Equitas Holding. Absolute :REDUCE Relative : UNDERWEIGHT 1QFY18 Results: Est. ( ), Target ( ), Rating ( ) Regular Coverage 4% Downside in 14Months

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1 Equitas Holding Absolute :REDUCE Relative : UNDERWEIGHT 1QFY18 Results: Est. ( ), Target ( ), Rating ( ) Regular Coverage 4% Downside in 14Months 2017Equirus All rights reserved Rating Information Price (Rs) 168 Target Price (Rs) 161 Target Date 30 th Sep 18 Target Set On 31 st Jul 17 Implied yrs of growth (ERE) 20 Fair Value (ERE) 161 Fair Value (DDM) Ind Benchmark Model Portfolio Position - Stock Information NA BANKEX Market Cap (Rs mn) 56,689 Free Float (%) % 52 Wk H/L (Rs) / Avg Daily Volume (1yr) 1,633,971 Avg Daily Value (1yr) 272 Equity Cap (Rs Mn) 3,384 Face Value (Rs) 10 Bloomberg Code EQUITAS IN Ownership Recent 3M 12M % Promoters 0.0 % 0.0 % 0.0 % DII 37.3 % 4.8 % 8.3% FII 16.0 % 6.3 % 4.5% Public 46.7 % % -12.8% Price % 1M% 3M% 12M% Absolute 11.7 % 0.8 % % Vs Industry 3.6 % % % UJJIVAN 4.4 % % % BHARATFIN 17.2 % 5.1 % -6.9 % Consolidated Quarterly EPS forecast Rs/Share 1Q 2Q 3Q 4Q EPS (17A) EPS (18E) Return ratios to take time to normalize; retain REDUCE Equitas Holding Ltd (EQUITAS) saw a 31% yoy decline in 1QFY18 PAT to Rs 156mn (EE Rs 226mn) on higher opex (+102% yoy) and provisions (+151% yoy), even as it booked Rs 601mn as PSLC fees. MFI disbursements (-57% yoy/-22% qoq) remained weak and in line with management strategy to reduce the MFI loan share to ~30% by FY18E (1QFY18: 42%). Asset quality remained stressed as PAR >0/>90 days stood at ~7%/~4.1% (vs. ~5.9%/~2.7%). First-month MFI collection efficiency declined further with Jun 17 collection at 94% (Mar 17: 94.4%). We pare FY18E/FY19E EPS as we build in higher opex expenses and reduce NII assumptions for FY18E. Maintain REDUCE with an ERoE-based Sep 18 TP of Rs 161 (Rs 171 earlier) set at 2.5/2.4 Sep 18/Mar 19 ABV of Rs 64/67. Weak disbursements lead to subdued 7% yoy AUM growth: EQUITAS reported gross AUM growth of 7% yoy/-2% qoq to Rs 70.4bn. While MFI disbursements declined 57% yoy, non-mfi disbursements were also modest at 20% yoy. The share of MFI/UCV/M-LAP in disbursements was at 33%/27%/20%. Deposit growth remained healthy at 19.6% qoq to Rs 22.6bn with retail TDs (<Rs 10mn) constituted ~35% of total deposits. CASA ratio stood at 26%/9% of total deposits/liabilities. Avg. balance per customer of CA/SA deposits was Rs 95k/Rs 48k. Higher opex, provisions drag down PAT: NII growth was subdued at 5.6% yoy/-2.5% qoq as NIM declined 70bps qoq on a change in the AUM mix and lower excess interest spreads on the securitized portfolio. EQUITAS sold PSLCs worth Rs 36bn and booked entire fee income of Rs 0.6bn during 1QFY18. The company has sold Rs 150mn by premium value of insurance products and has mobilized 6000 MF SIPs in 1QFY18. Opex increased by 102% yoy/21% qoq as branch and employee expenses remained elevated. GNPL ratio ~5% for both MFI/non-MFI loans: GNPA/NNPA ratios stood at 4.9%/2.4% (+138bps/+89bps qoq). Of total GNPAs of Rs 3bn, Rs 1.21bn were related to MFIs (~5%) and the rest Rs 1.79bn to the non-mfi book (~4.9%). UCV/M-LAP GNPLs stood at ~6.5%/~1.5%. Maharashtra contributes ~55% of MFI PAR>0. Only 25% of delinquent customers have been regular in re-paying recent installments. Management expects MFI collections to improve post the list of individuals eligible for waivers is released. Retain REDUCE with a Sep 18 TP of Rs 161: EQUITAS re-aligned its provisioning policy in line with RBI guidelines. Consequently, we trim our provision estimates for FY18E/FY19E. Given better-than-expected deposit and CASA traction, we raise FY19E NII estimates by 3% while lowering FY18E NII estimates by 8% on a change in the AUM mix in favor of lower-yielding loans. Maintain REDUCE with an ERoE based Sep 18 TP of Rs 161 (Rs 171 earlier). An improvement in MFI collections and faster breakeven of branches leading to a quicker recovery of profitability are the key risks. Financials Revised Estimates % Change FY18E FY19E FY18E FY19E NII 9,090 11, % 3.0% Provisions 989 1, % -37.0% PAT (Adj) 703 1, % -28.2% EPS (Rs.) % -28.8% Advances 70, , % 21.6% Deposits 38,105 64, % 59.1% Consolidated Financials Rs. Mn YE Mar FY17A FY18E FY19E FY20E Interest Income 14,423 15,175 17,346 22,072 Interest Expense 5,871 6,084 5,931 7,213 Net Interest Inc. 8,552 9,090 11,415 14,859 Other Income 1,511 2,269 1,913 2,027 Operating Exp 6,094 9,276 9,960 11,348 Provisions 1, ,088 1,546 PAT 1, ,482 2,595 Loan and Advances 58,289 70, , ,428 Deposits 18,857 38,105 64,047 89,983 Net Worth 22,309 23,011 24,493 27,088 NIM 10.6 % 9.6 % 10.3 % 10.4 % Prov/Avg Loan 2.7% 1.5% 1.3% 1.3% Rs Per Share FY17A FY18E FY19E FY20E EPS Adjusted EPS Book Value Adjusted BVPS DPS P/B (x) Adj P/B (x) Adj ROE (%) 8.9 % 3.1 % 6.2 % 10.1 % RoA (%) 2.0 % 0.7 % 1.3 % 1.7 % August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 1 of 13 Before reading this report, you must refer to the disclaimer on the last page.

2 Quarterly Results Table Particulars %Variation P&L Statement (Rsmn) 1QFY18 1QFY18E 1QFY17 4QFY17 % change vs Est % change y-y % change q-q Net interest income (NII) 2,158 2,259 2,044 2, % 5.6% -2.5% Other income % 258.7% 322.1% Total income 2,980 2,724 2,273 2, % 31.1% 23.7% Operating expenses 2,286 2,015 1,134 1, % 101.6% 21.0% Staff expenses 1,352 1, , % 79.7% 15.5% Other expenses % 144.8% 29.9% Operating profit , % -39.0% 33.6% Total provisions % 151.1% 7.5% Exceptional items Profit before tax % -73.7% 131.5% Tax % -72.3% 141.1% Profit after tax % -74.5% 125.9% Adjusted PAT % -74.5% 125.9% Balance sheet (Rs mn) 1QFY18 1QFY18E 1QFY17 4QFY17 % change vs Est % change y-y % change q-q Deposits 22,550 20,487-18, % % CASA 5,879-3, % Borrowings 42,771 43,556 41,518 46, % 3.0% -8.2% Advances 61,049 60,994 57,103 58, % 6.9% 4.7% Total gross AUMs 70,361 74,630 65,589 71, % 7.3% -2.0% Disbursement 10,550 13,910 10, % 1.8% MFI Disbursement 3,482 8,020 4, % -21.8% Non MFI Disbursement 7,069 5,890 5, % 19.7% Gross NPL (Rsmn) 3, , % 45.6% Net NPL (Rsmn) 1, , % 56.2% August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 2 of 14

3 Ratios (%) 1QFY18 1QFY18E 1QFY17 4QFY17 bp change y-y bp change q-q Profitability ratios Yield on Advances 20.2% 20.6% 20.2% Cost of Funds 9.2% 11.0% 9.7% NIM 9.1% 12.6% 9.8% RoaA 0.7% 3.7% 0.3% RoaE 2.8% 14.2% 1.2% -1, Asset Quality Gross NPL ratio 4.9% 1.6% 3.5% Net NPL ratio 2.4% 1.1% 1.5% Business & Other Ratios Cost-income ratio 76.7% 49.9% 78.4% 2, Non int. inc / Total income 27.6% 10.1% 8.1% 1,751 1,951 CASA 26.0% % CRAR 34.9% % Tier % % Source: Company, Equirus Sec August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 3 of 14

4 Exhibit 1:GNPA further deteriorated by 138bps qoq with higher GNPA of MFI Loans 6.0% Exhibit 3:CASA and term deposit growth showed good traction during 1QFY18 4.8% 4.9% 5.0% 4.4% 4.4% 4.9% 5.0% 4.0% 3.5% 3.0% 3.0% 2.5% 2.5% 2.5% 2.0% 1.6% 1.0% 0.3% 0.3% 0.3% 0.0% Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Source: Company Filings, Equirus Research Exhibit 2:Share of Microfinance AUM dropped from ~46% to ~42% qoq MF Non-MF Total 25.6% 9.0% 0.0% 4.6% 4.1% 4.2% 6.8% Source: Company Filings, Equirus Research 17.2% 28.6% Term Loan Refinance Debenture Sub Ordinated Debt Commercial Paper Unsecured Loan from Banks/FII CASA Term Deposit CBLO Exhibit 4:NIMs continues to decline lower share of MFI loans in the AUM mix and lower interest contribution from the securitized portfolio 2.0% 0.9% 0.2% 0.4% 0.2% 3.7% Microfinance 22.9% 27.7% Source: Company Filings, Equirus Research 42.0% UCV Micro LAP Housing Business Loan Agri Loan Gold Loan Small and Mid Corporate Loans Others Yield Funding Cost NIMs 30.0% 12.6% 25.0% 11.9% 11.8% 11.3% 11.2% 10.5% 10.0% 9.8% 9.1% 20.0% 15.0% 10.0% 5.0% 0.0% 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 Source: Company Filings, Equirus Research 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% August 1, 2017 Analyst: Rohan Mandora ( )/Ankit Choudhary Page 4 of 14

5 Exhibit 5:C/I ratio remained elevated at 77% due to rolling out of liability branches along with hiring spree 90.0% 80.0% 70.0% 60.0% 50.0% 47.6% 50.2% 53.0% 53.7% 54.6% 49.9% 58.6% 63.1% 80.4% 76.7% Exhibit 7: Average SA balances in rural/semi-urban locations is ~Rs 12,200 FY16 Source: RBI, Equirus Research No. of SA accounts (mn) Amount (Rsbn) Avg SA Balance (Rs) Rural 515 4,962 9,640 Semi-Urban 404 6,256 15,487 Urban 223 6,590 29,580 Metropolitan 209 8,876 42,452 All India 1,351 26,684 19, % 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 Source: Company Filings, Equirus Research Exhibit 6:PAR has increased to ~7% 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 POS (Rs Mn) PAR 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% - Sep '16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Jun % Source: Company Filings, Equirus Research August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 5 of 14

6 Concall highlights Equitas Holdings Absolute REDUCE Relative UNDERWEIGHT 4% Downside in 14 Months SFB transition update Challenges faced by Equitas are: 1. Leveraging new branch infrastructure and incurred costs for CASA origination and cross-sell income 2. Scaling up new asset products with stable asset quality 3. Leveraging physical infrastructure and staff for new products 4. Getting MFI business back to normal levels The company added 51 new branches during 1QFY18. Of these, 35 branches are ready for operations with employees already recruited and technology expenses incurred. Costs incurred for branch expansion are in line with management estimates. New asset products have been launched from ~130 branches. Training of employees on newer products would not entail significant costs as many products (agri loans, M-LAP) are cross-sold to existing MFI customers. Also, ~60% of M-LAP customers are MFI customers. The overlap of newer products with MFI customers is much lower. Infrastructure cost per branch is Rs 3.5mn. Yearly operating costs including salary and rentals stand at Rs 4.5-5mn/ branch. MFI business Of Rs 2.08bn of PAR in microfinance, ~Rs 370mn is in securitized loans. About ~Rs 700mn of provisions are outstanding against MFI loans. Collection efficiency in MFI loans disbursed post 1 Jan 17 was at 99.8%. All (100%) disbursements post demonetization were through bank accounts During 1QFY18, EQUITAS changed its MFI provision in line with RBI guidelines. Out of the overdue customers, ~35% have paid at least one installment in the past two or three months. As observed in the state of Uttar Pradesh (UP) by other MFIs, a recovery from overdue Maharashtra customers is likely once the list of individuals eligible for loan waivers is released. Losses in MFI securitized book will adversely impact NIMs due to lower excess income spread book by EQUITAS. Non-MFI business EQUITAS sold Rs 36bn of PSLCs during the quarter. The entire fee income of Rs 600mn from PSLC sale was booked in 1QFY18 and has not been amortized over the year. As on date, there is no further headroom for additional sale of PSLCs. However, there could be additional opportunity to sell PSLCs based on fresh disbursements done over FY18E, over and above PSL requirements. Business loan/agri/gold loans have taken off well and now constitute ~3.5% of the AUM. Share of CV/M-LAP in incremental disbursements is ~27%/20% Due to GST, there is a slowdown in MSME and business loans amid confusion and lack of clarity among borrowers. Currently EQUITAS is only disbursing agri loans to farmers with land between 1-5 acres. It will roll out products for farmers with land above five acres soon. About 70% of retail borrowers also are savings account customers. NIMs declined due to lower earnings on the securitized portfolio and change in mix of AUM. More than 30-40bps of NIM decline was due to lower Excess interest Spread (from securitization transaction) Asset quality GNPA is the non-mfi book primarily stemmed from UCV and M-LAP. GNPAs for UCV/M-LAP stood at ~6.5%/~1%. EQUITAS expects a decline in non-mfi GNPLs going ahead as the product mix will include higher share of larger-ticket secured loans to better quality customers, albeit at a lower interest rates. Unsold vehicle stock is shown as NPA in Bank. Guidance The company expects FY18 ROE to be lower than FY17 as FY18 includes the full impact of transition towards SFB. Management guides for ROA and ROE of 2-2.5% and 16-20% in the next 3-5 years. EQUITAS expects the MFI book to be below 30% by FY18 from current levels of 42%. Management is keen on building a stable book that is insulated from the external environment. EQUITAS expects to serve 10-11mn households by 2025 vs mn households currently. August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 6 of 14

7 Exhibit 7: ROE-ROA Tree Analysis Particulars (Rsmn) FY17A FY18E FY19E FY20E Yield on Gross AUMs 21.7% 20.1% 19.0% 18.6% Yield on Investments 6.8% 6.8% 6.8% 6.8% Cost of Funds 10.5% 8.9% 8.0% 7.8% Net Interest Margin (incl off balance sheet) 10.6% 9.6% 10.3% 10.4% Advances (A) 58,289 70, , ,428 Investments (B) 7,731 15,113 16,467 22,835 Cash In Hand & Balance with RBI [C] 10,651 4,267 3,875 5,373 Securitization (D) 13,471 8, IEA (on & off balance sheet) (E = A+B+C+D) 90,142 98, , ,636 Average IEA (on & off balance sheet) (F) 80,502 94, , ,192 NII/Avg IEA(on &off balance sheet) 10.6% 9.6% 10.3% 10.4% IEA (on balance sheet) (G = A+B+C) 76,671 89, , ,636 AvgInt Earning Asset (on balance sheet) (H) 68,481 83, , ,192 Asset multiplier (F/H) NII/AvgInt Earning Asset (on balance sheet) 12.5% 10.9% 10.7% 10.4% Non IntInc/AvgInt Earning Assets 2.2% 2.7% 1.8% 1.4% Total Income/AvgInt Earning Assets 14.7% 13.7% 12.5% 11.8% Op. Costs/AvgInt Earning Assets 8.9% 11.2% 9.3% 7.9% PPI/AvgInt Earning Assets 5.8% 2.5% 3.2% 3.9% Provisions/AvgInt Earning Assets 2.1% 1.2% 1.0% 1.1% Taxes/AvgInt Earning Assets 1.3% 0.5% 0.7% 1.0% Return on AvgInt Earning Assets 2.3% 0.8% 1.4% 1.8% Adj Return on AvgInt Earning Assets 2.3% 0.8% 1.4% 1.8% Productivity (Avg IEA/Avg Total Assets) Return on Average Total Assets 2.0% 0.7% 1.3% 1.7% Leverage (Avg Total Assets/Avg Equity) Return on Average Equity 8.9% 3.1% 6.2% 10.1% Source: Company Filings, Equirus Research August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 7 of 14

8 Company Snapshot How we differ from Consensus Equirus Consensus % Diff Comment EPS NII + Other Inc PAT (adj.) FY18E % FY19E % FY18E 11,360 11,970-5 % FY19E 13,328 14,557-8 % FY18E 703 1, % FY19E 1,482 2, % We expect consensus estimates to be revised Our Key Investment arguments: The company is in a migration phase to SFB and is adversely impacted due to demonetization. We expect near term opex and credit cost expenses to remain elevated and expect ROE to improve to double digit only by FY20. Key Assumptions 2016A 2017A 2018E 2019E 2020E Yields on Gross AUMs (%) 20.5% 21.7% 20.1% 19.0% 18.6% Yield on Investments (%) 0.0% 6.8% 6.8% 6.8% 6.8% Cost of Funds (%) 11.3% 10.5% 8.9% 8.0% 7.8% NIMs (%) 10.2% 10.6% 9.6% 10.3% 10.4% NII Growth (%) 53.2% 42.3% 6.3% 25.6% 30.2% PPI Growth (%) 49.2% 24.3% -47.5% 61.6% 64.5% Provision/Avg Loans(%) 1.4% 2.7% 1.5% 1.3% 1.3% PAT Growth (%) 56.8% -4.7% -55.9% 110.9% 75.1% Advances Growth (%) 46.3% 15.0% 20.5% 47.3% 30.0% Deposit Growth (%) NA NA 102.1% 68.1% 40.5% Key Risks: Improvement in MFI collection efficiency, Faster breakeven of branches leading to quicker recovery of profitability. Key Triggers: Early breakeven of branches, healthy recoveries from stressed portfolio Sensitivity to Key Variables % Change % Impact on EPS Net Interest Income 10 % 0.6 % Provisioning Costs 10 % -6.4 % ERoE Valuations & Assumptions Rf Ke Term. Growth RoE in Terminal Yr 6.8 % 13.4 % 5.0 % 18.1 % - FY18E FY19-22E FY23-27E FY28-37E PAT Growth % 43.3 % 20.7 % 18.0 % Dividend Payout (%) 0.0 % 0.0 % 10.0 % 10.0 % BV growth 3.1% 12.6% 16.2% 17.5% RoE (%) 3.1 % 10.4 % 16.2 % 17.8 % - Years of strong growth Valuation as on date (Rs) Valuation as of Sep Our Sep 18 TP of Rs.161 (vs.sep 18 TP of Rs. 171 earlier) based on EroE basis. Our TP corresponds to 2.5/2.4 Sep 18/Mar 19 ABV of Rs. 64/68. Company Description: Incorporated in 2005, Equitas Financial Services Ltd (Equitas) is a Tamil Nadu headquartered microfinance company which has been granted a small banking license by RBI in The company offers Microfinance loans, housing loans, Used Commercial Vehicle (UCV) loans and MSE loans. As on Mar 17, the firm has a distribution network of 610 branches across 14 states/uts Comparable valuation Mkt Cap Price Target EPS P/E BPS P/B RoE Div Yield Company Reco. CMP Rs. Mn. Target Date FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E EQUITAS REDUCE , Sep ' % 3 % 6 % 0.0 % 0.0 % UJJIVAN REDUCE , Sep % 8 % 12 % 0.2 % 0.2 % BHAFIN NR ,613 NR NR % 17 % 22 % 0.0 % 0.8 % August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 8 of 14

9 Consolidated Quarterly Earnings Forecast and Key Drivers Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18E 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18A FY19E FY20E Interest Income 3,259 3,560 3,822 3,782 3,744 3,770 3,789 3,872 3,979 4,214 4,450 4,703 14,423 15,175 17,346 22,072 Interest Expense 1,215 1,556 1,531 1,568 1,586 1,506 1,517 1,474 1,464 1,455 1,488 1,523 5,871 6,084 5,931 7,213 Net Interest Income 2,044 2,004 2,291 2,214 2,158 2,264 2,271 2,398 2,515 2,758 2,962 3,179 8,552 9,090 11,415 14,859 Non Interest Income ,511 2,269 1,913 2,027 Total Income 2,273 2,673 2,709 2,409 2,980 2,736 2,750 2,894 3,031 3,177 3,448 3,673 10,063 11,360 13,328 16,886 Operating and Other Expenses 1,134 1,408 1,663 1,889 2,286 2,308 2,330 2,353 2,440 2,473 2,507 2,541 6,094 9,276 9,960 11,348 Staff Cost ,118 1,171 1,352 1,366 1,379 1,393 1,463 1,478 1,492 1,507 3,961 5,491 5,940 6,831 Other Operating Expenses ,134 2,984 3,311 4,517 Pre-Provision Income 1,139 1,265 1, ,131 3,968 2,083 3,367 5,538 Provisions and Write-offs , ,088 1,546 PBT ,515 1,095 2,280 3,992 TAX ,397 Extraordinary PAT , ,482 2,595 EPS Key Drivers YoA 20.6% 20.9% 21.4% 21.1% 21.1% 21.0% 20.3% 20.0% 19.5% 19.3% 19.0% 18.8% 21.7% 20.1% 19.0% 18.6% YoI 0.0 % 0.0 % 6.8 % 6.8 % 0.0 % 6.8 % 6.8 % 6.8 % 6.8 % 6.8 % 6.8 % 6.8 % 6.8 % 7.1 % 6.7 % 6.8 % CoF 11.0 % 12.1 % 10.2 % 10.1 % 10.5 % 9.7 % 9.0 % 8.7 % 8.3 % 8.9 % 8.2 % 8.1 % 10.5 % 8.9 % 8.0 % 7.8 % NIM 11.5 % 9.6 % 9.7 % 9.1 % 9.2 % 9.4 % 9.6 % 9.9 % 10.0 % 10.4 % 10.5 % 10.6 % 10.6 % 9.6 % 10.3 % 10.4 % C/I Ratio 50 % 53 % 61 % 78 % 77 % 84 % 85 % 81 % 80 % 78 % 73 % 69 % 61 % 82 % 75 % 67 % CD Ratio NA 5197% 805% 309% 271% 238% 213% 193% 184% 176% 168% 161% 309% 184% 161% 149% Non-Interest Income/ Total Income 10.1 % 25.0 % 15.4 % 8.1 % 27.6 % 17.3 % 17.4 % 17.1 % 17.0 % 13.2 % 14.1 % 13.4 % 15.0 % 20.0 % 14.4 % 12.0 % ROA 3.7 % 2.3 % 2.0 % 0.3 % 0.7 % 0.5 % 0.7 % 1.0 % 0.9 % 1.0 % 1.4 % 1.6 % 2.0 % 0.7 % 1.3 % 1.7 % ROE 14.2 % 8.7 % 8.2 % 1.2 % 2.8 % 2.1 % 3.1 % 4.4 % 3.9 % 4.9 % 7.2 % 8.9 % 8.9 % 3.1 % 6.2 % 10.1 % Sequential Growth (%) NII 20.0 % -1.9 % 14.3 % -3.3 % -2.5 % 4.9 % 0.3 % 5.6 % 4.9 % 9.7 % 7.4 % 7.3 % TI 18.1 % 17.6 % 1.3 % % 23.7 % -8.2 % 0.5 % 5.2 % 4.7 % 4.8 % 8.5 % 6.5 % PPI 30.3 % 11.0 % % % 33.6 % % -2.0 % 28.9 % 9.3 % 19.1 % 33.7 % 20.2 % Provisions and Write-offs 20 % 200 % -36 % 21 % 7 % -45 % -39 % 4 % 58 % 7 % 7 % 7 % PAT 31 % -24 % -3 % -85 % 126 % -23 % 46 % 43 % -10 % 28 % 50 % 26 % EPS 8 % -28 % -2 % -85 % 125 % -11% -2% 1% -15% -1% 0% 4% Advances 13 % -1 % 4 % -1 % 5 % 9 % 5 % 5 % 9 % 7 % 13 % 7 % Deposits % 158 % 20 % 24 % 17 % 17 % 15 % 12 % 18 % 12 % Total Business 5 % -1 % 7 % 6 % 6 % 6 % 6 % 6 % 5 % 6 % 6 % 8 % Yearly Growth (%) NII 62 % 40 % 47 % 30 % 6 % 13 % -1 % 8 % 17 % 22 % 30 % 33 % 42 % 6 % 26 % 30 % TI 52 % 66 % 53 % 25 % 31 % 2 % 2 % 20 % 2 % 16 % 25 % 27 % 48 % 13 % 17 % 27 % PPI 53 % 67 % 28 % -41 % -39 % -66 % -60 % 4 % -15 % 64 % 124 % 109 % 24 % -48 % 62 % 64 % Provisions and Write-offs 7 % 283 % 138 % 181 % 151 % -54 % -56 % -62 % -44 % 8 % 88 % 94 % 146 % -32 % 10 % 42 % PAT 64 % 16 % 4 % -85 % -74 % -74 % -61 % 263 % 44 % 139 % 144 % 115 % -5 % -56 % 111 % 75 % EPS 33.8% -8.8% -18.1% -88.4% -75.8% -74.1% -61.3% 261.7% 44.2% 139.1% 144.3% 115.4% -24.2% -56.8% 110.9% 75.1% Advances 42 % 27 % 17 % 15 % 7 % 18 % 18 % 26 % 31 % 29 % 39 % 41 % 15 % 20 % 47 % 30 % Deposits ,467 % 347 % 102 % 94 % 75 % 76 % 68 % % 68 % 40 % Total Business 42 % 29 % 32 % 52 % 46 % 64 % 55 % 45 % 48 % 42 % 51 % 50 % 52 % 40 % 55 % 34 % August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 9 of 14

10 Consolidated Financials Equitas Holdings Absolute REDUCE Relative UNDERWEIGHT 4% Downside in 14 Months P&L FY17A FY18A FY19E FY20E Balance Sheet (Rs mn) FY17A FY18A FY19E FY20E FY17A FY18A FY19E FY20E Interest Income 14,423 15,175 17,346 22,072 Capital 3,381 3,381 3,381 3,381 Asset Quality Interest Expense 5,871 6,084 5,931 7,213 Reserves and Surplus 18,928 19,631 21,112 23,707 Gross NPA (Rs mn) 2,060 2,954 3,696 4,494 Net Interest Income 8,552 9,090 11,415 14,859 Deposits 18,857 38,105 64,047 89,983 Gross NPA (%) 3.5% 4.2% 3.6% 3.3% % Growth 42.3% 6.3% 25.6% 30.2% Borrowings 46,572 33,015 13,443 17,476 Net NPA (Rs mn) 1,050 1,505 1,884 2,291 Other Income 1,511 2,269 1,913 2,027 Other Liabilities & Provisions 6,698 3,984 33,387 41,875 Net NPA (%) 1.5% 2.1% 1.8% 1.7% Total Income 10,063 11,360 13,328 16,886 Total liabilities 94,435 98, , ,422 % coverage of NPA 49.0% 49.0% 49.0% 49.0% Employees Expenses 3,961 5,491 5,940 6,831 Cash & Cash Equivalent 10,651 4,267 3,875 5,373 Other Op. Expenses 2,134 2,984 3,311 4,517 Investments 7,731 15,113 16,467 22,835 Business Ratios Total Expenses 6,094 9,276 9,960 11,348 Advances 58,289 70, , ,428 Credit / Borrowing(%) 89.1% 98.7% 133.4% 125.1% Operating Profit 1, ,482 2,595 Int Earnings Assets 66,020 85, , ,263 Investment / Deposit (%) 41.0% 39.7% 25.7% 25.4% % Growth 24.3% -47.5% 61.6% 64.5% Fixed Assets 3,288 5,589 8,384 10,061 RoaA (%) 2.0% 0.7% 1.3% 1.7% Tax ,397 Other Assets 14,476 2,935 3,239 3,725 RoE (%) 8.9% 3.1% 6.2% 10.1% Total Provisions 1, , ,545.9 Total assets 94,435 98, , ,422 Dividend Yield (%) 0.0% 0.0% 0.0% 0.0% Net Profit 1, , ,594.8 % Growth 45.1% 3.9% 38.0% 30.3% % Growth -4.7% -55.9% 110.9% 75.1% Key assumptions Growth (%) Earnings Ratios Borrowings Total IncGro 48.2% 12.9% 17.3% 26.7% IntInc/Avg asset (%) 18.1% 15.8% 14.9% 14.2% Avg Borrowing gro (%) 39.7% 8.7% 9.0% 38.7% Total Exp Gr 69.4% 52.2% 7.4% 13.9% Int Exp./Avg. assets (%) 7.4 % 6.3 % 5.1 % 4.6 % Avg cost of funds (%) 10.5% 8.9% 8.0% 7.8% Provision Growth 145.9% -32.0% 10.0% 42.1% NIM (%) - computed 10.6 % 9.6 % 10.3 % 10.4 % Advances Int. exp/ Int earned (%) 40.7 % 40.1 % 34.2 % 32.7 % Avg. advgro (%) 15.0% 20.5% 47.3% 30.0% Per Share Data Oth. Inc./ Tot. Inc. (%) 15.0 % 20.0 % 14.4 % 12.0 % Avg yield on AUM (%) 21.7% 20.1% 19.0% 18.6% BVPS Rs Staff exp/total opt. exp (%) 65.0 % 59.2 % 59.6 % 60.2 % Investments Adj. BVPS, Rs Cost/ Income Ratio (%) 60.6 % 81.7 % 74.7 % 67.2 % Avg. investmtgro (%) % 95.5% 9.0% 38.7% Price/ Adj. BV Prov./ Operating Profit (%) 36.6 % 47.5 % 32.3 % 27.9 % Avg. YoI (%) 6.8% 6.8% 6.8% 6.8% EPS, Rs P/E Ratio August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 10 of 14

11 Historical Consolidated Financials P&L FY14A FY15A FY16A FY17A Balance Sheet FY14A FY15A FY16A FY17A FY14A FY15A FY16A FY17A Interest Income 4,355 6,868 10,368 14,423 Capital 730 2,689 2,699 3,381 Asset Quality Interest Expense 1,895 2,947 4,360 5,871 Reserves and Surplus 6,690 9,019 10,714 18,928 Gross NPA (Rs mn) ,060 Net Interest Income 2,460 3,921 6,008 8,552 Deposits ,857 Gross NPA (%) 0.7% 1.1% 1.3% 3.5% % Growth 67.4% 59.4% 53.2% 42.3% Borrowings 18,492 30,322 46,833 46,572 Net NPA (Rs mn) ,050 Other Income ,511 Other Liabilities 1,604 2,619 4,819 6,698 Net NPA (%) 0.6% 0.8% 0.9% 1.5% Total Income 2,940 4,612 6,789 10,063 Total liabilities 27,516 44,649 65,065 94,435 % coverage of NPA 16.4% 25.7% 29.9% 49.0% Employees Expenses 1,003 1,551 2,338 3,961 Cash & Cash Equivalent 4,147 5,574 9,470 10,651 Other Op. Expenses ,259 2,134 Investments 34 1, ,731 Business Ratios Total Expenses 1,618 2,472 3,597 6,094 Advances 21,232 34,646 50,702 58,289 Credit / Borrowing 114.8% 114.3% 108.3% 89.1% Operating Profit 1,322 2,140 3,192 3,968 Int Earnings Assets 21,266 36,401 50,821 66,020 Investment/Deposit NA NA NA 41.0% % Growth 166.8% 61.9% 49.2% 24.3% Fixed Assets ,288 RoaA (%) 3.2% 3.0% 3.0% 2.0% Tax Other Assets 1,831 2,206 4,117 14,476 RoE (%) 12.2% 11.1% 13.3% 8.9% Total Provisions ,453.3 Total assets 27,516 44,649 65,065 94,435 Dividend Yield (%) 0.0% 0.0% 0.0% 0.0% Net Profit , , ,593.1 % Growth 48.4% 62.3% 45.7% 45.1% % Growth 126.8% 43.4% 56.8% -4.7% Key assumptions Growth (%) Earnings Ratios Borrowings Total Income Gr 67.5% 56.9% 47.2% 48.2% Int Inc./Avg. Assets 18.9% 19.0% 18.9% 18.1% Avg Borrowing growth 45.1% 64.0% 54.5% 39.7% Total Exp Gr 28.4% 52.8% 45.5% 69.4% Int Exp./Avg. assets 8.2% 8.2% 7.9% 7.4% Avg cost of funds (%) 11.8% 11.6% 11.3% 10.5% Provision Growth 106.3% 174.3% 17.2% 145.9% NIM (%) - computed 10.2% 10.3% 10.2% 10.6% Advances Int. exp/ Int earned 43.5% 42.9% 42.0% 40.7% Avg. advances growth 75.0% 63.2% 46.3% 15.0% Per Share Data Oth. Inc./ Tot. Inc. 16.3% 15.0% 11.5% 15.0% Avg yield on AUM (%) 21.9% 21.1% 20.5% 21.7% BVPS Staff exp/opex 62.0% 62.7% 65.0% 65.0% Investments Adj. BVPS, Rs Cost/ Income Ratio 55.0% 53.6% 53.0% 60.6% Avg. investments Gr -13.8% % -93.2% % Price/ Adj. BVPS Prov./ Op Profit 13.9% 23.6% 18.5% 36.6% Avg. YoI 0.0% 0.0% 0.0% 6.8% EPS, Rs P/E Ratio August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 11 of 14

12 Equirus Securities Research Analysts Sector/Industry Equity Sales Abhishek Shindadkar IT Services VishadTurakhia Ashutosh Tiwari Auto, Metals & Mining Subham Sinha Depesh Kashyap Mid-Caps SwetaSheth Devam Modi Power & Infrastructure Viral Desai DhavalDama FMCG, Mid-Caps BinoyDharia Manoj Gori Consumer Durables Dealing Room Maulik Patel Oil and Gas Ashish Shah Praful Bohra Pharmaceuticals IleshSavla Rohan Mandora Banking & Financial Services Manoj Kejriwal Associates Dharmesh Mehta Ankit Choudhary SandipAmrutiya Ashdeep Kaur Compliance Officer Bharat Celly Jay Soni Harshit Patel Meet Chande ParvaSoni Pranav Mehta RonakSoni Samkit Shah ShreepalDoshi Vikas Jain Rating & Coverage Definitions: Absolute Rating LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion andatr>= 20% for rest of the companies ADD: ATR >= 5% but less than Ke over investment horizon REDUCE: ATR >= negative 10% but <5% over investment horizon SHORT: ATR < negative 10% over investment horizon Relative Rating OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon BENCHMARK: likely to perform in line with the benchmark UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion. Registered Office: Equirus Securities Private Limited Unit No. 1201, 12th Floor, C Wing, Marathon Futurex, N M Joshi Marg, Lower Parel, Mumbai Tel. No: +91 (0) Fax No:+91-(0) Corporate Office: 3rd floor, House No. 9, Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge, S.G. Highway Ahmedabad Gujarat Tel. No: +91 (0) Fax No:+91 (0) August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 12 of 14

13 2017 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited Analyst Certification We, Rohan Mandora/Ankit Choudhary, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclosures Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the Capital Market (Reg. No. INB ), Futures & Options Segment (Reg. No.INF ) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB ) of Bombay Stock Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH ), as a Portfolio Manager under SEBI (Portfolio Managers Regulations, 1993 (Reg. No.INP ) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP ). There are no disciplinary actions taken by any regulatory authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to merchant banking services, private equity, mergers & acquisitions and structured finance. As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. 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The Research Analyst engaged in preparation of this Report:- (a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months; (c) has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company. 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This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as to its accuracy or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant information contained herein. While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the information current. Also there may be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with companies covered in its research report. Thus, investors should be aware that the firm may have conflict of interest. August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 13 of 14

14 A graph of daily closing prices of securities is available at and (Choose a company from the list on the browser and select the three years period in the price chart). Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest Research Analyst or Relatives financial interest Research Analyst or Relatives actual/beneficial ownership of 1% or more Research Analyst or Relatives material conflict of interest No No No Disclaimer for U.S. Persons ESPL/its affiliates are not a registered broker dealer under the U.S. Securities Exchange Act of 1934, as amended (the 1934 act ) and under applicable state laws in the United States. In addition Equirus is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the Acts ), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Equirus, including the products and services described herein are not available to or intended for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition on soliciting the securities business in that jurisdiction without going through the registration requirements and/ or prohibit the use of any information contained in this report. This Report and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S. Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US Persons" under certain rules. August 1, 2017 Analyst: Rohan Mandora rohan.mandora@equirus.com ( )/Ankit Choudhary ankit.choudhary@equirus.com Page 14 of 14