IPO Note

Issuer: Equitas Ltd. Equitas Small Finance Bank SUBSCRIBE Transaction Type Fresh Issue (85 Mn shares), Offer for sale (72 Mn shares) Better product diversification among its peers (Face value Rs.10 each) Issue Open / Close 20-Oct-2020/ 22-Oct-2020, Equitas Small Finance Bank (ESFB) has begun the operations in 2007 as an NBFC –MFI (EMFL) and housing Finance since 2011 (EHFL) and had the most diversified portfolio, Type of Offering Fresh issue and offer for sale with 856 banking outlets across 17 states and union territories in India (Q1FY21). With a Total Offer Size Rs 510-518 Cr total loan book of Rs.155.7bn as of June ’20, it’s the Second largest SFB among the 10 SFB players that got the license. Asset products as of June ‘20 comprises: (i) Loans to Price Band Rs.32-33 small business comprising LAPs, housing loans, and agriculture loans to micro- Total Offer Size as % 7.5% entrepreneurs, (ii) microfinance to JLGs (women), (iii) used and new commercial vehicle of Post Issue Capital loans to drivers and micro-entrepreneurs (engaged in logistics), (iv) MSE loans to Percentage of  QIB: 50% proprietorships, and (v) corporate loans. On the liability side, bank offer savings Offer Size (Allocation)  NIB: 15% accounts, current accounts, salary accounts and a variety of deposit accounts. It is proxy  Retail: 35% to financial inclusion drive taken by RBI, to increase the reach of banking to unbanked areas. Loan book has doubled from FY17- FY20 with a CAGR of 35% and Deposit book with a CAGR of 78%. IPO is priced at a P/ABV of 1.34x (1.30x post IPO) and P/E of 15.0x Share holding pattern on June’ 20 numbers which is discount to its peers of P/ABV of 1.87x (Ujjivan SFB) and Pre-Issue Post-Issue

P/ABV of 5.32x (AU SFB) based on June’20 figures. We recommend subscribe to the issue Promoter 95.5 82.1 from the long term perspective. Public 4.5 17.9  Better product diversification among its peers (SFBs): ESFB has diversified the loan Total 100% 100% portfolio towards non micro finance segments such as small business loans, vehicle Financial Snapshot loans, MSE and corporates. Non – microfinance % of portfolio stood at 74% as FY17 FY18 FY19 FY20 compared to 5-20% for its peer SFBs (except AU with negligible microfinance book). We believe MFI book could be most vulnerable to Covid-19 impact due to unsecured NII 5,352 8,605 11,517 14,953 nature and thus diversification bodes well for the bank. PPOP 2,579 2,206 4,261 5,976 PBT 1,614 485 3,238 3,509  Regulatory requirements need bank to get listed: With respect to SFB license, bank PAT 1,041 318 2,106 2,436 required to list within a period of 3 years post commencement of operation while, it’s EPS 1.3 0.3 2.1 2.4 already in default listing period. Thus, EFSB required to list by Sept ‘2020 as ABV 19.1 19.2 20.7 23.9 commenced operations in Sept ‘2016. Also, need to comply with 40% promoter BVPS 20.0 20.3 22.4 26.1 holding within 5 years (prior Sept ‘4, 2021) as against currently 82% post IPO issue. However, Bank is seeking in principle approval from RBI for merger of EHL with the ROE (%) 5.2 1.6 9.4 8.9

Bank. ROA (%) 1.3 0.3 1.4 1.4 Source: RHP, IDBI Capital Research Bunty Chawla | [email protected] | +91-22-2217 1814  Nikhil Vaishnav | [email protected] | +91-22-2217 1819 October 19, 2020

Equitas Small Finance Bank | IPO Note

 Granular portfolio with robust CAGR growth: Bank with diversified portfolio grew with a CAGR of 35% (FY17-FY20) while within loan portfolio, small business loans (including housing loan) and vehicle finance product segments noted growth with a CAGR of 53% and 30%, respectively (FY18-FY20). In terms of new customer addition, Bank able to add 185,128 new customers in Small business loans, microfinance to 2,656,819 new customers, and vehicle finance loans to 132,427 new customers (FY18 -FY20). Priority sector credit portfolio represented 105% and 93% of ANBC in FY20 and June ’20 as against mandated 75%.  Strong liability franchise among its peers: Bank offer savings accounts, current accounts, salary accounts and a variety of deposit accounts. In terms of Deposit, bank is 2nd largest SFB among its peers (as of March 19). However, Bank total deposit reported a CAGR growth of 39% (during FY18-FY20). Bank enjoys robust retail deposit which grown at a CAGR of 43% (FY18-FY20). Retail to total deposit ratio (3rd highest among SFB) grew from 16% (FY18) to 46% (Q1FY21). Bank CASA grown at a CAGR of 16% (FY18-FY20) with 20% (FY20) of total deposits. In terms of Customers, Bank CASA and term deposit customers has grown from 187,224 and 12,199 (FY18), respectively, to 3,44,459 and 5,59,745 (Q1FY21), respectively. Due to its stable retail deposit it witness a decline in cost of funds from 8.36% (FY18) to 7.63% (Q1FY21).  Geographical diversification with major dependent on 2 states: Out of total banking outlets presence the top four states (Tamil Nadu, Maharashtra, Karnataka and Rajasthan) constitutes 72%. Tamil Nadu and Maharashtra comprises 55% of total outlets. Out of total Portfolios, Bank portfolio majorly dependent on south region with 68% (Q1FY21) of total Gross Advances. Bank deposit comprises 38% (Q1FY21) from North and 42% (Q1FY21) from south region and 88% of total deposits comes from Metropolitan and urban areas. Bank has presence across India but zero presence in East of India.  Under Banked areas provide opportunity: A large section of the Indian population lacks access to formal banking services or is served by informal providers. Accordingly, financial inclusion has always been a key priority for the Indian government. SFB operations are focused on serving the financially unserved and underserved segments in India. As of June ‘20, ESFB has 856 Banking Outlets located in 17 states and UT across India.

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Equitas Small Finance Bank | IPO Note

Key Risks:

 The continuing impacts of COVID-19 are highly unpredictable and may have an adverse effect on business, operations and our future financial performance.  Bank need to fulfill stringent regulatory requirements and prudential norms and not comply of same could affect the business and also Promoter is required to reduce its shareholding in Bank to 40% of paid-up Equity Share capital on or prior to September 4, 2021  Bank Promoter, and Directors, are involved in certain legal proceedings, any adverse developments related to which could materially and adversely affect business, reputation and cash flows.  Major portion of Advances comes from the state of Tamil Nadu and any adverse impact could lead to impact in portfolio.  Any adverse developments in the segments Bank operate in, including small business loans, microfinance and vehicle finance could adversely affect business and results of operations.  Bank microfinance loan portfolio and unsecured business loans portfolio are not supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a borrower of one of these loans, Bank may be unable to collect the unpaid balance.  Bank Part-time Chairman and Non-Executive Independent Director, Arun Ramanathan’s name previously appeared as one of the Directors of JCT Electronics Limited (“JCT”) in the wilful defaulter database maintained by TransUnion CIBIL Limited (“CIBIL”).

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Equitas Small Finance Bank | IPO Note

Exhibit 1: Details of Shareholding Pattern:

Pre-Issue Shareholding Post-Issue Shareholding

Number of Shareholding Number of Shareholding Entity Shares held (%) Shares held (%)

Promoters and Promoter Group 1,005,943,36 95.5 93,40,33,651 82.1 Public 47,458,239 4.5 20,43,37,648 17.9 Total 1,053,401,602 100.0 1,13,83,71,299 100.0

Source: Company; IDBI Capital Research

Exhibit 2: Equitas SFB 2nd largest player as per AUM.

North east, 2% Survoday, 4% ESAF, 6%

Fincare, 5% AU, 33%

Capital, 4%

Jana, 9%

ujjivan, 15% utkarsh, 6%

equitas, 16%

Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 3: Robust growth in deposits with 78% CAGR (FY18-FY20).

1,40,000 1,17,871 1,20,000 1,07,884 1,00,000 90,067 80,000 56,040 60,000 40,000 19,213 20,000 - FY17 FY18 FY19 FY20 Q1FY21

Deposits Source: Company; IDBI Capital Research

Exhibit 4: Loan portfolio grew at 34% CAGR (FY17-FY20).

1,60,000 1,37,472 1,43,886 1,40,000 1,15,936 1,20,000 1,00,000 77,060 80,000 57,018 60,000 40,000 20,000 - FY17 FY18 FY19 FY20 Q1FY21

Advances Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 5: CASA % seen decline and currently stable at 20% level.

35.0% 29.2% 30.0% 25.3% 25.0% 20.5% 20.0% 20.0% 17.3% 15.0% 10.0% 5.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21

CASA Source: RHP; IDBI Capital Research

Exhibit 6: Decline in Cost of funds supported NIMs .

9.5% 10.0% 9.0% 9.1% 8.6% 8.6% 8.0%

6.0%

4.0%

2.0%

0.0% FY17 FY18 FY19 FY20 Q1FY21

NIM Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 7: Yield lowest in Q1FY21. Exhibit 8: Cost of funds continues to decline.

18.0% 12.0% 17.4% 10.0% 17.5% 10.0% 8.4% 8.1% 17.0% 8.0% 7.6% 8.0% 16.5% 16.1% 16.1% 16.0% 15.7% 6.0% 15.4% 15.5% 4.0% 15.0% 2.0% 14.5% 14.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21 FY17 FY18 FY19 FY20 Q1FY21 Cost of funds Yield on asset Source: RHP; IDBI Capital Research

Exhibit 9: Decline in cost to income from peak of 80%. Exhibit 10: Cost to asset is also high due to high opex.

90.0% 7.0% 6.6% 6.4% 80.0% 6.1% 80.0% 70.3% 6.0% 5.5% 5.6% 66.4% 66.4% 67.3% 70.0% 5.0% 60.0% 50.0% 4.0% 40.0% 3.0% 30.0% 2.0% 20.0% 10.0% 1.0% 0.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21 FY17 FY18 FY19 FY20 Q1FY21

Cost to asset Cost to income Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 11: Asset quality remains stable and maintained in the range of 2.5-2.7%.

3.5% 3.3% 3.0% 2.7% 2.7% 2.7% 2.5% 2.5% 2.0% 1.7% 1.5% 1.5% 1.4% 1.5% 1.5% 1.0% 0.5% 0.0% FY17 FY18 FY19 FY20 Q1FY21

GNPA NNPA Source: RHP; IDBI Capital Research

Exhibit 12: Provision Coverage Ratio (PCR) increased in Q1FY21.

70.0% 58.4% 60.0% 47.1% 48.8% 50.0% 43.4% 45.2% 40.0% 30.0% 20.0% 10.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21

PCR Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 13: Tier I at 21% to support strong growth ahead without capital requirements.

40.0% 35.0% 3.4% 30.0% 2.5% 25.0% 1.2% 20.0% 1.5% 1.0% 33.8% 15.0% 27.1% 10.0% 20.9% 22.4% 21.0% 5.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21

Tier I (%) Tier II (%) Source: RHP; IDBI Capital Research

Exhibit 14: ROA remain in range bound of 1.1-1.4%.

12.0% 2.0% 9.4% 10.0% 8.9% 1.5% 8.0% 8.3% 6.0% 5.2% 1.0% 4.0% 1.6% 0.5% 2.0% 1.3% 0.3% 1.4% 1.4% 1.1% 0.0% 0.0% FY17 FY18 FY19 FY20 Q1FY21

ROA ROE Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 15: Small business loans share continue to increase.

100.0% 0.0%2.1% 6.5% 4.0% 5.3%1.5% 5.0%1.4% 0.1%3.1% 1.5%3.9% 4.4% 4.6% 80.0% 29.6% 28.2% 25.2% 24.5% 24.3% 60.0% 26.2% 23.5% 23.2% 45.7% 28.4% 40.0%

20.0% 33.6% 39.1% 40.9% 41.6% 22.5% 0.0% FY17 FY18 FY19 FY20 Q1FY21

Small Business Loans Micro Finance Vehicle Finance MSE Finance Corporates Others

Source: RHP; IDBI Capital Research

Exhibit 16: Concentrated on urban and semi-urban region. Exhibit 17: 68% portfolio from south region.

100.0% 4.8% 4.8% 4.8% 4.8% 100.0% 16.2% 15.8% 16.8% 16.8% 80.0% 33.9% 34.9% 34.2% 34.5% 80.0%

60.0% 60.0% 70.3% 69.1% 67.9% 68.0% 40.0% 41.0% 39.6% 39.4% 39.4% 40.0%

20.0% 20.0% 20.3% 20.7% 21.6% 21.3% 13.4% 15.2% 15.3% 15.2% 0.0% 0.0% FY18 FY19 FY20 Q1FY21 FY18 FY19 FY20 Q1FY21 Metropolitan Urban Semi-Urban Rural North South west

Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 18: 80% concentrated in north and South region while portion of south region rising.

100.0% 19.9% 21.4% 19.1% 20.1% 80.0%

60.0% 42.9% 38.0% 40.8% 41.9%

40.0%

20.0% 37.2% 40.5% 40.2% 38.0%

0.0% FY18 FY19 FY20 Q1FY21 North South west

Source: RHP; IDBI Capital Research

Exhibit 19: 52% Banking outlets in South region. Exhibit 20: Surge in metropolitan banking outlet count.

900 900 84 800 208 800 94 93 88 205 204 204 56 700 169 700 314 600 600 293 298 302 298 500 500 463 443 442 400 430 442 400 303 300 300 282 294 281 284 200 200 218 210 100 201 206 207 100 169 188 167 178 186 0 0 FY17 FY18 FY19 FY20 Q1FY21 FY17 FY18 FY19 FY20 Q1FY21 North South west Metropolitan Urban Semi-Urban Rural

Source: RHP; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 21: Peer Comparison (Q1FY21)

Loans CASA GNPA NNPA PCR RoA RoE Peer Comparison Tier I P/ABV (Rs bn) (%) (%) (%) (%) (%) (%)

Ujjivan small Finance 147 14.2 1.0 0.2 82.0 27.8 1.2 6.8 1.9 Bank ltd

AU Small Finance Bank 300 16.0 1.7 0.6 63.7 21.7 1.6 15.8 5.3 Ltd

Equitas Small Finance 156 20.0 2.7 1.5 48.8 21.0 1.1 8.3 1.3 Bank Ltd

Bandhan Bank Limited 743 37.1 1.4 0.5 66.4 25.9 2.3 14.1 3.4

Credit Access 97 0.0 1.6 0.0 4.4 22.4 2.2 9.4 3.5 Grameen Ltd

Spandana 68 0.0 0.6 0.1 6.1 53.0 8.7 22.3 1.3

Source: Company; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Exhibit 22: GNPA Segment wise

Particulars ( %) FY17 FY18 FY19 FY20 Q1FY21

Small Business Loans 2.4 2.9 2.6 2.7 2.7 Micro Finance 2.4 0.7 0.9 1.2 1.2 Vehicle Finance 5.6 5.0 4.0 4.0 3.9 MSE Finance 0.0 0.0 1.8 1.2 1.1 Corporates 0.0 0.0 0.0 0.0 0.8 Others 0.4 1.4 5.9 20.4 21.4 GNPA 3.3 2.7 2.5 2.7 2.7

Source: Company; IDBI Capital Research

Exhibit 23: Collection efficiency

Particulars (%) March April May June July August

Small Business Loans 72.8 17.0 15.9 60.6 66.3 105.0 Micro Finance 77.4 0.1 6.6 42.2 61.2 77.1 Vehicle Finance 80.5 13.0 14.1 42.0 48.4 71.5 MSE Finance 34.5 21.5 20.5 19.5 21.0 41.0 Corporates 99.3 67.1 33.3 91.8 88.1 96.3 Total 78.1 11.0 12.3 49.4 60.5 83.4

Source: Company; IDBI Capital Research

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Equitas Small Finance Bank | IPO Note

Company Background

After getting in Principle approval from RBI, Equitas Holding Limited (EHL) the promoter holder set up Equitas Small Finance Bank Limited (ESFB) and commenced its operation from 5th September 2016. ESFB is the largest SFB in India in terms of number of banking outlets, and the 2nd largest SFB in India in terms of AUM and total deposits in FY19. As of June 30, 2020, their distribution channels comprised 856 Banking Outlets and 322 ATMs across 17 states and union territories in India.

Exhibit 24: Management profile Name Designation Profile Arun Ramanathan Part-time Chairman and He holds a bachelor’s degree in science from University of Madras, a master’s degree in nuclear physics from Andhra University, a master’s Non-Executive Independent degree in business administration from University of Madras and a master’s of philosophy degree in economics and politics of development Director from University of Cambridge. Further, he is an associate member of the Institute of Cost and Works Accountants of India. He held several postings in the Government of India at the level of Secretary in various ministries. He has served as a director on the boards of several companies including State , IDBI Bank Ltd, ICICI Bank Ltd, India Infrastructure Finance Co. Ltd., IDFC Ltd, ONGC, Shipping Corporation of India Ltd, Tamil Nadu Petroproducts Ltd, National Textile Corporation Ltd, ONGC Videsh Ltd, Titan Industries Ltd, United Stock Exchange of India Ltd, Indian Clearing Corporation Ltd, Jenson and Nicholson (I) Ltd, JCT Electronics Ltd, Religare Enterprises Ltd and L&T Infra Debt Fund Ltd Vasudevan Pathangi MD and CEO He holds a bachelor’s degree in science (physics) from University of Madras. He is a qualified company secretary from the Institute of Narasimhan Company Secretaries of India. He has extensive experience in the financial services sector and had served as the executive vice president and head of consumer banking group in Development Credit Bank Limited, for more than one and half years. He has also worked for about two decades in Cholamandalam Investment and Finance Company Limited, part of the Murugappa Group. He was also the chairman of the managing committee of the South India Hire Purchase Association for Fiscal 2006. Nagarajan Srinivasan Non-Executive Non- He holds a master of arts degree in economics from University of Madras and a postgraduate diploma in business administration from the Independent Director University of Warwick. He is the head - south Asia for CDC India Advisers Private Limited. He advises the CDC Group on equity and debt financing transactions in south Asia. He has also served as a director with Actis, a global private equity fund and prior to that worked for CDC Group Plc in sub-Saharan Africa. Arun Kumar Verma Non-Executive Independent He has studied commerce from Sambalpur University and law from Utkal University. He is a fellow member of the ICAI. He has also served as Director the chairman of the Bhubaneswar branch of Eastern India Regional Council of ICAI. He has been a partner at M/s Venkataraman & Verma, since March 1, 1982 Narayanaswamy Non-Executive Independent He holds a bachelor of engineering degree in electronics and communication engineering from the University of Madras in 1972 and a Balakrishnan Director doctorate of philosophy from the Indian Institute of Science and an honorary doctorate from Punjab Technical University. He was a professor at the Indian Institute of Science and retired from service in 2015. He also served in the past as a member of the governing council of Centre for Development of Advanced Computing and as a director on the board of Bharat Electronics Limited, Industrial Finance Corporation of India Limited, Bharat Sanchar Nigam Limited and CDOT-Alcatel Lucent Research Centre Private Limited.

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Equitas Small Finance Bank | IPO Note

Navin Avinashchander Non-Executive Independent He holds a master’s degree in business administration from Texas Christian University. He is an associate member of the Institute of Chartered Puri Director Accountants of India. He has previously worked as a part of the senior management team at HDFC Bank Limited.

Sridhar Ganesh Non-Executive Independent He holds a post graduate diploma in management from Indian Institute of Management, Calcutta. He was previously the director of human Director resources of the Murugappa Group. Prior to that he has worked at Cadbury India Limited and at Cadbury Schweppes Plc, based in the United Kingdom. Narasimhan Srinivasan Non-Executive Independent He holds a bachelor of arts degree in economics from University of Madras and a master of arts degree in economics from Madurai Kamaraj Director University. He is a certified associate of Indian Institute of Bankers. He has served as the chief general manager at NABARD. He has also served as a director on the board of Belstar Microfinance Private Limited, Sahayaog Microfinance Limited, RGVN (Northeast) Microfinance Limited and Micro Credit Ratings International Limited. Tabassum Abdulla Non-Executive Independent She is an associate member of the Institute of Chartered Accountants of India. She has experience across firms like Goldman Sachs (India) Inamdar Director Securities Private Limited, UBS Securities India Private Limited, Kotak Securities Limited and Jardine Fleming India Broking Limited.

Vinod Kumar Sharma Non-Executive Independent He holds a bachelor’s degree in science and a master’s degree in science from Sagar University. Prior to joining our Bank, he has served as the Director executive director of the RBI and has chaired the working group on interest rate futures and the working group on common clearing for commodity exchanges. He was previously on the boards of and , and was a nominee director of RBI on the board of EXIM Bank.

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Equitas Small Finance Bank | IPO Note

Financial Summary

Profit & Loss Account (Rs mn) Ratios (%) Year-end: March FY17 FY18 FY19 FY20 Year-end: March FY17 FY18 FY19 FY20 Interest Earned 9,794 15,317 21,119 26,454 Growth Interest Expended 4,442 6,711 9,602 11,501 Deposits 191.7 60.7 19.8 Net Interest Income 5,352 8,605 11,517 14,953

Growth (%) 60.8 33.8 29.8 Advances 35.2 50.4 18.6 Other Income 2,333 2,412 2,829 2,824 NII 60.8 33.8 29.8 Total Income 7,685 11,018 14,346 17,777 Pre-Provision Profit (14.4) 93.1 40.2 Operating Expenses 5,106 8,811 10,085 11,801 Net Profit (69.4) 561.5 15.7 Operating Profit 2,579 2,206 4,261 5,976

Growth (%) (14.4) 93.1 40.2 Spreads Prov. & Contingencies 964 1,721 1,024 2,466 Yield on Assets 17.4 16.1 15.7 16.1 Profit Before Tax 1,614 485 3,238 3,509 Cost of Funds 10.0 8.4 8.1 8.0 Tax 573 167 1,132 1,073 NIM 9.5 9.0 8.6 9.1 Effective tax rate (%) 35.5 34.4 35.0 30.6

Profit After Tax 1,041 318 2,106 2,436 CASA 17.3 29.2 25.3 20.5 Growth (%) (69.4) 561.5 15.7 Operating Efeciency Cost-to-Income 66.4 80.0 70.3 66.4 Balance Sheet (Rs mn) Cost to average Assets 5.5 6.6 6.4 6.1 Year-end: March FY17 FY18 FY19 FY20 Asset Quality Capital 10,059 10,059 10,059 10,534 GNPA 3.3 2.7 2.5 2.7 Reserve & Surplus 10,060 10,378 12,484 16,907 NNPA 1.5 1.5 1.4 1.7

Net worth 20,119 20,438 22,543 27,441 Provision Coverage 58.4 47.1 43.4 45.2

Deposits 19,213 56,040 90,067 1,07,884 Credit Cost 2.2 2.7 1.1 1.9 Capital Adequacy Borrowings 47,789 51,772 39,730 51,349 CAR 37.2 29.6 22.5 23.6 Total Liabilities 92,501 133,012 157,627 193,145 Tier I 33.8 27.1 20.9 22.4 Cash and Balances with RBI 11,163 12,112 12,606 25,368 Valuation Investments 18,905 38,568 23,445 23,425 EPS 1.3 0.3 2.1 2.4 Advances 57,018 77,060 115,936 137,472 ABV 19.1 19.2 20.7 23.9 Fixed Assets 2,884 2,809 2,373 2,128 BVPS 20.0 20.3 22.4 26.1 Other Assets 2,531 2,462 3,267 4,752 ROE 5.2 1.6 9.4 8.9 Total Assets 92,501 133,012 157,627 193,145 ROA 1.3 0.3 1.4 1.4

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Equitas Small Finance Bank | IPO Note

Notes

Dealing (91-22) 6637 1150 [email protected]

Key to Ratings Stocks: BUY: Absolute return of 15% and above; ACCUMULATE: 5% to 15%; HOLD: Upto ±5%; REDUCE: -5% to -15%; SELL: -15% and below.

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Equitas Small Finance Bank | IPO Note

Analyst Disclosures

I, Bunty Chawla, hereby certify that the views expressed in this report accurately reflect my personal views about the subject companies and / or securities. I also certify that no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. Principally, I will be responsible for the preparation of this research report and have taken reasonable care to achieve and maintain independence and objectivity in making any recommendations herein.

Other Disclosure

IDBI Capital Markets & Securities Ltd. (hereinafter referred to as “IDBI Capital”) was incorporated in the year 1993 under Companies Act, 1956 and is a wholly owned subsidiary of IDBI Bank Limited. IDBI Capital is one of India’s leading securities firm which offers a full suite of products and services to individual, institutional and corporate clients namely Stock broking (Institutional and Retail) , Distribution of financial products, Merchant Banking, Corporate Advisory Services, Debt Arranging & Underwriting, Portfolio Manager Services and providing Depository Services. IDBI Capital is a registered trading and clearing member of BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE). IDBI Capital is also a SEBI registered Merchant Banker, Portfolio Manager and Research Analyst. IDBI Capital is also a SEBI registered with National Securities Depository Limited (NSDL) and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI).

IDBI Capital and its associates IDBI Bank Ltd. (Holding Company), IDBI Intech Ltd. (Fellow Subsidiary), IDBI Asset Management Ltd. (Fellow Subsidiary) and IDBI Trusteeship Services Ltd. (Fellow Subsidiary).

IDBI Group is a full-serviced banking, integrated investment banking, investment management, brokerage and financing group. Details in respect of which are available on www.idbicapital.com IDBI Capital along with its associates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our associates have investment banking and other business relationships with a significant percentage of the companies covered by our Research Department. Investors should assume that IDBI Capital and/or its associates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material. IDBI Capital generally prohibits its analysts, persons reporting to analysts, and their dependent family members having a financial conflict of interest in the securities or derivatives of any companies that the analysts cover. Additionally, IDBI Capital generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our sales people, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Directors of IDBI Capital or its associates may have interest in the Companies under recommendation in this report either as Director or shareholder. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of IDBI Capital. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. We and our associates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. For the purpose of calculating whether IDBI Capital and its associates holds beneficially owns or controls, including the right to vote for directors, 1% of more of the equity shares of the subject issuer of a research report, the holdings does not include accounts managed by IDBI Asset Management Company/ IDBI Mutual Fund.

IDBI Capital hereby declares that our activities were neither suspended nor we have materially defaulted with any Stock Exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advice letters or levied minor penalty on IDBI Capital for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. IDBI Capital, its directors or employees or associates, may from time to time, have positions in, or options on, and buy and sell securities referred to herein. IDBI Capital or its associates, during the normal course of business, from time to time, may solicit from or perform investment banking or other services for any company mentioned in this document or their connected persons or 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 their affiliate companies or act as advisor or lender / borrower to such company(ies)/associates companies or have other potential conflict of interest. This report may provide hyperlinks to other websites. Except to the extent to which the report refers to the website of IDBI Capital, IDBI Capital states that it has not reviewed the linked site and takes no responsibility for the content contained in such other websites. Accessing such websites shall be at recipient's own risk. IDBI Capital encourages the practice of giving independent opinion in research report preparation by the analyst and thus strives to minimize the conflict in preparation of research report. Accordingly, neither IDBI Capital nor Research Analysts have any material conflict of interest at the time of publication of this report. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us. The Research Analyst has not served as an officer, director or employee of Subject Company. We or our associates may have received compensation from the subject company in the past 12 months. We or our associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research Analyst or his/her relative’s may have financial interest in the subject company. IDBI Capital or its associates may have financial interest in the subject company. Research Analyst or his/her relatives does not have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. IDBI Capital or its associates may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. The Subject Company may have been a client during twelve months preceding the date of distribution of the research report. Price history of the daily closing price of the securities covered in this note is available at www.bseindia.com; www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes.

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