March 2021 Results Preview | Sector: Financials
Financials: Banks and Insurance
Result Preview
Earnings outlook steady; will optimism turn into reality in FY22E?
Asset quality under watch, resumption of AQ classification to aid clarity
4QFY21 earnings estimate (INR b)
4Q
YoY
PAT (INR b)
FY21E
(%)
Private Banks
AUBANK
AXSB
BANDHAN
DCBB
EQUITAS
FB
HDFCB
ICICIBC
IIB
KMB
RBK
Private Total
PSU Banks
BOB
SBIN
PSU Total
Banks Total
Other Financials
SBICARD
Life Insurance
HDFCLIFE
IPRULIFE
SBILIFE
MAXF
Life Total
3.54
3.01
3.76
2.70
13.01
13.5
67.5
-29.1
16.8
3.8
2.63
214.3
9.25
76.61
85.86
283.84
82.6
113.9
110.1
108.3
2.64
16.29
4.45
0.62
1.02
4.48
86.89
51.57
8.87
19.56
1.60
197.98
116.2
NM
-14.0
-10.5
36.0
48.7
25.4
322.2
181.6
54.4
39.6
107.5
QoQ
(%)
-44.8
45.8
-29.7
-36.0
-7.7
10.9
-0.8
4.4
6.9
5.5
8.6
2.2
-12.8
47.4
37.2
10.8
25.2
33.5
-1.6
61.6
22.7
27.1
The improvement in earnings outlook
is led by a continued uptick in economic
recovery and abating concerns around asset quality. Systemic loan growth is
showing signs of a revival, with disbursement across various retail products –
such as 2W, Home, Auto, LAP, and Gold loans – surpassing pre-COVID levels,
while Banks remain cautious on the unsecured book. Even growth in the
corporate segment is showing revival signs, with a focus on lending to highly
rated corporates mainly for working capital needs. We expect growth to pick up
and estimate systemic loan growth at 6.8%/11% for FY21E/FY22E. Private Banks
under our coverage are likely to grow relatively higher by ~11%/17% YoY.
AQ classification to resume, expect a slight uptick in GNPL ratios (over pro
forma levels):
The focus is likely to shift towards actively pursuing recovery
efforts as the SC stay on NPA recognition stands withdrawn. Thus, lenders would
recognize actual NPAs, which would keep slippages/asset quality elevated,
though the pace of formation is likely to moderate. Although overall trends in
asset quality have fared better than expectations, led by a sharp improvement
in collection efficiency and a lower restructuring book, the recent surge in
COVID-19 cases and the fear of a lockdown in key districts keep us watchful on
asset quality. While many Banks have already provided for this likely increase
and carry additional provision buffers, which should limit the impact on
profitability, we expect them to continue to strengthen their balance sheets and
credit cost to remain elevated. We estimate our Banking coverage universe to
deliver ~17%/108% PPOP/PAT growth in 4QFY21E (on a low base).
Private Banks: Operating profitability to improve while provisions would
remain elevated.
We
estimate Private Banks to report PPOP growth of ~19%
YoY (+2.7% QoQ) and PAT growth of ~108% YoY (+2.2% QoQ) due to a low
base in 4QFY20.
Although credit cost is likely to remain higher, a pick-up in loan
growth along with healthy traction in fee income and modest opex would
support earnings.
Loan growth is likely to pick up,
led by rising consumer demand, particularly
in the Retail segment. Even growth in the Corporate segment is recovering,
with the focus on lending to highly-rated corporates. Banks, however,
remain cautious about growing their unsecured portfolio.
We expect loans
of Private Banks to grow by 11%/17% over FY21E/FY22E,
and estimate
AXSB/ICICIBC to deliver 7.1%/13.5% YoY loan growth over 4QFY21E. HDFCB
reported a growth of 14% YoY (+4.6% QoQ) while FB/IIB reported sequential
growth of ~5%/3%. KMB is likely to report strong sequential growth (~5%)
while RBK is likely to report flattish growth.
Margin to exhibit stable/improving trends -
While continued monetary
easing has resulted in low lending rates, cost of funds is likely to remain low,
given the excess liquidity in the system. Although negative carry on
slippages could impact margins, gradual deployment of excess liquidity and
repricing of deposit base would support margins. Large Banks, with a strong
liability franchise, are better placed to tackle margin pressure.
We expect
NII growth of 15% YoY,
with BANDHAN ~27% and ICICIBC/KMB at 18% each.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
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)
April 2020
Investors are advised to refer through important disclosures made at the last page of the Research Report.
1
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Deposit traction would remain strong,
reflecting 12% YoY growth for the
system, while many Banks have increased focus on ramping up retail
deposits. Most Banks indicated that the deposit rates have bottomed out
and cost of funds is likely to remain low.
Asset quality would remain under watch
as lenders would recognize actual
NPAs as the stay on NPA recognition has ended. Though slippages would
remain higher, it is likely to moderate on a sequential basis. We remain
watchful of commentary given the rising COVID-19 cases and fear of a
lockdown in key districts. Within MFIs, elections, and rising COVID-19 cases
in key states could impact recovery trends. We remain watchful on
BANDHAN, IIB, and RBK.
PSBs earnings to show a healthy pick up.
We estimate operating metric for
PSBs to improve led by an improving overall environment. Within PSBs, we
expect SBIN to report healthy performance supported by the resolution of
Bhushan Power & Steel, which would result in healthy recoveries and a
seasonally strong quarter on fee income.
PSBs are expected to deliver NII/PPOP
growth of 27%/16% YoY and PAT growth of ~110% YoY (on a low base).
Asset quality challenges in mid-sized Private Banks remain a monitorable:
We
expect the performances of mid-sized Private Banks to remain mixed as they
face challenges on asset quality, given their high restructuring book and low
collection efficiency as compared to larger peers. We estimate DCB to report a
decline of ~11% YoY in net earnings, while RBK would report an increase of
~40% YoY (on a low base), despite higher credit cost. FB is best placed in terms
of liability franchise and would reflect a stable margin trajectory, led by an
improving CASA mix. It is likely to report earnings growth of ~49% YoY (+11%
QoQ) aided by healthy asset quality trends.
Small Finance Banks:
We expect AUBANK to report strong PPOP/PAT growth led
by an uptick in loan growth, while provisions are likely to moderate on a
sequential basis. EQUITAS is expected to report PPOP growth of 22% and PAT
growth of 36% YoY (-8% QoQ).
Life Insurers – premium growth to pick up while operating metrics remain
resilient.
Most Life Insurers are witnessing a gradual recovery in their new
business premium (NBP), with SBILIFE/HDFCLIFE/MAXF to reflect APE growth of
38%/31%/27% YoY. IPRU would continue to reflect tepid trends as FY21E is likely
to be a base reset period, reflecting a slowdown in ULIPs. We expect VNB
growth of 45%/42%/36% for MAXF/SBILIFE/HDFCLIFE, while IPRU would report
VNB growth of 17% YoY over 4QFY21E.
Other monitorables:
Asset quality outlook and restructuring trends
– The management
commentary on slippage/restructuring trends and provisioning would be an
important
metric given the rising COVID-19 cases and fear of lockdown in
key districts. More clarity would emerge in the restructuring pool.
Outlook on loan growth and margins
– The management commentary on
the growth outlook would be key to assess a recovery in the overall
environment.
Outlook on margins, given a pick-up in loan growth (as excess
liquidity gets deployed), lower lending rates, and lower cost of funds.
Treasury performance –
Bonds yield have increased during 4QFY21 which
could impact the treasury book and the gains which Banks were sitting on.
We expect the quantum of treasury gains to decline on a sequential basis.
April 2021
2
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Our top picks – ICICIBC, HDFCB, SBIN, FB, and MAXF
ICICIBC: Financial Snapshot (INR b)
Y/E March
FY21E FY22E FY23E
NII
391.2 463.4 549.9
OP
372.7 390.9 479.1
NP
169.5 217.7 274.5
NIM (%)
3.7
3.9
4.0
EPS (INR)
25.4 31.6 39.8
EPS Gr. (%)
106.6 24.5 26.1
ABV/Sh. (INR) 188.9 217.4 253.6
Cons. BV/Sh.INR 196.9 219.0 245.8
Ratios
RoE (%)
13.2 14.1 15.5
RoA (%)
1.4
1.6
1.8
Valuations
P/BV (x) (Cons.)
3.0
2.7
2.4
P/ABV (x)
2.3
2.0
1.7
P/E (x)
17.3 13.9 11.0
*Adjusted for Investment in
subsidiaries
HDFCB: Financial Snapshot (INR b)
Y/E March
FY21E FY22E FY23E
NII
651.4 797.4 950.1
OP
573.9 695.8 825.4
NP
316.2 387.8 464.2
NIM (%)
4.1
4.4
4.4
EPS (INR)
57.7 70.7
84.6
EPS Gr. (%)
20.0 22.7
19.7
BV/Sh. (INR) 359.9 420.4 494.2
ABV/Sh. (INR) 345.1 403.6 474.0
Ratios
RoE (%)
17.2 18.1
18.5
RoA (%)
1.9
2.0
2.1
Valuations
P/E(X)
25.7 21.0
17.6
P/BV (X)
4.1
3.5
3.0
P/ABV (X)
4.3
3.7
3.1
SBIN: Financial Snapshot (INR b)
Y/E March
FY21E FY22E FY23E
NII
1132.1 1240.0 1404.5
OP
734.4 805.5 930.2
NP
216.2 337.6 411.9
NIM (%)
3.1
3.1
3.1
EPS (INR)
24.2 37.8 46.2
EPS Gr. (%)
49.2 56.1 22.0
ABV (INR)
215.4 253.7 293.7
Cons. BV. INR 294.6 336.8 388.6
Ratios
RoE (%)
9.9 13.8 14.6
RoA (%)
0.5
0.7
0.8
Valuations
P/BV (x) Cons.
1.3
1.1
1.0
P/ABV (x)*
0.9
0.8
0.7
P/E (x)*
8.2
5.3
4.3
*Adjusted for investment in
subsidiaries
April 2021
ICICIBC (Buy)
ICICIBC has substantially increased its PCR to ~86% (pro forma PCR ~78% –
highest in the industry) and carries unutilized COVID-related provisions of
INR64.7b (~1% of loans). Slippages have been controlled, while restructuring
book stood lower ~0.4% of loans. It is well-cushioned with higher provisions on
its Balance Sheet and has guided for normalization of credit cost from FY22.
The bank continues to see strong growth in Retail deposits and has succeeded in
building a robust liability franchise over the past few years. It has one of the
lowest funding costs (with cost of deposits declining to 4%) among Private
Banks, enabling it to underwrite a profitable business without taking undue
Balance Sheet risks, thus supporting margin further.
The retail mix remains healthy with: a) CASA ratio of 45.2%, b) retail
contribution-to-fees ~78%, and c) increase in loan mix to ~66%.
ICICIBC appears firmly positioned to deliver healthy sustainable growth, led by
focus on core operating performance. We estimate RoA/RoE of 1.8%/15.5% for
FY23E. Adjusted for subsidiaries, the standalone bank trades at 1.7x FY22E ABV.
HDFCB (Buy)
HDFCB has shown robust traction in its Corporate portfolio, which is
compensating for the softness in Retail lending. Loan growth over FY21 YTD has
been largely led by the Corporate segment (53% of total loans). The
management continues to focus on lending to highly rated corporates, which
has enabled a sharp decline in RWA-to-total assets ratio to ~66% (v/s 75% in
FY19). Even the retail book witnessed revival trends, with disbursements
crossing pre-COVID levels.
Stress in the MSME segment declined to 2.3% v/s 9% as anticipated earlier,
while the impact on total asset quality due to COVID-19 remains under control,
with total restructuring at 0.5% of loans and pro forma slippages at INR49b. The
bank holds sufficient additional contingency provisions to manage residual
stress as business trends normalize fully. We estimate credit cost to sustain at
1.5% for FY21E and moderate to 1.3% by FY23E.
A strong liability franchise would support margin. The bank is, thus, well-placed
to gain incremental market share on both the asset and liability fronts. We
expect RoA/RoE of 2.1%/18.5% for FY23E. The bank trades at 3.1x FY22E ABV.
SBIN (Buy)
SBIN appears well-positioned to report a strong uptick in earnings as the
uncertainty ushered by the COVID-19 pandemic has receded significantly. Over
the years, SBIN has strengthened its Balance Sheet and increased its PCR
(including TWO) to 86%. It further holds a PCR of ~89% on Corporate NPAs.
It expects total COVID-19 impact on asset quality to be limited, with total
slippages + restructuring expected to remain ~2.5% for FY21E. It reported a
moderation in its pro forma GNPA/NNPA ratio, while the restructuring book was
controlled at 0.8% of loans. Domestic collection efficiency is in line with other
large Banks ~97%.
3
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
SBIN has one of the best liability franchises (CASA mix: ~45%). This puts it in a
better position to manage yield pressure, while a reduction in the interest rate
on deposits would continue to support margin to a large extent.
Subsidiaries – SBI MF, SBILIFE, and SBICARD – exhibited robust performances
over the last few years, which could result in value unlocking.
We estimate FY23E RoA/RoE of 0.8%/14.6%. Subsidiaries account for ~34% of
total valuation. Adjusted for subsidiaries, the standalone bank trades at 0.7x
FY22E ABV.
FB: Financial Snapshot (INR b)
Y/E March
FY21E FY22E FY23E
NII
55.8 64.7 76.8
OP
39.0 46.1 55.7
NP
15.6 22.4 28.8
NIM (%)
3.3
3.4
3.5
EPS (INR)
7.8 11.3 14.4
EPS Gr. (%)
1.0 43.8 28.2
BV/Sh. (INR)
80.1 90.1 102.8
ABV/Sh. (INR) 71.9 80.5 92.6
Ratios
RoE (%)
10.2 13.2 15.0
RoA (%)
0.8
1.1
1.2
Valuations
P/E(X)
10.1
7.0
5.5
P/BV (X)
1.0
0.9
0.8
P/ABV (X)
1.1
1.0
0.9
FB (Buy)
On the asset quality front, the impact from COVID-19 remains under control as
FB has no big ticket (>INR1b) accounts in its watch list. The management has
guided at a restructuring book of INR15-16b (1.3% of loans), while CE stood
~95%. We expect slippages to increase and credit cost to stay elevated for FY21E
as the focus remains on strengthening PCR. We expect the same to moderate
from FY22E.
CASA + retail TD constitutes ~90% of total deposits. FB saw a reduction in its
cost of deposits and has a lower cost of funds advantage as compared to other
mid-size Banks. This, along with a focus on cross-selling liability products to
corporate clients to garner salary accounts, would support margin.
FB has been taking a cautious approach in lending to high-rated corporates. The
mix of retail loans has improved to ~33% in 3QFY21 from 28.4% in FY19. Though
business growth remains subdued, we expect a gradual pick up in loan growth,
resulting in an improvement in overall operating performance.
We expect RoA/RoE of 1.2%/15% by FY23E. The stock currently trades at 0.9x
FY22E ABV.
MAXF (Buy)
MAXLIFE delivered a resilient performance amid a difficult macro environment,
reporting ~14% growth in individual APE in FY21 YTD v/s a decline of ~2% for
private players. Also, the market share in individual APE improved to ~6.4% in
FY21 YTD (~90bp increase over FY21 YTD).
The management increased its focus on the Protection and Non-PAR segments,
with their share increasing to ~31% in FY20 from ~16% in FY17. In the current
low business volumes, the share of Non-PAR and Protection increased sharply to
~49% as on 9MFY21. We believe MAXLIFE will continue to deliver better than
industry trends in both these segments.
The management has been making significant investments in growing its
proprietary channels – branch/employee count has increased by ~190/~5,600
over FY17-20 – which enabled it to steadily gain market share. Overall, these
contribute ~30% of total APE. The partnership with AXSB increases the long-
term growth visibility/cross-sell opportunity for MAXLIFE.
Distribution mix has started reflecting productivity gains, and increased focus
towards high margin products has enabled healthy expansion in VNB margin.
We expect margin to remain steady between 24% and 25%. This would enable
25% VNB CAGR over FY20-23E, while operating RoEV sustains ~21%. The stock
currently trades at 2.8x FY23E EV after considering 80% MFS stake and 20%
holding company discount.
MAXF: Financial snapshot (INR b)
Y/E March
FY21E FY22E FY23E
Net Premiums 187.2 219.8 263.6
Surplus/Deficit
12.7 13.9 20.3
Sh. PAT
6.9 9.4 11.8
NBP gr- unwtd. % 17.0 20.0 22.0
NBP gr.
–
APE % 13.9 21.2 23.0
Premium gr. %
15.7 17.4 20.0
VNB margin. %
26.0 24.9 24.5
RoE. %
26.0 24.9 24.5
RoEV. %
21.6 21.2 21.1
Total AUM
904.7 916.9 1,042.4
VNB
12.5 14.6 17.6
EV per share
274.6 326.2 388.9
Valuations
P/EV (x)
4.0 3.4
2.8
P/EVOP (x)
22.0 18.9 16.0
April 2021
4
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Exhibit 1:
4QFY21E earnings estimates
Private Banks
AU Bank
Axis Bank
Bandhan Bank
DCB Bank
Equitas Holdings
Federal Bank
HDFC Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank
RBL Bank
Pvt Banking Sector
PSU Banks
Bank of Baroda
State Bank
PSU Banking Sector
Banking Sector
Other Financials
SBI Cards & Payment
Life Insurance
HDFC Standard life
ICICI Prudential life
SBI life
Max Financial Services
Life Insurance
NII (INR m)
Mar’21
YoY (%)
6,935
25.0
76,454
12.3
21,377
27.2
3,394
4.8
5,293
16.0
14,698
20.9
173,847
14.3
105,620
18.3
35,085
8.6
42,124
18.3
9,429
-7.7
494,256
15.0
78,900
295,702
374,602
868,858
10,723
121,290
119,837
156,698
68,123
465,948
16.1
29.9
26.7
19.8
5.8
15.9
14.4
32.1
16.0
20.5
QoQ (%)
9.5
3.7
3.2
1.4
9.4
2.3
6.5
6.6
3.0
5.1
3.8
5.4
1.8
2.6
2.4
4.1
18.2
27.8
33.6
13.8
47.2
26.4
PPOP (INR m)
Mar’21
YoY (%)
4,605
45.8
63,220
8.0
19,585
28.8
2,365
11.5
2,692
22.1
9,997
4.2
155,566
20.0
94,154
27.4
30,256
5.9
33,103
21.5
8,107
7.8
423,651
18.5
56,444
215,873
272,318
695,968
10,349
4,023
3,198
3,925
NA
11,145
10.2
16.9
15.5
17.3
8.9
41.4
86.3
-24.8
NA
14.0
QoQ (%)
-47.2
3.7
2.3
-14.7
-2.1
3.8
2.4
6.8
2.1
7.4
0.7
2.7
1.0
24.5
18.8
8.4
11.1
50.7
-2.1
68.4
NA
34.8
PAT (INR m)
Mar’21
YoY (%)
2,644
116.2
16,285
NM
4,447
-14.0
615
-10.5
1,022
36.0
4,480
48.7
86,888
25.4
51,566
322.2
8,874
181.6
19,562
54.4
1,596
39.6
197,981
107.5
9,250
76,606
85,857
283,837
2,625
3,539
3,007
3,763
2,700
13,008
82.6
113.9
110.1
108.3
214.3
13.5
67.5
-29.1
16.8
3.8
QoQ (%)
-44.8
45.8
-29.7
-36.0
-7.7
10.9
-0.8
4.4
6.9
5.5
8.6
2.2
-12.8
47.4
37.2
10.8
25.2
33.5
-1.6
61.6
22.7
27.1
Note: For Life Insurance - NII represents net premium income, PPOP represents shareholder’s PBT, and PAT represents shareholder's profits
Exhibit 2:
Loan growth improves to 6.5%
Loans (INR t)
Chg YoY (%)
Exhibit 3:
Deposit growth remains healthy at 12.1%
Deposits (INR t)
Chg YoY (%)
Exhibit 4:
NIMs to exhibit stable/improving trends as loan growth picks up supported by lower cost of funds
PSU
4.1
4.1
4.0
4.1
4.0
3.9
3.9
4.1
3.9
3.9
4.0
4.0
Private
3.9
4.0
4.1
4.1
4.1
4.1
4.2
4.2
4.2
4.2
4.2
4.3
2.4
2.5
2.2
2.4
2.7
2.7
2.5
2.8
2.4
2.6
2.6
2.6
2.9
2.7
2.9
2.9
2.9
3.0
3.3
2.7
2.9
3.0
3.0
3.0
April 2021
5
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Exhibit 5:
Change in estimates across our Universe – modest cut in aggregate earnings with upgrades seen in FY22E
PAT (INR b)
Private Banks
AXSB
BANDHAN
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
EQUITAS
Total Private Banks
YoY growth
PSU Banks
BOB
SBIN
Total PSU Bank
YoY growth
Total for Banks
YoY growth
Other Financials
SBICARD
Old estimates
FY21E
FY22E
68.5
27.9
3.2
313.1
172.2
31.5
72.5
16.0
5.7
12.9
3.5
726.9
38.4%
27.2
221.1
248.3
65.1%
975.1
44.4%
12.2
134.6
45.9
3.8
379.0
213.7
65.7
85.1
22.3
10.1
11.8
4.7
976.9
34.4%
47.7
309.3
357.0
43.8%
1,333.9
36.8%
18.0
FY23E
188.1
61.4
5.1
452.5
268.6
81.9
100.5
28.6
15.1
15.6
6.0
1,223.3
25.2%
79.9
404.5
484.4
35.7%
1,707.8
28.0%
26.4
Revised estimates
FY21E
FY22E
55.4
25.5
3.2
316.2
169.5
28.9
72.4
15.6
5.9
12.7
3.7
708.9
35.0%
28.0
216.2
244.2
62.4%
953.1
41.1%
10.7
140.4
40.0
4.0
387.8
217.7
62.8
87.1
22.4
10.5
12.4
5.1
990.4
39.7%
44.1
337.6
381.6
56.3%
1,372.0
43.9%
17.8
FY23E
194.0
58.8
5.3
464.2
274.5
77.9
101.6
28.8
14.7
16.2
6.9
1,242.9
25.5%
74.8
411.9
486.7
27.5%
1,729.6
26.1%
26.1
Change (%)
FY21E
FY22E
-19.1
-8.7
1.0
1.0
-1.6
-8.1
-0.1
-2.3
4.8
-2.0
6.5
-2.5
4.3
-12.9
5.6
2.3
1.8
-4.4
2.3
0.4
4.1
5.1
8.9
1.4
FY23E
3.1
-4.2
4.1
2.6
2.2
-4.8
1.1
0.8
-2.3
4.2
13.9
1.6
3.0
-2.2
-1.6
-2.3
-7.7
9.1
6.9
2.9
-6.4
1.8
0.5
1.3
-12.0
-0.9
-0.9
Source: MOFSL, Company
Slippages to remain
elevated over FY21,
impacted by the COVID-19
outbreak
Exhibit 6:
Slippage ratio across Banks to normalize from FY22E
Slippage ratio (%)
AXSB
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
BoB
SBIN
FY17
6.1
1.8
1.4
7.5
1.4
1.2
1.6
2.5
1.7
3.5
7.0
FY18
8.2
1.9
2.1
6.1
2.6
1.0
2.7
1.9
2.1
6.0
8.4
FY19
3.0
1.9
1.9
2.0
3.3
0.9
1.6
1.8
2.5
3.0
1.6
FY20
3.7
2.7
1.9
2.2
3.0
1.4
1.7
6.2
2.5
3.4
2.2
FY21E
3.0
4.0
2.1
2.9
3.4
2.6
2.5
5.5
3.2
4.4
2.1
FY22E
2.4
3.3
2.0
2.5
2.5
1.6
2.0
4.1
2.3
3.8
2.2
FY23E
2.2
2.5
1.9
2.2
2.2
1.2
1.7
3.2
1.8
3.0
1.9
Source: MOFSL, Company
April 2021
6
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Credit cost to stay elevated
over FY21 as Banks would
look to provide for COVID-
related provisions
Exhibit 7:
Credit cost across Banks to normalize from FY22E
Credit cost (%)
AXSB
BANDHAN
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
BoB
SBIN
FY17
3.4
0.6
0.8
0.7
3.4
1.1
0.7
0.9
0.9
1.7
2.2
3.2
FY18
3.8
1.6
0.8
1.0
3.5
0.9
0.6
1.1
1.0
1.3
3.7
3.9
FY19
2.6
2.1
0.6
1.0
3.6
1.9
0.5
0.8
1.4
0.8
2.9
2.6
FY20
3.5
2.1
1.1
1.3
2.3
2.4
1.0
1.0
3.6
1.1
3.1
1.9
FY21E
2.9
4.9
1.9
1.3
2.3
3.6
1.2
1.4
3.9
2.2
2.3
1.9
FY22E
1.6
3.3
1.8
1.4
1.3
1.8
0.9
1.1
3.3
1.3
2.2
1.6
FY23E
1.3
1.9
1.4
1.3
1.2
1.6
0.7
1.0
3.0
1.1
1.9
1.2
Source: MOFSL, Company
Exhibit 8:
Pro forma asset quality ratios over 2Q and 3QFY21
Pro forma
asset quality
AXSB
BANDHAN
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
EQUITAS
BOB
SBIN
GNPA
4.28
1.54
2.39
1.37
5.36
2.32
2.70
NA
3.49
1.63
2.86
9.33
5.88
As of 2QFY21
NNPA
1.03
0.72
0.92
0.35
1.12
0.61
0.74
NA
1.49
0.53
1.45
2.67
2.08
GNPA
4.55
7.12
3.70
1.38
5.42
2.93
3.27
3.38
4.57
3.29
4.16
9.63
5.44
As of 3QFY21
NNPA
1.19
2.36
1.92
0.40
1.26
0.70
1.24
1.14
2.37
1.29
1.71
3.36
1.81
PCR
73.8
66.9
48.1
71.0
77.7
77.0
62.1
66.3
49.3
61.5
57.3
65.1
68.0
Difference
GNPA
NNPA
27
16
558
164
131
100
1
5
6
14
61
9
57
50
NA
NA
108
88
166
76
130
26
30
69
(44)
(27)
Source: MOFSL, Company
Banks carry higher provision
buffers to tackle COVID-
related stress
Exhibit 9:
Snapshot of additional provision buffers (excluding that on pro forma slippages)
as of 3QFY21
As of 3QFY21
AXSB
DCBB
HDFCB
ICICIBC
IIB
KMB
FB
RBK
AUBANK
EQUTAS
SBIN
Source: MOFSL, Company
Loans
(INR b)
5,828
253
10,823
6,990
2,071
2,141
1,255
564
303
168
23,681
Additional
provisions*
79.6
2.2
77.1
78.7
17.3
4.7
5.4
2.7
4.3
0.6
77.1
As a
As a percentage
As a percentage
percentage of
of pro forma
of loans
pro forma
GNPA
NNPA
1.4
27.4
108.2
0.9
23.6
45.5
0.7
51.6
178.0
1.1
18.2
81.7
0.8
28.4
119.0
0.2
6.6
17.5
0.4
12.7
37.6
0.5
10.2
20.1
1.4
41.9
108.7
0.3
7.9
18.4
0.3
5.8
18.0
*Additional provisions include COVID-related, excludes provisions on pro forma slippages
April 2021
7
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Exhibit 10:
Snapshot of the restructuring book across Banks
Restructuring book remains
under control (sub-1%) for
large Banks. Mid-size Banks
such as CUBK and DCB
could see higher
restructuring
INR b
KMB
ICICIBC
AXSB
HDFCB
IIB
CSBBANK
SBIN
AUBANK
IDFCB
FB
RBK
KBL
KVB
BOB
INBK
CBK
PNB
EQUITAS
CUBK
BOI
DCBB
YES
UJJIVAN
Absolute
6.0
25.5
27.1
54.1
12.4
0.9
181.3
2.5
8.8
10.7
5.6
6.9
6.8
95.0
55.8
108.4
120.0
3.4
8.1
93.6
6.9
80.6
8.5
Actual as
of Dec'20 (%)
0.28
0.40
0.42
0.50
0.60
0.72
0.77
0.80
0.80
0.90
1.00
1.28
1.31
1.40
1.62
1.62
1.82
1.97
2.21
2.54
2.70
4.75
6.25
Outlook for
Mar'21 (%)
Similar levels
0.40
0.42
Similar levels
1.80
Similar levels
1.50
2.00
1.30
1.50
3.32
5.00
Source: MOFSL, Company
Exhibit 11:
Snapshot of collection efficiency across Banks as of 3QFY21
Collection efficiency
AXSB
HDFCB
IIB
KMB
DCBB
FB
RBL
AUBANK
BANDHAN
BOB
SBIN
(%)
98
97
97
NA
NA
95
NA
97
92
93
96.5
Comments
Demand resolution stood at 98% as of Dec’20 (97% prior to the COVID-19 outbreak)
Collection trends at 97% (98% prior to the COVID-19 outbreak)
For Vehicles, CE stands at 96.9%. For MFIs, it stands at 94.4% (v/s 95.5% in Jan’21)
CE touched pre-COVID levels in the secured book. The same is slightly below the unsecured
book
CE at 94%/90%/80% for Home/Business/CV loans
Collections have touched pre-COVID levels
a) MFIs at 92%, b) Credit Cards at pre-COVID levels
The customer activation rate in Dec’20 improved to 84% (normalized levels)
Around 80% customers made full payments, while 12-13% made partial payments. For MFIs,
it stands at 90% as on 16th Jan'21 (92% in Dec'20)
About 95% of Corporate book
Represents CE in the domestic loan book (excluding the Agri segment)
Source: MOFSL, Company
April 2021
8
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Exhibit 12:
Retail loan growth improves to 9.6%; retail mix
rises ~930bp to 29.2% from 19% in FY15
Agri
30%
20%
10%
0%
-10%
Industry
Services
Retail
Exhibit 13:
Housing/Vehicle growth rises to ~8% YoY; Credit
Card growth modest ~5%
Retail
50.0%
35.0%
20.0%
5.0%
-10.0%
Housing
Credit Card
Vehicle YoY
Source: MOFSL, RBI
Source: MOFSL, RBI
Exhibit 14:
CD ratio at decade lows of ~72% (barring
demonetization)
82.0%
78.5%
75.0%
71.5%
68.0%
CD Ratio (%)
Exhibit 15:
Three-year G-Sec yield increased 50bp over
4QFY21; currently stands at 4.9%
9.0
7.5
6.0
4.5
3.0
Gvt 3 Yr Bond Yield
4.9
Source: MOFSL, BBG
Source: MOFSL, BBG
Exhibit 16:
Five-year G-Sec yield increased 90bp over
4QFY21; currently stands at 6.0%
9.0
7.8
6.5
5.3
4.0
Exhibit 17:
10-year G-Sec yield increased 30bp over 4QFY21;
currently stands at 6.2%
9.5
8.5
Govt 10yr bond yield
6.0
7.5
6.5
5.5
6.2
Source: MOFSL, BBG
Source: MOFSL, BBG
April 2021
9
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Exhibit 18:
Relative performance – three-months (%)
Nifty Index
112
108
104
100
96
MOFSL Financials Index
Exhibit 19:
One-year relative performance (%)
200
170
140
110
80
Nifty Index
MOFSL Financials Index
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 20:
Valuation summary
Company Name
Financials
Banks-Private
AU Small Finance
Axis Bank
Bandhan Bank
DCB Bank
Equitas Holdings
Federal Bank
HDFC Bank
ICICI Bank
IndusInd Bank
Kotak Mahindra Bank
RBL Bank
SBI Cards
South Indian Bank
Banks-PSU
Bank of Baroda
State Bank
Insurance
HDFC Life Insur.
ICICI Pru Life
Max Financial
SBI Life Insurance
CMP
(INR)
Reco
EPS (INR)
PE (x)
PB (x)
ROE (%)
FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
28.1
52.6 30.8
63.4 37.9
36.5 22.2
17.1 10.2
20.2
8.0
14.4 10.1
84.6 25.8
39.8 23.4
103.0 24.9
69.8 36.3
24.7 21.8
27.8 85.4
2.7
5.5
12.1
16.2 12.5
54.7 12.0
70.3
10.1 100.2
16.5 53.0
27.5 55.2
17.8 68.4
20.2
31.7
15.5
14.1
8.1
5.8
7.0
21.0
18.8
12.0
30.3
12.3
51.4
4.3
8.2
7.9
8.2
55.4
77.3
37.0
40.5
66.2
16.1
24.2
11.3
9.6
6.1
4.4
5.5
17.6
14.9
9.6
25.9
8.8
35.0
3.2
6.5
4.7
6.8
43.6
68.5
27.0
32.0
49.5
3.4
6.3
2.2
3.3
0.9
1.0
1.0
4.1
2.8
1.9
4.7
1.0
14.5
0.3
1.1
0.5
1.3
11.2
5.6
2.3
3.2
2.9
3.0
5.3
1.9
2.8
0.8
1.0
0.9
3.5
2.5
1.6
4.1
1.0
11.6
0.3
1.0
0.5
1.1
10.0
4.8
2.0
2.7
2.4
2.6
4.3
1.7
2.3
0.7
1.0
0.8
3.0
2.1
1.4
3.5
0.9
8.9
0.3
0.9
0.4
1.0
8.6
4.0
1.7
2.3
2.0
12.1
24.0
6.0
15.8
9.6
13.1
10.2
17.2
13.2
7.8
13.0
5.1
18.4
5.1
9.3
3.8
9.9
16.0
21.1
21.1
18.7
16.9
14.7
18.1
13.2
21.6
10.9
17.3
13.2
18.1
14.1
14.7
13.0
8.0
25.1
6.3
12.3
5.8
13.8
18.0
17.4
15.4
18.8
18.3
15.9
19.6
15.9
26.3
12.8
22.9
15.0
18.5
15.5
15.9
13.3
10.4
28.7
8.0
13.7
9.3
14.6
19.8
17.6
15.4
19.2
19.0
1,272
714
351
104
88
79
1,487
594
993
1,804
216
975
9
76
371
691
444
880
883
Buy
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
Buy
41.3
18.8
15.8
10.3
10.9
7.8
57.7
25.4
39.9
49.8
9.9
11.4
1.6
6.1
30.9
6.9
8.4
15.9
12.9
40.2
45.9
24.8
13.0
15.1
11.3
70.7
31.6
83.0
59.6
17.5
19.0
2.0
9.5
45.2
8.9
12.0
21.7
13.3
April 2021
10
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
The tables below provide a snapshot of actual and estimated numbers for companies under the MOFSL Coverage
Universe. Highlighted columns indicate the quarter/financial year under review.
AU Small Finance Bank
CMP: INR1,272 | TP: INR1,350 (+6%)
Margin to witness a positive bias.
Loan growth to pick up QoQ, while deposit growth will
witness a healthy traction.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loans (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
GNPA (%)
NNPA (%)
PCR (%)
1Q
3,956
38.1
2,109
6,065
3,157
2,908
90.7
315
2,593
690
1,903
147.3
198.5
231.0
98.5
51.3
2.1
1.3
40.5
FY20
2Q
4,516
40.7
1,508
6,024
3,247
2,777
58.5
610
2,167
447
1,719
88.1
221.5
248.1
72.1
36.9
2.0
1.1
43.9
3Q
5,068
45.7
1,612
6,681
3,552
3,128
75.1
401
2,727
825
1,902
99.5
238.7
265.7
62.5
32.9
1.9
1.0
46.8
EPS CHANGE (%): FY21|22: -2.0|+5.1
Asset quality and collection efficiency key monitorables.
CoF and C/I ratio are other key monitorables.
Buy
4Q
5,549
43.4
1,831
7,381
4,223
3,158
46.4
1,506
1,652
429
1,223
3.5
261.6
269.9
34.7
18.3
1.7
0.8
52.5
1Q
5,159
30.4
2,258
7,416
2,961
4,456
53.2
1,813
2,643
635
2,008
5.5
267.3
262.5
34.7
13.6
1.7
0.6
63.5
FY21
2Q
3Q
5,606
6,331
24.1
24.9
2,857
6,634
8,463
12,965
3,800
4,237
4,663
8,728
67.9
179.0
574
2,836
4,089
5,892
870
1,102
3,219
4,790
87.2
151.9
269.8
272.3
21.8
9.8
1.5
0.5
71.0
297.1
302.9
24.5
14.0
1.0
0.2
76.0
(INR m)
4QE
6,935
25.0
2,210
9,145
4,540
4,605
45.8
1,614
2,991
347
2,644
116.2
329.7
334.1
26.0
23.8
3.2
1.2
64.2
FY20
19,089
42.2
7,061
26,150
14,179
11,972
65.8
2,832
9,140
2,392
6,748
76.7
261.6
269.9
34.7
18.3
1.7
0.8
52.5
FY21E
24,031
25.9
13,959
37,990
15,538
22,453
87.5
6,837
15,616
2,954
12,661
87.6
329.7
334.1
26.0
23.8
3.2
1.2
64.2
Axis Bank
CMP: INR714 | TP: INR900 (+26%)
Credit cost to remain high YoY, but moderate QoQ.
Slippages a key monitorable given the rising COVID cases.
Restructuring/BB & below pool to remain under watch.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR t)
Loans (INR t)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
58.4
13.1
38.7
97.1
38.2
58.9
34.8
38.1
20.8
7.1
13.7
95.4
5.4
5.0
20.9
12.7
5.3
2.0
62.5
FY20
2Q
3Q
61.0
64.5
16.6
15.2
39.0
37.9
100.0
102.4
40.5
45.0
59.5
57.4
45.4
3.9
35.2
34.7
24.3
22.7
25.5
5.1
-1.1
17.6
NM
4.5
5.8
5.2
21.7
14.4
5.0
2.0
61.7
5.9
5.5
15.1
15.8
5.0
2.1
59.6
4Q
68.1
19.3
39.9
107.9
49.4
58.5
16.7
77.3
-18.8
-4.9
-13.9
NM
6.4
5.7
16.7
15.5
4.9
1.6
69.0
EPS CHANGE (%): FY21|22: -19.1|+4.3
Buy
Margin to expand to ~3.6%.
Loan growth to pick up QoQ; deposits to remain healthy.
(INR b)
1Q
69.9
19.5
25.9
95.7
37.3
58.4
-0.8
44.2
14.3
3.2
11.1
-18.8
6.3
5.6
16.2
12.9
4.7
1.2
74.8
FY21
2Q
73.3
20.1
38.1
111.3
42.4
69.0
15.9
45.8
23.2
6.3
16.8
NM
6.4
5.8
8.8
10.5
4.2
1.0
77.2
3Q
73.7
14.3
37.8
111.5
50.5
61.0
6.1
46.0
14.9
3.7
11.2
-36.4
6.5
5.8
10.6
5.9
3.4
0.7
79.0
4QE
76.5
12.3
40.6
117.1
53.9
63.2
8.0
41.5
21.7
5.4
16.3
NM
6.9
6.1
8.0
7.1
4.7
1.2
76.2
FY20
252.1
16.1
155.4
407.4
173.0
234.4
23.3
185.3
49.0
32.8
16.3
-65.2
6.4
5.7
16.7
15.5
4.9
1.6
69.0
FY21E
293.3
16.4
142.3
435.6
184.0
251.6
7.3
177.5
74.1
18.7
55.4
240.5
6.9
6.1
8.0
7.1
4.7
1.2
76.2
April 2021
11
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Bandhan Bank
Quarterly performance
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit Before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loans (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
CMP: INR351 | TP: INR370 (+5%)
NIMs to remain stable ~8.3%.
Business growth to remain modest.
FY20
2Q
3Q
15,290
15,403
41.9
37.0
3,603
3,577
18,893
18,980
5,824
6,341
13,069
12,639
49.5
40.4
1,455
2,949
11,614
9,690
1,896
2,380
9,718
7,310
99.3
120.7
492
598
49.3
88.4
1.8
0.6
68.3
549
606
58.5
78.9
1.9
0.8
58.4
EPS CHANGE (%): FY21|22: -8.7|-12.9
Credit cost to remain elevated; slippages to remain high.
Commentary around collection efficiency a key metric.
FY21
2Q
19,231
25.8
3,818
23,049
6,773
16,275
24.5
3,945
12,330
3,130
9,200
-5.3
661
733
34.4
22.6
1.2
0.4
70.0
FY20
63,239
40.7
15,492
78,731
24,265
54,466
45.3
13,932
40,534
10,297
30,237
54.9
571
666
32.0
68.1
1.5
0.6
60.8
Neutral
(INR m)
FY21E
79,441
25.6
18,900
98,341
27,499
70,843
30.1
36,790
34,052
8,581
25,471
-15.8
748
805
31.0
20.9
7.9
3.0
62.1
1Q
15,746
51.8
3,310
19,056
5,505
13,551
65.1
1,254
12,297
4,261
8,036
66.8
437
415
42.3
35.9
1.7
0.6
65.9
4Q
16,800
33.6
5,002
21,802
6,595
15,207
31.9
8,274
6,933
1,760
5,173
-20.5
571
666
32.0
68.1
1.5
0.6
60.8
1Q
18,115
15.0
3,868
21,983
6,141
15,842
16.9
8,491
7,351
1,853
5,498
-31.6
606
697
38.7
68.1
1.4
0.5
66.6
3Q
20,717
34.5
5,533
26,250
7,109
19,141
51.4
10,687
8,454
2,128
6,326
-13.5
712
768
29.6
26.7
1.1
0.3
76.6
4QE
21,377
27.2
5,682
27,059
7,475
19,585
28.8
13,667
5,918
1,471
4,447
-14.0
748
805
31.0
20.9
7.9
3.0
62.1
Bank of Baroda
CMP: INR76 | TP: INR75 (-1%)
Elevated credit cost and modest NII to dent earnings.
Asset quality to remain under pressure.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loans (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
64,981
48.3
19,156
84,137
41,375
42,762
42.3
32,849
9,913
2,815
7,099
34.5
8,955
6,332
54.0
52.8
10.3
4.0
64.1
EPS CHANGE (%): FY21|22: +3.0|-7.7
Rundown in international book to continue.
Movement in watch list/stress pool to be a key
monitorable.
FY21
2Q
3Q
75,075
77,487
6.8
8.7
28,023
28,955
103,098 106,442
47,580
50,536
55,518
55,906
4.0
12.7
30,016
39,567
25,502
16,340
8,716
5,729
16,786
10,611
127.9
NM
9,543
6,699
6.7
5.1
9.1
2.5
74.4
9,546
6,987
6.5
6.8
8.5
2.4
73.6
FY20
274,513
48.5
103,173
377,686
180,772
196,914
46.0
214,935
-18,021
-23,483
5,462
26.0
9,460
6,901
48.1
47.2
9.4
3.1
68.9
Neutral
FY20
2Q
70,279
56.4
28,239
98,519
45,160
53,359
73.1
42,092
11,268
3,901
7,367
73.2
8,941
6,373
47.3
47.0
10.3
3.9
64.4
(INR m)
FY21E
299,623
9.1
105,237
404,860
193,792
211,068
7.2
172,705
38,363
10,358
28,005
412.7
9,980
7,295
5.5
5.7
9.9
3.8
63.7
3Q
71,291
50.3
27,412
98,702
49,118
49,585
40.1
71,554
-21,970
-7,900
-14,070
-398.6
8,962
6,545
46.8
45.9
10.4
4.1
63.8
4Q
67,982
34.2
28,347
96,328
45,120
51,208
32.6
68,441
-17,233
-22,299
5,066
-151.1
9,460
6,901
48.1
47.2
9.4
3.1
68.9
1Q
68,161
4.9
18,183
86,344
43,144
43,199
1.0
56,277
-13,078
-4,435
-8,643
-221.8
9,345
6,867
4.3
8.4
9.4
2.8
71.9
4QE
78,900
16.1
30,076
108,976
52,532
56,444
10.2
46,846
9,599
348
9,250
82.6
9,980
7,295
5.5
5.7
9.9
3.8
63.7
April 2021
12
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
DCB Bank
CMP: INR104 | TP: INR110 (+5%)
Credit cost to remain high on potential stress in SME/LAP.
Expect slippages to rise, which could keep asset quality
under pressure. Loans under restructuring to be a key
monitorable.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loans (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
3,048
11.6
868
3,915
2,250
1,665
17.8
406
1,259
448
811
16.6
287.9
240.4
15.0
13.2
2.0
0.8
58.9
FY20
2Q
3,134
11.2
1,014
4,148
2,302
1,845
26.3
433
1,413
499
914
24.5
293.6
248.0
12.2
12.4
2.1
1.0
54.5
EPS CHANGE (%): FY21|22: +1.0|+5.6
C/I ratio may remain under pressure and could rise.
NIM compression/loan growth to remain a key
monitorable.
FY21
2Q
3,339
6.6
925
4,264
2,016
2,248
21.8
1,131
1,117
294
823
-10.0
287.7
248.8
-2.0
0.3
2.3
0.8
64.1
FY20
12,649
10.1
3,911
16,560
9,029
7,531
16.5
2,611
4,919
1,540
3,379
3.9
303.7
253.5
6.8
7.5
2.5
1.2
53.5
Neutral
3Q
3,231
10.0
931
4,162
2,263
1,899
9.3
590
1,309
342
967
12.3
297.3
254.4
8.1
11.1
2.2
1.0
52.8
4Q
3,237
7.6
1,099
4,336
2,215
2,121
14.5
1,182
938
251
688
-28.6
303.7
253.5
6.8
7.5
2.5
1.2
53.5
1Q
3,067
0.6
776
3,843
1,932
1,911
14.8
837
1,075
281
794
-2.1
294.3
250.6
2.2
4.2
2.4
1.0
60.0
3Q
3,348
3.6
1,545
4,893
2,119
2,773
46.0
1,477
1,296
334
962
-0.5
288.6
253.0
-2.9
-0.5
2.0
0.6
70.2
4QE
3,394
4.8
1,212
4,606
2,241
2,365
11.5
1,536
829
213
615
-10.5
297.6
258.5
-2.0
2.0
4.4
2.4
47.0
(INR m)
FY21E
13,148
3.9
4,458
17,606
8,309
9,298
23.5
4,981
4,316
1,122
3,194
-5.5
297.6
258.5
-2.0
2.0
4.4
2.4
47.0
Equitas Holdings
CMP: INR88 | TP: INR105 (+20%)
NIMs to expand slightly to ~8.6%.
Watchful of asset quality in the MSME book. The
management’s focus will remain on collection efficiency.
Quarterly performance
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
AUM (INR b)
Deposits (INR b)
Loans (INR b)
AUM Growth (%)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
3,372
32.5
592
3,963
2,768
1,196
57.2
308
888
317
571
61.2
123
91
120
35
60
43
2.7
1.5
44.0
FY20
2Q
3,505
29.1
639
4,145
2,833
1,312
23.6
454
858
363
495
1.5
133
100
130
33
44
38
2.9
1.6
38.8
3Q
3,836
23.3
857
4,693
3,108
1,584
30.4
405
1,180
239
941
51.2
146
105
137
37
33
30
3.0
1.7
38.9
4Q
4,561
44.9
736
5,297
3,092
2,205
80.1
1,300
906
154
752
17.0
154
108
137
31
20
19
2.7
1.5
45.2
EPS CHANGE (%): FY21|22: +6.5|+8.9
Elevated credit cost to impact earnings.
Loans under restructuring to be a key monitorable.
FY21
2Q
4,613
31.6
637
5,249
3,053
2,197
67.5
839
1,358
328
1,030
108.1
167
129
159
26
29
23
2.5
1.0
50.2
Buy
(INR m)
3Q
4,839
26.1
1,463
6,302
3,551
2,750
73.6
1,261
1,490
383
1,107
17.6
174
159
168
19
51
23
2.3
0.7
66.2
4QE
5,293
16.0
907
6,200
3,507
2,692
22.1
1,284
1,408
386
1,022
36.0
180
168
175
17
56
27
4.3
2.0
54.4
FY20
14,953
29.8
2,824
17,777
11,801
5,976
40.2
2,466
3,509
1,073
2,436
15.7
154
108
137
31
20
19
1.8
3.2
-
FY21E
18,787
25.6
3,304
22,090
13,031
9,060
51.6
4,068
4,992
1,256
3,736
53.3
180
168
175
17
56
27
2.0
4.0
0.0
1Q
4,043
19.9
297
4,339
2,919
1,420
18.8
683
737
160
577
1.1
156
118
144
27
29
20
2.9
1.5
44.2
April 2021
13
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Federal Bank
CMP: INR79 | TP: INR110 (+40%)
Business growth to show a healthy pick up.
Asset quality ratio and loans under restructuring to be a
key monitorable.
Quarterly performance
1Q
11,542
17.8
3,915
15,457
7,629
7,828
29.8
1,920
5,907
2,065
3,842
46.2
1,325
1,120
19.1
18.8
3.0
1.5
50.7
FY20
2Q
3Q
11,238
11,549
9.9
7.2
4,209
4,079
15,447
15,628
8,259
8,190
7,188
7,438
3.0
5.1
2,518
1,609
4,670
5,830
503
1,423
4,167
4,406
56.6
32.1
1,395
1,159
18.1
14.8
3.1
1.6
49.0
1,446
1,192
17.1
13.0
3.0
1.6
46.4
EPS CHANGE (%): FY21|22: -2.3|+0.4
Credit cost to remain high due to exposure to SMEs.
NIMs to expand to ~3.3%.
Buy
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loan (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
4Q
12,160
10.9
7,111
19,271
9,678
9,593
27.1
5,675
3,918
906
3,012
-21.0
1,523
1,223
12.8
10.9
2.8
1.3
54.5
1Q
12,964
12.3
4,884
17,848
8,524
9,324
19.1
3,946
5,378
1,370
4,008
4.3
1,549
1,213
16.9
8.3
3.0
1.2
59.6
FY21
2Q
3Q
13,799
14,370
22.8
24.4
5,093
4,818
18,892
19,189
8,827
9,560
10,065
9,629
40.0
29.5
5,921
4,206
4,145
5,423
1,069
1,382
3,076
4,041
-26.2
-8.3
1,567
1,229
12.3
6.1
2.8
1.0
65.7
1,617
1,255
11.8
5.3
2.7
0.6
78.2
(INR m)
4QE
14,698
20.9
5,388
20,086
10,089
9,997
4.2
4,274
5,723
1,244
4,480
48.7
1,727
1,318
13.4
7.8
3.6
1.2
67.3
FY20
46,489
11.3
19,314
65,803
33,756
32,047
16.0
11,722
20,325
4,898
15,428
24.0
1,523
1,223
12.8
10.9
2.8
1.3
54.5
FY21E
55,832
20.1
20,183
76,015
36,999
39,015
21.7
18,347
20,668
5,064
15,604
1.1
1,727
1,318
13.4
7.8
3.6
1.2
67.3
HDFC Bank
CMP: INR1,487 | TP: INR1,800 (+21%)
Business growth to remain healthy.
Watchful of asset quality in Agri and unsecured book.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposit Growth (%)
Loan Growth (%)
Deposits
Loan
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
132.9
22.9
49.7
182.6
71.2
111.5
28.9
26.1
85.3
29.7
55.7
21.0
18.5
17.1
9,546
8,297
1.4
0.4
69.7
EPS CHANGE (%): FY21|22: +1.0|+2.3
Margin broadly stable ~4.2%.
Commentary around credit cards and fee income traction
a key monitorable.
FY21
2Q
157.8
16.7
60.9
218.7
80.6
138.1
18.1
37.0
101.1
26.0
75.1
18.4
20.3
15.8
12,293
10,383
1.1
0.2
84.5
FY20
561.9
16.5
232.6
794.5
307.0
487.5
22.6
121.4
366.1
103.5
262.6
24.6
24.3
21.3
11,475
9,937
1.3
0.4
72.0
Buy
FY20
2Q
135.2
14.9
55.9
191.0
74.1
117.0
23.4
27.0
90.0
26.5
63.4
26.8
22.6
19.5
10,216
8,970
1.4
0.4
69.7
(INR b)
3Q
141.7
12.7
66.7
208.4
79.0
129.5
20.1
30.4
99.0
24.9
74.2
32.8
25.2
19.9
10,674
9,360
1.4
0.5
66.7
4Q
152.0
16.2
60.3
212.4
82.8
129.6
19.5
37.8
91.7
22.5
69.3
17.7
24.3
21.3
11,475
9,937
1.3
0.4
72.0
1Q
156.7
17.8
40.8
197.4
69.1
128.3
15.1
38.9
89.4
22.8
66.6
19.6
24.6
20.9
11,894
10,033
1.4
0.3
76.2
3Q
163.2
15.1
74.4
237.6
85.7
151.9
17.3
34.1
117.7
30.1
87.6
18.1
19.1
15.6
12,711
10,823
0.8
0.1
88.5
4QE
173.8
14.3
73.9
247.8
92.2
155.6
20.0
38.8
116.8
29.9
86.9
25.4
16.3
13.9
13,350
11,320
1.5
0.5
67.1
FY21E
651.4
15.9
250.1
901.5
327.6
573.9
17.7
148.9
425.0
108.8
316.2
20.4
16.3
13.9
13,350
11,320
1.5
0.5
67.1
April 2021
14
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
ICICI Bank
CMP: INR594 | TP: INR770 (+30%)
Loan growth to pick up; margin to remain stable ~3.7%.
Commentary on asset quality a key monitorable given
rising COVID-19 cases.
Quarterly performance
1Q
77.4
26.8
34.3
111.6
48.7
62.9
8.3
35.0
27.9
8.8
19.1
NM
6,607
5,924
20.8
14.7
7.3
1.8
74.1
FY20
2Q
80.6
25.6
41.9
122.5
53.8
68.7
30.9
25.1
43.7
37.1
6.5
-27.9
6,963
6,134
24.6
12.6
7.0
1.6
76.1
EPS CHANGE (%): FY21|22: -1.6|+1.8
Credit cost to remain high; slippages would be key.
Movement in stressed loans to remain a key monitorable.
Buy
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposits
Loans
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
3Q
85.5
24.3
45.7
131.2
55.7
75.5
22.8
20.8
54.7
13.2
41.5
158.4
7,163
6,357
18.1
12.6
6.5
1.5
76.1
4Q
89.3
17.1
42.5
131.8
57.9
73.9
18.6
59.7
14.2
2.0
12.2
26.0
7,710
6,453
18.1
10.0
6.1
1.4
75.6
1Q
92.8
19.9
61.4
154.2
46.5
107.8
71.4
75.9
31.8
5.8
26.0
36.2
8,016
6,312
21.3
6.5
6.1
1.2
78.5
FY21
2Q
93.7
16.2
40.3
133.9
51.3
82.6
20.2
30.0
52.7
10.1
42.5
549.1
8,329
6,526
19.6
6.4
5.2
1.0
81.6
3Q
99.1
16.0
46.9
146.0
57.8
88.2
16.8
27.4
60.8
11.4
49.4
19.1
8,743
6,990
22.1
10.0
4.4
0.6
86.1
4QE
105.6
18.3
50.5
156.1
61.9
94.2
27.4
30.2
64.0
12.4
51.6
322.2
9,175
7,324
19.0
13.5
5.5
1.2
79.4
FY20
332.7
23.1
164.5
497.2
216.1
281.0
19.9
140.5
140.5
61.2
79.3
135.8
7,710
6,453
18.1
10.0
6.1
1.4
75.7
(INR b)
FY21E
391.2
17.6
199.0
590.2
217.5
372.7
32.6
163.5
209.2
39.8
169.5
113.7
9,175
7,324
19.0
13.5
5.5
1.2
79.4
IndusInd Bank
CMP: INR993 | TP: INR1,300 (+31%)
Loan/deposit growth to witness healthy/strong traction
QoQ.
Margin to remain stable ~4.1%.
Quarterly performance
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Deposit Growth (%)
Loan Growth (%)
Deposit (INR b)
Loan (INR b)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
1Q
28,440
34.0
16,633
45,072
19,163
25,910
35.6
4,306
21,603
7,278
14,325
38.3
26.3
28.4
2,006
1,935
2.2
1.2
43.3
FY20
2Q
29,094
32.0
17,272
46,365
20,131
26,234
31.7
7,377
18,857
4,848
14,010
52.2
23.2
20.8
2,072
1,971
2.2
1.1
49.6
EPS CHANGE (%): FY21|22: -8.1|-4.4
Asset quality to remain under watch, led by higher strain
on the MFI business. Restructuring book to be key.
Credit cost to remain elevated as the focus remains on
higher PCR.
FY21
2Q
32,780
12.7
15,543
48,323
19,803
28,520
8.7
19,644
8,875
2,245
6,631
-52.7
10.0
2.1
2,279
2,012
2.2
0.5
76.7
3Q
34,061
10.8
16,458
50,519
20,883
29,636
7.5
18,535
11,100
2,797
8,304
-36.6
10.3
-0.1
2,391
2,071
1.7
0.2
87.3
4QE
35,085
8.6
17,455
52,539
22,283
30,256
5.9
18,268
11,989
3,114
8,874
181.6
26.8
3.0
2,562
2,130
3.5
0.9
73.8
FY20
120,587
36.3
69,527
190,114
82,373
107,741
33.2
46,521
61,220
17,027
44,193
33.9
3.7
10.9
2,020
2,068
2.5
0.9
63.3
Buy
3Q
30,742
34.4
17,900
48,642
21,065
27,577
30.3
10,435
17,143
4,050
13,092
32.9
23.3
19.8
2,167
2,074
2.2
1.1
52.5
4Q
32,312
44.7
17,722
50,034
21,467
28,567
38.2
24,403
4,164
1,012
3,152
-12.5
3.7
10.9
2,020
2,068
2.5
0.9
63.3
1Q
33,092
16.4
15,204
48,296
19,019
29,277
13.0
22,589
6,689
1,585
5,103
-64.4
5.3
2.4
2,113
1,981
2.5
0.9
66.6
(INR m)
FY21E
135,018
12.0
64,660
199,677
81,988
117,689
9.2
79,036
38,653
9,741
28,912
-34.6
26.8
3.0
2,562
2,130
3.5
0.9
73.8
April 2021
15
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Kotak Mahindra Bank
CMP: INR1,804 | TP: INR2,000 (+11%)
Loan growth to witness a healthy pick up on a sequential
basis.
Commentary around stress in the SME book and other
unsecured loans could keep credit cost elevated.
Quarterly performance
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Deposits (INR b)
Loans (INR b)
Deposit growth (%)
Loan growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
FY20
2Q
33,496
24.6
12,244
45,740
20,654
25,086
19.7
4,079
21,006
3,762
17,245
51.1
2,331
2,133
13.2
15.3
2.3
0.9
64.0
EPS CHANGE (%): FY21|22: -0.1|+2.3
Liability franchise to remain strong. Lower cost of funds to
result in stable margin (~4.5%).
Asset quality to remain largely stable, with GNPA ~3.4%
v/s pro forma GNPA of ~3.3% in 3QFY21.
FY21
2Q
39,132
16.8
14,520
53,652
20,678
32,975
31.4
3,686
29,289
7,444
21,845
26.7
2,616
2,048
12.2
-4.0
2.6
0.6
75.6
FY20
134,997
20.5
53,721
188,718
88,509
100,208
20.0
22,162
78,047
18,575
59,472
22.2
2,628
2,197
16.4
6.8
2.3
0.7
69.0
Neutral
1Q
31,730
22.8
13,047
44,778
20,789
23,989
18.0
3,168
20,822
7,220
13,602
32.7
2,329
2,080
22.8
17.6
2.2
0.7
67.0
3Q
34,295
16.7
13,414
47,710
23,829
23,881
23.2
4,440
19,441
3,482
15,959
23.6
2,394
2,168
12.0
10.4
2.5
0.9
64.4
4Q
35,597
16.8
14,894
50,490
23,238
27,253
19.4
10,475
16,778
4,112
12,666
-10.0
2,628
2,197
16.4
6.8
2.3
0.7
69.0
1Q
37,239
17.4
7,735
44,974
18,737
26,237
9.4
9,620
16,617
4,173
12,445
-8.5
2,615
2,040
12.3
-1.9
2.7
0.9
68.4
3Q
40,068
16.8
13,344
53,412
22,579
30,833
29.1
5,990
24,843
6,308
18,535
16.1
2,653
2,141
10.8
-1.2
2.3
0.5
78.4
4QE
42,124
18.3
15,059
57,183
24,081
33,103
21.5
7,078
26,025
6,463
19,562
54.4
2,733
2,241
4.0
2.0
3.4
1.3
61.6
(INR m)
FY21E
158,563
17.5
50,659
209,222
86,073
123,148
22.9
26,374
96,774
24,387
72,387
21.7
2,733
2,241
4.0
2.0
3.4
1.3
61.6
RBL Bank
CMP: INR216 | TP: INR300 (+39%)
Loan growth to remain modest.
Asset quality to remain under pressure due to exposure to
MFI/Credit Cards; collection efficiency remains key.
Quarterly performance
1Q
8,173
47.9
4,812
12,985
6,960
6,026
39.4
1,970
4,056
1,386
2,671
40.5
608.1
568.4
35.3
34.7
1.4
0.7
52.9
FY20
2Q
3Q
8,687
9,227
46.5
40.8
4,415
4,870
13,102
14,096
6,744
6,929
6,358
7,167
41.6
43.8
5,333
6,228
1,025
939
482
239
543
700
-73.4
-68.9
628.3
584.8
31.5
27.5
2.6
1.6
40.7
629.1
596.4
20.5
19.5
3.3
2.1
38.5
EPS CHANGE (%): FY21|22: +4.8|+4.1
Credit cost to remain elevated in the near term.
Growth in deposits and liquidity positioning to be key
monitorables.
FY21
2Q
3Q
9,321
9,082
7.3
-1.6
4,562
5,799
13,883
14,880
6,685
6,832
7,198
8,048
13.2
12.3
5,256
6,098
1,942
1,951
500
480
1,442
1,471
165.4
110.2
645.1
561.6
2.7
-4.0
3.3
1.4
59.4
671.8
564.4
6.8
-5.4
1.8
0.7
61.7
FY20
36,296
42.9
19,102
55,399
27,883
27,516
41.8
19,989
7,528
2,471
5,057
-41.7
578.1
580.2
-1.0
6.8
3.6
2.0
44.3
Buy
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR b)
Loans (INR b)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
4Q
10,210
38.2
5,005
15,215
7,696
7,519
34.3
6,012
1,508
364
1,144
-53.7
578.1
580.2
-1.0
6.8
3.6
2.1
44.3
1Q
10,413
27.4
3,333
13,746
6,849
6,897
14.5
5,002
1,896
483
1,412
-47.1
617.4
566.8
1.5
-0.3
3.5
1.7
53.2
4QE
9,429
-7.7
5,981
15,410
7,303
8,107
7.8
5,982
2,124
528
1,596
39.6
693.7
580.2
20.0
0.0
5.2
2.6
50.7
(INR m)
FY21E
38,244
5.4
19,676
57,919
27,670
30,250
9.9
22,337
7,912
1,992
5,921
17.1
693.7
580.2
20.0
0.0
5.2
2.6
50.7
April 2021
16
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
State Bank of India
CMP: INR371 | TP: INR500 (+35%)
Credit cost to remain high as the management continues
to strengthen its Balance Sheet.
Business growth to show a healthy pickup on a QoQ basis.
Quarterly performance
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
Operating Parameters
Deposits (INR t)
Loans (INR t)
Deposit Growth (%)
Loan Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
EPS CHANGE (%): FY21|22: -2.2|+9.1
Restructuring book and impact on asset quality to be key
given the rising COVID-19 cases.
Margin to remain stable ~3.1%; traction in fee income to
be key.
FY21
2Q
281.8
14.6
85.3
367.1
202.5
164.6
-9.6
101.2
63.4
17.7
45.7
51.9
34.7
22.9
14.4
6.9
5.3
1.6
71.0
FY20
980.8
11.0
452.2
1,433.1
751.7
681.3
22.9
430.7
250.6
105.7
144.9
NM
32.4
23.3
11.3
6.4
6.2
2.2
65.2
Buy
1Q
229.4
5.2
80.2
309.5
177.1
132.5
10.6
91.8
40.6
17.5
23.1
NM
29.5
21.3
7.3
13.8
7.5
3.1
61.1
FY20
2Q
246.0
17.7
120.2
366.2
184.2
182.0
30.9
131.4
50.6
20.5
30.1
218.7
30.3
21.5
8.0
9.6
7.2
2.8
62.9
3Q
277.8
22.4
91.1
368.8
186.6
182.2
44.3
72.5
109.7
53.9
55.8
41.2
31.1
22.0
9.9
7.4
6.9
2.7
63.5
4Q
227.7
-0.8
160.8
388.4
203.8
184.7
9.0
135.0
49.7
13.9
35.8
327.1
32.4
23.3
11.3
6.4
6.2
2.2
65.2
1Q
266.4
16.1
95.0
361.4
180.8
180.6
36.3
125.0
55.6
13.7
41.9
81.2
34.2
23.0
16.0
7.7
5.4
1.9
67.1
3Q
288.2
3.7
92.5
380.7
207.3
173.3
-4.9
103.4
69.9
17.9
52.0
-6.9
35.4
23.7
13.6
7.6
4.8
1.2
75.2
4QE
295.7
29.9
138.8
434.5
218.6
215.9
16.9
112.6
103.2
26.6
76.6
113.9
36.2
24.8
11.8
6.5
5.4
1.9
67.0
(INR b)
FY21E
1,132.1
15.4
411.5
1,543.6
809.2
734.4
7.8
442.2
292.2
76.0
216.2
49.2
36.2
24.8
11.8
6.5
5.4
1.9
67.0
SBI Cards and Payment Services
CMP: INR975 | TP: INR1,200 (+23%)
Credit cost to remain high given the unsecured nature of
the book.
Traction in credit card spends to be a key metric to assess.
Quarterly performance
1Q
7,473
NA
12,535
20,008
10,716
9,292
NA
3,966
5,325
1,869
3,456
NA
NA
NA
301.7
204.6
2.7
0.8
72.0
FY20
2Q
3Q
8,430
9,363
NA
NA
12,139
12,817
20,569
22,180
12,259
12,585
8,310
9,595
NA
NA
3,292
3,763
5,018
5,832
1,208
1,485
3,810
4,347
NA
NA
NA
42.2
331.8
222.8
2.3
0.8
67.0
NA
38.8
351.4
239.3
2.5
0.8
67.0
EPS CHANGE (%): FY21|22: -12.0|-0.9
Restructuring book and impact on asset quality to be key.
Impact of restructuring on margin a key monitorable.
FY21
2Q
3Q
10,112
9,071
20.0
-3.1
12,373
13,717
22,486
22,788
11,086
13,477
11,399
9,311
37.2
-3.0
8,617
6,483
2,782
2,829
720
732
2,061
2,097
-45.9
-51.8
-10.8
-1.6
295.9
219.3
4.3
1.5
65.6
7.6
-1.0
378.0
237.0
1.6
0.6
65.6
FY20
35,404
38.0
49,110
84,514
47,815
36,699
47.8
19,402
17,296
4,848
12,448
43.9
26.9
27.4
1,314.5
228.1
2.0
0.7
67.2
Buy
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
Spends Growth (%)
Loan Growth (%)
Spends (INR b)
Loan (INR b)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
4Q
10,138
NA
11,622
21,760
12,257
9,503
NA
8,382
1,121
285
835
NA
15.5
27.4
324.3
228.1
2.0
0.7
67.2
1Q
11,375
52.2
7,808
19,183
9,047
10,136
9.1
4,853
5,283
1,350
3,933
13.8
-36.8
7.2
190.9
219.2
1.4
0.4
68.3
4QE
10,723
5.8
15,276
25,998
15,650
10,349
8.9
6,915
3,433
808
2,625
214.3
20.5
12.0
390.6
255.5
5.1
1.7
68.4
(INR b)
FY21E
41,281
16.6
49,175
90,456
49,260
41,195
12.3
26,868
14,327
3,610
10,716
-13.9
-4.5
12.0
1,255.4
255.5
5.1
1.7
68.4
April 2021
17
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
HDFC Life Insurance
CMP: INR691 | TP: INR650 (-6%)
New business premium to show a healthy pickup led by
robust trends in Annuity/PAR segments.
Expense ratio to remain stable; RoEV to stay modest.
Quarterly performance (INR
m)
Policy holder's A/c
Net premium income
Growth (%)
PAT
Growth (%)
Key metrics (INR b)
New business APE
VNB
AUM
Key Ratios (%)
VNB Margin
Solvency ratio
1Q
64,512
29.2%
4,246
11.7%
17.1
5.1
1,296
29.8
193.0
FY20
2Q
3Q
74,537
78,543
10.0%
13.9%
3,087
2,502
7.6%
1.9%
17.6
4.5
1,310
25.4
192.0
18.2
4.5
1,365
24.7
195.0
EPS CHANGE (%): FY21|22: -1.3|+6.4
VNB growth to remain healthy while margin will witness a
slight moderation.
Rise in COVID-related claims a key monitorable.
FY21
2Q
3Q
100,454
94,870
34.8%
20.8%
3,261
2,650
5.6%
5.9%
20.9
5.5
1,506
25.6
203.0
21.0
5.7
1,656
26.4
202.0
FY20
322,236
11.4%
12,953
1.4%
71.6
19.2
1,272
25.9
184.1
Neutral
4Q
104,645
2.1%
3,117
-14.4%
18.7
5.1
1,272
27.4
184.1
1Q
57,218
-11.3%
4,511
6.2%
12.0
2.9
1,400
24.3
190.0
4QE
121,290
15.9%
3,539
13.5%
26.9
6.9
1,818
25.8
200.1
FY21E
373,833
16.0%
13,960
7.8%
80.6
21.0
1,818
26.1
200.1
ICICI Prudential Life Insurance
CMP: INR444 | TP: INR575 (+29%)
New business premium to witness an increase, but will
remain under pressure.
VNB margin to witness a healthy traction.
Quarterly performance (INR
m)
Policy holder's A/c
Net premium income
Growth (%)
PAT
Growth (%)
Key metrics (INR b)
New Business APE
VNB
AUM
Key Ratios (%)
VNB Margin
Solvency ratio
1Q
62,081
14.2%
2,849
1.2%
14.7
3.1
1,640
21.0
217
FY20
2Q
3Q
80,647
81,310
6.1%
8.7%
3,019
3,025
0.3%
1.9%
19.0
4.0
1,655
21.1
211
20.4
4.3
1,720
20.9
207
EPS CHANGE (%): FY21|22: +0.7|+26.4
Expense ratio to remain stable.
Growth in non-linked savings business to remain healthy.
FY21
2Q
3Q
85,722
89,708
6.3%
10.3%
3,032
3,056
0.5%
1.0%
14.7
4.0
1,815
27.4
206
16.7
4.3
2,049
25.7
226
FY20
328,790
7.5%
10,687
-6.3%
71.1
16.0
1,530
21.7
194
Buy
4Q
104,751
4.2%
1,795
-31.3%
17.0
4.7
1,530
23.8
194
1Q
55,511
-10.6%
2,876
0.9%
8.2
2.0
1,700
24.4
205
4QE
119,837
14.4%
3,007
67.5%
20.6
5.5
2,120
26.8
220
FY21E
350,778
6.7%
12,023
12.5%
60.1
15.8
2,120
26.3
220
SBI Life Insurance
Quarterly performance (INR
b)
Policy holder's A/c
Net premium income
Growth (%)
PAT
Growth (%)
Key metrics (INR b)
New Business APE
VNB
AUM
Key Ratios (%)
VNB margin
Solvency ratio
CMP: INR883 | TP: INR1,050 (+19%)
New business premium to witness a healthy uptick.
Margin to see an improvement, thereby improving VNB.
FY20
2Q
101.1
32%
1.3
-48%
28.1
5.2
1,548
18.5
220.0
EPS CHANGE (%): FY21|22: -4.1|-30.3
Continues to maintain cost leadership.
Protection mix to improve; Non-PAR to remain healthy.
FY21
2Q
128.6
27%
3.0
131%
27.1
5.1
1,864
18.8
245.0
FY20
403.2
23%
14.2
7%
105.1
20.1
1,604
18.7
195.0
Buy
1Q
66.6
40%
3.7
5%
18.6
3.3
1,470
17.7
217.0
3Q
116.9
28%
3.9
47%
33.8
6.2
1,642
18.3
230.0
4Q
118.6
5%
5.3
16%
26.9
5.4
1,604
20.1
195.0
1Q
75.9
14%
3.9
5%
12.7
2.4
1,754
18.9
239.0
3Q
137.7
18%
2.3
-40%
35.0
7.0
2,095
20.0
234.0
4QE
156.7
32%
3.8
-29%
37.1
7.7
2,166
20.7
228.7
FY21E
498.8
24%
12.9
-9%
111.9
22.2
2,166
19.8
228.7
April 2021
18
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
Max Financial Services
CMP: INR880 | TP: INR1,000 (+14%)
New business premium to witness a healthy uptick.
VNB margin to moderate as the protection business
moderates, though VNB growth will remain healthy.
Quarterly performance (INR
m)
Policy holder's A/c
Gross premium income
Growth (%)
PAT
Growth (%)
Key metrics (INR m)
New Business APE
VNB
AUM (INR b)
Key Ratios (%)
VNB Margin
Solvency ratio
1Q
26,510
14.3%
680
NA
6,850
1,340
640
19.6
225.0
FY20
2Q
3Q
37,810
38,800
14.6%
12.8%
860
1,540
NA
NA
10,450
2,300
650
22.0
224.0
10,100
2,120
686
21.0
220.0
EPS CHANGE (%): FY21|22: +9.1|+31.0
Proprietary channel to show a healthy recovery.
Non-PAR growth to remain healthy, while ULIP will see a
gradual recovery.
FY21
2Q
3Q
45,330
46,280
19.9%
19.3%
260
2,200
-69.8%
42.9%
11,540
3,250
780
28.2
207.0
12,250
3,500
850
28.6
208.0
Buy
4Q
58,710
6.4%
2,314
NA
14,090
3,210
685
22.8
207.0
1Q
27,510
3.8%
1,710
151.5%
6,610
1,130
730
17.1
212.0
4QE
68,123
16.0%
2,700
16.7%
17,876
4,667
905
26.1
208.7
FY20
161,830
11.0%
5,394
-3.1%
41,490
8,970
685
21.6
207.0
FY21E
187,243
15.7%
6,870
27.4%
48,276
12,547
905
26.0
208.7
April 2021
19
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
NOTES
April 2021
20
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
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
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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
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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
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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
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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
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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
********************************************************************************************************************************
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
April 2021
21
 Motilal Oswal Financial Services
March 2021 Results Preview | Sector: Financials
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.
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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
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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.
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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,
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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
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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
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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
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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.
-
April 2021
22