banking weekly - update for the week ended jan 08, 2016mailers.sparkcapital.in › uploads ›...

Banking Weekly - Update for the week ended Jan 08, 2016

Abhinesh Vijayaraj

[email protected]

+91 44 4344 0006

Nishant Rungta

[email protected]

+91 44 4344 0033

Navin Babu

[email protected]

+91 44 4344 0065

Date 12 Jan, 2016

BSE SENSEX 24934

NIFTY 7601

BSE BANKEX 18368

CRR % 4.00

SLR % 21.50

Reverse Repo % 5.75

Repo % 6.75

MSF% 7.75

Base Rate % 9.30/9.70

Deposit Rate % 7.00/7.90

INR/ US$ 66.64

WPI% -1.99

CPI% 5.41

Sensex DOWN 4.53% ending at 24934 wow; Bankex DOWN 4.97% to 18368

• The BSE Sensex was DOWN 4.53% for the week ending at 24934, a decrease of 1183points while the BSE Bankex was DOWN

4.97% (DOWN 960 points) over the previous week to end at 18368.

• The Spark NBFC Index was DOWN 6.16% to close at 207.64 from the previous week's close of 221.27 (Index value: 100 on

01/01/2012).

Key Takeaways

• The 10Y G-Sec yield was UP 1bps wow ending at 7.74% and the 5Y yield was DOWN 3bps wow ending at 7.62%.

• Spread between 10Y and 6M G-sec yields moved DOWN to 55bps, with the long term 10Y yield trending higher than the 6M yield.

• The 10Y bond yields was DOWN 15bps in US (2.12%), DOWN 19bps in UK (1.77%), DOWN 34bps in Brazil (6.85%) and UP 1bps in

China (2.87%).

• For the fortnight ended Dec 25, credit grew 11.2% yoy while the deposits grew by 10.88% yoy. During the fortnight, banks’ credit off

take was UP by Rs.493bn, while deposits were DOWN by Rs.3bn, with the CD ratio at 74.6%.

• ICICIBC CDS rate was UP 6bps wow to 182bps while SBI CDS rate was UP 1bps wow to 163bps.

• The 10Y AAA spread was DOWN 0bps to 0.65% and the 5Y AAA spread was UP 4bps to 0.75%.

• 3M CD rates were DOWN 0bps to 7.26%, 6M rates were DOWN 0bps to 7.46%, 12M rates were DOWN 0bps to 7.62%.

• Spread between overnight rate and 12M OIS rate trended lower to 6bps, suggesting that the market is expecting rates to decrease

by ~6bps from 7.02% in the next 12 months.

• Call money rate was UP 39bps to 6.84%, from the 6.45% levels seen during the past week.

• INR depreciated by 0.37% wow, against the USD, closing at 66.64 in the spot markets, while the USD/INR forward rates were

higher across tenors by ~1.01% wow.

• Gold price was UP 3.26% wow at INR 25858 per 10gm in INR terms and UP in USD terms by 4.02% wow and closed at USD 1104

per troy ounce. Crude oil prices were DOWN in USD terms by 10.18%, closing at USD 33.3.

1

2%

1%

-2%

-2%

-2%

-3%

-3%

-4%

-4%

-5%

-6%

-6%

-6%

-7%

-8%

-9%

-10%

1%

0%

-1%

-2%

-3%

-3%

-4%

-5%

-6%

-6%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

JK

BK

SIB

HD

FC

B

KV

B

IIB

CU

BK

KM

B

BO

I

YE

S

DC

BB

CB

K

FB

ICIC

IBC

SB

IN

AX

SB

PN

B

BO

B

CIF

C

SU

F

LIC

HF

SH

TF

MM

FS

IDF

C

SC

UF

RE

C

PF

C

RE

PC

O

Stock price movement (wow)

mailto:[email protected]

2

News and RBI Notifications during the week

2

News during the week

Management Updates:

Reserve Bank of India: The government re-appointed Mr. Urjit R. Patel as the Deputy Governor of the Reserve Bank of India for a further period of three years with effect

from taking charge of the post on or after January 11, 2016.

IDBI to raise funds via QIP: IDBI Bank has hired seven banks to raise Rs.37.7 bn through a qualified institutional placement issuance. At its current market capitalization,

the QIP will result in a dilution of around 15-20% in the government’s shareholding in the bank.

CUB opens a new branch: CUB informed the markets that it has opened a new branch in Madanapalle, in the Chittoor district. With this the total tally of the bank’s

branches is up to 492.

Banks may sell Rs.3 trillion to ARCs: Vinayak Bahuguna, MD and CEO, Asset Reconstruction Company of India Ltd indicated that the next 6-12 months could see

intense acceleration in the sell down of loans by banks. Once the Insolvency and Bankruptcy Bill is passed, the banks may put bad loans aggregating Rs.3.0 trillion on the

block in calendar 2017.

Federal Bank introduces fund transfer through missed call: Federal Bank introduced a funds transfer facility for its customers by the use of a missed call to the bank’s

dedicated number. The daily transaction limit for this service is Rs.5,000 with a monthly cap of Rs.25,000. The service is available 24X7 and has been offered free of

charges.

Bandhan’s deposit growth: According to Chandra Shekhar Ghosh, Founder-MD and CEO of Bandhan Bank, deposits have grown to nearly Rs.50 bn in a little over four

months of its existence. The bank, which started operations in August 2015,, has opened 605 branches across 27 states.

NHB for further disclosure on default accounts: National Housing Bank has asked mortgage firms to share information on default of Rs 2.5mn and above by wilful

defaulters so that further credit to such borrowers is halted.

SDRs to defer NPA recognition: According to a report, the strategic debt restructuring route introduced by the RBI will defer recognition of loans worth Rs.1.5 trillion as

non-performing assets, without solving the core bad asset problem.

Govt. may sell stake in Axis Bank: The Government is considering selling part of its stake in Axis Bank. At the current market price, the Government's stake of 11.6 per

cent in the bank is worth about $1.8 billion.

SBI to set up special branch for start-ups: SBI announced that it will soon set up a first-of-its-kind branch in Bangalore to cater exclusively to the growing banking needs

of start-ups. The new branch will be set up to give banking and other services to start-ups. This branch will give start-ups the necessary infrastructure and facilities for

meeting their banking needs.

RBI Notifications

RBI releases Primary (Urban) Co-operative Banks’ Outlook 2014-15: The Reserve Bank of India today released the 2nd volume of the annual publication titled ‘Primary

(Urban) Co-operative Banks’ Outlook 2014-15. [LINK]

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=35882

3

Key Industry Trends

10Y G-Sec yield was UP 1bps wow and 5Y yield was DOWN 3bps wow

Source: Bloomberg

Spread between 10Y and 6M bond yields moved UP to 55bps

Source: Bloomberg

The yield curve shifted downwards for select tenors wow

Source: Bloomberg

10Y bond yields DOWN in US, UK & Brazil and UP in China

,

Source: Bloomberg

7.73% 7.74%

7.65%

7.62%

7.52%

7.56%

7.60%

7.64%

7.68%

7.72%

7.76%

7.80%

11/Dec 18/Dec 25/Dec 1/Jan 8/Jan

10Y G-Sec Yield 5Y G-Sec Yield

2.27% 2.12%

1.96% 1.77%

2.86% 2.87%

7.19% 6.85%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%


US UK China Brazil

7.18%

7.20% 0.56%

0.55%

0.46%

0.48%

0.50%

0.52%

0.54%

0.56%

0.58%

0.60%

7.2%

7.2%

7.2%

7.2%

7.2%

7.2%

7.2%

7.2%

7.2%


6M G-Sec yield Spread between 10Y and 6M yields (RHS)

6.00%

7.00%

8.00%

9.00%

3M 6M 1Y 2Y 3Y 5Y 6Y 7Y 8Y 9Y 10Y 11Y 12Y 13Y 14Y

28-Sep-10 15-Jul-13 01-Jan-16 08-Jan-16

3

CD rates remained FLAT wow across tenors

2

Source: Bloomberg

5-year CDS rates UP 6bps wow for ICICI and UP 1bps for SBI

e

Source: Bloomberg

4

Key Industry Trends

10Y AAA bond spread FLAT wow, 5Y spread UP 4bps wow

Source: Bloomberg

TED spread expands to 43bps wow

Source: Bloomberg

163

180 177 176

182

158 160 163 162 163

120

130

140

150

160

170

180

190


ICICI Bank CDS (bps) SBI CDS (bps) (RHS)

0.51%

0.69% 0.68% 0.66% 0.65%

0.56%

0.64%

0.71% 0.71%

0.75%

0.4%

0.5%

0.6%

0.7%

0.8%

10/Dec 17/Dec 24/Dec 31/Dec 7/Jan

10Y Corporate AAA Spreads 5Y Corporate AAA Spreads

7.0%

7.2%

7.4%

7.6%

7.8%


3M 6M 12M

0.51%

0.59% 0.60%

0.26%

0.62%

0.25% 0.21%

0.13% 0.17% 0.19%

-0.05%

0.05%

0.15%

0.25%

0.35%

0.45%

0.55%

0.65%

0.75%


3-month LIBOR % (RHS) 3-month US T-Bill% (RHS)

4

5

Key Industry Trends

1Y FW OIS and overnight rate spread moved to negative 6bps

Source: Bloomberg

Call money rates UP wow to 6.84%

Source: Bloomberg

Forward USD/INR rates ended HIGHER across tenors

Source: Bloomberg

Gold in INR terms UP 3.3% wow and UP 4.0% in US$ terms

Source: Bloomberg

6.57%

6.35%

5.78%

6.45%

6.84%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%

6.4%

6.6%

6.8%

7.0%


34

6 0

9

-6

(10)

(5)

-

5

10

15

20

25

30

35

40

6.5%

6.6%

6.7%

6.8%

6.9%

7.0%

7.1%

7.2%


Overnight rate 12M OIS Spread (bps) (RHS)

67.14 67.82

68.11 68.81

70.02

70.79

64

66

68

70

72


3M forward rate 6M forward rate 12M forward rate

25,231

24,954

25,148 25,042

25,858

1,075

1,066 1,071

1,061

1,104

1,030

1,040

1,050

1,060

1,070

1,080

1,090

1,100

1,110

24,400

24,600

24,800

25,000

25,200

25,400

25,600

25,800

26,000


Gold Price in Rs. per 10g. Gold Price in US$ per troy ounce (RHS)

5

Return on Assets Vs. P/ABV dispersion

Source: Bloomberg

Coverage Uni. YES

IIB

AXSB

HDFCB

Private Banks

ICICIBC

KMB

SIB

KVB Old-gen Banks

JKBK

FB DCBB

CUBK

BOI

CBK

BOB PSU Banks

SBIN

PNB

CIFC

HDFC

LICHF

MMFS

POWF RECL

REPCO

SCUF

SHTF

SUF

0.0

1.0

2.0

3.0

4.0

5.0

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%

P/A

BV

Return on Assets %

6

Valuation

Return on Equity Vs. P/ABV dispersion

Source: Bloomberg

7

Valuation

Coverage Uni. YES

IIB

AXSB

HDFCB

Private Banks

ICICIBC

KMB

SIB

KVB

Old-gen Banks

JKBK

FB DCBB

CUBK

CBK

BOB PSU Banks

SBIN

PNB

CIFC

HDFC

LICHF

MMFS

POWF RECL

REPCO

SCUF

SHTF

SUF

0.0

1.0

2.0

3.0

4.0

5.0

5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% 21.0% 23.0%

P/A

BV

Return on Equity %

Valuation Matrix – Banks

Bank

Net Interest Income, Rs. bn Operating Profits, Rs. bn PAT, Rs. bn Gross NPA FY15-17E CAGR NIM

FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E NII PAT ABV FY15 FY16E FY17E

AXSB 142.2 166.7 191.9 133.9 157.7 180.7 73.6 84.3 95.9 1.5% 1.5% 1.5% 16% 14% 15% 3.6% 3.7% 3.7%

BOB 131.9 136.8 159.5 99.2 98.1 117.8 34.0 31.9 52.1 3.8% 5.6% 5.3% 10% 24% 1% 2.0% 2.0% 2.1%

BOI 113.4 124.5 141.0 74.9 71.6 85.7 17.1 -9.4 11.0 5.5% 7.8% 8.2% 11% -20% -20% 2.1% 2.1% 2.2%

CBK 96.6 106.8 120.3 69.5 81.4 91.9 27.0 28.3 38.9 4.0% 4.2% 4.3% 12% 20% 5% 2.0% 2.0% 2.0%

CUBK 8.1 9.5 10.8 6.9 8.4 9.8 3.9 4.5 5.8 1.9% 2.1% 2.1% 16% 21% 15% 3.3% 3.5% 3.4%

DCBB 5.1 6.0 7.1 2.8 3.3 3.2 1.9 1.7 1.7 1.8% 1.9% 1.8% 18% -5% 9% 3.8% 3.6% 3.5%

FB 23.8 25.1 28.6 16.3 14.9 18.6 10.1 7.4 11.4 2.1% 2.8% 2.7% 10% 6% 5% 3.3% 3.1% 3.2%

HDFCB 224.0 274.9 338.3 174.0 213.3 265.7 102.2 123.5 160.9 0.9% 0.9% 0.9% 23% 26% 18% 4.6% 4.6% 4.6%

ICICIBC 190.4 212.3 236.3 197.2 214.8 241.1 111.8 125.3 138.2 3.9% 3.8% 3.7% 11% 11% 15% 3.4% 3.5% 3.5%

IIB 34.2 44.7 58.8 31.0 40.1 51.7 17.9 23.0 30.2 0.8% 0.8% 0.8% 31% 30% 33% 3.8% 3.9% 4.1%

JKBK 26.5 27.9 30.5 18.4 17.9 19.3 5.1 7.8 9.6 6.2% 6.7% 6.5% 7% 38% 13% 3.7% 3.9% 4.0%

KMB 42.2 69.1 80.7 29.9 41.1 55.8 18.6 21.2 32.0 1.9% 2.7% 2.4% 38% 31% -11% 4.7% 4.1% 4.2%

KVB 14.7 17.4 19.6 9.4 12.4 14.1 4.6 5.9 7.1 1.9% 2.0% 1.9% 16% 25% 10% 3.0% 3.4% 3.3%

PNB 165.6 172.2 184.5 119.6 123.4 130.8 30.6 31.7 44.7 6.8% 6.6% 6.4% 6% 21% 10% 3.1% 2.9% 2.9%

SBIN 550.2 576.5 655.3 389.1 413.3 486.5 131.0 159.3 213.1 4.3% 4.2% 4.1% 9% 28% 12% 3.1% 2.9% 3.0%

SIB 13.7 15.2 17.3 8.8 8.6 9.7 3.1 3.6 4.7 1.7% 2.3% 2.2% 12% 23% 8% 2.6% 2.7% 2.8%

YES 34.9 46.3 58.5 32.5 42.3 53.8 20.1 25.4 33.0 0.4% 0.6% 0.6% 30% 28% 19% 3.1% 3.4% 3.4%

8

Valuation Matrix – Banks (Cont’d)

Bank

RoE RoA ABV/share Rs. P/ABV (x) CMP Shares M.Cap Target

Rating

FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY16E FY17E (Rs.) (mn) Rs. Bn P/ABV(x) Price

(Rs.)

AXSB 17.8% 17.4% 17.1% 1.7% 1.7% 1.6% 183 212 244 2.0 1.7 414 2371 981 1.8 442 SELL

BOB 9.2% 7.8% 11.5% 0.5% 0.4% 0.6% 139 126 141 1.1 1.0 140 2218 311 0.9 128 SELL

BOI 6.3% -3.3% 3.7% 0.3% -0.1% 0.2% 216 146 137 0.8 0.8 110 666 73 0.7 94 SELL

CBK 10.7% 9.9% 12.0% 0.5% 0.5% 0.6% 373 378 409 0.6 0.5 220 475 104 0.6 246 SELL

CUBK 16.7% 15.8% 17.5% 1.5% 1.5% 1.7% 41 47 55 1.9 1.6 90 597 54 2.1 116 BUY

DCBB 14.5% 10.2% 9.7% 1.3% 0.9% 0.8% 51 55 61 1.4 1.3 77 282 22 1.1 66 SELL

FB 13.7% 9.4% 13.5% 1.3% 0.8% 1.1% 43 43 47 1.2 1.1 53 1713 90 1.3 62 BUY

HDFCB 19.4% 18.4% 20.3% 1.9% 1.9% 2.0% 244 284 337 3.7 3.2 1062 2506 2663 3.8 1274 BUY

ICICIBC 14.5% 14.5% 14.0% 1.8% 1.8% 1.8% 128 147 169 1.3 1.1 245 5798 1421 1.9 364 BUY

IIB 19.0% 16.7% 16.1% 1.8% 1.8% 1.9% 190 288 334 3.3 2.8 947 529 501 3.3 1115 BUY

JKBK 8.6% 12.2% 13.4% 0.7% 1.0% 1.1% 101 111 127 0.8 0.7 84 485 41 1.0 129 BUY

KMB 14.0% 9.4% 12.7% 1.9% 1.2% 1.5% 175 122 138 4.6 3.9 695 1821 1266 3.0 576 SELL

KVB 12.1% 13.3% 14.5% 0.9% 1.0% 1.1% 326 353 395 1.4 1.2 481 122 58 1.5 593 BUY

PNB 8.5% 8.0% 10.3% 0.5% 0.5% 0.6% 120 129 145 0.8 0.7 105 1855 195 0.8 116 SELL

SBIN 10.6% 11.4% 13.5% 0.7% 0.7% 0.9% 135 153 168 1.1 0.9 209 7466 1560 1.5 297 BUY

SIB 9.2% 10.2% 12.0% 0.5% 0.6% 0.7% 23 24 27 0.8 0.7 20 1350 26 1.0 27 BUY

YES 21.3% 20.0% 21.8% 1.6% 1.7% 1.7% 278 326 392 2.1 1.8 694 418 290 2.5 980 BUY

* ICICIBC, KMB & SBIN - P/ABV adjusted for subsidiaries

9

Source: Spark Capital Research Prices as of Jan 08, 2016

Valuation Matrix – NBFCs

10

NBFC Net Interest Income, Rs. bn Operating Profits, Rs. bn PAT, Rs. bn Gross NPA FY15-17E CAGR NIM

FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E NII PAT ABV FY15 FY16E FY17E

CIFC 17.3 20.4 23.7 9.8 11.8 14.0 4.4 5.2 6.2 3.1% 4.6% 5.8% 17% 19% 10% 7.1% 7.5% 7.5%

HDFC 80.0 86.7 96.1 87.9 93.9 104.3 59.9 63.5 70.1 0.7% 0.7% 0.7% 10% 8% 11% 3.3% 3.1% 3.1%

LICHF 22.4 28.9 32.5 21.1 26.9 30.3 13.9 16.7 18.2 0.5% 0.6% 0.9% 21% 15% 15% 2.2% 2.5% 2.4%

MMFS 30.4 31.0 35.7 20.8 20.0 22.8 8.3 7.1 8.7 5.9% 8.9% 10.0% 8% 2% -2% 8.6% 8.0% 8.1%

POWF 98.4 117.2 127.6 92.3 110.4 118.1 59.6 69.1 76.2 1.1% 1.4% 1.7% 14% 13% 14% 4.8% 5.0% 4.8%

RECL 86.4 94.9 112.0 82.4 95.2 112.6 52.6 62.0 72.2 0.7% 1.2% 1.6% 14% 17% 17% 5.2% 4.8% 4.8%

REPCO 2.4 3.0 3.8 0.2 0.2 0.3 1.2 1.5 1.9 1.3% 1.7% 1.6% 26% 24% 18% 4.4% 4.4% 4.3%

SCUF 21.4 24.2 27.6 12.9 14.2 16.1 5.6 5.8 6.2 3.1% 6.0% 7.3% 14% 6% 6% 13.6% 13.4% 13.0%

SHTF 42.5 47.8 53.8 31.3 35.5 39.0 12.4 12.9 14.1 3.8% 5.5% 6.6% 13% 7% 7% 7.6% 7.5% 7.4%

SUF 10.9 11.4 13.1 7.5 8.2 9.2 4.5 5.0 5.2 1.5% 1.6% 2.5% 10% 7% 11% 6.8% 6.6% 6.6%

NBFC

RoE RoA ABV/share Rs. P/ABV (x) CMP Shares M.Cap Target

Rating FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY16E FY17E (Rs.) (mn) Rs. bn P/ABV(x)

Price

(Rs.)

CIFC 17.5% 16.6% 15.8% 1.9% 2.0% 2.1% 170 191 207 3.4 3.1 649 144 94 3.3 686 BUY

HDFC 20.3% 19.4% 19.3% 2.3% 2.1% 2.1% 190 210 233 4.1 3.6 1174 1575 1849 3.6 1168 SELL

LICHF 18.1% 19.7% 18.4% 1.3% 1.4% 1.3% 150 173 197 2.9 2.6 505 505 255 2.1 408 SELL

MMFS 15.5% 12.0% 13.6% 2.1% 1.7% 1.9% 86 80 83 2.9 2.8 236 564 133 2.3 192 SELL

POWF 20.0% 19.8% 18.8% 2.8% 2.9% 2.8% 230 262 300 0.7 0.6 190 1320 251 1.0 299 BUY

RECL 23.1% 22.8% 22.2% 3.1% 3.0% 2.9% 242 281 329 0.8 0.7 215 987 212 1.0 329 BUY

REPCO 15.8% 16.8% 18.0% 2.3% 2.1% 2.1% 125 146 173 4.5 3.8 649 62 40 4.6 796 BUY

SCUF 15.9% 13.5% 13.1% 3.2% 2.9% 2.7% 606 627 679 2.4 2.3 1528 66 101 3.0 2035 BUY

SHTF 14.1% 13.2% 13.0% 1.8% 1.7% 1.6% 390 417 446 2.0 1.9 842 227 191 1.7 757 SELL

SUF 16.9% 15.6% 14.6% 2.4% 2.5% 2.3% 262 298 324 4.1 3.7 1384 111 154 4.7 1640 BUY

Disclaimer

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directors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contents

or any errors or discrepancies herein or for any decisions or actions taken in reliance on the report or the inability to use or access our service in this report or for any loss or

damages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use of

or reliance on this report.

Absolute

Rating

Interpretation

BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year

horizon

ADD Stock expected to provide positive returns of >5% – <15% over a 1-year

horizon SELL Stock expected to fall >10% over a 1-year horizon

Disclaimer (Cont’d)

Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,

Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:

Disclosure of interest statement Yes/No

Analyst financial interest in the company No

Group/directors ownership of the subject company covered No

Investment banking relationship with the company covered No

Spark Capital’s ownership/any other financial interest in the company covered No

Associates of Spark Capital’s ownership more than 1% in the company covered No

Any other material conflict of interest at the time of publishing the research report No

Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months:

Managing/co-managing public offering of securities

Investment banking/merchant banking/brokerage services

products or services other than those above

in connection with research report

No

Whether Research Analyst has served as an officer, director or employee of the subject company covered No

Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research

analyst’s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

Additional Disclaimer for US Institutional Investors

This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under

the Securities Exchange Act of 1934, as amended) only by Auerbach Grayson, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange

Act of 1934, as amended). Auerbach Grayson accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities

discussed in the research material may do so through Auerbach Grayson. All responsibility for the distribution of this report by Auerbach Grayson, LLC in the US shall be borne

by Auerbach Grayson, LLC. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you

if Spark Capital Advisors (India) Private Limited or Auerbach Grayson, LLC is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available

to you. You should satisfy yourself before reading it that Auerbach Grayson, LLC and Spark Capital Advisors (India) Private Limited are permitted to provide research material

concerning investment to you under relevant legislation and regulations;

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