Cholamandalam Inv. & Finance
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
CIFC IN
782
257.7 / 3.6
349 / 226
0/11/22
497
26 February 2020
3QFY20 Results Update | Sector: Financials
CMP: INR318
TP: INR390 (+23%)
Buy
Growth slowing down; M&HCV stress to last 8-9 months
PAT increased 28% YoY to INR3.9b (2% miss) in 3QFY20. The quarter was
characterized by lower AUM growth and an increase in the GNPL ratio.
AUM growth slowed down from 24% YoY in the prior quarter to 21% YoY in
3QFY20. While LAP AUM growth has been steady at 16-17% YoY,
vehicle
finance AUM growth moderated from 24% YoY to 19% YoY.
During the quarter, CIFC assigned ~INR7b worth of vehicle finance loans.
The company used to sell down via the securitization route, but has started
direct assignments in VF too for the past two quarters.
As loan growth slowed down and the company assigned loans worth
~INR10b overall during the quarter, it did not raise capital from other
sources.
Total borrowings declined 2% QoQ. The share of bank loans
jumped from 53% to 61% QoQ.
Management commented that incremental
cost of funds has declined 20-30bp QoQ in 4Q.
Over the past nine months, CIFC has heavily curtailed its M&HCV
disbursements (due to asset quality pressure). While HCVs accounted for
14% of total AUM, they formed only 6% of fresh disbursements in 9MFY20.
On the other hand, it has grown faster in refinance and used vehicles (33%
of disbursements vis-à-vis 26% of AUM).
GNPL ratio increased across segments: Vehicle Finance – 2.7% v/s 2.35%
QoQ, Home Equity – 6.0% v/s 5.9% QoQ and Home Loan - 3.7% v/s 3.8%
QoQ.
Stage 3 PCR declined 250bp QoQ to 33% due to lower eventual credit
losses in M&HCVs compared to other products.
Increase in opex in the quarter is on account of higher collection costs and
higher growth in low-ticket products like 2Ws.
In M&HCVs, customers have slowly started repaying EMIs in January.
However, their struggle will continue for at least 8-9 months. Eventual
credit losses on HCVs are lower than that for other products.
Vehicle finance loan growth slowing down; lower incremental CoF
Financials & Valuations (INR b)
Y/E March
2019 2020E 2021E 2022E
Total Income 34.0 41.4 47.2 53.5
PPP
21.3 25.4 29.4 33.6
PAT
11.9 14.2 17.4 19.9
EPS (INR)
15.2 17.5 21.5 24.5
EPS Gr. (%)
29.1 15.4 22.9 14.0
BV (INR)
77
102
121
144
Valuations
NIM (%)
6.1
5.7
5.8
5.8
C/I ratio (%)
37.3 38.7 37.8 37.1
RoAA (%)
2.4
2.3
2.4
2.4
RoE (%)
21.5 19.9 19.3 18.5
Payout (%)
8.6
8.6
7.4
6.9
Valuations
P/E (x)
21.0 18.2 14.8 13.0
P/BV (x)
4.1
3.1
2.6
2.2
Div. Yield (%)
0.4
0.5
0.5
0.5
Shareholding pattern (%)
As On
Dec-19 Sep-19
Promoter
52.9
52.9
DII
21.5
20.3
FII
16.6
18.0
Others
9.0
8.7
FII Includes depository receipts
Tweaking VF product mix; GNPL ratio increasing
Dec-18
53.1
16.1
19.4
11.5
Highlights from management commentary
Valuation and view
There are two aspects of CIFC’s vehicle finance business that stand out
compared to most peers: (i) it is well diversified across product segments and
(ii) there is no state-level concentration – the largest state accounts for only
11% of total portfolio. While CIFC has managed to deliver 20%+ disbursement
and AUM growth in the past, we expect it to slow down to ~15% over the
medium term. There could also be ~30bp rise in credit costs unless the macro
environment improves.
While our estimates on growth and profitability
remain largely unchanged, we incorporate the impact of the recent INR9b QIP
in our numbers. This results in a 3% increase in our EPS estimate for FY21.
Maintain
Buy
with a target price of INR390 (2.7x FY22E BVPS).
Research Analyst: Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539 |
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526
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
Cholamandalam Inv. & Finance
Quarterly performance
Y/E March
Income from Operations
Interest Expenses
Net Interest Income
YoY Growth (%)
Total Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions & Loan Losses
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Key Parameters (%)
Yield on loans
Cost of funds
Spread
NIM
C/I ratio
Credit cost
Tax rate
Balance Sheet Parameters
Disbursements (INR b)
Growth (%)
AUM (INR b)
Growth (%)
AUM mix (%)
Vehicle finance
Home Equity
Others
Borrowings (INR b)
Growth (%)
Asset Quality Parameters
GS 3 (INR B)
GS 3 (%)
- Vehicle finance
- Home Equity
NS 3 (INR B)
NS 3 (%)
PCR (%)
Total ECL (%)
Vehicle finance AUM mix (%)
LCV
Cars & MUV
3W & SCV
Used CV
Tractor
HCV
Refinance
CE
Two wheeler
1Q
16,057
7,950
8,107
22.2
8,109
22.2
2,816
5,293
22.5
905
4,388
1,535
2,852
36.0
14.7
8.0
6.7
7.3
34.7
0.8
35.0
70.1
44.5
453.3
29.5
73.4
22.7
3.9
412.9
32.3
16.2
3.6
2.6
6.2
10.5
2.4
35.0
2.1
22.0
16.0
6.0
13.0
7.0
19.0
13.0
4.0
0.0
FY19
FY20
2Q
3Q
4Q
1Q
2Q
3Q
16,751 18,261 18,851 20,295 21,970 22,749
8,565 9,508 9,864 10,870 11,769 11,924
8,185 8,753 8,987 9,425 10,200 10,825
17.9
22.2
20.9
16.3
24.6
23.7
8,186 8,754 8,989 9,425 10,201 10,825
17.9
22.2
20.9
16.2
24.6
23.7
2,901 3,158 3,820 3,500 4,016 4,244
5,285 5,596 5,169 5,925 6,185 6,581
24.8
28.8
20.5
11.9
17.0
17.6
690
961
556 1,095
952 1,360
4,595 4,635 4,614 4,830 5,233 5,221
1,549 1,591 1,695 1,688 2,163 1,336
3,047 3,044 2,919 3,142 3,070 3,885
49.4
38.7
2.3
10.2
0.8
27.6
14.0
7.8
6.3
7.0
35.4
0.6
33.7
69.0
25.6
477.2
30.9
74.2
22.5
3.3
470.6
44.4
16.2
3.4
2.3
6.0
10.5
2.2
35.5
1.9
22.0
16.0
7.0
13.0
7.0
19.0
13.0
4.0
0.0
14.3
8.1
6.3
7.1
36.1
0.8
34.3
75.3
11.3
503.9
29.3
74.4
22.2
3.5
472.3
36.2
16.5
3.3
0.0
0.0
10.4
2.1
36.7
2.0
21.5
16.0
5.4
12.5
7.5
18.0
12.4
4.6
2.0
13.9
8.1
5.9
6.9
42.5
0.4
36.7
88.9
11.1
542.8
26.5
74.8
21.4
3.8
505.7
32.6
14.4
2.7
1.8
5.5
8.9
1.7
37.9
1.7
21.5
16.0
5.6
12.6
7.3
17.4
12.4
4.9
2.3
14.1
8.2
5.9
6.7
37.1
0.8
34.9
85.7
22.2
574.9
26.8
74.8
21.1
4.2
551.2
33.5
16.7
3.0
2.0
5.6
10.7
1.9
36.1
1.7
21.6
16.3
5.8
12.6
7.4
16.4
12.4
4.9
2.6
14.6
8.5
6.1
7.0
39.4
0.7
41.3
73.8
7.0
592.9
24.2
74.0
21.3
4.7
559.0
18.8
18.0
3.2
2.3
5.9
11.8
2.1
34.4
1.8
21.3
16.5
6.1
12.9
7.4
15.3
12.6
4.9
3.1
15.0
8.6
6.4
7.2
39.2
0.9
25.6
74.8
-0.7
607.8
20.6
73.4
21.4
5.2
549.4
16.3
20.2
3.5
2.7
6.0
13.6
2.4
33.0
1.9
21.1
17.0
6.3
13.3
7.6
13.6
12.7
4.9
3.5
Source: Company, MOFSL
4QE
23,184
12,259
10,925
21.6
10,926
21.5
4,262
6,664
28.9
1,211
5,454
1,370
4,084
39.9
14.8
8.6
6.2
7.0
39.0
0.8
25.1
87.8
-1.3
640.2
17.9
73.1
21.2
5.7
592.2
17.1
FY19
69,127
35,887
33,240
20.0
33,246
20.0
12,696
20,551
24.1
3,112
17,439
6,370
11,069
27.4
13.7
8.1
5.6
6.1
37.3
0.6
34.9
304.5
21.3
542.8
26.5
74.8
21.4
3.8
505.7
31.9
11.7
2.1
(INR m)
FY20E 3QFY20E v/s Est.
85,025
46,822
38,203
14.9
38,206
14.9
16,022
22,184
7.9
4,617
17,567
6,557
11,010
-0.5
14.1
8.5
5.5
5.9
38.7
0.8
28.0
322.1
5.8
640.2
17.9
73.1
21.2
5.7
592.2
17.1
20.4
3.2
22,299
12,064
10,236
16.9
10,238
16.9
3,815
6,422
14.8
1,100
5,322
1,341
3,981
30.8
2
-1
6
6
11
2
24
-2
0
-2
5.5
1.2
53.1
8.6
1.3
38.6
26 February 2020
2
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Highlights from management commentary
Business updates
Increase in opex in the quarter is on account of higher collection costs and also
because of higher growth in low-ticket products like 2Ws.
Post the capital raise, the company has enough capital to sustain 20% growth
provided PBT ROTA remains 3.5%.
Will like to have housing finance as a separate business unit within the group.
Will utilize the 1,000+ branches of the group. Average ticket size is INR1.4m
with LTV of 60%. Awaiting HFC license from regulator.
HCV ticket size will increase by 10-15% under BS6.
Ticket size in LAP will decline from INR5-5.5m to INR4.2-4.4m due to increasing
share in tier 2/3 towns. Yields are better in such places.
The company took rate hikes in LAP segment.
Incremental cost of borrowings in 4Q is 8.2-8.3%. CIFC was able to re-price
some bank borrowings in the quarter.
Asset quality
Stress in vehicle finance sector is coming from M&HCVs. Customers are
struggling but have started repaying EMIs in January due to increased
collection effort by CIFC as well as improved capacity utilization. This struggle
will be there for at least 8-9 months. However, eventual credit losses on HCVs
are lower than that for other products – hence PCR has declined.
GNPL ratio: VF – 2.7% v/s 2.35% QoQ, LAP – 6.0% v/s 5.9% QoQ, HL – 3.7% v/s
3.8% QoQ.
Asset quality in the used vehicle segment has been largely stable.
Guidance
Will cross 1,100 branches by Mar’20.
Others
Sourcing cost will not move in line with disbursements under Ind-AS.
Tier I ratio post QIP will be 15%.
Total industry sales in HCVs are increasing month on month (currently 15,000
units) but still below peak levels of 30,000 units.
There has been muted pre-buying in 4Q so far due to lower availability of BS4
vehicles at dealer locations.
In 2W, CIFC is working with Royal Enfield (since 2014) and now with Honda.
Have loss sharing arrangements with OEMs (first loss will be borne by CIFC).
10,000 executives in collections dealing with 0.8m accounts.
26 February 2020
3
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Key Exhibits
Exhibit 1: Overall disbursements modest…
Disbursements (INR b)
55 54
45
24
6
26
14
YoY Growth %
Exhibit 2: …resulting in AUM growth slowing down
Total AUM
26
7
-3
75
14
14
19
30
31
YoY Growth %
29
26
27
24
22
11
21
49
55
68
80
70
69
77
89
86
74
350 365 390 429 456 477 504 543 575 593 608
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: Product mix largely stable (%)
VF
3
27
3
26
3
25
3
24
4
23
HE
3
23
Others
3
22
4
21
4
21
5
21
5
21
Exhibit 4: C/I ratio up 300bp YoY
Cost to Income Ratio
42.3
39.0 39.4
34.9
36.1
34.7 35.4
42.5
39.4 39.2
37.1
70
70
72
73
73
74
74
75
75
74
73
Source: MOFSL, Company
Source: MOFSL, Company,GS3% on loans
Exhibit 5: Gross stage 3 up 30bp QoQ
GS 3%
35.9
34.3
36.7
PCR %
37.9
36.1
34.4
33.0
4.3
3.4
3.6
3.4
3.3
2.7
3.0
3.2
3.5
Exhibit 6: Trend in PAT
PAT (INR b)
49
35
27
19
2
2.1
2.0
2.2
2.9
2.9
3.0
3.0
2.9
30
36
39
10
3.1
PAT growth %
28
35.0
35.5
1
3.1
3.9
Source: MOFSL, Company
Source: MOFSL, Company
26 February 2020
4
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Valuation and view
There are two aspects of CIFC’s vehicle finance business that stand out
compared to most peers: (i) it is well diversified across product segments and (ii)
there is no state-level concentration – the largest state accounts for only 11% of
the total portfolio.
Over the past year, the company has managed to deliver 20%+ disbursement
and AUM growth despite the tough economic environment. It has also
maintained ~10% of balance sheet in cash & cash equivalents. However, the
near- to medium-term outlook appears challenging. We expect AUM growth to
slow down to ~15%.
Strong asset quality has been a hallmark for CIFC. While we do not expect any
major asset quality disruptions, we do note of increasing stress among small
fleet operators, especially M&HCV operators. Hence, credit costs could remain
elevated in FY21.
While our estimates on growth and profitability remain largely unchanged, we
incorporate the impact of the recent INR9b QIP in our numbers. This results in a
3% increase in FY21 EPS estimate.
BUY with a TP of INR390 (2.7x FY22E BVPS).
Exhibit 7: We increase our FY21 EPS estimate by 3% to factor in the recent QIP
INR B
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
RoA on AUM
RoE
AUM
Old Est.
FY20
41.4
16.0
25.4
4.6
20.8
6.6
14.2
2.3
21.2
643
FY21
46.5
17.8
28.7
6.1
22.6
5.7
16.9
2.3
20.9
733
FY20
41.4
16.0
25.4
4.6
20.7
6.6
14.2
2.3
19.9
640
New Est.
FY21
47.2
17.8
29.4
6.1
23.3
5.9
17.4
2.4
19.3
729
FY20
-0.1
0.0
-0.2
-0.2
-0.2
-0.2
-0.2
% change
FY21
1.4
0.0
2.3
-0.5
3.1
3.1
3.1
-0.4
-0.5
Source: MOFSL, Company
Exhibit 8: One-year forward P/E
P/E (x)
Min (x)
25.0
19.0
13.0
7.0
1.0
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 9: One-year forward P/B
5.2
4.0
2.7
1.5
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
22.6
18.4
14.3
10.2
5.9
4.4
3.2
2.3
1.4
0.8
16.0
3.0
0.2
Source: MOFSL, Company
Source: MOFSL, Company
26 February 2020
5
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Valuation Matrix
66
HFCs
HDFC*
LICHF
PNBHF
REPCO
Vehicle financiers
SHTF
MMFS
CIFC
Diversified
BAF
SCUF
LTFH
MUTH
INDOSTAR
MAS
Wholesale
ABCL
Others
IIFL Wealth
Rating
FY21E
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Under Review
Buy
Buy
Buy
CMP
(INR)
2,281
348
396
291
1,277
361
318
4,810
1,403
115
940
281
1,112
83
1,533
Mcap
(USDb)
55.3
2.5
0.9
0.3
4.2
3.2
3.6
38.8
1.3
3.2
5.3
0.4
0.8
2.6
1.9
P/E (x)
FY20E
23.3
6.6
5.5
5.9
9.5
16.6
17.5
47.6
8.1
9.6
12.8
18.4
30.3
6.9
47.7
FY21E
17.9
5.9
5.3
5.6
9.1
12.1
14.7
35.1
7.6
8.3
11.6
11.1
25.4
4.6
35.9
P/BV (x)
FY20E
3.1
1.0
0.8
1.0
1.6
1.9
3.4
8.6
1.2
1.5
3.3
0.8
5.8
0.7
4.29
FY21E
2.4
0.8
0.7
0.9
1.4
1.7
2.8
7.1
1.1
1.3
2.8
0.8
4.9
0.5
4.21
RoA (%)
FY20E
1.9
1.2
1.4
2.7
2.8
1.9
2.3
4.1
3.9
2.2
7.0
1.2
5.2
1.8
18.95
FY21E
1.8
1.3
1.5
2.6
2.7
2.2
2.3
4.3
4.0
2.4
6.5
2.1
5.4
2.0
22.32
RoE (%)
FY20E
14.4
15.3
15.2
18.5
17.9
12.2
21.2
22.7
16.5
16.8
28.7
4.6
21.8
11.5
9.3
FY21E
14.1
15.3
13.9
16.5
16.2
15.0
20.9
22.1
15.4
17.0
26.1
7.1
21.9
11.6
11.9
26 February 2020
6
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Financials and Valuations
Income Statement
Y/E March
Interest Income
Interest Expenses
Net Interest Income
Change (%)
Income from assignments
Other Operating Income
Other Income
Total Income
Change (%)
Total Operating Expenses
Change (%)
Operating Profit
Change (%)
Total Provisions
% of Operating Profit
PBT
Tax Provisions
PAT
Change (%)
Proposed Dividend
2015
34,600
19,604
14,996
16.5
1,435
870
7
17,308
16.0
7,489
13.8
9,819
17.8
3,247
33.1
6,572
2,221
4,352
19.5
503
2016
39,163
20,508
18,655
24.4
2,053
708
12
21,429
23.8
8,449
12.8
12,980
32.2
4,272
32.9
8,708
3,023
5,685
30.6
703
2017
43,717
22,308
21,409
14.8
2,103
776
8
24,295
13.4
10,133
19.9
14,162
9.1
3,106
21.9
11,056
3,868
7,187
26.4
860
2018
51,862
26,593
25,268
18.0
0
2,931
4
28,203
16.1
11,153
10.1
17,051
20.4
3,037
17.8
14,014
4,831
9,183
27.8
1,017
2019
64,860
35,887
28,972
14.7
867
4,193
7
34,039
20.7
12,696
13.8
21,344
25.2
3,112
14.6
18,232
6,370
11,862
29.2
1,017
2020E
79,075
46,822
32,253
11.3
2,900
6,221
3
41,377
21.6
16,022
26.2
25,355
18.8
4,617
18.2
20,738
6,557
14,181
19.6
1,215
2021E
90,200
53,185
37,014
14.8
3,335
6,843
3
47,196
14.1
17,840
11.3
29,356
15.8
6,064
20.7
23,292
5,870
17,423
22.9
1,296
(INR M)
2022E
103,062
60,437
42,624
15.2
3,335
7,528
3
53,490
13.3
19,864
11.3
33,626
14.5
7,074
21.0
26,553
6,691
19,861
14.0
1,377
Balance Sheet
Y/E March
Share Capital
Reserves & Surplus
Net Worth for Equity Shareholders
Borrowings
Change (%)
Total Liabilities
Investments
Change (%)
Loans
Change (%)
Net Fixed Assets
Total Assets
E: MOFSL Estimates
2015
1,437
30,296
31,733
194,752
7.6
226,486
675
-18.1
222,422
14.1
683
226,486
2016
1,562
35,012
36,574
225,762
15.9
262,336
666
-1.3
259,732
16.8
1,113
262,336
2017
1,564
40,062
41,626
302,001
33.8
343,627
697
4.7
332,244
27.9
1,417
343,627
2018
1,564
48,194
49,758
383,303
26.9
433,061
729
4.6
422,532
27.2
1,646
433,061
2019
1,564
58,973
60,537
505,667
31.9
566,205
729
0.0
526,223
24.5
1,754
566,205
2020E
1,621
80,639
82,260
592,158
17.1
674,418
2,961
306.0
599,407
13.9
1,432
674,418
2021E
1,621
96,506
98,127
666,667
12.6
764,793
6,667
125.2
680,024
13.4
890
764,793
(INR M)
2022E
1,621
114,715
116,335
763,803
14.6
880,138
7,638
14.6
781,846
15.0
213
880,138
26 February 2020
7
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield on Loans
Avg Cost of Funds
Int. Spread on Financing Portfolio
NIM (on AUM)
NIM (on loans)
Profitability Ratios (%)
RoE
RoA
Int. Expended / Int.Earned
Other Inc. / Net Income
Efficiency Ratios (%)
Op. Exps. / Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Loans/Borrowings Ratio
Net NPAs to Net Adv.
Assets/Equity
2015
16.6
10.4
6.1
6.7
7.2
2016
16.2
9.8
6.5
7.5
7.7
2017
14.8
8.5
6.3
7.4
7.2
2018
13.7
7.8
6.0
7.3
6.7
2019
13.7
8.1
5.6
6.1
6.1
2020E
14.1
8.5
5.5
5.9
5.7
2021E
14.1
8.5
5.7
5.9
5.8
(%)
2022E
14.1
8.5
5.7
5.9
5.8
15.9
2.0
56.7
5.1
16.6
2.3
52.4
3.4
18.4
2.4
51.0
3.2
20.1
2.4
51.3
10.4
21.5
2.4
55.3
12.3
19.9
2.3
59.2
15.0
19.3
2.4
59.0
14.5
18.5
2.4
58.6
14.1
43.3
29.6
39.4
30.1
41.7
39.7
39.5
48.1
37.3
46.5
38.7
41.7
37.8
41.5
37.1
41.4
114.2
2.0
7.1
2015
37.2
16.1
6.1
19.2
0.7
115.0
2.1
7.2
2016
46.8
25.9
7.3
20.1
0.9
110.0
3.2
8.3
2017
53.2
13.7
9.2
26.3
1.1
110.2
1.8
8.7
2018
63.6
19.5
11.7
27.7
1.3
104.1
1.2
9.4
2019
77.4
21.6
4.1
15.2
29.1
21.0
1.3
0.4
101.2
1.3
8.2
2020E
101.5
31.2
3.1
17.5
15.4
18.2
1.5
0.5
102.0
1.2
7.8
2021E
121.1
19.3
2.6
21.5
22.9
14.8
1.6
0.5
102.4
0.8
7.6
2022E
143.6
18.6
2.2
24.5
14.0
13.0
1.7
0.5
Valuations
Book Value (INR)
BV Growth (%)
Price-BV (x)
EPS (INR)
EPS Growth (%)
Price-Earnings (x)
Dividend per share
Dividend Yield (%)
E: MOFSL Estimates
26 February 2020
8
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
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.
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
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
26 February 2020
9
 Motilal Oswal Financial Services
Cholamandalam Inv. & Finance
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.
-
26 February 2020
10