Equity Research

Investment Idea – PCG Research

City Union Bank

Key Highlights

Superior NIMs due to its unparalleled lending franchise Well capitalised Balance Sheet
Improving C/I ratio helps company to maintain its return Steady Loan Growth
ratios Huge MSME lending opportunities
Lower stressed assets with a near nil watch list

Date: 15-April-2019

INDUSTRY ADD ON DIPS TO

Banks Rs. 197-188

CMP TARGET
Rs. 197.2 Rs. 236 Rs. 165

RECOMMEND TIME HORIZON

ed ed
Buy at CMP and add on declines 4 -5 quarters

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 Equity Research
Investment Idea – PCG Research

Company Profile:

City Union Bank Ltd (CUB) is a South India based mid-sized bank with a legacy of over 100 years. Based
HDFC Scrip Code out of Tamil Nadu, it has a network of 616 branches with 552 branches concentrated in southern India and
BSE Code 532210 426 branches in Tamil Nadu alone. A professionally managed bank with no identifiable promoters, CUB
mainly caters to the retail/wholesale traders with a granular asset profile. With a workforce of 5,443
NSE Code CUB employees (Average age < 30 years), CUB caters majorly to the southern region of India and has
Bloomberg CUBK maintained a dominant presence in this region.
Price on Apr 15 2019 197.2
Investment rationale:
Equity Capital (cr) 73.45
Face Value (Rs) 1  Superior NIMs due to its unparalleled lending franchisee
 Well capitalised Balance Sheet
Eq- Share O/S (cr) 73.45  Steady Loan Growth
Market Cap (Rs cr) 14,682  Huge MSME lending opportunities
 Improving C/I ratio helps company maintain its return ratios
Book Value (Rs) 63  Lower stressed assets with a near nil watch list
Avg.52 Wk Volume 821660
52 Week High 208.4 Concerns:

52 Week Low 157  Regional concentration may dent profitability in event of unforeseen circumstances.
Red flag Price Level 165  Competition from other larger private sector Banks for the MSME Business opportunity.
 Maintaining Superior Assets Quality.
PCG Risk Rating * Yellow
View and Valuation:
Shareholding Pattern % (Dec 31, 2018)
Institutions 50.81 CUBK is our preferred regional (and amongst mid-tier) bank as a result of its (1) Conservative management,
49.19 (2) Superior NIMs due to its unparalleled lending franchise, (3) Well capitalised B/S , (4) Steady operating
Non Institutions
efficiency, (4) Lower stressed assets with a near nil watch list and (5) Huge MSME lending opportunities
Total 100.00 and (6) Superior return ratios across cycles. We have estimated around 16% CAGR in NII, 17% CAGR in
earning and 20% CAGR in loan book between FY18-21E. We estimate its RoAE and RoAA to improve to
15.6% and 1.54% respectively in FY21E.

FUNDAMENTAL ANALYST Currently, it trades at ~2.8x FY20E and 2.4x FY21E adjusted Book Value (ABV). Given the consistent growth
Nisha Sankhala and controlled asset quality, we believe the bank will demand higher valuation compared to other peers.
nishaben.shankhala@hdfcsec.com We recommend CUB a BUY at CMP Rs. 197 and add on dips to Rs. 188 for the price Target of Rs. 236 over
the next 4 to 5 Quarters.

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 Equity Research
Investment Idea – PCG Research

Investment Rationale:
Key Highlights
Superior NIMs due to its unparalleled lending franchise

 CUB is the oldest private sector bank in For the past few quarters now, CUB has been in a position to maintain NIM in the range of 4-4.5% which
India with a history of more than 100 is comparable to few of the well-established banks of the country. This is really commendable considering
CASA Ratio at just 22-24% levels. The major reason behind this high NIM level is the cushion provided
years.
by the dips in CoF and rise in the CD (Credit Deposit) ratio. Also, company has focused on the high yield
SME/trader segment which has helped it up its interest income. In the last quarter also company has
 It has Superior NIMs among the peers due achieved 4.41% (+10bps QoQ) margin. The improvement was led by slower rise in CoF (8bps) due to
to its unparalleled lending franchise. higher SA growth and re-pricing of TD in 2Q and a faster (19bps) rise in yield on assets. Management
also attributed higher growth in avg. loans as one of the drivers for NIM improvement.
 Loan Book of CUB is growing at an
excellent rate of 20% between FY08-18 CUB’s focus on the MSME and trader segments, commendable customer loyalty, 65% of the book
consisting of high yielding W/C loans, higher proportion of floating rate book (95%) will insulate NIMs
and going ahead also we expect same
from a rise in CoF. Despite conservative management guidance, we have maintained our NIM
kind of growth rate. Despite this
assumptions at ~4% over FY19-21E.
spectacular growth rate the Average
Gross Non performing Asset remain below
2%. Bank is also well capitalized to fund
this growth. NIM (Net Interest Margin) Trend
Yield Cost NIM (%) RHS
 Currently it is trading at around 2.8x 16.0 5.0
FY20E and 2.4x FY21E adjusted Book 14.0
4.0
Value. Given the consistent growth and 12.0
10.0 3.0
controlled asset quality it will demand
8.0
higher valuation compared to other peers. 2.0
6.0
4.0
1.0
 We recommend CUB a BUY at CMP Rs. 197 2.0
and add on Dips of Rs. 188 for TP of Rs. - -
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
236 over the next 4 to 5 Quarters.

Source: Company, HDFC Sec Research

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Investment Idea – PCG Research

Well capitalised Balance Sheet

Capital position continues to remain strong with CAR at 14.8% / tier-I CAR at 14.4% and will supplement balance sheet growth. This is to help
bank grow its borrowing and lending activity without dilution in near to midterm. This indicates a good growth phase for the bank in the coming
fiscals.

Steady Loan Growth

Loan Book of CUB is growing at an excellent rate of 20% between FY08-18. In 9M FY19 also bank has managed to grow its advances by 18% YoY.
The management has guided for an 18-20% loan growth for next few years. We have factored in a loan CAGR of 20.8% over FY19-21E; despite
this spectacular growth rate the Average Gross Non performing Asset remain below 2%. This shows management’s experience and capacity to
take calculated risk.

Huge MSME lending opportunities

Recent Government’s focus to build job opportunities has open up new gates for the MSME sector as this is the highest job provider in country after
Agriculture. The steps taken by government for the support of sector includes (1) MUDRA lending scheme (2) reducing corporate tax rate for
companies with annual turnover below Rs 2.5bn (in FY17) to 25% (the limit was Rs 0.5bn earlier) (3) Rs 38bn allocated towards credit support,
capital, credit subsidy and innovation in the MSME segment for FY19E (4) Credit guarantee scheme for micro and small enterprises covers collateral
free credit. 51% of CUB’s loan book is towards MSME (including retail trade and wholesale trade) so CUB has a huge opportunities lying ahead.

Some PSU Banks are still under PCA (Prompt Corrective Action) and NBFCs having liquidity crunch have slowed lending to this segment. This
presents huge opportunity for CUB as with low competition CUB can cherry pick the Clients and can increase the market share.

Because of high risk perception like lack of financial transparency, survival risk and lack of collateral MSME have to pay high rate. So the margin
for this business is also very high.

Improving C/I ratio helps company maintain its return ratios

CUB has managed to keep C/I ratio around 40-42% since past many years compared to that of the other peer banks at around 60%. The main
reason that helped maintain such low C/I ratio has been the high NIM earned by CUB and further by the higher operational leverage witnessed by
it with growing loan book. Also, Bank’s non-interest income inclusive of various fees has been improving and the same is expected to continue in
the coming quarters.

Apart from improving on its costs directly, the ATM, POS, Card and Android platform data indicates superior digital franchise, a key distinctive
advantage. CUB has been able to successfully transfer its branch transactions to non-branch channels. About three years ago, 60% of transactions
happened via non-branch channels but this has now moved up to 85% thereby reducing cost. Furthermore, this also releases branch personnel to
focus on business promotion activities. Lowest C/I ratio translates into higher after tax profits and better return ratios justifying the higher valuations
at which bank trades.

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Investment Idea – PCG Research

Lower stressed assets with a near nil watch list

CUB’s GNPAs inched up 5% QoQ to Rs 8.9bn (2.91%) led by higher slippages of Rs 1.65bn (2.2% ann.) and lower reductions (Rs 597mn, down
~9% QoQ). Higher slippages were largely due to a singular exposure of Rs 800mn to the paper sector. Despite this CUBK’s n et stressed assets
(NNPA + restr.) were stable QoQ at 1.74%. A near nil watch-list, conservative management and lower exposure to stressed sectors bolster our
confidence in CUB’s asset quality. Our slippage assumption stands at 1.8% over FY19-21E.

Slippage Ratio NIL Restructured Book

Slippage (Rs mn) Ann (%) LHS Restructured loans (Rs bn) % of Loans RHS
4,000 10.0 3.5 1.8
3,500 9.0 1.6
3.0
8.0 1.4
3,000 2.5
7.0 1.2
2,500 6.0 2.0 1.0
2,000 5.0 0.8
1.5
1,500 4.0
0.6
3.0 1.0
1,000 0.4
2.0 0.5
500 0.2
1.0
- -
0 -

1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19

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

Risk & Concerns:

 Regional concentration may dent profitability in event of unforeseen circumstances.

 Competition from other larger private sector Banks for the MSME Business opportunity.

 Maintaining Assets Quality is the key risk across the whole segment in India. With high MSME exposure and in an event of economic
downturn, company may end up with a large bundle of stressed assets and thus bring down its profitability.

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Investment Idea – PCG Research

View & Valuation:

CUB is our preferred regional (and amongst mid-tier) bank as a result of its (1) Conservative management, (2) Superior NIMs due to its
unparalleled lending franchise, (3) Well capitalised B/S , (4) Steady operating efficiency, (4) Lower stressed assets with a near nil watch list and
(5) Huge MSME lending opportunities and (6) Superior return ratios across cycles. We have estimated around 16% CAGR in NII, 17% in earnings
and 20% CAGR in loan book over FY18-21E. We estimate its RoAE and RoAA to improve to 15.6% and 1.54% respectively in FY21E.

Currently, it trades at around 2.8x FY20E and 2.4x FY21E adjusted Book Value. Given the consistent growth and controlled asset quality, we
believe that it will demand higher valuation compared to its peers. We recommend CUB as a BUY at CMP Rs. 197 and add on dips to Rs. 188 for
TP of Rs. 236 over next 4-5 Quarters.

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Investment Idea – PCG Research

Five Quarters at a Glance

Rs mn 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 YoY Growth QoQ Growth
Net Interest Income 3,651 3,679 3,748 3,980 4,181 14.5% 5.0%
Non-interest Income 1,217 1,198 1,291 1,186 1,198 -1.5% 1.1%
Treasury Income 344 301 193 213 208 -39.5% -2.3%
Operating Income 4,868 4,878 5,039 5,166 5,379 10.5% 4.1%
Operating Expenses 1,904 1,935 2,045 2,206 2,311 21.4% 4.7%
Pre-Provision Profits 2,965 2,943 2,994 2,959 3,069 3.5% 3.7%
Other Provisions 857 862 778 680 788 -8.1% 15.9%
PBT 2,108 2,081 2,216 2,280 2,281 8.2% 0.1%
Provision For Tax 560 560 600 600 500 -10.7% -16.7%
PAT 1,548 1,521 1,616 1,680 1,781 15.1% 6.0%
Balance Sheet items/ratios
Deposits 313 329 336 345 355 13.3% 2.8%
CASA % 22.3 24.2 23.9 23.6 23.9 155 bps 22 bps
Advances 261 282 282 298 306 17.4% 2.9%
CD Ratio (%) 83.2 86.0 84.0 86.2 86.3 304 bps 4 bps
CAR (%) 14.9 16.2 16.1 15.1 14.8 -14 bps -32 bps
Tier I (%) 14.5 15.8 15.6 14.7 14.4 -8 bps -32 bps
Profitability
Yield On Advances (%) 11.37 11.19 10.86 10.86 11.0 -41 bps 10 bps
Cost Of Deposits (%) 6.24 6.22 6.15 6.1 6.2 -7 bps 10 bps
NIM (%) 4.41 4.36 4.24 4.32 4.41 0 bps 9 bps
Cost-Income Ratio (%) 39.1 39.7 40.6 42.7 43.0 385 bps 25 bps
Tax Rate (%) 26.6 26.9 27.1 26.3 21.9 -465 bps -440 bps
Asset quality
Gross NPA (Rs mn) 8,598 8,566 8,511 8,479 8,919 3.7% 5.2%
Net NPA (Rs mn) 4,478 4,748 4,735 4,978 5,276 17.8% 6.0%
Gross NPAs (%) 3.30 3.03 3.02 2.85 2.91 -39 bps 6 bps
Net NPAs (%) 1.74 1.70 1.70 1.69 1.74 0 bps 5 bps
Delinquency Ratio (%) 2.06 2.18 1.78 1.88 2.19 14 bps 32 bps
Coverage Ratio Calc. (%) 47.9 44.6 44.4 41.3 40.8 -707 bps -44 bps
Coverage Ratio Reported (%) 65.0 64.0 65.0 65.0 65.0 0 bps 0 bps
Restructured Book (%) 0.04 0.03 0.03 0.02 - -4 bps -2 bps
Source: Company, HDFC Sec Research

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Investment Idea – PCG Research

Loan Mix: Sequentially Stable Diversified Lending Mix

Traders Agri MSME Gold Large corp Others Beverage Other inds
Tobacco Automobiles (leather,
8 10 11 12 0.1 0.7 wood
15 14 15 15 16 17 17 18 17 18 19 18 19 18 19 Engg
8 7 7 6
6 7 7 7 7 7 7 cement
7 7 7 7 7 7 7 7 1.4
17 16 15 14 13 11 10 10 10 gems
9 9 9 9 9 9 8 9 9 9 Rubber
jewels)
Plastics
1.0
31 31 32 34 34 35 36 34 35 34 34 30 34 34 35 34 34 34 34 1.1

Chemicals
19 18 17 17 16 15 14 16 16 15 15 18 15 15 14 14 15 15 15 0.9
Textiles
17 18 18 18 17 18 18 18 18 18 17 18 17 18 17 18 17 17 17 Food
10.5
Processing
0.5
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16

3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18

4QFY18
1QFY19
2QFY19
3QFY19
2QFY16

3QFY18
Paper
Products
2.2
Metals
Source: Company, HDFC sec Research 5.0
Source: Company, HDFC sec Research

Loan Book to post 20% CAGR between FY18-21 NPA Story

6,00,000 12,000 3.50

10,000 3.03 3.00

4,83,251
5,00,000 2.83
8,000 2.71
3,97,738 2.51 2.50

Rs. mn
4,00,000 2.41
6,000 2.29

%
3,31,448
2.00
Rs mn

2,78,528 4,000 1.71

3,00,000 1.7
2,38,327
2,10,569 2,000 1.53 1.50
1.32
1.25
2,00,000 1.17
- 1.00
FY16 FY17 FY18 FY19E FY20E FY21E
1,00,000
Gross NPLs Net NPLs
Gross NPLs (%) Net NPLs (%)
0
FY16 FY17 FY18 FY19E FY20E FY21E
Source: Company, HDFC sec Research

Source: Company, HDFC sec Research

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Investment Idea – PCG Research

Net Interest Income Profitability Trajectory

25,000 9,478
10,000 19
22,150
9,000 18
17.75 8,040
20,000 18,974 8,000 17.8917
6,874 16.96
16,333 7,000 16.11
5,920 16
14,303 6,000
15,000 5,028

Rs mn
15
Rs mn

5,000 4,447

%
11,988
14
9,810 4,000
10,000 13 13.06 13
3,000
2,000 12
5,000 1,000 11
0 10
FY16 FY17 FY18 FY19E FY20E FY21E
0
FY16 FY17 FY18 FY19E FY20E FY21E PAT Growth (%)

Source: Company, HDFC sec Research

Source: Company, HDFC sec Research

ROAA (%)
1.59
1.57
1.57

1.54

1.51
1.50

FY16 FY17 FY18 FY19E FY20E FY21E

Source: Company, HDFC sec Research

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 Equity Research
Investment Idea – PCG Research

Income Statement Balance Sheet

(Rs mn) FY17 FY18 FY19E FY20E FY21E (Rs mn) FY17 FY18 FY19E FY20E FY21E
Interest Earned 31,738 34,024 39,232 47,139 57,267 SOURCES OF FUNDS
Interest Expended 19,750 19,721 22,900 28,165 35,117 Share Capital 601 665 731 731 731
Net Interest Income 11,988 14,303 16,333 18,974 22,150 Reserves 35,101 40,968 47,601 55,359 64,505
Other Income 4,839 5,321 5,205 5,418 5,762 Shareholders' Funds 35,702 41,632 48,332 56,090 65,236
Fee Income (CEB) 439 495 569 693 815 Savings 46,297 51,705 63,511 74,033 86,420
Treasury Income 1,078 938 1,250 1,000 850 Current 24,092 27,862 34,224 38,987 42,666
Total Income 16,827 19,624 21,537 24,392 27,912 Term Deposit 2,30,768 2,48,959 2,96,847 3,59,073 4,43,826
Total Operating Exp 6,890 7,546 8,640 9,719 11,083 Total Deposits 3,01,157 3,28,526 3,94,581 4,72,092 5,72,912
Employee Expense 2,981 3,159 3,636 4,029 4,557 Borrowings 5,310 17,359 9,691 13,785 17,260
PPOP 9,937 12,078 12,898 14,672 16,829 Other Liabilities & Provs. 10,538 11,855 13,814 15,845 18,060
Provisions & Contingencies 3,010 4,178 3,703 3,698 3,985 Total Liabilities 3,52,708 3,99,372 4,66,418 5,57,812 6,73,468
Prov. for NPAs 2,595 3,045 3,703 3,698 3,985
PBT 6,928 7,900 9,195 10,974 12,843 APPLICATION OF FUNDS
Provision for Tax 1,900 1,980 2,322 2,934 3,366 Cash & Bank Balance 28,790 26,364 31,797 38,506 47,821
PAT 5,028 5,920 6,874 8,040 9,478 Investments 70,315 78,791 86,540 1,03,281 1,22,137
Source: Company, HDFC sec Research G-Secs 66,906 76,344 83,848 1,00,320 1,18,879
Advances 2,38,327 2,78,528 3,31,448 3,97,738 4,83,251
Fixed Assets 2,151 2,231 2,276 2,390 2,509
Other Assets 13,126 13,458 14,357 15,898 17,749
Total Assets 3,52,708 3,99,372 4,66,418 5,57,812 6,73,468
Source: Company, HDFC sec Research

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Investment Idea – PCG Research

Key Ratios
FY17 FY18 FY19E FY20E FY21E FY17 FY18 FY19E FY20E FY21E
VALUATION RATIOS ASSET QUALITY
EPS (Rs) 8.4 8.9 9.4 11.0 13.0 Gross NPLs (Rs mn) 6,820 8,565 9,125 10,113 11,171
Earnings Growth (%) 13.1 17.7 16.1 17.0 17.9 Net NPLs (Rs mn) 4,083 4,748 4,367 4,983 5,647
BVPS (Rs) 59.4 62.6 66.1 76.7 89.2 Gross NPLs (%) 2.83 3.03 2.71 2.51 2.29
Adj. BVPS (Rs) 52.6 55.5 60.1 69.9 81.5 Net NPLs (%) 1.71 1.70 1.32 1.25 1.17
DPS (Rs) 0.3 0.3 0.3 0.4 0.5 Slippages (%) 2.14 2.22 1.90 1.80 1.70
ROAA (%) 1.51 1.57 1.59 1.57 1.54 Coverage Ratio (%) 61.0 64.0 71.1 70.4 68.5
ROAE (%) 15.2 15.3 15.3 15.4 15.6 Provision/Avg. Loans (%) 1.12 1.17 1.19 0.99 0.87
P/E (x) 23.5 22.1 21 17.9 15.2 ROAA TREE
P/ABV (x) 3.7 3.5 3.3 2.8 2.4 Net Interest Income 3.60% 3.80% 3.77% 3.71% 3.60%
Dividend Yield (%) 0.2 0.2 0.2 0.2 0.3 Non-interest Income 1.45% 1.42% 1.20% 1.06% 0.94%
PROFITABILITY Treasury Income 0.32% 0.25% 0.29% 0.20% 0.14%
Yield On Advances (%) 11.54 10.99 10.82 10.95 11.12 Operating Cost 2.07% 2.01% 2.00% 1.90% 1.80%
Yield On Investment (%) 8.06 7.01 7.00 7.00 7.00 Provisions 0.90% 1.11% 0.86% 0.72% 0.65%
Cost Of Funds (%) 6.82 6.05 6.11 6.33 6.53 Provisions For NPAs 0.76% 0.81% 0.84% 0.70% 0.62%
Cost of Deposits (%) 6.78 6.12 6.18 6.38 6.60 Tax 0.57% 0.53% 0.54% 0.57% 0.55%
Core Spread (%) 4.72 4.94 4.72 4.62 4.59 ROAA 1.51% 1.57% 1.59% 1.57% 1.54%
NIM (%) 3.94 4.16 4.11 4.00 3.86 Leverage (x) 10.0 9.7 9.6 9.8 10.1
OPERATING EFFICIENCY ROAE 15.2% 15.3% 15.3% 15.4% 15.6%
Cost/Avg. Asset Ratio (%) 2.1 2.0 2.0 1.9 1.8 Source: Company, HDFC sec Research
Cost-Income Ratio (Excl Treasury) 43.7 40.4 42.6 41.6 41.0
BALANCE SHEET STRUCTURE
Loan Growth (%) 13.2 16.9 19.0 20.0 21.5
Deposit Growth (%) 10.9 9.1 20.1 19.6 21.4
C/D Ratio (%) 79.1 84.8 84.0 84.3 84.4
Equity/Assets (%) 10.1 10.4 10.4 10.1 9.7
Equity/Advances (%) 15.0 14.9 14.6 14.1 13.5
CASA (%) 23.4 24.2 24.8 23.9 22.5
Capital Adequacy Ratio (CAR, %) 15.8 16.2 16.0 15.5 14.7
W/w Tier I CAR (%) 15.4 15.8 15.7 15.2 14.4
Source: Company, HDFC sec Research

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Investment Idea – PCG Research

Ratings Chart

R HIGH
E
T
U MEDIUM
R
N LOW
LOW MEDIUM HIGH
RISK

Ratings Explanation:

RATING Risk - Return BEAR CASE BASE CASE BULL CASE

IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 15% &
LOW RISK - LOW RATIONALE FRUCTFIES
BLUE PRICE CAN FALL 20% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
20% OR MORE
PRICE CAN RISE BY 15%
IF RISKS MANIFEST
IF INVESTMENT
MEDIUM RISK - IF RISKS MANIFEST PRICE CAN FALL 20% &
RATIONALE FRUCTFIES
YELLOW HIGH RETURN PRICE CAN FALL 35% IF INVESTMENT
PRICE CAN RISE BY
STOCKS OR MORE RATIONALE FRUCTFIES
35% OR MORE
PRICE CAN RISE BY 30%
IF RISKS MANIFEST
IF INVESTMENT
IF RISKS MANIFEST PRICE CAN FALL 30% &
HIGH RISK - HIGH RATIONALE FRUCTFIES
RED PRICE CAN FALL 50% IF INVESTMENT
RETURN STOCKS PRICE CAN RISE BY
OR MORE RATIONALE FRUCTFIES
50% OR MORE
PRICE CAN RISE BY 30%

# Explanation of Red-flag Price level: If stock prices starts sustaining below red-flag level, the premise of the investment needs to be reviewed. Risk averse
investors should exit the stock and preserve capital. The downside of following red-flag level is that if the price decline turns out to be temporary and if
it recovers subsequently you won’t be able to participate in the gains.

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Investment Idea – PCG Research

Price Chart

210

200

190

180

170

160

150

140

Rating Definition:

Buy: Stock is expected to gain by 10% or more in the next 1 Year.

Sell: Stock is expected to decline by 10% or more in the next 1 Year.

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Investment Idea – PCG Research

Research Analyst: Nisha Sankhala (nishaben.shankhala@hdfcsec.com)

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) 3075 3450 Compliance
Officer: Binkle R. Oza Email: complianceofficer@hdfcsec.com Phone: (022) 3045 3600

SEBI Registration No.: INZ000186937 (NSE, BSE, MSEI, MCX) |NSE Trading Member Code: 11094 | BSE Clearing Number: 393 | MSEI Trading Member Code: 30000 | MCX Member Code: 56015 | AMFI Reg No. ARN -13549, PFRDA Reg.
No - POP 04102015, IRDA Corporate Agent Licence No.-HDF2806925/HDF C000222657, Research Analyst Reg. No. INH000002475, CIN-U67120MH2000PLC152193.

Disclosure:
I, (Nisha Sankhala, MBA), 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.
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