) (5,527) (2,928) (5,409) (9,436) (3,180)
Net finance cost/ income 1,231 779 272 (211) (323) (526) (900)
Cash flow from operations 1,400 (728) (4,374) (654) (1,123) (2,919) 5,519
Capital expenditure (955) (7,421) (6,333) 83 (3,849) (2,930) (3,038)
Free cash flow 445 (8,149) (10,707) (571) (4,972) (5,850) 2,481
Key ratios/metrics
Revenue growth (%) 49.8 134.6 15.1 21.6 19.1 18.2
EBITDA margin (%) 2.6 (0.8) (5.6) 1.1 1.5 3.9 6.9
RoAE (%) 7.3 (2.1) (12.6) (8.3) (7.3) (3.0) 2.1
RoACE (%) (3.6) (10.8) (30.5) (16.5) (12.6) (5.7) 6.1
Notes:
(a) Digital Age was acquired by Brainbees in FY2023. FY2021-23 financials are hence not comparable with future years.
BrainBees Solutions
5
Initiate coverage with an ADD rating and FV of Rs630

We initiate coverage on Brainbees Solutions Limited (Firstcry) with an ADD rating and SoTP-based Fair
Value of Rs630/share. We value the India business comprising the multichannel retail of products for
moms and kids using a DCF-based methodology, as this business has long-term growth potential
backed by increasing geographic reach, a healthy pool of 8.7 mn transacting users and unique value
proposition in a difficult retail category. We value the international business and Globalbees (50%
stake) business using EV/sales multiples, as these businesses will take time to get to levels of optimal
profitability. Nearly 80% of the SoTP value is due to the India business; Firstcry is the largest player of
its kind in India and can command greater market share in the future.
We initiate coverage with an ADD rating; Fair Value of Rs630/share

We initiate coverage on Firstcry with an ADD rating and Fair Value (FV) of Rs630/share. We value the
standalone business (India business comprising the multichannel retail of moms’ and kids’ products) at
Rs260 bn using a DCF-based methodology. Our DCF is based on the following assumptions: (1) FY2024-
34E revenue CAGR of 15% tapering to FY2034-44E revenue CAGR of 12%, (2) EBIT margin of 6.3% in
FY2024 moving to 8.7% by FY2027E and then further to 11%+ after FY2030, (3) WACC of 12%, and (4)
terminal growth rate of 6%. We ascribe a 2X December 2026 EV/sales to value Firstcry’s 50.2% stake in
Globalbees and 1.5X December 2026 EV/sales multiple to its international business.
We arrive at an equity value of Rs260 bn based on the DCF methodology for the India multichannel business
DCF-based valuation of Firstcry as of December 2025, March fiscal year-ends, 2022-2045E (Rs mn)
2024 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E 2045E 2050E
Revenues 45,795 54,257 63,119 73,429 84,951 97,954 112,383 217,612 402,164 680,034 983,718
Growth (%) 15.0 18.5 16.3 16.3 15.7 15.3 14.7 13.7 12.6 10.1 6.0
EBITDA 4,040 5,325 6,989 8,774 10,633 12,858 15,148 30,441 56,258 95,128 137,610
EBITDA margin (%) 8.8 9.8 11.1 11.9 12.5 13.1 13.5 14.0 14.0 14.0 14.0
Adjusted EBITDA margin (%) 7.3 8.3 9.6 10.4 11.0 11.6 12.0 12.5 12.5 12.5 12.5
Adjusted EBITDA 3,353 4,511 6,042 7,672 9,359 11,388 13,462 27,177 50,225 84,928 122,854
Depreciation 1,169 1,844 2,170 2,375 2,581 2,752 2,896 3,370 4,340 6,377 9,369
EBIT (excl. other income) 2,870 3,481 4,819 6,399 8,052 10,106 12,252 27,071 51,918 88,752 128,240
EBIT growth (%) 84.1 21.3 38.4 32.8 25.8 25.5 21.2 16.2 13.0 10.2 5.9
EBIT margins 6.3 6.4 7.6 8.7 9.5 10.3 10.9 12.4 12.9 13.1 13.0
Operating tax 287 383 578 960 2,061 2,688 3,137 6,930 13,291 22,720 32,829
Tax rate (%) 10.0 11.0 12.0 15.0 25.6 26.6 25.6 25.6 25.6 25.6 25.6
NOPLAT 2,583 3,098 4,241 5,439 5,991 7,418 9,116 20,141 38,627 66,031 95,411
Growth (%) 122.7 19.9 36.9 28.2 10.1 23.8 22.9 16.2 13.0 10.2 5.9
Depreciation 1,169 1,844 2,170 2,375 2,581 2,752 2,896 3,370 4,340 6,377 9,369
Change in working capital (2,928) (1,407) (1,474) (1,714) (1,916) (2,162) (2,399) (4,368) (7,472) (10,354) (9,302)
Capital expenditure (2,132) (2,319) (2,369) (2,443) (2,387) (2,463) (2,544) (2,458) (4,225) (6,207) (9,121)
Free cash flow to the firm (1,307) 1,216 2,568 3,657 4,269 5,544 7,068 16,684 31,270 55,846 86,358
Growth (%) (70.3) (193.1) 111.1 42.4 16.7 29.9 27.5 19.3 13.5 11.2 7.4
DCF parameters
Terminal growth rate (%) 6.0
WACC (%) 12.0
DCF valuation (Dec 2025) Rs mn
PV of terminal value 121,443
Sum of discounted DCF 138,305
DCF-based valuation 259,748
DCF-based valuation (Rs/share) 488
Of our Rs630/share of FV, the India business comprises a lion’s share at Rs488/share.
BrainBees Solutions
6
We arrive at an SoTP-based Fair Value of Rs630/share

SoTP-based valuation of Firstcry, as of December 2026, March fiscal year-ends
Rs bn Rs/share
DCF-based valuation of the India business 260 488
Valuation of Globalbees based on 2.0X EV/sales 20 37
Valuation of the international business based on 1.5X EV/sales 46 87
EV/EBITDA valuation of other businesses 3 5
Net debt (cash) (7) (13)
Dec-2025 equity value of the company 335 630
Fully diluted share count (mn) 533
Fair value (Rs/share) 630
We model FY2024-27 revenue CAGR of 19.6% and expect adjusted EBITDA margin to expand to 8.8% by FY2027
Key financial assumptions of Firstcry, March fiscal year-ends (Rs mn)
FY2024-27E
2023 2024 2025E 2026E 2027E CAGR (%)
Revenue from operations 52,622 64,809 78,788 93,867 110,968 19.6
India 39,105 45,795 54,257 63,119 73,429 17.0
International 4,875 7,537 9,185 11,205 13,680 22.0
Globalbees 8,972 12,093 15,963 19,954 24,136 25.9
Others 230 334 400 678 887 38.5
Inter company adjustments (559) (950) (1,017) (1,088) (1,164)
Revenue share (%)
India 74.3 70.7 68.9 67.2 66.2
International 9.3 11.6 11.7 11.9 12.3
Globalbees 17.0 18.7 20.3 21.3 21.8
Others 0.4 0.5 0.5 0.7 0.8
Adjusted EBITDA 772 2,724 4,433 6,942 9,747 52.9
India 2,435 4,040 5,325 6,989 8,774 29.5
International (1,201) (1,396) (1,280) (960) (504)
Globalbees (447) 23 356 733 1,234 274.8
Others (31) 57 31 181 244 62.3
Inter company adjustments 15 - - - -
Adjusted EBITDA margin (%) 1.5 4.2 5.6 7.4 8.8
India 6.2 8.8 9.8 11.1 11.9
International (24.6) (18.5) (13.9) (8.6) (3.7)
Globalbees (5.0) 0.2 2.2 3.7 5.1
Others (13.3) 17.1 7.8 26.7 27.5
Note:
(a) Total revenue from operations includes consolidation adjustment.
Firstcry: Premium valuations backed by healthy long-term growth prospects

After accounting for Rs20 bn of valuation for Globalbees and the international business, Firstcry’s India
business at our FV imputes EV/EBITDA of 37X FY2026 and 30X FY2027. Over FY2024-27, we expect
revenue CAGR of 17.0% and adjusted EBITDA CAGR of 29.5% in this business. The imputed EV/EBITDA
multiples are at a premium to retailers such as Vedant Fashions. Nykaa, which is most similar to Firstcry
in terms of its business model, trades at a richer multiple owing to a larger category size, higher-margin
category and higher lifetime value of the customer on its platform.
BrainBees Solutions
7
While Firstcry’s India business has achieved substantial scale (Rs45.8 bn of FY2024 revenues), it will
achieve normalized margins only by FY2027 as it (1) optimizes gross margins by consolidating its vendor
base, (2) benefits from a further mix change in favor of higher gross margin categories such as apparel
and (3) witnesses lower competitive intensity, amid more rational industry-wide pricing and discounts,
and (4) benefits from operating leverage. Thus, we believe the comparison of Firstcry with peers on
EV/EBITDA multiple is more appropriate for FY2027. At our FV of Rs630, we impute EV/EBITDA of 30X
for the India business, which we compare with the current 33X EV/EBITDA for Nykaa’s BPC business,
36X for PAG and 31X for Vedant Fashions.
Retail and e-commerce players’ comparative valuation

Valuation summary, March calendar year-ends, 2024-27E
CMP Market-cap P/E (X) EV/EBITDA (X) RoE (%) 2024-27E CAGR (%)
Company (Rs/sh) (Rs bn) 2024 2025E 2026E 2027E 2024 2025E 2026E 2027E 2024 2025E 2026E 2027E Revenue EBITDA
Dmart 3,708 2,402 161 101 95 81 96 66 58 50 12 16 15 15 18 18
ABFRL 310 290 (267) (816) (50) na 31 23 25 18 (4) (1) (17) (15) 12 28
Manyavar 1,351 335 106 76 79 72 67 49 50 43 29 35 28 26 14 17
Page 47,003 524 98 92 92 73 66 61 60 50 54 46 38 41 13 18
Trent 7,063 2,511 4,047 633 279 132 438 234 131 89 3 16 27 38 39 42
Go Fashion 1,093 59 71 61 46 37 26 22 18 15 17 15 17 18 17 19
Arvind 430 112 33 32 20 16 10 14 10 8 10 10 14 15 14 19
Kewal Kiran 634 39 24 24 22 20 22 na na na 24 20 20 20 15 12
Shoppers Stop 615 68 87 245 63 38 15 12 10 9 30 12 28 34 17 15
Vmart 3,929 78 na 1,491 115 62 26 21 16 13 (12) 1 9 14 18 43
Nykaa 170 488 na 480 143 82 142 103 60 41 2 8 22 30 25 51
Zomato 292 2,665 nm 301 122 81 nm 275 107 56 2 4 9 12 51 378
Campus 306 93 104 75 57 45 32 38 31 25 15 17 19 19 13 13
Relaxo 654 163 81 77 60 49 50 37 30 26 10 10 12 13 10 15
Firstcry 599 311 (113) (106) (208) 290 124 67 44 31 (8) (7) (3) 2 20 58
Average 370 184 62 77 82 73 47 34
Source: Bloomberg, Kotak Institutional Equities estimates
BrainBees Solutions
8
Childcare industry: Beneficiary of rising online spends, large young population

We expect retail consumption in India to increase at a CAGR of 10.0-10.5% over FY2024-29; within
this, we expect the childcare industry to grow at a similar rate, driven by higher awareness and
increasing disposable incomes. Apparel is the largest category within the childcare industry, with
an estimated 68% share (according to Redseer). Firstcry had 8.7 mn unique ATCs in FY2024,
which we believe can grow to 23 mn ATCs over time, driven by the company’s focused approach
toward this segment. Our first principle approach pegs Firstcry’s TAM at Rs307 bn based on 23
mn ATCs and ~Rs13k/child of annual spend. Steady numbers of new births per annum, gradual
purchasing power increase and a resultant increase in usage of branded childcare products will
drive a steady increase in demand for Firstcry’s products.
Steady growth in the demand for childcare products will be driven by multiple levers of increasing
disposable income, high birth rates, rising adoption of childcare products, higher penetration
across tier 2+ towns, nuclearization of families and premiumization. Fragmented supply chain and
lack of sizeable specialty brands in the market drive customers toward Firstcry, which is a
specialist in this segment.
Growth driver #1: High number of births, urbanization and income levels driving an increase in
transacting customers
To compute a TAM for Firstcry, we first take into account the total number of births in India. According
to data from the UN, India witnesses the birth of 23 mn babies every year. We assume that children in
the 0-5 years of age group are key customers of Firstcry, implying a potential TAM of 117 mn kids.
However, we note that Firstcry, by virtue of its geographic presence (mostly in large cities), awareness
(mostly by urban consumers) and the type of products sold on its platform (branded, good quality) will
be favored by a certain number of the total market of 117 mn kids.
India witnesses ~23 mn births every year

Number of children born every year in India (mn)
2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Number of babies born in India 24.1 23.5 23.3 23.3 23.2 23.2 23.1 23.0 22.9
Source: UN, Kotak Institutional Equities
Number of births may flatline in India though category expansion may aid growth for Firstcry
India has one of the highest birth rates globally, with 16 births per thousand people in CY2021. The annual
birth rate of India is approximately 1.5X of developed economies. While India witnessed a small decline
in birth rates due to Covid, the decline was smaller than that seen in other countries. India’s birth rate is
expected to remain higher than several other countries going forward as well, which may bode well for
children-focused retailers such as Firstcry.
BrainBees Solutions
9
Global benchmarks of birth rates, December calendar year-ends
Birth rates - Global benchmarks (per '000 of population, CY)

20 18.5 2019 2021
17.5 17.0
16.4
16
11.4 11.0
12 10.4 10.7
10.1 9.8 10.3
7.5
8
0
India KSA China USA UK UAE
Notes:
(a) Population as of July 1: Latest data available is for CY2021 (World Bank).
Source: World Bank, Kotak Institutional Equities
According to data from the UN, birth rates in India are expected to fall over the next 2-3 decades, with
the number of annual births expected to decline from 23.2 mn in FY2024 to 22.6 mn by FY2030 and
further to 20.8 mn by FY2040. While Firstcry can gain customers over the next 10-15 years due to under-
penetration within its 23 mn (and expanding) target set of customers, subsequent growth will depend on
higher spends on childcare and other categories, and the expansion of the target customer base for
Firstcry to 0-10 years and beyond. We note the company has already added product lines suitable for
older kids.
Number of birth rates in India, 2019-35, December Number of birth rates in India, 2035-50, December
calendar year-ends (mn) calendar year-ends (mn)
Babies born in India (mn) Babies born in India (mn)
25 22 21.6
24.1
23.5 23.3 23.3 23.2 23.2 21.4
24 22 21.1
23.1 23.0 22.9 20.9
22.8 22.6 22.6
23 22.4 22.2 21 20.8
22.1 21.9 20.5
21.8
22 21 20.3
20.1
21 19.9
20 19.7
19.6
20 19.4
20 19.2 19.1
19 19.0
19
18
17 19
16 18
15 18
2025E
2026E
2027E
2028E
2029E
2030E
2031E
2032E
2033E
2034E
2035E
2019
2020
2021
2022
2023
2024
2036E
2037E
2038E
2039E
2040E
2041E
2042E
2043E
2044E
2045E
2046E
2047E
2048E
2049E
2050E
Source: United Nations Database Source: United Nations Database
BrainBees Solutions
10
Estimating a potential market for Firstcry

To compute the number of children who could potentially be Firstcry’s customers, we analyze the count
of children who avail private schooling facilities. We believe households who can afford private schooling
for children will, in general, have higher retail spends and better affordability for childcare products.
According to UDISE+ (an MIS initiated by the Department of School Education and Literacy, Ministry of
Education, Government of India), India witnessed total enrollments of 265 mn in FY2020, of which 135
mn were enrollments in pre-primary and primary classes. Of these, 53.5 mn enrollments were witnessed
in private, unaided and recognized schools. Assuming Firstcry’s relevant customers are predominantly
based in 50 cities and assuming a large chunk (55-60%) of private enrollments happen in these 50 cities,
we compute 32 mn children in private schools in pre-primary and primary grades. Weeding out older
children, we estimate a pool of ~23 mn children in the 0-5 years of age group, who can be eligible
customers of Firstcry. This pool can increase with time as the income levels of the overall population
increase.
There were 53 mn primary + pre-primary enrollments in 2020

Total enrollments in all schools and private unaided schools in India (mn)
2020 2021 2022

All schools
Total number of enrolments 265 264 265
Pre-primary 14 11 9
Primary 122 122 122
Upper primary 65 66 67
Secondary 38 39 39
Higher secondary 26 27 29
Private unaided recognized schools
Pre-primary 9 7 6
Primary 44 43 39
Upper primary 21 21 20
Secondary 13 13 13
Higher secondary 11 11 11
Pre-primary and primary
Total number of private enrolments 53 0 0
Private (% of total) 39.5 37.7 34.1
Notes:
(a) Pre-primary refers to lower kindergarten and upper kindergarten. Primary refers to grade 1-5, upper primary to grade 6-8,
secondary to grade 9-10 and higher secondary to grade 11-12.
Source: UDISE+, Kotak Institutional Equities
We estimate ~23 mn children to be Firstcry customers over the medium term

Eligible customers of Firstcry (mn)
Amount (mn) Comments
Total number of primary and pre-primary enrolments in 2020 53.5 Per USIDC data
Estimated number of private enrolments in 7 grades of primary/pre-primary in top-50 cities 32.1 Assumed that 60% of private enrolments are in top-50 cities
Number of private enrolments per grade per year 4.6 There are 7 grades of primary and pre-primary
Number of years a child is a customer of Firstcry (#) 5.0 Co is attempting to increase coverage but assume only 0-5 for now
Number of eligible customers of Firstcry 22.9 Assuming that annual numbers are similar for 0-5 year age-bracket
Source: UDISE+, Kotak Institutional Equities estimates
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Firstcry can witness sustained growth in its customer base over the medium term
Compared with the total pool of ~23 mn children, Firstcry reported 8.7 mn ATCs in FY2024. Assuming
that some customers were shopping for more than one kid, we believe nearly 10.9 mn children were
customers of Firstcry in FY2024. This calculation tells us that there is an opportunity for Firstcry to
gradually increase its pool of customers over the medium term.
We expect Firstcry to register 13% CAGR in transacting customers over FY2024-27

ATCs of internet companies in India, March fiscal year-ends (mn)
2021 2022 2023 2024 2025E 2026E 2027E
Firstcry 5.2 6.7 7.7 8.7 10.1 11.3 12.6
Zomato (food delivery) 28.0 53.0 58.0 63.0
Nykaa (BPC) 5.6 8.0 10.0 11.7 14.0 16.6 19.2
Nykaa (fashion) 0.6 1.8 2.5 3.0 3.7 4.5 5.4
Source: Company, Kotak Institutional Equities
Growth driver #2: Product awareness, demand for branded products to drive higher spends on childcare
Spends on childcare products can vary tremendously between households. Key categories of spends
include (1) apparel—generally accounting for the highest spends among categories, (2) consumables
(diapers, creams, detergents and other products; spends are the highest in the first year of a child’s birth
and can come off over time), (3) hard goods (prams, cots, cribs, carriers; again spends are highest early
on) and (4) toys, games and stationary. Note these spends exclude spends on essential services such
as medical care and education.
Using pricing and products available on e-commerce platforms such as Amazon, Flipkart and Firstcry,
we attempt to analyze recurring and non-recurring spends over a five-year horizon on a child in India. We
assume these spends to be made on apparel, consumables, hard goods and equipment and baby food.
On average, assuming basic spends on these products (mid-tier brands), we compute a spend of Rs63k
over a five-year period or an average of Rs13k per annum. Compared with this, Firstcry reported spends
of Rs8,735/customer in FY2024 on GMV basis and Rs5,276/customer in FY2024 on revenue basis. With
time, we expect Firstcry to report higher revenue per customer, as it further enhances its assortment and
demand for branded products increases.
We estimate average annual spend of Rs13k per child

Estimated spend on a child from age 0 to 5 (Rs)
Year 1 Year 2 Year 3 Year 4 Year 5 Total

Total Spend 23,207 9,947 9,947 9,947 9,947 62,995
Estimated spend on a child 0-5 years of age per year 12,599
Source: Company portals, Kotak Institutional Equities estimates
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Each Firstcry customer spent ~Rs5.3k on the platform in FY2024

Spend per customer per year on Firstcry, March fiscal year-ends (Rs)
CAGR (%)
2021 2022 2023 2024 2021-24
Orders (mn) 18.7 25.7 29.6 34.1 22.2
Annual unique transacting users (mn) 5.2 6.7 7.7 8.7 18.5
Orders per ATU (#) 3.6 3.8 3.8 3.9 3.1
GMV
AOV 1,933 2,043 2,156 2,226 4.8
Spend per customer 6,914 7,845 8,269 8,735 8.1
Revenue
AOV 1,053 1,251 1,321 1,345 8.5
Spend per customer 3,767 4,804 5,067 5,276 11.9
Note:
(a) AOV has been calculated based on dividing GMV/revenue by total number of orders.
Globally, spends on childcare vary tremendously between countries. According to Redseer, spends per
child per year were the highest in the US and UK at Rs0.17-0.22 mn in FY2024, compared with ~Rs9,300
in India. We believe AOV increase in India can be faster than in developed countries, as parents spend
more on new products and on more expensive branded products.
Global benchmarks on spend per child on childcare products
Notes:
(a) Childcare products include apparel (clothing, footwear, and accessories), consumables (diapering, bath & skin care, baby food
etc.), toys & games, hard goods (prams, feeding bottles, nursery & safety gears) and others that are used by children in the age
group of 0-12 years.
(b) US$1 = Rs80.
Source: Redseer, Kotak Institutional Equities
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We peg Firstcry’s TAM at Rs300 bn
Based on our computation above of 23 mn potential customers and Rs13k per customer spend per year,
we peg TAM for Firstcry at Rs300 bn. Note that TAM can increase on further category addition by Firstcry.
With time, we would expect more customers to demand a larger number of branded products in
categories such as apparel and consumables, which can further increase this TAM. We note that
Firstcry’s India business reported revenue of Rs46 bn in FY2024, implying a market share of 15%. We
prefer revenue to GMV to compute market share, as Firstcry runs an inventory-driven business.
According to Redseer, the childcare market in India was Rs2.8 tn in size in FY2024. Our calculation above
suggests a lower addressable market for Firstcry, as we believe Firstcry will cater to a select set of
families among the wider Indian population.
Firstcry has a ~16% market share among its relevant customer set
Calculated TAM and market share of Firstcry (Rs bn)
2024
Firstcry's annual AOV (Rs) 8,735
Estimated spends on a child 0-5 years of age (Rs) 12,599
Average spends per year (Rs) 12,599

Number of customers (mn) 23
TAM 289
Revenue 46
Market share (%) 16
Peers in India have achieved limited scale
An analysis of revenues of some large children-focused retailers and brands indicates that Firstcry is the
largest retailer of its kind in the childcare category. Other large retailers are (1) horizontal e-commerce
companies, which also retail a fairly large number of SKUs in the childcare category, (2) large department
stores such as Pantaloons, Westside, Zudio and Lifestyle, which sell kidswear and (3) other retailers and
brands such as Mothercare, Jockey Kids and Gini & Johnny.
We note that barring Firstcry, most other dedicated brands and retailers have not managed a large
revenue scale. This could be owing to the requirement to stock a relatively large number of SKUs, lack
of focus (menswear and womenswear are the most dominant categories of sales for department stores),
low price points of products for children products and more.
Firstcry has achieved sizeable scale compared with peers

Revenue comparison of Firstcry India and peers, March fiscal year-ends (Rs mn)
2019 2020 2021 2022 2023 2024

Firstcry 42,809 45,795
Gini and Jony 2,003 1,505 302 711 797
Mothercare 1,928 2,919
Hopscotch 2,227 2,099 2,037 2,357 1,934
Pantaloons Kids 5,110 5,622 2,974 3,676 6,116 6,365
Funskool 2,210 1,993 1,704 2,317 2,376
Skillmatics India 50 142 221 344 386
Ed-a-mamma 37 162 1,500
Chicco India 876 933 994 1,018 1,096
Mee Mee 1,797 1,709 1,492
Pigeon India 583 516 488 540 604
Baby & Mom 57 120 191 296 529
R for Rabbit 367 564 669 864 1,289
Source: Company, PrivateCircle, Kotak Institutional Equities
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Firstcry has achieved reasonable scale even when compared with diversified apparel retailers
Revenue comparison of Firstcry India and retail companies, March fiscal year-ends (Rs mn)
2022 2023 2024

Firstcry 42,809 45,795
Pantaloons 26,260 40,776 42,430
Trent 38,807 77,152 119,266
Shoppers stop 25,188 40,221 43,166
Lifestyle 45,240 66,090 65,590
Mothercare 1,928 2,919 —
Zara india 18,154 25,538 27,689
Kidswear as proportion of revenues for Pantaloons, March fiscal year-ends (Rs mn)
1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25
Total revenue 10,269 10,937 11,587 8,109 10,297 10,215 13,337 8,950 11,014
Kidswear revenue 1,438 1,531 1,738 - 1,545 1,532 2,134 1,343 1,652
Kidswear as % of total revenue 14.0 14.0 15.0 - 15.0 15.0 16.0 15.0 15.0
Mothercare is a dedicated childcare retailer globally. It operated 506 stores, as of CY2023, with revenues
of EUR323 mn in CY2023. The Middle East and Far Eastern markets (Malaysia, Singapore and Hong
Kong) are its largest geographies by revenue. By comparison, Mothercare India posted revenues of Rs2.9
bn, as of CY2023. Globally, Mothercare’s largest categories by revenue are clothing & footwear (65.7%
of revenue), home & travel (31.1% of revenue) and toys (3.3). For India, Redseer has estimated that
apparel accounted for ~68% of the childcare products market in CY2022 with consumables (14%), hard
goods (12%) and toys and games (6%) comprising the remainder.
Apparel accounted for ~68% of the childcare products market in India in CY2022
Market segmentation by categories—Indian childcare products market, December calendar year-
ends (%)
Apparel Consumables Hard goods Toys & games CAGR (%)

CY16-19 CY19-22
6 6 6 6
8 10 12 12
11 12 18
12
15 14
17 12
12 14
75 73 9 5
67 68
2016 2019 2021 2022
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Mothercare India: Targeting the affluent customer
In India, Mothercare tied up with Reliance Retail as its franchisee partner and ran 122 stores, as of
CY2023. Note its network of 122 stores is much smaller than Firstcry’s network of 1,063 stores.
We recently visited some stores of Mothercare and Firstcry in Mumbai. We note that Firstcry store had
a wider assortment with a lower pricing compared with Mothercare. Mothercare stores are located in
more premium malls (at least in Mumbai), indicating that it is currently catering to the more affluent
customer.
We show some key takeaways from the store visits below.
Product prices across categories in physical stores of Firstcry and Mothercare (Rs)
Product Firstcry Mothercare
Stroller 5k to 16k 14k to 80k
Crib 12k 23k
Clothes
Basics 149 to 849 999 to 1499
Fancy 1499 1499 to 2999
Ethnic 1499 to 1999 NA
Baby booties 399 899
Bottle 249 (Babyhug), 699 (Chicco) 1199
Diapers Babyhug, Pampers Mothercare
Teether 225 NA
Toothbrush 45 195
Toothpaste 155 NA
Detergent 295 450 to 649
Source: Companies, Kotak Institutional Equities
Childcare markets in the UAE and KSA are also poised to grow
The information in this section is derived from the Redseer’s December 26, 2023, report, ‘Childcare
market in India’.
UAE. The growth in childcare products market in the UAE is driven by the acceleration of digitalization
through e-commerce platforms, resumption of schools and regular activities after the Covid 19
lockdown, increasing participation of new childcare-focused, verticalized e-commerce brands, and the
shift of customer preference toward trustworthy and branded products. In the next five years, digital and
technology-based toys and games are expected to witness a significant rise in demand, while
scientific/educational toys and arts and crafts will drive growth in traditional toys. Ready-to-eat/prepared
baby food will also see a significant increase in demand due to the increasing population of working
parents. In the UAE childcare products market, Firstcry competes with organized horizontal online
players as Amazon and Noon and vertical players such as Namshi and Mumzworld.
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Childcare product market size–UAE, March fiscal year-ends (Rs bn)
Childcare product market size- UAE (Rs bn)

300
2 3 23 4
250 220-260
194
200
175
165
154
150
100
50
0
2016 2019 2021 2022 2027P
Notes:
(a) US$1 = Rs80, 1 AED = Rs21.6.
(b) The UAE’s childcare products market include apparel (clothing, footwear, and accessories), consumables (diapering, bath & skin
and baby food, among others), toys & games and excludes hard goods (prams, feeding bottles, nursery & safety gear).
(c) Above arrows are CAGR % computed on mid-points of ranges.
KSA. The growth in the KSA childcare products market is driven by an increasing number of international
brands, rising penetration of e-commerce, higher employment rates, growing concern of parents toward
children’s health and safety, and a wide variety of stock keeping units (SKUs) that have increased
shopping convenience on online platforms. Categories such as consumables (excluding diapers) and
apparel are expected to grow significantly in the next five years. There is a huge opportunity for childcare-
focused e-commerce entrants in the coming years due to a lack of specialty brands and growing demand
for childcare products in the country. In the KSA childcare products market, Firstcry competes with
organized online horizontal players such as Amazon and Noon and vertical players such as Mamas and
Papas, and Babyshop.
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The KSA’s childcare market is poised to increase at a CAGR of 4% over CY2022-27

The KSA’s childcare product market size, December calendar year-ends (Rs bn)
Childcare product market size- KSA (Rs bn)

0 -2 11 4
700
590-630
600
494
500 460 460 445
400
300
200
100
0
2016 2019 2021 2022 2027P
Notes:
(a) US$1 = Rs80, 1 AED = Rs21.6.
(b) The KSA’s childcare products market includes apparel (clothing, footwear and accessories), consumables (diapering, bath &
skin, and baby food, among others), excludes toys & games and hard goods (prams, feeding bottles, nursery & safety gear).
(c) Above arrows are CAGR % computed on mid-points of ranges
Direct-to-consumer (D2C) brands market in India to grow rapidly

India’s D2C market is estimated at Rs516 bn (~US$6.4 bn) in CY2022 and is projected to report a CAGR
of ~37% until CY2027 to ~Rs2,500 bn (~US$31 bn). D2C is a model where brands can market, sell and
ship their products directly to customers without any middlemen involved. D2C is one of the fastest-
growing channels of purchase, as the manufacturer directly reaches the customer and removes the
middlemen, thereby passing the monetary benefits to the customer. Typically, brands maintain a multi-
brand approach to the market, i.e., by maintaining both online and offline mediums to reach the end user.
Collectively, D2C brands have grown faster than the overall online retail market. Their share of the e-
commerce market has grown from ~6-7% in CY2019 to ~9% in CY2022, led by a sizeable market of
mature, urban and high-income users in India, better infrastructural support for e-commerce, the ability
for such brands to have wider reach/accessibility, their agility and rapid pace of innovation, niche product
offerings and effective digital marketing strategies.
D2C scale-up models are still to stabilize, given companies are new and in constant M&A mode. Mensa
Brands (PE/VC backed and led by Ananth Narayanan) and TMRW (ABFRL backed) are two prominent
D2C brand aggregator companies in existence. Both these companies are largely apparel and fashion
focused. Unlike these, Globalbees is focused more on general merchandise, smaller consumer durables
and more.
Financials of Mensa and TMRW, March fiscal year-ends (Rs mn)

2020 2021 2022 2023 2024
Mensa Brands
Revenue 2,105 4,996
EBITDA (494) (1,079)
TMRW
Revenue 5,367 5,483 7,582 12,127 14,974
EBITDA (735) 95 153 645 340
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Growing Indian preschool market opportunity

The growth of the Indian preschool market is also underpinned by an increasing employment rate for
women, rising number of nuclear households, government policies such as the national Early Childhood
Care and Education policy (ECCE) promoting pre-schooling in India, expansion of the franchisee model
in untapped areas such as Tier 2+ cities and towns, and increasing propensity to spend on quality
education and rising urbanization.
Indian preschool market size and branded share, December calendar year-ends (%)
0-4 years 5-9 years 10-12 years CAGR (%)

CY16-19 CY19-22
10 6
26 26 25 25 25
34 34 33 10 6
35 35
11 8
39 39 42 41 42
2016 2019 2021 2022 2027P

Notes:
(a) CAGR % is computed on mid-points of ranges.
(b) Branded schools include franchisee preschools and fully owned preschools.
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Firstcry: Multi-brand retail platform for childcare products

Firstcry is a one-stop destination for parenting needs across commerce, content, community
engagement and education in India. It is India’s largest multi-brand retailing platform for products
catering to mothers, babies and kids. It is also the largest specialist online mothers', babies' and
kids' product retail platform in the UAE and KSA. Firstcry’s leadership position has been bolstered
by 8.7 mn annual unique transacting users, 34.1 mn orders, 1,063 offline stores in 533 cities, 1.65
mn+ stock keeping units (SKUs) and 80 warehouses, as of March 31, 2024. We expect Firstcry to
gain a larger share of the childcare products market in India, driven by geographic expansion and
greater acceptance of Firstcry’s products.
Firstcry’s portfolio includes home brands, domestic brands, international brands and premium brands.
Broadly, the offerings can be divided into:
Online platform (India, the KSA and the UAE). The online platform houses both home and third-party
brands. In addition to shopping, the Firstcry parenting community provides a forum for enriching
parenting content and engagement. The app has various engagement tools such as baby names,
memories and milestones feed. It originally launched the online platform in India in 2010 and has now
expanded to foreign markets such as the UAE (launched in 2019) and the KSA (2022). The launch in
foreign markets was driven by Firstcry’s expertise in the Indian market, lack of product availability in
the UAE and the KSA, and the presence of the Indian diaspora in these countries.
Offline presence. As of March 31, 2024, Firstcry had a network of 1,063 physical stores in 533 Indian
cities. The physical modern stores are in three formats, i.e., (1) Firstcry franchisee stores, (2) Babyhug
franchisee stores and (3) company-owned and company-operated (COCO) stores of Firstcry and
Babyhug. 628 stores operate on an asset-light franchisee model, where capital expenditures and
operating expenditures, including working capital, are borne by the franchisees. The company had
435 COCO stores, as of March 31, 2024. With ~2.12 mn sq. ft of retail space, Firstcry has the largest
retail space and retail footprint among specialty mothers, babies, and kids’ products retailers in India.
Pre-school chain and adjacent products. Firstcry.com Intelli Education offers products and services
covering preschool products, books, toys, home learning kits and baby cognitive development
programs. In November 2019, the company acquired a chain of preschools and rebranded them with
the Intellitots brand in 2020. As of March 31, 2024, it had 208 active preschools in 107 cities. The
company follows a franchisee-led model for the pre-school chain. Firstcry Intellitots has been ranked
second in India as ‘India’s most respected early childhood education brand’ by Education World. Apart
from preschools, it also operates daycare facilities, library and parent-toddler circle.
Globalbees. Globalbees is a platform to scale up direct-to-consumer (D2C) brands across online and
offline channels. Firstcry intends to use its ability to create and scale brands, retail distribution
network, marketing and sourcing capabilities, and supply chain infrastructure to scale Globalbees.
Globalbees targets D2C brands across categories such as beauty, personal care, home, kitchen, food
and lifestyle; according to our understanding, Globalbees will not acquire brands in the products for
mothers and kids.
India's largest multi-brand, multi-brand retailing platform for mothers’, babies’ and kids’ products
Firstcry is India’s largest multi-brand retailing platform for mothers’, babies’ and kids’ products, with a
growing presence in select international markets. The company reported annual unique transacting
customers of 8.7 mn in India in FY2024. Annual unique transacting customers increased at a 19% CAGR
over FY2021-24. The company has an extensive offering, with more than 1.65 mn+ SKUs from more than
7,580 brands across the clothing and fashion, toys, books, school supplies, diapers, bath and skin care,
feeding and nursing, health and safety, baby gear, and maternity categories, as of March 31, 2024.
Firstcry co-founded Globalbees, which is a platform to scale up direct-to-consumer (D2C) brands across
online and offline channels. These brands can leverage Firstcry’s expertise in creating and scaling brands
and its multi-brand distribution network, sourcing capabilities, supply chain infrastructure and integrated
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technology ecosystem. Globalbees, operating as a subsidiary, targets D2C brands across categories
such as beauty, personal care, home, kitchen, food and lifestyle. To date, the company has invested Rs6.2
bn in Globalbees for a controlling interest of 50.23% on a fully diluted basis.
Firstcry Platform’s snapshot
Firstcry India multichannel business: Leading omnichannel retailer

Firstcry’s India business comprises Firstcry.com online platform and a network of stores dedicated to
selling products relevant to mothers, babies and kids. In FY2024, the platform recorded GMV of Rs76 bn,
of which 76.9% was online and the remainder 23.1% was from the offline channel. Over FY2022-24, GMV
from the offline channel has grown higher at 22.0% CAGR, while online channel GMV has grown at a
10.9% CAGR.
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Snapshots of the app
Key KPI of India multichannel business, March fiscal year-ends (Rs mn)
CAGR (%)
Unit 2021 2022 2023 2024 2025E 2026E 2027E 2024-27
Orders mn 18.7 25.7 29.6 34.1 39.7 44.9 50.3 13.9
Yoy growth % — 45.2 21.8 18.8 18.9 17.6 17.1
Revenue Rs mn 32,094 39,826 45,795 54,257 63,119 73,429 17.0
Content-based strategy to acquire new transacting customers
According to the RedSeer, Firstcry is the most popular mothers’, babies’ and kids’ products retail
distribution brand in India in terms of the number of followers on leading social media platforms, as of
October 25, 2023. As of November 30, 2023, Firstcry had over 2.1 mn followers on FB and more than 1.1
mn followers on Instagram. According to RedSeer, Firstcry Parenting, a YouTube (YT) channel with over
1.37 mn subscribers as of October 25, 2023, had the largest subscriber base among brand parenting
channels YT in India.
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Network effects led by content, brand and data

Content-led strategy enables engagement with parents early in their parenting lifecycle through its
parenting platform. Firstcry.com parenting platform features video and written content on a wide range
of topics from pre-pregnancy to pregnancy and parenting. This content is generated not only by other
parents, but also by specialists such as doctors, gynecologists and nutritionists. This leads to a virtuous
cycle of new customer acquisition and enriched content. The unique content strategy feeds into the
transaction funnel and creates a flywheel effect, as increased content consumption and community
engagement lead to increased customers, which in turn, lead to more transactions. During 3QFY23,
customers who interacted on the parenting community purchased products 2X more frequently than
customers who did not interact on the parenting community during 4QFY23 and 1QFY24.
Marketing strategy to position Firstcry as a destination for all parenting needs
Platform provides curation of home brands and prominent third-party brands

Through online platform and modern stores, Firstcry offers customers a variety of products, including
products of prominent global and domestic mothers’, babies’ and kids’ brands (such as Medela India
Private Limited, Chicco, Mee-Mee and Funskool (India) Limited), “mompreneurs” (i.e., mothers who
operate home-based businesses) and own home brands. As of March 31, 2024, the Firstcry multi-brand
retailing platform offered more than 1.65 mn+ on SKUs from more than 7,580 brands. The diverse
product offering, across third-party and home brands has significantly contributed to the growth of
revenue from operations over FY2021-24. The dedicated brand partnership team works with brands to
build mutually beneficial marketing campaigns that leverage Firstcry’s experience and data to grow the
childcare products ecosystem, providing brands with channels for customer acquisition and
opportunities for business growth. Furthermore, own baby and children product home brands for India
and international markets such as BabyHug, Babyoye, Cutewalk and Pine Kids play in the mid-to-premium
category.
Home brands contribute to a significant proportion of revenues for Firstcry’s India business and can be
found across a variety of categories such as apparel, baby care and equipment.
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Home brands of Firstcry

Home brands Description
Largest mothers', babies’, and kids' products brand in the Asia Pacific region (ex-China) in terms of product
assortment as of March 31, 2024, according to Redseer. It is also the largest multi-category mothers',
babies', and kids' products brand in India in terms of GMV, for FY2024, per Redseer. It sells products for new-
born babies to children aged six years, across apparel, footwear, diapers, wipes, baby gear, nursery, toys and
Babyhug
personal care categories. Its products have been purchased by 16 mn+ parents across India, UAE and KSA,
as at March 31, 2024, and offer comfort, functionality, style and convenience. In addition to the FirstCry
online platform, its products are also available in 768 Firstcry modern stores, 290 exclusive BabyHug modern
stores and 160k+ retail outlets (incl. pharmacies) across India as at March 31, 2024.
Exclusive babies' and kids' footwear sub-brand under BabyHug and has the largest product assortment of
Cutewalk
babies', and kids' footwear products in India as at March 31, 2024, according to Redseer.
Product offering for children aged 4-12 years. It is a clothing, footwear, accessories, toys, sports, education
and lifestyle brand that focuses on offering high quality, trendy, comfortable, functional, value-for-money and
Pine Kids safe products. Pine Active is a sports wear range Kids which provides comfortable athleisure wear with
more than 350 styles available as at March 31, 2024. It also has a bath and skin care range focused on
tweens and teens.
Premium brand for baby fashion products available in more than 10,800 styles. A majority of the products
under this brand are made out of premium soft organic fabrics and supima cotton.
Babyoye
In 2021, Firstcry launched a footwear range under this brand that currently offers more than 1,700 unique
premium footwear styles.
Full-stack platform with control over manufacturing and supply chain

As of March 31, 2024, Firstcry had a network of over 900 contract manufacturers across India and
overseas for its home brands, excluding contract manufacturers engaged by Globalbees brands and its
subsidiaries. By controlling the manufacturing process, it exercises greater control over product quality
and obtains improved gross margins. Its in-house developed product lifecycle management system
(PLM) helps manage each stage of the production cycle, thereby providing control on production
management with agility. The onboarded manufacturers also follow rigorous guidelines specified across
categories. With these carefully curated manufacturers and quality control processes, the company aims
to ensure consistency in product offerings. As of March 31, 2024, Firstcry’s multi-brand retailing platform
had an integrated supply chain consisting of 80 warehouses and stockists across 70 cities in India, with
a total capacity of 3.18 mn sq. ft., supporting 1,063 modern stores and a network of 567 distributors and
1,312 sub-distributors further enabling swift supply to more than 160,842 general trade/modern trade
retailers. As of March 31, 2024, Firstcry provides same-day delivery in 45 cities and next-day delivery in
1,043 cities in India for certain products.
The manufacturing and supply chain network, coupled with a custom-built technology platform, enables
it to follow an auto-replenishment ordering model for modern stores. This auto-replenishment model is
backed by demand forecasting, demand-based inventory management, product assortment and curation
and smart supply chain operations.
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Snapshot of the Firstcry technology platform
Back-end supply chain becoming more agile
As of March 31, 2024, the multichannel retailing platform had an integrated supply chain consisting
of 80 warehouses and stockists across 47 cities in India, with a total capacity of 3.18 mn sq. ft,
supporting 1,063 modern stores.
As of March 31, 2024, it provided same-day delivery in 45 cities and next-day delivery in 1,043 cities
in India for certain products (that are listed under the ‘same-day delivery’ and ‘next-day delivery’
categories on the website) through own and third-party logistics service providers.
Its third-party logistics service providers include BusyBees Logistics Solutions Private Limited, Ecom
Express Limited, Gati Limited, Safe Express Limited and TCI India Limited to execute deliveries, and
ensure smooth and efficient delivery of products from own warehouses to customers.
This widely distributed supply chain network helps to control logistics and overhead costs, while
maximizing customer satisfaction.
Store inventory linked to central systems; in-house staff training
Each modern store uses a cloud POS software, which is built in-house, continuously upgraded and
updated, and customized to suit business needs.
It also developed tools such as an ARS, which help replenish products at all modern stores. This
automates the supply chain and ensures availability of products for customers, while reducing errors
and overheads that arise from manual processing.
It also has customer relationship officers working at modern stores, who assist parents in choosing
the right products for their children.
Store staff is trained through the in-house developed virtual ‘FirstCry Academy’, which provides
training to ensure each staff member is well-equipped to assist customers.
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Technology and data-driven, personalized customer journey leads to higher customer engagement
The discovery-led customer journeys, coupled with data accumulated and analyzed from customers’
profiles, historical interactions, location/catchment data, socio-economic data and other channels,
provide a highly personalized tech-enabled shopping experience for parents. By cross-leveraging sales
information between online platform and modern stores, it is able to identify local preferences at the city
and state levels, particularly in fashion merchandise, based on geo-location tags. The data-driven
merchandising approach helps the company curate products that focus on market fit, ongoing demand
and evolving customer trends, for both online and offline retail. Lastly, through centralized inventory
management, it is able to merchandise inventory efficiently. Sales information across online platform
and modern stores helps it drive auto replenishment algorithms for modern stores, which coupled with
warehouse and logistics networks, helps modern stores remain capital efficient. The auto replenishment
algorithms cover categories ranging from consumables to complex categories such as baby and kids’
fashion.
Backward integration with own diaper manufacturing facilities
Two of Firstcry’s subsidiaries Swara Baby (86.0% stake) and Solis Hygiene (79.3% stake) manufacture
diapers for home brands and Baby and Solis Hygiene, manufacture diapers for home brands and other
third-party diaper brands.
Snapshot of Firstcry’s diaper manufacturing ecosystem (mn)

2021 2022 2023 2024 1QFY24
Swara baby
Installed capacity (mn) 382 800 1,174 1,174 293
Production (mn) 286 528 755 848 197
Capacity utilization (%) 75 66 64 72 67
Solis Hygiene
Installed capacity (mn) 155 265 66
Production (mn) 91 245 42
Capacity utilization (%) 59 92 64
Related party transactions (Rs mn)
Swara baby
Purchase of Traded Goods 305 1,040 2,066 1,944 708
Investment Made 874 — — — 2,642
Interest Income — 2 22 33 8
Loan Given — — 400 50 —
Competition from quick commerce: Limited impact
According to Redseer, apparel and accessories were the largest contributor (~68%) to childcare products
revenue in FY2024. We believe this category is the least likely to be disrupted by quick commerce (q-
commerce), given the inability of q-commerce to provide a larger number of SKUs, a discovery-driven
purchase process, returns and others. We have seen some sporadic instances of branded products being
available on q-commerce platforms (Blinkit), though it is unlikely these platforms will significantly
increase the availability of these items.
An in-depth analysis of SKUs available on Firstcry’s portal and on QC platforms indicates these platforms
carry only 0-1% of the number of SKUs available on Firstcry’s platform across categories such as
diapering, bath and health, toys and gaming, gear, feeding and nursery and moms. The overall difference
in assortment is very stark with our analysis totaling ~101k SKUs for Firstcry across these categories
compared with <1,000 SKUs for q-commerce. The revenue difference may however not be as stark, as
q-commerce would logically sell products that may have a lower ASP, but higher sales velocity.
We note that our tabulated SKU count for Firstcry across four key categories totals 101k, covering a
relatively small set of the 1.3 mn+ SKU count claimed by the company. This is because our analysis
excludes apparel and footwear categories, which we believe form a relatively large part of Firstcry’s
assortment. We believe q-commerce may not stock these products for the foreseeable future.
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Firstcry has a fairly limited SKU overlap with QC portals

SKU count across categories on Firstcry and different e-commerce portals (#)
Average QC count as
SKU count (#) a % of Firstcry's count
Category Firstcry Blinkit Zepto Big Basket QC - average (%)
Diapering, Bath and Health 21,898 242 246 267 252 1.1
Toys and Gaming 33,092 308 330 82 240 0.7
Gear, Feeding and Nursery 41,871 117 54 70 80 0.2
Moms 4,575 8 1 1 3 0.1
Total 101,436 675 631 420 575 0.6
Note:
(a) Data retrieved from various portals, as of September 19, 2024, for Mumbai delivery.
Source: Company portals, Kotak Institutional Equities
SKU count in diapering, bath and healthcare categories on Firstcry and different e-commerce portals (#)
Average QC count
as a % of Firstcry's
SKU count (#) count
Category Sub-category Firstcry Blinkit Zepto Big Basket QC - average (%)
Diapering Baby Diapers 2,183 106 86 89 94 4.3
Baby Wipes 1,277 12 23 18 18 1.4
Cloth Diapers/ Nappies 3,530 4 11 — 5 0.1
Diaper Bag 1,012 — — — — —
Diaper Changing Pads/Mats 2,065 — — — — —
Diaper Rash Cream 91 6 2 2 3 3.7
Potty Training 691 — — — — —
Bath Baby Creams and Ointments 180 15 18 15 16 8.9
Bathing Accessories 1,185 5 — — 2 0.1
Grooming 854 2 — 2 1 0.2
Lotions, Oils and Powders 1,245 41 45 47 44 3.6
Soaps, Shampoos and Body Wash 1,016 37 38 42 39 3.8
Health Childproofing and Safety 2,020 1 — — 0 0.0
Cleansers and Detergents 535 5 18 4 9 1.7
Medical Care 1,361 — — — — —
Mosquito Repellents and Care 347 1 3 2 2 0.6
Oral Care 1,259 5 — 32 12 1.0
Protection Face Masks and Gear 1,047 2 2 14 6 0.6
Total 21,898 242 246 267 252 1.1
Note:
(a) Data retrieved from various portals as of September 19, 2024, for Mumbai delivery.
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SKU count in toys and gaming categories on Firstcry and different e-commerce portals (#)
Average QC count as
SKU count (#) a % of Firstcry's count
Toys and Gaming Action Figures and Collectibles 641 9 8 1 6 0.9
Art Crafts and Hobby Kits 1,750 34 11 8 18 1.0
Baby Rattles 846 7 4 1 4 0.5
Bath Toys 308 3 — — 1 0.3
Board Games 1,636 54 47 30 44 2.7
Building Blocks, Construction Sets and
1,573 28 23 — 17 1.1
Stacking Toys
Dolls and Dollhouses 886 20 12 — 11 1.2
Indoor and Outdoor Play Equipment 1,860 — — — — —
Kids Musical Instruments 562 — 3 — 1 0.2
Kids Puzzles 3,772 10 13 7 10 0.3
Learning and Educational Toys 4,831 18 13 2 11 0.2
Musical Toys 2,068 9 20 — 10 0.5
Play Gyms and Playmats 409 1 — — 0 0.1
Push and Pull Along Toys 710 4 11 2 6 0.8
Radio and Remote Control Toys 609 8 10 — 6 1.0
Role and Pretend Play Toys 1,054 4 6 3 4 0.4
Soft Toys 2,517 35 70 — 35 1.4
Sports and Games 4,051 24 18 28 23 0.6
Toy Cars, Trains and Vehicles 2,378 32 56 — 29 1.2
Toy Guns and Vehicles 631 8 5 — 4 0.7
Total 33,092 308 330 82 240 0.7
Note:
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SKU count in gear, feeding and nursery categories on Firstcry and different e-commerce portals (#)
Average QC count as
a % of Firstcry's
SKU count (#) count
Gear Baby Car Seats 634 — — — — —
Baby Carriers 363 — — — — —
Baby Carrycots 77 — — — — —
Baby Strollers and Prams 675 — — — — —
Baby Walkers 608 — — — — —
Bouncers, Rockers and Swings 355 — — — — —
High Chairs and Booster Seats 448 — — — — —
Ride-ons and Scooters 1,859 — — 2 1 0.0
Tricycle and Bikes 739 1 — — 0 0.0
Feeding Baby Food and Infant Formula 728 22 42 31 32 4.3
Bibs and Hanky 1,834 1 — — 0 0.0
Breast Feeding 1,046 1 2 - 1 0.1
Dishes and Utensils 3,177 — — — — —
Feeding Accessories 1,556 20 — — 7 0.4
Feeding Bottles Cleaning 294 1 — 2 1 0.3
Feeding Bottles and Teats 1,117 6 3 15 8 0.7
Kids Food and Nutritional Supplements 2,421 28 2 18 16 0.7
Sippers and Cups 1,641 4 1 1 2 0.1
Sterilizers and Warmers 84 1 — — 0 0.4
Teethers and Soothers 1,763 9 — 1 3 0.2
Nursery Baby Bedding Sets and Pillows 3,659 2 3 — 2 0.0
Baby Furniture 833 — — — — —
Blankets, Wrappers and Sleeping Bags 4,394 2 — — 1 0.0
Clocks 140 — — — — —
Kids Accessories 8 17 1 — 6 75.0
Kids Furniture 947 — — — — —
Kids Room Décor and Furnishing 4,386 — — — — —
Mattresses and Mattress Protectors 885 — — — — —
Mosquito Nets 1,492 2 — — 1 0.0
Storage and Organization 1,728 — — — — —
Travel Accessories 510 — — — — —
Wall Paper and Sticker 1,470 — — — — —
Total 41,871 117 54 70 80 0.2
Note:
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SKU count in maternity categories on Firstcry and different e-commerce portals (#)
Average QC count as
SKU count (#) a % of Firstcry's
count
Moms Maternity Bottom Wear 335 — — — — —
Maternity Dresses and Skirts 1,220 — — — — —
Maternity Ethnic Wear 510 — — — — —
Maternity Footwear 51 — — — — —
Maternity Lingerie 998 — — — — —
Maternity Personal Care 53 — — — — —
Maternity Support Accessories 363 — — — — —
Maternity Tops 314 — — — — —
Nursing/Sleep Wear 675 — — — — —
Nutritional and Lactation Supplements 56 8 1 1 3 6.0
Total 4,575 8 1 1 3 0.1
Note:
(a) Data retrieved from various portals as of September 19, 2024, for Mumbai delivery.
Globalbees: House of brands
Firstcry co-founded Globalbees brands, a platform to scale up D2C brands across online and offline
channels. These brands can leverage Firstcry’s expertise in creating and scaling brands and its multi-
brand distribution network, sourcing capabilities, supply chain infrastructure and integrated technology
ecosystem.
Globalbees, operating as a subsidiary, targets D2C brands across categories such as beauty, personal
care, home, kitchen, food and lifestyle. To date, the company has invested Rs6.2 bn in Globalbees for a
controlling interest of 50.23% on a fully diluted basis.
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Snapshot of Globalbees house of brands
Globalbees is a subsidiary of Firstcry and investees of Globalbees are step-down subsidiaries of Firstcry.
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Globalbees’ investees are step-down subsidiaries of Firstcry

List of subsidiaries
Company Industry/Business Share (%)
Wholly-Owned Subsidiaries
Digital Age Retail Pvt Ltd Baby Products 100
Intellibees Solutions Pvt Ltd (formerly Lightning Bolt
Logistics Pvt Ltd) 100
Firstcry Management DWC-LLC 100
Shenzhen Starbees Services Ltd 100
Joybees Pvt Ltd 100
Other Subsidiaries
Swara Baby Products Pvt Ltd Baby Products NA
Globalbees Brands Pvt Ltd Brand Acquisition and Building 52
Firmroots Pvt Ltd
Solis Hygiene Pvt Ltd
Step Down Subsidiaries
Frootle India Pvt Ltd Appliances 51
Kuber Mart Industries Pvt Ltd Homecare Products 74
Maxinique Solutions Pvt Ltd Beauty Products 51
Merhaki Foods and Nutrition Pvt Ltd Nutritional Products 100
Firstcry Retail DWC-LLC
Firstcry Trading Company (Single member Foreign LLC)
Firstcry General Trading LLC
Better and Brighter Homecare Pvt Ltd Homecare Products 58
Eyezen Technologies Pvt Ltd Eyewear Products 51
Cloud Lifestyle Pvt Ltd FMCG 90
HealthHey Foods LLP Nutritional Products 60
The Better Home Homecare Products NA
Yellow Chimes Personal Care Products NA
Butternut Venutures Pvt Ltd FMCG 76
Mush Textiles Pvt Ltd Textile Products 52
Dynamic IT Solution Pvt Ltd Fitness Products 51
HS Fitness Pvt Ltd Fitness Products 80
DF Pharmacy Ltd Homecare Products 74
Urban Gabru Nutritional Products 60
Candes Technologies Pvt Ltd FMCG 76
Savya Homes Home Utilities NA
Cheston Appliances NA
Solarista Renewables Pvt Ltd Fashion/Lifestyle 53
Encasa Homes Pvt Ltd Home Utilities 51
Wellspire India Pvt Ltd Appliances 51
Prayosha Expo Pvt Ltd Home Utilities 70
JW Brands Pvt Ltd Fashion/Lifestyle 53
Plantex E-Commerce Pvt Ltd Home Utilities 60
Kitchenopedia Appliances Pvt Ltd Appliances 51
Yellow Chimes (B2B) Fashion/Lifestyle NA
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Globalbees’ top-5 investee companies posted combined revenue of Rs7.6 bn in FY2024

Key financials of top-4 subsidiaries, March fiscal year-ends (Rs mn)
2023 2024 Yoy growth (%)
Frootle India Pvt Ltd
Revenue 1,589 3,062 93
EBITDA 228 665 191
PBT 229 672 193
PAT 169 505 199
Kuber Mart Industries Pvt Ltd
Revenue 1,174 1,090 (7)
EBITDA 107 (16)
PBT 22 (78)
PAT (14) (18)
Maxinique Solutions Pvt Ltd
Revenue 69 27 (61)
EBITDA (219) (191)
PBT (218) (189)
PAT (219) (189)
Merhaki Foods and Nutrition Pvt Ltd
Revenue 2,250 3,444 53
EBITDA (175) (301)
PBT (199) (435)
PAT (198) (435)
Key financials of Globalbees brands, March fiscal year-ends (Rs mn)

2022 2023 2024
Revenue 1,050 8,972 12,093
EBITDA (92) (447) 23
EBIT (123) (1,408) (964)
PAT (409) (1,288) (1,366)
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Future growth strategy: More customers, multi-brand, new adjacencies

Firstcry’s future growth strategy focuses on getting more customers, strengthening offline and
online touchpoints, and exploring new markets and product lines. It intends to do this by ensuring
the right content, curation and assortment for customers, driving higher value for both brand
partners and consumers. The company intends to expand own portfolio and expand general trade
retail distribution of home brands and grow the Globalbees house of brands.
Grow customer base by investing in brand, technology, products and membership program
Annual unique transacting customers’ base over the years has expanded from 5.4 mn, as of March 31,
2021, to 9.9 mn, as of September 30, 2024, by consistently investing in brand, technology, products and
(since June 2021) the Firstcry Club Membership Program. It will continue to invest in increasing brand
awareness (by continuing marketing, business promotion and Firstcry Club activities) and brand salience
(by carefully expanding the assortment of products and SKUs, and maintaining the Firstcry parenting
community). The company will also further invest in technology to elevate its customer experience, and
provide personalized, enjoyable and multi-brand customer journeys. These strategic actions may also
help convert more cross-sell/up-sell opportunities into transactions. To ensure the right curation and
assortment of products for customers on the platform, it will also continue to grow the network of brand
partners.
Strengthen multi-brand capabilities across India and international markets

Firstcry has a multi-brand footprint to serve customers. As of March 31, 2024, it had 1,063 modern stores
(with 2.12 mn sq. ft retail space) across India, implying 2k sq. ft of area per store. Its mobile application
in India has been downloaded more than 127 mn times, as of March 31, 2024. Furthermore, the relatively
recent Firstcry Arabia (the UAE and the KSA) mobile application has been downloaded 2.71 mn times.
The company aims to invest toward the expansion of its modern store network by adding both new
stores and newer formats of stores across India and international markets. It will also continue to invest
in people, technology and infrastructure to build further capabilities for delivering an integrated multi-
brand shopping experience. The multi-brand business model will enable it to deliver superior operating
margins, which in turn, will act as a competitive advantage.
Firstcry has a pan-India offline presence with 1,063 stores as of March 31, 2024
Firstcry store footprint
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Firstcry’s RHP mentioned its ambition to add a cumulative 193 COCO stores and 162 over FY2025-
1HFY27 from IPO proceeds. Actual store addition may be higher, as the company can use internal
accruals to add more stores.
Store addition plans of Firstcry India, March fiscal year-ends (#)
2025E 2026E 1HFY27

New COCO stores (#) 38 89 66
Capex (Rs mn) 176 431 332
New digital age stores (#) 36 72 54
Capex (Rs mn) 359 748 583
Expand retail distribution network of home brands and brands acquired by Globalbees
Firstcry has started building a network of distributors and retailers across India to increase the presence
of home brands and brands acquired by Globalbees brands on store shelves, across ‘mom-and-pop’
stores, pharmacies, supermarkets and hypermarkets. This would highly expand the reach of its home
brands beyond its current presence on the website, mobile app and Firstcry and Babyhug modern stores.
The expanded retail distribution network will also help to increase the visibility and market penetration
of home brands in India and internationally.
Invest in manufacturing of baby and kids’ products, and supply chain capabilities
The company wants to expand manufacturing capabilities for toys, diapers and baby and kids’ apparel
categories in India by growing its network of contract manufacturers and increasing the manufacturing
capacity of subsidiaries. The expanded manufacturing capabilities will provide greater control over
product quality and assortment, achieve faster turnaround, ensure supply chain security and increase
gross margins. It also aims to invest in additional warehouses and last-mile delivery capabilities to
provide a better customer experience.
Continue to expand portfolio of home brands and Globalbees’ house of brands

By identifying market gaps and building innovative products to address consumer needs by leveraging
marketing and consumer insights, Firstcry aims to increase the product offerings in its current owned
brand portfolio across business verticals and add newer long-term focused brands. It will continue to
assess and expand the portfolio of India and global D2C brands (other than mothers’, babies’ and kids’
brands) in Globalbees house of brands through strategic investments and acquisitions, online platform
distribution relationship, brand licensing arrangements, and OEM relationships.
Selective expansion in international markets

As Firstcry grows its customer base in India, it will aim to selectively explore international expansion. It
will continue to selectively assess other international markets either through organic or inorganic
expansion. The key criteria for expansion into international markets include favorable demographics,
market size and growth potential, benign competition in relevant product categories, and scope of
scaling up the business to provide a multi-brand experience to customers in these countries. According
to RedSeer, it is the largest specialist online mothers', babies' and kids' product retail platform in the UAE,
in terms of GMV, for CY2022. Furthermore, it is the largest online-first mothers', babies' and kids' product-
focused retail platform in the KSA, according to the Redseer Report.
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Key risks: Slower growth, expansion risks in new markets, brand relationships
We highlight the following risk factors for Firstcry: (1) Slower growth in number of customers, (2)
risks from expansion into new markets and categories, (3) dependence on third-party
manufacturers and suppliers for home brands, (4) regulatory risks and (5) health-related
disruptions such as Covid 19.
Slower growth in consumer base could negatively impact revenues

The success of Firstcry platform depends on the user interface of the platform, the consumer experience
for both online and offline stores, and the effectiveness of its marketing strategies. As the consumer
base is highly diverse, spanning different age groups, gender and consumer profiles, their needs and
preferences also vary. Consumers can be price and value sensitive, have different preferences and
personal requirements, fashion styles or possess a preference for products, which Firstcry does not
offer. Any inability to continuously generate and maintain new, relevant and engaging content, including
user-generated content, to cater to the consumer base may result in a failure to meaningfully engage
and provide a satisfying experience for each consumer, which could result in its inability to retain
consumers and consequently affect business.
Failure to successfully integrate acquisitions and investments

Firstcry has acquired and invested in businesses, technologies, services and products in recent years,
such as the acquisitions of controlling stakes in Globalbees brands, Swara Baby, Firmroots, Solis
Hygiene and the acquisition of Digital Age. The company has invested Rs6.2 bn in Globalbees brands
and holds 50.23% stake on a fully diluted basis. Integration of newly acquired businesses may be costly
and time-consuming, and each acquisition could present the company with risks and difficulties in
integration, including the alignment of people culture.
Risk around foray into international geographies

Firstcry also offers products online in the United Arab Emirates and has expanded its presence in other
jurisdictions outside of India, including the KSA. International operations are typically subject to inherent
risks such as the impact of adverse geo-political and economic conditions in foreign countries affecting
the customers’ confidence and purchasing power and behavior, greater difficulty in collecting accounts
receivables, expenses associated with the localization of products, costs of staffing and managing
foreign operations, reduced protection for intellectual property rights in some countries, foreign currency
risk, changes in customs laws and regulations, trade and financing barriers, differing business practices,
and economic instability or political unrest.
Reliance on third-party manufacturers and suppliers for home brands

Firstcry also outsources the manufacturing of its home brand products to third-party manufacturers in
India and certain other countries. Sale of home brand products, including the products governed under
the Bureau of Indian Standards (BIS), among others, subjects it to (1) dependency on third-party
manufacturers engaged to manufacture its home brand products, (2) dependency on overseas
manufacturers and suppliers for certain products and raw materials, (3) challenges related to the imports
of products and raw materials and (4) limitations regarding the return of products due to operational and
regulatory challenges and changing import regime. The contribution of revenues from the sale of home
brands (in particular, BabyHug) has consistently grown over prior periods. As a result, any adverse impact
on one or more home brands (for example, a decline in the sales of its home brands) could have a
significant impact on the overall business.
Reliance on Xpressbees (Busybees) for logistics needs

Firstcry paid Rs2.9 bn to Xpressbees (Busybees Logistics Solutions Private Ltd) in FY2024 toward
logistics costs. This is sharply higher than Rs421 mn paid to the next nine suppliers in FY2024. Disruption
of operations or any other issue at Xpressbees could result in disruption in Firstcry’s logistics and
delivery, and may result in loss of revenue.
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Changing regulations in India could lead to new compliance requirements

The regulatory and policy environment in which Firstcry operates is continuously evolving and is subject
to change. The government of India (GoI) may implement new laws or other regulations and policies that
could affect the manufacturing, retail and e-commerce industries in general, which could lead to new
compliance requirements. Certain amendments were proposed to the Consumer Protection
(ecommerce) Rules, 2020, which included registration requirements for e-commerce entities, restrictions
on conducting ‘flash sales’ of goods and services offered by e-commerce entities on their platforms,
restrictions on the use of the brands associated with the e-commerce entity for promotion or offer for
sale of goods/services, introduction of a ‘fallback liability’ on e-commerce entities, expanding the scope
of the definition of ‘e-commerce entity’ to include related parties, requirement to disclose sponsored
listings, ranking parameters, restrictions on cross-selling, sales through related-parties, and more. Such
and other new compliance requirements could substantially increase the costs or otherwise adversely
affect the business, financial condition, cash flows and results of operations. Additionally, there are, and
will likely continue to be, an increasing number of laws and regulations pertaining to the internet and e-
commerce that may relate to liability for information retrieved from or transmitted over the internet,
display of certain taxes and fees, user privacy, data security and others. These might adversely impact
the company’s operations.
Health-related disruption in the future, similar to Covid 19, might affect operations
Firstcry’s operations could be adversely affected by any health epidemics in the future such as the Covid
19 pandemic, which saw several restrictions/curfews on businesses, individuals and others at the
national and local levels. The company saw the temporary closure of stores and disruptions in
operations of its contract manufacturers, resulting in supply chain and inventory management risks,
reducing the company’s ability to fulfill orders in a timely manner, disrupting the efficient operation of
logistics infrastructure, affecting the ability of delivery companies to make deliveries or of its vendors or
manufacturers to initiate the delivery due to various restrictive measures imposed by governmental
authorities. Pandemics similar to Covid 19 could also result in certain of the company’s brand
relationships, manufacturers, vendors and advertisers experiencing downturns or uncertainty in its own
business and operations, including closure of operations temporarily, and in some cases, permanently,
which in turn, may result in decreased income for Firstcry. Lastly, its business also depends on the ability
and willingness of customers to visit its physical stores. Customer footfall in its stores in FY2021 was
lower than in FY2020, which impacted growth in income from physical stores over the same year.
Statutory auditors of subsidiary, Firstcry Retail DWC LLC, have observed a going concern risk
Statutory auditors of its subsidiary, Firstcry Retail DWC LLC, have observed material uncertainty related
to going concern in their audit report for FY2023. The auditors observed that the net loss incurred by
Firstcry Retail DWC LLC during FY2023 and its accumulated losses, as of March 31, 2023, indicated a
material uncertainty that could cast significant doubts on its ability to continue as a going concern. There
can be no assurance that any similar observations or remarks will not form part of the financial
statements of the company or subsidiaries in the future, or that such remarks will not affect its financial
condition.
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Financials: Forecast India GMV CAGR of 17.9% over FY2024-27

India multichannel is the most important part of Firstcry’s business. We expect this segment to
report GMV CAGR of 17.9%, revenue CAGR of 17.0% and EBITDA CAGR of 29.5% over FY2024-27.
EBITDA CAGR will be boosted largely by gross margin expansion and operating leverage. For the
international business, we expect GMV CAGR of 22.0% and revenue CAGR of 22.0% over FY2024-
27. We expect EBITDA loss in the business to contract to Rs504 mn in FY2027 from Rs1,396 mn
in FY2024. For Globalbees, we expect revenue CAGR of 25.9% and EBITDA CAGR of 275% over
FY2024-27. For the consolidated entity, we expect a 19.6% revenue CAGR over FY2024-27.
Improvement in profitability across businesses will drive significant reduction in net loss in
FY2026 and a profit in FY2027.
Firstcry’s various businesses include (1) the India multichannel business comprising the online platform
and offline store network, general trade, diaper manufacturing and more, (2) international business in
the UAE and the KSA, (3) pre-school chain in India, Firstcry Intellitots and (4) Globalbees, D2C brands’
aggregator platform.
We model 17.0% revenue growth in the India business, driven by steady increase in transacting users
and AOVs
We expect Firstcry’s India multichannel business to report GMV CAGR of 17.9% and revenue CAGR of
17.0% over FY2024-27. GMV CAGR will be driven by a 13.3% CAGR in transacting customers, a 13.9%
CAGR in orders and 3.5% in AOV over FY2024-27. Over FY2021-24, Firstcry’s customer base increased
at a CAGR of 18.5% to 8.7 mn ATCs in FY2024.
We believe Firstcry’s customer base can witness a steady increase, as customer awareness improves
and marketing efforts by Firstcry drive new customer acquisitions. AOV increase over time will be driven
by price inflation, premiumization by customers, purchase of more items (larger product baskets) and
others.
Gross merchandise value (GMV) of Firstcry’s India Customer count of Firstcry’s India mutli-channel
mutli-channel business, March fiscal year-ends (Rs bn) business, March fiscal year-ends (mn)
GMV (Rs bn) Customers (mn)

(Rs (mn)
140 14 12.6
124.2
120 12 11.3
106.0
10.1
100 90.2 10 8.7
75.8 7.7
80 8 6.7
63.8
60 52.4 6 5.2
36.1
40 4
20 2
- -
2021 2022 2023 2024 2025E 2026E 2027E 2021 2022 2023 2024 2025E 2026E 2027E
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities
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Order count of Firstcry’s India mutli-channel Average order value (AOV) of Firstcry’s India mutli-
business, March fiscal year-ends (mn) channel business, March fiscal year-ends (Rs)
Orders (mn) AOV (Rs)

(mn) (Rs)
60 3,000
50.3 2,468
50 44.9 2,500 2,271 2,361
2,156 2,226
39.7 2,043
1,933
40 34.1 2,000
29.6
30 25.7 1,500
18.7
20 1,000
10 500
- -
2021 2022 2023 2024 2025E 2026E 2027E 2021 2022 2023 2024 2025E 2026E 2027E
We forecast GMV CAGR of 18% over FY2024-27 for the India multichannel business
Key operating metrics of Firstcry, March fiscal year-ends, 2021-24
CAGR (%)
Unit 2021 2022 2023 2024 2025E 2026E 2027E 2024-27
India
Orders mn 18.7 25.7 29.6 34.1 39.7 44.9 50.3 13.9
Yoy growth % — 45 22 19 19 18 17
International
Orders mn 0.7 1.1 1.4 1.8 2.1 2.5 3.0 18.8
Yoy growth % — 48 57 75 22 22 22
Notes:
(a) Revenues exclude other income.
(b) Annual unique transacting customers are defined as unique users that made at least one purchase on the Firstcry platform during the preceding 12 months on
the reporting date.
(c) Orders are defined as total orders across website, mobile application and Firstcry and Babyhug modern stores, including those operated by Digital Age and
franchisees prior to product returns.
(d) Average order value (AOV) is GMV generated across the Firstcry website, mobile application and Firstcry and Babyhug modern stores divided by orders
considered for such GMV.
(e) Gross merchandise value (GMV) is defined as the monetary value of orders inclusive of taxes and gross of discounts, if any, across the Firstcry website, mobile
application and Firstcry and Babyhug modern stores (both company-owned stores and franchisee stores), net of order cancellations, franchisee commission, net of
shipping and cash on delivery charges and prior to product returns.
(f) India: India represents Firstcry platform operated by the company across the Firstcry website (www.Firstcry.com), mobile application and Firstcry and Babyhug
modern stores, including those operated by Digital Age and franchisees. Prior to the acquisition of Digital Age, the company’s physical stores were operated through
Digital Age as franchisee.
(g) International: International represents Firstcry platform operated through its subsidiary company Firstcry Management DWC – LLC (and its subsidiaries) in Dubai
through its website www.Firstcry.ae. Firstcry Trading KSA through its website www.Firstcry.sa.
(h) International revenues are gross of inter-segment elimination.
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Firstcry earns revenue from the sale of goods and advertising revenue
Revenue profile of Firstcry, March fiscal year-ends (Rs mn)
2021-24 CAGR
2021 2022 2023 2024 (%)
Sale of products
Sale of goods 15,588 23,235 55,194 63,255 60
Other operating revenue
Internet display charges 408 635 753 926 31
Other operating revenue 32 143 378 628 168
Total revenues 16,029 24,013 56,325 64,809 59
Proforma revenues 35,975 52,622 64,809
Notes:
(b) Pro forma revenues include the impact of Digital Age consolidation FY2022 onward.
We expect overall ATU to increase at a CAGR of 13.3% over FY2024-27; India ATU to increase at a CAGR of
13.3%
Annual unique transacting customers of Firstcry, March fiscal year-ends (mn)
India International
14.0
0.6
12.0
0.6
10.0 0.5
0.4
8.0 0.3
0.2
6.0 12.6
0.2 11.3
10.1
4.0 8.7
7.7
6.7
5.2
2.0
-
2021 2022 2023 2024 2025E 2026E 2027E
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We expect overall orders to increase at CAGR of 14.1% in FY2024-27; India orders to report CAGR of 13.9%
Orders of Firstcry, March fiscal year-ends (mn)
India orders International orders

60
3.0
50
2.5
40 2.1
1.8
30 1.4
1.1 50.3
44.9
20 0.7 39.7
34.1
29.6
25.7
10 18.7
0
2021 2022 2023 2024 2025E 2026E 2027E
We expect overall GMV to report CAGR of 18.5% over FY2024-27; India GMV to increase at a CAGR of 17.9%
GMV details of Firstcry, March fiscal year-ends (Rs mn)
International GMV (Rs bn) India online GMV (Rs bn) India offline GMV (Rs bn)
140
120
27.0
25.0 26.0
100 24.0
20.0 22.0 23.0
80
73.0
60 74.0
76.0 75.0
80.0 78.0 77.0
40
20
22.8 27.9
15.4 18.7
3.8 5.6 8.8
0
2021 2022 2023 2024 2025E 2026E 2027E
India business: Online dominates, though offline is on the rise
In the India business, online GMV comprised 76.9% of the overall GMV in FY2024. This proportion
changed marginally from 81.6% in FY2022. We expect the offline channel’s contribution to the overall
GMV to increase marginally. This will be due to aggressive store addition in the offline channel.
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Online formed ~77% share of overall GMV in Firstcry’s India business in FY2024
GMV share of online and offline channels of Firstcry’s India multichannel business, March fiscal
year-ends (% India GMV)
India online GMV (%) India offline GMV (%)

100
90 20.0 18.4 22.6 23.1 25.0 26.0 27.0
80
70
60
50
40 80.0 81.6 77.4 76.9 75.0 74.0 73.0
30
20
10
-
2021 2022 2023 2024 2025E 2026E 2027E
We expect profitability to improve across businesses

Firstcry’s India business adjusted EBITDA margins improved to 8.8% in FY2024 from 6.2% (pro forma
financials) in FY2023. 1HFY25 margins came in at 8.5%; 2H typically witnesses higher margins and
should pull up the FY2025 margin performance. We reckon this improvement is driven by (1) steady
gross margin improvement, driven by lower discounts, platform fee and attempts to curb the
percentage of returns, (2) maturing cohort of offline stores, (3) reduction in advertising costs , as a
percentage of revenue and (4) operating leverage. We believe there is room for Firstcry to further
improve its margins in the India business by improving gross margins and share of its private label
further. This would be driven by better margins in its large apparel category (RM cost tailwinds,
vendor consolidation), optimization of advertising expense and further operating leverage .
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We model consolidated revenue CAGR of 20% and EBITDA CAGR of 53% over FY2024-27
Segmental metrics of Firstcry, March fiscal year-ends (Rs mn)
FY2024-27E
2023 2024 2025E 2026E 2027E CAGR (%)
Revenue from operations 52,622 64,809 78,788 93,867 110,968 19.6
India 39,105 45,795 54,257 63,119 73,429 17.0
International 4,875 7,537 9,185 11,205 13,680 22.0
Globalbees 8,972 12,093 15,963 19,954 24,136 25.9
Others 230 334 400 678 887 38.5
Inter company adjustments (559) (950) (1,017) (1,088) (1,164)
Revenue share (%)
India 74.3 70.7 68.9 67.2 66.2
International 9.3 11.6 11.7 11.9 12.3
Globalbees 17.0 18.7 20.3 21.3 21.8
Others 0.4 0.5 0.5 0.7 0.8
Adjusted EBITDA 772 2,724 4,433 6,942 9,747 52.9
India 2,435 4,040 5,325 6,989 8,774 29.5
International (1,201) (1,396) (1,280) (960) (504)
Globalbees (447) 23 356 733 1,234 274.8
Others (31) 57 31 181 244 62.3
Inter company adjustments 15 - - - -
Adjusted EBITDA margin (%) 1.5 4.2 5.6 7.4 8.8
India 6.2 8.8 9.8 11.1 11.9
International (24.6) (18.5) (13.9) (8.6) (3.7)
Globalbees (5.0) 0.2 2.2 3.7 5.1
Others (13.3) 17.1 7.8 26.7 27.5
Notes:
(b) Digital Age was acquired by Brainbees in FY2023. FY2023 financials are hence not comparable with future years.
By FY2027, we expect Firstcry’s India multichannel business to report a ~12% adjusted EBITDA margin,
which is ~70 bps lower than Nykaa’s core BPC business (excluding eB2B) margin of 12.6%. We believe
this margin alignment will be driven by relatively lower competitive intensity in Firstcry’s India business
and superior marketing spends efficiency, which we believe is a function of lower competitive intensity
in the case of Firstcry.
Firstcry’s India multichannel business margins can trend toward those of Nykaa’s core BPC margins
EBITDA margin profile of Firstcry’s India multichannel business and Nykaa’s core BPC business,
March fiscal year-ends (%)
2023 2024 2025E 2026E 2027E
Firstcry India
EBITDA margin (%) 5.6 8.8 9.8 11.1 11.9
Nykaa BPC
EBITDA margin (%) 11.3 11.3 11.2 12.1 12.6
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Expect investments in marketing and advertisement to become more efficient
Firstcry invests in marketing and advertisement initiatives to acquire new customers, encourage existing
customers to purchase more and enhance brand recognition in new markets. The company has built a
reputation as the leading parenting platform in India by leveraging capabilities in content, social media
engagement and hospital gift box program (provides free gift boxes to mothers who have just given birth,
through partnerships with hospitals and maternity clinics). The efficiency of these spends depends on
its ability to attract and retain customers at reasonable marketing expenses.
We expect ad spends, as a percentage of revenues, to decline to 6.4% for FY2027 from 7.4% in FY2024.
Declining ads and sales promotion costs as a proportion of revenue

Advertising and sales promotion cost of Firstcry, March fiscal year-ends, 2021-2027E
Advertisement & sales promotion expense (Rs bn, LHS)

(%) Advertisement & sales promotion expense (% of revenues. RHS)
8 11.2 12
10.2
7
10
6
7.4 7.4 7.1
6.6 8
5 6.4
4 6
3
4
2
2
1
1.6 2.7 4.2 4.8 5.6 6.2 7.1
0 0
2021 2022 2023 2024 2025E 2026E 2027E
Notes:
(a) Revenues exclude other income in the margin calculations.
(b) Digital Age consolidated May 2022 onward. Figures for prior periods may not be comparable.
Employee expenses: Expect some cost leverage by FY2027
Firstcry’s employee count was 3,499 employees, as of March 31, 2024. Share-based expenses increased
at a CAGR of 57% over FY2021-24. Increase in salaries and higher headcount (due to consolidation of
Digital Age, increase in modern store count, expansion of international operations, and Globalbees
acquisition) drove higher employee costs over the period.
The grant date Fair Value of equity settled share-based payment awards granted to employees is
recognized as an employee expense, with a corresponding increase in equity over the period that the
employees unconditionally become entitled to the awards.
Firstcry has implemented three ESOP schemes with the following details:
ESOP 2011. As on the date of the RHP, under ESOP 2011 scheme, 6,708,915 options have been
granted, 1,513,285 options have vested, 3,263,303 options have been cancelled (relinquished) and
1,907,161 options have been exercised.
ESOP 2022. As on the date of the DRHP, under ESOP 2022, out of the total 27,702,068 options,
25,905,635 equity shares were issued to Brainbees ESOP Trust on December 27, 2023, 24,290,976
options were granted, 4,290,018 options were vested and nil options were exercised.
ESOP 2023. As on the date of the DRHP, under ESOP 2023, out of the total 24,834,508 options,
14,900,705 equity shares were issued to Brainbees ESOP Trust on December 27, 2023, and no options
have been granted.
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The grant of options on account of these schemes would result in higher ESOP expense in FY2025-26
with some reduction FY2027 onward.
The company had 519.2 mn diluted shares, as of September 2024. After accounting for 3.4 mn of time-
based ESOPs and 9.9 mn of performance-based ESOPs, the company’s fully diluted share count would
be 533 mn shares.
We expect total employee cost, as proportion of revenue, to come off over FY2024-27
Details of employee cost of Firstcry, March fiscal year-ends, 2021-27E (Rs mn)
2021-27E CAGR
2021 2022 2023 2024 2025E 2026E 2027E (%)
Employee cost excluding share-based expenses (Rs mn) 1,679 2,467 4,084 5,084 6,188 7,270 8,509 31
Share-based expenses (Rs mn) 458 921 3,614 1,781 3,271 3,282 2,097 29
Total employee cost (Rs mn) 2,138 3,388 7,698 6,865 9,459 10,552 10,606 31
Employee cost as percentage of revenue from operations (%) 13.3 14.1 13.7 10.6 12.0 11.2 9.6
Besides ad spends, other expenses comprise rent, selling and distribution along with G&A expense and
others. It also includes logistics and other expenses relevant to the businesses.
We expect consolidated EBITDA margin to increase to 6.9% by FY2027 from 1.1% in FY2024
Cost profile of Firstcry, March fiscal year-ends (% of revenues from operations)
2023 2024 2025E 2026E 2027E
Gross profit margin 32.9 34.4 35.8 37.1 38.2
Advertisement & sales promotion expense 7.4 7.4 7.1 6.6 6.4
Employee expenses 14.7 10.6 12.0 11.2 9.6
Other expenses 16.8 15.3 15.3 15.4 15.3
EBITDA margin (6.0) 1.1 1.5 3.9 6.9
We note that Ind AS adjustments have a negative impact on Firstcry’s P&L. The company’s store cohort
is relatively young and Ind AS accounting, thereby results in a rental charge on the P&L that is higher than
actual. Ind AS accounting has impacted Firstcry’s PBT negatively by 15-17% over FY2024-1HFY25.
Ind AS accounting has impacted Firstcry’s reported PBT by 15-17%

Pre-Ind AS and Post-Ind AS PBT profile of Firstcry, March fiscal year-ends
2024 1HFY25
Profit (loss) before tax (2,743) (1,080)
IndAS 116 rental cost booked in P&L 2,201 1,190
Actual rental flow 1,776 1,006
Pre-IndAS PBT (2,318) (896)
Difference (%) (15) (17)
Healthy balance sheet with low leverage
As of September 2024, Firstcry had Rs13.8 bn in cash and cash equivalents. Debt on books was Rs5.6
bn. After the fund raise of Rs16.7 bn in the IPO, Firstcry’s cash and cash equivalents have increased.
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Firstcry may have to fund some more losses over FY2026-27

Net cash profile of Firstcry, March fiscal year-ends (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Net cash/(debt) 22,782 21,525 9,830 2,161 12,806 5,262 5,475
Net worth 34,371 35,279 34,563 31,707 48,372 49,739 52,676
Net cash:equity (X) 0.66 0.61 0.28 0.07 0.26 0.11 0.10
Notes:
(a) Net cash refers to cash and cash equivalents, plus other bank balances, plus investments less debt.
As Firstcry operates its COCO stores and online marketplace itself, it needs to invest in working
capital. We expect net working capital days to come off for the India business as inventory
management across businesses becomes more efficient, driven by tighter delivery timelines and
more JIT inventory stocking. In the India business, higher reliance on own brands will also bring down
inventory days. Overall, for the company, significant improvement may take time, as it continues to
grow international business and Globalbees at a rapid pace, which may consume working capital.
We expect net working capital days of Firstcry to remain stable

Working capital profile of Firstcry (as days of sales), March fiscal year-ends
2023 2024 2025E 2026E 2027E
Days of sales
Current assets 145 156 151 145 140
Inventories 83 92 89 87 84
Trade receivables 15 12 11 10 9
Other assets 47 52 50 48 46
Current liabilities 63 70 63 58 55
Trade payables 48 51 49 46 44
Other liabilities 14 17 12 10 10
Provisions 2 2 2 2 2
Net working capital (ex cash) 82 86 88 87 84
Notes:
(a) Other liabilities in FY2023-25E exclude liabilities due to deferred consideration and contingent consideration.
Large intangible asset and goodwill have bulked up the balance sheet
Intangible asset amount has increased in quantum on the balance sheet to Rs15.0 bn, as of March 31,
2024, from Rs0.8 bn, as of March 2021. Goodwill quantum also increased to Rs7.8 bn, as of March 31,
2024, from Rs3.3 bn, as of March 2021. This is on account of M&As undertaken by Firstcry and
Globalbees. Firstcry owns a 50.23% stake in Globalbees, as of March 31, 2024, on a fully diluted basis.
Brands acquired on business combination are initially recognized at Fair Value. After the initial
recognition, the brands are assessed between those having indefinite useful lives and those having
definite useful lives. Brands with indefinite useful lives are recognized at their carrying value less
impairment losses. Brands with definite useful lives are amortized over their estimated useful lives.
Amortization method and amortization period are reviewed by management and changes in the
estimated useful life are made if the same are expected to be used for a shorter period than the initial
estimated period.
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Intangible asset base increased to Rs15.2 bn, as of March 2024

Details of Firstcry’s intangible assets, March fiscal year-ends, 2021-24 (Rs mn)
2021 2022 2023 2024
Computer software 6 8 17 35
Indefinite life Brand value 459 9,657 459 459
Brand value 10 5 15,115 14,295
Contract value 13 8 4 -
Product development 22 31 31 19
Customer Relationship 243 254 183 100
Distribution Network — — 382 258
Content Writting 33 33 30 16
Trade mark 3 6 19 15
Platform 5 3 1 -
Total 792 10,005 16,241 15,198
Firstcry’s balance sheet shows goodwill value of Rs7.78 bn, as of March 2024
Goodwill details of Firstcry, March fiscal year-ends, 2021-24 (Rs mn)
Goodwill (Rs mn)

9,000
7,758 7,782
8,000
7,000 6,418
6,000
5,000
4,000 3,320
3,000
2,000
1,000
-
2021 2022 2023 2024
We expect Firstcry’s cash flow generation to improve, driven by higher profitability, more efficient
working capital cycle and limited M&A.
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We expect Firstcry to generate FCF by FY2027E

Free cash flow statement of Firstcry, March fiscal year-ends (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Cash flow
Operating cash flow before working capital changes 2,053 464 881 2,486 4,609 7,043 9,599
Working capital changes (1,885) (1,971) (5,527) (2,928) (5,409) (9,436) (3,180)
Net finance cost/ income 1,231 779 272 (211) (323) (526) (900)
Cash flow from operations 1,400 (728) (4,374) (654) (1,123) (2,919) 5,519
Capital expenditure (net of asset sales) (955) (7,421) (6,333) 83 (3,849) (2,930) (3,038)
Free cash flow 445 (8,149) (10,707) (571) (4,972) (5,850) 2,481
Notes:
(a) Operating cash flow before working capital changes refers to adjusted EBITDA less taxes.
(b) Net finance cost refers to other income less finance cost.
Multiple acquisitions in the past to strengthen the brand portfolio and other capabilities
We present key acquisitions and business transfer agreements of Firstcry in the table below. Besides
direct acquisitions made by the parent, Globalbees has acquired controlling stakes in 21 companies in
FY2022-24.
Firstcry has made several acquisitions since 2016

Details of acquisitions and business transfer agreements of Firstcry
Acquisition year Company Transaction type Stake of parent (%) Amounts (Rs mn) Acquisition rationale and benefits accrued
Business transfer
2016 BabyOye 100.0 3,621 FOFO stores (sold by Mahindra)
agreements
Oi (People Combine Business transfer
2019 100.0 120 Pre-school chain (5 COCO, 50 FOFO)
Initiatives LLP) agreements
2021 Firmroots Acquisition 89.1 1,139
To manufacture and offer products across
2021 Swara Baby Acquisition 87.8 3,546
categories such as diapers and wipes
2021 Solis Hygiene Acquisition 79.3 373 To manufacture adult diapers
To scale up to scale up D2C brands across
2022 Globalbees brands Acquisition 50.2 6,202
multichannels
To consolidate online platform and business
2023 Digital Age Acquisition 100.0 2,406
through mobile application
Notes:
(a) After the acquisition of Globalbees in June 2021, Globalbees now acquired controlling stakes in 21 entities on a fully diluted basis and entered into business
transfer agreements with five entities.
Firstcry operates its business through subsidiaries. It has (1) nine direct subsidiaries, out of which seven
are Indian subsidiaries and two are foreign subsidiaries and (2) 25 indirect subsidiaries, out of which 21
are Indian and four are foreign subsidiaries. We present the key details of its subsidiaries in the exhibit
that follows.
Globalbees, in which Firstcry owns a 50.23% stake on a fully diluted basis, as of July 30, 2024, reported
revenues of Rs8,972 mn in FY2023 and Rs12,093 mn in FY2024.
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Firstcry owns stakes directly and indirectly (through Globalbees) in several companies
Details of subsidiaries of Firstcry
Sl.no. Company Subsidiary Firstcry's stake (%) Nature of business
Indian direct wholly-owned
1 Intellibees Solutions 100 Deals in all kinds of fashion and lifestyle products.
subsidiary
Indian direct wholly-owned
2 Joybees 100 Deals in consumer goods, consumer durables and electronics
subsidiary
Deals in all kinds of baby care products, baby diapers and other baby hygiene related
3 Swara Baby Indian direct subsidiary 86
products and other such related products for men and women.
Deals in all kinds of food business including fast food, baby food, bakery and all types of
4 Firmroots Indian direct subsidiary 100
ready to serve and packaged food.
5 Solis Hygiene Indian direct subsidiary 79 Deal in manufacturing adult diapers.
D2C brand aggregator: deals in all kinds of cosmetics, laundry products, personal hygiene
6 Globalbees Brands Indian direct subsidiary 50
products, eye care, fashion, home accessories
7 Digital Age Retail Indian direct subsidiary 100 Deals in the business of retail trade of baby, kids and maternity products.
Foreign wholly-owned To provide management services to subsidiaries outside India and acting as intermediary
8 Firstcry management DWC 100
subsidiary holding company
Engage in providing services which includes but are not limited to providing quality check,
Foreign wholly-owned
9 Shenzhen Starbees Services Ltd 100 photography, sourcing, consultancy and management services for babies, kids and
subsidiary
maternity products
Globalbees's stake (%)
10 Better & Brighter (Globalbees) Indian indirect subsidiary 58 Deal in gift homecare, personal care and moisture absorber
11 Butternut Ventures (Globalbees) Indian indirect subsidiary 76 Deals in healthy food products
Candes Technology
12 Indian indirect subsidiary 62 Deals in all kinds of electronics, electrical instruments and audiovisual goods
(Globalbees)
13 Cloud Lifestyle (Globalbees) Indian indirect subsidiary 90 Deals in personal care products, wellness products and cosmetics.
14 DF pharmacy (Globalbees) Indian indirect subsidiary 100 Deal in pharmaceutical products
Dynamic IT solutions
15 Indian indirect subsidiary 51 Design, develop and supply software, software tools, magazines and call centres.
(Globalbees)
16 Encase Homes (Globalbees) Indian indirect subsidiary 51 Deals in cloth and textiles of all kinds in the category of home furnishing.
Eyezen Technologies
17 Indian indirect subsidiary 51 Deal in optical products like optical lenses, frames through an online portal.
(Globalbees)
18 Frootle India (Globalbees) Indian indirect subsidiary 51 Deal in electronic equipment in the category of home appliances.
19 HS Fitness (Globalbees) Indian indirect subsidiary 80 Deal in domestic and commercial fitness equipment.
Deal in various fashion brands with items like watches, jewellery, shoes, apparel,
20 JW Brands (Globalbees) Indian indirect subsidiary 56 accessories and other related items, to carry on B2B/B2C transactions with applications
of e-commerce and other sales channel.
21 Kitchenopedia (Globalbees) Indian indirect subsidiary 51 Deals in all types of electrical components for home appliance products.
Kuber Mart Industries
22 Indian indirect subsidiary 74 Deal in travelling bags, trunks and suitcases
(Globalbees)
23 Maxinique Solution (Globalbees) Indian indirect subsidiary 100 Deal in cosmetics, personal care products and their raw material.
Merhaki foods and nutrition

24 Indian indirect subsidiary 100 Deal in health food, processed food and diet drinks.
(Globalbees)
25 Mush textile (Globalbees) Indian indirect subsidiary 52 Deal in various kinds of synthetic waste, woollen spinners and polyester
Deals in all the kinds of household products, bathroom accessories, kitchen accessories,
26 Plantex E-com (Globalbees) Indian indirect subsidiary 60 hardware products, house storage and organization products made of steels and
stainless steel and iron products and other metals and nonmetal items and appliances
Deals in consumer goods, products whether finished, semi-finished or raw material
27 Prayosha Expo (Globalbees) Indian indirect subsidiary 70
including equipment, apertures, home-appliances, household, seeds, food grains etc.
Solarista Renewables
28 Indian indirect subsidiary 53 Deal in the trading of bags and briefcases.
(Globalbees)
Deal in all kinds of baby care products, sanitary wears, baby diapers, baby liners and other
29 Swara Hygiene (Swara Baby) Indian indirect subsidiary hygiene product, and all other related products for babies in particular and other such
related products for men and women
30 Wellspire India (Globalbees) Indian indirect subsidiary 51 Deal in electronic equipment in the category of home appliances
31 Firstcry General Trading LLC Foreign indirect subsidiary
Providing management services to subsidiaries outside India and acting as intermediary
32 Firstcry Retail DWC Foreign indirect subsidiary
holding company as authorized by its charter document
33 Firstcry Trading Company Foreign indirect subsidiary Kids furniture, clothing and maternity accessories.
34 Globalbees Brands DWC Foreign indirect subsidiary 100 D2C brand aggregator
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Consolidated profit and loss statement of Firstcry, March fiscal year-ends, 2021-27E (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Revenue from operations 16,029 24,013 56,325 64,809 78,788 93,867 110,968
Expenses (15,610) (24,195) (59,498) (64,104) (77,627) (90,207) (103,318)
Cost of material consumed (581) (2,228) (4,795) (5,575)
Purchase of stock-in-trade (11,733) (17,545) (31,172) (38,899) (50,562) (59,004) (68,631)
Changes in inventory of stock in trade 1,852 4,052 (3,386) 2,842
Subcontractor expenses (366) (508) (680) (866)
Employee benefits expense (1,679) (2,467) (4,084) (5,084) (6,188) (7,270) (8,509)
ESOP charges (458) (921) (3,614) (1,781) (3,271) (3,282) (2,097)
Advertisement costs (1,640) (2,686) (4,165) (4,822) (5,585) (6,228) (7,122)
Other expenses (1,005) (1,891) (7,602) (9,919) (12,021) (14,423) (16,960)
EBITDA 419 (182) (3,173) 705 1,162 3,660 7,650
Adjusted EBITDA (ex-ESOP) 877 739 442 2,485 4,433 6,942 9,747
Depreciation and amortisation expense (702) (1,109) (2,943) (3,709) (4,363) (5,150) (5,762)
EBIT (284) (1,291) (6,116) (3,004) (3,202) (1,490) 1,888
Other income 1,372 1,156 987 942 1,118 1,117 879
Finance costs (141) (377) (716) (1,154) (1,441) (1,643) (1,779)
Taxation 1,176 (275) 440 0 176 101 (148)
Profit after tax 2,124 (787) (5,404) (3,215) (3,348) (1,915) 840
Exceptional items — — 544 — (133) — —
Minority interest + share of loss in associates 25 68 450 472 561 426 232
Reported PAT 2,149 (719) (4,411) (2,743) (2,921) (1,489) 1,072
Diluted EPS (Rs/share) 5.7 (1.7) (10.0) (6.2) (5.6) (2.8) 2.0
Weighted average number of shares - diluted (mn) 375 414 443 442 523 528 533
Growth rates (%)
Revenues 50 135 15 22 19 18
EBITDA 65 215 109
EBIT NM NM NM NM NM NM
PAT NM NM NM NM NM NM
Diluted EPS NM NM NM NM NM NM
Key ratios (%)
Gross margin (%) 32.5 32.4 28.9 34.4 35.8 37.1 38.2
EBITDA margin (%) 2.6 (0.8) (5.6) 1.1 1.5 3.9 6.9
PAT margin (%) 13.3 (3.3) (9.6) (5.0) (4.2) (2.0) 0.8
Effective tax rate (%) (124.1) (53.9) 7.5 0.0 5.0 5.0 15.0
Notes:
(a) Digital Age consolidated May 2022 onward and hence financials for prior periods may not be comparable.
(b) Adjusted EBITDA in the above exhibit is calculated as EBITDA plus ESOP costs.
BrainBees Solutions
50
Consolidated balance sheet statement of Firstcry, March fiscal year-ends, 2021-24 (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Equity and liabilities
Share capital 785 884 885 885 1,047 1,056 1,062
Reserves and surplus 33,586 34,395 33,677 30,822 47,325 48,683 51,614
Shareholders' funds 34,371 35,279 34,563 31,707 48,372 49,739 52,676
Minority Interest 976 7,601 7,434 6,207 6,768 7,193 7,426
Loan funds 169 902 1,765 4,627 — — —
Short-term borrowings 70 391 1,214 2,333 — — —
Long-term borrowings 100 511 550 2,295 — — —
Deferred tax liabilities 48 1,745 3,015 2,845 2,845 2,845 2,845
Total sources of funds 37,171 48,719 54,003 54,985 69,835 73,880 78,401
Gross fixed assets 1,428 3,340 5,949 9,588 12,907 15,276 17,719
(-) Accumulated depreciation 458 879 1,733 2,897 4,741 6,911 9,285
Net fixed assets 969 2,461 4,216 6,692 8,166 8,365 8,433
Intangible assets 792 10,005 16,241 15,198 14,893 14,595 14,304
Capital work-in-progress 174 414 245 5 5 5 5
Intangible assets under development 5 3 20 0 0 0 0
Goodwill 3,320 6,418 7,758 7,782 7,782 7,782 7,782
RoU assets 1,607 3,242 7,117 9,009 11,261 13,513 14,865
Investments 0 0 0 50 50 50 50
Cash and bank balances 22,952 22,427 11,595 6,738 12,756 5,212 5,425
Current assets 9,697 15,872 22,379 27,733 32,529 37,340 42,470
Inventories 5,217 9,796 12,860 16,295 19,270 22,315 25,620
Trade receivables 1,361 2,180 2,251 2,184 2,439 2,649 2,828
Other assets 3,119 3,896 7,268 9,255 10,819 12,376 14,022
Current liabilities 3,611 13,252 17,196 20,119 19,505 14,880 16,830
Trade payables 2,987 5,289 7,379 9,079 10,498 11,865 13,266
Other liabilities 498 7,796 9,579 10,733 8,634 2,572 3,040
Provisions 125 167 237 306 372 443 524
Net working capital (ex-cash) 6,086 2,619 5,183 7,615 13,024 22,460 25,640
Deferred tax assets (net) 1,265 1,130 1,628 1,897 1,897 1,897 1,897
Total usage of funds 37,171 48,719 54,003 54,985 69,835 73,880 78,401
Key metrics/ratios
Days of sales
Current assets 221 241 145 156 151 145 140
Inventories 119 149 83 92 89 87 84
Trade receivables 31 33 15 12 11 10 9
Other assets 71 59 47 52 50 48 46
Current liabilities 82 101 63 70 63 58 55
Trade payables 68 80 48 51 49 46 44
Other liabilities 11 18 14 17 12 10 10
Provisions 3 3 2 2 2 2 2
Net working capital (ex cash) 139 140 82 86 88 87 84
RoAE (%) 7.3 (2.1) (12.6) (8.3) (7.3) (3.0) 2.1
RoACE (%) (3.6) (10.8) (30.5) (16.5) (12.6) (5.7) 6.1
Notes:
(a) Digital Age consolidated May 2022 onward and hence financials for prior periods may not be comparable.
BrainBees Solutions
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Consolidated cash flow statement of Firstcry, March fiscal year-ends, 2021-24 (Rs mn)
2021 2022 2023 2024 2025E 2026E 2027E
Cash flow from operating activities
Adjustments for:
Depreciation and amortisation expense 702 1,109 2,943 3,709 4,363 5,150 5,762
Finance costs 141 377 716 1,154 1,441 1,643 1,779
Employee stock option scheme expense 458 921 3,614 1,781 3,271 3,282 2,097
Debtors written off 2 — — — — — —
Net loss on sale of property, plant & equipments 5 — — — — — —
Rental waivers and gains on termination of leases (42) (9) (50) 79 — — —
Interest income (1,030) (985) (639) (534) (534) (534) (534)
Financial liability measured at FVTPL - net change in fair value — (0) — — — — —
Share of profit in associate/joint venture (36) — — — — — —
Operating profit/ (loss) before working capital changes 1,184 902 1,284 2,972 5,015 7,523 10,090
Change in working capital (1,885) (1,971) (5,527) (2,928) (5,409) (9,436) (3,180)
Cash generated from/ (used in) operations (701) (1,069) (4,242) 44 (394) (1,913) 6,910
Direct taxes paid (net of refunds) 32 (255) 267 (465) 176 101 (148)
Net cash generated from/ (used in) operations (668) (1,324) (3,975) (421) (217) (1,812) 6,762
Cash flow from investing activities
Purchase of tangible/non-tangible assets (439) (2,210) (2,383) (3,429) (3,849) (2,930) (3,038)
Proceeds from sale of PPE/non-tangible assets 8 — — — — — —
Purchase of investments (4,414) 1,484 9,047 (50) — — —
Investments in subsidiaries and other entities (524) (5,211) (3,949) 3,512 — — —
Interest income 917 1,139 610 536 534 534 534
Net cash generated/ (used in) investing activities (4,452) (4,906) 3,041 629 (3,315) (2,396) (2,504)
Cash flows from financing activities
Proceeds from issue of shares and security premium 7,991 89 1 — 20,013 3,282 2,097
Proceeds from issue of shares by subsidiaries — 7,676 — — 561 426 232
Repayment of lease liabilities (including interest) (397) (572) (1,201) (1,773) (1,684) (2,121) (2,500)
Others (376) (958) — — (3,271) (3,282) (2,097)
Amount paid on relinquishment of capital asset — — — — — — —
Proceeds from /(repayment of) borrowings (32) 340 849 2,862 (4,627) — —
Interest paid (5) (131) (156) (275) (1,441) (1,643) (1,779)
Net cash generated/ (used in) financing activities 7,181 6,444 (506) 815 9,550 (3,338) (4,047)
Net increase/ (decrease) in cash and cash equivalents 2,060 214 (1,440) 1,023 6,018 (7,546) 212
Cash and cash equivalents at start of the period/ year 1,768 3,828 4,049 2,594 3,617 9,635 2,089
Net foreign exchange difference (23) 7 (15) — — — —
Cash and cash equivalents at end of the period/ year 3,805 4,049 2,594 3,617 9,635 2,089 2,300
In May 2022, Firstcry acquired Digital Age Retail Private Limited (Digital Age). The principal business of
Digital Age is to deal in the retail trade of products for mothers, babies and kids. Prior to the acquisition,
Firstcry’s online platform was operated by Digital Age, pursuant to a platform sharing agreement.
Furthermore, some of Firstcry’s modern stores were franchised to Digital Age. As a result of the
acquisition, the company is able to consolidate all of these operations into its business.
Assuming the acquisition of DARP happened on April 1, 2022, we present the pro forma financials in the
following exhibit. Since the acquisition was complete in FY2023, the pro forma restatement is applicable
for FY2022 and FY2023 only.
BrainBees Solutions
52
Pro forma consolidated profit and loss statement of Firstcry, March fiscal year-ends, 2022-23
(Rs mn)
2022 2023
Revenue from operations 35,975 52,622
Expenses (36,168) (55,773)
Cost of material consumed (2,228) (4,795)
Purchase of stock-in-trade (25,906) (32,341)
Changes in inventory of stock in trade 4,064 1,839
Employee benefits expense (2,756) (4,108)
ESOP charges (921) (3,614)
Other expenses (8,420) (12,753)
EBITDA (193) (3,151)
Adjusted EBITDA (ex-ESOP) 728 464
Depreciation and amortisation expense (1,341) (2,963)
EBIT (1,534) (6,114)
Other income 1,214 988
Finance costs (424) (721)
Profit before tax (745) (5,847)
Taxation (273) 440
Current tax (121) (172)
Deferred tax charge/ (credit) (151) 612
Profit after tax (1,017) (5,408)
Exceptional items — 544
Reported PAT (1,017) (4,864)
Key ratios (%)
COGS as proportion of sales (%) 66.9 67.1
Employee expenses as proportion of sales (%) 10.2 14.7
Administration and other expenses as proportion of sales (%) 23.4 24.2
Gross margin (%) 33.1 32.9
EBITDA margin (%) (0.5) (6.0)
Adjusted EBITDA margin (%) 2.0 0.9
PAT margin (%) (2.8) (10.3)
Effective tax rate (%) (36.6) 7.5
BrainBees Solutions
53
Company background
Brainbees is India’s largest multi-brand retailing platform for products catering to mothers, babies
and kids, in terms of GMV in CY2022, according to RedSeer. The company offers products in
categories, including apparel, footwear, baby gear, nursery, diapers, toys and personal care. As of
March 31, 2024, Firstcry offered more than 1.65 mn+ SKUs from more than 7,580 brands,
including leading third-party Indian and global brands and home brands. The company has
established an offline network of 1,063 physical stores in 533 cities across India, as of March 31,
2024.
The multi-brand retail offering includes (1) Firstcry’s online platform across India, the KSA and the UAE,
(2) physical Firstcry stores comprising franchisee stores, Firstcry-owned multi-brand stores and
exclusive home brand stores, (3) pre-schools and adjacent product categories such as books and baby
toolkits and (4) D2C brand aggregator, Globalbees brands. Lastly, it is also present in retail distribution
of products through departmental, and mom and pop stores.
History and promoter background

Firstcry has a management team led by Supam Maheshwari, aged 50 years, who is the Co-founder,
MD and CEO, with an MBA from the Indian Institute of Management, Ahmedabad. There are four
other co-founders who are involved in different roles within the company. Prior to Firstcry, Supam
was associated with Brainvisa Technologies as President. He serves on the boards of various
companies, including Busybees Logistics Solutions Pvt. Ltd, Firmroots and Globalbees Brands.
Key management personnel and senior management of Firstcry

FY2024
remuneration
Name Designation Education Overall experience (Rs mn)
B.Tech (Delhi College of He was previously associated with Brainvisa Technologies as
Supam Maheshwari Co-founder, CEO & MD 36.9
Engineering); MBA (IIMA) a president.
Prashant Jadhav Co-founder, CTO Bachelors in Arts He was previously associated with Brainvisa Technologies 19.0
Prior to joining Firstcry, he has worked with Brainvisa
Sanket Hattimattur Co-founder, Chief of staff B.Com (Univ. of Mumbai) Technologies, Deutsche Bank Group-Global Markets Centre 17.5
and Tata AIG Life Insurance.
He has previously worked with Birla Ericsson Optical Limited,

B.Com, associate member
Gautam Sharma Group CFO Minda Valeo Security Systems Private Limited, Reliance 16.4
of ICAI, fellow of ICSI
Industries Limited and Vindhya Telelinks.
Co-founder; CEO, Prior to Globalbees, he has worked with Wecash (Asia

Nitin Agarwal B.Tech (IIT Delhi) 10.0
Globalbees Brands Pacific) Pte. Ltd and Edelweiss Financial Services Limited
Country head, Middle East, B.Tech; M.Sc. (Univ. of Prior to joining Firstcry Management, he has worked with
Abhinav Shama 20.0
Firscry Management Texas) Fossil Inc and Flipkart India Private Limited.
B.Com, Masters in Prior to joining Firstcry, she has worked with Project Concern
Chief Human Resources
Manjula Rao personnel in management International, Population Services International and Saertex 6.9
Officer
(Pune Univ.) India Private Limited
Prior to joining Firstcry, she has worked with Schaeffler India,
Company Secretary, B.Sc, (Pune Univ.), ICSI
Neelam Jethani Persistent Systems Limited and KPIT Cummins Infosystems 2.5
Compliance Officer associate
Limited.
Notes:
(a) Remuneration to KMP excludes provisions for gratuity and compensated absences benefits, which have been actuarially determined for the company as a whole
and hence, amounts pertaining to the KMP cannot be determined and excludes the perquisite value of employee stock options.
(b) Share-based payment accruals are excluded.
BrainBees Solutions
54
Employee base
As of March 31, 2024, Firstcry had 3,499 full-time employees. None of its employees are represented
by a labor union.
IPO in August 2024

Firstcry completed its IPO in August 2024. The IPO witnessed a fresh fund raise of Rs16.7 bn and OFS
of Rs25.2 bn.
Shareholding pattern
There are 519.2 mn outstanding equity shares after the offer, as of September 2024. Co-founders of
Firstcry hold a cumulative stake of 8.5%, which is split into (1) 5.2% with Supam Maheshwari, (2) 1.6%
with Amitava Saha and (3) 1.1% with Prashant Jadhav. Softbank (SVF Frog) is the largest shareholder
with a 20% stake in the company, as of September 2024.
Current shareholding pattern of Firstcry (%)

Others, 40.4
Brainbees ESOP
Trust, 2.5
Apricot, 2.8
Valiant, 2.9
NextGen
Management , 4.3
TPG, 3.9
SVF Frog (Cayman),
PI Opportunities, 20.0
5.1
Co-founders, 8.5
M&M, 9.7
Source: BSE, Kotak Institutional Equities
BrainBees Solutions
THEME
Consumer Durables & Apparel

India
Sector View: Cautious NIFTY-50: 24,642 December 11, 2024
Room ACs—the heat is on! Company data and valuation summary

While the Room AC (RAC) industry in India has a long penetration-led growth Consensus P/E ratio (X)
Company Rating CMP (Rs) FV (Rs)
runway ahead, it is also subject to (1) high volatility, leading to sudden peaks Voltas SELL 1,796 1,150
2025E 2026E 2027E
65 52 43
and troughs in annual volumes, (2) intense competition and pricing Havells SELL 1,753 1,500 69 55 46
Blue Star NR 2,127 na 71 57 47
pressures, with over 65 brands trying to gain market share in an industry Johnson Controls Hitachi NR 1,875 na 82 48 39
where it is difficult to differentiate, (3) adverse regulatory headwinds, with

Source: Visible Alpha, Company data, Kotak Institutional Equities estimates
tightening of energy efficiency norms at a regular interval and (4)
deteriorating RoCEs, as the industry moves to indigenous/captive production. Prices in this report are based on the market close of
December 11, 2024
Voltas has gained market share of late, but margin expansion remains
elusive, while Lloyd has seen a decent margin improvement, in its pursuit of
more balanced growth.
Quick Numbers
Room AC penetration in India is low and bound to grow

China’s RAC market (annual volume) is 7-8X the size
Room ACs in a hot country such as India may be a necessity, but they remain of India, implying robust volume-led growth headroom
an unaffordable luxury for most households at present. No wonder that the for the Indian RAC market
penetration of room ACs in India is still low at 14%. We believe that India’s RAC There are over 65 RAC brands; trying to stand out in a
industry has a long growth runway, given the consistently rising temperatures , market where product differentiation is difficult
low penetration and improving affordability. While the long term is promising,
Energy efficiency norms for RAC are expected to be
seasonality makes the short term volatile and difficult to predict. Just to recall,
tightened further in January 2026E
Voltas’ UCP sales had declined marginally in FY2019, after growing in high
double digits in the prior two years. We believe that the strong performance in
FY2025 has created a tough comparable for FY2026E.
Shift to domestic/captive manufacturing has weighed on return ratios

RAC players in India are looking to expand captive production capacities. We
believe that the production-linked incentive scheme (launched in 2021) may be
marginally positive for OEMs as (1) risks of PLI target-led higher competition
have waned and (2) contract manufacturers could have to pass on some gains
from PLIs to OEMs. Having said that, the shift to captive manufacturing, without
an associated increase in profitability, is weighing on the return ratios of players
such as Voltas (UCP RoCE is down to 43% in FY2024 from 100%+ earlier).
New features in ACs are easily imitated, making product differentiation difficult
An RAC consumer in India is spoilt for choice, with over 65 brands in the market.
A brand can stand out either through (1) innovation-led differentiation, (2) cost
leadership-led pricing edge and/or (3) other factors such as superior after-sales
service, creative branding and high brand trust. We reckon that Voltas has
managed to maintain its market leadership on the back of #2 (scale advantage)
and #3. A quick glance at current offerings in the market would conclude that
#1 (product differentiation) is very difficult as new features are easily imitated.
Distribution moat of top brands is at risk, with the rise of large format retail Related Research
The rise of large format retailers (such as Tata Croma, Reliance Retail, Vijay
→ Voltas: Margin miss overshadows robust
Sales and Aditya Vision), partly dented the GT (MBO) distribution moat of top
UCP growth
→ Voltas: Robust volume growth, but UCP
AC brands; LFRs bring with them an added challenge of private labels. We find
limited comfort in the AC brands’ ability to maintain current channel → margin disappoints
Voltas: UCP margins disappoint; EMP posts
profitability, considering (1) aggressive expansion of LFR, (2) weakening another loss
proposition of GT and (3) high competition in the RAC industry. Full sector coverage on KINSITE
Umang Mehta Jaykumar Doshi Eesha Mohanty Praneeth Reddy

56
Room AC penetration in India is low and bound to grow

Room ACs in a hot country such as India may be a necessity, but they remain an unaffordable
luxury for most households at present. No wonder that the penetration of room ACs in India is still
low at 14% (assuming 10Y RAC life and 1.5X RACs per household). China’s RAC market (annual
volume) is 7-8X the size of India, and its RAC population has already surpassed its household
count. We believe that India’s RAC industry has a long growth runway, given the consistently rising
temperatures, low penetration and improving affordability (rising per-capita income, stable total
cost of ownership and low/no cost EMIs), but it is also subject to (1) high volatility—strong
summer season in any particular year can lead to demand preponement, leading to sudden peaks
and troughs in annual volumes, (2) intense competition and pricing pressures, with over 65 brands
trying to gain market share in an industry where it is difficult to differentiate, (3) adverse regulatory
headwinds, with tightening of energy efficiency norms at a regular interval and (4) deteriorating
RoCEs, as the industry moves to indigenous/captive production.
Consistently rising temperatures + low AC penetration + rising affordability = robust volume-led growth
India’s RAC industry is well-placed to report robust volume-led growth over the next decade. We estimate
India’s RAC penetration at 14-15% at present, assuming 10Y life of an AC and ownership of 1.5X ACs per
household on average. We expect India’s RAC penetration to increase to 23% by FY2030E and 59% by
FY2040E, assuming a ~12% volume CAGR over time (as against ~8% CAGR over FY2020-25E). Our
robust growth expectations for the industry are based on the following:
Consistently rising temperatures. India is facing the heat of global warming, with temperatures
scaling newer highs across the country in CY2024. Over the past decade, we have seen multiple
instances of changes of over two degrees Celsius (yoy) across major cities in India. We believe that
this upward trend is likely to continue, albeit naturally with some element of unpredictability.
 Universal AC penetration in China. India’s RAC penetration is in the mid-teens, as against universal
penetration in China. Euromonitor data suggests that China’s RAC market (annual volume) is 7-8X
the size of India and its RAC population is much above its household count.
Rising affordability. The past decade has been good for an AC consumer in India, as the total cost of
owning (TCO) the AC (upfront + energy + maintenance cost) has remained stable over FY2014-24 (we
consider a 5-star AC for indicative calculations). Furthermore, rising income levels and abundance of
consumer financing options (low/no-cost EMIs) are further improving affordability of this category.
Overall, the industry is primed to be among the fastest-growing durables categories in India over the next
decade. No wonder that over 65 brands are currently contending for their fair share of the pie. Even as
the industry is fragmented today, we believe that consolidation will be necessary (especially considering
the declining industry RoCEs and growing clout of large format retailers) in the future. For instance, a
mature AC market such as China, where the top-three brands (Gree Electric, Midea and Haier) control
75% of the market today. Having said that, given where we are, consolidation still seems to be some time
away in India.
RAC penetration in India is in mid-teens, assuming 10Y life and 1.5X ACs per household on average
Room AC penetration in India, March fiscal year-ends (mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E
Population of Room ACs (mn units; assuming life of 10Y) 40 47 53 56 61 66 73 81 91 100 110 122 136 246 434
Households in India (mn) 298 304 311 319 327 335 344 352 361 371 380 390 401 442 488
Penetration rate (%)

Assuming average ownership of 1X AC per household 14 15 17 17 19 20 21 23 25 27 29 31 34 56 89
Assuming average ownership of 1.5X ACs per household 9 10 11 12 12 13 14 15 17 18 19 21 23 37 59
Assuming average ownership of 2X ACs per household 7 8 9 9 9 10 11 12 13 13 14 16 17 28 44
Source: Kotak Institutional Equities estimates

India Research
57
The last time India saw such strong RAC volume growth was in FY2017 (summer of CY2016)
Average and maximum monthly average of daily maximum temperatures across cities, April to June period of respective
calendar years (degree Celsius—oC)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Average of daily maximum temperatures
Ahmedabad 39 39 40 39 40 39 39 39 41 38 39
Bangalore 33 32 33 33 32 34 33 32 32 32 33
Chennai 37 35 36 37 36 38 36 36 36 36 36
Kolkata 36 34 35 35 35 34 34 35 34 35 35
Mumbai 32 33 33 33 33 33 33 33 33 33 33
Delhi 36 36 37 37 38 36 35 37 38 35 38
Mean 35 35 36 36 36 36 35 35 36 35 36
Maximum monthly average of daily maximum temperatures

Ahmedabad 41 43 43 42 43 42 43 41 43 41 43
Bangalore 35 33 36 36 34 35 34 34 34 35 37
Chennai 39 37 37 39 38 40 38 37 37 38 38
Kolkata 38 36 38 37 35 36 35 36 35 36 38
Mumbai 33 35 34 35 34 34 34 34 34 34 34
Delhi 41 41 40 40 40 41 40 38 40 37 42
Mean 38 37 38 38 37 38 37 37 37 37 39
Source: India Meteorological Department, Kotak Institutional Equities estimates
China’s AC market (by volume) is 7-8X the size of India China’s split AC population has surpassed its household count
AC market size in China (mn units) Penetration rates of split ACs in China (%)
AC market size in China (mn units) Penetration rates of Split ACs in China (%)
120 160
99 100 138
100 92 94 93 140 125 126 128
120 123
84 87 87 114
76 120
80 72 70 69
100
56 58
60 80
46
40 60
40
20
20
0
0
2010
2012
2013
2016
2017
2019
2020
2022
2023
2011
2014
2015
2018
2021
2024
2018 2019 2020 2021 2022 2023 2024
Source: Euromonitor, Kotak Institutional Equities estimates Source: Euromonitor, Kotak Institutional Equities estimates

India Research
58
There are over 65 AC brands available in India, according to Voltas management

Select AC brands available in India
S.no Company S.no Company
1 Acer India 26 Lloyd (Havells)
2 Amazon Basics 27 MarQ by Flipkart
3 Amstrad (formerly OVOT ) 28 Micromax
4 Black and Decker 29 Midea
5 Blue Star 30 Mitashi
6 BPL 31 Mitsubishi
7 Carrier 32 Motorola
8 Croma 33 Nokia
9 Cruise 34 O general
10 Daikin 35 Onida
11 Electrolux 36 Panasonic
12 Geepas 37 Realme
13 Godrej 38 Samsung
14 Gree 39 Sansui
15 Haier 40 Sharp
16 Hisense 41 Singer
17 Hitachi 42 TCL
18 Hyundai 43 Thomson
19 IFB 44 Toshiba
20 Impex 45 Trane
21 Intex 46 Truvision
22 Kelvinator 47 Vestar
23 Koryo 48 Videocon
24 LG Electronics 49 Voltas
25 Livpure 50 Whirlpool
Source: E-commerce/company websites, Kotak Institutional Equities
Top-3 brands in China control ~75% of market today

Market share (by volume) of AC brands in China, December year-ends, 2023 (%)
Panasonic , 1 Others, 9
Hisense , 1
Changhong , 2
Hisense , 4 Gree , 29
AUX , 4
Xiaomi , 3
TCL , 5
Haier , 15
Midea , 29
Source: Euromonitor, Kotak Institutional Equities

India Research
59
TCO of a room AC is likely to remain stable, going forward
Air conditioners can substantially increase the electricity consumption of a household—(1) room ACs
account for up to 50% of peak load on the grid in major metropolitan areas of India, according to the
Indian Cooling Coalition and (2) an AC of 1.5 ton capacity can consume the amount of electricity in an
hour that is equivalent to 20+ ceiling fans. Thus, the Indian Bureau of Energy Efficiency (BEE) launched
the energy labelling program for fixed-speed Room ACs in 2006 (as a voluntary initiative, but made it
mandatory in 2009), with periodic tightening of energy-efficiency standards. BEE launched a voluntary
labelling program for inverter RACs in 2015 and made it mandatory in 2018. The labelling program for
RACs now cover both fixed and inverter ACs under the same labelling scheme.
RAC efficiency was measured in terms of Energy Efficiency Ratio (EER), which was calculated as the
ratio of cooling output (in Watts) to total power input (in Watts) under standard rating conditions. In
2018, BEE moved to a new metric called the Indian Seasonal Energy Efficiency Ratio (ISEER), which
accounted for the variance in temperatures across various climatic zones in India and operating hours.
ISEER is the ratio of the cooling seasonal total load (in KWh) to cooling seasonal energy consumption
(in KWh). Frequent upgradations in energy-efficiency norms and higher adoption of inverter ACs
(consume lesser electricity than fixed-speed ACs) have led to a decline in power consumption of ACs in
India.
During FY2015-23, the share of energy-efficient inverter RACs has increased from 1% to 77%, whereas
the share of fixed-speed RACs have reduced from 99% to 23%. In terms of energy ratings, bulk of the
industry’s RAC sales are concentrated in the 3-star and 5-star categories today. However, the TCO of an
inverter AC is still about 3-4X its upfront cost, making it an unaffordable luxury for many households.
The past decade has been good for an AC consumer in India, as the total cost of owning (TCO) the AC
(upfront + energy + maintenance cost) has remained stable over FY2014-24 (we consider a 5-star AC
for indicative calculations). This is due to (1) a 40%+ improvement in energy efficiency and (2) a mere
1.5-2.0% inflation in consumer price for RAC, likely due to both technological advancements and intense
competition weighing on pricing power of brands. We expect RAC TCO to remain stable, as the energy
efficiency norms are likely to get tightened further (next revision is expected in January 2026E) and
competition is showing no signs of abatement. This should ensure that more households are able to
afford RACs (even if we assume that the underlying consumption sentiment remains muted) in the
short to medium term.
Each upward revision in energy efficiency norm requires an upgrade to RAC components (particularly in
the compressor of the AC), which could lead to a 5-8% increase in an RAC’s bill of material. This would
necessitate a similar price hike to maintain a percentage margin or a hike of 3-6% to maintain margin
per unit. Considering the low pricing CAGR over the past decade and based on our conversations with
industry participants, we believe that the brands have been unable to pass on this inflation entirely to
consumers in the past. Given the continued intense competition, AC manufacturers may not necessarily
pass on the entire impact in one go, going forward as well (especially if the season is unfavorable).
Last decade has been good for an AC consumer but not necessarily so for a manufacturer
Changes in TCO of a 5-star AC over time
2014-24 (% 2024-28E (%
Particulars 2014 2024 2028E
CAGR) CAGR)
Upfront cost (Rs) [a] 33,500 39,500 42,000 1.7 1.5
Cooling power (KW) 5,200 5,200 5,200
EER/ISEER (X) 3.5 5.0 5.6
Annual energy consumption (KWh) 1,141 799 713 (3.5) (2.8)
Total energy cost (Rs) [b] 82,154 76,677 77,019
Total AMC cost (Rs) [c] 30,000 30,000 30,000
Residual value (Rs) [d] 1,675 1,975 2,100
Total cost of ownership (Rs) [a+b+c-d] 143,979 144,202 146,919 0.0 0.5
Note:
(a) We assume energy cost of Rs6/KWh in 2014, Rs8/KWh in 2024 and Rs9/KWh in 2029E and life of 12 years
(b) We assume AMC cost of Rs2.5K per annum
(c) Residual value assumed to be 5% of upfront cost

India Research
60
A 5-star AC has seen over 40% improvement in energy efficiency over the past decade
Revision in star rating plans for split type RACs over time (minimum ISEER to qualify)
Jan'09- Jan'12- Jan'14- Jan'18- Jul'22- Jan'26-
Star level
Dec'11 Dec'13 Dec'17 Jun'22 Dec'25 Dec'28
1 star 2.3 2.5 2.7 3.1 3.3 3.5
2 star 2.5 2.7 2.9 3.3 3.5 3.8
3 star 2.7 2.9 3.1 3.5 3.8 4.3
4 star 2.9 3.1 3.3 4.0 4.4 5.0
5 star 3.1 3.3 3.5 4.5 5.0 5.6
Note: ISEER stands for Indian Seasonal Energy Efficiency Ratio, which is a ratio of the annual amount of heat the AC can remove to
the total amount of energy it consumes
Inverter ACs dominate with 75%+ mix in the market 3-star and 5-star ACs contribute nearly 90% to market demand
Split of fixed-speed and inverter ACs in India, March Split of RACs by energy-efficiency labels, March
fiscal year-ends (%) fiscal year-ends, 2022 (%)
1 star 2 star
Fixed-speed ACs (%) Inverter ACs (%) 0% 2%
5 star
100% 1
11 26%
90%
30
80%
70% 54 57 62
69
60% 77
50% 99
89
40%
70 4 star
30% 9%
20% 46 43 3 star
38
31 63%
10% 23
0%
2016 2017 2018 2019 2020 2021 2022 2023
Source: Bureau of Energy Efficiency, Kotak Institutional Equities Source: Company, Kotak Institutional Equities

India Research
61
While long term is promising, seasonality makes the short term volatile and difficult to predict
India’s RAC is poised to report ~30% volume growth in FY2025E due to a scorching summer/heat waves
across the industry and a weak base (unseasonal rains during summer of CY2023). The leading Indian
AC players have reported ~26-55% yoy growth (primary sales growth) in 9MCY24 owing to the strong
summer season. Even the industry participants were caught by surprise and many of them faced supply
constraints. Market leader Voltas capitalized on this and gained market share, by ensuring high
availability of its products across channels and geographies.
Such is the nature of this industry, which is characterized by sudden peaks and troughs—the last time
the industry saw such strong volume growth was in FY2017 (summer of CY2016) when temperatures
soared across the country. Volumes in the next two years, however, reported a 6.2% CAGR, as the volume
strength in FY2017, was likely due to some demand preponement. Just to recall, Voltas’ UCP sales had
declined marginally in FY2019, after growing in high double digits in the prior two years.
We believe that the strong performance in FY2025 has created a tough base for FY2026E. On the high
base, we are expecting industry volume growth to moderate to 8% in FY2026E, especially considering
the overall subdued consumption sentiment (high consumer inflation and low real wage growth) and to
keep some buffer for seasonality-led uncertainty. In the long term, we expect annual industry volumes to
touch ~22 mn by FY2030E and ~69 mn by FY2040E.
A strong summer season can lead to demand preponement in some years

Room AC market size in India, March fiscal year-ends (mn units)
Particulars 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E
RAC production (mn units) 3.5 4.6 4.7 6.4 7.6 7.2 8.9 6.6 8.3 8.6 10.0 13.0 14.0 15.7 17.6 19.7 22.1 38.9 68.6
Growth (%) 6 31 2 36 19 (5) 23 (25) 25 4 17 30 8 12 12 12 12 12 12
Source: Bureau of Energy Efficiency, Kotak Institutional Equities estimates
Voltas lost some market share over FY2018-24, but has grown faster than peers (except Hitachi) in 9MCY24
Indian AC industry—comparison of sales and margins of top brands, March fiscal year-ends (Rs mn, %)
2018-24 (%
2018 2019 2020 2021 2022 2023 2024 CAGR) 9MCY23 9MCY24
Revenues (Rs mn)
Voltas (UCP) 32,261 31,556 40,737 42,185 48,819 64,745 81,605 13.4 57,714 83,395
Blue Star (UP) 21,892 22,690 23,006 18,683 26,122 36,269 45,922 13.1 31,957 42,054
Lloyd 14,141 18,556 15,903 16,888 22,606 33,686 37,852 17.8 30,624 38,517
Daikin 31,943 36,524 40,052 33,650 48,336 68,129 na 16.4 na na
Hitachi 22,583 22,413 21,974 16,465 21,590 23,844 19,187 1.1 13,950 21,641
LG (AC revenues) 22,695 23,489 24,892 22,608 28,703 39,978 42,991 12.0 na na
Revenue growth (%)

Voltas (UCP) (2) 29 (13) 16 33 26 44
Blue Star (UP) 4 1 (19) 40 39 27 32
Lloyd 31 (14) 6 34 49 12 26
Daikin 14 10 (16) 44 41 na na
Hitachi (1) (2) (25) 31 10 (20) 55
LG (AC revenues) 3 6 (9) 27 39 8 na
EBIT (Rs mn; incl other income)

Voltas (UCP) 4,749 3,254 5,121 5,837 5,134 5,378 6,935 2.9 5,058 7,137
Blue Star (UP) 1,931 1,859 1,623 1,088 1,559 2,823 3,603 11.0 2,579 3,534
Lloyd na na (401) 741 (711) (2,227) (1,644) na (1,562) 822
Daikin 2,704 3,279 4,123 2,560 3,503 4,612 na 11.3 na na
Hitachi 1,533 1,351 1,241 499 325 (821) (555) na (999) 813
EBIT margin (%; incl other income)

Voltas (UCP) 14.7 10.3 12.6 13.8 10.5 8.3 8.5 -620 bps 8.8 8.6
Blue Star (UP) 8.8 8.2 7.1 5.8 6.0 7.8 7.8 -100 bps 8.1 8.4
Lloyd na na (2.5) 4.4 (3.1) (6.6) (4.3) na (5.1) 2.1
Daikin 8.5 9.0 10.3 7.6 7.2 6.8 na na na na
Hitachi 6.8 6.0 5.6 3.0 1.5 (3.4) (2.9) -970 bps (7.2) 3.8
Note:
(a) FY2018-23 CAGR considered for Daikin
(b) For Voltas, we have adjusted revenue/EBIT CAGR to account for the restatement of commercial AC business from EMP to UCP wef FY2021

India Research
62
Just to recall, after growing in high DDs in FY2017/18, Voltas’ UCP sales had declined in FY2019
Voltas—key takeaways from 4Q earnings calls
Full year
Fiscal year Segment market share Comments
in MBO (%)
Sold 2 mn+ ACs. Split AC volumes grew 50% in FY2024. Voltas' expanded portfolio with newer ACs designed in-house and with
RAC 18.7 competitive pricing, has resulted into increase in inverter AC mix to 80%. Based on success of split inverter category, Voltas has
expanded its window inverter AC portfolio as well, at strategic price points. Mix of 4/5-star products has also increased.
FY2024 Voltas registered significant volume growth in air coolers (acceptance of high-end portfolio, channel expansion and tactical
distributor schemes) and commercial refrigeration (industry growth was low due to lower capex, particularly in chocolates
Others
segment) products. Commercial AC growth was robust but stiff competition restricted ability to pass on RM inflation, impacting
its margins.
Sold 1.4 mn+ ACs. Summer season was partly washed out due to unseasonal rains in 2H of March. Split inverter category is in
high demand and its mix is up to 75%. Aggressive pricing (certain brands have resorted to deep discounting) to leverage early
summer sales has increased competition in an already fragmented market (over 40 brands in market). Voltas and Highly decide to
RAC 21.9
terminate the JV for compressor manufacturing, due to regulatory hurdles. Blue star and a few other brands are becoming very
FY2023 strong in North by trying to put a pricing strategy to secure market share (given that product will not give such kind of huge
differentiation). On yoy basis, Daikin (+200 bps), Lloyd, and Blue Star (+50-60 bps) have gained market share.
Commercial refrigeration (particularly water coolers/dispensers and visi-coolers) continued its growth (despite high base) led by
Others
increased participation from retail chains and OEMs. Commercial AC has grown with improved margin.
Took 12-15% price hike during FY2022, even as competitors lagged in pricing action. Share of window AC is down to 19-20%,
similar to industry. Lockdown restrictions, Omicron variant, and extended winters in 4Q, impacted sentiment of channel partners
and primary sales of the company. UCP margin was impacted by higher RM prices, disruptive pricing by competition and
resistance by trade on price increases. Split inverter category mix stood at 75%. Fragmented market and disruptive pricing by
RAC 23.4
competition (particularly in South, which led to share loss in region) will have its impact on margin. Voltas is improving presence
FY2022 in 2-ton 5-star AC. Product differentiation between brands is there but not very significant. Voltas lost market share to LG, Lloyd
and Samsung (strong in South), whereas Hitachi/Daikin maintained their share. JV with Highly could invest up to Rs2.5-5 bn in
two phases, for 1 mn units compressor capacity.
Commercial refrigeration (led by beverages and ice cream sales in Tier-3/4 cities) grew again and surpassed pre-Covid topline. Air
Others coolers saw some inventory glut due to limited window of sale and washout of season in early months. Commercial ACs reported
positive growth on full year basis.
As against industry's 29% decline, Voltas saw about 15% decline during the year. Inverter ACs mix in split AC sales at 77%. The
impact of pandemic-led restrictions in beginning of the year was partly offset by strong growth towards end of the year. Voltas
took advantage of pent-up demand in channel amidst supply chain disruptions and price hikes. Timely price hikes and smart
RAC 25.6
customer schemes offset the impact of custom duty hike and high RM/supply chain costs on margins. Given external
FY2021 uncertainties (competition/Covid), will be able to maintain margin at 12%. Replacement demand (drive by improving energy
efficiency of new models) is good but it is not a big contributor to sales. About 20% of sales is through channel finance.
Channel expansion with healthier model mix from B2B accounts, helped commerical refrigeration category. Air coolers benefited
Others
from higher # of variants/SKUs.
UCP sales grew by 50% in first 11 months (well ahead of industry) but Covid impacted Mar-20. UCP margin expanded due to RM
RAC 24.2 efficiencies and improved mix. Voltas achieved leadership in inverter AC (64% mix in split and 50%+ in overall), overtaking nearest
FY2020 competitor in Jan/Feb.
Air coolers grew by 60% led by better availability, wider distribution and competitive pricing. Commercial refrigeration also grew
Others
well due to expansion of retailers and change in lifestyle.
The erratic summer last year led to a 3% decline for industry (Voltas' volumes were flat) during FY2019. Custom duty hike, RM
inflation and inability to take price hike weighed on margins. Inventory carried since last summer got liquidated only in 4Q.
RAC 23.9
Intense competition from existing players and a significant number of new entrants, led to higher sales and distribution cost.
FY2019 Voltas launched adjustable inverter ACs.
Air coolers reported a decline, in line with industry trend. Voltas strengthened its commercial refrigeration range by introducing
Others
new products.
Industry grew by 11%, while Voltas grew secondary sales by 14.5% (despite intense competition and aggressive pricing). Inverter
sales mix stood at about 20%; difference between fixed speed and inverter ACs is about Rs3.5K. Strategy of continued focus on
RAC 22.1
both inverter, fixed-speed split ACs as well as window ACs has enabled us to address customer needs for different products .
FY2018 Voltas' high UCP margin (14%) gives a certain amount of security in tackling competition.
Voltas fresh-air coolers sold 207K units, growing 38% yoy led by expanded range, supported by better features, competitive
Others
pricing and deeper distribution networks. Commercial refrigeration grew led by enhanced portfolio.
Industry grew by 31% and Voltas grew secondary sales by 33%. Barring Nov/Dec-16 (Demonetization impact), demand has been
RAC 21.4 good for the industry due to the hot weather. Voltas sold 1 mn ACs during the year. Inverters mix for the market is about 14%.
FY2017 Competition in room AC market is more intense.
In its second year of operations, Voltas fresh-air coolers sold 170K units. Commerical refrigeration also grew with an enhanced
Others
portfolio of new products.

India Research
63
Voltas’ UCP valuation re-rated after the strong summer in 2016 and de-rated after erratic summer in 2019
Voltas—1-year forward P/E valuation for the company and UCP business (implied)
UCP implied 1Y forward PE (X)
120.0
Erratic
100.0 A strong
summer
summer in 2019
in 2016
80.0 leads to
leads to a
a 50%
massive derating
60.0 re-rating
40.0
20.0
0.0
Mar-15
Mar-22
Mar-24
Mar-14
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-23
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Jul-24
Nov-14
Nov-16
Nov-23
Nov-15
Nov-17
Nov-18
Nov-19
Nov-20
Nov-21
Nov-22
Nov-24
Voltas 1Y forward PE (X)
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Mar-15
Mar-22
Mar-24
Mar-14
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-23
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Jul-23
Jul-24
Nov-14
Nov-16
Nov-18
Nov-23
Nov-15
Nov-17
Nov-19
Nov-20
Nov-21
Nov-22
Nov-24
Notes:
(a) We calculate the implied valuation for UCP business by valuing the other businesses at 12X P/E. We have ignored the value of
Voltbek JV for the purpose of this exercise.
(b) Voltas had re-classified its commercial AC business from EMP to UCP segment w.e.f FY2021. We have not adjusted the same in
above implied UCP valuation.

India Research
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Shift to domestic/captive manufacturing has weighed on return ratios

RAC players in India are looking to expand captive production capacities to reduce dependence
on contract manufacturers (improves ability to differentiate and have a better control on supply
chain) and on imports (as nudged by the government through positive and negative stimuli). The
production-linked incentive scheme for ACs, launched by the government in 2021, had limited
success in indigenizing high-value intermediates (including compressors, which account for 20-
30% of RAC bill-of-material), but recent phase-3 saw some traction on that front. Overall, we
believe that the PLI scheme may be marginally positive for OEMs as (1) the risks of PLI target-led
higher competition have waned and (2) contract manufacturers could have to passed on some
gains from PLIs to the OEMs. A shift from imports/contract manufacturing to captive
manufacturing, without an associated increase in profitability, is weighing on return ratios of
players such as Voltas (UCP ROCE is down to 43% in FY2024 from 100%+ earlier).
A decade ago, the Indian RAC industry was largely dependent on imports. A series of measures by the
government to indigenize production (such as increasing customs duty on components, ban on
completely built units of ACs with refrigerants and the production-linked incentive scheme) have led to
a significant decline in AC imports into the country. Industry participants claim that (1) imports of AC
finished goods is near negligible today and (2) the average value addition or localization ratio has
improved from 25% to 55% after implementation of the PLI scheme.
While India has successfully reduced reliance on imports of completely built or knocked-down units of
RACs, it has achieved limited success on the domestic manufacturing of compressors (a key component
that typically contributes 20-30% of the bill of material). India’s compressor imports stood at 9.2 mn in
FY2024, equivalent to 90% of domestic RAC industry volumes (annual compressor requirement could be
around 12-13 mn in FY2024, about 120% of the total RAC industry capacity to address primary and
secondary replacement-led demand).
Top RAC brands in India are expanding their captive manufacturing capacity aggressively to (1) reduce
reliance on outsourced manufacturing to differentiate (to the extent they can) and have a better control
on the supply chain (to avoid stock-outs during good summer seasons) and (2) capitalize on
government’s PLI scheme, wherein companies can recover up to 64-80% of invested capital.
We note that Daikin is the most backward integrated (it has set up its own compressor unit in India),
whereas Voltas still has some scope to improve. Blue Star and Lloyd are somewhere in the middle, with
both laying more emphasis on captive manufacturing than others.
Government’s thrust on domestic manufacturing has significantly impacted imports into the country
Imports of ACs and components into India, March fiscal year-ends (Rs mn and mn units)
Particulars 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Imports (Rs mn)
Air conditoners (fixed or split) 25,116 27,924 26,307 30,654 40,859 40,801 35,842 18,346 16,930 18,841 12,569
Parts of air conditioners 19,910 20,774 19,623 19,697 21,324 27,214 26,941 21,818 27,618 36,139 32,584
Compressors for AC 15,472 19,560 19,508 20,538 20,728 25,173 29,218 22,382 32,891 45,850 40,722
Growth (%)
Air conditoners (fixed or split) (13) 11 (6) 17 33 (0) (12) (49) (8) 11 (33)
Parts of air conditioners 13 4 (6) 0 8 28 (1) (19) 27 31 (10)
Compressors 20 26 (0) 5 1 21 16 (23) 47 39 (11)
Imports (mn units)

Air conditoners (fixed or split) 1.4 1.6 1.4 2.0 2.6 2.3 2.5 1.2 0.9 1.0 0.8
Compressors for AC 3.5 4.7 4.4 5.2 5.2 6.1 7.5 5.6 10.6 10.7 9.2
Growth (%)
Air conditoners (fixed or split) (21) 10 (9) 37 33 (14) 11 (54) (24) 17 (20)
Compressors for AC 12 33 (5) 17 (1) 18 23 (25) 90 1 (13)
Notes:
(a) HSN codes 841510 and 841590 considered for value data and 84151010 for volume data, pertaining to AC/parts of AC
(b) HSN code 84148011 considered for value/volume data pertaining to compressors
Source: Ministry of Commerce and Industry, Kotak Institutional Equities estimates

India Research
65
Backward integration progress of Voltas, Havells (Lloyd), Blue Star, Daikin and Hitachi
Purchase of stock-in-trade/traded goods as percentage of sale of goods, March fiscal year-ends
(%)
2017 2024
90 84
80
70
70
60
50 42
40
29
30 26
21 19 22
20
7 9
10
0
Voltas Havells (Lloyd) Blue Star Daikin Hitachi
Note:
(a) Standalone financials considered for Voltas and Blue Star
(b) FY2023 data considered instead of FY2024 for Daikin
(c) FY2018 data considered instead of FY2017 for Lloyd
Compressors could contribute about 20-30% of an RAC’s bill of material

Raw material basket for a RAC (%)
Compressors, 30
Others (including
packing material),
45
Copper, 15
Fan motors, 10

India Research
66
Voltas UCP ROCE (post-tax) is down to 43% in FY2024 from over 100% in pre-pandemic period
Among the listed players, we note that—(1) Voltas has recently expanded its manufacturing capacity to
2.5 mn units and has plans to further increase it by 20-40% to 3.0-3.5 mn units, (2) Lloyd recently more
than doubled its capacity to 2 mn and has announced 50% expansion to 3 mn by 4QFY25 and (3) Blue
Star recently expanded capacity to 1.2 mn and can potentially reach 1.8 mn units capacity. Most brands
have opted to have two facilities, to cater to North/West and South/East markets from separate units to
optimize the freight cost.
A shift from imports/contract manufacturing to captive production may be a necessary move for the
RAC producers, but it is weighing on their return ratios (lower asset turns and without any associated
improvement in margin). For instance—Voltas’ UCP segment has seen a steady deterioration in its UCP
ROCE from 100%+ to 43% in FY2024. With the company looking to further expand capacity and margins
unlikely to expand materially in the foreseeable future, we expect return ratios to remain under pressure.
RAC industry in India is amid a massive capacity expansion phase

RAC manufacturing capacities across players in India
Company/Brand Current captive RAC capacity (units) Planned captive capacity (mn units)
2.5 mn (1.5 mn in Uttarakhand and 1 mn in Can expand to 3-3.5 mn (+20-40%) units through
Voltas
Tamil Nadu) brownfield expansion at TN unit
1.2 mn (600-700K in Himachal Pradesh and Can expand to 1.8 mn (+50%) units through
Blue Star
600-650K in Andhra Pradesh) brownfield expansion at AP unit
Announced expansion to 3 mn (+50%) units through
2 mn (900K in Rajasthan and 1.1 mn in Andhra
Lloyd (Havells) brownfield expansion at both RJ (+600K) and AP
Pradesh)
(+400K) by 4QFY25
2.5 mn units in Rajasthan (2 factories) and
Targets to manufacture 5 mn (+100%) units (4 mn
Daikin Andhra Pradesh (1 factory). Daikin also has
for domestic and 1 mn for exports) by 2030
capacity of 3 mn RA compressor units
2.5-3 mn units in Uttar Pradesh and
LG is planning to setup its third manufacturing
LG Maharashtra. LG also has capacity of 1 mn dual-
facility in India
inverter compressor units
Media reports indicate plans to enter into a JV with
1-1.5 mn units in Uttar Pradesh and
Haeir JSW group and invest up to Rs10 bn across
Maharashtra
businesses
Godrej 0.9 mn units in Punjab and Maharashtra Could expand to 1.5 mn (+67%) units
Await for any expansion plans or change in strategy
Johnson Hitachi 0.9 mn units in Gujarat
under the new owner (Bosch)
Source: Media articles, Kotak Institutional Equities
Voltas’ RoCE in UCP business has declined to 43% in FY2024 from over 100% in pre-pandemic period
Voltas—trend in UCP RoCE (%)
2018-24 (%
Particulars 2016 2017 2018 2019 2020 2021 2022 2023 2024 CAGR, bps)
UCP revenues (Rs mn) 24,941 29,846 32,026 31,563 40,737 42,185 48,819 64,745 81,605 14
UCP EBIT (Rs mn) 3,381 4,403 4,749 3,171 5,121 5,837 5,134 5,378 6,935 3
UCP EBIT margin (%) 13.6 14.8 14.8 10.0 12.6 13.8 10.5 8.3 8.5 -630 bps
UCP average capital employed (Rs mn) 2,742 1,572 2,086 5,923 3,722 7,828 8,365 9,806 11,996 31
UCP post-tax ROCE (%) 92 210 171 40 103 56 46 41 43 -130 ppts
Note:
(a) We have adjusted revenue/EBIT CAGR to account for the restatement of commercial AC business from EMP to UCP wef FY2021

India Research
67
Compressor manufacturing in India has seen limited interest from domestic participants
Currently, only four companies manufacture AC compressors in India—(1) GMCC—started commercial

production in early 2023, (2) Highly—2 mn units capacity, (3) Daikin—3 mn units capacity and (4) LG—1
mn units capacity; Daikin and LG’s facilities are also new and set up under the PLI scheme.
Daikin and LG, with their backward integration into compressors, would have a natural cost advantage
over peers. However, their premium pricing suggests that they prefer to make higher margins than to
chase market share by playing on pricing. We understand that the Indian RAC manufacturers did not find
it viable to set up compressor capacity in the past, as their captive volumes were not sufficient (minimum
2.5 mn units required) to meet required ROI. For instance, despite being present in India for about a
decade, Highly India’s (a compressor manufacturer) RoCE was still in mid-single digits in CY2022.
Despite India increasing import duty on AC compressors over the years, the landed cost of imported
compressors (after ~19% duty incidence, excluding GST that would apply even on domestic
compressors) still seems to be competitive versus locally produced units. The data on imports from the
Ministry of Commerce suggests that the average cost of AC compressor in FY2024 stood at ~Rs4.4K,
similar to its cost in FY2014. China/Thailand contribute ~65%/15% to India’s AC compressor imports.
China, with its 200 mn+ annual compressor units capacity, enjoys enviable scale economies. Thus, we
expect India’s import dependence for compressors to continue for the foreseeable future.
Media reports indicate that over 50 component suppliers from China and Vietnam are yet to receive their
Bureau of Indian Standards (BIS) certifications, which could possibly lead to shortage of ACs in summer
of 2025. Our conversations with Lloyd and Blue Star suggest that they are well prepared and are unlikely
to face any supply chain issues, at least in the upcoming season.
India’s per-unit cost of imported compressors (ex-duty) have remained stable over past decade
India’s cost of imported compressors (Rs per unit)
Cost of imported compressors (Rs per unit)
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Note: HSN code 84148011 considered for value/volume data pertaining to compressors
Source: Ministry of Commerce and Industry, Kotak Institutional Equities

India Research
68
Duty incidence (excluding IGST) on imported compressors is about 19%

Sample calculation of duty on imported compressors worth Rs1 mn (Rs)
Particulars Amount (Rs)
Assessable value 1,000,000
Basic custom duty @ 15% [a] 150,000
Customs AIDC @ 15% on a [b] 22,500
Social welfare surcharge @ 10% on a+b [c] 17,250
IGST @ 18% 214,155
Total duty 403,905
Total duty excluding IGST (%) 19.0
Note: HSN code 84148011 considered for above computation
Source: CBIC, Kotak Institutional Equities
Highly makes low-to-mid single-digit EBIT margin in India

Highly Electrical Appliances India—P&L snapshot, December year-ends (since 2019; Rs mn)
Apr 19-
FY2017 FY2018 FY2019 Dec19 CY2020 CY2021 CY2022
Net revenues 4,386 4,969 5,230 4,337 4,394 6,466 8,228
RM costs (2,978) (3,995) (4,000) (3,355) (3,517) (5,384) (6,752)

Employee costs (200) (246) (162) (158) (184) (192) (220)
Other expenses (757) (610) (491) (335) (301) (398) (437)
Total operating costs (3,935) (4,851) (4,653) (3,848) (4,003) (5,974) (7,409)
EBITDA 451 117 577 489 391 492 819

EBITDA margin (%) 10.3 2.4 11.0 11.3 8.9 7.6 10.0
Depreciation (182) (244) (448) (387) (525) (524) (506)

Other income 70 45 105 62 (63) 1 (266)
Interest expense (7) (62) (212) (124) (58) (39) (85)
Exceptional item
PBT 333 (143) 22 40 (255) (70) (38)
Income tax 0 1 (21) (12) 13 (0) 0
PAT from continuing operations before MI 333 (143) 1 28 (243) (70) (38)
Minority interest
Share of profit/loss of associates and joint ventures
Net profit 333 (143) 1 28 (243) (70) (38)
ETR (0.03) 0.36 96.44 31.08 5.07 (0.50) 0.88
Growth yoy (%)

Net revenues 13.3 5.3 (12.7) 1.3 47.1 27.2
EBITDA (74.0) 391.7 316.3 (19.9) 25.7 66.4
Net profit (142.9) (100.5) (119.3) (977.4) (71.1) (45.6)
Margins (%)
Gross margin 32.1 19.6 23.5 22.6 20.0 16.7 17.9
EBITDA margin 10.3 2.4 11.0 11.3 8.9 7.6 10.0
Employee costs as % of revenues 4.6 4.9 3.1 3.6 4.2 3.0 2.7
A&P spends as % of revenues 0.1 0.0 0.2 0.2 0.1 0.1 0.0

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Highly’s post-tax RoCE is in mid-single digits, even after a decade of presence in India
Highly Electrical Appliances India—BS snapshot, December year-ends (since 2019; Rs mn)
Apr 19-
FY2017 FY2018 FY2019 Dec19 CY2020 CY2021 CY2022
Net block 1,969 3,350 3,519 3,470 2,946 2,494 2,087
CWIP 1,573 90 41 4 19 54 101
Non-current assets 122 117 34 83 130 56 135
Inventory 881 1,246 1,581 1,915 1,695 2,216 3,036
Receivables 1,762 1,707 1,588 1,714 1,455 2,000 2,201
Cash and cash equivalents 685 433 856 545 363 1,284 639
Other current assets 428 357 344 468 458 261 262
Total current assets 3,767 3,804 4,463 4,693 3,973 5,777 6,139
Trade payables (1,027) (1,463) (1,627) (1,583) (656) (1,802) (1,562)
Other current liabilities (539) (112) (196) (277) (183) (87) (75)
Net current assets 2,201 2,228 2,639 2,834 3,135 3,888 4,502
Total Assets 5,865 5,786 6,237 6,393 6,232 6,493 6,827
Share capital 4,153 4,153 4,448 4,448 4,448 4,448 4,448
Reserves and surplus (305) (447) (445) (418) (662) (730) (770)
Minority interest -
Net worth 3,848 3,706 4,003 4,030 3,786 3,718 3,678
ST Borrowings - - - - 45 59 33
LT Borrowings 1,945 1,951 1,955 2,062 2,230 2,566 2,953
Long-term liabilities 72 129 280 301 172 151 162
Total Liabilities 5,865 5,786 6,237 6,393 6,232 6,493 6,827
- - - - - (0) -
Key metrics
Gross asset turnover (X) 0.9 1.4 1.7
Inventory days (#) 92 110 161 141 125 135

Receivable days (#) 125 111 144 121 113 98
Payable days (#) 107 114 133 54 102 69
Net working capital days (#) 109 108 172 207 136 163
Net debt (Rs mn) 1,250 1,457 1,005 1,466 1,909 1,325 2,346
Capital employed (Rs mn) 5,793 5,657 5,958 6,092 6,061 6,343 6,665
Invested capital (Rs mn) 5,097 5,163 5,007 5,496 5,696 5,043 6,024
Average ROE (3.8) 0.0 0.7 (6.2) (1.9) (1.0)

Average ROCE (2.2) 0.1 1.2 (2.1) (0.5) 4.8
Average ROIC (2.5) 0.1 1.3 (2.3) (0.6) 5.6
PLI scheme for ACs could be marginally positive for the AC brands
Indian government had sanctioned the production-linked incentive (PLI) scheme for white goods (air
conditioners and LED lights), with an outlay of Rs62.4 bn in April 2021. For the AC category—in phase-1,
26 applicants were provisionally selected (November 2021), with committed investments of Rs39 bn and
in phase-2, 6 applicants were provisionally selected (June 2022), with committed investments of Rs9 bn.
In phase 1+2, the largest outlay among the selected AC OEMs came from Daikin (Rs5.4 bn), followed by
LG (Rs3 bn), Blue Star (Rs1.56 bn), Havells/Lloyd (Rs1.1 bn), Voltas (Rs1 bn) and Hitachi (Rs1 bn).
Given the limited response shown by industry participants in the high-value intermediates production
(just 3-5 applications) in phase-1/2, the government re-opened the PLI scheme for white goods during
July-Oct 2024 (phase-3). The government announced that in this round (1) 21 companies applied with a
committed investment of Rs36.8 bn and (2) several investments have been proposed to manufacture
high-value intermediates of ACs—copper tubes (plain/grooved), aluminum stock for foils or fins for heat
exchangers and compressors, which account for almost 50% of bill of material for room ACs. However,
the applicants (new or existing) in the third round shall only be eligible for incentives for the remainder
of the scheme’s tenure (maximum 2-3 years).

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We believe that the PLI scheme could be marginally positive for the AC OEM industry:
Risks of PLI-led higher competition have waned. The share of investments committed by the AC
brands in the overall committed investments in phase 1+2 was just 30% (of which, half was committed
by just two brands—Daikin and LG). Furthermore, a strong summer-led volume boost in CY2024
should ensure that the minimum incremental sales targets (to receive incentives) are comfortably met
and should not result into any heightened pricing-led competitive intensity. The annual incentives
likely to be received by the brands would be equivalent to just 0.75-1.0% of industry sales, according
to our rough math.
Component manufacturers could pass on some benefits to OEMs. The AC manufacturers’ intent to
reduce reliance on the contract manufacturers is likely to lead to greater competition among the latter.
This could result in these component manufacturers passing on most PLI gains, possibly benefiting
the OEMs’ gross margins to some extent.
Annual production-linked incentives of RAC OEMs could be equivalent to 0.75-1% of RAC industry sales
Likely incentives under PLI (based on phase 1+2) for AC OEMs
Committed Incremental sales Likely incentives Likely incentives Annual incentive
Company Segment investments (captive) at 5X asset over five years annualized (Rs (as % of current
(Rs mn) turn in Y5 (Rs mn) (Rs mn) mn) sales)
Daikin High + lower value intermediates 5,387 26,935 3,502 700 1.2-1.5%
LG High + lower value intermediates 3,000 15,000 2,190 438 1-1.25%
Panasonic High + lower value intermediates 3,000 15,000 2,190 438 na
Haier Lower value intermediates 1,836 9,178 1,340 268 na
Blue Star Lower value intermediates 1,560 7,800 1,139 228 0.5-0.7%
Havells (Lloyd) Lower value intermediates 1,127 5,636 823 165 0.5-0.7%
Hitachi Lower value intermediates 1,007 5,034 735 147 0.75-1%
Voltas Lower value intermediates 1,000 5,000 730 146 0.2-0.5%
IFB industries Lower value intermediates 570 2,850 416 83 na
Total 18,486 92,432 13,064 2,613 0.75-1%
Note:
(a) Likely incentives calculated assuming that the company meets the minimum thresholds as per schedule
(b) Panasonic's FDI approval status is unknown
(c) Since above players are OEMs, the components manufactured under the scheme shall mostly be used for their captive consumption
Source: Department for Promotion of Industry and Internal Trade, Kotak Institutional Equities estimates

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A manufacturer could potentially recoup 64-80% of upfront capex invested through production-linked incentives
India production-linked incentives—minimum cumulative investment, incremental sale and incentive (Rs mn)
Large investment Normal investment
Segment Year PLI (%)

Min cumulative Min incremental Min prod-linked Min cumulative Min incremental Min prod-linked
Investment sale incentive Investment sale incentive
AC (components) FY2021-22 1,500 500
FY2022-23 6.0 3,000 7,500 1,000 2,500
FY2023-24 6.0 4,000 15,000 450 1,500 5,000 150
FY2024-25 5.0 5,000 20,000 900 2,250 7,500 300
FY2025-26 5.0 6,000 25,000 1,000 3,000 11,250 375
FY2026-27 4.0 30,000 1,250 15,000 563
FY2027-28 1,200 600
Total 6,000 97,500 4,800 3,000 41,250 1,988
High-value FY2021-22 500 500

intermediates of FY2022-23 6.0 1,250 2,500 1,000 2,500
ACs FY2023-24 6.0 2,000 6,250 150 1,500 5,000 150
FY2024-25 5.0 3,000 10,000 375 2,000 7,500 300
FY2025-26 5.0 4,000 15,000 500 2,500 10,000 375
FY2026-27 4.0 20,000 750 12,500 500
FY2027-28 800 500
Total 4,000 53,750 2,575 2,500 37,500 1,825
Lower-value FY2021-22 200 100

intermediates of FY2022-23 6.0 400 1,000 200 500
ACs FY2023-24 6.0 600 2,000 60 300 1,000 30
FY2024-25 5.0 800 3,000 120 400 1,500 60
FY2025-26 5.0 1,000 4,000 150 500 2,000 75
FY2026-27 4.0 5,000 200 2,500 100
FY2027-28 200 100
Total 1,000 15,000 730 500 7,500 365
Notes:
(a) Segment of AC components include high-value intermediates or low-value intermediates or sub-assemblies or a combination thereof
(b) High-value intermediates of ACs include compressor, aluminium foils, and copper tubes
(c) Lower-value intermediates of ACs include PCB assembly for controllers, BLDC motors, service valves, cross flow fans and other components
(d) Above schedule is applicable for applicants that opted for initial investment period as Apr'21 to Mar'22
Source: Department for Promotion of Industry and Internal Trade, Kotak Institutional Equities

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Phase 1 and 2 of PLI scheme saw limited interest in high-value intermediates

Details of applicants for PLI scheme for white goods
High-value intermediates of ACs Lower-value intermediates of ACs
Committed
Gestation Aluminum stock for Control assemblies Plastic
Applicant investments
period (upto) foils or fins for heat for IDU or ODU or Display panels Valve/brass Heat Sheet metal molding
(Rs mn)
Compressors Copper Tube exchangers remote (LCD/LED) Motors Cross flow fan components exchangers components components
Phase-1 (applicants provisionally selected on 3rd November 2021)
Daikin Mar-23 5,387
Amber Mar-22 4,602
PG technoplast Mar-22 3,210
EPAC durables Mar-22 3,000
Hindalco Mar-23 5,390
Mettube India Mar-23 3,002
IL JIN electronics Mar-23 1,673
Blue Star Mar-23 1,560
Havells (Lloyd) Mar-22 1,127
Hitachi Mar-22 1,007
Voltas Mar-23 1,000
Napino auto Mar-23 666
Bhagwati products Mar-22 610
Epavo electricals Mar-23 580
IFB industries Mar-22 570
Lucas-TVS Mar-23 540
Nidec India Mar-22 519
Dixon Mar-22 510
Syrma Mar-23 510
VVDN tech Mar-23 510
Virtuoso optoelectronics Mar-22 505
East India tech Mar-23 500
Magnum mi steel Mar-23 500
Panasonic India Mar-22 500
Sun home Mar-23 500
Tritonvalves climatech Mar-23 500
Total 38,978 1 2 1 17 1 13 10 3 14 15 13
Phase-1 (applicants advised to obtain FDI approval on 3rd November 2021)

Hi-volt enterprises Mar-23 3,540
Midea India Mar-23 2,500
Haier appliances Mar-22 1,836
Total 7,876 2 0 0 1 0 1 0 0 1 1 1
Phase-1 (applicants referred to committee of experts on 3rd November 2021)

Panasonic India Mar-23 2,500
Om rudra Mar-23 500
Total 3,000 1 0 0 0 0 0 0 1 0 0 0
Phase-2 (applicants provisionally selected on 28th June 2022)

Adani copper tubes Mar-23 4,080
LG electronics Mar-23 3,000
Starion India Mar-23 501
Kaynes Mar-23 500
Mitsubishi electric Mar-23 500
Swaminathan enterprises Mar-23 500
Total 9,081 1 1 0 4 1 2 2 0 3 1 3
Phase-2 (applicants referred to committee of experts on 28th June 2022)

Zeco aircon Mar-23 1,000
Emm ess aircon Mar-23 520
Total 1,520 0 0 0 1 0 0 1 1 1 2 1
Grand total (phase 1+2) 60,455 5 3 1 23 2 16 13 5 19 19 18

Grand total (phase 1+2; for OEMs) 18,486 3 0 0 5 0 3 3 0 9 7 6
Phase-3 (21 applicants; details awaited) 36,790
Source: Department for Promotion of Industry and Internal Trade, Kotak Institutional Equities

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New features in AC are easily imitated, making product differentiation difficult

An RAC consumer in India is spoilt for choice, with over 65 brands vying to win his/her business.
In such a crowded market, a brand can stand out either through (1) innovation-led product
differentiation, (2) cost-leadership led pricing edge and/or (3) other factors such as
superior/reliable after-sales service, creative branding and high brand trust-led consumer loyalty
(such as that enjoyed by Voltas, a Tata Group entity). We reckon that Voltas has managed to
maintain its market leadership due to #2 (scale advantage) and #3. A quick glance at the current
offerings in the market would conclude that #1 (product differentiation) is very difficult in this
industry as new features are almost instantaneously imitated. Thus, companies are trying to move
toward in-sourcing (reduce manufacturing/freight cost), better aesthetics, ensuring better
availability and working to improve after-sales service to improve their standing in the market.
While RAC market has always been crowded in India, the number of new entrants in the industry have
kept on increasing. In a recent earnings call, Voltas CEO remarked that today, there are over 65 brands
(including private labels) in the RAC market in India. In such a crowded market, product differentiation
becomes vital to remain relevant and profitable.
A brand can differentiate due to (1) innovation-led product differentiation—success is fleeting as

features are easily imitated by peers, (2) cost-leadership led pricing edge—we believe that most brands
are in-sourcing production, partly to this end and (3) other factors such as superior/reliable after-sales
service, creative branding and high brand trust-led consumer loyalty—Voltas scores high on all three.
We compared select inverter AC models (1-1.5 tons and 3/5-star specifications) of leading brands (LG,
Daikin, Blue Star, Lloyd, Voltas and Godrej) available on an e-commerce platform. Our key findings are
as follows:
Lack of product differentiation—new features introduced in the category are easily imitated, making
it difficult for brands to differentiate on technology. Among the select models that we compared, we
found that features such as adjustable cooling (4-in-1 to 6-in-1 convertible), copper condenser, PM
2.5/anti-dust filter, stabilizer-free operations, blue fin or gold fin coating and environment-friendly
refrigerant (R32) were available across most models.
Price positioning—in terms of pricing for comparable units, LG/Daikin were at the top, followed by
Blue Star, Lloyd, Voltas and Godrej (in that order). The Lloyd SKUs that we analyzed were at a 2-6%
premium to Voltas. In terms of TCO of a 1-ton 3-star AC, we found Voltas and Daikin to be the lowest
and Godrej to be the highest.
Product performance—in the select 1-ton AC SKUs that we analyzed, Daikin turned out to be the most
energy-efficient in terms of ISEER value, whereas Voltas SKUs scored low (just at the minimum cut-
off of the star rating—3.8X ISEER for 3-star AC and 5X for 5-star AC).
Consumer reviews—we understand that consumer reviews on online forums are typically biased and
would not assign much weight to it. Nevertheless, we find that Lloyd products enjoyed relatively higher
ratings and better reviews versus the other brands.

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Voltas and Daikin offer the lowest TCO in 1-ton 3-star AC category
TCO of a 1-ton AC (3-star) across brands
Annual energy Total cost of
Upfront consumption Total energy Total AMC Residual ownership
Brand cost (Rs) (KWh) cost (Rs) cost (Rs) value (Rs) (Rs)
Godrej 29,990 980 94,116 30,000 1,500 152,606
Voltas 30,990 673 64,601 30,000 1,550 124,042
Lloyd 31,500 698 67,054 30,000 1,575 126,979
Blue Star 31,990 707 67,871 30,000 1,600 128,262
Daikin 33,490 680 65,318 30,000 1,675 127,134
LG 34,690 642 61,657 30,000 1,735 124,612
Note:
(a) We assume energy cost of Rs8/KWh and life of 12 years
(b) We assume AMC cost of Rs2.5K per annum
(c) Residual value assumed to be 5% of upfront cost
Source: Amazon, Kotak Institutional Equities estimates
LG/Daikin enjoy a 10-15% price premium versus Voltas

Consumer prices of 1-ton (3/5 star) and 1.5-ton (3/5 star) ACs across brands
Godrej Voltas Lloyd Blue Star Daikin LG
50,000
45,000
40,000
35,000
30,000
25,000
1-ton 3 star 1-ton 5 star 1.5-ton 3 star 1.5-ton 5 star
Source: Amazon, Kotak Institutional Equities

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In the select SKUs that we analyzed, Daikin turned out to be the In the select SKUs that we analyzed, Daikin turned out to be the
most efficient in 1-ton 3-star ACs most efficient in 1-ton 5-star ACs
Performance of 1-ton 3-star ACs across brands Performance of 1-ton 5-star ACs across brands
Cooling power (KW; LHS) Cooling power (KW; LHS)

ISEER (X; LHS) ISEER (X; LHS)
Annual energy consumption (KWH; RHS) Annual energy consumption (KWH; RHS)
4.20 1,200 5.50 545
540
4.00 1,000 5.00
535
3.80 800
4.50 530
3.60 600 525
4.00 520
3.40 400
515
3.20 200 3.50
510
3.00 0 3.00 505
Godrej Voltas Lloyd Blue Daikin LG Godrej Voltas Lloyd Blue Daikin LG
Star Star
Notes: Notes:
(a) Electricity consumption is based on 1,600 operating hours per annum, (a) Electricity consumption is based on 1,600 operating hours per annum,
under test conditions under test conditions
(b) ISEER is the ratio of the cooling seasonal total load (in KWh) to cooling (b) ISEER is the ratio of the cooling seasonal total load (in KWh) to cooling
seasonal energy consumption (in KWh) seasonal energy consumption (in KWh)
Source: Amazon, Kotak Institutional Equities Source: Amazon, Kotak Institutional Equities
For select SKUs that we analyzed, Lloyd ACs had among the highest user ratings and relatively better customer feedback versus other
brands
User reviews on 1-ton ACs of different brands on Amazon
Brand Rating (out of 5) Feedback Rating (out of 5) Feedback
1-ton 3 star AC 1-ton 5 star AC
Customers appreciate the quality, performance, and value of the air Customers like the quality, cooling, and value of the air conditioner.
conditioner. They mention it's a very good product, reliable, and They mention it's a solid choice that offers great value for the price,
Godrej 3.8 powerful. However, some customers have reported issues with noise 3.8 and it can cool a decent-sized bed room. Some are also happy with the
level and gas leakage. Opinions are mixed on the cooling, functionality, design. However, some customers disagree on its functionality,
and ease of installation. installation, noise level, and energy efficiency.
Customers have negative opinions about the air conditioner's Customers appreciate the quality and value of the air conditioner. They
functionality and installation time. They mention that the remote mention it's a perfect buy and worth the money. However, some
Voltas 3.6 4.0
doesn't work and the LED is not working. Opinions are mixed on the customers have reported that the remote doesn't work after 10 days
quality, cooling, value for money, noise level, and efficiency. and the air conditioning stopped working after 30 days.
Customers like the quality, cooling efficiency, and value for money of Customers like the quality, cooling, and value for money of the air
the air conditioner. They mention it's the best under this category, does conditioner. They mention it's an excellent product, keeps the
Lloyd 4.1 its job perfectly, and is worth the price. Some are also happy with its 4.2 temperature comfortable, and is worth the price. Some are satisfied
performance and look. However, some customers have mixed opinions with the noise level and design. However, some customers have mixed
on the ease of installation and AC function. opinions on the ease of installation and functionality.
Customers like the cooling, quality, and noise level of the air Customers have negative opinions about the installation charges of
conditioner. They mention it's fast for a small room, a real workhorse, the air conditioner. They mention it's a big problem, and there are
Blue Star 4.0 and has a high cooling capacity. Some also like the energy efficiency 3.7 errors during installation. Customers also dislike water leakage.
and size. However, some customers have different opinions on value Opinions differ on functionality, cooling efficiency, noise level, value for
for money, installation quality, and ac performance. money, and quality.
Customers like the quality, noise level, and value of the air conditioner. Customers like the cooling capacity, performance, and noise level of
They mention it's a good product offering great cooling for a medium- the air conditioner. Some are satisfied with the energy efficiency.
Daikin 3.8 sized room. Some appreciate the silent operation and say it's worth the 3.9 However, some customers have reported issues with the installation
price. However, some dislike the quality, service quality, and copper and functionality. Opinions are mixed on the quality and value for
pipe. Opinions are mixed on the cooling efficiency and installation. money.
Customers like the quality, value, and functionality of the air Customers like the quality and noise level of the air conditioner. They
conditioner. They mention it works like a charm and is energy efficient. mention it works well, is very silent, and is satisfied with the build
LG 3.5 4.0
However, some customers have reported issues with the installation quality, energy efficiency, and size. However, some customers disagree
and design. Opinions are mixed on the cooling. on the cooling, installation, and value for money.
Note:
(1) Above reviews are based on select SKUs and may not be representative of overall consumer feedback on the brand
(2) 1.5 ton 5 star AC considered for Godrej instead of 1 ton 5 star AC

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Comparison of select RAC SKUs across select brands available on e-commerce (1/2)
Cooling Annual energy PM 2.5 or HD
Copper Stabilizer-free
Consumer power consumption Noise level Refrigerant condenser
or anti-dust
operation
Brand Stars Inverter MRP (Rs) price (Rs) (KW) ISEER (X) (KWH) (db) filter Warranty Extra features
0.8 ton category (suitable for up to 100 sq ft rooms)
1Y (product), 1Y
Coanda airflow for uniform cooling
Daikin 3 No 37,400 26,490 2.80 3.95 549 32 (IDU) R32 Yes Yes Yes (condenser), 5Y
across the room
(compressor)
1Y (product), 5Y 5 in 1 convertible, golden fin evaporator,

Within 140- (component incl smart 4-way swing, 5m long air throw,
Lloyd 3 Yes 47,990 28,490 2.70 3.81 549 32 (IDU) R32 Yes Yes
280V range PCB), 10Y filter cleaning indication, low gas
(compressor) detection
1 ton category (suitable for 110-120 sq ft rooms)

5Y
(comprehensive), 5 in 1 convertible, blue fin coating, self-
Godrej 3 Yes 42,900 29,990 3.50 3.90 980 37 (IDU) R32 Yes Yes No
10Y diagnosis, i-sense tech,self-cleaning
(compressor)
1Y (product and
4 in 1 adjustable cooling, anti-corrosive
Voltas 3 Yes 56,990 30,990 3.30 3.80 673 na R32 Yes Yes Yes PCB) and 10Y
coating, self diagnosis
(compressor)
1Y (product), 5Y
5 in 1 convertible, golden fin evaporator,
Within 140- (component inc
Lloyd 3 Yes 49,990 31,500 3.55 3.93 698 32 (IDU) R32 Yes Yes 2-way swing, 7m long air throw, filter
280V range PCB), 10Y
cleaning indication, low gas detection
(compressor)
1Y (product), 5Y
5 in 1 convertible with 2-way swing, blue
Blue Star 3 Yes 51,500 31,990 3.52 3.85 707 41.7 (IDU) R32 Yes Yes Yes (PCB), 10Y
fin coating, self-diagnosis
(compressor)
Self-adjusting capacity, 7 hepta sense,

Equipped with 1Y (product), 5Y
power airflow/dual flaps, dew clean tech
Daikin 3 Yes 48,200 33,490 3.52 4.00 680 29 (IDU) R32 Yes Yes stabilizer (PCB), 10Y
(auto cleans evaporator coil of IDU), self
inside (compressor)
heal coating
1Y (product), 5Y AI 6 in 1 convertible, gold fin+ coating,

21 (IDU), Within 120-
LG 3 Yes 46,290 34,690 3.28 3.96 642 R32 Yes Yes (PCB), 10Y ocean black protection, monsoon
56 (ODU) 290V range
(compressor) comfort technology, auto clean
5Y
5 in 1 convertible, blue fin coating, self-
(comprehensive),
Godrej 5 Yes 48,990 33,990 3.48 5.10 524 47 (IDU) R32 Yes Yes No diagnosis, i-sense tech, heavy duty
10Y
cooling at 52 degrees, self-cleaning
(compressor)
1Y (product and
Within 110- 4 in 1 adjustable cooling, anti-corrosive
Voltas 5 Yes 44,990 34,700 3.50 5.00 543 46 (IDU) R32 Yes Yes PCB) and 10Y
285V range coating, self diagnosis
(compressor)
1Y (product), 5Y
5 in 1 convertible, golden fin evaporator,
(component inc
Lloyd 5 Yes 57,990 36,000 3.50 5.07 534 38 (IDU) R32 Yes Yes Yes 4-way swing, 7m long air throw, filter
PCB), 10Y
cleaning indication, low gas detection
(compressor)
1Y (product), 5Y 5 in 1 convertible with 4-way swing, blue

Blue Star 5 Yes 63,000 36,490 3.38 5.05 518 49 (IDU) R32 Yes Yes Yes (PCB), 10Y fins, smart ready voice command (at
(compressor) additional cost), self diagnosis
1Y (product), 5Y
AI 6 in 1 convertible, gold fin+ coating,
(PCB), 10Y
21(IDU), Within 120- ocean black protection, 4-way swing,
LG 5 Yes 75,990 39,990 3.50 5.20 521 R32 Yes Yes (compressor
55 (ODU) 290V range monsoon comfort technology, auto
with gas
clean
charging)
Equipped with 1Y (product), 5Y

3D airflow, dew clean tech (auto cleans
Daikin 5 Yes 55,500 40,990 3.52 5.20 524 30 (IDU) R32 Yes Yes stabilizer (PCB), 10Y
evaporator coil of IDU)
inside (compressor)

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Comparison of select RAC SKUs across select brands available on e-commerce (2/2)
Cooling Annual energy PM 2.5 or HD
Consumer power consumption Noise level Copper or anti-dust Stabilizer-free
Brand Stars Inverter MRP (Rs) price (Rs) (KW) ISEER (X) (KWH) (db) Refrigerant condenser filter operation Warranty Extra features
1.5 ton category (suitable for 120-150 sq ft rooms)
5Y
5-in-1 convertible, blue fin coating, self
(comprehensive),
Godrej 3 Yes 45,900 32,490 4.80 3.85 966 38 (IDU) R32 Yes Yes No diagnosis, cools even at 52 degrees, i-
10Y
sense tech
(compressor)
1Y (product and 4 in 1 adjustable cooling, 4-way swing,

Within 110-
Voltas (1.4 ton) 3 Yes 70,990 32,490 4.90 3.81 975 45 (IDU) R32 Yes Yes PCB) and 10Y anti-corrosive coating, auto clean
285V range
(compressor) function, self diagnosis
1Y (product), 5Y
(components 5-in-1 cooling, 2-way air swing, blue fins
Within 140-
Lloyd 3 Yes 58,990 34,490 4.75 3.84 957 32 (IDU) R32 Yes Yes including PCB), coating, low-gas detection, clean filter
280V range
10Y indication
(compressor)

Blue Star 3 Yes 61,250 35,990 5.01 3.85 1,007 32 (IDU) R32 Yes Yes Yes (PCB), 10Y fins, smart ready voice command (at
Equipped with 1Y (product), 5Y Self adjusting capacity, dew clean

Daikin 3 Yes 58,400 36,990 5.00 4.00 966 35 (IDU) R32 Yes Yes stabilizer (PCB), 10Y technology, 7 Hepta sense, DNNS self-
inside (compressor) healing coating, power airflow/dual flaps

1Y (product), 5Y
Within 120- ocean black protection, 4-way swing,
LG 3 Yes 78,990 36,990 4.40 4.00 852 26 (IDU) R32 Yes Yes (PCB), 10Y
290V range monsoon comfort technology, auto
(compressor)
clean
5Y
5-in-1 convertible, blue fin coating, self
(comprehensive),
Godrej 5 Yes 54,900 37,990 4.80 5.10 728 38 (IDU) R32 Yes Yes No diagnosis, cools even at 52 degrees, i-
10Y
sense tech
(compressor)
1Y (product and 4 in 1 adjustable cooling, 4-way swing,

Within 110-
Voltas (1.4 ton) 5 Yes 73,490 39,490 4.60 5.00 713 38 (IDU) R32 Yes Yes PCB) and 10Y anti-corrosive coating, auto clean
285V range
(compressor) function, self diagnosis
1Y (product), 5Y
(components 5-in-1 cooling, 2-way air swing, 10-m
Within 100-
Lloyd 5 Yes 66,990 41,490 na 5.20 715 37 (IDU) R32 Yes Yes including PCB), long air throw, blue fins coating, low-gas
300V range
10Y detection, clean filter indication
(compressor)
1Y (product), 1Y 5 in 1 convertible, Durafin Ultra for

Within 130-
Samsung 5 Yes 72,990 42,990 5.00 5.16 749 46 (IDU) R32 Yes Yes (PCB), 10Y corrosion resistance, 15%/18%/31%
290V range
(compressor) bigger fan/wider inlet/wider blade

Blue Star 3 Yes 73,000 43,999 5.00 5.02 771 30.8 (IDU) R32 Yes Yes Yes (PCB), 10Y fins, smart ready voice command (at
Equipped with 1Y (product), 5Y Self adjusting capacity, dew clean

Daikin 5 Yes 67,200 45,490 5.28 5.20 786 30 (IDU) R32 Yes Yes stabilizer (PCB), 10Y technology, 7 Hepta sense, DNNS self-
inside (compressor) healing coating, power airflow/dual flaps

1Y (product), 5Y
31 (IDU) Within 120- ocean black protection, 4-way swing
LG 5 Yes 85,990 46,490 5.00 5.20 745 R32 Yes Yes (PCB), 10Y
56 (ODU) 290V range with 15m air throw, monsoon comfort
(compressor)
technology, auto clean
Since product differentiation through technological features is difficult in this category, we see more
brands moving towards better aesthetics. Lloyd (Havells) has seen a good response to its recently
launched premium ACs (Stellar and Stylus), even in tier-2/3 towns, on the back of its creative marketing
campaigns. They hope these premium ranges will elevate Lloyd’s brand perception.
Brands are moving towards better aesthetics Brands are moving towards better aesthetics
Lloyd’s Stellar AC with mood light and Stylus AC Godrej’s wood finish AC and Haeir’s dark edition
with replaceable front panels (to match the wall décor)


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A brand can also differentiate itself through higher availability (distribution reach), a superior/reliable
after-sale service (a key pain point in durables in India) and/or creative branding/marketing campaigns.
Distribution. Voltas remains among the most distributed AC brands in the country, with coverage of
over 30K retail outlets. It is followed by Haier (20K+), Daikin (15K+), and Lloyd (13K+). Blue Star
currently reaches only about 8K+ outlets, implying decent headroom for it to grow its distribution.
Service. Voltas has about 1,838 authorized service centers (including 24 direct centers) in India,
whereas Blue Star (1K), Daikin/Haier (700+) and Johnson Hitachi (640) are still lagging. Voltas’ bench
of engineers is 10K strong (15K during summer season).
We believe that when summers are as strong as 2024, consumers are impatient and would prefer
brands (such as Voltas) that offer immediate installation. Figure this—Voltas sold 2 mn ACs in
8MCY24, implying 8.3K ACs per day on an average. This number would be much higher during the
peak season, making it necessary to have a large team of service technicians. Voltas’ turnaround time
is less than 48 hours for installation and service.
In order to demonstrate how important is the after-sales service function for AC category—in FY2024,
Voltas, Blue Star, and Hitachi received 5.7 mn, 2.7 mn, and 0.6 mn customer complaints during the
year, significantly higher than their respective annual sale volumes.
Marketing. We believe that Voltas’ ‘Murthy’ campaign in 2012 was ingenious and that it strengthened
Voltas’ top-of-mind recall. Lloyd’s campaign with the Bollywood duo Ranveer Singh and Deepika
Padukone has also improved its brand appeal; Lloyd spends 300-400 bps higher than peers on A&P.
Blue Star onboarded Virat Kohli two years ago, to strengthen its presence in North.
Voltas remains among the most distributed AC brands in India

Distribution and service capabilities across brands
Retail Exclusive brand Auth service
Company/Brand outlets (#) outlets (#) providers (#) Engineers (#)
1,838 (including 10,000 (15,000
Voltas 30,000+ 320+ 24 direct service during summer
centers) season)
Blue Star 8,000+ na 1,060 8,000+
Lloyd (Havells) 13,000+ na na na
Daikin 15,000+ 350+ 700+ na
Haeir 20,000+ na 700+ 4,000+
640 (including
Johnson Hitachi 4,000+ 30+ 40 owned by na
company)

India Research
79
Voltas is dominant in North and East, while Lloyd/Blue Star are formidable in West/South, based on Google Search trends data
Share in Google Search trends across different states for top AC brands in past 1 year
Lloyd Blue Star Daikin Voltas Hitachi
100
90 16 18 15 17
80
70 34 25 29 35
60
50 13 13
40 13 7
30 18 24 17 22
20
10 20 20 25 20
0
Jammu and Kashmir
Uttarakhand
Tripura
Sikkim
Karnataka
Rajasthan
Tamil Nadu
Gujarat
Delhi
Jharkhand
Maharashtra
Assam
Odisha
Kerala
Average (West)
Average (East)
Mizoram
Chandigarh
Nagaland
Average (North)
Madhya Pradesh
Manipur
Punjab
Andhra Pradesh
Himachal Pradesh
Haryana
Goa
West Bengal
Chhattisgarh
Telangana
Meghalaya
Bihar
Uttar Pradesh
Arunachal Pradesh
Average (South)
Source: Google Search trends, Kotak Institutional Equities
As % of sales, the top AC players have largely maintained their spends over the past decade
A&P spends of top AC players in India
2015 2019 2024
Revenues (Rs mn)
Voltas (standalone) 51,689 66,932 86,876
Blue Star (standalone) 30,808 47,837 89,989
Daikin 19,846 36,524 68,129
Johnson Hitachi 15,728 22,413 19,187
Haier 12,377 35,501 63,020
A&P spends (Rs mn)

Voltas (standalone) 448 775 1,235
Blue Star (standalone) 519 1,200 1,880
Daikin 240 910 650
Johnson Hitachi 1,092 645 377
Haier 629 1,699 3,023
A&P spends (% of sales)

Voltas (standalone) 0.9 1.2 1.4
Blue Star (standalone) 1.7 2.5 2.1
Daikin 1.2 2.5 1.0
Johnson Hitachi 6.9 2.9 2.0
Haier 5.1 4.8 4.8
Note:
(a) FY2023 financials considered for Daikin and Haier
(b) Haier and LG derive only a part of their topline from ACs

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Search interest for Blue Star and Daikin have improved, while Voltas yet to surpass previous peak
Google search trends for top AC brands over time
Lloyd Linear (Lloyd) Blue Star Linear (Blue Star)
60 50
40
40 30
20
20
10
0 0
2022
2024
2015
2016
2017
2018
2019
2020
2021
2023
2016
2018
2015
2017
2019
2020
2021
2022
2023
2024
Daikin Linear (Daikin) Voltas Linear (Voltas)
50 150
40 100
30
20 50
10
0 0
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2016
2018
2020
2022
2015
2017
2019
2021
2023
2024
Source: Google Search trends, Kotak Institutional Equities
Just to recall, Kotak’s 2019 survey (link) covering AC buyers and dealers had found that while buying an
AC, factors such as brand name and product performance (energy efficiency, cooling etc.) take
precedence over the price of the product. Of the consumers surveyed then, 41% ranked brand name as
the top-most factor considered before buying an AC. We note that over a five-year period, running cost
of an AC is much higher than the initial capital cost. Therefore, customers are more conscious about the
brand, which is an indication of reliability and trust. We believe that Voltas is well-placed on this count
due to the trust factor that comes from being a Tata brand.
41% of consumers surveyed in 2019, highlighted that brand name is the top-most factor considered while buying an AC
Top-three factors that influence customer’s decision to purchase an AC (%)
Source: Kotak Institutional Equities E2G-AC industry survey (2019)

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81
40% of customers surveyed in 2019 bought the pre-decided AC brand only

Breakdown of customers who buy pre-decided brand versus purchase on offers/dealer
recommendations (%)
Pre-decided but Purchase based on
bought another recommendations
brand (within of retailer
consideration set) 16%
due to better offer
26%
Decided the brand Bought the pre-

at the outlet decided brand only
19% 39%
Source: Kotak Institutional Equities E2G-AC industry survey (2019)

India Research
82
Distribution moat of top brands is at risk, with the rise of large format retail
Leading room AC brands in India, with their wide reach in general trade (multi-brand outlets)
channel, were able to defend their turf, as earlier new players took time to build the same
distribution muscle. Because of the fragmented nature of GT, the brands enjoyed a considerable
negotiating power as well. The rise of large format retailers (such as Tata Croma, Reliance Retail,
Vijay Sales, Aditya Vision, among others), has partly balanced that equation; they bring with them
the additional challenge of private labels as well. AC remains a high-involvement category and
mix of online channel in overall sales is still low at ~10%. Nevertheless, e-commerce has
democratized distribution and discoverability, allowing newer brands to find some place in the
market. Net-net, we find limited comfort in AC brands’ ability to maintain their current channel
profitability, especially considering (1) aggressive expansion of LFR, (2) weakening proposition of
general trade, and (3) high competition in room AC industry.
Voltas remains among the most distributed AC brands in the country, with coverage of over 30K retail
outlets. It is followed by Haier (20K+), Daikin (15K+), and Lloyd (13K+). Blue Star currently reaches only
about 8K+ outlets, implying decent headroom for it to grow its distribution. Voltas grew its distribution
reach by 18% CAGR over FY2014-19 to 15K outlets and doubled that to 30K outlets over FY2019-24 (15%
CAGR). Going forward, industry participants expect overall outlet coverage to stagnate/moderate, as GT
(MBOs) is likely to consolidate, in order to compete against large format retail.
AC is a high involvement product and consumers prefer to do detailed research before buying a particular
product. As per our survey in 2019, more than 70% of the customers preferred to do (1) internet search
to compare different brands and products and (2) visit stores to physically check the product quality and
features before buying an AC. Consumers also depend on product/brand reviews and seek opinion from
friends and family. Thus, AC as a category, has among the lowest online salience (as % of overall industry
sales) in the consumer durables category. Nevertheless, the e-commerce channel has democratized
distribution/discoverability and made it easier for new brands to find some place in the market.
The rise of large format retailers (such as Tata Croma, Reliance Retail, Vijay Sales, Aditya Vision, among
others) has likely impacted the negotiating power of AC brands, that are already dealing with intense
competition within the space. These LFR chains are expanding at a rapid pace, leading to declining share
of general trade outlets. For the large consumer durables category, we believe that the shift from MBO
to LFR will continue at an accelerated pace, as LFR offers a significantly better retail experience than GT.
The top few electronics chains cumulatively have over 1,500 stores across the country.
Voltas grew its reach at a robust DD CAGR over past decade AC remains a high-involvement category, with low online mix
Voltas’ distribution reach in India (# outlets) Online salience in consumer durables categories
(%)
Voltas' outlet reach (#)

Online mix (%)
35,000
30,000 40 35 35
30,000 35
30
25,000 25 20
20 15 15
20,000 15 10
15,000
15,000
10
5
10,000 0
6,500
Water heaters
Air coolers
Refrigerators
Washing machines
Water purifiers
Air conditioners
5,000
0
FY2014 FY2019 FY2024

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83
Top few electronics chains cumulatively have over 1,500 stores across India
Latest store count of large format electronics retailers in India (#)
Latest store count (#)
600 521
500
400
400
300
200 145 145 137 120 93
100 60
0
Croma
Sonovision
Vasanth & co
Great Eastern
Aditya Vision
Reliance Digital
Vijay Sales
Electronics Mart
appliances
GT mix for leading AC brands stands at about 40-60%

Channel-wise mix for select AC brands in India (%)
General trade (%) Other channels (LFR, e-commerce, EBOs etc; %)
70
60 60
60
50 50
50
40 40
40
30
20
10
0
AC company 1 AC company 2 AC company 3

India Research
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Some LFR chains are making mid-teen gross margins now

P&L comp sheet for electronics retailers of India, March fiscal year-ends (Rs mn, % of sales)
Aditya Vision Tata Croma Vijay Sales Electronics Mart
2021 2022 2023 2024 2021 2022 2023 2024 2021 2022 2023 2021 2022 2023 2024
Amount (Rs mn)
Revenue from operations 7,480 8,991 13,222 17,433 53,150 82,069 158,511 178,325 36,489 53,048 70,683 32,019 43,493 54,457 62,854
Less COGS (6,561) (7,567) (11,112) (14,655) (45,701) (72,530) (142,429) (156,638) (30,910) (46,369) (62,216) (27,673) (37,554) (47,050) (53,707)
Gross profit 919 1,424 2,110 2,778 7,449 9,539 16,081 21,688 5,579 6,679 8,468 4,346 5,939 7,407 9,147
Less expenses
Employee cost (248) (292) (395) (568) (2,669) (3,430) (5,970) (7,441) (1,227) (1,555) (2,067) (614) (788) (940) (1,115)
Rent (reported) 0 (32) (48) (64) (670) (796) (1,552) (1,792) (353) (10) (12) (11) (5) (11) (18)
A&SP (60) (83) (87) (119) (628) (1,562) (4,016) (2,720) (429) (307) (471) (961) (1,403) (2,023) (2,321)
Freight (7) (10) (25) (31) (278) (516) (921) (952) 0 (671) (917) (18) (20) (27) (43)
Hospitality costs (7) (43) (48) (51) 0 0 0 0 0 0 0 0 0 0 0
Electricity and power cost (29) (59) (76) (107) (373) (491) (883) (1,235) (183) (262) (414) (158) (232) (320) (385)
Others (34) (75) (101) (164) (2,730) (3,944) (8,402) (9,420) (903) (939) (1,032) (543) (571) (725) (770)
Total expenses (385) (594) (780) (1,103) (7,348) (10,740) (21,743) (23,561) (3,096) (3,745) (4,913) (2,307) (3,020) (4,046) (4,652)
EBITDA 534 831 1,330 1,675 101 (1,201) (5,662) (1,873) 2,483 2,934 3,554 2,039 2,919 3,361 4,495
Less depreciation (128) (161) (204) (286) (2,007) (2,520) (3,664) (5,647) (587) (1,195) (1,398) (581) (713) (854) (1,057)
Less finance cost (170) (253) (295) (388) (2,156) (2,865) (5,145) (7,443) (450) (782) (1,129) (717) (846) (985) (1,077)
Add other income 38 15 29 65 1,345 1,305 1,644 1,769 542 1,212 1,842 55 38 110 101
PBT 273 431 860 1,067 (2,717) (5,281) (12,827) (13,195) 1,987 2,170 2,869 796 1,398 1,632 2,462
Less taxes (69) (79) (218) (296) 701 828 3,257 3,328 (500) (599) (757) (209) (359) (404) (622)
Recurring PAT 204 353 641 771 (2,017) (4,454) (9,570) (9,867) 1,487 1,571 2,112 586 1,039 1,228 1,840
Less exceptional items 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Reported PAT 204 353 641 771 (2,017) (4,454) (9,570) (9,867) 1,487 1,571 2,112 586 1,039 1,228 1,840
As % of sales
Revenue from operations 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Less COGS (87.7) (84.2) (84.0) (84.1) (86.0) (88.4) (89.9) (87.8) (84.7) (87.4) (88.0) (86.4) (86.3) (86.4) (85.4)
Gross profit 12.3 15.8 16.0 15.9 14.0 11.6 10.1 12.2 15.3 12.6 12.0 13.6 13.7 13.6 14.6
Less expenses
Employee cost (3.3) (3.2) (3.0) (3.3) (5.0) (4.2) (3.8) (4.2) (3.4) (2.9) (2.9) (1.9) (1.8) (1.7) (1.8)
Rent (reported) 0.0 (0.4) (0.4) (0.4) (1.3) (1.0) (1.0) (1.0) (1.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)
A&SP (0.8) (0.9) (0.7) (0.7) (1.2) (1.9) (2.5) (1.5) (1.2) (0.6) (0.7) (3.0) (3.2) (3.7) (3.7)
Freight (0.1) (0.1) (0.2) (0.2) (0.5) (0.6) (0.6) (0.5) 0.0 (1.3) (1.3) (0.1) (0.0) (0.1) (0.1)
Hospitality costs (0.1) (0.5) (0.4) (0.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Electricity and power cost (0.4) (0.7) (0.6) (0.6) (0.7) (0.6) (0.6) (0.7) (0.5) (0.5) (0.6) (0.5) (0.5) (0.6) (0.6)
Others (0.4) (0.8) (0.8) (0.9) (5.1) (4.8) (5.3) (5.3) (2.5) (1.8) (1.5) (1.7) (1.3) (1.3) (1.2)
Total expenses (5.1) (6.6) (5.9) (6.3) (13.8) (13.1) (13.7) (13.2) (8.5) (7.1) (7.0) (7.2) (6.9) (7.4) (7.4)
EBITDA 7.1 9.2 10.1 9.6 0.2 (1.5) (3.6) (1.1) 6.8 5.5 5.0 6.4 6.7 6.2 7.2
Less depreciation (1.7) (1.8) (1.5) (1.6) (3.8) (3.1) (2.3) (3.2) (1.6) (2.3) (2.0) (1.8) (1.6) (1.6) (1.7)
Less finance cost (2.3) (2.8) (2.2) (2.2) (4.1) (3.5) (3.2) (4.2) (1.2) (1.5) (1.6) (2.2) (1.9) (1.8) (1.7)
Add other income 0.5 0.2 0.2 0.4 2.5 1.6 1.0 1.0 1.5 2.3 2.6 0.2 0.1 0.2 0.2
PBT 3.7 4.8 6.5 6.1 (5.1) (6.4) (8.1) (7.4) 5.4 4.1 4.1 2.5 3.2 3.0 3.9
Less taxes (0.9) (0.9) (1.7) (1.7) 1.3 1.0 2.1 1.9 (1.4) (1.1) (1.1) (0.7) (0.8) (0.7) (1.0)
Recurring PAT 2.7 3.9 4.9 4.4 (3.8) (5.4) (6.0) (5.5) 4.1 3.0 3.0 1.8 2.4 2.3 2.9
Less exceptional items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Reported PAT 2.7 3.9 4.9 4.4 (3.8) (5.4) (6.0) (5.5) 4.1 3.0 3.0 1.8 2.4 2.3 2.9

India Research
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AC manufacturers have lost 300-600 bps gross margin over FY2019-24 period
Profit and loss statement and common-size P&L for AC players in India, March fiscal year-ends (Rs mn, % of sales)
2019 2024
Voltas Blue Star Daikin Hitachi Voltas Blue Star Daikin Hitachi
Amount (Rs mn)
Revenue from operations
(a) unitary products 36,311 32,044 34,164 20,834 75,529 58,956 64,058 17,582
(b) projects 24,837 11,067 0 0 4,145 23,153 0 0
(c) services 5,435 4,468 2,235 1,396 6,153 6,873 3,686 1,407
(d) others 349 257 125 182 1,050 1,008 385 198
Total revenues 66,932 47,837 36,524 22,413 86,876 89,989 68,129 19,187
Consumption of raw materials (28,306) (23,828) (19,406) (10,423) (41,010) (50,114) (50,666) (10,555)
Purchase of stock-in-trade (26,825) (7,907) (6,413) (5,041) (31,658) (15,092) (4,536) (1,601)
Changes in inventories 2,734 (1,670) 1,216 1,025 3,742 (1,086) 5,380 (1,330)
Gross profit 14,534 14,432 11,921 7,974 17,951 23,696 18,306 5,701
Staff cost (4,888) (3,727) (2,214) (2,158) (4,583) (5,972) (3,956) (2,240)
Advertising and sales promotion (775) (1,200) (910) (645) (1,235) (1,880) (650) (377)
Freight and forwarding (568) (837) (1,028) (824) (1,637) (1,269) (1,682) (578)
Service charges (650) (2,555) (1,430) (336) (1,422) (4,026) (2,579) (500)
Legal and professional charges (319) (498) (160) (99) (473) (838) (213) (280)
Travelling and conveyance (487) (432) (170) 0 (357) (590) (256) (59)
Power and fuel (92) (171) (140) (95) (156) (181) (184) (189)
Others (2,903) (2,039) (2,146) (2,179) (2,871) (3,122) (3,269) (1,491)
EBITDA 3,853 2,973 3,723 1,638 5,218 5,817 5,516 (13)
Depreciation (197) (692) (708) (442) (428) (754) (1,364) (644)
Finance costs (229) (449) (499) (27) (209) (560) (500) (166)
Other income 2,626 231 263 154 3,001 413 459 101
PBT 6,052 2,063 2,780 1,324 7,582 4,917 4,112 (722)
Tax (1,663) (581) (859) (464) (1,539) (1,242) (1,050) 233
PAT 4,389 1,482 1,921 859 6,043 3,675 3,062 (489)
Commonsize (revenue = 100)

Revenue from operations
(a) unitary products 54 67 94 94 87 66 94 92
(b) projects 37 23 0 0 5 26 0 0
(c) services 8 9 6 6 7 8 5 7
(d) others 1 1 0 1 1 1 1 1
Total revenues 100 100 100 101 100 100 100 100
Consumption of raw materials (42) (50) (53) (47) (47) (56) (74) (55)
Purchase of stock-in-trade (40) (17) (18) (23) (36) (17) (7) (8)
Changes in inventories 4 (3) 3 5 4 (1) 8 (7)
Gross profit 22 30 33 36 21 26 27 30
Staff cost (7) (8) (6) (10) (5) (7) (6) (12)
Advertising and sales promotion (1) (3) (2) (3) (1) (2) (1) (2)
Freight and forwarding (1) (2) (3) (4) (2) (1) (2) (3)
Service charges (1) (5) (4) (2) (2) (4) (4) (3)
Legal and professional charges (0) (1) (0) (0) (1) (1) (0) (1)
Travelling and conveyance (1) (1) (0) 0 (0) (1) (0) (0)
Power and fuel (0) (0) (0) (0) (0) (0) (0) (1)
Others (4) (4) (6) (10) (3) (3) (5) (8)
EBITDA 6 6 10 7 6 6 8 (0)
Depreciation (0) (1) (2) (2) (0) (1) (2) (3)
Finance costs (0) (1) (1) (0) (0) (1) (1) (1)
Other income 4 0 1 1 3 0 1 1
PBT 9 4 8 6 9 5 6 (4)
Tax (2) (1) (2) (2) (2) (1) (2) 1
PAT 7 3 5 4 7 4 4 (3)
Note:
(a) Standalone financials considered for Voltas and Blue Star
(b) Voltas reclassified its commercial AC segment to UCP in FY2021

India Research
86
Company section—Voltas regains share, while Lloyd focuses on profitability

Among the companies that we cover, we note that Voltas has regained market share in CY2024,
on the back of its round-the-clock operations and strong support from OEMs to meet market
demand during peak summer, even as the industry faced supply chain disruptions. Havells
(Lloyd)’s strategy to sell closer to the peak season has had a growth trade-off, but its profitability
is significantly better than earlier. Among the uncovered names, Blue Star has been gaining
market share, on the back of its distribution expansion and recent foray into affordable RACs,
while Johnson Controls Hitachi has witnessed some turnaround this year, after a dismal CY2023.
Our FV of Rs1,150 for Voltas, values UCP business at 35X Dec-26 PE. Even in our bull-case (blue
sky scenario) FV of Rs1,800, we find limited upside in Voltas from CMP.
Voltas. Over FY2021-24, Voltas’ market share (based on YTD Feb or Mar of respective years) had
declined from 25.6% to 18.7%. While we acknowledge that this data was largely on the back of MBO
sales and couldn’t accurately capture other channels (such as EBOs), we believe that some share loss
(at overall level) would have happened. In 9MCY24, Voltas’ growth in UCP business (+44% yoy) has
outpaced peers (except Hitachi, which benefited owing to a weak base) and it has regained market
share even in the MBO channel. However, margin expansion (in % terms) remained elusive, despite
such strong volume growth. Management continues to focus on absolute EBIT growth and does not
foresee margins expanding to double-digit in the near future (given high competition). We discuss our
broad assumptions for base-case and bull-case DCF valuation below –
 Base-case (FV of Rs1,150). We expect RAC industry to grow to ~22/69/106 mn units by FY2030E/
FY2040E/FY2045E, implying 90%+ penetration (based on 1.5X average ownership per household)
by FY2045E. We expect Voltas’ RAC market share and UCP EBIT margin to be at 25%/9% in
FY2045E. Focus on captive manufacturing would lead to a moderation in gross fixed asset turns
at 9.1X by FY2045E. Net-net, our assumptions imply a ~14% FCFF CAGR over FY2026-45E. We
value the EMP and EPS businesses at 12X Mar-27E EPS and implied valuation for UCP business
turns out to 33X Mar-27E EPS (including other income).
 Bull-case (FV of Rs1,800). We expect RAC industry to grow to ~22/69/106 mn units by FY2030E/
FY2040E/FY2045E, implying near universal penetration (based on 1.5X average ownership per
household) by FY2045E. We expect Voltas’ RAC market share and UCP EBIT margin to be at
30%/11% in FY2045E. Focus on captive manufacturing would lead to a moderation in gross fixed
asset turns at 10.6X by FY2045E. Net-net, our assumptions imply a ~17.5% FCFF CAGR over
FY2026-45E. We value the EMP and EPS businesses at 20X Mar-27E EPS and implied valuation for
UCP business turns out to 53X Mar-27E EPS (including other income).
Havells (Lloyd). Lloyd reported the fastest growth (in terms of primary sales) over FY2018-24, as
compared to its listed AC peers. The brand, in order to build its presence in modern format retail
(negligible at the time of acquisition), had to offer higher margin than peers. Its pricing was also at a
discount to the market leader. Having reached a meaningful topline, the brand has pivoted its strategy
to sell closer to the peak season (which had some impact on primary growth due to capacity shortage
during the season; company is expanding its captive capacity to 3 mn units to cater to peak demand)
and has also started to focus more on premium end (launched models as expensive as Rs60K) to
elevate its brand perception. Lloyd’s pricing on e-commerce also seems to be at a slight premium to
Voltas now. We note that Lloyd’s contribution margin has been in double-digits for past three quarters,
which enabled it to expand EBIT margin to 3.8% in 9MCY24 (despite continued intensity on A&P
spends, which remain 300-400 bps higher than peers).
Blue Star forayed into the room AC market in 2011. It started as a premium brand and later launched
affordable premium ACs as well. Most recently, it launched its affordable range around end-CY2023.
The brand enjoys a high recall in South; in order to build its presence in the North, they onboarded
Virat Kohli as its brand ambassador about two years ago. The company has been disciplined in its
approach and has not sacrificed margins in order to gain market share. On the back of its quality focus
(in-house manufacturing), the brand has expanded its market share in RAC to 13.75% at present. In
9MCY24, its unitary products segment has grown at 32% (higher than Lloyd but lower than Voltas)—
partly impacted by weakness in non-RAC segments.

India Research
87
Voltas lost some market share over FY2018-24, but has grown faster than peers (except Hitachi) in 9MCY24
Indian AC industry—comparison of sales and margins of top brands, March fiscal year-ends (Rs mn, %)
2018-24 (%
2018 2019 2020 2021 2022 2023 2024 CAGR) 9MCY23 9MCY24
Revenues (Rs mn)
Voltas (UCP) 32,261 31,556 40,737 42,185 48,819 64,745 81,605 13.4 57,714 83,395
Blue Star (UP) 21,892 22,690 23,006 18,683 26,122 36,269 45,922 13.1 31,957 42,054
Lloyd 14,141 18,556 15,903 16,888 22,606 33,686 37,852 17.8 30,624 38,517
Daikin 31,943 36,524 40,052 33,650 48,336 68,129 na 16.4 na na
Hitachi 22,583 22,413 21,974 16,465 21,590 23,844 19,187 1.1 13,950 21,641
LG (AC revenues) 22,695 23,489 24,892 22,608 28,703 39,978 42,991 12.0 na na
Revenue growth (%)

Voltas (UCP) (2) 29 (13) 16 33 26 44
Blue Star (UP) 4 1 (19) 40 39 27 32
Lloyd 31 (14) 6 34 49 12 26
Daikin 14 10 (16) 44 41 na na
Hitachi (1) (2) (25) 31 10 (20) 55
LG (AC revenues) 3 6 (9) 27 39 8 na
EBIT (Rs mn; incl other income)

Voltas (UCP) 4,749 3,254 5,121 5,837 5,134 5,378 6,935 2.9 5,058 7,137
Blue Star (UP) 1,931 1,859 1,623 1,088 1,559 2,823 3,603 11.0 2,579 3,534
Lloyd na na (401) 741 (711) (2,227) (1,644) na (1,562) 822
Daikin 2,704 3,279 4,123 2,560 3,503 4,612 na 11.3 na na
Hitachi 1,533 1,351 1,241 499 325 (821) (555) na (999) 813
EBIT margin (%; incl other income)

Voltas (UCP) 14.7 10.3 12.6 13.8 10.5 8.3 8.5 -620 bps 8.8 8.6
Blue Star (UP) 8.8 8.2 7.1 5.8 6.0 7.8 7.8 -100 bps 8.1 8.4
Lloyd na na (2.5) 4.4 (3.1) (6.6) (4.3) na (5.1) 2.1
Daikin 8.5 9.0 10.3 7.6 7.2 6.8 na na na na
Hitachi 6.8 6.0 5.6 3.0 1.5 (3.4) (2.9) -970 bps (7.2) 3.8
Note:
(a) FY2018-23 CAGR considered for Daikin
(b) For Voltas, we have adjusted revenue/EBIT CAGR to account for the restatement of commercial AC business from EMP to UCP wef FY2021

India Research
88
Voltas—base case DCF-based valuation for UCP and overall valuation for the company
2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E 2045E 2026-45E (% CAGR)
Industry
RAC industry volume (mn units) 13.0 14.0 15.7 17.6 19.7 22.1 38.9 68.6 105.5 11.2
RAC industry volume growth (%) 30.0 8.0 12.0 12.0 12.0 12.0 12.0 12.0 7.0
RAC population in India (mn units) 81.2 90.5 99.9 109.9 122.4 135.6 246.4 434.2 732.4
Households (mn) 352.4 361.5 370.8 380.5 390.4 400.6 442.2 488.3 539.1
RAC penetration (%) 15.4 16.7 18.0 19.3 20.9 22.6 37.1 59.3 90.6
Voltas
RAC market share (%) 20.2 20.4 21.3 21.5 21.7 21.9 22.9 23.9 25.0
RAC volume (mn units) 2.6 2.9 3.3 3.8 4.3 4.8 8.9 16.4 26.3 12.4
RAC ASP (Rs/unit) 24,480 24,970 25,469 25,978 26,498 27,028 29,841 32,947 32,947 1.5
RAC sales (Rs mn) 64,284 71,517 85,105 98,139 113,160 130,468 265,478 539,165 867,468 14.0
RAC sales growth (%) 33.9 11.3 19.0 15.3 15.3 15.3 15.2 15.2 8.3
Non-RAC sales (Rs mn) 40,986 46,912 54,345 61,138 68,475 77,034 124,064 199,806 293,581 10.1
Non-RAC sales growth (%) 22.0 14.5 15.8 12.5 12.0 12.5 10.0 10.0 8.0
UCP sales (Rs mn) 105,270 118,429 139,450 159,277 181,634 207,502 389,542 738,971 1,161,049 12.8
EBIT (Rs mn) 9,001 10,303 12,272 14,176 16,347 18,675 35,059 66,507 104,494 13.0
EBIT margin (%) 8.6 8.7 8.8 8.9 9.0 9.0 9.0 9.0 9.0
Post-tax EBIT (Rs mn) 6,714 7,686 9,155 10,575 12,195 13,932 26,154 49,615 77,953 13.0
Depreciation (Rs mn) 693 803 910 1,051 1,212 1,401 2,798 5,393 8,434
Change in working capital (Rs mn) (3,207) (1,856) (2,936) (2,817) (3,201) (3,727) (6,935) (13,786) (14,491)
Capital expenditure (Rs mn) (3,537) (1,515) (1,510) (1,979) (2,280) (2,687) (5,404) (10,289) (10,402)
Free cash flow to firm (Rs mn) 664 5,118 5,619 6,830 7,927 8,918 16,612 30,933 61,494 14.0
FCFF growth (%) 671.1 9.8 21.6 16.1 12.5 12.4 12.8 9.9
WACC (%) 12.0 12.0 12.0 12.0 12.0 11.5 11.5 11.0
Discount factor 0.3 1.3 2.3 3.3 4.3 9.3 14.3 19.3
Discounted cash flow (Rs mn) 4,936 4,838 5,251 5,441 5,466 6,023 6,508 8,260
Other assumptions for DCF

Gross block 9,154 10,669 12,179 14,158 16,437 19,125 39,547 79,034 128,293
Accumulated Depreciation (2,803) (3,605) (4,516) (5,567) (6,779) (8,179) (18,975) (40,056) (76,095)
Net Block 6,351 7,064 7,663 8,591 9,659 10,945 20,573 38,979 52,197
Depreciation as % of gross block 7.6 7.5 7.5 7.4 7.4 7.3 7.1 6.8 6.6
Gross FATR (%) 11.5 11.1 11.5 11.3 11.1 10.9 9.9 9.4 9.1
Net FATR (%)
NWC ex-cash 13,901 15,757 18,694 21,511 24,712 28,439 55,335 108,667 176,540
NWC ex-cash as % of sales 13.2 13.3 13.4 13.5 13.6 13.7 14.2 14.7 15.2
DCF parameters
Terminal growth (%) 6.0
PV of terminal value (Rs mn) 176,888

Sum of discounted DCF (Rs mn) 128,060
Implied equity value of UCP business (Rs mn) 304,948
Implied share price (Rs/share) 922
Voltas sum-of-the-parts
Mar-27E Value (Rs per Market cap

Segment P/E (X) share) (Rs bn)
UCP 33 922 305
EMP 12 61 21
EPS 12 67 22
Total 1,050 348
Voltbek JV (DCF-based value) 100 33
Total Fair Value (Rs/share) 1,150 381

India Research
89
Voltas—bull-case DCF-based valuation for UCP and overall valuation for the company
2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E 2045E 2026-45E (% CAGR)
Industry
RAC industry volume (mn units) 13.0 14.0 15.7 17.6 19.7 22.1 38.9 68.6 105.5 11.2
RAC industry volume growth (%) 30.0 8.0 12.0 12.0 12.0 12.0 12.0 12.0 7.0
RAC population in India (mn units) 81.2 90.5 99.9 109.9 122.4 135.6 246.4 434.2 732.4
Households (mn) 352.4 361.5 370.8 380.5 390.4 400.6 442.2 488.3 539.1
RAC penetration (%) 15.4 16.7 18.0 19.3 20.9 22.6 37.1 59.3 90.6
Voltas
RAC market share (%) 20.2 20.7 21.2 21.7 22.2 22.7 25.2 27.7 30.2
RAC volume (mn units) 2.6 2.9 3.3 3.8 4.4 5.0 9.8 19.0 31.9 13.4
RAC ASP (Rs/unit) 24,720 25,462 26,225 27,012 27,823 28,657 33,222 38,513 38,513 2.2
RAC sales (Rs mn) 64,915 73,999 87,427 103,234 121,835 143,714 325,950 731,991 1,227,391 15.9
RAC sales growth (%) 35.2 14.0 18.1 18.1 18.0 18.0 17.7 17.5 8.8
Non-RAC sales (Rs mn) 40,355 44,430 52,023 59,827 68,801 79,121 142,579 256,932 413,791 12.5
Non-RAC sales growth (%) 20.1 10.1 17.1 15.0 15.0 15.0 12.5 12.5 10.0
UCP sales (Rs mn) 105,270 118,429 139,450 163,061 190,636 222,835 468,529 988,923 1,641,182 14.8
EBIT (Rs mn) 9,001 10,303 12,272 14,675 17,538 20,947 46,853 103,837 180,530 16.3
EBIT margin (%) 8.6 8.7 8.8 9.0 9.2 9.4 10.0 10.5 11.0
Post-tax EBIT (Rs mn) 6,714 7,686 9,155 10,948 13,084 15,626 34,952 77,462 134,675 16.3
Depreciation (Rs mn) 693 803 910 1,062 1,239 1,444 2,999 6,248 10,227
Change in working capital (Rs mn) (3,207) (1,856) (2,936) (3,328) (3,915) (4,604) (9,615) (21,066) (22,321)
Capital expenditure (Rs mn) (3,537) (1,515) (1,510) (2,125) (2,493) (2,924) (6,033) (13,092) (13,649)
Free cash flow to firm (Rs mn) 664 5,118 5,619 6,557 7,915 9,543 22,303 49,553 108,932 17.5
FCFF growth (%) 671.1 9.8 16.7 20.7 20.6 17.3 17.3 12.8
WACC (%) 12.0 12.0 12.0 12.0 12.0 11.5 11.5 11.0
Discount factor 0.3 1.3 2.3 3.3 4.3 9.3 14.3 19.3
Discounted cash flow (Rs mn) 4,936 4,838 5,041 5,433 5,849 8,087 10,426 14,506
Other assumptions for DCF

Gross block 9,154 10,669 12,179 14,304 16,796 19,720 42,401 91,567 155,562
Accumulated Depreciation (2,803) (3,605) (4,516) (5,578) (6,816) (8,260) (19,694) (43,488) (86,460)
Net Block 6,351 7,064 7,663 8,726 9,980 11,460 22,707 48,079 69,102
Depreciation as % of gross block 7.6 7.5 7.5 7.4 7.4 7.3 7.1 6.8 6.6
Gross FATR (%) 11.5 11.1 11.5 11.4 11.4 11.3 11.1 10.8 10.6
Net FATR (%)
NWC ex-cash 13,901 15,757 18,694 22,022 25,936 30,540 66,556 145,423 249,546
NWC ex-cash as % of sales 13.2 13.3 13.4 13.5 13.6 13.7 14.2 14.7 15.2
DCF parameters
Terminal growth (%) 6.0
PV of terminal value (Rs mn) 306,878

Sum of discounted DCF (Rs mn) 179,117
Implied equity value of UCP business (Rs mn) 485,995
Implied share price (Rs/share) 1,469
Voltas sum-of-the-parts
Mar-27E Value (Rs per Market cap

Segment P/E (X) share) (Rs bn)
UCP 53 1,469 486
EMP 20 104 36
EPS 20 106 37
Total 1,680 558
Voltbek JV (DCF-based value) 120 40
Total Fair Value (Rs/share) 1,800 598

India Research
90
Annexures
Daikin India—P&L snapshot, March fiscal year-ends (Rs mn)

2015 2016 2017 2018 2019 2020 2021 2022 2023
Net revenues 19,846 23,690 28,404 31,943 36,524 40,052 33,650 48,336 68,129
RM costs (13,788) (15,361) (17,618) (21,211) (24,603) (26,567) (23,006) (34,710) (49,823)
Employee costs (1,194) (1,455) (1,780) (1,952) (2,214) (2,650) (2,278) (3,103) (3,956)
Other expenses (4,070) (5,797) (7,172) (5,958) (5,985) (5,735) (4,685) (6,008) (8,833)
Total operating costs (19,051) (22,613) (26,570) (29,120) (32,801) (34,953) (29,969) (43,820) (62,612)
EBITDA 795 1,077 1,834 2,822 3,723 5,100 3,681 4,516 5,516
EBITDA margin (%) 4.0 4.5 6.5 8.8 10.2 12.7 10.9 9.3 8.1
Depreciation (530) (580) (590) (515) (708) (1,386) (1,349) (1,378) (1,364)
Other income 283 390 487 396 263 409 228 365 459
Interest expense (110) (222) (374) (479) (499) (641) (257) (298) (500)
Exceptional item -
PBT 437 665 1,357 2,224 2,780 3,482 2,303 3,205 4,112
Income tax 85 (117) (378) (721) (859) (1,157) (805) (895) (1,050)
PAT from continuing operations before MI 522 548 978 1,503 1,921 2,324 1,498 2,310 3,062
Minority interest
Net profit 522 548 978 1,503 1,921 2,324 1,498 2,310 3,062
ETR (19.50) 17.61 27.89 32.43 30.91 33.24 34.94 27.92 25.53
Growth yoy (%)

Net revenues 19.4 19.9 12.5 14.3 9.7 (16.0) 43.6 40.9
EBITDA 35.5 70.3 53.9 31.9 37.0 (27.8) 22.7 22.1
Net profit 5.0 78.5 53.6 27.8 21.0 (35.5) 54.2 32.5
Margins (%)
Gross margin 30.5 35.2 38.0 33.6 32.6 33.7 31.6 28.2 26.9
EBITDA margin 4.0 4.5 6.5 8.8 10.2 12.7 10.9 9.3 8.1
Employee costs as % of revenues 6.0 6.1 6.3 6.1 6.1 6.6 6.8 6.4 5.8
A&P spends as % of revenues 1.2 3.7 3.2 2.7 2.5 1.5 1.7 1.3 1.0
After sales service as % of revenues - - - - 3.9 4.0 3.7 3.6 3.8
Daikin India —BS snapshot, March fiscal year-ends (Rs mn)

2015 2016 2017 2018 2019 2020 2021 2022 2023
Gross Block 2,176 2,411 3,189 5,123 6,531 9,447 10,286 11,945 12,815
Less accumulate depreciation - 566 1,131 1,581 2,180 3,480 4,411 5,193 6,057
Net block 2,176 1,844 2,058 3,543 4,351 5,966 5,876 6,752 6,758
CWIP - 177 317 158 243 66 71 139 8,819
Intangible assets 14 23 94 87 74 66 175 175 190
Non-current assets 761 793 677 787 1,088 673 583 1,278 2,240
Inventory 5,556 5,624 7,554 7,481 9,781 11,375 9,082 12,868 19,180
Receivables 1,168 1,697 1,615 1,850 3,420 2,443 1,949 2,740 3,916
Cash and cash equivalents 2,686 3,930 4,507 4,575 2,066 2,448 11,426 8,480 3,532
Investments 8 18 16 14 7 12 39 33 12
Other current assets 408 495 539 1,323 1,840 2,680 2,297 4,001 4,817
Total current assets 9,827 11,765 14,231 15,244 17,115 18,957 24,793 28,121 31,456
Trade payables (3,111) (3,832) (4,556) (5,316) (6,028) (5,937) (8,224) (9,193) (11,354)
Other current liabilities (1,197) (1,749) (2,753) (2,653) (2,822) (2,872) (4,473) (5,678) (7,232)
Net current assets 5,519 6,184 6,922 7,275 8,264 10,148 12,096 13,250 12,870
Total Assets 8,470 9,022 10,068 11,850 14,021 16,920 18,834 21,617 30,899
Share capital 8,029 8,029 8,029 8,029 8,029 8,029 8,029 8,029 13,029
Reserves and surplus 161 709 1,683 3,191 5,110 7,377 8,856 11,166 14,216
Minority interest - - - - - - - - -
Net worth 8,190 8,738 9,712 11,220 13,140 15,406 16,885 19,196 27,245
ST Borrowings - - - - - - 84 76
LT Borrowings 1 - 3 4 - - 18 8 -
Long-term liabilities 279 284 352 626 881 1,514 1,847 2,338 3,654
Total Liabilities 8,470 9,022 10,068 11,850 14,021 16,920 18,834 21,617 30,899
- - - - - - - - -
Key metrics
Gross asset turnover (X) 9.1 9.8 8.9 6.2 5.6 4.2 3.3 4.0 5.3
Inventory days (#) 102.2 86.7 97.1 85.5 97.7 103.7 98.5 97.2 102.8
Receivable days (#) 21.5 26.1 20.8 21.1 34.2 22.3 21.1 20.7 21.0
Payable days (#) 57.2 59.0 58.5 60.7 60.2 54.1 89.2 69.4 60.8
Net working capital days (#) 66.5 53.8 59.3 45.9 71.7 71.8 30.5 48.4 62.9
Average ROE 6.4 6.5 10.6 14.4 15.8 16.3 9.3 12.8 13.2
Average ROCE 3.9 4.8 9.7 14.9 17.1 17.4 9.4 12.5 13.3
Average ROIC 5.7 8.0 18.0 26.4 23.5 20.7 16.4 27.8 17.9

India Research
91
Johnson Controls Hitachi—P&L snapshot, March fiscal year-ends (Rs mn)

2017 2018 2019 2020 2021 2022 2023 2024
Net revenues 20,986 22,583 22,413 21,974 16,465 21,590 23,844 19,187
Excise duty (1,813) (729)
RM costs (12,198) (14,176) (14,439) (13,974) (10,317) (15,060) (17,881) (13,486)
Employee costs (1,222) (1,410) (1,652) (1,745) (1,673) (1,774) (1,836) (1,702)
Other expenses (4,075) (4,279) (4,685) (4,533) (3,301) (3,792) (4,315) (4,012)
Total operating costs (19,308) (20,594) (20,775) (20,252) (15,291) (20,625) (24,033) (19,200)
EBITDA 1,678 1,989 1,638 1,722 1,175 965 (188) (13)

EBITDA margin (%) 8.0 8.8 7.3 7.8 7.1 4.5 (0.8) (0.1)
Depreciation (519) (529) (442) (563) (755) (721) (753) (644)

Other income 68 74 154 82 79 81 120 101
Interest expense (44) (20) (27) (50) (136) (91) (75) (166)
Exceptional item - - - (8) 71 (7) (156) (268)
PBT 1,183 1,514 1,324 1,183 434 226 (1,052) (990)
Income tax (370) (512) (464) (348) (103) (65) 231 233
PAT from continuing operations before MI 813 1,002 859 835 331 161 (821) (757)
Minority interest
Net profit 813 1,002 859 835 331 161 (821) (757)
ETR 31.25 33.83 35.08 29.40 23.79 28.58 21.91 23.53
Growth yoy (%)

Net revenues 7.6 (0.8) (2.0) (25.1) 31.1 10.4 (19.5)
EBITDA 18.5 (17.6) 5.1 (31.8) (17.8) (119.5) (93.1)
Net profit 23.1 (14.2) (2.8) (60.4) (51.3) (609.6) (7.8)
Margins (%)
Gross margin 41.9 37.2 35.6 36.4 37.3 30.2 25.0 29.7
EBITDA margin 8.0 8.8 7.3 7.8 7.1 4.5 (0.8) (0.1)
Employee costs as % of revenues 5.8 6.2 7.4 7.9 10.2 8.2 7.7 8.9
A&P spends as % of revenues 0.3 0.4 0.4 0.6 0.6 0.7 0.5 1.5

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Upgrade to BUY; growth recovery ahead Company data and valuation summary
Indegene’s stock price has corrected by ~12% in the last one month and Stock data
presents an attractive entry point for investors. Indegene will benefit both
CMP(Rs)/FV(Rs)/Rating 591/730/BUY
from strong market growth (courtesy low outsourcing penetration and high
52-week range (Rs) (high-low) 737-469
scope for digitalization in life sciences commercial operations) and healthy
Mcap (bn) (Rs/US$) 141/1.7
market share gains (courtesy strong positioning). Revenue growth should
ADTV-3M (mn) (Rs/US$) 711/8.4
accelerate in FY2026E after a tepid FY2024-25E, aided by better market
growth and resolution of client-specific issues. We are confident of long-term Shareholding pattern (%)
healthy double-digit growth for Indegene. Upgrade to BUY from ADD earlier.
0.0
4.81.6
Expect growth acceleration in FY2026E 0.1
Indegene’s US$ revenue growth slowed down to 7.9% CAGR in FY2023-25E after 24.3
an impressive 46.8% US$ revenue CAGR in FY2020-23. The slowdown is a result
of pharma industry revenue headwinds, slowdown in the pace of digitalization 69.1
post the rush during Covid and spending cuts in a few key clients. We believe
client-specific issues are on the mend and will get resolved in 2HFY25. We
Promoters FPI s MFs BFIs Retail Others
expect improved market growth in FY2026E, driven by better revenue outlook
Private Circulation Only. This document may only be distributed to QIBs (qualified institutional buyers) as defined under rule 144A of the Securities A ct of 1933
among pharma companies and increase in the pace of digitalization. Indegene Price performance (%) 1M 3M 12M
is pursuing deals targeting upstream marketing activities; the success in this Absolute (12) (14) 0
endeavor can provide additional kicker to growth. We expect US$ revenue Rel. to Nifty (14) (13) 0
growth of 13-14% in FY2026-27E from 7.1% in FY2025E. We continue to expect Rel. to MSCI India (15) (12) 0
20% EBITDA margins in FY2025E.

EPS (Rs) 16.8 20.9 24.8
Healthy cross-selling in largest account can be replicated in others
EPS growth (%) 12.3 24.3 18.7
Indegene’s top account contributed US$47 mn revenue in 2QFY25 on LTM
P/E (X) 35.2 28.3 23.8
basis. The account has ramped up well in the last several years helped by cross -
P/B (X) 5.5 4.6 3.8
selling of multiple services across commercial, medical and analytics and share EV/EBITDA (X) 22.3 18.5 15.2
gains from competition. Indegene has strong momentum in the account with RoE (%) 20.1 17.6 17.6
opportunities to expand into upstream marketing activities, aided by capabilities Div. yield (%) 0.0 0.0 0.0
from Cult Health acquisition. The top account can become a US$75 mn account Sales (Rs bn) 28 32 37
within the next ~3 years and provides a template for other accounts. EBITDA (Rs bn) 6 7 8
Net profits (Rs bn) 4 5 6
Indegene is positioned in a sweet spot in the industry
Source: Bloomberg, Company data, Kotak Institutional Equities estimates
Indegene aspires to be a true digital-first end-to-end partner for life sciences
Prices in this report are based on the market close of
clients. Its single vertical focus and mid-tier size enable undivided attention to
December 11, 2024
the life sciences industry needs and high-touch relationships with clients.
Indegene is in a sweet spot. Digital cannibalizes existing business of agencies,
which also tend to have weaker domain expertise than Indegene and operate in
fragmented fashion. The operating models of ad agencies are typically no t
geared to adapt to tech shift, where one common platform sits across multiple
brands and countries. IT companies have weaker domain expertise, weaker
relationships beyond the CIO level and are generally multi-vertical focused.
CROs have great domain expertise and strong client relationships, but have
traditionally used a cost-plus model and do not have the incentive to use
technology because it can disrupt the existing model. Indegene’s breadth of
offerings is large and offers differentiation against life sciences specialists.
Sathishkumar S Kawaljeet Saluja Vamshi Krishna

93
Upgrade to BUY; Fair Value unchanged at Rs730

We continue to value Indegene at 30X (unchanged) Dec 2026E EPS, leading to an unchanged FV of
Rs730. Indegene is well positioned to benefit from rising digitalization, outsourcing and consolidation
trends in life sciences operations. The price correction presents an attractive entry point. The stock
presents an upside of ~24% at CMP. Upgrade to BUY from ADD earlier.
Confident of healthy double-digit long-term growth

Despite a weak FY2024 and a moderate FY2025E, we believe Indegene has the elements to ensure
healthy double-digit growth CAGR in the long term. Our confidence stems from the following factors:
Increasing digitalization, centralization and consolidation in pharma operations, especially in S&M.

Scope for further increase in digitization is huge and provides a long runway to digital-focused players
such as Indegene. Greater use of digital, data analytics and AI helps reduce the timeline from drug
development to launch, target stakeholders better post-launch, reduce fragmented operations and
increase efficiency of operations spends. Pharma companies continue to emphasize investments in
technology, data and digital, a tailwind for rise in digitization.
S&M outsourcing is underpenetrated, resulting in a fast-growing addressable market. As per

Indegene Everest Group report (2024), outsourcing penetration in S&M operations is in the 7-12%
range and lower than all other operations in the life sciences value chain. The report pegs outsourcing
growth at ~14.5%, the highest among all operations in the value chain. Indegene, a leader in the space,
has ~68% revenue exposure to S&M operations and will be a key beneficiary.
Provides services at the intersection of domain, interactive and technology in a cost-efficient

manner. Indegene provides services at the intersection of domain, interactive and technology creating
differentiation from peers with focus on individual layers.
Robust account management; top accounts have scope to scale up further. The client roster is
impressive and includes all top 20 global pharma companies. Indegene has demonstrated strong
mining and hunting motion aided by an experienced senior leadership team.
Indegene has strong connects with key stakeholders within client organizations. The company has
a strong connect with business leaders, functional heads such as Chief Marketing Officer, Chief
Commercial Officer, Chief Safety Officer, Chief Medical Officer, Head of Medical Writing and
technology heads such as the Chief Digital Officer.
Acquisitions can give multiplier effect. Indegene has acquired several niche companies in its history
that have provided it with new capabilities. CultHealth acquisition can open doors to upstream
marketing agency business, a lucrative market with healthy growth prospects.
Quarterly revenue trends, US$ mn
Revenue (US$ mn)

84.0
82.0
82.0 80.9 81.1 81.1
80.0
78.0 77.1 76.9
76.0
73.9
74.0
72.0
70.0
68.0
Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
Indegene
IT Services India Research
94
Quarterly EBIT margin trends, %
EBIT margin (%)

25.0
19.5
20.0 17.9
15.9 16.1 15.5
15.0 12.3 12.6
10.0
5.0
-
Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
Key model assumptions, March fiscal year ends, 2020-27E

2020 2021 2022 2023 2024 2025E 2026E 2027E
INR/USD rate 70.8 74.0 74.4 80.2 82.8 83.8 84.8 85.5
Revenues (US$ mn) 91 131 224 287 313 335 380 435
% growth 43.7 71.4 28.4 8.8 7.1 13.6 14.5
Headcount 2,002 3,059 4,825 5,431 5,081 5,345 6,067 6,928
Employee addition 1,057 1,766 606 (350) 264 722 861
Headcount growth (%) 52.8 57.7 12.6 (6.4) 5.2 13.5 14.2
Blended volume growth (%) 27.2 60.1 25.1 7.5 2.2 12.3 13.6
Blended pricing change (USD, %) 13.0 7.1 2.7 1.2 4.7 1.1 0.8
Blended utilization rate (%) 80.9 79.1 76.3 75.8 80.3 82.5 82.3 82.3
Indegene
95
Key operating metrics

4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25
Revenue (US$ mn) 77.1 73.9 76.9 80.9 81.1 81.1 82.0
Service offering mix (%)
Enterprise Medical Solutions 21.8 23.2 23.2 22.6 23.8 27.9 28.8
Enterprise Commercial Solutions 58.7 60.4 59.6 57.9 58.3 55.4 56.2
Omnichannel Activation 14.5 10.9 11.5 13.7 13.1 12.2 11.6
Others 5.0 5.5 5.7 5.8 4.8 4.5 3.4
Geography mix (%)
North America 69.4 66.6 66.1 66.7 64.8 64.8 NA
Europe 26.4 29.7 30.2 30.2 32.5 32.2 NA
India 1.5 1.1 1.2 0.5 0.6 0.7 NA
RoW 2.7 2.6 2.5 2.6 2.1 2.3 NA
Geography mix (%) (reclassified)
North America 66.1 69.1 70.2
Europe 30.2 27.9 27.0
India 1.2 0.7 0.6
RoW 2.5 2.4 2.2
Vertical mix (%)
Biopharma 91.3 92.8 93.0 93.9 93.8 93.5 94.1
Medical Devices 4.1 3.7 3.3 2.8 2.8 2.7 2.4
Emerging Biotech 3.5 2.7 3.1 2.5 2.7 2.6 2.6
Others 1.1 0.8 0.6 0.8 0.7 1.2 0.9
Client concentration (%) - LTM
Top client 12.1 13.8 13.9 13.5 12.7 14.3 14.4
Top 5 clients 48.8 49.2 47.6 46.5 42.6 40.7 41.0
Top 10 clients 69.2 69.1 65.6 65.8 63.9 59.3 58.9
Top 20 clients 86.0 85.5 83.2 83.6 82.8 80.6 80.0
Active client base 63 NA 63 NA 63 65 68

Client metrics
US$1-10 mn NA NA 28 NA 26 26 27
US$10-25 mn NA NA 4 NA 6 7 8
US$25 mn+ NA NA 3 NA 3 3 2
US$1 mn+ NA NA 35 NA 35 36 37
Employee metrics
Total headcount 5,431 5,321 5,230 5,181 5,081 5,093 5,016
- Delivery 4,765 4,656 4,565 4,510 4,422 4,414 4,338
- Support 666 665 665 671 659 679 678
Offshore 4,717 4,597 4,513 4,461 4,367 4,273 4,208
Onsite 714 724 717 720 714 820 808
Offshore mix (%) 86.9 86.4 86.3 86.1 85.9 83.9 83.9
Onsite mix (%) 13.1 13.6 13.7 13.9 14.1 16.1 16.1
Voluntary Attrition (%) - LTM 22.2 19.4 16.2 16.0 15.7 16.0 16.9
Expertise in healthcare-related educational backgrounds 20.0 20.0 19.9 20.5 21.5 21.9 22.6
DSO (days) 85 81 78 75 73 75 79
Indegene
96
Condensed consolidated financials of Indegene, March fiscal year-ends, 2020-27E (Rs mn)
2020 2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Revenue (US$ mn) 91 131 224 287 313 335 380 435
Revenues 6,429 9,663 16,646 23,061 25,896 28,064 32,233 37,220
EBITDA 1,437 2,305 2,869 3,962 5,054 5,603 6,501 7,548
Depreciation and amortization expense (193) (255) (335) (598) (761) (779) (734) (816)
EBIT 1,243 2,050 2,535 3,364 4,293 4,824 5,768 6,731
Profit before tax 1,189 2,287 2,734 3,630 4,560 5,451 6,777 8,045
Tax expense (261) (458) (637) (969) (1,219) (1,417) (1,762) (2,092)
Net profit (continued operations) 995 1,827 2,117 2,661 3,341 4,034 5,015 5,954
Extraordinary items (437) 30 (469) — 24 — — —
Net profit post extraorinary items 558 1,857 1,648 2,661 3,365 4,034 5,015 5,954
Profit/ (loss) from discontinued operations (621) (363) — — — — — —
Restated profit/(loss) for the period/ year (63) 1,494 1,648 2,661 3,365 4,034 5,015 5,954
Diluted EPS (Rs/ share) 2.5 8.7 9.6 12.0 15.1 16.8 20.9 24.8
Balance sheet
Total equity (156) 3,331 7,639 10,637 14,291 25,926 30,941 36,894
Current borrowings 1,105 71 73 — 697 — — —
Non-current borrowings 3,407 177 109 3,943 3,334 — — —
Provisions 242 331 619 845 1,110 970 1,050 1,146
Lease liabilities 317 266 475 1,082 865 1,272 1,367 1,462
Other non-current liabilities — 201 788 1,365 638 638 638 638
Other current liabilities 1,088 1,583 3,831 4,166 4,521 4,629 5,074 5,607
Total liabilities and equity 6,002 5,960 13,535 22,039 25,456 33,435 39,070 45,748
Cash and bank 1,803 1,399 5,173 858 1,910 2,435 4,241 4,880
Fixed assets 120 231 337 406 340 296 290 291
Goodwill 530 290 409 3,261 3,330 4,787 4,787 4,787
Other intangible assets 266 105 169 1,924 1,984 1,666 1,366 1,032
Receivables 2,236 2,854 4,439 6,420 6,480 7,074 8,124 9,381
Investments 132 — 1,199 6,140 7,965 13,965 16,965 21,965
RoU assets 276 233 462 1,050 804 724 683 646
Other assets 639 848 1,347 1,978 2,643 2,489 2,614 2,765
Total assets 6,002 5,960 13,535 22,039 25,456 33,435 39,070 45,748
Cash flow
Operating cash flow, excl. working capital 1,085 2,131 3,136 4,544 5,368 5,917 6,501 7,548
Working capital changes (592) 85 538 (2,160) 958 (472) (651) (779)
Income tax paid (net) (270) (496) (703) (1,082) (1,249) (1,417) (1,762) (2,092)
Operating cash flow 223 1,720 2,970 1,302 5,077 4,028 4,088 4,677
Finance income/ (expense) (59) (46) (39) (130) (10) 627 1,009 1,314
Operating cash flow post finance income/ (expense) 164 1,674 2,932 1,172 5,067 4,655 5,098 5,991
Capex (61) (206) (247) (188) (107) (168) (193) (223)
Acquisitions (126) (45) (164) (3,925) (1,721) (1,457) — —
FCF post acquisitions (23) 1,423 2,520 (2,941) 3,239 3,029 4,904 5,768
Key ratios/ metrics
Revenue growth (US$ terms) (%) 43.7 71.4 28.4 8.8 7.1 13.6 14.5
Re/US$ rate 70.8 74.0 74.4 80.2 82.8 83.8 84.8 85.5
EBITDA margin (%) 22.3 23.9 17.2 17.2 19.5 20.0 20.2 20.3
EBIT margin (%) 19.3 21.2 15.2 14.6 16.6 17.2 17.9 18.1
Adjusted PAT margin (%) 15.5 18.9 12.7 11.5 12.9 14.4 15.6 16.0
Indegene
UPDATE
KPIT Technologies (KPITTECH) SELL

IT Services
CMP(₹): 1,549 Fair Value(₹): 1,150 Sector View: Neutral NIFTY-50: 24,642 December 12, 2024
Some hope beyond near-term challenges Company data and valuation summary
We met KPIT for insights on demand evolution and medium-term growth Stock data
opportunity. The key highlights are–(1) auto OEMs continue to invest in R&D
CMP(Rs)/FV(Rs)/Rating 1,549/1,150/SELL
initiatives for SDV while optimizing costs elsewhere, (2) deal pipeline remains
52-week range (Rs) (high-low) 1,929-1,283
healthy, dominated by Europe and (3) scouting for acquisitions in select
Mcap (bn) (Rs/US$) 425/5.0
capabilities and funded by internal accruals and debt raise rather than equity
ADTV-3M (mn) (Rs/US$) 2,265/26.7
dilution. We maintain our cautious stance given the near-term weakness and
evolving industry structure that could have some implications on the Shareholding pattern (%)
addressable opportunity. Maintain SELL with FV of Rs1,150 (unchanged).
Confident on medium-term growth potential despite near-term uncertainty 7.5
Automotive clients are undergoing demand challenges, leading to some delay 17.3
39.5
in decision-making. However, R&D spends needed to future-proof their
4.4
businesses will continue. KPIT expects spends on ICE platforms or on legacy 10.4
areas could be curtailed further to fund R&D initiatives for new platform
20.9
development. A realignment of spends has led to some delay in deal closures
leading to near-term weakness. The deal pipeline remains healthy, led by
Europe. The company indicated that the programs have not been shelved by
Price performance (%) 1M 3M 12M
clients and expects continued benefits from share gains against European Absolute 10 (13) 6
peers. The company is partnering with clients to address dual requirements– Rel. to Nifty 8 (12) (12)
(1) increased efficiency of R&D spends and (2) accelerated development timelines. Rel. to MSCI India 7 (12) (18)
KPIT remains confident of sustaining elevated growth rate in the next few years,
driven by market opportunity and strong capabilities in major growth areas.
EPS (Rs) 27.4 34.5 42.6
Addressable opportunity would evolve with market dynamics EPS growth (%) 28.8 25.8 23.6
The company believes the technology transition underway in the vertical would P/E (X) 56.5 44.9 36.3
have implications on overall addressable opportunity. KPIT sees reasonable P/B (X) 15.3 12.3 10.0
scope for consolidation in the market, but believes partnering with stronger EV/EBITDA (X) 33.5 26.7 22.1
OEMs would position it better if such events playout. Further, business benefits RoE (%) 30.4 30.4 30.3
for stronger OEMs could trickle into some increase in R&D spending. Div. yield (%) 0.6 0.7 0.9
Sales (Rs bn) 59 70 82
Remains selective with large deal opportunities EBITDA (Rs bn) 12 15 18
KPIT sees multiple large deals to meet cost-saving initiatives of clients. Net profits (Rs bn) 7 9 12
However, the company indicated that some of those opportunities do not meet
its medium-term growth and profitability criteria. KPIT believes in maintaining
its differentiated positioning to partner with clients on their key business December 11, 2024
imperatives. The company is in pursuit of few such opportunities and hopes
them to materialize in 3-6 months, providing better comfort on sustaining
robust growth in FY2026E.
Acquisition to address white-spaces; funded through internal accruals & debt

KPIT is scouting for assets to strengthen capabilities in areas such as (1) Related Research
cybersecurity and compliance, (2) truck and off-highway and (3) cost reduction. → KPIT Technologies: Industry-wide challenges
The target’s revenues would be similar to recent acquisition, but overall
→ bite
ERD services: Auto pulse–challenges ahead
consideration could be higher. The company currently has ~US$120 mn gross
→ ERD services: Auto pulse - OEM spends
cash and would opt to fund any excess by raising debt. It could proceed with QIP
remain elevated
if there are reasonable opportunities that could establish its leadership positioning.
Kawaljeet Saluja Vamshi Krishna Sathishkumar S

98
Reasonable progress in Asian markets while US could remain weak in the near term
The company sees reasonable momentum in Japan and Korean markets while China remains a work in
progress. KPIT might also evaluate partnerships with a few Chinese vendors, with a proposition to
address gaps in their existing offerings that could enable market access. Further, it is also evaluating
working with Chinese OEMs that are foraying into new markets such as Europe. For instance, this could
include offering homologation services to these clients. However, the company acknowledges that the
ecosystem is mature and would have to evaluate opportunities in detail before proceeding given its
unique dynamics.
KPIT’s US revenues have trended in a narrow band in the past seven quarters. KPIT is working on
activating new logos in both existing segments and adjacencies such as trucks and off-highway to spur
growth in the geography. However, these initiatives would take time to fruition, leading to muted trends
in the near term.
Captives could be a threat but continued investments in capabilities would enable differentiated
positioning
KPIT believes that automotive OEMs now have propensity to do most of the R&D activity inhouse rather
than overly relying on vendors. Vendors that are offering legacy services and mostly competing on cost
could be most at risk as OEMs set up offshore-based captive centers. On the other hand, the company’s
investments in the past decade have positioned it as a beneficiary of current demand trends around SDV
and alternative powertrains (electric and hybrid). The company believes clients would adopt a measured
sourcing approach for R&D activities.
Gradual margin improvement in the medium term

KPIT’s revenue per employee of US$56.6k could moderate in the upcoming quarters, with increased
offshoring. Operating leverage and optimizing employee pyramid would be key levers to pull margins in
the medium term. The company indicated that pricing has remained broadly stable. The company will
prefer maintaining pricing discipline and rather extend more favorable payment terms to select clients
during periods of weaker demand. The company will continue to plough back some part of margin
expansion into R&D. KPIT expects 30-40 bps yoy EBITDA margin expansion in the medium term. EBITM
expansion could be a tad higher than that of EBITDAM.
Revenue growth driven by Asia and middleware segment

Exhibit 1: Revenue growth across geographies, verticals and business units (Sep 2024)
Revenues Growth (%) Contribution to C/C growth (%)
US$ mn qoq yoy revenues (%) qoq yoy
Total revenues 173.2 5.0 19.3 100.0 4.7 20.1
Geographical mix
US 47.6 2.4 7.8 27.5
Europe 84.5 (0.6) 10.6 48.8
Asia 41.1 23.1 66.6 23.7
Vertical mix
Passenger Cars 139.1 5.3 26.4 80.3
Commercial Vehicles 28.7 2.8 (1.4) 16.5
Others 5.5 9.2 (10.2) 3.1
Business unit mix (%)
Feature Development & Integration 103.4 2.7 15.2 59.7
Architecture & Middleware Consulting 40.6 20.2 38.1 23.4
Cloud Based Connected Services 29.2 (4.2) 12.1 16.9
KPIT Technologies
99
We forecast 19.5% c/c revenue growth and 17.3% EBIT margin in FY2025E
Exhibit 2: Key model assumptions, March fiscal year-ends, 2021-27E
2021 2022 2023 2024 2025E 2026E 2027E
INR/USD rate 74.1 74.1 80.4 83.0 83.9 84.8 85.5
Revenue (US$ mn) 275 328 418 587 698 824 961
% growth (9.6) 19.5 27.4 40.4 18.9 18.0 16.6
C/c revenue growth (%) NA 20.5 36.7 39.1 19.5 18.0 16.6
Organic c/c revenue growth (%) NA 17.4 27.3 31.3 19.5 18.0 16.6
EBITDA margin (%) 15.0 18.0 18.9 20.3 21.1 21.9 22.1
EBIT margin (%) 8.4 13.1 14.5 16.3 17.3 18.5 19.2
Headcount 6,366 8,245 11,013 12,856 14,437 17,237 19,737
Headcount addition (net) (759) 1,879 2,768 1,843 1,581 2,800 2,500
Revenue growth remains robust at 20.1% yoy

Exhibit 3: Revenue growth (c/c yoy), Dec-21-Sep-24 (%)
c/c yoy growth rate (%)

60.0
50.0 51.7 51.7
50.0 44.7
40.0
31.5
27.0 27.6
30.0 24.8
23.0
21.2 21.0 20.1
20.0
10.0
-
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
Deal TCV remains rangebound at US$207 mn; Book-to-bill trends steadily at 1.2X
Exhibit 4: Deal TCV, Mar-22-Sep-24 (US$ mn)
Deal TCV (US$ mn) Book-to-bill (X) [RHS]

450 423 4.0
400 3.5
350 3.0
300 272 261 2.5
250 207
190 189 202 2.0
200
155 156
142 1.5
150 125
100 1.0
50 0.5
- -
Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
KPIT Technologies
100
Revenue per development employee rises to US$56.6K, up 6.7% qoq and 9.2% yoy
Exhibit 5: Revenue per development employee, Mar-19-Sep-24 (US$ '000)
Revenue per development employee ('000)
60.0
56.6
55.0
50.0
45.0
40.0
35.0
30.0
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Jun-19
Jun-22
Jun-20
Jun-21
Jun-23
Jun-24
Dec-21
Dec-19
Dec-20
Dec-22
Dec-23
Mar-21
Mar-24
Mar-19
Mar-20
Mar-22
Mar-23
T21 clients’ revenue mix moderates to 85.5% (down 100 bps qoq)
Exhibit 6: Strategic T21 clients revenue mix, Jun-19-Sep-24 (%)
Strategic T21 clients (%)

88.0
86.0
85.5
84.0
82.0
80.0
78.0
76.0
74.0
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Jun-24
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Mar-24
Mar-20
Mar-21
Mar-22
Mar-23
KPIT Technologies
101
Exhibit 7: FPP revenue mix, Mar-19-Sep-24 (%)
Fixed price project revenue mix (%)

60.0
56.7
50.0
40.0
30.0
20.0
10.0
-
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Jun-21
Jun-22
Jun-19
Jun-20
Jun-23
Jun-24
Dec-20
Dec-21
Dec-19
Dec-22
Dec-23
Mar-19
Mar-24
Mar-20
Mar-21
Mar-22
Mar-23
Weak revenue growth in Americas with declining EBITDA margin

Exhibit 8: Segmental revenue and EBITDA trend, Sep 2022-Sep 2024
Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24

Segment revenue (Rs mn)
Americas 2,830 2,999 3,812 3,825 3,798 3,903 3,916 3,945 4,101
UK & Europe 3,356 4,974 5,267 5,814 6,507 6,832 7,228 7,288 7,591
Rest of the world 3,993 4,260 4,725 5,030 5,594 5,959 6,264 6,611 7,226
Segment EBITDA (Rs mn)
Americas 687 826 1,292 1,216 1,106 1,106 1,074 1,001 941
UK & Europe 559 909 722 827 1,150 1,573 1,761 1,703 1,700
Rest of the world 433 523 537 639 769 797 910 1,062 1,472
Segment EBITDA margin (%)
Americas 24.3 27.5 33.9 31.8 29.1 28.3 27.4 25.4 22.9
UK & Europe 16.7 18.3 13.7 14.2 17.7 23.0 24.4 23.4 22.4
Rest of the world 10.9 12.3 11.4 12.7 13.7 13.4 14.5 16.1 20.4
Exhibit 9: Segmental EBITDA margin (%) and revenue mix (%) (Sep 2024)
Change (bps)
Geographies EBITDA margin (%) QoQ YoY Revenue mix (%)
Americas 22.9 (243) (618) 27.5
UK & Europe 23.4 (97) 472 48.8
Rest of the world 16.1 430 662 23.7
Total 20.8 (29) 82 100.0
KPIT Technologies
102
KPIT added 62 development employees during the quarter (adjusted for those transferred to Qorix), 0.5%
increase qoq
Exhibit 10: Development headcount net adds, Jun-19-Sep-24
Net addition
1,200 1,028
942
1,000
800 714 730
600 511 502 540

383 408 382 374
400
209 177 167
200 82 115
5
-
(200)
(179) (172) (190)
(400) (289)
(600) (494)
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Jun-24
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Dec-19
Dec-21
Dec-23
Dec-20
Dec-22
Mar-20
Mar-22
Mar-24
Mar-21
Mar-23
R&D intensity has moderated in the past two quarters

Exhibit 11: R&D expense and intensity, Jun-21-Sep-24 (US$ mn, %)
R&D expense (US$ mn, LHS) R&D intensity (%, RHS)
4.0 3.7 3.5

3.5
3.5 3.3 3.3
3.0 3.0
3.0 2.7 2.7
2.5 2.5
2.3 2.4
2.5 2.2 2.1 2.1 2.2
2.0
2.0
1.5
1.5
1.0
1.0
0.5 0.5
- -
Sep-21
Sep-22
Sep-23
Sep-24
Jun-22
Jun-24
Jun-21
Jun-23
Dec-21
Dec-22
Dec-23
Mar-23
Mar-22
Mar-24
KPIT Technologies
103
Billed DSO declined by 1 day qoq to 45 days

Exhibit 12: Receivable days trend, Mar-19-Sep-24
DSO (days)
100
90
80
70
60
50
45
40
30
20
10
-
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Jun-21
Jun-24
Jun-19
Jun-20
Jun-22
Jun-23
Dec-22
Dec-19
Dec-20
Dec-21
Dec-23
Mar-22
Mar-19
Mar-20
Mar-21
Mar-23
Mar-24
Notes:
(a) DSO excluding unbilled receivables
KPIT Technologies
104
Exhibit 13: Key operating metrics, Jun-22-Sep-24

Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24
Revenues (US$ mn) 90 94 111 124 134 145 149 159 165 173
DSO (excl unbilled) 46 48 51 54 50 47 46 51 46 45
Revenue growth (qoq, c/c%) 6.0 8.3 19.3 8.5 7.1 9.0 4.3 5.1 4.7 4.7
Revenue growth (yoy, c/c%) 23.0 27.0 44.7 50.0 51.7 51.7 31.5 27.6 24.8 20.1
Revenue break-up
Geography (%)
US 38.9 37.0 32.0 36.1 33.5 30.4 29.9 29.7 28.2 27.5
Europe 39.9 43.6 51.5 49.6 50.8 52.6 52.8 51.7 51.5 48.8
Asia 21.2 19.4 16.4 14.3 15.7 17.0 17.3 18.6 20.3 23.7
Verticals (%)
Passenger Cars 74.5 73.6 77.8 74.4 75.1 75.8 78.3 79.0 80.1 80.3
Commercial Vehicles 24.5 25.2 21.3 24.8 21.5 20.0 17.4 17.5 16.9 16.5
Others 1.0 1.2 0.9 0.7 3.4 4.2 4.3 3.6 3.0 3.1
Business units (%) (new)
Feature Development & Integration 68.6 68.9 64.7 61.6 61.3 61.8 62.4 62.0 61.0 59.7
Architecture & Middleware Consulting 14.3 12.8 16.4 19.2 20.9 20.2 18.5 18.7 20.5 23.4
Cloud Based Connected Services 17.1 18.3 18.9 19.2 17.8 18.0 19.1 19.3 18.5 16.9
Revenue by contract type (%)
T&M 51.0 53.5 51.0 54.6 55.0 48.6 46.0 49.2 46.5 43.3
Fixed Price 49.0 46.5 49.0 45.4 45.0 51.4 54.0 50.8 53.5 56.7
Client metrics
Strategic T21 clients (%) 84.9 85.4 81.4 79.5 82.6 84.0 85.0 86.4 86.5 85.5
Active customers 60 60 60 60 60 60 60 60 60 60
Headcount details
Development 8,570 9,284 9,795 10,297 10,837 11,219 11,949 12,064 12,438 12,248
Enabling & sales 613 632 695 716 734 752 778 792 815 839
Total headcount 9,183 9,916 10,490 11,013 11,571 11,971 12,727 12,856 13,253 13,087
Other metrics
Revenue per development employee (US$) 41,951 40,569 45,105 48,092 49,439 51,773 49,926 52,725 53,018 56,558
Deal TCV (US$ mn) 155 142 272 423 190 156 189 261 202 207
R&D expense (US$ mn) 2.13 2.23 2.50 2.74 3.01 3.31 3.51 3.70 3.29 2.70
Currency mix (%)
USD 42.7 41.1 35.0 36.3 34.0 31.1 31.1 30.7 28.7 27.8
EUR 33.5 35.4 46.1 42.8 44.5 44.8 45.9 45.6 45.5 41.8
GBP 6.3 8.1 5.6 6.3 6.0 7.1 6.6 5.7 5.2 6.2
JPY 8.7 6.9 6.5 8.8 10.5 11.4 10.6 12.4 15.7 18.7
INR 5.8 5.9 4.3 4.1 3.5 3.8 3.3 3.5 3.0 3.6
Others 2.9 2.6 2.5 1.8 1.5 1.9 2.5 2.0 1.8 1.9
Hedge details
Hedge rates
USD/INR 78.9 80.4 81.5 82.8 83.1 83.4 84.0 84.0 84.3 84.7
EUR/INR 88.7 89.6 86.8 88.7 90.4 92.0 92.8 92.7 92.5 93.5
GBP/INR 104.5 103.0 100.9 101.2 103.1 105.2 105.5 105.7 106.2 108.7
JPY/INR 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6
Hedge Amounts (mn)
USD/INR 47.9 50.4 44.3 47.6 45.0 51.7 65.4 66.8 65.9 65.4
EUR/INR 10.9 13.0 23.4 24.7 25.4 25.9 34.9 34.8 34.1 50.2
GBP/INR 3.4 2.4 5.7 6.0 6.8 6.7 10.5 11.0 9.8 14.6
JPY/INR 282.0 1,017.0 2,469.0 1,955.0 1,415.0 3,175.0 2,980.0 4,220.0 6,488.0
KPIT Technologies
105
Exhibit 14: Condensed consolidated financials for KPIT technologies, March fiscal year ends (Rs mn), 2021-27E
2021 2022 2023 2024 2025E 2026E 2027E
Profit model
Revenue 20,357 24,324 33,650 48,715 58,594 69,826 82,167
Employee costs (13,415) (16,106) (21,553) (31,120) (37,443) (44,384) (52,135)
Other expenses (3,897) (3,832) (5,743) (7,682) (8,783) (10,168) (11,857)
EBITDA 3,045 4,385 6,355 9,913 12,368 15,274 18,174
Depreciation and amortization (1,332) (1,196) (1,464) (1,958) (2,213) (2,348) (2,433)
EBIT 1,714 3,189 4,891 7,955 10,155 12,926 15,741
Other income, net 11 254 53 (80) 241 232 465
Pretax profits 1,725 3,443 4,944 7,876 10,396 13,158 16,206
Tax expense (362) (683) (1,099) (2,019) (2,762) (3,553) (4,376)
Minority interest and exceptional items 42 (18) (49) 89 485 (172) (172)
Profit after tax 1,404 2,742 3,796 5,945 8,119 9,434 11,658
Dil. EPS (Rs) 5.2 10.0 14.0 21.8 29.7 34.5 42.6
Balance sheet
Total equity 12,097 13,251 16,633 21,630 27,671 34,387 42,457
Borrowings 31 26 492 447 — — —
Provisions 433 913 893 1,284 1,284 1,284 1,284
Other non-current liabilities 281 927 3,450 2,242 2,242 2,242 2,242
Other current liabilities 4,565 5,998 10,165 13,235 14,934 16,627 18,486
Total liabilities and equity 19,675 23,361 34,006 41,679 49,101 57,643 67,714
Cash and bank 7,008 8,928 5,491 7,705 9,786 15,783 22,873
Fixed assets 4,591 4,444 4,795 5,434 5,717 5,948 6,261
Intangible assets including goodwill 1,299 1,968 12,375 14,300 16,276 16,437 16,738
Receivables 3,777 4,410 7,748 9,558 11,237 13,391 15,758
Investments 1,276 1,292 642 945 2,348 2,348 2,348
Other assets 1,724 2,319 2,955 3,736 3,736 3,736 3,736
Total assets 19,675 23,361 34,006 41,679 49,101 57,643 67,714
Cashflow statement
Operating cash flow, excl. wc 3,527 4,763 7,382 10,518 13,229 15,451 18,249
Working capital changes 3,076 875 (1,769) 871 20 (462) (507)
Cash taxes paid (327) (888) (989) (1,371) (2,762) (3,553) (4,376)
Capital expenditure (600) (686) (1,295) (1,553) (1,875) (2,200) (2,568)
Acquisition consideration and deferred payments (226) (858) (6,229) (3,286) (1,997) — —
Other income 121 (68) 754 381 (241) (232) (465)
Free cash flow 5,676 4,064 3,329 8,464 8,612 9,237 10,799
Key ratios and assumptions
Revenue growth (%) (5.6) 19.5 38.3 44.8 20.3 19.2 17.7
EBITDA margin (%) 15.0 18.0 18.9 20.3 21.1 21.9 22.1
EBIT margin (%) 8.4 13.1 14.5 16.3 17.3 18.5 19.2
RoAE (%) 12.0 21.8 25.7 30.6 30.6 30.6 30.5
RoACE (%) 10.4 16.7 19.7 24.3 25.7 26.1 26.3
KPIT Technologies
UPDATE
CEAT (CEAT) SELL

Automobiles & Components
CMP(₹): 3,149 Fair Value(₹): 2,715 Sector View: Cautious NIFTY-50: 24,642 December 12, 2024
Strengthening its position in global OH tire segment Company data and valuation summary
CEAT has entered into a definitive agreement with Michelin to acquire Camso Stock data
brand’s off-highway construction equipment bias tire and tracks business
CMP(Rs)/FV(Rs)/Rating 3,149/2,715/SELL
from Michelin at an EV of US$225 mn. The acquisition will increase its OHT
52-week range (Rs) (high-low) 3,581-2,210
mix to 25-26%, which is a margin accretive segment. In the near term, the
Mcap (bn) (Rs/US$) 127/1.5
acquisition will be EPS dilutive, but we expect it to be accretive from FY2027E
ADTV-3M (mn) (Rs/US$) 844/10.0
as the company scales up business resulting in improved margins.
Acquisition will aid CEAT in scaling up international presence and offerings. Shareholding pattern (%)
3.6
Acquires Camso brand’s select businesses at EV of US$225 mn 14.0
3.0
CEAT entered into a definitive agreement with Michelin to acquire the Camso 4.2
13.5
47.2
brand’s off-highway construction equipment bias tire and tracks business from 12
4.5
47.2
Michelin in an all-cash deal at about US$225 mn, implying EV/sales of 15.1 18.8
~1.1X/1.2X based on CY2023/CY2024 revenues. Under the deal, CEAT will
Promoters FPIs MFs BFIs Retail Others
acquire two Sri Lanka-based facilities and IP associated with this business. The 16.6
acquisition would be funded through debt (70%) and internal accruals (30%). Price performance (%) 1M 3M 12M
Global ownership of the Camso brand will be transferred to CEAT after a three- Absolute 11 10 38
Rel. to Nifty 9 11 20
year licensing period. The transaction is expected to close within 6-9 months. Price performance (%) 1M 3M 12M
Rel. to MSCI India 8 12 14
Absolute 11 10 38
Transaction would be EPS dilutive over FY2025-26E; accretive after FY2027E Rel. to Nifty 9 11 20
Rel. to MSCI India 8 12 14
CEAT has not exactly shared the financials of the Camso brand business; we will EPS (Rs) 136.6 164.7 171.4
await further details on the same in the coming quarters. However, based on our EPS growth (%)
Forecasts/Valuations (19.4)
2025E 20.6
2026E 4.1
2027E
assumptions, we believe the transaction will be EPS transaction over FY2025- P/E
EPS (X)
(Rs) 23.0
136.6 19.1
164.7 18.4
171.4
26E (3-5%) due to a revenue decline in FY2025E (weak OEM demand trends) and P/B (X)
EPS growth (%) 2.9
(19.4) 2.6
20.6 2.3
4.1
its subsequent negative impact on profitability. Given the weak outlook from EV/EBITDA
P/E (X) (X) 9.6
25.0 8.4
20.7 7.8
19.9
global OHT players, we expect FY2026E would be challenging, after which we RoE (X)
P/B (%) 13.0
3.1 14.1
2.8 13.3
2.5
are expecting recovery in revenues and margins. In our analysis, we have Div. yield
EV/EBITDA (%)(X) 1.1
10.3 1.3
9.0 1.3
8.4
assumed 15.0-15.5% EBITDA margins over FY2025-26E and 18% in FY2027E. Sales
RoE (%)(Rs bn) 132
13.0 140
14.1 148
13.3
After the transaction, net debt/EBITDA will increase to 2.2X from 1.2X currently. EBITDA
Div. yield(Rs
(%)bn) 15
1.0 17
1.2 19
1.2
Net profits
Sales (Rs bn)
(Rs bn) 6
132 7
140 7
148
Acquisition will aid in improvement of OHT segment mix for CEAT EBITDA (Rs bn) 15 17 19
After the acquisition, the OHT segment mix for CEAT will rise to ~25-26% from Net profits (Rs bn) 6 7 7
15%, which is a higher margin business. The acquisition will give it access to a December 11, 2024
global customer base (40 OEMs and 200+ premium OHT distributors). Camso
will give CEAT the ability to widen its product base into tracks and construction December 11, 2024
bias tires. The company will adopt a dual brand strategy, where CEAT will be
focusing on mass market segments and Camso on premium segments. Camso
has 750 SKUs, which will result in 1.7k SKUs for CEAT.
Maintain our FY2025-27E consolidated EPS estimates; maintain SELL

Related Research
We have maintained our FY2025-27E consolidated EPS estimates as we await
exact financials of FY2025-27E. In the near term, we believe the transaction will →
be EPS dilutive, but with an improvement in capacity utilization, we expect →
improvement in its margin and RoCE profile after FY2027E. Revise FV of →
Rs2,715 (from Rs2,375) based on 16X December 2026E EPS (14X December
2026E EPS earlier). SELL stays.
Strengthening its position in global OH tire segment
CEAT reported 2QFY25 consolidated EBITDA of Rs3.6 bn (-21% yoy), 3%
Rishiour
below Voraestimates due to
Praveen
weakPoreddy
gross margin print. Given our expectation
of demand moderation in OEM and select replacement segments (price
increases), we believe volume growth will remain below street expectations.
Although the company is planning to implement a price increase to offset RM
inflation, competitive intensity remains elevated in select segments, which k.kathirvelu-kotak.com
could restrict it from taking further increases. SELL stays.
107
Camso is one of the largest players in track and compact construction bias tire segment
Camso is a premium brand in construction equipment tire and tracks, with strong equity and market
position in the EU (30% revenue mix) and North American (60% revenue mix) markets, with roughly equal
contribution from the OEM and replacement segments. Overall, Camso is a US$1.2 bn brand and it is
present across the compact construction, mining and agriculture segments; however, it is selling its
compact construction bias and tracks business to CEAT. Over the next three years, Michelin will transfer
the rest of the businesses to other brands and after that, CEAT will get full ownership of the Camso
brand. After that, CEAT can leverage the Camso brand and get into other segments. Currently, the Camso
brand has a 20% market share in the tracks business and 10% market share in the compact construction
bias tire business.
Other key takeaways from the call

Camso brand reported revenues of US$213 mn in CY2023; however, the company will witness a
decline in CY2024E owing to weakness in the OEM segment. Over the past few years (until CY2022),
the company has delivered a 5-6% revenue CAGR.
Currently, the plants are operating at 65% capacity utilization.

In terms of pricing, CEAT pricing in the OHT segment is US$3-4 per kg, whereas Camso pricing is
US$5.5-7.0 per kg.
The company will receive no licensing fees from Michelin over the next three years, as it is a part of
the enterprise value of the deal.
Currently, the profitability of the business is mid-high teens; however, over time, the company expects
the margin to improve to 20% and higher.
Market size of tracks business is around US$1 bn and compact construction bias business is also
around US$1 bn. The company highlighted that the track segment is growing faster and has a larger
premium play with customers. The compact construction bias segment has increased at CAGR of 2-
3%, whereas track business has increased at a CAGR of 6-7% over the past few years.
CEAT can use existing distributors of Camso to further expand its reach, as there is limited overlap
between the two brands’ current distributors.
The company will retain all employees of the Camso business.

Camso will not require major capex after the acquisition. Marginal capex would be required pertaining
to hardware installments in their plants.
Transaction would be EPS dilutive over FY2025-26E; expect it to be 3-4% accretive in FY2027E
Exhibit 1: Pro forma financials of CEAT after the acquisition of the Camso brand, March fiscal year-ends, 2025-27E (Rs mn, %)
CEAT consolidated Camso Pro-forma financials
2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Comments - Camso business assumptions
Profit model (Rs mn)
Net sales 131,808 139,729 147,564 17,220 17,564 18,443 149,028 157,294 166,006 Built revenue of USD205 mn for FY2025E and USD210 mn for FY2026E
EBITDA 15,165 17,412 18,522 2,583 2,722 3,320 17,748 20,135 21,842 Building 15% EBITDA margin for FY2025-26E and 17% for FY2027E
EBITDA margin (%) 11.5 12.5 12.6 15.0 15.5 18.0 11.9 12.8 13.2
Net interest cost (2,417) (2,351) (2,357) (1,701) (1,701) (1,701) (4,118) (4,052) (4,058) Interst cost is pertaining to acquistion cost of Camso brand at 9%
Depreciation (5,524) (6,352) (7,109) (1,205) (1,230) (1,291) (6,729) (7,582) (8,400) Depreciation assumed to be 7% of sales
Extraordinary income/(losses) 75 — — — — — — — —
Profit before tax 7,299 8,709 9,056 (323) (208) 328 6,901 8,501 9,383
Tax (1,979) (2,331) (2,422) — 52 (82) (1,979) (2,279) (2,504)
Profit from associates & minority interest 262 285 300 — — — 262 285 300
Reported net profit 5,581 6,663 6,934 (323) (156) 246 5,258 6,507 7,180
Adjusted net profit 5,527 6,663 6,934 (323) (156) 246 5,258 6,507 7,180
Adjusted EPS (Rs) 136.6 164.7 171.4 (8.0) (3.9) 6.1 130.0 160.9 177.5 Transaction would be 3-5% dilutive over FY2025-26E and 3-4% accretive for FY2027E
CEAT
Automobiles & Components India Research
108
After the acquisition, off-highway mix will increase to ~25-26% for CEAT
Exhibit 2: Pro forma revenue mix after acquisition of Camso brand, March fiscal year-ends, 2024 (%)
2024 2024 (including Camso Brand)
Truck & Bus (MHCV) 31.0 27.2

Two-wheeler/Three-wheeler 27.0 23.7
Passenger vehicles 20.0 17.5
LCV 7.0 6.1
Off-highway 15.0 25.5
Total 100.0 100.0
Most global tire names are trading at 0.8-1.0X EV/sales on CY2025E basis
Exhibit 3: Valuation comp of global tire companies, calendar year-ends, 2023-26E
P/E (X) EV/EBITDA (X) EV/sales (X) RoE (%)
Company 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E 2023 2024E 2025E 2026E
Global tyre companies
Continental 11.4 9.4 7.3 6.1 4.8 3.7 3.2 2.8 0.5 0.4 0.4 0.4 8.6 10.1 11.7 12.6
Michelin 11.7 10.4 9.4 8.4 5.7 4.9 4.6 4.0 0.9 0.9 0.9 0.9 11.3 12.0 12.4 13.1
Pirelli 11.3 10.2 8.9 8.3 5.8 5.0 4.6 4.2 1.2 1.1 1.0 0.9 8.9 9.4 10.2 10.8
Bridgestone Corp 11.0 9.9 9.9 8.7 5.0 4.6 4.4 4.1 0.9 0.9 0.8 0.8 10.5 11.1 10.3 10.8
Mean 11.4 10.0 8.9 7.9 5.3 4.5 4.2 3.8 0.9 0.8 0.8 0.7 9.8 10.7 11.2 11.8
Median 11.4 10.0 9.2 8.3 5.4 4.7 4.5 4.1 0.9 0.9 0.9 0.8 9.7 10.6 11.0 11.7
International rubber prices continued their uptrend in the past Domestic natural rubber prices have softened sharply in the
quarter and remain at elevated levels past one month
Exhibit 4: Tokyo commodity exchange rubber futures, 2013-24 Exhibit 5: Kottayam natural rubber RSS4 prices, 2013-24 (Rs
(Rs per kg) per kg)
290 310
240 260
190 210
140 160
90 110
40 60
Nov-14
Nov-16
Nov-18
Nov-20
Nov-22
Nov-24
Jul-13
Jul-15
Jul-17
Jul-19
Jul-21
Jul-23
Mar-14
Mar-16
Mar-18
Mar-20
Mar-22
Mar-24
Nov-14
Nov-16
Nov-18
Nov-20
Nov-22
Nov-24
Jul-13
Jul-15
Jul-17
Jul-19
Jul-21
Jul-23
Mar-14
Mar-16
Mar-18
Mar-20
Mar-22
Mar-24
CEAT
109
We expect the company to deliver 7% revenue CAGR in consolidated entity over FY2024-27E
Exhibit 6: CEAT consolidated revenue mix, March fiscal year-ends, 2018-27E (Rs mn, %)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E 2024-27E CAGR (%)
Revenues (Rs mn)
Truck & Bus (MHCV) 19,882 20,494 20,918 25,747 27,938 33,790 36,867 39,290 40,552 41,761 4.2
Two-wheeler/Three-wheeler 19,020 21,860 20,918 21,961 26,075 29,284 32,110 35,674 38,004 40,284 7.9
Passenger vehicles 8,480 9,564 9,447 10,602 16,763 22,527 23,785 25,599 27,785 30,008 8.1
LCV 7,456 7,514 7,423 6,816 8,381 9,011 8,325 9,261 9,772 10,359 7.6
Farm 4,349 4,099 4,049 5,301 9,313 12,164 13,082 14,418 15,214 16,127 7.2
Specialty and other income 3,803 5,516 5,865 6,126 6,972 7,609 6,529 6,956 7,743 8,313 8.4
Standalone revenues 62,130 68,313 67,479 75,728 93,126 112,633 118,926 131,197 139,070 146,851 7.3
Yoy growth (%) 9.0 10.0 (1.2) 12.2 23.0 20.9 5.6 10.3 6.0 5.6
Revenues of subsidiaries 704 1,532 310 368 508 516 509 611 659 712 11.9
Consolidated revenues 62,834 69,845 67,788 76,096 93,634 113,149 119,435 131,808 139,729 147,564 7.3
Yoy growth (%) 9.0 11.2 (2.9) 12.3 23.0 20.8 5.6 10.4 6.0 5.6
Standalone revenue mix (%)
Truck & Bus (MHCV) 32.0 30.0 31.0 34.0 30.0 30.0 31.0 29.9 29.2 28.4
Two-wheeler/Three-wheeler 30.6 32.0 31.0 29.0 28.0 26.0 27.0 27.2 27.3 27.4
Passenger vehicles 13.6 14.0 14.0 14.0 18.0 20.0 20.0 19.5 20.0 20.4
LCV 12.0 11.0 11.0 9.0 9.0 8.0 7.0 7.1 7.0 7.1
Farm 7.0 6.0 6.0 7.0 10.0 10.8 11.0 11.0 10.9 11.0
Specialty 6.1 8.1 8.7 8.1 7.5 6.8 5.5 5.3 5.6 5.7
Overall revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
We expect EBITDA per kg to improve from FY2026E

Exhibit 7: Volumes and ratios on per kg basis of standalone business, March fiscal year-ends, 2018-27E (Rs per kg)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Sales volumes (tons) 309,834 329,715 315,354 358,026 384,700 429,700 459,058 488,884 515,999 544,955
Yoy growth (%) 4.7 6.4 (4.4) 13.5 7.5 11.7 6.8 6.5 5.5 5.6
Key ratios (Rs per kg)
Net realizations 200.5 207.2 214.0 211.5 242.1 262.1 259.1 268.4 269.5 269.5
RM cost 122.8 125.6 123.8 118.7 156.3 171.2 150.2 166.1 164.8 164.7
Gross profit 77.8 81.6 90.1 92.8 85.8 90.9 108.8 102.3 104.7 104.7
Employee cost 13.3 14.9 16.9 18.6 17.8 16.9 18.2 17.1 17.1 17.2
Other expenses 44.2 47.4 50.4 46.9 49.8 51.3 54.6 54.2 53.9 53.7
EBITDA 20.2 19.3 22.8 27.2 18.2 22.7 36.1 31.0 33.7 33.9
CEAT
110
We expect standalone EBITDA to increase at CAGR of 3-4% over FY2024-27E owing to higher base
Exhibit 8: CEAT’s standalone financial summary, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Net sales 62,130 68,313 67,479 75,728 93,126 112,633 118,926 131,197 139,070 146,851
EBITDA 6,274 6,375 7,177 9,738 7,011 9,773 16,557 15,166 17,392 18,467
Other income 568 553 307 318 282 387 263 390 390 490
Interest (865) (645) (1,491) (1,731) (2,040) (2,390) (2,659) (2,577) (2,586) (2,695)
Depreciation (1,617) (1,743) (2,378) (3,396) (4,351) (4,693) (5,084) (5,518) (6,345) (7,101)
Extraordinary income/(losses) (264) (442) (298) (341) (129) (334) (425) 75 — —
Profit before tax 4,097 4,098 3,317 4,589 772 2,742 8,652 7,536 8,851 9,161
Tax (1,309) (1,209) (678) (453) (229) (679) (2,109) (1,959) (2,301) (2,382)
Reported net profit 2,787 2,889 2,639 4,136 543 2,063 6,543 5,577 6,549 6,779
Adjusted net profit 2,972 2,876 2,876 4,443 634 2,314 6,864 5,522 6,549 6,779
Adjusted EPS (Rs) 73.5 71.1 71.1 109.8 15.7 57.2 169.7 136.5 161.9 167.6
Balance sheet (Rs mn)
Equity 25,468 27,510 27,606 31,647 31,503 33,456 39,511 43,694 48,606 53,690
Deferred tax liability 1,782 2,077 2,611 2,656 3,080 3,800 4,389 4,389 4,389 4,389
Other long-term liabilities 370 46 1,645 796 1,221 1,494 1,229 1,229 1,229 1,229
Total borrowings 6,409 12,605 19,082 13,971 20,714 20,657 15,930 17,430 18,930 18,930
Current liabilities 13,663 18,380 20,382 29,980 33,092 35,285 37,226 38,840 40,827 42,820
Total liabilities 47,692 60,619 71,325 79,050 89,609 94,691 98,285 105,581 113,980 121,057
Net fixed assets 26,266 35,695 50,594 54,911 61,371 66,327 69,297 73,780 79,434 84,333
Investments 3,201 3,130 1,108 1,181 1,260 1,303 1,557 1,557 1,557 1,557
Other long-term assets 1,153 1,884 2,001 1,118 1,240 695 1,190 1,190 1,190 1,190
Cash 730 597 289 255 167 531 347 (415) 669 1,206
Other current assets 16,342 19,312 17,332 21,586 25,571 25,835 25,893 29,469 31,129 32,771
Total assets 47,692 60,619 71,325 79,050 89,609 94,691 98,285 105,581 113,980 121,057
Free cash flow (Rs mn)
Operating cash flow excl. working capital 5,307 5,385 6,963 9,212 6,906 10,037 14,620 13,282 15,091 16,085
Working capital changes 2,135 (57) 2,721 4,300 (582) 2,115 2,620 (1,962) 326 351
Net finance income (539) (252) (1,324) (1,501) (1,841) (2,087) (2,480) (2,187) (2,196) (2,205)
Cash flow from operations 6,903 5,076 8,360 12,011 4,482 10,065 14,759 9,133 13,221 14,231
Capital expenditure (4,037) (10,622) (11,712) (6,427) (9,587) (8,892) (8,660) (10,000) (12,000) (12,000)
Free cash flow 2,867 (5,546) (3,353) 5,583 (5,105) 1,174 6,094 (867) 1,221 2,231
Ratios
Gross margin (%) 38.8 39.4 42.1 43.9 35.4 34.7 42.0 38.1 38.8 38.9
EBITDA margin (%) 10.1 9.3 10.6 12.9 7.5 8.7 13.9 11.6 12.5 12.6
PAT margin (%) 4.8 4.2 4.3 5.9 0.7 2.1 5.8 4.2 4.7 4.6
Net debt/equity (X) 0.2 0.4 0.7 0.4 0.7 0.6 0.4 0.4 0.4 0.3
Book value (Rs/share) 630 680 682 782 779 827 977 1,080 1,202 1,327
RoAE (%) 12.2 10.9 10.4 15.0 2.0 7.1 18.8 13.3 14.2 13.3
RoACE (%) 10.4 9.3 8.9 12.5 3.8 7.2 16.0 12.2 12.7 12.2
CEAT
111
We expect consolidated EBITDA to increase at CAGR of 3-4% over FY2024-27E

Exhibit 9: CEAT’s consolidated financial summary, March fiscal year-ends, 2018-27E (Rs mn)
2018 2019 2020 2021 2022 2023 2024 2025E 2026E 2027E
Net sales 62,834 69,845 67,788 76,096 93,634 113,149 119,435 131,808 139,729 147,564
EBITDA 6,148 6,425 7,238 9,830 7,098 9,738 16,522 15,165 17,412 18,522
Other income 295 390 205 138 114 169 197 190 265 368
Interest (974) (880) (1,509) (1,755) (2,070) (2,421) (2,691) (2,607) (2,616) (2,725)
Depreciation (1,686) (1,927) (2,765) (3,396) (4,352) (4,693) (5,088) (5,524) (6,352) (7,109)
Extraordinary income/(losses) (340) (448) (298) (341) (129) (334) (582) 75 — —
Profit before tax 3,443 3,560 2,871 4,476 661 2,459 8,359 7,299 8,709 9,056
Tax (1,340) (1,251) (742) (516) (243) (718) (2,214) (1,979) (2,331) (2,422)
Profit from associates & minority interest 277 213 184 361 294 120 282 262 285 300
Reported net profit 2,380 2,522 2,313 4,320 712 1,862 6,427 5,581 6,663 6,934
Adjusted net profit 2,618 2,488 2,534 4,622 794 2,098 6,854 5,527 6,663 6,934
Adjusted EPS (Rs) 64.7 61.5 62.6 114.3 19.6 51.9 169.4 136.6 164.7 171.4
Equity 26,061 27,661 29,079 33,163 32,728 34,396 40,426 44,613 49,639 54,878
Minority interest 234 238 237 232 235 174 97 97 97 97
Deferred tax liability 1,893 2,198 2,744 2,800 3,177 3,886 4,509 4,509 4,509 4,509
Other long-term liabilities 511 46 1,645 580 833 667 998 998 998 998
Total borrowings 9,193 14,980 19,290 14,176 20,968 20,927 16,289 17,789 18,289 18,289
Current liabilities 13,573 18,926 20,535 30,365 33,662 36,228 37,626 39,415 41,470 43,535
Total liabilities 51,464 64,049 73,529 81,316 91,603 96,278 99,945 107,422 115,002 122,306
Net fixed assets 30,192 40,124 52,283 55,563 62,051 66,922 69,315 73,791 79,439 84,330
Goodwill — — — — — — 231 231 231 231
Investments 2,135 1,814 1,796 2,061 1,710 1,529 1,658 1,658 1,658 1,658
Other long-term assets 1,392 2,104 1,157 1,289 1,426 941 1,354 1,354 1,354 1,354
Cash 863 735 342 431 363 719 591 (1) 132 757
Other current assets 16,883 19,271 17,951 21,972 26,054 26,168 26,797 30,389 32,189 33,977
Total assets 51,464 64,049 73,529 81,316 91,603 96,278 99,945 107,422 115,002 122,306
Operating cash flow excl. working capital 4,986 5,379 6,981 9,061 6,925 9,844 14,518 13,522 15,366 16,400
Working capital changes 1,738 235 2,582 4,516 (736) 2,211 2,674 (1,802) 255 276
Net finance cost (865) (586) (1,445) (1,706) (2,040) (2,335) (2,644) (2,417) (2,351) (2,357)
Cash flow from operations 5,859 5,028 8,119 11,871 4,149 9,720 14,549 9,303 13,270 14,320
Capital expenditure (4,839) (11,073) (11,099) (6,347) (9,558) (8,779) (8,668) (10,000) (12,000) (12,000)
Free cash flow 1,021 (6,045) (2,980) 5,524 (5,409) 941 5,881 (697) 1,270 2,320
Ratios
Gross margin (%) 39.4 40.1 42.2 43.9 35.6 34.7 42.0 38.1 38.9 38.9
EBITDA margin (%) 9.8 9.2 10.7 12.9 7.6 8.6 13.8 11.5 12.5 12.6
PAT margin (%) 4.2 3.6 3.7 6.1 0.8 1.9 5.7 4.2 4.8 4.7
Net debt/equity (X) 0.3 0.5 0.7 0.4 0.6 0.6 0.4 0.4 0.4 0.3
Book value (Rs/share) 644 684 719 820 809 850 999 1,103 1,227 1,357
RoAE (%) 10.4 9.3 8.9 14.9 2.4 6.3 18.3 13.0 14.1 13.3
RoACE (%) 8.1 7.7 7.4 12.0 3.5 6.6 15.2 11.9 12.4 11.9
CEAT
UPDATE
Consumer Staples
India
Sector View: Attractive NIFTY-50: 24,642 December 12, 2024
Bhartia family acquires 40% stake in HCCB

Jubilant Bhartia Group (JBG) has signed an agreement to acquire a 40% stake
in HCCB, Coca-Cola’s largest Indian bottler for an estimated consideration of
Rs125 bn. The deal valuation is at a significant discount (>50%) to VBL, likely
due to the gap in profitability (partly structural) and optionality. Under JBG,
HCCB would sharpen focus on growth and profitability, but we expect rational
competitive behavior. Overall, this is a great deal for JBG.
Event—Bhartia Group to acquire 40% stake in Hindustan Coca Cola Beverages

Coca-Cola has signed an agreement with Jubilant Bhartia Group (JBG) for the
strategic sale of 40% stake in its wholly-owned bottling subsidiary, Hindustan
Coca Cola Beverages (HCCB). HCCB is Coca Cola’s largest bottler in India (out
of ~13 bottlers) with ~50% sales salience, primarily catering to South/West
India. This strategic move aims to bolster HCCB’s operational strength by
leveraging Bhartia family’s expertise in scaling up F&B businesses, and is in line
with Coca-Cola’s aim to transition to an asset-light model in India and delegate
bottling/distribution to local partners. HCCB has 15 factories manufacturing 37
different products under eight categories and retail reach of 2.3 mn outlets (VBL
India: ~3.5 mn). This deal is subject to regulatory approvals.
While Coca Cola has not disclosed deal valuation, the transaction consideration
for the 40% stake is estimated to be Rs125 bn as per media articles (valuing
HCCB at an EV of about Rs304). Based on HCCB’s FY2024 financials (MCA
filing), it implies EV/Sales of 2.2X, EV/EBITDA of 17X and adjusted PE of 35X.
According to media articles, HCCB was to transfer Rajasthan, Bihar and North
East (including West Bengal) operations to other bottlers this year. Thus, we are
not sure about the present scale of operations of HCCB and implied valuations.
We expect JBG to largely fund this transaction through debt and it is not clear
to us whether the group would sell some stake (or pledge shares) in
JUBI/JUBLINGR/JUBLPHAR (MCap Rs467/Rs135/Rs183 bn; Promoter
shareholding 42%/51%/51%).
Comparison of operating metrics of VBL and HCCB

VBL’s operating metrics (Exhibits 4 and 5) are far better than that of HCCB: (1)
VBL India/HCCB’s 5-year revenue CAGR (March 2019-24) was 26.6% (~17%
organic)/8.3% and EBITDA CAGR was 28.8% (~23% organic)/17.3% and (2) VBL
India’s EBITDA margin of 24.3% (TTM Mar-24) was 1,170 bps higher than
HCCB’s 12.7%. We note that about 600 bps margin difference is at gross margin
level and likely attributable to (1) a slightly higher revenue share of Coca Cola
as compared to PepsiCo, (2) VBL’s backward integration and (3) VBL
manufacturing units in select states enjoy grants (subsidies). The balance 600
bps margin gap is attributable to VBL’s operating efficiencies across line items Related Research
such as employee costs, freight and other miscellaneous expenses.
→ Varun Beverages: Acquires PepsiCo bottler
Implications for VBL in Tanzania
→ Varun and Ghana
Beverages: A good compounding
Under JBG’s control, we expect HCCB to have a sharper focus on growth and → story
Varun Beverages: A blip
profitability at HCCB, especially as we expect the entity to plan an IPO in 12-18
months. Overall, we expect rational competitive behavior from the JBG. Full sector coverage on KINSITE
Jaykumar Doshi Umang Mehta Praneeth Reddy Eesha Mohanty

113
Deal valuation, March fiscal year ends

HCCB transaction details Rs bn
Deal consideration for 40% stake (Rs bn) 125

Equity value of HCCB (Rs bn) 313
FY2024 net debt (Rs bn) (9)
Enterprise Value (Rs bn) 304
FY2024 Revenues (Rs bn) 140
FY2024 EBITDA (Rs bn) 18
FY2024 Recurring PAT (Rs bn) 9
Implied EV/sales (X) 2.2
Implied EV/EBITDA (X) 17.1
Implied PE (X) 34.9
Notes: (1) HCCB financials from MCA. Deal valuation could be higher in
case HCCB transferred some territories to other bottlers in FY2025.
(2) Deal consideration of Rs125 bn is as per media articles
as Coca Cola has not disclosed the same in its press release.
(3) Recurring PAT computed assuming ETR of 25.2%
Source: MCA filings, Media articles, Kotak Institutional Equities
VBL valuation at CMP of Rs645

Mar-24 CY2024E CY2025E CY2026E
Equity value 2,178 2,178 2,178 2,178

EV 2,160 2,160 2,160 2,160
Revenue 165 202 243 282
EBITDA 38 48 57 66
PAT 22 26 32 39
EV/Revenue 13 11 9 8
EV/EBITDA 57 45 38 33
P/E 101 83 67 55
Consumer Staples
India Research
114
HCCB – condensed standalone financials, March fiscal year-ends, 2021-24 (Rs mn)
2021 2022 2023 2024
Net revenues 69,560 89,993 127,351 140,215
EBITDA 6,039 9,940 15,762 17,779
Other income 481 1,493 1,573 2,187
Interest (219) (189) (288) (524)
Depreciation (5,291) (5,397) (6,199) (7,475)
Profit before tax 1,011 5,847 10,847 11,967
Tax expense (314) (1,348) (2,144) (9,113)
Exceptional items/minority int. 12 (727) (5,185) 25,267
Reported PAT 709 3,771 3,518 28,121
Recurring PAT 698 4,499 8,703 8,952
Equity 49,197 53,038 59,514 87,557
Total borrowings 0 0 0 0
Payables 18,631 20,257 27,331 26,881
Others 13,315 13,073 14,858 18,815
Total liabilites 81,144 86,368 101,702 133,253
Net fixed assets 43,855 44,662 54,503 58,551
Inventories 20,090 23,943 24,654 27,216
Cash 4,066 3,323 1,950 8,869
Others 13,133 14,440 20,595 38,617
Total assets 81,144 86,368 101,702 133,253
Operating cash flow 13,921 7,596 15,899 2,860
Capital expenditure (5,032) (7,802) (17,320) (33,819)
Free cash flow 8,890 (206) (1,421) (30,959)
Ratios
Revenue growth (%) 29.4 41.5 10.1
EBITDA growth (%) 64.6 58.6 12.8
PAT growth (%) 544.8 93.5 2.9
Gross margin (%) 50.0 48.0 45.7 46.6
EBITDA margin (%) 8.7 11.0 12.4 12.7
Gross fixed asset turns (X) 1.0 1.2 1.5 1.5
Average RoE (%) 1.4 7.4 15.5 12.2
Average RoCE (%) 1.0 6.8 12.7 10.5
Source: MCA filings, Kotak Institutional Equities
Common size P&L statement comparison of HCCB and VBL (%)

HCCB (March fiscal year-end) VBL India (Calendar year-end)
2021 2022 2023 2024 2021 2022 2023
Net revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0
COGS 50.0 52.0 54.3 53.4 47.4 49.8 47.4
Employee costs 14.2 11.8 9.5 9.7 11.2 8.7 8.2
Other expenses 27.1 25.1 23.9 24.2 23.4 21.0 20.8
- Power and fuel 3.3 3.3 3.5 3.5 3.9 3.7 3.5
- Rent 1.0 0.6 0.6 0.7 0.5 0.4 0.4
- Advertising promotional expenses 0.6 0.5 0.5 0.8 0.9 0.7 0.8
- Freight costs 8.0 8.3 8.9 8.2 8.0 7.5 7.6
- Consumption of stores and spare parts 0.7 0.7 0.8 0.8 1.0 1.0 0.8
- Legal and Professional charges 0.6 0.5 0.5 0.5 0.3 0.2 0.3
- Travelling and conveyance 0.4 0.4 0.6 0.6 0.8 0.8 0.7
- Repairs and maintenance 1.9 2.5 2.0 2.3 2.9 2.7 2.4
- Others and Miscellaneous expenses 10.7 8.4 6.5 6.7 5.1 4.0 4.3
EBITDA 8.7 11.0 12.4 12.7 17.9 20.6 23.6
Depreciation 7.6 6.0 4.9 5.3 6.1 4.6 4.1
Other income 0.7 1.7 1.2 1.6 0.9 1.4 1.2
Interest expense 0.3 0.2 0.2 0.4 2.4 1.5 1.9
PBT 1.5 6.5 8.5 8.5 10.3 15.9 18.7
Exceptional item 0.0 (0.8) (4.1) 18.0 - - -
Income tax 0.5 1.5 1.7 6.5 2.9 3.9 4.7
Recurring net profit 1.1 4.9 6.4 6.4 7.4 12.0 14.1
Notes: (a) Assumed effective tax rate of 25.2% to compute recurring net profit.
Consumer Staples
India Research
115
Like-for-Like comparison of key metrics of VBL India and HCCB, March fiscal year-ends (Rs mn, %)
2019 2020 2021 2022 2023 2024 2019-24 CAGR (%)
Revenue (Rs mn)
HCCB 94,275 97,889 69,560 89,993 127,351 140,215 8.3
VBL India - April to March 39,503 59,438 53,619 69,810 116,333 128,571 26.6 (Organic ~17%)
Gross profit (Rs mn)

HCCB 45,455 48,599 34,765 43,155 58,249 65,283 7.5
VBL India - April to March 21,140 32,122 29,094 35,742 58,678 68,713 26.6
Gross margin (%)

HCCB 48.2 49.6 50.0 48.0 45.7 46.6 -166 bps
VBL India - April to March 53.5 54.0 54.3 51.2 50.4 53.4 -7 bps
EBITDA (Rs mn)

HCCB 8,016 11,181 6,039 9,940 15,441 17,779 17.3
VBL India - April to March 8,830 12,339 9,575 12,591 24,512 31,302 28.8 (Organic ~23%)
EBITDA margin (%)

HCCB 8.5 11.4 8.7 11.0 12.1 12.7 418 bps
VBL India - April to March 22.4 20.8 17.9 18.0 21.1 24.3 199 bps
PAT (Rs mn)

HCCB 3,216 9,745 698 4,499 8,703 8,952 22.7
VBL India - April to March 3,543 4,700 2,748 5,659 14,478 18,715 39.5
PAT margin (%)

HCCB 3.4 10.0 1.0 5.0 6.8 6.4 297 bps
VBL India - April to March 9.0 7.9 5.1 8.1 12.4 14.6 559 bps
Source: Kotak Institutional Equities
Consumer Staples
India Research
116
VBL—consolidated profit & loss, balance sheet and cash flow, calendar year-ends, 2018-26E (Rs mn)
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E
Net operating revenues 51,053 71,296 64,501 88,232 131,731 160,426 201,547 243,021 282,429
EBITDA 10,066 14,477 12,019 16,546 27,881 36,095 47,549 56,951 66,092
Other income 218 425 370 679 388 794 1,038 1,688 1,923
Interest expense (2,126) (3,096) (2,811) (1,847) (1,861) (2,681) (4,241) (4,119) (2,867)
Depreciation (3,851) (4,886) (5,287) (5,313) (6,172) (6,809) (9,220) (10,999) (12,502)
Pretax profits 4,308 6,919 4,290 10,066 20,236 27,398 35,127 43,521 52,646
Tax (1,339) (2,241) (52) (2,606) (4,735) (6,375) (8,444) (10,454) (12,738)
Minority Interest/share of profit from associates (40) 11 (283) (520) (527) (464) (522) (574) (631)
Reported net income 2,928 4,690 3,955 6,941 14,974 20,559 26,161 32,493 39,277
Shares outstanding (mn) - FD 3,082.1 3,247.8 3,247.8 3,247.7 3,247.8 3,248.0 3,248.0 3,248.0 3,248.0
Fully Diluted EPS (Rs) 1.0 1.4 1.2 2.1 4.6 6.3 8.1 10.0 12.1
Total shareholders' equity 19,985 33,284 35,240 40,799 51,024 69,365 92,293 120,793 154,085
Total borrowings 28,079 34,172 32,059 33,419 36,948 51,944 62,667 48,667 29,889
- Other borrowings 28,079 34,172 32,059 33,419 36,948 51,944 62,667 48,667 29,889
- PepsiCo deferred payout — — — — — — — — —
Deferred tax liability 1,588 2,825 2,259 3,111 3,368 3,430 3,430 3,430 3,430
Total liabilities and equity 49,729 70,588 70,206 78,497 92,471 126,221 159,872 174,372 188,886
Net fixed assets including CWIP 47,393 65,429 64,754 68,074 75,389 103,314 124,518 131,355 141,593
Investments 112 0 0 0 0 211 13,411 13,411 13,411
Cash 935 1,711 1,901 3,366 2,853 4,599 3,544 8,153 9,221
Net current assets 1,288 3,448 3,551 7,057 14,230 18,097 18,399 21,453 24,661
Total assets 49,729 70,588 70,206 78,497 92,472 126,221 159,872 174,371 188,886
Operating cash flow (excluding working capital) 10,498 13,903 11,228 15,002 23,752 30,643 38,781 46,193 53,056
Working capital (501) (851) (1,108) (2,687) (5,852) (6,735) (302) (3,054) (3,208)
Capital expenditure (including PepsiCo payout) (8,579) (23,666) (5,356) (8,154) (17,499) (31,939) (43,624) (17,836) (22,740)
Free cash flow 1,418 (10,614) 4,764 4,160 401 (8,031) (5,145) 25,303 27,107
Key ratios (%)
Sales growth 27.5 39.7 (9.5) 36.8 49.3 21.8 25.6 20.6 16.2
EBITDA growth 20.4 43.8 (17.0) 37.7 68.5 29.5 31.7 19.8 16.1
PAT growth 39.3 60.1 (15.7) 75.5 115.8 37.3 27.2 24.2 20.9
EBITDA margin 19.7 20.3 18.6 18.8 21.2 22.5 23.6 23.4 23.4
Gross margin 56.0 54.8 57.1 54.3 52.5 53.8 55.0 55.2 55.2
A&P (% of sales) 2.2 1.7 1.8 1.4 1.1 1.2 1.4 1.5 1.6
Employee cost (% of sales) 11.4 11.4 13.8 11.4 9.2 9.0 9.0 9.1 9.2
RoE (%) 15.5 17.6 11.5 18.3 32.6 34.2 32.4 30.5 28.6
RoCE (%) 8.8 10.5 9.2 10.9 18.8 19.8 19.7 20.2 21.6
ETR (%) 31.1 32.4 1.2 25.9 23.4 23.3 24.0 24.0 24.2
Net Debt 27,144 32,461 30,158 30,053 34,095 47,345 59,123 40,514 20,668
Key metrics/assumptions 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Total volumes (mn cases) 340 491 425 569 802 913 1,128 1,336 1,522
- India volumes (mn cases) 274 404 337 454 653 737 835 927 1,029
- International volumes (mn cases) 67 88 88 115 149 176 293 410 493
Total volume growth (%) 21.9 44.5 (13.4) 33.8 40.9 13.8 23.6 18.5 13.9
India volume growth (%) 22.1 47.6 (16.4) 34.7 43.6 12.9 13.3 11.0 11.1
India organic volume growth (%) 13.3 13.0 (25.9) 34.7 43.6 12.9 13.3 11.0 11.1
Realization per case (Rs) 154 148 154 157 167 179 182 186 191
EBITDA per case (Rs) 29.6 29.5 28.3 29.1 34.8 39.5 42.1 42.6 43.4
Notes: (1) Our estimates do not factor in recent QIP and Tanzania/Ghana acquisitions
Consumer Staples
India Research
UPDATE
Pharmaceuticals
India
Sector View: Neutral NIFTY-50: 24,642 December 11, 2024
IPM pulse—return to double digits Company data and valuation summary

After a subdued past three months, the Indian Pharma Market (IPM) growth Fair Value P/E (X)
recovered to 10.7% yoy in Nov 2024, aided by a favorable base of 3.4% yoy in Company Rating (Rs) 2026E 2027E
Nov 2023. We highlight volume growth at 3.5% yoy touched a 13-month high
in Nov 2024. IPM grew by 7.5% yoy in MAT Nov 2024, primarily driven by Aurobindo Pharma SELL 1,225 16.6 15.5
Biocon REDUCE 315 44.8 30.9
pricing and new launches. Buoyed by improved field force productivity across
Blue Jet Healthcare ADD 550 30.3 24.2
most companies, price hikes in the non-NLEM portfolio, new launches and Cipla ADD 1,750 22.0 22.5
higher sales from other channels, we are currently baking in 6-13% yoy Concord Biotech ADD 2,050 46.8 36.3
organic domestic sales growth in FY2025E for our coverage. Within our Divis Laboratories SELL 4,000 60.6 47.7
formulations coverage, Sun, Cipla, Lupin, JB and Emcure are our preferred Dr Reddy's Laboratories REDUCE 1,295 17.7 19.9
Emcure Pharmaceuticals BUY 1,680 28.2 23.4
picks.
Gland Pharma REDUCE 1,625 28.1 23.0
Glenmark Life Sciences BUY 1,200 22.4 19.8
Ipca, Ajanta, DRRD, Sun growth leaders; Alembic, Sanofi lag in Nov 2024 JB Chemicals & Pharma BUY 2,325 33.1 28.7
IPM grew by 10.7% yoy in Nov 2024, benefitted by a low base of 3.4% yoy growth Laurus Labs SELL 370 61.2 46.5
Lupin ADD 2,385 25.3 26.5
in Nov 2023. Both chronic and acute therapies grew by 11% yoy, during the
Mankind Pharma ADD 2,855 37.0 30.5
month. Bulk of the IPM growth in Nov 2024 was driven by therapies such as Sun Pharmaceuticals ADD 2,045 31.6 27.5
urology, derma, opthals, pain and cardiac. In Nov 2024, revenues of domestic Torrent Pharmaceuticals REDUCE 3,300 45.4 37.1
Pharmaceuticals Neutral 30.1 27.3
companies grew by 10.8% yoy, compared to 10.2% yoy sales growth for MNC
companies. Including unlisted companies, growth leaders in Nov 2024 were Source: Bloomberg, Company data, Kotak Institutional Equities estimates
Ipca, Ajanta, Dr Reddy’s, Sun, JB, Glenmark, Abbott, FDC, Zydus and Alkem,
which posted 11-19% yoy sales growth. On the other hand, key underperformers December 11, 2024
in Nov 2024 were Alembic, Sanofi, GSK, Micro Labs, Emcure, USV, Eris and Cipla
(impacted by a relatively subdued respiratory pick-up), which posted sales
growth of 0-6% yoy. Quick Numbers
Market share: Cipla, Sun, Glenmark top gainers; FDC, Torrent top losers IPM grew 7.5% yoy in MAT Nov 2024
IPM growth of 7.5% yoy in MAT Nov 2024 (on a base of 10.4% yoy) was led by
Both chronic and acute therapies grew 11% yoy in Nov
430 bps yoy contribution from higher pricing, and 260 bps yoy contribution from
2024
new launches. Volume growth only contributed 60 bps to IPM growth in MAT
Nov 2024. Among the top 25 companies, Cipla, Sun, Aristo, Glenmark, Alkem, Domestic companies’ sales grew 10.8% yoy,
Dr Reddy’s and Alembic have gained maximum share over the past six months. compared to 10.2% yoy growth for MNC companies in
Nov 2024
On the other hand, FDC, Torrent, Lupin, USV, Emcure, Sanofi and Eris have lost
maximum share in the past six months.
Risk of further acceleration in generics adoption not baked in

Factoring in the volume impact from the trade generics and Jan Aushadhi
channels, we estimate a 70-110 bps annual dent on branded IPM growth at least
until FY2028E. With Jan Aushadhi’s rapid expansion (14K+ stores now), there
is a risk of this hit on IPM swelling further. As seen earlier, the government is
keen on pushing generics. We note that current valuations imply the ongoing
steady decline in the share of branded generics will continue and do not factor
Related Research
in any further growth deceleration in the next few years. If the share of branded
products slips faster, there is scope for derating. Yet, as highlighted in our → IPM pulse—volume pangs linger
earlier reports, a forced change might be ineffective unless the quality → TRP: Taking stock of Curatio
conundrum is addressed. → EMCURE: Organic growth to pick up hereon
Alankar Garude, CFA Samitinjoy Basak Aniket Singh

118
IPM: Story in charts
IPM – MAT Nov-24 sales grew 7.5% yoy IPM – Nov-24 sales grew 10.7% yoy
Exhibit 1: Annual sales, Nov MAT year-ends, 2022-24 (Rs bn, %) Exhibit 2: Monthly sales, Nov MAT year-ends, 2023-24 (Rs bn, %)
MAT sales (Rs bn, LHS) yoy growth (%, RHS) Monthly sales (Rs bn, LHS) yoy growth (%, RHS)
2,400 20 205 202 30

199 202 200 199
2,281 200
2,300
15 195 20
2,200
2,122 190 11.7
2,100 185 7.9 10
10 10.7
180 178
2,000 10.4
1,922 7.0
175 5.3 5.2 0
1,900 7.5
6.4 5 170
1,800 165 (10)
Aug-24
Jul-24
Nov-24
Jun-24
Sep-24
Oct-24
1,700 0
MAT Nov-22 MAT Nov-23 MAT Nov-24
Source: IQVIA, Kotak Institutional Equities Source: IQVIA, Kotak Institutional Equities
IPM – key drivers of MAT Nov-23 growth IPM – key drivers of MAT Nov-24 growth
Exhibit 3: Nov MAT year-end, 2023 (%) Exhibit 4: Nov MAT year-end, 2024 (%)
12 8
7
10
6 2.6
3.0
8
5
6 4
7.5
4.8 10.4
3
4 4.3
2
2 1
2.7
0.6
0 0
Vol growth Price growth N.I. growth Value growth Vol growth Price growth N.I. growth Value growth
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Company-wise sales and market share – top-25 companies enjoy ~71% market share
Exhibit 5: Nov MAT year-ends, 2021-24 (Rs bn, %)
MAT sales (Rs bn) MAT sales yoy growth (%) Monthly sales yoy growth (%) Market share (%)
Rank Company MAT Nov-21 MAT Nov-22 MAT Nov-23 MAT Nov-24 MAT Nov-22 MAT Nov-23 MAT Nov-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 MAT Nov-24
IPM 1,807 1,922 2,122 2,281 6.4 10.4 7.5 7.0 11.7 7.9 5.3 5.2 10.7 100.0
1 Sun Pharma 133 148 164 179 11.2 10.4 9.4 8.4 14.0 9.8 7.6 10.2 13.0 7.9
2 Abbott 109 119 131 142 8.8 10.3 8.4 6.0 13.8 10.1 7.1 9.1 12.4 6.2
3 Cipla 102 105 116 124 2.8 10.7 6.9 3.8 7.5 7.1 5.7 5.6 6.3 5.4
4 Mankind 85 91 102 111 6.4 12.2 8.5 9.0 13.7 7.2 5.1 2.1 10.4 4.8
5 Alkem 70 77 86 90 10.3 11.5 4.5 4.7 9.4 6.2 2.3 1.4 11.2 3.9
6 Intas 57 65 74 83 14.3 13.8 11.6 8.5 18.7 11.6 10.3 9.2 10.8 3.6
7 Lupin 64 67 73 78 5.7 7.8 8.0 7.0 13.0 7.9 5.0 7.4 8.9 3.4
8 Torrent 58 65 72 78 11.4 10.8 8.4 4.4 15.0 8.3 7.1 9.3 9.4 3.4
9 Macleods 57 62 71 75 9.7 14.5 6.1 9.9 6.2 5.6 (1.5) (1.7) 8.1 3.3
10 Dr. Reddy's 58 60 65 71 2.8 8.6 9.6 6.4 12.5 8.3 7.9 8.0 14.9 3.1
11 Zydus 53 56 61 65 6.0 8.6 7.5 7.6 14.4 10.6 7.4 7.1 11.5 2.9
12 Aristo 53 55 63 65 4.0 14.7 2.8 3.8 8.8 8.1 (3.3) (7.7) 10.9 2.8
13 GSK 47 49 52 52 4.8 5.5 0.6 2.8 4.7 0.3 (2.8) (1.9) 3.9 2.3
14 Emcure 45 45 48 50 0.2 6.3 4.9 5.1 9.9 6.7 6.7 4.1 5.6 2.2
15 Glenmark 42 39 43 48 (6.8) 11.1 11.8 10.0 14.4 13.4 9.3 7.8 12.4 2.1
16 Ipca Labs 32 36 41 47 14.3 13.6 13.4 12.1 23.8 9.8 7.8 5.8 18.8 2.0
17 USV 34 37 41 44 8.3 9.7 6.5 2.4 8.9 7.3 4.7 5.3 6.2 1.9
18 Micro Labs 30 33 34 35 7.7 6.0 2.7 2.9 9.5 3.2 2.9 2.2 4.1 1.6
19 Pfizer 34 33 34 34 (3.9) 2.8 0.7 13.8 2.4 6.1 1.9 3.3 7.2 1.5
20 Alembic 27 29 32 32 8.5 10.1 1.0 5.0 6.5 3.2 (5.1) (5.0) 1.6 1.4
21 Eris 25 26 28 30 5.4 9.0 6.6 6.7 8.2 2.8 1.8 4.3 6.2 1.3
22 JB 18 21 24 27 17.4 15.3 11.4 7.2 11.8 13.7 15.5 11.8 12.5 1.2
23 FDC 18 20 22 24 10.8 12.9 9.9 10.1 13.9 7.9 12.4 4.3 12.2 1.1
24 Sanofi 21 22 22 23 4.6 0.6 5.2 9.2 10.5 (1.0) 0.5 (3.3) 1.7 1.0
25 Himalaya 16 16 17 18 2.8 5.1 7.2 9.6 12.5 2.2 5.0 2.9 11.3 0.8
26 Ajanta 12 14 16 18 14.4 12.6 10.6 9.2 16.3 9.5 10.9 9.3 16.9 0.8
32 Indoco 12 12 13 13 4.6 3.4 1.1 (4.1) 9.5 5.2 0.2 3.4 11.0 0.6
Source: IQVIA, Kotak Institutional Equities
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Sun Pharma
Sun Pharma – MAT Nov-24 sales grew 9.4% yoy Sun Pharma – Nov-24 sales grew 13% yoy
Exhibit 6: Annual sales, Nov MAT year-ends, 2022-24 (Rs mn, %) Exhibit 7: Monthly sales, Nov MAT year-ends, 2023-24 (Rs mn, %)
MAT sales (Rs mn, LHS) yoy growth (%, RHS) Monthly sales (Rs mn, LHS) yoy growth (%, RHS)
210,000 20 18,000 30
15,885 15,663 15,498 15,762 15,992
179,174 16,000
180,000 14,179
163,735
14,000 20
148,357 15
150,000 12,000
10,000
120,000 14.0 10
13.0
10 8,000
11.2 9.8 10.2
90,000 10.4 8.4 7.6
9.4 6,000
4,000 0
60,000
5
2,000
30,000
0 (10)
Aug-24
Oct-24
Jul-24
Jun-24
Nov-24
Sep-24
0 0
Sun Pharma – key drivers of MAT Nov-23 growth Sun Pharma – key drivers of MAT Nov-24 growth
12 10
9 1.3
10
1.8 8
7
8
2.5 6
4.8
6 5
9.4
10.4
4
4
3
6.1
2
2 3.4
1
0 0
Sun Pharma – key therapeutic drivers

Exhibit 10: Nov MAT year-ends, 2021-24 (Rs mn, %)
MAT sales (Rs mn) MAT sales yoy growth (%)
Rank Therapies MAT Nov-21 MAT Nov-22 MAT Nov-23 MAT Nov-24 MAT Nov-22 MAT Nov-23 MAT Nov-24
1 Neuro/CNS 23,192 25,542 28,403 31,166 10.1 11.2 9.7
2 Cardiac 22,294 24,810 27,869 30,291 11.3 12.3 8.7
3 Gastro-intestinal 16,420 19,009 21,316 23,677 15.8 12.1 11.1
4 Anti-infectives 11,504 13,256 14,688 15,036 15.2 10.8 2.4
5 Pain/analgesics 9,911 11,400 12,329 14,204 15.0 8.1 15.2
6 Anti-diabetic 11,351 11,303 11,835 13,774 (0.4) 4.7 16.4
7 Respiratory 6,520 7,583 8,839 9,063 16.3 16.6 2.5
8 Derma 6,739 7,026 7,192 7,605 4.3 2.4 5.7
9 VMN 6,137 6,788 6,907 7,476 10.6 1.7 8.2
10 Gynaec 5,422 6,205 6,572 7,024 14.4 5.9 6.9
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Abbott
Abbott – MAT Nov-24 sales grew 8.4% yoy Abbott – Nov-24 sales grew 12.4% yoy
14,000 30
145,000 141,928 12 12,399 12,576 12,563 12,594 12,361
10.3
12,000 11,172
140,000
8.8 10
20
135,000 10,000
130,877
8 8,000
130,000 8.4
13.8 10
6,000 12.4
125,000 6 10.1 9.1
118,634 4,000 6.0 7.1
120,000 0
4
115,000 2,000
2
110,000 0 (10)
Aug-24
Jun-24
Jul-24
Nov-24
Sep-24
Oct-24
105,000 0
Abbott – key drivers of MAT Nov-23 growth Abbott – key drivers of MAT Nov-24 growth
12 9
8 1.2
10
7
3.1
8 6
5
6 5.7
4 8.4
10.3
4 6.0 3
2
2
1
1.5
1.2
0 0
Abbott – key therapeutic drivers

1 Anti-diabetic 26,295 28,090 31,516 33,459 6.8 12.2 6.2
3 VMN 11,109 10,371 11,571 12,739 (6.6) 11.6 10.1
4 Anti-infectives 8,764 10,455 11,235 11,349 19.3 7.5 1.0
5 Cardiac 7,096 7,506 8,429 9,768 5.8 12.3 15.9
6 Hormones 6,316 7,429 8,737 9,536 17.6 17.6 9.1
7 Neuro/CNS 8,621 9,134 9,599 9,455 5.9 5.1 (1.5)
8 Hepatoprotectives 3,804 4,473 5,346 6,417 17.6 19.5 20.0
9 Gynaec 4,722 5,194 5,520 5,573 10.0 6.3 0.9
10 Pain/analgesics 3,648 3,965 4,566 5,415 8.7 15.2 18.6
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Cipla
Cipla – MAT Nov-24 sales grew 6.9% yoy Cipla – Nov-24 sales grew 6.3% yoy
7.5
140,000 25 14,000 7.1 8
124,006
116,015 11,518 7
12,000
120,000
104,805 10,449 10,736 10,730
20 10,050
8,971 6
10,000
100,000 6.3
5.7 5
8,000 5.6
80,000 15
4
10.7 6,000
60,000 3.8 3
10
6.9 4,000
2
40,000
2,000 1
2.8 5
20,000
0 0
Aug-24
Oct-24
Jul-24
Jun-24
Nov-24
Sep-24
0 0
Cipla – key drivers of MAT Nov-23 growth Cipla – key drivers of MAT Nov-24 growth
12 8
7
10 1.5
6 1.5
8
5
4.6
6 4
10.7 6.9
3 4.7
4
2
2 4.6
1
0.7
0 0
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Cipla – key therapeutic drivers

1 Respiratory 33,741 36,873 42,348 45,444 9.3 14.8 7.3
2 Anti-infectives 14,883 14,934 16,331 17,122 0.3 9.4 4.8
3 Cardiac 10,776 11,550 12,851 14,357 7.2 11.3 11.7
4 Anti-diabetic 6,499 6,529 6,350 6,836 0.5 (2.7) 7.6
6 Urology 4,609 4,763 5,269 6,080 3.3 10.6 15.4
7 Neuro/CNS 5,233 5,451 5,678 5,752 4.2 4.2 1.3
8 Pain/analgesics 3,166 3,705 4,239 5,011 17.0 14.4 18.2
9 Derma 3,348 3,276 3,706 4,176 (2.1) 13.1 12.7
10 Antiviral 5,920 3,203 3,287 3,372 (45.9) 2.6 2.6
Mankind
Mankind – MAT Nov-24 sales grew 8.5% yoy Mankind – Nov-24 sales grew 10.4% yoy
120,000 20 12,000 16
110,515
101,860 9,796 9,915 9,616 14
10,000 9,466 9,469
100,000 90,806 8,414 13.7 12
15 8,000
80,000 10
10.4
6,000 8
12.2 9.0
60,000 10
7.2 6
4,000
40,000 8.5 4
5.1
5 2,000
6.4 2
20,000 2.1
0 0
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
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Mankind – key drivers of MAT Nov-23 growth Mankind – key drivers of MAT Nov-24 growth
14 9
8
12
7 2.5
3.3
10
6
8 5
4 8.5
6 6.1 12.2
5.1
3
4
2
2
2.8 1
0.9
0 0
Mankind – key therapeutic drivers

1 Cardiac 10,105 11,221 13,197 15,658 11.0 17.6 18.7
2 Anti-infectives 11,507 11,992 14,672 15,339 4.2 22.3 4.5
3 Gynaec 7,931 9,785 10,804 11,886 23.4 10.4 10.0
5 VMN 8,729 8,258 8,510 9,075 (5.4) 3.0 6.6
6 Anti-diabetic 6,442 6,839 7,852 8,977 6.2 14.8 14.3
7 Respiratory 7,202 7,906 8,731 8,272 9.8 10.4 (5.3)
8 Derma 6,065 5,395 5,418 5,890 (11.0) 0.4 8.7
9 Urology 3,872 4,704 5,424 5,840 21.5 15.3 7.7
10 Pain/analgesics 4,207 4,289 4,415 4,806 2.0 3.0 8.9
Alkem
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Alkem – MAT Nov-24 sales grew 4.5% yoy Alkem – Nov-24 sales grew 11.2% yoy
9,000 8,336 8,538 12
95,000 14 7,950 8,178 7,927
89,560 8,000
90,000 85,727 12 6,853 11.2 10
10.3 7,000
85,000 11.5 10 6,000 9.4 8
5,000
80,000 76,889 8 4.7 6
4,000
6.2
75,000 6 3,000 4
2,000
70,000 4 2
4.5 1,000 2.3
65,000 2 1.4
0 0
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
60,000 0
Alkem – key drivers of MAT Nov-23 growth Alkem – key drivers of MAT Nov-24 growth
15 5
5
12 4
4 2.1
4.0
9 3
3
4.5
6 11.5 2
4.6
2
2.1
3 1
2.9 1
0 0 0.2
Alkem – key therapeutic drivers

1 Anti-infectives 27,400 28,526 31,334 30,674 4.1 9.8 (2.1)
3 VMN 7,903 8,408 8,968 10,132 6.4 6.7 13.0
4 Pain/analgesics 7,285 8,341 9,333 9,605 14.5 11.9 2.9
5 Anti-diabetic 2,424 2,981 3,796 4,291 22.9 27.4 13.1
6 Neuro/CNS 2,625 2,800 3,260 3,560 6.7 16.4 9.2
7 Gynaec 2,417 3,041 3,371 3,513 25.8 10.8 4.2
8 Respiratory 2,110 2,477 2,750 2,782 17.4 11.0 1.2
9 Derma 2,008 2,100 2,428 2,755 4.6 15.6 13.5
10 Cardiac 1,896 1,852 2,002 2,135 (2.3) 8.1 6.7
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Lupin
Lupin – MAT Nov-24 sales grew 8.0% yoy Lupin – Nov-24 sales grew 8.9% yoy
80,000 78,389 20 8,000 30

6,975 6,747 6,739
6,678 6,681
78,000 7,000 6,124
76,000 6,000 20
15
74,000 72,602 5,000
72,000 4,000 10
13.0
70,000 10 3,000
67,378 7.9 8.9
68,000 7.0 7.4
2,000 5.0 0
66,000 7.8 8.0
5 1,000
64,000 5.7
0 (10)
62,000
Aug-24
Jun-24
Jul-24
Oct-24
Nov-24
Sep-24
60,000 0
Lupin – key drivers of MAT Nov-23 growth Lupin – key drivers of MAT Nov-24 growth
9 9
8 8
7 7
2.8 3.3
6
6
5
5
4 8.0
4 7.8
3
3 3.7 5.1
2
2 1
1 0
1.2 (0.4)
0 (1)
Lupin – key therapeutic drivers

1 Cardiac 13,680 14,470 15,787 17,951 5.8 9.1 13.7
2 Anti-diabetic 14,446 14,863 14,734 16,044 2.9 (0.9) 8.9
3 Respiratory 8,800 9,417 10,709 11,287 7.0 13.7 5.4
5 Anti-infectives 4,982 4,570 5,223 5,472 (8.3) 14.3 4.8
6 Gynaec 2,818 3,566 4,082 4,032 26.5 14.5 (1.2)
7 VMN 3,624 3,543 3,572 3,830 (2.2) 0.8 7.2
8 Neuro/CNS 3,031 3,261 3,510 3,714 7.6 7.6 5.8
9 Pain/analgesics 2,541 2,825 2,964 2,988 11.2 4.9 0.8
10 Anti-TB 1,872 2,152 2,249 2,641 14.9 4.5 17.5
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Intas
Intas – MAT Nov-24 sales grew 11.6% yoy Intas – Nov-24 sales grew 10.8% yoy
100,000 14.3 16 8,000 7,475 7,347 7,234 7,250 20

13.8 7,074
82,796 14 6,562 18
80,000 74,222 18.7 16
12 6,000
65,207 14
11.6 10 12
60,000
4,000 11.6 10
8 10.8
10.3 8
40,000 8.5 9.2
6 6
2,000
4
4
20,000 2
2 0 0
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
Intas – key drivers of MAT Nov-23 growth Intas – key drivers of MAT Nov-24 growth
15 14
12
12 3.8
10 3.5
9
8
3.9
13.8 3.7
6 11.6
6
4
3 6.2
2 4.4
0 0
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Intas – key therapeutic drivers

1 Neuro/CNS 17,049 19,564 22,182 24,906 14.8 13.4 12.3
2 Cardiac 7,137 7,850 8,589 9,179 10.0 9.4 6.9
3 Anti-diabetic 5,306 6,232 6,960 7,852 17.5 11.7 12.8
4 Pain/analgesics 4,144 5,044 5,658 6,286 21.7 12.2 11.1
5 Antineoplast/immunomodulator 2,755 3,619 4,267 5,221 31.3 17.9 22.3
6 Gynaec 2,789 3,570 4,259 4,489 28.0 19.3 5.4
7 Derma 3,130 3,275 3,609 4,362 4.6 10.2 20.9
9 Urology 2,359 2,774 3,227 3,646 17.6 16.3 13.0
10 VMN 2,427 2,658 3,025 3,434 9.5 13.8 13.5
Torrent
Torrent – MAT Nov-24 sales grew 8.4% yoy Torrent – Nov-24 sales grew 9.4% yoy
78,166 8,000 30
80,000 20 7,069
72,108 6,760 6,627 6,803 6,695
7,000 6,245
65,101
6,000 20
60,000 15
5,000
9.3 9.4
4,000 15.0 10
40,000 11.4 10 3,000
10.8 8.3 7.1
2,000 4.4 0
8.4
20,000 5 1,000
0 (10)
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
Torrent – key drivers of MAT Nov-23 growth Torrent – key drivers of MAT Nov-24 growth
12 10
10 8
3.8 2.5
8
6
6
10.8 4 8.4
7.2
4 7.4
2
2
0 0
(0.4) (1.3)
(2) (2)
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Torrent – key therapeutic drivers

1 Cardiac 16,754 17,593 19,130 21,174 5.0 8.7 10.7
3 Neuro/CNS 8,087 9,356 10,523 11,441 15.7 12.5 8.7
4 VMN 5,656 6,579 7,248 7,796 16.3 10.2 7.6
5 Anti-diabetic 4,822 5,275 6,190 7,022 9.4 17.4 13.4
6 Pain/analgesics 4,800 5,515 6,073 6,391 14.9 10.1 5.2
7 Derma 3,655 4,200 4,855 5,119 14.9 15.6 5.5
8 Anti-infectives 2,011 1,781 1,858 1,951 (11.4) 4.3 5.0
9 Gynaec 1,185 1,599 1,655 1,833 34.9 3.5 10.7
10 Antineoplast/immunomodulator 228 476 675 442 109.0 41.9 (34.6)
Macleods
Macleods – MAT Nov-24 sales grew 6.1% yoy Macleods– Nov-24 sales grew 8.1% yoy
71,112 75,416 8,000 9.9 12

80,000 16
6,799 6,843 6,732 6,621
7,000 6,320 10
70,000 14 5,786
62,107 14.5 6,000 8
60,000 12 8.1
5,000 6
50,000 10 6.2
9.7 4,000 5.6 4
40,000 8
3,000 2
30,000 6 2,000 0
6.1
20,000 4 1,000 (2)
(1.5) (1.7)
10,000 2 0 (4)
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
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Macleods – key drivers of MAT Nov-23 growth Macleods – key drivers of MAT Nov-24 growth
16 7
14 6
2.3
1.6
12 5
10 4
8 8.0 3 6.1
14.5 5.1
6 2
4 1
2 4.3 0
(0.6)
0 (1)
Macleods – key therapeutic drivers

1 Anti-infectives 14,743 16,889 20,938 22,454 14.6 24.0 7.2
2 Cardiac 7,611 7,839 8,609 9,488 3.0 9.8 10.2
3 Respiratory 4,692 5,290 6,713 6,783 12.7 26.9 1.0
4 Hormones 4,736 5,310 6,167 6,527 12.1 16.1 5.8
5 Pain/analgesics 4,558 5,309 5,760 6,087 16.5 8.5 5.7
6 Anti-diabetic 3,252 3,753 4,154 4,575 15.4 10.7 10.1
8 Derma 4,793 4,482 4,308 4,094 (6.5) (3.9) (5.0)
9 VMN 2,378 2,619 2,665 2,712 10.1 1.7 1.8
10 Gynaec 1,502 1,787 2,075 2,128 19.0 16.2 2.5
Aristo
Pharmaceuticals
India Research
131
Aristo – MAT Nov-24 sales grew 2.8% yoy Aristo – Nov-24 sales grew 10.9% yoy
66,000 64,794 16 7,000 6,284 15

14.7 6,197
5,778 5,889
64,000 63,034 14 6,000 5,444
10
62,000 12 5,000 4,623 10.9
8.8 8.1
4,000 5
60,000 10
58,000 8 3,000 3.8

0
56,000 54,950 6 2,000
(5)
54,000 4 1,000 (3.3)
4.0 (7.7)
52,000 2 0 (10)
2.8
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
50,000 0
Aristo – key drivers of MAT Nov-23 growth Aristo – key drivers of MAT Nov-24 growth
16 6
5
14 1.4
4
12 3
5.1
10 2 1.5
7.4 2.8
1
8
14.7 0
6 (1)
(2) (3.8)
4
5.9 (3)
2
(4)
0 (5)
Aristo – key therapeutic drivers

1 Anti-infectives 24,824 24,332 28,779 28,805 (2.0) 18.3 0.1
3 Cardiac 4,787 5,187 5,784 6,319 8.4 11.5 9.3
4 Respiratory 2,173 2,479 2,975 2,873 14.1 20.0 (3.4)
5 Pain/analgesics 2,387 2,443 2,548 2,614 2.3 4.3 2.6
6 Gynaec 1,733 2,222 2,610 2,519 28.2 17.5 (3.5)
7 Anti-diabetic 1,890 2,004 2,231 2,456 6.0 11.3 10.1
8 VMN 2,149 2,126 2,238 2,342 (1.0) 5.2 4.6
9 Neuro/CNS 1,364 1,581 1,772 1,943 16.0 12.1 9.7
10 Urology 750 935 1,110 1,313 24.7 18.8 18.3
Pharmaceuticals
India Research
132
Dr. Reddy’s
Dr. Reddy’s – MAT Nov-24 sales grew 9.6% yoy Dr. Reddy’s – Nov-24 sales grew 14.9% yoy
Monthly sales (Rs mn, LHS) yoy growth (%, RHS)

MAT sales (Rs mn, LHS) yoy growth (%, RHS)
6,600 14.9 16
80,000 25
71,058 6,329 6,391
6,400 14
70,000 64,846 6,230
59,725 20 6,205 12
60,000 6,200 6,074
12.5
10
50,000 6,000
15 8
40,000 5,800 5,663 8.3 8.0
9.6 7.9 6
8.6
30,000 10 5,600 6.4
4
20,000 5,400 2
2.8 5
10,000 5,200 0
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
Dr. Reddy’s – key drivers of MAT Nov-23 growth Dr. Reddy’s – key drivers of MAT Nov-24 growth
10 12
9
10
8 1.3
7
8 3.7
6
5 6
5.3
4 8.6
9.6
4 3.7
3
2
2.0 2
1 2.2
0 0
Dr. Reddy’s – key therapeutic drivers

2 Respiratory 8,150 8,186 9,260 9,764 0.4 13.1 5.4
3 Pain/analgesics 6,184 6,384 6,794 7,573 3.2 6.4 11.5
4 Cardiac 6,608 7,322 6,747 6,787 10.8 (7.9) 0.6
5 Derma 3,578 4,019 4,574 5,472 12.3 13.8 19.6
6 Vaccines 3,726 3,381 4,390 5,296 (9.3) 29.8 20.6
7 Anti-diabetic 3,024 3,306 3,602 4,000 9.3 9.0 11.0
8 VMN 3,405 3,512 3,538 3,819 3.1 0.7 8.0
9 Stomatologicals 1,914 2,191 2,859 3,359 14.5 30.5 17.5
10 Anti-infectives 2,826 2,527 2,974 3,253 (10.6) 17.7 9.4
Pharmaceuticals
India Research
133
Zydus
Zydus – MAT Nov-24 sales grew 7.5% yoy Zydus – Nov-24 sales grew 11.5% yoy
70,000 65,215 20 7,000 30

60,646 5,713 5,776 5,821 5,624 5,689
55,860 6,000
60,000 5,027
20
15 5,000
50,000
4,000
40,000 14.4 10
10 3,000 10.6 11.5
30,000 7.6 7.4 7.1
2,000
8.6 0
20,000 7.5 5 1,000
6.0
10,000 0 (10)
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
Zydus – key drivers of MAT Nov-23 growth Zydus – key drivers of MAT Nov-24 growth
9 8
8 7
2.7 2.0
7
6
6
5
5
4 3.3
8.6 7.5
4
4.8 3
3
2
2
1 2.3
1
1.1
0 0
Zydus – key therapeutic drivers

1 Cardiac 7,022 7,655 8,092 9,229 9.0 5.7 14.0
2 Respiratory 7,037 7,625 8,761 8,991 8.4 14.9 2.6
3 Anti-infectives 7,015 6,973 7,653 8,434 (0.6) 9.8 10.2
5 Pain/analgesics 3,861 4,320 4,799 5,029 11.9 11.1 4.8
7 Gynaec 3,512 4,314 4,400 4,491 22.8 2.0 2.1
8 Derma 3,652 3,757 3,814 4,093 2.9 1.5 7.3
9 VMN 2,564 2,398 2,392 2,347 (6.5) (0.3) (1.9)
10 Hormones 2,108 2,086 2,173 2,175 (1.1) 4.2 0.1
Pharmaceuticals
India Research
134
GSK
GSK – MAT Nov-24 sales remained flat yoy GSK – Nov-24 sales grew 3.9% yoy
60,000 15 5,000 4,517 4,572 4,531 4,545 30
4,491
51,890 52,219
49,191
50,000 3,837
12 4,000
20
40,000 3,000
9
10
30,000 2.8 3.9
5.5 2,000
4.8 0.3
6 4.7 (1.9)
20,000 (2.8) 0
1,000
3
10,000
0.6 0 (10)
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
GSK – key drivers of MAT Nov-23 growth GSK – key drivers of MAT Nov-24 growth
6 2.0
0.4 1.5
5
1.0
1.7
4
0.5
3.1 0.5 0.6
3 0.0
5.5
(0.5)
2
(1.6)
(1.0)
1 2.0
(1.5)
0 (2.0)
GSK – key therapeutic drivers

1 Derma 12,328 13,845 14,590 15,255 12.3 5.4 4.6
2 Anti-infectives 10,219 11,902 12,643 12,436 16.5 6.2 (1.6)
3 Vaccines 7,039 5,872 5,910 6,630 (16.6) 0.6 12.2
4 Pain/analgesics 6,185 6,015 6,376 5,703 (2.8) 6.0 (10.5)
5 Hormones 3,877 3,883 4,334 4,062 0.2 11.6 (6.3)
6 VMN 2,537 2,846 3,065 3,336 12.2 7.7 8.9
7 Respiratory 2,188 2,533 2,549 2,412 15.7 0.6 (5.4)
8 Anti-parasitic 720 734 780 677 1.9 6.3 (13.2)
9 Stomatologicals 426 380 376 519 (11.0) (0.9) 38.0
10 Gastro-intestinal 581 346 298 372 (40.4) (13.9) 24.7
Pharmaceuticals
India Research
135
Emcure
Emcure – MAT Nov-24 sales grew 4.9% yoy Emcure – Nov-24 sales grew 5.6% yoy
9.9
51,000 6.3 7 5,000 4,498 10
50,109 4,420 4,417 4,426
4,166 9
50,000 3,937
6
4,000 8
49,000
47,771 5 7
48,000 3,000 6
6.7 6.7
4.9
47,000 4 5
5.1 5.6
2,000 4
46,000 3
44,954 4.1 3
45,000
2 1,000 2
44,000 1
0.2 1 0 0
43,000
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
42,000 0
Emcure – key drivers of MAT Nov-23 growth Emcure – key drivers of MAT Nov-24 growth
7 6
6 5
5
3.0 4
4 2.8
3 6.3 3
5.5 4.9
2 2
3.0
1 1
0
0
(1) (2.3)
(1) (0.9)
(2)
(3) (2)
Pharmaceuticals
India Research
136
Emcure – key therapeutic drivers

1 Cardiac 11,878 10,216 10,222 10,391 (14.0) 0.1 1.6
2 Gynaec 7,180 9,027 9,423 9,242 25.7 4.4 (1.9)
3 Anti-infectives 5,732 5,214 5,721 6,267 (9.0) 9.7 9.5
4 Pain/analgesics 2,404 2,938 3,266 3,538 22.2 11.2 8.3
5 VMN 3,562 3,170 3,325 3,373 (11.0) 4.9 1.5
6 Blood related 2,256 2,571 2,748 2,907 14.0 6.9 5.8
7 Antineoplast/immunomodulator 2,525 2,024 2,067 2,710 (19.9) 2.2 31.1
8 Respiratory 2,103 2,453 2,738 2,561 16.7 11.6 (6.5)
9 Antiviral 1,535 1,759 1,981 2,458 14.6 12.6 24.1
Glenmark
Glenmark – MAT Nov-24 sales grew 11.8% yoy Glenmark – Nov-24 sales grew 12.4% yoy
48,134 5,000 14.4 16

50,000 40 4,274 4,302
4,500 3,979 4,161 4,236 14
43,045
38,734 4,000 3,494
40,000 30 13.4 12
3,500 12.4
3,000 10
30,000 20 2,500 10.0 8
9.3
11.1 11.8 2,000 7.8 6
20,000 10 1,500
4
1,000
500 2
10,000 0
(6.8) 0 0
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 (10)
Glenmark – key drivers of MAT Nov-23 growth Glenmark – key drivers of MAT Nov-24 growth
12 14
10 2.2 12
2.1
10
8
3.5
8
6 5.6
11.1 11.8
6
4
4
5.4
2 2 4.2
0 0
Pharmaceuticals
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137
Glenmark – key therapeutic drivers

1 Cardiac 9,257 11,213 13,257 16,043 21.1 18.2 21.0
2 Derma 9,225 9,633 10,555 12,262 4.4 9.6 16.2
3 Respiratory 7,865 8,321 10,179 10,178 5.8 22.3 (0.0)
4 Anti-infectives 3,971 3,647 3,910 4,419 (8.1) 7.2 13.0
5 Anti-diabetic 2,908 3,109 2,676 2,571 6.9 (13.9) (3.9)
6 Stomatologicals 484 593 623 675 22.6 5.2 8.3
7 Opthal/otologicals 396 443 459 513 11.7 3.7 11.7
8 Gynaec 387 429 458 510 11.1 6.7 11.2
9 Antineoplast/immunomodulator 190 589 500 499 210.8 (15.1) (0.2)
10 Gastro-intestinal 135 198 210 219 46.7 5.8 4.2
USV
USV – MAT Nov-24 sales grew 6.5% yoy USV – Nov-24 sales grew 6.2% yoy
3,900 14
50,000 14
43,535 3,806
45,000 40,868 3,800 12
12 3,722 3,729
40,000 37,251
3,670 10
35,000 10 3,700
7.3 3,616 8
30,000 9.7 3,600 8.9
8 5.3
25,000 8.3 6
3,476 6.2
20,000 6 3,500
6.5 4
4.7
15,000 4 3,400 2
10,000 2.4
2 3,300 0
5,000
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
USV – key drivers of MAT Nov-23 growth USV – key drivers of MAT Nov-24 growth
12 7
10 6
2.1
1.8 5
8
4
6
6.5
3
6.4 9.7
4 3.8
2
2 1
1.5 0.6
0 0
Pharmaceuticals
India Research
138
USV – key therapeutic drivers

1 Anti-diabetic 16,822 18,369 19,875 20,644 9.2 8.2 3.9
2 Cardiac 12,086 13,585 15,589 17,408 12.4 14.8 11.7
3 VMN 1,986 1,974 2,073 2,105 (0.6) 5.0 1.6
4 Derma 1,642 1,616 1,505 1,643 (1.6) (6.9) 9.1
5 Gastro-intestinal 681 736 834 854 8.1 13.2 2.4
6 Anti-infectives 664 496 545 540 (25.3) 9.8 (0.9)
7 Neuro/CNS 214 176 156 139 (18.0) (11.4) (11.0)
8 Gynaec 196 194 179 97 (1.4) (7.6) (45.7)
9 Respiratory 28 34 44 40 19.1 31.5 (9.8)
10 Blood related 39 39 37 35 (0.6) (4.6) (6.4)
Ipca Labs
Ipca Labs – MAT Nov-24 sales grew 13.4% yoy Ipca Labs – Nov-24 sales grew 18.8% yoy
23.8
50,000 14.3 46,710 14 4,500 25
4,369
41,205 4,400 4,335
14 18.8
40,000 4,300 4,220 20
36,285 14 4,200 4,118 4,140
14 4,100 15
30,000
4,000 9.8
14 3,900 10
12.1
3,800
20,000 13.6 13 3,800
3,700 7.8 5
13.4 13 5.8
10,000 3,600
13 3,500 0
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
0 13 Oct-24
Pharmaceuticals
India Research
139
Ipca Labs – key drivers of MAT Nov-23 growth Ipca Labs – key drivers of MAT Nov-24 growth
15 16
14
1.6
12 1.3
12
9 10
7.3 6.9
8
13.6
6 13.4
6
4
3
4.6 5.2
2
0 0
Ipca Labs – key therapeutic drivers

1 Pain/analgesics 11,439 14,000 16,303 18,216 22.4 16.5 11.7
2 Cardiac 4,277 4,640 5,152 6,011 8.5 11.0 16.7
3 Anti-infectives 2,958 3,038 3,256 3,456 2.7 7.2 6.2
4 Derma 1,470 1,840 2,198 2,672 25.2 19.4 21.6
7 Urology 906 1,274 1,592 2,166 40.7 25.0 36.0
8 Respiratory 1,390 1,807 2,008 2,038 30.0 11.2 1.5
9 Neuro/CNS 1,169 1,487 1,666 1,915 27.2 12.1 14.9
10 Anti-malarial 2,034 1,680 1,806 1,891 (17.4) 7.5 4.7
Micro Labs
Micro Labs – MAT Nov-24 sales grew 2.7% yoy Micro Labs – Nov-24 sales grew 4.1% yoy
3,500 3,198 3,289 3,227 10

40,000 9 3,083
35,439 3,014
34,491 9
35,000 32,535 8 3,000 2,714 9.5
8
30,000 7.7 7 2,500 7
6 2,000 6
25,000
6.0 5 5
20,000 1,500 4
2.9
4
15,000 1,000 4.1 3
3 3.2 2
10,000 500 2.9
2.7 2 2.2 1
5,000 1 0 0
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
Pharmaceuticals
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140
Micro Labs – key drivers of MAT Nov-23 growth Micro Labs – key drivers of MAT Nov-24 growth
7 4
6
3
5
2.6
2 1.7
4
2.8 2.7
3 6.0 1
5.0
2 0
1
(1) (1.8)
0
(1.6) (2)
(1)
(2) (3)
Micro Labs – key therapeutic drivers

1 Cardiac 5,505 5,741 6,093 6,596 4.3 6.1 8.3
2 Pain/analgesics 5,492 5,911 6,414 6,257 7.6 8.5 (2.4)
3 Anti-diabetic 4,002 4,451 4,745 5,087 11.2 6.6 7.2
4 Anti-infectives 4,017 4,010 4,224 4,218 (0.2) 5.3 (0.1)
5 Neuro/CNS 2,439 2,670 2,609 2,614 9.4 (2.3) 0.2
6 Opthal/otologicals 1,745 1,975 2,115 1,955 13.2 7.0 (7.5)
7 Derma 1,316 1,471 1,623 1,928 11.8 10.3 18.8
8 Respiratory 1,551 1,799 1,912 1,886 16.0 6.2 (1.3)
9 Gastro-intestinal 1,411 1,617 1,611 1,573 14.6 (0.4) (2.3)
10 VMN 1,025 1,049 974 1,001 2.4 (7.2) 2.8
Pfizer
Pharmaceuticals
India Research
141
Pfizer – MAT Nov-24 sales grew 0.7% yoy Pfizer – Nov-24 sales grew 7.2% yoy
40,000 4 3,500 24
2,944 2,955 2,969 3,033
32,635 33,558 33,776 3 3,000 2,755 2,679
35,000 19
30,000 2.8 2 2,500
1 2,000 14
25,000
0.7 0 13.8
20,000 1,500 7.2 9
(1)
15,000 1,000 3.3
(2) 2.4 1.9
6.1 4
10,000 500
(3.9) (3)
5,000 (4) 0 (1)
Aug-24
Oct-24
Jun-24
Jul-24
Nov-24
Sep-24
0 (5)
Pfizer – key drivers of MAT Nov-23 growth Pfizer – key drivers of MAT Nov-24 growth
3 1.5
0.2
2.5
1.0
2 1.4
0.5
1.9
0.7
1.5
2.8
0.0 (0.1)
1
(0.6)
(0.5)
0.5
0.8
0 (1.0)
Pfizer – key therapeutic drivers

1 Cardiac 3,523 3,585 4,178 4,457 1.8 16.6 6.7
2 Anti-infectives 4,461 5,038 4,269 4,378 12.9 (15.2) 2.6
3 VMN 5,130 4,224 4,203 4,317 (17.7) (0.5) 2.7
4 Vaccines 3,711 2,923 3,030 3,804 (21.2) 3.6 25.5
5 Gastro-intestinal 3,545 3,297 3,369 3,264 (7.0) 2.2 (3.1)
6 Gynaec 2,362 2,543 2,733 2,674 7.7 7.5 (2.2)
7 Pain/analgesics 2,174 2,330 2,430 2,527 7.2 4.3 4.0
8 Hormones 2,777 2,560 2,438 2,479 (7.8) (4.7) 1.7
9 Respiratory 3,030 2,755 3,072 2,451 (9.1) 11.5 (20.2)
10 Antineoplast/immunomodulator 676 828 1,127 1,079 22.5 36.1 (4.3)
Sanofi
Pharmaceuticals
India Research
142
Sanofi – MAT Nov-24 sales grew 5.2% yoy Sanofi – Nov-24 sales grew 1.7% yoy
2,500 10.5 12
25,000 22,868 6 9.2
21,607 21,739 10
1,933 1,908 1,947 1,885 1,915
5 2,000 1,733 8
20,000
5.2
6
4.6 4 1,500
1.7 4
15,000
2
3 1,000
0
10,000 0.5
2 500 (2)
(1.0)
5,000 (4)
1 (3.3)
0 (6)
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0.6 0
Sanofi – key drivers of MAT Nov-23 growth Sanofi – key drivers of MAT Nov-24 growth
2 6
2 5 0.5
1
1.7 4 1.1
-
1
0.6 3
0 5.2
2 3.6
(1) (1.1)
(1) 1
(2) 0
Sanofi – key therapeutic drivers

1 Anti-diabetic 11,415 11,556 11,082 11,643 1.2 (4.1) 5.1
2 Respiratory 3,691 4,084 4,365 4,522 10.6 6.9 3.6
4 Pain/analgesics 2,095 2,092 2,191 2,235 (0.1) 4.7 2.0
5 VMN 544 523 569 303 (3.9) 9.0 (46.8)
6 Others 83 111 115 130 34.8 3.1 13.1
7 Antineoplast/immunomodulator 142 163 186 125 14.7 14.2 (32.6)
8 Gynaec 102 107 87 79 5.0 (18.6) (9.8)
9 Vaccines 5 4 4 0 (5.5) (4.5) (92.1)
10 Hepatoprotectives 0 0 0 0 548.9 28.3 (44.1)
Pharmaceuticals
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143
Alembic
Alembic – MAT Nov-24 sales grew 1.0% yoy Alembic – Nov-24 sales grew 1.6% yoy
35,000 31,865 32,196 60 3,500 10

28,955 2,793 2,884 8
30,000 3,000 2,712 2,723 2,737
6
40 2,386
25,000 2,500 6.5 4
5.0
2,000 2
20,000 3.2
1.6 0
20 1,500 (2)
8.5 10.1
15,000
1.0 1,000 (4)
10,000 (5.0) (6)
0 500 (5.1) (8)
5,000 0 (10)
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 (20)
Alembic – key drivers of MAT Nov-23 growth Alembic – key drivers of MAT Nov-24 growth
12 6
10 4
5.1
2
8 4.0 2.3
1.0
0
6
10.1 (2)
4 (6.4)
5.4 (4)
2 (6)
0 0.6 (8)
Alembic – key therapeutic drivers

1 Anti-infectives 6,654 6,580 7,083 6,642 (1.1) 7.6 (6.2)
2 Cardiac 4,243 4,480 4,806 5,103 5.6 7.3 6.2
3 Gynaec 2,949 3,732 4,525 4,910 26.5 21.3 8.5
4 Respiratory 3,325 3,769 4,375 4,099 13.4 16.1 (6.3)
6 Anti-diabetic 1,968 2,275 2,384 2,638 15.6 4.8 10.7
7 VMN 1,534 1,612 1,686 1,623 5.1 4.6 (3.8)
8 Pain/analgesics 954 1,056 1,134 1,084 10.6 7.4 (4.4)
9 Opthal/otologicals 483 605 787 903 25.2 30.1 14.9
10 Urology 731 848 923 900 16.0 8.8 (2.5)
Pharmaceuticals
India Research
144
JB
JB – MAT Nov-24 sales grew 11.4% yoy JB – Nov-24 sales grew 12.5% yoy
30,000 30 3,000 18
26,616
2,351 2,396 2,393 16
23,887 2,500 2,250 2,274
25,000 25 2,121 14
20,723 15.5
2,000 13.7 12
20,000 20 12.5
11.8 11.8 10
15.3 1,500
15,000 17.4 15 8
1,000 6
7.2
10,000 10 4
11.4 500
2
5,000 5
0 0
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
JB – key drivers of MAT Nov-23 growth JB – key drivers of MAT Nov-24 growth
18 12
0.8
16
10
14 2.6
12 8
6.5
4.2
10
6
11.4
8 15.3
6 4
4 8.5
2 4.2
2
0 0
JB – key therapeutic drivers

1 Cardiac 6,837 8,180 9,808 11,566 19.6 19.9 17.9
3 Anti-parasitic 1,331 1,730 1,952 2,112 30.0 12.9 8.2
5 Gynaec 614 803 1,002 1,115 30.9 24.7 11.3
6 Derma 470 512 572 691 8.9 11.6 20.8
7 Anti-infectives 481 430 417 433 (10.6) (2.9) 3.7
8 Respiratory 139 273 397 401 95.8 45.4 1.0
9 VMN 326 313 342 361 (3.9) 9.3 5.6
10 Pain/analgesics 306 293 273 267 (4.1) (6.8) (2.3)
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Eris
Eris – MAT Nov-24 sales grew 6.6% yoy Eris – Nov-24 sales grew 6.2% yoy
3,000 9
35,000 10 2,646
9.0 2,478 2,536 2,490 2,538 2,540 8
30,220
28,343 9 2,500
30,000 8.2 7
26,009 8 6.2
25,000 2,000 6.7 6
7
6 4.3 5
20,000 6.6 1,500
5 4
15,000 5.4 1,000 3
4
3 2.8 2
10,000 500
2 1.8 1
5,000 0 0
1
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
Eris – key drivers of MAT Nov-23 growth Eris – key drivers of MAT Nov-24 growth
12 8
10 7
8 6 6.6
5
6
10.3 4 4.8
4 9.0
3
2 4.2
2
3.5
0
1
(2)
(5.5) 0
(4) (1) (1.6)
(6) (2)
(8) (3)
Eris – key therapeutic drivers

1 Anti-diabetic 7,128 7,781 8,801 9,560 9.2 13.1 8.6
2 Cardiac 3,969 4,076 4,352 4,549 2.7 6.8 4.5
3 VMN 3,221 3,153 3,430 3,819 (2.1) 8.8 11.4
4 Derma 3,365 3,617 3,366 3,741 7.5 (6.9) 11.1
6 Gynaec 918 1,178 1,474 1,490 28.3 25.2 1.1
7 Neuro/CNS 1,131 1,298 1,438 1,416 14.8 10.7 (1.5)
9 Pain/analgesics 543 617 762 792 13.8 23.4 3.9
10 Anti-infectives 843 610 732 699 (27.7) 20.0 (4.5)
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FDC
FDC – MAT Nov-24 sales grew 9.9% yoy FDC – Nov-24 sales grew 12.2% yoy
30,000 12.9 14 2,500 16

13.9 2,229 2,179
2,052 2,128
24,364 1,976 14
25,000 10.8 12 2,000
22,172 1,793
12
19,632 10 12.4 12.2
20,000 1,500 10
9.9 10.1
8 8
15,000 1,000 7.9 6
6
10,000 4
4 500
4.3
2
5,000 2 0 0
Aug-24
Jul-24
Jun-24
Nov-24
Sep-24
Oct-24
0 0
FDC – key drivers of MAT Nov-23 growth FDC – key drivers of MAT Nov-24 growth
14 12
12 1.4
10
10 2.4
4.3 8
8
6
12.9
6 5.2 9.9
4
4
7.3
2 2
2.3
0 0
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FDC – key therapeutic drivers

2 Anti-infectives 6,052 6,723 7,563 7,989 11.1 12.5 5.6
3 VMN 1,386 1,646 1,749 1,880 18.8 6.3 7.5
4 Derma 1,313 1,391 1,486 1,675 6.0 6.8 12.8
6 Cardiac 861 790 800 855 (8.3) 1.3 6.9
7 Gynaec 593 624 655 801 5.2 5.0 22.2
8 Respiratory 513 552 568 575 7.5 3.0 1.3
9 Anti-diabetic 241 254 293 375 5.7 15.0 28.1
10 Antiviral 556 261 293 282 (53.0) 12.0 (3.6)
Himalaya
Himalaya – MAT Nov-24 sales grew 7.2% yoy Himalaya – Nov-24 sales grew 11.3% yoy
20,000 8 1,800 1,654 15

18,244 1,595 1,595 1,565 1,578
18,000 17,023 1,600 1,450 13
16,193 7 11.3
16,000 7.2 1,400 11
12.5
6 1,200
14,000 9
12,000 5 1,000 9.6
5.1 7
10,000 4 800
2.8 5
8,000 600
3 5.0 3
6,000 400
2 2.9 1
4,000 200 2.2
2,000 1 0 (1)
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
0 0 Oct-24
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Himalaya – key drivers of MAT Nov-23 growth Himalaya – key drivers of MAT Nov-24 growth
15 14
12
10 11.8 10
8
0.4
6 12.5
5 0.3
4 7.2
5.1
2
0
0
(7.0) (2)
(5.7)
(5) (4)
(6)
(10) (8)
Himalaya – key therapeutic drivers

1 Hepatoprotectives 5,113 5,438 5,839 6,637 6.3 7.4 13.7
2 Derma 2,759 2,665 2,930 3,027 (3.4) 10.0 3.3
3 Urology 1,351 1,403 1,422 1,534 3.8 1.4 7.9
4 Cardiac 1,049 1,127 1,161 1,259 7.5 3.0 8.4
5 Gastro-intestinal 1,181 1,163 1,104 1,167 (1.5) (5.1) 5.8
6 Sex stimulants/rejuvenators 844 894 903 949 5.8 1.0 5.2
7 Others 706 705 830 892 (0.2) 17.7 7.5
8 Gynaec 691 718 726 778 3.9 1.1 7.2
9 Pain/analgesics 559 555 579 570 (0.8) 4.3 (1.6)
10 Respiratory 565 546 569 493 (3.5) 4.2 (13.4)
Ajanta
Ajanta – MAT Nov-24 sales grew 10.6% yoy Ajanta – Nov-24 sales grew 16.9% yoy
20,000 14.4 16 1,800 18

17,650 1,582 1,557
18,000 14 1,600 1,436 1,490 1,489 1,468 16
15,951
16.3 16.9
16,000 14,167 1,400 14
12
14,000 12.6 1,200 12
12,000 10 1,000 10
10.6 10.9
10,000 8 800 9.5 8
9.2 9.3
8,000 600 6
6
6,000 400 4
4
4,000 200 2
2,000 2 0 0
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
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Ajanta – key drivers of MAT Nov-23 growth Ajanta – key drivers of MAT Nov-24 growth
15 12
10
12
2.7
3.7
8
9
6
4.3 5.4 10.6
6 12.6
4
3
4.6 2
2.5
0 0
Ajanta – key therapeutic drivers

1 Cardiac 4,710 5,235 5,634 6,239 11.2 7.6 10.7
2 Opthal/otologicals 3,447 3,963 4,597 4,895 15.0 16.0 6.5
3 Derma 2,199 2,706 3,191 3,727 23.1 17.9 16.8
4 Pain/analgesics 896 1,063 1,259 1,399 18.6 18.5 11.2
5 Anti-diabetic 336 365 407 431 8.8 11.5 5.7
6 Respiratory 213 246 275 292 15.4 11.7 6.4
7 Neuro/CNS 218 231 221 245 5.8 (4.3) 11.1
8 Urology 98 120 130 147 22.3 8.1 13.0
9 VMN 136 122 116 113 (10.3) (5.1) (2.1)
Indoco
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Indoco – MAT Nov-24 sales grew 1.1% yoy Indoco – Nov-24 sales grew 11.0% yoy
15,000 5 11.0
1,400 12
12,477 12,906 13,054 1,214 1,197 1,222
4.5 1,174 1,174 10
1,200
12,000 4.6 4
9.5 8
1,000 922
3.5 6
9,000 3.4 3 800 4
5.2
2.5 600 3.4 2
6,000 2 0
400
1.1 1.5 (4.1) 0.2 (2)
200 (4)
3,000 1
0.5 0 (6)
Aug-24
Jun-24
Nov-24
Jul-24
Sep-24
Oct-24
0 0
Indoco – key drivers of MAT Nov-23 growth Indoco – key drivers of MAT Nov-24 growth
5 8
4 6
3
4
4.3 2.2
2 5.6
3.4 2
1 2.2
1.1
0
0
(2)
(1)
(3.1) (6.7)
(4)
(2)
(3) (6)
(4) (8)
Indoco – key therapeutic drivers

1 Stomatologicals 2,098 2,292 2,473 2,397 9.3 7.9 (3.1)
2 Anti-infectives 2,200 2,281 2,329 2,303 3.7 2.1 (1.1)
3 Respiratory 2,115 2,158 2,195 2,089 2.1 1.7 (4.8)
5 Urology 855 953 1,002 1,095 11.5 5.2 9.2
6 Opthal/otologicals 696 755 838 808 8.5 11.0 (3.6)
7 Derma 462 567 674 736 22.6 18.9 9.2
8 VMN 675 673 648 674 (0.4) (3.7) 4.1
9 Pain/analgesics 415 385 349 339 (7.3) (9.3) (2.8)
10 Anti-diabetic 429 389 310 266 (9.3) (20.4) (14.1)
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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Price (Rs) Fair Value Upside Mkt cap. O/S shares EPS (Rs) P/E (X) P/B (X) EV/EBITDA (X) RoE (%) Dividend yield (%) ADV-3M (US$ mn)
Company Rating 11-Dec-24 (Rs) (%) (Rs bn) (US$ bn) (mn) 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E 2025E 2026E 2027E Traded Delivered
Automobiles & Components
Amara Raja Energy & Mobility SELL 1,316 1,050 (20) 241 2.8 183 55 63 69 24 21 19 3.1 2.8 2.4 14 12 11 14 14 14 0.4 0.5 0.5 11 5
Apollo Tyres SELL 541 390 (28) 344 4.1 638 23 28 30 24 20 18 2.3 2.1 2.0 9 8 7 10 11 11 1.1 1.3 1.3 11 3
Ashok Leyland ADD 231 235 2 679 8.0 2,936 10 11 12 23 21 19 6.2 5.3 4.7 14 13 12 29 27 26 1.7 1.9 2.6 26 12
Bajaj Auto SELL 9,070 7,225 (20) 2,533 30 279 314 336 374 29 27 24 9.5 8.9 8.3 22 21 18 34 34 35 2.8 3.0 3.3 87 42
Balkrishna Industries SELL 2,820 2,375 (16) 545 6.4 193 82 90 102 34 31 28 5.4 4.8 4.2 21 18 16 17 16 16 0.6 0.7 0.8 8 4
Bharat Forge SELL 1,379 1,100 (20) 642 7.6 466 28 36 44 49 39 32 8.0 6.9 5.9 24 21 18 17 19 20 0.5 0.6 0.6 19 10
CEAT SELL 3,149 2,715 (14) 127 1.5 40 137 165 171 23 19 18 2.9 2.6 2.3 10 8 8 13 14 13 1.1 1.3 1.3 10 4
CIE Automotive SELL 514 450 (12) 195 2.3 378 23 25 28 23 20 19 2.9 2.6 2.4 14 12 11 13 14 14 1.1 1.2 1.4 2 1
Eicher Motors SELL 4,802 3,500 (27) 1,316 15.5 272 170 174 190 28 28 25 7.1 6.2 5.5 25 23 21 27 24 23 1.2 1.3 1.4 36 18
Endurance Technologies SELL 2,343 1,875 (20) 330 3.9 141 56 66 74 42 35 32 5.9 5.2 4.6 21 19 17 14 15 15 0.5 0.6 0.7 5 3
Escorts Kubota SELL 3,496 3,000 (14) 391 4.6 112 114 121 137 31 29 25 3.7 3.4 3.0 26 24 20 12 12 12 0.5 0.5 0.6 13 5
Exide Industries SELL 468 300 (36) 398 4.7 850 14 16 17 34 30 27 2.8 2.6 2.4 20 18 16 9 9 9 0.5 0.5 0.5 26 9
Hero Motocorp SELL 4,650 3,800 (18) 930 11.0 200 226 241 262 21 19 18 4.8 4.5 4.2 14 12 11 24 24 24 3.4 3.6 3.9 47 22
Hyundai Motor ADD 1,823 2,025 11 1,482 17.5 813 72 78 91 25 23 20 9.7 7.7 6.3 15 14 11 38 33 31 0.8 1.7 2.0 — #N/A
Mahindra & Mahindra BUY 3,072 3,400 11 3,820 45.0 1,159 103 114 126 30 27 24 5.7 4.8 4.1 22 20 18 21 19 18 0.5 0.6 0.6 137 74
Maruti Suzuki REDUCE 11,278 10,800 (4) 3,546 41.8 314 449 467 510 25 24 22 3.9 3.5 3.2 17 15 14 16 15 15 1.6 1.7 1.8 82 45
MRF SELL 132,624 102,500 (23) 562 6.6 4 4,635 5,225 5,850 29 25 23 3.0 2.7 2.4 13 11 10 11 11 11 0.2 0.2 0.2 12 4
Ola Electric REDUCE 96 70 (27) 424 5.0 4,411 (3) (3) (2) NM NM NM 6.8 8.3 9.9 NM NM NM NM NM NM 0.0 0.0 0.0 73 21
Samvardhana Motherson REDUCE 167 170 2 1,174 13.8 7,036 6 6 7 30 26 23 3.4 3.1 2.8 12 11 9 13 12 13 0.5 0.6 0.6 49 24
Schaeffler India REDUCE 3,662 3,700 1 572 6.7 156 60 69 80 61 53 46 10.8 9.7 8.7 39 34 29 19 19 20 0.1 0.0 0.0 4 2
SKF ADD 4,984 5,000 0 246 2.9 49 119 143 161 42 35 31 8.2 7.3 6.4 31 25 22 20 21 21 0.9 1.1 1.2 4 2
Sona BLW Precision ADD 642 700 9 399 4.7 618 11 14 16 60 46 39 7.0 6.3 5.6 33 28 23 15 14 15 0.4 0.5 0.6 19 11
Tata Motors ADD 799 925 16 3,060 36.1 3,677 57 69 86 14 12 9 2.8 2.4 1.9 6 5 4 22 22 23 0.9 1.3 1.9 163 71
Timken ADD 3,304 3,800 15 249 2.9 75 57 73 90 58 46 37 8.8 7.4 6.2 40 31 25 16 18 19 0.0 0.0 0.0 3 2
TVS Motor SELL 2,531 1,850 (27) 1,203 14.2 475 52 60 70 48 42 36 15.9 12.6 10.1 30 26 22 33 33 31 0.5 0.6 0.7 27 13
Uno Minda SELL 1,078 925 (14) 619 7.3 572 17 19 21 65 56 50 10.6 9.0 7.7 34 29 26 16 16 15 0.2 0.2 0.3 12 6
Varroc Engineering SELL 594 460 (23) 91 1.1 153 16 26 32 38 23 18 5.1 4.2 3.4 12 10 8 14 18 19 — — — 3 1
Automobiles & Components Cautious 26,118 307.9 27.7 24.6 21.3 5.0 4.4 3.9 14.8 13.2 11.6 18.1 17.9 18.1 1.1 1.2 1.4 885 #N/A
Banks
AU Small Finance Bank ADD 590 675 14 439 5.2 744 30 42 59 20 14 10 2.7 2.3 1.8 — — — 15 17 20 — — — 19 8
Axis Bank BUY 1,147 1,500 31 3,550 41.9 3,087 81 90 103 14 13 11 2.1 1.8 1.6 — — — 15 15 15 1.1 1.2 1.4 137 82
Bandhan Bank BUY 174 250 43 281 3.3 1,611 25 29 33 7 6 5 1.2 1.0 0.9 — — — 17 17 17 2.3 2.7 3.0 36 15
Bank of Baroda ADD 261 270 4 1,349 15.9 5,178 31 32 34 8 8 8 1.2 1.1 1.0 — — — 14 13 12 2.4 2.5 2.6 43 18
Canara Bank REDUCE 109 110 1 986 11.6 9,071 16 17 17 7 6 6 1.2 1.0 0.9 — — — 16 15 13 3.0 3.1 3.1 35 14
City Union Bank ADD 186 170 (9) 138 1.6 741 15 17 19 13 11 10 1.6 1.4 1.3 — — — 12 13 13 1.3 1.4 1.6 11 5
DCB Bank BUY 130 160 23 41 0.5 313 19 22 31 7 6 4 0.8 0.7 0.6 — — — 11 12 14 1.4 1.9 3.1 2 1
Equitas Small Finance Bank BUY 64 85 32 73 0.9 1,139 3 6 10 25 10 6 1.2 1.1 1.0 — — — 5 11 16 — — — 4 2
Federal Bank BUY 215 225 5 527 6.2 2,435 16 17 20 14 13 11 1.7 1.5 1.4 — — — 12 12 13 1.1 1.2 1.4 30 12
HDFC Bank BUY 1,863 1,900 2 14,243 167.9 7,597 88 109 124 21 17 15 2.9 2.6 2.3 — — — 14 16 16 1.2 1.4 1.6 412 254
ICICI Bank BUY 1,328 1,450 9 9,368 110.4 7,023 62 65 72 21 20 18 3.5 3.1 2.7 — — — 17 16 15 0.9 1.0 1.1 226 136
IndusInd Bank BUY 985 1,650 68 767 9.0 778 91 125 140 11 8 7 1.1 1.0 0.9 — — — 11 13 13 1.3 1.8 2.0 73 39
Karur Vysya Bank BUY 239 250 5 191 2.2 804 22 23 26 11 10 9 1.7 1.6 1.4 — — — 17 16 16 2.4 2.5 2.8 7 3
Punjab National Bank ADD 109 110 1 1,248 14.7 11,011 14 13 13 8 9 9 1.1 1.0 0.9 — — — 13 11 10 2.5 2.3 2.3 56 23
SBI Cards and Payment Services BUY 731 850 16 695 8.2 951 23 35 48 31 21 15 5.0 4.1 3.3 — — — 17 22 24 0.4 0.5 0.6 13 7
State Bank of India BUY 862 975 13 7,689 90.6 8,925 66 73 92 13 12 9 2.0 1.7 1.5 — — — 15 15 16 1.7 1.8 1.9 151 67
Ujjivan Small Finance Bank BUY 36 50 37 71 0.8 1,931 4 5 7 8 7 6 1.1 1.0 0.9 — — — 14 16 17 2.7 3.3 4.0 6 3
Union Bank BUY 129 155 20 986 11.6 7,634 20 20 20 6 6 7 1.0 0.9 0.8 — — — 15 13 12 3.1 3.2 3.1 17 8
Utkarsh Small Finance Bank ADD 38 45 17 42 0.5 1,101 2 3 7 25 13 6 1.4 1.3 1.1 — — — 6 10 20 — — — 1 1
YES Bank SELL 22 18 (17) 677 8.0 28,768 1 1 2 29 16 11 1.4 1.3 1.2 — — — 5 8 11 — — — 26 10
Banks Attractive 43,361 511.1 15.4 13.6 11.9 2.1 1.9 1.7 13.7 13.8 14.0 1.3 1.5 1.6 1,304 707
Building Products
Astral SELL 1,853 1,800 (3) 498 5.9 269 27 34 41 70 55 46 13.2 11.0 9.1 43 35 30 21 22 22 0.3 0.3 0.4 13 7
Building Products Cautious 498 5.9 69.7 55.0 45.6 13.2 11.0 9.1 42.5 35.0 29.6 18.9 20.0 20 0.3 0.3 0.4 13 7
Source: Company, Bloomberg, Kotak Institutional Equities estimates
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Capital goods
ABB SELL 7,729 5,900 (24) 1,638 19.3 212 85 96 107 91 81 72 21.5 17.3 14.2 71 63 56 27 24 22 0.1 0.1 0.1 37 16
Bharat Electronics SELL 314 230 (27) 2,296 27.1 7,310 7 8 9 47 41 36 11.9 10.2 8.7 34 30 26 28 27 26 0.9 1.0 1.1 90 41
BHEL SELL 254 110 (57) 883 10.4 3,482 1 5 11 267 50 23 3.5 3.3 2.8 NM 30 15 1 7 13 (0.0) (0.2) (0.6) 49 14
Carborundum Universal SELL 1,385 1,320 (5) 264 3.1 190 27 33 39 52 42 35 7.5 6.5 5.7 32 26 22 15 17 17 0.4 0.5 0.6 2 1
CG Power & Industrial SELL 783 475 (39) 1,197 14.1 1,527 7 9 10 116 91 76 31.9 25.5 20.6 84 66 56 27 28 27 (0.2) (0.3) (0.4) 32 15
Cochin Shipyard SELL 1,628 800 (51) 428 5.0 263 28 30 41 58 54 40 7.8 7.1 6.3 45 37 29 14 14 17 0.6 0.6 0.8 17 15
Cummins India BUY 3,605 4,100 14 999 11.8 277 68 81 96 53 44 37 14.4 12.7 11.2 50 41 34 29 30 32 1.0 1.3 1.5 24 11
G R Infraprojects SELL 1,611 1,070 (34) 156 1.8 97 69 86 108 23 19 15 2.0 1.8 1.6 16 13 10 9 10 11 0.0 0.0 0.0 2 1
IRB Infrastructure ADD 59 65 10 356 4.2 6,039 2 2 3 32 24 21 2.6 2.6 2.6 13 12 11 8 11 12 3.5 3.9 4.2 15 6
Kalpataru Projects ADD 1,312 1,400 7 213 2.5 160 51 80 102 25 16 13 3.6 3.0 2.4 11 9 7 15 20 21 0.3 0.5 0.7 5 3
KEC International REDUCE 1,202 900 (25) 320 3.8 257 30 48 61 40 25 20 5.5 4.6 3.8 20 15 12 16 20 21 0.3 0.4 0.5 14 5
L&T ADD 3,917 3,600 (8) 5,386 63.5 1,375 119 147 178 33 27 22 6.6 5.7 4.8 23 19 16 22 23 24 0.7 0.9 1.1 106 63
Siemens SELL 7,871 4,600 (42) 2,803 33.0 356 80 93 100 98 84 79 16.3 14.3 12.6 75 64 61 18 18 17 0.3 0.3 0.3 32 15
Thermax REDUCE 4,752 4,650 (2) 566 6.7 113 65 85 100 73 56 47 10.7 9.3 8.0 59 44 36 15 18 18 0.3 0.3 0.3 7 3
Capital goods Cautious 17,505 206.3 50.7 40.0 32.6 8.4 7.3 6.3 32.9 26.6 22.1 16.6 18.4 19.4 0.5 0.6 0.7 431 210
Capital Markets
360 One REDUCE 1,211 1,100 (9) 470 5.5 359 25 31 36 48 40 33 11.8 10.9 10.1 — — — 25 29 32 1.5 1.9 2.2 9 5
ABSL AMC ADD 827 830 0 238 2.8 288 31 35 38 27 24 22 6.8 6.1 5.5 — — — NM NM NM 2.2 2.5 2.7 6 3
Computer Age Management Services REDUCE 5,222 4,200 (20) 258 3.0 49 92 107 125 57 49 42 23.1 19.2 16.0 — — — 45 43 42 1.0 1.2 1.4 25 9
CRISIL SELL 5,448 3,900 (28) 398 4.7 73 99 113 128 55 48 43 16.3 14.6 13.0 — — — 31 32 32 1.2 1.3 1.5 5 2
HDFC AMC REDUCE 4,544 4,200 (8) 971 11.4 213 114 139 155 40 33 29 12.8 11.9 11.0 — — — 33 38 39 2.0 2.5 2.7 28 16
ICRA SELL 6,699 6,000 (10) 65 0.8 10 181 208 238 37 32 28 5.8 5.4 45.9 — — — 16 17 35 0.2 0.2 0.2 1 1
Kfin Technologies SELL 1,257 920 (27) 216 2.5 171 20 24 27 64 53 46 16.7 14.4 12.4 — — — 22 22 22 0.6 0.7 0.9 14 6
Nippon AMC REDUCE 790 720 (9) 500 5.9 630 22 25 27 36 32 29 12.1 11.6 11.2 — — — 34 37 39 2.5 2.8 3.1 11 6
UTI AMC REDUCE 1,395 1,300 (7) 178 2.1 127 62 56 60 22 25 23 3.9 3.8 3.7 — — — 18 16 16 3.6 3.2 3.5 6 3
Capital Markets Cautious 3,294 38.8 40.6 35.2 31.5 11.2 10.4 9.9 28 29 31 1.6 1.9 2.1 104 349
Commercial & Professional Services
SIS REDUCE 388 405 4 56 0.7 147 18 22 24 22 18 16 2.1 1.9 1.7 10 9 9 10 11 11 — — — 0 0
TeamLease Services SELL 2,814 2,800 (0) 47 0.6 17 89 104 133 32 27 21 5.0 4.2 3.5 26 20 16 17.1 16.9 18.0 — — — 1 1
Commercial & Professional Services Cautious 103 1.2 24.9 20.9 18.1 2.8 2.5 2.2 13.6 11.6 10.3 11.4 12.0 12.2 0.0 0.0 0.0 2 1
Commodity Chemicals
Asian Paints REDUCE 2,417 2,400 (1) 2,319 27.3 959 45 49 55 54 49 44 11.1 9.9 9.0 37 33 31 22 21 21 0.9 1.0 1.2 49 27
Berger Paints SELL 476 490 3 555 6.5 1166 10 11 12 47 44 40 9.0 8.0 7.2 29 28 26 21 20 19 0.7 0.9 1.1 9 4
Indigo Paints REDUCE 1,474 1,300 (12) 70 0.8 48 31 33 38 48 45 38 6.8 6.1 5.4 28 26 22 15 14 15 0.3 0.5 0.6 5 2
Kansai Nerolac REDUCE 264 275 4 213 2.5 808 8 9 10 31 29 27 3.6 3.4 3.2 19 19 17 12 12 12 1.6 1.7 1.8 2 1
Tata Chemicals SELL 1,126 840 (25) 287 3.4 255 29 34 37 39 33 31 1.3 1.2 1.2 10 9 8 3 4 4 1.3 1.3 1.3 26 9
Commodity Chemicals Cautious 3,444 40.6 48.9 44.5 40.4 6.1 5.7 5.3 28.5 26.1 24.0 12.4 12.7 13.1 0.9 1.1 1.2 91 44
Construction Materials
ACC REDUCE 2,251 2,360 5 423 5.0 188 92 124 145 24 18 16 2.4 2.2 1.9 13 9 8 10 13 13 0.8 1.1 1.3 11 5
Ambuja Cements SELL 578 415 (28) 1,425 16.8 2,463 14 18 21 41 33 27 2.7 2.5 2.3 20 15 12 7 8 9 0.4 0.4 0.5 25 12
Dalmia Bharat REDUCE 1,967 1,750 (11) 369 4.3 187 46 61 85 42 32 23 2.2 2.0 1.9 15 12 10 5 6 9 0.4 0.5 0.7 7 4
Grasim Industries REDUCE 2,671 2,435 (9) 1,797 21.2 680 76 103 128 35 26 21 2.0 1.8 1.7 13 11 9 6 7 8 0.4 0.5 0.5 22 12
J K Cement SELL 4,700 2,475 (47) 363 4.3 77 84 107 127 56 44 37 6.2 5.5 4.9 22 18 16 12 13 14 0.3 0.3 0.3 7 3
Nuvoco Vistas Corp. ADD 370 355 (4) 132 1.6 357 (2) 5 7 NM 73 50 1.5 1.5 1.4 13 11 9 NM 2 3 0.0 0.0 0.0 2 1
Shree Cement SELL 27,300 17,550 (36) 985 11.6 36 262 432 438 104 63 62 4.6 4.4 4.1 27 21 18 5 7 7 0.1 0.2 0.2 10 5
The Ramco Cements SELL 1,020 600 (41) 241 2.8 236 9 21 30 109 48 34 3.1 2.9 2.7 21 16 14 3 6 8 0.1 0.2 0.3 8 4
UltraTech Cement SELL 11,899 6,900 (42) 3,435 40.5 289 218 301 366 54 39 32 5.3 4.9 4.4 29 22 19 10 13 14 0.5 0.7 0.9 45 26
Construction Materials Cautious 9,170 108.1 47.5 34.5 28.4 3.2 3.0 2.7 18.7 14.9 12.7 6.7 8.6 9.6 0.4 0.5 0.6 138 71
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Aditya Birla Fashion and Retail SELL 310 250 (19) 332 3.9 1,070 (6) (4) (2) NM NM NM 6.8 7.5 8.0 18 14 12 NM NM NM — — — 19 8
Campus Activewear REDUCE 306 290 (5) 93 1.1 304 4 5 6 76 62 51 12.0 10.4 8.9 38 31 26 17 18 19 — — 0.5 6 2
Cello World ADD 848 880 4 187 2.2 221 16 19 22 54 45 39 8.8 8.0 7.1 34 29 25 21 19 19 0.6 0.8 1.0 1 1
Crompton Greaves Consumer ADD 414 420 2 266 3.1 643 9 12 14 45 36 30 7.9 7.0 6.1 29 24 20 19 21 22 1.0 1.2 1.4 14 7
Eureka Forbes BUY 616 750 22 119 1.4 209 7 10 14 85 62 45 2.9 2.8 2.6 46 36 27 3 5 6 — — — 3 2
Havells India SELL 1,752 1,500 (14) 1,099 12.9 628 24 29 35 73 61 50 13.2 11.6 10.2 50 40 33 19 20 22 0.6 0.7 0.8 23 13
Page Industries SELL 47,003 37,000 (21) 524 6.2 11 644 768 904 73 61 52 27.0 22.5 19.0 50 42 36 41 40 40 0.8 0.9 1.2 19 9
Polycab SELL 7,401 4,750 (36) 1,113 13.1 151 125 150 185 59 49 40 11.6 9.9 8.3 40 33 27 21 22 23 0.4 0.5 0.6 36 16
Vedant Fashions REDUCE 1,351 1,010 (25) 328 3.9 243 19 21 24 72 63 55 17.4 14.7 12.3 42 35 30 26 25 24 — — — 4 2
Voltas SELL 1,797 1,150 (36) 595 7.0 331 28 33 41 64 55 44 9.2 8.2 7.3 48 42 35 15 16 17 0.5 0.5 0.7 42 22
Whirlpool SELL 1,937 1,500 (23) 246 2.9 127 29 38 48 67 51 40 6.3 5.8 5.3 38 30 24 9 12 14 0.4 0.5 0.6 6 3
Consumer Durables & Apparel Cautious 4,902 57.8 76.1 60.6 48.4 10.3 9.3 8.2 38.8 31.8 26.3 13.5 15.3 17.0 0.5 0.6 0.7 172 84
Consumer Staples
Britannia Industries ADD 4,890 5,350 9 1,178 13.9 241 89 103 117 55 47 42 27.3 25.4 24.0 38 33 29 52 56 59 1.8 2.1 2.4 28 15
Colgate-Palmolive (India) REDUCE 2,894 2,825 (2) 787 9.3 272 55 60 66 53 49 44 41.3 39.0 36.6 38 34 31 79 82 86 1.8 2.0 2.2 23 13
Dabur India ADD 508 590 16 901 10.6 1,772 10 12 14 48 42 37 8.5 7.9 7.3 36 31 28 18 20 21 1.3 1.5 1.7 20 12
Godrej Consumer Products ADD 1,135 1,365 20 1,161 13.7 1,023 20 25 28 57 46 40 8.6 7.8 7.2 38 33 29 16 18 19 0.9 1.1 1.4 25 15
Hindustan Unilever ADD 2,401 2,850 19 5,642 66.5 2,350 45 51 56 53 48 43 10.9 10.5 10.1 37 33 30 21 22 24 1.7 1.9 2.1 59 36
Honasa Consumer REDUCE 261 340 30 85 1.0 322 2 4 6 127 59 40 7.0 6.1 5.1 108 41 27 6 11 14 0.0 0.0 0.0 13 7
ITC ADD 465 540 16 5,821 68.6 12,428 17 18 20 28 25 23 7.7 7.4 7.1 21 19 17 26 28 30 3.1 3.4 3.7 73 43
Jyothy Labs SELL 417 410 (2) 153 1.8 367 10 11 13 40 37 33 7.7 7.0 6.4 30 27 24 20 20 20 1.3 1.4 1.7 5 2
Marico REDUCE 633 640 1 820 9.7 1,290 13 14 15 49 46 41 19.8 18.4 17.1 37 33 30 42 42 43 1.7 1.8 2.0 20 11
Nestle India ADD 2,241 2,475 10 2,161 25.5 964 33 37 43 69 60 53 47.5 37.1 31.6 46 40 35 79 69 65 0.9 1.1 1.4 34 21
Sula Vineyards ADD 446 450 1 38 0.4 84 9 11 13 49 41 35 6.2 5.6 5.0 24 21 19 13 14 15 0.5 0.7 0.8 2 1
Tata Consumer Products ADD 935 1,110 19 929 11.0 989 14 19 22 65 50 42 4.7 4.5 4.3 36 29 25 8 9 10 0.9 1.1 1.3 24 14
United Breweries REDUCE 1,985 1,900 (4) 525 6.2 264 21 31 39 95 65 51 11.8 10.8 9.9 56 40 32 13 17 20 0.8 1.2 1.5 6 3
United Spirits ADD 1,517 1,525 1 1,103 13.0 727 19 23 27 80 65 57 13.7 12.1 10.8 54 45 39 18 20 20 0.5 0.6 0.7 14 8
Varun Beverages ADD 644 640 (1) 2,177 25.7 3,248 8 10 12 80 64 53 22.7 17.3 13.6 47 39 33 32 30 29 0.2 0.2 0.3 51 29
Consumer Staples Attractive 23,481 276.8 46.7 41.2 36.8 11.1 10.4 9.7 33.3 29.2 26.0 24 25 26 1.6 1.9 2.1 399 230
Diversified Financials
Aadhar Housing Finance BUY 419 550 31 180 2.1 427 22 27 34 19 15 12 2.8 2.4 2.0 — — — 17 17 17 — — — 6 3
Aavas Financiers BUY 1,674 1,925 15 132 1.6 79 72 89 108 23 19 16 3.0 2.6 2.2 — — — 14 15 16 — — — 4 2
Aptus Value Housing Finance ADD 312 370 19 156 1.8 499 15 17 20 21 18 15 3.6 3.2 2.8 — — — 18 18 19 1.3 1.6 1.9 7 3
Cholamandalam ADD 1,349 1,500 11 1,134 13.4 840 49 61 77 28 22 17 4.8 3.8 3.2 — — — 19 19 20 0.1 0.3 0.5 28 16
Five Star Business Finance ADD 635 890 40 186 2.2 291 35 42 51 18 15 13 3.0 2.5 2.1 — — — 18 18 18 — — — 30 17
Home First Finance BUY 1,034 1,360 32 92 1.1 89 43 54 68 24 19 15 3.7 3.2 2.7 — — — 17 18 19 — 0.5 0.7 14 6
India Shelter BUY 696 850 22 75 0.9 107 36 40 48 19 17 14 2.8 2.4 2.1 — — — 15 15 15 — — — 3 2
L&T Finance ADD 150 160 7 374 4.4 2,480 11 14 16 14 11 9 1.5 1.3 1.2 — — — 11 13 14 2.2 2.7 3.3 19 8
LIC Housing Finance BUY 637 750 18 350 4.1 550 94 99 102 7 6 6 1.0 0.9 0.8 — — — 15 14 13 2.4 2.5 2.6 17 7
Mahindra & Mahindra Financial ADD 283 320 13 350 4.1 1,234 18 22 25 16 13 11 1.8 1.6 1.4 — — — 12 13 13 1.3 1.5 1.8 11 5
Muthoot Finance BUY 2,065 2,175 5 829 9.8 401 133 159 183 15 13 11 2.9 2.5 2.1 — — — 20 21 20 1.5 1.8 2.1 14 7
SBFC ADD 94 90 (4) 102 1.2 1,107 3 4 5 30 24 19 3.6 3.2 2.7 — — — 12 13 14 — — — 7 3
Shriram Finance BUY 3,248 3,700 14 1,221 14.4 376 281 285 341 12 11 10 2.2 1.9 1.6 — — — 16 17 18 1.3 1.3 1.6 56 30
Diversified Financials Attractive 12,279 144.7 19.7 16.4 13.6 3.4 2.9 2.5 17.3 17.6 18.1 0.6 0.7 0.9 353 176
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Electric Utilities
CESC SELL 193 145 (25) 256 3.0 1,326 11 14 15 17 14 13 2.1 1.9 1.8 9 8 7 13 14 14 2.6 3.1 3.2 13 4
JSW Energy SELL 678 330 (51) 1,184 14.0 1,744 16 21 25 42 32 27 4.2 3.7 3.3 18 15 13 11 12 13 0.3 0.3 0.3 26 12
NHPC SELL 86 70 (19) 865 10.2 10,045 4 6 7 22 15 12 2.1 1.9 1.8 21 10 8 10 14 15 1.9 2.7 3.4 27 12
NTPC SELL 366 310 (15) 3,544 41.8 9,895 22 23 25 16.5 15.8 15 1.9 1.8 1.6 10 9 9 12 12 12 2.2 2.2 2.3 82 43
Power Grid SELL 328 280 (15) 3,046 35.9 9,301 18 20 21 18.4 16.2 15 3.3 3.1 2.8 10 9 9 18 20 19 3.7 3.9 4.1 65 40
Tata Power SELL 435 330 (24) 1,389 16.4 3,196 15 17 20 30 25 22 3.7 3.3 2.8 16 13 12 14 14 14 — — — 81 29
Electric Utilities Cautious 10,285 121.2 20.0 17.6 16.0 2.6 2.4 2.2 11.5 10.0 9.3 12.8 13.4 13.5 2.1 2.3 2.4 293 140
Electronic Manufacturing Services
Amber Enterprises ADD 5,793 6,000 4 196 2.3 34 80 123 160 72 47 36 8.3 7.0 5.9 29 22 18 12 16 18 — — — 59 15
Avalon Technologies SELL 896 520 (42) 59 0.7 65 9 14 21 99 62 43 9.6 8.3 7.0 58 40 28 10 14 18 — — — 7 3
Cyient DLM SELL 669 620 (7) 53 0.6 79 12 20 26 54 34 26 5.3 4.6 3.9 31 22 17 10 13 15 — — — 3 1
Dixon Technologies SELL 17,529 8,430 (52) 1,053 12.4 60 176 195 234 99.8 89.8 75 37.7 26.2 19.1 73 53 44 39 34 30 — — — 115 29
Kaynes Technology ADD 6,507 5,730 (12) 417 4.9 58 50 75 106 129.9 87.2 62 13.5 11.5 9.5 91 59 41 12 16 19 — — — 36 10
Syrma SGS Technology REDUCE 596 450 (24) 106 1.3 176 8 12 17 71 49 35 6.0 5.3 4.6 36 26 19 8 11 14 — — — 12 5
Electronic Manufacturing Services Cautious 1,884 22.2 104.0 72.8 56.3 16.7 13.6 10.9 59.3 42.8 33.6 16.0 18.6 19.4 0.0 0.0 0.0 232 63
Fertilizers & Agricultural Chemicals
Bayer Cropscience ADD 6,306 5,950 (6) 283 3.3 45 135 204 249 47 31 25 9.6 9.2 8.8 35 23 19 21 30 35 1.8 2.7 3.4 3 2
Godrej Agrovet ADD 780 820 5 150 1.8 192 23 27 35 34 29 23 5.0 4.5 3.9 19 16 13 15 16 19 1.4 1.8 2.2 3.2 1.6
Rallis India SELL 328 230 (30) 64 0.8 195 8 10 12 39 33 27 3.3 3.1 2.9 — — — 9 10 11 0.9 1.1 1.2 5 2
UPL SELL 552 430 (22) 431 5.1 751 4 21 34 141 27 16 1.6 1.5 1.4 9 7 6 2 6 9 0.2 0.2 0.2 17 7
Fertilizers & Agricultural Chemicals Cautious 928 10.9 56.1 28.2 19.9 2.8 2.6 2.4 12.1 9.6 8.1 5.0 9.3 12.1 0.9 1.3 1.6 28 12
Gas Utilities
GAIL (India) SELL 206 160 (22) 1,353 16.0 6,575 15 14 14 14 15 14 1.9 1.8 1.7 10 10 10 14 13 12 2.9 3.2 3.4 38 19
Indraprastha Gas SELL 393 290 (26) 275 3.2 700 21 24 24 19 17 16 3.1 2.9 2.7 16 13 13 17 18 17 2.7 2.8 2.9 25 12
Mahanagar Gas SELL 1,300 1,000 (23) 128 1.5 99 89 89 90 15 15 14 2.2 2.0 1.9 9 9 8 16 15 13 2.4 2.4 2.4 17 6
Petronet LNG SELL 341 235 (31) 512 6.0 1,500 29 27 28 12 13 12 2.5 2.2 1.9 8 9 8 23 18 17 1.5 0.7 1.5 14 8
Gas Utilities Cautious 2,487 29.3 14.4 15.0 14.7 2.2 2.0 1.8 10.1 10.2 9.7 14.9 13.2 12.6 2.4 2.4 2.7 102 48
Health Care Services
Apollo Hospitals ADD 7,341 8,100 10 1,055 12.4 144 101 140 188 73 52 39 12.9 10.5 8.4 35 28 22 19 22 24 0.2 0.2 0.2 33 18
Aster DM Healthcare NR 489 - (100) 244 2.9 500 7 11 14 70 46 36 5.1 4.7 4.2 27 22 17 7 11 12 0.4 0.4 0.5 9 5
Dr Lal Pathlabs REDUCE 3,153 3,250 3 264 3.1 84 52 60 69 60 52 45 12.8 11.5 10.3 36 30 26 22 23 24 0.9 1.0 1.2 8 3
Global Health ADD 1,124 1,175 5 302 3.6 268 19 22 28 60 51 40 9.0 7.9 6.7 33 28 22 16 17 18 0.2 0.3 0.4 7 4
KIMS ADD 612 580 (5) 245 2.9 400 8 10 14 80 63 44 11.5 9.7 7.9 33 27 21 16 17 20 0.0 0.0 0.0 4 2
Max Healthcare REDUCE 1,132 975 (14) 1,101 13.0 971 15 21 27 77 53 42 10.4 8.8 7.3 49 37 29 14 18 19 0.1 0.1 0.1 29 18
Metropolis Healthcare REDUCE 2,217 2,175 (2) 114 1.3 51 36 46 57 61 48 39 9.2 8.1 7.1 31 26 21 16 18 19 0.3 0.4 0.8 4 1
Narayana Hrudayalaya ADD 1,280 1,400 9 262 3.1 204 38 46 54 34 28 24 7.2 5.7 4.6 22 17 15 24 23 21 — — — 5 3
Rainbow Children's Medicare REDUCE 1,644 1,400 (15) 167 2.0 102 23 30 36 70 56 46 11.5 9.8 8.3 34 28 24 18 19 20 0.3 0.3 0.4 7 3
Health Care Services Neutral 3,753 44.2 66.3 49.5 38.8 10.0 8.5 7.1 35.6 28.2 22.6 15.1 17.2 18.3 0.2 0.2 0.3 106 57
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Hotels & Restaurants
Chalet Hotels ADD 927 930 0 203 2.4 218 8 29 46 119 32 20 6.8 5.7 4.5 28 20 13 7 19 25 (0.2) (0.2) (0.3) 3 1
Devyani International ADD 172 184 7 208 2.4 1,204 (0) 0 1 NM 348 164 19.7 19.2 18.1 26 21 18 NM 6 11 0.0 0.0 0.0 7 4
Indian Hotels ADD 836 800 (4) 1,191 14.0 1,423 12 16 20 68 52 42 10.6 9.0 7.6 39 30 25 17 19 20 0.3 0.3 0.4 35 17
Jubilant Foodworks REDUCE 708 540 (24) 467 5.5 660 4 5 7 199 135 106 19.7 17.9 15.8 40 33 28 10 14 16 0.2 0.2 0.3 17 8
Lemon Tree Hotels REDUCE 143 118 (17) 113 1.3 792 2 4 5 58 41 28 10.9 9.7 8.3 21 16 13 20 25 32 0.9 1.1 1.5 6 3
Restaurant Brands Asia REDUCE 84 95 13 42 0.5 495 (2) (1) (1) NM NM NM 2.4 2.4 2.5 15 12 10 NM NM NM — — — 3 1
Samhi Hotels BUY 198 265 34 44 0.5 220 6 9 13 34 23 15 3.7 3.3 2.7 14 12 10 11 15 20 0.0 0.0 0.0 3
Sapphire Foods ADD 325 380 17 104 1.2 318 1 2 3 482 155 95 7.6 7.2 6.7 21 17 15 2 5 7 — — — 4 2
Westlife Foodworld REDUCE 793 700 (12) 124 1.5 156 1 5 8 1,312 167 101 20.7 18.8 16.4 40 29 23 2 12 17 — — — 2 1
Hotels & Restaurants Attractive 2,494 29.4 103.6 64.2 47.1 10.6 9.3 8.0 31.8 24.8 20.0 10.2 14.5 17.0 0.2 0.2 0.3 80 37
Insurance
HDFC Life Insurance BUY 635 850 34 1,366 16.1 2,020 8 10 11 75 65 56 8.8 8.3 7.8 — — — 12 13 14 0.3 0.4 0.4 31 17
ICICI Lombard ADD 1,945 2,075 7 963 11.4 493 52 60 70 38 32 28 6.8 5.8 4.9 — — — 19 19 19 0.4 0.5 0.6 17 10
ICICI Prudential Life BUY 695 850 22 1,005 11.8 1,441 6 7 8 109 96 88 8.7 8.1 7.6 — — — 8 9 9 0.5 0.5 0.5 10 4
LIC BUY 939 1,250 33 5,938 70.0 6,325 67 70 72 14 13 13 5.2 4.0 3.3 — — — 43 34 28 — — — 17 8
Max Financial Services ADD 1,145 1,350 18 395 4.7 345 2 2 3 614 535 457 — — — — — — 1 1 1 — — — 15 8
PB Fintech REDUCE 2,165 1,500 (31) 994 11.7 456 6 13 21 345 170 104 — — — 4 9 12 — — — 38 21
SBI Life Insurance ADD 1,456 1,900 30 1,459 17.2 1,005 24 27 29 61 55 51 8.8 7.8 6.9 — — — 15 15 14 0.3 0.3 0.3 36 21
Star Health and Allied Insurance REDUCE 458 500 9 269 3.2 585 13 17 25 34 27 19 3.8 3.3 2.8 — — — 12 13 16 — — — 7 4
Insurance Attractive 12,389 146.0 24.2 22.7 21.4 6.4 5.3 4.4 27 23 21 0.1 0.1 0.1 171 93
Internet Software & Services
Brainbees Solutions ADD 599 630 5 311 3.7 523.4 (6) (3) 2 NM NM 298 6.5 6.4 6.1 257 84 40 NM NM 2.1 — — — 6 #N/A
Cartrade Tech SELL 1,569 700 (55) 74 0.9 51.5 17 20 23 94 80 68 3.7 3.6 3.4 60 49 41 4.1 4.6 5.1 — — — 6 3
FSN E-commerce Ventures SELL 170 170 0 486 5.7 2,875.0 0 1 2 480 143 82 35.8 28.6 21.2 103 60 41 7.8 22 30 — — — 17 8
Indiamart SELL 2,399 2,575 7 144 1.7 59.9 80 89 103 30 27 23 6.8 5.7 4.7 23 19 16 24 23 22 0.8 0.8 0.8 12 6
Info Edge ADD 8,557 8,350 (2) 1,109 13.1 129.1 77 93 110 110 92 78 4.2 4.1 3.9 95 78 66 3.9 4.5 5.2 0.2 0.3 0.3 26 13
Just Dial BUY 1,075 1,475 37 91 1.1 85.0 67 67 74 16 16 14 2.0 1.8 1.6 12 9 6 13.2 11.6 11.5 — — — 5 2
Zomato BUY 292 315 8 2,816 33.2 9,131 1 2 4 301 122 81 12.1 10.7 9.3 275 107 56 4.2 9.3 12.2 0.0 0.0 0.0 197 87
Internet Software & Services Attractive 5,031 59.3 178 105 74 8.0 7.3 6.7 132 78 49 4.5 7.0 9.0 0.1 0.1 0.1 270 118
IT Services
Coforge ADD 8,996 9,300 3 601 7.1 67 144 200 256 62 45 35 9.9 8.9 8.1 31 23 19 20 21 24 0.8 1.0 1.6 48 20
Cyient BUY 2,087 2,050 (2) 232 2.7 111 66 82 92 31 25 23 4.7 4.2 3.9 18 15 13 15 17 18 1.7 2.1 2.7 8 4
HCL Technologies REDUCE 1,931 1,760 (9) 5,240 61.8 2,716 63 70 78 30 28 25 7.4 7.0 6.5 19 18 16 25 26 27 2.8 3.0 3.1 60 36
Indegene BUY 591 730 24 141 1.7 240 17 21 25 35 28 24 5.5 4.6 3.8 22 18 15 20 18 18 0.0 0.0 0.0 8 4
Infosys BUY 1,974 2,200 11 8,197 96.6 4,151 63 72 80 31 27 25 8.7 8.0 7.6 20 18 16 29 30 32 2.4 2.7 3.4 143 87
KPIT Technologies SELL 1,549 1,150 (26) 425 5.0 273 27 34 43 56 45 36 15.3 12.3 10.0 33 27 22 30 30 30 0.6 0.7 0.9 27 13
L&T Technology Services SELL 5,370 4,450 (17) 568 6.7 106 123 145 165 44 37 33 9.4 8.2 7.2 28 24 21 23 24 24 0.9 1.0 1.2 9 3
LTIMindtree ADD 6,599 6,750 2 1,954 23.0 296 163 203 233 40 33 28 8.7 7.6 6.6 27 23 20 23 25 25 1.2 1.4 1.7 33 15
Mphasis SELL 3,185 2,750 (14) 604 7.1 189 90 99 116 35 32 27 6.5 6.1 5.6 23 20 18 19 20 21 2.0 2.2 2.2 27 13
Persistent Systems SELL 6,360 4,600 (28) 991 11.7 155 87 107 128 73 60 50 16.9 14.2 12.0 49 40 33 25 26 26 0.5 0.6 0.7 32 14
RateGain REDUCE 723 800 11 85 1.0 119 17 22 26 41 34 28 5.1 4.4 3.8 34 26 21 13 14 15 — — — 4 2
Tata Elxsi SELL 7,350 5,600 (24) 458 5.4 62 139 162 186 53 45 39 16.1 14.2 12.5 38 32 28 33 33 34 1.1 1.4 1.6 19 7
Tata Technologies SELL 943 650 (31) 383 4.5 406 17 20 24 56 47 40 10.7 9.6 8.6 38 32 27 20 22 23 0.9 1.1 1.3 19 9
TCS ADD 4,427 4,500 2 16,019 188.8 3,619 136 151 170 32 29 26 15.6 14.1 12.8 23 21 18 51 50 51 2.5 2.7 3.1 127 79
Tech Mahindra ADD 1,763 1,850 5 1,556 18.3 890 51 66 84 35 27 21 5.8 5.4 5.1 21 16 13 17 21 25 2.2 2.3 2.9 46 25
Wipro SELL 309 250 (19) 3,233 38.1 10,472 12 13 14 26 24 22 3.7 3.4 3.2 16 15 14 16 15 15 0.2 1.9 2.4 55 24
IT Services Neutral 40,687 479.6 32.9 29.1 25.8 9.0 8.3 7.6 21.8 19.4 17.2 27.4 28.5 29.6 2.0 2.4 2.8 666 336
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Media
PVR INOX ADD 1,487 1,700 14 146 1.7 98 13 42 56 111 35 26 1.7 1.6 1.6 21 13 11 2 5 6 0.1 0.3 0.4 11 4
Sun TV Network REDUCE 750 730 (3) 295 3.5 394 45 50 54 16 15 14 2.6 2.3 2.1 12 10 9 16 16 16 2.6 2.9 3.2 4 2
Zee Entertainment Enterprises REDUCE 138 138 (0) 133 1.6 960 8 10 11 17 14 13 1.2 1.1 1.1 9 8 7 7 8 9 2.9 3.3 3.6 26 10
Media Neutral 574 6.8 21.2 17.2 15.4 1.8 1.7 1.6 12.6 10.2 9.0 8.6 10.0 10.5 2.0 2.3 2.6 42 16
Metals & Mining
Gravita India ADD 2,253 2,500 11 156 1.8 69 44 58 72 51 39 31 14.2 10.8 8.6 37.3 29.5 24.0 32 31 31 0.3 0.4 0.8 8 3
Hindalco Industries REDUCE 671 680 1 1,507 17.8 2,220 66 59 63 10 11 11 1.2 1.1 1.0 5.6 5.8 5.5 13 11 10 1.0 0.9 0.9 52 23
Hindustan Zinc SELL 509 380 (25) 2,151 25.4 4,225 25 26 26 20 20 20 15.7 15.7 15.7 12.0 11.6 11.3 74 79 79 5.7 5.0 5.0 17 9
Jindal Steel and Power BUY 995 1,160 17 1,015 12.0 1,020 46 71 103 22 14 10 2.1 1.8 1.5 11.1 8.1 5.9 10 14 17 0.2 0.4 0.5 30 14
JSW Steel REDUCE 1,000 925 (8) 2,446 28.8 2,445 36 65 84 28 15 12 2.9 2.5 2.1 11.3 8.5 6.9 11 17 19 0.5 1.0 1.3 26 10
National Aluminium Co. REDUCE 250 250 0 458 5.4 1,837 25 21 22 10 12 11 2.6 2.3 2.1 6.1 7.2 6.4 29 21 19 4.0 3.3 3.5 69 20
NMDC SELL 241 210 (13) 707 8.3 2,931 24 23 21 10 10 11 2.4 2.1 1.9 6.9 7.0 7.5 25 21 17 4.0 3.8 3.5 37 15
SAIL SELL 127 55 (57) 524 6.2 4,130 2 4 4 53 35 33 0.9 0.9 0.9 10.0 9.5 9.6 2 3 3 0.6 0.8 0.9 35 11
Tata Steel SELL 151 135 (10) 1,880 22.2 12,486 5 11 14 32 13 11 2.0 1.8 1.6 10.0 7.2 6.6 6 14 15 1.1 1.9 2.3 87 33
Vedanta SELL 514 430 (16) 2,011 23.7 3,913 31 40 44 16 13 12 5.3 4.7 4.1 6.2 5.3 5.0 36 38 37 6.8 5.3 5.5 70 29
Metals & Mining Cautious 12,855 151.5 18.4 14.4 12.6 2.5 2.3 2.0 8.6 7.4 6.7 13.8 15.9 16.3 2.8 2.6 2.8 432 165
Oil, Gas & Consumable Fuels
BPCL SELL 307 265 (14) 1,334 15.7 4,273 22 29 28 14 11 11 1.6 1.5 1.3 7.5 6.2 6.4 12 15 13 2.4 3.2 3.1 43 18
Coal India SELL 417 420 1 2,570 30.3 6,163 52 53 54 8 8 8 2.6 2.2 1.9 7.3 6.2 5.5 35 30 27 6.0 6.0 6.0 47 24
HPCL SELL 410 200 (51) 873 10.3 2,128 16 35 34 25 12 12 2.0 1.8 1.6 14.3 9.4 9.4 8 16 14 1.2 2.6 2.5 36 15
IOCL SELL 143 100 (30) 2,022 23.8 14,121 8 15 14 17 10 10 1.1 1.0 1.0 8.3 5.8 5.8 7 11 10 2.6 4.3 4.2 35 15
Oil India SELL 470 360 (23) 764 9.0 1,627 45 51 50 10 9 9 1.6 1.4 1.3 7.7 6.5 6.4 16 16 14 3.1 3.8 3.8 29 13
ONGC ADD 257 285 11 3,228 38.1 12,580 40 46 46 6 6 6 0.9 0.8 0.7 4.2 3.3 3.3 14 15 13 4.9 5.1 4.9 53 25
Reliance Industries ADD 1,278 1,405 10 17,298 203.9 13,532 51 62 71 25 21 18 2.0 1.9 1.7 11.9 9.8 8.3 8 9 10 — 0.4 0.4 283 175
Oil, Gas & Consumable Fuels Neutral 28,088 331.1 15.3 12.6 12.0 1.7 1.5 1.4 8.9 7.1 6.5 10.9 12.1 11.6 1.8 2.0 2.0 525 286
Pharmaceuticals
Aurobindo Pharma SELL 1,226 1,225 (0) 712 8.4 586 63 74 79 19 17 15 2.3 2.1 1.9 11 9 9 12 13 12 1.5 1.8 2.1 19 10
Biocon REDUCE 368 315 (14) 442 5.2 1,202 (1) 8 12 NM 45 31 1.7 1.7 1.6 17 13 11 NM 4 5 0.8 0.8 1.1 20 7
Blue Jet Healthcare ADD 499 550 10 87 1.0 173 12 16 21 42 30 24 8.4 6.7 5.3 31 21 16 22 24 24 0.2 0.3 0.3 1 1
Cipla ADD 1,454 1,750 20 1,174 13.8 806 60 66 65 24 22 23 3.8 3.4 3.0 16 14 14 17 16 14 0.9 1.0 1.0 45 25
Concord Biotech ADD 2,195 2,050 (7) 230 2.7 105 35 47 60 64 47 36 12.8 10.6 8.7 45 34 27 22 25 24 0.4 0.5 0.7 6 2
Divis Laboratories SELL 5,928 4,000 (33) 1,574 18.6 265 79 98 124 75 61 48 10.7 9.7 8.7 53 43 34 15 17 19 0.6 0.7 0.9 52 27
Dr Reddy's Laboratories REDUCE 1,239 1,295 5 1,033 12.2 832 68 70 62 18 18 20 3.1 2.7 2.4 12 11 11 19 16 12 0.8 0.8 0.8 31 18
Emcure Pharmaceuticals BUY 1,368 1,680 23 259 3.1 189 39 49 59 35 28 23 6.0 5.2 4.4 18 15 13 20 20 20 0.7 0.9 1.1 3
Gland Pharma REDUCE 1,775 1,625 (8) 292 3.4 164 49 63 77 36 28 23 3.2 3.0 2.8 20 16 14 9 11 13 1.3 1.5 1.6 7 4
Glenmark Life Sciences BUY 1,050 1,200 14 129 1.5 123 39 47 53 27 22 20 5.1 4.6 4.1 18 15 14 20 22 21 2.2 2.3 2.4 3 1
JB Chemicals & Pharma BUY 1,815 2,325 28 282 3.3 157 44 55 63 41 33 29 8.2 6.9 5.8 26 21 18 22 23 22 0.6 0.6 0.6 4 3
Laurus Labs SELL 573 370 (35) 309 3.6 536 6 9 12 99 61 47 6.9 6.2 5.5 32 24 20 7 11 13 - - - 18 7
Lupin ADD 2,150 2,385 11 981 11.6 455 67 85 81 32 25 26 5.8 4.9 4.2 19 15 15 20 21 17 0.5 0.7 0.7 27 14
Mankind Pharma ADD 2,624 2,855 9 1,051 12.4 401 58 71 86 45 37 31 9.5 7.9 6.6 34 28 23 23 23 24 0.5 0.6 0.8 13 7
Sun Pharmaceuticals ADD 1,814 2,045 13 4,352 51.3 2,399 48 57 66 38 32 27 6.0 5.2 4.5 27 23 20 17 18 18 0.5 0.6 0.7 45 28
Torrent Pharmaceuticals REDUCE 3,375 3,300 (2) 1,142 13.5 338 58 74 91 59 45 37 13.8 11.2 9.0 30 26 22 26 27 27 0.4 0.5 0.6 23 13
Pharmaceuticals Neutral 14,049 165.6 36.4 30.1 27.3 5.2 4.6 4.0 22.2 18.8 17.0 14.2 15.2 14.8 0.5 0.6 0.7 316 167
India Research
157
Real Estate
Brigade Enterprises BUY 1,236 1,320 7 302 3.6 244 26 34 48 47 37 26 5.3 4.7 4.0 22 16 11 14 13 17 0.2 0.2 0.2 6 3
Brookfield India Real Estate Trust ADD 276 330 19 133 1.6 480 3 7 10 81 40 27 1.3 1.3 1.4 14 13 12 1 3 4 6.7 7.3 7.9 1 1
DLF BUY 876 960 10 2,168 25.6 2,475 17 22 31 53 40 28 5.2 4.7 4.2 107 51 37 10 12 16 0.7 0.8 0.9 37 15
Embassy Office Parks REIT ADD 372 425 — 352 4.2 948 25 12 16 15 30 23 1.5 1.6 1.6 15 13 12 10 5 7 6.2 6.6 7.1 5 4
Godrej Properties SELL 2,913 2,245 (23) 877 10.3 278 65 52 95 45 56 31 6.9 6.1 5.1 526 219 74 17 12 18 — — — 31 12
Macrotech Developers ADD 1,411 1,340 (5) 1,406 16.6 995 26 41 43 54 34 33 7.0 5.8 4.9 36 25 23 14 19 16 — — — 24 12
Mindspace REIT ADD 374 410 10 222 2.6 593 11 14 18 35 26 20 1.6 1.6 1.7 15 14 12 4 6 8 5.7 6.3 6.7 1 1
Nexus Select Trust ADD 140 155 11 212 2.5 1,515 4 5 6 34 29 25 1.5 1.6 1.6 16 15 14 4 5 6 5.9 6.5 7.1 2 1
Oberoi Realty REDUCE 2,130 1,825 (14) 774 9.1 364 56 86 120 38 25 18 4.9 4.1 3.3 26 17 12 14 18 21 0.5 0.6 0.7 33 16
Phoenix Mills REDUCE 1,868 1,465 (22) 668 7.9 357 35 44 46 53 42 40 6.3 5.5 4.9 26 22 20 12 14 13 0.1 0.2 0.2 16 9
Prestige Estates Projects ADD 1,752 1,830 4 755 8.9 408 22 26 47 78 68 37 4.2 4.2 3.8 27 22 15 6 6 11 0.1 0.1 0.2 19 9
Signature Global BUY 1,222 1,570 28 172 2.0 141 32 74 164 38 17 7 15.9 8.1 3.9 37 12 5 53 65 71 — — — 11 3
Sobha REDUCE 1,625 1,500 (8) 173 2.0 107 14 38 55 115 42 29 3.8 3.5 3.2 46 21 14 4 9 11 0.2 0.3 0.3 5 2
Sunteck Realty BUY 509 670 32 75 0.9 140 16 39 52 31 13 10 2.1 1.8 1.6 24 10 7 7 15 17 0.2 0.2 0.2 3 1
Real Estate Attractive 8,289 97.7 46.2 36.6 26.4 4.2 4.0 3.6 34.2 23.9 18.2 9.2 10.8 13.5 0.9 1.0 1.1 193 89
Retailing
Avenue Supermarts SELL 3,708 3,450 (7) 2,413 28.4 651 46 55 66 81 68 56 11.1 9.6 8.2 50 42 35 15 15 16 — — — 38 23
Metro Brands REDUCE 1,269 1,100 (13) 345 4.1 272 14 17 21 94 73 60 16.5 14.3 12.2 45 36 31 19 21 22 — 0.5 0.6 1 1
Titan Company REDUCE 3,473 3,275 (6) 3,083 36.3 888 42 52 62 83 67 56 26.9 21.1 16.7 53 44 38 36 35 33 0.4 0.5 0.5 53 27
Trent ADD 7,063 6,800 (4) 2,511 29.6 356 54 76 108 132 93 65 42.3 29.1 20.1 89 64 46 38 37 36 — — — 96 51
Retailing Neutral 5,842 98.5 92.9 73.8 58.7 20.3 16.4 13.2 58.7 47.5 38.6 22 22 22 0.2 0.2 0.2 188 102
Specialty Chemicals
Aarti Industries SELL 447 380 (15) 162 1.9 363 9 11 18 48 39 26 2.9 2.7 2.5 19 16 13 6 7 10 0.2 0.4 0.6 13 5
Atul SELL 7,466 5,270 (29) 220 2.6 29 189 232 274 39 32 27 4.0 3.6 3.3 20 17 15 10 12 13 0.5 0.6 0.7 7 3
Castrol India SELL 215 190 (11) 212 2.5 989 9 11 11 23 20 19 9.4 8.6 7.9 16 14 13 42 44 44 3.7 4.0 4.2 11 4
Clean Science & Technology ADD 1,440 1,540 7 153 1.8 106 26 36 50 55 40 29 10.8 8.9 7.2 38 29 21 21 24 28 0.4 0.6 0.8 4 2
Deepak Nitrite SELL 2,737 1,990 (27) 373 4.4 136 59 69 81 47 39 34 6.7 5.8 5.0 33 29 25 15 16 16 0.2 0.3 0.3 11 4
Navin Fluorine REDUCE 3,593 3,330 (7) 178 2.1 50 50 86 119 72 42 30 6.9 6.0 5.2 42 26 20 10 15 18 0.2 0.4 0.5 7 3
Neogen Chemicals ADD 2,310 2,070 (10) 61 0.7 26 23 51 61 100 45 38 7.5 6.6 5.7 45 28 17 8 16 16 0.1 0.3 0.4 4 1
Pidilite Industries ADD 3,191 3,315 4 1,623 19.1 509 43 49 56 75 65 57 17.2 15.5 14.1 51 45 40 24 25 26 0.7 0.9 1.1 15 8
PI Industries REDUCE 4,102 4,000 (2) 622 7.3 152 120 131 147 34 31 28 6.0 5.2 4.5 26 23 20 19 18 17 0.4 0.5 0.5 12 6
S H Kelkar and Company BUY 283 370 31 39 0.5 138 10 12 17 28 23 17 3.0 2.7 2.4 13 12 9 11 12 15 0.9 0.9 1.2 4 2
SRF ADD 2,336 2,290 (2) 693 8.2 296 38 57 81 61 41 29 5.6 5.1 4.5 28 22 17 10 13 16 0.5 0.6 0.7 16 9
Vinati Organics SELL 1,846 1,200 (35) 191 2.3 104 37 46 57 50 40 32 6.9 6.0 5.2 33 27 22 15 16 17 0.3 0.4 0.5 2 1
Specialty Chemicals Neutral 4,648 54.8 51.6 42.1 34.4 7.5 6.7 5.9 31.9 26.6 22.1 14.5 15.9 17.1 0.6 0.8 0.9 106 49
India Research
158
Telecommunication Services
Bharti Airtel ADD 1,586 1,720 8 9,491 111.9 5,753 40 53 68 39 30 23 10.0 8.0 6.9 12 10 8 27 30 31 0.9 1.4 1.8 124 77
Indus Towers SELL 360 340 (5) 949 11.2 2,638 32 28 21 11 13 17 2.9 2.4 2.4 5 5 6 29 20 14 0.6 5.6 2.8 50 24
Vodafone Idea SELL 8 7 (13) 560 6.6 69,645 (4) (3) (3) NM NM NM NM NM NM 16 14 13 NM NM NM — — — 70 23
Tata Communications SELL 1,840 1,645 (11) 524 6.2 285 42 63 82 44 29 23 20.0 13.4 9.5 13 11 9 54 55 49 0.9 1.3 1.8 11 5
Telecommunication Services Attractive 11,524 135.8 208.4 77.6 48.7 68 33 25 11.5 9.7 8.3 33 42 52 0.8 1.7 1.8 255 129
Transportation
Adani Ports and SEZ BUY 1,234 1,630 32 2,665 31.4 2,160 50 62 68 25 20 18 4.3 3.6 3.1 17 14 12 19 20 18 0.6 0.7 0.8 72 30
Container Corp. SELL 856 750 (12) 522 6.2 609 23 27 32 38 32 26 4.2 3.9 3.7 23 20 16 11 13 14 1.2 1.4 1.7 15 7
Delhivery BUY 379 475 25 282 3.3 747 3 5 9 125 78 43 2.9 2.8 2.6 65 35 22 2 4 6 — — — 10 6
Gateway Distriparks ADD 90 104 16 45 0.5 500 5 6 6 20 16 14 2.2 2.0 1.8 13 11 9 11 13 14 2.1 2.3 2.5 1 1
GMR Airports SELL - 74 - - 0.0 6,036 (1) 1 1 NM NM NM NM NM NM 8 4 3 1,708 NM 203 - - - 23 #VALUE!
Gujarat Pipavav Port SELL 196 178 (9) 95 1.1 483 8 10 11 24 20 18 3.8 3.1 2.6 14 12 10 17 17 16 — — — 4 2
InterGlobe Aviation BUY 4,466 5,200 16 1,725 20.3 383 185 252 266 24 18 17 18.8 9.1 4.3 8 6 4 128 69 43 — — — 57 33
JSW Infrastructure SELL 324 255 (21) 681 8.0 2,119 6 8 8 51 41 40 7.5 6.6 24.7 30 28 25 16 17 15 0.4 0.5 0.5 11 5
Transportation Attractive 6,015 70.9 29.2 21.6 19.4 5.6 4.6 3.8 13.9 11.0 9.0 19.3 21 19.5 0.4 0.5 0.6 193 #VALUE!
KIE universe 318,488 3,754 27.0 22.8 20.0 4.0 3.5 3.2 16.5 13.9 12.3 14.7 15.5 15.8 1.2 1.4 1.5
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2024 means calendar year 2023, similarly for 2025 and 2026 for these particular companies.
(c) Exchange rate (Rs/US$)= 84.8
India Research
159
DISCLAIMERS, DISCLOSURES & LEGAL

Distribution of ratings/investment banking relationships
Kotak Institutional Equities Research coverage universe
Percentage of companies covered by Kotak Institutional

70%
Equities, within the specified category.
60%
Percentage of companies within each category for which
50% Kotak Institutional Equities and or its affiliates has
provided investment banking services within the previous
12 months.
40% 37.8%
* The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over
28.7%
30% the next 12 months; Add = We expect this stock to deliver
5-15% returns over the next 12 months; Reduce = We
19.6% expect this stock to deliver -5-+5% returns over the next
20%
13.8% 12 months; Sell = We expect this stock to deliver less than
9.5% -5% returns over the next 12 months. Our target prices
10% are also on a 12-month horizon basis. These ratings are
3.3% 1.8% used illustratively to comply with applicable regulations. As
1.5%
of 30/09/2024 Kotak Institutional Equities Investment
0%
BUY ADD REDUCE SELL Research had investment ratings on 275 equity securities.
Source: Kotak Institutional Equities

As of September 30, 2024
Ratings and other definitions/identifiers

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

Brainbees Solutions Ltd (FIRSTCRY) ADD

in this business over FY2024-27, driven by growth in customers and AOV.

Initiate coverage with ADD rating and FV of Rs630

Garima Mishra Ishani Swain

Key financials’ snapshot of Firstcry (consolidated), March fiscal year-ends, 2021-27E

Source: Company, Kotak Institutional Equities estimates

We expect consolidated GMV CAGR of 19% over FY2024-27

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Initiate coverage with an ADD rating and FV of Rs630

We initiate coverage with an ADD rating; Fair Value of Rs630/share

Source: Company, Kotak Institutional Equities estimates

We arrive at an SoTP-based Fair Value of Rs630/share

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

Firstcry: Premium valuations backed by healthy long-term growth prospects

Retail and e-commerce players’ comparative valuation

Source: Bloomberg, Kotak Institutional Equities estimates

Childcare industry: Beneficiary of rising online spends, large young population

India witnesses ~23 mn births every year

Source: UN, Kotak Institutional Equities

Global benchmarks of birth rates, December calendar year-ends

Birth rates - Global benchmarks (per '000 of population, CY)

Source: World Bank, Kotak Institutional Equities

Source: United Nations Database Source: United Nations Database

Estimating a potential market for Firstcry

There were 53 mn primary + pre-primary enrollments in 2020

2020 2021 2022

Source: UDISE+, Kotak Institutional Equities

We estimate ~23 mn children to be Firstcry customers over the medium term

Source: UDISE+, Kotak Institutional Equities estimates

We expect Firstcry to register 13% CAGR in transacting customers over FY2024-27

Source: Company, Kotak Institutional Equities

We estimate average annual spend of Rs13k per child

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Source: Company portals, Kotak Institutional Equities estimates

Each Firstcry customer spent ~Rs5.3k on the platform in FY2024

Source: Company, Kotak Institutional Equities estimates

Global benchmarks on spend per child on childcare products

(b) US$1 = Rs80.

Source: Redseer, Kotak Institutional Equities

We peg Firstcry’s TAM at Rs300 bn

Average spends per year (Rs) 12,599

Source: Company, Kotak Institutional Equities estimates

Peers in India have achieved limited scale

Firstcry has achieved sizeable scale compared with peers

2019 2020 2021 2022 2023 2024

Source: Company, PrivateCircle, Kotak Institutional Equities

2022 2023 2024

Source: Company, PrivateCircle, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

Apparel Consumables Hard goods Toys & games CAGR (%)

2016 2019 2021 2022

Source: Redseer, Kotak Institutional Equities

Mothercare India: Targeting the affluent customer

We show some key takeaways from the store visits below.

Source: Companies, Kotak Institutional Equities