India Equity Research

Banking and Financial Services

Result Update

AXIS BANK

Strong balance sheet expansion; margins squeeze

Miss on NII undone by better asset quality performance

In Q4FY11, Axis Bank reported NII of INR 17 bn (up 16.5% Y-o-Y), below our estimate (INR 18.2 bn) because of a higher than expected contraction in margins (down 37bps) due to a sharp squeeze on the cost of funds (up 77bps). Balance sheet expansion was aggressive with loan book growing 37% Y-o-Y/15% Q-o-Q and deposits growing 33.9% Y-o-Y/22% Q-o-Q. Headline asset quality continued to impress with slippages reined in at 0.7% of advances (culminating into lower NPL provisions) and drawing support from better recoveries. PAT came in at INR 10.2 bn (up 33.4% Y-o-Y/14.4% Q-o-Q) - in line with our estimate.

April 21, 2011

Reuters: AXBK.BO Bloomberg: AXSB IN

EDELWEISS 4D RATINGS Absolute Rating Rating Relative to Sector Risk Rating Relative to Sector Sector Relative to Market BUY Outperformer Medium Equalweight

Note: Please refer last page of the report for rating explanation

Significant upward re-pricing of deposits leads to lower NII

A strong upward re-pricing of deposits pulled the margins down by 37bps to 3.44%. After reporting a 13bps improvement in margins in Q3FY11, led by a muted increase in cost of funds, during the current quarter, the bank witnessed a sharp squeeze on the cost of funds (up 77 bps). A strong credit growth necessitated the dependence on wholesale funds as the accretion in retail term deposit could not keep pace (daily average CASA balances were down 400 bps to 37%). Going forward, with the decline in wholesale rates, we believe that a large part of the cost increase is behind us. However in the near term the impact of
MARKET DATA CMP 52-week range (INR) Share in issue (mn) M cap (INR bn/USD mn) : : : : INR 1,448 1,609 / 1,147 410.5 594 /13,413 1,694.8

Avg. Daily Vol. BSE/NSE (000): SHARE HOLDING PATTERN (%) Promoters* : : : : :

37.2 5.1 37.7 20 NIL

MFs, FIs & Banks lower yielding PSL will put pressure on margins. ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. FIIs

Outlook and valuations: maintain BUY

During the quarter, the banks higher than expected margin decline came in as a negative surprise with the aggressive balance sheet expansion acting as the key culprit. As against the popular belief of a severe asset quality stress, given its relatively higher bent towards SME, Axis Bank has come out the cycle relatively unscathed with GNPL being around impressive levels of 1% and NNPLs at 0.26%. Given the pressure on cost, we expect NIMs to come off by 20 bps in FY12. However, over FY11-13, we expect the bank to deliver an impressive earnings growth of 25% CAGR on account of a lower NPL provisioning and higher operating efficiency translating into strong return ratios: ROA to the tune of ~1.6% over FY11-13 and ROE of 20%. The bank is currently trading at 2.7 FY12E and 2.2x FY13E adjusted book and 13.9 FY12E and 11.2x FY13E earnings. We maintain BUY recommendation on the stock and rate it the Sector Outperformer on a relative basis.

Others * Promoters pledged shares (% of share in issue) PRICE PERFORMANCE (%) Stock 1 month 3 months 12 months 14.1 12.7 23.2

Nifty EW BFSI Index 8.9 2.5 11.9 10.8 7.9 25.4

Nilesh Parikh +91 22 4063 5470 nilesh.parikh@edelcap.com

Financials Year to March Net int. inc. (INR mn) Net profit (INR mn) Adj. B/V per share (INR) Diluted EPS (INR) Price/ Adj Book (x) Price/ PPOP (x) Diluted P/E (x) 24.5 18.6 32.1 21.4 14.5 Q411 17,010 10,201 Q410 14,601 7,649 Growth % 16.5 33.4 Q311 17,331 8,914 Growth % (1.9) 14.4 FY11 65,629 33,884 455.8 82.5 3.2 10.2 17.6 FY12E 80,322 42,649 537.1 103.9 2.7 8.2 13.9
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Kunal Shah +91 22 4040 7579 kunal.shah@edelcap.com Vivek Verma +91 22 4040 7576 vivek.verma@edelcap.com

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Banking and Financial Services

Faster than expected business expansion
Balance sheet expansion was aggressive with the loan book growing 37% Y-o-Y/15% Qo-Q and deposits growing 33.9% Y-o-Y/22% Q-o-Q; consequently the CD ratio eased off by 4% pts to 75%. Over the past few quarters, Axis Bank had been leveraging its improving liability franchise and strong pricing power to increase the exposure in the large corporate segment with a minimal impact on margins. However, during the quarter, focus shifted to SME (up 25%) and agri (up 61%) as the bank had to meet its PSL obligations. Tractions continued to remain strong in the retail segment (10% Q-o-Q, 33.3% Y-o-Y), though the management maintained its focus on secured lending (housing and auto). During the quarter, term deposit growth (up 24%) outpaced the overall deposits growth, resulting in ~100bps decline in CASA ratio (to 41%). The management has guided for a 25% loan book growth over FY12 (1.4x the system growth).

Asset quality shows signs of improvement

Slippages during the quarter came off to INR 2.48 bn (0.7% of advances) from INR 3.34 bn in Q3FY11 (1.1% of advances). The management expects slippages to remain in control going forward. Recoveries came in at INR 1.22 bn toeing the previous two quarters. Write-offs moderated during the quarter to INR 100 mn (against INR 870mn in Q3 and INR 2.8 bn average during H1), signaling relatively a lower deterioration in the book. Gross NPLs increased 8% Q-o-Q to INR 15.9 bn (1.01%) while net NPAs declined 6% Q-o-Q to INR 4.1 bn (0.26%). Provision coverage (ex write-offs) remained stable (at 74%) but including write-offs, it declined by 179bps to 80.9%. Due to an account upgradation, outstanding restructured advances contracted to INR 19 bn (1.36%) of advances in Q4 from INR 21.2bn in Q3. Restructuring during the quarter stood at INR 1.08 bn (0.08%). During the quarter, INR 350 mn of restructured book slipped while INR 2.5 bn got repaid. During the quarter the bank recovered INR 1.6 bn from written-off ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. accounts- a key earning support.

Strong growth in fees income

Axis Banks core fees income grew 39% Y-o-Y (adjusting for change in accounting policy for BG commissions for Q4FY11) and 38% Q-o-Q. Tracking the loan book growth, fees income from agri and SME grew 73% Q-o-Q. On the back of a strong growth in the third party distribution (a seasonal phenomenon), retail fees income jumped 10% Q-o-Q and 45% Y-o-Y (on Y-o-Y basis, the benefit came from a smaller base as during Q4FY10, the bank exited bancassurance tie-up with Metlife).

Other highlights
Wholesale deposits formed 65% of term deposits Tier I stood at 9.41% and CAD at 12.65%; management has guided that bank would not require growth capital over FY12 Bank has decreased exposure to BBB rated loans by 2% pts to 23% while it increased exposure to AA and A by an equivalent amount. Risk weighted assets stood at INR 1.96 tn Management highlighted that they received in-principle approval for the merger with Enam .

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Axis Bank
Table 1: Business growth ahead of the system (%) Q110 Q210

Q310 848 4.6 12.5 1,139 (1.5) 7.7 74.5

Q410 1,043 23.1 27.9 1,413 24.1 20.4 73.8

Q111 1,086 4.1 39.1 1,475 4.4 33.4 73.6

Q211 1,106 1.8 36.5 1,569 6.4 35.7 70.5

Q311 1,235 11.7 45.7 1,558 (0.7) 36.9 79.3

Q411 1,424 15.3 36.5 1,892 21.5 33.9 75.3

Advances (INR bn) Advances growth Q-o-Q (%) Advances growth Y-o-Y (%) Deposits (INR bn) Deposit growth Q-o-Q (%) Deposit growth Y-o-Y (%) CD ratio (%)

781 (4.2) 27.7 1,105 (5.8) 24.2 70.7

810 3.8 17.7 1,156 4.6 12.4 70.1

Table 2: Focus on SME/agri to meet the PSL obligation As % of total advances Q110 Q210

Q310 49.1 19.5 9.2 22.3 71.0

Q410 50.3 17.5 12.2 20.0 70.8

Q111 55.4 15.5 9.7 19.4 71.0

Q211 57.6 15.2 8.2 19.0 73.0

Q311 57.1 13.8 8.7 20.4 67.0

Q411 53.3 15.0 12.2 19.5 68.0

Large corporate Mid corporate and SME Agriculture Retail Housing (% of retail)
Table 3: CASA at 41% (%)

49.8 19.1 9.7 21.5 65.0

49.5 19.6 8.8 22.2 67.0

Q110 40.0 40.0 514 715

Q210 42.8 41.8 519 724

Q310 45.6 45.1 527 740

Q410 46.7 43.0 541 788

Q111 40.2 38.7 587 744

Q211 41.5 38.5 544 737

Q311 42.3 39.4 547 774

Q411 41.1 39.3 549 734

CASA Retail deposits (% of total dep.) Retail dep. / branch (INR mn) Retail bus. / branch (INR mn)

ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. Table 4: NIMs contract sequentially (%) Q110 Q210 Q310 Q410 Q111 Q211

Q311 4.8 3.8 42.3

Q411 5.6 3.4 41.0

Cost of funds NIM CASA

6.1 3.3 40.1

5.4 3.5 42.8

4.8 4.0 45.6

4.5 4.1 46.7

4.6 3.7 40.2

4.8 3.7 41.5

Table 5: Asset quality continues to improve Q110

Q210 11.3 23.6 1.2 4.2 13.5 0.5 63.2 2.6

Q310 11.7 3.7 1.2 4.3 3.1 0.5 63.4 1.8

Q410 13.2 12.3 1.1 4.2 (2.5) 0.4 68.2 0.9

Q111 13.4 1.7 1.1 4.1 (1.3) 0.4 69.2 1.2

Q211 13.6 1.6 1.1 4.1 (1.0) 0.3 70.0 1.4

Q311 14.8 8.8 1.1 3.9 (5.8) 0.3 74.0 0.8

Q411 16.0 7.9 1.0 4.1 6.4 0.3 74.3 0.3

Gross NPA (INR bn) Growth Q-o-Q Gross NPA (%) Net NPA (INR bn) Growth Q-o-Q Net NPA (%) Provison coverage (%) Credit costs (annualised), (%)

9.2 2.0 1.0 3.7 12.2 0.4 59.9 1.8

Table 6: Slippages continue to decline

(INR mn) Incremental slippage Incremental slippage (%) Recoveries and upgrades writeoffs

Q111 4,210 1.6 1,210 2,770

Q211 4,460 1.6 1,300 2,940

Q311 3,340 1.1 1,260 870

Q411 2,480 0.7 1,220 100

Source: Company, Edelweiss research

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Banking and Financial Services

Table 7: Restructured INR 1.08bn of loans during the quarter (INR mn) Q110 Q210 Q310

Q410 1,603 0.2 22,861 2.2

Q111 300 0.0 21,510 2.0

Q211 600 0.1 20,610 1.9

Q311 1,630 0.1 21,170 1.7

Q411 1,080 0.1 19,300 1.4

Incremental restructuring % of advances Restructured book Restructured book (% of advances)

Table 8: Fees income break-up As % of total fee income

9,960 1.3 25,201 3.2

3,901 0.5 23,632 2.9

870 0.1 23,090 2.7

Q110* 25.5 6.3 14.1 2.8 30.0 21.3 13.4 47.8

Q210* 25.5 6.3 14.1 2.8 30.0 21.3 11.2 48.1

Q310* 23.1 6.7 11.4 1.5 25.4 31.9 (7.3) 42.3

Q410* 28.5 8.3 9.4 5.1 28.1 20.7 (5.5) 39.0

Q111 28.3 4.6 11.7 2.5 25.5 27.4 7.2 39.8

Q211 32.2 5.2 9.9 1.7 24.9 26.1 3.2 39.0

Q311 34.8 5.7 9.4 1.5 28.1 20.5 11.1 39.8

Q411 31.5 7.2 7.7 1.4 22.4 29.9 26.4 46.0

*re-stated

Corporate banking Agri and SME Banking Business banking Capital markets Retail banking Others Q-o-Q growth in non int. inc. Fee inc. to total inc.

Table 9: Other ratios %

Q110 41.3

Q210 41.1

Q310 41.2

Q410 42.2

Q111 42.3

Q211 43.9

Q311 42.4 33.7 8.9

Q411 42.2 34.9 9.4

Cost-income ratio

Tax rate 34.7 34.1 34.5 35.3 33.6 33.6 ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. Tier-1 9.4 11.4 11.8 11.2 10.3 9.8

Source: Company, Edelweiss research

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Axis Bank
Financials snapshot Year to March Interest on advances Interest on investments Interest on other resources Interest income Interest expenses Net interest income Other income Fee income Operating expenses Staff expense Other opex Pre prov Op profit (PPoP) Investment gains Provisions Profit before tax Provision for tax Profit after tax Diluted EPS (INR) Ratios NII / GII Provisions / PPOP Tax rate Balance sheet data Advances (INR bn) Deposits (INR bn) Investments (INR bn) Ratios CASA Ratio (%) Capital adequacy (%) NIM(%) CD ratio (%) Asset Quality Gross NPA (INR mn) Net NPA (INR mn) Net NPA(%) Gross NPA(%) Provisioning coverage (%) 15,994 4,104 0.3 1.0 74.3 13,180 4,190 0.4 1.1 68.2 21.4 (2.1) 14,829 3,855 0.3 1.1 74.0 7.9 6.4 15,994 4,104 0.3 1.0 74.3 20,834 6,330 0.4 1.0 69.6 26,925 8,462 0.4 1.1 68.6 41.0 12.7 3.4 75.3 46.7 15.8 4.1 73.8 42.3 13.8 3.8 79.3 41.1 15.8 3.2 84.5 44.9 17.4 3.1 88.4 45.5 16.7 3.1 89.0 1,424 1,892 720 1,043 1,413 560 36.5 33.9 28.6 1,235 1,558 596 15.3 21.5 20.7 1,424 1,892 720 1,794 2,277 912 2,261 2,846 1,111 39.0 14.4 34.9 48.9 15.8 35.3 45.2 20.6 33.7 43.3 22.0 34.0 38.7 42.6 19.2 33.5 38.7 41.3 19.3 33.5 Cost - income 42.2 42.4 42.7 ISIEmergingMarketsPDF in-boa01 42.2 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. from Q411 30,626 12,131 636 43,667 26,657 17,010 14,504 13,924 13,306 3,960 9,346 17,628 580 2,544 15,664 5,463 10,201 24.5 Q410 20,750 8,560 272 29,885 15,284 14,601 9,335 8,305 10,098 3,338 6,761 12,808 1,030 2,019 11,819 4,171 7,649 18.6 Growth (%) 47.6 41.7 133.8 46.1 74.4 16.5 55.4 67.6 31.8 18.7 38.2 37.6 (43.7) 26.0 32.5 31.0 33.4 32.1 Q311 26,006 11,668 482 38,383 21,052 17,331 11,477 10,127 12,224 3,962 8,262 15,235 1,350 3,139 13,446 4,532 8,914 21.4 Growth (%) 17.8 4.0 32.0 13.8 26.6 (1.9) 26.4 37.5 8.9 (0.0) 13.1 15.7 (57.0) (19.0) 16.5 20.5 14.4 14.5 FY11 104,031 44,387 3,130 151,548 85,919 65,629 46,321 40,281 47,794 16,139 31,655 58,116 6,040 12,800 51,357 17,473 33,884 82.5 FY12E 151,218 52,715 3,753 207,686 127,363 80,322 55,753 50,253 58,001 20,807 37,194 72,574 5,500 13,941 64,134 21,486 42,649 103.9 (INR mn) FY13E 193,063 65,264 3,326 261,653 160,267 101,386 65,081 60,081 68,735 25,034 43,701 92,732 5,000 17,891 79,842 26,748 53,094 129.3

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Banking and Financial Services

Company description
Axis Bank is the third-largest private sector bank in India in terms of asset size, with a balance sheet of INR 2.5 tn. It has a network of over 1000 branches and extension counters across the country. The bank earns substantial fee income from transaction and merchant banking activities. The key promoter UTI-I (special undertaking) holds 24%, LIC holds 9.6%, and the rest is widely held by FIIs and public.

Investment theme
Axis Bank has registered buoyant loan growth on a balanced portfolio skewed towards corporate advances than retail (as compared with its private peers). Retail advances contributed 20% to the total loan portfolio. Thus, it has better scope for aggressively expanding across segments where it has a low presence. It is also spreading across geographies and targeting presence in more than 75% of Indias districts in the next five years. The banks loan book is expected to grow at a brisk pace of 25% plus in FY10-12E. Rapidly growing franchise and new product offerings (viz., credit cards) will further drive growth in retail fee income. The bank is also intensifying efforts to penetrate the remittance business by aggressively spreading its international operations. Other key contributors to fee income will be project advisory, debt syndication, and third party distribution of insurance.

Key risks n g i

g M a r k e t s P D F i n Change in management may affect the pace of growth and profitability in the near term.
Deterioration of macro environment can result in higher slippages and slow down business growth.

6 D o

Edelweiss Securities Limited w n l o a d e d b y i n b o a 0 1 f r o m

Axis Bank

Financial Statements
Income statement Year to March Interest income Interest expenses Net interest income Non interest income - Fee & forex income - Misc. income - Investment profits Net revenues Operating expense - Employee exp - Other opex Preprovision profit Provisions - Loan loss provisions - Investment depreciation - Other provisions PBT Taxes PAT FY09 108,355 71,493 36,862 28,969 25,348 818 2,802 65,831 28,582 9,977 18,606 37,249 9,394 9,032 1,078 (716) 27,855 9,701 18,154 FY10 116,380 66,335 50,045 39,458 30,334 2,022 7,102 89,503 37,097 12,558 24,539 52,406 13,888 14,126 (222) (15) 38,517 13,372 25,145 FY11E 151,548 85,919 65,629 46,321 38,954 1,328 6,040 111,950 47,793 16,139 31,654 64,157 12,800 11,800 500 500 51,357 17,473 33,884 FY12E 207,686 127,363 80,322 55,753 48,726 1,527 5,500 136,075 58,000 20,807 37,193 78,075 13,941 13,741 100 100 64,134 21,486 42,649 (INR mn) FY13E 261,653 160,267 101,386 65,081 58,326 1,756 5,000 166,467 68,734 25,034 43,700 97,733 17,891 17,291 500 100 79,842 26,748 53,094 129.3 17.0 14.5

Diluted EPS 50.4 62.0 82.5 103.9 ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. DPS 10.0 12.0 15.0 17.0 Payout ratio (%) Growth ratios (%) Year to March NII growth Fees growth Opex growth PPOP growth PPP growth Provisions growth PAT growth Operating ratios (%) Year to March Yield on advances Yield on investments Yield on assets Net interest margins Cost of funds Cost of deposits Cost of borrowings Spread Cost-income Tax rate FY09 10.6 7.6 8.7 3.0 6.0 6.1 7.7 2.7 43.4 34.8 FY10 8.6 6.7 7.3 3.1 4.4 4.4 5.6 2.9 41.4 34.7 FY11E 8.4 6.5 7.4 3.2 4.4 4.4 6.1 2.9 42.7 34.0 FY12E 9.4 6.5 7.9 3.1 5.0 5.2 6.5 2.9 42.6 33.5 FY09 42.6 65.5 32.6 70.5 67.3 62.1 69.5 FY10 35.8 19.7 29.8 31.5 40.7 56.4 38.5 FY11E 31.1 28.4 28.8 28.3 22.4 (16.5) 34.8 FY12E 22.4 25.1 21.4 24.9 21.7 16.4 25.9 23.2 21.3 20.0 18.0

FY13E 26.2 19.7 18.5 27.8 25.2 25.8 24.5

FY13E 9.5 6.5 8.0 3.1 5.0 5.2 6.8 3.0 41.3 33.5

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Banking and Financial Services

Balance sheet As on 31st March Liabilities Equity capital Reserves Net worth Sub bonds/pref cap Deposits Borrowings Other liabilities Total Assets Loans Investments Gilts Others Cash & equi Fixed assets Other assets Total Balance sheet ratios (%) Credit growth Deposit growth EA growth 35.7 33.9 35.0 23.7 20.4 22.8 35.1 33.9 34.3 25.9 20.3 22.6 25.9 25.0 25.1 22.0 89.0 45.5 1.1 0.4 68.6 1.4 3.1 16.1 11.3 658.5 277,272 186,031 150,709 10,729 36,912 1,477,220 341,959 217,789 152,064 12,224 39,011 1,806,479 450,405 269,511 214,087 22,732 46,321 2,427,134 577,917 334,062 183,896 22,756 148,412 3,061,382 696,121 414,638 244,302 22,432 197,315 3,835,676 815,567 1,043,431 1,424,078 1,794,339 2,260,867 3,602 98,546 102,148 53,344 1,173,741 101,855 46,133 1,477,220 4,053 156,393 160,446 71,558 1,413,002 100,137 61,335 1,806,479 4,106 185,883 189,988 88,558 1,892,378 174,121 82,089 2,427,134 4,106 220,840 224,946 118,558 2,276,564 236,121 205,194 3,061,382 4,106 266,243 270,349 148,558 2,846,068 318,121 252,580 3,835,676 FY09 FY10E FY11E FY12E (INR mn) FY13E

SLR ratio 21.7 22.6 22.8 23.0 ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 2011-04-25 02:54:51 EDT. DownloadPDF. C-D ratio 81.4 83.7 84.5 88.4 Low-cost deposits Gross NPA ratio Net NPA ratio Provision coverage Incremental slippage Net NPA / Equity Capital adequacy - Tier 1 Book value ROA decomposition (%) Year to March Net interest income/Assets Fees/Assets Investment profits/Assets Net revenues/Assets Operating expense/Assets Provisions/Assets Taxes/Assets Total costs/Assets ROA Equity/Assets ROAE FY09 3.0 2.1 0.2 5.3 (2.3) (0.8) (0.8) (3.8) 1.5 7.6 19.1 FY10E 3.1 2.0 0.4 5.6 (2.3) (0.9) (0.8) (4.0) 1.6 8.2 19.2 FY11E 3.2 2.0 0.3 5.4 (2.3) (0.6) (0.8) (3.8) 1.6 8.5 19.3 FY12E 3.1 1.9 0.2 5.2 (2.2) (0.5) (0.8) (3.6) 1.6 7.9 20.6 43.1 0.9 0.4 63.6 1.3 3.2 13.7 9.3 283.6 46.7 1.1 0.4 68.2 1.9 2.6 15.8 11.2 395.8 41.1 1.0 0.3 74.3 1.3 2.2 17.4 12.8 462.8 44.9 1.0 0.4 69.6 1.4 2.8 16.7 11.9 547.9

FY13E 3.1 1.8 0.2 5.1 (2.1) (0.5) (0.8) (3.5) 1.6 7.6 21.4

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Axis Bank
Valuation metrics Year to March Diluted EPS (INR) EPS growth (%) Book value per share (INR) Adjusted book value/share (INR) Diluted P/E (x) Price/ BV (x) Price/ ABV (x) Dividend yield (%) Price to income (x) Price to PPOP (x) FY09 50.4 69.3 283.6 277.2 28.8 5.1 5.2 0.7 11.7 15.2 FY10E 62.0 23.1 395.8 388.6 23.4 3.7 3.7 0.8 10.3 13.0 FY11E 82.5 33.0 462.8 455.8 17.6 3.1 3.2 1.0 8.3 10.2 FY12E 103.9 25.9 547.9 537.1 13.9 2.6 2.7 1.2 6.8 8.2 FY13E 129.3 24.5 658.5 644.1 11.2 2.2 2.2 1.2 5.7 6.4

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Banking and Financial& INTERPRETATION RATING Services

Company Allahabad Bank Bank of Baroda HDFC ICICI Bank Infrastructure Development Finance Co Ltd Karnataka Bank LIC Housing Finance Oriental Bank Of Commerce Punjab National Bank Rural Electrification Corporation South Indian Bank State Bank of India Union Bank Of India

Absolute reco BUY BUY HOLD BUY HOLD BUY REDUCE BUY BUY BUY BUY HOLD BUY

Relative reco SO SO SU SO SU SO SP SU SO SO SO SP SO

Relative risk H L L L M L M H L L H L L

Company Axis Bank Federal Bank HDFC Bank Indian Overseas Bank ING Vysya Kotak Mahindra Bank Manappuram General Finance Power Finance Corp Reliance Capital Shriram City Union Finance SREI Infrastructure Finance Syndicate Bank Yes Bank

Absolute reco BUY BUY HOLD HOLD HOLD BUY HOLD BUY HOLD BUY UNDER REVIEW BUY BUY

Relative reco SO SO SP SU SP SP SU SO SP SO SO SP SO

Relative Risk M M L H H L M L M H L H M

ABSOLUTE RATING
Ratings Buy Expected absolute returns over 12 months More than 15%

ISIEmergingMarketsPDF in-boa01 from 171.161.56.16 on 5% 2011-04-25 02:54:51 EDT. DownloadPDF. Hold Between 15% and Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Sector Outperformer (SO) Sector Performer (SP) Criteria Stock return > 1.25 x Sector return Stock return > 0.75 x Sector return Stock return < 1.25 x Sector return Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe within the sector

RELATIVE RISK RATING

Ratings Low (L) Medium (M) High (H) Criteria Bottom 1/3rd percentile in the sector Middle 1/3rd percentile in the sector Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING
Ratings Overweight (OW) Equalweight (EW) Criteria Sector return > 1.25 x Nifty return Sector return > 0.75 x Nifty return Sector return < 1.25 x Nifty return Underweight (UW) Sector return < 0.75 x Nifty return

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Edelweiss Securities Limited

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