Result Update Rating matrix Rating : Buy Target : 7 Target Period : 12 months Potential Upside : 14% What s Changed? Target Changed from 6 to 7 EPS FY19E Unchanged EPS FY2E Unchanged Rating Unchanged Quarterly Performance Q1FY19 Q1FY18 YoY (%) Q4FY18 QoQ (%) NII 519. 49.9 26.6 487.2 6.5 Other income 21.7 122. 72.7 23.4 3.6 PPP 82.5 556.9 47.3 73.8 16.6 PAT 481.7 326.6 47.5 387.8 24.2 Key Financials FY17 FY18 FY19E FY2E NII 243 332 4348 579 PPP 1793 243 3567 4656 PAT 1112 1346 218 2612 Valuation summary (x) FY17 FY18 FY19E FY2E P/E 6.6 54.5 36.3 28.1 Target P/E 68.9 62.1 41.4 32. P/ABV 15.4 8. 6.7 5.6 Target P/ABV 17.5 9.1 7.6 6.3 P/BV 15.1 7.8 6.6 5.4 RoE (%) 28.6 19.5 19.6 21.1 RoA (%) 4.4 3.6 4. 4. Stock data Particulars Values Market Capitalisation 7395 crore Networth 9863 crore 52 week H/L ( ) 618 / 455 Equity Capital 1193 crore Face Value ( ) 1. DII Holding (%) 3.5 FII Holding (%) 12.6 Price performance (%) 1M 3M 6M 12M Bandhan 8.8 NA NA NA Ujjivan -4.9-5.8-6. 9.6 Equitas -1.5-11.2-1.8-19.5 Research Analyst Kajal Gandhi kajal.gandhi@icicisecurities.com Vishal Narnolia vishal.narnolia@icicisecurities.com Vasant Lohiya vasant.lohiya@icicisecurities.com July 19, 218 Bandhan Bank (BANBAN) 615 Stellar performance in business & PAT growth Advances growth continued to remain robust at 52% YoY to 3259 crore, above our estimate. Micro loans (forms 85.8% of advances) grew 44.8% YoY to 27979 crore while non micro loans rose 127% YoY from 268 crore in Q1FY18 to 4614 crore in Q1FY19 NII increase was higher than estimate at 39.5% YoY to 137 crore led by robust growth in AUM and strong margins at ~1.27%. On a sequential basis, NIM increased ~1 bps from 9.3% in Q4FY18 to 1.27% in Q1FY19. Non-interest income also increased 72.7% YoY to 211 crore. Consequently, operating profit increased 47.3% YoY to 821 crore vs. our estimate of 649 crore However, headline asset quality stayed steady QoQ with GNPA ratio at 1.26% and NNPA ratio at.64%. Provision came lower at 8 crore. The bank has utilised dispensation provided by the RBI and spread MTM on investment in four quarters Aided by higher than estimated NII growth and steady asset quality, PAT came in strong 47.5% YoY to 481 crore, above our estimates Customer acquisition continued to remain robust with addition of 6.35 lakh customers in Q1FY19 taking total customer base to 1.36 crore (micro banking 1.1 crore and non-micro 26.5 lakh) On the liability front, deposit growth continued to remain strong at 37% YoY to 373 crore with CASA ratio at 35.46% Unique business model imparting highest margins in industry Bandhan Bank is a unique business model of high yielding micro finance loan and low cost deposit franchise with 34.4% CASA offered in the ambit of a commercial bank (only MFI to receive universal banking licence in 214). This enables it to garner highest margin among banking peers at ~9-1%. Continued focus on deposit, CASA accretion will enable to keep CoF under control across various cycles. We expect NIM to sustain at ~9% even as the bank starts building non-micro loans. GNPA (excluding IBPC/assignment) was at.51%. Expect asset quality in micro loans to remain stable with GNPA at ~1.2% in FY18-2E. It had lowest CI ratio at ~35% in FY18 and, hence, superior return ratios. This is attributable to the hub and spoke model of using DSCs and associated bank branches Robust growth in advances and deposits Bandhan Bank has demonstrated stellar advances growth at ~51% CAGR in the last five years despite the AP crisis and demonetisation. As of June 3, 218, AUM was at 32,34 crore with customer base at ~1.3 crore. Micro credit forms 86% of loan book while retail, SME together are still small. Continued focus on building deposit franchise led the base grow from zero in August 215 to 33869 crore in FY18. Current and savings account deposit (CASA) was at 11,617 crore, constituting 34.3% of deposits. Only 6% of deposits come from MFI clients. Majority of deposits come from bank branch customers while 8% of the same is retail. Expect advances and deposits growth at 38% and 31% CAGR in FY18-2E. CASA ratio is seen at ~36% by FY2E. Superior RoA led by robust growth, strong NIMs & low CI; maintain BUY Robust growth in balance sheet, elevated margins and stable asset quality fuelled return ratios of the bank. Sustenance of higher margins at 9.5-1% and low cost to income ratio at 37-38% by FY2E is seen enabling earnings growth at 39.3% CAGR in FY18-2E. Consequently, expect high RoA of 3.5-4%, RoE >2% to sustain and continue to trade at a premium. We revise our target price to 7 from 6, valuing the stock at ~6.3x FY2E ABV (32x FY2E EPS). We maintain our BUY rating. ICICI Securities Ltd Retail Equity Research
Variance analysis Q1FY19 Q1FY19E Q1FY18 YoY (%) Q4FY18 QoQ (%) Comments NII 519 86 41 26.6 487 6.5 Robust growth in AUM at 52% YoY and healthy margin led to NII growth NIM (%) 1.3 3.9 1.8-48 bps 9.3 97 bps Shedding of bulk deposits led to QoQ improvement in margins Other Income 211 19 122 72.7 23 3.6 Income from PSLC was at 256 crore to be divided in four quarters Net Total Income 73 996 532 37.2 691 5.7 Staff cost 249 179 163 52.5 189 31.9 Other Operating Expenses 178 167 145 22.8 174 2.4 PPP 82.5 649.2 556.9 47.3 73.8 16.6 Provision 8. 114.5 55.6 43.8 19.1-26.6 MTM loss at 87 crore to be provided in four quarters; accounted for 22 crore PBT 74.5 534.6 51.2 47.7 594.7 24.5 Tax Outgo 258.8 179.6 174.7 48.1 26.9 25.1 PAT 481.7 355. 326.6 47.5 387.8 24.2 Higher NII growth and steady asset quality aided PAT growth Key Metrics GNPA 388 41 175 121.7 373 4.1 GNPA ratio steady at 1.26%; Micro loans consttitute ~ 37 crore of GNPA NNPA 194 199 15 84.2 173 12.3 NNPA ratio increased 6 bps QoQ to.64% Advances 3,533 31,113 18,743 62.9 29,713 2.8 Micro as well as non micro segment contribute to robust advance growth Deposits 3,73 35,224 22,439 36.8 33,869-9.3 CASA accretion ahead of deposit growth; CASA ratio at 35.46% Change in estimates FY19E FY2E ( Crore) Old New % Change Old New % Change Net Interest Income 4,348 4,348. 5,79 5,79. Pre Provision Profit 3,567 3,567. 4,656 4,656. NIM (%) 8.9 8.9 bps 9.1 9.1 bps PAT 2,18 2,18. 2,612 2,612. ABV ( ) 91.6 91.6. 11.8 11.8. Assumptions FY17 FY18 FY19E FY2E FY19E FY2E Credit growth (%) 652. 786.6 4.8 461.2 4.8 461.2 Deposit Growth (%) 92.2 45.8 26.7 36.1 26.7 36.1 CASA ratio (%) 29.4 34.3 35.2 35.7 35.2 35.7 NIM Calculated (%) 1.1 8.4 8.9 9.1 8.9 9.1 Cost to income ratio (%) 36.3 35. 34.1 34.3 34.1 34.3 GNPA ( crore) 86.3 373.1 56. 675.8 56. 675.8 NNPA ( crore) 61.2 172.9 259.5 365.6 259.5 365.6 Slippage ratio (%).8 1.8 1. 1. 1. 1. Credit cost (%).3 1.2 1.2 1.2 1.2 1.2 Current Earlier ICICI Securities Ltd Retail Equity Research Page 2
Company Analysis Exhibit 1: Robust growth in AUM continued at ~52% YoY in Q1FY19 crore 7 6 5 4 3 2 1 87.5 37.6 51.1 38.3 52.4 37.4 61546 44719 3234 3259 23543 15578 FY16 FY17 FY18 Q1FY19 FY19E FY2E 1 9 8 7 6 5 4 3 2 1 (%) AUM YoY growth (%) Exhibit 2: Building micro loan along with focus on non-micro business FY17 FY18 Q1FY19* FY19E FY2E Gross advances (AUM) 23543 3234 3259 44719 61546 Net advances (O/s Loan Book) 16839 29713 3533 4114 5676 Micro loans 14684 2524 25953 33347 4381 Non micro loans 2155 4689 458 7667 12266 Growth in CASA remained ahead of deposit accretion at 84% YoY to 1887 crore. Therefore, CASA ratio has increased to 35.46% in Q1FY19 compared to 26.33% in Q1FY18. Exhibit 3: Deposit accretion remains strong with focus on CASA. Exhibit 4:..to enable steady NIM ahead ( crore) 7 6 5 4 3 2 1 4 58391 34.3 35.46 35.2 35.735 29.4 42917 3 33869 25 21.6 373 2 23229 15 1289 1 5 FY16 FY17 FY18 Q1FY19 FY19E FY2E (%) 12 1 8 6 4 2 1.1 1.27 8.4 8.9 9.1 6.4 FY16 FY17 FY18 Q1FY19 FY19E FY2E Deposits CASA ratio (%) NIM Source: Company, ICICI Direct, Research Source: Company, ICICI Direct, Research Continuous focus on cost control supports superior return ratios Bandhan Bank has been instrumental in keeping a close watch on its cost matrix, which has paid off well in term of lower CI ratio at ~35% in FY18 and superior return ratios. This is attributable to the hub and spoke model of using DSCs, associated bank branches and focus on tech initiatives. Scaling up of its geographical presence, product portfolio and expenditure related to IT infrastructure are expected to keep opex growth at 36.4% CAGR in FY18-2E to 2434 crore. CI ratio is expected to remain broadly stable at ~34-35% in FY18-2E with opex to AUM seen at ~4% by FY2E. ICICI Securities Ltd Retail Equity Research Page 3
Exhibit 5: Asset quality maintained steady Exhibit 6: Growth along with prudent asset quality to keep RoA higher ( crore) 8 7 6 5 4 3 2 1.5 18.8.2 86.3 1.3 1.26 1.2 1.2 373.1 388.3 675.8 56. 1.4 1.2 1..8.6.4.2. (%) (%) 35 3 25 2 15 1 5 11.2 1.8 28.6 19.5 19.9 19.6 21.1 4.4 3.6 4.49 4. 4. FY16 FY17 FY18 Q1FY19 FY19E FY2E FY16 FY17 FY18 Q1FY19 FY19E FY2E GNPA GNPA ratio (%) ROE (%) ROA (%) Source: Company, ICICI Direct, Research Source: Company, ICICI Direct, Research Asset quality remains stable; unseasoned non-micro book to be watched Bandhan Bank reported a consistent outperformance on a relative basis in terms of asset quality with GNPA ratio at ~1% in FY14-18. Group based individual lending model and extensive risk management led to robust hold on asset quality, despite events like the AP crisis and demonetisation. As of June 3, 217, GNPA (excluding IBPC/assignment) was at.51%. We expect asset quality in micro loans to remain stable with GNPA at ~1.2% in FY18-2E. Loans in new verticals are unseasoned. Therefore, they could surprise on the negative side on credit quality. Adopting a conservative approach, we factor in higher delinquency in non-micro loans with GNPA ratio at 1.4% in FY19E and 1.2% in FY2E. Consequently, overall asset quality may remain prudent with GNPA ratio at 1.2% over FY19-2E. Exhibit 7: Asset quality prudent; unseasoned non-micro book remains to be watched crore FY16 FY17 FY18 Q1FY19 FY19E FY2E GNPA Micro loans 18.8 86.3 371.8 37. 4.2 525.7 as a % of micro loans.2.6 1.5 1.3 1.2 1.2 Non-micro loans... 18. 15.8 15.1 as a % of non-micro loans....4 1.4 1.2 Total GNPA 18.8 86.3 371.8 388.3 56. 675.8 GNPA (%).2.5 1.3 1.3 1.2 1.2 NNPA 1.2 61.2 172.9 194. 259.5 365.6 NNPA (%).1.4.6.6.6.7 Source: RHP, ICICI Direct Research Exhibit 8: CI ratio to inch up in near term; still remain lower than peers FY16 FY17 FY18 Q1FY19 FY19E FY2E Operating expenses 615.9 122. 138.3 427.3 1844.3 2434. YoY growth (%) 65.9 28. 38.5 41. 32. CI ratio (%) 56.9 36.3 35. 34.2 34.1 34.3 Opex to AUM (%) 4. 4.3 4. 5.2 4.1 4. Employee cost to AUM (%) 2.1 2.3 2.1 3.1 2.2 2.1 Other opex to AUM (%) 1.9 2. 1.9 2.1 2. 1.9 Source: RHP, ICICI Direct Research ICICI Securities Ltd Retail Equity Research Page 4
Exhibit 9: Customer accretion continue to remain healthy Lakh Q1FY18 FY18 Q1FY19 Borrowers 68 78 81 Micro borrowers 67 77 8 Non micro borrowers 1 1 1 Superior RoA led by robust growth, strong NIMs & low CI; maintain BUY Robust growth in balance sheet, elevated margins and stable asset quality have fuelled return ratios of the bank. Going ahead, growth is seen continuing to remain robust with AUM at 38% CAGR in FY18-2E. Sustenance of higher margins at ~9% and low cost to income ratio at ~34% by FY2E are seen enabling earnings growth at 39.3% CAGR in FY18-2E. Consequently, we expect high RoA of 3.5-4%, RoE >2% to sustain. Superior growth, strong liability franchise, stable margins and steady credit costs are seen sustaining ahead. With almost double NIM, RoA vs. peers & lower C/I ratio, with no legacy corporate portfolio pains, we believe Bandhan Bank will command higher premium. Hence, we maintain our target price at 6, valuing the stock at ~5.4x FY2E ABV. We maintain our BUY rating. Exhibit 1: Valuation summary NII Growth PAT Growth P/E ABV P/ABV RoA RoE ( cr) (%) ( cr) (%) (x) ( ) (x) (%) (%) FY17 2,43 157.7 1,112. 34.1 6.6 4. 15.4 4.4 28.6 FY18 3,32 26.2 1,345.6 21. 54.5 77.2 8. 3.6 19.5 FY19E 4,348 43.4 2,18.2 5. 36.3 91.6 6.7 4. 19.6 FY2E 5,79 33.2 2,612.2 29.4 28.1 11.8 5.6 4. 21.1 Exhibit 11: Valuation Comparison ROA ROE P/E P/BV FY18 FY19E FY2E FY18 FY19E FY2E FY18 FY19E FY2E FY18 FY19E FY2E Bandhan Bank 3.6 4. 4. 19.5 19.6 21.1 54.5 36.3 28.1 7.8 6.6 5.4 Bharat Fin 4.2 4. 4. 16.9 28.1 25.4 35.4 21.8 16.6 5.4 4.2 3.3 AU Small Fin 3.6 3.3 2.9 18.2 19.3 19.3 61.1 43.2 29.2 7.9 6.7 5.5 Equitas.4 1.2 1.6 1.8 7.8 11.2 148.9 26.7 15.9 2. 1.9 1.7 IndusInd Bank 1.8 2. 2.1 16.2 18.8 2.6 32. 23.6 18.1 4.8 4.1 3.4 Kotak Bank 1.7 1.8 1.9 12.5 13.2 14.8 63.9 5.3 4.8 7.3 6.7 6. Bajaj Finance 3.6 3.7 3.9 2.3 19.1 21.5 52. 39.7 28.6 8.6 6.9 5.5 ICICI Securities Ltd Retail Equity Research Page 5
Recommendation history vs. Consensus ( ) 7 6 5 4 3 2 1 12. 1. 8. 6. 4. 2. (%) Apr-18 Apr-18 May-18 May-18 Jun-18 Jun-18 Jul-18. Jul-18 Source: Bloomberg, Company, ICICI Direct Research Price Idirect target Consensus Target Mean % Consensus with BUY Key events Date Mar-18 Event Gets listed on the bourse Top 1 shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Bandhan Financial Holdings Ltd 31-Mar-18.8 981.5 981.5 2 Caladium Investments Pte. Ltd. 31-Mar-18. 54.6 54.6 3 IFC Asset Management Company 31-Mar-18. 21.1 21.1 4 Axis Asset Management Company Limited 31-May-18. 13.4.7 5 Aditya Birla Sun Life AMC Limited 3-Jun-18. 5.6.1 6 SBI Funds Management Pvt. Ltd. 31-May-18. 5. -.2 7 HSBC Global Asset Management (Hong Kong) Limited 31-Mar-18. 4.6 4.6 8 Goldman Sachs Asset Management International 31-May-18. 3.4.5 9 Aberdeen Asset Management (Asia) Ltd. 3-Apr-18. 1.8.9 1 Nomura Asset Management Singapore Ltd. 31-Mar-18. 1.7 1.7 Source: Reuters, ICICI Direct Research Shareholding Pattern (in %) Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Promoter 82.3 82.3 FII 9.6 12.6 DII 1.8 3.5 Others 6.3 1.7 Recent Activity Buys Sells Investor name Value(m) Shares(m) Investor name Value(m) Shares(m) Bandhan Financial Holdings Ltd 766.2 981.5 ICICI Prudential Asset Management Co. Ltd. -5.7 -.7 Caladium Investments Pte. Ltd. 393.4 54.6 BNP Paribas Asset Management India Pvt. Ltd. -5.1 -.7 IFC Asset Management Company 151.7 21.1 Fidelity Management & Research Company -4.3 -.6 HSBC Global Asset Management (Hong Kong) Limited 32.8 4.6 FIL Investment Management (Hong Kong) Limited -3.7 -.5 Nomura Asset Management Singapore Ltd. 12.5 1.7 FMR Investment Management (U.K.) Limited -3.1 -.4 Source: Reuters, ICICI Direct Research ICICI Securities Ltd Retail Equity Research Page 6
Financial summary Profit and loss statement Crore ( Crore) FY17 FY18 FY19E FY2E Interest Earned 398.7 482.3 74.5 9422.5 Interest Expended 155.2 177.1 2692.8 3632.3 Net Interest Income 2,43.5 3,32.2 4,347.7 5,79.3 growth (%) 157.7 26.2 43.4 33.2 Non Interest Income 411.4 76.2 163.8 13. Operating Income 2814.9 3738.4 5411.5 79.3 Staff cost 545.6 688. 963.7 1282.4 Other Operating expense 476.4 62.3 88.6 1151.5 Operating profit 1792.9 243.1 3567.2 4656.3 Provisions 88.4 374.2 462.4 637.6 Exceptional items.... PBT 174.5 255.9 314.9 418.8 Taxes 592.5 71.3 186.7 146.6 Net Profit 1112. 1345.6 218.2 2612.2 EPS ( ) 1.2 11.3 16.9 21.9 Key ratios (Year-end March) FY17 FY18 FY19E FY2E Valuation No. of Equity Shares (Crore) 19.5 119.3 119.3 119.3 EPS (Rs.) 1.2 11.3 16.9 21.9 BV (Rs.) 4.6 78.7 93.8 113.9 ABV (Rs.) 4. 77.2 91.6 11.8 P/E 6.6 54.5 36.3 28.1 P/BV 15.1 7.8 6.6 5.4 P/ABV 15.4 8. 6.7 5.6 Yields & Margins (%) Net Interest Margins 1.1 8.4 8.9 9.1 Yields on Loans 17.4 14.9 16.6 16.4 Cost of funds 8. 6.5 7.5 7.7 Quality and Efficiency (%) Cost to income ratio 36.3 35. 34.1 34.3 GNPA.51 1.25 1.23 1.21 NNPA.36.58.63.65 ROE 28.6 19.5 19.6 21.1 ROA 4.4 3.6 4. 4. Balance sheet Crore ( Crore) FY17 FY18 FY19E FY2E Sources of Funds Capital 195.1 1192.8 1192.8 1192.8 Reserves and Surplus 3351.3 8189.1 9992.6 1239.1 Networth 4446.5 9381.9 11185.4 13582.9 Deposits 23228.7 33869. 42917.1 58391.1 Borrowings 128.9 285. 356.3 498.8 Other Liabilities & Provisions 1532. 774.1 928.9 1161.2 Total 3236.1 4431. 55387.6 73633.9 Applications of Funds Fixed Assets 251.8 238.1 285.7 342.9 Investments 5516.5 8371.9 865.6 11187.2 Advances 16839.1 29713. 4113.6 5676. Other Assets 7628.7 5987. 5482.7 627.8 Total 3,236.1 44,31. 55,387.6 73,633.9 Growth ratios (% growth) (Year-end March) FY17 FY18 FY19E FY2E Total assets 53. 46.5 25. 32.9 Advances 652. 786.6 4.8 461.2 Deposit 92.2 45.8 26.7 36.1 Total Income 16. 32.8 44.8 31. Net interest income 157.7 26.2 43.4 33.2 Operating expenses 17.4 6.1 11.7 8.4 Operating profit 284.2 35.5 46.8 3.5 Net profit 34.1 21. 5. 29.4 Net worth 33.4 111. 19.2 21.4 EPS 198.6 11.1 5. 29.4. ICICI Securities Ltd Retail Equity Research Page 7
ICICI Direct Research coverage universe (Banking) CMP M Cap EPS ( ) P/E (x) P/ABV (x) RoA (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY18 FY19E FY2E FY18 FY19E FY2E FY18 FY19E FY2E FY18 FY19E FY2E FY18 FY19E FY2E Bank of Baroda (BANBAR) 12 185 Buy 31,812 67 78 94 1.8 1.5 1.3.3.2.2 1.8 1.8 1.9 18.1 17.1 16.6 State Bank of India (STABAN) 26 34 Buy 232,53-7 26 17-35.5 1. 15.1 2.1 1.3 1.6 -.2.7.4-3. 9.7 6.5 Axis Bank (AXIBAN) 531 6 Buy 136,473 1 21 38 494.8 24.8 14. 2.9 2.7 2.3..7 1.1..7 1.1 City Union Bank (CITUNI) 17 2 Buy 12,442 9 9 11 19.1 19.1 15.4 3.1 3. 2.2 1.6 1.6 1.7 15.6 15.1 15. DCB Bank (DCB) 162 17 Hold 4,998 8 1 14 2.6 15.8 11.6 2. 1.8 1.6.9 1. 1.1 1.9 11.7 14. Federal Bank (FEDBAN) 86 15 Buy 17,73 4 6 7 19.3 14. 11.6 1.5 1.4 1.3.7.8.9 8.2 9.3 1.4 IndusInd Bank (INDBA) 1,885 2,15 Buy 113,191 6 81 16 31.4 23.1 17.8 4.9 4.2 3.5 1.8 2. 2.1 16.2 18.8 2.6 Jammu & Kashmir Bk(JAMKAS) 47 75 Buy 2,642 4 9 12 13. 5.4 4..8.7.7.2.5.6 3.4 7.8 9.6 Kotak Mahindra Bank (KOTMAH) 1,399 1,44 Buy 266,649 21 27 34 65.3 51.4 41.6 7.4 6.8 6.1 1.7 1.8 1.9 12.5 13.2 14.8 Yes Bank (YESBAN) 387 375 Hold 89,15 18 23 27 21.1 16.6 14.2 3.6 3. 2.5 1.6 1.6 1.5 17.6 18.9 18.6 Bandhan Bank (BANBAN) 614 7 Buy 73,375 11 17 22 34.3 22.9 17.7 5. 4.2 3.5 3.6 4. 4. 19.5 19.6 21.1 ICICI Securities Ltd Retail Equity Research Page 8
RATING RATIONALE ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/2% for large caps/midcaps, respectively, with high conviction; Buy: >1%/15% for large caps/midcaps, respectively; Hold: Up to +/-1%; Sell: -1% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICI Direct Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 4 93 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 9
ANALYST CERTIFICATION We /I, Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA, Research Analysts, 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. 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. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number INH99. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities 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. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the 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. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates 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 ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report. It is confirmed that Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. ICICI Securities Ltd Retail Equity Research Page 1