27 October 2020
Company Update | Sector: Financials
HDFC Bank
BSE SENSEX
40,522
S&P CNX
11,889
CMP: INR1,233 TP: INR1,500 (+22%)
Business trends undergoing swift normalization
Margins to stabilize; collection trends near pre-COVID levels
Buy
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
Financials Snapshot (INR b)
Y/E MARCH
FY20 FY21E
NII
561.9 648.1
OP
487.5 565.5
NP
262.6 300.9
NIM (%)
4.2
4.1
EPS (INR)
48.0 54.9
EPS Gr. (%)
21.2 14.2
BV/Sh. (INR) 311.8 357.1
ABV/Sh. (INR) 300.3 342.3
Ratios
RoE (%)
16.4 16.4
RoA (%)
1.9
1.8
Payout (%)
24.8 17.5
Valuations
P/E(X)
25.7 22.5
P/BV (X)
4.0
3.5
P/ABV (X)
4.1
3.6
Div. Yield (%)
1.0
0.8
HDFCB IN
5,504
6787.7 / 90.6
1304 / 739
10/5/-4
14449
78.8
FY22E
740.8
663.8
364.7
4.1
66.5
21.2
413.4
394.1
17.3
1.9
15.4
18.5
3.0
3.1
0.8
FY23E
864.8
778.5
437.7
4.2
79.8
20.0
482.3
460.5
17.8
2.0
13.6
15.4
2.6
2.7
0.9
HDFC Bank (HDFCB) has built an exceptional banking franchise, powered by flawless
execution. It consistently challenges the status quo – as reflected in its product and
digital innovation – and yet persistently adheres to the basics of banking with regard
to underwriting standards. The bank has reported remarkable improvement in
collection efficiency, to 97% of pre-COVID levels, and is well-placed to gain
incremental market share on both the asset and liability fronts.
The bank is seeing improving trends across key business verticals, with some
segments like Credit Cards showing strong buoyancy. The Credit Cards segment grew
6% QoQ, with spends also back at pre-COVID levels. Corporate growth remains
robust, and the bank continues to focus on high-rated borrowers, which has aided
decline in RWA / total assets to ~65% (v/s 75% in FY19). HDFCB has prudently made
contingent + floating provisions of ~INR77.6b, which would allow the bank to absorb
any asset quality issues as business trends normalize fully.
We estimate HDFCB to deliver a ~19% PAT CAGR over FY20–FY23E, with ROA/ROE at
2.0%/17.8% for FY23E. Maintain Buy, with revised TP of INR1,500 (3.3x Sep’22E ABV).
Retail cycle holding well; strengthening distribution in rural/semi-urban
markets to aid growth
HDFCB is the largest private bank, with a market leadership position across various
retail products (Vehicle, Personal Loans, Credit Cards, etc.). Hence, its performance
is the yardstick for assessing the health of the overall retail cycle. The bank has
reported a ~97% collection efficiency, which has assuaged concerns not only on the
asset quality outlook for the bank but also the broader retail cycle. HDFCB is well-
placed to gain incremental market share as recovery strengthens. Meanwhile, a
strong geographical reach in the rural and semi-urban markets – which have proved
to be more resilient amid the pandemic – provides a strong growth engine for the
bank.
Shareholding pattern (%)
As On
Sep-20 Jun-20 Sep-19
Promoter
21.2
21.2
21.3
DII
18.6
18.0
17.3
FII
49.1
48.8
49.4
Others
11.1
12.0
12.1
FII Includes depository receipts
Stock Performance (1-year)
HDFC Bank
Sensex - Rebased
1,375
1,150
925
700
Corporate segment continues to drive growth; expect balanced
contribution as Retail makes a comeback
HDFC Bank has shown robust traction in the corporate portfolio, thus compensating
for the softness in retail lending. The Corporate segment reported 26.5% YoY
growth in 2QFY21, while Retail loans grew at a tepid ~5% YoY (~7% YoY in 1QFY21).
In 1HFY21, the Corporate segment entirely contributed to overall loan growth,
raising the segment’s share to 52% of total loans. As per strategy, the bank
continues to focus on lending to high-rated corporates, which has enabled steep
decline in RWA / total assets to ~65% (v/s 75% in FY19). However, with early signs
of recovery seen across several retail verticals, we expect a more balanced growth
outlook, even as we estimate HDFCB to deliver a 15% loan growth CAGR over FY20–
23E.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
HDFC Bank
Margins on the cusp of bottoming out; expect gradual recovery from FY22
For the past two quarters, most private banks have reported decline in margins due
to the slowing of credit growth, higher liquidity, and yield pressures from sharp
monetary easing. As a result, HDFCB has reported 20bp QoQ decline in margins to
4.1%. However, with the revival in retail disbursements, a healthy uptick in the CASA
ratio, and gradual repricing in the deposits portfolio, we expect margins to stabilize
at current levels and improve from FY22.
Asset quality seeing sharp recovery; contingent prov. offers comfort
Several banks have recently indicated a sharp recovery in collection trends. Banks
such as HDFCB, Indian Bank, and FB have reported collection efficiencies of 95–97%;
BANDHAN, too, has reported a collection efficiency of ~90%. KMB collection
efficiency also reached close to pre-COVID levels (barring unsecured portfolio).
Furthermore, numerous banks have suggested corporate restructuring would be
significantly slower than anticipated. On the other hand, the stress in the Mid-
Corporate and SME segments has been significantly addressed by the credit
guarantee scheme. HDFCB’s stress in the MSME segment also declined to 3% (v/s
9% in 1QFY21). Overall, expect restructuring to be in the low single digits. HDFCB has
prudently made contingent + floating provisions of INR77.6b, which would allow the
bank to absorb any asset quality issues as business trends normalize fully. We
estimate credit cost to sustain at 1.5% for FY21 and moderate to 1.3% by FY23.
Earnings cycle showing signs of bottoming out; estimate steady growth
rates after 2HFY21
HDFCB delivered steady earnings in 1HFY21, reporting the usual 19% YoY growth in
net profit. The bank appeared completely oblivious to the global pandemic despite
having built a strong provisioning cushion. We expect HDFCB to maintain a steady
growth trend from FY22. But, we remain conservative in our earnings outlook over
2HFY21, largely as COVID-related impairments peak, while the tax rate base
normalizes to ~25% in 2HFY20 (v/s ~32% in 1HFY20). Nevertheless, we continue to
project steady core operating profit growth of ~21% YoY in 2HFY21 v/s ~11% YoY in
1HFY21. Our estimates for the Banking sector further suggest that over 3QFY20–
1QFY21 results, we cut private sector aggregate earnings by 29%/25% for
FY21E/FY22E (40%/31% for FY21E/FY22E, excluding HDFC Bank). However, we have
turned more constructive and have recently increased earnings for many banks
(please refer to Exhibit-19 for details).
Valuation and view
HDFCB continues to deliver strong growth in a challenging macro environment, and
the business momentum has swiftly moved toward pre-COVID levels. Furthermore,
the bank’s operating performance remains strong despite margin pressure and
lower fee income trends. However, we expect the margin trajectory to now
stabilize, and an uptick in unsecured retail would support fee income trends. Also,
HDFCB continues to make healthy provisions to further strengthen the balance
sheet. Thus, a higher provision buffer would limit the damage on asset quality and
enable the bank to quickly recover to a normal growth run-rate. We estimate a 19%
PAT CAGR over FY20–23E, with ROA/ROE of 2.0%/17.8% for FY23E. Maintain
Buy,
with revised TP of INR1,500 (3.3x Sep’22E ABV).
27 October 2020
2
 Motilal Oswal Financial Services
HDFC Bank
Retail cycle holding well; strengthen distribution in rural/semi-
urban markets
HDFC Bank has built an exceptional retail franchise over the past two decades,
with strong processes, digitalization, and an excellent talent pool. Also, the bank
has sufficient product verticals to reflect strong growth despite already having
high market share in segments such as Personal Loans, Credit Cards, etc.
During
the quarter, the bank’s credit card growth revived to 6.3% QoQ, with card
spends back at pre-COVID levels.
Furthermore, with the launch of ‘Festive
Treats 2.0’ with a higher reach over the last year, we expect credit card
financing to reflect robust trends in 3QFY21.
Some of the lead indicators suggest that the semi-urban and rural markets are
now seeing accelerating trends v/s urban/metros.
HDFC Bank, over the last
decade, has increased its focus in these geographies, with ~52% of the total
branches located in these regions (v/s 27% in FY10).
Thus, the bank is well-
placed to benefit and gain incremental market share from these markets. We
are now seeing a strong uptick in two-wheelers, tractors, and gold financing in
the semi-urban and rural markets. Thus, HDFC Bank is poised to gain market
share and reflect strong trends.
Overall, the bank has indicated its collection efficiency in retail has reached
~97% of pre-COVID levels as
no major deterioration, such as job losses and
salary cuts, has been seen in its customer base.
Some of the recent digital initiatives, such as personal loan approvals in 10
seconds and loans against mutual funds, have also helped accelerate growth
trends.
Recently, the bank hinted at launching a completely digitalized version
for auto loan financing. This could be a game-changer for the bank in terms of
gaining incremental market share despite the sector facing cyclical headwinds.
Overall, we believe the bank would continue to maintain strong underwriting
standards and does not need to take excessive risk as it manufactures the best
financial products in the industry.
Exhibit 2: …system-level data further suggests revival in CC
growth sequentially
Systemic credit growth QoQ (%)
12.9%
6.3
-0.2
-5.0
-12.5%
-16.3%
-9.7%
6.6% 5.6%
4.8%
2.1%
4.6%
Exhibit 1: Credit Cards growth revives sequentially at 6.3%
QoQ
Credit Cards (INRb)
10.6
7.4
6.5
5.4
4.0
6.2
5.1
QoQ growth (%)
10.8
361 385 405 448 466 495 520 577 576 547 581
Source: MOFSL, Company
Source: MOFSL, Company
27 October 2020
3
 Motilal Oswal Financial Services
HDFC Bank
Exhibit 3: ~51% branch share in rural/semi-urban
Rural
Semi-Urban
Urban
Metro
Exhibit 4: Market share trends across key segments
Market share (%)
53.3%
44%
31%
23%
29%
20%
32%
20%
FY17
28%
20%
19.7%
30%
21%
FY20
Advances
Wholesale Home loans
Vehicle
Credit cards
9.6%
8.7%
3.0%
29%
35%
23%
4%
FY10
12%
FY13
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: Domestic loan mix increases toward wholesale to
~52%
Retail
Wholesale
Exhibit 6: Loan growth CAGR across key segments
CAGR growth (FY10-FY20) (%)
29%
31%
19%
49%
49%
47%
45%
46%
49%
52%
17%
22%
23%
23%
23%
51%
51%
53%
55%
54%
51%
48%
FY15
FY16
FY17
FY18
FY19
FY20
1HFY21
Source: MOFSL, Company
Source: MOFSL, Company
27 October 2020
4
 Motilal Oswal Financial Services
HDFC Bank
Focus on high-rated corporates; expect balanced contribution as
Retail makes a comeback
As per strategy, the bank continues to focus on lending to high-rated corporates,
which has enabled steep decline in RWA / total assets to ~65% (v/s 75% in FY19).
However, with early signs of recovery across several retail verticals, we expect a
more balanced growth outlook, even as we expect HDFCB to deliver a 15% loan
growth CAGR over FY20–23E.
HDFC Bank’s market share in wholesale lending has been lower v/s certain retail
segments, such as Auto and unsecured businesses. However, in the last few
years, HDFC Bank has shown robust traction in the corporate portfolio, thus
compensating for the softness in retail lending. The Corporate segment thus
reported 26.5% YoY growth in 2QFY21, while Retail loans grew at a tepid ~5%
YoY (~7% YoY in 1QFY21). In 1HFY21, the Corporate segment entirely
contributed to overall loan growth, raising the segment’s share to 52% of total
loans.
Overall, market share in corporate lending increased to 8.7% in FY20 v/s
6.1% in FY18.
The robust trends in wholesale lending are driven by the bank’s deepening
existing relationships with corporates – it provides better cash management and
supply chain financing solutions. Also, market share gains are led by cautious
risk strategy by other competitive peers (AXSB and ICICIBC) in growing corporate
portfolio.
The bank’s strategic focus remains on lending to high-rated corporates,
which
has enabled steep decline in RWA / total assets to ~65% (v/s 75% in FY19).
In
disbursement trends in wholesale lending, more than 50% was put toward
financing working capital, 30% toward capex, and so forth.
Furthermore, we note that growth in the corporate sectors remains broad-
based, with no increased risk seen in any particular sector/borrowers.
Exposure
to the top 20 borrowers has declined to 12% v/s 14.3% in FY15.
Also, loan
growth trends across sectors suggest highly broad-based trends v/s reliance on
any specific sectors.
However, with early signs of recovery across multiple retail verticals, we expect
a more balanced growth outlook even as we expect HDFCB to deliver a 15% loan
growth CAGR over FY20–23E.
Exhibit 7: Market share in wholesale loans increases to 8.7%
Market share in wholesale loans (%)
7.0
5.6
4.0
3.2
3.0
3.1
4.7
5.9
6.1
71.6
71.5
65.0
64.5
8.7
Exhibit 8: RWA / Total assets improve sharply
RWA/total Assets (%)
74.1
75.2
74.9
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: MOFSL, Company
FY15
FY16
FY17
FY18
FY19
FY20
1HFY21
Source: MOFSL, Company
27 October 2020
5
 Motilal Oswal Financial Services
HDFC Bank
Cost ratios in control; benefits from digitalization to aid further
decline
HDFCB has shown a steady improvement in operating costs. This has enabled it
to maintain healthy earnings growth as the benefit of technology is finally
reflected, with the C/I ratio over the last five years having improved by ~600bp.
The benefit has come despite the bank adding 1400 branches and ~41k
employees over a similar period. Digitalization has helped improve costs sharply,
led by lower customer acquisition costs, servicing costs, etc. ~95.1% of
transactions currently happen digitally, which has enabled the bank to
materially lower its costs.
Furthermore, the COVID-19 pandemic has warranted the role of technology in
providing seamless banking services. Thus, we can expect further technology-
related investments in the near term as the bank focuses on completely
digitalizing auto financing over the next few months. Overall, the bank has
indicated further improvement in the cost-income ratio to ~35% levels over the
medium term.
Exhibit 10: …despite banks continuing to add employees and
branches
No of Employees
Branches
Exhibit 9: Cost ratios improve significantly, led by digital
initiatives over past decade…
62.0
54.0
46.0
38.0
30.0
FY01
FY04
FY07
FY10
FY13
FY16
FY19 FY22E
C/I ratio (%)
Average trend line
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 11: Cost/Asset ratio trends across key large private banks (%)
FY19
FY20
2.1%
2.0%
1.9%
2.0%
2.1%
2.0%
2.3%
2.7%
2.4%
2.5%
HDFCB
ICICIBC
AXSB
IIB
KMB
Source: MOFSL, Company
27 October 2020
6
 Motilal Oswal Financial Services
HDFC Bank
Margins on the cusp of bottoming out; expect gradual recovery from
FY22
For the past two quarters, most private banks have reported decline in margins due
to the slowing of credit growth, higher liquidity, and yield pressures from sharp
monetary easing. As a result, HDFCB has reported 20bp QoQ decline in margins to
4.1%. However, with the revival in retail disbursements, a healthy uptick in the CASA
ratio, and gradual repricing in the deposits portfolio, we expect margins to stabilize
at current levels and improve from FY22.
Exhibit 12: NIM trends across banks – pressured for the past few quarters; expect NIM to stabilize going forward
NIM (%)
AXSB
DCBB
HDFCB
ICICIBC
IIB
KMB
YES
FB
RBK
SBIN
1Q20
3.40
3.67
4.30
3.61
4.05
4.49
2.80
3.15
4.31
2.81
2Q20
3.51
3.67
4.20
3.64
4.10
4.61
2.70
3.01
4.35
2.90
3Q20
3.57
3.71
4.20
3.77
4.15
4.69
1.40
3.00
4.57
3.05
4Q20
3.55
3.64
4.30
3.87
4.25
4.72
1.90
3.04
4.93
2.97
1Q21
3.40
3.42
4.30
3.69
4.28
4.40
3.00
3.07
4.85
3.01
2Q21
NA
NA
4.10
NA
NA
4.52
NA
3.13
NA
NA
Source: MOFSL, Company
Exhibit 13: Cost of deposits on the decline
Cost of Deposits (%)
AXSB
HDFCB
ICICIBC
KMB
SBIN
IIB
DCBB
FB
RBK
1QFY21
4.73%
NM
4.53%
NM
4.48%
5.73%
6.67%
5.37%
6.27%
YoY (bps)
(66)
NM
(55)
NM
(59)
(113)
(32)
(60)
(73)
QoQ (bps)
(28)
NM
(25)
NM
(46)
(32)
(21)
(37)
(13)
Exhibit 14: Cost of funds on the decline
Cost of Funds (%)
AXSB
HDFCB*
ICICIBC
KMB*
SBIN*
IIB
DCBB
FB*
RBK
*On a calculated basis
1QFY21
4.93%
4.53%
4.61%
4.18%
4.37%
5.10%
6.82%
5.17%
6.10%
YoY (bps)
(77)
(85)
(62)
(117)
(48)
(84)
(32)
(66)
(70)
QoQ (bps)
(27)
(22)
(31)
(40)
(23)
(42)
(20)
(19)
(30)
Source: MOFSL, Company
Source: MOFSL, Company
27 October 2020
7
 Motilal Oswal Financial Services
HDFC Bank
CASA ratios improve; lower SA & TD differential further
aiding growth
Prior to FY21, most banks were reporting healthy growth in term deposits, led by
healthy traction in retail TD. On the other hand, CASA growth was moderately
slower, resulting in some moderation in CASA ratios (barring for KMB). However,
post FY20, with decline in consumption and an increase in savings (on account of
COVID-led uncertainty), banks are reporting healthy growth in CASA deposits,
resulting in an uptick in CASA ratios. Banks such as KMB, FB, SBIN, and RBK have
posted an increase in their CASA ratios in the past few quarters, while banks such as
ICICIBC and IIB have seen some moderation. HDFCB, too, reported an increase in
2QFY21 after seeing decline in 1QFY21. Most other banks also reported improved
CASA ratios in 2QFY21.
We believe the impetus for strong incremental growth in term deposits is low. This
is attributable to the narrowing of the differential between SA and TD accounts,
driven by 135–200bp decline in TD rates in the past year. This is likely to aid growth
in CASA deposits, enabling further improvement in CASA ratios.
Peak TD rates decline 135–
200bp in the past year
Exhibit 15: CASA ratio trends across bank for the past few quarters
CASA (%)
AXSB
DCBB
HDFCB
ICICIBC
IIB
KMB
YES
FB
RBK
SBIN
1Q20
41.0
24.5
39.7
45.2
43.1
50.7
30.2
31.4
25.8
45.1
2Q20
41.0
23.2
39.3
46.7
41.4
53.6
30.8
31.6
26.5
45.1
3Q20
41.0
23.2
39.5
47.0
42.4
53.7
32.1
31.5
26.8
44.7
4Q20
41.0
21.5
42.2
45.1
40.4
56.2
26.6
30.5
29.6
45.2
1Q21
41.0
21.9
40.1
42.5
40.0
56.7
25.8
32.0
30.1
45.3
2Q21
NA
NA
41.6
NA
40.4
57.1
NA
33.7
31.1
NA
Source: MOFSL, Company
Exhibit 16: Differential between peak TD and SA rate trends over Mar’19–Oct’20
BOB
8.0%
6.0%
4.0%
2.0%
0.0%
Peak TD rate
Mar'19
SA rate
Peak TD rate
Oct'20
Source: MOFSL, Company
SA rate
PNB
SBIN
AXSB
HDFCB
ICICIBC
KMB
27 October 2020
8
 Motilal Oswal Financial Services
HDFC Bank
Exhibit 17: One-year peak TD rates across banks
Peak Deposit rate
(%)
BOB
PNB
SBIN
AXSB
HDFCB
ICICIBC
KMB
Repo Rate
Mar'19
6.80
6.75
6.80
7.50
7.40
7.50
7.30
6.25
Jun'19
6.80
6.75
6.80
7.50
7.40
7.50
7.30
5.75
Aug'19
6.70
6.75
6.70
7.20
7.30
7.10
6.90
5.40
Sep'19
6.60
6.60
6.70
7.00
7.00
7.00
6.80
5.40
Nov'19
6.40
6.40
6.25
6.85
6.85
6.85
6.50
5.15
Apr'20
5.70
5.80
5.70
6.10
6.00
6.00
5.80
4.40
May'20
5.70
5.75
5.30
5.80
5.75
5.75
5.25
4.00
June'20
5.30
5.50
5.30
5.80
5.50
5.50
5.25
4.00
July'20
5.20
5.40
5.20
5.50
5.30
5.30
5.20
4.00
Oct'20
5.10
5.25
4.90
5.10
5.10
5.00
5.10
4.00
Change
(bps)
-150
-135
-180
-190
-190
-200
-170
-140
Source: MOFSL, Company website
27 October 2020
9
 Motilal Oswal Financial Services
HDFC Bank
Asset quality seeing sharp recovery; contingent prov. offers comfort
Several banks have recently indicated a sharp recovery in collection trends. Banks
such as HDFCB, Indian Bank, and FB have reported collection efficiencies of 95–97%;
BANDHAN, too, has reported a collection efficiency of ~90%. KMB collection
efficiency also reached close to pre-COVID levels (barring unsecured portfolio).
Furthermore, numerous banks have suggested corporate restructuring would be
significantly slower than anticipated. On the other hand, the stress in the Mid-
Corporate and SME segments has been significantly addressed by the credit
guarantee scheme. HDFCB’s stress in the MSME segment also declined to 3% (v/s
9% in 1QFY21). Overall, expect restructuring to be in the low single digits. HDFCB has
prudently made contingent + floating provisions of INR77.6b, which would allow the
bank to absorb any asset quality issues as business trends normalize fully. We
estimate credit cost to sustain at 1.5% for FY21 and moderate to 1.3% by FY23.
Exhibit 18: Asset quality trends – total provision coverage (incl. floating, contingent,
general provisions) at 195% of reported GNPA or 154% of proforma GNPA
GNPA ratio (%)
NNPA ratio (%)
PCR (%)
84.5
76.2
69.9
68.7
69.8
71.4
73.9
72.0
74.5
0.9 0.2
FY15
0.9 0.3
FY16
1.1 0.3
FY17
1.3 0.4
FY18
1.4 0.4
FY19
1.3 0.4
FY20
1.4 0.3
1QFY21
1.1 0.2
2QFY21
1.4 0.4
2QFY21
Proforma
Source: MOFSL, Company
Exhibit 19: Exposure to stressed sectors, as collated from Basel III disclosures,
% of total exposure
NBFCs
Entertainment
Aviation
Hotels & Tourism
Metal & Metal Products
Construction
Power
Real Estate (ex of LRD)
Telecom
Gems & Jewellery
Total of above
FB
2.5%
0.3%
NA
NA
3.1%
2.4%
2.4%
4.2%
2.0%
NA
16.9%
AXSB
NFB
0.4%
0.7%
NA
NA
5.7%
13.8%
3.0%
1.0%
4.5%
NA
29.1%
Total
2.2%
0.4%
NA
NA
3.4%
3.6%
2.4%
3.9%
2.3%
NA
18.2%
FB
2.7%
NA
NA
NA
1.9%
1.8%
1.9%
3.2%
1.5%
0.6%
13.6%
ICICIBC
NFB
NA
NA
NA
NA
6.2%
11.2%
3.1%
NA
NA
0.7%
21.1%
Total
2.1%
NA
NA
NA
2.8%
3.7%
2.1%
2.5%
1.2%
0.6%
15.1%
FB
4.2%
NA
0.3%
0.4%
4.1%
7.3%
8.4%
4.2%
1.5%
0.5%
30.9%
SBIN
NFB
NA
NA
NA
NA
9.2%
14.9%
7.0%
NA
2.3%
0.2%
33.5%
Total
3.6%
NA
0.2%
0.3%
4.9%
8.4%
8.2%
3.6%
1.6%
0.4%
31.3%
Source: MOFSL, Company
27 October 2020
10
 Motilal Oswal Financial Services
HDFC Bank
Exhibit 20: Exposure to stressed sectors, as collated from Basel III disclosures
% of total exposure
NBFCs
Entertainment
Aviation
Hotels & Tourism
Metal & Metal Products
Construction
Power
Real Estate (ex of LRD)
Telecom
Gems & Jewellery
Total of above
FB
1.8%
0.3%
0.1%
0.6%
2.1%
1.5%
1.6%
4.4%
0.9%
2.1%
15.5%
IIB
NFB
1.3%
0.2%
0.0%
0.3%
2.7%
9.3%
10.6%
1.3%
4.8%
1.1%
31.7%
Total
1.7%
0.3%
0.1%
0.5%
2.3%
3.6%
4.0%
3.6%
1.9%
1.8%
19.8%
FB
3.7%
NA
NA
NA
2.7%
1.5%
4.9%
3.9%
2.8%
0.6%
20.2%
HDCFB
NFB
0.2%
NA
NA
NA
8.0%
10.3%
3.6%
3.7%
3.0%
0.4%
29.2%
Total
3.4%
NA
NA
NA
3.2%
2.2%
4.8%
3.9%
2.9%
0.6%
20.9%
FB
4.6%
NA
NA
NA
2.3%
1.7%
NA
4.6%
NA
NA
13.3%
KMB
NFB
0.2%
NA
NA
NA
2.4%
18.8%
NA
1.1%
NA
NA
22.4%
Total
4.0%
NA
NA
NA
2.3%
3.9%
NA
4.1%
NA
NA
14.5%
Source: MOFSL, Company
Exhibit 21: Snapshot of moratorium book and provisions as of 1QFY21
Moratorium
1.0
1QFY21
(INR b)
AXSB
BANDHAN
DCBB
HDFCB**
ICICIBC
IIB**
IDFC First
KMB
FB
RBK
AUBANK
Equitas
SBIN*
SBI Cards
Advances
5,613
697
251
10,033
6,312
1,981
1,041
2,040
1,213
567
263
144
22,983
219
as a % of loans
25–28%
~71%
~60%
NA
~30%
~50%
~35%
~26%
~35%
~33%
~25%
~93%
~23%
~17%
Moratorium
2.0
as a % of
COVID-19
In value terms
loans
related
9.7%
24%
26%
9%
18%
16%
28%
9.65%
24%
13.7%
11%
43%
9.5%
7%
545
167
65
903
1,105
317
291
197
291
78
29
62
2,183
15
30.0
14.4
1.0
15.5
82.8
12.0
6.0
12.6
1.9
3.6
2.8
1.4
30.0
4.9
Additional/
Contingent
38.9
3.4
1.0
54.5
14.0
NA
NA
NA
0.0
NA
NA
NA
NA
NA
Provisions
Total
68.9
17.8
2.0
70.0
96.7
12.0
6.0
12.6
1.9
3.6
2.8
1.4
30.0
4.9
as a % of
loans
1.2%
2.6%
0.8%
0.7%
1.5%
0.6%
0.6%
0.6%
0.2%
0.6%
1.1%
1.0%
0.1%
2.2%
as a % of
Morat
book
12.7%
10.6%
3.0%
7.8%
8.8%
3.8%
2.1%
6.4%
0.6%
4.6%
9.6%
2.3%
1.4%
31.9%
* For SBIN, moratorium book represents term loans that paid less than two EMIs
**For IIB, the proportion of customers availing moratorium was disclosed in the 1QFY21 earnings call
Source: MOFSL, Company
27 October 2020
11
 Motilal Oswal Financial Services
HDFC Bank
Earnings cycle showing signs of bottoming out; estimate steady
growth rates after 2HFY21
We believe the earnings cycle in the Banking sector has bottomed out. The
sector should start to stabilize
as margins are on the cusp of bottoming out –
aided by a reduction in the cost of funds, as most banks have lowered their
SA/TD rates by 135–200bp in the past year.
Moreover, as the disbursement
trend improves, we expect fee income to also reflect better trends in the
coming quarters.
HDFCB delivered steady earnings in 1HFY21, reporting the usual 19% YoY growth
in net profit. The bank appeared completely oblivious to the global pandemic
despite having built a strong provisioning cushion. We expect HDFCB to
maintain a steady growth trend from FY22. But, we remain conservative in our
earnings outlook over 2HFY21, largely as COVID-related impairments peak, while
the tax rate base normalizes to ~25% in 2HFY20 (v/s ~32% in 1HFY20).
Nevertheless, we continue to project steady core operating profit growth of
~21% YoY in 2HFY21 v/s ~11% YoY in 1HFY21.
Overall, our estimates for the Banking sector further suggest that over 3QFY20–
1QFY21 results, we cut private sector aggregate earnings by 29%/25% for
FY21E/FY22E (40%/31% for FY21E/FY22E, excluding HDFC Bank). However, we
have turned more constructive and have recently increased earnings for many
banks such as KMB, ICICIBC, Federal etc.
Exhibit 22: We believe the earnings downgrade cycle to have bottomed out….
PAT (INR b)
Private Banks
AXSB
BANDHAN
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
Total for private banks
Total for private banks (excl HDFCB)
PSU Banks
BOB
SBIN
Total for PSB
Total
Estimates post 3QFY20
FY21E
FY22E
121.9
40.3
5.1
342.5
189.1
70.8
76.4
21.7
11.3
10.4
889.5
547.0
63.5
319.5
383.0
1,272.5
174.5
49.3
6.5
415.7
229.6
93.6
92.0
26.8
16.6
14.7
1,119.3
703.6
92.8
417.6
510.4
1,629.7
Estimates post 1QFY21
FY21E
FY22E
61.6
35.4
2.3
301.5
104.1
45.5
54.5
12.9
5.3
6.3
629.4
327.9
6.7
152.2
158.9
788.3
110.0
45.7
3.2
357.3
157.4
63.9
69.8
16.9
8.1
8.8
841.1
483.8
31.4
224.0
255.4
1,096.5
Current Estimates
FY21E
FY22E
53.2
35.4
2.8
300.9
115.1
22.2
54.8
15.3
6.9
7.6
614.2
313.3
1.7
148.9
150.6
764.8
96.3
45.6
3.6
364.7
174.7
48.5
68.9
21.4
10.8
10.4
844.9
480.2
23.8
224.2
248.0
1,092.9
% Change over 1QFY21
FY21E
FY22E
-13.6%
0.0%
21.7%
-0.2%
10.6%
-51.2%
0.6%
18.9%
30.2%
20.6%
-2.4%
-4.4%
-74.6%
-2.2%
-5.2%
-3.0%
-12.5%
-0.2%
12.5%
2.1%
11.0%
-24.1%
-1.3%
26.4%
33.3%
18.2%
0.4%
-0.8%
-24.2%
0.1%
-2.9%
-0.3%
Source: MOFSL, Company
27 October 2020
12
 Motilal Oswal Financial Services
HDFC Bank
Valuation and view
Corporate loan growth for HDFCB remains strong and is compensating well for
the softness in its retail portfolio (due to muted growth in Vehicles / Credit
Cards). Although, among the retail assets, growth is picking up in Business
Banking and Credit Cards.
The fee income profile has been impacted by decline in economic activity on
account of the COVID-19 crisis. However, it has improved on a QoQ basis.
Furthermore, strong cost control, led by further digitalization, is likely to drive
overall improvement in the bank’s return ratios. Although margins have
declined in the current quarter, they are expected to remain stable due to
moderation in the cost of funds, aided by a strong and granular liability
franchise. As corporate lending gains momentum with the revival in economic
activity, we believe corporate fees would also reflect improving trends.
Asset quality ratios saw sequential decline, aided by the SC stay order on NPA
recognition. However, if not for the dispensation, GNPA/NNPA would have been
at ~1.37%/0.35% – stable YoY/QoQ on a like-to-like basis. The bank intends to
use its analytical models to determine slippages, resulting in the expedited
recognition of NPAs. CV/CE and unsecured retail loans to the Self-Employed
segment need to be monitored amid COVID-19, and we expect a rise in
delinquency trends in the near term. However, PCR improved ~830bp QoQ to
~84%. This, along with a floating provision of INR14.5b and contingent provision
of INR63b, should keep credit cost under control. Overall, we expect NNPA to
remain at 0.6% in FY22E.
Furthermore, strong capitalization and liquidity levels should help HDFCB sustain
its growth momentum over the next few years.
Buy, with Target Price of INR1,500:
HDFCB continues to deliver strong growth in
a challenging macro environment, and the business momentum has swiftly
moved toward pre-COVID levels. Furthermore, the bank’s operating
performance remains strong despite margin pressure and lower fee income
trends. However, we expect the margin trajectory to now stabilize, and an
uptick in unsecured retail would support fee income trends. Also, HDFCB
continues to make healthy provisions to further strengthen the balance sheet.
Thus, a higher provision buffer would limit the damage on asset quality and
enable the bank to quickly recover to a normal growth run-rate. We estimate a
19% PAT CAGR over FY20–23E, with ROA/ROE of 2.0%/17.8% for FY23E.
Maintain Buy, with revised TP of INR1,500 (3.3x Sep’22E ABV).
27 October 2020
13
 Motilal Oswal Financial Services
HDFC Bank
Financials and Valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Growth (%)
Non Interest Income
Total Income
Growth (%)
Operating Expenses
Pre Provision Profits
Growth (%)
Core PPP
Growth (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Growth (%)
FY17
693.1
361.7
331.4
20.1
123.0
454.4
18.5
197.0
257.3
20.4
220.9
19.7
35.9
221.4
75.9
34.3
145.5
18.3
FY18
802.4
401.5
400.9
21.0
152.2
553.2
21.7
226.9
326.2
26.8
311.0
40.8
59.3
267.0
92.1
34.5
174.9
20.2
FY19
989.7
507.3
482.4
20.3
176.3
658.7
19.1
261.2
397.5
21.8
380.3
22.3
75.5
322.0
111.2
34.5
210.8
20.5
FY20
1,148.1
586.3
561.9
16.5
232.6
794.5
20.6
307.0
487.5
22.6
465.9
22.5
121.4
366.1
103.5
28.3
262.6
24.6
FY21E
1,298.7
650.6
648.1
15.3
239.6
887.7
11.7
322.2
565.5
16.0
533.4
14.5
163.5
402.0
101.2
25.2
300.9
14.6
FY22E
1,456.0
715.2
740.8
14.3
301.9
1,042.7
17.5
378.9
663.8
17.4
626.6
17.5
176.4
487.4
122.7
25.2
364.7
21.2
(INRb)
FY23E
1,675.4
810.6
864.8
16.7
350.2
1,215.0
16.5
436.5
778.5
17.3
734.9
17.3
193.5
585.0
147.2
25.2
437.7
20.0
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Growth (%)
of which CASA Dep
Growth (%)
Borrowings
Total Liabilities
Current Assets
Investments
Growth (%)
Loans
Growth (%)
Fixed Assets
Total Assets
FY17
5.1
855.6
860.7
6,436.4
17.8
3,091.5
30.8
740.3
8,638.4
489.5
2,144.6
9.5
5,545.7
19.4
36.3
8,638.4
FY18
5.2
1,057.8
1,063.0
7,887.7
22.5
3,430.9
11.0
1,231.0
10,639.3
1,229.2
2,422.0
12.9
6,583.3
18.7
36.1
10,639.3
FY19
5.4
1,486.6
1,492.1
9,231.4
17.0
3,912.0
14.0
1,170.9
12,445.4
813.5
2,931.2
21.0
8,194.0
24.5
40.3
12,445.4
FY20
5.5
1,704.4
1,709.9
11,475.0
24.3
4,846.3
23.9
1,446.3
15,305.1
866.2
3,918.3
33.7
9,937.0
21.3
44.3
15,305.1
FY21E
5.5
1,952.4
1,957.9
13,368.4
16.5
5,534.5
14.2
1,397.4
17,485.3
1,196.0
4,329.7
10.5
11,129.5
12.0
48.8
17,485.3
FY22E
5.5
2,261.0
2,266.5
15,641.0
17.0
6,553.6
18.4
1,433.1
20,201.2
1,365.9
4,935.8
14.0
12,910.2
16.0
53.6
20,201.2
FY23E
5.5
2,639.4
2,644.9
18,456.4
18.0
7,844.0
19.7
1,480.3
23,554.0
1,535.1
5,626.9
14.0
15,234.0
18.0
59.0
23,554.0
Asset Quality
Y/E March
GNPA
NNPA
GNPA Ratio
NNPA Ratio
Slippage Ratio
Credit Cost
PCR (Excl Tech. write off)
FY17
58.9
18.4
1.1
0.3
1.5
0.6
68.7
FY18
86.1
26.0
1.3
0.4
2.1
0.8
69.8
FY19
112.2
32.1
1.4
0.4
1.9
0.9
71.4
FY20
126.5
35.4
1.3
0.4
1.9
1.0
72.0
FY21E
233.8
55.2
2.1
0.5
2.7
1.5
76.4
FY22E
313.9
82.0
2.4
0.6
2.3
1.4
73.9
FY23E
366.2
92.6
2.4
0.6
2.0
1.3
74.7
27 October 2020
14
 Motilal Oswal Financial Services
HDFC Bank
Financials and Valuations
Ratios
Y/E March
Yield & Cost Ratios (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Invt
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Capitalisation Ratios (%)
CAR
Tier I
Tier II
Business and Efficiency Ratios (%)
Loans/Deposit
CASA Ratio
Cost/Assets
Cost/Total Income
Cost/Core Income
Int. Expense/Int.Income
Fee Income/Total Income
Non Int. Inc./Total Income
Empl. Cost/Total Expense
Investment/Deposit
86.2
48.0
2.3
43.4
45.8
52.2
21.8
27.1
32.9
33.3
83.5
43.5
2.1
41.0
42.2
50.0
22.8
27.5
30.0
30.7
88.8
42.4
2.1
39.7
40.7
51.3
23.5
26.8
29.7
31.8
86.6
42.2
2.0
38.6
39.7
51.1
24.1
29.3
31.0
34.1
83.3
41.4
1.8
36.3
37.7
50.1
20.9
27.0
32.2
32.4
82.5
41.9
1.9
36.3
37.7
49.1
23.1
29.0
31.2
31.6
82.5
42.5
1.9
35.9
37.3
48.4
23.1
28.8
31.2
30.5
14.6
12.8
1.8
14.8
13.3
1.6
17.1
15.8
1.3
18.5
17.2
1.3
18.6
17.5
1.1
18.5
17.5
1.0
18.4
17.5
0.9
9.6
10.2
7.8
5.5
5.3
4.2
4.6
9.4
10.3
7.2
4.9
4.6
4.5
4.4
9.6
10.5
7.6
5.2
4.8
4.4
4.4
9.0
10.1
6.1
5.0
4.9
4.0
4.2
8.7
9.7
6.5
4.7
4.5
4.0
4.1
8.5
9.5
6.4
4.5
4.3
4.0
4.1
8.4
9.4
6.3
4.4
4.2
4.0
4.2
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
Valuation
RoE
RoA
RoRWA
Book Value (INR)
Growth (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Growth (%)
Price-Earnings (x)
Dividend Per Sh (INR)
Dividend Yield (%)
17.9
1.8
2.4
167.9
16.9
7.3
165.4
7.5
28.4
16.7
43.4
5.5
0.4
17.9
1.8
2.4
204.8
22.0
6.0
193.9
6.4
33.9
19.4
36.4
7.8
0.6
16.5
1.8
2.4
273.9
33.8
4.5
262.8
4.7
39.6
16.9
31.1
9.0
0.7
16.4
1.9
2.6
311.8
13.8
4.0
300.3
4.1
48.0
21.2
25.7
11.9
1.0
16.4
1.8
2.7
357.1
14.5
3.5
342.3
3.6
54.9
14.2
22.5
9.6
0.8
17.3
1.9
2.9
413.4
15.8
3.0
394.1
3.1
66.5
21.2
18.5
10.2
0.8
17.8
2.0
3.0
482.3
16.7
2.6
460.5
2.7
79.8
20.0
15.4
10.8
0.9
27 October 2020
15
 Motilal Oswal Financial Services
HDFC Bank
NOTES
27 October 2020
16
 Motilal Oswal Financial Services
HDFC Bank
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30
days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary
company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL
(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of
India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its
stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member
of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance
products.
Details
of
associate
entities
of
Motilal
Oswal
Financial
Services
Limited
are
available
on
the
website
at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell
the securities or derivatives thereof of companies mentioned herein. (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.; however the same shall have no bearing whatsoever on the specific recommendations made by the
analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in
some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware
that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment
banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and
Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity
and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use
would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities
and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal
Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report
is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to
professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer
or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is 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 MOFSL 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
MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as
defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on
by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in
only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a
chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered
broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading
securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services
license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First
Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising
from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of
"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be
such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives have financial interest in the subject company, as they have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has received compensation for investment banking/merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
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 Motilal Oswal Financial Services
HDFC Bank
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
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)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider
demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not
considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential 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 MOFSL. The report is
based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from
publicly available media or other 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. The report is prepared solely for informational purpose and does not
constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers
simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.
Disclaimer:
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. This report and information herein is solely for informational purpose and may 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. 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. 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), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures,
options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,
is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is
provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The
Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and
the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform
or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is
already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. 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 MOFSL 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. Neither the Firm, not its directors, employees, agents or representatives shall be
liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not
to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,
costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-
400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:
ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration
No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:
INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,
NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered
through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk
Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,
read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law
Tribunal, Mumbai Bench.
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