Sector Update | 14
| Financials
Sector Update
June 2020
Financials
Technology
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Supreme Court rules out complete interest waiver
Relief for banking system; Potential impact significantly reduced
The Honourable Supreme Court (SC) has ruled out the possibility of a complete interest
waiver during the moratorium period on 12th Jun’20. This is in line with
our earlier report,
which highlights miniscule probability of a complete interest waiver. Further, the SC has
added that the scope of hearing is limited to the interest waiver, which is levied on
accrued interest. The SC has also asked the Finance Ministry and the RBI to meet within
three days to decide on the matter and has deferred the hearing to 17th Jun’20.
This comes as a sign of relief to the banking system, which otherwise would have faced
significant operating losses coupled with triggered capital calls across banks. Our analysis
shows that the interest forgone on the accrued interest in the moratorium book for a
period of six months could impact FY21 operating profits in the range of 0.5-2.6% while
PBT could get impacted in the range of 0.7-9.0%.
Impact of Interest waiver on
accrued interest on coverage
banks
FY21 (%)
BoB
DCBB
PNB
RBK
BANDHAN
FB
SBIN
IIB
AXSB
AUBANK
ICICIBC
KMB
HDFCB
Interest waiver on
accrued Interest for
6m
% of PPoP % of PBT
1.8%
9.0%
2.6%
6.6%
1.3%
6.1%
1.0%
3.8%
2.4%
3.4%
1.1%
2.4%
0.5%
1.6%
0.9%
1.4%
0.5%
1.4%
0.8%
1.2%
0.5%
1.1%
0.5%
0.7%
0.5%
0.7%
SC rules out complete interest waiver; next hearing on 17
th
Jun’20
In the hearing on 12
th
Jun’20, the SC has ruled out the possibility of a complete
waiver of interest during the moratorium period. The SC has added that the scope of
hearing is limited to the waiver of interest, which is levied on the accrued interest.
The SC has asked the Finance Ministry and the RBI to hold a meeting within three
days to decide on the matter and has deferred the hearing to 17
th
Jun’20. The
government has further stated that it would hold a meeting of the stakeholders
(including the RBI, banks and the Finance Ministry) this weekend to arrive at a
response and would submit it to the SC by 17
th
Jun’20.
Waiver of interest on accrued interest to impact PBT in the range of 0.7%-9.0%
We have now re-assessed the impact of this judgment on our coverage universe.
Our analysis shows that the NPV of the interest forgone on the accrued interest in
the moratorium book for a period of six months could impact FY21 operating profits
in the range of 0.5-2.6% and would have a slight bearing on margins. The
incremental interest that would be lost – if the interest on accrued interest is
waived off – forms 0.7-8.1% of FY21 provisions and constitutes 0.7-9.0% of a bank’s
FY21 PBT.
Our analysis suggests an EMI increase of ~8%/17% for home/car loans and ~214%
for MFI loans; tenure could increase by 1-8 months
Further, we have analyzed the probable impact of the moratorium on borrowers
considering there would be some restructuring in the EMI/tenure of the loan. We
have taken a car loan, home loan and MFI loan as samples to assess the impact on
revised EMI/tenure (For
details refer page 4).
Home loans could see 7.6% increase in EMI; tenure could increase by 8
months:
We have taken a sample home loan of INR5m with an interest rate of
8% and tenure of 15 years. Note that after availing the moratorium, for a
borrower who has already paid 60 installments, the EMI could increase by ~7.6%
with constant total tenure.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
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.
14 June 2020
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
Further, if we keep the EMI constant, then the loan tenure could increase by an
additional 8 months (14 months including the moratorium period of 6 months).
Car loans could see ~17% increase in EMI; tenure could increase by 3 months:
We have taken a sample car loan of INR0.5m with an interest rate of 9% and
tenure of 5 years. We note that after availing the moratorium, for a customer
who has already paid 12 installments, the EMI could increase by ~16.9% with
constant total tenure. Further, if we keep the EMI constant, then the loan
tenure could increase by an additional 3 months (9 months including
moratorium period of 6 months).
MFI loans could see 214% rise in EMI; tenure could increase by 1 month:
We
have taken a sample MFI loan of INR50k with an interest rate of 20% and tenure
of 1 year. We note that after availing the moratorium, for a customer who has
already paid 3 installments, the EMI could increase by ~214% with constant total
tenure. Further, if we keep the EMI constant, then the loan tenure could
increase by a mere 1 month (7 months including the moratorium period of 6
months).
View
The SC has stated that the scope of hearing is limited to the interest waiver, which
is levied on accrued interest. This has significantly reduced the potential impact on
the banking system and brought a huge relief to banks, as many banks would have
seen capital calls getting triggered.
Loan waivers in the past have impacted credit
behavior, and thus, this event remains important from the credit behavior
perspective within both moratorium and regular paying loans. According to our
assessment, the impact of potential interest waiver on accrued interest will be quite
manageable at 0.7-1.6% of PBT for large private banks and SBIN.
We continue to
maintain our preference for ICICIBC, HDFCB and SBIN.
Exhibit 1: Chronology of events in the interest waiver plea at Supreme court
Date
27
th
Mar’20
26
th
May’20
3
rd
June’20
4
th
June’20
12
th
June’20
Events
Plea filed by Mr. Gajendra Sharma for interest forgo during the moratorium period
The court asked RBI response on the plea seeking interest waiver on the moratorium on term loans
RBI filed a counter affidavit against the interest waiver
SC asked Finance Ministry to intervene and submit a joint response with the RBI; next hearing scheduled on 12th June’20
SC ruled out complete waiver of interest. The question remains on the waiver of interest charged on accrued interest
Government to hold a meeting with Finance Ministry and RBI; next hearing scheduled on 17
th
Jun’20
Source: Media articles, MOFSL
Moratorium book for the
banking system stands at
~39% of the total book
Exhibit 2: As per our assessment waiver of interest on accrued interest for six months on
moratorium loans could impact the banking system by ~INR102b – equates to ~0.8% of
systemic net-worth
Systemic Level
Advances as on Feb'20
Moratorium availed (%)
Moratorium book
Monthly Interest waiver
Total interest waiver for 6 months
Waiver of Interest on accrued interest for 6 months (Present Value)
Total Net-worth as on FY19
Interest waiver as a % of net-worth
INR t
101.0
39%
38.6
0.34
2.01
0.10
13.31
0.8%
Source: RBI, MOFSL, Media articles
14 June 2020
2
 Motilal Oswal Financial Services
Sector Update | Financials
Exhibit 5: Snapshot of moratorium availed by customers and COVID related provisions made by banks
Moratorium availed
FY20 (INRb)
AXSB
BANDHAN
DCBB
HDFCB**
ICICIBC
IIB*
KMB
YES
FB
RBK
AUBANK
Equitas
UJJIVAN
SBIN***
SBI Cards
Advances
5,714.2
666.3
253.5
9,937.0
6,452.9
2,067.8
2,197.5
1,714.4
1,222.7
580.2
269.9
137.5
140.4
23,252.9
228.1
as a % of
customers
10%-12%
NA
NA
NA
NA
NA
NA
15%-25%
NA
NA
~29%
~98.3%
NA
~22%
~20%
as a % of loans In value terms
25%-28%
~71%
~60%
NA
~30%
~5%
~26%
35%-45%
~35%
~33%
~25%
~93%
~90%
~23%
~17%
1,428.6
473.1
152.1
NA
1,935.9
57.7
571.3
685.8
427.9
191.5
67.5
127.8
126.4
5,348.2
38.0
COVID-
19/Standstill
related
30.0
6.9
0.6
15.5
27.3
2.8
6.5
2.4
0.9
1.2
1.4
1.0
0.7
9.4
4.9
Provisions
Contingent
29.8
NA
1.0
44.5
NA
NA
NA
NA
0.1
NA
NA
NA
NA
NA
NA
Total
59.8
6.9
1.6
60.0
27.3
2.8
6.5
2.4
1.0
1.2
1.4
1.0
0.7
9.4
4.9
*For IIB, the proportion of customers availing moratorium is as a proportion of vehicle financing, MFI and unsecured loans. The bank indicated
that very few corporates have applied for the moratorium
**For HDFCB, Contingent provisions includes floating provision of INR14.5b
***For SBIN, moratorium book does not include Agri segment while no clarity on inclusion of working capital loans
Source: MOFSL, Company
Waiver of interest on
accrued interest on
moratorium loans for a
period of 6m could result in
an impact of 0.9%-8.1% in
provisions
Exhibit 6: Waiver of interest on accrued interest on moratorium book for 6m could impact
0.5%-2.6%% of PPoP while impact to PBT could be in the range of 0.7%-9.0%
FY21 (%)
AXSB
DCBB
BANDHAN
HDFCB*
ICICIBC
IIB*
KMB
FB
RBK
AUBANK
BoB
PNB
SBIN
Interest waiver on accrued interest for 6 m
% of NII
0.5%
1.5%
2.0%
0.4%
0.5%
0.8%
0.4%
0.7%
0.7%
0.5%
1.3%
1.1%
0.3%
% of PPoP
0.5%
2.6%
2.4%
0.5%
0.5%
0.9%
0.5%
1.1%
1.0%
0.8%
1.8%
1.3%
0.5%
% of Prov.
0.9%
4.3%
8.1%
1.7%
1.1%
2.2%
1.9%
1.9%
1.3%
2.1%
2.2%
1.7%
0.7%
% of PBT
1.4%
6.6%
3.4%
0.7%
1.1%
1.4%
0.7%
2.4%
3.8%
1.2%
9.0%
6.1%
1.6%
Note: We have taken the respective banks YOA for purpose of interest calculations and calculated the
NPV to arrive at the impact since interest income would have been earned in a deferred manner.
Actual
impact may vary given the assumptions in our calculation.
*For HDFCB and IIB we have taken the
average moratorium of private banks for the purpose of our calculation.
Source: MOFSL, Company
14 June 2020
3
 Motilal Oswal Financial Services
Sector Update | Financials
Change in EMI for MFI loans
stands much higher at 214%
as the overall loan tenure is
short; if the period is
increased by additional 3m,
the EMI could increase by
~61%
Exhibit 7: Change in EMI (keeping loan tenure unchanged): We note that the EMI for home
loans could increase by ~7.6% while the EMI for car loans could increase by ~17%
EMI
INR
Car Loan
INR0.5m
INR0.8m
Home Loan
INR5m
INR7m
MFI Loan
INR50k
INR70k
MFI Loan (If period is increased by additional 3m
)
INR50k
INR70k
4,632
6,484
7,459
10,443
61.0%
61.0%
4,632
6,484
14,557
20,380
214.3%
214.3%
47,783
66,896
51,408
71,972
7.6%
7.6%
10,379
16,607
12,136
19,418
16.9%
16.9%
Original
Revised
Change (%)
Source: MOFSL, Company
Change in tenure for MFI
loans stands lowest with an
additional EMI of just one
month (excluding the
moratorium period)
Exhibit 8: Change in loan tenure (keeping EMI unchanged): We note that the tenure for car
loans could increase by 3 months while for home loans could increase by 8 months
Tenure (In months)
INR
Car Loan
INR0.5m
INR0.8m
Home Loan
INR5m
INR7m
MFI Loan
INR50k
INR70k
12
12
19
19
58.2%
58.2%
Source: MOFSL,
180
180
194
194
7.5%
7.5%
60
60
69
69
14.4%
14.4%
Original
Revised*
Change (%)
*Revised tenure includes the moratorium period of 6 months
Company
Assumptions
We have assumed that the interest rate remains the same post restructuring of
loans
For car/home/MFI loans, we have assumed a total tenure of 5Yr/15Yr/1Yr
respectively
For car/home/MFI loans, we have assumed that the customer has paid EMI for a
period of 12m/60m/3m respectively before availing the moratorium
14 June 2020
4
 Motilal Oswal Financial Services
Sector Update | Financials
A sample EMI schedule for a car loan
Exhibit 9: Loan amount: INR0.5m, Rate of Interest: 9%, Tenure: 5Yr (60m). The loan gets restructured after 12months before
availing moratorium of 6months while the total tenure remain the same
Original Loan Schedule
Months
1
2
3
Principal
6,629
6,679
6,729
Interest
3,750
3,700
3,650
EMI
10,379
10,379
10,379
Balance Principal
493,371
486,692
479,963
NA
NA
NA
Revised Loan Schedule
Principal Interest
NA
NA
NA
EMI
NA
NA
NA
Balance Principal
NA
NA
NA
12
13-18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
7,197
7,584
7,640
7,698
7,755
7,814
7,872
7,931
7,991
8,051
8,111
8,172
8,233
8,295
8,357
8,420
8,483
8,547
8,611
8,675
8,740
8,806
8,872
3,182
2,796
2,739
2,681
2,624
2,566
2,507
2,448
2,388
2,329
2,268
2,207
2,146
2,084
2,022
1,959
1,896
1,833
1,769
1,704
1,639
1,573
1,507
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
417,085
365,171
357,531
349,833
342,078
334,264
326,392
318,461
310,470
302,419
294,308
286,136
277,903
269,608
261,251
252,832
244,349
235,802
227,191
218,516
209,776
200,970
192,098
NA
8,867
8,934
9,001
9,068
9,136
9,205
9,274
9,343
9,413
9,484
9,555
9,627
9,699
9,772
9,845
9,919
9,993
10,068
10,144
10,220
10,296
10,374
NA
3,269
3,202
3,135
3,068
3,000
2,931
2,862
2,793
2,723
2,652
2,581
2,509
2,437
2,364
2,291
2,217
2,143
2,068
1,992
1,916
1,840
1,762
NA
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
NA
426,987
418,053
409,052
399,984
390,848
381,643
372,369
363,026
353,612
344,128
334,573
324,946
315,247
305,475
295,630
285,711
275,718
265,650
255,506
245,286
234,990
224,616
Moratorium availed for the period of six months
50
51
52
53
54
55
56
57
58
59
60
9,560
9,632
9,704
9,777
9,850
9,924
9,999
10,074
10,149
10,225
10,302
819
747
675
602
529
455
381
306
230
154
77
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
10,379
99,636
90,004
80,300
70,523
60,672
50,748
40,750
30,676
20,527
10,302
0
11,179
11,262
11,347
11,432
11,518
11,604
11,691
11,779
11,867
11,956
12,046
958
874
789
704
618
532
445
357
269
180
90
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
12,136
116,502
105,239
93,893
82,461
70,943
59,339
47,648
35,869
24,002
12,046
0
Source: MOFSL
14 June 2020
5
 Motilal Oswal Financial Services
Sector Update | Financials
A sample EMI schedule for a home loan
Exhibit 10: Loan amount: INR5m, Rate of Interest: 8%, Tenure: 15Yr (180m). The loan gets restructured after 60months before
availing moratorium of 6months while the total tenure remain the same
Original Loan Schedule
Months
1
2
3
Principal
14,449
14,546
14,643
Interest
33,333
33,237
33,140
EMI
47,783
47,783
47,783
Balance Principal
4,985,551
4,971,005
4,956,363
NA
NA
NA
Revised Loan Schedule
Principal Interest
NA
NA
NA
EMI
NA
NA
NA
Balance Principal
NA
NA
NA
60
61-66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
21,385
22,403
22,552
22,702
22,854
23,006
23,160
23,314
23,469
23,626
23,783
23,942
24,101
24,262
24,424
24,587
24,751
24,916
25,082
25,249
25,417
25,587
25,757
26,398
25,380
25,231
25,080
24,929
24,776
24,623
24,469
24,313
24,157
23,999
23,841
23,681
23,520
23,359
23,196
23,032
22,867
22,701
22,534
22,365
22,196
22,025
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
3,938,313
3,784,575
3,762,023
3,739,321
3,716,467
3,693,461
3,670,301
3,646,987
3,623,518
3,599,892
3,576,109
3,552,167
3,528,065
3,503,803
3,479,379
3,454,793
3,430,042
3,405,126
3,380,044
3,354,795
3,329,378
3,303,791
3,278,034
NA
24,103
24,263
24,425
24,588
24,752
24,917
25,083
25,250
25,419
25,588
25,759
25,930
26,103
26,277
26,452
26,629
26,806
26,985
27,165
27,346
27,528
27,712
NA
27,306
27,145
26,983
26,820
26,656
26,491
26,325
26,158
25,990
25,820
25,650
25,478
25,305
25,131
24,956
24,780
24,602
24,423
24,243
24,062
23,880
23,697
NA
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
NA
4,071,743
4,047,480
4,023,054
3,998,467
3,973,715
3,948,798
3,923,715
3,898,465
3,873,046
3,847,458
3,821,700
3,795,769
3,769,666
3,743,389
3,716,937
3,690,308
3,663,502
3,636,517
3,609,352
3,582,006
3,554,478
3,526,766
Moratorium availed for the period of six months
170
171
172
173
174
175
176
177
178
179
180
44,415
44,711
45,009
45,309
45,611
45,915
46,221
46,529
46,840
47,152
47,466
3,368
3,072
2,774
2,474
2,172
1,867
1,561
1,253
943
631
316
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
47,783
460,763
416,052
371,043
325,734
280,123
234,208
187,987
141,458
94,618
47,466
(0)
47,785
48,103
48,424
48,747
49,072
49,399
49,728
50,060
50,394
50,730
51,068
3,623
3,305
2,984
2,661
2,336
2,009
1,680
1,348
1,015
679
340
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
51,408
495,725
447,622
399,197
350,450
301,379
251,979
202,251
152,191
101,797
51,068
0
Source: MOFSL
14 June 2020
6
 Motilal Oswal Financial Services
Sector Update | Financials
A sample EMI schedule for a MFI loan
Exhibit 11: Loan amount: INR50k, Rate of Interest: 20%, Tenure: 1Yr (12m). The loan gets restructured after 3months before
availing moratorium of 6months while the total tenure remain the same
Original Loan Schedule
Months
1
2
3
4-9
10
11
12
4,408
4,481
4,556
224
151
76
4,632
4,632
4,632
Principal
3,798
3,862
3,926
Interest
833
770
706
EMI
4,632
4,632
4,632
Balance Principal
46,202
42,340
38,414
9,037
4,556
0
Principal
NA
NA
NA
13,853
14,084
14,319
Revised Loan Schedule
Interest
NA
NA
NA
704
473
239
EMI
NA
NA
NA
14,557
14,557
14,557
Balance Principal
NA
NA
NA
28,402
14,319
-
Source: MOFSL
Moratorium availed for the period of six months
Exhibit 12: Loan amount: INR50k, Rate of Interest: 20%, Tenure: 1Yr (12m). The loan gets restructured after 3months before
availing moratorium of 6 months while the total tenure is increased by additional 3 months
Original Loan Schedule
Months
1
2
3
4-9
10
11
12
13
14
15
4,408
4,481
4,556
NA
NA
NA
224
151
76
NA
NA
NA
4,632
4,632
4,632
NA
NA
NA
Principal
3,798
3,862
3,926
Interest
833
770
706
EMI
4,632
4,632
4,632
Balance Principal
46,202
42,340
38,414
9,037
4,556
0
NA
NA
NA
Principal
NA
NA
NA
6,755
6,867
6,982
7,098
7,216
7,337
Revised Loan Schedule
Interest
NA
NA
NA
704
592
477
361
243
122
EMI
NA
NA
NA
7,459
7,459
7,459
7,459
7,459
7,459
Balance Principal
NA
NA
NA
35,500
28,633
21,651
14,553
7,337
0
Source: MOFSL
Moratorium availed for the period of six months
14 June 2020
7
 Motilal Oswal Financial Services
Sector Update | Financials
NOTES
14 June 2020
1
 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
14 June 2020
2
 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.
14 June 2020
3