Dear Sir/ Madam, UPL Ltd Q3FY17 Result Update CMP: Rs 740 Target: Rs 749 Previous Rating: Sell Current Rating: Reduce Key highlights of the result Strong Volume growth: UPL posted revenue growth of 26% in Q3FY17 same as Q2FY17, mainly on account of strong volume growth of 18% during the quarter (23% in Q2FY17). There was a price decline of 3% while exchange impacted positively by 3%. Geographically, India / Latin America contributed highest to growth with 20%/37% (23%/34% in Q2FY17) respectively. Gross & EBITDA Margin continues to improve: Gross margin for the quarters declined by 90bps to 53.2% from 54.2% while EBITDA margin declined by 103bps to 19.1%. High Depreciation and Forex impact restricts PAT growth: Depreciation for the quarter increased by 31.5% to Rs1.6bn, while other income saw forex loss increase of Rs32mn vs gain of 53mn last year. Exceptional item for the quarter came in at mere Rs21mn vs loss of Rs237mn. Tax outflow during the quarter decreased by 36%, leading to PAT growth of 50% to Rs4.6bn during the quarter. Outlook and Valuation UPL’s Q3FY17 results were ahead of our estimated. UPL is a leading global generic player in the agrochemical Industry (ranks among the Top-5 post patent agrochemical manufacturers in the world). We expect UPL sales to register CAGR of 14% over FY2016-19E, while Adj PAT is likely to show a CAGR of 24% during same period. Over past few quarters, UPL has seen strong revival in volume growth, with improving EBITDA margin. At current price stock is trading at 18.7x & 16.1x its FY18E & FY19E earnings respectively. We expect stock to remain in limelight on account of inclusion in Nifty (not confirmed), also due to recent run up in the price, stock trades near to its fair value, hence we rate stock Reduce with TP of Rs749.

Dear Sir/Madam, Rallis India Ltd Q3FY17 Result Update CMP: Rs 209 Target: Rs 267 Previous Rating: Sell Current Rating: Buy Agrochemical business reviving – Rallis on standalone basis posted growth of 7.9% in Net Sales for quarter, as domestic business picked up on back of strong monsoon. Domestic business was struggling on account of 2 back to back droughts and high channel inventory. Other business (majorly seed) posted decline of 9.9% for the quarter, as only 1Q is business season quarter. Margin on expansion mode – Gross margin for the quarter increased by 260bps (Standalone & consolidated) , while EBITDA margin increased by 145bps on standalone basis and 115bps on consolidated basis. Margin expansion clearly indicated returning of pricing power and product acceptance. Lower interest and higher other income further boost PAT – Total PAT for the quarter came in at Rs253mn, an yoy increase of 29.9%, driven by lower interest cost for the quarter. Interest cost during the quarter declined by 66%. PBT came in at Rs318mn , an growth of 61.7%, driven by 23.9% growth in agrochemical and while seed business witness increase in loss by 9.1%. Outlook and Valuation Rallis’s Q3FY17 numbers were marginally ahead of our expectation. Growth in sales with expansion in margin indicates revival in company. We would be closely monitoring innovation index and ramp up in export business. Overall, we estimate Rallis to register a CAGR of 8.4% in Net Sales and 13.2% Profit over FY2016-19E, respectively. On the valuation front, the stock is trading at 22x & 20x FY2018 & FY2019 Estimated Earnings. We recommend Buy on stock with a Target Price of Rs267.

Dear Sir/Madam, UPL Ltd Q2FY17 Result Update CMP: Rs 698 Target: Rs 688 Previous Rating: Reduce Current Rating: Sell Key highlights of the result Strong volume growth: UPL posted gross revenue growth of 19% in Q2FY17, mainly on account of strong volume growth of 23% during the quarter. There was a price decline of 5% while exchange impacted positively by 1%. Total net revenues grew by 26% during the quarter. Geographically, India / Latin America contributed highest to the growth with 23%/34% respectively. Seed business witnessed a revenue growth of 23%. Gross margin continues to improve: Gross margin for the quarters improved by 225bps to 52.1% from 49.9% while EBITDA margin declined by 110bps to 17.6%. High Depreciation and Forex impact restrict PAT growth: Depreciation for the quarter increased by 38% to Rs1.5bn, while other income saw forex loss increase of 118%. Exceptional item for the quarter came in at Rs557mn vs Rs76mn. Tax outflow during the quarter decreased by 45%, leading to PAT growth of 17% to Rs1,9bn during the quarter. Outlook and Valuation UPL’s Q2FY16 results were marginally below our estimated. UPL is a leading global generic player in the agrochemical Industry (ranks among the Top-5 post patent agrochemical manufacturers in the world). We expect UPL sales to register CAGR of 14.5% over FY2016-18E, while Adj PAT is likely to show a CAGR of 20.2% during same period. Over past few quarters, UPL has seen a strong revival in volume growth, with improving gross margin. At current price stock is trading at 25x & 20x its FY17E & FY18E earnings respectively. Due to recent run up in the price, stock trades near to its fair value, hence we rate stock Sell with TP of Rs 688 per share.

Dear Sir/Madam, Rallis India Ltd Q2FY17 Result Update CMP: Rs 232 Target: Rs 223 Previous Rating: Reduce Current Rating: Sell Revival in growth of core business – Rallis, on standalone basis, posted growth of 17.8% in Net Sales for the quarter, as domestic business picked up on back of strong monsoon and spillover of export order from previous quarter. Domestic business was struggling on account of two back to back droughts and high channel inventory. Other business (majorly seed) posted strong growth of 66% for the quarter. A bit stress on EBITDA – On yearly basis Consolidated EBITDA margin contracted by 40bps to 19.3%, however on standalone basis it decreased by 60bps. Seed business reported EBITDA loss of Rs55mn vs a loss 62mn in 2QFY16. Lower interest cost helps PAT – Total PAT for the quarter came in at Rs665mn, an yoy increase of 31%., driven by lower interest cost for the quarter. Interest cost during the quarter declined by 60.4%. PBT came in at Rs958mn , an growth of 26.8%, driven by 21.8% growth in agrochemical and while seed business reduced its loss by 22.3%. Outlook and Valuation Rallis’s Q2FY17 numbers were in-line with our expectation. Even thought Rallis has one of the best distribution network, company seems to be unable to capitalize on it. Given stellar performance by peers, Rallis’s lowering innovation index and declining growth in domestic business indicate urgent need for business restructuring & focus. Overall, we estimate Rallis to register a CAGR of 9% in Net Sales and Profit over FY2016-18E, respectively. On the valuation front, the stock is trading at 29x & 26x FY2017 & FY2018 Estimated Earnings. We recommend Sell on stock with a Target Price of Rs223.

Dear Sir/Madam, Bayer CropScience Ltd Q2FY17 Result Update CMP: Rs 4510 Target: Rs 4,038 Previous Rating: Sell Current Rating: Sell Key highlights of the result Drought impact waning: Bayer CropScience (BCS) registered sales of Rs10.8Bn, a growth of 9.2%YoY and 35.2% QoQ, indicating pick up in growth. We believe post healthy monsoon, market demand is picking up. Margin expansion restricted: Gross margin contract by 215bps to 40.2%. EBITDA margin for the quarter came in at 21.5% against 22.1% in Q2FY16 & 22.9% in Q1FY17. Higher depreciation & lower income restrict PAT growth: Depreciation for the quarter increased by 13.6%, ahead of sales growth, while other income declined by 35.9% yoy for the quarter. Overall PAT posted a growth of 2.1% to Rs1.6bn. Outlook and valuation Overall performance of BCS was encouraging on back of improving monsoon condition, we believe as season picks up, 3Q & 4Q numbers should improve. We expect BCS to post CAGR of 16% in Revenue & 17% growth in PAT over FY16-18E. At current valuation of 43x & 37x FY17 & FY18 expected earnings, we believe stock is overvalued, however managements regular buy back & lower trading volume would support higher price. We maintain our Sell rating on stock with Target price of Rs4,038.

Dear Sir / Madam, Bayer CropScience Ltd Q1FY17 Result Update CMP: Rs 4,047 Target: Rs 3,121 Previous Rating: Sell Current Rating: Sell Key highlights of the result: Drought impact continues: Bayer CropScience (BCS) posted a growth of 8.4% in sales to Rs7.9Bn and 7.9% in total revenue to Rs8.2Bn during Q1FY17. This compares better to 7% decline in Q4FY16. Given two back to back drought we believe market growth is slow in pick up. Margin improvement across the board: Gross margin improved by 140bps to 48.5%. EBITDA margin for the quarter came in at 22.9% against 19.2% Q1FY16. PAT growth supported by higher EBITDA: Depreciation for the quarters increased by 8.3%,, while other income declined by 29% yoy basis. Finance cost was also up by 20% for the quarter. Overall PAT posted a growth of 18.6% to Rs1.3bn. Outlook and valuation Overall performance of BCS was encouraging after poor monsoon condition prevailing in country during last two monsoon seasons. Here onwards on the back of very good monsoon so far, we believe as season picks up, 2Q numbers should improve. Two poor monsoons had led to higher channel inventory accompanied by heavy competition in generic business. We have revised our Sales/EBITDA/PAT estimates for FY17/FY18. We expect BCS to post CAGR of 16% in Revenue & 23% growth in PAT over FY16-18E. At current valuation of 37.8x & 31.3x FY17 & FY18 respectively, we believe stock is overvalued. However regular buy backs and lower trading volume would support higher stock price. We maintain our Sell rating on stock with Target price of Rs3,121.

Dear Sir/Madam, UPL Ltd Q1FY17 Result Update CMP: Rs 611 Target: Rs 656 Previous Rating: Accumulate Current Rating: Reduce Key highlights of the result Strong Volume growth: UPL posted revenue growth of 8% in Q1FY17, mainly on account of similar volume growth during the quarter. A price decline of 2% got nullified by upward movement in currency to similar tune. Geographically, Latin America/EU/RoW contributed highest to growth with 13%/12%/13% respectively. Seed business witnessed a revenue decline of 20%. Gross & EBITDA Margin continues to improve: Gross margin for the quarters improved by 160bps to 53.6% from 52% while EBITDA margin improved by 90bps to 19.9%. There were significant changes in depreciation and interest on account of Ind-AS, however the overall impact was minute at the PBT level. Healthy growth in profit continues: Exceptional item for the quarter came in at Rs281mn vs Rs169mn. Tax rate for the quarter came in at 1%. PBT for the quarter grew by 15% to Rs 4,319mn, while PAT grew by 23% to Rs4,012mn. Outlook and Valuation UPL’s Q1FY16 revenue were below the management’s annual guidance of 12-15% growth, while profit growth was ahead. UPL is a leading global generic player in the agrochemical Industry (ranks among the Top-5 post patent agrochemical manufacturers in the world). We expect UPL sales to register CAGR of 13% over FY2016-18E, with steady EBITDA margins. Adj PAT is likely to show a CAGR of 22% during same period. Over past few quarters, UPL has seen strong revival in volume growth, with improving EBITDA margin. With RoCE/RoE of 23%/21% in FY17 & FY18, at current price stock is trading at 16.2x & 14x its FY17E & FY18E earnings respectively. Due to recent run up in the price, stock offers limited upside of 7% from here on, hence we rate stock Reduce with TP of Rs656.

Dear Sir/Madam, Rallis India Ltd Q1FY17 Result Update CMP: Rs 218 Target: Rs 222 Previous Rating: Sell Current Rating: Reduce International & Seed business saves the day – Rallis on standalone basis posted a growth of 1% in revenue for quarter, mainly on account of Export (4QFY16 orders deliveries were pushed back into 1QFY17). Domestic business is struggling on account of 2 back to back droughts and high channel inventory. Other business (majorly seed) posted strong growth of 16% for the quarter, however it was below long term CAGR of 20-25% on account of supply constraint. EBITDA improves – On yoy basis, Consolidated EBITDA margin during the quarter improved by 250bps to 16.9%, however on standalone basis it improved by 160bps only. Seed business reported EBITDA margin of 26.2%. Exceptional item boost PAT – Total PAT for the quarter came in at Rs1.7bn, an yoy increase of 310%, driven by exceptional item (sale of leasehold land). Core PBT (before exceptional item) came in at Rs624mn, an growth of 38%, driven by 56% growth in agrochemical and 33% in other business (seed). Outlook and Valuation Rallis’s Q1FY17 numbers were marginally below our expectation. Even thought Rallis has one of the best distribution network, company seems to be unable to capitalize on it. Given stellar performance by peers, Rallis’s lowering innovation index and declining growth in domestic business indicate urgent need for business restructuring & focus. Overall, we estimate Rallis to register a CAGR of 9% in Net Sales and Profit over FY2016-18E, respectively. On the valuation front, the stock is trading at 27.5x & 24.5x FY2017 & FY2018 Estimated Earnings. We recommend Reduce on stock due to very limited upside with a Target Price of Rs222.

Dear Sir/Madam, Bayer CropScience Ltd Q4FY16 Result Update CMP: Rs 4,075 Target: Rs 2,944 Previous Rating: Sell Current Rating: Sell Key highlights of the result Drought impact continues: Bayer CropScience (BCS) posted a decline of 7% in sales to Rs5Bn and 7% in total revenue to Rs5.2BN during Q4FY16. This compares better to 10% decline in revenues during Q3FY16. Growth was impacted on account of poor monsoon across the country. For the full year revenue showed a flattish growth of 0.5% to Rs37bn. Poor demand impacts margin: Gross margin declined by 210bps to 34.4%. However decline in sales led to lower operating efficiency and 510bps contraction in EBITDA margin. EBITDA margin for the quarter came in at 3.8% against 8.9% Q4FY15. For the FY16 EBITDA margin declined by 260bps to 11.2%. Lower other income impacts PAT: Interest & Depreciation for the quarters remained in band, while other income declined by 38% yoy basis. Overall PAT declined by 62% to Rs165mn. For FY16 interest outgo increased by 59% , while other income declined by 14%, resulting in overall PAT decline of 21% to Rs3bn. Outlook and valuation Overall performance of BCS for FY16 was poor on back of drought condition prevailing in country. We have revised our Sales/EBITDA/PAT estimates by 4%/12%/13% on account of good monsoon expectations. We expect BCS to post CAGR of 13% in Revenue & 17% growth in PAT over FY16-18E. At current valuation of 41x & 32x, FY17E & FY18E earnings respectively, we believe stock is overvalued, however managements regular buy back would support higher stock price. We maintain our Sell rating on stock with Target price of Rs2,944 per share.

Dear Sir/Madam, UPL Ltd Q4FY16 Result Update CMP: Rs 538 Target: Rs 638 Previous Rating: Accumulate Current Rating: Accumulate Key highlights of the result Strong Volume growth: UPL posted revenue growth of 20% in Q4FY16, mainly on account of strong volume growth of 25% in quarter (-6% currency impact). Geographically North America and Latin America contributed highest with growth of 13% & 57% respectively. For the FY16 total revenue increased by 10% on back of 17% volume growth (-8% currency impact). Gross & EBITDA Margin continues to improve: Gross margin for the quarters improved by 200bps to 50% from 48%., while EBITDA margin improved by 100bps to 22.6%. For FY16 Gross margins improved by 160bps to 51.8% while EBITDA margin improved by 90bps to 20.4%. Healthy growth in profit continues: PBT for the quarter grew by 36% Rs6,917mn while post exception & prior period item profit grew by 32%. PAT for the quarter grew by 32% to Rs5,954mn. For the FY16 PBT & PAT mirrored growth of 15% each. Outlook and Valuation UPL’s Q4FY16 revenue were way ahead of our/street estimates, hence we have revised our estimates upward for FY17. UPL is a leading global generic player in the agrochemical Industry (ranks among the Top-5 post patent agrochemical manufacturers in the world). We expect UPL sales to register CAGR of 10% over FY2016-18E, with EBITDA margins expansion, driven by operating leverage, to 20.5%. Adj PAT is likely to show a CAGR of 17.5% during same period. Over past 4 quarters, UPL has seen strong revival in volume growth, with improving EBITDA margin. With RoCE/RoE of 23%/21% in FY18, at current valuation of 13.5x FY17E EPS & 12.1x FY18E EPS, the stock of the company offers upside of 19% from here on, hence we rate stock Accumulate with TP of Rs638.

Dear Sir/Madam, Rallis India Ltd Q4FY16 Result Update CMP: Rs 198 Target: Rs 193 Previous Rating: Sell Current Rating: Sell Lean season for the quarter, mute performance for the year – Rallis posted sales growth of 8.6% for Q4FY16 on consolidated basis, driven by 9.4% growth in core agrochemical business and 1.9% growth in Seed. Generally 4Q is the lean season hence the muted performance. On full year basis FY16 witnessed total revenue declined by 10.5% on back of 13.8% decline in core agrochemical business, while seed & other business posted a growth of 5.9% for the year. Gross margin up, EBITDA down – Gross margin for FY16 on consolidated basis improved from 45.4% to 48.5%, an improvement of 310bps. EBITDA margin declined by 120bps to 14.1%, while on standalone basis EBITDA margin declined by 85bps to 16.1%. Seed business reported EBITDA margin of 7.1%. Poor operating performance hits PAT – Total PAT for the year came in at Rs1467mn, an yoy decline of 8.2%. Core agrochemical business witness decline of 13.3% to Rs265mn , while Seed /Other business reported a profit of Rs207mn (43.9% up). Tax outgo for the FY16 witness decline of 36.9%, restricting PAT decline to 8.2% only. There was exceptional income of Rs65mn that bumped up other income for the quarter & year. Outlook and Valuation Rallis’s Q4FY16 numbers were ahead of our expectation. However, the company witnessed poor performance during FY16. We are revising our Sales/EBITDA/Earnings estimates upwards by 6%/9%/21% respectively for FY17 on account of good monsoon expectations. On the valuation front, the stock is trading at 25.6x & 22.3 FY2017 & FY2018 Estimated Earnings. We maintain our Sell recommendation on stock with Target Price of Rs193.

Dear Sir/Madam, Talwalkars Better Value Fitness Q3FY16 Result Update CMP: Rs 224 Target: Rs 317 Previous Rating: Accumulate Current Rating: Buy Key highlights of the result Lean season, muted growth – Sales for the quarter registered a growth of 8.9% in Q3FY16 to Rs 460 mn. Steady EBITDA - Stable cost helped EBITDA margin for the quarter remain steady while total EBITDA posted a growth of 8.8% in-line with sales growth to Rs 216 mn. Higher other income boost PAT– Other income for the quarter increased by 10x on back of strong cash on balance sheet, while interest cost increased by 18% for the quarter. Overall PAT (before MI) for the quarter registered a growth of 17% to Rs 69mn. Net PAT post Minority Interest grew by 21% to Rs 54mn. M&A – company announced 2 acquisition, 1) Zorba – company acquired 50% stake in Chennai based Yoga studio and 2) Inshape Health and Fitnez (IHPL) – an gym chain based in Chennai, TBVF has acquired 51% stake in the same. No details pertaining to transaction or company financial have been released. Outlook and Valuation TBVF has been focusing on converting itself from being pure gym company to a fitness company. Over FY2015-17, we expect company to post CAGR of 19%, 20% & 13% in Sales, Profit & EPS respectively. At current valuation of 10x FY2017E EPS and 4.4x FY2017 EV/EBITDA stock is trading at attractive valuation. Hence we recommend Buy rating on the stock with Target Price of Rs 317.

Dear Sir/Madam, Talwalkars Better Value Fitness Q2FY16 Result Update CMP: Rs 252 Target: Rs 317 Previous Rating: Reduce Current Rating: Accumulate Key highlights of the result: SSS continues to drive growth - Sales for the quarter registered a growth of 9.9% in Q2FY16 to Rs 822 mn. Growth was primarily driven by same-store-sales growth of 11% . Stable cost accompanied by higher VAS contribution help EBITDA expand - Stable cost helped improve EBITDA margin for the quarter by 400bps to 57.5%. EBITDA posted a growth of 18% to Rs 473 mn. PAT growth momentum continues - Other income for the quarter increased by 800% on back of strong cash on balance sheet, while interest cost increased by 50% for the quarter. However adjuste3d interest cost decreased by 22% .Overall PAT (before MI) for the quarter registered a growth of 24.8% to Rs 262mn. Net PAT post Minority Interest grew by 25.3% to Rs 246mn. M&A - company acquired 49.5% stake in Power World Gyms Ltd - Sri Lanka based health & fitness chain and 19% stake in Gymtrekker.com. No details have pertaining to transaction or company financial have been released. Outlook and Valuation : TBVF has been focusing on converting itself from being pure gym company to a fitness company. Over FY2015-17, we expect company to post CAGR of 19%, 20% & 13% in Sales, Profit & EPS respectively. At current valuation of 11x FY2017E EPS and 4.8x FY2017 EV/EBITDA stock is trading at attractive valuation. Hence we recommend Accumulate rating on the stock with Target Price of Rs 317.

Dear Sir/Madam, UPL Ltd Q2FY16 Result Update CMP: Rs 474 Target: Rs 524 Previous Rating: Reduce Current Rating: Accumulate Key highlights of the result Marginal Miss on sales because of adverse currency movement: UPL posted growth of 5% in Q2FY16 to Rs 28 bn against our estimate of Rs29bn, mainly on account of adverse currency impact of 11%. Volume growth stood at healthy rate of 13%. Geographically North America and RoW contributed highest to growth with 9% & 11% growth respectively. Steady improvement in EBITDA margin: EBITDA margin for quarter improved by 70bps to 18.7% Vs 18% same period last year. Overall EBITDA grew by 9% to Rs 5.2 bn for the quarter. Margin expansion was driven by ongoing cost control & operating leverage. Management has guided for overall expansion of EBITDA margin by 60-100bps over full year. Adverse currency movement and higher tax hits PBT/PAT: Adverse currency hit PBT to the tune of Rs600mn (Rs360mn in other income and Rs250mn in Interest cost. This led to a decline of 5% yoy basis. Tax rate for the quarter came in 30% vs 20%, resulting in PAT decline of 8%, while post minority & share of associate Net PAT grew by 12%. Outlook and Valuation UPL’s Q2FY15 revenue were marginally below our estimates. UPL is a leading global generic player in the agrochemical Industry (ranks among the Top-5 post patent agrochemical manufacturers in the world). We are marginally cutting our estimates. we expect UPL sales to register CAGR of 10% over FY2015-17E, with EBITDA margin expansion, driven by operating leverage, to 19.5%. Adj PAT is likely to show a CAGR of 22% during over mentioned period. Over past 4 quarters, UPL has seen strong revival in volume growth, with improving EBITDA margin. With RoCE/RoE of ~23%/~20% in FY16 & FY17, at current valuation of 15x FY16E EPS & 13xFY17E EPS stock offers 11% upside from here on, hence we have Accumulate rating on the stock with TP of Rs524.

Dear Sir/Madam, Rallis India Ltd Q2FY16 Result Update CMP: Rs 205 Target: Rs 139 Previous Rating: Sell Current Rating: Sell International business continues to be under pressure – Consolidated sales declined by 22% to Rs5,017 against our estimate of Rs7,122mn. On standalone basis Rallis posted a decline of 21% in revenue for quarter. Seed business also declined by 35% for the quarter due to lower off take from government. Gross margin improves but EBITDA contracts – Gross margin on consolidated basis improved from 39% to 41%, an improvement of 200bps. EBITDA margin remained steady at 19.3% leading to a decline of 21% at EBITDA level. However on standalone basis EBITDA margin improved by 111bps to 22.2%. Seed business reported EBITDA loss of Rs65mn. Core agrochemical business has suffered to due to drought like condition in domestic market and slowdown in export business. Poor operating performance hits PAT – PAT for the quarter came in at Rs 558mn, an yoy decline of 23%. Core agrochemical business witness decline of 15% to Rs647mn , while Seed /Other business reported a loss of Rs 89mn vs a loss of Rs 33 mn in Q2FY15. Outlook and Valuation Rallis’s Q2FY16 numbers were way below our expectation. Even thought Rallis has one of the best distribution network, company seems to be unable to capitalize on it. Rallis’s lowering innovation index and declining growth in domestic business indicate urgent need for business restructuring & focus. We are cutting our Sales/EBITDA/Earnings estimates 23%/23%/31% respectively for FY17. On the valuation front, the stock is trading at 33x & 30x FY2016 & FY2017 Estimated Earnings. We recommend Sell on stock with Target Price of Rs139.