Equity Research INDIA June 22, 2018 BSE Sensex: 35432 AU Small Finance Bank BUY ICICI Securities Limited Upgrade from Hold is the author and distributor of this report Because tomorrow came yesterday Rs690 Reason for Report: Company update and recommendation change
FINANCIALS AU Small Finance Bank (AU’s) disbursement velocity in Q4FY18 left even our most optimistic expectations completely in the dust. In three months they disbursed about a quarter of their current loan AUM, an event one might legitimately expect in only a start-up! As if on cue, a primary raise - ~5% dilution, Target price Rs835 70% of it in warrants, @Rs692.8 per share – followed. A quick analysis of the composition of this growth spurt soothes nerves regarding the quality of said growth – the natural first order of business. Our March, 2018 initiating coverage Earnings revision report on the company mentioned, “…With leverage touching 8x in FY20E and (%) FY19E FY20E RoE expected to inch close to 20%, a capital raise maybe opportune…”. Short NII ↑ 3.2 ↑ 6.4 PPoP ↑ 5.2 ↑ 8.9 story shorter, in the next two months, AU reset the outer limits of what we PAT ↑ 7.8 ↑ 10.4 thought of as possible growth and raised equity capital. If we were nit picking, we
could say that AU probably lost some pricing power in the bargain, at the Target price revision aggregate loan portfolio level, through an asset mix shift accommodating Rs835 from Rs700 traditional bank assets & customers. Most would however see it as a natural evolution in lieu of accelerated liability side gains since bank conversion. On Shareholding pattern balance, we would have to agree. Sep Dec Mar ‘17 ‘17 ‘18 We argue in the following pages, with segment granularity, that meaningful Promoters 32.9 32.7 32.7 outperformance of already high growth expectations is not implausible. Our bull- Institutional investors 16.6 18.9 19.2 case scenario analysis on next two years loan growth suggests that if said MFs and UTI 7.4 7.1 7.4 positive surprise does indeed play out; the bank may be in a position to access FIs/Banks 0.0 0.0 0.0 the equity markets, without prejudice to interim capital productivity, as early as Insurance co. 2.8 4.5 4.4 FIIs 6.4 7.3 7.4 H2FY20 (still!). A 3-5% dilution, even at a 27% discount to current valuation Others 50.3 48.4 48.1 multiples, would imply a 15-24% expansion in FY20E BVPS. This and the likelihood of many such shareholder value enhancing dilutions in its wake, supports current valuations of 6.8xFY19E P/BVPS. Hiccups on asset quality can Price chart derail the story, but the remoteness of that possibility is well captured in the 750 valuations. We continue to nominate the real estate cycle sensitive subset of the SME segment as the most likely culprit of an unlikely upset. We drop our target 700 multiple to 6xFY20E BVPS from 7x, to reflect the conclusion of the equity raise 650 which had motivated our earlier increase. This leads to a 12M TP of Rs835 (Rs
(Rs) 600 700 earlier, upgrade is due to the current dilution’s boost to FY20E BVPS). We upgrade our recommendation to BUY from HOLD. 550 Growth not at the cost of safety. A closer look at the composition of the growth in 500 disbursements delivered by the company provides succour on any worries about
dilution of credit standards. Simply put, the high growth was due to the company
Jul-17
Jun-18
Mar-18 Sep-17 Dec-17 capitalising on its liability side gains to access customers at lower loan yields, who they would not have been able to target as a NBFC. This is part of the reason of the high growth (25.1% YoY) in auto disbursements and the jump in business banking loans (traditionally a bank product). These two segments were the main drivers of
the growth surprise as MSME growth expectations were already high.
Market Cap Rs197bn/US$2.9bn Year to March 2018 2019E 2020E 2021E
Reuters/Bloomberg AUFI.BO/AUBANK IN NII (Rs mn) 9,389 12,928 16,618 22,138 Shares Outstanding (mn) 285.7 Net Profit (Rs mn) 2,900 3,960 6,634 9,534 Research Analysts: 52-week Range (Rs) 737/358 EPS (Rs) 9.9 12.9 21.7 31.1 Santanu Chakrabarti Free Float (%) 67.3 % Chg YoY -65.6 30.1 67.5 43.7 [email protected] FII (%) 7.4 P/E (x) 69.4 53.4 31.9 22.2 +91 22 6637 7351 Daily Volume (US$/'000) 2,043 P/BV (x) 8.8 6.8 5.0 4.1 Abhijit Tibrewal Absolute Return 3m (%) [email protected] 18.1 Net NPA (%) 1.3 1.8 1.8 1.8 +91 22 6637 7230 Absolute Return 12m (%) NA Dividend Yield (%) 0.1 0 0 0 Sensex Return 3m (%) 7.4 RoA (%) 2.9 2.2 2.6 2.9 Sensex Return 12m (%) 14.7 RoE (%) 13.6 14.7 18.0 20.3
Please refer to important disclosures at the end of this report
AU Small Finance Bank, June 22, 2018 ICICI Securities
Growth not at the cost of safety
A diagnostic analysis of AU Small Finance Bank’s growth in Q4FY18 is illustrative of the fact that growth has been a function of a target market expansion from the ability to tackle lower yield customer segments (namely, the scale up in business banking, usual high growth in MSME financing and a market expansion opportunity in auto finance), thanks to liability side gains.
Chart 1: Auto and MSME leads disbursement run rate expansion…
Vehicle Finance MSME SME Gold Loan and others
30,000 28,360 990 25,000 10,600 20,000 20,980 1,990 15,000
6,420 (Rs mn) (Rs 10,000 16,260 5,000 10,150
0 Q4FY17 Q4FY18
Source: Company data, I-Sec research
Chart 2: …as does business banking and NBFC, together constituting the lion’s share of the dramatic disbursement jump
NBFC Real Estate Business Banking
16,000 13,690 14,000
12,000 5,650 10,000 8,000 1,650 (Rs mn) (Rs 6,000 3,620 4,000 410 790 6,390 2,000 2,420 0 Q4FY17 Q4FY18
Source: Company data, I-Sec research
2
AU Small Finance Bank, June 22, 2018 ICICI Securities
Chart 3: Move into business banking signals openness to traditional banking low risk reasonable yield asset classes
Business Banking disbursements QoQ Growth rate (RHS) 6,000 5,650 250
5,000 200
4,000 150
3,000 (%)
(Rs mn)(Rs 100 2,000 1,690 1,440 50 1,000 90 280 410 0 0 0 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18
Source: Company data, I-Sec research
Chart 4: Auto finance growth also helped by willingness to accept business at more bank equivalent yields
Vehicle Finance disbursements QoQ Growth rate (RHS) 18,000 16,260 70 16,000 60 50 14,000 40 12,000 10,750 10,150 10,560 30 10,000 8,600 8,330 20 6,780
8,000 10 (%) (Rs mn) (Rs 0 6,000 (10) 4,000 (20) 2,000 (30) 0 (40) Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18
Source: Company data, I-Sec research
Chart 5: MSME business continues to grow from a still small base
MSME disbursements QoQ Growth rate (RHS) 12,000 200 10,600
10,000 150
8,000 100 6,420 6,200 5,890 6,000 50
4,240 (%)
4,590 (Rs mn)(Rs 4,000 0 2,370 2,000 (50)
0 (100) Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18
Source: Company data, I-Sec research
3
AU Small Finance Bank, June 22, 2018 ICICI Securities
Growth acceleration can foreshorten dilution timeline
We consider a scenario where growth surprises further to the north of the 35.1% CAGR that we build in for FY18-20E. We do not believe that this scenario is beyond the pale, given that our base case growth assumptions are not factoring in; (i) rebuild of the housing loan business segment, (ii) a likely acceleration in the UV/ CV cycle, (iii) the opportunity to grow business banking at a high clip and (iv) off balance sheet business growth through products like bank guarantees.
Our bull case scenario indicates the opportunity for a late FY20 dilution. It does not build one in.
Chart 6: Vehicle finance disbursements can be legitimately higher than our expectations and forms one of our two segmental tweaks for the bull case
Vehicle Finance Disbursements
30,000 Base Case Bull Case
25,000
20,000
15,000 (Rs mn)(Rs 10,000
5,000
0 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Source: Company data, I-Sec research
Chart 7: SME segment disbursement assumptions for the bull case higher to accommodate a strong showing in the re-started housing loan segment
SME Disbursements
4,000 Base Case Bull Case 3,500 3,000 2,500 2,000
(Rs mn) (Rs 1,500 1,000 500 0 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Source: Company data, I-Sec research
4
AU Small Finance Bank, June 22, 2018 ICICI Securities
Chart 8: Just changing the assumptions on these two segments boosts total FY19E AUM growth by 810bps in the bull case AUM Growth (FY19E) Base case Bull case 200 180 174.0 160 140 120 100 78.6 84.7
(%) 80 49.2 48.3 60 40.3 40.2 32.5 34.0 40 20 7.8 0 -20 -5.4 Vehicle MSME SME Gold Loan NBFC Real Business Total AUM Finance and others Estate Banking
Source: Company data, I-Sec research
Chart 9: A capital raise becomes justifiable by mid to late FY20 (earlier leverage looks higher because warrant conversion is assumed in Q2FY20)
Leverage (Loans/Net Worth)
9.0 Base Case Bull Case 8.0 7.4 7.6 7.4 7.1 7.2 6.7 6.9 6.9 7.0 6.2 6.5 6.3 6.4 5.7 5.9 6.0 5.3 5.4 5.0
(x) 4.0 3.0 2.0 1.0 0.0 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Source: Company data, I-Sec research
Chart 10: Hard to make the case that a late FY20 dilution in the bull case, happens at a point of low capital productivity
ROE Base Case Bull Case 25.0
20.6 19.8 20.0 18.7 18.9 17.4 17.3 18.0 15.7 16.2 16.1 15.0 14.0 14.1 13.9 14.6
11.1 10.9 (%) 10.0
5.0
0.0 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20
Source: Company data, I-Sec research
5
AU Small Finance Bank, June 22, 2018 ICICI Securities
Chart 11: Of course, BVPS does not shift by much in the absence of a dilution
Base case Bull case
150 141.8 139.3 140
130
120
(Rs) 110 102.0 102.3 100
90
80 FY19 FY20
Source: Company data, I-Sec research
Chart 12: EPS sensitivity is obviously higher
Base case Bull case
26 23.8 24 21.7 22 20
18 (Rs) 16 13.5 13.9 14 12 10 FY19 FY20
Source: Company data, I-Sec research
6
AU Small Finance Bank, June 22, 2018 ICICI Securities
A triggered dilution can boost BVPS substantially
If the bull case growth scenario triggers a dilution in early FY20E, the following analysis illustrates the impact on FY20E BVPS for a 3% and 5% dilution. This is to illustrate how valuations may start reflecting this eventuality if reality starts to move closer to the bull case assumptions. As we see, the bull case growth scenario can boost FY20E BVPS by 15-24%.
Table 1: FY20E BVPS impact calculation if bull case triggers a 3% dilution (in Rs mn) FY20E Assumption Pre money share count (mn) 306.3 Pre money net worth 43,428 Pre money BVPS (in Rs) 141.8 Issue price 830 ~20% over CMP, 27% discount to current multiple Dilution (%) 3.0 Post money share count (mn) 315.7 Post money net worth 51,290 Post money BVPS (in Rs) 162.4 Inflation in BVPS from issue (%) 14.6 Source: Company data, I-Sec research
Table 2: FY20E BVPS impact calculation if bull case triggers a 5% dilution (in Rs mn) FY20E Assumption Pre money share count (mn) 306.3 Pre money net worth 43,428 Pre money BVPS (in Rs) 141.8 Issue price 830 ~20% over CMP, 27% discount to current multiples Dilution (%) 5.0 Post money share count (mn) 322.4 Post money net worth 56,807 Post money BVPS (in Rs) 176.2 Inflation in BVPS from issue (%) 24.3 Source: Company data, I-Sec research
7
AU Small Finance Bank, June 22, 2018 ICICI Securities
Annexure: Financials
Table 3: Profit and Loss Statement (Rs mn, year ending March 31) FY16 FY17 FY18 FY19E FY20E FY21E Interest earned 10,104 13,739 17,667 26,856 36,150 46,492 Interest expended 3,952 5,003 8,278 13,928 19,532 24,354 Net interest income 6,152 8,736 9,389 12,928 16,618 22,138
Other income 31 106 3,955 5,738 7,799 10,022
Staff cost 1,577 1,928 4,245 6,134 7,456 9,063 Depreciation 85 58 104 125 150 180 Other operating expenses 874 1,503 3,248 4,372 4,894 6,281 Total operating cost 2,537 3,488 7,598 10,631 12,500 15,524
Pre-provisioning op profit 3,646 5,353 5,745 8,035 11,917 16,637
Provisions & contingencies 419 623 1,326 2,099 1,971 2,343
Profit before tax & exceptional items 3,227 4,730 4,419 5,936 9,946 14,294 Exceptional items - 6,703 - - - - Profit before tax & exceptional items 3,227 11,434 4,419 5,936 9,946 14,294
Income taxes 1,110 3,214 1,519 1,977 3,312 4,760
PAT 2,117 8,220 2,900 3,960 6,634 9,534 Source: Company data, I-Sec research
Table 4: Balance Sheet (Rs mn, year ending March 31) FY16 FY17 FY18 FY19E FY20E FY21E Capital 441 2,843 2,857 2,923 3,062 3,062 Reserves & surplus 9,654 17,033 19,955 28,308 39,602 48,402 Networth 10,095 19,876 22,812 31,231 42,665 51,464
Total borrowings 47,826 70,710 155,622 257,285 336,005 426,360 Banks 18,780 27,637 43,107 75,548 105,582 128,335 NCDs/Bonds 23,850 38,275 33,147 10,087 2,801 2,801 Commercial papers/CDs 5,196 4,798 311 27,941 7,812 -4,312 Term Deposits & CASA - - 79,211 143,709 219,810 299,536
Provisions 663 762 2,088 2,088 4,017 4,017 Other Liabilities 4,359 6,770 7,806 9,048 8,516 10,089
Total liabilities & stockholders' equity 62,942 98,117 188,328 299,652 391,203 491,930
Loans & advances 58,125 65,950 133,121 220,394 292,712 371,441
Investments 2,315 21,503 30,506 51,457 67,201 85,272 Cash and Balance 1,235 6,245 17,612 19,823 22,311 25,111
Fixed Assets 246 2,758 3,861 4,345 4,891 5,505 Current & other assets 1,022 1,661 3,227 3,632 4,088 4,602
Total Assets 62,942 98,117 188,328 299,652 391,203 491,930 Source: Company data, I-Sec research
8
AU Small Finance Bank, June 22, 2018 ICICI Securities
Table 5: Key Ratios (Year ending March 31) FY16 FY17 FY18 FY19E FY20E FY21E Growth (%): AUM 47.7 30.6 49.4 40.2 30.2 26.9 Disbursements 66.4 19.8 60.9 35.8 23.2 23.0 Loan book (on balance sheet) 64.3 16.5 97.6 65.4 32.8 26.9 Total Assets 55.5 55.9 91.9 59.1 30.6 25.7 Total Deposits 0.0 0.0 0.0 81.4 53.0 36.3 Total NDTL 66.2 47.8 120.1 65.3 30.6 26.9 Total Investments 65.6 828.8 41.9 68.7 30.6 26.9 Interest Income 39.3 36.0 28.6 52.0 34.6 28.6 Interest Expenses 40.2 26.6 65.5 68.2 40.2 24.7 Net Interest Income (NII) 38.8 42.0 7.5 37.7 28.5 33.2 Non-interest income 833.3 243.5 3637.7 45.1 35.9 28.5 Net Income 39.4 43.0 50.9 39.9 30.8 31.7 Total Non-Interest Expenses 61.1 71.9 116.2 34.6 11.9 28.3 Pre provisioning operating profits (PPoP) 26.5 46.8 7.3 39.9 48.3 39.6 PAT 50.8 288.3 -64.7 36.5 67.5 43.7 EPS 25.7 261.3 -64.9 36.5 67.5 43.7 CA 293.7 107.4 46.4 SA 73.0 46.4 21.6 Time deposits 112.9 46.4 38.5
Yields, interest costs and spreads (%) NIM on AUM 8.9 9.2 7.0 6.7 6.4 6.7 Yield on loan assets 14.7 14.5 13.2 13.9 14.0 14.0 Average cost of funds 10.3 8.4 7.3 6.7 6.6 6.4 Interest Spread on loan assets 4.3 6.1 5.9 7.2 7.4 7.6
Operating efficiencies Non interest income as % of net income 0.5 1.2 42.1 44.4 46.9 45.3 Cost to income ratio (%) 41.0 39.5 56.9 57.0 51.2 48.3 Op.costs/avg AUM (%) 3.7 3.7 5.7 5.5 4.8 4.7 No of employees 5072 8515 11151 11551 11951 12351 Average annual salary (Rs '000) 311.0 226.4 380.7 531.1 623.9 733.8 Salaries as % of non-int.costs (%) 62.2 55.3 55.9 57.7 59.6 58.4 AUM/employee(Rsm) 16.2 12.6 14.4 19.5 24.5 30.1 Number of asset branches 291 119 97 117 137 157 AUM/asset branch(Rsm) 282.5 902.0 1653.5 1922.2 2136.6 2365.9
Balance Sheet Structure Loans/ deposits (%) - - 168.1 153.4 133.2 124.0 Loans/ Total assets 92.3 67.2 70.7 73.6 74.8 75.5 Loans/NDTL 121.5 93.3 85.5 85.7 87.1 87.1 CA% of NDTL - - 2.5 6.0 9.5 11.0 SA% of NDTL - - 11.2 11.7 13.1 12.6 CASA% of NDTL - - 13.7 17.7 22.7 23.6 Total deposits as % of NDTL - - 50.9 55.9 65.4 70.3
Capital Structure Leverage (x) 5.8 3.3 5.8 7.1 6.9 7.2 CAR (%) 16.9 23.2 19.3 14.6 15.3 14.9 Tier 1 CAR (%) 13.5 21.1 18.4 12.6 13.3 12.9 Tier 2 CAR (%) 3.4 2.1 0.9 2.0 2.0 2.0 Tier 1 Capital (Rs mn) 8,776 18,955 22,669 31,059 42,458 51,216 Tier 2 Capital (Rs mn) 2,238 1,916 1,381 4,924 6,378 7,920 RWA (Rsmn) 65,126 89,928 153,460 246,224 318,895 395,986
Asset quality and provisioning GNPA (%) 1.3 1.8 2.0 2.7 2.7 2.7 NNPA (%) 0.8 1.2 1.3 1.8 1.8 1.8 GNPA (Rsmn) 741 1245 2697 5951 7903 10029 NNPA (Rsmn) 468 805 1693 3868 5137 6519 Coverage ratio (%) 36.9 35.4 37.2 35.0 35.0 35.0 Credit costs as % of average AUM 1.2 0.4 0.5 0.7 0.8 0.6
Return ratios RoAA (%) 4.5 13.3 2.9 2.2 2.6 3 RoAE (%) 23.3 54.9 13.6 14.7 18.0 20.3 Payout ratio (%) 0.0 0.0 4.9
9
AU Small Finance Bank, June 22, 2018 ICICI Securities
FY16 FY17 FY18 FY19E FY20E FY21E Valuation Ratios EPS (Rs) 8.0 28.9 10.1 13.5 21.7 31.1 EPS fully diluted (Rs) 8.0 28.9 9.9 12.9 21.7 31.1 Price to Earnings 86.2 23.9 68.0 50.9 31.9 22.2 Price to Earnings (fully diluted) 86.2 23.9 69.4 53.4 31.9 22.2 Book Value per share (fully diluted, Rs) 38 70 78 102 139 168 Adj book value per share (fully diluted, Rs) 36 67 72 89 123 147 Price to Book 18.1 9.9 8.8 6.8 5.0 4.1 Price to Adjusted Book 19.0 10.3 9.5 7.7 5.6 4.7 DPS - - 0.5 1.0 1.5 2.0 Dividend yield (%) - - 0.1 0.1 0.2 0.3 Source: Company data, I-Sec research
Table 6: Du Pont Analysis FY16 FY17 FY18 FY19E FY20E FY21E Interest earned 14.7 14.5 13.2 13.9 14.0 14.0 Interest expended 5.7 5.3 6.2 7.2 7.5 7.3 Gross Interest Spread 8.9 9.2 7.0 6.7 6.4 6.7 Credit cost 0.6 0.7 1.0 1.1 0.8 0.7 Net Interest Spread 8.3 8.6 6.0 5.6 5.7 6.0 Operating cost 3.7 3.7 5.7 5.5 4.8 4.7 Lending spread 4.6 4.9 0.3 0.1 0.8 1.3 Non interest income 0.0 0.1 3.0 3.0 3.0 3.0 Operating spread 4.7 5.0 3.3 3.1 3.8 4.3 Exceptional items 0.0 7.1 0.0 0.0 0.0 0.0 Final Spread 4.7 12.1 3.3 3.1 3.8 4.3 Tax rate (%) 1.6 3.4 1.1 1.0 1.3 1.4 ROAAUM 3.1 8.7 2.2 2.1 2.6 2.9 Effective leverage (AAUM/ AE) 7.6 6.3 6.3 7.1 7.0 7.1 RoAE 23.3 54.9 13.6 14.7 18.0 20.3 Source: Company data, I-Sec research
10
AU Small Finance Bank, June 22, 2018 ICICI Securities
This report may be distributed in Singapore by ICICI Securities, Inc. (Singapore branch). Any recipients of this report in Singapore should contact ICICI Securities, Inc. (Singapore branch) in respect of any matters arising from, or in connection with, this report. The contact details of ICICI Securities, Inc. (Singapore branch) are as follows: Address: 10 Collyer Quay, #37-16 Ocean Financial Tower, Singapore - 049315, Tel: +65 6232 2451 and email: [email protected], [email protected].
"In case of eligible investors based in Japan, charges for brokerage services on execution of transactions do not in substance constitute charge for research reports and no charges are levied for providing research reports to such investors."
New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise) BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return
ANALYST CERTIFICATION ANALYST CERTIFICATION We /I, Santanu Chakrabarti, PGDM; Abhijit Tibrewal, PGDM; Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts are not registered as research analysts by FINRA and are not associated persons of the ICICI Securities Inc. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990.ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. 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 of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall 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. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. 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. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report. It is confirmed that Santanu Chakrabarti, PGDM; Abhijit Tibrewal, PGDM; Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Santanu Chakrabarti, PGDM; Abhijit Tibrewal, PGDM; Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. 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 ICICI Securities and affiliates 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. This report has not been prepared by ICICI Securities, Inc. However, ICICI Securities, Inc. has reviewed the report and, in so far as it includes current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.
11