INDUSTRY BANKS CMP (as on 26 Jul 2018) Rs 98 Target Price Rs 148 Nifty 11,167 Sensex 36,985 KEY STOCK DATA Bloomberg KVB IN No. of Shares (mn) 726 MCap (Rs bn) / ($ mn) 72/1,041 6m avg traded value (Rs mn) 132 STOCK PERFORMANCE (%) 52 Week high / low Rs 150/94 3M 6M 12M Absolute (%) (6.4) (11.9) (23.1) Relative (%) (13.0) (14.5) (37.3) SHAREHOLDING PATTERN (%) Promoters 2.08 FIs & Local MFs 14.91 FPIs 25.19 Public & Others 57.82 Source : BSE Pranav Gupta pranav.gupta@hdfcsec.com +91-22-6171-7337 Darpin Shah darpin.shah@hdfcsec.com +91-22-6171-7328 Kaushik Utpat kaushik.utpat@hdfcsec.com +91-22-6639-3037 Slow heal, SME fumble Barring the SME fumble (net NPA accretion of ~Rs 2.4bn vs. ~Rs 630mn QoQ), KVB s 1Q show was inline. Stress inched up (slippages ~6.77% ann.) as corporate stress recognition continued. Asset growth was driven by Retail (+25% YoY) and SME (+15% YoY), while fees surprised positively (+31% YoY). The NIM slide was optical, owing to a one-off in. Rising CASA (30%, up 82bps) and slower opex growth (up merely 2% QoQ) were noteworthy. As corporate stress recognition tops out at KVB, the SME crack is a fresh concern worth tracking hereon. The strategic shifts (employee incentives, digital focus, growth-led efficiency gains, etc.) are known positives, but visible results are still some time away. Curtailed costs will boost profitability hereon, but elevated provisions will limit the gains at least in FY19. We expect KVB to achieve 1% RoAA by FY20E, despite cutting earnings by ~21/11% in FY19/20E. Maintain BUY with a revised TP of Rs 148 (2x Mar-20E ABV of Rs 74). RESULTS REVIEW 26 JUL 2018 Karur Vysya Bank BUY Highlights of the quarter Overall accretion to stress was elevated with net slippages of ~Rs 5.5bn (6.77% ann. vs 5.0% QoQ). While higher corporate slippage (~Rs 2.7bn) was on expected lines, the spike in SME stress (net slippage of ~Rs 2.4bn) surprised negatively. With a relapse of ~Rs 2bn, the stock of restructured assets dipped to a mere 11bps. With the renewed focus on retail/sme and accelerated recognition of stress over the past few quarters, we believe the worst is behind. However, we have cautiously built slippages of ~2.7% over FY18-20E. Though the NIM slide looks dramatic, it was partly optical due to one off interest income (~Rs 600mn) in 4Q. However, falling yields (-25bps QoQ) and rising CoF (+10bps QoQ) also kept NIM under pressure. We believe NIMs should stabilisse here on given the easing of stress and rising proportion of retail and SME loans. We have factored in NIMs of 3.80% over FY18-20E. Near-term outlook: Given that results were on expected lines, the stock should remain range bound. FINANCIAL SUMMARY (Rs mn) YoY (%) QoQ (%) FY17 FY18 FY19E FY20E Net Interest Income 5,836 5,386 8.4% 6,429-9.2% 20,737 22,981 25,148 28,579 PPOP 4,596 4,494 2.3% 4,797-4.2% 15,710 17,773 19,001 22,001 PAT 459 1,480-69.0% 506-9.2% 6,060 3,457 3,924 7,992 EPS (Rs) 3.2 12.1-74.0% 3.5-9.2% 9.9 4.8 5.4 11.0 RoAE (%) 12.6 6.1 6.2 12.2 RoAA (%) 1.00 0.54 0.56 1.01 Adj. BVPS (Rs) 65.7 60.6 63.2 73.9 P/ABV (x) 1.50 1.62 1.55 1.33 P/E (x) 9.9 20.7 18.2 8.9 Source: Bank, HDFC sec Inst Research HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters
Five Quarters At A Glance Rs mn YoY Growth QoQ Growth Net Interest Income 5,386 5,550 5,616 6,429 5,836 8.4% -9.2% Non Interest Income 2,363 2,301 2,249 2,087 2,549 7.9% 22.2% Treasury Income 470 200 260 77 70-85.1% -8.5% Operating income 7,749 7,851 7,865 8,515 8,385 8.2% -1.5% Operating expenses 3,255 3,581 3,653 3,718 3,789 16.4% 1.9% Pre provision profits 4,494 4,270 4,212 4,797 4,596 2.3% -4.2% Provisions and contingencies 2,334 3,214 3,247 3,942 4,227 81.1% 7.2% NPA Provisions 1,570 1,600 3,020 4,210 3,780 140.8% -10.2% PBT 2,160 1,057 965 855 369-82.9% -56.8% Provision for Tax 680 300 250 350 (90) -113.2% -125.6% PAT 1,480 756 715 506 459-69.0% -9.2% Other details Balance Sheet items/ratios Deposits (Rs bn) 547 564 572 569 576 5.3% 1.2% CASA deposits (Rs bn) 159 156 160 166 172 8.1% 4.0% SA (Rs bn) 101 102 105 110 114 12.9% 3.4% CA (Rs bn) 59 54 55 56 59 0.1% 5.3% Advances (Rs bn) 424 434 448 448 464 9.4% 3.6% CD ratio (%) 77.6 77.0 78.4 78.7 80.6 307 bps 188 bps CAR (%) 11.7 12.2 13.9 14.4 14.1 237 bps -35 bps Tier I (%) 11.0 11.4 13.4 13.9 13.6 253 bps -35 bps Profitability Yield on Advances (%) 10.50 10.51 10.42 9.90 9.65-85 bps -25 bps Cost of deposits (%) 6.15 6.08 6.06 5.80 5.79-36 bps -1 bps NIM (%) 3.76 3.81 3.76 4.13 3.65-11 bps -48 bps Cost-Income ratio (%) 42.0 45.6 46.4 43.7 45.2 318 bps 152 bps Tax rate (%) 31.5 28.4 25.9 40.9 (24.3) NA NA Asset quality Gross NPA (Rs mn) 18,070 21,362 26,633 30,158 35,634 97.2% 18.2% Net NPA (Rs mn) 11,892 14,073 16,989 18,628 20,883 75.6% 12.1% Gross NPAs (%) 4.27 4.83 5.94 6.56 7.44 317 bps 88 bps Net NPAs (%) 2.85 3.24 3.88 4.16 4.50 165 bps 34 bps Restructured Book (%) 1.90 1.62 1.60 0.59 0.11-179 bps -47 bps Delinquency ratio (%) 3.67 3.93 6.36 5.02 6.77 309 bps 174 bps Coverage ratio (%) 34.2 34.1 36.2 38.2 41.4 720 bps 316 bps Coverage ratio (%) Reported 57.0 54.1 54.1 56.5 56.5-51 bps 0 bps Sharp dip (4% lower than estimates) owing to the dent in margins (down 48bps sequentially) and higher interest reversals As expected, treasury profits remained subdued KVB utilized the RBI dispensation on spreading MTM losses and deferred provisions of ~Rs 765mn CASA growth outpaced deposit growth primarily driven b robust SA traction; CASA ratio now stands at 30% Growth was driven by the banks focus segments of Retail (+25% YoY) and SME (+15% YoY) NIMs faced pressure from either side as yields dipped 25bps QoQ while CoF jumped 10bps sequentially Net additions of ~Rs 5.5bn is primarily driven by corporate and SME slippages of ~Rs 2.7bn and ~Rs 2.4bn respectively Relapse of ~Rs 2bn led to the sharp dip in restructured book Page 2
Net Advances Up ~10% YoY Advances Mix: Retail Inches Up Gross advances grew ~13/4% YoY/QoQ primarily driven by robust retail growth of ~25/8% YoY/QoQ. SME loans grew ~14/3% YoY/QoQ to form 35.6% of advances With retail, LAP and Housing loans clocked robust growth of ~41% and ~23% respectively 500.0 450.0 400.0 350.0 300.0 250.0 200.0 Advances (Rs bn) YoY (%) - RHS 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Corporate Commercial Retail Agri 18 17 14 17 17 15 18 18 16 17 17 18 18 17 17 17 13 13 17 14 15 16 15 15 18 16 15 16 16 16 17 17 32 32 32 32 32 32 32 33 34 34 35 34 34 34 35 34 37 38 37 36 36 36 35 34 33 34 33 32 33 32 31 31 With various digital products in the pipeline, we believe the opportunity for growth is immense We have factored in a loan CAGR of 16% over FY18-20E CASA deposits grew ~8/4% YoY/QoQ to form ~30% of total deposits. SA growth was the primary driver with a growth of ~13% YoY Deposits Grew ~5% YoY 600.0 550.0 500.0 450.0 400.0 350.0 300.0 250.0 200.0 Deposits (Rs bn) YoY (%) - RHS 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% CASA Ratio Jumped ~90bps QoQ 190.0 170.0 150.0 130.0 110.0 90.0 70.0 50.0 CASA (Rs bn) CASA Ratio (%) - RHS 35.0% 32.5% 30.0% 27.5% 25.0% 22.5% 20.0% 17.5% 15.0% 12.5% 10.0% Only 14% of term deposits are above Rs 10mn Page 3
The sharp drop (48bps QoQ) in NIM can partially be attributed to a one-off of ~Rs 600mn in 4Q However, NIMs saw additional pressure owing to falling yields (25bps QoQ) and rising CoF (10bps QoQ) We have factored in NIMs of 3.85% over FY18-20E The bank did not open a branch in 1Q NIMs Dive 48bps Sequentially 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Yield on advances Cost of Deposits NIM - RHS % % 5.00 4.75 4.50 4.25 4.00 3.75 3.50 3.25 3.00 2.75 2.50 2.25 2.00 C-I Ratio Deteriorates 150bps QoQ 3.0 2.8 2.5 2.3 2.0 1.8 1.5 1.3 1.0 0.8 0.5 0.3 Opex /Non interest Income x C/I Ratio (RHS) % 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 Fee growth (+31% YoY) was largely driven by strong 3 rd party distribution income. Treasury income remained muted at ~Rs 77mn KVB has a modified duration of 4.04 years Non-interest Income : Distribution Income Drives Growth Rs mn 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY16 FY16 FY16 FY16 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 FY19 Fees 1,520 1,420 1,640 1,550 1,470 1,370 1,380 1,550 1,890 2,100 1,990 2,010 1,910 % of loans 0.41% 0.38% 0.43% 0.40% 0.37% 0.35% 0.36% 0.38% 0.45% 0.48% 0.44% 0.45% 0.41% Treasury 100 640 90 110 150 810 320 110 470 200 260 140 70 Forex 90 110 260 90 100 80 100 90 110 110 80 140 130 others 160 150 300 390 130 130 160 390 170 500 380 340 440 TOTAL 3,140 3,480 3,370 3,210 3,090 3,550 3,080 3,210 4,250 4,400 4,240 4,160 2,550 % of total income 26.0% 22.1% 26.4% 24.3% 22.8% 19.2% 20.1% 19.1% 24.4% 26.7% 25.3% 23.6% 22.8% Source: Karur Vysya Bank Page 4
The mgt stated that branch expansion will be slowed hereon and the focus will be on improving performance Net slippages were at ~Rs 5.5bn of which corporate were at ~Rs 2.7bn and SME slippages came in at ~Rs 2.4bn Retail slippage was at a mere ~Rs 210mn Slippage from restructured book was ~Rs 2bn and the residual book is at merely 11bps O/S 5/25 of Rs 760mn is not included in the restructured book O/S S4A was nil vs. ~Rs 790mn QoQ Branch Addition Muted Maharashtra 28 Kerala 21 Karnataka 52 Gujarat 16 Telangana 59 Andhra Pradesh 119 New Delhi 14 West Bengal 16 Restructured Book At Merely 11bps1 24.0 22.0 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Restructured Book (Rs bn) Tamil Nadu 420 % of loans - RHS 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% GNPA/NNPAs Jumped 88/34bps Sequentially 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 GNPA (Rs Mn) GNPA (%) - RHS Calc. Coverage Up 316bps QoQ 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% Coverage Ratio (%) NNPA (Rs Mn) NNPA (%) - RHS 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% NPA provisions % of loans - RHS 0.9 0.7 0.5 0.3 0.1-0.1 Page 5
Peer Set Comparison BANK Mcap (Rs bn) CMP (Rs) Rating Breakup Of Provisions Rs mn 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY16 FY16 FY16 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 FY19 NPA 1,239.5 1,000.0 730.0 530.0 940.0 960.0 880.0 2,040.0 1,570.0 1,600.0 3,020.0 4,210.0 Std assets 37.0 160.0 50.0 50.0 (40.0) - (40.0) (20.0) 10.0 40.0 30.0 (270.0) Rest Assets (290.0) - - (320.0) (60.0) (30.0) 1.7 (40.0) 80.0 110.0 20.0 (330.0) Other 0.3 100.0 150.0 (190.0) (100.0) 80.0 95.8-674.4 1,110.0 20.0 - Inv 189.7 - - (200.0) (70.0) 180.0 2.5 190.0-350.0 190.0 330.0 TOTAL 1,176.5 1,260.2 927.4 (126.2) 669.2 1,191.9 943.1 2,175.0 2,334.4 3,213.6 3,247.0 3,941.7 Change in Estimates (Rs mn) FY19E FY20E New Old Change New Old Change NII 25,287 25,148-0.6% 28,770 28,579-0.7% PPOP 19,220 19,001-1.1% 22,054 22,001-0.2% PAT 4,962 3,924-20.9% 8,990 7,992-11.1% Adj. BVPS (Rs) 70.0 63.2-9.7% 78.0 73.9-5.2% Source: HDFC sec Inst Research TP (Rs) ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E KMB # 2496 1310 BUY 1378 175 207 238 48.9 39.0 30.5 5.98 4.96 4.21 13.2 13.2 14.3 1.72 1.73 1.77 ICICIBC # 1837 286 BUY 377 105 126 150 18.8 12.5 8.6 1.87 1.45 1.11 7.3 9.5 9.8 0.81 1.00 1.17 AXSB 1412 542 NEU 538 184 226 269 504.3 27.6 14.9 2.95 2.40 2.01 0.5 7.7 12.9 0.04 0.69 1.13 IIB 1164 1957 BUY 1,971 379 444 526 32.6 26.0 20.6 5.17 4.41 3.72 16.5 17.8 19.2 1.80 1.81 1.85 RBL 237 568 BUY 584 152 171 195 37.5 26.6 19.8 3.74 3.33 2.92 11.5 12.7 15.2 1.15 1.28 1.34 FB 174 88 NEU 103 54 60 69 19.8 14.6 10.9 1.63 1.46 1.29 8.3 9.4 11.6 0.69 0.79 0.90 CUB 112 169 BUY 231 55 66 77 19.0 16.3 14.0 3.05 2.56 2.20 15.3 15.4 15.4 1.57 1.60 1.57 KVB 72 98 BUY 148 61 63 74 20.7 18.2 8.9 1.62 1.55 1.33 6.1 6.2 12.2 0.54 0.56 1.01 DCBB 52 167 BUY 216 78 88 98 20.9 16.2 13.1 2.13 1.90 1.70 9.8 10.8 12.0 0.90 0.95 0.97 SBIN # 2,559 287 BUY 328 93 137 175-25.5 16.0 7.3 2.00 1.36 1.06-3.3 4.8 9.8-0.21 0.29 0.60 BOB 321 139 BUY 182 75 108 138-15.1 18.4 9.0 1.85 1.29 1.00-6.1 4.5 8.6-0.34 0.27 0.50 AUSFB 192 640 NEU 673 73 117 135 62.6 43.1 32.7 8.74 5.49 4.76 13.8 15.0 14.9 1.98 1.98 1.96 Source: Company, HDFC sec Inst Research, # Adjusted for subsidiaries value Page 6
Income Statement (Rs mn) FY16 FY17 FY18P FY19E FY20E Interest Earned 54,434 56,224 56,997 62,314 71,125 Interest Expended 36,620 35,486 34,015 37,167 42,546 Net Interest Income 17,814 20,737 22,981 25,148 28,579 Non-interest Income 7,068 7,822 8,999 9,755 11,337 Fee Income (CEB) 4,595 4,802 6,171 7,247 8,478 Treasury Income 944 2,046 1,011 500 750 Total Income 24,882 28,559 31,980 34,902 39,916 Total Operating Exp 11,851 12,850 14,207 15,902 17,915 Employee Expense 5,474 6,080 6,391 7,252 8,219 PPOP 13,031 15,710 17,773 19,001 22,001 Provisions & Contingencies 3,914 6,875 12,250 13,366 11,149 Prov. For NPAs (Incl. Std Prov.) 3,443 4,061 10,219 13,116 10,999 PBT 9,116 8,835 5,524 5,634 10,852 Provision for Tax 3,440 2,775 2,067 1,710 2,860 PAT 5,676 6,060 3,457 3,924 7,992 Source: Bank, HDFC sec Inst Research Balance Sheet (Rs mn) FY16 FY17 FY18P FY19E FY20E SOURCES OF FUNDS Share Capital 1,219 1,219 1,453 1,453 1,453 Reserves 44,511 49,138 61,189 62,529 65,258 Shareholders' Funds 45,729 50,357 62,642 63,982 66,711 Savings 76,473 99,683 110,006 124,306 143,574 Current 40,272 49,203 55,764 62,455 69,326 Term Deposit 384,044 388,112 403,131 451,507 514,718 Total Deposits 500,789 536,998 568,901 638,269 727,618 Borrowings 28,942 16,957 23,817 24,309 26,590 Other Liabilities 14,386 13,765 13,932 14,932 16,331 Total Liabilities 589,847 618,076 669,291 741,492 837,250 APPLICATION OF FUNDS Cash & Bank Balance 28,916 43,451 42,969 34,129 24,751 Investments 144,427 148,575 158,032 168,660 184,811 G-Secs 133,850 128,955 140,128 148,078 163,714 Advances 390,844 409,077 448,001 517,610 605,588 Fixed Assets 4,201 4,186 5,282 5,546 5,823 Other Assets 21,459 12,787 15,007 15,546 16,277 Total Assets 589,847 618,076 669,291 741,492 837,250 Source: Bank, HDFC sec Inst Research Page 7
Key Ratios FY16 FY17 FY18P FY19E FY20E VALUATION RATIOS EPS (Rs) 9.3 9.9 4.8 5.4 11.0 Earnings Growth (%) 24.6 6.8 (43.0) 13.5 103.7 BVPS (Rs) 75.1 82.6 86.2 88.1 91.8 Adj. BVPS (Rs) 71.5 65.7 60.6 63.2 73.9 DPS (Rs) 2.8 2.6 0.6 0.7 1.4 ROAA (%) 1.01 1.00 0.54 0.56 1.01 ROAE (%) 12.9 12.6 6.1 6.2 12.2 P/E (x) 10.5 9.9 20.7 18.2 8.9 P/ABV (x) 1.4 1.5 1.6 1.6 1.3 P/PPOP (x) 0.9 0.8 0.8 0.8 0.6 Dividend Yield (%) 2.8 2.6 0.6 0.7 1.4 PROFITABILITY Yield On Advances (%) 11.52 11.01 10.32 10.17 10.16 Yield On Investment (%) 8.05 7.55 7.32 7.25 7.20 Cost Of Deposits (%) 7.24 6.64 5.99 6.02 6.09 Core Spread (%) 4.27 4.37 4.33 4.15 4.07 NIM (%) 3.46 3.73 3.85 3.82 3.82 OPERATING EFFICIENCY Cost/Avg. Asset Ratio (%) 2.1 2.1 2.2 2.3 2.3 Cost-Income Ratio (Ex. Treasury) 49.5 48.5 45.9 46.2 45.7 BALANCE SHEET STRUCTURE Loan Growth (%) 8.2 4.7 9.5 15.5 17.0 Deposit Growth (%) 12.1 7.2 5.9 12.2 14.0 C/D Ratio (%) 78.0 76.2 78.7 81.1 83.2 Equity/Assets (%) 7.8 8.1 9.4 8.6 8.0 Equity/Advances (%) 11.7 12.3 14.0 12.4 11.0 CASA (%) 23.3 27.7 29.1 29.3 29.3 Capital Adequacy Ratio (CAR, %) 12.2 12.5 14.4 13.4 12.3 W/w Tier I CAR (%) 11.3 11.9 13.9 12.9 11.9 FY16 FY17 FY18P FY19E FY20E ASSET QUALITY Gross NPLs (Rs mn) 5,112 14,838 30,158 33,485 27,132 Net NPLs (Rs mn) 2,162 10,335 18,628 18,038 12,977 Gross NPLs (%) 1.31 3.63 6.73 6.47 4.48 Net NPLs (%) 0.55 2.53 4.16 3.48 2.14 Slippage (%) 3.01 3.33 4.88 3.50 1.85 Coverage Ratio (%) 57.7 30.4 38.2 46.1 52.2 Provision/Avg. Loans (%) 0.93 1.04 2.39 2.70 1.94 ROAA TREE Net Interest Income 3.18% 3.43% 3.57% 3.57% 3.62% Non-interest Income 1.26% 1.30% 1.40% 1.38% 1.44% Treasury Income 0.17% 0.34% 0.16% 0.07% 0.10% Operating Cost 2.11% 2.13% 2.21% 2.25% 2.27% Provisions 0.70% 1.14% 1.90% 1.89% 1.41% Provisions For NPAs 0.61% 0.67% 1.59% 1.86% 1.39% Tax 0.61% 0.46% 0.32% 0.24% 0.36% ROAA 1.01% 1.00% 0.54% 0.56% 1.01% Leverage (x) 12.72 12.57 11.39 11.14 12.08 ROAE 12.87% 12.61% 6.12% 6.20% 12.23% Source: Bank, HDFC sec Inst Research Page 8
RECOMMENDATION HISTORY Karur Vysya Bank 150 130 110 90 70 TP Date CMP Reco Target 12-Dec-17 116 BUY 154 9-Jan-18 123 BUY 151 1-Feb-18 110 BUY 151 10-Apr-18 103 BUY 157 28-May-18 99 BUY 156 6-Jul-18 99 BUY 156 26-Jul-18 98 BUY 148 50 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period Page 9
Disclosure: We, Pranav Gupta, ACA, Darpin Shah, MBA & Kaushik Utpat, ACA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. Any holding in stock No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purposes without prior written approval of HSL. Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail and/or its attachments. HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report. HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or co-managing public offerings, Corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: complianceofficer@hdfcsec.com Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE-INB/F/E 231109431, BSE-INB/F 011109437, AMFI Reg. No. ARN: 13549, PFRDA Reg. No. POP: 04102015, IRDA Corporate Agent License No.: HDF 2806925/HDF C000222657, SEBI Research Analyst Reg. No.: INH000002475, CIN - U67120MH2000PLC152193 Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing. Page 10
HDFC securities Institutional Equities Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013 Board : +91-22-6171 7330 www.hdfcsec.com Page 11