Motilal Oswal Financial Services

Sector Update | 3 February 2020

Sector Update | Financials

FinancialsTechnology

- Insurance

Dividend as a % of

Surplus/Deficit before tax

FY19 (%)

HDFCLIFE

IPRULIFE

SBILIFE

MAXLIFE

Impact of budgetary announcements on Life Insurers

Policyholder'sShareholder's

Premium growth may moderate; Dividend taxation to impact EV/VNB margins

A/C

360.0%

23.6%

389.4%

36.8%



In the Union Budget 2020, the government removed all major exemptions under the

537.5%

30.3%

new tax regime, which is likely to take away one of the key incentives that drives the

388.9%

26.3%

*Dividend income includes Interest

income and rent income

4Q individal un-weghted WRP

as a % of total

un-weighted WRP

HDFCLIFE

IPRULIFE

SBILIFE

MAXLIFE

FY16

37.9%

33.4%

36.5%

39.4%

FY19

34.9%

32.7%

31.6%

40.7%



Source: MOFSL, Company

Effect on Tax out flows due to

budgetary announcements

Savings/extra tax payable

Maximum savings under

new tax regime assuming no

exemptions were taken

Extra tax payable under new

tax regime assuming

exemptions were taken if

- Salary is INR7.5L

- Salary is INR10L

- Salary is INR12.5L

- Salary is INR15L

INR

78,000



39,000

47,320

57,720

81,120



Source: MOFSL, Company

sale of Life Insurance products. This resulted in a steep stock price correction for

insurers. The correction was especially more for the ones with a higher mix of the

savings business (MAXLIFE, ICICIPRU and SBILIFE corrected in the range of 10-14%

while HDFCLIFE corrected by ~6%).

The Indian insurance industry is primarily savings oriented and though growth in the

protection business has been strong, its share in total new business remains low.

Typically, the second-half of the fiscal is business-heavy owing to increased focus on

tax-saving investments (however, this skewness has been declining), and this may

drive softness in industry sales if individuals migrate to the new tax regime.

Moreover, the removal of Dividend Distribution Tax (DDT) and the move of making

dividend taxable in the hands of recipients will result in higher Effective Tax Rate (ETR)

for life insurers, particularly for those that are ULIP-heavy. However, if corporates

maintain the same payout ratio, the impact will be relatively limited.

The government’s proposal to list LIC will also be a significant event to monitor. LIC

accounted for 61%/71% of total new business on weighted/un-weighted basis as at

9MFY20; its share in industry AUM stood at 78% (INR27.6t) as at FY19. Listing of LIC

will help improve transparency and disclosure standards for the entire life insurance

industry and will attract investors to participate in wealth creation in a sector that has

delivered one of the best returns last year.

In this note, we further analyze the tax liability for individuals under the new/existing

regimes across income levels. We note that while some individuals, especially in the

low/mid income level may opt for the new tax regime, tax liability for individuals

(availing exemptions) will actually increase, and thus, will prevent any meaningful

impact on new business sales of life insurers.

Skewness of insurance sales in 4Q showing declining trends; expect impact

to be modest

The removal of major exemptions/deductions under the new tax regime could

adversely impact the sale of life insurance companies, as typically the 4Q of every

fiscal is business-heavy owing to an increased focus on tax-saving investments.

However, this skewness seems to have declined over the past few years with the

proportion of premium being underwritten in the 4

quarter to total premium

showing declining trends for all listed insurers, barring Max Life (Exhibit

1 and 2).

This reflects the changing consumer behavior in buying insurance for the right

reasons, such as life protection and planning their cash flows for retirement/

emergencies, rather than just for tax-saving purposes. Though some tax payers

might shift to the new tax regime, with increasing consumer awareness, we expect

the impact to be modest.

Research Analyst: Nitin Aggarwal

(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542|

Himanshu Taluja

(Himanshu.Taluja@motilaloswal.com)

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com) |

Yash Agarwal

(Yash.Agarwal@motilaloswal.com)

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Investors are advised to refer through important disclosures made at the last page of the Research Report.

3 February 2020

Sector Update | Financials

Savings biz to be most impacted but ticket size remains an important factor

The Indian insurance industry is primarily savings oriented (~85% total business) and

though growth in the protection business has been strong, its share in total new

business APE remains low across insurers. With all the exemptions gone, we believe

the sale of savings products will be moderately impacted. We note that IPRULIFE

and SBILIFE have higher proportion of ULIPs at 69%/70% (on APE basis) while

HDFCLIFE and MAXLIFE ULIPs’ share is relatively lower. However, IPRULIFE focuses

on an affluent customer base and has higher average ticket size of ~INR159k

compared to other players that may not be as prone to moving to the new tax

regime owing to higher tax liability in the absence of all exemptions.

Removal of DDT to increase ETR; to adversely impact EV and VNB margins

The removal of Dividend Distribution Tax (DDT) and the move of making dividends

taxable in the hands of recipients will result in higher tax rates for life insurers. This

will likely have an adverse impact on the Embedded Value (EV) and Value of new

business (VNB), thereby impacting margins. Dividend income forms a significant

proportion of the overall PBT ranging between 24-37% for FY19 under the

shareholders account. According to the sensitivity analysis disclosed by insurance

companies, the change in tax rate to 25% (from ~14% currently) negatively impacts

the VNB in the range of 8-20% while EV would see an impact in the range of 4-12%

(Exhibit

7).

However, this may still not throw color on the actual impact as dividend

income would have been taken as tax-free under these sensitivity tables. We further

note that if corporates maintain the same dividend payout ratio then the impact will

be relatively limited as insurance companies need to pay lower tax rate at ~14.5%.

Tax liability may increase under new tax regime in absence of exemptions

Under the new tax regime, the government has reduced the tax rates and removed

all major exemptions/deductions. This will have a mixed effect as the tax liability for

individuals (without availing exemptions) will decrease by a maximum INR78k,

thereby increasing their in-hand cash flows while for individuals (availing

exemptions), the tax liability will actually increase in the range of INR40-80k,

depending on the income level. Thus, individuals especially in the lower tax bracket

may prefer to opt for the new tax regime, which may impact insurance sales.

However, with the rise in their income, they would be inclined to avail exemptions

to reduce their tax outflow. Moreover, if an individual is having business income,

once the new tax regime is opted for, the said individual cannot revert to the old tax

regime, which will help maintain status quo. We, thus, expect this amendment to

have a modest impact on the new business sales of life insurers.

Valuation & View

The removal of major exemptions/deductions under the new tax regime will impact

sales of Life Insurance products as individuals migrating to the new tax regime will

lose on tax savings on their insurance purchase. We reckon that under the new tax

regime, tax liability for individuals (availing exemptions) will actually increase, and

thus, a large section of individuals might not prefer to migrate, resulting in a modest

impact on the new business sales of life insurers. Moreover, the removal of DDT will

result in higher effective tax rate (ETR) for life insurers, which will adversely impact

EV, VNB margins and shareholder earnings for insurers, more so for those that are

ULIP-heavy. We further note that if corporates maintain the same dividend payout

ratio then the impact will be relatively limited as insurance companies will pay tax at

a lower rate of ~14.5%. We await further details from company managements on

these developments and believe that while the structural story for the insurance

sector is intact, the near-term stock performance may remain volatile until clarity

emerges. We maintain

Buy

rating on

IPRULIFE

and

Neutral

HDFCLIFE.

3 February 2020

Sector Update | Financials

Exhibit 1:

% of Individual APE in 4 quarter showing declining

Exhibit 2:

…Individual un-weighted received premium also

trends (barring Max Life)…

reflects the same trend

4Q Individual APE as a %

FY15

of total Individual APE

HDFC Life

37.0%

IPRU Life

SBI Life

Max Life

34.5%

39.5%

34.3%

FY16

38.2%

32.7%

37.1%

40.3%

FY17

44.0%

33.3%

37.3%

39.8%

FY18

37.3%

27.6%

31.3%

41.7%

FY19

35.1%

32.1%

31.8%

42.1%

4Q Indl un-weighted WRP as a %

FY15 FY16 FY17 FY18 FY19

of total indl un-weighted WRP

HDFC Life

37.7% 37.9% 43.0% 41.3% 34.9%

IPRU Life

SBI Life

Max Life

34.6% 33.4% 33.0% 28.6% 32.7%

38.6% 36.5% 36.7% 31.1% 31.6%

34.3% 39.4% 38.5% 39.8% 40.7%

Source: MOFSL, Company

Exhibit 3:

As at 9MFY20, share of ULIPs within savings was

high for IPRU and SBI Life…

Business Mix (APE basis)

Savings

ULIP

PAR

Non Par

Annuity

Non Savings

Term

Annuity

Group

Total

*As on 1HFY20

88%

28%

13%

47%

11%

100%

86%

69%

11%

14%

100%

88%

70%

11%

100%

86%

35%

31%

20%

14%

100%

Exhibit 4:

…while for HDFCLIFE and MAXLIFE, it remained

relatively lower

HDFC Life IPRU Life SBI Life Max Life

32%

11%

16%

43%

28%

15%

25%

100%

63%

47%

11%

26%

100%

Savings

ULIP

PAR

Non Par

Non Savings

Term

Annuity

Group

Total

HDFC Life IPRU Life SBI Life Max Life Business Mix (NBP basis)

Source: MOFSL, Company *As on 1HFY20

Source: MOFSL, Company

Exhibit 5:

Policyholder’s A/c – Dividend income as % of PBT

Policyholder's A/c (INRm)

HDFC Life

Dividend Income

Surplus/Deficit before tax

% of Surplus/Deficit before tax

IPRU Life

Dividend Income

Surplus/Deficit before tax

% of Surplus/Deficit before tax

SBI Life

Dividend Income

Surplus/Deficit before tax

% of Surplus/Deficit before tax

Max Life

Dividend Income

Surplus/Deficit before tax

% of Surplus/Deficit before tax

14,139

6,136

230.4%

17,940

4,632

387.3%

22,199

6,555

338.7%

26,616

7,083

375.8%

32,065

8,245

388.9%

36,288

8,077

449.3%

45,137

8,176

552.1%

52,716

8,342

631.9%

61,157

12,608

485.1%

72,896

13,561

537.5%

35,403

12,124

292.0%

38,169

14,124

270.2%

41,929

11,527

363.8%

48,132

14,832

324.5%

52,438

13,467

389.4%

28,609

9,413

303.9%

34,725

11,342

306.2%

40,676

10,996

369.9%

47,354

12,701

372.8%

56,792

15,775

360.0%

FY15

FY16

FY17

FY18

FY19

*Dividend income includes Interest income and rent income

Source: MOFSL, Company

3 February 2020

Sector Update | Financials

Exhibit 6:

Shareholder’s A/c – Dividend income as % of PBT

Shareholder's A/c (INRm)

HDFC Life

Dividend Income

Profit before tax

% Profit before tax

IPRU Life

Dividend Income

Profit before tax

% Profit before tax

SBI Life

Dividend Income

Profit before tax

% Profit before tax

Max Life

Dividend Income

Profit before tax

% Profit before tax

2,033

4,776

42.6%

1,731

5,109

33.9%

1,356

7,681

17.7%

1,756

6,152

28.5%

1,635

6,226

26.3%

2,432

8,345

29.1%

2,894

8,738

33.1%

3,202

9,746

32.9%

3,496

11,843

29.5%

4,155

13,729

30.3%

3,789

15,854

23.9%

3,878

17,717

21.9%

3,763

17,843

21.1%

4,216

17,188

24.5%

4,274

11,612

36.8%

1,486

8,046

18.5%

1,639

8,349

19.6%

1,833

9,141

20.1%

2,250

11,267

20.0%

3,049

12,899

23.6%

FY15

FY16

FY17

FY18

FY19

*Dividend income includes Interest income and rent income

Source: MOFSL, Company

Taxation of dividends at the

hand of insurance

companies would adversely

impact margins and EV;

however, the sensitivity

tables may not give much

color on the actual impact

as dividend income would

have been taken as tax-free

under these tables.

Higher ULIP ticket size for

IPRU shows that customers

are not buying ULIP plans

only for tax savings as the

average ticket size stands

higher than the maximum

exemption limit of

INR150,000.

Exhibit 7:

Sensitivity analysis to change in tax rate

Sensitivity to change in tax rate to 25%

% Change in VNB

% Change in VNB Margin

% Change in EV

HDFC Life

-17.4%

-5.8%

-7.3%

IPRU Life

-7.5%

-4.0%

SBI Life

-16.1%

Max Life

-20.0%

-19.5%

-12.0%

Source: MOFSL, Company

Exhibit 8:

Ticket size under different categories

Ticket Size (INR)

Protection

ULIP

Par

Non Par

*As on FY19

IPRU Life*

12,048

159,329

60,308

76,468

Source: MOFSL, Company

3 February 2020

Sector Update | Financials

Exhibit 9:

Average ticket size for individual single business

Average Ticket Size (INR)

HDFC Life

Individual Single Premium (INRm)

Individual Single Policies Sold (Nos.)

Average Ticket Size

IPRU Life

Individual Single Premium (INRm)

Individual Single Policies Sold (Nos.)

Average Ticket Size

SBI Life

Individual Single Premium (INRm)

Individual Single Policies Sold (Nos.)

Average Ticket Size

Max Life

Individual Single Premium (INRm)

Individual Single Policies Sold (Nos.)

Average Ticket Size

4,598

1,040

4,421,346

5,671

890

6,371,798

7,444

722

10,310,662

8,544

938

9,108,444

9,635

1,102

8,743,073

7,767

1,356

5,727,655

7,065

40,708

173,548

7,804

41,861

186,422

5,912

26,240

225,290

6,873

21,841

314,699

7,572

19,939

379,766

12,372

24,106

513,221

2,521

9,111

276,644

4,327

23,021

187,968

6,336

32,355

195,832

10,460

46,627

224,332

11,616

40,435

287,270

9,293

12,708

731,264

3,849

208,019

18,504

3,609

287,459

12,555

6,283

240,765

26,095

13,216

28,182

468,966

29,252

46,750

625,710

19,953

28,518

699,656

FY15

FY16

FY17

FY18

FY19

9MFY20

Source: MOFSL, Company

Exhibit 10:

Average ticket size for individual regular new business

Average Ticket Size (INR)

HDFC Life

Individual Non-Single Premium (INRm)

Individual Non-Single Policies Sold (Nos.)

Average Ticket Size

IPRU Life

Individual Non-Single Premium (INRm)

Individual Non-Single Policies Sold (Nos.)

Average Ticket Size

SBI Life

Individual Non-Single Premium (INRm)

Individual Non-Single Policies Sold (Nos.)

Average Ticket Size

Max Life

Individual Non-Single Premium (INRm)

Individual Non-Single Policies Sold (Nos.)

Average Ticket Size

19,023

488,929

38,908

20,451

425,828

48,027

25,648

502,338

51,057

31,290

560,394

55,836

37,823

643,811

58,749

26,164

410,200

63,783

30,497

1,085,186

28,103

41,980

1,104,597

38,005

58,789

1,247,951

47,109

77,186

1,405,193

54,929

88,790

1,505,500

58,977

71,573

1,129,393

63,373

45,704

629,689

72,582

49,245

497,857

98,914

63,447

669,563

94,759

73,560

789,976

93,116

69,784

852,045

81,902

48,619

542,572

89,609

29,290

668,125

43,839

32,969

777,533

42,403

35,727

843,716

42,345

46,215

1,021,443

45,244

47,198

948,250

49,774

40,583

610,942

66,427

FY15

FY16

FY17

FY18

FY19

9MFY20

Source: MOFSL, Company

3 February 2020

Sector Update | Financials

Tax savings under the new tax regime stands at maximum INR78k (assuming individual was availing no exemptions)

Existing Regime without

New Regime

INR

availing any benefits

Case 1*

Case 2

Case 3

Taxable Income

1,500,000

Taxable Income

750,000 1,000,000 1,250,000

Tax at various Slabs

- Nil upto 2.5L

- @5% upto 2.5L-5L

- @20% upto 5L-10L

- @30% beyond 10L

Tax at various Slabs

- Nil upto 2.5L

- @5% upto 2.5L-5L

- @10% upto 5L-7.5L

- @15% upto 7.5L-10L

- @20% upto 10L-12.5L

- @25% upto 12.5L-15L

Tax Payable

Cess @ 4%

Total Tax Payable

Case 4

1,500,000

12,500

100,000

150,000

Tax Payable

Cess @ 4%

Total Tax Payable

Maximum savings under

the new regime

Source: MOFSL, Company

262,500

10,500

273,000

78,000

12,500

25,000

37,500

1,500

39,000

12,500

25,000

37,500

75,000

3,000

78,000

12,500

25,000

37,500

50,000

125,000

5,000

130,000

12,500

25,000

37,500

50,000

62,500

187,500

7,500

195,000

Extra tax payable under the new tax regime stands in the range of INR39-80k (assuming individual is availing basic exemptions)

Exiting Regime

INR

Case 1*

Case 2

Case 3

Case 4

Total Income

750,000

1,000,000

1,250,000

1,500,000

Less: HRA

Less: Standard Deduction

Less: 80C

Less: 80D

Total Basic Deductions

Taxable Income

Tax at various Slabs

- Nil upto 2.5L

- @5% upto 2.5L-5L

- @20% upto 5L-10L

- @30% beyond 10L

Tax Payable

Cess @ 4%

Total Tax Payable

Extra tax payable under new regime

Source: MOFSL, Company

150,000

40,000

150,000

25,000

365,000

385,000

200,000

40,000

150,000

25,000

415,000

585,000

250,000

40,000

150,000

25,000

465,000

785,000

300,000

40,000

150,000

25,000

515,000

985,000

39,000

12,500

17,000

29,500

1,180

30,680

47,320

12,500

57,000

69,500

2,780

72,280

57,720

12,500

97,000

109,500

4,380

113,880

81,120

Assumptions:

1) We have assumed HRA to be 20% of the total salary.

2) Taxable income up to INR5lac is exempt as rebate is allowed for salary up to INR5lac.

3) We have not factored in the tax benefits from other exemptions viz. LTA, 80G, Interest u/s 24, etc., which will

further improve the attractiveness of the existing tax regime.

3 February 2020

Sector Update | Financials

Government’s intent to list LIC will increase investor interest in the sector

The government has proposed to list LIC as part of its disinvestment initiative. This is

a significant step as LIC accounted for 61%/71% of total new business market share

on weighted/un-weighted basis as at 9MFY20. For FY19, its share in industry AUM

stood at 78% (INR27.6t). During FY19, LIC reported total premium collection of

INR3.4t (66% of total industry) through its vast network of 1.2m agents. Listing of LIC

will help improve the transparency and disclosure standards for the entire life

insurance industry and will attract investors to participate in the wealth creation in a

sector that has delivered one of the best returns over the past one year.

Exhibit 11:

A snapshot of LIC’s performance on key parameters

INRm

Premium Underwritten

First year Premium

Single Premium

New Business Premium

Renewal Premium

Total Premium

Market Share (%)

First year Premium

Single Premium

New Business Premium

Renewal Premium

Total Premium

Commission Expense Ratio

Operating Expense Ratio

Solvency Ratio

Surplus/Deficit

PAT

AUM

Life Fund

Pension & General Annuity & Group Fund

ULIP

Persistency ratio (By no of policies)

13th Month

25th Month

37th Month

49th Month

61st Month

Persistency ratio (By annualized premiums)

13th Month

25th Month

37th Month

49th Month

61st Month

No of Individual Agents

Distribution Offices

FY15

231,122

553,955

785,077

1,611,599

2,396,677

49%

84%

69%

75%

73%

6.3%

9.3%

155.0%

18,031

18,238

17,863,126

76%

19%

66.0%

51.0%

49.0%

47.0%

44.0%

77.0%

68.0%

65.0%

60.0%

51.0%

1,163,604

4,877

FY16

238,294

740,621

978,915

1,685,527

2,664,442

47%

84%

70%

74%

73%

5.8%

8.5%

155.0%

24,970

25,178

20,091,189

76%

21%

63.0%

60.0%

48.0%

47.0%

44.0%

72.0%

65.0%

62.0%

55.0%

1,061,560

4,892

FY17

263,010

982,823

1,245,833

1,759,041

3,004,874

44%

85%

71%

72%

5.5%

9.6%

173.0%

22,003

22,317

22,752,766

75%

22%

64.0%

56.0%

45.0%

44.0%

74.0%

66.0%

68.0%

62.0%

58.0%

1,131,181

4,897

FY18

281,464

1,065,253

1,346,717

1,835,515

3,182,232

43%

83%

69%

5.7%

9.5%

158.0%

24,218

24,464

25,269,231

75%

24%

66.0%

58.0%

53.0%

43.0%

76.0%

68.0%

63.0%

66.0%

59.0%

1,148,811

4,908

FY19

313,262

1,110,097

1,423,360

1,951,691

3,375,051

43%

78%

66%

67%

66%

5.7%

8.7%

160.0%

26,606

26,885

27,606,581

74%

25%

66.0%

60.0%

54.0%

50.0%

51.0%

77.0%

71.0%

65.0%

60.0%

63.0%

1,179,229

4,932

Source: MOFSL, Company

3 February 2020

Sector Update | 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.

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/Associate%20Details.pdf

Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject company in the

past 12 months. 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. Research

Analyst may have served as director/officer, etc. in the subject company in the past 12 months. MOFSL and/or its associates may have received any compensation from the subject company in the past 12 months.

In the past 12 months , MOFSL or any of its associates may have:

managed or co-managed public offering of securities from subject company of this research report,

received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,

received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.

Subject Company may have been a client of MOFSL or its associates in the past 12 months.

MOFSL 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. To enhance transparency, MOFSL 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. MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients

of this report should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service

transactions. 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. 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.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in

whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not

recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its

accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for

securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

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.

Disclosures:

Disclosure of Interest Statement

Analyst ownership of the stock

Companies where there is interest

A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its

associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their

views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL & its

group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and

Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)

Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available

to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian

Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S:

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOFSL is not a registered

investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the

Acts, any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by

Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment

activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934,

as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S.

registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD

rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore:

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore,

as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in

Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of

"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must

immediately discontinue any use of this Report and inform MOCMSPL.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or

reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report

may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by

any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and

should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative

products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained

in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without

any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or

have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any

company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that

is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you

solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or

entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement

within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such

restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use

of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees

responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com.

CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance

Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance

Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group

company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in

securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.

3 February 2020