IndusInd Bank
BSE SENSEX
28,335
S&P CNX
8,768
7 February 2017
Update
| Sector:
Financials
CMP: INR1,326
TP: INR1,535(+16%)
IIB/BHAFIN merger - Win-win for both
Better profitability - strong market share gain
Buy
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg. Val, INR m
Free float (%)
IIB IN
595.8
1336 / 799
10/12/30
631
9.4
1528
85.0
The Economic Times, in its
article
published last week, reported that IndusInd
Bank (IIB) and Bharat Financial Inclusion (BHAFIN) are in talks to explore a merger
opportunity. In this note, we present a short summary of our “what-if’’ analysis on
the possible merger. (Clarification:
IIB
and
BHAFIN).
IIB
(Results
Update 3QFY17)
– synergy benefits plenty
We believe IIB could derive significant synergy benefits from the possible merger
with BHAFIN, including a diversified and granular retail loan book, RoA acceleration
(our estimate of 20bp accretion), a strong PSL book (fee income generation
opportunities via PSLC), cross-sell opportunities, strong knowledge of local economy
and scale benefits. We also note that PPoP to average assets stands at ~7% for
BHAFIN, higher than ~3.5% for IIB. Furthermore, capitalization of BHAFIN is very
high with a tier I ratio of ~36% (leverage of just 3x).
Financials Snapshot (INR b)
2016 2017E 2018E
Y/E Mar
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoA (%)
P/E (X)
P/BV (X)
45.2
41.4
22.9
4.0
38.4
13.4
291
16.6
1.8
34.5
4.6
60.2
52.4
28.8
4.3
48.4
25.9
333
15.5
1.9
27.4
4.0
71.8
62.8
34.9
4.3
58.7
21.3
383
16.4
1.9
22.6
3.5
BHAFIN
(Results
Update 3QFY17)
– RoEs higher under banking setup; Removes
political risk
In our view, under a banking setup, BHAFIN can generate higher RoEs with a)
elimination of the need to carry excess liquidity (negative carry), which is required
in day-to-day operations and first loss margins for off balance sheet, b) lower cost of
funds (difference of ~400bp between IIB and BHAFIN), c) no cap on lending rates, d)
higher leverage (10x v/s 5x now) and e) removal of political/regulatory overhang
due to the diversified balance sheet. We believe these benefits should more than
compensate for the negative carry of CRR and SLR on the expanded balance sheet.
Granularity of loan book to increase
IIB targets to diversify its retail:corporate loan mix to 50:50 (from 42:58 now).
Within retail, it aims to raise the share of non-vehicle loans to 50% (from 30% as of
now). Additionally, it intends to increase the size of its MFI book from INR30b
currently to ~INR100b. The merger, if successful, will add ~7.5% to IIB’s existing
loans and ~6.5% to the combined balance sheet. Post-merger, the share of retail is
likely to increase to 46-47%. Also, the possible buyout of BHAFIN will bring along a
strong sales force network and supporting technology infrastructure.
Shareholding pattern (%)
As On
Dec-16 Sep-16 Dec-15
Promoter
DII
FII
Others
15.0
12.5
54.0
18.6
14.9
11.6
54.7
18.9
14.9
11.2
53.9
20.0
FII Includes depository receipts
Stock Performance (1-year)
IndusInd Bank
Sensex - Rebased
1,350
1,200
1,050
900
750
Significant synergy benefits, but valuations are key
Assuming that IIB acquires BHAFIN at a 5% premium to CMP (i.e. INR870), the swap
ratio would be 1:1.51 (1 shares of IIB for 1.51 shares of BHAFIN). This would result in
13.2% dilution to equity shareholders of IIB (merged entity). However, given the
strong multiple that IIB trades at, we believe the acquisition will not impact BVPS
significantly (estimated at INR445 – similar to pre-merger levels – in FY19).
Additionally, with the acquisition, RoA is likely to cross 2%, and IIB is likely to enjoy
the highest RoA among peers. Note that we have not built in cost synergies from
the merger – (1) NIM could be better than expected and (2) operating leverage
benefits, which could improve RoA further. Maintain
Buy
on both IIB and BHAFIN.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526
Sohail Halai
(Sohail.Halai@MotilalOswal.com); +91 22 6129 1544

IndusInd Bank
Exhibit 1: BV dilution to be low even if merger happens at a premium
CMP
824
1,326
1.59
862
12.7
383
446
-0.03
0.44
5%
872
1,326
1.51
905
13.2
381
444
-0.65
-0.18
Premium to CMP
10%
15%
913
955
1,326
1,326
1.45
1.38
948
991
13.7
14.3
378
441
-1.25
-0.79
376
438
-1.85
-1.39
20%
996
1,326
1.33
1,034
14.8
374
436
-2.44
-1.98
BHAFIN Price for merger
IIB Price
Swap Ratio
Shares to be issued
% dilution (merged entity)
FY18 BV
FY19 BV
Dilution of BV
FY18 BV
FY19 BV
Source: MOSL, Company
Exhibit 2: Pro forma merged entity
FY16
45,166
32,970
78,135
36,721
41,414
6,722
34,693
11,828
34.1
22,865
5.9
167.2
173.1
884
1,400.5
38.4
291.0
1.8
16.6
IndusInd
FY17
FY18
60,157
71,792
33.2
19.3
40,612
49,023
23.2
20.7
100,768 120,815
29.0
19.9
48,337
58,005
31.6
20.0
52,431
62,810
26.6
19.8
8,760
9,925
30.3
13.3
43,671
52,885
25.9
21.1
14,892
17,981
34.1
34.0
28,779
34,904
25.9
21.3
5.9
5.9
191.9
197.9
14.3
1,096
24.0
1,709.5
22.1
48.4
332.6
1.9
15.5
221.9
227.9
15.2
1,337
22.0
2,061.8
20.6
58.7
383.1
1.9
16.4
FY19
87,356
21.7
58,560
19.5
145,915
20.8
69,976
20.6
75,939
20.9
11,770
18.6
64,168
21.3
21,817
34.0
42,351
21.3
5.9
258.4
264.3
16.0
1,631
22.0
2,489.0
20.7
71.2
444.3
1.9
17.2
Bharat Financial Inclusion
FY16
FY17
FY18
FY19
5,796
8,037
9,586
13,454
38.7
19.3
40.3
2,565
3,361
4,295
5,499
31.1
27.8
28.0
8,361 11,398
13,881
18,953
36.3
21.8
36.5
4,036
5,533
7,098
9,074
37.1
28.3
27.8
4,325
5,865
6,784
9,879
35.6
15.7
45.6
386
635
867
1,174
64.4
36.5
35.5
3,939
5,230
5,917
8,705
32.8
13.1
47.1
909
-969
0
2,002
-206.6
3,030
6,199
5,917
6,703
104.6
-4.6
13.3
1.2
1.3
1.3
1.3
12.5
13.8
50.2
71.5
23.8
108.6
5.1
24.9
26.1
27.5
99.1
69.6
38.8
99.5
39.1
45.2
200.9
7.2
30.0
32.0
33.4
21.5
107.9
54.9
152.6
53.3
43.2
244.0
4.7
19.4
38.7
40.1
20.0
148.6
37.7
203.4
33.3
48.9
292.9
3.8
18.2
FY16
50,962
35,534
86,496
40,757
45,740
7,108
38,632
12,737
25,894
5.9
179.7
185.7
Merged Entity
FY17
FY18
68,193 81,379
33.8
19.3
43,973 53,318
23.7
21.3
112,166 134,696
29.7
20.1
53,870 65,102
32.2
20.9
58,296 69,594
27.5
19.4
9,395 10,792
32.2
14.9
48,901 58,802
26.6
20.2
13922 17980
28.5
30.6
34,978 40,821
35.1
16.7
5.9
6.8
FY19
100,810
23.9
64,058
20.1
164,868
22.4
79,050
21.4
85,818
23.3
12,945
19.9
72,873
23.9
23819
32.7
49,054
20.2
6.8
NII
Growth
Other Income
Growth
Net Income
Growth
Opex
Growth
PPP
Growth
Provisions
Growth
PBT
Growth
Tax
Tax Rate
PAT
Growth
Equity
R&S (B)
Networth (B)
Growth
Loans (B)
Growth
Total Assets (B)
Growth
EPS
BV
RoA
RoE
218.1 254.0 297.1
224.0 260.8 304.0
20.7
16.4
16.5
934.4 1,166.0 1,445.5 1,780.5
24.8
24.0
23.2
1,472.1 1,809.0 2,214.5 2,692.4
22.9
22.4
21.6
58.8
59.9
72.0
377
383
446
2.1
2.03
2.0
17.1
16.8
17.4
Source: Company, MOSL
7 February 2017
2

IndusInd Bank
Exhibit 3: Pre-merger shareholding pattern - IIB (%)
Others,
17.2
Promoter,
15.0
Pre-merger
Exhibit 4: Post-merger shareholding pattern - IIB (%)
Others,
17.0
Promoter,
13.1
Merged Entity
Domestic
FI, 12.4
FII/Foreign
Corporate,
44.5
Source: Company, MOSL
Domestic
FI, 12.2
FII/Foreign
Corporate,
48.6
Source: Company, MOSL
GDR, 10.8
GDR, 9.4
Exhibit 5: State presence to expand for IIB; primary increase would be in asset branches
MAHARASHTRA
UTTAR PRADESH
KARNATAKA
ODISHA
BIHAR
WEST BENGAL
RAJASTHAN
MADHYA PRADESH
HARYANA
PUNJAB
GUJARAT
KERALA
JHARKHAND
Overall
BFIN
131
147
176
162
157
129
67
73
29
18
54
54
1252
IIB
137
94
33
31
21
48
80
63
86
84
91
29
19
1083
Merged entity
268
241
209
193
178
177
147
136
115
102
91
83
73
2335
Source: Company, MOSL
Exhibit 6: Nearly 50:50 loan mix, corporate: retail (%)
Pre-merger
Vehicle
finance, 32
Corporate
loans, 51
LAP/Credit
Card/P.L.,
10
Business MFI, 3
Banking, 4
Source: Company, MOSL
Exhibit 7: Proportion of MFI could go up to 9%
Post-merger
Vehicle
finance,
29.8
Corporate
loans, 48.1
LAP/Credit
Card/P.L.,
9.3
MFI, 9.0
Source: Company, MOSL
Business
Banking,
3.8
7 February 2017
3

IndusInd Bank
Exhibit 8: Liquid assets form substantial part of the balance sheet for BHAFIN (%)
Cash as a % of assets
72
51
25
35
24
13
36
25
Cash as a % of borrowings
68
53
41
34
42
26
33
47
25
34
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Source: Company, MOSL
Exhibit 9: IndusInd Bank DuPont Analysis (% of average assets)
Y/E March
Net Interest Income
Core Fee Income
Core Income
Operating Expenses
Cost to Core Income
Employee cost
Others
Core operating Profits
Non-Interest income
Trading and others
Operating Profits
Provisions
NPA
Others
PBT
Tax
Tax Rate
RoA
Leverage (x)
RoE
FY11
3.40
1.6
4.95
2.49
50.3
0.94
1.55
2.46
1.76
0.21
2.67
0.50
0.40
0.10
2.17
0.75
34.4
1.43
13.5
19.3
FY12
3.30
1.8
5.07
2.60
51.3
0.94
1.66
2.47
1.96
0.19
2.66
0.35
0.28
0.07
2.31
0.76
32.7
1.55
12.4
19.2
FY13
3.41
1.9
5.31
2.68
50.6
1.01
1.67
2.62
2.08
0.19
2.81
0.40
0.34
0.07
2.41
0.79
32.7
1.62
11.0
17.8
FY14
3.61
2.0
5.61
2.73
48.6
1.01
1.72
2.89
2.36
0.35
3.24
0.58
0.39
0.19
2.65
0.90
33.8
1.76
10.0
17.5
FY15
3.44
2.2
5.68
2.89
50.8
0.99
1.90
2.80
2.56
0.32
3.12
0.39
0.34
0.05
2.73
0.92
33.8
1.80
10.5
19.0
FY16
3.59
2.2
5.82
2.92
50.1
0.98
1.93
2.90
2.62
0.39
3.29
0.53
0.40
0.14
2.76
0.94
34.1
1.82
9.1
16.6
FY17E
3.87
2.2
6.09
3.11
51.0
0.99
2.11
2.98
2.61
0.39
3.37
0.56
0.41
0.15
2.81
0.96
34.1
1.85
8.4
15.5
FY18E
3.81
2.3
6.06
3.08
50.8
0.98
2.09
2.98
2.60
0.35
3.33
0.53
0.45
0.07
2.80
0.95
34.0
1.85
8.9
16.4
FY19E
3.84
2.26
6.10
3.08
50.4
0.99
2.08
3.03
2.57
0.31
3.34
0.52
0.46
0.06
2.82
0.96
34.0
1.86
9.2
17.2
Source: Company, MOSL
7 February 2017
4

IndusInd Bank
Exhibit 10: Bharat Financial Inclusion: DuPont Analysis (% of average assets)
Net Interest Income
Income from assignment of loans
NII (including assignment Income)
Non-interest Income
Loan processing fees
Recoveries from written off accounts
Interest on margin money deposits
Other Income
Net Income
Operating Expenses
Cost to income (%)
Employees
Others
Operating Profits
Provisions/write offs
PBT
Tax
Tax Rate (%)
PAT
Leverage (x)
RoE
FY11
16.3
2.8
19.1
2.8
-
0.1
0.2
2.2
22.0
12.2
55.7
7.8
4.5
9.7
5.6
4.1
1.4
34.7
2.7
3.1
8.2
FY12
5.3
1.2
6.4
2.6
0.3
0.7
0.4
1.2
9.1
14.1
155.2
8.7
5.4
(5.0)
39.1
(44.1)
1.2
(2.8)
(45.3)
2.7
(122.8)
FY13
3.7
2.8
6.5
3.6
1.1
0.8
0.7
1.0
10.0
12.5
125.1
8.2
4.3
(2.5)
11.7
(14.2)
-
-
(14.2)
5.1
(72.0)
FY14
7.1
2.2
9.4
3.8
1.3
0.7
0.7
1.0
13.2
9.8
74.5
6.6
3.2
3.4
0.6
2.8
-
-
2.8
5.9
16.4
FY15
8.0
1.9
9.8
4.7
1.3
0.7
0.5
2.2
14.6
8.9
61.1
6.4
2.5
5.7
0.3
5.4
0.2
3.0
5.2
4.8
24.9
FY16
7.9
1.9
9.8
4.3
1.2
0.2
0.3
2.6
14.1
6.8
48.3
4.9
1.9
7.3
0.7
6.6
1.5
23.1
5.1
4.9
24.9
FY17E
8.2
1.2
9.4
3.9
1.3
0.2
0.2
2.1
13.3
6.5
48.5
4.7
1.8
6.9
0.74
6.1
(1.1)
(18.5)
7.2
4.1
30.0
FY18E
6.9
0.7
7.6
3.4
1.3
0.2
0.2
1.7
11.0
5.6
51.1
4.2
1.5
5.4
0.7
4.7
-
-
4.7
4.1
19.4
FY19E
6.9
0.7
7.6
3.1
1.3
0.2
0.2
1.5
10.6
5.1
47.9
3.8
1.3
5.5
0.7
4.9
1.1
23.0
3.8
4.8
18.2
Source: Company, MOSL
7 February 2017
5

IndusInd Bank
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Equity Dividend (Incl tax)
Core PPP*
Change (%)
*Core PPP is (NII+Fee income-Opex)
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Change (%)
of which CASA Dep
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
Asset Quality
GNPA (INR m)
NNPA (INR m)
GNPA Ratio
NNPA Ratio
PCR (Excl Tech. write off)
E: MOSL Estimates
2012
53,592
36,549
17,042
23.8
10,118
27,160
29.9
13,430
13,730
26.9
1,804
11,927
3,900
32.7
8,026
39.0
1,196
12,680
29.9
2013
69,832
47,504
22,329
31.0
13,630
35,958
32.4
17,564
18,395
34.0
2,631
15,764
5,152
32.7
10,612
32.2
1,838
17,325
36.6
2014
82,535
53,628
28,907
29.5
18,905
47,812
33.0
21,853
25,960
41.1
4,676
21,283
7,203
33.8
14,080
32.7
2,154
23,327
34.6
2015
96,920
62,717
34,203
18.3
25,480
59,683
24.8
28,701
30,982
19.3
3,891
27,092
9,155
33.8
17,937
27.4
2,552
28,232
21.0
2016
115,807
70,641
45,166
32.1
32,970
78,135
30.9
36,721
41,414
33.7
6,722
34,693
11,828
34.1
22,865
27.5
3,522
36,541
29.4
2017E
143,247
83,091
60,157
33.2
40,612
100,768
29.0
48,337
52,431
26.6
8,760
43,671
14,892
34.1
28,779
25.9
4,023
46,357
26.9
(INR Million)
2018E
2019E
169,123
199,941
97,331
112,585
71,792
87,356
19.3
21.7
49,023
58,560
120,815
145,915
19.9
20.8
58,005
69,976
62,810
75,939
19.8
20.9
9,925
11,770
52,885
64,168
17,981
21,817
34.0
34.0
34,904
42,351
21.3
21.3
4,880
5,921
56,237
68,865
21.3
22.5
(INR Million)
2018E
2019E
5,950
5,950
225,585
261,913
231,535
267,863
1,522,230 1,887,565
24.0
24.0
566,470
725,349
27.7
28.0
219,424
235,557
88,700
98,044
2,061,889 2,489,030
140,730
164,799
449,486
539,383
20.0
20.0
1,337,608 1,631,882
22.0
22.0
14,298
15,233
119,767
137,733
2,061,889 2,489,030
(%)
13,073
15,761
5,408
6,628
1.0
1.0
0.4
0.4
58.6
57.9
2012
4,677
42,740
47,417
423,615
23.3
115,631
23.9
86,820
18,108
575,961
55,396
145,719
7.5
350,640
34.0
6,568
17,638
575,961
3,471
947
1.0
0.3
72.7
2013
5,229
71,074
76,303
541,167
27.7
158,674
37.2
94,596
21,000
733,065
68,487
196,542
34.9
443,206
26.4
7,561
17,269
733,065
4,578
1,368
1.0
0.3
70.1
2014
5,256
85,173
90,430
605,023
11.8
196,909
24.1
147,620
27,187
870,259
67,694
215,630
9.7
551,018
24.3
10,164
25,753
870,259
6,208
1,841
1.1
0.3
70.4
2015
5,295
101,151
106,445
741,344
22.5
252,996
28.5
206,181
63,904
1,117,874
107,791
228,783
6.1
687,882
24.8
11,576
81,841
1,117,874
5,629
2,105
0.8
0.3
62.6
2016
5,950
171,010
176,960
930,003
25.4
327,243
29.3
221,559
72,048
1,400,570
101,119
312,143
36.4
884,193
28.5
12,553
90,561
1,400,570
7,768
3,218
0.9
0.4
58.6
2017E
5,950
195,663
201,613
1,227,605
32.0
443,485
35.5
200,212
80,070
1,709,500
121,019
374,572
20.0
1,096,400
24.0
13,363
104,146
1,709,500
10,662
4,387
1.0
0.4
58.9
7 February 2017
6

IndusInd Bank
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury and RWO
Asset-Liability Profile (%)
Loans/Deposit Ratio
CASA Ratio
Investment/Deposit Ratio
G-Sec/Investment Ratio
CAR
Tier 1
Valuations
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
96.7
17.8
13.7
95.4
13.9
17.2
38.5
77.3
2.2
0.2
141.9
46.7
9.3
140.2
9.5
20.3
18.3
65.3
3.0
0.2
164.5
15.9
8.1
162.2
8.2
26.8
32.0
49.5
3.5
0.3
193.7
17.7
6.8
191.1
6.9
33.9
26.5
39.1
4.0
0.3
291.0
50.3
4.6
287.5
4.6
38.4
13.4
34.5
4.5
0.3
332.6
14.3
4.0
327.8
4.0
48.4
25.9
27.4
5.8
0.4
383.1
15.2
3.5
377.2
3.5
58.7
21.3
22.6
7.0
0.5
444.3
16.0
3.0
437.1
3.0
71.2
21.3
18.6
8.5
0.6
82.8
27.3
34.4
81.7
13.9
11.4
81.9
29.3
36.3
71.8
15.4
13.8
91.1
32.5
35.6
71.3
13.8
12.7
92.8
34.1
30.9
78.3
12.1
11.2
95.1
35.2
33.6
81.0
15.5
14.9
89.3
36.1
30.5
85.8
14.5
14.1
87.9
37.2
29.5
85.2
13.8
13.4
86.5
38.4
28.6
84.6
13.2
12.9
51.3
36.1
84.2
1.0
50.6
37.7
84.3
1.0
48.6
37.0
79.0
1.0
50.8
34.2
74.5
1.0
50.1
33.7
76.9
1.1
51.0
32.0
85.7
1.2
50.8
32.0
94.9
1.3
50.4
32.3
100.5
1.3
19.2
1.6
68.2
33.6
37.3
17.8
1.6
68.0
34.5
37.9
17.5
1.8
65.0
33.7
39.5
19.0
1.8
64.7
37.4
42.7
16.6
1.8
61.0
36.0
42.2
15.5
1.9
58.0
34.3
40.3
16.4
1.9
57.6
35.1
40.6
17.2
1.9
56.3
35.3
40.1
11.5
13.8
7.7
8.0
8.0
3.4
3.6
11.7
14.1
7.5
8.3
8.3
3.4
3.7
11.3
13.3
7.2
7.7
7.6
3.5
3.9
10.9
12.5
7.1
7.4
7.7
3.5
3.9
10.4
11.8
6.6
6.7
6.8
3.6
4.0
10.3
11.7
6.9
6.4
6.3
3.9
4.3
10.0
11.2
6.9
6.1
5.9
3.9
4.3
9.8
11.0
6.6
5.8
5.5
3.9
4.3
2012
2013
2014
2015
2016
2017E
2018E
2019E
7 February 2017
7

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed
Bank
IndusInd
by it and/or
its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide
for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate
investors on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering,
applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally,
MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or
affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make
investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential
conflicts of interest. MOSt and its affiliated company(ies), their directors and employees 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 affiliates of MOSt even though
there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not
match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various
objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from,
any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt 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. The information contained herein is based on publicly available data or other
sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a
subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the
document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons
that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in
the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation
the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or
for any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation
for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this
report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested
to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -
Click here to access detailed report
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. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research
receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee -
INDUSIND BANK
No
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
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 MOSt & 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 Kong 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 Securities Limited (MOSL) 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 MOSL 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 MOSL, 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., MOSL 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
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the
Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
Motilal Oswal Securities Ltd
7 February 2017
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
8