Motilal Oswal Financial Services

State Bank of India

BSE SENSEX

40,802

S&P CNX

12,048

2 December 2019

Update | Sector: Financials

CMP: INR339

TP: INR425 (+26%)

Buy

Earnings momentum to accelerate

Subs monetisation a big trigger



Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

SBIN IN

8,925

3021.4 / 42.2

374 / 244

6/-6/6

7996

42.9



Financials Snapshot (INR b)

Y/E March

FY19 FY20E FY21E

NII

883.5 969.1 1,117.6

554.4 663.7 781.8

8.6 229.0 330.3

NIM (%)

2.8

3.0

3.2

EPS (INR)

1.0

25.7

37.0

EPS Gr. (%)

44.2

ABV (INR)

169.6 206.6 247.8

Cons. BV (INR)

247.6 272.2 308.6

RoE (%)

0.4

11.1

RoA (%)

0.0

0.6

Valuations

P/BV (x) (Cons.)

1.4

1.2

P/ABV (x)

1.3

1.1

P/E (x)

8.8

*Price adjusted for value of subs



Earnings recovery in sight; resolutions to support higher recoveries

State Bank of India (SBIN) has delivered 28% returns since our last

report

on the

bank in Oct’19. There have been significant developments over the past two months

which have supported this performance: (i) Essar Steel resolution enabling

significant write-backs for banks, (ii) upcoming listing of its cards subsidiary at

proposed valuation of ~INR600b and (iii) easing of stress in the telecom sector, aided

by the recent tariff hikes and the government deferring payment of spectrum fees.

Although the macro environment remains challenging, net stressed loans for SBIN at

0.8% of loans are the lowest amongst peers. This, along with anticipated

provisioning write-backs, will enable normalization in credit cost, in our view.

We upgrade our FY20/21 earnings estimates by 15%/12% and project credit cost to

decline to 1.3% by FY21 (guidance: <1%). We thus estimate RoA/RoE to improve to

0.8%/14.1%. Maintain Buy with a revised target price of INR425 (1.3x FY21E ABV +

INR114 per share for subs). Subs accounts for ~34% of total valuation.

After reporting a sub-optimal performance over the last few years, SBIN appears

well positioned to report a strong uptick in earnings. With the overhang on Essar

resolution getting clear, recoveries for the bank are expected to be robust at

~INR120b (90% of exposure). This will enable it to further improve upon the PCR

14.1

and provide toward a few other residual stressed accounts. Even at the core

0.8

earnings level, we estimate SBIN to report a 19% CAGR in PPoP over FY19-21.

1.1

0.9

6.1

Net stressed loans (excl. NPA) at ~0.8% of total loans

Our deep-dive analysis on stressed accounts suggests that SBIN’s exposure to the

stressed pool stands at ~2% of total loans, which we believe is manageable.

However, according to SBIN’s disclosure on stressed accounts, net stressed loans

(excl. NNPA) at ~0.8% are lowest amongst corporate banks. We estimate

Shareholding pattern (%)

As On

Sep-19 Jun-19 Sep-18

GNPL/NNPL ratio to decline to ~4.5%/1.6% by FY21 and PCR to improve to ~65%.

Promoter

57.1

DII

24.1

23.5

FII

12.0

Others

6.8

7.4

FII Includes depository receipts

Stock Performance (1-year)

57.7

23.5

11.5

7.4

Subs gaining remarkable scale; value unlocking to boost returns

SBI’s subs – SBI MF, SBI Life, SBI Cards and SBI Cap – have displayed a robust

performance over the last few years. The bank plans to monetize its subsidiaries,

which would lead to further value unlocking for stakeholders, in our view. At CMP,

subs account for ~34% of total valuation, while SBIN trades at a discount of 24% to

its six-year average (1.2x ABV) (refer page 7 for quick snapshot on subs).

400

350

300

250

200

St Bk of India

Sensex - Rebased

Valuation and view

SBIN has demonstrated a strong improvement in slippage trajectory and prudently

improved PCR over the past two years. The bank has one of the lowest net

stressed assets amongst corporate banks which will drive a sharp decline in credit

cost to 1.3% by FY21. Also, NCLT write-backs and subs monetization will further

boost earnings. At CMP, subs accounts for ~34% of total valuation, while the bank

trades at a discount of 24% to its six-year average (1.2x ABV). We estimate

RoA/RoE to improve to 0.8%/14.1% by FY21 though quarterly earnings may still

remain volatile. SBIN remains our top investment idea. Maintain

Buy

with a

revised target price of INR425 (1.3x FY21E ABV + INR114 per share for subs).

Research Analyst: Nitin Aggarwal

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

Parth Gutka

(Parth.Gutka@motilaloswal.com); +91 22 6129 1567

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com); |

Himanshu Taluja

(Himanshu.Taluja@motilaloswal.com); |

Yash Agarwal

(Yash.Agarwal@motilaloswal.com)

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

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

State Bank of India

Earnings recovery in sight

After reporting a sub-optimal performance during most of FY11-19, SBIN now

appears well positioned for an earnings recovery. With the overhang on Essar Steel

resolution getting clear, recoveries for the bank are expected to be robust at

~INR120b (90% of exposure). In our view, the SC judgment will also expedite the

NCLT resolution process and drive further recoveries for underlying banks.

While the bank’s core PPoP growth is expected to remain strong (19% CAGR over

FY19-21), higher recoveries along with normalization in credit costs to 1.3% by FY21

(guidance of <1% for FY21, average of 3.2% over FY17-19) will likely result in a sharp

earnings revival. Further, the reduction in the corporate tax rate from 30% to 22%

will likely support earnings. However, 2HFY20 will be impacted by one-time DTA

reversal, while the full benefit will come from FY21.

Overall, we estimate profits to grow to INR229b/INR330b for FY20/21 (v/s 10-year

average PAT of INR70b). We thus estimate RoA/RoE to improve to 0.8%/14.1% by

FY21.

Exhibit 1: RoA trajectory in the last two decades

GNPA ratio improved from

9.6% to 4.0%; PAT at 18%

CAGR over FY01-05

GNPA ratio further improved

to ~2.4%; average ROA stood

at ~1.0% during this period

RoA (%)

GNPA ratio declined to ~7.5% (FY19) due

to asset quality-clean up; ROA also

declined to 0.02% in FY19

Credit cost

moderated to

2.2%/1.3% in

FY20-21E

Source: MOFSL, Company

Exhibit 2: PAT and provisions trajectory over last decade – earnings to pick up sharply as provisions subside

INR208

INR277

INR210

INR207

INR192

INR267

INR194

INR293

INR250

INR321

PAT (INRb)

91.7

82.6

117.1

141.0

108.9

131.0

99.5

-18.1

-65.5

8.6

229.0

330.3

Denotes SBIN share price as at year end

Source: MOFSL , Company

2 December 2019

State Bank of India

Expect PPoP CAGR of 19%

over FY19-21.

Exhibit 3: Gap between PPoP and provisions (as % of assets) to widen….

3.0%

2.3%

1.5%

0.8%

0.0%

PPoP as a % of assets

Prov as a % of assets

Source: MOFSL , Company

Exhibit 4: Key Financial Indicators: SBIN base case and stress case as presented by management

Actuals

Credit Growth

NII Growth

NIM (Domestic)

Non-Interest Income Growth

Opex Growth

PPoP (INRb)

Slippage Ratio

Credit Cost

PCR (with AUCA)

ROA

FY19

11.96%

18.03%

2.95%

-17.55%

16.26%

536

1.60%

2.66%

78.73%

0.02%

1HFY20

8.65%

11.32%

3.11%

24.81%

9.89%

280

2.18%

1.98%

81.23%

0.29%

>10%

>17%

>3.15%

>15%

<10%

>650

<2.00%

<1.80%

>84%

0.4-0.5%

Base case

FY20E

FY21E

>12%

>14%

>3.20%

>15%

<10%

>750

<1.30%

<1.00%

>88%

0.9-1.0%

Stress case

FY21E

>10%

<10%

>3.00%

>10%

<12%

<700

<1.50%

<1.10%

>85%

0.75-0.85%

MOSLE

FY21E

12.00%

15.30%

3.17%

2.00%

5.30%

782

1.40%

1.30%

0.81%

Source: MOSL, Company

Net stressed loans (excl. NPA) at ~0.8% of total loans

According to SBIN’s disclosure on stressed accounts, net stressed loans (excl. NNPA)

at ~0.8% are lowest amongst corporate banks. We build in elevated credit cost of

2.2% /1.3% for FY20/21, which will likely be partly offset by NCLT-linked write-backs.

We thus estimate the GNPL/NNPL ratio to decline to ~4.5%/1.6% by FY21 and the

PCR to improve to ~65% from ~63% in 2QFY20.

Exhibit 5: PCR up by ~1,147bp to 61.9% in FY19

GNPA Ratio

NNPA Ratio

PCR (Excl Tech. W/O)

Exhibit 6: NSL down to 3.6% from 10.7% in 1QFY18

10.7

As a % of Loans

9.6

8.4

3.9

5.1

6.5

3.7

2.6

7.1

2.7

5.9

2.1

4.8

2.8

3.3

3.4

Credit Cost (RHS)

4.3

2.2

3.6

2.1

Source: Company, MOFSL

2 December 2019

State Bank of India

Exhibit 7: Slippages over the past several years – a downtrend

Slippages (INRb)

Slippages Ratio (%)

8.4

7.0

5.4

2.9

3.6

1.6

1.9

1.4

Slippage ratio expected to

decline to 1.4% by FY21.

3.4

4.3

Source: MOFSL , Company

We estimate SBIN to write

back INR120b, supporting

earnings.

Exhibit 8: Top 10 exposure toward Essar Steel and expected recoveries

Banks &

Financial Creditors (INR b)

State bank of India

Canara Bank

Punjab national Bank

Deutsche Bank AG

IDBI Bank

ICICI Bank

Union Bank of India

Bank of India

Corporation bank

Syndicate Bank

Amount

admitted

132.3

38.0

29.4

28.3

24.8

22.9

21.2

19.9

15.7

9.7

Estimated Write-backs based

on Recovery Rate of 90%

118.8

34.1

26.4

25.4

22.3

20.6

19.1

17.8

14.1

8.7

Source: MOFSL , Company, NCLT Order

Exposure toward NCLT list 1

and 2 at INR249.9b.

Exhibit 9: SBIN exposure toward NCLT and other accounts where ICA is in process

As on 2QFY20 (INRb)

Accounts admitted to NCLT

Accounts filed but not yet admitted

21 NPA A/c where ICA signed/likely to be signed

15 Standard A/c where ICA signed/likely to be signed

Total

1,163.7

238.0

265.4

168.2

NPA

482.5

83.3

265.4

PCR (%)

93.0%

80.8%

60.3%

13.2%

Source: MOFSL , Company, NCLT Order

Exhibit 10: NPL ratios in stressed sectors moderate

FY18

FY19

Exhibit 11: SBIN has INR1.3t technically written-off pool

Implied W/ off pool

as a % of GNPA

69%

61%

62%

PCR (incl TWO)

79%

66%

79%

47%

1043

FY18

1371

FY19

58%

45%

327

Coal

Iron & Steel

All Engg

Telecom

Roads

FY15

438

FY16

42%

742

FY17

Source: Company, MOFSL , Basel III disclosure

2 December 2019

State Bank of India

As slippages declined, substandard assets have halved

31%

26%

Sub Standard

33%

Loss

45%

14%

15%

Sub Standard

20%

Loss

Source: Company, MOFSL

Exhibit 12: A comparison of net stressed loans across major banks

As on 2QFY20 (INRb)

GNPA

Stressed Exposure

- Security Receipts

- BB and below (Fund based)

- BB and below (Non-Fund based)

- BB and below (Investment)

- Non performing Investment

- Stressed exposure/Watchlist

- Non funded NPA exposure

Gross stress loans

as a % of advances

Specific Provisions

Contingent provisions

Net Stress Loans

as a % of net advances

Net Stress Loans (excluding NPA)

as a % of net advances

171

1,788

8.3%

1,017

771

3.6%

171

0.8%

109

657

10.7%

347

296

4.8%

187

3.0%

447

8.6%

179

242

4.6%

131

2.5%

210

507

22.6%

434

19.3%

336

15.0%

4.1%

3.0%

1.9%

SBIN

1,616

ICICIBC

456

AXSB

291

YES

171

IIB

Source: Company, MOFSL,



SMA 1 and 2 for SBIN stood at INR93.1b (0.4% of loans) in 2QFY20 with SMA 2

accounts (INR50m and above) comprising ~INR43.6b. The bank’s power/telecom

exposure remains comfortable, with bulk of it toward PSU entities and better-

rated corporates. DHFL comprises bulk of SBIN’s private HFC exposure, for which

a resolution plan is under process.

2 December 2019

State Bank of India

Exhibit 13: Disclosure on stressed sectors as identified by management

Sector

Power sector:

Remains a key

monitor able

Comments



Total exposure of ~INR2t, of which ~INR1.7t is standard while the balance (INR0.2t) is classified as NPA.



SBIN remains comfortable due to its large exposure towards PSU entities and top-rated private corporates (~58% are

rated A- or higher). As of 2QFY20, the bank held ~54% PCR on the NPA portion.

Further, according to the management, two power accounts of INR18b are expected to be resolved soon, while three

other accounts are expected to be resolved through the OTS schemes.

Total fund-based exposure of INR357b, of which ~INR93b is NPA. Non-fund-based exposure stands at INR102b.

Of the standard exposure, ~72% is towards the private sector with ~99% towards highly rated private sector

conglomerates in the sector.

As of FY19, the bank held ~50% PCR on the NPA portion.

Of the total exposure of ~INR34b, INR16b is already recognized as NPA with PCR of ~60%.

Of the standard portion of ~INR18b, INR1.4b/INR9.3b is categorized in the red/amber category.

PCR held on the red category is 21.9% as of FY19.

NBFC and FI exposure stands at INR1.7t of which HFCs constitutes INR0.6t while other NBFCs stand at INR1.0t.

Of total exposure: ~25% is backed by the Central and State government, ~9% is backed by PSU entities while 45% is

backed by large private institutions.

Of INR0.6t exposure to HFCs, ~79% is towards private sector.

Source: Company, MOFSL



Telecom sector:

99% of the standard

exposure is towards

two private sector

conglomerates



IL&FS:

Exposure manageable;

provisions coverage



increased to 60%



NBFC exposure:



Majority of exposure is

towards PSU entities



and highly-rated

private sector



Exposure toward stressed groups controlled at ~2% of total loans

The macro environment remains challenging with high rating downgrades in the

system. This has resulted in new names being added to the stressed pool. Our deep

dive analysis on stressed accounts suggests that SBIN’s exposure to the stressed

pool constitutes ~2% of total loans. Given its size, new stress is manageable, in our

view.

Exhibit 14: SBIN’s exposure toward certain stressed groups

Stressed groups

Vodafone

DHFL

Indiabulls

SREI

CG Power

ADAG Group

Sintex

ECL Finance

Jain irrigation

Cox & Kings

Essel Group

Edelweiss Housing

Lodha Developers

Total

As a % of total loans

INR b

112.0

102.4

82.6

29.0

26.3

23.6

16.0

13.2

12.2

6.2

5.6

4.0

2.5

435.5

2.0%

Source: MOFSL , Company, MCA, Debt offering circulars, media articles

2 December 2019

State Bank of India

Subs gaining remarkable scale; value unlocking to boost

shareholder returns

SBI Cards – robust profitability, operating metrics remain healthy

SBI Cards PAT CAGR of 42%

over FY17-19.



SBI Cards has delivered a strong performance in both customer acquisitions and

earnings. As at 2QFY20, SBI Cards had a market share of 18% on a card base of

9.5m and 17.9% in card spends. Over FY17-19, card spends CAGR stood at 50%

and PAT CAGR at 42% (PAT up 83% YoY in 2QFY20). Return ratios remain healthy

with an RoE of 36.1% and a CAR of 18.9%.

SBI Cards is looking to expand sourcing by leveraging SBIN’s higher penetration,

integrating with SBI platforms and capturing cross-selling opportunities with

subsidiaries.

It further plans to unlock some value by listing the cards business in FY20 and

has already filed a DRHP to raise ~INR80-90b – pegging total valuation of

INR530-600b.

Exhibit 15: Snapshot – PAT/spend CAGR of 42%/50% over past two years

INR m

Spends on cards

Mkt. Share Spends

Mkt. Share cards base

Revenue

PAT

PBT

RoA

RoE

Net Worth

Total Assets

FY15

2,33,610

11.3%

15.0%

19,050

2,670

2,710

4.4%

30.8%

8,660

60,480

FY16

3,09,050

11.9%

14.8%

24,920

2,840

4,380

3.7%

26.7%

10,610

78,800

FY17

4,60,070

13.1%

15.3%

33,630

3,904

5,980

3.7%

29.5%

13,217

1,06,521

FY18

7,98,080

16.8%

16.4%

51,870

5,810

7,760

4.6%

33.4%

16,141

1,46,950

FY19

1HFY20

10,36,046

6,33,505

17.1%

17.9%

17.6%

18.0%

69,990

46,640

7,880

7,270

4.8%

6.5%

30.2%

36.1%

195,930

244,591

Source: MOFSL , Company

Exhibit 16: SBI Cards - Valuation

INR b

Total Assets

RoE %

RoA %

Net profit

Target PAT multiple (x)

SBI Cards Valuation

SBI Stake

Value for SBI

Value per share

FY17

108.3

29.5%

3.7%

3.9

FY18

147.0

33.4%

4.6%

5.8

FY19

195.9

30.2%

4.6%

7.9

FY20E

15.0

FY21E

20.2

566

74%

419

Source: MOFSL , Company

SBI Life – growth momentum steady; distribution – a key edge

New business premium

CAGR of 26% over FY15-19.



SBI Life has delivered a robust all-round operational performance and

maintained its dominant market position with an un-weighted NBP market

share of 6.2% as at 1HFY20.

It delivered ~26% CAGR in un-weighted NBP over FY15-19 (+40% YoY in 1HFY20)

with a VNB margin of 17.7% as at FY19 (18.1% as on 1HFY20). SBI Life’s VNB/EV

grew 33%/24% YoY to INR9.4b/INR261.5b in 1HFY20.

2 December 2019

State Bank of India



It has robust distribution franchise with 22,000 branches, 50,000+ CIFs,

~121,600 individual agents and 12,000 branches of other banking partners.

Furthermore, the subsidiary has one of the lowest cost structures with a total

expense ratio of 11.3% as at 1HFY20. This has enabled it to maintain healthy

margins (despite a higher share of the ULIP business) and deliver an RoEV of

~17.5%.

Exhibit 18: Total expense (as a % of GWP) improved to

10.5% in FY19 from ~16% in FY13

15.9%

15.5%

13.8%

13.7%

Exhibit 17: SBILIFE reported 150bp improvement in NBM

over FY19 while VNB grew at 24% in FY19

VNB (INRb)

NBM (RHS)

17.7%

16.2%

15.4%

16.2%

11.6%

13.8

FY18

17.2

FY19

FY13

FY14

FY15

FY16

FY17

11.2%

7.9

FY16

10.2

FY17

10.5%

FY19

FY18

Source: MOFSL , Company

Exhibit 19: Key operating metrics of SBI Life

INR b

Gross premium

New business premium

New business margin

Net profit

AUM

Embedded Value

FY17

210.2

101.4

15.7%

9.6

977.4

165.4

FY18

FY19

253.5

329.9

109.7

137.9

16.0%

17.7%

11.5

13.3

1,162.6

1,410.2

190.6

224.0

Source: MOFSL , Company

Exhibit 20: SBI Life Insurance – Valuation

INR b

Gross premium

New buss premium

New business margin

FY17

210.2

101.4

15.7%

FY18

253.5

109.7

16.0%

11.5

1,162.6

190.6

FY19

329.9

137.9

17.7%

13.3

1,410.2

224.0

FY20E

427.9

182.1

18.4%

14.8

1,680

265.4

FY21E

557.0

243.9

19.2%

17.2

2,032.4

315.9

3.0

948

952

55.1

58%

546

HDFC Life*

452.7

252.6

27.1%

17.5

1,962.7

293.8#

3.9

4.1

1,208

1,160

61.5

IPRU Life* Max Life**

395.7

139.5

23.2%

13.5

2,405.1

321.2#

2.2

2.3

745

716

49.8

64.3

22.9

21.0%

1.7

650.0

98.3

138

Net profit

9.6

AUM

977.4

Embedded Value

165.4

P/EV multiple forward

Target EV multiple (x)

SBI Life's Valuation

- Current market cap

Implied PAT multiple forward (x)

SBI Stake

Value for SBI

Value per share

*As on FY21

**For Max Life the numbers are as of 1HFY20

#Valuations are based on Sep‘21

Source: MOFSL , Company

2 December 2019

State Bank of India

SBI General Insurance – rapidly gaining scale and profitability

Gross written premium

CAGR of 31% over FY15-19.



SBI General Insurance delivered ~31% CAGR in gross written premium over

FY15-19, while it grew robustly at 51% YoY to INR31.2b in 1HFY20. It ranks 7

amongst private insurers and 11

in the industry on the basis of gross written

premium. Its market share improved to 3.27% in 2QFY20 from 2.35% in FY18.

PAT increased 26% YoY to INR3.3b in FY19 from INR2.6b in FY18, with an RoE of

20.1%. For 1HFY20, it delivered PAT of INR1.9b with an RoE of 21.6%. Combined

ratio declined from ~96.4% in FY18 to ~94.9% in FY19, while a continuous

improvement in process efficiencies, claims and expenses drove better

operating ratios.

According to a news article (Link), SBIN’s general insurance business is valued at

~INR120b.

Exhibit 22: PAT grew sharply over the last three years with

RoE improving to ~20%

PAT (INRm)

RoE (%)

22.1%

13.9%

1,530

-1,050

-1,200

FY16

FY17

FY18

FY19

2,650

20.1%

3,340

Exhibit 21: GWP CAGR of 31% over FY15-19

Gross Written Premium (INRm)

FY15

FY16

FY17

FY18

FY19

FY15

Source: MOFSL , Company

Exhibit 23: SBI General Insurance – Valuation

INRb

Gross premium

RoE

Net profit

P/PAT multiple forward

Target PAT multiple (x)

SBI General Valuation

- Current market cap

SBI Stake

Value for SBI

Value per share

FY17

26.1

13.9%

1.5

FY18

35.5

22.1%

2.7

FY19

20.1%

3.3

FY20E

4.2

FY21E

5.4

25.0

136

70%

Source: MOFSL , Company

ICICI Lombard (FY19)

144.9

20.3%

10.0

37.0

619

SBI Asset Management – fast gaining market share

Third largest mutual fund

with total AUM of ~INR3.2t.



SBI Mutual Fund is the country’s largest ETF provider and the third largest

mutual fund with total AUM of ~INR3.2t (INR5.01t incl. PMS) and a market share

of 12.5% as at 2QFY20. It had an SIP book of 10.9b as at 2QFY20.

AUM CAGR was robust at 38% over FY16-19 (up from INR1.1t in FY16 to INR2.8t

in FY19). PAT CAGR over the same period was 27% to reach INR4.3b in FY19

2 December 2019

State Bank of India



(INR2.8b in 1HFY20) with an RoE of 31.1%. SBI MF has a wide reach with ~6m

retail investors and a 30% unique investor base of the MF industry.

SBI MF has a wide distribution base of 22,000 SBI branches, 24,157 of AMFI

certified distributors, 50,000 individual financial advisors and global banks like

CITI, STANC, Deutsche, Barclays. With stable inflows from SIP accounts and an

increase in financialisation of savings, SBI MF is likely to continue gaining

momentum and expanding market share, in our view.

Exhibit 25: PAT CAGR of 27% over FY15-19

PAT (INRm)

30.5%

RoE (%)

32.8%

29.6%

26.6%

31.1%

Exhibit 24: AUM CAGR of 40% over FY15-19

AUM (INRb)

1,630

FY15

FY16

FY17

FY18

FY19

FY15

1,650

FY16

2,240

FY17

3,360

FY18

4,280

FY19

Source: MOFSL , Company

Exhibit 26: SBI MF gained the maximum market share

Market Share (%)

HDFC MF

IPRU MF

SBI MF

Birla MF

Reliance MF

UTI MF

Kotak MF

Franklin MF

Axis MF

DSP MF

FY17

12.9%

13.3%

8.6%

10.6%

11.5%

7.5%

5.0%

4.5%

3.1%

3.6%

FY18

13.0%

13.3%

9.4%

10.7%

10.6%

6.7%

5.4%

4.5%

3.4%

3.7%

FY19

14.0%

13.1%

11.6%

10.1%

9.6%

6.5%

6.1%

4.9%

3.7%

3.2%

Exhibit 27: SBI AUM CAGR of 38% over FY16-19

Total AUM (INR b)

HDFC MF

IPRU MF

SBI MF

Birla MF

Reliance MF

UTI MF

Kotak MF

Franklin MF

Axis MF

DSP MF

FY17

2,375

2,431

1,575

1,953

2,117

1,368

924

825

578

652

FY18

3,008

3,062

2,180

2,478

2,456

1,549

1,249

1,041

774

863

FY19

3,425

3,213

2,841

2,467

2,343

1,597

1,503

1,199

898

784

CAGR

(FY16-19)

25%

22%

38%

22%

14%

15%

37%

21%

33%

25%

Source: MOFSL , Company

Exhibit 28: SBI Funds Management – Valuation

INRb

Net profit

RoE

AUM

Debt: Equity Mix

P/AUM multiple forward

Target AUM multiple (x)

SBI Funds Valuation

- Current market cap

Implied PAT multiple forward (x)

SBI Stake

Value for SBI

Value per share

*As on 1HFY20

FY17

2.2

29.6%

1,570.3

FY18

3.4

31.7%

2,176.5

67:33

FY19

4.3

31.1%

2,840.0

67:33

FY20E

6.2

3,550.0

FY21E

8.6

4,437.5

5.7%

253

29.5

63%

159

Source: MOFSL , Company

HDFC AMC* ICICI AMC* Kotak AMC*

6.6

3,662.4

55:45

15.4%

740

48.0

5.2

3,266.1

53:47

1.6

1,577.8

59:41

2 December 2019

State Bank of India

NIM to sustain at ~3%; reduction in SA rate to support transition to external

benchmark

The linking of floating rate retail and MSME loans to the external benchmark will

bring in more variability to the bank’s margins. However, SBIN has a higher share of

CASA deposits, which places it in a better position to manage yield pressure on the

asset side. SBIN has already linked SA balances above INR0.1m to the repo rate

which stands at 3% (at floor level, unchanged after the last policy rate cut) and

recently announced reducing the SA rate on balances up to INR0.1m to 3.25% from

3.5% w.e.f from 1

Nov’19. We believe that this will help offset margin pressure and

will gradually become an important tool to control funding cost.

SBIN offers home loans linked

to repo rate in the range of

7.95%-8.30%.

Further, margins should also be supported by an increasing proportion of retail

loans to ~36% of domestic advances (2QFY20) v/s ~30% in 1QFY18, and lower

interest reversal due to controlled slippages trajectory v/s previous years.

Exhibit 29: Snapshot of home loan rates under external benchmark-based pricing regime

Home Loan Rates (%)

Repo Rate

Spread

Additional for customer risk rating

Housing Loan as per Repo linked (A)

One Year MCLR

Spread

Housing Loan as per MCLR (B)

Impact (B-A)

BOB

5.15%

295bp

Up to 100bp

8.10%-9.10%

8.40%

Up to 100bp

8.40%-9.40%

30bp

PNB

5.15%

265bp

25bp-30bp

8.05%-8.10%

8.30%

25bp-30bp

8.55%-8.60%

50bp

SBIN

5.15%

265bp

15bp-50bp

7.95%-8.30%

8.15%

15bp-50bp

8.30%-8.65%

35bp

AXSB

5.15%

345bp-390bp

8.60%-9.05%

8.40%

ICICIBC

5.15%

350bp-410bp

8.65%-9.25%

8.45%

Exhibit 30: Trends – CASA ratio/NIM over past few years

NIM (%)

CASA ratio (%)

Exhibit 31: Trend – cost of funds (%)

Cost of Funds (%)

2.6% 3.2% 3.6% 3.3% 3.1% 3.1% 3.0% 3.0% 2.5% 2.8%

Source: MOFSL , Company

Loan book gaining granularity; retail loan CAGR of 24% over FY15-19

Within retail, home loans

comprise ~62% of total

loans as at FY19.



SBIN’s loan book is becoming granular. Retail loan CAGR was at 24% over FY15-

19, as the proportion of retail loans to domestic advances improved to ~36% in

2QFY20 from ~25% in FY15. Within retail loans, home loans CAGR was at 26%

and auto CAGR at 22% over FY15-19. Home and auto loans together form ~72%

of total retail loans.

SBIN has an overall NPA ratio of 1.0% on the retail book – 0.9%/1.0% in home

loans/auto loans. The increased contribution of the retail book is likely to

support the delinquency/margin profile.

2 December 2019

State Bank of India



SBIN is offering home loans (linked to repo rate) at 7.95-8.30%. Peers like AXSB

offer at 8.60%-9.05% and ICICIBC at 8.65%-9.25%. We believe that SBIN is

offering home loans at the lowest rates, which should help it gain market share.

Exhibit 32: Loan book split: Retail loan CAGR of 24% over

FY15-19

Loan Mix (INR b)

Large Corporates

Mid Corporates

International

SME

Retail

Agri

FY14

2,427

2,284

2,143

1,798

2,377

1,423

FY16

3,301

2,424

2,668

2,177

3,270

1,254

FY18

4,119

3,298

3,020

2,699

5,466

1,883

2QFY20

7,660*

3,202

2,741

6,856

2,025

Exhibit 33: Composition of retail loans as on 2QFY20

Others,

27.8%

Home,

61.9%

Home

Auto

Source: MOFSL , Company

Auto, 10.3%

Others

Source: MOFSL , Company

Expect CI ratio to improve over FY19-21; staff provisions to moderate

sharply

SBIN had made additional provisions toward wage revisions (INR39.8b) and

enhancement in gratuity limit (~INR27.1b) over FY19, which led to elevated

operating expenses. Besides, management guided for INR19b of wage-related

provisions over FY20 (~50% reduction over FY19). Further, we expect rationalization

of branches and improved efficiency due to technological initiatives on the digital

front to help control operating expenses. We thus estimate an improvement in its

C/I ratio to ~50% by FY21 from ~56% in FY19.

Exhibit 34: Provision for employees grew ~101% YoY in

FY19, leading to higher employee expense

Salary (INRb)

Provision for Employee Expenses (INRb)

1.5

1.2

147

0.7

0.8

0.7

0.8

Exhibit 35: Cost per employee across major banks

Cost per employee (INRm)

259

264

FY18

FY19

Source: Company, MOFSL

SBIN

ICICIBC

HDFCB

AXSB

Source: Company, MOFSL

2 December 2019

State Bank of India

Exhibit 36: CI ratio to start declining post FY19 as wage revision and gratuity related

provisions moderate

Cost/Total Income

2.0

1.9

1.8

1.9

1.8

1.7

Cost/Assets

1.9

1.8

Source: Company, MOFSL

Valuation and view



SBIN is strengthening its balance sheet by making higher provisions toward

stressed accounts. The bank increased its PCR (including TWO) from ~65% in

1QFY18 to ~81% in 2QFY20. SBIN holds higher provision coverage on power

NPAs compared to peers. It maintains a PCR of ~54% on power NPAs and 93%

(including TWO) on admitted NCLT accounts. The bank fully utilized the stake

sale gain to create provisioning on stressed accounts.

Among PSU banks, SBIN remains the best play on the gradual recovery in the

Indian economy with a healthy PCR of 63% (81.2% including TWO), robust

capitalization (Tier 1 of ~11.3%), a strong liability franchise and an improvement

in core operating profitability (margins and opex).

SBIN has demonstrated a strong improvement in slippage trajectory but

prudently improved the coverage ratio over the past two years. The bank has

one of the lowest net stressed assets amongst corporate banks, which will

enable credit cost to decline sharply to 2.2%/1.3% for FY20/21 while NCLT write-

backs and subs monetization will further boost earnings. At CMP, subs account

for ~34% of total valuation, while the bank trades at a discount of 24% to its six-

year average (1.2x ABV). We estimate RoA/RoE to improve to 0.8%/14.1% by

FY21 though quarterly earnings may still remain volatile. SBIN remains our top

investment idea in the banking space. Maintain

Buy

with a revised target price

of INR425 (1.3x FY21E ABV + INR114 per share for subs).

Exhibit 37: SOTP-based valuation

Name

SBI Bank

Life insurance

Cards

Asset management

General insurance

Capital Market/DFHI/Others

Total Value of Subs

Less: 20% holding disc

Value of Subs (Post Holding Disc)

Target Price

Stake

(%)

100

Total Value

(INR b)

2,776

546

419

159

1,272

254

1,017

3,793

Value

per Share

311

142

114

425

% of total value

Rationale

1.3x FY21E ABV

3.0x FY21E EV

28x FY21E PAT

5.7% of FY21E AUM

25x FY21E PAT

Source: MOFSL , Company

2 December 2019

State Bank of India

Exhibit 38: Subsidiaries contribution over the years

Subs value as % of CMP

267

192

158

17%

34%

194

293

Market Price

321

250

339

0.94

1.41

0.75

1.01

0.95

Exhibit 39: One-year forward P/ABV (adjusted for Subs)

P/ABV (adj for Subs)

1.71

1.16

0.91

20%

28%

22%

36%

25%

34%

Source: MOFSL , Company

Exhibit 40: We upgrade our FY20/21 earnings estimates by 15%/12% as we factor in higher recoveries from NCLT write-backs

INR B

Net Interest Income

Other Income

Total Income

Operating Expenses

Operating Profits

Provisions

PBT

Tax

PAT

Cons. PAT

Loans (INRt)

Deposits (INRt)

Margins (%)

Credit Cost (%)

RoA (%)

RoE (%)

Standalone ABV

Consol BV

Consol EPS

Consol PAT post MI

Old Estimates

FY20E

FY21E

969.1

1,081.4

433.9

442.6

1,403.0

1,524.1

739.3

788.1

663.7

735.9

371.4

340.2

292.3

395.8

93.2

99.7

199.1

296.0

216.3

316.7

24.0

26.9

31.6

34.7

3.0

3.1

2.2

1.3

0.5

0.7

9.7

13.0

202.7

239.4

268.8

301.4

24.2

35.5

216.3

316.7

Revised Estimates

FY20E

FY21E

969.1

1,117.6

433.9

442.6

1,403.0

1,560.2

739.3

778.4

663.7

781.8

331.4

340.2

332.3

441.6

103.3

111.3

229.0

330.3

246.3

351.0

24.0

26.9

31.6

34.7

3.0

3.2

2.2

1.3

0.6

0.8

11.1

14.1

206.6

247.8

272.2

308.6

27.6

39.3

246.3

351.0

Change (%)/bps

FY20E

FY21E

0.0

3.3

0.0

2.4

0.0

-1.2

0.0

6.2

-10.8

0.0

13.7

11.6

10.8

11.6

15.0

11.6

13.8

10.8

0.0

136

116

1.9

3.5

1.2

2.4

13.8

10.8

13.8

10.8

Source: MOFSL, Company

2 December 2019

State Bank of India

Exhibit 41: DuPont – return ratios to improve over FY19-21

Y/E MARCH

Interest Income

Interest Expense

Net Interest Income

Fee income

Trading and others

Non-Interest income

Total Income

Operating Expenses

Employee cost

Others

Operating Profit

Core Operating Profit

Provisions

NPA

Others

PBT

Tax

RoA

Leverage (x)

RoE

FY16

7.89

5.23

2.66

0.74

0.49

1.23

3.88

1.91

1.08

0.83

1.97

1.48

1.37

1.29

0.08

0.60

0.17

0.43

17.0

7.2

FY17

7.28

4.83

2.44

0.94

0.44

1.39

3.83

1.90

1.10

0.79

1.93

1.49

1.97

1.80

0.17

-0.04

0.02

-0.06

17.6

-1.0

FY18

6.52

4.31

2.21

0.92

0.40

1.32

3.53

1.77

0.98

0.79

1.76

1.36

2.22

2.11

0.11

-0.46

-0.27

-0.19

18.0

-3.5

FY19

6.81

4.33

2.48

0.94

0.09

1.03

3.51

1.95

1.15

0.80

1.55

1.47

1.49

1.53

-0.04

0.06

0.04

0.02

18.3

0.4

FY20E

6.98

4.43

2.56

1.07

0.07

1.14

3.70

1.95

1.15

0.80

1.75

1.68

0.87

1.30

-0.43

0.88

0.27

0.60

18.3

11.1

FY21E

6.94

4.21

2.73

1.01

0.08

1.08

3.81

1.90

1.12

0.78

1.91

1.83

0.83

0.81

0.02

1.08

0.27

0.81

17.5

14.1

Source: Company, MOFSL

2 December 2019

State Bank of India

Financials and Valuations

Income Statement

Y/E March

Interest Income

Interest Expense

Net Interest Income

Change (%)

Non-Interest Income

Total Income

Change (%)

Operating Expenses

Pre Provision Profits

Change (%)

Core Provision Profits

Change (%)

Provisions (excl. tax)

PBT

Tax

Tax Rate (%)

PAT

Change (%)

Cons. PAT post MI

Change (%)

Balance Sheet

Y/E March

Share Capital

Reserves & Surplus

Net Worth

Deposits

Change (%)

of which CASA Dep.

Change (%)

Borrowings

Other Liab. & Prov.

Total Liabilities

Current Assets

Investments

Change (%)

Loans

Change (%)

Fixed Assets

Total Assets

Asset Quality

GNPA

NNPA

GNPA Ratio

NNPA Ratio

Slippage Ratio

Credit Cost

PCR (Excl. Tech. W/O)

E: MOSL Estimates

FY16

2,149.7

1,425.8

723.9

4.4

334.3

1,058.2

9.2

520.8

537.3

10.0

479.0

8.4

374.1

163.2

47.3

29.0

115.9

-28.9

122.2

-28.1

FY16

1,683

1,691

22,405

9.8

8,608

6.9

2,525

1,898

28,519

2,020

6,155

3.0

18,493

10.5

143

28,519

FY17

2,239.8

1,487.8

752.0

3.9

426.4

1,178.4

11.4

583.8

594.6

10.7

458.5

-4.3

607.2

-12.6

5.5

-43.3

-18.0

2.4

-98.0

FY17

2,110

2,118

25,853

15.4

11,988

39.3

3,321

1,756

33,049

2,709

9,329

51.6

18,690

1.1

499

33,049

FY18

2,205.0

1,456.5

748.5

-0.5

446.0

1,194.5

1.4

599.4

595.1

0.1

460.9

0.5

750.4

-155.3

-89.8

57.8

-65.5

-45.6

FY18

2,182

2,191

27,063

4.7

12,039

0.4

3,621

1,671

34,548

1,919

10,610

13.7

19,349

3.5

400

34,548

FY19

2,428.7

1,545.2

883.5

18.0

367.7

1,251.2

4.7

696.9

554.4

-6.8

522.9

13.5

531.3

23.1

14.5

62.6

8.6

23.0

FY19

2,200

2,209

29,114

7.6

12,976

7.8

4,030

1,456

36,809

2,225

9,670

-8.9

21,859

13.0

392

36,809

FY20E

2,647.6

1,678.5

969.1

9.7

433.9

1,403.0

12.1

739.3

663.7

19.7

635.4

21.5

331.4

332.3

103.3

31.1

229.0

246.3

FY20E

2,419

2,428

31,589

8.5

14,183

9.3

3,431

1,558

39,005

2,379

9,090

-6.0

24,045

10.0

400

39,005

(INRb)

FY21E

2,842.3

1,724.7

1,117.6

15.3

442.6

1,560.2

11.2

778.4

781.8

17.8

750.6

18.1

340.2

441.6

111.3

25.2

330.3

44.2

351.0

42.5

FY21E

2,734

2,743

34,747

10.0

15,984

12.7

3,703

1,683

42,876

2,513

9,635

6.0

26,930

12.0

412

42,876

1,182

558

6.18

3.02

5.4

2.2

52.8

1,779

970

9.12

5.19

7.0

3.3

45.5

2,234

1,109

10.91

5.73

8.4

3.8

50.4

1,728

659

7.53

3.01

1.6

2.7

61.9

1,438

506

5.76

2.10

1.90

2.2

64.8

1,263

438

4.55

1.63

1.40

1.3

65.3

2 December 2019

State Bank of India

Financials and Valuations

Ratios

Y/E March

Yield and Cost Ratios (%)

Avg. Yield-Earning Assets

Avg. Yield on loans

Avg. Yield on Investments

Avg. Cost-Int. Bear. Liab.

Avg. Cost of Deposits

Interest Spread

Net Interest Margin

Capitalization Ratios (%)

CAR

Tier I

Tier II

Business and Efficiency Ratios (%)

Loans/Deposit Ratio

CASA Ratio

Cost/Assets

Cost/Total Income

Cost/Core Income

Int. Expense./Int. Income

Fee Income/Total Income

Non Int. Inc./Total Income

Emp. Cost/Total Expense

Investment/Deposit Ratio

Profitability Ratios and Valuation

RoE

RoA

RoRWA

Consolidated RoE

Consolidated RoA

Consol BV (INR)

Change (%)

Price-Consol BV (x)

Adjusted BV (INR)

Price-ABV (x)

EPS (INR)

Change (%)

Price-Earnings (x)

Dividend Per Share (INR)

Dividend Yield (%)

E: MOSL Estimates

FY16

8.9

9.0

8.3

6.0

5.8

2.9

3.0

FY17

9.0

9.3

8.5

6.0

6.4

3.0

FY18

7.4

7.2

4.9

5.1

2.5

FY19

7.8

7.5

4.8

5.0

2.9

2.8

FY20E

8.1

8.4

7.4

4.9

5.1

3.1

3.0

FY21E

8.0

8.5

7.2

4.7

4.8

3.3

3.2

13.1

9.9

3.2

13.0

10.4

2.6

12.7

10.5

2.2

12.8

10.8

2.1

12.6

10.8

1.9

12.5

10.8

1.6

82.5

38.4

1.8

49.2

53.6

66.3

26.1

31.6

56.4

27.5

72.3

46.4

1.8

49.5

56.0

66.4

24.6

36.2

58.2

36.1

71.5

44.5

1.7

50.2

56.5

66.1

26.1

37.3

55.3

39.2

75.1

44.6

1.9

55.7

57.1

63.6

26.9

29.4

58.9

33.2

76.1

44.9

1.9

52.7

53.8

63.4

28.9

30.9

58.9

28.8

77.5

46.0

1.8

49.9

50.9

60.7

26.4

28.4

59.0

27.7

7.6

0.4

0.9

7.8

0.4

222

7.2

1.4

157

1.4

14.9

-31.6

15.1

2.6

0.8

-1.1

-0.1

0.1

0.0

248

11.6

1.3

139

1.6

-2.3

3.0

0.9

-3.5

-0.2

-0.3

-2.0

-0.1

243

-2.0

1.3

135

1.7

-7.7

0.0

0.4

0.0

1.0

0.1

248

2.0

1.4

170

1.3

0.1

0.0

11.1

0.6

1.0

9.9

0.6

272

10.0

1.2

207

1.1

25.7

8.8

1.1

0.3

14.1

0.8

1.3

12.9

0.8

309

13.4

1.1

248

0.9

37.0

44.2

6.1

1.7

0.5

2 December 2019

State Bank of India

NOTES

2 December 2019

State Bank of India

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

< - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30

days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,

is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary

company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL

(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of

India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its

stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member

of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance

products.

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some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware

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or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

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

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

chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be

executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered

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For Singapore

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

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Specific Disclosures

1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOSL has received compensation for investment banking/merchant banking/brokerage services from the subject company in the past 12 months

8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOSL has not received any compensation or other benefits from third party in connection with the research report

10 MOSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company

received compensation/other benefits from the subject company in the past 12 months

2 December 2019

State Bank of India

other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific

recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there

might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider

demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not

considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research

analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be

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as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not

constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers

simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

Disclaimer:

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

in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be

used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal,

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options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,

is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is

provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The

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

the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform

or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is

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

views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

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locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or

licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose

possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be

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costs, damages,

expenses that may be suffered by the person accessing this information due to any errors and delays.

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

www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-

400 064. Tel No: 022 7188 1000.

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

ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration

No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:

INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,

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

through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk

Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,

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

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

Tribunal, Mumbai Bench.

2 December 2019