SELL - HDFC securities Oswal... · market share. Given industry fund raising environment was tepid, investment banking revenues remained soft in FY19. However IB revenues surprised

RESULT REVIEW 4QFY19 13 MAY 2019

Motilal Oswal Financial Services SELL

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters

Sailing against the wind Led by treasury gains and IB deal win, MOFS (ex-MOHL) reported APAT of Rs 1.38bn (+21.7% vs. est). Performance at the relatively structural businesses (broking + AMC) was in-line as difficult fund raising and highly competitive broking environment persist. Despite MOFS being a high quality franchise, tough macros compel our SELL rating with TP of Rs 650 (20x/10x AMC/Capital Markets FY21E PAT).

HIGHLIGHTS OF THE QUARTER AMC (ex. WM): Revenues/EBITDA/PAT was in-line at

Rs 1,752/672/430mn (-3.8/+16.9/+27.6% YoY). On back of sub-dued equity markets, MF/PMS AUMs grew 4.7/3.9% QoQ to Rs 200/160bn and net AUM accretion declined to Rs 2bn (-93.3/-75.0% YoY/QoQ). Management suggested that TER cuts will impact MF revenues by ~6bps of AuM.

Capital Markets (in. WM): Revenues/EBITDA/PAT at 3,213/991/443mn (-13.3/-25.8/-31.6% YoY), were ahead of estimates. Competitive intensity continues as evidenced by broking market share/yields declined 175/83bps YoY to 2.6%/1.5bps. Large deal win resulted in strong IB revs, which at Rs 146mn were 2.8x vs est.

Treasury: Led by a sharp equity rally (Nifty 4QFY19: ~7%), PAT printed Rs 528bn i.e. +27% vs. est.

MOHL: 4QFY19 NII/PAT at Rs 514/81mn (vs. Rs 567/ (234)mn in 4QFY18), displaying a profit after 4 qtrs. Net slippages during 4QFY19 improved materially to Rs 160mn (-81.6/-78.4% YoY/QoQ), while disbursements were weak at Rs 0.8bn (-55.6/+33.3% YoY/QoQ). We are encouraged by the seasoning of the book and lower slippages in 4Q, but remain watchful on scale-up.

We have increased our multiple for MOHL to 0.7x (+40%), resulting in an increased value of Rs 34/share.

Outlook: Limited upside to stock as macros remain challenging.

STANCE On the AMC side we remain concerned about fund raising, fee renegotiations and regulatory clampdown, while on broking we are wary of increased competition. Lastly, despite much of the negatives in MOHL being factored in, the business needs to display scalability. Challenging macros compels us to retain SELL. Key Risks: Positive macro environment driving up fund raising and broking environment and stronger scale up in MOHL.

FINANCIAL SUMMARY: MOFS (ex-MOHL) (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) FY18 FY19P FY20E FY21E Revenue 4,761 3,921 21.4 4,505 5.7 19,837 17,186 18,829 20,753 EBITDA 1,944 833 133.4 1,828 6.3 7,762 6,131 7,535 8,393 EBITDA Margin (%) 40.8 21.2 1,959bps 40.6 25bps 39.1 35.7 40.0 40.4 PAT 1,384 358 286.6 1,345 2.9 5,543 4,350 5,542 6,157 EPS 9.3 2.4 286.6 9.1 2.9 38.3 30.1 38.3 42.5 P/E (x) 17.4 22.7 17.8 16.0 ROIC (%) 25.7 14.9 16.8 16.8

Source: Company, HDFC sec Inst Research estimates

INDUSTRY FINANCIAL SERVICES CMP (as on 13 May 2019) Rs 685 Target Price Rs 650 Nifty 11,148

Sensex 37,091

KEY STOCK DATA

Bloomberg MOFS IN

No. of Shares (mn) 145

MCap (Rs bn) / ($ mn) 100/1,415

6m avg traded value (Rs mn) 82

STOCK PERFORMANCE (%)

52 Week high / low Rs 990/545

3M 6M 12M

Absolute (%) 20.3 6.4 (26.5)

Relative (%) 17.4 0.9 (30.9)

SHAREHOLDING PATTERN (%) Dec-18 Mar-19 Promoters 70.3 70.3 FIs & Local MFs 1.0 1.6 FPIs 13.9 13.3 Public & Others 14.8 14.9 Pledged Shares Nil Nil Source : BSE

Madhukar Ladha, CFA [email protected] +91-22-6171-7323 Keshav Binani [email protected] +91-22-6171-7325

mailto:[email protected]

MOTILAL OSWAL FINANCIAL SERVICES : RESULT REVIEW 4QFY19

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MOFS (ex-MOHL) Results Summary: 4QFY19 (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ(%) Adj. Revenues 4,761 3,921 21.4 4,505 5.7 Total costs 3,293 3,621 (9.1) 3,170 3.9 EBITDA 1,944 833 133.4 1,828 6.3 PAT 1,401 376 272.6 1,354 3.5 Less: interco adjustments (17) (18) (5.6) (9) 88.9 APAT 1,384 358 286.6 1,345 2.9 EPS 9.3 2.4 286.6 9.1 2.9 Source: Company, HDFC sec Inst Research PAT Break-up (segment wise) Business segment (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) Broking 362 421 (14.0) 336 7.7 Investment banking 55 149 (63.1) (22) NM Wealth management 29 66 (56.1) 25 16.0 Capital market 446 636 (29.9) 339 31.6 Asset management 344 317 8.5 337 2.1 Private equity 77 49 57.1 102 (24.5) Total asset management 421 366 15.0 439 (4.1) Fund based business 528 (609) NM 563 (6.2) Con. APAT ex. MOHL before interco adj 1,395 393 255.0 1,341 4.0 Less: intercompany adjustments (11) (35) (68.6) 4 (375.0) Con. APAT ex. MOHL 1,384 358 286.6 1,345 2.9 MOHL 81 (219) NM (947) NM Consolidated APAT 1,465 139 954.0 398 268.1 Source: Company, HDFC sec Inst Research

Beat on APAT was lead by lumpy gains in fund based business and strong IB performance. Investment banking revenues were significantly ahead of our expectation of Rs 53mn. Asset management business (Including PE) continues to grow as PAT grew 15% YOY to Rs 421mn MOHL turned profitable this quarter leading to high delta in overall profitability.


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Segment wise financial highlights Asset Management (Includes Private equity) Particulars (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) Revenues 1,752 1,821 (3.8) 1,687 3.9 Total costs 1,080 1,246 (13.3) 1,006 7.4 EBITDA 672 575 16.9 681 (1.3) PBT 669 567 18.0 680 (1.6) PAT 430 337 27.6 449 (4.2) Source: Company, HDFC sec Inst Research Capital Markets (Includes Broking, IB, distribution and wealth management) Particulars (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) Revenues 3,213 3,708 (13.3) 3,000 7.1 Total costs 2,213 2,375 (6.8) 2,164 2.3 EBITDA 991 1,335 (25.8) 836 18.5 PBT 684 915 (25.2) 493 38.7 PAT 443 648 (31.6) 342 29.5 Source: Company, HDFC sec Inst Research Treasury (Fund based) Particulars (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) Revenues 535 (845) NM 565 (5.3) PAT 528 (609) NM 563 (6.2) Source: Company, HDFC sec Inst Research MOHL Particulars (Rs mn) 4QFY19 4QFY18 YoY (%) 3QFY19 QoQ (%) NII 514 567 (9.3) 523 (1.7) Other income 39 61 (36.1) 33 18.2 Total income 553 628 (11.9) 556 (0.5) Expenses 237 286 (17.1) 274 (13.5) PPoP 316 342 (7.6) 282 12.1 Provisions/write offs 223 651 (65.7) 1,778 (87.5) PBT 93 (309) NM (1,496) NM PAT 81 (234) NM (970) NM Source: Company, HDFC sec Inst Research

Asset management reported in line revenues. AUM growth was sub-dued due to tepid market conditions and weak investment performance. Lead by rally in equity markets (Nifty 4QFY19 Return: ~7%), PAT came in at Rs 528mn. Housing finance turned profitable after 4 quarters.


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MF/PMS/AIF AUMs grew 9.9/6.7/16.7% YoY Falling SIP market share

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

IB revenues remained soft in FY19 Broking: Blended yields continue to slide downwards


Total AUM increased 9.0/4.3% YoY/QoQ to Rs 388bn. Despite increase in industry SIP inflows, MOAMC SIP inflows have remained constant leading to loss in market share. Given industry fund raising environment was tepid, investment banking revenues remained soft in FY19. However IB revenues surprised us positively in 4QFY19. The company has been losing its ADTV market share. However its cash/F&O mix at 9:91% as against 3/97% of the industry in FY19 has helped in arresting yield decline

182 194 189 191 200

150 154 148 154 160

24 26 26 27

28

-

50

100

150

200

250

300

350

400

4QFY18 1QFY19 2QFY19 3QFY19 4QFY19

MF AUM PMS AUM AIF AUM

1.5 1.7 1.7 1.7 1.6

2.3 2.3

2.2

2.1

2.0

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

1.4

1.5

1.5

1.6

1.6

1.7

1.7

1.8


SIP Inflows (Rs bn) - LHS SIP market share (%) - RHS

212 151 34 50 146

(50.5)

(34.9)

(84.8)(88.9)

(31.1)

(100.0)

(90.0)

(80.0)

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

-

0

50

100

150

200

250


IB revenues (Rs mn) - LHS Growth YoY (%) - RHS

221 161 220 141 174

4.3

3.1 3.4

2.1 2.6

2.4 1.6 1.7 1.4 1.5

-0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

-

50

100

150

200

250


Broking ADTO (Rs bn) (ex prop)Calculated market share (%)


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MOHL: Book growth remained sub-dued in FY19 MOHL: NNPL remains high at 7.2%


Management guided for low double digit AUM growth is MOHL in FY20E.

48.6 48.0 46.0 44.0 43.6

1.8 0.7 0.8 0.6 0.8 -

10.0

20.0

30.0

40.0

50.0

60.0


Loan Book (Rs Bn) Disbursement (Rs Bn)

4.5

6.8 7.0

8.7 9.3

3.3

5.6 5.6

7.0 7.2

-1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10.0


GNPL (%) NNPL (%)


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Valuation Sum of the parts valuation

Business segments Metric FY19P FY20E FY21E Multiple (x)

Valuation (Rs mn) Valuation (Rs/share) FY19P FY20E FY21E FY19P FY20E FY21E

Broking and distribution PAT 1,874 2,017 2,171 10.0 18,738 20,166 21,715 127 136 147 AMC (Public and private) PAT 1,799 2,022 2,406 20.0 35,980 40,439 48,120 243 273 325 Investments/Treasury MTM value 26,541 27,123 30,633 0.8 21,233 21,699 24,506 143 147 166 Housing finance ABV 5,155 5,988 7,223 0.7 3,608 4,191 5,056 24 28 34 Total 79,559 86,495 99,397 537 584 671 Less: intersegment -13 -202 -195 15.0 -202 -3,025 -2,931 (1) (20) (20) Total 79,357 83,470 96,466 536 564 651 Source: Company, HDFC sec Inst Research

We have upgraded our multiples only for housing finance business from 0.5x to 0.7x ABV FY21E. We believe multiples will rerate only when equity flows improve considerably or downward pressure on broking yields eases.


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Assumptions Financial summary: Broking, IB and distribution (Includes wealth management) (Rs mn) FY17 FY18 FY19P FY20E FY21E Total revenue 8,163 12,218 11,786 12,128 12,830 EBITDA 2,415 3,899 3,144 3,354 3,587 PAT 1,592 2,581 1,874 2,017 2,171 Broking revenues 5,101 8,030 7,521 7,502 7,641 Growth (%) NA 57.4 (6.3) (0.3) 1.9 Broking yields (bps) calculated 2.4 2.4 1.7 1.7 1.6 Broking ADTV (Rs bn) 85 137 174 183 192 Growth (%) 44.7 60.4 27.2 5.0 5.0 Distribution revenues 970 1,430 1,000 1,177 1,392 Growth (%) NA 47.4 (30.1) 17.7 18.3 Distribution AUM (Rs bn) 44 75 96 106 121 Growth (%) 147.1 71.4 27.5 10.0 15.0 Yield (%) 3.1 2.4 1.2 1.2 1.2 Spread income 555 612 1,772 1,706 1,744 Growth (%) NA 10.1 189.7 (3.7) 2.2 Spreads on funding (%) 5.6 7.3 6.8 7.0 7.0 Interest income -T+5+LAS+MTF book 1,160 1,500 2,123 2,287 2,291 -Liened investments 39 40 666 706 741 Book Size (T+5+LAS+MTF) 7,250 11,500 14,910 13,676 14,964 Liened investments 680 9,019 9,752 10,240 10,752 Yield (%) 7.0 4.3 7.8 7.0 7.0 Wealth Management Revenue 720 992 1,088 1,314 1,599 Growth (%) 62 37.6 9.7 20.8 21.7 Wealth AUM (Rs bn) 101 147 175 214 259 Growth (%) 56.8 45.7 18.9 22.3 21.1 Net Sales (Rs bn) 18 27 24 22 24 Yield (%) 0.87 0.80 0.68 0.68 0.68 Investment banking Revenue 872 1,135 381 400 420 Growth (%) 250 30.1 (66.4) 5.0 5.0 Other revenues (56) 20 24 29 35 Source: Company, HDFC sec Inst Research

We have factored in a modest ADTV growth of 5% during FY20E-21E, while broking yields are expected to fall from 2.4bps in FY18 to 1.6bps in FY21E.


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Financial summary: Asset management & Private equity (Rs mn) FY17 FY18 FY19P FY20E FY21E Total revenue 4,597 6,498 6,890 7,506 8,913 EBITDA 1,404 2,420 2,782 3,085 3,661 PAT 989 1,650 1,799 2,022 2,399

1) Asset management (public equities) Revenue 3,403 5,175 5,786 6,304 7,459 Growth (%) 84 52.0 11.8 9.0 18.3 AUM (Rs bn) Mutual fund 93 182 200 238 282 PMS 105 150 160 192 229 AIF 5 24 28 30 32 AUM growth (%) MF 83.4 95.5 10.1 19.0 18.5 PMS 93.5 42.8 7.0 20.1 19.3 AIF - 347.8 15.8 7.9 6.1

As % of AAUM (bps) Revenues 221 185 156 149 149 Staff expenses 19 19 15 15 14 Brokerage expenses 130 92 66 63 64 Admin and other opex 23 14 12 11 11 Total exp 172 125 94 90 88 EBITDA 49 61 62 59 60 EBIT 49 60 62 59 60 NOPLAT 32 39 40 38 39 PBT 49 60 62 59 60 PAT 32 39 40 38 39

2) Private equity & Real estate funds Revenue 1,193 1,323 1,104 1,202 1,454 Growth (%) 156 10.9 (16.5) 8.9 21.0 Fee income 528 549 1,016 1,052 1,104 % of AuM 1.8 1.8 1.8 1.6 1.6 Carry income 665 1,107 88 150 350 AUM (Rs bn) 31 47 64 68 71 Growth (%) 9.9 52.7 36.3 5.5 4.4 Source: Company, HDFC sec Inst Research Note: Post 22nd October circular, the company reports MF revenues net of distributor commissions. We have restated FY18 MF revenues to net of distributor commissions. Thus FY17-18 revenues and cost are not directly comparable.

Since almost 100% of MF assets are equity which is the highest yielding class, overall yields are better than other AMCs. ~50% of AUM consists of alternative assets. This has also contributed to higher yields.


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Financial summary: MOHL (Rs mn) FY17 FY18 FY19P FY20E FY21E Total income 2,209 2,848 2,443 2,425 2,733 Net interest income 1,259 2,297 2,245 2,237 2,470 Pre-provision operating profit 1,379 1,765 1,408 1,316 1,572 PAT 821 315 -1,369 371 893

Loan Book 41,413 46,074 40,061 39,351 41,009 Growth (%) 98.4 11.3 (13.1) (1.8) 4.2 Disbursements 23,896 14,331 2,900 5,220 7,308 Growth (%) 31.4 (40.0) (79.8) 80.0 40.0 GNPA (Rs mn) 241 2,199 4,099 4,076 3,844 GNPA (%) 0.6 4.6 9.3 9.4 8.6 NNPA (Rs mn) 157 1,894 3,111 2,649 2,306 NNPA (%) 0.4 3.9 7.8 6.7 5.6 Source: Company, HDFC sec Inst Research Treasury (Fund based) (Rs mn) FY17 FY18 FY19E FY20E FY21E Revenue 1,493 2,270 591 1,762 1,841 EBITDA 1,298 2,048 613 1,742 1,821 PAT 873 1,584 612 1,619 1,692

AUM (Rs bn) 11.7 19.8 26.5 27.1 30.6 Yield (%) 12.8 14.4 2.5 6.6 6.4 Source: Company, HDFC sec Inst Research


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Change in estimates (ex-MOHL)

(Rs mn) FY20E FY21E

Revised Old Change (%) Revised Old Change (%)

Revenues 18,829 17,931 5.0 20,753 19,879 4.4 EBITDA 7,535 7,105 6.1 8,393 8,017 4.7 EBITDA margin (%) 40.0 39.6 40 40.4 40.3 11 PAT 5,542 5,419 2.3 6,157 6,079 1.3 RoE (%) 17.1 16.8 25 17.1 17.0 8 Source: Company, HDFC sec Inst Research estimates Estimate change (MOHL)

(Rs mn) FY20E FY21E

Revised Old Change (%) Revised Old Change (%) NII 2,237 2,249 (0.6) 2,470 2,383 3.6 PPoP 1,316 1,320 (0.3) 1,572 1,464 7.3 PAT 360 334 7.6 866 813 6.5 Source: Company, HDFC sec Inst Research estimates

Our revised estimates mean a FY20E/21E increase in EBITDA by 6.1/4.7% over our previous estimates. We believe bottoming out of PAT in FY19, while loan book growth to remain sub-dued.


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Income statement (ex-MOHL) (Rs mn) FY17 FY18 FY19P FY20E FY21E Net Revenues 12,555 19,837 17,186 18,829 20,753 Growth (%) 58.1 58.0 (13.4) 9.6 10.2 Employee Benefits Expenses 3,129 4,129 4,380 5,169 6,203 Operating Expenses 5,101 7,945 6,675 6,125 6,158 EBITDA 4,325 7,762 6,131 7,535 8,393 EBITDA Margin (%) 34.5 39.1 35.7 40.0 40.4 EBIDTA Growth (%) 39.9 13.6 (8.8) 12.2 1.1 Depreciation 295 311 176 211 253 EBIT 4,030 7,452 5,956 7,324 8,140 Other Income (includes treasury ) (232) (271) - - - Interest & Financial Charges - - - - - PBT 3,798 7,180 5,956 7,324 8,140 Tax 975 1,872 1,687 1,868 2,073 RPAT 2,823 5,308 4,268 5,456 6,067 Minority Interest (106) (98) 2 2 2 Profit/Loss of Associate Company 60 91 80 84 88 EO (Loss) / Profit net of tax 207 242 - - - APAT 2,984 5,543 4,350 5,542 6,157 APAT Growth (%) 131.3 85.7 (21.5) 27.4 11.1 AEPS 20.6 37.7 29.0 36.9 41.0 EPS Growth (%) 129.5 83.4 (23.1) 27.4 11.1

Source: Company, HDFC sec Inst Research

Balance sheet (ex-MOHL) (Rs mn) FY17 FY18 FY19P FY20E FY21E SOURCES OF FUNDS Share Capital 145 145 148 148 148 Reserves 16,213 26,323 30,507 34,057 37,818 Minority Interest 285 354 351 349 347 Total Shareholders Funds 16,643 26,822 31,007 34,555 38,313 Long-term Debt 2,500 2,000 2,000 2,000 2,000 Short-term Debt 10,187 12,283 13,000 12,000 13,000 Total Debt 12,687 14,282 15,000 14,000 15,000 Other Financial Liabilities & Provisions 1,092 1,749 1,554 1,702 1,876

Other Non Current Liabilities 17 17 17 18 19 Net Deferred Tax Liability 334 1,434 1,465 1,496 1,528 TOTAL SOURCES OF FUNDS 30,772 44,304 49,043 51,771 56,736 APPLICATION OF FUNDS Net Block 2,791 2,864 2,860 2,838 2,793 Non current Investments 18,080 29,827 31,707 34,353 37,259 Loans & Deposits 1,269 1,342 1,413 1,548 1,706 Other Non Current Assets 36 185 185 185 185 Total Non-current Assets 22,177 34,218 36,165 38,924 41,943 Current Investments 1,650 3,466 3,466 3,639 3,821 Debtors 12,511 10,358 7,063 7,738 8,529 Inventories 2 3 3 3 3 Cash & Equivalents 2,981 3,619 7,299 6,554 8,065 Loans & Advances 3,150 8,772 9,078 10,338 11,376 Other Current Assets 103 120 94 52 57 Total Current Assets 20,398 26,338 27,003 28,323 31,851 Creditors 10,087 13,185 11,771 12,897 14,215 Other Current Liabilities 1,715 3,067 2,354 2,579 2,843 Total Current Liabilities 11,802 16,252 14,125 15,476 17,057 Net Current Assets 8,595 10,086 12,877 12,847 14,793 TOTAL APPLICATION OF FUNDS 30,772 44,304 49,043 51,771 56,736



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Cash Flow (ex-MOHL) (Rs mn) FY17 FY18 FY19P FY20E FY21E Reported PBT 4,076 7,508 5,956 7,324 8,140 Non-operating & EO Items (527) (1,002) - - - Interest Expenses - - - - - Depreciation 295 311 176 211 253 Working Capital Change 2,332 4,628 1,371 (1,496) 796 Tax Paid (975) (1,872) (1,687) (1,868) (2,073) OPERATING CASH FLOW ( a ) 5,201 9,571 5,815 4,170 7,115 Net Capex (201) (384) (172) (188) (208) (Purchase)/sale of net operating financial assets (6,102) (7,067) (1,800) (2,735) (3,000)

Free Cash Flow (FCF) (1,102) 2,120 3,843 1,247 3,908 Investments - - - - - Non-operating Income INVESTING CASH FLOW ( b ) (6,303) (7,451) (1,972) (2,923) (3,208) Debt Issuance/(Repaid) 1,500 (500) - - - Interest Expenses - - - - - FCFE 398 1,620 3,843 1,247 3,908 Proceeds From Issue of Share Capital 429 208 1,102 - - Dividend (518) (1,190) (1,062) (2,138) (2,554) Others - - (203) 146 158 FINANCING CASH FLOW ( c ) 1,411 (1,483) (163) (1,992) (2,397) NET CASH FLOW (a+b+c) 310 637 3,680 (745) 1,511 Opening Cash & Equivalents 2,673 2,981 3,619 7,299 6,554 Closing Cash & Equivalents 2,982 3,619 7,299 6,554 8,065


Key Ratios (ex-MOHL) FY17 FY18 FY19P FY20E FY21E PROFITABILITY (%) EBITDA Margin 34.5 39.1 35.7 40.0 40.4 EBIT Margin 32.1 37.6 34.7 38.9 39.2 APAT Margin 23.8 27.9 25.3 29.4 29.7 RoE 19.7 25.9 15.2 17.1 17.1 Core RoCE 19.7 25.9 15.2 17.1 17.1 EFFICIENCY 19.8 25.7 14.9 16.8 16.8 Tax Rate (%) Asset Turnover (x) 25.7 26.1 28.3 25.5 25.5 Inventory (days) 4.5 6.9 6.0 6.6 7.4 Debtors (days) 0 0 0 0 0 Other Current Assets (days) 364 191 150 150 150 Payables (days) 3 2 2 1 1 Other Current Liab & Prov (days) 293 243 250 250 250 Working Capital (days) 50 56 50 50 50 Debt/EBITDA (x) 24 (106) (148) (149) (149) Net D/E 2.93 1.84 2.45 1.86 1.79 Interest Coverage 0.6 0.4 0.3 0.2 0.2 PER SHARE DATA AEPS (Rs/sh) 20.6 37.7 29.0 36.9 41.0 CEPS (Rs/sh) 22.9 40.4 31.3 39.7 44.3 DPS (Rs/sh) 5.5 8.5 6.1 12.3 14.7 BV (Rs/sh) 115.2 184.9 209.4 233.4 258.8 VALUATION P/E 32.0 17.4 22.7 17.8 16.0 P/BV 5.8 3.6 3.2 2.9 2.6 EV/NOPLAT 12.5 15.9 12.9 11.6 10.3 OCF/EV (%) 5.3 9.8 6.0 4.3 7.3 FCF/EV (%) (1.1) 2.2 4.0 1.3 4.0 FCFE/MCAP (%) 0.4 1.7 4.0 1.3 4.0 Dividend Yield (%) 0.8 1.2 0.9 1.8 2.1



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RECOMMENDATION HISTORY

Rating Definitions

BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 1-Mar-19 568 NEU 641

19-Mar-19 640 NEU 611 9-Apr-19 688 NEU 613 6-May-19 713 SELL 613

13-May-19 685 SELL 650

500600700800900

1,0001,1001,2001,300

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov-

18

Dec-

18

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

MOFS TP


Page | 14

Disclosure: We, Madhukar Ladha, CFA & Keshav Binani, CA authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. The area of operations of the above company mentioned in the report are similar to that of the research entity. Any holding in stock –No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from 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. This document is for information purposes only. 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HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE-INB/F/E 231109431, BSE-INB/F 011109437, AMFI Reg. No. ARN: 13549, PFRDA Reg. No. POP: 04102015, IRDA Corporate Agent License No.: HDF 2806925/HDF C000222657, SEBI Research Analyst Reg. 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