Banking Error! Reference source not found.

04 January
2011
Quarterly Preview 04 January 2011

Banking NII growth

(%)

Strong quarter amid rising risks 50

40
30
We expect strong NII growth for banks under our coverage supported by a low 20
base of Q3FY10, strong credit growth and year-on-year NIMs improvement. 10
However, PAT growth would be relatively lower due to increased operating 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3E
expenses and provisions. NIMs are expected to decline from Q2FY11 levels
though the downside would likely be capped by asset re-pricing. Slippages could FY09 FY10 FY11

remain high (particularly for PSU banks) and hence, we are factoring in higher
provisioning expenses. We are also building in higher operating costs stemming Growth in pre-provisioning profit
from provisions towards second pension liabilities. We remain positive on the (%)
sector in the long term and continue to prefer banks with a superior liability 50
40
franchise. Our top picks are State Bank of India (SBIN), Bank of Baroda (BOB)
30
and Axis Bank (AXSB) among large caps and Dena Bank (DBNK) among mid caps. 20
Key risks to our call are a sharp rise in inflation and negative surprises on asset 10
quality and pension liabilities. 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3E

Advances growth strong; deposit growth continues to lag: Total advances of FY09 FY10 FY11
scheduled commercial banks (SCB) are likely to grow by over 6% QoQ and 23–
24% YoY. However, deposits continue to lag credit growth and are likely to PAT growth
increase only 3–4% QoQ. (%)
60
NIMs to decline marginally: The sharp rise in deposit rates would put pressure 50
40
on margins; however, we believe that NIMs moderation would be marginal in 30
Q3FY11 as banks have hiked lending rates and assets are re-priced faster than 20
liabilities. Thus, on a YoY basis, NIMs would still show significant improvement 10
0
due to the low base in Q3FY10; consequently, we expect NII for our coverage Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3E
universe to grow by 28% YoY (3% QoQ). We are factoring in higher margin FY09 FY10 FY11
compression for banks with a relatively poor liability franchise and greater
reliance on wholesale funding. However, net revenue growth could be lower at
Relative valuations
22% YoY due to sluggish fee income growth and muted treasury gains. P/BV (x) P/E (x) RoE (%)
Company Avg
FY11E FY12E FY11E FY12E
Slippages to remain in line with Q2FY11; opex likely to increase: Slippages FY10-12
could remain at elevated levels for some banks (particularly PSUs), as was Banks
witnessed in H1. Higher bond yields may lead to MTM losses as well; however, SBI 2.3 2.0 14.6 11.7 16.6

the quantum is unlikely to be significant as bond yield on 10-yr G-Sec bonds has SBI # 1.9 1.6 11.5 9.1 17.5
PNB 1.9 1.6 8.3 6.6 26.0
risen by ~8bps only. We are building in higher provisioning expenses as well as
BOB 1.9 1.6 8.5 7.0 24.6
higher opex (to account for pension liabilities and salary hikes). Any significant
BOI 1.5 1.3 8.3 6.9 18.1
pressure on asset quality and higher-than-expected pension liability are key risks. CBK 1.7 1.4 7.2 6.4 25.6
DBNK 1.1 0.9 5.7 4.8 22.3
Outlook and top picks: While near-term headwinds (high inflation particularly
UBI 1.6 1.3 7.7 5.8 24.3
with rising commodities prices/interest rates) could weigh on earnings/stock OBC 1.1 1.0 6.4 5.2 18.6
performance, we are positive on the sector in the long term as the loan outlook CRPBK 1.3 1.1 6.3 5.4 22.0
remain robust and credit costs are likely to moderate in FY12. We are concerned ICICIBC 2.2 2.1 24.0 18.7 9.7
about the spike in deposit rates and continue to prefer banks with strong ICICIBC ## 2.3 2.1 19.8 15.3 12.1
liabilities franchisees. Improvement in liquidity due to higher government HDFCB 4.4 3.8 28.0 21.6 17.3
spending would be a positive trigger. Our top picks in the sector remain SBIN, AXSB 2.9 2.5 17.1 13.3 19.3
YESB 2.9 2.4 15.4 12.2 20.6
BOB and AXSB among large caps and DBNK among mid-caps. Among NBFCs
Speciality Finance
we like Shriram Transport at current levels.
HDFC 6.2 5.5 31.1 26.1 21.1
HDFC # 7.9 6.4 22.6 19.0 34.8
LICHF 10.9 9.1 50.0 41.7 23.9
DEWH 1.9 1.6 12.6 9.1 20.4
SHTF 3.7 3.0 14.8 12.4 27.7
# Adj. for valuation of subsidiaries

Siddharth Teli Ishank Kumar Nikhil Rungta RCML: Voted amongst Top 4 most improved brokerages by Asia Money Poll 2010
(91-22) 6766 3463 (91-22) 6766 3467 (91-22) 6766 3451 RCML Research is also available on Bloomberg FTIS <GO> and Thomson First Call1

siddharth.teli@religare.in ishank.kumar@religare.in nikhil.rungta@religare.in

 Banking Quarterly Preview 04 January 2011

Fig 1 - RCML Banking Universe: Q3FY11 preview

NII Pre-provision Profit PAT
(units)
Growth Growth Growth
Q3FY11E Q3FY11E Q3FY11E
YoY (%) QoQ (%) YoY (%) QoQ (%) YoY (%) QoQ (%)
PSU Banks
SBIN 82,535 30.7 1.7 62,320 34.9 (2.0) 27,579 11.2 10.3
PNB 30,882 32.6 3.7 21,739 19.6 3.5 11,205 10.8 4.3
BOB 21,047 31.4 3.3 16,579 31.1 0.1 10,229 22.9 0.3
BOI 17,992 20.4 1.3 13,736 21.5 (0.4) 6,395 57.3 3.7
CBK 20,519 38.8 2.4 14,930 1.6 5.5 9,695 (7.9) (3.8)
DBNK 4,825 70.5 3.7 3,330 68.4 2.2 1,584 17.8 (1.4)
UNBK 15,758 48.0 2.6 12,654 38.4 11.9 5,885 10.2 94.0
CRPBK 7,257 21.1 1.5 5,882 6.6 2.6 3,283 7.7 (6.7)
OBC 10,481 20.1 (2.7) 8,058 29.4 (0.0) 3,745 29.4 (5.8)
Private Banks
ICICIBC 23,455 14.0 6.4 23,711 0.1 7.2 13,112 19.1 6.1
HDFCB 26,256 18.1 3.9 19,476 19.9 7.8 10,034 22.6 10.0
AXSB 16,865 25.0 4.4 15,882 15.5 6.9 8,128 23.9 10.6
YESB 3,217 52.5 2.7 3,026 40.0 7.5 1,802 43.1 2.3
Total – Banks 281,089 28.5 2.7 221,322 21.8 2.8 112,678 15.6 7.4
NBFCs
HDFC 10,309 20.7 1.1 11,600 19.2 1.0 8,187 22.0 1.4
LICHF 3,142 37.8 3.0 3,141 35.2 (1.6) 2,205 43.5 (5.9)
DEWH 883 54.6 8.9 828 57.8 6.9 621 54.6 7.0
SHTF 7,944 34.5 2.5 5,999 30.3 4.8 3,103 31.0 3.8
Source: Company, RCML Research

Fig 2 - Strong advances growth to boost earnings

System-wide credit growth strong at (Rs bn) (%)
Bank credit YoY growth (R)
+6% YoY 38,000 35
36,000
30
34,000
32,000 25
30,000
20
28,000
26,000 15
24,000
10
22,000
20,000 5
May-09

May-10
Mar-09

Mar-10
Sep-08

Sep-09

Sep-10
Nov-08

Nov-09

Nov-10
Jul-09

Jul-10
Jan-09

Jan-10

Source: Bloomberg

2
 Banking Quarterly Preview 04 January 2011

Fig 3 - Deposit growth continues to lag at ~15% YoY despite rate hikes
Deposit mobilization growth continues (%) Deposit growth Loan to deposit ratio (R) (%)
to lag credit pick-ups 24 77
22 76
75
20
74
18 73
16 72
71
14
70
12 69
10 68

Nov-08

Nov-09

Nov-10
Jan-09

May-09

Jan-10

May-10
Mar-09

Mar-10
Sep-08

Sep-09

Sep-10
Jul-09

Jul-10
Source: Bloomberg

Fig 4 - Repo purchases at record high level

Muted deposit growth has result in tight (Rs bn)
liquidity situations; as a result, banks 2,000
have raised their deposit rates 1,500
aggressively 1,000
500
0
(500)
(1,000)
(1,500)
(2,000)
Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11
Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10
Source: Bloomberg

Fig 5 - Short term yields has risen due to tight liquidity

Yield on 10 yr G-Sec has risen only by 8 (%) 1 yr G-Sec 3 yr G-Sec 5 yr G-Sec 10 yr G-Sec
bps; however, sharp increase in short 9.0
term rates could lead to nominal MTM
losses 8.0

7.0

6.0

5.0

4.0
May-10
Mar-10
Feb-10

Sep-10

Dec-10
Oct-10

Oct-10

Nov-10
Jul-10
Jan-10

Aug-10
Apr-10

Jun-10

Source: Bloomberg, RCML Research

3
 Banking Quarterly Preview 04 January 2011

Fig 6 - SBIN has aggressively raised their deposit rates in Q3FY11

Rates Rates effetive
Rate Revised rate Change from Change from Change from
effective upto from Aug 17,
Tenor w.e.f. Oct 1, w.e.f. Dec 7, Dec 6, 2010 Sep 30, 2010 Aug 16, 2010
Aug 16, 2010 2010
2010 (%) 2010 (%) (bps) (bps) (bps)
(%) (%)
7 days to 15 days 3.00
16 days to 45 days 2.50 4.00 4.00 4.50 50 50 200
46 days to 90 days 3.50 4.00 4.00 5.50 150 150 200
91 days to 180 days 4.75 4.75 5.50 6.00 50 125 125
181 days to <1 yr 5.25 6.00 6.00 7.25 125 125 200
1 yr to 554 days 6.00 6.75 7.00 7.75 75 100 175
555 days 6.00 7.25 7.50 8.50 100 125 250
556 days to <2 yr 6.00 6.75 7.25 7.75 50 100 175
2 yr to 999 days 6.50 7.00 7.50 8.25 75 125 175
1000 days 6.50 7.25 7.75 8.50 75 125 200
1001 days to <3 yr 6.50 7.00 7.25 8.25 100 125 175
3 yr to <5 yr 6.50 7.25 7.25 8.25 100 100 175
5 yr to <8 yr 7.25 7.50 7.50 8.50 100 100 125
8 yr to <10 yr 7.50 7.75 7.75 8.75 100 100 125
Source: Company, RCML Research

Fig 7 - Hike in lending rates to neutralize the impact of higher deposit rates
Increase in BPLR Increase in Base Rate
Hike in lending rate and faster re- State Bank of India 25 bps 10 bps
pricing of assets to help margins in Punjab National Bank 75 bps 100 bps
Q3FY11
Bank of Baroda 75 bps 100 bps
Bank of India 75 bps 100 bps
Union Bank 50 bps 100 bps
ICICI Bank 50 bps 25 bps
Source: RCML Research

Fig 8 - PSU Banks could report higher slippages in line with Q2FY11
We believe that slippages could remain (%)
FY10 Q1FY11 Q2FY11
at elevated levels for some PSU Banks in 5.0
Q3FY11
4.0

3.0

2.0

1.0

-
UNBK

DBNK
PNB

AXSB
BOI
BOB
SBIN

Source: Company, RCML Research

4
 Banking Quarterly Preview 04 January 2011

Fig 9 - Higher commodity prices could put pressure on inflation

Inflation has moderated but remains (%)
higher than RBI’s target; sharp increase 12
in oil and commodities prices is likely to
10
put further pressure on inflation
8

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Nov-10
May-05

May-06

May-07

May-08

May-09

May-10
-2

Source: Company, RCML Research

Fig 10 - Comparative valuations

Average Average
CMP MCAP P/BV (x) P/E (x) EPS growth CASA Target
RoE (%) RoA (%) Reco
(Rs) (Rs bn) (Rs)
FY11E FY12E FY11E FY12E FY10-12E FY10-12E FY10-12E FY10
PSU Banks
SBIN 2,736 1,737 2.3 2.0 14.6 11.7 27.5 16.6 1.0 47.3 3,200 BUY
SBIN # 2,084 1,323 1.9 1.6 11.5 9.1 28.0 17.5 1.0 47.3 2,548
PNB 1,221 385 1.9 1.6 8.3 6.6 21.8 26.0 1.4 40.8 1,375 BUY
BOB 878 320 1.9 1.6 8.5 7.0 22.5 24.6 1.2 29.6 975 BUY
BOI 439 230 1.5 1.3 8.3 6.9 38.7 18.1 0.9 27.8 480 HOLD
CBK 649 266 1.7 1.4 7.2 6.4 17.2 25.6 1.2 29.1 560 HOLD
UNBK 332 168 1.6 1.3 7.7 5.8 17.6 24.3 1.1 31.7 400 BUY
OBC 394 99 1.1 1.0 6.4 5.2 29.2 18.6 1.0 25.0 490 BUY
CRPBK 622 89 1.3 1.1 6.3 5.4 19.1 22.0 1.1 31.3 660 HOLD
DBNK 115 33 1.1 0.9 5.7 4.8 16.5 22.3 0.9 36.0 BUY
Private Banks
ICICIBC 1,104 1,268 2.2 2.1 24.0 18.7 27.7 9.7 1.3 41.7 1,060 HOLD
ICICIBC # 860 988 2.3 2.1 19.8 15.3 29.5 12.1 1.4 41.7 819
HDFCB 2,346 1,088 4.4 3.8 28.0 21.6 29.9 17.3 1.6 52.0 2,475 HOLD
AXSB 1,348 553 2.9 2.5 17.1 13.3 27.9 19.3 1.6 46.7 1,575 BUY
YESB 306 106 2.9 2.4 15.4 12.2 33.8 20.6 1.5 10.5 350 HOLD
Speciality Finance
HDFC 732 1,071 6.2 5.5 31.1 26.1 19.3 21.1 2.7 750 HOLD
HDFC # 499 730 7.9 6.4 22.6 19.0 22.7 34.8 2.7 517
LICHF 193 91 10.9 9.1 50.0 41.7 28.6 23.9 2.0 1,575 BUY
DEWH 274 29 1.9 1.6 12.6 9.1 28.0 20.4 1.9 370 BUY
SHTF 780 176 3.7 3.0 14.8 12.4 23.9 27.7 3.9 950 BUY
Source: RCML Research #Adj. for subsidiaries

5
 Banking Quarterly Preview 04 January 2011

Companies
Fig 11 - Axis Bank
Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 16,865 13,491 25.0 16,151 4.4 Loan book growth likely to remain strong at 36%
YoY
Net revenues 27,734 23,372 18.7 26,483 4.7 Margins could decline from Q2FY11 levels due

PPP 15,882 13,746 15.5 14,864 6.9 to the sharp increase in wholesale rates
Expect delinquencies to come off from H1FY11
PAT 8,128 6,560 23.9 7,351 10.6 levels of 1.9%

Fig 12 - Bank of Baroda

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 21,047 16,012 31.4 20,381 3.3
NII growth to be supported by 29% YoY growth
Net revenues 27,697 22,609 22.5 27,194 1.8 in advances
PPP 16,579 12,650 31.1 16,567 0.1 Margins likely to sustain at Q2FY11 level
No major surprises expected on asset quality
PAT 10,229 8,325 22.9 10,193 0.3

Fig 13 - Bank of India

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 17,992 14,948 20.4 17,761 1.3
Expect advances to grow in line with industry
Net revenues 23,938 20,664 15.8 23,605 1.4
NIMs likely to remain stable
PPP 13,736 11,308 21.5 13,795 (0.4) Asset quality likely to remain stable
PAT 6,395 4,065 57.3 6,166 3.7

Fig 14 - Canara Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 20,519 14,778 38.8 20,033 2.4 Advances to grow by 25% YoY
Net revenues 26,019 22,591 15.2 25,029 4.0 Lower net revenue growth expected due to
sharp decline in treasury profits YoY
PPP 14,930 14,700 1.6 14,158 5.5 PAT likely to decline YoY on account of higher
PAT 9,695 10,526 (7.9) 10,079 (3.8) operating expenses

Fig 15 - Corporation Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 7,257 5,994 21.1 7,152 1.5 Advances likely to grow by 29% YoY (above
industry level growth of 24-25%)
Net revenues 9,744 8,511 14.5 9,414 3.5 NIMs could remain under pressure due to sharp

PPP 5,882 5,516 6.6 5,735 2.6 increase in wholesale rates

Lower other income and higher operating
PAT 3,283 3,050 7.7 3,517 (6.7) expenses to restrict PAT growth

Fig 16 - Dena Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 4,825 2,830 70.5 4,653 3.7 Business likely to grow at 30% YoY (much
ahead of the industry’s 18–20%)
Net revenues 6,044 4,162 45.2 5,842 3.5
Slippages to decline from Q2FY11 levels
PPP 3,330 1,977 68.4 3,256 2.2 PAT to decline sequentially primarily due to
PAT 1,584 1,345 17.8 1,606 (1.4) provisions towards second pension liability

6
 Banking Quarterly Preview 04 January 2011

Fig 17 - Dewan Housing Finance

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 883 571 54.6 811 8.9
Disbursements likely to grow by 60% YoY
Net revenues 1,258 898 40.1 1,186 6.1
Margins to remain stable at ~3%
PBT 828 525 57.8 774 6.9 Asset quality to remain stable
PAT 621 402 54.6 580 7.0

Fig 18 - HDFC
Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 10,309 8,544 20.7 10,195 1.1
Disbursements and loan book to grow by +20%
Net revenues 12,650 10,580 19.6 12,527 1.0 YoY
PPP 11,600 9,733 19.2 11,485 1.0 Spread to remain at ~2.2%
No surprises excepted on asset quality
PAT 8,187 6,713 22.0 8,075 1.4

Fig 19 - HDFC Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 26,256 22,239 18.1 25,263 3.9
Advances likely to grow at 30%+ YoY (much
Net revenues 37,029 30,769 20.3 34,870 6.2 ahead of the industry growth of 24%)
PPP 19,476 16,237 19.9 18,071 7.8 Other income could grow at ~25%
Asset quality to remain stable
PAT 10,034 8,185 22.6 9,121 10.0

Fig 20 - ICICI Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 23,455 20,581 14.0 22,044 6.4 Advances likely to grow by 13% YoY; NIMs
stable QoQ
Net revenues 40,350 37,312 8.1 37,823 6.7 Operating expenses to increase QoQ due to full

PPP 23,711 23,688 0.1 22,119 7.2 impact of BoR merger

Asset quality stable; we expect provisioning
PAT 13,112 11,011 19.1 12,363 6.1 expenses to decline further during the quarter

Fig 21 - LIC Housing Finance

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
Disbursements to grow by 25% YoY; loan book
NII 3,142 2,280 37.8 3,051 3.0
to grow by 35%; NIMs could decline by ~10
bps to 2.8%
Net revenues 3,666 2,748 33.4 3,696 (0.8)
Gross NPA to improve from Q2FY11 levels
PPP 3,141 2,323 35.2 3,191 (1.6) We are not factoring in higher provisioning
expenses on dual rate schemes (as required by
NHB)
PAT 2,205 1,536 43.5 2,342 (5.9)

Fig 22 - Oriental Bank of Commerce

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 10,481 8,729 20.1 10,771 (2.7) Tepid loan growth likely at ~18% YoY due to
the high base of Sep-09
Net revenues 13,035 11,106 17.4 12,912 1.0
NIMs likely to decline by ~20bps from Q2
PPP 8,058 6,228 29.4 8,060 (0.0) levels due to the sharp rise in wholesale rates
PAT 3,745 2,894 29.4 3,976 (5.8)

7
 Banking Quarterly Preview 04 January 2011

Fig 23 - Punjab National Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 30,882 23,291 32.6 29,767 3.7 Strong NII growth expected driven by 25%+
YoY advances growth
Net revenues 38,006 30,601 24.2 36,950 2.9
NIMs to decline by ~15–20bps QoQ
PPP 21,739 18,182 19.6 21,002 3.5 Delinquencies to remain at elevated levels,
PAT 11,205 10,113 10.8 10,746 4.3 leading to higher provisions

Fig 24 - State Bank of India

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 83,067 63,163 31.5 81,149 2.4 Expect strong NII growth driven by ~19% YoY
advances growth and low base of Q3FY10
Net revenues 121,352 96,820 25.3 121,201 0.1
NIMs to decline by 5–7bps QoQ
PPP 62,852 46,181 36.1 63,570 (1.1) Expect delinquencies to remain at Q2 level,
PAT 27,967 24,791 12.8 25,014 11.8 leading to higher provisions

Fig 25 - Shriram Transport Finance

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
Net operating income 7,944 5,905 34.5 7,754 2.5 Disbursements to remain at Q2FY11 levels;
AUM to grow by 18% to Rs 331bn
PPP 5,999 4,603 30.3 5,725 4.8
NIMs to remain healthy at ~8% on AUM
PAT 3,103 2,370 31.0 2,990 3.8 Provisioning expenses at ~0.4% of AUM

Fig 26 - Union Bank of India

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 15,758 10,647 48.0 15,358 2.6 NII growth would be supported by 23% growth
in advances and YoY improvement in NIMs
Net revenues 20,753 15,294 35.7 20,455 1.5
However, delinquencies would remain high (in
PPP 12,654 9,142 38.4 11,306 11.9 line with management guidance)
PAT 5,885 5,341 10.2 3,034 94.0 Higher provisions to restrict PAT growth

Fig 27 - Yes Bank

Y/E March (Rs mn) Q3FY11E Q3FY10 % YoY Q2FY11 % QoQ Comments
NII 3,217 2,109 52.5 3,132 2.7 Runaway credit growth coupled with stable
NIMs to aid strong NII growth YoY
Net revenues 4,725 3,387 39.5 4,442 6.4 Expect robust fee income growth QoQ driven by

PPP 3,026 2,162 40.0 2,814 7.5 higher fees from the financial market segment
Asset quality to remain stable, leading to lower
PAT 1,802 1,259 43.1 1,763 2.3 provisions YoY

8
 Banking Quarterly Preview 04 January 2011

Coverage Profile

By recommendation By market cap (US$)

(%) (%)
80 80 66
62
60 60

40 30 40 32

20 8 20
2
0 0
Buy Hold Sell > $1bn $200mn - $1bn < $200mn

Recommendation interpretation

Recommendation Expected absolute returns (%) over 12 months

Buy More than 15%

Hold Between 15% and –5%

Sell Less than –5%

Recommendation structure changed with effect from March 1, 2009

Expected absolute returns are based on share price at market close unless otherwise stated. Stock recommendations are based on absolute upside (downside) and have a
12-month horizon. Our target price represents the fair value of the stock based upon the analyst’s discretion. We note that future price fluctuations could lead to a temporary
mismatch between upside/downside for a stock and our recommendation.

Religare Capital Markets Ltd

th
4 Floor, GYS Infinity, Paranjpe ‘B’ Scheme, Subhash Road, Vile Parle (E), Mumbai 400 057.

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