Sector Update |

Update | Financials

Sector

14 October 2020

Financials

Technology

Asset quality remains under watch; MSME credit declines 6% YoY

Credit guarantee scheme aiding faster revival; PSBs gaining market share

Higher NPAs in large ticket size

bucket









Proportion of missed payments

for loans across CMR; 20%

aggregate increase in missed

payments



As per the latest

TransUnion CIBIL Ltd on MSME Pulse

report, asset quality continued

to deteriorate in the MSME segment, with the NPA ratio increasing by 140bp YoY to

12.8% as of 1QFY21. However, NBFCs have witnessed the most significant increase in

NPAs in the segment by ~390bp YoY to 9.7%.

Currently, ~80%/86% of the PSB/Private Bank MSME disbursements in June’20 were

toward the Super Prime and Prime category MSME borrowers. However,

incrementally higher inquiries were seen from high-risk category borrowers.

Total MSME credit declined 6% YoY (3.4% QoQ) in 1QFY21. However, the emergency

credit line guarantee scheme (ECLGS) provided a much-needed boost. The impact was

clearly visible in PSBs, which disbursed 2.6x the loan amount in Jun’20 over Feb’20.

Also, private banks rebounded to earlier disbursal levels of Feb'20.

As per the latest press release from the finance ministry, the total loans sanctioned

under ECLGS stand at ~INR1.9t, of which INR1.4t has already been disbursed. Among

the lenders, PSBs disbursed INR688b, private banks INR597b, and NBFCs just INR22b.

MSME credit witnessed the sharpest decline in the metro/urban locations v/s the rural

and semi-urban regions. Furthermore, among the states, Maharashtra reported the

sharpest decline, followed by Gujarat, while Chhattisgarh and Bihar witnessed

moderately improving trends.

Sharp surge in NPA levels; higher missed payments rate in high-risk MSME

segment







The NPA ratio in the MSME segment increased by 140bp YoY to 12.8% in

1QFY21. Furthermore, private banks’ NPAs in the segment increased by 120bp

YoY to 5.8%, and PSBs’ NPAs increased by ~110b YoY to 18.6%.

However, NBFCs

witnessed the most significant increase in NPAs by ~390bp YoY to 9.7%.

Within the MSME sub-segments, higher NPAs were reported in higher ticket size

category loans.

Over the last few months (from Mar’20 to June’20),

the missed payments rate

(at least on term loans) increased from 9% (pre-COVID levels) to 25% in the

Super Prime category. On the other hand, a sharp increase was seen in sub-

prime category borrowers from 11% (pre-COVID) to ~36%.

Credit inquiries spike among high-risk category borrowers

Currently, ~80% of PSB disbursements to MSME in Jun’20 were toward Super Prime

(CMR 1–3) and Prime (CMR 4–6) category borrowers. Also, for private banks, ~86%

of the total disbursements were toward higher rated MSME borrowers.

However,

the latest credit inquiry trends in Aug’20 indicate higher inquiries from high-risk

category borrowers.

PSBs reported a sharp drop in Super Prime inquiries to 32% in

Aug’20 from 38% in Feb’20. Conversely, sub-prime inquiries for NBFCs increased to

24% in Aug’20 from 15% in Feb’20.

Research Analyst: Nitin Aggarwal

(Nitin.Aggarwal@MotilalOswal.com) |Himanshu

Taluja

(Himanshu.Taluja@motilaloswal.com)

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com)

|

Yash Agarwal

(Yash.Agarwal@motilaloswal.com)

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

Investors

14 October 2020

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

1

Sector Update | Financials

MSME credit declines 6% YoY, but faster revival led by credit guarantee

scheme





Total MSME credit declined 6% YoY (3.4% QoQ) in 1QFY21, impacted by

lockdown and weak economic trends. Also, commercial credit growth (including

MSMEs and large corporates) declined 3.6% QoQ (~4% YoY decline). Among the

MSME sub-segments, Medium and Small Enterprises posted sharper decline v/s

the Very Small and Micro category.

The ECLGS announcement has been a positive step. The impact was clearly

visible in Jun’20, with PSBs disbursing 2.6x the loan amount over Feb’20 levels.

Also, private banks rebounded to earlier disbursal levels of Feb’20.

~INR1.4t of loans disbursed to MSME under credit guarantee scheme

As per the latest press release from the finance ministry, the total loans sanctioned

under ECLGS stand at ~INR1.9t, of which INR1.4t has already been disbursed. Thus, a

total of 2.7m MSME businesses have availed loans under this scheme. Among the

lenders, PSBs have sanctioned loans of INR816b, of which INR688b has already been

disbursed. Private banks have sanctioned loans of INR866b, of which INR597b has

thus far been disbursed. On the other hand, NBFCs have reported significantly lower

disbursements of INR22b (of the total ~INR30b worth of loans sanctioned).

PSBs’ market share increases to ~52% in 1QFY21 v/s ~49% in FY20

PSBs – which had been losing market share over the last few years to private banks

and NBFCs until FY20 – saw sharp improvement. PSBs’ market share improved to

~52% in June’20 from ~49% in FY20. This was primarily led by market share decline

in NBFCs to ~10%.

Better trends in rural/semi-urban v/s metro locations; Maharashtra sees

sharpest decline

Credit growth in the MSME segment declined the most at 6% YoY each in the

metro/urban locations v/s 3%/4% YoY decline in rural/semi-urban. Among the

states, Maharashtra posted the sharpest decline in MSME credit, followed by

Gujarat, while Chhattisgarh and Bihar saw moderate growth in the MSME portfolio.

Furthermore, the number of MSME loans disbursed in June’20 was over 3x in the

semi-urban/urban regions (v/s ~1.9x in metros) over Feb’20 levels (indexed to 1).

Exhibit 1:

NPAs trends across lenders in MSME segment; sharp spike in NPAs

Source: MOFSL, TransUnion CIBIL

14 October 2020

2

Sector Update | Financials

Sharp surge in NPA levels; higher missed payments rate in high-risk

MSME segment





The NPA ratio in the MSME segment increased by 140bp YoY to 12.8% in

1QFY21. Furthermore, private banks’ NPAs in the segment increased by 120bp

YoY to 5.8%, and NPAs for PSBs increased by ~110b YoY to 18.6%.

However,

NBFCs witnessed the most significant increase in NPAs by ~390bp YoY to 9.7%.

Within the MSME sub-segments, higher NPAs were reported in the higher ticket

size category loans.

Exhibit 2:

NPA trends across lenders in MSME segment; sharp spike in NPAs

NBFCs have seen the most

significant increase in NPAs

by ~390bp YoY to 9.7%

Source: MOFSL, TransUnion CIBIL

Exhibit 3:

Segment-wise NPA trends across MSME sub-segments

FY19

1QFY20

2QFY20

3QFY20

FY20

1QFY21

VERY SMALL

MICRO 1

SMALL

MEDIUM 1

MEDIUM 2

Source: MOFSL, TransUnion CIBIL



Missed payments rate on

term loans witnessed an

aggregate rise of 20%

Over the last few months (from Mar’20 to June’20), the missed payments rate

(at least on term loans) increased from 9% (pre-COVID levels) to 25% in the

Super Prime category. On the other hand, a sharp increase was seen in sub-

prime category borrowers from 11% (pre-COVID) to ~36%.

14 October 2020

3

Sector Update | Financials

Exhibit 4:

Higher NPAs in large ticket size bucket

PSBs

Private

NBFC

27.3%

16.6%

12.5%

5.6% 6.4%

4.8%

8.1%

7.3%

Exhibit 5:

Proportion of missed payments for loans across

CMR; 20% aggregate increase in missed payments

CMR 1-3

CMR 4-6

CMR 7-10

36%

25%

14.1%

9%

9%

11%

29%

Micro

Small

Medium

Pre COVID

Post COVID

Source: MOFSL, TransUnion CIBIL

Source: MOFSL, TransUnion CIBIL

Exhibit 6:

Portfolio distribution of MSMEs in each sector, by CMR (as of Jun'20)

High-risk borrowers in

Logistics, Mining,

Construction, Hotels, and

Tourism categories

Super Prime

Logistics

Mining

Construction

Hotel, Restaurants, Tourism

Roads & Other Infrastructure

Auto Components, Auto. Manufacturing

Gems & Jewellery

FMCG

Textiles

Chemicals & Pharma Manufacturing

CRE

Cement

Power

Prime

24%

27%

35%

26%

38%

40%

39%

38%

37%

42%

38%

36%

38%

Sub-Prime

34%

35%

28%

37%

27%

27%

28%

29%

31%

29%

33%

34%

40%

42%

38%

37%

37%

35%

33%

33%

33%

32%

30%

29%

29%

22%

Source: MOFSL, TransUnion CIBIL

14 October 2020

4

Sector Update | Financials

Credit inquiries spike among high-risk category borrowers





Currently, ~80% of PSB disbursements to MSME in Jun’20 were toward Super

Prime (CMR 1–3) and Prime (CMR 4–6) category borrowers. Also, for private

banks, ~86% of the total disbursements were toward higher rated MSME

borrowers. However, the latest credit inquiry trends in Aug’20 indicate higher

inquiries from high risk category borrowers.

PSBs reported a sharp drop in Super Prime inquiries to 32% in Aug’20 from

38% in Feb’20. Conversely, sub-prime inquiries for NBFCs increased to 24% in

Aug’20 from 15% in Feb’20.

Exhibit 8:

Distribution of all MSMEs

Super prime

19%

39%

23%

18%

Overall

Medium

Small

Micro

17%

18%

45%

35%

50%

Prime

49%

16%

40%

Sub-Prime

33%

39%

25%

34%

Exhibit 7:

Distribution of MSMEs eligible for ECLGS

Super prime

Overall

Medium

Small

Micro

28%

43%

37%

26%

Prime

53%

18%

40%

56%

Sub-Prime

Source: MOFSL, TransUnion CIBIL

Source: MOFSL, TransUnion CIBIL

Exhibit 9:

PSBs: MoM loan disbursals (by volume) by CMR

CMR 1-3

18.0%

37.5%

18.6%

38.2%

CMR 4-6

21.2%

38.5%

CMR 7-10

20.8%

38.3%

20.2%

43.0%

Exhibit 10:

Private banks: MoM loan disbursals (by volume)

by CMR

CMR 1-3

10.2%

37.2%

12.2%

33.4%

CMR 4-6

14.9%

27.3%

CMR 7-10

12.9%

25.8%

13.6%

35.5%

44.5%

Feb'20

43.1%

Mar'20

40.3%

Apr'20

40.9%

May'20

36.7%

June'20

52.6%

54.4%

57.7%

61.4%

50.9%

June'20

Feb'20

Mar'20

Apr'20

May'20

Source: MOFSL, TransUnion CIBIL; CMR is CIBIL MSME Rank

Source: MOFSL, TransUnion CIBIL; CMR is CIBIL MSME Rank

Exhibit 11:

NBFCs: MoM loan disbursals (by volume) by CMR

CMR 1-3

14.5%

49.1%

21.1%

37.8%

CMR 4-6

14.5%

55.2%

CMR 7-10

21.7%

38.1%

21.2%

41.6%

36.4%

Feb'20

41.1%

Mar'20

30.3%

Apr'20

40.2%

May'20

37.1%

June'20

Source: MOFSL, TransUnion CIBIL, CMR is CIBIL MSME Rank

14 October 2020

5

Sector Update | Financials

Exhibit 12:

PSBs: MoM credit inquiry trend

CMR(1-3)

19%

43%

19%

43%

19%

47%

CMR(4-6)

20%

49%

CMR(7-10)

19%

56%

21%

50%

20%

47%

Exhibit 13:

Private banks: MoM credit inquiry trend

CMR(1-3)

12%

45%

12%

44%

12%

33%

CMR(4-6)

10%

36%

CMR(7-10)

12%

45%

14%

45%

14%

45%

38%

38%

33%

31%

25%

29%

Jul'20

32%

Aug'20

43%

44%

55%

54%

43%

41%

Jul'20

41%

Aug'20

Feb'20 Mar'20 Apr'20 May'20 Jun'20

Feb'20 Mar'20 Apr'20 May'20 Jun'20

Source: MOFSL, TransUnion CIBIL; CMR is CIBIL MSME Rank

Source: MOFSL, TransUnion CIBIL; CMR is CIBIL MSME Rank

Exhibit 14:

NBFCs: MoM credit inquiry trend; highest inquiries from sub-prime category

customers

CMR(1-3)

15%

54%

16%

52%

28%

39%

33%

Apr'20

CMR(4-6)

22%

42%

36%

May'20

CMR(7-10)

16%

57%

22%

53%

25%

Jul'20

24%

48%

28%

Aug'20

31%

Feb'20

32%

Mar'20

26%

Jun'20

Source: MOFSL, TransUnion CIBIL, CMR is CIBIL MSME Rank

14 October 2020

6

Sector Update | Financials

MSME credit declines 6% YoY, but faster revival led by credit

guarantee scheme

Total MSME credit declined 6% YoY (3.4% QoQ) in 1QFY21, impacted by lockdown

and weak economic trends. Also, commercial credit growth (including MSMEs and

large corporates) declined 3.6% QoQ (~4% YoY decline). Among the MSME sub-

segments, Medium and Small Enterprises posted sharper decline v/s the Very Small

and Micro category.

Exhibit 15:

Total commercial credit trends; MSME / Large Corporate segment in 1QFY21 sees 3.4%/3.7% QoQ decline

INR t

Very small (<INR1m)

Micro 1 (INR1-5m)

Micro 2 (INR5-10m)

Small (INR10m-100m)

Medium 1 (INR100m-250m)

Medium 2 (INR250m-500m)

Large (>500m)

Total commercial credit

- of which total MSME

- of which large corporates

1QFY19

0.8

1.9

1.3

6.5

3.3

2.7

44.9

61.3

16.4

44.9

2QFY19

0.8

2.0

1.4

6.8

3.4

2.8

48.9

66.1

17.2

48.9

3QFY19

0.9

2.1

1.4

7.0

3.5

2.8

50.0

67.6

17.6

50.0

FY19

0.9

2.2

1.5

7.3

3.6

2.9

52.3

70.6

18.3

52.3

1QFY20

0.9

2.1

1.5

7.2

3.5

2.8

51.8

69.8

18.0

51.8

2QFY20

0.9

2.2

1.5

7.3

3.5

2.8

51.5

69.6

18.1

51.5

3QFY20

0.9

2.2

1.5

7.3

3.5

2.8

51.5

69.7

18.2

51.5

FY20

0.9

2.2

1.5

7.0

3.3

2.6

52.0

69.6

17.5

52.0

1QFY21

0.9

2.2

1.4

6.8

3.2

2.5

50.1

67.0

17.0

50.1

YoY

(%)

3.4%

1.4%

-2.1%

-5.8%

-8.6%

-11.8%

-3.3%

-3.9%

-5.7%

-3.3%

QoQ

(%)

-2.2%

-0.9%

-2.1%

-3.0%

-4.5%

-6.1%

-3.7%

-3.6%

-3.4%

-3.7%

Source: MOFSL, TransUnion CIBIL



PSBs disbursed 2.6x higher

loan amount over Feb'20

levels





The ECLGS announcement has been a positive step. The impact was clearly

visible in Jun’20, with PSBs disbursing 2.6x the loan amount over Feb’20 levels.

Also, private banks rebounded to earlier disbursal levels of Feb’20.

On the other hand, significantly lower disbursements were reported by NBFCs

to MSME at 0.2x Feb’20 levels. NBFCs have also gradually taken advantage of

ECLGS, but are yet to return to pre-COVID levels.

Among the MSME sub-segments, the highest disbursements were reported in

the Small category, followed by the Micro segment.

Exhibit 16:

MoM loans disbursed (by value) across lender groups indexed to Feb’20; PSBs

disburse significantly higher loan amounts in Jun’20

Source: MOFSL, TransUnion CIBIL

14 October 2020

7

Sector Update | Financials

Exhibit 17:

Inquiry trends in MSME segment over July’20/Aug’20; uptick in NBFCs, while

sharply deceleration seen in PSBs

Source: MOFSL, TransUnion CIBIL

Exhibit 18:

MoM loans disbursed (by value) across MSME sub-segment indexed to Feb’20;

Small segment sees sharp increase, followed by Micro

Source: MOFSL, TransUnion CIBIL

~INR1.4t worth of loans disbursed to MSME under ECLGS

As per the latest press release from the finance ministry, the total loans sanctioned

under ECLGS stand at ~INR1.9t, of which INR1.4t has already been disbursed. Thus, a

total of 2.7m MSME businesses have availed loans under this scheme. Among the

lenders, PSBs have sanctioned loans of INR816b, of which INR688b has already been

disbursed. Private banks have sanctioned loans of INR866b, of which INR597b has

thus far been disbursed. On the other hand, NBFCs have reported significantly lower

disbursements of INR22b (of the total ~INR30b worth of loans sanctioned).

Better trends in rural/semi-urban v/s metros; Maharashtra sees sharpest

decline

PSBs disbursed INR688b,

private banks INR597b, and

NBFCs just INR22b under

ECLGS

Credit growth in the MSME segment declined the most at 6% YoY each in the

metro/urban locations v/s 3%/4% YoY decline in rural/semi-urban. Among the

states, Maharashtra posted the sharpest decline in MSME credit, followed by

Gujarat, while Chhattisgarh and Bihar saw moderate growth in the MSME portfolio.

Furthermore, the number of MSME loans disbursed in June’20 was over 3x in the

semi-urban/urban regions (v/s ~1.9x in metros) over Feb’20 levels (indexed to 1).

8

14 October 2020

Sector Update | Financials

Exhibit 19:

Region-wise MSME YoY credit growth; rural/

semi-urban sees lowest MSME decline

1QFY19

17%

8%

19%

9%

1QFY20

18%

12%

1QFY21

18%

Exhibit 20:

MoM loan disbursals (by volume) by region (Feb

disbursals indexed to 1)

Feb'20

Mar'20

Apr'20

May'20

June'20

13%

-6%

Metro

-6%

Urban

-4%

Semi-Urban

Rural

-3%

Metro

Urban

Semi-Urban

Rural

Source: MOFSL, TransUnion CIBIL

Source: MOFSL, TransUnion CIBIL

Exhibit 21:

State-wise MSME YoY credit growth trends; Maharashtra sees sharpest decline,

followed by Gujarat, while Bihar posts positive trend

Source: MOSL, TransUnion CIBIL

Higher disbursements to existing borrowers in Jun’20:

Overall, lenders are

currently more focused on disbursing loans to existing customers under the credit

guarantee scheme. Thus, 94% of the total MSME disbursements in Jun’20 were

toward ‘Existing to Bank’ customers only.

Exhibit 22:

MoM credit inquiries, by borrower type

Existing to Bank

34%

26%

40%

30%

23%

47%

69%

20%

11%

New-to-Bank

21%

14%

64%

20%

12%

68%

New-to-Credit

27%

20%

52%

31%

23%

46%

Exhibit 23:

MoM loan disbursals (by volume), by borrower

Existing to Bank

33%

10%

57%

Feb'20

30%

6%

65%

New-to-Bank

6% 1%

New-to-Credit

9% 2%

90%

5% 1%

93%

94%

Feb'20 Mar'20 Apr'20 May'20 June'20 July'20 Aug'20

Source: MOSL, TransUnion CIBIL

Mar'20

Apr'20

May'20

June'20

Source: MOSL, TransUnion CIBIL

14 October 2020

9

Sector Update | Financials

PSBs’ market share rises to ~52% in 1QFY21 v/s ~49% in FY20

PSBs – which had been losing market share over the last few years to private banks

and NBFCs until FY20 – saw sharp improvement. PSBs’ market share improved to

~52% in June’20 (from ~49% in FY20), primarily led by market share decline in NBFCs

to ~10%. On the other hand, private banks continue to reflect market share gains.

.

Exhibit 24:

Market share trends in MSME segment; PSBs gaining market share, while

NBFCs’ share declining in MSME credit

PSBs

12%

34%

13%

34%

13%

34%

13%

35%

Private

12%

36%

NBFC

13%

37%

13%

38%

13%

38%

10%

39%

55%

1QFY19

53%

2QFY19

53%

3QFY19

51%

FY19

51%

1QFY20

51%

2QFY20

49%

3QFY20

49%

FY20

52%

1QFY21

Source: MOFSL, TransUnion CIBIL

Exhibit 25:

Lenders’ share – Micro

9.6%

PSBs

Private

60.7%

NBFCs

Exhibit 26:

Lenders’ share – Small

9.2%

46.8%

44.0%

PSBs

Private

NBFCs

Exhibit 27:

Lenders’ share – Medium

10.4%

PSBs

49.8%

39.9%

Private

NBFCs

29.7%

Source: MOFSL, TransUnion CIBIL

Source: MOFSL, TransUnion CIBIL

Source: MOFSL, TransUnion CIBIL

14 October 2020

10

Sector Update | Financials

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.

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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.

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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

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"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

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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

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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

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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

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Sector Update | Financials

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.

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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

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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.

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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;

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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.

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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

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* 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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