SELL

YES Bank (YES)

https://ultraviewer.et/en/own Banks MAY 01, 2021
load.html
RESULT
Sector view: Attractive

Pain declines but still elevated. Yes Bank reported a loss led by a sharp decline in CMP (`): 15
interest income due to interest reversal on recognition of fresh impairments and higher Fair Value (`): 11
provisions on these exposures. Deposit mobilization has improved which is positive but
BSE-30: 48,782
we are seeing volatile trends in asset quality (declined qoq) making it harder to predict
near term business direction and momentum. CET-1 at 11% is comfortable currently
but any fresh stress would be a negative outcome. Maintain SELL (FV unchanged).
YES Bank
Stock data Forecasts/valuations 2021 2022E 2023E
CMP(Rs)/FV(Rs)/Rating 15/11/SELL EPS (Rs) (1.4) (0.9) (0.1)
52-week range (Rs) (high-low) 32-11 EPS growth (%) 89.4 37.2 89.4
Mcap (bn) (Rs/US$) 365/5 P/E (X) (10.9) (17.3) (163.6) QUICK NUMBERS
ADTV-3M (bn) (Rs/US$) 1.8/0.1 P/B (X) 1.4 1.6 1.5
Shareholding pattern (%) BVPS 10.6 9.6 9.9  NII declined 23%
Promoters 0.0 RoE (%) (12.6) (6.8) (0.7)
yoy driven by
FPIs/MFs/BFIs 15.0/0.3/52.5 Div. yield (%) 0.0 0.0 0.0
interest reversals
Price performance (%) 1M 3M 12M NII (Rs bn) 74 70 69
Absolute (6.7) (7.6) (47.8) PPOP (Rs bn) 44 40 43
 Non-NPL stress at
Rel. to BSE-30 (5.3) (12.3) (64.0) Net profits (Rs bn) (35) (22) (2)
~9% of loans
Interest reversals and high credit costs push up losses
 Retain SELL with
Yes Bank reported a loss led by high interest reversals and provisions for bad loans. Revenue Rs11 FV
increased on the back of a low base yoy, but declined ~50% qoq with NII declining ~60% led (unchanged)
by interest reversals. Operating profits declined ~90% qoq. These highlight the challenges in
forecasting revenue where impairment recognition is still not complete. Loan book was flat yoy
with corporate loan book declining 15% yoy while retail loans grew 23% yoy. Operating
expenses declined 8% yoy. The bank’s CET-1 ratio is at 11.2% which is well above the
regulatory limit despite the loss this quarter.

Several challenges restrict us from turning constructive

Even as we discuss the challenges for the bank, it is pertinent to note the remarkable recovery
in deposit mobilization in such a short period. Despite losing credibility over the past year the
bank has rebuild its reputation and reported an impressive ~33% yoy growth in retail term
deposits, 60% yoy growth in corporate term deposits and ~50% yoy growth in CASA in
FY2021. However, the bank is still far from normalcy. NPLs have still not normalized but
M B Mahesh, CFA
disclosures have improved making it easier to understand the stress book. Since FY2017, the
bank has reported ~30% of the peak loan book (FY2019) as slippages but there is still stress in
SMA book (8% of loans) some of which would get restructured in FY2022. The bank has a Nischint Chawathe
high coverage ratio (75% on NPL and 60% on all stress) and is optimistic that the slippages
would be lower than recovery but this is yet to be tested. Even if these challenges are addressed Abhijeet Sakhare
and credit costs are under control, the bank is still looking to compete in segments where the
large banks have built a strong franchise which implies that the return ratios, even if they do Ashlesh Sonje
recover, would still be weaker than that of peers. Finally, even if you do see recovery in return
ratios, we find valuations are not inexpensive to take a more constructive view given that any of Dipanjan Ghosh
the above challenges could persist for a much longer period than envisaged.

Maintain SELL: unchanged Fair Value

We maintain our SELL with an unchanged FV of Rs11. We value the bank at ~1.1X book for
RoEs which are likely to remain quite weak in the medium term. Confidence in building an
earnings trajectory is yet to emerge because the provisions required for bad loans are not easy
kspcg.research@kotak.com
to forecast today. Contact: +91 22 6218 6427

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
 Banks YES Bank

Exhibit 1: Yes bank - quarterly results

March fiscal year-end, 4QFY20 – 4QFY21 (Rs mn)
(% chg.) Calc.
4QFY21 4QFY21E 4QFY20 3QFY21 4QFY21E 4QFY20 3QFY21 2021 2020 (% chg.) 2022E
Income statement (Rs mn)
Interest income 39,893 44,903 52,214 53,211 (11.2) (23.6) (25.0) 200,418 260,666 (23.1) 185,694
Advances 31,693 36,188 45,809 44,746 (12.4) (30.8) (29.2) 166,420 212,612 (21.7) 150,541
Investments 6,420 6,615 5,150 6,457 (2.9) 24.7 (0.6) 26,801 42,609 (37.1) 28,032
Balance with RBI 936 1,175 235 1,094 (20.4) 298.6 (14.4) 3,320 5,445 (39.0) 7,122
Interest expenses 30,026 28,291 39,476 27,607 6.1 (23.9) 8.8 126,132 192,614 (34.5) 115,498
Net interest income 9,867 16,612 12,737 25,604 (40.6) (22.5) (61.5) 74,286 68,052 9.2 70,196
Non-interest income 8,160 8,452 5,973 11,973 (3.4) 36.6 (31.8) 33,407 118,565 (71.8) 28,015
Total income 18,027 25,063 18,710 37,577 (28.1) (3.6) (52.0) 107,693 186,617 (42.3) 98,211
Operating expenses 16,178 14,393 17,645 14,721 12.4 (8.3) 9.9 57,920 67,292 (13.9) 58,463
Employee cost 5,739 5,715 6,390 6,009 0.4 (10.2) (4.5) 24,304 25,999 (6.5) 22,518
Other operating cost 10,440 8,678 11,256 8,713 20.3 (7.2) 19.8 33,616 41,293 (18.6) 35,945
Pre-prov profit 1,849 10,670 1,064 22,855 (82.7) 73.7 (91.9) 49,773 119,325 (58.3) 39,748
Provisions 52,396 30,398 (14,246) 21,988 72.4 NM 138.3 97,124 327,584 (70.4) 68,959
Profit before tax (50,547) (19,728) 15,310 867 NM (430.2) (5,930.1) (47,351) (208,259) (77.3) (29,211)
Tax (12,670) (4,173) (10,976) (640) NM NM NM (12,729) (44,079) (71.1) (7,478)
Reported PAT (37,877) (15,555) 26,286 1,507 NM (244.1) (2,613) (34,622) (164,180) (78.9) (21,733)
PBT- treasury gains (54,757) (23,848) 11,840 (3,223) NM (562.5) NM (59,831) (222,836) (73.2) (44,079)
Asset quality
GNPL (Rs bn) 286 329 295 (13.0) (3.2) 286
NNPL (Rs bn) 98 86 69 13.8 43.1 103
GNPL (%) 15.4 16.8 15.4 -139 bps 5 bps 13.3
NNPL (%) 5.9 5.0 4.0 85 bps 184 bps 5.9
Provision coverage (%) 66 74 77 -807 bps -1109 bps 64
Restructured loans (Rs mn) 12.4 1.7 15.2 623.3 (18.3)
Restructured loans (%) 0.7 0.1 0.9 65 bps -15 bps
Key balance sheet items (Rs bn)
Shareholder funds 332 355 217 370 (6.5) 52.8 (10.2) 310
Advances 1,669 1,707 1,714 1,697 (2.2) (2.7) (1.7) 1,744
Deposits 1,629 1,625 1,054 1,462 — 54.7 11.4 1,780
Current 190 95 159 100.0 19.8 225
Saving 236 186 221 27.1 6.7 293
CASA (%) 26.1 26.6 26.0 -50 bps 17 bps 29.1
Investments 433 463 439 388 (6.4) (1.4) 11.7 473
Total assets 2,735 2,841 2,578 2,601 (3.7) 6.1 5.2 2,808
Advances break-up (Rs bn)
Corporate and institutional 818 960 883 (14.8) (7.3)
Commercial 851 754 815 12.8 4.5
Medium enterprises 150 137 136 9.5 10.6
Micro and small 200 223 204 (10.1) (1.7)
Retail 501 408 475 22.7 5.4
Key ratios calculated (%)
Yield on advances 7.5 10.2 10.6 -272 bps -310 bps 9.8 10.3 -46 bps 8.8
Cost of funds 5.5 6.5 5.4 -94 bps 10 bps 5.7 6.9 -127 bps 5.0
NIM 1.9 2.2 4.9 -32 bps -304 bps - 2.5 -249 bps 3.3
Cost income 89.7 94.3 39.2 53.8 36.1 59.5
CD ratio 102.4 162.7 116.1 102.4 162.7 98.0
RoA (5.7) 3.8 0.2 (0.8)
RoE (43.2) 68.0 1.6 (6.8)
Capital adequecy (%)
CAR 17.5 8.5 19.6 900 bps -210 bps
Tier-I 11.2 6.5 13.2 470 bps -200 bps
Other key parameters (#)
Employees 22,270 22,973 21,984 (3.1) 1.3 20,634

Source: Company, Kotak Institutional Equities estimates

2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Exhibit 2: Yes bank - quarterly results

Key financial items, March fiscal year-ends, 4QFY20 – 4QFY21 (Rs mn)

4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 YoY (%)

Key balance sheet items (Rs mn)
Deposits 1,053,639 1,173,600 1,358,152 1,462,330 1,629,466 54.7
Current deposits 94,990 120,090 142,030 158,560 189,970 100.0
Saving deposits 185,640 183,160 195,100 221,180 235,900 27.1
CASA ratio (%) 26.6 25.8 24.8 26.0 26.1 -46 bps
Branches 1,135 1,139 1,106 1,098 1,070 (5.7)
Investments 439,148 385,540 404,698 387,980 433,192 (1.4)
Total assets 2,578,269 2,554,850 2,498,143 2,600,620 2,735,428 6.1

Yield management measures (%)

Cost of funds 6.5 6.6 6.4 6.1 6.0 -50 bps
Yield on advances 8.9 9.4 9.4 9.3 6.9 -200 bps
NIM 1.9 3.0 3.1 3.4 1.6 -30 bps
Spread 2.9 4.4 4.4 5.2 2.4 -49 bps

Asset quality details

Gross NPL (Rs mn) 328,776 327,027 323,444 295,465 286,095 (13.0)
Gross NPL (%) 16.8 17.3 16.9 15.4 15.4 -139 bps
Net NPL (Rs mn) 86,238 81,575 78,681 68,566 98,134 13.8
Net NPL (%) 5.0 5.0 4.7 4.0 5.9 85 bps
Provisions (Rs mn) 242,538 245,452 244,762 226,900 187,962 (22.5)
Provision Coverage (%) 73.8 75.1 75.7 76.8 65.7 -807 bps
Restructured Loans (Rs mn) 1,720 1,900 2,640 15,230 12,440 623.3
Restructured Loans (% of cust. assets) 0.1 0.1 0.2 0.9 0.7 65 bps

Capital adequacy details (%)

CAR 8.5 8.6 19.9 19.6 17.5 900 bps
Tier I 6.5 6.7 13.6 13.2 11.2 470 bps
Tier II 2.0 1.9 6.3 6.4 6.3 430 bps

Fee income composition (Rs mn)

Forex, DCM, securities and trading income 1,800 4,070 2,800 6,290 2,180
Corporate Banking (420) (180) (250) 10 (10)
Retail fee 3,470 1,210 2,970 4,090 4,210
Trade and Cash Mgmt 1,060 1,050 1,420 1,280 1,540
Others 63 57 128 303 240
Total 5,973 6,207 7,068 11,973 8,160 36.6

Source: Company, Kotak Institutional Equities

Stress seems to be peaking out

 Headline ratios. Reported gross NPL ratio was broadly flat qoq at ~15.4%, down from
16.8% in 4QFY210. This signifies some progress given the outstanding proforma GNPA
of ~Rs83 bn as on 3QFY21. Net NPL ratio was up ~180 bps qoq to 5.9%. This was a
result of high level of slippages during the quarter (~28% annualized) accompanied by
significant write-offs of ~Rs103 bn (~24% of opening advances, annualized). The
provision cover implies a PCR of ~66% on this book.

 We have shared a snapshot of the other stressed portfolios for the bank and
corresponding provisions in Exhibit 3. Non-NPA stressed advances constitute ~8.8% of
advances for the bank, down from ~11.6% qoq.

 Out of the outstanding SMA portfolio as on 3QFY21, ~Rs20 bn has already become
current. This gives us some comfort on the resolution of stress going forward.

 Collections. Retail portfolio saw a collection efficiency of 96% in 4QFY21, up from ~95%
in 3QFY21. This is marginally lower than the collection efficiency of ~95% experienced in
the first two months of 4QFY20 (benchmark for pre-Covid performance).

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Banks YES Bank

 We are still in the phase of building confidence in the operating profitability and asset
quality performance for the bank. It is hard to assess if the bank is conservative while it is
assessing its stress levels. Recent experiences from stressed asset resolution at Axis Bank
and ICICI Bank indicate that the situation does not normalize as swiftly as expected.
Hence, we continue to wait before building conviction on the bank’s outlook.

Exhibit 3: Non-NPL stress for the bank stands at ~8.8% of advances

Workings for stress loans across categories, March fiscal year-ends, 4QFY21 (Rs bn)

4QFY21
Loans Provisions Cover (%)
Gross NPL 286.1 188.0 65.7
Non-fund based NPL 16.7 3.8 22.9
Non-performing investment 65.9 60.7 92.1
SR 21.7 7.5 34.5
Standard restructured loans 12.4 0.8 6.0
Other standard exposures 11.8 4.9
Incremental expected Covid restructuring 25.0
Overdue (61-90 days) 24.6
Overdue (31-60 days) 88.9
Total stress 553.2 265.6 48.0
% of 4QFY21 loans 29.8 14.3
Non-NPA stress 162.8 5.7 3.5
% of 4QFY20 loans 8.8 0.3
Notes:
(1) 31-60 days and 61-90 days overdue portfolios exclude advances of ~Rs22 bn and ~Rs1.5 bn which are
instead shown as part of ‘incremental expected Covid restructuring’.

Source: Company, Kotak Institutional Equities

Exhibit 4: Gross NPL increased substantially in 2020 Exhibit 5: Slippages jumped sharply in 2020 and 4QFY21
NPL and coverage ratio, March fiscal year-ends, 1QFY18 – 4QFY21 Slippages and credit cost, March fiscal year-ends, 2014 - 2020,
(%) 1QFY21 – 4QFY21 (%)

Gross NPL (LHS) Net NPL (LHS) PCR (RHS) Slippages (%) Credit cost (%)
20 80 30.0

16 64 24.0

12 48 18.0

8 32 12.0

4 16 6.0

0 - -
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21

2014

2015

2016

2017

2018

2019

2020

1QFY21

2QFY21

3QFY21

4QFY21

Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Non-interest income jumps with robust growth in core fee income

Overall non-interest income jumped ~37% yoy in 4QFY21 driven by strong growth in retail
banking fees and fees from corporate trade and cash management. The bank enjoys a ~45%
volume market share in UPI P2M transactions.

Exhibit 6: Overall non-interest income was up 37% yoy in 4QFY21

Break-up of non-interest income, March fiscal year-end. 4QFY20-4QFY21 (Rs mn)

(% of fee income) 4QFY21 4QFY20 YoY (%) 3QFY21 QoQ (%)

Non Interest Income 8,160 5,973 36.6 11,973 (32)
Corporate Trade & Cash Management 1,540 1,060 45.3 1,280 20
Forex, Debt Capital Markets & Securities and trading income 2,180 1,800 21.1 6,290 (65)
Corporate Banking Fees (10) (420) NM 10
Retail Banking Fees 4,210 3,470 21.3 4,090 3
Others 240 63 284.6 303 (21)

Source: Company, Kotak Institutional Equities

Exhibit 7: Share of fee income from capital markets business has declined steadily since 2017
Breakup of fee income by business, March fiscal year-ends, 2016 - 2020 (%)

Corporate trade and cash mgmt Retail banking

Forex, DCM, securities and trading Corporate banking fees
100 3

39 35 39 34
80 37

60 16
22 32 26
40 42
32
23
22 22
20

17 19 18
11 13
-
2016 2017 2018 2019 2020

Source: Company

One-offs affect margins during the quarter

Margins were affected in 4QFY21 due to two one-off items during the quarter: (1) reversal
of interest income on account of recognition of proforma NPA amounting to ~Rs7.5 bn,
which impacted NIM by ~140 bps, and (2) reversal of interest on interest (for loans >Rs20
mn, in line with RBI guidelines) amounting to ~Rs1.44 bn (in line with our estimate of
~Rs1.38 bn) which had a one-time impact of ~30 bps on NIM for 4QFY21.

We see headwinds to near term NIM assumptions for the bank. Lending yields would be
under constant pressure as the bank moves away from the high margin corporate loan
portfolio to a less risky one and further shifts the loan mix towards retail and MSME. Given
the need to build a retail deposit base (102% CD ratio), Yes Bank continues to offer higher
premium on TD rates (~120bps) compared to peers.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Banks YES Bank

Exhibit 8: Premium on Yes Bank’s deposit rates has declined for the short tenor, but remains high for
the long tenor
Comparison of term deposit rates offered by Yes Bank and frontline private sector banks, September 2019
onwards (%)

Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Apr-21

1 month tenor
ICICI Bank 4.50 4.50 4.75 3.25 3.00 3.00 3.00 3.00
Axis Bank 4.25 4.25 4.90 4.00 2.50 3.00 3.00 3.00
HDFC Bank 5.00 4.50 4.75 3.25 3.00 3.00 3.00 3.00
Yes Bank 4.50 4.50 5.00 5.00 5.00 4.00 3.40 3.00
Difference in Yes and frontline bank average (0.08) 0.08 0.20 1.50 2.17 1.00 0.40 -
1 year tenor
ICICI Bank 6.70 6.45 6.25 5.25 5.05 4.95 4.95 4.95
Axis Bank 7.00 6.45 6.45 5.75 5.20 5.20 5.20 5.20
HDFC Bank 6.80 6.20 6.15 5.25 5.10 4.90 4.90 4.90
Yes Bank 7.25 7.25 7.35 7.15 7.00 6.50 6.25 6.25
Difference in Yes and frontline bank average 0.42 0.88 1.07 1.73 1.88 1.48 1.23 1.23

Source: Company

Deposit accretion continues

Liability profile continues to stabilize. Overall deposits growth was 11% qoq on period-end
basis. CASA deposits grew 12% qoq driven by CA (+20% qoq), SA (+7% qoq) while term
deposits grew 11% qoq, driven by retail deposits (up 13% qoq). Share of retail deposits and
CASA has improved to 58%, up ~100bps from the previous quarter. LCR ratio improved to
comfortable levels of ~114%.

As we discussed in the recent initiation report, we believe deposit rebuild is a gradual

process assuming the intention of building a retail and granular deposit base. Yes Bank’s
higher than peers deposit rates would help this effort, but nonetheless it remains a key
monitorable. In the meanwhile, the bank is likely to benefit from the support of its strong
institutional shareholder base with SBI being the dominant shareholder.

Exhibit 9: Improving share of CASA and retail term deposits Exhibit 10: Growth in both wholesale and retail term deposits
Break-up of funds, March fiscal year-ends, 2018 – 2020, 1QFY21 - Break-up of term deposits, March fiscal year-ends, 2018 – 2020,
4QFY21 (Rs bn) 1QFY21 – 4QFY21 (Rs bn)

Current Savings Term Borrowings Corporate TD Retail TD CD

3,500 1,600

2,800 1,280

2,100 960

1,524
1,400 1,276 640

1,204 923
1,021 1,083 795
700 773 870 320 617
525 551
314 389

- -
2018 2019 2020 1QFY21 2QFY21 3QFY21 2021 2018 2019 2020 1QFY21 2QFY21 3QFY21 2021

Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Exhibit 11: Reducing dependence on top few depositors has been a challenge for Yes Bank
Share of deposits with top 20 depositors, March fiscal year-ends, 2016 - 2020 (%)

HDFCB ICICIBC AXSB Yes Bank

12.5

10.0

7.5

5.0

2.5

-
2016 2017 2018 2019 2020

Source: Company

Overall loan book contracts, but healthy momentum in retail disbursements

Yes Bank’s overall loan book declined ~2% qoq and ~3% yoy. However, retail advances
registered strong growth at 23% yoy. Disbursements in the retail portfolio was strong
(highest ever retail disbursals in 2HFY21) driven predominantly by the secured portfolio.
Share of large corporate declined qoq to 49% with the bank targeting a mix of retail/SME
loans of over 60% in the medium-term.

We believe the bank’s strategy to shift to retail/SME is on the right track, we await greater
clarity on which specific segments will drive growth. Currently, the bank seems to be
focusing on the secured retail portfolio. 21% of the retail book is in secured business loans
and another ~31% is in auto loans (including CV).

Relative to bigger frontline banks, Yes Bank has the disadvantage of higher cost of funds
and lack of a strong customer base which can make cost of customer acquisition expensive.
While the bank is looking at exploiting its technological/payments leadership, we await
greater details to get more constructive on growth.

The management has guided towards ~15% loan growth in FY2022E. However, we remain
skeptical given the economic challenges and the bank’s positioning.

Exhibit 12: Share of retail loans increases to ~30%; wholesale down to 49%
Break-up of loans, March fiscal year-ends, 4QFY18-4QFY21 (%)
4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 YoY (%)
Loan book (Rs bn) 2,035 2,147 2,396 2,439 2,415 2,363 2,245 1,861 1,714 1,645 1,669 1,697 1,669 (3)
Corporate and institutional 1,382 1,452 1,634 1,654 1,584 1,510 1,390 1,061 960 921 935 883 818 (15)
Business banking 197 187 199 190 188 182 168 153 137 148 134 136 150 10
Micro and small 208 208 220 224 239 239 242 236 223 197 200 204 200 (10)
Retail 248 301 343 371 403 432 445 413 408 378 401 475 501 23
% of loan book
Corporate and institutional 68 68 68 68 66 64 62 57 56 56 56 52 49 -700 bps
Business banking 10 9 8 8 8 8 8 8 8 9 8 8 9 100 bps
Micro and small 10 10 9 9 10 10 11 13 13 12 12 12 12 -100 bps
Retail 12 14 14 15 17 18 20 22 24 23 24 28 30 620 bps

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Banks YES Bank

Exhibit 13: Share of wholesale business has declined since 2018

Loan book breakup, March fiscal year-ends, 2016 – 2020, 1QFY21 – 4QFY21 (%)

Corporate and institutional Buisness banking Consumer banking Micro & small enterprise
100
13.0 12.3 10.2 9.9 13.0 12.0 12.0 12.0 12.0

10.8 9.5 12.2 16.7

80
23.8 23.0 24.0 28.0
11.1 10.5 9.7 30.0
7.8
60 8.0 9.0 8.0
8.0 9.0

40
65.1 67.7 67.9 65.6
56.0 56.0 56.0 52.0 49.0
20

0
2016 2017 2018 2019 2020 1QFY21 2QFY21 3QFY21 4QFY21

Source: Company

Exhibit 14: Exposure to CRE and construction/ EPC sectors continues to be high
Break-up of customer assets, March fiscal year-ends, 2014-3QFY21 (%)

2014 2015 2016 2017 2018 2019 2020 1QFY21 2QFY21 3QFY21
Electricity 4.8 8.3 8.7 11.3 9.2 7.6 6.2 5.9 5.5 6.0
Commercial real estate 0.0 0.0 6.8 5.8 5.9 7.0 6.7 7.6 7.7 7.0
Other real estate 0.0 0.0 0.9 0.8 0.5 1.3 1.4 1.5 1.6 NA
Tech, ITES, Media 3.4 2.9 1.4 1.2 1.0 0.9 0.9 1.0 1.0 NA
Food processing 4.4 3.2 2.7 2.4 2.4 2.4 2.0 1.9 1.8 NA
Iron & Steel 3.5 3.3 2.2 1.8 2.0 3.0 3.3 3.4 3.5 NA
Social & Commercial Infra 1.8 2.7 2.4 2.7 2.5 2.6 2.3 2.6 2.5 NA
Vehicles & equipments 2.8 3.1 2.5 2.4 2.8 2.5 2.5 2.5 2.6 NA
Construction/ EPC 2.9 3.1 6.0 7.3 7.9 10.0 10.7 11.1 10.6 10.0
Other metal/products 2.3 2.0 2.4 2.5 3.1 2.4 1.9 1.8 1.9 NA
Telecom 3.1 2.2 4.5 4.9 2.2 2.5 3.2 3.3 3.2 NA
Textiles 0.7 0.5 0.9 1.4 1.5 1.4 1.7 1.7 1.8 NA
Aviation 0.3 0.2 0.6 1.0 0.8 0.7 0.4 0.5 0.5 NA
Other industries 68.4 66.8 58.0 54.5 58.2 55.7 56.8 55.2 55.8 NA

Source: Company, Kotak Institutional Equities

Other highlights for the quarter

 Operating expenses down 13% yoy. The bank demonstrated a good performance on
the costs front. Staff expenses were down ~10% yoy, while other expenses were down
~7% yoy. The bank has shed a net of 65 branches in FY2021.

 CET-1 at 11.2%. The high level of provisioning and consequent losses in 4QFY21
resulted in the CET1 ratio for the bank declining by ~190 bps qoq to 11.2%. CRAR for
the bank stands comfortable at ~17.5%.

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Exhibit 15: Tier-1 ratio at 11.2%

Tier-1 and leverage ratio (total assets to net worth), March fiscal year-ends, 4QFY16 – 4QFY21 (X)

(X) Tier-1 (RHS) Leverage (LHS) (%)

20 18
14.7
17 13.313.8 13.2 13.212.8 13.6 13.2 14
12.2 12.0
11.0 11.3 11.5 11.2
10.7 10.3 10.7
14 10.1 11

11 6.5 6.7 7

8 2.1 4

5 0
4QFY16

1QFY17

2QFY17

3QFY17

4QFY17

1QFY18

2QFY18

3QFY18

4QFY18
1QFY19

2QFY19
3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21
4QFY21
Source: Company, Kotak Institutional Equities

Exhibit 16: Cost-to-income ratio improved to ~39% in 3QFY21 on one-off gains

Cost-to-income and total employees, 4QFY16 – 4QFY21 (%)

(#) Employees (LHS) Cost-to-income (RHS) (%)

25,000 120

20,000 102

15,000 84

10,000 66

5,000 48

0 30
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
4QFY20
1QFY21
2QFY21
3QFY21
4QFY21

Source: Company, Kotak Institutional Equities

Exhibit 17: Yes Bank has the highest percentage of employee cost to total cost among peer private banks
Employee cost as a percentage of overall costs, March fiscal year-ends, 2012-2023E (%)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Axis Bank 34.6 34.4 32.9 33.4 33.4 31.9 30.8 30.0 30.7 33.5 33.0 32.1
HDFC Bank 36.6 35.3 34.7 34.0 33.6 32.9 30.0 29.7 31.0 31.7 31.6 31.8
ICICI Bank 44.8 43.2 40.9 41.3 39.4 38.9 37.7 37.6 38.3 37.5 36.2 35.9
IndusInd Bank 36.1 37.7 37.0 34.2 33.7 31.8 31.8 28.9 26.8 29.5 28.0 30.7
Yes Bank 51.0 49.1 44.8 43.6 43.6 44.1 42.0 39.4 38.6 42.0 39.2 38.4

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

Banks YES Bank

Exhibit 18: De-risking of balance sheet under process for capital conservation
Risk-weighted assets and total assets, fiscal year-ends, 2013 - 2021 (Rs bn)

2013 2014 2015 2016 2017 2018 2019 2020 2QFY21 2021
Credit RWA 553 643 907 1,151 1,625 2,232 2,680 2,037 2,004 2,311
Market RWA 88 80 70 95 132 182 193 138 129 124
Operational RWA 31 43 57 83 106 140 186 230 228 228
Total RWA 672 766 1,034 1,329 1,863 2,554 3,058 2,406 2,362 2,664
Assets 991 1,090 1,362 1,653 2,151 3,124 3,808 2,578 2,498 2,601
(Assets/RWA, %) 68 70 76 80 87 82 80 93 95 102
Loans 470 556 755 982 1,323 2,035 2,415 1,714 1,669 1,697
(Loans/credit RWA, %) 118 116 120 117 123 110 111 119 120 136

Source: Company, Basel disclosures, Kotak Institutional Equities

Exhibit 19: Steep decline in revenues in the last few quarters Exhibit 20: PBT growth has been very inconsistent
Revenue and NII growth, March fiscal year-ends, 4QFY18 – 4QFY21 PBT growth, March fiscal year-ends, 4QFY18 – 4QFY21 (%)
(%)
500
NII growth Revenue growth
200 26 29 41
-
150 (2) (9) (66)
122 (90) (91) (100)
(165)
(235)
(500)
100 (430)
140
50 33 (1,000)
23 24
31 23 28 417 16 3
-
(10) (1,500)
(49) (16) (10) (23)
(4)
(15) (9) (20)(60) (14)
(50) (29)
(38)
(52) (2,000) (1,820)
1QFY19

2QFY19

3QFY19

1QFY20

2QFY20

3QFY20

1QFY21

2QFY21

3QFY21
4QFY18

4QFY19

4QFY20

4QFY21
(100)
4QFY18

1QFY19

2QFY19

3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Exhibit 21: Funding used to have a higher dependence on borrowings

Balance sheet common size statement, March fiscal year-ends, 2009-2021 (%)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Liabilities
Equity 7.1 8.5 6.4 6.4 5.9 6.5 8.6 8.3 10.2 8.2 7.1 8.4 12.1
Deposits 70.6 73.7 77.9 66.8 67.6 68.1 67.0 67.6 66.4 64.2 59.8 40.9 59.6
Current 5.3 6.7 6.7 6.6 6.7 6.4 6.2 6.6 8.9 9.2 7.5 3.7 6.9
Savings 0.8 1.1 1.4 3.4 6.1 8.6 9.2 12.4 15.2 14.2 12.3 7.2 8.6
Term deposits 64.4 65.9 69.8 56.7 54.8 53.1 51.5 48.6 42.3 40.8 40.0 30.0 44.0
Borrowings 17.9 13.4 11.5 19.5 21.2 19.7 19.5 19.3 18.2 24.3 28.6 44.1 23.4
Other liabilities 4.4 4.5 4.2 7.4 5.3 5.7 5.0 4.7 5.1 3.2 4.6 6.6 4.9
Assets
Cash and bank balances 8.4 7.3 5.9 4.9 4.1 5.4 5.5 5.0 9.1 7.9 7.1 3.3 5.4
Investments 31.1 28.1 31.9 37.7 43.4 37.6 31.7 29.6 23.2 21.9 23.5 17.0 15.8
Loans 54.2 61.0 58.2 51.6 47.4 51.0 55.5 59.4 61.5 65.1 63.4 66.5 61.0
Fixed assets 0.6 0.3 0.2 0.2 0.2 0.3 0.2 0.3 0.3 0.3 0.2 0.4 0.4
Other assets 5.8 3.3 3.7 5.6 4.9 5.7 7.0 5.8 5.8 4.8 5.8 12.8 17.4

Source: Company, Kotak Institutional Equities

Exhibit 22: Yields declined in 4QFY21 due to interest reversals Exhibit 23: Cost of funds at higher end among peers
Calculated yield on loans versus peers, March fiscal year-ends, Calculated cost of funds versus peers, March fiscal year-ends, 4QFY16
4QFY16 – 4QFY21 (%) – 4QFY21 (%)

Axis HDFCB ICICI IndusInd Yes Axis HDFCB ICICI IndusInd Yes
12.5 8.0

11.0
7.0

9.5
6.0

8.0
5.0

6.5
4.0
5.0
4QFY16

2QFY17

4QFY17

2QFY18

4QFY18

2QFY19

4QFY19

2QFY20

4QFY20

2QFY21

4QFY21

3.0
4QFY16

2QFY17

4QFY17

2QFY18

1QFY19

2QFY19

4QFY19

2QFY20

4QFY20

2QFY21

4QFY21
Source: Company, Kotak Institutional Equities
Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

Banks YES Bank

Exhibit 24: Yes bank - estimate changes

March fiscal year-ends, 2022E-2024E (Rs mn)

New estimates Old estimates % change

2022E 2023E 2024E 2022E 2023E 2022E 2023E
Net interest income 70,196 69,112 78,201 74,230 74,702 (5) (7)
NIM (%) 2.9 2.7 2.8 2.9 2.6 0 bps 10 bps
Customer assets 1,898,915 2,010,533 2,182,181 2,019,650 2,280,718 (5.98) (11.85)
Loan loss provisions 68,259 44,996 48,537 71,433 49,883 (4) (10)
Other income 28,015 31,983 36,664 22,614 24,612 24 30
Fee income 18,772 21,005 23,539 10,408 11,236 80 87
Treasury income 1,500 1,500 1,500 1,500 1,500 - -
Operating expenses 58,463 58,486 59,190 55,425 56,731 5 3
Employee expenses 22,518 22,476 22,381 22,497 22,455 0 0
PBT (29,211) (3,087) 6,439 (30,714) (7,999) (5) (61)
Tax (7,478) (790) 1,648 (7,863) (2,048) (5) (61)
Net profit (21,733) (2,297) 4,791 (22,851) (5,951) (5) (61)
PBT-treasury+provisions 38,248 41,109 54,176 39,919 41,084 (4) 0
Adjusted BVPS (Rs) 10 10 11 10 10 (3) 1
Slippage ratio (%) 4.0 2.5 2.0 6.0 3.0 -200 bps -50 bps
Gross NPA (%) 13.3 12.4 11.0 16.9 15.2 -357 bps -279 bps
Credit cost (%) 4.0 2.5 2.5 4.0 2.5 0 bps 0 bps

Source: Company, Kotak Institutional Equities estimates

Exhibit 25: Yes Bank trades at 1.5X one-year forward book Exhibit 26: Yes Bank is trading at a discount to private bank
P/BV (12-month rolling forward adjusted book) for Yes Bank (X) peers
Yes Bank valuation discount to private bank peers (X)
Rolling PBR (X) (RHS)
6.0 2.5

4.8 2.0

3.6
1.5

2.4
1.0

1.2
0.5

-
0.0
Apr-13

Apr-14

Apr-16

Apr-17

Apr-20

Apr-21
Apr-15

Apr-18

Apr-19

Apr-13

Apr-14

Apr-16

Apr-18

Apr-20
Apr-15

Apr-17

Apr-19

Apr-21

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

YES Bank Banks

Exhibit 27: Yes bank- key financial growth rates and ratios
March fiscal year-ends, 2018 – 2024E (Rs mn)

2018 2019 2020 2021E 2022E 2023E 2024E

Growth rates (%)
Net loan 53.9 18.7 (29.0) (2.7) 4.5 6.4 9.2
Net fixed assets 21.2 (1.8) 23.5 112.9 (26.3) (14.3) (14.2)
Cash and bank balance 26.5 8.7 (68.8) 249.8 (23.5) (5.9) 31.3
Total Asset 45.3 21.9 (32.3) 6.1 2.6 7.0 11.6
Deposits 40.5 13.4 (53.7) 54.7 9.2 14.0 14.0
Current 51.1 (1.0) (66.7) 100.0 18.6 23.0 22.3
Savings 35.3 5.3 (60.3) 27.1 24.3 27.8 26.3
Net interest income 30.9 26.8 (30.6) 9.2 (5.5) (1.5) 13.2
Loan loss provisions 66.9 286.2 436.8 (65.3) (23.9) (34.1) 7.9
Total other income 27.5 (12.2) 158.3 (71.8) (16.1) 14.2 14.6
Net fee income 29.3 (12.1) (58.0) 13.6 8.3 11.9 12.1
Operating expenses 25.0 20.2 7.4 (13.9) 0.9 0.0 1.2
Employee expenses 18.9 12.8 5.3 (6.5) (7.3) (0.2) (0.4)
Key ratios (%)
Yield on average earning assets 8.1 9.1 9.0 8.7 7.7 7.2 7.2
Yield on average loans 9.2 10.3 10.3 9.8 8.8 7.9 7.9
Yield on average investments 6.9 7.7 6.4 6.1 6.2 6.3 6.4
Average cost of funds 5.5 6.5 6.9 5.6 5.0 4.6 4.5
Interest on deposits 5.5 6.4 7.2 5.3 4.9 4.6 4.5
Difference 2.7 2.6 2.0 3.0 2.7 2.6 2.8
Net interest income/earning assets 3.1 3.0 2.3 3.2 2.9 2.7 2.8
New provisions/average net loans 0.7 2.2 12.5 5.3 4.0 2.5 2.5
Interest income/total income 59.7 68.1 36.5 69.0 71.5 68.4 68.1
Other income / total income 40.3 31.9 63.5 31.0 28.5 31.6 31.9
Fee income to total income 31.9 25.3 8.2 16.1 19.1 20.8 20.5
Operating expenses/total income 40.2 43.5 36.1 53.8 59.5 57.9 51.5
Tax rate 31.8 27.0 21.2 26.9 25.6 25.6 25.6
Dividend payout ratio 13.0 36.2 (3) - - - -
Share of deposits
Current 14.4 12.5 9.0 11.7 12.7 13.7 14.7
Savings 22.1 20.5 17.6 14.5 16.5 18.5 20.5
Loans-to-deposit ratio 101.4 106.1 162.7 102.4 98.0 91.4 87.6
Equity/assets (EoY) 8.2 7.1 8.4 12.1 11.0 10.2 9.3
Dupont analysis (%)
Net interest income 2.9 2.8 2.1 2.8 2.5 2.4 2.5
Loan loss provisions 0.5 1.4 8.1 3.4 2.5 1.5 1.5
Net other income 2.0 1.3 3.7 1.3 1.0 1.1 1.2
Operating expenses 2.0 1.9 2.2 2.2 2.1 2.0 1.9
(1- tax rate) 68.2 73.0 78.8 73.1 74.4 74.4 74.4
ROA 1.6 0.5 (5.1) (1.3) (0.8) (0.1) 0.2
Average assets/average equity 11.0 13.2 13.1 9.7 8.6 9.4 10.2
ROE 17.7 6.5 (67.5) (12.6) (6.8) (0.7) 1.5

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

Banks YES Bank

Exhibit 28: Yes bank- key financials

March fiscal year-ends, 2018 – 2024E (Rs mn)

2018 2019 2020 2021E 2022E 2023E 2024E

Income statement (Rs mn)
Total interest income 202,674 296,247 260,666 200,418 185,694 182,665 199,644
Loans 154,782 229,226 212,612 166,420 150,541 142,050 153,048
Investments 41,025 60,484 42,609 26,801 28,032 31,826 36,859
Cash and deposits 6,867 6,537 5,445 7,198 7,122 8,788 9,737
Total interest expense 125,304 198,157 192,614 126,132 115,498 113,553 121,442
Deposits from customers 93,834 136,871 120,053 71,395 83,394 87,406 98,164
Net interest income 77,371 98,090 68,052 74,286 70,196 69,112 78,201
Loan loss provisions 12,476 48,184 258,650 89,746 68,259 44,996 48,537
Net interest income (after prov.) 64,895 49,907 (190,597) (15,460) 1,937 24,116 29,665
Other income 52,251 45,902 118,565 33,407 28,015 31,983 36,664
Net fee income 41,380 36,361 15,262 17,340 18,772 21,005 23,539
Net capital gains 5,135 3,175 11,135 15,340 1,500 1,500 1,500
Net exchange gains 2,316 1,570 3,732 1,493 1,344 1,478 1,626
Operating expenses 52,128 62,643 67,292 57,920 58,463 58,486 59,190
Employee expenses 21,889 24,698 25,999 24,304 22,518 22,476 22,381
Depreciation on investments 2,599 6,825 64,819 6,000 — — —
Other Provisions 463 2,767 4,116 1,378 700 700 700
Pretax income 61,956 23,573 (208,259) (47,351) (29,211) (3,087) 6,439
Tax provisions 19,697 6,371 (44,079) (12,729) (7,478) (790) 1,648
Net Profit 42,246 17,203 (164,180) (34,622) (21,733) (2,297) 4,791
% growth 26.9 (59.3) (1,054.4) (78.9) (37.2) (89.4) (308.6)
Operating profit 72,359 78,174 108,191 34,433 38,248 41,109 54,176
% growth 31 -64 -1176 -71 -51 -85 -208
Tax rate (%) 32 27 NM NM NM NM 26
Balance sheet (Rsmn)
Cash and bank balance 247,344 268,895 83,830 293,253 224,337 211,163 277,159
Cash 6,227 6,334 16,307 16,307 40,252 20,953 76,192
Balance with RBI 108,031 101,643 43,129 72,269 75,036 81,162 91,918
Balance with banks 782 1,994 6,820 6,820 6,820 6,820 6,820
Net value of investments 683,989 895,220 439,148 433,192 473,262 539,518 615,051
Govt. and other securities 488,861 553,611 329,069 368,077 412,630 482,031 559,577
Shares 644 429 244 244 244 244 244
Debentures and bonds 145,046 154,985 74,399 29,760 23,808 19,046 15,237
Net loans and advances 2,035,339 2,414,996 1,714,433 1,668,930 1,744,032 1,855,650 2,027,297
Fixed assets 8,324 8,170 10,091 21,485 15,838 13,566 11,638
Other assets 149,460 220,980 330,767 318,734 350,607 385,668 424,234
Total assets 3,124,456 3,808,261 2,578,269 2,735,593 2,808,076 3,005,565 3,355,379

Deposits 2,007,381 2,276,102 1,053,639 1,629,460 1,780,185 2,029,411 2,313,528

Borrowings and bills payable 758,087 1,088,155 1,140,772 642,358 578,122 520,310 572,341
Other liabilities 101,404 174,963 166,595 131,640 139,538 147,911 156,785
Total liabilities 2,866,873 3,539,220 2,361,006 2,403,458 2,497,846 2,697,632 3,042,655
Paid-up capital 4,606 4,630 25,101 50,110 50,110 50,110 50,110
Reserves & surplus 252,977 264,412 192,162 281,854 260,121 257,824 262,614
Total shareholders' equity 257,583 269,042 217,263 331,963 310,230 307,934 312,724

Source: Company, Kotak Institutional Equities estimates

14 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Disclosures

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.

60%
Percentage of companies within each category for which Kotak
Institutional Equities and or its affiliates has provided
50%
investment banking services within the previous 12 months.

40% * The above categories are defined as follows: Buy = We

32.5% expect this stock to deliver more than 15% returns over the next
27.4% 12 months; Add = We expect this stock to deliver 5-15% returns
30%
23.6% over the next 12 months; Reduce = We expect this stock to
deliver -5-+5% returns over the next 12 months; Sell = We
20% 16.5% expect this stock to deliver less than -5% returns over the next
12 months. Our target prices are also on a 12-month horizon
basis. These ratings are used illustratively to comply with
10%
3.8% 4.7% applicable regulations. As of 31/12/2020 Kotak Institutional
2.8%
0.5% Equities Investment Research had investment ratings on 212
0% equity securities.
BUY ADD REDUCE SELL

Source: Kotak Institutional Equities As of March 31, 2021

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our Fair Value estimates are also on a 12-month horizon basis.

Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not
strictly be in accordance with the Rating System at all times.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock
and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

KOTAK INSTITUTIONAL EQUITIES RESEARCH 15

Corporate Office Overseas Affiliates
Kotak Securities Ltd. Kotak Mahindra (UK) Ltd Kotak Mahindra Inc
27 BKC, Plot No. C-27, “G Block” 8th Floor, Portsoken House 369 Lexington Avenue
Bandra Kurla Complex, Bandra (E) 155-157 Minories 28th Floor, New York
Mumbai 400 051, India London EC3N 1LS NY 10017, USA
Tel: +91-22-43360000 Tel: +44-20-7977-6900 Tel:+1 212 600 8856
Copyright 2021 Kotak Institutional Equities (Kotak Securities Limited). All rights reserved.
1. Note that the research analysts contributing to this report may not be registered/qualified as research analysts with FINRA; and
2. Such research analysts may not be associated persons of Kotak Mahindra Inc and therefore, may not be subject to NASD Rule 2711 restrictions on communications with a subject
company, public appearances and trading securities held by a research analyst account.
3. Any U.S. recipients of the research who wish to effect transactions in any security covered by the report should do so with or through Kotak Mahindra Inc and (ii) any transactions in
the securities covered by the research by U.S. recipients must be effected only through Kotak Mahindra Inc at vinay.goenka@kotak.com.
This report is distributed in Singapore by Kotak Mahindra (UK) Limited (Singapore Branch) to institutional investors, accredited investors or expert investors only as defined under the
Securities and Futures Act. Recipients of this analysis / report are to contact Kotak Mahindra (UK) Limited (Singapore Branch) (16 Raffles Quay, #35-02/03, Hong Leong Building, Singapore
048581) in respect of any matters arising from, or in connection with, this analysis / report. Kotak Mahindra (UK) Limited (Singapore Branch) is regulated by the Monetary Authority of
Singapore.
Kotak Securities Limited and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We along with our affiliates are
leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a
significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other
business selection processes. Investors should assume that Kotak Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or
companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our
research professionals are paid in part based on the profitability of Kotak Securities Limited, which include earnings from investment banking and other business. Kotak Securities Limited
generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that
the analysts cover. Additionally, Kotak Securities Limited generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of
any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect
opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the
recommendations expressed herein.
In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important
information regarding our relationships with the company or companies that are the subject of this material is provided herein.
This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not
soliciting any action based on this material. It is for the general information of clients of Kotak Securities Limited. It does not constitute a personal recommendation or take into account the
particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is
suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go
down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original
capital may occur. Kotak Securities Limited does not provide tax advise to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment.
Certain transactions -including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all
investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions
expressed are our current opinions as of the date appearing on this material only. We endeavor to update on a reasonable basis the information discussed in this material, but regulatory,
compliance, or other reasons may prevent us from doing so. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this
material, may from time to time have "long" or "short" positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Kotak
Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to
or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or
income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively assume currency risk. In addition
options involve risks and are not suitable for all investors. Please ensure that you have read and understood the current derivatives risk disclosure document before entering into any
derivative transactions.
Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house.
Kotak Securities Limited is a corporate trading and clearing member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE), Metropolitan Stock
Exchange of India Limited (MSE), National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange(MCX). Our businesses include stock broking, services rendered
in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management.
Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited
is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor
registered with Association of Mutual Funds in India (AMFI). Kotak Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014.
We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI,
Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on KSL for certain operational
deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point
of time.
We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us
Details of Associates are available on website i.e. www.kotak.com
Research Analyst has served as an officer, director or employee of subject company(ies): No
We or our associates may have received compensation from the subject company(ies) in the past 12 months.
We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months. YES. Visit our website for more details
We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our
associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the
past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report.
Our associates may have financial interest in the subject company(ies).
Research Analyst or his/her relative's financial interest in the subject company(ies): No
Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: YES Bank - YES
Nature of Financial interest: Holding equity shares or derivatives of the subject company.
Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of
Research Report.
Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of
publication of Research Report: No
Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of
Research Report: No
Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report.
A graph of daily closing prices of securities is available at https://www.moneycontrol.com/india/stockpricequote/ and http://economictimes.indiatimes.com/markets/stocks/stock-quotes.
(Choose a company from the list on the browser and select the"three years" icon in the price chart).
Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22
43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg,
Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No. INZ000200137(Member of NSE, BSE, MSE, MCX & NCDEX). Member Id: NSE-08081; BSE-673; MSE-1024;
MCX-56285; NCDEX-1262. AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal.
Call: 022 - 4285 8484, or Email: ks.compliance@kotak.com. Investments in securities market are subject to market risks, read all the related documents carefully before investing.
In case you require any clarification or have any concern, kindly write to us at below email ids:
Level 1: For Trading related queries, contact our customer service at ‘service.securities@kotak.com’ and for demat account related queries contact us at ks.demat@kotak.com or call us on:
Toll free numbers 18002099191 / 1860 266 9191
Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at ks.escalation@kotak.com or call us on 022-42858445 and if you feel you are
still unheard, write to our customer service HOD at ks.servicehead@kotak.com or call us on 022-42858208.
Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Mr. Manoj Agarwal) at
ks.compliance@kotak.com or call on 91- (022) 4285 8484.
Level 4 : If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach Managing Director / CEO (Mr. Jaideep Hansraj) at ceo.ks@kotak.com or
call on 91-(022) 4285 8301.
First Cut notes published on this site are for information purposes only. They represent early notations and responses by analysts to recent events. Data in the notes may not have been
verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject.
There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability
for the contents of the First Cut Notes.