IndianIndian Brokerage Industry
December 23, 2019
Broking twist: Advantage large brokers… Initiating on… The fragmented Indian broking industry has witnessed an increase in market
share of top brokers in volume terms with top 10 brokers now forming 37% Motilal Oswal – Buy – TP | 850 vs. 22% in 2014. In the past few years, Indian equity markets witnessed (Diversified business model with strong rise in average daily turnover (ADTO) at ~34.4% CAGR in FY13-19. presence across capital market Derivatives witnessed robust traction at 35.4% CAGR from | 155400 crore domain, expect to be beneficiary in FY13 to | 959000 crore in FY19 while cash ADTO has increased at ~18.1% of stricter SEBI norms and CAGR in FY13-19 to | 35200 crore. This has led to a reduction in the cash consolidation in industry) segment, declining to only ~3% of total volumes impacting brokers. 5 Paisa – Hold – TP | 205 (Start-up discount broker with
The Indian broking industry has a large of number of players, many being Coverage Initiating proprietary in nature while large brokers still offer trading and investment aggressive client acquisition, services to customers. In terms of market share, as per active clients, top 10 consistent revenue growth to drive brokers contribute ~63% in industry size. Among the same, top two brokers valuation) constitute ~15% of market share in active clients, followed by ~46% market IIFL Sec – Buy – TP | 50 share contributed by the next eight players. Top two players constitute 15% (Pure broker with distribution in ADTO of the market. Indian brokers have progressed from being pure strength, relatively cheap on brokers (bank led brokers & non-bank led full service brokers) to distributors valuation) of financial products and business diversification by forming AMC/PE funds, Geojit Fin – Hold – TP | 29 lending through NBFC and setting up ARCs. (Marginal player in aggressive In the wake of changes experienced in the domestic stock market and competitive space, high broking industry, evolution in terms of business model was imminent. In our proportion of cash ADTO remains view, the Indian broking industry is transitioning from a transaction based strength) model to service or fee based model offering services like wealth management and investment advisory. A shift towards a fee based model is Edelweiss Fin – Hold – TP | 125 already in the works with brokers focusing on building advisory model (Balance sheet restructuring (wealth AUM). Apart from advisory services, focus on fund based activities, underway, minimal contribution of including margin funding and loan against shares, is on the rise, enabling retail segment in capital market brokers to build sustainable earnings. Cyclicality of income from volatile revenue) markets/volumes is seen abating as pure brokerage income forms ~50-60% of overall revenue for each player vs. 80-90% few years back. Again, with JM Fin – Hold – TP | 94
Retail Equity Research Equity Retail SEBI tightening norms on managing client funds as float or pledge on client (Strong performance in capital
– shares, direct lending by brokers to clients in the form of allowing overdue market business, exposure to real will disappear. Brokers need banks or NBFC tie-up, as they can only take estate remains an overhang) pledge of client shares to fund the client. Bank led brokerages stand to gain both as quick enablers of funding and trust on safety of demat holdings. Research Analyst In a recent circular, SEBI announced new norms on bringing margin for cash Kajal Gandhi [email protected] buy/sell order addition. As we notice, online brokers had practiced the same
as clients need to keep margin money before buy order placement and sell Vishal Narnolia Securities ICICI is allowed only from delivery, leading to very negligible impact of new [email protected] norms. All these SEBI norms and intense competition have impacted small Harsh Shah brokers while large brokers are expected to gain market share. [email protected]
Traditional brokers emerge strong on earnings
The Indian broking industry comprises participants with varied business models from those primarily engaged in capital market activities and others engaged in other financial activities including lending, AMC and ARC. Given the dependence on capital market and inherent cyclicality, we assign PE multiple in range of <15x for peers engaged in capital market. Accordingly, we value pure brokers like IIFL Securities at 8x FY21E EPS and Geojit BNP Paribas Financial Services at 12x FY21E standalone EPS. Players with business models in other financial segments are valued on SoTP basis. We value JM Financial at 1x FY21E BV (implying 11.5x FY21E EPS), Edelweiss at 1.4x FY21E BV (implying 16.7x FY21E EPS) and Motilal Oswal at 23x FY21E EPS. 5Paisa as a startup is valued at 4x FY21E revenue. We initiate coverage with a BUY rating on IIFL Sec and Motilal Ostwal and HOLD rating on 5 Paisa, Geojit Financial, Edelweiss Financial Services and JM Financial. Initiating Coverage | Indian Broking Industry ICICI Direct Research
Exhibit 1: Valuation | crore CMP TP Rating Mcap PAT (| crore) RoE (%) P/E (x) NW (| crore) P/BV (x) | | | crore FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E Motil.Oswal.Fin. 730 850 Buy 10803 499 539 14 13 21.6 20.0 3809 4349 2.8 2.5 Edelweiss.Fin. 116 125 Hold 10827 343 656 5 8 31.6 16.5 7994 8656 1.4 1.3 JM Financial 91 94 Hold 7699 582 681 11 12 13.2 11.3 7620 7806 1.0 1.0 IIFL Securities 38 50 Buy 1214 164 205 20 21 7.4 5.9 895 1100 1.4 1.1 Geojit Fin. Ser. 28 29 Hold 655 14 20 9 11 46.9 33.5 515 572 1.3 1.1 5Paisa Capital 180 205 Hold 458 2.8 7.2 3 5 163.3 63.6 151 158 3.0 2.9
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 2 Initiating Coverage | Indian Broking Industry ICICI Direct Research
Industry Trend
Indian brokerage industry – perspective and structure The Indian broking industry is very fragmented with large number of participants (~3755/3099 registered with SEBI in cash/derivative market). Many of these may be propriety desk, still a large number of brokers offer trading services to customers. In the last six years, Indian markets have witnessed a spurt in volumes at ~34.4% CAGR from FY13 to FY19. Following global trend of higher tilt towards options, derivatives witnessed robust traction at 35.4% CAGR from | 155400 crore in FY13 to | 959000 crore in FY19, while equity (Cash) ADTO grew only by ~18.1% CAGR in FY13-19 to | 35200 crore. The Indian stock market has undergone developments over several years in terms of yields, products and customer services. In the initial phase, Indian brokerages were to be divided in two categories – bank led brokers and non- bank led brokers. Majority of these brokerages were full service brokers with services spanning from providing platform for trading, settlement services, investment advisory (research), investment banking and wealth management. In order to counter the volatility of markets and thereby business, brokerages started on the path of diversification – the first step being distribution of financial products – insurance and mutual funds. Later, brokerages entered next level of diversification through entry into new line of business spanning from asset management to credit disbursement through NBFC. The Indian brokerage industry has now witnessed entry of new category of brokers – discount brokers that offer basic transactional service at low fixed brokerage irrespective of the size of trade quantum. Apart from transactional service, these brokers provide various product used for analysis and research services at additional cost.
Exchange volumes skewed towards derivatives in last 5 years Option segment witnessing higher share at 92% The Indian stock market has been witnessing a continuous rise in volumes 16 traded in FY15-Q2FY20. However, there has been a growing divergence 14 between cash and derivatives product segment. While the proportion of 12 cash segment has remained steady at ~3% of total volumes, option as a 10 8 13.4 product has been gaining prominence with share in total volume rising from 11.4 6 8.7 79% in FY15 to 88% in FY19 and 92% in Q2FY20. 4 5.7 2 2.6 2.3 3.2 Exhibit 2: Market volume tilting towards options crore lakh ADTO| in 0 0.5 0.5 0.6 0.8 0.9 0.8 0.9 ADTO in | crore FY17 FY18 FY19 Q1FY20 Q2FY20 Propn
Cash Intraday 16600 23300 26048 Cash Futures Options
Cash Delivery 8100 9600 9152 Source: NSE, ICICI Direct Research Cash 24700 33000 35200 33629 34023 2.3% Futures (NSE) 62361 82959 87564 79951 89734 6% Stocks (NSE) 44877 63405 65109 55955 61020 4% Index (NSE) 17484 19555 22455 23996 28714 2% Options (NSE) 318164 587711 870503 1136812 1339202 92% Stocks (NSE) 24627 39248 50735 45480 52299 4% Index (NSE) 293537 548463 819768 1091332 1286903 88% F&O total 382100 671000 959000 1216763 1428936 97.7% Total ADTO 406800 704000 993000 1250392 1462959
Source: NSE, ICICI Direct Research
ICICI Securities | Retail Research 3 Initiating Coverage | Indian Broking Industry ICICI Direct Research
Exhibit 3: Options forming ~92% of market volume 16 14 12 10 8 13.4 11.4 6 8.7 4 5.7 ADTO in | lakh crore lakh ADTO| in 3.2 2 2.6 2.3 0.9 0.8 0.9 0 0.5 0.5 0.6 0.8 FY 15 FY 16 FY 17 FY18 FY19 Q1FY20 Q2FY20 Cash Futures Options
Source: NSE, ICICI Direct Research
Exhibit 4: Internet based trading on the rise in last five years 35 30 25 20 15
of total volume) of total 10 (% 5 0 FY14 FY15 FY16 FY17 FY18
Cash F&O
Source: NSE, ICICI Direct Research
Exhibit 5: Increase in market share of top five & 10 members 40 35 30 25
20 (%) 15 10 5 0 Mar-16 Mar-17 Mar-18 Mar-19 Nov-19 Top 10 brokers contribute ~63% of share (Sep’19) Top 5 Top 10
Source: NSE, ICICI Direct Research 13%
37% Snapshot of brokerages in India The Indian broking industry has a large number of players. However, in terms of number of active clients top 10 brokers contribute to ~63% of the industry size. Among peers, Zerodha has the highest number of active clients with ~13% market share, followed by ~51% market share 50% contributed by next nine players. In terms of active clients, Zerodha has largest share of active clients, which were at 69%, compared to other players Zerodha Next top 9 brokers Others wherein active clients as a percentage of total was in the range of 24-32%.
Source: NSE, ICICI Direct Research
ICICI Securities | Retail Research 4 Initiating Coverage | Indian Broking Industry ICICI Direct Research
Exhibit 6: Financials of brokers (FY19) | crore Kotak Sec HDFC Sec Axis Sec Moti JM Geojit Angel Zerodha Revenue from operation 1708 782 190 1120 343 288 731 880 Broking Income 868 526 160 668 121 223 501 490 Revenue ex interest income 1236 702 172 1045 298 288 542 712 Revenue ex interest inc/ Total Rev 72% 90% 91% 86% 87% 100% 74% 81% Total expense 1093 287 142 750 315 230 640 320 PAT 403 330 73 173 23 35 79 400 Total opex/total revenue 64% 37% 75% 70% 92% 80% 88% 36%
Source: Company, Media articles, annual report, DRHP, ICICI Direct Research
Exhibit 7: Proportion of clients remain broadly in a range across brokers Q2FY20 HDFC Sec Sharekhan Kotak Sec Motilal IIFL Sec Angel* JM Geogit Edelweiss 5 Paisa Zerodha Total clients ( in Lakh) 21.0 19.0 13.6 12.6 8.3 11.0 NA 10.1 11.0 4.2 15.0 Active clients ( in Lakh) 6.4 4.8 4.6 3.3 2.0 4.3 2.0 1.6 1.2 3.0 10.4 Active % of total clients 31% 27% 32% 32% 24% 39% NA 16% 11% 70% 69%
Source: Company, NSE, media articles & websites, annual report, Angel, DRHP, ICICI Direct Research
Exhibit 8: ADTO and yield of traditional and discount brokers Kotak Sec Motilal Sec IIFL Sec Angel Broking JM 5 paisa Zerodha Q1FY20 Q2FY20 Q1FY20 Q2FY20 Q1FY20 Q2FY20 FY18Q1FY19* Q1FY20 Q2FY20 Q1FY20Q2FY20* Q1FY20*
Total ADTO (| crore) 21207 23800 18900 20600 16934 19161 10890 13169 8205 10748 24619 27638 126900 Derivative (| crore) 17507 20536 17200 19000 15856 18021 9211 11318 7264 9861 23860 26568 123220 Cash (| crore) 3700 3264 1700 1600 1078 1140 1679 1851 941 887 755 1070 3680
Market share total 1.7% 1.6% 1.5% 1.4% 1.3% 1.3% 1.5% 1.3% 0.6% 0.7% 1.9% 2.0% 10.0% Market share deriv 1.4% 1.4% 1.4% 1.3% 1.3% 1.3% 1.4% 1.5% 0.6% 0.7% 1.9% 1.9% 10.0% Market share cash 10.0% 9.0% 4.6% 4.4% 2.9% 3.1% 8.8% 10.3% 2.6% 2.4% 2.1% 3.0% 10.0% * Angel DRHP, annual reports
Source: Company, NSE, media articles, ICICI Direct Research Sub-brokers have been integral part of traditional broker In terms of business model, traditional broker had sub-broker as integral part of distribution franchise. Motilal Ostwal and Angel have been strong players in the industry with a large sub-broker franchise. This leads to fillip to brokerage revenue enabling it as good business model for large traditional brokers. Going ahead, we expect smaller brokers to become sub-broker of larger franchise leading to consolidation in industry led by increased competitive intensity.
Exhibit 9: Broker-wise share of franchise FY19 Kotak Sec Sharekhan MOSL Angel# IIFL Sec No of franchise <1100 2600 2500 <11000 500* Volume share of franchise (ADTO in %) ~10-15 30 70 50 ~20-25 *Operational franchise, # Angel numbers are as per prospectus
Source: Company, media articles, ICICI Direct Research
Scaling of margin funding book to contribute to revenue Margin funding i.e. providing funding in lieu of securities held by client in his account is one of the avenues to generate interest based income for Indian brokers. Traditionally brokers have been providing this facility to their clients and generating interest income. Brokers provide margin funding on a rolling basis for different tenures. Therefore, actual interest generating margin ICICI Securities | Retail Research 5 Initiating Coverage | Indian Broking Industry ICICI Direct Research
funding book is seen at 1.5-2x of the closing balance as depicted in the Exhibit below. This avenue remains attractive as yields generated from margin funding book ranges between 12% and 18% on a rolling basis.
Exhibit 10: Margin funding book broker-wise as reported in balance sheet (FY19) 800 660 686 700 581 600 Funding book is in the range of 1.5-2x of what is 500 450 reported as closing balance 400 300 227 200 As of September 2019, majority of players have 103 78 100 24 52 witnessed decline in margin funding book due to lack 0 of funding options (e.g.: commercial papers) Kotak Sec HDFC Sec Sharekhan Axis Sec Moti Angel 5Paisa Geojit IIFL Securities
Source: Company, annual report, DRHP ICICI Direct Research
Exhibit 11: Interest as percentage of total income rising…. Exhibit 12: Share of broking income moderating
100 86 100 80 84 80 74 77 76 80 65 80 67 69 54 51 56 51 55 56 60 44 60 44 40 28 30 27 40 28 26 20 19 14 12 16 14 20 9 8 20 10 6 0 3 3 0 0
Brokergae Income/ Total Income Interest Income/ Total Income Brokergae Income/ Total Income Interest Income/ Total Income
Source: Company, Annual reports, DRHP, ICICI Direct Research Source: Company Annual reports, DRHP,, ICICI Direct Research
Business model to shift to advisory to sustain revenues In the western stock market, entry of discount brokers have led to traditional brokers mould their business model towards fee based income. Recently, brokers including Charles Schwab, TD Ameritrade, E-Trade have dropped trading fees and are offering nearly zero commission to clients. Accordingly, the aim is to generate revenue from service offering including ETF and advisory services rather than earlier regime of transaction based commission. In the wake of changes undertaken in domestic stock market and broking industry, evolution in terms of business model is imminent. In our view, the Indian broking industry is set to witness a gradual shift from transaction based model to service or fee based model offering services like wealth management and investment advisory. A shift towards fee based model is already in foray with brokers focussing on building non transaction - wealth AUM (refer Exhibit below). Apart from advisory services, focus on fund based activities including margin funding and loan against shares, which the brokers are currently engaged, is seen further increasing, enabling brokers as sustainable avenue of contribution to earnings.
ICICI Securities | Retail Research 6 Initiating Coverage | Indian Broking Industry ICICI Direct Research
Exhibit 13: Business model to focus on generation of AUM AUM (| crore) Motilal Edelweiss IIFL Wealth JM AMC 38,500 35,900 23,420 Wealth 18,100 26,950 48,041 DP/Custodian assets 60,100 21500# 28,907 Distribution 9,900 80850* 72,730
Total 126,600 165,200 173,098 14,037 *Includes retail demat AUM, # comprises fully of custodian & clearing assets
Source: Company, ICICI Direct Research
Bank led brokerages maintain top slot amid competition Emergence of discount brokers offering low brokerage on per order basis has led to a shift in market share in terms of active clientele. Market share of top 10 brokers in terms of number of clients moderated to ~63% in September 2019 vs. ~65% in July 2019. Gaining market share, RKSV and 5Paisa are new additions in top 12 list of brokers in terms of clientele. Both have climbed three places in ranking to nine and 11, respectively.
Exhibit 14: Active clients of top brokers Active Clients (in '000) FY14 FY15 FY16 FY17 FY18 FY19 Jul-19 Sep-19 Nov-19 Mkt share Zerodha 18 30 62 166 541 981 1008 1045 1113 12.3% ICICI Securities 501 595 560 618 798 881 895 906 935 10.3% HDFC Securities 279 348 408 483 602 651 647 635 648 7.1% Sharekhan 275 343 336 366 535 505 501 481 486 5.4% Kotak Securities 223 268 247 274 369 447 456 463 485 5.3% Axis Securities 77 120 184 259 405 390 377 338 311 3.4% Angel Broking 140 160 171 230 364 427 432 432 455 5.0% Motilal Oswal 123 153 166 207 308 326 330 326 333 3.7% RKSV Securities 188 277 376 4.1% Karvy 126 172 167 181 245 267 268 265 283 3.1% 5 Paisa Capital Ltd 158 234 295 3.3% SBI CAP Securities 68 114 126 169 214 212 213 213 220 2.4% IIFL Securities 201 199 2.2% Geojit Financial Services 157 157 1.7% Edelweiss Broking 115 117 1.3%
Source: NSE, ICICI Direct Research Among discount players, Zerodha has been one of the prominent player witnessing continuous increase in market share to ~12.3% in November 2019. Apart from Zerodha, RKSV and 5Paisa are next upcoming discount brokers gaining market share. In addition, new players like Bajaj Financial Securities (Bajaj Financial Services has launched subscription based brokerage plans) and Paytm are also in row to formally launch fixed brokerage plans. One of the peculiarity witnessed in terms of clientele is that discount brokers have a large proportion to the extent of 60-70% of first time investors in the age bracket of 25-40 years. With focus on engaging with incremental or new investors entering stock markets, traditional brokers have started to offer fixed brokerage products mainly in the derivative segment. As depicted in the Exhibit below, traditional brokers including Angel Broking, Edelweiss and Axis Securities has launched fixed brokerage plans.
ICICI Securities | Retail Research 7 Initiating Coverage | Indian Broking Industry ICICI Direct Research
Revenue model of discount brokers is based on fixed brokerage per order rather than percentage of trade value. Players like Zerodha cater to ~20-40 lakh order/trade per day, though ~50% of orders generate revenue (Zerodha charges nil brokerage on cash delivery trades). Similarly 5Paisa caters to ~2- 3 lakh order per day and charges flat brokerage on per order basis. Increase in clientele and orders provides with the top-line in terms of brokerage fees, however, sustainability of this growth is yet to be seen. While low cost enables discount brokers to maintain business parity, sustainable rise in volumes remains most key driver for discount brokers to make meaningful profitability.
Exhibit 15: Broking plans - traditional players moving to fixed plans Brokers Angel Edelweiss Axis Sec Zerodha Upstox 5 Paisa
Discount plans I Trade Prime Edelweiss Lite Trade @ 20*
Brokerage Equity Delivery Nil ₹10 or 0.01% whichever lower |. 20 Nil Nil |. 10 Equity Intraday |. 20 ₹10 or 0.01% whichever lower |. 20 |. 20 |. 20 |. 10 Equity Futures |. 20 ₹10 or 0.01% whichever lower |. 20 |. 20 |. 20 |. 10 Equity Options |. 20 |. 10 |. 20 |. 20 |. 20 |. 10 Currency Futures |. 20 ₹10 or 0.01% whichever lower |. 20 |. 20 |. 10 Currency Options |. 20 |. 10 |. 20 |. 20 |. 10
Source: NSE, company websites, media articles, ICICI Direct Research Traditional brokers had started with the business model encompassing online & offline model. Hence, requirement of headcounts have been higher compared to discount brokers. Therefore, as seen in the exhibit below, number of employees for traditional brokers stands higher on relative basis.
Exhibit 16: Broker-wise headcounts 6000 5000 4000 3000 2000 1000 0 Sharekhan Kotak Sec Motilal* HDFC Sec Angel Zerodha 5 Paisa * Geojit
No of employees
Source: Company, annual report, media articles, ICICI Direct Research
SEBI tightens rules on clients funds; large brokers could gain In June 2019, SEBI released a circular tightening rules for usage of client’s funds by brokers. As per the new rules, brokers need to transfer securities to their client accounts within one day of receiving payment and not put to any other use. In case, where the client defaults on payment, brokers have been asked to hold the securities up to five days post which the broker can liquidate securities in the market and recover their dues. Further, SEBI has mandated that securities with brokers for non-receipt of payment from clients is not be used as collateral for any of proprietary trades or can be pledged with financial institutions. Post this circular, brokers will not be able to use client stock as collateral thereby impacting revenue stream of few brokers.
ICICI Securities | Retail Research 8 Initiating Coverage | Indian Broking Industry ICICI Direct Research
In a recent announcement, NSE has suspended Karvy Stock broking license due to non-compliance of regulatory provisions of the exchange. As per media sources, market regulator estimates that the broker has misused client securities worth ~| 2800 crore, pledging the securities with financial institutions. Currently, NSE has appointed EY India Ltd to conduct a forensic audit and findings of the same is awaited. However, such events act as trust deficit and can lead to large brokers gaining market share. In a recent circular, SEBI announced new norms on bringing margin for cash buy/sell order addition. As we notice, online brokers had practiced the same as clients need to keep margin money before buy order placement and sell is allowed only from delivery, leading to very negligible impact of new norms. All these SEBI norms and intense competition have impacted small brokers while large brokers are expected to gain market share.
Emergence as top discount broker - Zerodha Zerodha has introduced disruptive pricing model offering low flat brokerage to clients. Currently, Zerodha is serving to ~17 lakh customers (of which close to 12 lakhs are active clients) with order/trades per day at 20-40 lakhs as per the management. Accordingly, Zerodha has clocked revenue of ~| 800-900 crore in FY19. Nearly 2.5-3 lakh traders trade on their terminal on a daily basis. Management ascribes transparency and nimbleness as their core strengths apart from low pricing. Announcement of zero brokerage on delivery based cash transaction in December 2015 and adoption of e-KYC post demonetisation were game changing moves for the company which led to significant addition in customer base. Launch of newer products has enabled garnering incremental revenue Valuation
Traditional brokers emerge strong on earnings The Indian broking industry comprises participants with varied business models from those primarily engaged in capital market activities and others engaged in other financial activities including lending, AMC and ARC. Given the dependence on capital market and inherent cyclicality, we assign PE multiple in range of <15x for peers engaged in capital market. Accordingly, we value pure brokers like IIFL Securities at 8x FY21E EPS and Geojit BNP Paribas Financial Services at 12x FY21E standalone EPS. Players with business models in other financial segments are valued on SoTP basis. We value JM Financial at 1x FY21E BV (implying 11.5x FY21E EPS), Edelweiss at 1.4x FY21E BV (implying 16.7x FY21E EPS) and Motilal Oswal at 23x FY21E EPS. 5Paisa as a startup is valued at 4x FY21E revenue. We initiate coverage with a BUY rating on IIFL Sec and Motilal Ostwal and HOLD rating on 5 paisa, Geojit Financial, Edelweiss Financial Services and JM Financial.
Exhibit 17: Valuation | crore CMP TP Rating Mcap PAT (| crore) RoE (%) P/E (x) NW (| crore) P/BV (x) | | | core FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E Motil.Oswal.Fin. 730 850 Buy 10803 499 539 14 13 21.6 20.0 3809 4349 2.8 2.5 Edelweiss.Fin. 116 125 Hold 10827 343 656 5 8 31.6 16.5 7994 8656 1.4 1.3 JM Financial 91 94 Hold 7699 582 681 11 12 13.2 11.3 7620 7806 1.0 1.0 IIFL Securities 38 50 Buy 1214 164 205 20 21 7.4 5.9 895 1100 1.4 1.1 Geojit Fin. Ser. 28 29 Hold 655 14 20 9 11 46.9 33.5 515 572 1.3 1.1 5Paisa Capital 180 205 Hold 458 2.8 7.2 3 5 163.3 63.6 151 158 3.0 2.9
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 9 Motilal Oswal Financial (MOTOSW)
CMP: | 729 Target: | 850 (16.5%) Target Period: 12 months BUY
months December 23, 2019
Cyclicality of business to moderate…
MOSL is the eighth largest retail broker in India based on active client base of 3.3 lakh with a total client base of 12.6 lakh. With an average daily turnover (ADTO) of | 20600 crore, it enjoys 1.4% market share as on September 2019. Particulars The consolidated entity includes asset management (MF), distribution, wealth management apart from broking & investment banking in its overall Amount business arena. It maintains its own treasury worth | 2650 crore. Market Capitalisation | 10804 crore Overall revenue has grown at 14%, 23% CAGR in the last 10 years, five Networth (Q2FY20) | 3310 crore
years, respectively, depicting MOSL’s consistency in diversifying & building 52 week H/L 855/480 Coverage Initiating revenue streams. EBIDTA, PAT have grown at 14%, 6% and 61%, 48% Face Value | 1 CAGR in nine, five years, respectively. Losses in home finance & fund based Promoter (%) 69.9 segments in the last year have impacted earnings. We expect revenues to DII Holding (%) 1.7 grow at 4% CAGR boosted by growth in fund based revenues & PAT growth at 26% CAGR in FY19-22E led by lower provisions & tax reduction. FII Holding (%) 13.2 Others (%) 15.1
Leading traditional broker, presence in retail, institutional, IB Key Highlights Motilal Securities has been a strong player in the capital markets with a Rich experience in capital market & presence across business segments. It has seen a declining trend in ADTO inclination to scale up wealth & home finance business bodes well market share to 1.4%, down from highs of over 4% in FY09. However, it has for the company’s long term vision tried to maintain share in the high yielding cash segment in last few years. At current valuation, stock is fairly Latest profits remained healthy growing 14% YoY, 58% QoQ in Q2FY20 post valued. Accordingly, we initiate FY19 reported PAT growing 18% YoY to | 173 crore. It runs a lending book coverage with BUY rating and target of ~| 1274 crore currently with pure margin funding at around | 348 crore. price of | 850
Strong presence in broking, enables it to spread wings Price movement 14,000 1,800 Over the years, MOSL has successfully built a pan-India distribution 12,000 1,600 1,400 network. It has over 211 branches and 2400 franchises. The company enjoys 10,000 1,200
advantage of access to the rich experience and network of promoters and 8,000 1,000 6,000 800
Retail Equity Research Equity Retail
600 broking client relationships to expand even in other business segments. 4,000
400 – AMC, wealth management, P/E and home finance are its key segments. 2,000 200
0 0
Oct-16 Feb-17 Jun-17 Jul-18 Nov-18 Mar-19 Nov-17 Mar-18 Jul-19 Nov-19 Vast experience – new business lines augur well, initiate with BUY
The experience of promoters and management remains rich in the capital MOFSL (R.H.S) Nifty (L.H.S)
market segment. We believe the wealth management and AMC businesses Source: ICICI Direct Research, Reuters would reduce the impact of cyclicality of capital markets in earnings. We Research Analyst
expect revenues, PAT to grow at 4%, 26% CAGR, respectively, in FY19-22E. Securities ICICI Housing losses are turning around with other businesses picking up. We Kajal Gandhi [email protected] expect RoE to gradually improve from 9% in FY19 to 13-14% by FY20-21E. Factoring in AMC business commands higher multiple, we value MOSL Vishal Narnolia slightly higher than pure brokers. We value company on SOTP basis [email protected] implying multiple of 23x FY21E PAT, providing a target price of | 850. We Harsh Shah initiate coverage with BUY rating on the stock. [email protected]
Key Financial Summary
FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 13,700 17,400 19,314 20,859 22,528 Market Share (%) 2.0 1.8 1.6 1.4 1.3 Total Revenue (| crore) 2,935 2,677 2,624 2,783 2,993 Net Profit (| crore) 622 294 499 539 594 EPS (|) 43 20 34 37 41 P/E (x) 17 36 21 20 18 P/BV (x) 3.6 3.4 2.8 2.4 2.2 RoE (%) 9.6 14.0 13.2 12.8
s
Initiating Coverage | Motilal Oswal Financial ICICI Direct Research
Story in charts & rationale
Exhibit 18: Diversified revenue mix
100% 6 2 5 4 3 3 14 10 9 3 24 22 23 23 23 80% 20 30 23 20 60% 24 27 30 29 30 32 32 26 40% 62 20% 45 38 42 44 44 43 42 41
0% FY15 FY16 FY17 FY18 FY19 H1FY20 FY20E FY21E FY22E
Capital Market Asset & wealth Management Housing finance Fund Based
Source: Company, ICICI Direct Research
Exhibit 19: Segment wise return on equity FY18 FY19 H1FY20 RoE (%) % of NW RoE (%) % of NW RoE (%) % of NW Capital Market 96 9 89 10 66 9 Asset & wealth Management 141 5 127 3 108 5 Housing finance -13 23 -17 27 1 25 Fund Based -5 63 3 60 11 60 Consolidated RoE (%) 6 10 18 Source: Company, ICICI Direct Research Broking Motilal Securities has been a strong player in the capital markets with a presence across business segments. It has seen a declining trend in ADTO market share to 1.4%, down from highs of over 4% in FY09. However, it has tried to maintain share in the high yielding cash segment over the years. Latest profits remained healthy growing 14% YoY, 58% QoQ in Q2FY20 post FY19 with reported PAT growing 18% YoY to | 173 crore. It runs a lending book of ~| 1274 crore currently with pure margin funding ~| 348 crore as on Sept 2019. We expect broking segment earnings to grow marginally higher from here led by lower volume growth and contained costs, along with lower taxes at 25%.
Exhibit 20: Broking P&L | Crore FY18 FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 FY20E FY21E FY22E Total Revenues 1,121 1,133 294 270 281 278 302 1,102 1,147 1,221 Operating Cost 762 750 188 188 193 181 195 710 739 786 PAT 147 173 51 34 36 40 56 187 195 220
Source: Company, ICICI Direct Research
AMC As of September 2019, AMC AUM was at | 38500 crore (up 6% YoY), with MF AUM at | 19900 crore (up 5% YoY), PMS AUM at | 15800 crore (up 7% YoY) and alternative investment fund (AIF) AUM at | 2600 crore. The group has built a strong recurring revenue item from scratch. The growth continues to remain healthy except last year. MF equity market share is 1.9%. It reported revenue & PAT of | 579 crore & | 150 crore, respectively, in FY19 and grew 22% YoY in Q2FY20 benefiting from lower taxes.
ICICI Securities | Retail Research 11 Initiating Coverage | Motilal Oswal Financial ICICI Direct Research
Exhibit 21: AUM & income statement | Crore FY18 FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 FY20E FY21E FY22E AUM 35,600 38,900 36,402 37,400 38,900 38,809 38,501 41,623 45,785 50,364 Total Revenues 520 579 154 137 140 144 136 595 659 725 Operating Cost 349 348 93 83 86 88 85 379 418 460 PBT 170 231 61 54 53 56 50 223 245 274 PAT 110 150 39 34 36 36 48 167 184 206 Source: Company, ICICI Direct Research IB and wealth management Wealth management is the recent addition to the kitty with AUM of | 18100 crore and quarterly revenue of | 28 crore. However, the potential to expand the business and build recurring revenues remains high. The IB business remains lumpy.
Exhibit 22: Wealth management income statement | Crore FY18 FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 FY20E FY21E FY22E AUM 14,700 17,500 15,485 16,400 17,500 18,008 18,141 18,375 20,213 22,234 Total Revenues 98 109 32 25 26 22 28 103 113 125 Operating Cost 66 88 24 21 21 21 26 93 100 103 PBT 31 20 8 4 4 1 1 7 11 14 PAT 21 14 6 3 3 1 1 5 9 11 Source: Company, ICICI Direct Research Aspire Housing Finance renamed Motilal Oswal Housing Finance Aspire was the housing finance arm of MOFSL. The entity had faced losses in the last two years due to asset quality issues. The management has done write-offs in Q2FY20 and significantly reduced the GNPA and NNPA ratios to 2.39% and 1.82% from a high of 10.4% and 7.8%, respectively. PCR is at 62%. These lower NPLs will help them to further boost lender’s confidence and bring down incremental cost of funds. We expect housing loan growth to pick up moderately to | 4280 crore in FY21E with asset quality concerns subsiding.
Exhibit 23: Housing finance income statement | Crore FY18 FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 FY20E FY21E FY22E NII 238 231 70 52 51 58 54 225 235 257 Other Income 22 13 3 3 4 2 2 10 11 11 Total Revenues 261 244 73 56 55 60 57 235 246 268 Operating cost 99 104 26 27 24 24 25 108 113 123 PPoP 162 141 47 28 32 36 32 127 133 145 Provisions 137 352 101 178 22 11 49 70 70 70 PBT 25 -212 -54 -150 9 25 -18 57 63 75 PAT 19 -137 -36 -97 8 17 -12 40 44 52 Source: Company, ICICI Direct Research
Exhibit 24: Housing finance key data FY18 FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 FY20E FY21E FY22E AUM 4860 4360 4600 4400 4360 4300 3850 3927 4280 4666 NIM (%) 4.1 4.8 4.6 4.85 4.8 5.2 5.1 5.7 5.5 5.5 GNPA (%) 4.5 9.3 7 8.68 9.3 10.4 2.4 NNPA (%) 3.3 7.2 5.6 6.97 7.2 7.8 1.8 Source: Company, ICICI Direct Research MOFSL has an equity treasury book of ~| 1,100 crore with MTM valuations of | 1550 crore as on September 2019. Apart from these, there are liquid/debt funds of | 300 crore and sponsor investments in Private Equity and Real Estate funds to the tune of ~| 450 crore. ICICI Securities | Retail Research 12 Initiating Coverage | Motilal Oswal Financial ICICI Direct Research
Valuation The experience of promoters and management remain rich in the capital market segment. We believe the wealth management and AMC businesses would reduce the impact of cyclicality of capital markets in earnings. We expect revenues, PAT to grow at 4%, 26% CAGR, respectively, in FY19-22E. Housing losses are turning around with other businesses picking up. We expect RoE to gradually improve from 9% in FY19 to 13-14% by FY20-21E. Factoring in AMC business commands higher multiple, we value MOSL slightly higher than pure brokers. We assign 23x FY21E PAT, providing a target price of | 850. We initiate coverage with a BUY rating on the stock.
Exhibit 25: SOTP valuation Business Segment Value (| crore) |/share AMC 6,704 460 Broking & IB 3,562 245 PE & other business 2,416 166 Home Finance 1,895 130
Holding company discount 15% 15% Value per share 12,391.2 850 Source: Company, ICICI Direct Research
Exhibit 26: One year forward PE 1600 1400 1200 1000 800
| crore | 600 400 200 0 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
CMP 15.0 X 20.0 X 25.0 X 30.0 X
Source: Capital line , ICICI Direct Research
ICICI Securities | Retail Research 13 Initiating Coverage | Motilal Oswal Financial ICICI Direct Research
Financial Summary
Exhibit 27: Income Statement (| crore)Exhibit 28: Balance Sheet (| crore) FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E Total Revenue 2,677 2,624 2,783 2,993 Sources of Funds Operating Cost 1,543 1,400 1,383 1,471 Equity EBITDA 937 1,014 1,178 1,253 Net-worth 3050 3809 4349 4943 Interest Expense 517 470 446 433 Borrowings 5160 4472 4420 4332 PBT 396 666 719 792 Minority Interest 40 30 30 30 Tax 10 17 18 20 Total Liabilities 8250 8281 8769 9275 PAT 294 499 539 594 Source: Company, ICICI Direct Research Application of Funds Fixed assets 300 330 330 330 Investment 2690 2700 2720 2720 Loans and Advances 4880 4677 5098 5554 Working Capital (net) 360 514 561 611 Deferred tax assets (net) 20 60 60 60 Total Assets 8250 8281 8769 9275 Source: Company, ICICI Direct Research
Exhibit 29: Key Ratios Exhibit 30: Growth (%) FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E No of Eq Shares (Crore) 14.57 14.57 14.57 14.57 Total Asset 0.4 5.9 5.8 EPS (|) 20.2 34.3 37.0 40.8 Total Income -2.0 6.1 7.5 Book Value(|) 212 261 298 339 ADTO 11.0 8.0 8.0 BVPS (|) 209 261 298 339 Expences -9.3 -1.2 6.4 P/E (x) 36.1 21.3 19.7 17.9 Net Profit 69.7 8.0 10.2 P/B (x) 3.5 2.8 2.4 2.2 Book Value 24.9 14.2 13.7 RoE (%) 9.6 14.0 13.2 12.8 EPS 69.7 8.0 10.2 ADTO (| crore) 17400 19314 20859 22528 Source: Company, ICICI Direct Research Market Share (%) 1.8 1.6 1.4 1.3 Yield (%) 0.015 0.014 0.013 0.013 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 14 5paisa Capital (5PACAP)
CMP: | 180 Target: | 205 (14%) Target Period: 12 months HOLD months December 23, 2019 Sustainable revenue growth; pivotal for PAT visibility… 5paisa Capital is a leading discount stock broker backed by Nirmal Jain led
IIFL group. It started operations in March 2016 with 3652 active clients as of FY17. Over the years, aggressive customer acquisition and competitive Particulars pricing have aided in superior active client growth to 2.64 lakh as on October Amount 2019. The company has become the third largest discount broker. However, Market Capilatisation | 459 crore the company plans to make itself a financial platform and differentiator with offerings like P2P lending platform apart from discount broking with a Networth | 141 crore product suite (free plan/ |249 plan & |499 plan) to select from. 52 week H/L 271/111 Face Value | 10 Initiating Coverage Initiating Increasing active clients; market share set to rise DII Holding (%) 0 On the back of its lower fixed brokerage and user friendly mobile apps & FII Holding (%) 18.2 systems, the company has been constantly acquiring active clients. This led Promoter Holding (%) 34.6 to market share gains to 1.4% in Q2FY20. As of October 2019, number of Others (%) 47.2 active clients was at 264712 vs. 3652 in March 2017 implying growth at 455% CAGR for the period. Led by lower brokerage, active client to total client is Key Highlights expected to be better than traditional brokers. Further, average daily Third largest discount broker with turnover (ADTO) witnessed 200% growth to | 8658 crore in FY19 vs. | 2860 active clients base of 2.64 lakh as of October 2019 crore in FY18. Going ahead, increasing pace of customer acquisition & improving market share is seen improving ADTO growth to 59% CAGR to With the stock fairly valued, we initiate coverage on the stock with a
| 34500 crore by FY22E. Market share is seen improving to 2% by FY22E. HOLD rating and a target price of | 205/share Superior revenue growth to aid improvement in CI ratio Price movement The company witnessed strong revenue growth of 189% CAGR to | 62.6 crore in FY19 (| 7.5 crore in FY17), largely led by improving ADTO & 14,000 350 increasing client base. We expect revenues growth at 36% CAGR in FY19- 12,000 300 22E, led by operating leverage which is seen driving CI ratio lower to 89% 10,000 250 8,000 200 in FY22E. 70-75% of opex is acquisition cost. Accordingly, it is poised to 6,000 150 post FY22E PAT of ~| 12.8 crore vs. loss of ~| 17 crore in FY19. 4,000 100 2,000 50 Retail Equity Research Equity Retail Return ratios to improve, fairly valued
0 0 – Jan-18 Mar-18 May-18 Jul-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Sep-19 Nov-19 Post years of losses, the company is expected to post a profit from FY20E on the back of operating leverage. Accordingly, return ratios are expected to turn from negative to positive, reporting RoE of ~8% in FY22E. The 5 Paisa (R.H.S) Nifty (L.H.S) company focuses on increasing business growth led by aggressive pricing Source: Reuters, ICICI Direct Research and strong client acquisition compared to peers. Accordingly, an increase in Research Analyst operating leverage is anticipated. Revenue growth holds key. With expected PAT of ~| 12.8 crore by FY22E, we believe the stock to be looked at as a Kajal Gandhi Securities ICICI [email protected] start-up story. As a large number of clients are new to stock markets without long experience, burnout ratio or leakage is to be watched. The stock is Vishal Narnolia currently trading at 66x FY21E PAT and 3.6x revenues. With the stock fairly [email protected] valued, we initiate coverage on the stock with a HOLD rating and a target Harsh Shah price of | 205/share, implying 4x revenues and 73x FY21E. [email protected] Key Financial Summary FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 2860 8658 22500 28500 34500 Market Share (%) 0.4 0.9 1.8 1.9 2.0 Revenue from operation (| crore) 19.7 62.6 103.9 129.8 158.1 Net Profit (| crore) -25.3 -16.6 2.8 7.2 12.8 EPS (|) -19.9 -13.0 1.1 2.8 5.0 P/E (x) -9.1 -13.8 163.5 63.7 35.8 RoE (%) -33.5 -30.3 2.8 4.7 7.8 s Source: ICICI Direct Research, Company Initiating Coverage | 5paisa Capital ICICI Direct Research
Story in Charts
Exhibit 31: Superior revenue growth Exhibit 32: Improving CI ratio seen ahead
180 158 250 350 319 160 219 300 269 140 130 200 250 120 163 104 150 100 200 (%) (%) 80 63 136 | crore | 100 150 60 96 93 89 66 100 40 20 50 25 50 20 7 22 0 0 0 FY17 FY18 FY19 FY20E FY21E FY22E FY17 FY18 FY19 FY20E FY21E FY22E
Revenue Revenue Growth Cost To Income Ratio
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research
Exhibit 33: Aggressive client acquisition aiding strong ADTO growth 40000 34500 35000 28500 30000 25000 22500 20000 | crore | 15000 8658 10000 5000 2860 0 FY18 FY19 FY20E FY21E FY22E
ADTO
Source: Company, ICICI Direct Research
Valuation Post years of losses, the company is expected to post profit from FY20E on the back of operating leverage. Accordingly, return ratios are expected to turn from negative to positive, reporting RoE of ~8% in FY22E. The company focuses on increasing business growth led by aggressive pricing and strong client acquisition compared to peers. Accordingly, an increase in operating leverage is expected. Revenue growth holds key. Also, with expected PAT of ~| 12.8 crore by FY22E, we believe the stock should be looked at as a start-up story. The stock is currently trading at 66x FY21E PAT and 3.6x revenues. With the stock fairly valued, we initiate coverage on it with a HOLD rating and a target price of | 205/share, implying 4x revenues and 73x FY21E.
ICICI Securities | Retail Research 16 Initiating Coverage | 5paisa Capital ICICI Direct Research
Financial Summary
Exhibit 34: Profit & Loss Ratios (| crore)Exhibit 35: Balance Sheet Ratios (| crore) Particulars FY18 FY19 FY20E FY21E FY22E Particulars FY18 FY19 FY20E FY21E FY22E Revenue from operation 19.7 62.6 103.9 129.8 158.1 Source of Funds Other Income - - - - - Equity Capital 12.7 12.7 25.5 25.5 25.5 Total Income 19.7 62.6 103.9 129.8 158.1 Reserve& Surplus 50.2 33.6 125.6 132.8 145.6 Employee expense 19.3 25.8 31.0 37.2 40.9 Networth 62.9 46.4 151.1 158.3 171.1 Finance cost 0.8 6.8 6.8 7.6 9.1 Borrowings 16.1 92.0 96.6 101.4 106.5 Depreciation 0.7 1.4 2.2 3.0 4.2 Other Liability 52.2 143.2 128.8 141.7 155.9 Other expenses 32.1 51.0 60.2 72.2 86.7 Total 131.3 281.5 376.5 401.5 433.5 Total Expense 52.9 85.1 100.1 120.1 140.9 Profit Before Tax -33.2 -22.5 3.8 9.7 17.2 Application of Funds Tax -7.9 -5.9 1.0 2.5 4.4 Fixed Asset 2.1 2.3 2.3 2.4 2.5 Profit After Tax -25.3 -16.6 2.8 7.2 12.8 Investment 2.1 2.1 5.3 5.8 6.4 EPS (-19.9) (-13.0) 1.10 2.83 5.03 Advances 36.4 36.8 40.5 47.8 52.6 Source: Company, ICICI Direct Research Cash 27.9 113.0 90.4 94.9 102.5 Other Asset 62.7 127.3 238.1 250.5 269.5 Total 131.3 281.5 376.5 401.5 433.5 Source: Company, ICICI Direct Research
Exhibit 36: Key Ratios (| crore) Exhibit 37: Key Ratios (%) Particulars FY18 FY19 FY20E FY21E FY22E Growth (%) FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 2860 8658 22500 28500 34500 Total Asset 20 115 34 7 8 Market Share (%) 0.4 0.9 1.8 1.9 2.0 Advances 539 1 10 18 10 Yield (%) 0.002 0.003 0.002 0.002 0.002 Borrowing 0 470 5 5 5 ROE (%) -33.5 -30.3 2.8 4.7 7.8 Total Income 163 219 66 25 22 No of Shares (crore) 1.3 1.3 2.5 2.5 2.5 Operating expense 122 61 18 20 17 EPS (|) -19.9 -13.0 1.1 2.8 5.0 Net profit -116 35 117 -157 -78 PE (x) -9.1 -13.8 163.5 63.7 35.8 Book Value -29 -26 63 5 8 Book Value (|) 49.4 36.4 59.3 62.1 67.2 EPS -38 34 108 -157 -78 P/BV (x) 3.6 4.9 3.0 2.9 2.7 Source: Company, ICICI Direct Research Pat margin (%) -128.7 -26.5 2.7 5.6 8.1 CI Ratio (%) 269.0 135.9 96.4 92.5 89.1 Mcap/Sales (x) 23.4 7.3 4.4 3.5 2.9 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 17 IIFL Securities (IIFSEC)
CMP: | 38 Target: | 50 (32%) Target Period: 12 months BUY
months December 23, 2019 Holding its ground… Started in 1995 as capital markets player, IIFL has emerged as a financial
conglomerate engaged in various businesses from broking, wealth management to lending. In September 2019, the company got demerged Particulars and IIFL Securities (IIFL Sec) got listed separately. It is engaged in retail and institutional broking, distribution of financial products and investment Amount banking. Currently, the company caters to a retail client base of 8.25 lakh Market Capitalisation | 1215 crore and more than 600 institutional clients. In terms of active client base, the Networth | 730 crore th company is at 11 rank while in terms of ADTO market share, IIFL Sec has 52 week H/L 47.7/19 1.3% share as on Q2FY20 (| 19191 crore).
Face Value | 2 Coverage Initiating Client acquisition, higher volume to increase ADTO DII Holding (%) 1 FII Holding (%) 23.5 IIFL Sec caters to various client segments across spectrum including affluent Promoter Holding (%) 29.4 customers (~1.75 lakh), millennial (~4 lakh) and small retail customer (~2.5 Others (%) 45.9
lakh). In the recent past, IIFL Sec has witnessed a decline in ADTO market share from 2% in FY18 to 1.3% in Q2FY20, led by higher volatility in markets Key Highlights and rising share of options. Share in the cash segment saw a decline from Traditional broker with retail & 3.9% in FY18 to 3.4% in Q2FY20. Client base has seen an increase from 7.66 institutional business and lakh in FY18 to 8.23 lakh in Q2FY20. With focus on client acquisition and distribution of financial products increase in volume of activity, average daily turnover (ADTO) is expected to Building AUM at | 26900 crore – to enable gradual shift to fee based increase at ~15% CAGR to | 21000 crore in FY19-22E. Hence, we expect brokerage revenues to increase at 10% CAGR to | 414 crore in FY22E. model Initiate coverage with BUY rating Building of AUM to enable shift toward fee based model and target price of | 50
In initial phase, earning fee based income through selling financial products Price movement (MF & insurance) remained the key focus. Likewise, AUM has increased at 15,000 300 27% CAGR in FY17-19 to | 26900 crore. Distribution AUM rose at ~103% 250 CAGR in FY17-19 to | 8300 crore. However, a gradual shift towards AUM 10,000 200 based business model and margin funding is anticipated catering to higher 150
fee based income. Led by fee-based income, we expect revenues/PAT to 5,000 100
Retail Equity Research Equity Retail grow at 12%/11 CAGR in FY20-22E to | 874 crore/188 crore. 50
–
0 0
Dec-16 Jul-17 Feb-18 Jun-18 Sep-18 Jan-19 Apr-19 Aug-19 Dec-19 Apr-17 Nov-17 Valuation discount to persist; current lower valuation offers upside Focus on increasing business growth led by client acquisition and increasing IIFLSec (R.H.S) Nifty (L.H.S)
market activity remain key catalysts for the base business. Focus on building Source: Reuters, ICICI Direct Research AUM bodes well for a gradual shift towards the fee-based business model. Research Analyst We expect the topline to increase at 12% CAGR to | 855 crore in FY22E while earnings are seen at | 198 crore, growing at 10% CAGR. We believe as the Kajal Gandhi Securities ICICI [email protected] wealth management and discount broking are already separately listed in group, hence the discount in valuation vs. peers may remain. However, the Vishal Narnolia stock is currently trading cheap at 6.4x FY21E EPS, which is at a steep [email protected] discount compared to peers. We initiate coverage on the stock with a BUY Harsh Shah rating and a target price of | 50/share, implying ~8x FY21E EPS. [email protected]
Key Financial Summary sss FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 8415 13988 17709 20000 24000 Market Share (%) 1.2 1.4 1.4 1.3 1.4
Revenue from operation (| crore) 834.7 835.1 775.7 820.4 828.1
Net Profit (| crore) 180.6 171.5 163.8 204.8 203.9 EPS (|) 5.7 5.4 5.1 6.4 6.4 P/E (x) 6.7 7.1 7.4 5.9 6.0 RoE (%) 29.0 25.3 20.2 20.5 17.0
s
Source: Company, ICICI Direct Research
Initiating Coverage | IIFL Securities ICICI Direct Research
Snapshot of company
Exhibit 38: Revenue streams Exhibit 39: Brokerage income (retail & institutional business) Proportion 300 282.9 | crore FY17 FY18 FY19 1HFY20 (1HFY20) 236.3 240.3 250 Broking 200 Retail 236.3 282.9 240.3 105.3 28% 138.5 150 123.6 130.8 105.3 Institutional 123.6 138.5 130.8 68.1 18% crore | 100 68.1 Distribution 102.7 154.4 180.4 68.8 19% 50 IB 36.1 82 33.4 10 3% Others 289.3 290.6 117.7 32% 0 FY17 FY18 FY19 1HFY20 Total 947.1 875.5 369.9 100% Source: Company, ICICI Direct Research Retail Institutional
Source: Company, ICICI Direct Research
Exhibit 40: ADTO & market share (cash segment) Exhibit 41: ADTO & market share (overall) 5 1180 2.5 25000 1154 1155 1140 1160 19161 4 2 17709 20000 1140 16934 13988 3 1120 1.5 15000
1100 (%)
(%) 1078 | crore | 2 1080 crore | 1 10000 1060 1 0.5 5000 1040 0 1020 0 0 FY18 FY19 Q1FY20 Q2FY20 FY18 FY19 Q1FY20 Q2FY20
Cash ADTO Market Share (%) Total ADTO Market Share (%)
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research
Exhibit 42: Break up of AUM | crore FY17 FY18 FY19 1HFY20 CAGR (FY17-19) DP 15900 20800 20800 18600 14% Financial products 1900 5500 7800 8300 103% Total AUM 17800 26300 28600 26900 27%
Source: Company, ICICI Direct Research
Valuation Focus on increasing business growth led by client acquisition and increasing market activity remain key catalysts for the base business. Focus on building AUM bodes well for a gradual shift towards the fee-based business model. We expect the topline to increase at 12% CAGR to | 855 crore in FY22E while earnings are seen at | 198 crore; growing at 10% CAGR. We believe that as the wealth management and discount broking are already separately listed in group, hence the discount in valuation vs. peers may remain. However, the stock is currently trading cheap at 6.4x FY21E EPS, which is at a steep discount compared to peers. We initiate coverage on the stock with a BUY rating and a target price of | 50/share, implying ~8x FY21E EPS.
ICICI Securities | Retail Research 19 Initiating Coverage | IIFL Securities ICICI Direct Research
Financial Summary
Exhibit 43: Profit & Loss (| crore) Exhibit 44: Balance Sheet (| crore) Particulars FY18 FY19 FY20E FY21E FY22E Particulars FY18 FY19 FY20E FY21E FY22E Revenue from operation 834.7 835.1 775.7 776.4 801.7 Source of Funds Other Income 112.40 40.40 44.47 48.92 53.81 Equity Capital 63.7 63.8 63.8 63.8 63.8 Total Income 947.1 875.5 820.2 825.3 855.5 Reserve& Surplus 559.5 667.1 830.9 1035.7 1239.6 Employee expense 210.9 256.6 256.6 228.0 244.0 Networth 623.2 730.9 894.7 1099.5 1303.4 Finance cost 144.5 114.5 111.4 56.8 66.2 Borrowings 1012.8 660.5 60.5 378.5 473.2 Depreciation 36.5 41.9 46.1 50.7 55.8 Other Liability 1225.8 1658.5 1675.1 1691.8 1708.8 Other expenses 275.9 200.9 183.2 223.5 219.3 Total 2861.8 3049.9 2630.3 3169.9 3485.3 Total Expense 667.8 613.9 597.3 559.0 585.3 Profit Before Tax 279.3 261.6 222.9 266.3 270.3 Application of Funds Tax 92.9 86.6 59.1 70.6 71.6 Fixed Asset 583.9 469.8 493.3 468.6 421.8 Profit After Tax 180.6 171.5 163.8 195.7 198.7 Investment 159.5 139.6 153.6 168.9 185.8 Exceptional Item 0.0 0.0 87.2 0.0 0.0 Advances 81.6 433.2 519.8 623.8 779.8 PAT post excp item 180.6 171.5 251.0 195.7 198.7 Cash 855.3 1065.0 465.0 688.5 764.2 EPS 5.67 5.38 5.14 6.14 6.23 Other Asset 1181.6 942.3 998.6 1220.0 1333.8
Source: Company, ICICI Direct Research Total 2861.8 3049.9 2630.3 3169.9 3485.3 Source: Company, ICICI Direct Research
Exhibit 45: Key Ratios (| crore) Exhibit 46: Growth (%) Particulars FY18 FY19 FY20E FY21E FY22E Growth (%) FY19 FY20E FY21E FY22E ADTO (| crore) 8415 13988 17709 20000 24000 Total Asset 7 -1 5 10 Market Share (%) 1.2 1.4 1.4 1.3 1.4 Advances 431 20 20 25 Yield (%) 0.025 0.015 0.009 0.008 0.006 Borrowing -35 -45 5 25 ROE (%) 29.0 25.3 20.2 20.5 17.0 Total Income -8 -6 1 4 No of Shares (crore) 31.9 31.9 31.9 31.9 31.9 Operating expense -8 -3 -6 5 EPS (|) 5.7 5.4 5.1 6.4 6.4 Net profit -5 -4 19 1 PE (x) 6.7 7.1 7.4 5.9 6.0 Book Value 17 33 12 18 Book Value (|) 19.6 22.9 28.0 34.5 40.9 EPS -5 -4 19 1
P/BV (x) 1.9 1.7 1.4 1.1 0.9 Source: Company, ICICI Direct Research Pat margin (%) 19.1 19.6 20.0 23.6 23.1 CI Ratio (%) 70.5 70.1 72.8 67.9 68.5 Mcap/Sales (x) 1.3 1.4 1.5 1.4 1.4
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 20 Geojit Financial Services (GEOBNP)
CMP: | 27.3 Target: | 29 (6%) Target Period: 12 months HOLD months December 23, 2019 Marginal player in competitive environment… Geojit Financial services (GFS) is a leading retail financial services company
in India with a growing presence domestically and in the Middle East. Established in 1987, the company offers a wide portfolio of savings and Particulars investment solutions to over 10.2 lakh clients through a countrywide Amount network of over 469 offices, phone services & dedicated customer care Market Capitalisation | 651 crore centres. The company also has a strategic presence in Middle East region in Networth (FY19) | 409 crore the form of joint ventures and partnerships. 52 week H/L 48/22 Higher cash market share in tough environment Face Value | 1 DII Holding (%) 1.2 Coverage Initiating Increased competitive intensity led by large brokers has weighed on the FII Holding (%) 2.6 company’s market share & positioning. GFS has lost 26200 active customers in the last 30 months, with corresponding market share dwindling from 0.5% Promoter Holding (%) 62.1 in FY15 to 0.21% in Q2FY20. ADTO over this time frame has grown to | 1936 Others (%) 34.1 crore at a subdued CAGR of 11%, vastly underperforming the industry’s Key Highlights 42% pace. Despite loss in active clients & slower ADTO growth, GFS has Increasing competition from large been able to maintain share in cash segment (FY19- | 448 crore, 23% of brokers taking a toll on business ADTO) in total ADTO compared to its peers (Avg~10% for peers). growth Initiate coverage with HOLD rating Moderation in revenue, higher cost to weigh on earnings and target price of | 29
Revenues grew to | 265 crore in FY19, with growth in FY16-19 limited to 7% Price movement CAGR. Topline growth has remained a laggard despite robust 32% CAGR in distribution income in the past 36 months (financialisation of savings effect) 14,000 160 as brokerage income (76% of revenues) grew meagrely by 4% in this period. 12,000 140 120 Combined with a quicker rise in costs, the ensuing cost to income ratio 10,000 100 8,000 surged ~1000 bps in FY19 to 80% (70% in FY18), thus dragging earnings. 80 6,000 PAT witnessed a 6% CAGR decline in FY16-19. Going ahead, earnings are 60 seen being supported by a shift to lower tax rates and modest improvement 4,000 40 in CI ratio against any meaningful uptick in brokerage revenues. 2,000 20 0 0 Dec-16 Mar-17 Jul-17 Nov-17 Feb-18 Jun-18 Sep-18 Jan-19 Apr-19 Aug-19 Nov-19 Retail Equity Research Equity Retail
Awaiting growth triggers; initiate coverage with HOLD – GFS’ current business strategy appears to be hampered by a moderation in yield and loss of active clients, with revenues and market share suffering as Geojit (R.H.S) Nifty (L.H.S)
a result. Simultaneously, cost overhangs also limit visibility on the Source: Reuters, ICICI Direct Research profitability front. In our opinion, GFS is in dire need of re-strategizing to be able to compete better with large brokers. We expect earnings to remain Research Analyst muted with the benefit of lower tax rate aiding profitability, going ahead. Kajal Gandhi ICICI Securities Securities ICICI With earnings strength a key point of concern, the company’s competitive [email protected] position appears threatened. GFS is currently trading at at 11.5x FY21E standalone EPS (9.5x FY21E on consolidated basis). In our view, limited Vishal Narnolia [email protected] growth visibility caps upside, though higher share of cash segment stays its forte. We initiate coverage with HOLD rating and a target price of | 29, Harsh Shah valuing it at 12x FY21E standalone EPS (10x FY21E on consolidated basis). [email protected] Key Financial Summary s FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 1994 1936 2250 2775 3450 Market Share (%) 0.28 0.19 0.18 0.19 0.20 Revenue from operation (| crore) 304 265 285 331 384 Net Profit (| crore) 67.5 29.2 40.8 57.0 67.1 EPS (|) 2.8 1.2 1.7 2.4 2.8 P/E (x) 9.6 22.3 15.9 11.4 9.7 RoE (%) 16.2 6.9 8.8 10.5 11.1
Source: ICICI Direct Research, Company Initiating Coverage | Geojit Financial Services ICICI Direct Research
Story in charts
Exhibit 47: Average daily turnover (ADTO) growth over the years 4000 3500 3000 Cash ADTO grew at a meagre pace of 1% during 2500 FY15-19 while derivatives grew at 14% CAGR during 2000 2898 the same period 2276 (| crore) (| 1500 1498 1488 1800 1000 868 760 956 500 426 369 394 496 448 450 500 552 0 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Cash Derivative
Source: Company, ICICI Direct Research
Exhibit 48: Active clients and lower turnover impacting market share
0.60 0.53 0.50 0.40 Continuous loss of active clients and lower turnover 0.40 0.33 0.28 are impacting market share, which has halved to (%) 0.30 0.19% in FY19 vs. 0.53% in FY15 0.19 0.18 0.19 0.20 0.20
0.10
0.00 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Market Share
Source: Company, ICICI Direct Research
Exhibit 49: Revenue break-up | Crore FY16 FY17 FY18 FY19 FY20E FY21E FY22E Declining yield & market share led to muted growth Brokerage Income 182 204 242 202 219 256 302 in brokerage income (4% CAGR) while increased Distribution Income 18 24 45 43 47 51 57 financialisation aided distribution growth (32% CAGR) Others 36 38 47 41 31 35 37 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 22 Initiating Coverage | Geojit Financial Services ICICI Direct Research
Valuation GFS’ current business strategy appears to be hampered by a moderation in yield and loss of active clients, with revenues and market share suffering as a result. Simultaneously, cost overhangs also limit visibility on the profitability front. In our opinion, GFS is in dire need of re-strategizing to be able to compete better with large brokers. We expect earnings to remain muted with the benefit of lower tax rate aiding profitability, going ahead. With earnings strength a key point of concern, the company’s competitive position appears threatened. GFS is currently trading at at 11.5x FY21E standalone EPS (9.5x FY21E on consolidated basis). In our view, limited growth visibility caps upside, though higher share of cash segment stays its forte. We initiate coverage with HOLD rating and a target price of | 29, valuing it at 12x FY21E standalone EPS (10x FY21E on consolidated basis).
Exhibit 50: One year forward PE 140 120 100 80 | 60 40 20
0
Jul-15 Jul-16 Jul-19 Jul-14 Jul-17 Jul-18
Oct-14 Oct-17 Oct-18 Oct-15 Oct-16 Oct-19
Apr-14 Apr-15 Apr-17 Apr-18 Apr-16 Apr-19
Jan-15 Jan-16 Jan-17 Jan-19 Jan-18
CMP 5.0 X 10.0 X 15.0 X 20.0 X 25.0 X
Source: Company, Capital line, ICICI Direct Research
ICICI Securities | Retail Research 23 Initiating Coverage | Geojit Financial Services ICICI Direct Research
Financial Summary (Standalone)
Exhibit 51: Profit & Loss (| crore) Exhibit 52: Balance Sheet (| crore) Particulars FY18 FY19 FY20E FY21E FY22E Particulars FY18 FY19 FY20E FY21E FY22E Revenue from operation 304.1 264.9 285.4 331.2 383.9 Source of Funds Other Income 30.1 20.2 10.1 10.1 10.1 Equity Capital 23.8 23.8 23.8 23.8 23.8 Total Income 334.2 285.1 295.5 341.3 394.0 Reserve& Surplus 411.8 385.0 490.9 547.9 615.0 Employee expense 93.1 101.3 106.4 117.0 134.6 Networth 435.6 408.9 514.7 571.8 638.8 Finance cost 0.4 0.7 0.8 0.8 1.0 Borrowings 4.6 2.4 3.7 5.1 6.7 Depreciation 12.4 13.7 15.1 16.6 18.6 Other Liability 227.6 292.2 306.9 322.2 338.3 Other expenses 126.9 113.9 118.4 130.3 149.8 Total 667.8 703.6 825.2 899.1 983.8 Total Expense 232.7 229.6 240.7 264.8 304.0 Profit Before Tax 101.4 55.5 54.8 76.6 90.0 Application of Funds Tax 34.0 18.8 14.0 19.5 23.0 Fixed Asset 55.3 66.4 69.7 76.6 84.3 Profit After Tax 67.5 29.2 40.8 57.0 67.1 Investment 114.7 45.0 67.4 74.2 81.6 EPS 2.8 1.2 1.7 2.4 2.8 Advances 155.9 172.5 175.9 184.7 203.2 Source: Company, ICICI Direct Research Cash 188.0 204.9 348.4 383.2 421.5 Other Asset 153.8 214.8 163.8 180.3 193.1 Total 667.8 703.6 825.2 899.1 983.8 Source: Company, ICICI Direct Research
Exhibit 53: Key Ratios (| crore) Exhibit 54: Growth (%) Particulars FY18 FY19 FY20E FY21E FY22E Growth (%) FY18 FY19 FY20E FY21E FY22E ADTO (| crore) 1994 1936 2250 2775 3450 Total Asset 5 5 17 9 9 Derivative (| crore) 1498 1488 1800 2276 2898 Advances 37 11 2 5 10 Cash (| crore) 496 448 450 500 552 Borrowing 0 -47 50 40 30 Market Share (%) 0.3 0.2 0.2 0.2 0.2 Total Income 25 -15 4 16 15 Yield (%) 0.046 0.040 0.037 0.035 0.033 Operating expense 21 -1 5 10 15 ROE (%) 16.2 6.9 8.8 10.5 11.1 Net profit -76 57 40 40 18 No of Shares (crore) 23.8 23.8 23.8 23.8 23.8 Book Value 9 -6 26 11 12 EPS (|) 2.8 1.2 1.7 2.4 2.8 EPS 74 -57 40 40 18 PE (x) 9.6 22.3 15.9 11.4 9.7 Source: Company, ICICI Direct Research Book Value (|) 18.3 17.2 21.6 24.0 26.8 P/BV (x) 1.5 1.6 1.3 1.1 1.0 Pat margin (%) 20.2 10.2 13.8 16.7 17.0 CI Ratio (%) 69.6 80.5 81.4 77.6 77.2 Mcap/Sales (x) 1.9 2.3 2.2 1.9 1.7 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 24 Edelweiss Financial (EDEFIN)
CMP: | 115 Target: | 125 (9%) Target Period: 12 months HOLD
months December 23, 2019 Growth pauses; balance sheet in restructuring mode
Edelweiss Financial Services (Edelweiss) has successfully transformed itself from a pure investment banking advisor (65% of PBT in FY10) to a financial conglomerate with businesses spanning three scalable and profitable business segments: 1) credit (retail & corporate) (| 31289 crore) & ARC Particulars
(| 38200 crore), 2) advisory (wealth management -| 107800 crore, asset management- | 34900 crore & capital markets custodian asset | 21500 crore Amount and 3) life & general insurance (| 218 crore premium). Market Capitalisation | 10744 crore The recent resolution of Essar Steel has benefitted Edelweiss ARC that had Networth | 8830 crore 52 week H/L 210/67
the second largest exposure at ~| 8307 crore of which 85% has been Coverage Initiating recovered. Edelweiss Tokio Life Insurance continued to generate minor Face Value | 1 losses of | 28 crore in Q2FY20 while premium growth was healthy at 21% DII Holding (%) 4.9 YoY to | 218 crore. Breakeven is expected by FY23E. Major concerns remain FII Holding (%) 30.0 its high exposure to real estate of | 11000 crore spread across 162 projects Promoter Holding (%) 32.9 while 30-35 of them are stressed with risk of higher provisions ahead. Others (%) 32.2
Key Highlights Credit business contributes 73% of the consolidated PAT post minority Higher-than-expected recovery interest (MI) in Q2FY20. Concentration within real estate/wholesale sector from Essar Steel and on boarding of has impacted ratings, earnings scenario. Post the September 2018 liquidity new investors provides comforts. crisis, Edelweiss has cautiously started unwinding wholesale book and Factoring in muted FY20E and focused on scaling up retail & advisory business. It is expected to continue. expected revival in earnings in
Notably, in Q2FY20, the company on-boarded two large investors in the FY21E, we initiate coverage with advisory business, reflecting its ability to raise capital even in a challenging HOLD rating & target price of | 125
period. However, we are three to four quarters away from witnessing an Price movement improvement. Post a muted FY20E, consolidated profits are expected to pick up in FY21E to | 617 crore, though lower than | 1044 crore in FY19. 14,000 400 12,000 350 10,000 300 Advisory – wealth, ARC hold key, fairly valued 250 8,000 200 6,000 The company’s strong positioning in institutional, investment banking 150 4,000 continues while market share in pure retail broking business has gradually 100 2,000 50
Retail Equity Research Equity Retail
reduced. Overall market share may have reduced from 6.5% (actual) in FY09 0 0
Dec-16 Jul-17 Feb-18 Jun-18 Sep-18 Jan-19 Apr-19 Aug-19 Dec-19 Apr-17 Nov-17 to under 2% now (estimates basis active clients). The advisory business – including wealth management is expected to maintain healthy traction.
Advisory AUM of | 107800 crore includes 26% advisory, 74% distribution, EDEL (R.H.S) Nifty (L.H.S) including retail demat balances. The management raised funds in a Source: ICICI Direct Research, Reuters challenging period bringing new partners and has been increasing focus on advisory and retail businesses. It is moving towards a capital light, fee based Research Analyst model. Real estate & wholesale books are expected to move to fund based
models while co-lending model has been worked out with five banks to keep Kajal Gandhi Securities ICICI the balance sheet light. Factoring in balance sheet restructuring would take [email protected]
at least a year, we initiate coverage on the stock with a HOLD rating. We Vishal Narnolia assign SoTP based target price of | 125/share (implying 16.7x FY21E EPS). [email protected]
Harsh Shah [email protected]
Key Financial Summary
es FY17 FY18 FY19 FY20E FY21E
Revenue from operation (| crore) 3383 4443 5275 4290 4780 Net Profit (| crore) 609 838 991 343 656 EPS (|) 7.3 10.1 11.4 3.9 7.5 P/E (x) 15.8 11.4 10.1 29.2 15.3 Book Value 51.5 72.9 83.8 85.3 92.4 P/B (x) 2.2 1.6 1.4 1.3 1.2 RoE (%) 15.2 15.0 14.3 4.7 8.5 RoA (%) 1.5 1.5 1.6 0.6 1.3
Source: ICICI Direct Research, Company
Initiating Coverage | Edelweiss Financial ICICI Direct Research
Story in Charts
Exhibit 55: Expected business structure by FY22
Source: Company, ICICI Direct Research
Exhibit 56: Expected business structure by FY20
Source: Company, ICICI Direct Research Exhibit 57: Loan book break-up | crore FY15 FY16 FY17 FY18 FY19 Q1FY20 Q2FY20 Credit Business 13810 18118 25837 40589 41120 37812 35110 Wholesale 9622 12097 13875 19525 18055 16987 16178 Structured Credit 5,991 6,750 6,763 9,352 6,456 5,566 5,144 Real Estate 3,631 5,347 7,112 10,173 11,599 11,421 11,034 Retail Loans 4,187 6,021 11,962 21,064 23,065 20,825 18,932 Retail Mortgages 2,081 2,641 3,614 6,672 8,996 8,726 8,075 LAS & Others 1,162 1,940 2,328 4,640 4,089 3,998 2,943 SME & Agri Financing 944 1,440 3,010 4,876 4,990 4,257 4,093 SME 0 0 2,138 3,677 4,591 3,844 3,821 Agri & Rural 0 0 872 1,199 399 413 272
ARC Asset 0 0 4,781 6,297 7,380 8,631 8,765
Total Loan Book 13810 18118 30618 46886 48500 46443 43875
Proportion (%) Credit Business 100 100 84 87 85 81 80 Wholesale 70 67 45 42 37 37 37 Retail Loans 30 33 39 45 48 45 43
ARC Asset 0 0 16 13 15 19 20
Total Loan Book 100 100 100 100 100 100 100 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 26 Initiating Coverage | Edelweiss Financial ICICI Direct Research
Exhibit 58: Revenue break-up FY16 FY17 FY18 FY19 Q1FY20 Q2FY20 Net Interest Income - Credit (adjusted 1,651 2,135 2,305 3,142 710 504 for BMU/Corporate) Income from non-credit business 697 1,061 1,330 1,310 509 460 Capital Markets revenue 455 556 620 342 Management Fees from Mutual fund 0 52 130 243 Management Fees from Wealth 242 453 580 725
Net Revenue 2,348 3,196 3,635 4,452 1,219 965 Source: Company, ICICI Direct Research
Exhibit 59: Return ratios to improve going ahead 8.1 20.0 7.7 9 7.2 7.0 8 6.8 18.9 6.6 7 15.0 16.6 15.5 14.5 6 5 (%) 10.0 12.0 (%) 4 9.2 3 5.0 2.7 2 1.9 2.1 2.1 1.6 2.4 1 0.0 0 FY16 FY17 FY18 FY19 FY20E FY21E
RoA RoE (RHS) NIM
Source: Company, ICICI Direct Research Exhibit 60: Pressure on asset quality to persist in near term 4.50 3.87 4.00 3.50 2.94 3.00 2.50 (%) 1.87 2.00 1.59 1.75 1.40 Near term challenges lie in managing liquidity and 1.50 0.83 asset quality, with a shift towards advisory & retail 1.00 0.60 0.70 0.47 seen improving the granularity of the portfolio. 0.50 0.19 0.24 0.00 FY16 FY17 FY18 FY19 FY20E FY21E
GNPA NNPA
Source: Company, ICICI Direct Research
Exhibit 61: Wealth Management snapshot As on 30th Sept 2019 No of Clients AUA (| crore) Number of RM Ultra HNI 2410 83500 161 Affluent Investor 525300 24300 781 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 27 Initiating Coverage | Edelweiss Financial ICICI Direct Research
Exhibit 62: Break up of Wealth AUM (| 107800 crore ) 100% 27 26 30 29 26 80%
60%
40% 73 74 70 71 74 20%
0% FY17 FY18 FY19 Q1FY20 Q2FY20
Distribution Asset Advisory Asset
Source: Company, ICICI Direct Research Exhibit 63: Snapshot of ARC business | crore Q1FY20 Q2FY20 AUM 47463 47029 EOP Capital employed 8631 8765 EOP Equity 2158 2236 Net Interest Income 204 179 Credit Cost 26 17 PAT 105 73 Net Interest Margin (%) 11.2 8.3 Cost To Income (%) 22 28 RoA (%) 5.8 3.4 RoE (%) 22.3 13.1 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 28 Initiating Coverage | Edelweiss Financial ICICI Direct Research
Valuation The management raised funds in a challenging period bringing new partners and has been increasing focus towards advisory and retail businesses, it is moving towards capital light and fee based model. Real estate & wholesale books are expected to move to fund based models and co-lending model is worked out with 5 banks to keep balance sheet light. Factoring balance sheet restructuring to take at least a year, we initiate coverage on the stock with a HOLD rating. We assign SoTP - based target price of | 125 per share (implying 15.3x FY21E EPS).
Exhibit 64: SoTP Valuation Company Value (| crore) Value/share Credit Business Wholesale Credit 3,147 34 Retail Credit 3,343 36 Distressed Credit 1,537 16 Franchise Business Wealth Management 1,724 18 Asset Management 1,433 15 Capital Markets 554 6
Total Value 11,738 125 CMP 10,744 115 Upside/Downside(%) 9 Source: Company, ICICI Direct Research
Exhibit 65: 1 Year Forward PE chart 400
300
| 200
100
0 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
CMP 10.0 X 15.0 X 20.0 X 25.0 X 30.0 X
Source: ICICI Direct Research, Capital Line
ICICI Securities | Retail Research 29 Initiating Coverage | Edelweiss Financial ICICI Direct Research
Financial Summary
Exhibit 66: Income Statement (| crore) Exhibit 67: Balance Sheet (| crore) FY18 FY19 FY20E FY21E FY18 FY19 FY20E FY21E Net Interest Income- Credit Business2,305 3,142 3,212 3,551 Share capital 87 89 94 94 Income from non credit business 1,330 1,310 1,078 1,230 Reserves and surplus 6,796 7,588 7,901 8,563 Other operating Revenue 81 82 0 0 Shareholders' Equity 6,883 7,677 7,994 8,656 Net Revenues 4,443 5,275 4,290 4,780 ex-insurance 6,328 7,143 7,525 8,254 Operating Expences 2,530 3,144 2,972 3,375 Minority interest 2,719 3,298 27,191 27,191 Borrowings 48,031 45,217 38,949 35,486 Operating Profit 1,913 2,131 1,319 1,405 Other liabilities 7,630 10,612 76,299 76,299 Provisioning 616 512 838 512 Total liabilities 63,487 64,544 55,582 56,965 PBT (ex- insurance) 1,297 1,618 481 893 Gain/(loss) from insurance business 53 -157 -127 -132 Fixed assets 577 548 657 789 PBT 1,350 1,740 550 1,009 Cash and bank balances 4,562 6,455 4,467 3,690 Tax 512 699 182 303 Investments 7,887 8,799 7,490 6,551 Consol PAT (ex-minority int) 838 1,040 369 706 Loans 38,439 38,408 34,361 36,899 Minority Interest -27 49 26 50 Other assets 12,022 10,333 8,606 9,036 Consol PAT 838 991 343 656 Total assets 63,487 64,544 55,582 56,965 Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research
Exhibit 68: Key ratios Exhibit 69: Growth (%) FY18 FY19 FY20E FY21E FY18 FY19 FY20E FY21E Valuation Total Asset 1.7 -13.9 2.5 No of equity Shares 92 92 94 94 Advances -0.1 -10.5 7.4 EPS (|) 10.1 11.4 3.9 7.5 Borrowing -5.9 -13.9 -8.9 BV (|) 72.9 83.8 85.3 92.4 Total Income 18.7 -18.7 11.4 P/E (x) 11.1 9.9 28.5 14.9 Total Expense 24.3 -5.5 13.6 P/BV (x) 1.5 1.3 1.3 1.2 Net Profit 18.2 -65.4 91.5 Margin EPS 12.4 -65.4 91.5 NIM (%) 7.7 8.1 6.6 7 Book Value 14.9 1.9 8.3 Quality & Efficiency Source: Company, ICICI Direct Research GNPA (%) 1.7 1.9 2.9 3.9 NNPA (%) 0.7 0.8 0.2 0.2 ROA (%) 1.5 1.6 0.6 1.3 ROE (%) 15.0 14.3 4.7 8.5 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 30 JM Financial (JMFINA)
CMP: | 91 Target: | 94 (3%) Target Period: 12 months HOLD months December 23, 2019 Capital market business positive; real estate caps upside JM Financial is a diversified financial group engaged in various businesses
providing a host of services including mortgage lending (wholesale and retail), distress asset management (ARC), investment banking, wealth Particulars
management and securities (IWS) and AMC. As of September 2019, the es advances book was at | 13810 crore, comprising | 9167 crore and | 639 Amount crore of wholesale & retail mortgage, respectively, | 1100 crore for capital Market Capitalisation | 7675 crore markets and | 2904 crore in corporate/promoter funding. Apart from lending Networth | 5214 crore ARC AUM was at | 14037 crore. In capital markets, JM Financial has a market 52 week H/L 110/73 share in overall ADTO at 0.74% with 2.42% share in cash ADTO. In terms of Face Value | 1 Initiating Coverage Initiating active client base, the company has ~36661 customers as of Sep’19. DII Holding (%) 4 FII Holding (%) 20.3 Real estate woes keep lending on slower track Promoter Holding (%) 62.1 JM Financial is engaged in wholesale and retail mortgage lending as well as Others (%) 13.9 lending to capital markets. Primary exposure in real estate is towards large Key Highlights developers in metros. Given the slowdown in the real estate sector, Focus on capital markets activities to advances to the real estate sector witnessed de-growth in H1FY20 to | 9367 support performance ahead crore. Moderate growth in real estate advances and maintaining higher Slowdown in real estate sector to liquidity would keep NIM, earnings under pressure. Several measures taken keep advance growth moderate in by government for real estate remain positive, asset quality risk still persist. near term Initiate coverage with HOLD rating
Capital market business to remain key driver and price target of | 94 The capital market has been a major contributor in terms of topline as well Price movement
as bottomline at ~45%. Investment banking has remained a strong point for 14,000 200 the entity. Apart from investment banking, JM Financial has been focusing 12,000 on institutional as well as HNI customers with limited presence in the retail 10,000 150 domain. In terms of active clients, JM Financial has ~36661 customers as of 8,000 100 September 2019 and contributes ~0.74% market share in overall ADTO. 6,000 However, the company has ~2.42% market share in cash ADTO at | 887 4,000 50 crore in Q2FY20. Going ahead, we expect focus on capital market business 2,000 Retail Equity Research Equity Retail
0 0 to continue and contribute a substantial proportion in future performance. Dec-16 Apr-17 Jul-17 Nov-17 Feb-18 Jun-18 Sep-18 Jan-19 May-19 Aug-19 Dec-19 –
Strong promoter, management to sustain valuations JM Fin (R.H.S) Nifty (L.H.S) Given the current subdued environment in the real estate sector, the lending Source: ICICI Direct Research, Reuters business is seen staying on the slower track. We expect advances growth to remain moderate at 6.7% CAGR in FY20-22E. Business growth is seen being Research Analyst led by focus on capital market activities ahead. The recent reduction in tax Kajal Gandhi rate would benefit earnings momentum ahead. Board approval for capital [email protected] Securities ICICI raising of ~| 850 crore boosts confidence. Earnings are expected to grow at Vishal Narnolia ~10% CAGR in FY20-22E to | 748 crore. The stock is currently trading at [email protected] 11.6x FY21E EPS and ~1 P/BV on FY21E. We initiate coverage on the stock with a HOLD rating and a target price of | 94 (using SOTP valuation), Harsh Shah implying a multiple of ~11.5x on FY21E EPS. [email protected]
sseses Key Financial Summary FY18 FY19 FY20E FY21E FY22E NII (| crore) 1957.0 2133.0 2055.3 2213.7 2309.3 Net Profit (| crore) (Ex MI) 600.0 573.0 582.1 681.2 747.6 EPS (|) 7.2 6.8 6.9 8.1 8.9 P/E (x) 12.7 13.3 13.1 11.2 10.2 P/BV (x) 1 1 1 1 1 P/ABV (x) 1.31 1.07 1.02 0.99 0.97 RoE (%) 17.3 15.6 11.5 12.3 12.9 RoA (%) 3.9 3.7 3.8 4.0 4.0 s Source: Company, ICICI Direct Research Initiating Coverage | JM Financial ICICI Direct Research
Snapshot of company
Exhibit 70: Credit business & capital market to remain key revenue contributor
4450 101 87 3950 94 76 3450 112 2950 2202 1851 2047 2450 1261 1916 1950 38 (| crore) (| 1450 924 950 1724 1635 1500 1644 1711 450 750 -50 FY18 FY19 H1FY20 FY20E FY21E FY22E
Investment Banking, Securities and Wealth Credit business Asset management Others
Source: Company, ICICI Direct Research
Exhibit 71: Market share in ADTO to witness gradual uptick
16000 1483 14000 1290 12000 887 1075 10000 8000 13349 (| crore) (| 6000 1175 986 11608 9861 9673 4000 2000 4797 4834 0 FY18 FY19 H1FY20 FY20E FY21E FY22E
Derivative Cash
Source: Company, ICICI Direct Research Exhibit 72: Loan book break-up
18,000 828 16,000 464 753 581 639 14,000 684 3,477 2,705 2,317 3,161 12,000 2,904 2,874 1,325 2,334 1,078 1,204 Loan book growth to remain slow amidst real estate 10,000 1,100 1,095 8,000 woes (| crore) (| 6,000 10,131 9,934 10,928 4,000 9,268 9,167 9,031 2,000 0 FY18 FY19 H1FY20 FY20E FY21E FY22E
Real Estate Capital market Structured Finance SME
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 32 Initiating Coverage | JM Financial ICICI Direct Research
Exhibit 73: Change in borrowing franchise from FY18 Exhibit 74: …to H1FY20
2% 2% 1% 2%
15% 30% 27% 27%
55% 39%
CP NCD Term Loans Short termloans from Banks Others CP NCD Term Loans Short termloans from Banks Others
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research
Exhibit 75: Marginal stress witnessed in asset quality
4.0 3.6 3.5 3.0 2.4 2.5 2.0 1.6 (%) 1.4 1.5 1.3 1.31.1 0.9 1.0 0.7 0.7 0.7 0.8 0.60.5 0.50.4 0.6 0.6 0.5 0.0 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
GNPA NNPA SMA 2
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 33 Initiating Coverage | JM Financial ICICI Direct Research
Valuation Given the current subdued environment in the real estate sector, lending business is seen staying on slower track. The board has approved capital raising of ~| 850 crore, which will boost confidence. We expect advances growth to remain moderate at 6.7% CAGR in FY20-22E. However, increasing business growth led by focus on capital market activities would continue ahead. The recent reduction in tax rate would benefit earnings momentum ahead. Earnings is expected to grow at ~10% CAGR in FY20-22E to | 748 crore. The stock is currently trading at 10.6x EPS and ~1x P/BV on FY21E. We initiate coverage on the stock with HOLD rating and a target price of | 94 (using SOTP valuation), implying a multiple of ~10.5x on FY21E EPS.
Exhibit 76: P/E band 250
200
150 | 100
50
0 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
CMP 5.0 X 10.0 X 15.0 X 20.0 X
Source: Capital Line, ICICI Direct Research
Exhibit 77: SoTP valuation Business Segment JM's stake (%) |/share JM Financial Credit Soln 50.0 14 JM Financial Products 99.3 18 JM Financial ARC 50.0 11 Wealth Management 100.0 47 AMC 59.5 4 AIF 100.0 1
Value per share of JM 94 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 34 Initiating Coverage | JM Financial ICICI Direct Research
Financial Summary
Exhibit 78: Profit & Loss (| crore) Exhibit 79: Balance Sheet (| crore) FY18 FY19 FY20E FY21E FY22E FY18 FY19 FY20E FY21E FY22E Intrest Income 3,096 3,579 3,488 3,774 4,010 Shareholders' Equity 4,502 5,079 5,298 5,298 5,298 Interest Expense 1,139 1,446 1,432 1,561 1,700 Minority interest 1,395 2,150 2,322 2,508 2708 Net Interest Income 1,957 2,133 2,055 2,214 2,309 Total Equity 5,897 7,229 7,620 7,806 8,007 Operating Expences 759 815 766 792 801 Share of security receipt holder523 484 489 494 499 Employee Exp 391 422 414 420 416 Borrowings 14,988 13,991 13,563 14,919 16,411 Other Exp 368 393 353 372 384 Other liabilities 746 879 1,064 1,276 1531.57 Operating Profit 1,198 1,318 1,289 1,422 1,508 Provisioning 34 35 123 120 116 Total liabilities 22,154 22,583 22,736 24,496 26,448 PBT 1,164 1,283 1,166 1,302 1,393 Tax 382 446 315 351 376 Loan Book 14,768 13,999 13,684 15,052 16,557 PAT (ex-minority int) 782 837 851 950 1,017 Distressed Asset book 3,026 4,194 4,160 4,368 4,587 Minority Interest 182 264 269 269 269 Cash 1,469 1,737 2,084 2,064 2,043 Adjusted PAT 600 573 582 681 748 Other Investment 1,004 842 884 928 975 Source: Company, ICICI Direct Research Arbitrage & Trading 198 312 328 360 396 Fixed Asset 377 372 417 458 504 Other Asset 1,312 1,127 1,179 1,264 1,386
Total Asset 22,154 22,583 22,736 24,496 26,448 Source: Company, ICICI Direct Research
Exhibit 80: Key Ratios (| crore) Exhibit 81: Growth (%) FY18 FY19 FY20E FY21E FY22E FY18 FY19 FY20E FY21E FY22E Valuation Total Asset 2 1 8 8 No of equity Shares 83.79 83.99 84.11 84.11 84.11 Advances -5 -2 10 10 EPS (|) 7.2 6.8 6.9 8.1 8.9 Borrowing -7 -3 10 10 BV (|) 70.4 86.1 90.6 92.8 95.2 Total Income 16 -3 8 6 ABV (|) 69.4 85.2 89.6 91.7 93.9 Operating expense 7 -6 3 1 P/E (x) 12.7 13.3 13.1 11.2 10.2 Net Profit (ex-MI) 7 2 12 7 P/BV (x) 1.29 1.06 1.00 0.98 0.96 Book Value 22 5 2 3 P/ABV (x) 1.31 1.07 1.02 0.99 0.97 EPS -5 1 17 10 Margin Source: Company, ICICI Direct Research Yield (%) 15.1 17.0 16.5 16.6 16.3 Cost of Fund (%) 7.6 10.3 10.6 10.5 10.4 Spread (%) 7.5 6.6 5.9 6.1 6.0 Quality & Efficiency GNPA (%) 0.63 0.68 0.77 0.80 0.84 NNPA (%) 0.56 0.55 0.62 0.65 0.68 ROA (%) 3.9 3.7 3.8 4.0 4.0 ROE (%) 17.3 15.6 11.5 12.3 12.9 Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 35 Initiating Coverage | JM Financial ICICI Direct Research
RATING RATIONALE ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock Buy: >15% Hold: -5% to 15%; Reduce: -15% to -5%; Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]
ICICI Securities | Retail Research 36 Initiating Coverage | JM Financial ICICI Direct Research
ANALYSTRATING CERTIFICATIONRATIONALE
We /I, Kajal Gandhi, CA, Vishal Narnolia, MBA and Harsh Shah, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this researchICICI reportDirect accurately endeavours reflect our views to about provide the subject objective issuer(s) or securities. opinions We also and certify recommendations. that no part of our compensation ICICI was, is,Direct or will be assigns directly or indirectly ratings related to to its the specificstocks recommendation(s) according or to view(s) their in this notional report. It is alsotarget confirmed price that above vs. mentionedcurrent Analysts market of this price report haveand no tthen received categorises any compensation them from the ascompanies Strong mentioned Buy, in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report. Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined Termsas the analysts' & conditions valuation and for othera stock 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 Limited Sebi Registration is INZ000183631 for stock broker. ICICI SecuritiesBuy: >10%/15%is a subsidiary of ICICI for Bank large which iscaps/midcaps, India’s largest private sector respectively; 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
ICICIHold: Securities Up is toone +/of the-10%; 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 reportingSell: -to10% analysts or and more; 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 judgmentPankaj by any Pandey recipient. The recipient should independently evaluateHead the – Researchinvestment risks. The value and return on [email protected] 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 Direct Research Desk, 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 Limited, 1st Floor, Akruti Trade Centre, 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,Road corporate No finance, 7, MIDC, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. Andheri (East) ICICI Securities or its associates might have received any compensationMumbai for prod ucts– 400 or services 093 other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. [email protected] 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. 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.
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ICICI Securities | Retail Research 37