7 June 2020
4QFY20 Results Update | Sector: Financials
Aditya Birla Capital
Estimate change
TP change
Rating change
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CMP: INR56
TP: INR84 (+51%)
Buy
Growth marred by macros; Asset quality under pressure
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
ABCAP IN
2,201
127.4 / 1.7
115 / 37
8/-34/-34
215
Financials & Valuations (INR b)
Y/E March
2020 2021E 2022E
PBT Break-up
NBFC
10.7
9.1
10.4
Housing
1.4
1.3
1.5
AMC
6.6
6.0
6.7
Life Insurance
1.4
1.5
1.7
Consol PBT
16.9
16.5
19.2
Consol PAT Post MI
9.2
9.2
10.7
Growth (%)
5.8
0.1
16.7
RoE (%)
8.3
7.0
7.6
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
70.5
73.6
72.7
DII
12.6
8.7
7.5
FII
2.2
2.4
3.7
Others
14.8
15.3
16.1
FII Includes depository receipts
ABCAP’s 4QFY20 consol. PAT plunged ~44% QoQ/YoY to INR1.4b while FY20
PAT was up 6% YoY to INR9.2b. PAT for NBFCs has plummeted 33%/40%
QoQ/YoY to INR1.37b due to (a) loans declining 9%/2% YoY/QoQ to
INR470b, and (b) higher credit cost (2.7% v/s 0.5% in 4QFY19), led by COVID
related provision of INR1.6b and 90bp QoQ rise in GS3 to 3.6% (+30% to
INR17b).
Other businesses: (a)
HFC loans were flat QoQ and up 6% YoY to INR121b,
(b)
AMC AAUM grew 1%/2% QoQ/YoY to INR2.67t; 4QFY20 PAT declined
24% QoQ/YoY to INR1b, impacted by mix change and INR200m MTM loss
on the investment book,
(c)
Life Insurance business reported EV of
INR51.9b (+6% YoY)and RoEV of 13.2%. 13
th
month persistency improved to
83% (v/s 81% a quarter ago), and
(d)
Health Insurance combined ratio
improved to 134% (v/s 149% a year ago) and stood at 117% in 4QFY20.
The transaction business has demerged from AB My-universe to ABCL
Wealth (part of the NBFC division).
Since business had losses, the company
could manage to get tax benefit at the NBFC level; however, it had Net
worth (NW) impact of INR1.47b.
We expect the company to consolidate operations in the near term and to
focus on liquidity, asset quality and cutting flab in the system.
New
businesses like ARC and Health Insurance are showing strong traction.
While large profit contributors – Lending and the AMC business – would
remain under pressure, reduction in losses for new businesses and capital
raise at Holding Company level should lead to ABCAP reporting flat YoY
profit in FY21. Nevertheless, consolidated RoEs are likely to be moderate at
7-8%. Maintain
Buy
with SOTP of INR84 (v/s INR105 earlier).
Lending business – focus on improving granularity
NBFC loans stood at INR471b (down 2%/9% QoQ/ YoY). The share of
Promoter and UHNI loans declined from 9.5% to 4.3% YoY, which was
compensated by rise in the share of Retail to 19% (13% a year ago). Within
Retail, Unsecured Business loans and Personal loans and LAP are ABCAP’s
key focus areas. Further, share of large corporates has declined by 200bp to
45% (down 13% YoY in absolute terms). NIMs (including fees) are stable
YoY at 5.25%.
The company remains increasingly focused on the lower ticket size segment
in HFC. Share of affordable housing has increased 1,400bp over the last
four quarters to 19%. Its HFC book stood at INR121b (flat QoQ, up 6% YoY).
In the NBFC/HFC business, INR140b/INR23b of liability maturity is expected
in FY21. The NBFC/HFC business has INR37.4b/INR4.3b cash in hand and
~INR30/INR25b of undrawn sanctions in hand.
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526 |
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com); +91 22 6129 1540
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Aditya Birla Capital
Asset quality deteriorates
NBFC asset quality deteriorated with rise in GS3 by 90bp QoQ to 3.6%. This
includes the IL&FS exposure of INR2.2b (0.5% of loans). Excl. IL&FS’ large
corporate loans, GS3 stands at 5.1% with PCR of 31%. The company has 1.2x
security cover on such assets.
GS3 for HFC too has increased 17bp to 1.2%. The company has PCR of 32%.
~33%
of ABCAP’s book has opted for moratorium.
In the NBFC/HFC business, the company has made COVID related provision of
INR1.6b/INR200m – ~20bp of loans.
Highlights from management commentary
Targeting INR1.5-1.7b cost savings across platforms in FY21.
Few mid-large corporate NPLs are under resolution, which are delayed due to
the lockdown.
Valuation and view
FY20 has been a challenging year for the company with slowdown in loan
growth and asset quality stress.
The company has entered FY21 with 33% of
borrowers under moratorium – while this number is better than many peers
and is in line with some large banks, we look to monitor the eventual
slippages.
Resolution of some corporate NPLs is underway; however, we do not
foresee any meaningful resolutions in the near term given the overall
environment.
We see significant moderation in business growth and earnings pressure in high
profit contributing segments like Lending and the Asset Management business.
Reduction in expenses in standalone business and losses in new ventures like
Health Insurance, etc. should lead to flat earnings in FY21. Overall, we expect 7-
8% consolidated RoE over FY20-22E.
Exhibit 1: SOTP (Mar’22E based)
Stake
NBFC
HFC
AMC
LI
Others
Target Value
Current market cap.
Upside (%)
100
100
51
51
Value
(INR B)
77
13
77
32
4
204
135
50.6
Value
(USD B)
1.2
0.2
1.2
0.5
0.1
3.1
2.1
50.6
INR
per share
32
5
32
13
2
84
56
50.6
Source: MOFSL, Company
% To
Total
38
6
38
16
2
100
Rationale
0.8x PBV
0.8x PBV
30x Earnings
1x EV
7 June 2020
2
 Motilal Oswal Financial Services
Aditya Birla Capital
Quarterly performance
Y/E March
1Q
ABFSL - NBFC arm
Net Income
5,412
5,520
5,931
6,517
6,947
6,430
6,290
6,329
23,380
25,996
Change YoY (%)
22.5
21.8
25.7
37.3
28.4
16.5
6.0
-2.9
26.9
11.2
Opex
1,720
1,900
2,010
2,400
1,980
1,909
2,075
2,304
6,250
8,268
Cost to Income Ratio (%)
31.8
34.4
33.9
36.8
28.5
29.7
33.0
36.4
26.7
31.8
Operating Profits
3,692
3,620
3,921
4,117
4,967
4,521
4,215
4,026
15,350
17,728
Change YoY (%)
15.8
11.6
22.2
36.4
34.5
24.9
7.5
-2.2
21.3
15.5
Provisions
340
450
690
590
960
1,350
1,490
3,242
1,830
7,042
Profit Before Tax
3,352
3,170
3,231
3,527
4,007
3,171
2,725
784
13,280
10,687
Change YoY (%)
32.6
25.6
22.0
25.6
19.5
0.0
-15.7
-77.8
26.4
-19.5
Consolidated Earnings
Profit Before Tax
3,330
2,840
3,550
4,090
4,370
3,710
3,420
1,280
13,810
12,780
Growth YoY %
15.6
-17.0
38.7
59.1
31.2
30.6
-3.7
-68.7
20.8
-7.5
Lending
3,486
3,378
3,554
3,931
4,395
3,526
3,075
1,052
14,349
12,048
NBFC
3,352
3,170
3,231
3,527
4,007
3,171
2,725
784
13,280
10,687
HFC
134
209
323
404
388
356
351
268
1,069
1,362
AMC
1,458
1,553
1,655
1,802
1,754
1,754
1,734
1,366
6,468
6,607
Life Insurance
222
-20
491
624
249
414
335
377
1,316
1,375
Others*
-1,835
-2,071
-2,150
-2,267
-2,027
-1,984
-1,725
-1,514
-8,323
-7,250
Taxes
1,380
1,310
1,470
1,540
1,810
1,290
1,010
30
5,700
4,140
Tax rate %
41.4
46.1
41.4
37.7
41.4
34.8
29.5
2.3
41.3
32.4
Profit After Tax
1,950
1,530
2,080
2,550
2,560
2,420
2,410
1,250
8,110
8,640
Growth YoY %
6.6
-36.5
35.9
67.8
31.3
58.2
15.9
-51.0
11.2
6.5
MI and Others
-180
-330
-50
-40
-140
-130
-90
-180
-600
-540
PAT
2,130
1,860
2,130
2,590
2,700
2,550
2,500
1,430
8,710
9,180
Growth YoY %
23.8
-17.3
46.9
52.4
26.8
37.1
17.4
-44.8
22.3
5.4
Networth allocation mix
NBFC
61.4
64.3
64.0
64.6
64.6
64.3
58.5
52.9
Housing Finance
8.7
10.5
10.4
10.3
10.2
10.1
9.2
9.3
Life Insurance
22.0
21.4
21.5
21.7
21.6
21.4
19.5
18.3
AMC
12.2
11.1
11.7
10.8
11.4
10.5
10.4
9.0
General Ins Adv
0.3
0.3
0.3
0.2
0.3
0.1
0.1
0.0
Broking
2.0
1.9
1.9
1.9
1.8
1.8
1.6
1.4
Health Insurance
1.3
1.9
1.5
1.7
1.8
2.4
2.6
2.1
Others*
-7.3
-11.4
-11.4
-11.9
-12.1
-12.1
-3.2
4.8
Elimnation/Unallocated
-0.7
0.0
0.1
0.6
0.5
1.3
1.3
2.2
Details on lending business
Loans (INR B)
536
579
601
631
620
604
601
592
Change YoY (%)
30.5
29.7
29.2
22.8
15.7
4.3
0.0
-6.3
NBFC
444
481
493
517
502
484
479
471
Change YoY (%)
22.5
23.6
24.0
19.6
13.0
0.6
-2.8
-9.0
HFC
92
99
108
114
118
121
122
121
Change YoY (%)
90.5
71.1
60.4
40.2
28.9
22.2
12.6
6.1
Net Interest Margins
NBFC
4.88
4.64
4.85
5.24
5.39
5.28
5.24
5.24
HFC
2.89
3.32
3.26
3.08
3.06
2.97
2.97
3.05
GNPA %
NBFC
0.95
0.93
1.17
1.49
1.69
1.85
2.72
3.62
HFC
0.67
0.71
0.72
0.67
0.67
0.85
1.05
1.21
Details on Other business
AMC Business
QAAUM (INR B)
2,672
2,716
2,588
2,629
2,704
2,694
2,655
2,670
Change YoY (%)
18.7
11.0
-1.3
-2.0
1.2
-0.8
2.6
1.6
Life Ins - 13th Mt persistency
72.4
74.0
75.0
78.0
78.3
80.0
80.9
83.0
Source: Company, MOFSL; PBT assuming 100% share of AMC business* Others includes Health Ins, PE, AB Money and inter group adjustment;
Numbers may vary from actual reporting due to difference in reporting
FY19
2Q
3Q
4Q
1Q
FY20
2Q
3Q
4Q
FY19
(INR m)
FY20
7 June 2020
3
 Motilal Oswal Financial Services
Aditya Birla Capital
Highlights from management commentary
Business updates
Life/Health Insurance new premiums grew 10%/ 49% YoY in May’20.
In Life Insurance, the company has achieved 81% premium renewal rate in
Apr’20, which has increased to pre-COVID levels in May’20.
Targeting INR1.5-1.7b cost savings across platforms in FY21.
Few mid-large corporate NPLs are under resolution, but are delayed due to the
lockdown.
The AMC business has witnessed INR13b of equity inflows in Apr-May’20.
In the NBFC segment, the company looks to grow in retail secured lending and
affordable housing finance.
In the Life Insurance segment, 6% premiums are from individual protection. The
share of protection insurance is on an uptrend (10% share in Apr’20).
Looking at 8-9% cost saving in the HFC business.
INR200m MTM losses in the AMC segment from proprietary investments in AMC
schemes.
Asset Quality/Moratorium
43% of retail customers have opted for moratorium. Expect moratorium rate
to come down as the economy starts opening up.
Security in most cases is hard security such as property and not just cash flow.
Reclassification of stage 2 assets from the erstwhile 30-60dpd (followed by
ABCAP) to 61-90dpd has led to some movement of assets from stage 1 to stage
2 during the quarter and the full year.
Liquidity/Funding
HFC segment has received INR2.28b NHB sanction; it has also raised INR4b
during the lockdown.
95% of borrowings are long term. The borrowing mix: Term loans - 40%, NCD -
38%, CP - 5%, Sub-debt - 4%, ECB - 6%.
Others
75% of MSME unsecured loans are covered by GoI’s MSME emergency credit
line.
Dividend of INR211m from AMC and Insurance Broking business was recognized
during the quarter.
De-merger of businesses to be opportunistic.
Health Insurance: Combined ratio improves 1,500bp to 134%.
~85% of branches are operational as of now.
7 June 2020
4
 Motilal Oswal Financial Services
Aditya Birla Capital
Key Exhibits
Exhibit 2: NBFC loan book continues to run down
Loan book (INR b)
25
23
24
24
20
YoY Growth (%)
Exhibit 3: HFC loan book growth slowing
91
71
Loan book (INR b)
60
40
29
22
YoY Growth (%)
13
1
-3
479
-9
471
92
99
108
13
6
121
432
444
481
493
517
502
484
114
118
121 122
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 4: Share of Affordable up 200bp in HFC loan mix (%)
9
25
7
59
8
25
9
58
Home loans
7
23
11
59
Affordable
7
23
13
57
LAP/LRD
7
23
14
56
Construction Finance
5
5
24
24
16
55
17
54
4
24
19
53
Source: MOFSL, Company
Higher reliance on external
borrowings and bond
markets, share up ~300%
sequentially.
Exhibit 5: Borrowing profile (FY20, %)
40
38
7
6
5
CPs
4
Sub debt
Term loans
NCDs
Others
ECB
Source: MOFSL, Company, Overall, Share of TL reducing sequentially
7 June 2020
5
 Motilal Oswal Financial Services
Aditya Birla Capital
Exhibit 6: AAUM mix (%)
Domestic Equity
6
6
7
60
60
60
Domestic Debt
6
6
60
60
offshore & Alternatives
6
6
6
61
59
60
Exhibit 7: AMC revenues (INR b)
Revenue (INR b)
0.22
3.6
0.23
3.9
0.25
3.4
1.6
1.7
PBT (INR b)
0.28
0.26
PBT margin* (%)
0.26
0.26
0.21
3.2
1.8
3.2
1.8
3.2
1.8
3.2
1.7
2.8
1.4
33
34
34
34
34
33
35
34
1.5
Source: MOFSL, Company
Source: MOFSL, Company,*% of AAUM Annualized
Exhibit 8: Share of ULIP up 200bp sequentially (%)
9
30
24
37
ULIP
8
30
23
39
PAR
7
33
23
37
Non PAR
6
8
33
24
37
35
25
32
Term/Protection
6
6
7
42
23
28
43
21
30
42
20
32
Exhibit 9: 13
th
month persistency level up 300bp QoQ (%)
80.0
80.9
83.0
78.0
72.4
74.0
75.0
78.3
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 10: Trend in Health Insurance GWP (INR m)
Exhibit 11: Pre-tax loss in other segments
Loss before tax (INR b)
28
21
23
22
16
21
15
0.98
0.65
0.65
% of PBT
30
0.90
1.07
1.06
1.14
0.87
Source: MOFSL, Company
Source: MOFSL, Company
Valuation and view
The past year has been turbulent for the NBFC sector, both in terms of liquidity
tightness as well as asset quality stress in certain segments. However, given its
parentage, ABCAP handled the liquidity situation and managed to raise INR120b
long-term debt in FY20.
Moreover, the company has been prudent on its ALM,
with share of CPs in total borrowings down to only 5% currently.
In the NBFC segment, ABCAP has been running down the structured finance and
promoter funding book, which is a good strategy in this environment. However,
the sharp increase in GNPLs over the past year is concerning. Moreover, given
the overall environment, we do not foresee any meaningful resolution for
corporate NPLs in the near term.
7 June 2020
6
 Motilal Oswal Financial Services
Aditya Birla Capital
The company has entered FY21 with 33% of borrowers under moratorium –
while this number is better than many peers and is in line with some large
banks, we look to monitor the eventual slippages. Hence, we increase our credit
cost estimates in the NBFC segment to 1.43% for FY21.
In its other key verticals, ABCAP has done a good job of improving profitability.
The HDFC Bank partnership in LI has performed better than our expectations.
The business has witnessed an improvement in product mix as well as VNB
margins (adjusted for the COVID-19 impact).
While the AMC business is
witnessing slowing AAUM growth, expense control has led to PBT growth.
We use SOTP (FY22E based) to value the company. We assign P/B multiples of
0.8x to the NBFC/HFC segments, P/E multiple of 30x to the AMC and P/EV
multiple of 1.0x to the Life Insurance business. Maintain
Buy
with a TP of INR84.
Value
(INR B)
77
13
77
32
4
204
135
50.6
Value
(USD B)
1.2
0.2
1.2
0.5
0.1
3.1
2.1
50.6
INR
per share
32
5
32
13
2
84
56
50.6
% To
Total
38
6
38
16
2
100
Rationale
0.8x PBV
0.8x PBV
30x Earnings
1x EV
Exhibit 12: SOTP (March’22 based)
Stake
NBFC
HFC
AMC
LI
Others
Target Value
Current market cap.
Upside (%)
100
100
51
51
Source: MOFSL, Company
Exhibit 13: Business segment-wise net-worth contribution (INR m)
Y/E MARCH
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated Networth
Of which Non controlling Int
Consolidated NW Post NCI
% of Total Networth
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated Networth
Change YoY %
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated Networth
2015
19,848
458
5,759
0
666
6,040
32,771
3,069
29,702
2015
60.6
1.4
17.6
2.0
18.4
100.0
2015
2016
35,108
2,048
7,794
0
683
6,472
52,105
7,557
44,548
2016
67.4
3.9
15.0
1.3
12.4
100.0
2016
76.9
35.3
2.7
7.1
59.0
2017
49,813
3,675
9,416
18,047
782
3,739
85,472
19,518
65,954
2017
58.3
4.3
11.0
21.1
0.9
4.4
100.0
2017
41.9
79.5
20.8
14.4
-42.2
64.0
2018
61,724
7,475
11,610
23,294
2,540
-10,704
95,939
10,560
85,378
2018
64.3
7.8
12.1
24.3
2.6
-11.2
100.0
2018
23.9
103.4
23.3
224.8
-386.2
12.2
2019
74,140
11,900
12,154
24,488
2,322
-18,307
1,06,698
11,574
95,124
2019
69.5
11.2
11.4
23.0
2.2
-17.2
100.0
2019
20.1
59.2
4.7
5.1
-8.6
71.0
11.2
2020
80,780
13,830
13,041
26,574
2,112
2,618
1,38,954
13,196
1,25,758
2020
58.1
10.0
9.4
19.1
1.5
1.9
100.0
2020
9.0
16.2
7.3
8.5
-9.1
-114.3
30.2
2021E
87,957
14,669
13,937
28,081
2,648
2,535
1,49,827
14,892
1,34,935
2021E
58.7
9.8
9.3
18.7
1.8
1.7
100.0
2021E
8.9
6.1
6.9
5.7
25.4
-3.1
7.8
2022E
96,753
16,136
14,945
29,739
3,298
1,634
1,62,504
16,861
1,45,643
2022E
59.5
9.9
9.2
18.3
2.0
1.0
100.0
2022E
10.0
10.0
7.2
5.9
24.6
-35.5
8.5
Source: MOFSL, Company
7 June 2020
7
 Motilal Oswal Financial Services
Aditya Birla Capital
Exhibit 14: Valuation matrix
Rating
66
FY22E
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
CMP
(INR)
1,766
262
203
100
616
154
145
2,393
637
62
915
622
Mcap
(USDb)
40.2
1.6
0.5
0.1
1.8
1.2
1.5
17.7
0.6
1.5
4.8
0.4
P/E (x)
FY21E
16.5
5.8
4.0
2.2
8.2
19.4
15.3
35.7
4.8
7.3
11.4
20.2
FY22E
12.5
4.8
3.1
2.1
5.3
10.8
11.3
23.4
4.2
5.3
10.1
16.8
P/BV (x)
FY21E
1.8
0.7
0.4
0.3
0.7
0.8
1.4
4.0
0.5
0.8
2.7
3.0
FY22E
1.3
0.6
0.3
0.3
0.6
0.8
1.2
3.5
0.5
0.7
2.3
2.7
RoA (%)
FY21E
1.6
1.0
1.1
2.3
1.6
0.7
1.2
2.4
3.0
1.6
7.1
3.7
FY22E
1.5
1.1
1.4
2.4
2.4
1.2
1.6
3.4
3.4
2.1
7.2
4.0
RoE (%)
FY21E
11.2
12.0
9.6
14.4
9.0
4.2
9.4
11.8
11.4
11.3
25.8
16.0
FY22E
11.0
13.0
11.5
13.6
12.7
7.2
11.6
15.9
11.8
13.8
24.4
16.9
HFCs
HDFC*
LICHF
PNBHF
REPCO
Vehicle fin.
SHTF
MMFS
CIFC
Diversified
BAF
SCUF
LTFH
MUTH
MAS
Note : *Adjusted for investment in subsidiaries
7 June 2020
8
 Motilal Oswal Financial Services
Aditya Birla Capital
Financials and Valuations
BALANCE SHEET
Y/E MARCH
ESC
Reserves and Surplus
Networth
Non Controlling Interest
Other Capital Instruments
Borrowings
Change (%)
Insurance Business Related
Change (%)
Other liabilities
Change (%)
Total Liabilities
Customer assets
Change (%)
Fixed Assets
Change (%)
Insurance Business Related
Change (%)
Other assets
Change (%)
Total Assets
PROFIT BEFORE TAX
Y/E MARCH
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated PBT
Taxes
Tax Rate (%)
Consolidated PAT
Minoirty Interest
Consolidated PAT Post MI
% of Total PBT
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated PBT
Change YoY %
NBFC
Housing
AMC
Life Insurance
Other Businesses
Consolidation Adjustments
Consolidated PBT
Taxes
Consolidated PAT
Minoirty Interest
Consolidated PAT Post MI
2015
7,570
10,556
18,126
3,069
15,853
1,48,151
0
11,222
1,96,421
1,88,489
2,925
0
5,007
1,96,421
2015
4,108
-56
1,816
0
-291
-388
5,190
2,101
40.5
3,089
696
2,393
2015
79.2
-1.1
35.0
0.0
-5.6
-7.5
100.0
2015
2016
7,960
19,212
27,172
7,557
17,523
2,30,125
55.3
0
18,037
60.7
3,00,414
2,91,163
54.5
3,249
11.1
0
6,002
3,00,414
2016
6,264
-302
3,136
0
-331
-78
8,688
3,446
39.7
5,242
1,436
3,806
2016
72.1
-3.5
36.1
0.0
-3.8
-0.9
100.0
2016
52.5
72.7
13.9
-79.9
67.4
64.0
69.7
106.3
59.1
2017
12,322
53,632
65,954
19,518
147
3,29,378
43.1
3,33,888
32,421
79.7
7,81,306
4,10,633
41.0
8,120
149.9
3,45,959
16,594
176.5
7,81,306
2017
8,319
-155
3,371
0
-534
-343
10,658
3,746
35.1
6,912
1,612
5,300
2017
78.1
-1.5
31.6
0.0
-5.0
-3.2
100.0
2017
32.8
-48.7
7.5
61.3
338.8
22.7
8.7
31.9
12.3
39.3
2018
22,010
63,368
85,378
10,560
0
4,45,157
35.2
3,64,716
9.2
31,331
-3.4
9,37,142
5,20,198
26.7
8,701
7.2
3,74,305
8.2
33,937
104.5
9,37,142
2018
10,509
341
5,231
1,304
-1,478
-1,531
14,377
5,769
40.1
8,608
1,743
6,865
2018
73.1
2.4
36.4
9.1
-10.3
-10.6
100.0
2018
26.3
-320.1
55.2
176.8
346.2
34.9
54.0
24.5
8.1
29.5
2019
22,014
73,110
95,124
11,574
0
5,63,242
26.5
4,01,500
10.1
25,480
-18.7
10,96,920
6,37,935
22.6
9,262
6.4
4,14,145
10.6
35,578
4.8
10,96,920
2019
13,280
1,070
6,468
1,315
-2,155
-2,008
17,969
7,681
42.7
10,288
1,619
8,669
2019
73.9
6.0
36.0
7.3
-12.0
-11.2
100.0
2019
26.4
213.7
23.6
0.8
45.8
31.2
25.0
33.2
19.5
-7.1
26.3
2020
24,138
1,01,620
1,25,758
13,196
0
5,55,836
-1.3
4,12,645
2.8
30,255
18.7
11,37,690
6,33,439
-0.7
12,550
35.5
4,28,267
3.4
63,435
78.3
11,37,690
2020
10,690
1,360
6,607
1,370
-1,870
-1,285
16,872
5,804
34.4
11,068
1,897
9,171
2020
63.4
8.1
39.2
8.1
-11.1
-7.6
100.0
2020
-19.5
27.1
2.2
4.2
-13.2
-36.0
-6.1
-24.4
7.6
17.2
5.8
2021E
24,138
1,10,797
1,34,935
14,892
0
5,56,691
0.2
4,53,910
10.0
37,894
25.2
11,98,322
6,35,913
0.4
13,015
3.7
4,73,794
10.6
75,600
19.2
11,98,322
2021E
9,146
1,309
5,976
1,507
-1,464
0
16,474
5,601
34.0
10,873
1,696
9,177
2021E
55.5
7.9
36.3
9.1
-8.9
0.0
100.0
2021E
-14.4
-3.7
-9.6
10.0
-21.7
-2.4
-3.5
-1.8
-10.6
0.1
(INR Million)
2022E
24,138
1,21,505
1,45,643
16,861
0
6,21,016
11.6
4,99,301
10.0
47,282
24.8
13,30,103
7,10,241
11.7
13,572
4.3
5,24,413
10.7
81,877
8.3
13,30,103
(INR Million)
2022E
10,429
1,451
6,719
1,658
-1,050
0
19,208
6,531
34.0
12,677
1,969
10,708
2022E
54.3
7.6
35.0
8.6
-5.5
0.0
100.0
2022E
14.0
10.8
12.4
10.0
-28.3
16.6
16.6
16.6
16.1
16.7
7 June 2020
9
 Motilal Oswal Financial Services
Aditya Birla Capital
NOTES
7 June 2020
10
 Motilal Oswal Financial Services
Aditya Birla Capital
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
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.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, 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 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, 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 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
7 June 2020
11
 Motilal Oswal Financial Services
Aditya Birla Capital
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL 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
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.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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7 June 2020
12