Sector Update | 22
|
May 2020
Sector Update Financials
Financials
Technology
More operational creditors than
financial creditors in the cases
referred
No. of cases
Quarter initiated by
Total
*
**
#
FC
OC CD
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
8
7
37
58
99
98
65
65
85
89
102 129
100 126
114 146
197 164
130 154
279 294
267 329
163 215
1,646 1,874
22
35
38
14
22
18
16
16
21
17
9
17
9
254
37
130
235
147
196
249
242
276
382
301
582
613
387
3,774
IBC: Report card up to Mar’20; Pace of resolution slows
Average recovery at 44%; CIRP initiations decline, partly due to lockdown
The IBC (Insolvency and Bankruptcy Code) has been playing a critical role in dealing with
corporate delinquencies and in bringing a stronger credit discipline. With PSU banks
witnessing high exposure to NCLT cases and other sets of accounts, wherein the ICA (inter-
creditor agreement) is signed / likely to be signed, the asset quality recovery cycle for
banks is closely linked with the efficacy of the IBC framework. In this note, we have
analyzed the progress made by the IBC since its inception up to Mar’20. The recovery rate
under the IBC for cases that saw resolution stands at ~44% (182% of the liquidation value).
The finance minister announced several amendments, such as: a) the minimum threshold
would be increased to INR10m from INR0.1m, b) no new insolvency proceedings would be
initiated for up to one year, and c) COVID-19-related debt would be kept out of the
definition of default. While this would provide much-needed respite to borrowers, it
would also prolong the resolution/recovery process. Furthermore, the extension of the
resolution timeline by 90 days from the existing 180 days would ease the additional
provisioning requirement. ICICIBC and HDFCB remain our top picks.
Source: IBBI, MOFSL
*Financial Creditor
**Operational Creditor
#Corporate Debtor
3,774 cases referred to NCLT, ~44% from financial creditors
As of Mar’20, a total of 3,774 cases had been admitted under the IBC; 1604 of these
were closed, while 2,170 cases remain outstanding to date. Of the cases submitted,
the majority (~1,874 cases or 50%) were filed by operational creditors, while 1,646
(~44%) were filed by financial creditors. Around 254 cases (7%) were filed by
corporate debtors.
Recovery rate stands at 44%,
while ex-RBI List-1 it stands at
25%
Only 14% of cases resolved; activity slows due to COVID-19 outbreak
As of Mar’20, 1,604 cases had been disposed, of which only 221 (14%) were
successfully resolved, while 914 (57%) were liquidated. However, the pace of
Realization by FCs
(% of
resolution has slowed due to the outbreak of COVID-19, with 27 cases being
INRb
(% of claims
liquidation
approved for resolution (35 over Oct’19–Dec’19). Of the remaining cases, 312 (19%)
admitted)
value)
are under appeal, while 157 (10%) have been withdrawn from the IBC process.
Metals Total
52.2%
236.3%
Non-Metals
total
Grand total
Grand total
(Ex RBI List-1)
34.8%
43.6%
24.6%
134.4%
181.7%
140.1%
Manufacturing, Real Estate, Construction form ~71% of admitted cases
The Manufacturing sector accounts for ~40% of the total cases admitted, while Real
Estate, Renting, and Business Activities constitute ~20%. Construction forms 11%,
Source: IBBI, MOFSL
while trade sectors account for ~10%. Within Manufacturing, the Metals sector
constitutes ~17%, whereas Textiles, Leather, and Apparel Products form 17%.
Recovery rate stands at 44%; moderates to 25%, excl. RBI List-1
The recovery rate under the IBC for cases that have been resolved stands at
~44% (182% of the liquidation value). The recovery rate for cases belonging to
Metals stands higher at ~52% (236% of the liquidation value), while that for
Non-Metals cases stands much lower at ~35% (134% of the liquidation value).
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542
|
Yash Agarwal
(Yash.Agarwal@motilaloswal.com); +91 22 6129 1571
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526
|
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com); +91 22 6129 1544
22 May 2020
Investors are advised to refer through important disclosures made at the last page of the Research Report.
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Sector Update | Financials
Eight accounts have been resolved
from the RBI List-1
Realization by FCs
Name
(% of claims
admitted)
(% of
liquidation
value)
Electrosteel
40.4%
183.5%
Bhushan Steel
63.5%
252.9%
Monnet Ispat
26.3%
123.4%
Essar Steel
82.9%
266.7%
Alok industries
17.1%
114.0%
Jyoti structures
50.1%
387.4%
Bhushan Power
41.0%
203.4%
& Steel
Jaypee Infratech 100.2%
130.8%
ABG Shipyard
Under Liquidation
Lanco Infratech
Under Liquidation
Amtek Auto
Under Process
Era Infra
Under Process
Engineering
Source: IBBI, MOFSL
We further note the recovery rate, excluding RBI List-1 accounts, moderated to
25%. For Metals cases, the recovery rate declined far more sharply to ~9%. This
is primarily attributed to higher recoveries in select List-1 accounts, wherein
recoveries stood as high as 100%. To date, only eight cases have been resolved
from List-1 (of the 12 a/c referred by the RBI), with recoveries in the range of
17–100% (114–387% as a percentage of the liquidation value).
Liquidation value suggests banks adequately provided; expect write-backs
across most banks
For the cases that have been successfully resolved, the liquidation value as a
percentage of the total claims admitted works out to ~24%, while the realization
was ~1.8x of the liquidation value (~1.4x excluding RBI List-1 a/c). Healthy PCR by
banks in the range of 73–92% on NCLT accounts suggests the banks are adequately
provided—we expect most banks to witness write-backs as the accounts get
resolved. We expect SBIN, BoB, and BOI to be the key beneficiaries, while ICICIBC
would gain among the private banks.
Average time for resolution at ~410 days; ~309 days for liquidation
As of Mar’20, the average time taken for the resolution of cases stood at 410 days
v/s 387 days up to Dec’19 (including the days spent under litigation). This is longer
than the 270-day deadline, but much shorter than the ~4.3 year period before the
IBC’s establishment. The average time taken for the 914 liquidation orders
announced to date is 309 days.
Status of pending cases: 270-day timeline breached for ~34%
Of the 2,170 cases outstanding as of Mar’20, the 270-day timeline was breached for
~34%. The liquidation process was initiated for 914 cases, but the final report was
submitted for only 69 cases, with the 270-day timeline already breached for ~52% of
cases. This highlights the completion of the liquidation process is quite a long-drawn
affair.
COVID-19 outbreak to slow resolution process
The outbreak of COVID-19 has affected the pace of the IBC resolution process. The
finance minister announced several amendments, such as: a) the minimum
threshold would be increased to INR10m from INR0.1m, b) no new insolvency
proceedings would be initiated for up to one year, and c) COVID-19-related debt
would be kept out of the definition of default. While this is likely to slow the process
of resolution, it is necessary under the current circumstances. Furthermore, the
extension of the resolution timeline by 90 days from the existing 180 days would
ease the additional provisioning requirement, offering some respite on provisioning
to underlying banks.
ICICIBC and HDFCB remain our top picks.
Exhibit 1:
Status of ongoing CIRPs
Days elapsed
>270 days
>180 days and <270 days
>90 days and <180 days
<90 days
Total
No of CIRPs
738
494
561
377
2,170
Source: IBBI, MOFSL
Exhibit 2:
Status of liquidation process
Days elapsed
>270 days
>180 days and <270 days
>90 days and <180 days
<90 days
Total
No of CIRPs
443
143
138
121
845
Source: IBBI, MOFSL
22 May 2020
2
 Motilal Oswal Financial Services
Sector Update | Financials
Exhibit 3:
Bank-wise exposure of NCLT cases and accounts for which ICA is signed / likely to be signed
As of 3QFY20 (INR b)
NCLT List 1
NCLT List 2
Accounts filed by bank at NCLT
Accounts filed by other banks at NCLT
Total NCLT Exposure
PCR on above
Accounts for which ICA is signed / likely to be signed
GNPA
NNPA
PCR
PCR (incl. T/WO)
BOI
20.8
24.7
63.5
261.9
370.9
91.0%
150.0
617.3
201.1
67.4%
77.2%
SBIN
1,462.0
1,462.0
90.3%
305.2
1,596.6
582.5
63.5%
81.7%
INBK
16.5
7.3
10.6
54.7
89.0
72.5%
NA
138.6
64.9
53.2%
70.8%
BOB
57.8
64.4
59.8
320.9
502.9
89.0%
NA
731.4
265.0
63.8%
77.8%
PNB
63.4
41.7
70.7
174.8
330.1
251.9
505.9
75.0%
91.6%
NA
NA
499.2
768.1
215.1
305.2
56.9%
60.3%
67.4%
75.3%
Source: MOFSL, IBBI
UNBK
43.2
33.9
3,774 cases referred to NCLT, ~44% from financial creditors
As of Mar’20, a total of 3,774 cases had been admitted under the IBC, of which
1,604 cases were closed, while 2,170 cases remain outstanding to date. Of the cases
submitted, the majority (~1,874 cases or 50%) were filed by operational creditors,
while 1,646 (~44%) were filed by financial creditors. Around 254 cases (7%) were
also filed by corporate debtors.
~50% of the cases were
filed by operational
creditors.
Exhibit 4:
Initiation of CIRP process – Category-wise
Financial
Creditor
8
37
99
65
85
102
100
114
197
130
279
267
163
1,646
No. of resolution process initiated by
Operational
Corporate
Creditor
Debtor
7
22
58
35
98
38
65
14
89
22
129
18
126
16
146
16
164
21
154
17
294
9
329
17
215
9
1,874
254
Quarter
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
Total
Total
37
130
235
147
196
249
242
276
382
301
582
613
387
3,774
Source: MOFSL, IBBI
Only 14% of cases resolved; activity slows due to COVID-19 outbreak
57% of cases saw
resolution.
As of Mar’20, 1,604 cases had been disposed, of which only 221 (14%) were
successfully resolved, while 914 (57%) have been liquidated. However, the pace of
resolution has slowed due to the COVID-19 outbreak, with 27 cases being approved
for resolution v/s 35 over Oct’19–Dec’19. Of the remaining cases, 312 (19%) are
under appeal, while 157 (10%) have been withdrawn from the IBC process.
22 May 2020
3
 Motilal Oswal Financial Services
Sector Update | Financials
Exhibit 5:
Number of CIRPs admitted slowed in 4QFY20 due to COVID-19 outbreak
Quarter
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
Total
Corporates o/s
as at beginning
-
36
158
365
438
541
702
769
894
1,099
1,227
1,575
1,966
Admitted
37
130
235
144
196
249
242
276
382
301
582
613
387
3,774
Appeal/
Review/Settled
1
8
18
40
23
22
33
13
50
26
28
27
23
312
Closure by
Withdrawal u/s Approval of
Commencement of Corporates o/s
12A
resolution plan
Liquidation
as at end
-
-
-
36
-
-
-
158
-
2
8
365
-
7
24
438
-
11
59
541
1
14
51
702
27
29
86
769
38
18
82
894
21
20
86
1,099
26
26
95
1,227
21
32
153
1,575
11
35
149
1,966
12
27
121
2,170
157
221
914
2,170
Source: MOFSL, IBBI
Manufacturing, Real Estate, Construction form ~71% of admitted cases
The Manufacturing sector accounts for ~40% of the total cases admitted, while Real
Estate, Renting, and Business Activities constitute ~20%. Construction forms 11%,
while trade sectors account for ~10%. Within Manufacturing, the Metals sector
constitutes ~17%, whereas Textiles, Leather, and Apparel Products form 17%.
Manufacturing comprises
~40% of total admitted
cases.
Exhibit 6:
Sectoral distribution of accounts admitted under IBC
19%
40%
10%
11%
20%
Manufacturing
Real Estate, Renting & Business Activities
Construction
Wholesale & Retail Trade
Others
Source: MOFSL, IBBI
Within Manufacturing,
Metals constitutes the
highest share at 17%.
Exhibit 7:
Breakup of accounts admitted under IBC – within Manufacturing
Food, Beverages & tobacco products
7%
17%
13%
10%
7%
12%
11%
6%
17%
Chemicals & chemical products
Electrical machinery & apparatus
Fabricated metal products, except machinery & equipment
Machinery & equipment
Textiles, leather & apparel products
Wood, rubber, plastic & paper products
Basic metals
Others
Source: MOFSL, IBBI
22 May 2020
4
 Motilal Oswal Financial Services
Sector Update | Financials
Recovery rate stands at 44%; moderates to 25%, excl. RBI List-1
The recovery rate under the IBC for cases that have been resolved stands at ~44%
(182% of the liquidation value). The recovery rate for cases belonging to Metals
stands higher at ~52% (236% of the liquidation value), while that for Non-Metals
cases stands much lower at ~35% (134% of the liquidation value).
We further note the recovery rate, excluding RBI List-1 accounts, moderated to 25%.
For Metals cases, the recovery rate declined far more sharply to ~9%. This is
primarily attributed to higher recoveries in select List-1 accounts, wherein
recoveries stood as high as 100%. To date, eight cases have been resolved from List-
1 (of the 12 a/c referred by the RBI), with recoveries in the range of 17–100% (114–
387% as a percentage of the liquidation value).
Recovery rate for Metals
cases stands at 52% v/s 35%
for Non-Metals cases.
Exhibit 8:
Recovery rate stands at 44%; at 25% excl. RBI List-1
Total
admitted
claims
2,066.6
2,034.2
4,100.8
1,731.8
Realization by Realization by
FC's
FC's
Realization (% of claims (% of liquidation
by FC's
admitted)
value)
1,079.4
52.2
236.3
707.9
34.8
134.4
1,787.3
43.6
181.7
426.2
24.6
140.1
Source: MOFSL, IBBI
INRb
Grand total (for metals)
Grand total (non-metals)
Grand total
Grand total (Ex RBI List-1)
Liquidation
Value
456.8
526.7
983.4
304.2
Of the 12 RBI cases, eight
have been resolved, while
two have been liquidated.
Exhibit 9:
Seven accounts resolved from RBI List-1
Realization as a
Amt. admitted Amt. realized Realization as a % of liquidation
(INRb)
(INRb)
% of claims
value
131.8
53.2
40.4%
183.5%
560.2
355.7
63.5%
252.9%
110.2
28.9
26.3%
123.4%
494.7
410.2
82.9%
266.7%
295.2
50.5
17.1%
114.0%
73.7
36.9
50.1%
387.4%
471.6
193.5
41.0%
203.4%
231.8
232.2
100.2%
130.8%
Source: MOFSL, IBBI
Name of the Debtor
Electrosteel Ltd
Bhushan Steel
Monnet Ispat Ltd
Essar Steel
Alok industries
Jyoti structures
Bhushan Power & Steel Ltd
Jaypee Infratech Ltd
Liquidation value suggests banks adequately provided; expect write-backs
across most banks
For the cases that have been successfully resolved, the liquidation value as a
percentage of the total claims admitted works out to be ~24%, while the realization
was ~1.8x of the liquidation value (~1.4x excluding RBI List-1 a/c). Healthy PCR by
banks in the range of 73–92% on NCLT accounts suggests the banks are adequately
provided—we expect most banks to witness write-backs as the accounts get
resolved. We expect SBIN, BoB, and BOI to be the key beneficiaries, while ICICIBC
would gain among the private banks.
Liquidation value as a
percentage of total claims
stands at 24%.
Exhibit 10:
Realization as a % of liquidation value
INRb
Claims admitted
Liquidation Value
Realization Value
LV as a % of claims
Realization as a % of LV
Metal
2,066.6
456.8
1,079.4
22%
236%
Non-Metal
2,034.2
526.7
707.9
26%
134%
Total
4,100.8
983.4
1,787.3
24%
182%
Total (Ex - RBI List 1)
1,731.8
304.2
426.2
18%
140%
Source: MOFSL, IBBI
22 May 2020
5
 Motilal Oswal Financial Services
Sector Update | Financials
Average time for resolution stands at ~410 days; ~309 days for liquidation
As of Mar’20, the average time taken for the resolution of cases stood at 410 days
v/s 387 days up to Dec’19 (including the days spent under litigation). This is longer
than the 270-day deadline, but much shorter than the ~4.3 year period before the
IBC’s establishment. The average time taken for the 914 liquidation orders
announced to date is 309 days.
Status of pending cases: 270-day timeline breached for ~34%
Of the 2,170 cases outstanding as of Mar’20, the 270-day timeline was breached for
~34%. The liquidation process was initiated for 914 cases, but the final report was
submitted for only 69 cases, with the 270-day timeline already breached for ~52% of
cases. This highlights the completion of the liquidation process is quite a long-drawn
affair.
Exhibit 11:
Status of ongoing CIRPs
Days elapsed
>270 days
>180 days and <270 days
>90 days and <180 days
<90 days
Total
No of CIRPs
738
494
561
377
2,170
Source: IBBI, MOFSL
Exhibit 12:
Status of liquidation process
Days elapsed
>270 days
>180 days and <270 days
>90 days and <180 days
<90 days
Total
No of CIRPs
443
143
138
121
845
Source: IBBI, MOFSL
COVID-19 outbreak to slow resolution process
The outbreak of COVID-19 has affected the pace of the IBC resolution process. The
finance minister announced several amendments, such as: a) the minimum
threshold would be increased to INR10m from INR0.1m, b) no new insolvency
proceedings would be initiated for up to one year, and c) COVID-19-related debt
would be kept out of the definition of default. While this is likely to slow the process
of resolution, it is necessary under the current circumstances. Furthermore, the
extension of the resolution timeline by 90 days from the existing 180 days would
ease the additional provisioning requirement, offering some respite on provisioning
to underlying banks.
ICICIBC and HDFCB remain our top picks.
Exhibit 13:
Bank-wise exposure of NCLT cases and accounts for which ICA is signed / likely to be signed
As on 3QFY20 (INRb)
NCLT List 1
NCLT List 2
Accounts filed by bank at NCLT
Accounts filed by other banks at NCLT
Total NCLT Exposure
PCR on above
Accounts for which ICA is signed/likely to be signed
GNPA
NNPA
PCR
PCR (incl. T/WO)
BOI
20.8
24.7
63.5
261.9
370.9
91.0%
150.0
617.3
201.1
67.4%
77.2%
SBIN
1,462.0
1,462.0
90.3%
305.2
1,596.6
582.5
63.5%
81.7%
INBK
16.5
7.3
10.6
54.7
89.0
72.5%
NA
138.6
64.9
53.2%
70.8%
BOB
57.8
64.4
59.8
320.9
502.9
89.0%
NA
731.4
265.0
63.8%
77.8%
PNB
63.4
41.7
70.7
174.8
330.1
251.9
505.9
75.0%
91.6%
NA
NA
499.2
768.1
215.1
305.2
56.9%
60.3%
67.4%
75.3%
Source: MOFSL, IBBI
UNBK
43.2
33.9
22 May 2020
6
 Motilal Oswal Financial Services
Sector Update | Financials
Quick recap of RBI’s revised Stressed Asset Resolution Framework
The RBI in its Jun’19 circular released a revised framework for the early recognition
and resolution of stressed assets, wherein:
Lenders would be allowed a ’30-day’ review period from the date of default (the
period from 1st Mar’20 to 31st May’20 shall be excluded) and would thereafter
have 180 days to implement the resolution plan
(270 days post the recent
amendment).
Lenders could choose to initiate legal proceedings for insolvency or agree on
other resolution plans v/s the earlier requirement of mandatorily referring the
stressed asset to the IBC if the resolution plan is not implemented within 180
days (270 days post the recent amendment).
The approval requirement for arriving at a resolution plan has been lowered to
75% by value and 60% by number v/s the earlier requirement of 100% creditor
approval.
Incremental provisioning at 20% has been proposed if the resolution plan is
not implemented within 180 days (270 days post the recent amendment) / for
35% if the implementation is delayed beyond 365 days from the
commencement of the review period.
Incentives would be provided for taking the IBC route through the allowance
write-backs on additional provisions made on the stressed accounts.
22 May 2020
7
 Motilal Oswal Financial Services
Sector Update | Financials
Exhibit 14:
Quick recap of the Jun’19 circular, along with the recent amendments
June'19 Circular
All scheduled commercial banks
All Indian financial institutions (EXIM, NABARD, NHB)
Small financial banks
Systemically important deposit-taking and Non-deposit-taking
NBFCs
Since the default with any lender is a lagging indicator of financial
stress faced by the borrower, it is expected that the lenders
initiate the process of implementing RP even before a default.
Once a borrower is in default by any of the lenders, the lenders
shall undertake a review of the account within 30 days of such
default. During this period of 30 days, lenders may choose to
initiate legal proceedings for insolvency or recovery.
Applicability
Implementation
of RP before
default
Review
period
Inter-creditor
agreement
(ICA) norms
The accounts that were
under review, the period
from 1 Mar’20–31 May’20
shall be excluded from the
calculation of 30 days.
st
st
The approval of 75% of lenders by value (fund + non-fund) and
60% by number is required.
RP is deemed to be implemented only if:
RP which does not involve restructuring / change in ownership
shall be deemed to be implemented only if the borrower is not in
default with any of the lenders as of the 180th day from the end of
Implementation
the review period. (Any subsequent default after the 180-day
condition for RP
period shall be treated as a fresh default, triggering a fresh
review.)
RP which involves restructuring: all the documentation / necessary
formalities are completed.
RP shall be implemented within 180 days from the end of the review
period in respect of accounts with aggregate exposure above the
Reference
threshold specified. The review period shall commence not later than:
date
the reference date, if already in default as of the reference date,
the date of first default after the reference date.
When RP in respect of a borrower is not implemented within the
timelines given below, all lenders shall make additional provisions as
Additional
under:
provisions
180 days from the end of the review: 20% on total outstanding,
on delayed
365 days from the commencement of the Review Period: 15% on
implementation
total additional outstanding
(i.e., total additional provisioning of 35%).
Additional provisions made may be reversed if:
When RP involves only payment of overdues by the borrower: only
if the borrower is not in default for a period of six months from the
date of clearing of the overdues with all the lenders.
When the RP involves restructuring: the additional provisions may
Reversal of
be reversed upon the implementation of RP.
additional
When the resolution is pursued under IBC: 50% of the additional
provisions
provisions may be reversed on filing of insolvency application and
the balance 50% may be reversed upon admission of the borrower
into the insolvency resolution process under the IBC.
The additional provision may be reversed upon completion of the
assignment of debt / recovery.
Account may be upgraded only when:
Conditions
all the outstanding loans/facilities in the account demonstrate
for
satisfactory performance from the date of implementation of the
Upgrade
RP up to the date by which at least 10% of the sum of the
outstanding principal debt and interest, if any, are repaid.
For accounts under the
resolution period, the timeline
would be extended by 90
days, i.e., the resolution plan
would now have to be
implemented within 270 days.
Thus, the period for additional
provisioning of 20% would get
extended by 90 days.
Source: RBI, MOFSL
22 May 2020
8
 Motilal Oswal Financial Services
Sector Update | Financials
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
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 does not have financial interest in the subject company, as they do not 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 not 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
22 May 2020
9
 Motilal Oswal Financial Services
Sector Update | Financials
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
- 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.
22 May 2020
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