BSE SENSEX
34,346
S&P CNX
10,554
AU Small Finance Bank
CMP: INR587
TP: INR705 (+21%)
Perfect start to a promising journey; Upgrading to Buy
28 February2018
Update | Sector: Financials
Upgrade to 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, INRm
Free float (%)
AUBANK IN
284.3
739/358
-9/-1/-
198.1
3.1
1285
67.1
Financials Snapshot (INR b)
Y/E MAR
FY18E FY19E FY20E
NII
11.4
17.0
23.4
PPP
6.1
8.7
12.2
PAT
3.0
4.3
6.1
EPS
10.6
15.3
21.6
BV/Share
80.8
96.4 118.4
P/E (x)
54.9
38.2
27.0
P/BV (x)
7.2
6.0
4.9
RoA (x)
1.8
1.9
2.0
ROE(X)
14.1
17.2
20.1
Shareholding pattern (%)
As On
Dec-17
Promoter
32.7
DII
11.6
FII
7.3
Others
48.4
FII Includes depository receipts
Stock Performance (since listing)
AU Small Finance
Sensex - Rebased
AU Small Finance Bank (AUBANK) has reported strong progress as it undertakes
transitioning from a leading retail-focused NBFC (AU Finance) to a small finance bank
(SFB). While migration to an SFB is expected to weigh on the return ratios over the near
term, we believe operating costs should peak out in FY18E and will begin to gradually
improve thereafter. The bank continues to record robust balance sheet growth and has
also surprised positively in terms of liability franchise development (2.7x CD ratio, 37%
CASA ratio within three quarters of banking operations), which should provide cushion
against a decline in yields. We expect 42% earnings CAGR over FY18-20E, driving RoA/RoE
to 1.98%/20.1% in FY20E. Post the recent correction, the stock trades at 4.9x FY20E BV
and 27x FY20E EPS. In view of its long-term sustainable business and earnings growth
potential, we believe that AUBANK should continue trading at a premium. We thus
upgrade the stock to Buy with a target price of INR705 (unchanged), based on 5.9x FY20E
BV/32.7x FY20E EPS.
Business growth remains robust; diversification set to improve further
Post transition to an SFB, AUBANK has launched several new deposit/lending
products and also expanded its presence in chosen geographies. Business growth,
too, continues to be strong (67% YoY loan growth; 38% YoY AUM growth). Aided by
its strong distribution network and launch of new products (including housing
finance), AUBANK should deliver 42% loan book CAGR over FY18-20E in our view.
We believe loan mix and geographical diversification will add stability to the
franchise and help maintain steady growth.
Deposit accretion surprises positively; will help cushion against drop in
yields arising from banking transition
Sep-17
32.9
10.2
6.4
50.5
AUBANK has surprised positively in terms of liability franchise development (88%
YoY deposits growth in 3Q) and demonstrated robust CASA growth (CASA ratio at
37%, +400bp QoQ). Deposits now form ~37% of total credit v/s 23% in 2QFY18 –
this should provide protection against a decline in yields, containing contraction in
the NIM (~80bp moderation over FY17-20E).
Earnings growth to accelerate from FY19E; cost ratios have likely peaked
700
500
300
100
We expect the return ratios to bounce back to healthy levels over FY19-20E as opex
ratios have likely peaked out in FY18E while strong build-up of liability franchise
will cushion NIM contraction. We believe a diversified loan book, wide
geographical presence and strong underwriting skills across different lending
segments will enable AUBANK to complete its SFB transition expeditiously. We
expect RoA/RoE to bottom out at 1.82%/14.1% in FY18 and recover to
1.98%/20.1% by FY20E.
Valuation and view
We expect a CAGR of 43% in loan book and 42% in PAT over FY18-20, with RoA/RoE
of 1.98%/20.1% in FY20. Post the recent correction, the stock trades at 4.9x FY20E
BV, and we believe AUBANK should continue trading at a premium, given its
superior performance and accelerated SFB transition. We upgrade to Buy with a TP
of INR705 (unchanged), based on two-stage GGM, corresponding to 5.9x FY20E BV.
Our PT corresponds to 32.7x FY20E EPS even as we expect the bank to deliver 40%+
earnings CAGR over the medium term.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 3982 5540 |
Anirvan Sarkar
(Anirvan.Sarkar@MotilalOswal.com); +91 22 3982 5505
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
| Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
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.

AU Small Finance Bank
New products to scale up gradually and provide diversification:
As an asset-
financing NBFC, AUBANK had built a strong franchise across three secured lending
segments: Vehicle loans, MSME loans and SME loans. Post transition to an SFB, it
has launched several new deposit/lending products and has also expanded into
newer geographies. The bank has also launched the housing finance business where
in it has successful prior experience. Given its prior experience in housing finance
and rapidly expanding presence in tier-II/III centers, AUBANK is well placed to
rapidly scale up this business post launch, in our view. Even though the bank’s
business mix is largely in favor of vehicle and SME loans (82% of AUM), newer
products will help it build scale and diversify risks. We expect AUBANK to deliver
~42% loan book CAGR over FY18-20E.
Exhibit 1: We expect the bank to register 37% AUM CAGR over FY18-20E
AUM (INRb)
Loan book (INRb)
277.2
235.6
Business growth remain robust; off-balance sheet mix to decline
further
37.0
18.4
44.5
24.6
55.7
82.2
34.0
107.3
63.9
56.2
148.2
115.6
201.3
165.1
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: Company, MOSL
Exhibit 2: AUBANK has recorded strong AUM growth across
verticals…
YoY growth in 3QFY18
104.8
Exhibit 3: …with increasingly diversified AUM mix
Wheels
Gold loans
RE Group
Secured MSME
Agri loans
Business Banking
Secured SME
NBFC
43.8
25.3
52.5
5.7
30.6
49.4
8.4
29.7
47.7
2QFY18
9.9
29.2
46.7
3QFY18
Source: MOSL, Company
Vehicle finance Secured MSME Secured SME
NBFC
1QFY18
Source: MOSL, Company
Decreasing off-BS should improve NIM (including off-BS):
As a bank, AUBANK has
access to deposits – we note that it has progressed well on deposits accretion,
bringing down incremental cost of funds. This will enable AUBANK to engage in
more direct lending rather than securitization / direct assignment of loans which it
had resorted to in a higher cost of funds scenario as an NBFC.
We expect off-BS loan contribution to decline to 15% of total AUM by FY20E from
~25% now.
28 February 2018
2

AU Small Finance Bank
Exhibit 4: Off-BS loans as % of total AUM should decline to
15% by FY20E
Off BS %
50.2
44.8
8.2
38.9
40.5
31.6
22.0
18.0
15.0
6.0
6.1
Exhibit 5: NIM (including off BS) to remain stable over FY18-
20E
NIM (including off BS)
8.7
8.2
8.3
8.6
8.4
FY13
FY14
FY15
FY16
FY17 FY18E FY19E FY20E
Source: MOSL, Company
FY13
FY14
FY15
FY16
FY17 FY18E FY19E FY20E
Source: MOSL, Company
Fee income growth to be supported by distribution fees
Third-party distribution fee growth should offset likely moderation in PSLC fees:
As
an SFB, AUBANK is required to maintain 75% of PSL-compliant loans on its books. As
the bank diversifies its product mix in favor of non-PSL compliant loans, it will
decrease the quantum of PSL certificates the bank can sell, leading to some
moderation in PSLC fees. However, this will likely get compensated by healthy
growth in third-party distribution fees, as the bank has tied up with 11 mutual funds,
one health insurance and one non-life insurance company to distribute their
products.
Deposit build-up beats expectations; to form 68% of total funds by FY20E
Fast-paced deposit accretion to cushion against drop in yields:
AUBANK has
surprised positively with fast-paced build-up of its liability franchise (88% YoY
deposits growth in 3Q) while also demonstrating robust CASA growth (CASA ratio at
37%, +400bp QoQ). The CD ratio has improved to 270% in 3QFY18 within just nine
months of the launch of its banking operations.
Accelerated deposits build-up has favored cost of funds, as incremental cost of
funds for 9MFY18 stands at 7.2%, with cost of deposits at 6.55%. Granularity of
deposits is at a healthy level, with an average SA ticket size of INR40,000. We note
that 89% of AUBANK’s deposits come from new to bank customers. We believe that
robust growth in deposits will protect against a decline in yields, containing NIM
contraction (9.3% in FY20 v/s 10.1% in FY17, excluding off-BS)
.
28 February 2018
3

AU Small Finance Bank
Exhibit 6: Funding mix incrementally diversified with
growing mix of deposits (34% in 3QFY18)
NCDs
CPs
Deposits
0
23
14
12
45
2QFY17
0
18
7
21
50
4QFY17
10
13
11
16
46
1QFY18
Refinance
Loans-Banks and NBFC
Others
21
8
6
21
40
2QFY18
34
5
0
23
34
3QFY18
Exhibit 7: We expect deposits to form 68% of total funds by
FY20E
Deposits
Borrowings
58.6
40.8
31.8
41.4
FY18E
59.2
FY19E
68.2
FY20E
Source: MOSL, Company
Source: MOSL, Company
Exhibit 8: CASA ratio is best-in-class among listed SFBs, even
though AUBANK started operations after Equitas and Ujjivan
CASA ratio
Exhibit 9: Cost of funds to decline steadily aided by healthy
deposit accretion
Cost of funds
12.3
12.5
11.3
10.3
8.4
7.5
7.1
6.9
37.2
AU Bank
32.6
Equitas
3.7
Ujjivan
Source: Company, MOSL
FY13
FY14
FY15
FY16
FY17 FY18E FY19E FY20E
Source: Company, MOSL
Asset quality improving post a minor bump-up from GST/90dpd migration
Asset quality to improve with stabilization in vehicle portfolio:
A large proportion
of secured advances, strong underwriting and effective credit monitoring has
enabled AUBANK to maintain NPL ratios at controlled levels. However, post the
launch of its SFB operations, migration to the 90dpd recognition basis in 1QFY18,
combined with inability to recognize repossessed vehicles as a bank (NBFCs are
allowed) had resulted in an increase in the GNPL ratio to ~3%. Vehicle finance
portfolio NPAs are partly also due to GST implementation which had impacted
AUBANK’s customer segment. However, as the implementation issues iron out,
asset quality in this segment should improve further.
In 3QFY18, asset quality improved slightly with ~19% QoQ decline in fresh slippages
to INR680m, leading to a 25/22bp QoQ improvement in the GNPA/NNPA ratios to
2.83%/1.87% (2.12%/1.40% including off-balance sheet). Vehicle finance GNPAs
declined to 3.2% in 3QFY18 from 3.7% in 2QFY18. PCR for the bank had declined
post 4QFY17 due to aggressive write-offs (the bank provides 100% for loans that are
delinquent for > 730 days), but improved to 34.4% in 3QFY18 from 28.6% in 1QFY18.
Management has guided for a further improvement in PCR to 38-40% by end-FY18.
28 February 2018
4

AU Small Finance Bank
Exhibit 10: Asset quality expected to improve steadily
GNPA
50.0
50.0
50.0
52.5
40.2
1.3
0.4
0.2
0.5
0.3
0.6
1.0
0.5
35.3
1.1
0.7
0.4
1.7
2.7
35.9
1.4
1.7
2.6
2.4
1.2
NNPA
PCR
45.4
50.7
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: MOSL, Company
Earnings growth to accelerate from FY19E; cost-ratios have likely peaked
Transitioning into an SFB will impact the return ratios on (i) negative carry due
to CRR/SLR, resulting in margin compression and (ii) higher operating expenses
due to investments in technology, branches, operating centers, employees, etc.
However, we believe that operating expenses will peak out in FY18E and
operating leverage should improve gradually FY19E onward. We also believe
that fast-paced deposit accretion will help reduce incremental cost of funds,
helping cushion against NIM contraction. We expect the return ratios to bounce
back to healthy levels over FY19-20E.
Exhibit 11: Operating leverage is expected to improve FY19 onward…
Cost to income
54.0
45.2
40.2
36.6
2.8
40.9
3.4
39.3
3.0
Cost to average assets
54.4
4.4
54.3
4.6
53.2
4.5
2.4
2.5
2.3
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: MOSL, Company
We believe a diverse loan book, wide geographical presence and strong
underwriting skills across different lending segments will enable AUBANK to
complete its SFB transition expeditiously.
We expect RoA/RoE to bottom out at 1.82%/14.1% in FY18 and recover to
1.98%/20.1% by FY20E.
28 February 2018
5

AU Small Finance Bank
Exhibit 12: ...leading to an improvement in RoA/RoE over FY19/20E
RoA
23.3
17.8
13.6
1.7
1.4
19.9
2.5
2.8
RoE
20.4
2.6
14.1
1.8
20.1
17.2
1.9
2.0
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Source: MOSL, Company
Valuation view
We expect a CAGR of 43% in loan book and 42% in PAT over FY18-20, with RoA/RoE
of 1.98%/20.1% in FY20. Considering the likelihood of business and earnings growth
sustainability with strong management at the helm, we believe the stock should
continue trading at a premium. Post the recent correction, the stock trades at 4.9x
FY20E BV. We thus upgrade AUBANK to
Buy,
with a target price of INR705
(unchanged), based on two-stage GGM, corresponding to 5.9x FY20E BV.
28 February 2018
6

AU Small Finance Bank
Financials and Valuations
INCOME STATEMENT
Y/E MARCH
Interest Income
Interest Expense
Net Financing income
Change (%)
Income from Sec.
Net Income (Incl Secur)
Change (%)
Other Income
Net Income
Change (%)
Operating Expenses
Change (%)
Operating Profits
Change (%)
Total Provisions
% to operating income
PBT
Exceptional items
PBT including exceptional
Tax
Tax Rate (%)
PAT
Adjusted PAT
Change (%)
Change (on adjusted basis) (%)
BALANCE SHEET
Y/E MARCH
Equity Share Capital
Reserves & Surplus
Equity Networth
Interest bearing liabilities
Change (%)
Other liabilities
Change (%)
Total Liabilities
Loans
Change (%)
Investments
Net Fixed Assets
Other assets
Total Assets
Total Assets (incl. off BS)
AUM Mix
AUM (INR b)
Change (%)
On BS (%)
Off BS (%)
2013
3,370
1,972
1,398
169.6
711
2,109
73.4
24
2,133
74.2
965
45.9
1,168
107.6
168
14.4
1,001
0
1,001
333
33.3
668
668
106.4
106.4
2014
4,984
2,876
2,108
50.8
656
2,764
31.1
58
2,822
32.3
1,134
17.6
1,688
44.4
607
36.0
1,081
0
1,081
371
34.3
709
709
6.3
6.3
2015
6,429
2,820
3,609
71.2
610
4,219
52.7
24
4,243
50.4
1,554
37.0
2,690
59.4
606
22.5
2,084
0
2,084
681
32.7
1,402
1,402
97.7
97.7
2016
9,351
3,953
5,399
49.6
753
6,152
45.8
50
6,202
46.2
2,538
63.3
3,665
36.2
438
12.0
3,226
0
3,226
1,110
34.4
2,116
2,116
50.9
50.9
2017
12,298
5,003
7,294
35.1
1,441
8,736
42.0
135
8,871
43.0
3,489
37.5
5,382
46.9
652
12.1
4,730
6,703
11,433
3,214
28.1
8,220
3,400
288.4
60.7
2018E
18,761
7,402
11,359
55.7
1,521
12,880
47.4
473
13,353
50.5
7,270
108.3
6,084
13.0
1,508
24.8
4,576
0
4,576
1,556
34.0
3,020
3,020
-63.3
-11.2
2019E
27,995
10,964
17,031
49.9
1,273
18,305
42.1
829
19,133
43.3
10,387
42.9
8,746
43.8
2,162
24.7
6,584
0
6,584
2,239
34.0
4,345
4,345
43.9
43.9
(INR Million)
2020E
38,873
15,487
23,386
37.3
1,284
24,669
34.8
1,326
25,995
35.9
13,818
33.0
12,177
39.2
2,886
23.7
9,291
0
9,291
3,159
34.0
6,132
6,132
41.1
41.1
2013
405
4,014
4,419
24,821
1,889
31,128
18,432
7,387
168
5,142
31,128
49,740
2013
37,043
45.0
49.8
50.2
2014
430
5,548
5,978
21,300
2,308
22.2
29,586
24,560
33.3
1,136
169
3,721
29,586
49,516
2014
44,490
20.1
55.2
44.8
2015
441
7,667
8,108
28,783
3,462
50.0
40,353
34,040
38.6
1,398
194
4,721
40,353
61,990
2015
55,677
25.1
61.1
38.9
2016
441
9,654
10,094
47,826
5,022
45.0
62,942
56,208
65.1
2,316
246
4,172
62,942
88,947
2016
82,213
47.7
68.4
31.6
2017
2,843
17,033
19,876
70,710
7,531
50.0
98,117
63,900
13.7
21,503
2,758
9,956
98,117
1,41,556
2017
1,07,339
30.6
59.5
40.5
2018E
2,843
20,130
22,973
1,26,745
8,661
15.0
1,58,440
1,15,587
80.9
30,104
6,896
4,353
1,58,440
1,91,042
2018E
1,48,189
38.1
78.0
22.0
2019E
2,843
24,572
27,414
1,81,947
12,991
50.0
2,22,414
1,65,051
42.8
41,544
13,103
842
2,22,414
2,58,645
2019E
2,01,282
35.8
82.0
18.0
2020E
2,843
30,824
33,666
2,68,433
17,538
35.0
3,19,699
2,35,594
42.7
60,239
22,930
-1,500
3,19,699
3,61,275
2020E
2,77,169
37.7
85.0
15.0
28 February 2018
7

AU Small Finance Bank
Financials and Valuations
RATIOS
Y/E MARCH
Spreads Analysis (%)
Avg. Yield - on earning assets
Avg. Yield - on loans
Avg. Cost of funds
Spreads
Net Interest Margin
Net Interest Margin (Incl off BS)
Profitability Ratios (%)
RoE
RoA (On balance Sheet)
RoA (incl off BS AUM)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Net NPAs to Adv.
Debt/Equity (x)
Assets/Equity (Avg)
Assets/Equity (Avg - Incl off)
CAR
Tier I
Valuations
Book Value (INR)
BV Growth (%)
Price-BV (x)
EPS (INR)
Adjusted EPS (INR)
EPS Growth (%)
Price-Earnings (x)
E: MOSL Estimates
2013
19.1
22.8
12.3
10.5
7.9
6.0
2014
19.3
22.1
12.5
9.6
8.2
6.1
2015
21.0
21.4
11.3
10.1
11.8
8.2
2016
19.9
20.5
10.3
10.2
11.5
8.7
2017
17.1
20.3
8.4
11.9
10.1
8.2
2018E
16.1
18.9
7.5
11.4
9.8
8.3
2019E
15.7
18.2
7.1
11.1
9.7
8.6
2020E
15.3
17.7
6.9
10.8
9.3
8.4
17.8
3.1
1.7
45.2
54.6
13.6
2.3
1.4
40.2
61.4
19.9
4.0
2.5
36.6
60.8
23.3
4.1
2.8
40.9
62.2
20.4
3.8
2.6
39.3
55.2
14.1
2.4
1.82
54.4
59.7
17.2
2.3
1.93
54.3
60.5
20.1
2.3
1.98
53.2
61.4
0.3
5.6
5.7
10.4
18.3
14.9
2013
109.2
0.6
3.6
5.8
9.5
18.8
15.7
2014
139.1
27.4
17.0
17.0
0.5
3.6
5.0
7.9
17.3
15.8
2015
183.9
32.2
32.2
32.2
89.4
0.4
4.7
5.7
8.3
16.9
13.5
2016
228.9
24.5
48.0
48.0
49.0
1.1
3.6
5.4
7.7
23.2
21.1
2017
69.9
-69.5
18.6
20.7
-61.3
1.7
5.5
6.0
7.8
19.5
17.4
2018E
80.8
15.6
7.2
10.6
10.6
-42.8
54.9
1.4
6.6
7.6
8.9
17.0
15.4
2019E
96.4
19.3
6.0
15.3
15.3
43.9
38.2
1.2
8.0
8.9
10.1
16.2
13.6
2020E
118.4
22.8
4.9
21.6
21.6
41.1
27.0
28 February 2018
8

AU Small Finance Bank
NOTES
28 February 2018
9

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
AU Small Finance Bank
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.
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The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,
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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
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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.
Disclosure of Interest Statement
Analyst ownership of the stock
AU Small Finance Bank
No
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 MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have
expressed their views.
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For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities
and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)
Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only
available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from
registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal 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
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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
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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
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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:
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced
in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in
this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of
independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document
(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including
those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy,
completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval.
MOSL, 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 MOSL. The views expressed are those of the analyst, and
the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall
be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees
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or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100.
Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real
Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
28 February 2018
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